Question marks over R430-million budget increase for South Africa’s new driver’s licence cards

The Organisation Undoing Tax Abuse (Outa) has called on the Department of Transport (DoT) to cancel the contract for the country’s new driver’s licence card printing machine that was awarded to French security company Idemia in August.

This comes after Outa received evidence indicating that the budget for the printing machine has ballooned from the previously indicated R468 million to as much as R898.597 million, an increase of 92%.

“Outa has for years repeatedly tried to get information from the DLCA (Driving Licence Card Account) and the department about the new driving licence card machine procurement process but this has been refused,” said the civil rights group.

“The department has also refused to make public details of the various tenders and related bidders, including the awarded contract value.”

After the DoT announced its decision to appoint Idemia as the successful bidder earlier this month, Outa engaged with newly instated Minister of Transport Barbara Creecy, setting out key concerns and evidence of tender manipulation over this procurement.

The group noted that it is mainly worried that the tender for the card machine has been deliberately manipulated to ensure that a specific bidder was awarded the contract.

“This included repeatedly issuing, withdrawing, and reissuing the tender, along with three extensions of the price validity period, which is highly irregular and discouraged by Treasury’s procurement guidelines,” said Outa.

It also highlighted a number of other irregularities in the way in which the printing machine contract was awarded.

“The DLCA ran the tender on three occasions between 2021 and 2023, withdrawing it and re-issuing it, without providing the details and reasons for cancellation of each tender in a transparent manner,” said Outa.

“Some of these early tenders and requests for information have been removed from the department’s website, although Outa believes they should remain publicly accessible to enable civil society to track such matters.”

Outa called on the DLCA to reveal why it retracted and reissued the first two tenders.

Additionally, it said that at least 25 companies attended the tender briefing by DLCA in March 2023, but only five companies submitted bids for the project.

“We are told that it had become clear to many of the tenderers that DLCA were doing everything they could to reduce the number of participants in this next tender,” said Outa.

“This strategy appears to have been successful, with bidders reduced to five companies, whilst 25 interested parties attended the DLCA tender briefing session. We contend that DLCA had been successful in discouraging potential bidders from participating.”

For the second tender, Outa received information from various bidders who submitted proposals that they were not notified of its withdrawal or cancellation.

In the final tender, bidders were told at least three times to extend the validity periods for their pricing.

“This contravenes the National Treasury’s guide which discourages extending the validity period of bids. In at least one instance, bidders were given less than an hour – at the end of the day on a Friday – to agree to such an extension,” said Outa.

“Outa believes this unfairly prejudices bidders who are unable to do this.”

ex-transport minister Fikile Mbalula with the current licence card printing machine. Source: MyBroadband

Furthermore, Outa found two Bid Evaluation Committee reports, dated the same day, for submission to the Bid Adjudication Committee, which each showed different values for Idemia’s bid.

“This points to the high probability of gross tender manipulation,” said Outa.

The organisation also has copies of correspondence showing that, on 4 April 2024, the Bid Adjudication Committee chair wrote to the DLCA acting CFO, saying that the committee had discussed concerns on 28 March that its budget of R468 million was insufficient and that the Idemia bid was R762 million.

“The DLCA acting CFO wrote back to say that the DLCA had budgeted ‘without the knowledge of the actual costs of the equipment’ and had asked National Treasury for ‘additional funding in a form of a refund of surplus funds previously surrendered to the tune of R448 million as well as to retain the 2022/2023 surplus amounting to R268 million‘,” said Outa.

Another Bid Evaluation Committee report shows the Idemia bid as R898.597 million. Outa attached these documents as annexures in its correspondence with Minister Creecy.

Outa further received information that there was tampering with the pricing envelopes in the bids submitted for the second (cancelled) tender.

“This was discovered by bidders who were ‘disqualified’ in the technical evaluation process before pricing was evaluated by the Bid Evaluation Committee, which required that the pricing bid envelopes should have remained sealed,” said Outa.

These bidders allegedly requested the return of the “unsuccessful” tender documents from the DLCA and discovered that their sealed “Pricing” envelope had been tampered with.

“This implies the DLCA had broken the rules and opened this document, revealing the tender price to people inside (and possibly outside) the DLCA,” said Outa.

“This raises the possibility of competing bidders being alerted to their competitions’ prices.”

Several other concerns were also raised to Minister Creecy, including bidders allegedly being marked down for aspects of their bid which should have gained them points, and last-minute changes to tender requirements.

Tender document showing South Africa’s new licence card

Investigation launched

In response to these allegations, Minister Creecy recently announced that she had instructed the Auditor-General (AG) to expedite and widen the scope of its audit of the licence card tender award.

She asked the AG to put emphasis on the following concerns:

• Was Idemia the most affordable option.
• Whether supply chain management prescripts were followed to the letter.
• Whether other South African service providers tendered, including service providers contracted by the Government Printing Works? And why were they not selected?
• Whether the specs for the project included adequate measures to protect the safety of personal data given the sensitivity of information and security features involved in this project.
• The implications for this procurement process of the recent cancellation by Airports Company South Africa of a contract that was awarded to Idemia due to a contractual dispute between Idemia and its BBBEE partner InfoVerge.
• Whether Idemia’s technical capacity and timeous delivery were adequately considered in the tender process following allegations of challenges at three Airports where IDEMIA’s Biometrics system was contracted by the Border Management Authority;

“The Auditor-General has been requested to prioritize this audit process given the current backlog for driving license card applications and the parlous state of the current printing machine,” said Creecy in a media statement on 5 September.