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Oxygen firm suffocating competitors – claim


A major row has erupted over a Lesotho parastatal’s dealings with a South African company over an estimated 20 million maloti tender for two oxygen generating plants that are set to play a key role in the country’s health system.

Cape Town-based Foxolution Systems Engineering was engaged to advise the Lesotho Millennium Development Agency (LMDA) on the formulation of a tender for the oxygen plant contract.

However, the company has now been accused of looking after itself by recommending specifications for equipment that it provides.

A local bidder for the contract, Amin Mphetha, has referred the tender to Lesotho’s graft-busting agency, the Directorate for Corruption and Economic Offences, which has asked the LMDA to suspend it pending investigations.

Oxygen is widely used by hospitals, clinics and emergency medical services.

The plants will be erected in two southern and northern reginal hospitals –Mafeteng Hospital and Motebang Hospital in Leribe district – to supply 156 health centres and 17 hospitals in the country.

Also standing to benefit is the Botšabelo complex, which consists of the Sankatana and Lepereng hospitals, the National Referral Laboratory, the Lesotho Blood Transfusion Services, and the National Health Training Centre.

Lesotho currently imports all its oxygen needs in the form of small-quantity cylinders. The limited supply makes it hard for health facilities to offer reliable oxygen therapy.

MNN could not ascertain the projected cost of the oxygen plants. The health ministry’s principal secretary, Thebe Mokoatle, referred questions to finance ministry, which refused to comment.

MNN quizzed the LMDA’s chief executive, Keketso Chalatse, about allegations that Foxolution is conflicted over the tender. Chalatse said after consulting all possible suppliers in the Southern African region, “Foxolution was found to be the supplier that met the LMDA’s requirements”.

Chalatse confirmed that Foxolution was engaged to help draw up the technical specifications for the oxygen plant tender document. However, he denied any conflict, saying the company was barred from competing on its own for the tender and could not partner with the successful bidder, although it could supply any successful tenderer.

Chalatse said that “Foxolution will not be bidding for this particular tender as they assisted LMDA in developing the specifications. This was confirmed before the specifications were developed and as such, there is not going to be any favouritism.”

However, a Lesotho-based bidder for the contract, Mphethe, wants the tender halted and redrawn as a “call for proposals”.

Mphethe is the managing director of Amin Video Vision and Electronics, part of a joint venture with an undisclosed oxygen generation plant supplier.

He argues that the South African company is implicated in a conflict of interest by including its own products among the tender specifications.

Chalatse confirmed receiving Mphethe’s complaints, saying that “an aspiring contractor”  had alleged irregularities and asked the LMDA to stop the tender. “However, we believe there are good reasons not to stop it,” he said.

Craig Motherwell, Foxolution’s managing director, said that the development agency had been in contact with his company to ensure that the specifications for the oxygen generation plant equipment were accurate.

Motherwell also said his company is barred from competing for the tender, although it is allowed to supply any successful tenderer.

“We may have no role to play at all; this is subject to who is awarded the tender and who they appoint as the supplier of the equipment.  We will have no direct dealings with the LDMA.”

Mphethe lodged a complaint with Chalatse on January 27 following site visits to two hospitals – Mafeteng and Leribe – where the oxygen generation plants are to be erected.

MNN has also learned he has lodged a complaint with the DCEO. It is understood that in January this year the anti-corruption body asked the development agency to supply all documentation related to the tender.

Contacted for comment, the DCEO’s chief information officer, ‘Matlhokomelo Senoko, said the body has adopted a new policy of not commenting on its investigations.

However, Chalatse confirmed that the “LMDA has received some communication from the DCEO pertaining to this issue”.

He said “the DCEO has not necessarily stopped the tendering process, as it is aware of the powers that it has. It has only advised that it be stopped, and the LMDA has yet to consider that.”

“We are talking with the DCEO on this tender to ensure the bid adheres to our regulations. So we are indeed working with the DCEO,” said Chalatse.

Mphethe’s key complaint is that Foxolution has designed the specifications in a manner that “disenfranchises other bidders from freely competing”, as they are strongly aligned with its products, listed standards and norms, literature and services.

This was done in such an obvious way that in some cases the specifications included the precise numbers of Foxolutions parts.

Technical specifications cited by Mphethe as “a direct replication of those of Foxolution’s specifications” include:

  • the bid specifies three different cylinder sizes, which match the only cylinders that Foxolution  supplies in term of water capacity.
  • the three tables in the bid specifications for the three cylinder sizes are a direct copy of those of the company’s cylinders.
  • the bid table for each cylinder contains nine rows where the line items in each row follow the exact sequence, wording and specifications of Foxolution’s cylinder tables.
  • The bid document specifies that the plant must come with a seven-inch touch-screen display, which is among the products offered by Foxolution. “Why is the   bid so specific about the size of the screen?” Mpethe asked.

He wants the tender withdrawn and changed into a call for proposals, so that individual companies can demonstrate their competencies instead of being forced to meet specifications determined by a competitor.

Motherwell said he is “unaware of the claims”. However, he argued that an agreement between Foxolution and the development agency specifies that the tender document must be drawn up in a manner that does not exclude other bidders.

On whether Foxolution crafted the tender document, he argued that his company “developed the technical specification for the tender in line with international standards, globally harmonised norms and best operating practices within the industry”.

Foxolution’s products happened to meet these criteria.

 “In relation to the specifications created, compliance with international standards can’t be seen as bordering on corruption,” he added. “We are extremely thorough. If others can’t meet the standards, then that’s that, but it’s not corruption.

“Safety is our prime motivator. The allegation implies that these people are quite prepared to offer the LMDA non-compliant, sub-standard products. 

“You can’t do that with oxygen, as it an extremely hazardous gas.”

In the light of Mphethe’s complaint Chalatse said the LMDA has issued an addendum to the tender document removing any specific reference to Foxolution part numbers.

This had since been shared with all bidders.

“We diluted use of specifics to Foxolution for a wider spectrum of bidders to tender. No bidder will be allowed to partner with Foxolution, as they crafted the technical specifications,” said Chalatse.


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