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City of Johannesburg

ro11p f 0ff,ns 1c,und Inv •·tigation Smvices

a world class African city

orensic I vestigatio eport

Strictly Privat e & Confidential


PRIVIL EGED

ALLEGED POLITICAL INFLUENC E IN THE AWARDING A CONTRACT TO AFRIRENT


THROUGH REGULATION 32 OF THE MFMA.
( . REPORT
29 MARCH 2019
City of Johannesburg
J. Group Forensic and Investigation Services

Jobur~ FORENS IC INVEST/GA TION REPORT

DISTRIBUTION LIST

Name To Secure
For Action
For
Designat ion Act ion
information

Mr. Ndivhon iswani Lukhwareni


X
City Manager

Mr. Herman Mashaba


X
(
Execut ive Mayor

( .

ALLEGED POLITICAL INFLUENCE IN THE AWARD ING A CONTRACT TO AFRIRENT THROUGH REGULATION
32 OF THE MFMA.

Page 1

GFIS: 65/01/ 2019


29 March 2019
City of Jo/ra rineshwg
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Date : 29 March 2019

Our Reference : GFIS 220/10/2017


TO: COPIED TO:
Cllr. Herman Mashaba Mr Ndivhoniswani Lukhwareni

Executive Mayor City Manager

This report is confidential and NOT for p11blicalion

I LI I / '

ALLEGED POLITICAL INFLUENCE IN THE AWARDING A CONTRACT TO AFRIRENT


THROUGH REGULATION 32 OF THE MFMA INCLUDING AN EXTERNAL LEGAL OPINION
ON THE REGULATION 32 PROCESS.
It is with great pleasure to present to you our report into alleged political influence in the
cancellation of the open tender process for proposed contract A733 and awarding of the
Fleet Management Contract to Afrirent PTY (Ltd) through regulation 32 of the MFMA.

The attached report records the results of our forensic investigation and recommends the
actions we deem appropriate to be taken. We would appreciate your written response on

( suggested recommendations of the investigation, within 10 working days after receipt of


this report.

Should you have queries or questions regarding the content of this report, please contact
Mshiwa Sibande on 081 301-4341 or email him at email address: mshiwas @joburg .org. za.

Email: shadracks@ joburq .org.za


(

(
City of Johannesburg

J, Group Forensic Investigation Services

Jobur3 FORENSIC INVEST/GA TION REPORT

TABLE OF CONTENTS

SECTION HEADING PAGES

1. BACKGROUND 4
2. PURPOSE AND OBJECTIVES OF OUR INVESTIGATION 5

3. SCOPE OF OUR INVESTIGATION AND PERIOD UNDER REVIEW 5

4. APPROACH AND PROCEDURES PERFORMED 5

5. LIMITATIONS AND RESTRICTIONS 6

( 6. EXECUTIVE SUMMARY 7
7. REGULATORY FRAMEWORK 12
8. FINDINGS 13
9. CONCLUSIONS 42
10. RECOMMENDATIONS 43

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(

(
City of Johannesburg
Group Forensic and Investigation Services

FORENSIC INVESTIGATION REPORT

LIST OF ABBREVIATIONS USED:

CoJ/Citv City of Johannesburci


GFIS Group Forensic and lnvestiaation Services
GRAS Group Risk Assurance Services
BEC Bid Executive Committee
BSC Bid Specification Committee
EAC Executive Adiudication Committee
SHELA Safetv Health Environment
FCM Fleet Compliance Management
GCSS Group Corporate Shared Services
GSCM Group Supplier Chain Management
AFRIRENT Afrirent Pty (Ltd)
EM Executive Mayor
AO Accounting Officer (City Manager)
MAHUNA Mahuna Investments
MFMA Municioal Finance Management Act
EFF Economic Freedom FiQhters
VBS Venda Banking Society

ROLE PLAYERS IN THE INVESTIGATION

Lucas Tshibalo (Tshibalo) Director Loaistics


Sanjav Dubru (Dubru) ActinQ Grouo Executive Director GCSS
( Su leiman Ghanchi (Ghan chi) Former Director Fleet
Kabelo Mashabela (Mashabela) Suspended Fleet Soecialist
Dr Shaun Ramrooo (Ramrooo) Former Head SHELA and FCM
CLLR. Herman Mashaba CCLLR. Herman Mashaba) Executive Mavor
CLLR Funzela Naobeni (CLLR Funzela Ngobeni) MMC
Senzo Tsabedze (Tsabedze) CEO Afrirent
Deputv Director Leshoka (Leshoka) Group Supplier Chain Manaaement
Mr Mashoabane (Mashoabane) Member Mahuna
Pringle Raedane (Raedane) City ManaQer Moqale Citv

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Ratha Ramathla1Je (Ramathla1Je) Actina CM Mogale City


Paul Richards (Richards) Emolovee Afrirent
Refik Bismila (Bismila) GED Health Department
Smanaaliso Vilakazi (Vilakazi) Grouo Leaal and Contracts
Cornelius Jamela (Jamela) Director SCM
Sethlab i Leso (Leso) Director SCM
Israel Maluleke (Maluleke) Fleet Controller
Jacaues David Rabie (Rabie) Fleet Manaaer City Power
Zwelithini Lazarus Khumalo (Khumalo) Lead Transoort Joburg Water
Sioho Makhanye (Makhanve) Deoutv Director GRAS
Thomas Sambo (Sambo) Senior Soecialist Public Safety
Gerhard Booysen (Boovsen) Manaaer Fleet Operations: Pikituo
Mark Truter (Truter) Manaaer Fleet: City Parks and Zoo
Andre Geen {Geen) Fleet Manaaer: J RA
Tsheoo Mohati {Mohati) Fleet Manaaer: EMS
Zelda Verwev {Verwev) Deoutv Director: GCSS
Sandile Sibaya {Sibava) Officer Sunnlv Chain
SM Xulu {Probitv) Probitv Auditors

1. BACKGROUND
1.1 Group Forensic and Investigation Services (GFIS) received a request from Cllr Herman
Mashaba, the Executive Mayor (EM) of the City of Joburg Municipality (City) to conduct an
investigation into alleged political interference with the awarding of a contract to Afrirent Pty
\
(Ltd) (Afrirent) for Fleet Management Services of Non-specialised fleet through a Regulation
32 process of the MFMA (Regulation 32). The EM requested the investigation after an article
appeared in the Mail and Guardian newspaper alleging that during the appointment of the
current service provider, Afrirent, there was political interference in the tender process which
resulted in the appointment of Afrirent irregularly.

1.1.1 It was further alleged that Afrirent had made payments amounting to R500 000.00 to Mahuna,
a company that is owned by a cousin of Mr Julius Malema (Malema) the President of
Economic Freedom Fighters (EFF) a political party. It is also alleged that this company was

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part of the Venda Banking Society (VBS) looting scandal. The newspaper article highlighted
the fact that it was very co-incidental that Afrirent made payments to Mahuna which was
owned by Malema's cousin just before the tender process was cancelled by the CoJ and was
Afrirent appointed through the alternative Regulation 32 process of the MFMA which allows
for Government in all spheres to appoint a supplier that is providing services to another state
institution without following a competitive tender process.

2. PURPOSE AND OBJECTIVES OF INVESTIGATION AND REPORT

2.1 The primary objective of our investigation was to independently and objectively investigate
the allegation that Afrirent was appointed through political pressure from the EFF through a
( compromise reached by the EM and the EFF so that the City's 18/19 budget could be
approved .

2.2 This report is not a court document, and has been prepared solely for the purpose of this
investigation. It is to be used solely as a discussion document and should not be used for
any other purpose. No part of this report may be quoted, referred to or disclosed, in whole
or in part, other than to competent authorities in terms of due legal requirements, without our
prior written consent.

3. SCOPE OF INVESTIGATION

3.1 Our mandate was limited to analysing the circumstances that lead to the Regulation 32
appointment of Afrirent by reviewing all available documentation and interviewing individuals
that played a role in the process to specifically determine if political pressure was exerted on
them to cancel the open tender process for proposed contract A733 and then following the
( Regulation 32 process to appoint Afrirent. Neither the validity nor legality of the open tender
process or the Regulation 32 process was probed in this report.

3.2 The allegation of corruption between Afrirent and the EFF is outside the scope of this
investigation.

3.3. Our investigation does not constitute an audit in terms of Generally Accepted Auditing
Standards nor was it required to.

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4. APPROACH AND PROCEDURES PERFORMED

4.1 The nature of our investigation was based on the analysis of the documentary evidence, the
extraction of relevant information there-from, the determination of the nature of the relevant
transactions, interviews with various persons and ultimately summarising the results in order
to conclude on our factual findings.

4.2 We reviewed the following documentation.

a) Report for the approval of the Regulation 32 process

b) Bid Adjudication Committee meeting minutes provided by SCM and GCSS

c) Bid Evaluation Committee meetings minutes provided by SCM and GCSS (


d) Probity Report of the appointment of fleet management services

e) Report compiled for submission to the Executive Adjudication Committee for the
appointment of the fleet management service provider for non specialised fleet

f) Report to the Executive Adjudication Committee for the cancellation of tender for fleet
management services for non specialised fleet.

g) Reports and Documents related to the Regulation 32 appointment of fleet management


service provider, provided by SCM and GCSS.

5. LIMITATION AND RESTRICTIONS

5.1 GFIS have attempted to obtain all information relevant to our investigation, but cannot at this
stage guarantee that all relevant documentation had been obtained, despite diligent efforts
made. \
5.2 Although GFIS have attempted to test the accuracy of all information provided to us, we take
no responsibility for the accuracy or the veracity of other information provided to us by other
parties.

5.3 GFIS requested and were not provided with the contracts between Mahuna and Afrirent and
therefore we could not ascertain that there was a business relationship between the
companies although this was confirmed by the CEO of Afrirent.

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5.4 GFIS requested and we were not provided with the scope of work, the invoices and the sites
for which Mahuna was contracted to perform services, by Afrirent, as such we could not
confirm the assertion that payments made to Mahuna were for services rendered.

