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Johannesburg - Malcolm Lobban, CEO of civil engineering and construction group Sanyati Holdings [JSE:SAN], said the group was "mystified and taken aback" by the lack of communication from Ethekwini Municipality for a R699.4m tendered project in KwaZulu-Natal.
The project in question is the Western aqueduct for the Ethekwini Municipality.
According to Sanyati, it involves the installation of about 50km of steel pipeline, ranging in diameter from 500mm to 1 600mm, starting at Inchanga station and including a route through Hillcrest and Kloof before crossing the Umgeni River and ending at Ntuzuma resorvoir.
"We submitted our bid in February last year and were adjudged as the lowest, with a price of R699.4m. WBHO (Wilson Bayly Holmes-Ovcon) were about 2.8% higher than us and their price was R720.1m," said Lobban, speaking at a press briefing at the group's offices in Sandton.
"Subsequent to February 2010, we (together with six other bidders) have been requested to extend the validity of our bid no less than four times between February and December 15.
"We were somewhat mystified, therefore, when we established on January 11 that the municipality (in a letter dated December 16 addressed to one of the other bidders) was seeking to award the contract to Esorfranki [JSE:ESR], whose bid price was R864.1m.
"Naturally, we have objected to this decision and we have called on the municipality to provide us with the data pertinent to that discussion, including an adjudication report and the minutes of the meeting of the tender board at which that decision was taken," Lobban said.
The Sanyati group head said that the information requested on January 11 had not yet been provided, "nor have we been given the undertaking requested from the municipality that they do not conclude any contract or permit any access to the site pending the conclusion of this procedure".
Sanyati accused the media of reporting that the contract had been awarded to Esorfranki and that "this was the correct decision in the light of the risks associated with concluding a contract with Sanyati at below cost price," Lobban said.
"We are more than happy with our tendered price, we are very confident in our ability to perform on this contract and we have an excellent track record and performance record with Ethekwini Municipality," Lobban said.
The CEO insisted: "We don't price a job to break even. I would be fired.
"Price is always a key issue; 90% is about price, the rest is about softer issues," Lobban said, referring to matters like black economic empowerment and track records.
"We haven't been formally advised, like others, that we haven't gotten the job. The only response we have had to date is to tell us that they (the municipality) need more time.
"We await the outcome of our request and remain clear in our objective of following the correct procedure to resolve this matter," Lobban said.
