R70bn back-door spend: How government bypasses tender rules - TimesLIVE

Government departments and state-owned entities have quietly funnelled nearly R70bn in public funds to service providers — often without competitive bidding or external oversight — by extending contracts beyond their original expiry dates and repeatedly adding millions to their original value.

In just one day, the South African National Roads Agency Limited (Sanral) approved the expansion of 17 contracts held by one company — Vea Road Maintenance and Civils — in a deal worth R454m.

The Sanral approvals are among billions in public funds spent through the back door, via a parallel procurement system in which officials repeatedly expand and extend existing contracts instead of appointing new contractors through fresh bidding processes.

While the practice is permitted in exceptional circumstances, a Sunday Times investigation has found that it is often misused and can involve massively inflated payments, making it ripe for corruption and almost impossible to assess whether taxpayers are getting value for money.

Records submitted by government departments and state entities to the National Treasury, reviewed and analysed by the Sunday Times, show that between October 2023 and March this year officials repeatedly expanded or varied roughly 3,000 contracts beyond their originally approved terms.

An expansion enables officials to bypass a new tender process and pile more work and money on to an existing contractor, often on a scale that far exceeds the original contract.

In the Sanral case, the entity approved 36 expansions worth R758m for routine road maintenance on October 28 2024, 17 of which went to Vea. Over the period, officials expanded Vea’s road maintenance contracts 18 times, adding R520m to their value. On one stretch of the N14, Sanral has increased a contract originally worth R27m by a further R62m.

At least three Sanral maintenance contracts, including one held by Vea, had been extended to the end of August 2024, yet were expanded again two months after they had expired. Treasury rules do not permit contracts to be expanded after expiry.

Approached for comment, Vea MD Thoko Tshabalala-Shandu said all the company’s original contracts had been won through open tenders and that it had “not requested contract extensions or additional budgets”.

Extensions were “initiated, evaluated and managed by our clients”, the company said, while the timing of the October approvals was “determined by the relevant clients’ procurement schedules”. Routine maintenance was an essential road-safety service that could not simply be halted, it added.

The Treasury admitted to the Sunday Times this week that, though expansions were “an exception” and “not a normal tool”, there was no limit on how far a contract could be expanded. The guideline of a 15% or R15m threshold (20% or R20m for construction) was “for reporting purposes” only, it said. The Treasury did “not assess the reasonableness of these variations as the power to approve rests at institutional level”.

The Sunday Times found that departments and state entities often gave no reason for expanding or extending contracts. In other cases, the explanations were weak.

In one example, the Road Accident Fund (RAF) more than doubled a R1.9m contract for VIP protection of its board chair, adding R2.9m because “the current close protectors are familiar with the chairperson’s routine and operational needs, and are trusted”. Changing them, it said, “might create a sense of insecurity to the chairperson”.

In another example, Eskom expanded a scaffolding contract by R10.2m because the contractor “has performed as per expectation” and is “one of the few reputable scaffolding contractors in the market”.

Some entities were blunt about why they expanded contracts. Sanral justified a R93.9m expansion with two words: “Poor planning.”

However, when approached for comment on the Vea expansions, Sanral said this week that extensions to long-running projects should not be “misinterpreted as poor planning” but reflected the “nature and complexity” of multiyear projects, inflation and construction delays.

Sanral said all extensions followed its approval process and were escalated to the company’s board or the Treasury, depending on their value, and that no additional spending was incurred without the necessary approval.

The Treasury records reviewed by the Sunday Times show that officials routinely stretched contracts to several times their original values, with nearly 60 contracts increased to more than 10 times the amounts initially approved.

At Eskom, an engineering and project-management contract for the Medupi and Kusile power stations, awarded for R114m in 2006, has been expanded to about R2.5bn — more than 20 times its original value. Of that, R437m was added in June 2025 alone.

Geo Quinot, a professor of public law at Stellenbosch University and director of the African Procurement Law Unit, said that while there was nothing inherently unlawful about procuring goods and services through deviations, expansions and variations, these mechanisms were designed for exceptional circumstances, not as routine alternatives to competitive tendering.

He agreed that the rate at which government entities were resorting to contract expansions amounted to “procurement by other means” and reflected the emergence of a parallel contracting and procurement system.

“Quite often it is undoubtedly justifiable, but it is also highly problematic because there is no competition,” he said. “Expanding contracts means we would never know if government is paying fair prices.

“In many cases, [expansions] happen because of poor contract management. But we also can’t rule out corruption. Wherever contracts are being expanded repeatedly, those are massive red flags for corruption.”

The Sunday Times investigation found nearly 30 cases in which contracts were expanded, extended or topped up after they had expired, some more than a year after they had lapsed.

The Treasury is unequivocal on this: “Contracts should be expanded/extended prior to expiry. Failure to do so may result in an irregular contract being awarded and any subsequent expenditure incurred will be deemed irregular.”

Quinot was blunt about the expansion of expired contracts, saying, “It is completely unlawful and illegal.”

The records show that the most common reason for expanding contracts was not disaster, war, floods or other emergencies — it was bureaucracy. Officials repeatedly told the Treasury that tenders had not been finalised, procurement processes were still under way, evaluations were incomplete, contracts had not yet been awarded or new suppliers had not been onboarded. In about 300 cases, officials offered no tangible explanation at all, entering only the word “expansion” or “variation”.

The Treasury has never ordered an entity to reverse an expansion, keeps no record of repeat users and has not analysed how many expansions result from tenders not finalised in time — the most common reason officials give.

Nowhere is the contract-expansion economy more visible than at Eskom. The power utility accounts for about R41bn of the expansions — nearly 60% of the total — across more than 850 approvals.

The records show that the utility approved a R4.4bn uranium-contract expansion; three separate scaffolding and insulation expansions worth more than R1bn each; an R838m increase for maintenance services; a R489.7m expansion to fix Kusile’s west chimney; and a R392.3m expansion of a fuel-supply contract that had been previously increased by R2.3bn. In every case, Eskom’s justification for increasing the contract was simply “expansion”. The utility did not respond to questions sent more than a week ago.

At Transnet, the expansions are also documented in the company’s latest annual report, published last month. It includes an appendix titled “procurement by other means”, which discloses 119 contracts worth about R2.8bn awarded without open competitive tendering, as well as a further 178 contract variations and expansions totalling R3bn. Together, that amounts to roughly R5.8bn in a single year that bypassed competitive bidding.

Transnet also conceded that the auditor-general had identified “several contract variations and expansions that had not been reported to National Treasury at the time”, while others went unreported “due to administrative oversight” until months later.

The department of forestry, fisheries & the environment kept a private operator in charge of its research vessels for two years after the contract was due to end in June 2024, through a series of month-to-month extensions and expansions. By the time a new contract began on July 1 this year, the department had paid R1.65bn on a contract originally worth R953m.

The RAF, which owes billions in unpaid claims, has kept regional offices running on rolling lease extensions, including one that expired five years ago. The lease for its Cape Town office expired in October 2021. Since then, the fund has extended it four times — in December 2023, May 2024, November 2024 and January this year — adding a further R86m to a lease originally worth R43m.

The RAF has been leasing its East London office from the same landlord since 2014, and has increased the value of the lease, originally worth R35m, by a further R51m since late 2023.

Asked to explain expansions of expired contracts by its own technical advisory centre, and by the Treasury itself, the Treasury said it “would appreciate guidance”.