5.5 GFIS could not compel the Department of Rural Development and Land Reform to provide
contracts or invoices regarding Afrirent's contract with them despite the Deputy Director Mr
Leshoka: SCM, Department of Rural Development and Land Reform confirming that such a
contract exists.

5.6 Mr Mashoabane from Mahuna Investments was contacted telephonically and he refused to
speak to GFIS referring all questions to Afrirent.
(
5.6 Non - availability of the Probity Officer for analysis, Group Risk and Assurance was asked to
assist but at the time of writing this report they had not responded.

5.7 GFIS was limited by the fact that key role players in the process viz: Dr Ramroop, Ghanchi
and Mashabela have resigned and been suspended respectively. Attempts to source
documentation and interview these individuals were limited to emails and telephonic
conversations, the current employees at GCSS have not been able to obtain complete
documentation regarding the process followed.

6. EXECUTIVE SUMMARY
6.1 On 31 January 2012, the City approved the award of contract A400A for the provision of non-
specialised vehicles and fleet support services to Zeda Cart/a Avis Fleet Services (Avis). For
a period of sixty (60) months, commencing on 01 November 2012 and terminating on 31
October 2017, valued at R830 479 683.00 {excluding Value Added Tax (VAT), fuel and ad-
( hoe rentals).
6.2 As a result of the delay in the commencement of the tender process combined with the delays
in the approval of the various committees the timeframes for the procurement process was
affected and as such contract A 400 was extended three (3) times as follows:
• On 31 October 2017, the City extended the contract for a period of five (5) months with
effect from 1 November 2017 to 31 March 2018 to a total value not exceeding R124 571
000(excluding VAT, fuel and ad-hoe rentals). At this stage the User Department
attempted to use Regulation 32 for the utilisation of a fleet contract from Oudtshoorn
Municipality however this request was not approved by EAC. Instead EAC approved the

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extension for five (5) months through circular 62 of the MFMA. The Regulation 32 report
was authored by Mashabela and supported by Ramroop, this is an indication that the
User Department already determined that Regulation 32 was an acceptable option for
the procurement of goods and services.
• And further extensions for a period of one ( 1) month and six (6) months with effect from
01 April 2018 to 31 April 2018 and 01 May to 31 October 2018 respectively
6.3 The extensions of the contractA400 from 1 November 2018 to 31 October 2018 were granted
due to the fact that the City could not execute service delivery without fleet and the extension
of the contract A400 allowed for the tender process to continue without denying the City
access to fleet.
(
6.4 Ramroop, Director Fleet, GCSS, the official with delegated authority to supervise the
functions of fleet management did not execute his function with due diligence and care as a
result the tender process to replace A400 was excessively delayed.
6.5 BSC meeting took place from 13 July 2017 to 20 October 2017, this resulted in the
compilation for the term of reference for the tender for the provision of non specialised
vehicles which were approved on 14 September 2017. Subsequently, the tender was
advertised on 22 September 2017.
6.6 The tender proposals received were evaluated by the BEC meetings which took place
between13 December 2017 and 04 April 2018. The BEC took a decision to recommend the
appointment of Avis trading as Zeda Cars as the successful bidder initially. However this
recommendation by the BEC was changed when they received the probity report which had
material negative findings and was recommending the cancellation of the tender process.
The Chief Audit Executive of CoJ and the Managing Director of SM Xulu confirmed that the \
information contained in their probity report was authentic and that they stand by their findings
and recommendations.
6.7 Due to the adverse findings in the probity report, the BEC submitted a cancelation of
proposed contract A733 and the recommencement of the process to EAC and this was
approved on 18 May 2018. The EAC approved the recommendations of the BEC and
recommended the cancellation of the process to the Accounting Officer for approval. This
was done on 18 June 2018.
6.8 When proposed contract A733 was cancelled, approximately four (4) months remained
before the last extension granted for contract A400 was to expire on 31 October 2018. The

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tender process for proposed contract A733 began in April 2017 and the BEG only compiled
a report for EAC approval in March 2018 this process took 11 months. Therefore the
timeframe of four (4) months to re-start the tender process afresh was very optimistic.
6.9 A meeting was held between Tshibalo, Dubru and Ghanchi wherein it was decided that while
the open tender process be re-started a parallel Regulation 32 process also be considered
in case the open tender process was not concluded before the expiry of the extension
granted on A400. This was due to the limited timeframe that remained between the
cancellation of proposed contract A733 and the expiry of the extensions already granted on
contract A400. No further extensions could be approved on the current contract and if there
was no contract in place then the City would not be able to execute service delivery.
( 6.10 According to Mr. Lucas Tshibalo, the process of determining which entity had a suitable fleet
management contract which could be used for Regulation 32 was completed by Ghanchi and
Mashabela. According to Tshibalo the following municipalities were approached:

NUMBER NAMEOF MUNICIPALITY Rl8PONIE


1 Tshwane Metropolitan Municipality The Non-specialised vehicles
contract was under review.
2 Mogale City Municipality Specialised and non-specialised
contract in place which could be
used bv the Citv.

6.11 On 06 July 2018, the City Manager, Dr Lukhwareni, wrote a letter to Readane: City Manager,
Mogale City. In the letter, Dr Lukhwareni requested permission to utilise Mogale City's
contract number 1(f) 01/2018:- Vehicle Fleet Financing in line with Regulation 32 of the

~ . MFMA.
6.12 On 19 July 2018, the Acting City Manager, Ramathlape from Mogale City granted the City of
Joburg consent in writing to utilise their vehicle fleet contract. Furthermore, Mogale City
indicated that tender number I (F) 01/2018 for Fleet Financing was for a period of three years
and had been awarded to Afrirent (PTY) Ltd.
6.14 On 20 July 2018, Dr Lukhwareni granted Dubru permission to engage Afrirent (PTY) Ltd as
per the requirement of Regulation 32 of the MFMA.
6.16 On 26 July 2018, a meeting was held between Afrirent and the City of Johannesburg to
negotiate a discount from Afrirent. Subsequent to that meeting, Afrirent provided a proposal
for the provision of leasing and support service for a period of 36 months. The proposal

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provided for leasing of fleet and support services to the City and its Entities by Afrirent was
at the following costs:

R1 387 213 335.50 R1 487 325 475.29 R100 112 139.79

6.18 According to Tshibalo, Afrirent (Pty) Ltd was requested to provide a guarantee from the bank
with respect to their financial position to enable support this of this contract and ASSA granted
them conditional reserved funds of R1 billion.
(
6 .19 On 03 October 2018 a report requesting the appointment of Afrirent in terms of Regulation
32 was tabled before the EAC. The report recommended that the Accounting Officer approve
the City's participation on contract (IF) 01/2018) between Mogale City and Afrirent for vehicle
fleet financing on a full maintenance lease for a period of 36 months or a period deemed fit
by the Accounting Officer at a total cost of R1 387 213 335.50. A period of 30 months for this
request was approved by the Accounting Officer on recommendation by the EAC.
6.20 During the interview with Tsabedze, he indicated that Afrirent was established in 2003 in
order to participate in the fleet management environment. Tsabedze indicated that Afrirent
has 19 municipal clients, three national and two provincial government clients. In addition, he
indicated that 60% of those contracts were current.
6.21 In addition to the above Tsabedze confirmed that Afrirent has a contract with the Department
of Rural Development and Land Reform in Limpopo Province. The value of the contract is
R2 181 734 100.00 for the provision of tractors, implements and equipment for a period of
thirty six months.
6.22 According to Tsabedze the implements and machinery have to be delivered to various farms
within the province. In addition, Afrirent had to train the farmers of the co-operatives on how
to use the implements and machinery.
6.23 Tsabedze indicated that initially, Afrirent used their suppliers to deliver the implements and
machinery to the farms in Limpopo and an additional cost and Afrirent's Project Managers
provided the training, however, this proved to be counter-productive and costly as there was
a language barrier between the Project Managers and the members of the cooperative at the
farms.

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6.24 The project managers employed by Afrirent were White Afrikaners and the farmers receiving
the implements spoke Venda, Tsonga or Pedi. Therefore, Mahuna Investment, a company
in Limpopo was contracted to provide logistic and interpretation services to Afrirent at a
reduced cost and are 100% Black owned.
6.2.5 Tsabedze further indicated that for the work that was completed, Mahuna Investment
submitted invoices and were paid accordingly . The first invoices were paid around April or
May 2018 and the second in June or July 2018. The appointment of Afrirent in CoJ happened
in October/ November 2018.
6.26 Tsabedze indicated that at no stage did he or Afrirent have any knowledge of any relationship
between Mahuna Investments and any political party in South Africa. Specifically, he was not
aware of any link between Mahuna Investment and Mr Julius Malema or the Economic
Freedom Front (EFF).
6.27 The following officials Tshibalo, Dubru, Mashebela and former official Ghanchi who played a
role in the procurement process for proposed contract A733 and the Regulation 32 process
for the appointment of Afrirent were approached in person or telephonically and they provided
the following submission:
• That there was no interference in the open tender process or in the Regulation 32 process
by any political party or political figure.
• The decision to cancel the proposed contract A733 was entirely a decision taken by
officials of the City through a prescribed process as contained in the cancellation report
tabled before the EAC.
• The decision to pursue the Regulation 32 process was a decision made by GCSS

( management who recommended it to the Accounting Officer.


6.28 Ramroop who was also approached for comment provided a statement where he levels
allegations of corruption against Dubru indicating that he was appointed to manipulate the
tender process, however he is not specific on how this happened or which political party or
politician was responsible for his agenda.
6.29 Thirteen (13) members of the SEC confirmed that they were not influenced in any way into
cancelling the open tender process, proposed contract A733 .
6.30 The City Manager confirmed that there was no political influence regarding the cancellation
of the open tender process for proposed contract A733 and the Regulation 32 appointment
of Afrirent. He indicated that he was satisfied with the process followed.

