A PROGRAMME by Transnet Freight Rail (TFR) to buy 1,064 new locomotives as part of an ambitious seven-year strategy to ramp up capacity is running four months late as Transnet, the Department of Public Enterprises and the Treasury fight over evaluation criteria for the multibillion-rand bids.
Transnet and its shareholder, the Department of Public Enterprises, are pushing the Treasury for a relaxation of the 90:10 evaluation formula — as stipulated in the Preferential Procurement Policy Framework Act (PPPFA) — to 70:30, in order to reach more industrial and social development goals.
The Treasury is concerned Transnet will pay a higher premium than is allowed under state programmes to leverage procurement into industrial outcomes.
via www.bdlive.co.za
Treasury are correct here. Under the 90:10 scheme the state is willing to pay 11% extra for empowerment. If Transnet gets their 70:30 then Transnet could end up paying 43% more for empowerment criteria. It's not clear why they want to pay more for this, nor is it clear why the ratio is causing the tender process to slip up. The article says that Transnet needs to increase the ratio "in order to reach more industrial and social development goals". This logic doesn't work for me, why not just take 20% of the R35bn and pour it into a variety of job creation activities at those small towns that a train may go through.
There is a precedent for this.
The Passenger Rail Agency of South Africa, which operates Metrorail and is embarking on a R123bn fleet renewal, fought the Treasury for an exemption seeking a 65:35 split. It was granted a 85:15 exemption.
I think we need to be cautious here. If they allocate more for empowerment the potential for corruption goes through the roof.
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