The Public Protector has recommended that President Jacob Zuma investigate the circumstances under which a now cancelled security contract was awarded to a company associated with Communications Minister Siphiwe Nyanda, the DA said on Wednesday.

"According to the report, the award of the security contract to Abalozi by the Gauteng Department of Public Transport, roads and works (GDTRW) in October 2008 was irregular," DA spokesperson Jack Bloom said.

"This was because it was awarded without any competitive bidding process and did not comply with the constitutional requirement of cost-effectiveness, nor the provisions of the Public Finance Management Act."

Last week Gauteng's roads department confirmed that it had cancelled the contract due to irregularities in the procurement process, in response to questions posed by the DA in the provincial legislature.

No procurement processes followed

In a written reply, the MEC Bheki Nkosi said the contract, which had cost R70-million so far, was awarded without procurement processes being followed.

"We can safely say no GNS (Abalozi's predecessor) rendered services to the department, however we discovered that there are companies who could do the same service at a much lower rate," he said.

The MEC at the time was Ignatius Jacobs, the premier Mbhazima Shilowa, who left the ANC to co-form Cope, and the accounting officer was Sibusiso Buthelezi who was given a R1-million settlement to leave the department amid corruption allegations.

Bloom said last week he was pleased the contract had been cancelled, but said an investigation was needed about the "fishy" matter.

In a follow-up on Wednesday, he said he had received a response from the Public Protector, who he had asked to investigate the matter.

No conflict of interest

"There was 'no evidence' that General Nyanda 'was directly involved in securing the contract, although by its own admission, the GDTRW did take into consideration his background in the security sector in the award of some of the contracts'. There was therefore no conflict of interest or violation of the Executive Members' Ethics Act," Bloom said, quoting from the protector's report.

However, the protector said the circumstances under which the contract was awarded "is cause for concern, particularly as there seems to be a growing trend in this direction, with attendant risks regarding the quality and cost-effectiveness of goods and services procured under these circumstances, as well as the impact on fair competition".

Bloom said at the time of Nkosi's reply that he had been told there had been no tender process because the matter was urgent, but he rejected this, saying there were numerous security companies who could have put in a tender.

The protector recommended Zuma investigate the circumstances under which that contract was awarded and was considering directing the Gauteng premier to investigate.

Investigate all contracts

Treasury should also investigate all contracts that exceed R1-million issued without tender and to sanction violations.

Tiyani Rikhotso, spokesperson for Nyanda in his capacity as communications minister, said it was public information that Nyanda was a shareholder of the company until his appointment to public office.

"It is also important to note that his involvement didn't translate to active participation in the affairs of the organisation," he said in an e-mailed response to questions.

He stressed that it was important to remember that the issue referred to happened before his appointment to Cabinet and therefore had no relevance to him.

Nyanda recently threatened to sue Congress of SA Trade Unions' general secretary Zwelinzima Vavi for saying his name when asked what he meant when government should investigate reports of alleged corruption.

That followed a story in the Mail & Guardian that Nyanda spent time in Cape Town's Mount Nelson hotel at public expense while his official residence was being prepared for him.

Investigation into corruption

Nyanda took umbrage to his name being linked to a call for an investigation into alleged corruption, citing damage to his reputation as communications minister as one of the reasons he was taking legal action.

That action was later dropped.

Gauteng transport department spokesperson Philemon Motshwaedi said the contract was cancelled on 17 December following a "wholesome review" of all projects and contracts after the new administration took office in 2009.

However, the contract ran for a further three months' "grace period" as they finalised business.

The review will eventually form part of a report by provincial and national Treasury departments on how to proceed further with such matters so the department could not immediately say what action would be taken, if any.

Recently, a contract that GNS was awarded by former Transnet CEO Siyabonga Gama was cancelled due to alleged irregularities.