South Africa Halts Social Security Payments Tender Process

(Bloomberg) -- South African Social Development Minister Susan Shabangu has suspended the tender process aimed at securing a new distributor for the country’s social security cash payments for millions of people, after G4S Plc lodged a complaint about discrepancies in the bid procedures.

“I have resolved to have the bid for the provision of the cash payment services for social assistance suspended,” Shabangu said in an affidavit filed at the Constitutional Court on Wednesday. “The tender documentation fails to provide bidders with accurate information pertaining to the number of beneficiaries to be serviced.”

South Africa is seeking a new distributor of social security payments that cost the government more than 150 billion rand ($12.1 billion) annually, after the Constitutional court ruled in 2014 that the contract with Net 1 UEPS Technologies Inc was unconstitutional because correct processes weren’t followed.

Net 1 Controversy

The South African Social Security Agency failed to find a new service provider and the court intervened again last year to demand that action be taken amid accusations by civil society organizations that Net 1 used the information it gleaned on grant recipients to sell services to some of the country’s poorest and least literate people. The contract was again extended for six months on March 23 after Sassa sought more time to finalize the tender process.

“The further information provided by Sassa to the bidders was inadequate, contained discrepancies and made it impossible for bidders to come up with a proper costing model,” Shabangu added. “I am mindful of the 20 September 2018 deadline and I have every intention to ensure Sassa complies with its obligations within the stated time frame, despite my decision to suspend the tender.”

The ruling African National Congress has held up the social security program as one of its greatest successes taken to alleviate poverty in one of the world’s most unequal nations. An interruption in the processing of payments could undermine the party’s support in national elections next year.

The National Treasury has informed Sassa that the bid evaluation process should not proceed to the second stage until it has reviewed the outcome of the first phase of the administrative evaluation process, Shabangu added.

Former Social Development Minister Bathabile Dlamini has been asked by the court to explain why she should not pay the costs of the court cases personally because of her negligence.

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