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Bidvest contract revealed

by Lesotho Times
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Lekhetho Ntsukunyane

CONTRARY to claims the government would own half of its vehicle fleet, it has entered into a contract hire arrangement with Bidvest Bank Limited, the Lesotho Times can reveal.

According to a contract the government entered with Bidvest Bank Limited last month, the South African financial institution would provide “possession, use and enjoyment of the vehicles for the contract period”.

The 48-month contract also stipulates the government would not “acquire any ownership rights of any nature whatsoever” of the vehicles despite being registered as “owner” while Bidvest Bank Limited would be listed as “title holder” on the Ministry of Public Works and Transport’s system.

The tenets of the contract are in contrast to the government’s claim Bidvest would only provide computerised fleet management services for the next four years.

Bidvest had originally been awarded a six month contract to run the government fleet from 1 October 2015 to 31 March 2016 after the expiry of the government’s fleet management contract with Avis.

The government had promised to exclude Bidvest from any new tender to find a new fleet management firm to replace Avis. However, the government cancelled the tender process, preferring instead to enter a new long-term deal with Bidvest, which had not bid for the tender as earlier agreed in light of its enjoyment of the six month contract.

Announcing the new deal with Bidvest in June this year, Finance Minister Dr ’Mamphono Khaketla said the government would buy 600 vehicles and hire another 600 from ordinary Basotho, with Bidvest only managing the fleet.  She also said the government decided to cancel the tender because it did not have enough money to continue with the route of hiring vehicles.

However, a joint venture company shortlisted for the tender has since gone to court seeking an order to stop the government from engaging Bidvest.

Last month, Communications Minister Khotso Letsatsi said implementation of the Bidvest deal was already in full swing with the government receiving the “first lot” of 300 vehicles, out of the 600 vehicles, it is supposed to purchase from outside the country.

Dr Khaketla also recently told a local newspaper the first lot of vehicles “bought” by the government were currently waiting for clearance from the Lesotho Revenue Authority (LRA) and Interpol.

She said from there, there would be allocated to the different ministries by the Ministry of Public Works and Transport. The minister insisted Bidvest had only been given the responsibility of overseeing the tracking system.

Dr Khaketla also indicated since the cars were expensive, the government “could not just walk into a dealership and buy in cash”. She said the acquisition of the first batch of 300 vehicles was financed by a bank, while for the other 300 the government would “dig into the 2016/2017 budget of M15.6 million that was set aside for fleet services”.

But according to a copy of the contract in the Lesotho Times’ possession, the government agreed to rent the vehicles from Bidvest.

Titled “Fleet Management System Agreement” the contract is signed by Ministry of Finance Principal Secretary Tom Mpeta and the ministry’s Chief Legal Officer Motale Tšeole on behalf of the government.

On Bidvest’s part, the contract is signed by Head of Fleet and Asset Finance Mkhuseli Setuse and Finance Head – Fleet and Asset Finance Mark Mortimer.

Dated 10 August 2016, part of the contract states: “The Service Provider rents to the GoL (government of Lesotho), which hires from the Service Provider (Bidvest Bank Limited), the vehicles and accessories specified in the schedules upon the terms and conditions set out in this Agreement.”

The contract indicates all risk in the vehicles would be passed to the government once they are availed by Bidvest.

“Risk in the vehicle shall remain with the GoL until the vehicle is returned to the Service Provider.”

It stipulates the government appointed Bidvest “to source the vehicles and provide the Fleet Management System as well as manage maintenance related costs of such vehicles”.

“The Service Provider has the resources and capacity required to source the vehicles for the GoL on this basis and, in terms of the Bidvest acceptance letter, the Service Provider has agreed to provide same,” reads the contract.

Bidvest, the agreement states, is “permitted, but not obliged” to relinquish its rights in the deal.

“The Service Provider registering an entity within the Kingdom of Lesotho which entity the Service Provider shall be entitled, but not obliged, to cede and assign all of its rights and obligations in terms hereof to.”

The duration of the contract is for 48 months barring any unforeseen disagreements.

“The parties shall by mutual written consent be entitled to renew this Agreement for such periods as may be agreed upon by them. Any such renewal of this Agreement shall be made on the same terms and conditions (or such other terms and conditions as may be agreed upon in writing between the parties) save that the Service Provider shall be permitted to adjust the amounts payable to it in terms hereof.”

