Council 'spending millions too much'

2009-03-10 00:00

A closed corporation, Starglow Trading cc, have accused the Msunduzi Municipality of costing ratepayers an extra R41 million by awarding a tender for a new high technology electricity and water meter management system to a Port Elizabeth-based rival company, Unique Mbane (Pty) ltd.

Advocate Jean Marais, SC, yesterday urged Pietermaritzburg High Court Judge Jerome Mnguni to set aside the decision to award the contract to Unique Mbane, and to find that exceptional circumstances exist entitling the court to award the tender to Starglow Trading.

An application for an interim interdict preventing the parties from going ahead with the contract pending the judge’s ruling was not granted by Mnguni.

Judgment has been reserved.

Marais argued that Msunduzi municipal manager Rob Haswell, who awarded the tender, was not authorised to make the decision; that the relevant legislation, policy and procedures were not complied with; that the award was “procedurally unfairly made”; was made for a reason not authorised by the regulations and was made because relevant considerations were not taken into account.

According to documentation, Starglow Trading emerged with the highest “points” calculated by the municipality’s bid evaluation committee, yet was not awarded the contract.

In his affidavit, Haswell said Starglow Trading was fewer than three points ahead of Unique Mbane and was awarded three points because it is local.

Unique Mbane was awarded higher points for functionality and in the end Haswell said he preferred the “most functional tenderer rather than the local tenderer”.

Haswell maintained that he has a discretion to award the tender to the best tenderer, who is “not necessarily the tenderer with the best price or the highest points”.

Starglow Trading’s initial tender price (before adjustments) was R219 823 800 and Unique Mbane’s R241 090 905 — a difference of R21 267 105.

In his submissions to court, Marais suggested that these figures did not include “extras” or so-called “hidden costs” totalling some R20 million, which he said Starglow Trading included in its tender price, but which were not incorporated in the tender of Unique Mbane.

He suggested this was “unfair”, and further meant ratepayers are paying R41 million more than if the contract went to Starglow Trading.

Advocate Alistair Dickson, SC, for the municipality and advocate R. Vahed, SC, for Unique Mbane, urged the court to dismiss the application.

Dickson submitted that before the court can review the decision, the judge has to be satisfied that Haswell’s decision was not rational.

He said if the court were to order the municipality to award the contract to Starglow Trading, it would be usurping a municipal function. “Even if the review succeeds it [the decision] must be referred back to the decision maker,” he said.

The municipality also disputes the contention that ratepayers are effectively paying R41 million more by choosing Unique Mbane.

Municipal procurement manager Francis Grantham said in his affidavit tenderers are not entitled to add “hidden costs”.

Grantham said Unique Mbane has accepted that the hidden “extra costs” must be regarded as being part of the amount tendered by it. “The budget is then established at the tender price of R200 million and this must cover all items required for the proposal to work,” he said. “I deny there is any misdirection or unfairness in this respect.”

What is it? High-tech meter management system

The high technology electricity and water meter management system is a “smart system”, recommended by government and the National Energy Regulator of SA. It measures consumption electronically and relays the information to the municipality. The system replaces manual meter reading, which has been plagued by difficulties including lack of access to properties, fraud and inefficiency by employees.

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