<\/strong><\/p>\n\n\n\nThe first to raise the alarm about the way the tender was handled was Naledi Rail Engineering.<\/p>\n\n\n\n
In July, director Pulane Kingston, the daughter of ANC Stalwart Mendi Msimang and former health Minister Manto Tshabalala-Msimang, filed a court application to interdict, review and set aside the awards made by Prasa.<\/p>\n\n\n\n
In papers, Kingston accused Prasa of unlawfully excluding her company\u2019s bid and dangling the tender in front of her to persuade her to drop ongoing dispute with the rail agency.<\/p>\n\n\n\n
This was communicated to Naledi in a debriefing meeting with Prasa\u2019s Mphelo and two other executives on 29 April 2022.<\/p>\n\n\n\n
All 24 bidders who had put in submissions for the tender were invited to a debriefing session held at Prasa\u2019s offices where they were informed about the outcome of their bids. Naledi\u2019s representatives were told that Prasa could not make a decision until Naledi agreed to drop its case.<\/p>\n\n\n\n
In her papers, Kingston also accused Prasa of appointing contractors that are \u201cnot financially stable, are fraudulent and corrupt, do not have the technical capability, and do not have the requisite experience in the industry\u201d.<\/p>\n\n\n\n
Kingston, whose company Mirai Rail bought Naledi out of business rescue in November 2021, took specific aim at the two companies that had been appointed in Gauteng where Naledi had hoped to get work.<\/p>\n\n\n\n
One of them, TMH Africa, a subsidiary of Russian rolling stock manufacturer Transmashholdings, was revealed to be financially unstable after entering into business rescue a few days after it received its award, said Kingston.<\/p>\n\n\n\n
TMH Africa entered the South African market in 2018 as part of a R500 million investment strategy to expand its operations on the African continent. However, TMH Africa\u2019s financials show that it was heavily reliant on cash injections and business from its parent company, and after sanctions were imposed following Russia\u2019s invasion of the Ukraine, its cashflow dried up.<\/p>\n\n\n\n
TMH\u2019s lawyers argue that the company\u2019s financial stability was a non-issue because it was not in financial distress at the time that Prasa awarded contract in April.<\/p>\n\n\n\n
“The intended income to be generated from the contract concluded with Prasa will assist in rescuing TMH. Without it, TMH will be wound-up,\u201d they confirmed<\/p>\n\n\n\n
The second company, YNF, had previously been implicated in fraud and corruption, Kingston said.<\/p>\n\n\n\n
A 2018 investigative report from Prasa\u2019s protection services found that YNF had invoiced Prasa for R1.7-million to rewind seven traction motors. YNF had supposedly only \u201cpolished\u201d the motors and failed to return the parts.<\/p>\n\n\n\n
Naledi argued that YNF should have similarly been disqualified for this past dispute with Prasa. In its response, Prasa distanced itself from the report because it was \u201cnot signed\u201d while YNF claimed it was not aware of the findings.<\/p>\n\n\n\n
The high court ultimately dismissed Naledi\u2019s application for an interim interdict saying the company did not sufficiently show that the harm it would suffer would be irreparable if the award to companies like TMH and YNF was not stopped.<\/p>\n\n\n\n
But Prasa\u2019s baffling decision not to inform Naledi about the outcome of its bid led Judge Norman Manoim to conclude that it had \u201cestablished at least prima facie\u2026 that Prasa\u2019s decision to refuse its bid was inconsistent with its approach to approve the bids of the other two successful tenderers\u201d.<\/p>\n\n\n\n
\u201cPrasa took into account irrelevant issues and failed to consider ones that were relevant. As a result, the decision taken was irrational,\u201d Manoim said in a judgment in September.<\/p>\n\n\n\n
The tender will now be the subject of a review hearing that Naledi believes will result in the awards being set aside because Prasa\u2019s decision was, as stated in the judgment, \u201cso profoundly irrational, that one cannot help suspect that something more nefarious is afoot\u201d. <\/strong><\/p>\n\n\n\nA train is set alight during a protest over delays at Cape Town train station. Photo taken by: Ashraf Hendricks\/GroundUp<\/figcaption><\/figure>\n\n\n\n\u201cToo much controversy\u201d <\/strong> <\/strong><\/p>\n\n\n\nAmaBhungane spoke to ten losing bidders on condition of anonymity who said despite receiving an unusual request to come to Prasa\u2019s offices where they were informed about the outcome of their bids, Mphelo and the other officials did not provide any tangible detail about why they were disqualified. <\/strong><\/p>\n\n\n\nOne bidder said Mphelo explained that there had been \u201ctoo much controversy on this thing,\u201d and they had decided to personally inform each bidder of the outcome because they wanted to \u201ckill\u201d all the speculation and bad press around the tender.<\/p>\n\n\n\n
