…as water utility warns cancellation of CCC Engineering deal could delay water delivery
Moorosi Tsiane
THE Water and Sewerage Company (WASCO) has asked the High Court to declare its M535 million contract with CCC Engineering (Pty) Ltd unlawfully awarded, while allowing the deal to remain in force until completion.
In a striking legal contradiction, WASCO chief executive officer, Mpeke Lebohang Makara, admits in a sworn affidavit that the procurement process breached mandatory provisions of the Public Procurement Act of 2023, but argues that cancelling the contract would undermine the public interest and delay the delivery of water infrastructure to communities around Sehlabeng.
The dispute concerns the Greater Maseru Water Supply Project extension, which was intended to expand water supply infrastructure to communities initially excluded from the project.
WASCO’s application seeks judicial review of the procurement process that led to the award of the extension contract to CCC Engineering on 5 December 2024. The company wants the court to declare the process unlawful and invalid but exercise its discretion to preserve the contract.
In his affidavit, Mr Makara says WASCO is not seeking to escape its contractual obligations but to correct an unlawful procurement process without jeopardising the project.
“I verily aver that applicant (WASCO) does not seek to avoid lawful obligations, but this application is necessitated by the Applicant constitutional and statutory obligation to hold the rule of law, transparency, accountability and sound procurement governance while ensuring fairness and justice for all parties,” Mr Makara states.
CCC Engineering, the Lesotho Public Procurement Authority, the Ministry of Natural Resources and the Attorney General are cited as first to fourth respondents respectively.
Direct sourcing under scrutiny
According to Mr Makara, the Greater Maseru Water Supply Project was conceived in 2008, with funding support from the government, the Arab Bank for Economic Development in Africa and the OPEC Fund for International Development.
The project was designed to improve water supply capacity and reliability in Maseru and surrounding settlements, including Ha Makhoathi, Ha Bosofo, Mazenod, Ha Senekane, Tšenola, Ha-Tsautse, Qoaling, Ha Tšiame, Ha Lesia, Ha Mabote, Foso, Marabeng, Berea, Sehlabeng and Ha-Motloheloa.
Following a feasibility study completed in March 2016 and preparatory work, WASCO awarded the original construction contract on 21 July 2022 to the CHICO/CCCE/SM joint venture, of which CCC Engineering was a member.
The original contract was valued at US$22,759,852.45, equivalent to approximately M410 million at the illustrative exchange rate of M18 to US$1.
However, budget constraints meant the original project excluded several communities in the Sehlabeng area, despite the development of transmission pipeline infrastructure.
Mr Makara says the exclusion triggered tensions with residents, including threats to vandalise WASCO infrastructure and obstruction that affected the joint venture’s work.
In response, WASCO’s project department proposed an extension in 2024 covering Sehlabeng, Ha Rasenkisi, Ha Jimisi, Motheo II, Ha Makhoathi, Mokhethoaneng, Ha Masana, Ha Bua Sono, Tsereoane and Mazenod.
The extension was intended to include feasibility studies, detailed designs, reservoir construction, and transmission and distribution pipelines.
According to Mr Makara, the government allocated M35 million for detailed civil designs, environmental and social impact assessments, and a resettlement action plan.
WASCO’s tender adjudication committee approved the extension on 19 August 2024, before the contract was signed with CCC Engineering on 5 December that year.
Mr Makara acknowledges that CCC Engineering was selected through direct sourcing because it was already involved in the original project.
“It is apposite to inform this court that the procurement of First Respondent was conducted through a direct sourcing simply because First respondent was already the one undertaking the main project,” he states.
WASCO is now challenging the legality of the award.
Breach of procurement law
Mr Makara argues that the committee should have followed competitive procurement procedures instead of awarding the extension directly to CCC Engineering.
According to him, Section 4(1)(d) of the Public Procurement Act of 2023 promotes competition, integrity, transparency, accountability, fairness and equitable treatment in public procurement.
He further states that Section 79(2) establishes competitive procurement as the standard method, while Section 84(1)(a) and Schedule 2 prescribe the relevant methods and thresholds.
According to Mr Makara, works exceeding M50 million must be procured through open international competitive tendering, while consulting services exceeding M200,000 must be awarded through prescribed competitive selection methods.
