IN THE CONSTITUTIONAL COURT OF SOUTH AFRICA In the application of: FREEDOM UNDER LAW NPC To intervene as an applicant in the matter between: THE BLACK SASH TRUST and THE MINISTER OF SOCIAL DEVELOPMENT CHIEF EXECUTIVE OFFICER OF THE SOUTH AFRICAN SOCIAL SECURITY AGENCY ‘SOUTH AFRICAN SOCIAL SECURITY AGENCY THE MINISTER OF FINANCE NATIONAL TREASURY CASH PAYMASTER SERVICES (PTY) LTD THE INFORMATION REGULATOR Case No: CCT 48/17 Applicant Applicant First Respondent Second Respondent Third Respondent Fourth Respondent Fifth Respondent Sixth Respondent Seventh Respondent ANSWERING AFFIDAVIT ON BEHALF OF THE FIRST, SECOND AND THIRD RESPONDENTS|, the undersigned WISEMAN KHEHLA MAGASELA do hereby make oath and state that: 1. | am the acting Chief Executive Officer of the third respondent (‘SASSA”) | depose to this affidavit on behalf of the first, second and third respondents and am duly authorised to do so. 2. Subject to what follows, the facts contained herein are within my personal knowledge unless otherwise stated or apparent from the context, and are to the best of my knowledge and belief true and correct. 2.1.My personal knowledge of the history of this matter is unfortunately limited. My permanent appointment is as a Deputy Director General in the Department of Social Development ("the Department’) responsible for research and policy development. Approximately five weeks ago | was seconded as a special adviser to the first respondent (‘the Minister’). On Wednesday evening, 8 March 2017 that secondment was terminated, and | was appointed as acting CEO of the third respondent (‘SASSA"). The circumstances in which this occurred were that the current CEO, Mr Thokozani Magwaza, went on sick leave on about 27 February 2017 and is still absent on medical grounds. Ms Thamo Mzobe was then appointed as acting CEO. Ms Mzobe is currently CEO of the National Development Agency, and was brought in to SASSA in;3. this acting capacity in light of the absence of Mr Magwaza during this critical period. Ms Mzobe led SASSA until 7 March 2047, when she too was unfortunately taken ill. 2.2.1 do have personal knowledge of the recent negotiations with the sixth respondent (“CPS”) as | was part of the team representing SASSA and the Department of Social Development. 2.3.1 also have access to SASSA records but, given the short duration of my direct involvement with SASSA, | am not familiar with the full record of the history of the matter. I have read the notice of application and founding affidavit of Ms Maart in the main application, i.e. the application by the Black Sash Trust (“the Black Sash"). | have also read the notice of application and founding affidavit of Ms Fritz in the application by Freedom Under Law NPC (“FUL”) to intervene in the main application. The first to third respondents’ stance as regards the main application is they do not oppose the relief sought by the Black Sash. Although there are certain allegations and some matters raised in the founding affidavit that warrant further investigation (and will be investigated in due course for other purposes), as the first to third respondents do not oppose the relief sought they have not filed and do not intend filing any answering papers in the main application. The first to third respondents’ stance as regards the application of FUL is that although they do not oppose its intervention as a co-applicant (paragraph 1 of thenotice of application), the granting of the condonation sought (paragraph 2 thereof) and the costs order sought (paragraph 5 thereof), we do oppose the granting of the substantive relief sought (paragraph 4 thereof) to the extent set out below. . Before explaining the first to third respondents’ opposition to the substantive relief sought by FUL, it is necessary briefly to update what was said by the first and second respondents in their report to this Court dated 2 March 2007 regarding SASSA's intended course of action (paragraphs 46 to 52 of the report), with specific reference to SASSA’s intended interim arrangement with CPS aimed at ensuring the uninterrupted payment of social grants from 1 April 2017. The negotiations were held over a period of three days, starting on Wednesday 1 March and ending on Friday 3 March 2017. Those present agreed in principle on the key elements of a new contract for an interim period between SASSA and CPS, which were subject to approval by the Minister and the National Treasury. These elements included a two-year contract period during which CPS would be paid