Transport minister Barbara Creecy has instructed her department to lodge a High Court application for a declaratory order regarding the driving licence card machines tender found to have been irregular by the Auditor-General South Africa (AGSA).
French company IDEMIA landed the lucrative contract in September last year, after competing with Ren-form Corporate Print Media, NEC XON, Muehlbauer ID Services and Gemalto Altron Fintech Southern Africa.
IDEMIA has denied any wrongdoing in being awarded the R486 million tender and is considering legal options to resolve the dispute.
New driving licence cards in South Africa will incorporate new security features aimed at eliminating the ever-increasing risks of fraudulent and counterfeit driving licences.
The AGSA audit of the Driving Licence Card Account’s (DLCA’s) supply chain management processes revealed irregularities in the tender evaluation. IDEMIA, the winning bidder, failed to meet key bid technical requirements, it found.
The DLCA is a state-owned entity under the Department of Transport, which exists solely to produce driving licences. The DLCA was attempting to replace its sole card machine, which has repeatedly broken down.
Additionally, the AGSA’s review confirmed the other bidders were not unfairly disqualified, as they also did not meet the bid technical specifications.
In a statement, the transport department says the AGSA identified instances of non-compliance with the required procurement processes.
Unearthing discrepancies
Furthermore, the AGSA noted that the bid evaluation committee (BEC) deviated from assessing the bids using the exact criteria set out in the bid specifications when evaluating documents provided by bidders.
The BEC members had to use their judgement and make executive decisions on how to assess the bids due to ambiguous bid specifications, which did not clearly address the DLCA requirements, says the department.
It notes this ambiguity led to discrepancies identified by the AGSA, resulting in an unfair and non-transparent procurement process.
According to the department, the inconsistencies extended beyond technical evaluation, to site visits conducted by the DLCA.
During these visits, it adds, the DLCA was supposed to confirm that the machine proposed by the bidder, IDEMIA’s MX8100, had the required capacity and capability to deliver on the requirements.
The AGSA found that the DLCA chose to inspect an unrelated machine.
“The deviation from the bid specifications and the use of ambiguous criteria undermine the fairness and transparency of the procurement process,” says the Department of Transport.
Furthermore, the AGSA noted that the evaluation of a machine not proposed by the bidder increases the risk that the selected service provider, IDEMIA, may not be able to fulfil the contract requirements. “This could result in the DLCA failing to meet its constitutional mandate.”
The AGSA has further indicated that while the current non-compliances do not indicate fraud risk factors, their impact will be fully evaluated during the final regularity audit of 2024-25.
In notes that all bids submitted exceeded the R486.385 million budget set by the DLCA, indicating inadequate market analysis and budgeting.
“The DLCA used outdated pre-COVID prices, and the budget they submitted to Cabinet for approval did not include all the costs for the contract, leading to Cabinet approving a memo that was not a true reflection of the cost of the contract. This poses the risk of the project being delayed or cancelled due to insufficient funds,” says the AGSA.
“The department is in no position to turn a blind eye on the findings of the AGSA that point to irregularities in the tender process and the transgressions of the PFMA [Public Finance Management Act],” says the transport department.
“In terms of section 81 (1) of the PFMA, an accounting officer for a department or a constitutional institution commits an act of financial misconduct if that accounting officer, wilfully or negligently, makes or permits an unauthorised expenditure, an irregular expenditure, or a fruitless and wasteful expenditure.”
Consequently, Creecy has instructed the department to lodge a High Court application for a declaratory order for guidance on how to proceed, given the AGSA audit report.
Seeking resolution
In a statement to ITWeb, IDEMIA says: “IDEMIA Smart Identity, which operates under the IDEMIA South Africa entity, legitimately won this tender, as we firmly believe we are the best in this field.
“We take very seriously the results of the audit carried out by the Auditor-General of South Africa. While some of the findings pertain to matters beyond our scope, others directly concerning IDEMIA Smart Identity do not reflect the reality of our operations. We are actively working to clarify these points and ensure a full understanding of the situation.
“We remain open to constructive dialogue with all stakeholders to address any concerns in a transparent and solution-oriented manner. At the same time, we will continue to assess all appropriate avenues, including our legal options, to ensure a fair and objective resolution of the issues raised in the audit.”
Over the years, IDEMIA has made news headlines following contracts awarded by South African government entities.
The firm was previously awarded lucrative government contracts by the Department of Home Affairs (DHA) and Airports Company South Africa (ACSA).
It was tasked with implementing the DHA’s Automated Biometric Identification System (ABIS).
ABIS was announced in December 2017, with the first phase supposed to be up and running after 12 months. It forms part of the DHA’s move towards a digital identification system and is intended to replace the Home Affairs National Identity System, in an effort to root out ID and passport fraud.
However, the project has faced controversy over the years, including a contentious R400 million tender involving former service provider EOH. The DHA ceded the contract to IDEMIA as of 31 March 2021, after EOH decided to exit all government contracts.
The French firm was also contracted to implement biometric and facial recognition technologies for ACSA, as well as e-gate systems for regulating passenger movement at airports.
Last year, ACSA terminated the multimillion-rand contract, which had become embroiled in controversy after claims surfaced that IDEMIA secured the four-year deal with the help of insiders, side-lining its empowerment partner, InfoVerge, in the process.
Meanwhile, the Organisation Undoing Tax Abuse (Outa) has welcomed Creecy’s intervention.
“This outcome is the direct result of effective civil intervention, when civil society organisations work responsibly with whistleblowers to build strong evidence-based cases that halt grossly overpriced and what is clearly a corrupt tender from being awarded,” says Outa CEO Wayne Duvenage.
“We also hope that those involved in the bid evaluation and adjudication process will be held accountable.”
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