The illegality of the Cash Paymaster Services’ (CPS’s) tender as a distribution agency of social grants and the South African Social Security Agency’s (Sassa’s) resolve to prolong its (CPS’s) services came to a head once again before the Standing Committee on Public Accounts (Scopa). Scopa invited the Minister of Finance, Mr Pravin Gordhan, to pronounce his ministry’s responsibilities on this matter.
The Chairperson of Scopa, Mr Themba Godi, set the context of today’s engagement. You are here today because of the failure of Sassa and the Department of Social Development to provide adequate responses to the procurement of the social grant distribution agency going forward. We had Sassa to discuss this matter that seized the nation. But we had responses that still left question marks.
“We have called you to determine why we came to where we are now, subsequent to the Constitutional Court’s ruling. We want to ascertain where the National Treasury is regarding the current engagements between Sassa and CPS. If you have to okay such processes, will that not be an irregular expenditure? And what budgetary implications will that have?”
We could not get clarity on this matter, which is useful for Parliament and the nation to have a full picture of what is happening, he said. Our task is to ensure that there is a sound financial governance in government departments. The element of recklessness and issues of irregular expenditure attract our attention.
“It is in that context that we had to pursue this. Not small contract of change, it is a lucrative contract. Given the beneficiaries of social grants, to jeopardise this process is the most reckless thing you can do. We want to know what is happening in Sassa? Our main interest is to hear from you than from the speculations that are doing the rounds currently.
The Minister started off by explaining where the executive responsibility of his Ministry lies in respect to the payment of grants. “Our role is in four folds in this regard: we are responsible for budget, procurement framework, oversight and support role and national interest. In terms of procurement, the National Treasury seeks to ensure that all bids are advertised competitively in accordance with the Public Finance Management Act (PFMA). And the ministry’s task is to set uniform norms and standards, including supply chain management and must monitor and assess the implementation of this Act,” he said.
“In terms of its oversight over this matter, the National Treasury has had various engagements with various stakeholders to come up with a new payment model. As a result, six options have since been presented to Sassa,” he said.
But the current situation has been complicated by a standing court ruling which nullified CPS as Sassa’s service provider in 2012. Subsequent to that on 29 November 2013, 17 April 2014 and 24 March 2015, the Constitutional Court arrived at the same conclusion. The Minister stated unequivocally that the National Treasury does not support the extension of an invalid contract.
“That tender is unlawful, its extension must be pronounced by the Constitutional Court. If it grants it an extension it should be the shortest extension. And that tender must be open to competitive bidding and that must be in line with what is required by PFMA (Public Finance Management Act) and our procurement processes. The Court has an ability to suspend the unlawfulness to ensure there is a continuation of the payment of grants.
“And it is upon these grounds that the Department of Social Development has applied for deviation from normal bidding process on 2 March that will keep CPS as its service provider. But the Minister said there are set criteria for such. “An emergency procurement may occur when there is a serious and unexpected situation that poses an immediate risk to health, life, property or the environment, which calls an agency to action and there is insufficient time to invite competitive bids.”
The current problem does not qualify as a deviation because it does not fall within the ambit of what constitutes a deviation, said Ms Ntombovuyo Mate. “We have people who have no desire to come up with a procurement system that is legal. We are now held at ransom by an individual who points a gun to our heads because of the national or high value of grants payments. Someone is driving this vehicle into a ditch and we are forced to go into the ditch as well.”
The Minister concurred: “You are right, there is no act of the hand of God in this regard. We want to be frank that we are facing a contingency, but we must ensure that grants are paid come 1 April.”
In spite of all this, the Ministry has the higher duty to ensure that grants are paid on the 1st of April this year, he said. “There is a collective responsibility to ensure that grants are paid on 1 April 2017 on a legally and acceptable basis.”
“If you consider this an emergency it would be an injustice to have a company that makes unlawful deductions as a service provider of Sassa,” said Mkhuleko Hlengwa.
“Is it proper to state that we are currently facing a crisis of credibility and uncertainty with regard to this matter?” asked Mr David Ross.
The Minister replied: “On a more reassuring note, the Minister stated that they want to remove the clouds of a crisis by stating that the beneficiaries will receive their grants. Hence there is a task team to ensure the higher duty is executed within the framework of the law. The combination of political and judicial process will ensure that payments are made on the 1st of April.
The court’s finding borders on criminality, have you considered that as such? The disregard for Treasury, have you spoken face to face with the Minister about this matter? And it is difficult to ascertain your intervention in this regard.
The Deputy Director at the National Treasury, Mr Dondo Mogajane, said they have had various interactions with Sassa on the matter. “We have had several engagements with the department and some of the issues that are now raised here are some of the issues we raised during our engagements. These engagements have always been continuous and robust,” he said.
“The current ministerial team, which has avoided contact with CPS, is in a way, a vote of no confidence to the Minister regarding the way she has handled this matter,” said the Chairperson of Scopa, Mr Themba Godi.
The bravado that was displayed here last week by the Minister is misplaced. What has emerged is that the process of getting the new contract has been taken away from the Minister. “This shows there is a crisis of confidence. We cannot over-emphasise our outcry over CPS. Its conduct is unbecoming. Often we complain of judicial outreach, but sometimes these things are brought upon them by their own doings. Whether grants will be paid or not is not an issue, but we wanted to ensure that what would be done is within the law.”
By Abel Mputing
14 March 2017
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