a fixed monthly fee. They also include that SASSA would get ready to and gradually take over certain of the functions currently performed by CPS; SASSA would conduct a competitive bidding process for the appointment of service providers to undertake those of CPS's current functions which will not be performed by SASSA in the medium term; and the successful bidders would get ready to and gradually take over those functions. The second year of the two- year contract period in particular would be when CPS was phased out and SASSA and the successful bidders would be phased in.8. On Wednesday 8 March 2017 a Ministerial Task Team ("MTT") was appointed to assist with ensuring the uninterrupted payment of social grants from 1 April 2017 and to oversee the response to the Directions issued by the Chief Justice that day in case 48/2013. In addition to the Minister, the MTT comprises Ministers J Radebe (Chairperson), S Cwele, M Gigaba, P Gordhan, M Mahlobo and N Pandor. Atits first meeting on Thursday 9 March 2017 (which | attended), after considering input from, amongst others, the Acting Chief State Law Adviser, the MTT decided that the current negotiations with CPS should be terminated and fresh negotiations should start afresh only if and when the National Treasury gave its prior written approval for a deviation from the requirement that SASSA invite competitive bids as contemplated in paragraph 8.5 of National Treasury Instruction 3 of 2016/2017 (a copy of which is attached, marked “WKM1”). It was further decided that steps be taken forthwith by SASSA to seek such approval, and that the process be overseen by senior counsel (Adv. Wim Trengove SC) to ensure the process is legally sound. Pursuant to this decision SASSA's legal team are preparing a request for a deviation for consideration and approval by Adv. Trengove SC. Once approved, it will be submitted to the MTT (which is scheduled to meet again this coming Sunday 12 March 2017) and, if acceptable to the MTT (including the Minister), the Minister will direct me in terms of section 6(1) of the SASSA Act 9 of 2004 to make the request to the National Treasury in terms of paragraph 8.5 of National Treasury Instruction 3 of 2016/2017. 9. Turing to the relief sought by FUL in paragraph 4.1 of its notice of application, although the first to third respondents have no objection to filing with this Court, within 20 days after the conclusion of any interim contract with CPS, a copy of the contract, any drafts of the contract, and such other documents as this Courtrequire, the first to third respondents respectfully submit that the range of documents specified in this paragraph is too wide. An order in such wide terms at this juncture is not required and may lead to the unintended consequence of multiple people associated with the Department, SASSA, CPS and/or the National Treasury being in contempt of the order because they omitted to make available for filing e.g. a WhatsApp message which is related in some way or another to the negotiation of the contract. FUL and anyone else who, in future, may wish to have access to the wide range of documents referred to in this paragraph, have adequate remedies under the Promotion of Access to Information Act 2 of 2000 and/or Rule 29 of the Rules of this Court (read with Uniform Rule 35(13)). 10. Turning to the relief sought by FUL in paragraph 4.2 of its notice of application, the first to third respondents oppose this relief in its entirety because, with respect, it would not be appropriate for this Court to determine, in advance, the terms as to price and duration on which SASSA and CPS may contract with one another. Itis not normally the function of a Court to make a contract or the key terms of a contract for the parties, even if one of them is an organ of state. Although the power of this Court to grant just and equitable relief in constitutional matters where it has assumed a supervisory jurisdiction is very wide, it is only in the most exceptional case where this Court will intervene, in anticipation of contractual negotiations, in the manner suggested by FUL. There is no warrant to do so in the present case. The National Treasury must first be persuaded to grant approval for the deviation ~ i.e. to commence bilateral negotiations with CPS — that SASSA will be seeking. The new negotiations with CPS, if authorized by the National Treasury, like the negotiations earlier this month, are likely to be very.complex because the subject-matter of any eventual agreement