City of Johannesburg paralysed woman-owned business

Feb 13, 2019
A multimillion-rand tender with the City of Johannesburg (COJ) – that had the potential to be one of the good stories of government’s vision to empower black women – has gone sour and the city is being sued R8 million for not honouring the contract.
 
Faithfulness Business Enterprise was awarded a contract to supply and deliver protective footwear for members of the metro police department – JMPD – valued at R23.760 million over three years in 2014.
 
In accordance with the tender, the company subsequently spent millions of rands and hired more staff to deliver on its contractual obligations.
 
However, the city placed only a single order for R660 000 in December 2014 and then placed orders with other suppliers, leaving the company with a mountain of costs and no orders.
 
Two years into the contract and a single order later, the city applied to the Johannesburg High Court, seeking to terminate the service level agreement on the basis that the tender process was flawed and that there were a number of irregularities.
 
However, none of the alleged irregularities was related to the company or because of its influence.
 
The court dismissed with costs of the city’s application in February last year and upheld the service level agreement as binding and valid.
 
But the city still did not place any orders with the company.
 
The company took the city to court to recoup its losses, which it initially estimated at R17 million, but after being audited amounted to R8.666 million.
 
In a letter of demand sent to the city, the company said it had suffered damages amounting to more than R17 million in respect of rental expenditure incurred in leasing premises suitable for the storage and sorting of the contracted quantities of footwear; salaries and wages of staff who were employed to ensure the capacity to meet the future orders; stationery and printing costs; vehicle costs, office equipment; and loss of profits.
 
Speaking to City Press, Selina Siganga, ownerof Faithfulness Business Enterprise, said the tender had left her worse off and had paralysed her business.
 
“Because of that contract, the banks increased the overdrafts and now I have to deal with them. I have had to lay off people I had employed and had to negotiate with them not to take me to the Commission for Conciliation, Mediation and Arbitration because I was paying their salaries but not getting orders.
 
“This government always says it wants to support black woman in business and wants employment [to create jobs] but it is killing us,” she said.
 
Spokesperson for the city Nthatisi Modingoane opted not to comment on the matter.
 
“The matter is before the courts and thus the city will wait for the court process,” Modingoane said.
 
 
Source: City Express
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