Critical state-owned company in South Africa hits reset after R9.5 billion blowback
The South African National Roads Agency (SANRAL) is returning to an open tender process for routine road maintenance and engineering consultancy services after the High Court deemed its system for a R9.5 billion tender unlawful and unconstitutional.
Previously, SANRAL managed road maintenance through approximately 251 contractors.
In an effort to streamline procurement, the agency consolidated this work by awarding contracts to a smaller panel of just 20 companies from a pool of 401 bidders.
However, two construction firms successfully contested this decision in court.
A separate panel for Category 2 engineering consultants was also recently ruled unlawful due to irregularities in the tender adjudication process.
SANRAL outgoing CEO Reginald Demana announced that the agency is now preparing to issue new open tenders in batches, with a limited number already released in the Western Cape and Northern Cape.
The group said that to ensure continuous road maintenance during this transition, existing contractors will remain on board until the end of November, by which time the new open-tender contracts must be finalised.
Currently, there are no existing service providers for engineering consultancy work, so no extensions are necessary.
Following the litigation, SANRAL recognised the need for improved internal preparations when changing its core operating model, and the significant socio-economic impact on service providers excluded from five-year panel appointments.
“The incumbent contractors remain in place until 30 November 2026, and SANRAL must ensure uninterrupted road maintenance during the transition; and all panel appointments have fallen away – no work may be allocated under the set-aside tender,” said Demana.
“We have prepared the tender packs, and we are running a live proactive internal assurance process,” he said.
In the Western Cape and Northern Cape provinces, a limited number of tenders have already been issued, signalling our intention to move quickly.
Challenges in court
Demana acknowledged that the agency was not equipped to award a R9.5 billion tender for routine road maintenance to a panel of 20 companies, which was declared unconstitutional and unlawful, leading to its annulment by the Pretoria High Court.
“We were ill-equipped to enter into panels. For now, we will go back to what we have always done: issue tenders individually using an open tender process, as we have done in the past before exploring the panel route,” he said during a media briefing.
Construction companies BCB Solutions and Botle Ba Afrika Roads successfully challenged Sanral’s decision to reject their bids in court last week.
SANRAL had opted to appoint a panel to perform routine maintenance on national roads nationwide.
The CEO of Sanral stated that the agency has faced legal challenges in recent years related to weaknesses in its procurement processes.
This includes issues with awarding high-value contracts and the selection of panels for engineering consultants and routine road maintenance contractors.
In most instances, Demana noted, unsuccessful bidders have sought urgent court interdicts to halt the signing of service level agreements and the start of work, followed by thorough reviews of the procurement decisions.
He noted that legal counsel consistently assessed Sanral’s chances of successfully defending these cases as low.
Consequently, the organisation chose to concede rather than engage in costly litigation that would burden taxpayers, all while ensuring that road maintenance work could proceed without interruption.
During the media briefing, Demana highlighted weaknesses in the tender value chain system and emphasised that colleagues needed to provide explanations for the lapses, the individuals involved, and the actions that would be taken.
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