Taking charge of social grant payments

The provision of social grant payment services in South Africa has been a contentious issue and the awarding of the tender for this service to Cash Paymaster Services (CPM) was found to be unconstitutional.

An interesting element of this case, however, is whether there is an alternative party in the country that can effectively provide the social grant payment services.

The South African Social Security Agency (SASSA) itself and the South African Post Office are the obvious contenders for taking over the payment services, but an analysis of the history of the matter reveals why this has not materialised.

The facts of the matter

On 3 February 2012, SASSA concluded a contract with CPS to provide social grant payment services for a period of five years. However, the Constitutional Court ruled on 29 September 2013 that awarding the tender to CPS for these services was unconstitutional.

However, the Court then issued a remedial order that suspended the declaration of invalidity.

The declaration was based on the premise that either a new five-year tender would be awarded through a proper procurement process, or SASSA itself would take over the payment of the social grants when the contract with CPS came to an end on 31 March 2017.

The Court stated that the best option for the state and taxpayers would be for SASSA to make the payments, particularly since the state would save the funds it had paid CPS to provide the service. SASSA was further ordered to report to the Court on its progress in respect of the new tender process and its outcome.

In November 2015, SASSA finally reported to the Court that it had decided not to award a new tender; it would take over the payment of social grants itself and would meet the deadline of 31 March 2017. The Court accepted its assurance and discharged its supervisory order. But the assurance proved to be without foundation.

On 28 February 2017, SASSA and its CEO launched an urgent application for an order authorising it to take further steps to ensure payments of social grants from 1 April 2017. The application was withdrawn the next day. On 3 March 2017, SASSA filed a follow-up report with limited information on how it was not able to take over the grant payments and what might transpire in future.

This came about as the role of CEO of SASSA was held by so many different individuals since the filing of the progress report that the implementation project that would enable it to make payments was not executed.

The second contender

The other contender to take over the payment of social grants is the South African Post Office (SAPO), a state-owned corporation established by statute. In the main, its deposition sought to prove that it has the capacity to take over the distribution of grants immediately or in the medium term.

This was a fresh, empowering perspective, which gave a real sense that the state itself could credibly manage the grants distribution process. But this impression did not last too long.

SAPO sought admission as friends of the Court, not as a party seeking substantive relief. Its factual assertion of its capability also introduced new evidence that did not fall within the ambit of the application.

As a result, the Court was not in a position to assess its worth – and it was in any event not within its remit to do so. The Court therefore admitted that CPS was the only entity capable of making payment of the social grants after 31 March 2017.

The remaining question

The outcome takes us back to the issue of whether CPS could continue making the payments outside the fair and equitable procurement framework provided by section 217 of the Constitution.

All parties to the case agreed that CPS could continue making the payments outside the framework, for the very reason that the constitutional and legal basis therefore is section 172(1)(b)(ii) of the Constitution and not section 217.

In terms of section 172, no party has any claim to profit from the potential invasion of the people’s rights, but at the same time, no-one should be expected to be out of pocket for ensuring the continued exercising of those rights. This equilibrium was the premise of the court’s previous remedial order – that it is just and equitable to continue with the status quo on that basis.

The court’s order accordingly reflects that SASSA and CPS should continue to fulfil their respective constitutional obligations regarding the payment of social grants for a period of 12 months, as an extension of the current contract and to the extent necessary.

The court’s earlier declaration of invalidity of that contract will be further extended, as well as the suspension of that declaration of invalidity. In the event that CPS wishes to alter the content of its financial obligations or entitlement, the order makes provision for it to approach National Treasury for its consideration and approval, to be confirmed after a report on the issue to the Court.

Guaranteeing future payments

The suspension of the invalidity of the contract is to ensure that SASSA and CPS will fulfil their obligation of paying social grants for a period of 12 months from 1 April 2017 and on the same terms and conditions as in the contract, which expired on 31 March 2017.

The payments must be made under a constitutional obligation until an entity other than CPS is able to provide the service, as failure to do so will infringe on grant beneficiaries’ rights of access to social assistance under S27(1)(c) of the constitution.

To ensure that these conditions are met, the Minister and SASSA must file reports and affidavits with the court every three months, starting three months after the date of the court’s order.

The said reports and affidavits must set out how they plan to ensure the payment of social grants after the 12-month period expires, what steps are being taken in that regard, what further steps they will take and when each step will be taken.