will depend on a wide range of variables and interactions between them and the parties’ respective constraints and needs. The validity of any new process of negotiation with CPS and of any contract concluded with it, can only be determined once the contract has been concluded. If, in any later proceedings in which the validity of that process or contract are assailed, this Court finds grounds for interference, and in particular grounds to alter the terms of the contract in the manner now suggested by FUL, it may do so at that juncture. As the execution of the contract is likely to be ongoing when any such proceedings are brought and adjudicated, if so ordered the parties can make and implement the adjustments this Court requires. 11. Finally as to the relief sought by FUL in paragraphs 4.3 and 4.4 of its notice of application, while the first to third respondents have no in-principle objection to the granting of this relief, which is similar to the relief in paragraphs 4.2 and 4.3 of the 17 April 2014 order of this Court in Case 48/2014, they submit that, as in that order, the periods specified for compliance should be 60 days rather than 30 days and 40 days respectively. The latter periods may well be too short for the auditors to perform their functions. 12.In the premises, the first to third respondents: 12.1. do not oppose the relief sought by the Black Sash Trust in the main application; 12.2. do not oppose the relief sought by Freedom Under Law NPC in paragraphs 1, 2 and 5 of its notice of application; and12.3. tothe extent set outin paragraphs 9 to 11 above, oppose the relief sought by Freedom Under Law NPC in paragraph 4 of its notice of application WISEMAN KHEHLA MAGASELA | certify that the above deponent has acknowledged to me that he knows and understands the contents of this affidavit, which affidavit was signed and swom to before me afsuneysielt/ on this the /O__ day of MARCH 2017, in accordance with thé requirements of Government Notice R1258 dated 21 July 1972 as amended by Government Notices R1648 dated 19 August 1977 and R1428 dated 11 July 1980 and by GN R774 of 23 April 1982.Woy" SwZer national treasury TOALL: ACCOUNTING OFFICERS OF DEPARTMENTS AND CONSTITUTIONAL INSTITUTIONS ACCOUNTING AUTHORITIES OF PUBLIC ENTITIES HEAD OFFICIALS OF PROVINCIAL TREASURIES NATIONAL TREASURY INSTRUCTION SCM INSTRUCTION NOTE 3 OF 2016/17 SYSTEMING AND COMBATING ABUSE IN THE SUPPLY CHAIN MANAGEMENT SYSTEM 4. OBJECTIVE ‘The objective of the SCI Treesury Instruction isto provide guidance on measures to Prevent and combat abuse in the Supply Chain Management System 2. BACKGROUND 21 The Public Finance Management Act (PFMA), 1999 (Act No. 1 of 1999) promotes feanamy, ficiency, effectiveness and transparency in the use of state resources. Me bgctive Is fo establish end maintain @ responsive end credible Supely Chan Management System, 22 In terms of section 6 (2) (a), (t), (9 and (a) and section 18 (2) ), (0, (Q) and () ofthe tret A tne National Treasury and provincial treasuries have an obligation to omens Men dvoPer norms and Standards are set to prevent abueo of the Suply Chee Management System and enforce the prescribed measures, 25° The Nallonal Treasury therefore considered i prudent to introduce and enhance Measure to prevent and combat abuse of the SCM System, 3. REGISTER OF COMPLAINTS 34 The Accounting Offcer/Accounting Authority must establish a system thet deals wih Monganagement of complaints and or allegations of abuse in the Supply chen Management System, 3.2 The system must provide for: 2.2.1 Wotton, verbal or enonymous reporting of the complaint 5.22 The estabishment ofa register of al allegations of abuse in the Supply Chain Management System in the format as per Annexure A allached ic the geouy Treasury Instruction.National Treasury Instruction 3 of 2018/2047 Preventing and Gombating Abuse inthe Supply Chain Management System 83° Complaints that impicate the Accounting Offeer/Accounting Authonty must be epored to the relevant Treasury within 14 calendar days of the receipt ot the complaint, by the delegated oficial in relevant institutions. 4. INVESTIGATE’ COMPLAINTS 4-1 The Accounting Officer/Accounting Authority must 4-1" Intiate an investigation within 14 calendar days of receipt of the complaint and or allegation of abuse: 412 The investigation must be completed within 30 celendar days from date of initiation uniose an extension was approved by the relevant treasury. 