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6.31 On the allegation that the negotiations with EFF on the tariff proposal for the 2018/2019 City
of Joburg budget were based on the awarding of fleet management tender, Executive Mayor,
Cllr Herman Mashaba indicated that the allegations are without base. In fact, on 12 June
2018, a meeting was held between the Executive Mayor, the Member of Municipal Council
(MMC) Cllr Funzela Ngobeni and representatives of the EFF. During the meeting , EFF had
indicated that the tariff increase on water and electricity was too high. A compromise was
reached whereby the "proposed decrease retail increases" were decreased by 0,2 % for
electricity and 1% for water. Based on the compromise, the budget and tariff proposal were
ultimately adopted by Council on 21 June 2018. MMC Cllr Ngobeni confirmed the
engagement and the compromised reached with EFF representatives.
(
6.32 The Executive Mayor indicated that he became aware of the fleet management contract
challenges at a meeting on 05 October and the City Manager had assured him that the matter
was under control. Since the Executive Mayor had no rights and responsibilities in the supply
chain management process, he was satisfied with the response from the City Manager.
6.33 The Executive Mayor indicated that he had never heard of the company Afrirent prior to the
publication of the ama-Bhungane article on 29 November 2018 and this was the first time he
had been alerted to potential irregularities in the awarding of the fleet management contract
to Afrirent. Given the nature of the allegations, the Executive Mayor instructed the Head of
Group Forensic Investigation Services to conduct an investigation into the allegations.
6.34 According to the external legal opinion obtained from MNS Attorneys in regards to the
regulation 32 process the following was concluded:
A. "CoJ was justified in cancelling the tender A733 as advised by the Probity Report.
However, CoJ must in future consider appointing a probity advisor at the beginning of the
procurement process to ensure that each and every stage of the procurement process is
vetted to minimize risks of belated tender cancellations and legal challenges;
B. CoJ still had an option of further extending contract A400A , per Regulation 36 as the
reasons for the initial extension on Regulation 36 still prevailed as at 31 October 2018;
C. CoJ complied with the procedural requirements of the MFMA Regulation 32 when it
appointed Afrirent;
D. There are sufficient mitigating grounds to argue that substantively CoJ complied with
Regulation 32 and CoJ's SCM Policy;

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E. There might, however, be a debate raised on whether the material price difference
between Mogale City/ Afrirent contract and the CoJ/Afrirent contract impact on the
substantive compliance with MFMA regulation 32 and CoJ policy; and
F. CoJ must consider engaging National Treasury to affirm the substantive compliance with
MFMA Regulation 32 in the conclusion of the Afrirent contract."

7. REGULATORY FRAMEWORK

7 .1 GFIS obtained and reviewed the Regulation 32 of the Municipal Supply Chain Management
(MFMA) and it states the following :
(32) Procurement of goods and services under contracts secured by other organs of state:
(1) A supply chain management policy may allow the accounting officer
to procure goods or services for the municipality or municipal entity under a contract
secured by another organ of state, but only if -
(a) the contract has been secured by that other organ of state by means of a
competitive bidding process applicable to that organ of state;
(b) the municipality or entity has no reason to believe that such
contract was not validly procured;
(c) there are demonstrable discounts or benefits for the municipality or entity to do
so; and
(d) that other organ of state and the provider have consented to such procurement
in writing.
(2) Sub-regulation (1)(c) and (d) do not apply if-
( (a) a municipal entity procures goods or services through a contract secured by its
aren't municipality; or
(b) a municipality procures goods or services through a contract secured by a
municipal entity of which it is the parent municipality

7.2 GFIS obtained and reviewed the Regulation 36 of the MFMA and it states the following:
(36) Deviation from, and ratification of minor breaches of, procurement processes
(1) A supply chain management policy may allow the accounting officer-

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(a) to dispense with the official procurement processes established by the policy
and to procure any required goods or services through any convenient process,
which may include direct negotiations , but only -
(i) in an emergency;
(ii) If such goods or services are produced or available from a single provider
only
(iii) for the acquisition of special works of art or historical objects where
specifications are difficult to compile
(iv) acquisition of animals for zoos; or
(v) in any other exceptional case where it is impractical or impossible to follow the
(
official procurement processes; and
(b) to ratify any minor breaches of the procurement processes by an official or
committee acting in terms of delegated powers or duties which are purely of a
technical nature.
(2) The accounting officer must record the reasons for any deviations in
terms of sub-regulation (l)(a) and (b) and report them to the next meeting of the
council, or board of directors in the case of a municipal entity, and include as a
note to the annual financial statements.
(3) Sub-regulation (2) does not apply to the procurement of goods and services
contemplated in regulation 11 (2).

8. FINDINGS

8.1 GFIS established that on 31 January 2012, the City approved the award of contract A400A
for the provision of non-specialised vehicles and fleet support services to Zeda Cart/a Avis
Fleet Services (Avis). The duration of the awarded contract was sixty (60) months,
commencing on 01 November 2012 and terminating on 31 October 2017. The total value of
the contract was R830 479 683.00 {excluding Value Added Tax (VAT), fuel and ad-hoe
rentals).
8.2 Group Corporate and Shared Services Department (GCSS) were the custodians of the
contract and are responsible for fleet management including non-specialised fleet.

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8.3 Group Corporate and Shared Services (GCSS) requested approval to go out on tender to
replace the existing non-specialised fleet management contract A400. The approval was
granted on 18 April 2017, this was five (5) months before contract A400 was to expire. The
bid specification committee (BSC) was approved in 18 May 2017. However the first BSC
meeting took place on 13 July 2017. The appointment of the bid evaluation committee (BEG)
took place on 30 October 2017. The fact that contract A400 was expiring on 31 October 2017,
meant that in order to accommodate the new tender process for the replacement of contract
A400 had to be extended with Avis.
Contract A400 was extended three (3) times as follows through submissions to the Executive
Adjudication Committee (EAC):
(
• On 31 October 2017, the City extended the contract for a period of four (5) months with
effect from 1 November 2017 to 31 March 2018 for a total value not exceeding
R124 571 000 (excluding VAT, fuel and ad-hoe rentals) (Refer to annexure A1). GFIS
further obtained a report requesting the extension of contract A400 through Section 116
(3) of the MFMA from the EAC (Refer to Annexure A2), however there are no
corresponding EAC minutes or resolution for this report indicating that report may not
have been submitted to EAC.
Subsequently a report dated 25 October 2017 requesting the EAC to approve the
recommendation of a Regulation 32 utilisation of a fleet contract from Oudtshoorn
Municipality (Annexure A3). This report was authored by Mashabela and supported by
Ramsaroop. The corresponding EAC minutes and resolution indicate that the
recommendation for a regulation 32 utilisation of contract SCM22/2016 (Oudtshoorn
Municipality) was not approved. The EAC recommended that the Accounting Officer (AC)
(
approve an extension of contract A400 through MFMA circular 62 providing for the
variation of the contract from 1 November 2017 to 31 March 2018 (Annexure A4).
The AC approved the EAC recommendation however expressing his concerns about the
lateness of the action taken by the User Department and suggested a letter of reprimand
be issued.
• And further extensions for a period of one ( 1) month and six (6) months with effect from
01 April 2018 to 31 April 2018 and 01 May to 31 October 2018 respectively (Refer to
annexure B and C respectively)

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8.4 It shou ld be noted that GCSS had 60 months from 01 November 2012 to 31 October 2017
(for the duration of contract A400) to plan, prepare and procure the replacement contract for
contract A400. The extensions above were granted due to the fact that the City could not
execute service delivery without fleet and the extension of the contract A400 allowed for the
tender process to continue without denying the City access to fleet. However, if Dr. Ramroop :
Group Head (SHELA and FCM), the individual with overall responsibility for Fleet at GCSS
and his direct reports executed their function with diligence and due care by ensuring that
there was amp le time for the tender process to be completed then there would be no need
for extensions of contract A400.
8.5 The time line for the completion of the open tender process for proposed contract A733
to replace contract A400 was as follows:
Event Date
Approva l of the tender to commence for the procurement of un- 18 April 2017
specialised fleet services
Bid Specification Committee (BSC) appointed on (Refer to 18 May2017
annexureD)
BSC met between (Refer to annexure E) 13 July 2017 and
20 October 2017
Addendum to bid specification 20 October 2017
Bid Specification approved on (Annexure F) 14 September 2017
Tender advertised on (as per report to EAC from BEC) 22 September 2017
Compulsory briefing session 11 October 2017
Bid Evaluation Committee (BEC) Appointed on (Annexure G) 30 October 2017
BEC met between (Annexure H) 13 July 2017 and \
20 October 2017
Closing of tender (as per advert) (Annexure /) 7 November 2017
Public tender opening (as per advert) (Annexure I) 7 November 2017
BEC report prepared for Executive Adjudication Committee 9 March 2018
approval but not submitted (Annexure J)
Presentation of the probity report to BEC prior to submission of 4 April 2018
BEC report to EAC for approval (Annexure K)

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Request to cancel proposed contract A733 presented to EAC for 18 May 2018

cancellation after the probity report showed material defects with


the specification (Annexure L)
Proposed contract A733 Accounting Officer approve the 18 June 2018

cancellation of proposed contract A733 (Annexure M)

8.6 From the above process it is clear that an attempt to secure a replacement contract for contract
A400 through an open tender process was undertaken by GCSS, however the process had
to be cancelled due to the fact that there were material negative findings made by the Probity
Auditors. This audit was conducted by an independent Auditing Company, SM Xulu. It should
( be noted from above that the User Department supported by the Head SHELA and FCM,
Ramroop attempted to use the Regulation 32 process as early as 31 October 2017. The
contract from Oudtshoorn that was proposed in the Regulation 32 process was between
Oudtshoorn and Avis, this was not approved by EAC.