A second bidder said their company had spent millions setting up their facilities to meet the tender requirements and, despite being unsuccessful, was told by Prasa that \u201cyou’ll definitely be part [of the contract], because they don’t have enough guys, they are going to add some extra, and they don’t want to lose our skills, so they would like to ask us to please just wait for them,\u201d said the bidder.<\/p>\n\n\n\n
Naledi was not the only company that tried to get to the bottom of why it was disqualified.<\/p>\n\n\n\n
In the background, Transnet Engineering (TE) had tried in vain to get information about why its bid was disqualified. It was only after submitting an application in terms of the Promotion of Access to Information Act for the record of Prasa\u2019s decision, that Transnet Engineering learnt it was disqualified for submitting unsigned financial statements.<\/p>\n\n\n\n
Three years’ signed financials were one of the mandatory documents that bidders had to submit, although Prasa\u2019s tender advert seemingly allowed companies to submit basic compliance documents within seven days of an award being made, \u201cfailing \u2026 which the award will be recalled\u201d.<\/p>\n\n\n\n
In a letter sent in August this year, Transnet\u2019s chairperson Popo Molefe asked Minister of Public Enterprises Pravin Gordhan to mediate between the two entities.<\/p>\n\n\n\n
If unsigned financials was the only reason for disqualifying Transnet, which has been Prasa\u2019s \u201cprimary service provider\u201d for rolling stock engineering services for years, then the decision should be reviewed, Molefe argued.<\/p>\n\n\n\n
\u201cTE has received sub-contracting requests from companies that were successfully awarded provision on the Prasa [general overhaul tender],\u201d said Molefe. \u201cThis just goes to show TE\u2019s capacity and capability which should be the subject matter of fair consideration.\u201d<\/p>\n\n\n\n
\u201cPrasa\u2019s behaviour is indicative of unfair prejudice imposed on TE \u2026 which prejudice is largely to the detriment of Prasa and South Africa as a country,\u201d he added.<\/p>\n\n\n\n
The department confirmed it had received the Molefe\u2019s letter but said it had informed him it could not intervene between the two state-owned entities. Transnet did not respond to specific questions only saying that it was \u201creviewing the decision by Prasa and considering its options.\u201d<\/p>\n\n\n\n
Prasa did not respond to amaBhungane\u2019s question asking why it did not give Transnet the opportunity to submit signed financials. In fact, the Prasa did not answer any questions related to the general overhaul contract, only partly responding to issues involving its current operations.<\/p>\n\n\n\n
In his judgment, Manoim had described Prasa\u2019s approach to vetting the bidders as \u201cinconsistent\u201d.<\/p>\n\n\n\n
While Transnet was disqualified for not submitting signed financials, TMH Africa and YNF only submitted one year\u2019s signed financial records instead of the three which Prasa needed to determine a company\u2019s financial stability. Neither TMH nor YNF were disqualified on this ground.<\/p>\n\n\n\n
Enter the board<\/strong><\/p>\n\n\n\nIn October, another unsuccessful bidder \u2013 Field Service Engineering (FSE) and Mbita Consulting Services \u2013 launched a separate legal challenge to review Prasa\u2019s decision.<\/p>\n\n\n\n
By this point, Prasa had been forced to share the record of decision as part of the Naledi case, which revealed that curious changes were introduced when the tender went to the board for approval.<\/p>\n\n\n\n
The documents showed that Naledi, Transnet and FSE-Mbita were among the contractors who had passed the evaluation and adjudication stages and were initially recommended for appointment by the bid adjudication committee (BAC) but later disqualified after the board got involved.<\/p>\n\n\n\n
The BAC had selected 11 successful bidders across the country and had also made provision to place other firms on standby as \u201creserve capacity\u201d, following a special request from the technical department to increase the number of contractors beyond what Prasa had advertised would be appointed.<\/p>\n\n\n\n
This would not only help to tackle the maintenance backlog but also mitigate against the poor performance of new entrants that were still \u201csetting up\u201d and allow the more experienced contractors to \u201crecover\u201d after years of being inactive, according to the request.<\/p>\n\n\n\n
Ironically, it was Prasa\u2019s concern about irregular expenditure and exposure to litigation that would cull most of the more experienced firms.<\/p>\n\n\n\n
