Transport Minister Barbara Creecy has instructed her department to seek a High Court order following the Auditor-General of South Africa’s (AGSA) report on the irregularities surrounding the award of a lucrative R486 million tender for driving licence card machines. The tender, which was awarded to French company IDEMIA in September 2023, has now come under scrutiny after an AGSA audit found significant flaws in the procurement process.
The AGSA’s investigation into the tender process for the Driving Licence Card Account (DLCA) has revealed discrepancies in the evaluation of bids, which led to the award of the contract to IDEMIA despite failing to meet key technical requirements. Although other bidders, including Ren-form Corporate Print Media, NEC XON, Muehlbauer ID Services, and Gemalto Altron Fintech Southern Africa, also did not meet the technical specifications, IDEMIA’s failure raised concerns about the transparency and fairness of the procurement process.
The tender was for new driving licence card machines that would incorporate advanced security features to combat increasing fraudulent activities. However, the AGSA found that the DLCA’s bid evaluation committee (BEC) deviated from the set specifications and used ambiguous criteria to assess the bids, leading to an unfair and non-transparent process.
Following the audit’s findings, Minister Creecy has directed the Department of Transport to lodge a High Court application for a declaratory order to determine the proper course of action in light of the AGSA’s findings. This marks a crucial move to clarify the legal standing of the tender and address any potential breaches of the Public Finance Management Act (PFMA).
The AGSA’s review also pointed out issues with the budget for the contract. The DLCA’s budget, which exceeded R486 million, was based on outdated pre-COVID prices, and the government’s approval process for the project was found to be incomplete and lacking a full reflection of the actual cost, leading to the risk of project delays or cancellation due to insufficient funds.
In response to the allegations, IDEMIA, which has been awarded several government contracts in South Africa in the past, including for biometric identification systems, strongly denied any wrongdoing. The company maintains that it legitimately won the tender and is working to resolve the issues raised in the audit report. IDEMIA has committed to engaging in transparent dialogue with all stakeholders and exploring legal options if necessary to ensure a fair resolution.
The company also noted that some aspects of the AGSA’s findings were outside its scope, while others relating directly to IDEMIA’s operations were being addressed to clarify any misunderstandings. IDEMIA’s role in previous high-profile contracts, including those with the Department of Home Affairs (DHA) and Airports Company South Africa (ACSA), has attracted significant attention, especially after controversies emerged surrounding contracts awarded by these entities.
IDEMIA’s involvement with South African government projects has not been without controversy. The company was tasked with implementing the DHA’s Automated Biometric Identification System (ABIS), a project that has faced significant delays and controversies, including allegations of inflated costs and procurement irregularities. IDEMIA also faced criticism for a multimillion-rand contract with ACSA for biometric and facial recognition technologies, which was terminated over claims of improper dealings and insider influence.
The Organisation Undoing Tax Abuse (Outa), a civil society group, welcomed Minister Creecy’s decision, praising the role of civil intervention in halting a potentially corrupt and overpriced tender. Outa’s CEO, Wayne Duvenage, called for accountability and further investigation into the individuals involved in the bid evaluation and adjudication process, hoping that the actions taken would ensure transparency in government procurement.
As the department seeks a declaratory order, the future of the R486 million tender hangs in the balance. With the AGSA’s findings revealing significant flaws in the procurement process, the matter will likely face further legal scrutiny. Minister Creecy’s intervention may set the tone for future government contracts, highlighting the importance of fairness, transparency, and compliance with public procurement regulations.
The situation remains fluid, and IDEMIA’s ongoing legal considerations will likely add more layers to the complex legal and political landscape surrounding this contentious tender.
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