8.7 Timeline for BSC resolutions for proposed contract A733 (open tender process):

Not provided n/a

Anita van der Merwe - Minutes not provided


GCSS
Andrie Geen -JRA
Liner Seleise - GSSCM
Israel Maluleke - Joburg
( Market
Tsakani Mohale-GCSS
Mervin Martin - Metro
Bus
Johan Maree - JCPZ
Jacques Rabbie - City
Power
Tshepo Mphati - EMS
Kabelo Mashabela -
GCSS
Zweli Khumalo - Joburg
Water
Zama N owo - GCSS

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M Zondo - Group
Accounting
Amanda Gxwala -
GRAS/ Probity Advisor
Pumla Ganca - SSCM
Petra Smit- GCSS
Sean Coetzee-JMPD
Lindiwe Nkosi - GSSCM

02 August Anita van der Merwe - The committee deliberated on the contract
2017 GCSS period presentation made by GCSS-FCM and an
Andrie Geen -JRA agreement was made that a number of factors
Liner Seleise - GSSCM be incorporated then the item be discussed in
Israel Maluleke - Joburg the next meeting. However, amongst other
Market issues raised with regards to the contract period (
Tsakani Mohale - GCSS was that having the contract running for 36
Mervin Martin - Metro months is likely to make the lease of each
Bus vehicles more expensive. Other members of the
Dumisane Chauke - committee felt that 36 months' contract will be
GDED less complicated due to the fact there will not be
Jacques Rabbie - City a public participation. A decision for the contract
Power period was put on hold until the next meeting.
Tshepo Mphati - EMS
Kabelo Mashabela - All proposals that will score less than 70 points
GCSS out of one hundred ( 100) points for functionality
Zweli Khumalo - Joburg will not be considered further.
Water
Gerhard Booysens - Bidders proposals must be divided into two
Pikitup envelopes for submission:
Amanda Gxwala - Functionality envelope - provides for the
GRAS/ Probity Advisor bidder's submission in line with the functions of
Philani Zamia - GSSCM the bid as outlined in section 4, all returnable
Petra Smit - GCSS documents, full and properly completed RFP
Sean Coetzee - JMPD document in line with Annexures and the (
Lindiwe Nkosi - GSSCM proposal documents in line with the conditions
spelt out in the bid document.
B-BBEE Envelope - provides for the bidders'
submission in terms of Preferential Procurement
Regulations 2017 as outlined in section 6 and B-
BBEE status level contribution of the bidder .

The chairperson adjourned the meeting, and


concluded the finalisation of the terms of
reference .

The next meeting will be held on the 04 August


2017.

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04 August Anita van der Merwe - The chairperson of the committee has presented
2017 GCSS the estimations in terms of how the contract will
Andrie Geen - JRA cost the city when it is structured for 36 months
Liner Seleise - GSSCM period when compared to a 60 months period.
Amanda Gxwala - The committee then agreed that it is more
GRAS economically sound to have the contract for a
Israel Maluleke - Joburg period of 60 months.
Market
Tsakan i Mohale - GCSS This will not be applicable to a non-specialised
Mervin Martin - Metro fleet contract.
Bus
Thulani - Ndlovhu - The insurance premiums will be part of monthly
Core Admin lease for all the FML vehicles and the insurance
Jacques Rabbie - City history of the history of the city will be provided
Power to the bidders to assist in determining the
(
Zweli Khumalo - Joburg premiums for each vehicles.
Water The Chairperson adjourned the meeting, and
Kabelo Mashabela - concluded the finalisation of the terms of
GCSS reference .
Smangaliso Vilakazi -
Group Legal The committee has agreed that bidders will be
Gerhard Booysens - given 45 days to submit their proposals and no
Pikitup subm ission that will be made after the closing
Lindiwe Nkosi - GCSS will be considered.
Sean Coetzee - JMPD The chairperson thanked everyone for their time
Petra Smit- GCSS and cooperation in BSC meetings.
Finance A report will be written to request the approval of
the final bid document.

Meeting officially closed.

07 Anita van der Merwe - The BSC has resolved that the following
September GCSS elements be used as the disqualifying criteria for
( 2017 Andrie Geen -JRA bidder:
Liner Seleise - GSSCM a) Failure to submit a Valid Tax clearance
Israel Maluleke - Joburg certificate or One Time Pin for tender
Market purposes.
Tsakani Mohale- GCSS b) Failure to comp lete and sign the form of
Mervin Martin - Metro bid
Bus c) Incomplete pricing schedule
Johan Maree - JCPZ d) Failure to attend the compulsory briefing
Jacques Rabbie - City section.
Power e) Failure to complete and sign MBD 4,
Tshepo Mphati - EMS MDB 5 , MDB 8, AND MDB 9
Kabelo Mashabela - f) Failure to adhere to sub -contracting
GCSS requirement as regulation 9 of PPPFA,
2017 .
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Zweli Zwane - The SSC committee agreed and resolved that


Economic the contract period will be 60 months.
Development The BSC committee agreed and resolved that
Zwe li Khumalo - Joburg the closing date for the bidder's submission will
Water be in 45 days after the advert has gone out due
Smangaliso Vilakazi - to the complexity of the contract i.e. PPPFA
Group Legal Regulation on sub- contracting requirements.
Thulani Ndlovu - CORE
Gerhad Booysens - Proposals will be evaluated in terms of the
PIKITUP Preferential Procurement Policy Framework
Zandile Dlamini - Act's requirements of the 90:10 points system.
GSSCM
'Nkosikhona Mnguni -
Probity
Sipho Makhanya- (
GRAS
Lindiwe Nkosi - GSSCM

20 Anita van der Merwe - The committee then thoroughly discussed the
October GCSS rate card and at the end of the all members
2017 Andrie Geen -JRA agreed to adapt the amended rate card in a
Liner Seleise - GSSCM summarised version.
Luxolo Ntisana - Probity
Israel Maluleke - Joburg The committee resolved that an approval
Market request will be send to the Accounting Officer of
Tsakani Mohale - GCSS the City before the amended rate card could be
Mervin Martin - Metro communicated to the bidders that attended the
Bus briefing sessions.
Johan Maree - JCPZ
Jacques Rabbie - City The committee resolved that the communication
Power of the amendment will be limited to the bidders
Tshepo Mphati - EMS that attended the briefing session.
Kabelo Mashabela -
GCSS It was then agreed by all members of the
Zweli Khumalo - JHB committee that the bidders will be given two
Water weeks extension so that they are afforded
Smangaliso Vilakazi - enough time to complete the revised pricing
Group Legal schedule.
Thulani Ndlovu - CORE
Gerhad Booysens - The chairperson officially adjourned the meeting.
PIKITUP
Philani Zamia - GSSCM

8.8 The SSC meetings above lead to the compilation of the term of reference for the tender
(specifications) (Annexure F).The terms of reference was approved on 14 September 2017

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by the Accounting Officer. Which meant that the tender could be advertised. The tender was
advertised on 22 September 2017.

It must be noted that after the advertisement of the tender 22 September 2017, there was a
subsequent BSC meeting as a result of amendments being made to the rate card. This
resulted in an extension of two weeks for submission granted to all bidders that attended the
briefing session.

GFIS confirmed that all members that served on the BSC were officials from the City and its
Entities. No political office bearers or representatives are allowed to serve on these
( committees.

8.9 Timeline for BEC resolutions for proposed contract A733 (open tender process):

• ""''"' '1 •
Ill
13 Mark Thute - JPCZ Chairperson enquired whether the committee
December Nkosikhona Mnguni - forms a quorum. The approved members of the
2017 Probity BEC are fifteen (15), and a confirmed that there
Thulani Ndlovu - GCSS was 8 members plus, therefore the committee
Gerhard Booysen - formed a quorum.
Pikitup Smangaliso
Vilakazi - Group Legal Chairperson raised a concern regarding the
Zweli Khumalo - Joburg committee member's time keeping. Late coming
Water will not be tolerated. The concern was raised
Israel Maluleke - Joburg directly to Supply Chain and the fact that it is not
( Market possible to open the meeting without them.
Kabelo Mashaba -
COJ/GCSS The next meeting was scheduled for the 14
Louis Shitllela - GSSCM December 2017.
Jacques Rabie - City
Power
Tshepo Mphati -
COJ/EMS
Zelda Verwey-
SHELA+FCM
Andrie Geen - JRA

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14 Jacques Rabie, - City The committee resolved that should it be


December Power identified that bidders did not submit compliant
2017 Tshepo Mphathi - key returnable documents that are not a
COJ/EMS disqualifying criteria; bidders will be given an
Mark Thute-JPCZ opportunity to re-submit.
Nkosikhona Mnguni -
Probity However, it was further resolved that a
Thulani Ndlovu - GCSS permission will be requested from the
Gerhard Booysen - Accounting Officer before that process can take
Pikitup place.
Jabulile Sibeko - Group
Legal Smangaliso The Committee further resolved that the invalid
Vilakazi - Group Legal tax clearance or one-time pin will results in
Zweli Khumalo - Joburg bidders been disqualified due to the fact that it is
Water a disqualifying criterion as set out in the bid
Israel Maluleke - Joburg spec.
Market
Kabelo Mashaba - Joint venture can be requested if it is not in the
COJ/GCSS document. Power of attorney should be
Bheki Mabelo - GSSC requested.
Louis Shitllela - GSSCM
Sipho Makhanya - GRAS The committee resolved that in as much it is not
Andrie Geen-JRA a key returnable document nor disqualifying
criteria, the profile of the company is important
and it will assist for ease of reference.
Members were urged to put a sticker of where
they actually found the document.