\u201cWhen we went out into the market, we wanted ten service providers spread across all of the provinces,\u201d former acting CEO Mphelo told Parliament in June 2022. But the \u201crigorous process that we have run ended up with five\u201d.<\/p>\n\n\n\n
In September, Prasa\u2019s current acting CEO Hishaam Emran told Parliament that the board instructed management to put the tender process through an extensive compliance assurance audit \u201cto ensure that this programme does not become irregular expenditure again\u201d.<\/p>\n\n\n\n
Prasa appointed audit firm SNG Grant Thornton (SNG) to assess if the bidding process was compliant.<\/p>\n\n\n\n
In a memo to transport minister Fikile Mbalula, Prasa chair Leonard Ramatlakane said SNG had raised concerns that Transnet\u2019s financials were not audited while other bidders \u2013 including the Pamodzi and Thaleka joint venture \u2013 had \u201cfailed to submit proof of premises or simply submitted letters for intention to lease.\u201d The FSE and Mbita joint venture, he said, was disqualified for supposedly not meeting the 80% functionality threshold.<\/p>\n\n\n\n
\u201cThe view was that Transnet Engineering, FSE & Mbita JV, Pamodzi and Thaleka should have been disqualified for failing to meet Stage 1 mandatory requirements,\u201d Ramatlakane reported.<\/p>\n\n\n
\n
<\/p>\n\n\n\n
After some debate, it was decided that Naledi\u2019s bid would be put on hold until its litigation with Prasa \u2013 which related to outstanding payments on a previous contract \u2013 had been resolved.<\/p>\n\n\n\n
This left just five bidders to complete the R7.5-billion tender. But the fine-toothed comb which the Prasa board used to disqualify the losing bidders was nowhere to be seen when it came to picking the winners.<\/p>\n\n\n\n
And while Transnet was licking its wounds, the winning bidders came knocking.<\/p>\n\n\n\n
Knocking on Transnet\u2019s door<\/strong> <\/strong><\/p>\n\n\n\nOne of the main requirements for the general overhaul tender was that contractors have a facility equipped with a railway siding and other equipment in order to carry out the work. Bidders who failed this requirement would be disqualified.<\/p>\n\n\n\n
Armtec Rewinds was one of the companies Prasa appointed to conduct general overhauls in KwaZulu-Natal. In September 2022, Armtec chairperson and former ANC provincial executive council member Mzwandile Mkhwanazi wrote to the department of public enterprises with a proposal to lease Transnet\u2019s Durban facility for ten years and possibly sub-contract some of the work to the state-owned entity.<\/p>\n\n\n\n
\u201cA facility was secured in Umbogintwini but unfortunately the facility was damaged in the recent devastating floods in KwaZulu-Natal. The cost of repairs and the time period for the repairs renders the site now not feasible,\u201d Mkhwanazi said in his letter.<\/p>\n\n\n\n
What this means is that when Armtec was awarded the Kwazulu-Natal portion of the tender, it had no working facility, the single most important criteria of the tender.<\/p>\n\n\n\n
This was not the first time Armtec had made a proposal to lease one of Transnet\u2019s facilities.<\/p>\n\n\n\n
Armtec\u2019s CEO Langa Ngcobo had made a similar proposal to Transnet in March, a month before the April floods. At the time, Armtec said it wanted to lease a different warehouse where it planned to \u201cextend\u201d the general overhaul contract if it was successful.<\/p>\n\n\n\n
Ngcobo told amaBhungane that their original facility was evaluated by Prasa and was compliant with all the criteria but \u201cdue to unforeseen circumstances and the lengthy adjudication process we had to look at alternative options\u201d.<\/p>\n\n\n\n
Prasa, he said, was \u201cmade aware of the challenges regarding our site\u201d. He added: \u201cWe have since secured a new site, which has been audited by Prasa and we \u2026 are currently executing our allocation as per the contract.\u201d<\/p>\n\n\n\n
Transnet, he said, never responded to Armtec\u2019s calls or emails.<\/p>\n\n\n\n
Moving in on a rival\u2019s turf<\/strong><\/p>\n\n\n\nIn the Eastern Cape, a similar pattern was playing out as the sole winning bidder, KNPC, was seemingly still shopping for a facility.<\/p>\n\n\n\n
In June, after the tender was awarded, KNPC allegedly applied to lease the Transnet Goods Shed in East London to use as its workshop for the general overhaul contract.<\/p>\n\n\n\n
Until April, the same facility had been occupied by Rolling Stock Repair Services (RSRS).<\/p>\n\n\n\n
RSRS was part of Prasa\u2019s previous general overhaul contract and had also submitted a bid for the same contract but lost and soon after was placed under voluntary liquidation.<\/p>\n\n\n\n
