Were Eskom cleaning contracts rigged?

Johannesburg - Contracts worth millions of rands awarded by power utility Eskom in KwaZulu-Natal have been questioned by insiders and losing bidders.

A total of 13 companies contested the cleaning and facilities management contracts, but only two of them were chosen for R64.2 million work.

However, Eskom, in an unusual turn of events and against professional advice, increased the price of the contracts by R13.2 million to R77.4 million.

This is what Eskom allegedly did when a tender committee led by its general manager in KwaZulu-Natal, Monde Bala, allegedly flouted several regulations to hand the contract to Mfesi Cleaning Services and Total Serve Facilities Management.

According to documents seen by City Press, the committee overlooked several regulations to award the tender to Mfesi and disregarded a professional quantity surveyor’s opinion, which recommended against the continuation of the Mfesi contracts for three sites, including at Eskom’s Empangeni and Pietermaritzburg offices.

Mfesi’s contract was valued at R60.1 million, up from R50.2 million, while Total Serve’s contract was upped from R14 million to R17.3 million.

Among the services listed to be provided at the different sites are cleaning, laundry and removal of front-line services.

The recommendation only fingered Mfesi’s contract – not both companies’.

“Mfesi can either continue with the price as per the contract signed or terminate and follow the correct contract management process.

"Eskom can choose to reissue this contract at a common base schedule or continue to use as per legal advice, pending clarification of the tendered rates.

"Bearing in mind there might be legal repercussions from the unsuccessful tenders,” the recommendation reads.

Bala denied seeing any report that recommended that the contract be continued at the initial price or cancelled, and instead said the company’s own internal legal adviser, which reported to him, said they should continue with the tender.

Among the findings in the same report were that the pricing structure used was incorrect, and that the bill of quantities (BoQ) submitted to the quantity surveyor was not the same one submitted in the tender document and showed a number of discrepancies.

The report further states that:

“Had the negotiations and the clarification meeting been carried out, the contract would not have been awarded due to the inconsistency and errors in the BoQ and the new engineering contract.”

The tender was adjusted two months into the 36-month contract in March this year.

The Eskom modification report gives six reasons why the price of the contracts were hiked, including extra work, services not required, items that weren’t originally tendered for and were now included, an ambiguous price list and adjustments for overheads.

Mfesi Cleaning Services’ sole director, Jannet Dube, declined to comment.

The sole director of Total Serve, Thandeka Ndlovu, said the adjustment was because of overheads that were not included in the initial tender and when asked why that was so, she referred the matter to Eskom.

Eskom spokesperson Khulu Phasiwe said: “Contracts are adjusted in line with Eskom’s procurement and supply chain management policy.

"The adjustments were made to ensure compliance with statutory obligations by both parties, hence Eskom cannot disclose confidential information with its supplier,” he said.

Asked why the recommendation was ignored, Phasiwe said Eskom considered various options to minimise risk.

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