NEWS & ANALYSIS

Gauteng Health pays R220m collection fee for RAF claims – Jack Bloom

DA MPL says there are lots of these long-term cosy contracts either because of inefficiency or corruption

Gauteng Health pays R220m collection fee for RAF claims

2 September 2020

The Gauteng Health Department has paid R220 million to a company to do the investigative and administrative work to claim from the Road Accident Fund (RAF) in the past three years.

This is revealed by Acting Gauteng Health MEC Jacob Mamabolo in a written reply to my questions in the Gauteng Legislature.

According to Mamabolo, Batsumi Claims Management Solutions was paid R220 million and collected R524 million from the RAF. This amounts to an exorbitant 42% collection fee as the Department only received R304 million of the RAF money.

Mamabolo says that the Gauteng Health Department has outsourced the collection of accident information “because of its legal nature and lack of internal capacity to collect information and get accident reports from the South African Police Services and Metro police.”

Batsumi has had a contract with the Department since 2006, initially through an open tender but “the second award for this contract was through participation of the Free State Department of Health tender (DOH (FS) 126/16/17) in terms of Section 16.A6.5 of Treasury Regulations.”

Mamabolo claims that there is value for money in this contract as it has enabled the department to meet its annual revenue targets.

I find it suspicious that an open tender process was not followed for Batsumi’s second contract but instead piggybacks on a tender from another province.

There are surely other companies that can do this work at a much lower rate. Premier David Makhura praises the open tender system, but there are far too many examples where it is bypassed, as in this 14-year contractual relationship that should have been reviewed long ago.

There are lots of these long-term cosy contracts either because of inefficiency or corruption.

A management shake-up is needed to ensure that all contracts are awarded through a fair competitive process.

Issued by Jack Bloom, DA Gauteng Shadow MEC for Health, 2 September 2020