He contends that the extension contract exceeded both thresholds by a substantial margin.
Mr Makara says the tender adjudication committee acted unlawfully by awarding the works and consulting services through direct sourcing, adding that it exceeded its authority under Section 31(1) of the Act.
He also alleges that the signing of the contract by then WASCO’s chief accounting officer contravened Section 58(1) of the Procurement Act.
The affidavit further argues that the committee failed to establish the availability of funds before proceeding with the procurement, as required by Section 49(1)(b) of the Act.
“At the material time in 2024 when procurement of the First Respondent was undertaken the Government had only allocated funds for consultancy services not for construction works,” Mr Makara states.
WASCO also disputes the argument that the extension could lawfully be treated as a continuation of the original project.
Mr Makara argues that Section 101(a)(ii) requires a procuring entity to consider the limited size of a proposed extension in relation to the original procurement.
He maintains that the extension was not sufficiently limited in scope to justify direct sourcing under the Act.
Construction costs soar
Mr Makara reveals a substantial difference between the estimated construction costs and the amount subsequently reflected in CCC Engineering’s final bill of quantities.
The extension contract comprised two components: Part A, covering the feasibility study and detailed civil designs, and Part B, covering supply and construction.
The affidavit initially records Part A at US$1,268,653.55, approximately M20.8 million, inclusive of VAT, and Part B at US$18,720,837.01, approximately M307 million.
However, after completing the design work, CCC Engineering submitted a final bill of quantities putting the cost of construction at US$29,761,075.46, equivalent to approximately M535.7 million.
That represents an increase of US$11,040,238.45, or approximately M228.7 million, above the earlier construction estimate.
WASCO wants contract preserved
Despite seeking a declaration that the procurement was unlawful, WASCO argues that the court should not cancel the contract because CCC Engineering has already completed part of its obligations.
According to Mr Makara, CCC Engineering submitted inception, interim and draft final reports for the feasibility study and detailed designs, which WASCO approved and paid for.
The affidavit puts the amount already paid at US$992,870.30, approximately M17.9 million.
He says CCC Engineering has also submitted final reports valued at US$110,317.70, approximately M2 million, which have been approved but remain unpaid.
The construction component, however, has not yet commenced.
Mr Makara says WASCO wants to preserve the value already obtained from the design work while ensuring that the project proceeds to construction.
“The reports already prepared by First Respondent remain valuable and useful to the Applicant. The Applicant will use these reports for the planned construction works following applicable procurement process,” he states.
He argues that setting aside the contract would force WASCO to undertake a fresh procurement process, resulting in further delays, duplicated expenditure and possible increases in construction costs.
Mr Makara also maintains that CCC Engineering acted in good faith and that the procurement irregularities did not arise from fraud, corruption, collusion or bad faith on the contractor’s part.
“I aver that the procurement irregularity does not arise from fraud, corruption, collusion, bad faith or any improper conduct on the part of the contractor. Rather, the invalidity stems from non-compliance with prescribed procurement procedures,” Mr Makara says.
Communities caught in the middle
WASCO argues that the dispute extends beyond the company and its contractor because communities in the Sehlabeng Sa Thuathe area have long awaited improved water supplies.
Mr Makara says the original project delivered the transmission pipeline from Ha Senekane Junction to the High North Reservoir and subsequently to the Berea Reservoir, but the infrastructure alone did not deliver the intended water services to the affected communities.
He says residents had engaged WASCO over the anticipated benefits and expressed dissatisfaction when those benefits were not realised.
“Against this background, the Applicant’s representatives were required to attend community gatherings and provide assurances that the GMWSP Extension would ultimately be implemented to address the prevailing water supply difficulties,” he states.
He warns that cancelling the contract could further delay construction and undermine public confidence in WASCO’s ability to fulfil its mandate.
“The prejudice to the public and the affected communities would be substantial and immediate.”
Mr Makara further argues that the existing contract’s prices are not excessive or inflated, claiming they were derived from the original project’s competitively established unit rates, adjusted for inflation and changing market conditions.
He maintains that a fresh tender could expose WASCO to higher costs arising from inflation, market volatility and contractor mobilisation.
Ultimately, WASCO wants the High Court to declare the procurement process unlawful while allowing the contract to remain enforceable until completion.