Gauteng's Putco bus contract illegally implemented, says public protector

The Putco bus company has been enjoying a monopoly in Gauteng for more than 20 years, as its contract with the provincial roads and transport department was continuously extended without a competitive bidding process taking place.

This is a finding public protector Busisiwe Mkhwebane made after an investigation conducted into allegations that Putco was the sole contractor doing business with the government in the province.

This investigation and several others conducted by Mkhwebane’s office culminated in a series of reports released on Monday.

The investigation into the Putco contract stems from a complaint from Sam Masango, who was acting on behalf of the Moloto Corridor Concerned Residents (MCCR). MCCR complained that Putco faced no competition, restricted other service providers from entering the market and doing business with the government, and enjoyed the power of setting its prices for services rendered on behalf of the government.

“We found that the allegation that the Gauteng department of roads and transport (GDRT) irregularly implemented the contract is substantiated,” Mkhwebane said.

She said their investigation revealed that the original 136-week contract which was awarded to Putco in 1997 had been continuously extended.

“The investigation also revealed that the GDRT has contravened section 41(3) of the National Land Transport Act (NLTA) by extending the Contract IC52/97 beyond a period of 12 years.

“The investigation also revealed that the department contravened section 41(5) of the NLTA, section 38(1)(c) of the PFMA [Public Finance Management Act] and relevant provisions of the National Treasury regulations and instruction notes by failing to ensure that timely steps were taken before expiry of Contract IC52/97 to ensure that services are procured through a competitive bidding process to ensure continuous service delivery to the passengers,” Mkhwebane said.

Mkhwebane directed the roads and transport MEC to take note of the final report and monitor compliance regarding contract management, procurement of goods and services and extension of contracts.

As part of her remedial action, Mkhwebane called on the head of department to provide her office with quarterly reports from meetings with the national department of roads and transport, the National Treasury and the auditor-general to ensure compliance with relevant legislation on procurement processes.

“In addition, the HOD must ensure that the GDRT staff are trained regularly about the provisions of the PFMA regarding contract management, procurement of goods and services and extension of contracts,” Mkhwebane said.

She referred the matter to the competition commissioner to consider the possibility of investigating 108 bus contracts that are similar to the Putco bus contract “for possible elements of restrictive horizontal practice as defined in the Competition Act”.

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