Joburg Metro cover-up

The mystery of the bid that died and rose again.

The City of Johannesburg’s refusal to give any rational explanation for having cancelled a multi-million-rand tender after it had been adjudicated upon, only to re-advertise the identical tender months later and then award it to a politically connected firm, leads one to assume they’ve got something to hide.

Although assumptions can be dangerous, in this case documentary evidence obtained by Noseweek – and in some instances the absence of it – leads to the same conclusion. 

Johannesburg Mayor Herman Mashaba

The City of Johannesburg recently released a tranche of documents to Noseweek in response to a Promotion of Access to Information Act (Paia) application. At first the city refused the request which was then successfully appealed by Noseweek.

However it is clear that vital documents specifically requested by Noseweek are missing, while others that have no relevance at all to the initial request have been handed over. 

A veil of secrecy surrounds the R99,9-million tender (nose211) – known as Bid A683 in October 2016 – which was awarded to Durban-based Evaluations Enhanced Property Appraisals.

The cover-up has its roots in the tender’s predecessor – Bid A654. Both tenders were identical in all material aspects – in that the city had budgeted R320m for the bid; there were nearly 900,000 properties to be evaluated; and it was a three-year deal. The only difference was that another company won the first tender: DPP Valuers (Pty) Ltd.

DPP’s winning bid was R144,9m. They had the best empowerment credentials too. Evaluations was second, at R167,2m. This was during the period when the ANC was still running the council.

Mysteriously this tender process was left on the back burner, in File 13, until the prescribed time-limit passed and it lapsed, forcing the city to re-advertise the tender – a gross piece of negligence that the city has refused to explain or apportion blame for – despite the political change from an ANC-led metro to a DA-led metro. 

By the time the new tender was advertised Evaluations managed to shave a massive R67,3m off its original price – and win.

When the contract was first put out to tender, Evaluations was owned by Durban tenderpreneur Willy Govender, who is considered part of the ANC’s crony political business elite, having made his fortune off the back of government contracts (noses202&203).

But within three months of the contract’s having been awarded to Evaluations, it emerged that the company was in the process of being sold to JSE-listed EOH Holdings, another tenderpreneur company.

EOH obtained approval from the Competition Commission in May to purchase several of Govender’s businesses. Industry insiders believe EOH will soon corner the valuations market.  

“The Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any market. The proposed transaction does not raise any public interest concerns,” said the commission.

What the documents that were supplied to Noseweek via the Paia process show is that the initial tender, A654, was advertised in December 2015 and closed in January 2016.

The documents show that on 30 November 2015 the city’s bid specification committee met to finalise details of the bid. Present were Johannesburg Director of Valuations Piet Eloff, Deputy Liezl Govender, procurement officials, representatives from city treasury and officials from the Department of Governance and Traditional Affairs. The city’s Valuations head, Sihle More, was absent.

They discussed several technical details and estimated that there were between 885,000 and 889,900 plots that needed to be valued in the city. On 10 December 2015 Eloff said at the tender briefing session that they anticipated the winning bidder would be “announced in March 2016”.

The bid went out and five entities responded. Most were consortiums, except for DPP and Evaluations.

The documents show that all the other bidders, except Evaluations and DPP, were disqualified, as they failed to score the minimum of 70 points out of 100 to even be considered for the contract. 

On 4 February 2016 the Bid Evaluation Committee accepted that DPP and Evaluations were the top two bids, scoring 90,125/100 and 87,125/100 respectively. Committee chairperson Sihle More asked that the bids be “revisited to compare again... instead of going to tender again”.

On 11 February 2016 City Compliance’s Beverly Cvetkovski said she was “comfortable with their scoring” and said if any scores were changed, the scorers would have to account for them.

It was clear, according to the documents, that DPP was the winner. Yet for four months the city went cold and made no attempt to contact DPP –  and this is where the document trail goes cold. The first time DPP became aware that the tender had been cancelled was when the new bid, Bid A683, was advertised.

Various bidders shared with Noseweek a “Cancellation” letter they received on 30 June 2016. 

“The City of Johannesburg regrettably [sic] informs you of the cancellation of the above-mentioned tender due to the expiry of the validity period,” said the letter, sent by director of strategic supply chain management support, Setlhabi Leso. It said a new bid would be opened in four days, with the closing date being 1 August – just two days before the local elections that saw the ANC lose control not only of Johannesburg Metro, but also of Tshwane and Nelson Mandela Bay.

Johannesburg former city manager Trevor Fowler

The city did give Noseweek the minutes of the “Executive Adjudication Committee” held on 4 October 2016 – now with the DA in charge of the city – and chaired by then city manager Trevor Fowler. It noted the awarding of the tender to Evaluations.

The only mention as to why A654 was cancelled is contained in two lines: “The [Valuations] Department was asked to take the Committee through the report and to explain the processes followed after the initial proposal had been cancelled. The Valuations department responded. After cancellation of the initial proposal, the process of re-advertising the tender followed”. The department was represented by Eloff.

The second document provided to Noseweek is a letter from Johannesburg to Evaluations on 17 October 2016 confirming they had been awarded the tender. To date the city has yet to provide Noseweek with a Bid Opening Register of Bid A683, the scoring, or any minutes of the Bid Evaluations Committee for A683. 

DPP CEO Tinus Geyser said the bidding fiasco had left many unanswered questions, one being “how did Evaluations suddenly manage to drop its price quoted in its initial tender bid by no less than R67,3 million in the second?” He added: “[They say] they can make the bid work at R99m – 40% less than the initial bid – as they have done the previous city general valuation rolls and have the data [but] we still have our concerns. After the second bid was awarded, we wrote to Fowler and to Mayor Herman Mashaba. We told them we were not happy with the process. No one responded.”

Geyser said that normally they challenge decisions if their price was better, but in this case Evaluations had slashed their price considerably and there was no immediate or obvious reason to suspect irregularities in the management process of the second bid.

“Challenging the decision in court would have been throwing good money after bad.”

Evaluations has a messy past with the city. In 2013 they massively undervalued the properties of the city’s elite while overvaluing the properties of the poor.  There were 94,565 valuation objections of which 71,552 were lodged by the city’s own officials – an unheard-of situation in South Africa’s recent valuation history.

Noseweek revealed in August 2016 (nose202) that Evaluations had [conveniently? – Ed] undervalued the properties of Johannesburg’s elite, including billionaires such as the Guptas, the Oppenheimers, Tokyo Sexwale, insurance tycoon Douw Steyn and Angolan warlord Bento dos Santos Kangamba. Not to speak of providing valuations of nil for billion-rand developments such as Melrose Arch – as in the General Valuation Roll of 2013 (GV2013).

These “errors”  such as with the valuation of the property belonging to JSE-listed Remgro (long associated with the Rupert family) which was set at R0 then re-valued to R88.8m, and a Gupta-owned property that was eventually upped by the valuations appeal board from a valuation of R480,000 (by Evaluations) to one of R22m – were uncovered by Howick pensioner and maverick tax crusader Dr Robert McLaren (noses202; 203 & 207). Later, McLaren was served a R24,000 costs order by the city’s internal valuations appeal board, apparently for “wasting their time”. The board had never before issued such a costs order.

The board had asked McLaren to provide information to back up his demands for higher rates for the city’s uber rich – and which Evaluations was allowed to ignore when doing its original valuations. The city failed to provide this. As a result, McLaren was forced to withdraw many of his otherwise valid objections.

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