15 Gerhard Booysen - The committee resolved that a request for


December Pikitup permission to communicate with bidders whose
2017 Sipho Makhanya - GRAS municipal accounts are not in order will be made
Nkosikhona Mnguni - to the Accounting Officer.
Probity
Thulani Ndlovu - GCSS Bidders will be given three days to re-submit
Mark Thute - JPCZ
(
after the authorization was provided.
Zweli Khumalo - Joburg
Water The committee resolved that the following
Zelda Verwey - SHELA+ meeting was due to be conducted after the
FCM bidders have re-submitted.
Israel Maluleke - Joburg
Water The meeting adjourned.
Kabelo Mashaba -
COJ/GCSS
Smangaliso Vilakazi -
Group Legal
Andrie Geen - JRA
Jacques Rabie - City
Power
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Louis Shitllela - GSSCM

19 Ziyanda Mncanca - The chairperson enquired whether the members


January Probity reached a quorum, as the approved members
2018 Gerhard Booysen - are 13 excluding Probity and Legal. The
Pikitup members formed a quorum.
Nghezimani Samba -
Public Safety JMPD There were 2 new members that joined the
Male Thule - JCPZ committee namely:
Zweli Khumalo - Joburg • Ziyanda Mncanca taking over on behalf
Water of the probity consultant (SM XULU)
Jabulile Sibeko - Group • Sandile Sibiya taking over from Group
Legal Supply Chain.
Thami Mbuzo - GSSCM
Kabelo Mashaba - The committee resolved to deliberate on the
( COJ/GCSS functionality evaluation matrix before the actual
Jacques Rabie - City evaluation so that all members scoring
Power understands exactly what is expected:
Sand ile Sibiya - GSSCM
Zelda Verwey - It was resolved by the committee that when it
SHELA+FCM comes to all requirements in the functionality
Louis Shitllela - GSSCM scores, members are expected to score in line
Tshepo Mphati - with the bid specification.
COJ/EMS
Israel Maluleke - Joburg The functionality threshold for the tender is 70%
Market and any bidder that will score below 70% will be
Sipho Makhanya - GRAS disqualified as the bid specification.
Andrie Geen -JRA
The bidders below were evaluated for
functionality:
• Zeda Car leasing
• 58 fleet PTY LTD
• Absa Vehicle Management solutions
( • Fleet Data technologies CC
• Afrirent Fleet Management Services
• Dataqwip Rentals Pty Ltd
• Amasondo Fleet Services, Fleet Africa a
division of super group
• Bidvest Bank Limited
• Tallis Fleet
• Springs car wholesalers
Next meeting scheduled for 22 March 2018.

Meeting adjourned.

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22 Ziyanda Mncanca - The chairperson welcomed all members and


January Probity has indicated that functionality evaluation was
2018 Nghezimani Samba - proceeding .
Public Safety JMPD Members of the committee were reminded of
Mark Thule - JCPZ their responsibility to ensure that functionality
Zweli Khumalo - Joburg evaluation is in accordance with the
Water specification .
Jabulile Sibeko - Group Functionality evaluation continued.
Legal
Kabelo Mashaba - Meeting adjourned.
COJ/GCSS
Jacques Rabie - City
Power
Sandile Sibiya - GSSCM
Zelda Verwey - (
SHELA+FCM
T she po Mphati -
COJ/EMS
Israel Maluleke - Joburg
Market
Sipho Makhanya - GRAS
Andrie Geen - JRA

23 Ziyanda Mncanca - The chairperson has indicated that there is an


January Probity approved member who has not been part of the
2018 Nghezimani Samba - process of evaluation from inception and he has
Public Safety JMPD only joined the team on the 23 January 2018
Mark Thule - JCPZ
Zweli Khumalo - Joburg The name of the official is Allan Ndzamela
Water representing JPC.
Jabulile Sibeko - Group
Legal The committee inquired with Mr Allan Ndzamela
Kabelo Mashaba - on why he has not been attending the meetings .
COJ/GCSS The member indicated that he has been unable (
Jacques Rabie - City to receive all the invitations due to a technical
Power error of computer.
Sandile Sibaya - GSSCM
Zelda Verwey - The committee resolved that Allan will continue
SHELA+FCM to join the committee in the sessions .
T she po Mphati - However , he was not allowed to score due to
COJ/EMS the fact that the process of scoring has already
Israel Maluleke - Joburg begun.
Market
Sipho Makhanya - GRAS The chai rperson briefed Allan with regards to
Andrie Geen - JRA progress thus far.

The functionality evaluation continued.


Next meeting scheduled for 26 Janu ary 2018
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24 Ziyanda Mncanca - The chairperson welcomed all members and


January Probity has indicated that functionality evaluation was
2018 Nghezimani Samba- proceed ings.
Public Safety JMPD Members of the community were reminded of
Zweli Khumalo - Joburg their responsibility to ensure that functionality
Water evaluation is in accordance with the
Kabelo Mashaba - specification.
COJ/GCSS Functionality evaluation continued .
Sandile Sibiya - GSSCM
Israel Maluleke - Joburg Meeting adjourned.
Market
Andrie Geen -JRA
Thulani Ndlovu - GCSS
( 25 Ziyanda Mncanca - The chairperson welcomed all members and
January Probity has indicated that functionality evaluation was
2018 Gerhard Booysen - proceeding .
Pikitup Members of the committee were reminded of
Nghezimani Samba - their responsibility to ensure that functionality
Public Safety JMPD eva luation is in accordance with the
Andrie Geen - JRA specification.
Zweli Khumalo - Joburg
Water Kabelo Mashaba - Meeting adjourned.
COJ/GCSS
Sandile Sibiya - GSSCM
Tshe po Mphati -
COJ/EMS
Allan Ndzamela - F.M.O
Israel Maluleke- Job urg
Market
Smangaliso Vilaka zi -
Group Legal
Thu lani Ndlovu - GSCC
( Jacques Rabie - City
Power

26 Ziyanda Mncanca - The chairperson welcomed all members and


January Probity has indicated that fun ctionality evaluation was
2018 Gerhard Booysen - proceedings.
Pikitup
Nghezimani Samba - Members of the committee were reminded of
Public Safety JMPD their responsibi lity to ensure functionality
Mark Thule - JCPZ evaluation is in accordance with the
Zweli Khumalo - Joburg specification .
Water Kabelo Mashaba -
COJ/GCSS Functionality eva luation continued.
Sandile Sibiya - GSSCM
Meetinq adjourned.
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Tshepo Mphati -
COJ/EMS
Sipho Makhanya - GRAS
Andrie Geen -JRA
Thulani Ndlovu - GCSS
Smangaliso Vilakazi -
Group Legal
Allan Ndzamela - JPC

30 Ziyanda Mncanca - The chairperson briefed members that


January Probity functionality scoring has been completed and all
2018 Nghezimani Sambo - members have their set of functionality scoring
Public Safety JMPD sheets ( 11 Bidders).
Mark Thule - JCPZ
Zweli Khumalo - Joburg Members were advised that they needed to (
Water ensure that their hand-writing is visible and
Kabelo Mashaba - where there is an alteration it must be
COJ/GCSS accompanied by signature or initials.
Sandile Sibiya - GSSCM
Andrie Geen-JRA Discrepancies were presented by GSCM
Thulani Ndlovu - GCSS together with the probity advisor.
Smangaliso Vilakazi -
Group Legal All members corrected and amended their
Allan Ndzamela - JPC scoring sheets where necessary.
Tshepo Mphati -
COJ/EMS Not all the elements of the functionality scoring
Israel Maluleke - Joburg matrix were attended to at the session.

Further discrepancies were to be dealt with in


the following meeting .

Next meeting scheduled for 31 January 2018

31 Ziyanda Mncanca - The chairperson briefed the committee and has


January Probity indicated that since the closing of all the issues
2018 Gerhard Booysen - was not completed on the scores , the process
Pikitup was set to continue in that meeting .
Nghezimani Sambo -
Public Safety JMPD GSCM was given an opportunity to present all
Mark Thule - JCPZ the discrepan cies.
Zweli Khumalo - Joburg
Water Kabelo Mashaba - All committee members engaged and discussed
COJ/GCSS all the issues .
Sandile Sibaya - GSSCM
Tshe po Mphati - All committee members engaged and discussed
COJ/EMS all the issues .
Andrie Geen - JRA
Thulani Ndlovu - GCSS
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Smangaliso Vilakazi - Some members needed to amend their scores


Group Legal and sign each time they alter the scoring.
Jabulile Sibeko - Group
legal contract The committee set parameters for the BBBEE
Allan Ndzamela - JPC and pricing evaluation which was due to take
Zelda Verwey - place the following meetings.
SHELA+FCM
The committee resolved that as per the bid
document incomplete pricing schedule is a
disqualifying criterion and bidders who will
provide incomplete prices are going to be
disqualified
An expl~nation was made to members that
bidders were requested in the spec to provide
( quotations for manuals FMLs, Motorcycles
FMLs, Trucks FMLs and MM on city owned non-
specialised vehicles.
The pricing schedule is per individual category
of a vehicle.

The final price to be used for evaluation from the


bidder's proposal will be the price that appears
in the bid document.

Group risk has to advice on insurance premiums


and excess as per the bidder's proposals .

Zelda Verwey _apologised that she was not


going to be able to attend the meetings until the
28 February 2018 as she will be on leave .
Zwelithini Khumalo apologised that he was not
going to be able to attend the meeting until the
13 February 2018 as she will be on study leave.
( Next meeting scheduled for 05 February 2018.

05 Ziyanda Mncanca - The chairperson has indicated that the following


February Probity 8 companies were to be evaluated for pricing
2018 Gerhard Booysen - and BBBEE :
Pikitup
Nghezimani Sambo - • Fleet Afri ca a Division of Supplier Group
Public Safety JMPD (PTY) LTD
Mark Thule - JCPZ • Bidvest bank limited
Kabelo Mashaba - • Afrirent fleet Managem ent Services
COJ/GCSS
Sandile Sibaya - GSSCM
• Dataqwip Rentals (Pty) Ltd
• Talis Fleet PTY LTD
• Zeda ca r leasing (Pty) Ltd t/a Avis fleet

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T shepo Mphati - • Absa Vehicle Management Solutions


COJ/EMS PTY LTD
Andrie Geen -JRA • Amasondo Fleet Services
Thulani Ndlovu - GCSS
Smangaliso Vilakazi - It was brought to the attention of members that
Group Legal as part of the spec. bidders were requested to
Allan Ndzamela - JPC provide pricing both on automatics and manual
Jacques Rabie - City for the majority categories of vehicles.
Power A counter view was raised that should it be
Louis Shitllela - GSSCM found that certain vehicles do not exist, the two
Israel Maluleke - Joburg bidders might have been found misleading.
Market
Further clarity was provided that for hybrid
vehicles, bidders were requested to quote both
on automatic and manuals units.

