Questionable tender prices dominate Sars inquiry

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It has emerged that Bain, the consulting agency responsible for introducing the restructuring project at the South African Revenue Service (Sars) followed an irregular tender process, which saw them getting paid  R164 million for what was initially a tender R2 million tender.

During the bidding processes, Bain initially offered Sars a 50 percent discount on the tender, which saw them securing the tender for R2 million. However, on receiving the work, Bain continued to charge double rates for the rest of the project, bringing their final bill to R164-million.

Managing director at Bain, Vittorio Massone was responding to questions posed by retired judge Robert Nugent during the inquiry.

“What you’ve got is a discount that’s going to get you the job and full rates that are going to apply for the rest of the job. So when you doing the initial tender, you were fully aware that you’re going to be charging for the rest of the work, is that correct?” asked judge Nugent, to which Massone confirmed, “yes”.

Massone says the model which fragmented operations at Sars was not the problem… he says it was the implementation and the changes in leadership that created problems.

“On the fragmentation, I think fragmentation in some case was necessary.  The problem was in the appointment of people… as the Chief Officer and other people were appointed… too many people, I can say, for the wrong reasons were appointed. In general too much change in an organisation, especially at the leadership level, is not healthy.”

Massone, says additional input from other senior stuff members at Sars would not have changed the outcome of the operating model they introduced at the revenue collector.

“There was no need to change the strategy and actually stayed the same, but the point is that in the real world clients decide, and you can not dictate to the client what they do. You can easily see how an initial mandate on structure can bring to redesigning all the softer elements and the cultural change. It is very normal that our client hired us on structure, and then on strategy, and then on cultural change.”

On the final day of public hearings, the commission will hear testimonies from Finance Minister Nhlanhla Nene and and Home Affairs Minister Malusi Gigaba.

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