IMPERIAL WINS R2-BILLION GOVERNMENT MOTOR CONTRACT

10 June 1999

The Minister of Transport Mac Maharaj today signed a R2-billion, six-year contract with Imperial Holdings to provide motor transport services to four national government departments.

They are the departments of Transport, Labour, Health, and Water Affairs and Forestry. Cabinet ministers will also make use of the service.

Maharaj said the decision to outsource part of government=s needs for motor transport was driven by Transport=s policy to introduce competitive practices that would also ensure government got value for money, and was in line with his department=s policy to establish public-private sector partnerships for the provision of services.

The significance of this initiative is that the Department of Transport, in consultation with the nine provinces, has recognised that the provision of government transport is not a core business function of government and is better placed within the private sector which is better equipped to shoulder and manage the risks.

The contract will allow for the improvement in management controls and authorisation procedures which, it is envisaged, will lead to a 20% reduction in fraud (particularly in km abuse, unauthorised use, unnecessary servicing and overcharging) and a further 10% reduction in the duplication of services. Imperial will purchase existing vehicle assets of the departments for R80 million.

The contract was put out to tender in 1997. Three consortia were shortlisted in June last year and Imperial Holdings was announced the preferred bidder in October.

The evaluation process identified bidders who had the financial and technical capacity to deliver a service of this size and undertook a relative assessment of the tenderers understanding of, and approach to, the proposed contract.

The contract is for a six-year period with an annual value of R350 million. Imperial will provide a total transport service which is supported by a state- of-the-art IT system which will allow for tighter management of the vehicles. In line with government policy on empowerment, Imperial will have a 25% empowerment partner in this deal.

The outsourcing of this contract in only one part of the Department of Transport=s plan to make the provision of government transport more effective and efficient. Other measures include:

• The R750-million subsided car system to government employees has been revised to allow for a greater private sector involvement. The two-year contract, which started in March this year, is one of the largest single wheels-financing deals ever done in South Africa.
• Last year Maharaj announced a three-year tendered contract with a turnover value of R750 million per year for the fuel and managed maintenance of the government=s large vehicle fleet (including SAPS).
• An announcement is expected next week on a contract for a Vehicle Identification Technology system which will reduce fuel fraud through a tagging system that will replace fuel cards.

These contracts are in line with a worldwide trend to use not only private sector financing but also their planning, technical and management capability for the provision of services and infrastructure.

Issued by Didi Moyle: PA and Media Liaison Officer to the Minister of Transport
Queries: Mark Ashworth Department of Transport (012) 309 3164/ 083 625 6841