The R39.1 million tender awarded by the The Free State Treasury Department and Department of Health (Free State Treasury and Health) to 32 service providers to supply surgical gowns, in response to Covid-19 pandemic, has been reviewed and set aside. The Special Tribunal (Tribunal) on Monday, 31 January 2021, declared the decision of the Free State Treasury and Health to award the surgical gowns tender invalid and unlawful, and ordered all respondents, including Free State Treasury and Health, to pay SIU legal costs.
The Special Investigating Unit (SIU) approached the Tribunal to review and set aside the tender, following an intensive investigation, which revealed that the service providers supplied Free State Treasury and Department of Health with surgical gowns of inferior quality. Only three service providers supplied surgical gowns as per tender specifications, SIU investigation revealed.
The Tribunal ordered that the service providers are divested of the profit they have derived or stand to derive from the tender. In the event that Free State Treasury and Health suffer any financial losses, as a result of the tender, the losses shall be recovered from responsible officials, the Tribunal ordered. Free State Treasury has made payment to several service providers in the amount of R9,512,837.68.
The SIU was ordered to enlist the services of an appropriate independent expert to assess the surgical gowns delivered to the Free State Treasury and Health by the respondent entities which are still in the possession of the Departments to assess the quality of the surgical gowns and their appropriate use; and thereafter determine the fair value of the surgical gowns and file expert report within 30 days.
In the event that any service provider disputes the determination made by the SIU appointed expert, the Tribunal ordered that the service provider is entitled to appoint its own expert and file their expert report. In that case, the service provider shall, within 5 days of the report, notify the other parties of its intention to appoint its own expert. Thereafter, the service provider shall file its expert report within 15 days.
The SIU welcomes the outcome of the review application. This is a continuation of implementation of the SIU investigation outcomes and consequence management to recover monies lost by the State.
The Tribunal also made the following order:
1. The SIU, and Free State Treasury and Health shall permit any service provider who was not given an opportunity to identify the surgical gowns they delivered to the Departments, to do so.
2. The surgical gowns supplied by Luyolwe Holding (Pty) Ltd (“Luyolwe”), Ral Corporation (Pty) Ltd (“Ral Corporation”), Rise Now 34 Trading (Pty) Ltd (“Rise Now”) and any other service provider who is subsequently found to have delivered compliant surgical gowns shall be excluded from being stripped profits of the tender.
3. The fair value of the surgical gowns so determined, shall be used to determine the profit the service providers derived or stand to derive from the tender.
4. The actual costs incurred to source the surgical gowns supplied in terms of the tender shall be used to profit made by Luyolwe, Ral Corporation and Rise Now and any respondent entity who is subsequently found to have delivered compliant surgical gowns.
5. Luyolwe, Ral Corporation and Rise Now are directed to file, within 20 days of the handing down of this judgment, file an audited statement and debatement of account in respect of all the money due or received from the Free State Treasury for supplying surgical gowns and all the costs that they have incurred in order to meet their obligations in respect of the surgical gowns.
6. The service providers are directed to submit, within 20 days of expiry of the notice period, an audited statement and debatement of account in respect of all the money due or received from the Free State Treasury Department for supplying surgical gowns and all the costs that they have incurred in order to meet their obligations in respect of the surgical gowns tender.
7. In the event that the SIU disputes any of the service providers’ audited statement and debatement of account, the SIU is entitled to subject it to an audit by its auditors. In that event, the SIU shall file the statement and debatement of account audited by its auditors within 20 days.
8. In the event that any dispute arises between the parties, the parties may approach the Tribunal on supplemented papers for an appropriate order.
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Source: Government of South Africa