The committee resolved that in line with the


specification , bidders that did not quote on
certain vehicles and they did not give reasons
as to why they didn't quote on them they will be
disqualified as their pricing schedule is
incomplete.

The committee further resolved that for the


bidders that gave a reason why there is no
prices for certain vehicles will have to be
considered as their pricing schedule is
complete.

The meeting schedu led for 07 February 2018

Meeting adjourned.

06 Ziyanda Mncanca - The committee resolved that a report to be sent


February Probity to the Accounting Officer , explaining that there
2018 Larry Manels - Group seems to be a challenge with the spec. The
Legal Accounting Officer be requested to grant the
Nghezimani Sambo - committee permission on the following
Public Safety JMPD
Mark Thule - JCPZ 1. That the Accounting Officer grants
Kabelo Mashaba - permission to the Bid Evaluation
COJ/GCSS Committee to conduct a verification of
Sandile Sibaya - GSSCM the automatic vehicles category that
Tshepo Mphati - bidders indicated they do not exist with
COJ/EMS the OEM 's.
Andrie Geen - JRA 2. That the Accounting Officer grants
Thulani Ndlovu - GCSS permission to the Bid Evaluation
Allan Ndzamela - JPC Committee, that upon verification the
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Jacques Rabie - City vehicles categories that are existing and


Power bidders indicated they do not exist the
Israel Maluleke - Joburg said bidders be disqualified in line with
Market the disqualifying criteria in the bid
specification of the "Incomplete Pricing
Schedule".
3. That the Accounting Officer grants
permission to the Bid Evaluation
Committee, that upon verification the
vehicles category that are not existing as
per the response of the OEM's and
some bidders have given pricing on such
categories the said bidders be
disqualified because of misleading
pricing.
( 4. That the Accounting Officer grants
permission to the Bid Evaluation
Committee to evaluate bidders pricing on
the basis of the current Manual and
Automatic make -up of the vehicles
categories for fleet user departments
and Municipal Entities in the City .
The committee resolved that a meeting will be
convened upon receiving response from the
Accounting Officer.

Next meetina will be communicated.


21 Ziyanda Mncanca - The committee resolved that let all available
February Probity avenues be looked at first.
2018 Larry Manels - Group
Legal The chairperson requested that all departments
Nghezimani Sambo - supply chain, probity, and legal, should provide
Public Safety JMPD the reasons for their decisions, or lack thereof,
Kabelo Mashaba - in writing as per the instructions by the
( COJ/GCSS accounting officer.
Gerhard Booysen -
Pikitup There was a proposal that for the bidders that
Andrie Geen- JRA did not provide pricing on certain vehicles in as
Thulani Ndlovu - GCSS much as they have given reasons they should
Allan Ndzamela - JPC be disqualified.
Jacques Rabie - City
Power This notion was on the basis of the view that in
Israel Maluleke - Joburg as much as the vehicles are not there in the
Market market for the bidders that gave pricing on
Zweli Khumalo - Joburg everything it would mean they went an extra
Water mile to try and ensure that alterations be done
on the vehicles when ordered.

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The committee then became of the view that


evaluating only the bidders that completed the
pricing schedule in full would be ideal.

The resolution was that legal will once more be


given an opportunity to study the bid
specification to ensure that the committee is
safe in proceeding with route of evaluating only
the two bidders.

The committee further resolved that all the


pricing schedules and pricing principles of the
bidder's proposals be evaluated again. This was
in an effort to try and check if the bidders gave
reasons for the incomplete pricing. (
Next meeting will be on the 26 February 2018

26 Ziyanda Mncanca - The committee resolved that bidders cannot be


February Probity evaluated outside the offer that was made in the
2018 Amanda Gxwala - Probity bid document.
Nghezimani Samba -
Public Safety JMPD The final price of the bidder becomes the offer.
Mark Thule - JCPZ A thorough engagement took place around
Kabelo Mashaba - ensuring that the manner at which the above
COJ/GCSS companies are going to be evaluated, it has to
Sandile Sibaya - GSSCM be in line with the spec and it has to be fair.
Zweli Khumalo - Joburg The committee felt that a lot of views and
Water concerns were raised many times and the
Andrie Geen - JRA committee doesn't seem to agree.
Thulani Ndlovu - GCSS It was then resolved that members from outside
Allan Ndzamela-JPC the committee be consulted and perhaps a
Jacques Rabie - City positive way forward might come out of the
Power consultation.
Israel Maluleke - Joburg
Market It was resolved that the chairperson and the
Smangaliso Vilakazi - three members were delegated by the
Group legal committee to consult with Group Head Legal ,
Group head GSCM and Group Head: SHELA
and FCM.
The delegated members will come back to
report to the committee in the next meeting.

Next meeting will be communicated after the


consultation meeting.

02 March Nghezimani Samba- The committee therefore resolved to use the


2018 Public Safety JMPD offer with manual combination to ensu re that
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Kabelo Mashaba - there are fair comparisons with the order


COJ/GCSS bidders.
Sandile Sibaya - GSSCM
Tshepo Mphati - The committee therefore resolved to use the
COJ/EMS offer with a combination of manua l vehic les,
Andrie Geen -JRA Trucks, Motorcycles and managed maintenance
Thulani Ndlovu - GCSS of the city owned vehicles in order to ensu re that
Sma ngaliso Vilakazi - there is a fair comparison with the other bidders .
Group Legal
A llan Ndzamela - JPC The EAC report will be drafted and all the risk
Louis Shitllela - GSSCM and challenges will be explained in the report.
Zweli Khumalo - Joburg The EAC will then take a decision .
Water
Zelda Verwey - GCSS It was further noted that the tender validity
( SHELA+FCM period was expiring on the 22 March 20:18 and
the EAC is seating on the 29 March 2018.

GSCM was requested to request for the


extension of the tender validity period.

The meeting was adjourned and members were


thanked for their participation .

09 March Nghezimani Sambo - The committee found that there could have
2018 Public Safety JMPD been a discrepancy on the Bid Specifications
Mark Thule - JCPZ regarding the Pricing Schedules and a form of
Kabelo Mashaba - bid, as well as the Bidders ' responses on the
COJ/GCSS availability or non-ava ilability of automatic
Sand ile Sibaya - GSSCM vehicles in the market. This was required by the
Tshepo Mphati - specifications as bidders were expected to
COJ/EMS quote on both .
Andrie Geen -JRA
Thu lani Ndlovu - GCSS The decision to evaluate bidders on the as it
( Allan Ndzamela - JPC appears in the form of bid was on basis that all
Zweli Khuma lo - Joburg bidders have provided pricing with a
Water combination of manual vehicles, trucks,
Smangaliso Vilakazi - motorcycles and managed maintenan ce of city
Group Legal Contracts owned vehicles. The committee therefo re
resolved to use the offer with manual
combination to ensure that there is a fair
comparison.

The decision of the committee was taken to


minimize the potential risk as we ll as fina lising
the bid process as almost all qua lifying bidders
had subm itted their forms of bid on manual
vehicles.

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FINANCIAL IMPLICATIONS

The preferred bidders pricing on the provision of


non-specialised fleet on a full maintenance
lease for 2915 vehicles and fleet support
services amounts to R1 235 672 186.84
(excluding Vat, fuel, Ad-hoe rentals and actual
maintenance of city owned non-spec ialised
vehicles) for a period of 60 months

CONTINGENCY OF THE CONTRACT VALUE

The contingency put in place for the provision of


non-specialised fleet on Full Maintenance Lease
and fleet support services is 15% of R1 235 672 (
186.84 contract value amounts to R 185 350
828.03 (excluding Vat, fuel , ad-hoe rentals and
cost of city owned vehicles ( e-tools, actual
maintenance and licensing ) the reason for a
15% contingency is that the lease cost of
vehicles is non-firm prices and they are subject
to a lot of economic factors like price hikes,
interest rate changes and price escalations.

All members were happy with what was


contained in the EAC Report, the report was
adopted.

The meeting was officially closed.

03 April Nghezimani Samba - The chairperson of the committee reported that


2018 Public Safety JMPD the new acting GED GCSS has indicated that
Mark Thule - JCPZ the final probity report will provide comfort on
Kabelo Mashaba - where the process was followed or not.
COJ/GCSS
l
Sandile Sibaya - GSSCM The chairperson wants to present the final
T she po Mphati - recommendations of probity; this will even be
COJ/EMS presented to the EAC.
Andrie Geen -JRA GSCM has indicated that there will be no need
Thulani Ndlovu - GCSS for them to respond to the findings but what will
Allan Ndzamela - JPC be captured in the response to the probity audit
Amanda Gxwala - GRAS findings will be the resolutions of the BEC.
SM Xulu
Jacques Rabie - City Probity said that BEC members can still respond
Power to the findings, as the response from the
chairperson representing the committee are not
final.

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Meeting adjourned.

Next meeting 4 April 2018

04 April Sipho Makhanya - GRAS The committee resolved that looking at all the
2018 Mark Thule - JCPZ findings a final decision has to be made on
Kabelo Mashaba - where the tender get cancelled or not.
COJ/GCSS
Sandile Sibaya - GSSCM A proposal was made from the committee that
Tshepo Mphati - the tender be cancelled and all the
COJ/EMS shortcomings of the bid specification be taken
Andrie Geen - JRA into consideration when the tender is re-
Thulani Ndlovu - GCSS advertised.
Allan Ndzamela - JPC
Zweli Khumalo - Joburg The motion was seconded and finally the
( committee resolved that the tender be cancelled
Water
Smangaliso Vilakazi - and re-advertised .
Group Legal Contracts A report was due to be written and taken to the
Israel Maluleke - Joburg EAC for cancellation.
Market
Jacques Rabie - City Meeting adjourned.
Power
Ziyanda Mncanca -
Probity/ GRAS

8.1O Each tender proposal received after the tender was advertised were evaluated in the above
meetings. It is important to note the committee consisted of representatives of various
Departments of the City including representatives from the Entities.