It is not clear which premises were evaluated in KNPC\u2019s bid submission but the evaluation documents show that it was scored for having compliant premises. The Transnet Goods Shed is unlikely to have been the location because RSRS was still occupying the facility.<\/p>\n\n\n\n
KNPC\u2019s facilities evaluation shows that the company failed on every plant and equipment metric except for having a rail siding. In September, five months after the contract was awarded, the company purchased RSRS\u2019s equipment from the liquidator.<\/p>\n\n\n\n
AmaBhungane was able to speak to KNPC\u2019s director and former Prasa executive Enos Ngutshane once over the phone where he claimed to have not seen our questions sent through Whatsapp. Shortly after they were sent to his email address Ngutshane blocked us. His co-director Joan Ratone was also forwarded questions and did not respond to text and phone calls.<\/p>\n\n\n
\n
A sign shows numerous delayed train at Langa station in 2019. Photo by Ashraf Hendricks\/GroundUp<\/figcaption><\/figure>\n<\/div>\n\n\nFacing Eviction <\/strong><\/p>\n\n\n\nIn Gauteng, one of the winning bidders, YNF, had secured a facility but was struggling to keep it.<\/p>\n\n\n\n
YNF\u2019s principal business is maintenance of train components, such as traction motors, not train refurbishments. The company allegedly approached Transnet with a request for support and collaboration after the bids were awarded.<\/p>\n\n\n\n
In its court papers, Naledi accused YNF of moving to a new premises in Ekurhuleni, alleging it was no longer located at the Pretoria facility that it used to apply for the tender.<\/p>\n\n\n\n
It argued that not only was YNF\u2019s new premises too far from the Prasa\u2019s Wolmerton depot, whose trains the company is earmarked to service, but it also does not have a rail siding.<\/p>\n\n\n\n
Bidders were scored on how far their facilities were from Prasa\u2019s depots and disqualified if they did not have a rail siding which would allow Prasa to transport trains to their various warehouses.<\/p>\n\n\n\n
Although YNF strongly denied moving its operations to Ekurhuleni, amaBhungane is in possession of a court order authorising the eviction of YNF from the Pretoria warehouse in February 2022, two months before Prasa awarded the contract and after each bidder\u2019s premises had been evaluated.<\/p>\n\n\n\n
YNF was served with an eviction order after failing to pay rent for the Pretoria warehouse it was leasing from steel company ArcelorMittal South Africa (AMSA) since February 2019.<\/p>\n\n\n\n
Court filings for the eviction application show that YNF had only made three payments towards the rent since February 2019. Email communication and details of phone calls show that AMSA could not get the company to pay rent or even sign an acknowledgement of debt or comply with a payment plan that YNF itself had proposed.<\/p>\n\n\n\n
YNF only started responding to emails in April 2021, when the steel manufacturer\u2019s lawyers issued an eviction notice. At this stage, YNF had not paid rent for more than two years and owed AMSA over R11-million.<\/p>\n\n\n\n
In April 2021, one of YNF\u2019s directors, Riccardo Orren, responded to the lawyer\u2019s email asking for \u201cleniency\u201d and proposing a settlement agreement. Orren said YNF had a potential work\/contract that was going to be awarded in 2019, got postponed to 2020 but because of Covid did not materialise. It was now back on track, he indicated.<\/p>\n\n\n\n
The timeline shows that YNF was able to buy itself some time, at least enough to ensure it had a valid facility when Prasa\u2019s evaluation committee arrived to conduct a site evaluation visit in May 2021.<\/p>\n\n\n\n
But by August 2021, YNF once again failed to honour its rental payments and AMSA had run out of patience: it instructed its lawyers to send the company a notice to cancel the lease and launch eviction proceedings.<\/p>\n\n\n\n
Interestingly, AMSA told the court that after it sent YNF a notice cancelling the lease, YNF called AMSA\u2019s lawyer to say that the company wanted to remain on the property because \u201cthe tender the respondent was awaiting had, after many delays, been awarded and that operations in the Occupied Property would soon commence\u201d.<\/p>\n\n\n\n
As mentioned before, Prasa only told the bidders about the outcome of the tender in April 2022.<\/p>\n\n\n\n
YNF either lied to AMSA or was aware of the outcome of its bid nine months before it was officially communicated to the bidders.<\/p>\n\n\n\n
AMSA told amaBhungane that YNF had \u201cnever occupied the premises but had the right to occupation in terms of a lease agreement\u2026. This right was terminated when the eviction order was granted\u201d.<\/p>\n\n\n\n
