Transport Minister Barbara Creecy has instructed her department to lodge a high court application for a declaratory order regarding the Driving Licence Card Machine (DLCM) tender found to have been irregular by the Auditor-General South Africa (AGSA).
The department on Wednesday said the declaratory order is being sought to get guidance on how to proceed, given the findings of the AGSA audit report.
In September last year, the Minister requested the AGSA, who at the time was undertaking an audit of the procurement process for the new DLCM, to widen the scope of the audit process to include whether Supply Chain Management (SCM) prescripts were followed to the letter, and if the specs of the project included adequate measure to protect the safety of personal data, given the sensitivity of information and security features involved in this project.
The AGSA identified instances of non-compliance with the required procurement processes.
“The non-compliances emanated from transgressions of SCM prescripts (Public Finance Management Act (PFMA), Treasury Regulations and Driving Licence Card Account (DLCA) SCM policies, rendering the procurement process irregular,” the Department of Transport said on Wednesday.
The AGSA audit of the DLCA SCM processes revealed irregularities in the tender evaluation.
IDEMIA, the winning bidder, failed to meet key bid technical requirements. Additionally, the AGSA review confirmed that the other bidders were not unfairly disqualified, as they also did not meet the bid technical specifications.
All bids submitted exceeded the R486 385 million budget set by the DLCA, indicating inadequate market analysis and budgeting.
The AGSA found that the DLCA used outdated pre-COVID-19 prices, and the budget they submitted to Cabinet for approval did not include all the costs for the contract, leading to Cabinet approving a memo that was not a true reflection of the cost of the contract.
“This poses the risk of the project being delayed or cancelled due to insufficient funds,” the AGSA said in its report.
The AGSA also noted that the bid specifications included an adequate assessment of the ability of the system to protect personal data. All bidders were evaluated on this criterion, and some were responsive.
According to the AGSA, the Bid Evaluation Committee (BEC) deviated from assessing the bids using the exact criteria set out in the bid specifications when evaluating documents provided by bidders.
“The BEC members had to use their judgement and make executive decisions on how to assess the bids due to ambiguous bid specifications, which did not clearly address the DLCA requirements. This ambiguity led to discrepancies identified by the AGSA, resulting in an unfair and non-transparent procurement process.
“The inconsistencies extended beyond technical evaluation to site visits conducted by the DLCA. During these visits, the DLCA was supposed to confirm that the MX8100 machine proposed by the bidder, IDEMIA, had the required capacity and capability to deliver on the requirements. The DLCA chose to inspect an unrelated machine”.
The AGSA said the deviation from the bid specifications and the use of ambiguous criteria undermined the fairness and transparency of the procurement process.
“It is on the basis of the above that the department is in no position to turn a blind eye on the findings of the AGSA that points to irregularities in the tender process and the transgressions of the Public Finance Management Act (PFMA).
“In terms of section 81 (1) of the PFMA, an accounting officer for a department or a constitutional institution commits an act of financial misconduct if that accounting officer wilfully or negligently… makes or permits an unauthorised expenditure, an irregular expenditure, or a fruitless and wasteful expenditure.
“Consequently, Minister Creecy has instructed the department to lodge a high court application for a declaratory order for guidance on how to proceed, given the AGSA audit report,” the department said.
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