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Medical waste companies, KZN health department in court over waste contract


A stinking legal battle between two waste companies and the KwaZulu-Natal department of health is being played out in the Pietermaritzburg High Court.

At the heart of the fight is a claim by one of the companies that taxpayers will have to foot the bill for an “unfair” tender awarded to its competitor.

Dr Phetole Sekete, the owner of Buhle Waste which was recently awarded a multimillion-rand medical waste contract by the KZN health department. It is being challenged in court by Compass Medical Waste Services. Image: Thuli Dlamini

Compass Medical Waste Services, a Durban-based company with a national footprint, last week lodged a review, asking the department to set aside the appointment of Buhle Waste as the KZN department of health's new providers. In a judgement delivered in the Pietermaritzburg High Court on May 7 2019, judge Jerome Mnguni dismissed Compass's interdict application with costs.

Compass, which has been the sole medical service provider to the province for the past 20 years, claimed in court papers that the new contractor, Johannesburg-based Buhle Waste, hired to handle the medical waste contract at almost 600 state hospitals, clinics, mortuaries and community healthcare centres, would cost the state more than triple its costs.

The department hailed the appointment of a 100% black-owned waste management consortium as “a shining example of radical economic transformation”.

It went on to say the consortium, led by Buhle Waste, with Makhathini Medical Waste and service providers Ecocycle and Microvulintuthuko, replaced “a single, white-owned monopolistic waste-management company”.

In its previous interdict application, Compass argued for the extension of its month-to month contract and for the status quo to remain until the matter was resolved. It also argued that Buhle's appointment was not a "competitive" process and was, therefore, irregular.

But in his judgment, Judge Mnguni said Compass did not have an entitlement in contract or administrative law to insist the department allow it to render services. However, he said Compass could easily institute an action for damages against the department.

Lawyers representing Compass served papers on the department and Buhle Waste on Monday last week, in which they claimed the department avoided competition and cost-effectiveness considerations to award the tender to Buhle. The company wants the court to declare the awarding of the tender to Buhle unlawful and to force the department to follow proper tender procedures.

In his affidavit, Compass managing director Ian du Randt argued that the department had not given any indication as to how it arrived at a budget estimate of R39.2m for six months for the tender awarded to Buhle.

“I challenge the department and Buhle to take this court into their confidence and disclose the full extent of the prices that will be paid for the service.

"The department will pay more to Buhle than what it currently pays to Compass. I say so because Compass has been able to compare the prices of Buhle with the prices paid to Compass,” he said.

Du Randt said Compass revenue was R2.9m a month for treating medical waste and R956,836 per month for container sales, compared with Buhle at R10m per month for medical waste treatment only, excluding the price of containers.

However, in response, Buhle's owner, Dr David Sekete, said the direct price calculations claimed by Compass were a “red herring” and that it had not taken into account that the quantum of goods and services in the scope of the job had increased substantially.

“The new contract is therefore twice as large in scope at an extra 30% of the price that Compass seeks to charge.” He said in the process of taking over, several “troubling findings” had been made with regard to the profits previously claimed from the department as a subcontractor and the minimum wages paid to employees.

“Through a combination of irregular service-level agreements, labour exploitation and potentially illegal contract arrangements, Compass seeks to bill the department R13.1m. Incidentally, this figure is comparable to the amount budgeted for the new contract but secured through transparent and legal mechanisms,” said Sekete.

In response, Du Randt said: “It is impossible to respond to Buhle’s vague allegations save to say that the department has not been charged more than the agreed terms of our contract, all Compass employees are paid in accordance with legislation, and that Buhle is charging far more than Compass would have charged for the same service.”

Provincial health department spokesperson Ncumisa Mafunda denied the allegations concerning costs.

“The allegations being made are not true. As a matter of principle, the department does not comment on matters that are still serving before a court of law,” she said.



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