Despite this, when Naledi alleged in court that YNF had been evicted from the Pretoria facility, YNF immediately sent an email to Prasa\u2019s acting head of legal Thato Tsautse and then acting CEO David Mphelo denying the allegations.<\/p>\n\n\n\n
As proof, it attached a copy of the original lease agreement but seemingly failed to tell Prasa about the eviction order.<\/p>\n\n\n\n
\u201cYNF approached ArcelorMittal South Africa on 17 May 2022\u201d \u2013 after the tender was awarded \u2013 \u201cenquiring about premises in Pretoria and requested if the \u2018old bay\u2019 was still available. They were told that it was available and [AMSA] team started negotiations with YNF to enter into a new lease, which included the settlement of all arrears,\u201d said AMSA group communications manager, Tami Didiza in an email.<\/p>\n\n\n\n
Didiza said the new lease agreement and the settlement agreement were not yet signed but the company had been granted \u201cearly occupation\u201d in September.<\/p>\n\n\n\n
In October, shortly after learning that amaBhungane had approached AMSA with questions on the eviction, YNF director Jade Orren invited us to the facility in Pretoria to show us that it the company\u2019s premises was compliant.<\/p>\n\n\n\n
But when amaBhungane sent Orren it\u2019s questions, YNF responded through a letter from its lawyers who claimed the matter was \u201csub judice\u201d as it was still before the courts: \u201cWe would therefore appreciate it if you could \u2026 refrain from communicating with our client further.\u201d<\/p>\n\n\n\nCommuters hang onto the trains at Rondebosch train station in Cape Town. Photo by: Lucas Nowicki\/GroundUp<\/figcaption><\/figure>\n\n\n\n <\/strong>Courting tragedy<\/strong><\/p>\n\n\n\nNaledi\u2019s hearing to review Prasa\u2019s decision has been set down for April 2023. This could lead to the tender being cancelled for a second time, adding to the tally of self-inflicted setbacks by Prasa\u2019s management and board.<\/p>\n\n\n\n
Prasa failed to meet 81% of its performance targets in 2021\/22.<\/p>\n\n\n\n
In its evaluation, the Auditor-General said, “the major root cause for non-performance was failures on the procurement front with planned contracts not having been awarded and in certain instances awards that were cancelled.\u201d<\/p>\n\n\n\n
The millions of commuters who rely on Prasa\u2019s services are the ones who feel impact the most, as Prasa admits in its corporate plan:<\/p>\n\n\n\n
\u201cThe direct cost to Prasa and government of the theft and vandalism is estimated to be R6.4 billion, however, it is the direct and indirect costs to commuters that comprise the bulk of the overall cost to the economy.<\/p>\n\n\n\n
\u201cThe direct loss of income, because of higher transport costs and loss of person hours to delays, costs commuters between R4-billion and R5-billion per year.\u201d<\/p>\n\n\n\n
In these circumstances, leaving such a critical tender in the hands of contractors who may not be able to do the work is a massive risk.<\/p>\n\n\n\n
Or, to borrow from Naledi\u2019s lawyer, Tembeka Ngcukaitobi\u2019s comments during the interdict hearing: \u201cI hate to use the analogy, but the train is coming and it is going to hit all of us.\u201d<\/p>\n\n\n\n
Note: <\/strong>A previous edition of this article said Prasa\u2019s decision to withhold its decision on Naledi Engineering\u2019s bid until a separate dispute between the parties was finalised was described as \u201centirely unfair\u201d in a judgment by Judge Norman Manoin on 30 September 2022. This was a mischaracterisation of the judgment and has been corrected.<\/em><\/p>\n\n\n\nMain pictures sourced from GroundUp: Picture 1 and 2 (Ashraf Hendricks\/GroundUp), Picture 3 (Mandla Mnyakama\/GroundUp)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"The Passenger Rail Agency of South Africa (Prasa) faces the threat of total collapse after shedding millions of customers and haemorrhaging revenue over the past four years. Now its handling of a R7.5-billion overhaul and maintenance tender to get its…<\/p>\n","protected":false},"author":5,"featured_media":25283,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-25282","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/25282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=25282"}],"version-history":[{"count":3,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/25282\/revisions"}],"predecessor-version":[{"id":30085,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/25282\/revisions\/30085"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/25283"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=25282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=25282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=25282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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