EduSolutions gets millions more

2012-07-11 00:00

CAPE TOWN — Eight months after clinching a three-year textbook and stationery supply contract in Mpumalanga, controversial school supplies company EduSolutions convinced the government to pay it millions more than the contract allowed for.

Leaked documents detailing the company’s bid to supply Mpumalanga’s 1 868 government schools — apparently worth R120 million — include a request from the company’s managing director, Moosa Ntimba, on January 24 this year, that the Education Department pay EduSolutions an additional 15% to warehouse and distribute stationery.

The management fee to EduSolutions in Mpumalanga alone is R38 million.

The contract, awarded to EduSolutions in July last year, is valid for three years — starting this month — with an option to renew for a further two years. The contract also allows the company a 60% share of any trade discounts formerly offered to the government for bulk purchases of books and other material.

The practice of passing on the discount to the company is unlawful, according to a legal opinion obtained by the government to terminate EduSolutions’ deal in Limpopo earlier this year.

David Lewis, executive director of CorruptionWatch, said the practice of requesting higher payment once a supplier was locked into a contract was a common form of tender abuse.

“It should not be countenanced unless the purchaser has seriously altered the specifications after the award of the tender. In this case it seems that EduSolutions should have done its homework and realised that certain goods were non-discounted and then built that transparently into its bid price. I don’t think that they should have been allowed to change it subsequently by tacking on the additional 15%.”

An internal memo from the department’s deputy director-general for curriculum, Lucy Moyane, to the bid adjudication committee in Mpumalanga pointed out that trade discounts also didn’t apply for “other items such as equipments and consumables for science or hospitality, ECD [early childhood development] equipment, computers etc”.

She recommended to the bid adjudication committee that it “approv[es] that EduSolutions be paid 15% of the procurement costs towards off-setting warehousing and distribution costs on non-discountable LTSMs [learner and teacher support materials]”.

Moyane also mentioned that when the contract was awarded to EduSolutions in July last year, the department still had a valid contract with two other stationery suppliers “which EduSolutions was obliged to honour”.

In its tender bid, EduSolutions explained that the sliding-scale management fee it charged the provincial education departments went towards administration and staffing, catalogue development, requisition handling and processing, aggregating orders, receiving and verifying materials, packaging the supplies for individual schools, verifying delivery and drawing up status reports. To pay for warehousing and distributing, it said, it secured discounts from publishers and suppliers.

Media24 Investigations sent EduSolutions detailed questions about the circumstances that surrounded the need for an additional payment of 15% on top of its initial price. The company, through its attorney, Ian Small-Smith, refused to comment, accusing members of Media24 Investigations of having “a predetermined and unlawful agenda”.

The Mpumalanga Education Department did not respond to a request for comment at the time of going to press.

• investigations@media24.com

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