PwC report on oxygen tender exhibits failure in governance: Macpherson – SABC Information

Minister of Public Works and Infrastructure Dean Macpherson says the report by PwC in the controversial R800 million Pressure Swing Adsorption (PSA) Oxygen plant tender, awarded by the Independent Development Trust (IDT), represents a monumental failure in governance and adherence to the IDTs policies and National Treasury regulations.

Macpherson says the awarding of this tender undermined the integrity of public procurement and threatened donor funds.

Macpherson says he is glad his department acted when it did, despite criticism received during the investigating process. He revealed that according to some of the findings in the report, the bid evaluation process was flawed and the IDT CEO, Tebogo Malaka failed to exercise oversight during this process.

The report by PwC also found many irregularities including maladministration, financial misconduct and corruption, as well as misrepresentation by the bidders.

Macpherson says his government’s commitment is to root out corruption and restore integrity in public procurement processes.

“The report therefore confirms that multiple companies awarded work under the PSA project did not have valid Saphra licensing and therefore should never have qualified in the first place. One company, as we have said originally,  Bulking PTY Limited submitted a separate license belonging to Atlas Copco Industrial SA, without the knowledge or consent of Atlas Copco. This was clear misrepresentation, in simple language it’s called fraud.”

Oxygen Plant Tender | Disciplinary action recommended

Macpherson says the forensic investigation found eight bidders were appointed on the panel for the rollout of the PSA oxygen plant at 60 state hospital facilities.

However, the service providers that were appointed on the panel were not required to provide evidence that they met the separate requirements as set out in the infrastructure program implementation plan.

“The bid evaluation process was deeply flawed. The separate compliance requirement originally stipulated in the project execution plan and the Department of Health’s memorandum of agreement was deliberately removed from the final request for proposal. This opened the door for ineligible bidders to participate and win massive contracts which they did not qualify for. Meeting minutes were missing or incomplete, which is shocking but not surprising and committee appointments for these bid adjudication committees were not properly constituted. Their people sat on those committees that were not entitled to sit on them and also bid scores were not properly documented.”

It was also found that the tender amount ballooned from R216 million to nearly R600 million.

“The PSP pretender estimated at tender stage was R216 million and at design stage was R253 million as determined by the service provided the Department of Health was subsequently requested to approve the increased funding for the rollout and implementation of the plant projects to R592 million, more than double what the original starting estimate was. This project was therefore increased by a staggering 174%.”

The PwC report recommends that appropriate action must be taken against the relevant officials who are involved in the oxygen plant project and that disciplinary action should be taken against IDT CEO, Tebogo Melaka and Dr CiCi of the IDT team.