Mbabane- Government’s preference for the cheapest bidder when awarding tenders is contributing to the exploitation of workers, Labour and Social Security Minister Phila Buthelezi has warned.
Buthelezi said some companies deliberately submit bids below the actual cost of providing a service simply to secure government contracts, only to struggle later to meet their operational costs and pay employees.
The minister’s comments come amid concerns over the treatment of workers in the security and textile industries, where he said some employees are paid below the minimum wage prescribed by government, while others go for about three months without receiving their salaries.
Speaking in an interview with Kingdom Online Network earlier this month, Buthelezi said government needed to reconsider its approach to awarding tenders if it wanted to address some of the labour problems facing workers.
He said the lowest price should not automatically determine which company wins a government contract because a bid that is too low may not be sufficient to cover wages and other costs associated with providing the service.
“Some issue the tender below costs just to get the tender,” Buthelezi said, explaining that companies sometimes fail to properly factor in the expenses they will incur once they secure the contract.
He said the problem was particularly evident in the security sector, where companies have to meet costs such as workers’ uniforms and transport in addition to salaries.
Buthelezi also raised concerns about the short duration of some government contracts, saying security companies were sometimes given contracts lasting only six months.
He said this created additional financial pressure because a company had to incur costs at the beginning of the contract, including purchasing uniforms and arranging transport for workers, but might lose the contract before it had enough time to recover those costs.
When the contract is awarded to another company, the new contractor has to make similar investments, creating a cycle in which companies repeatedly face high start-up costs over relatively short contract periods.
The minister said this could eventually affect workers when companies struggle to meet their financial obligations.“We have seen this mainly in health facilities and constituencies,” he said.
Buthelezi further identified delayed payments by government as another factor that could place contractors under financial strain.
He said when government takes too long to pay a company for services already provided, the financial pressure can ultimately affect its ability to meet obligations, including paying employees.
The minister acknowledged that the Labour Ministry does not control the awarding of government tenders, making it difficult for it to directly address some of the problems arising from procurement decisions.
He said tender awards were overseen by other ministries and government structures which may not necessarily be aware of the labour conditions affecting workers employed by the successful bidders.
Buthelezi said there was therefore a need for greater consideration of labour and operational realities when government contracts were designed and awarded.
He argued that businesses should be given reasonable periods to establish themselves and recover the costs associated with delivering government services.
The minister said government should also move away from awarding contracts solely on the basis of the lowest price, arguing that the quality and sustainability of the service should also be considered.
He warned that selecting a contractor simply because it submitted the cheapest bid could prove counterproductive if the company subsequently struggled to deliver the service or meet its obligations to workers.
Buthelezi said government should instead ensure that tender prices were realistic enough to allow companies to operate sustainable while paying workers what they are legally entitled to receive.
“Government should refrain from giving tenders to the lowest bidder for quality service,” he said.
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