Bain contract with Revenue Service was ‘irregular’, advocate tells Sars inquiry
The contract awarded to Bain for the far-reaching restructuring at the SA Revenue Service (Sars) was irregular, the commission of inquiry into governance and administration at the tax agency heard on Wednesday.
International consultancy Bain was in the hot seat during the second leg of hearings taking place in Pretoria. The consultancy received R164m for the far-reaching restructuring, which the commission has heard neutralised Sars’s capacity under suspended commissioner Tom Moyane.
Evidence leader advocate Carol Steinberg said that there were many irregularities in awarding the contract, which Sars and the Treasury would have to answer for. She explained — with evidence from the minutes of Sars executive committee meetings — that a request for proposals was issued merely for a diagnostic. The cost of this was less than R3m.
Bain was appointed because it gave Sars a 50% "discount" for the diagnostic, which made them the cheapest bidder.
The problem emerged thereafter: no new tender was issued for the actual restructuring. Bain was used for the work, without testing the market for further quotes — and while it gave a 50% discount for the initial work, the cost for the rest of it had almost doubled.
Steinberg said the initial contract for the diagnostic was expanded twice.
Bain’s managing partner in its Johannesburg office, Vittorio Massone, said it was standard practice for the consultancy to give a discount to a new client.
He said there was a lengthy period of waiting from when the diagnostic was finalised to the point where he met Sars procurement officials for the rest of the contract. He did not know what processes were followed by Sars during that four-month period.
Steinberg described the contract as highly irregular — that a R2m contract ended up costing over R160m. "What are Bain’s checks and balances?" she asked.,
He appeared unfamiliar with standard procurement processes in the country. He said he believed the processes were proceeding during those four months.
Questioning of Bain has now turned to why it interviewed only 33 people to conclude its diagnostic. These individuals were identified by Moyane, who himself had only joined the 14,000-strong, highly complex institution mere months before.