Sanral to readvertise 86 road construction tenders valued at R7.2bn

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30-11-2023
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Moneyweb
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Aims to get projects back on track after the tenders were cancelled following a legal challenge to the road agency’s now-withdrawn new preferential procurement policy.

The SA National Roads Agency (Sanral) is readvertising 86 road construction tenders, collectively valued at R7.2 billion, that were among those cancelled because of a legal challenge to its new preferential procurement policy (PPP) scoring system.

Sanral indicated on Wednesday that its stated aim is to fast-track the adjudication of the 86 tenders to get these projects back on track as speedily as possible.

The SA Forum of Civil Engineering Contractors (Safcec) welcomed the advertisement of these tenders.

However, a construction company that did not want to be named highlighted the potential negative impact of advertising so many tenders in such a short period because of the capacity constraints in the construction industry.

Retender process

Sanral CEO Reginald Demana said the roads agency will resume procurement for road construction projects on Wednesday, with tenders for 86 projects expected to be advertised.

Sanral confirmed the estimated value of these 86 tenders is R7.2 billion.

Demana said as part of the retender process, Sanral had reprioritised some of the less complex previously advertised tenders related to consulting engineer appointments and contractor appointments for asset preservation projects.

He said these tenders will be subjected to a shortened retender period to enable their closing by 14 December 2023 to enable Sanral to commence with tender evaluations during the December period and get projects back on track as fast as possible.

The tenders will be adjudicated in terms of Sanral’s new interim PPP, which was adopted by its board on Tuesday.

It follows Sanral conducting a series of countrywide public consultation sessions after the withdrawal of its PPP, with many verbal and written submissions made during these sessions to Sanral to consider in formulating its interim PPP.

“We are making good on our promise to the road construction industry and the South African public that we would move as fast as possible to overcome the legal challenges to our PPP and get the industry back on track,” Demana said.

This is a reference to the board of Sanral on 24 October 2023 withdrawing its new PPP, including its controversial tender scoring system, which was adopted by Sanral’s board on 23 May 2023.

It led to the cancellation of Sanral tenders valued at billions of rand.

Sanral said that it withdrew the policy at the time to avoid lengthy court battles associated with implementing the new policy, which could easily derail the road agency from fulfilling its core mandate of building and maintaining national roads.

Sanral’s board further committed the roads agency to move speedily to consult interested and affected parties on a proposed interim PPP.

The decision by Sanral’s board to withdraw the policy came shortly before an application by H&I Construction, which was joined by WBHO, to review and set aside Sanral’s new tender scoring system was to be heard in the High Court in Gqeberha.

Defects remedied

Safcec CEO Webster Mfebe welcomed the fact that Sanral tenders are back on track because “this is the daily bread of contractors” across the industry.

Mfebe said road construction is also key to the economy because it is where goods, services, and people are transported and is “a key cog in the recovery of economic activities in the country”.

He expressed the hope that Sanral has remedied the defects in its PPP that led to some contractors challenging the previous policy, adding that the Constitutional Court ruling confirmed that organs of state will determine the policy until National Treasury’s Public Procurement Bill becomes law.

Read: ConCourt confirms validity of 2017 Preferential Procurement Regulations

“I am hoping the policy will target and advance transformation so that we do not have the complaints we have had that also lead to business forums taking the law into their own hands because black people are not given opportunities,” he said.

Back to old policy

A construction company executive who attended one of Sanral’s PPP public participation roadshow sessions said Sanral had effectively reverted to its old PPP, which H&I Construction suggested they do when it applied to interdict Sanral from implementing the new PPP.

He questioned why Sanral did not have a public participation process before implementing the now-withdrawn PPP.

The executive said the construction industry has been “hammered” by a lack of work, and it will now be problematic for the industry from a capacity perspective to price so much work in such a short time.

“This is now a huge concern because you are likely to get a bunch of contractors maybe chasing one or two nice jobs, which might receive quite a few prices, but Sanral might only get one or two prices, if any, on other jobs.

“It’s unfortunately symptomatic of them not understanding the industry,” he said.

The executive added that this will result in negative political rhetoric that the industry has been begging for work, and now contractors are not pricing Sanral’s work.

He said Sanral presented its interim preferential procurement policy to those at the public participation process, which involves reverting to the scorecard with a 30% subcontractor requirement.

“If you do not meet that requirement, there is a penalty, which is fair,” he said.

Pragmatic decision

Demana stressed that following the Constitutional Court ruling of 16 February 2022, the determination of a procurement policy was firmly placed within the domain of the individual organs of state, which initially gave rise to Sanral coming up with the procurement policy that became the subject of court challenges.

Sanral emphasised the withdrawal of the policy was not a sign of capitulation but a pragmatic decision to ensure that the procurement of goods and services and service delivery were not interrupted.

Sanral board chairperson Themba Mhambi said South Africa’s democracy is underpinned by transformation, and if there is no transformation, “we will fail as a country and organisation”.

“The only way to achieve equality is for Sanral to make purposeful moves to expand wealth creation opportunities among black businesses,” he said.

Demana said the Sanral board is satisfied that it has taken into account the necessary considerations for the adoption of the interim PPP, with meaningful, targeted and deliberate consultations with interested and affected parties across the country.

“We have heard the cries for more aggressive transformation from black business and noted the objections and push-back from other fronts.

“We remain steadfast in our resolve to ramp up wealth creation for black contractors while at the same time being mindful of the importance of working with the big construction companies as we collectively develop South Africa’s economy,” he said.

Public Procurement Bill

Sanral added that it has taken note of the Public Procurement Bill deliberations currently unfolding before parliament’s Standing Committee on Finance.

Demana said the National Treasury revisions and submissions on the bill, particularly the measures through which an organ of state can provide for preference, resonate with Sanral.

“These measures include setting aside specific contracts for preferred groups, applying a points system to provide for preference, using subcontracting as a condition of tender, applying thresholds for local production and content, and making set-asides mandatory.

“Some of these elements were contained in our contested procurement policy.

“We hope the bill will soon be finalised, and we will all have a clear understanding of the broader framework within which we must procure,” he said.