41.3 Ensure thatthe investigation reports are securely stored, ‘41-4 (pform the relevant treasury ofthe outcome ofthe investigation, together with the proposed actions within 7 calendar days of receiving the reestigation report. 42° Ths relevant treasury must inate en investigation ito complaints that implicate the eeunting Offcer/Accounting Authority, within 44 calendar days from the rece cr ‘the complaint and or allegation of abuse. 49° he jelevant troasury must inform the Executive Authotity of the outcome of the the aa gaccbether withthe proposed actions within 7 calendar dave ef recelving the investigation report. 44 The Executive Authorty wil thereafter handle the financial misconduct process, applicable, 5. IMPLEMENT REMEDIAL ACTION 5.1. The Accounting Officer/Accounting Authonty must: S11 Intlate “discptinary proceedings if the investigation report confirms the allegations of financial misconduct °-12 Teper! such allegation tothe South Afican Poice Services within 7 working {lays I the investigation report confirms the allegations of a oriminal natne 513. Inform the relevant treasury, in wating, of any criminal compen witin 7 Boing days of tne complaint being lodged with the South African Potiog Services. 5-14 nite the implementation of the recommended remedial actions against the Sreper within 14 calendar days of the receipt of the Investigation repon ‘Such remedial actions may include: 5.1.4.1 rejecting the bid: 5.4.4.2 cancelation of the contract; saiataate te conan ois nsructon meat cary outs yeemat frm pot to examine o Se ora aft ilcciey Mee of eden or cccurence soo esabioh We Sons sos ae ie one oF moze ofthe foiowin 2, Camalance review bythe procuring enty of te evant Treasury 2 ftena!oudt revi by te roeuring ety the evant esseey 3. Forensic aust raview By a relevant sulhonead inciaaies 4 Any other probly check cance by the relevant ui rcedinstuton82 53 54 55 56 64 82 63 84 7 National Treasury Instruction 3 of 2016/2017 Preventing and Combating Abuse inthe Supply Chain Management System 37:43 lestricting the supplier from doing business with the state; andor 5.4.4.4 claiming damages (if any), somiee Reounting Officer) Accounting Authority fal to inte the remedial actions Rerioe ne Supplier wihin 14 calendar days of receiving the investigator topea we Stine apr BSUTY or the relevant provincial teasury must intiate the Meeloees eens of the remedial actions, inn atone! Treasury or the relevant provincial treasury must recover oll cots for Ancang, he implementation of the remedial actions from the Accourimg neey Accounting Authority sreyiovant treasury musi publish an investigation report which confims the abuse ‘of supply chain management on the website. von cet tesuty must publish a Fal ofall SCM related criminal cases opened by various enforcement agencies on the website, preceeneyaM (reasury must publish @ list of iregular expenditure applications processed on the wabsite on a quarterly basis. REPORT OUTCOMES, reponk eeunling OffeerAccounting Authorty of provincial inaiutions must table the schon Sr nen pellegations received, outcome of the investigations and the tetete, Sctions at the Provincial Legislatures on a quarterly basis Tae, Rorounting Otfcer/Accounting Authority of National Insttuions must table the schon inte alegatons received, outcome ofthe investigations and the ‘ersem actions in Parliament on a quarterly basis, Leg lecaumtng OffcertAccouming Authorty must submit reperts to the Provincel \edistturesPartiement by the 15" ofthe month folowing the end of te nner Relevant Legisiature/Pariiament Committees must ensure thet the. ‘Accounting Officer! Seceumtng Authority are held accountable to enhance elleienccs mr wee oe, System, RESTRICTION OF SUPPLIERS, SHAREHOLDERS AND DIRECTORS The Accounting Offcer/Accounting Authority must 741 Notify the supplier end any other person of the intention to restrict by registered mail. The letter of restriction must provide for ZA the grounds for restriction, 74-12 the petiod of restriction which must nct exceed 10 years, 7.1.12 A period of 14 calendar days for the supplier lo prove reasons why the restriction should not be imposed.National Tressury Instruction 3 of 2016/2047 Preventing and Combating Abuse in the Supply Chain Management System 7.2. The Accounting Officer/Accounting Authority: 7241 May regard the intended penalty as not objected to and may impose such Penatty on the supplier, should the supplier fail to respond, 7-22 Must essess the reasons provided by the supplier and take the final decision, 7.3 the penalty is imposed, the Accounting Officer/Accounting Authority must inform National Treasury of the restriction within 7 calendar days and must furnish the following information: 7.3.4 The name and address of the person to be restricted; 7.32 The identity number of individuals and the registration number ofthe entity; 7.3.3 Period of restriction, 7-4 National Treasury will lad the details on the Database of Prohibited Suppliers after Spaurng thal the Accounting Offcer/Accounting Authority has complied with Supply Chain Management legal framework. 