Government uncovers shocking levels of overcharging for contracts

The Department of Public Works (DPW) has vowed to recover millions of rands from consultants and construction companies for overcharging.

To date, the department has issued summons to reclaim a total of about R67 million which was over-paid in two projects.

Investigations, conducted by the department and the Special Investigating Unit (SIU), are underway to determine whether any action could be taken in other projects, it said.

The DPW found that consultants and contractors who worked on approximately 27 multi-million rand construction, refurbishment and facilities management and maintenance contracts overcharged by as much as R200 million.

The department said it made the “shocking findings” after it scrutinised the final accounts of the 27 projects. The investigations were conducted as part of its ongoing seven-year turnaround strategy.

The DPW said that projects under scrutiny include the construction and refurbishment of various ministerial houses in the Western Cape and Parliamentary precinct. The projects were awarded in separate tenders to different companies in 2007.

The investigations found that approximately 45 built-environment professional consultants, architects, quantity surveyors and engineers are implicated in over-charging the DPW by more than R35 million in professional fees.

The consultants as professional built-environment experts as well as the contractors won the tenders to upgrade the ministerial houses totalling approximately R70 million in 2007.

The upgrading of the parliamentary precinct projects cost in excess of R150 million, it said.

To date, the department has served summons to reclaim R7 million in overpayment from the professional consultants and constructors who worked on the Empangeni Prison in KwaZulu-Natal.

And in another similar case, the department has issued summons to reclaim R60 million in overpayment arising from the Skilpadhek Border Post project. The case will be heard at end of October.

The department said it plans to institute internal disciplinary action against any officials who are found to have flouted the procurement laws.

Investigation uncovered the the following:

  • In a R10 million contract for the repairs and renovations of 120 Plein Street, the investigation found the contractors and the professional consultants were overpaid by more than R5 million. The contractors were overpaid by approximately R4.4 million and architect and the quantity surveyors were by more than R1 million.
  • In a R13 million contract for the upgrade of civil and electrical work in the Acacia Park Parliamentary Villages, it was found that the contractor and professional consultants were overpaid by more than R1.3 million. The contractors overcharged the Department by approximately R500,000 and the professional consultants by approximately R900,000.
  • In the upgrading of Groote Schuur residences, it was found that the projects included amounts of more than R10 million that could not be verified because of the lack of detail. The professional consultants were overpaid by more than R1.8 million.

Minister Nxesi vowed that the department would take tough and decisive steps against the culprits.

“We are on record that we would not hesitate to take action against any officials involved in illegal activities. The same will apply to these private sector companies. Their involvement shows that government officials do not always act on their own. They have willing partners in the private sector. We will update the public about the progress of the investigation.”

“We have unearthed massive corruption and maladministration as part of our ongoing clean-up and transformation of the department. The upgrading of the Ministerial houses is one of them. But we would like to assure the public we have introduced remedial measures to strengthen the internal systems at (the) DPW.”

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Government uncovers shocking levels of overcharging for contracts