Mpumalanga rejects escalating library contract

2017-10-15 06:00
David Mabuza

David Mabuza

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An Mpumalanga head of department has quit his job after allowing a contract for the installation of anti-theft devices in provincial libraries to escalate by R30m.

City Press has documentary evidence indicating that the provincial treasury rejected former culture, sport and recreation department head Walter Mnisi’s request to escalate the contract from R4.9m to about R35.4m after he first signed the contract with Frugacode CC, the service provider.

He, however, expanded the contract to cover additional costs without getting approval.

This meant that Mnisi flouted sections of the Public Finance Management Act and other treasury regulations.

City Press has the motivational letter Mnisi sent to the treasury, copies of the contract between his department and Frugacode, and the bid documents.

Mnisi handed his resignation to Premier David Mabuza in August and served a month’s notice in September.

This was after Nombedesho Nkamba, head of treasury in the province, turned down his request for the increase on June 22.

Mnisi wrote a six-page letter, dated June 5, in which he explained why the value of the contract should be allowed to exceed the stipulated threshold.

Mnisi argued that Frugacode had already procured additional software and hardware required for the libraries.

The hardware included radio-frequency identification (RFID) scanners, printers, tags and mobile conversion stations that cost R10.5m. Mnisi indicated this money had already been paid.

He said an additional R24.9m was required for the development of the software, maintenance, a site survey and implementation.

Documents

Frugacode was awarded the contract to install RFID management systems in 116 libraries over three years in March 2016 and started working in April last year.

The company, based in Mbombela, previously bid for tenders such as refurbishing water treatment plants, the installation of movable classrooms and construction.

In response, Nkamba argued that while supply chain management regulations allowed for an increase on contracts in exceptional cases, this could not be more than 15% or R15m (whichever was the lower amount) of the original value.

This meant that the RFID contract could be increased by at most R735 000, to R5.6m.

“Our view is that prior approval should have been sought from provincial treasury,” Nkamba said.

“We believe that under those circumstances, the department was supposed to cancel the tender and readvertise the project on the basis of the revised specifications, for purposes of enhancing fairness, transparency and cost-effectiveness.”

City Press has seen documents showing that Mnisi allegedly increased Frugacode’s scope of work without seeking Treasury’s approval.

The documents indicate that he approached the department about the proposed increases long after he had signed an addendum to Frugacode’s original contract, on September 12 2016, in order to increase the scope of the company’s work.

Frugacode’s managing director, Thabiso Jacques Mathebula, allegedly signed the addendum the following day.

This addendum was signed allegedly after officials realised that the new system to be introduced was not compatible with security gates and other systems already in use in these libraries.

According to the bid document, Frugacode should have been aware that the system it was supposed to introduce had to be compatible with existing systems.

The bid tender document that Frugacode’s official, Happy Nxumalo, submitted on February 12 2016, explicitly states that the RFID system should be compatible with current library management systems and should be adaptable for future modifications.

It is understood that the culture, sport and recreation department could face a legal challenge to pay the outstanding R24.9m, because Mnisi signed the addendum extending the work and committing the department.

Nxumalo declined to comment or share with City Press her boss Mathebula’s details so he could be directly contacted.

“I can’t give you anything,” she said before hanging up.

Mnisi did not respond to calls, text and WhatsApp messages.

Mpumalanga culture, sport and recreation spokesperson Sibongile Nkosi did not respond to written questions.

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