7-5 A supplier who refuses to cooperate with a government institution must be suspended from the Central Supplier Database unt i fuly complies. 8. DEVIATIONS FROM NORMAL BIDDING PROCESS B14 The [Accounting Offeer/Accounting Authority rust only deviato trom inviting Competitive bids in cases of emergency and sole supplier status 52. An emergency procurement may oocur when there is a serious and unexpected Situation thal poses an immediate risk to health, life, property or environment which calls an agency to action and there is insufficient time to invite competitive bide 8 Sole source procurement may occur when there Is evidence that only one supplier Possesses the unique and singulerly available capacity to meet the requirements of the institution, 84 The ‘Accounting Oficer/Accounting Authority must invite as many suppliers as Possible and select the preferred supplier using the competiive bid committee system, 88 Any other deviation wil be allowed in exceptional cases subject to the prior witten ‘pproval from the relevant treasury. 8. EXPANSIONS OR VARIATION OF ORDERS S-1_The Accounting Officer/Accounting Authority must ensure that contracts ere no! varied by more than 20% or R 20 milion (including VAT) for construction related goods works and or services and 15% or R18 milion (including VAT) for al other googs and OF services of the criginal contract value. 92 Any deviation in excess of the prescribed thresholds will only be allowed in exceptional cases subject to prior writen approval from the relevent treasury,National Troasury Instruction 3 of 2016/2017 Preventing and Combating Abuse inthe Supply Chain Management System 10, BID COMMITTEE MEETINGS The relevant Treasury may, at its sole discretion, choose to attend Bid Committee meetings in an advisory capacity or prescribe which bid evaluation/adjudication process must be open to the public Every member of the Bid Commitice is jointly and severally fable for the improper evaluation and adjudication of the bid. 11. PROCUREMENT WITHOUT A BUDGET The Accounting Officer! Accounting Authority must not advertise a bid for which no provision has been made in the budget, 12 CONDONATION OF IRREGULAR EXPENDITURE lwegular expenditure may be condoned if there ts evidence thet the Accounting Officer’ Accounting Authority took effective and appropriate steps against any person found to have caused i 13, INFORMATION TO BE SUBMITTED ‘The Accounting Officer! Accounting Authority must submit such information, retums, documents, explanations and motivations as prescribed or required by the relevant treasury. Any application from the Accounting Officer/ Accounting Authority who fail submit {he requited informaton must not be processed by the relevant treasury untl they fully comply. 14. APPLICABILITY ‘This SCM Treasury Instruction applies to all institutions and public entities 15. WITHDRAWAL OF CIRCULAR DATED 24 APRIL 2012 Circular on the postponement of paragraph 3.9.4 dated 24/04/2012 of instruction Note 32 of 2011 is hereby withdrawn, 46. EFFECTIVE DATE ‘This SCM Treasury instruction takes effect from the 1 May 2016, 17. DISSEMINATION OF INFORMATION CONTAINED IN THIS INSTRUCTION 17-4 Head officials of provincial treasuries must bring the contents of this SCM Treasury Instruction to the attention of all Accounting OfficersiAccounting Authorities, 17.2 Accounting Officers and Accounting Authorities at Nationat level must bring the Contents of this SOM Treasury instruction to the attention ofthe relevant officials‘National Treasury Instruction 9 of 2016:2017 Preventing and Combating Abuse inthe Supply Chain Meniagement System 18 AUTHORITY FOR THIS SCM INSTRUCTION. This SCM Treasury Instruction is issued in terms of section 76(4) (c) of the PFMA, 19 GONTACT INFORMATION Enquiries related to this SCM Treasury Instruction may be directed to: Egendii Nanakan Director: SCM Governance ‘Tel 012 315 5452, Email: Knowledge Ndou@Treasury.qov.za or Lel po Molefe@Treasury gov za ROCUREMENT OFFICER pate 14 [eA vig