The deliberations during the meetings lead to the committee making a decision to appoint
( Avis as the successful bidder. This lead to the compilation of a BEC report recommending
Avis as the successful bidder to the EAC. However, this recommendation by the BEC was
changed when the BEC received the probity report (Annexure K) which indicated that there
were material findings that suggested that the process was not compliant with section 217 of
the Constitution of the Republic of South Africa, Act 105 of 1996 and recommended the
cancellation of the tender process. The CoJ, Chief Audit Executive, Mr Vusi Ndlovu and the
Managing Director of SM Xulu, Mr Sandile Xulu, confirmed that the information contained in
their probity report was authentic and that they stand by their findings and recommendations.
(Refer to Annexures AG1 and AG2)

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The report compiled by the BEC for EAC was not tabled at the EAC but rather the BEC
compiled a subsequent cancellation report, for cancellation of the proposed contract A733 as
recommended by the probity report. The cancellation report from BEC was submitted to EAC
and the recommended cancellation approved on 18 May 2018 for action by the Accounting
Officer.

After the EAC recommendation for the Accounting Officer to cancel the tender process for
proposed contract A733, it was cancelled a month later on 18 June 2018 (Refer to Annexure
(
M). It must be noted that this cancellation has to be placed in the press before an
advertisement for the same goods or services can be placed again.

GFIS confirmed that all members that served on the BEC were officials from the City and its
Entities. No political office bearers or representatives are allowed to serve on these
committees.

8.11 The cancellation of the open tender process to secure contract A 733 to replace contract A400
on, 18 June 2018, meant that the open tender process had to restart . There was only four (4)
months left before the last extension granted for contract A400 was to expire on 31 October
2018. It must be noted that the cancelled process for proposed contract A733 began in April
2017 and the BEC only compiled a report for EAC approval in March 2018 this process took
11 months .
8.12 Against the above background there was a real possibility that the City could run the risk of
l
not having fleet to execute service delivery.
8.13 Due to these circumstances, a meeting was held between Tshibalo (Refer to annexure N),
Dubru and Ghanchi on June 2018, wherein it was decided that while the open tender process
be re-started a parallel Regulation 32 process also be considered in case the open tender
process was not concluded before the expiry of the extension granted on A400. This was due
to the limited time that remained between the cancellation of proposed contract A733 and the
expiry of the extension being approximately five (5) months. This was confirmed by Ghanchi
(Refer to Annexure 0)

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8.14 In addition Ghanchi in an email (Refer to annexure P) to Tshibalo and Dubru dated 31 July
2018 expressed his concern that the open tender process may not be completed before the
31 October 2018, the scheduled expiration of the third extension granted on contract A400 .
8.15 According to progress report (Annexure Q) provided by Ghanchi on the open tender process
dated 16 August 2108, the BSC session for the new open tender process had commenced
on 9 July 2018 and was due to be concluded on 15 August 2018. There was, however,
outstanding issues around section 197 staff transfer still outstanding. Besides these issues
there still the process of advertising, BEG evaluation and EAC and Accounting Officer
approval outstanding . Therefore there was limited time for the new tender process to be
completed.
( 8.16 According to Tshibalo, it was decided that he manage the Regulation 32 process specifically
and Ghanchi, as the project manager will ensure the open tender process continued.
However Ghanchi was also involved in the Regulation 32 process. He was responsible for
the determining whether there were any contracts at other organs of state that could be
utilised by the City in the regulation 32 process.
8.17 According to a feedback report (Annexure R) provided to GCSS Group Executive, dated 20
November 2018, on the justification of the appointment of Afrirent in terms of Regulation 32,
prepared by Tshibalo, the circumstances that were considered by Tshibalo, Dubru, Ramroop
and Ghanchi at the time when it was decided to follow the Regulation 32 process were as
follows :

a) "It was highly unlikely if not impossible to complete a bidding process before the expiring
of the current contract which was end of October 2018;

( b) However business had to continue at the end of October 2018;


c) For business to continue, it was not feasible or workable to give a shorter period like
six months through Regulation 32 and also did not make business sense to the service
provider;
d) This contract has been extended three (3) times already on a shorter period to give
opportunity for the bid process to be finalised with no success;
e) Enough time was also needed to finalise bid process which normally takes six months;
f) Placement of orders also required times and service provider will take approximately
six months to replace the entire fleet estimated at +-2732.
g) Delivery of vehicles might takes another three months once order is place and finalised;

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h) Branding and replacement of vehicles is not an easy process;


i) Afrirent (Pty) Ltd and A vis who is a current service provider are not business related
and not one company, meaning that transitional arrangement between the two service
providers will take some times to a period between three to six months;
j) The bid process was taking place at the wrong months as we are approaching festive
period from November 2018 to January 2019, the businesses (City and Service
Providers) will actual recommence with work in February 2019 which another delay of
three months;
k) Entering into SLA and sub-contracting to be completed in an estimated
I) The department has recently got capacity and limited resources problem which
(
emanating from resignation, termination of services, suspension which even makes it
difficult to set up and supervise bid process of this magnitude;
m) The probity report of the contract of this magnitude would have required time to have
quality report done that will identify all risks associated with the bid process, and for that
to happen soon was unlikely as GRAS are reported to have not fully resourced and was
to rely on external service providers that would have taken two to three months to be
done."
8.16 Tshibalo indicated that during the Regulation 32 process Tshwane Municipality was
approached by Ghanchi with the intention of establishing whether they had a fleet
management contract for specialised and non-specialised vehicles (Refer to annexures N
andO)
8.17 Tshibalo indicated that although Tshwane Municipality had specialised and non-specialised
vehicles contracts with Fleetmatics VMS (PTY) Ltd and Moipone Group of Companies l
respectively, their non-specialised fleet contract was under legal review. This was confirmed
by Ghanchi (Annexure 0). According to Tshibalo and Ghanchi the following municipalities
were approached formally:

NUMIIEtt NAMEOFMUNICPM.nY MIPONN


1 Tshwane Metropolitan Municipality Specialised vehicle contract
was in place
Non-specialised vehicles
contract was under review.

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2 Mogale City Municipality Specialised and non-


specialised contract in
place that could be used by
the City.

8.18 Tshibalo further explained that although he confirms that the above Municipalities were
approached formally, there were attempts by Ghanchi to engage other organs of state but he
cannot comment on which organs of state were approached as Ghanchi had done this prior
to Tshibalo getting involved in the process. Ghanchi in his response confirmed that he,
Ramroop and Mashebela did enquire across the country about fleet contracts that could be

( utilised for the purposes of Regulation 32.


8.19 GFIS established that on 06 July 2018, the City Manager, Dr Lukhwaren i wrote a letter to
Raedane, City Manager at Mogale City. In the letter, Dr Lukhwareni requested permission to
utilise Mogale's contract number 1(f) 01/2018:- Vehicle Fleet Financing in line with Regulation
32 of the MFMA. Tshwane was not approached by CoJ due to their response par. 8.17 above
(Refer to annexure S).
8.20 It should be noted that in terms of the pricing schedule submitted by Afrirent for the Mogale
City tender bid, the pricing was as follows:
• 123 general vehicles amounted to R50 262 014,30 (including VAT)
• 45 truck class vehicles amounted to R61 456 514.55 (including VAT);
8. 21 GFIS established in the response from Mogale City of 19 July 2018, the Acting City Manager,
Mr Ratha Ramathlape : Mogale City, granted the City of Joburg consent in writing to utilise
their vehicle fleet contract. Furthermore, Mogale City indicated that tender number l(F)
( 01/2018 for Fleet Financing was for a period of three years and had been awarded to Afrirent
(PTY) Ltd (Refer to annexure T)
8.22 GFIS established that on 20 July 2018, Dr Lukhwareni granted Dubru permission to engage
Afrirent (PTY) Ltd as per the requirement of Regulation 32 of the MFMA (Refer to annexure
U)
8.23 On 26 July 2018, a meeting was held between Afrirent and the City of Johannesburg to
negotiate a discounted offer from Afrirent. The City of Joburg team was represented by
Tshibalo, Vilakazi, Leso and Jamela. Afrient was represented by Tsabedze and Richards.
8.24 Subsequent to that meeting, Afrirent provided a proposal (Refer to annexure v,) for the
provision of leasing and support service for a period of 36 months.
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8.25 It should be noted that in the proposal, Afrirent confirm the existence of a contract at Mogale
City. The proposal provided for leasing of fleet and support services to the City and its entities
at the following cost:
Totalpaymentpermo111~
ovwie ~~• IIDCI~
9.Al)'MPg~~-
R1 387 213 335.50 R1 487 325 475.29 R100 112 139.79

8.26 According to Tshibalo, Afrirent (Pty) Ltd was requested to provide a guarantee from the bank
with respect to their financial position to enable support this of this contract and ABSA granted
(
them conditional reserved funds to the region of R1 billion ( Refer to annexure W).
8.27 GFIS established that a report dated 03 October 2018 was tabled before the EAC and the
objective of the report was to request the appointment of Afrirent in terms of Regulation 32
of the MFMA. The report sought to utilise the contract of Mogale City for vehicle fleet financing
for non-specialised vehicles and appoint Afrirent for a period of 30 months or a period
deemed fit by the accounting officer (Refer to annexure X).
8.28 GFIS established that the report recommended that the Accounting Officer approve the City's
participation on contract (IF} 01/2018) of Mogale City and Afrirent for vehicle fleet financing
on a full maintenance lease for a period of 36 months or a period deemed fit by the
Accounting Officer at a total cost of R1 387 213 335.50 However the EAC approved the
Regulation 32 request for 30 months (Refer to annexure Y).