The contract stipulates when the government requires a vehicle, it would complete and sign a Vehicle Requisition Form and submit it to Bidvest. The Vehicle Requisition Form would contain information on the type of vehicle required, any accessories which are required, the estimated monthly kilometres/hours and the delivery location for the vehicle.

“The Vehicle Requisition Form shall constitute an irrevocable instruction by the GoL to the Service Provider for the Service Provider to place an order for the vehicle/s concerned in accordance with the Vehicle Requisition Form,” states the contract.

“The Service Provider shall within three business days of receipt of the aforementioned Vehicle Requisition Form sign same and return a copy of same to the GoL.”

Bidvest also commits to use “all reasonable endeavours” to ensure delivery of the requested vehicles within six months after the issuance of the Vehicle Requisition Forms.

“Once ready for delivery, the Service Provider shall make the vehicles available at the delivery location specified in the Vehicle Requisition Form. The GoL shall take delivery of the vehicles from the Service Provider at the delivery location and shall hold the vehicles on behalf of the Service Provider for the duration of the contract period.”

Upon delivery of the vehicles, the parties are also obligated to complete and sign a delivery note.

“. . . the Service Provider shall complete and sign a schedule in respect of every vehicle requisitioned by and delivered to the GoL in terms of the Vehicle Requisition Form and shall deliver by hand or send by prepaid registered post a copy of the schedule to the GoL for signature.

“The GoL undertakes to return each schedule to the Service Provider, duly signed on behalf of the GoL, within seven days of the contract start date of the relevant schedule. If any schedule is not returned to the Service Provider within the aforesaid period, the GoL agrees that such schedule shall automatically be deemed to have been signed by the GoL and shall be binding on the GoL and that the provisions of this Agreement shall apply thereto.”

On the rental payments, the contract says they should be made within 30 days of receipt by the government of Bidvest’s invoice.

“The GoL shall, unless directed otherwise in writing by the Service Provider, pay all amounts which are payable by the GoL to the Service Provider under this Agreement by way of electronic funds transfer directly into the following bank account held the name of the Service Provider . . .

“Any amounts not paid by the GoL on the due date therefore shall accrue interest at the prime rate from the due date for such payment until the date on which payment is received.”

The government is also not permitted to defer or withhold any amount payable under the agreement.

“If the Service Provider cancels this Agreement and the GoL disputes such cancellation, the GoL shall continue to pay all payables into the Service Provider’s bank account whilst the GoL remains in possession of the vehicles,” states the contract.

“In the event that the GoL disputes all or any part of the Service Provider’s invoice, it shall notify the Service Provider of such fact in writing prior to the due date for such payment.

“In the event that the GoL notifies the Service Provider of a dispute as aforesaid, the GoL will be entitled to withhold payment of the disputed amount only. The parties will negotiate in good faith to resolve the dispute.”

The cost of repairs, service and maintenance would be borne by the government with Bidvest empowered to retake possession of the vehicles if the former defaults on the terms and conditions.

If the contract is terminated for “any reason whatsoever”, the government would be obligated to return the vehicles on a business day immediately following such termination, “together with all its accessories and all tools, tyres, licenses, registration papers and other documents relating to the vehicle; and all manuals and documents issued by the Service Provider”.

Upon the lapsing of the agreement, the government had an option to acquire the vehicles by stating their intention within 30 days prior to its expiry “failing which this option shall permanently lapse and cease to be of any further force or effect”.

“In the event that the GoL exercises its option, the Service Provider shall be obliged to sell the vehicle to the GoL. . .”

The purchase consideration for each vehicle would be the greater of the market value, capital balance or the net book value. It would also include the disposal costs of the vehicle, end of contract costs and all amounts due and payable in terms of the agreement.

Contacted for comment yesterday, Mr Mpeta asked this reporter where he got a copy of the contract. He, however, insisted the government owned the vehicles.

“The government agreed with Bidvest on three things basically; that the bank buys the vehicles for the government of Lesotho; that the company manages the fleet; and be responsible for their maintenance,” said Mr Mpeta.

“If you want to ascertain whether these vehicles belong to the government of Lesotho or not, I advise you to check their Blue Cards which will surely indicate they are owned by the government of Lesotho. “Other than that, you will be aware the new vehicles will bear registered number plates starting with X, which indicates they belong to the government. Otherwise they would be registered Y if they were not owned by the government.”

For his part, Mr Letsatsi said he was not in a position to comment “on issues that are already before the courts”.

“I would advise you to make a deep investigation to establish the truth about all issues surrounding the government fleet tender,” he said.

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