The search for a new service provider to assist the South African Social Security Agency (Sassa) with cash payments of social grants will only be in place by July, MPs have heard.

Sassa admitted in court papers filed on Monday that there was no feasible solution to assist around 2.8-million beneficiaries - roughly 26% of the scheme, who receive their grants in cash - before the April 1 deadline.

It asked the Constitutional Court last week to extend the contract of current invalid service provider Cash Paymaster Services (CPS) for a further six months so it could continue making the cash payments.

On Wednesday, Sassa grants executive manager Dianne Dunkerley said the bidding period to find a replacement for CPS to deliver cash had finally closed on Monday.

"There are now tight time frames set, and the awarding and contracting will be completed by May 4," she told the Portfolio Committee on Social Development.

"A new service provider would be afforded an opportunity to set up and be ready to pay cash grants from July 1."

There had been a request from one of the bidders to extend the deadline to March 30, but this was declined, Dunkerley said.

CPS was one of the bidders for the new tender, she confirmed, after the Constitutional Court upheld its right to apply for future Sassa tenders.

The delayed date puts more pressure on the court to allow CPS to continue its relationship on current terms with the social grants scheme.

Sassa maintained the other 70% of beneficiaries, who receive their grants either electronically or through various merchants, would be paid by Sassa on April 1 through its "PMG" account.

CPS raises 'risk' in plan to pay 5.7-million grants directly

Sassa was on course to transfer money directly to the 5.7-million beneficiaries who use the existing Grindrod Bank cards, Dunkerley said.

She added that a successful pilot test of 100 000 beneficiaries was conducted through the month of March.

CPS, however, whose technology is used in the transfer to those Grindrod accounts, raised "systemic risks" to their system if Sassa was to upscale their transfers to all 5.7-million on April 1.

"So we are engaging them [CPS], as well as the Reserve Bank, over how the concerns can be addressed so it doesn't impact on the payment of the beneficiaries at this stage."

The 5.7-million beneficiaries, meanwhile, would be the same ones who would be migrated to the new Sassa/SAPO card in mid-April, if they didn't opt to use their commercial accounts.

The card's roll out would be ready from April 3, and mass delivery would take place by April 30.

Sassa was reprimanded by the Constitutional Court last Thursday for telling the media that it had a contingency plan for cash payments, if the court rejected its request for an extension.

'Contingency plan'

Acting CEO Pearl Bhengu said the agency would need to find ways to assist those beneficiaries with transport to other pay points and with new PINS to access the money on their cards.

Dunkerley, though, said the broad contingency plan was always to find a new service provider, which had now been confirmed to only be ready in July, and not April 1.

"So we are still sitting with a gap of a few months and we need to say, that is the reality we are facing now.

"If the court does not grant the request for extension, our question is, how are we going to manage that."

Meanwhile, the details of the cash payment "contingency" were simultaneously being discussed in Cabinet with the inter-ministerial committee on Wednesday.

New Social Development Minister Susan Shabangu, Bhengu and project leader Zodwa Mvulane were attending that meeting to update Cabinet.

In court papers on Monday, Bhengu told the court that, logistically, the "contingency" would not be ready by April 1, and had yet to be costed.

Her comments to the media were merely an acknowledgement of the broad needs of what would happen in the event the court denied the request.

The court has not yet given a date for when it will make its ruling on CPS' extension.