Scopa requests further detail during SANRAL's first appearance

Issued by SANRAL
Pretoria, Nov 17, 2016

The South African National Roads Agency (SANRAL) today appeared before the Standing Committee on Public Accounts (Scopa) to clarify the R1.165 billion in 'irregular, fruitless and wasteful' expenditure finding in the Auditor General's state expenditure report.

This year, SANRAL received its 13th unqualified audit from the Auditor General.

The presentation yesterday morning was the first time SANRAL has been called to account by Scopa.

The matter was not finalised and the agency will return next week to provide detailed information per line item.

At the heart of the matter is SANRAL's routine road maintenance (RRM) contracts, which are in place on 100% of its network.

These contracts are a great incubator of small, medium and micro enterprises (SMMEs) and in line with SANRAL's policy of ensuring a significant amount of work is awarded to SMMEs. RRM contracts are awarded for three years and renewable for two years, subject to satisfactory performance.

"The development of SMMEs forms part of SANRAL's broader socioeconomic development strategy and we always look for ways to enable local communities to enjoy the long-term economic benefits from SANRAL projects," said Koos Smit, acting CEO of the roads agency.

The finding of irregularity was made because neither the Preferential Procurement Policy Framework Act (PPPFA) nor its regulations define the lowest acceptable price, and SANRAL had, in the past, used a method to determine a viable lowest acceptable price.

"We respect the findings of the AG and the comments made by Scopa members. We have been rectifying the irregularity in a phased approach as we had contracts in place that we left to run their course in order not to incur cancellation claims. The last contracts will expire in 2017. New contracts have since been awarded to the lowest price and in line with PPPFA," said Smit.

Many black-owned SMMEs in the construction and maintenance sectors have received their first experience working on SANRAL projects. The training and empowerment programmes that accompany these work packages enable them to become eligible for larger and more complex contracts in the future.

In 2015/16, SANRAL awarded 210 contracts worth R14.8 billion for new works, rehabilitation and maintenance projects. SMMEs earned a total of R3.5 billion, of which, R1.9 billion went to more than 1 000 black-owned enterprises.

SANRAL's projects created the equivalent of 15 721 full-time jobs.

"These numbers are important to us as every job means that a family is being fed. We will continue to make every effort to grow the economy and play our part in the socioeconomic upliftment of the people of our country, while acting in accordance with the law.

"We value the opportunity given by Scopa to provide further detail and we hope to conclude the matter satisfactorily next week," said Smit.