This was the statement made by the Tshwane MMC for Corporate and Shared Services, Cllr Cilliers Brink, today during a press conference at Tshwane House in Pretoria. Cllr Brink was joined by the Tshwane Finance, Cllr Mare-Lise Fourie. #CoTBroadbandReview
The City of Tshwane has approached the North Gauteng High Court to set aside the so-called Tshwane Broadband contract with Thobela Telecoms on the grounds that the previous administration entered into this contract unlawfully.
In November last year the Auditor-General found the deal to be irregular, and determined its value at R2.736 billion. The AG finding prompted the Msimanga administration to investigate the procurement of the deal.
It is important to distinguish this agreement from that between the City and Project Isizwe NPO for the provision of Tshwane Free Wi-fi, which the Msimanga administration is committed to putting on solid financial footing so that we may continue to provide free wi-fi to the people of Tshwane.
Tshwane Broadband is a different matter and is now the subject of a review application brought by this administration.
The Msimanga administration contends that the Broadband contract and its procurement is riddled with irregularities and non-compliance committed by the previous administration, and includes the following:
- Changes to bid specifications after bids had closed;
- Violation of the Preferential Procurement Act and its Regulations;
- Two vendors from the same holding company submitted bids and were not eliminated;
- Crucial adverse information about the proposed deal was withheld from councillors when they voted to approve it; and
- Non-compliance with Section 112 of the MFMA relating to cost effectiveness.
Tshwane Broadband is the third in a list of major, multi-year contracts concluded by the previous City government, which the Msimanga administration seeks to set aside because we contend they are manifestly unlawful – and preventing the city from discharging its mandate to provide better services to our residents.
The Tshwane broadband deal binds the City in an 18-year relationship with a ICT service provider to build a broadband network, which would later become a commercial outfit. The tender price (excluding VAT) was R2.736 billion.
An assessment of the deal’s terms and conditions confirm that it exposes the City to severe, one-sided liability and does not offer value for ratepayers’ money.
One of the many questions which now stand to be decided is: did the City, councillors, and members of the public know what they were getting into when the deal was approved?
The Tshwane Metro Council voted in favour of Broadband in April 2016. Council approval is required for all obligations binding a municipality beyond three (3) financial years. Based on copies of correspondence obtained, Council was not properly informed or did not properly consider the objections or concerns raised by the National Treasury, the Gauteng Provincial Treasury and the Department of Telecommunications and Postal Services. In brief, these concerns can be summarized as follows:
- Absence of feasibility studies to demonstrate full costs and benefits (affordability);
- Options of service modality as the project financing structure resembles a Private/Public/Partnerships;
- ICT infrastructure should be directed at technologies that are future proof and scalable to avoid future costs considering the period of the contract;
- Management of risks unclear; and
- Project deemed to fall outside the scope of the powers and functions assigned to local government in terms of the Constitution of the Republic of South Africa.
At the time the DA questioned the timing of such a massive undertaking so soon before the 2016 Local Government Election.
Given the sparsity of available information while still in opposition, the DA in Council feared that Tshwane Broadband was fatally flawed.
The AG finding confirmed some of our suspicion, and a new cohort of senior managers embarked upon a cumbersome investigation into how the Broadband deal was concluded. The A-G deemed the tender irregular as a result of the non-compliance to the requirements of the PPR and the MFMA. Accordingly, all future related expenditure must be disclosed in the financial statements as irregular.
What we have discovered, and will now present to Court, are serious irregularities which we believe taint the legality of the Broadband deal.
When a majority of councillors voted to approve the deal in April 2016, they did not have the necessary information to make this determination. We also believe that crucial information was withheld from them.
Members of the public were also given insufficient opportunity to express objections to the deal, as is required by section 33 of the MFMA.
Subjecting the Broadband deal to judicial review is crucial, not only to the City’s financial recovery but its duty as a constitutional agent not to submit to an unlawful contract.
On the advice of our attorneys, we will delay commenting in further detail about our case until the matter has been set down in Court.