8.29 During our interview with Tsabedze (Refer to annexure Z), he indicated that Afrirent was l
established in 2003 in order to participate in the fleet management environment. Early in
2003, Afrirent subcontracted to Imperial Fleet Services and then to Avis. Tsabedze indicated
that Afrirent have 19 Municipal, three National and two Provincial Government contracts . In
addition, he indicated that 60% of those contracts were current.
8.30 Tsabedze provided the following information regarding contracts between Afrirent and
National/ Provincial Departments and Municipalities:

IEntity IValueal controct 1.,...- period.,


appointment

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R79 691 269.33 20 August 2016 for 5 years


National Laboratories
R111 718 528.85 27 June 2018 for 3 years
Mogale City
According to proposal 19 June 2018 for 48 months
Harry Gwala District
Municipality
R16 824 663.32 29 June 2016 for 36 months
West Rand District
Municipality
R2 936 517.11 22 October 2016 for three years
Victor Khanye
Municipality
( Greater Kokstad
R1 725 055.71 02 January 2018 period not
specified
Municipality
R1 348 760.14 30 March 2016 period not
Amajuba District
specified
Municipality
R130 829 137.00 01 July 2014 for a period of 36
City of Tshwane
months
Not indicated 20 October 2014 for a period of
Mbombela Local
36 months
Municipality
Not indicated 17 April 2015 for a period of
Department of
three years
Transport Eastern
Cape

( R2 970 634.90 18 April 2018 for a period of 36


Rand West City Local
months
Municipality
R1 080 000.00 28 October 2016 for a period of
Alfred Duma Local
36 months
Municipality
Not indicated 16 April 2016 for a period of 36
Thembisile Hani Local
months
Municipality
R4 255 403.12 15 December 2017 period not
Dr Nkosazana Dlamini
specified
Zuma Municipality

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Not indicated 21 November 2017 for 36


Department of Rural
months
Development and
Land Reform (8
districts in Eastern
Cape)
Not indicated 16 July 2018 for 5 years
Department of Rural
Development and
Land Reform Eastern
Cape
R114 657 300,12 13 March 2018 period not
(
Department of Rural
specified
Development and
Land Reform (Eastern
Cape)
R2 181 734 100.00 01 November 2017 for a period
Department of Rural
of three years
Development and
Land Reform
(Limpopo)

8.31 According to documents provided by Afrirent in their submission during the Regulation 32
process Afrirent has a contract with the Department of Rural Development and Land Reform
in Limpopo Province. The value of the contract is R2 181 734 100.00 for the provision of
tractors, implements and equipment for a period of thirty six months. In addition, the contract l
is split amongst five (5) districts as follows:
• Capricon R436 346 820.73;
• Waterburg R436 346 820.73;
• Sekhukhune R436 346 820.73;
• Mopani R436 346 820.73; and
• Vhembe R436 346 820. 73
8.32 Tsabedze further explained that the contract with the Department of Rural Development and
Land Reform (DRDLR) consists of the supply and delivery of farming implements (ploughs)
and machinery to the Limpopo Province. The implements and machinery have to be delivered

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to various farms within the province. In addition, Afrirent had to train the farmers of the co-
operatives on how to use the implements and machinery. Initially Afrirent used their suppliers
to deliver the implements and machinery to the farms in Limpopo and an additional cost and
Afrirent's Project Managers provided the training, however, this proved to be counter-
productive and costly as there was a language barrier between the Project Managers and
the members of the cooperative at the farms.
8.33 The project managers employed by Afrirent were White Afrikaners and the farmers receiving
the implements spoke Venda, Tsonga or Pedi. Therefore a company in Limpopo was
contracted to provide logistic and interpretation services to Afrirent at a reduced cost. This
company was Mahuna. Tsabedze indicated that the companies being used at that stage were
( Landbou and Vukani which were wholly white owned. Afrirent was spending R300 million a
year at Landbou and Vukani for the machinery and delivery but were experiencing problems
with language. Mahuna are 100% Black owned.
8.34 Tsabedze further indicated that for the work that was completed, Mahuna submitted invoices
and were paid accordingly. The first invoices were paid around April or May 2018 and the
second in June or July 2018 .
8.35 According to Tsabedze, the appointment of Afrirent in CoJ happened in October /November
2018, therefore there is no relationship between Mahuna Investment payment and the
contract between CoJ and Afrirent Pty (Ltd).
8.36 Tsabedze indicated that at no stage did he or Afrirent have any knowledge of any relationship
between Mahuna Investments and any political party in South Africa. Specifically, he was not
aware of any link between Mahuna Investment and Mr Julius Malema or the EFF.

( !

8.37 The following officials Tshibalo (AnnexureN), Dubru (AnnexureAA), Mashebela (Annexure
AB) and former official Ghanchi (Annexure 0) who played a role in the procurement process
for proposed contract A733 and the Regulation 32 process for the appointment of Afrirent
were approached in person or telephonically and they provided the following submission:
• That there was no interference in the open tender process or in the Regulation 32 process
by any political party or political figure.
• The decision to cancel the proposed contract A733 was entirely a decision taken by
officials of the City through a prescribed process as contained in the cancellation report
tabled before the EAC.
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• The decision to pursue the Regulation 32 process was a decision made by GCSS
management who recommended it to the Accounting Officer.
8.38 Ramroop (Refer to annexure AC) who was also approached for comment provided a
statement where he levels allegations of corruption against Dubru indicating that he was
appointed to manipulate the tender process, however he is not specific on how this happened
or which political party or politician was responsible for his agenda.
8.39 Thirteen (13) members of the BEC confirmed that they were not influenced in any way into
cancelling the open tender process, proposed contract A733 (Refer to annexure AD).
8.40 The City Manager (Refer to annexure AE) confirmed that there was no political influence
regarding the cancellation of the open tender process for proposed contract A733 and the
(
Regulation 32 appointment of Afrirent. He indicated that he was satisfied with the process
followed.

8.41 On the allegation that the negotiations with EFF on the tariff proposal for the 2018/2019 City
of Joburg budget were based on the awarding of fleet management tender, Executive Mayor,
Cllr Herman Mashaba (Refer to annexure AF) indicated that the allegations are without
base. In fact, on 12 June 2018, a meeting was held between the Executive Mayor, the
Member of Municipal Council (MMC) Cllr Funzela Ngobeni and representatives of the EFF.
During the meeting, EFF had indicated that the tariff increase on water and electricity was
too high. A compromise was reached whereby the "proposed decrease retail increases" were
decreased by 0,2 % for electricity and 1% for water. Based on the compromise, the budget
and tariff proposal were ultimately adopted by Council on 21 June 2018. MMC Cllr Ngobeni
(Refer to annexure AG) confirmed the engagement and the compromised reached with EFF l
representatives .
8.42 The Executive Mayor indicated that he became aware of the fleet management contract
challenges at a meeting on 05 October and the City Manager had assured him that the matter
was under control. Since the Executive Mayor had no rights and responsibilities in the supply
chain management process , he was satisfied with the response from the City Manager.
8.43 The Executive Mayor indicated that he had never heard of the company Afrirent prior to the
publication of the ama-Bhungane article on 29 November 2018 and this was the first time he
had been alerted to potential irregularities in the awarding of the fleet management contract

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to Afrirent. Given the nature of the allegations, the Executive Mayor instructed the Head of
Group Forensic Investigation Services to conduct an investigation into the allegations.
8.44 GFIS obtained an external legal opinion from MNS Attorney's on the Regulation 32 process
on the following issues:
• The validity of the cancellation of proposed contract A733.
• Was the Regulation 32 process the only available option for CoJ.
• Did the Regulation 32 process comply with the MFMA.
8.45 According to the external legal opinion (Refer to annexure AH) obtained from MNS
Attorneys in regards to the regulation 32 process the following was concluded:
A. "CoJ was justified in cancelling the tender A733 as advised by the Probity Report.
(
However, CoJ must in future consider appointing a probity advisor at the beginning of the
procurement process to ensure that each and every stage of the procurement process is
vetted to minimize risks of belated tender cancellations and legal challenges;
B. CoJ still had an option of further extending contract A400A, per Regulation 36 as the
reasons for the initial extension on Regulation 36 still prevailed as at 31 October 2018;
C. CoJ complied with the procedural requirements of the MFMA Regulation 32 when it
appointed Afrirent;
D. There are sufficient mitigating grounds to argue that substantively CoJ complied with
Regulation 32 and CoJ's SCM Policy;
E. There might, however, be a debate raised on whether the material price difference
between Mogale City/ Afrirent contract and the CoJ/Afrirent contract impact on the
substantive compliance with MFMA regulation 32 and CoJ policy; and

( F. CoJ must consider engaging National Treasury to affirm the substantive compliance with
MFMA Regulation 32 in the conclusion of the Afrirent contract."

9. CONCLUSIONS

It is concluded that:

9.1 From the analysis of the information provided to GFIS and the documentation of the process
an open tender process was followed to replace contract A400 with proposed contract A 733
however the process followed had to be cancelled prior to finalisation due to a probity report
that indicated material negative findings .

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9.2 An attempt was made to re-start the process, however, the timelines for the completion of
the process was very limited (approximately 4 months). From experience in the previously
cancelled process (proposed contract A733) this timeline would be in-sufficient as the
cancelled process took 11 months.

9.3 According to interviews conducted with the majority of the role players as indicated above
decisions taken regarding the utilisation of the Regulation 32 process was by Officials of the
City and they were not pressured influenced politically.

9.4 The MFMA and its regulations do not specify under which circumstances an entity may apply
Regulation 32 for procurement of goods and services.
(
9.5 From the information gathered through various reports mentioned above and interviews
conducted the City could not afford to not have a non-specialised fleet contract in place as
this would severely hamper service delivery. The officials at GCSS attempted to secure a
contract through an open tender process, however the process has to be cancelled due to
negative findings in a probity report. The Regulation 32 process was used to secure the non-
specialised fleet contract.

10. RECOMMENDATIONS

It is recommended that: -

10.1 The City in the future allow ample time for the replacement of contracts ensuring that there
is sufficient time to restart a tender process should the need arise.

10.2 The City's acquisition plan must be adhered to and monitored by GSCM as well as the User
Departments.

10.3 The City must consider providing probity reports at each stage of the tender process so that
anomalies can be remedied in good time rather than at the end of the BEC process .

10.4 User Departments must at all times consult Group Legal & Contracts and GSCM before any
decision to deviate from the open tender process is contemplated.

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