Poor handling of roads tender inflates cost and delays completion by 12 years

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

The poor handling of the road tender for the upgrade of the R56 road, near Indwe in the Eastern Cape, has inflated the cost by R111 million and delayed construction by 12 years.

The maintenance and upgrade of roads are critical in linking individuals to opportunities, by providing accessibility and mobility for both commercial and personal transport.

The project was recently flagged by the Auditor General at a meeting of SCOPA.

In response to formal questions to the Transport MEC, Weziwe Tikana-Gxothiwe, the Department acknowledged that the original budget to upgrade the R56 was just over R200 Million.

Download response.

Nine years after the original contract was awarded, only two-thirds of the road have been completed. The estimated cost to complete this project has escalated by 55%, to R311 million, and it is now only expected to be completed in 2025.

The project was marred in controversy from the start after the original award was made to Tau Pele Construction in 2013. Umso Construction successfully challenged the appointment of Tau Pele in court, and as a result, was then awarded the lucrative tender in 2016.

Between 2017 and 2020 Umso Construction received R173 254 877.25 from the province for completing 68% of the work already and overpayment of R37 million.

The company was then placed under business rescue, and subsequently, the contract was cancelled.

The fact that the contractor was overpaid, indicates gross negligence on the part of the Department in relation to project management.

The Democratic Alliance has long been advocating for tighter controls when it comes to the appointment of contractors for large civil works. Often, contractors are unable to complete these intricate projects which lead to huge financial losses by the government.

The Democratic Alliance will continue to advocate for the following changes to procurement processes:

  1. The blacklisting of companies and/or directors of companies who have delivered substandard work to the government and are either unwilling or unable to fix same;
  2. The blacklisting of companies and/or directors of companies who have been unable to deliver on the original scope of the contract and which have led to the government suffering a loss as a direct result therein;
  3. The upfront delivery of minimum bank guarantees for large civil contracts to cover government if contractors have liquidity problems

The poor handling of this project by the Department has deprived residents of Indwe and surrounds of decent roads and the opportunities that come with this.