A letter by National Treasury to acting South African Social Security Agency (Sassa) CEO Pearl Bengu says the agency should not have disqualified the South African Post Office (Sapo) from three possible services in the social grants scheme.

Treasury was given a week last Wednesday to review all the deal points of the then-collapsing deal between the two entities to ease the migration from current service provider Cash Paymaster Services (CPS).

In the letter sent to Bengu on Tuesday from Treasury director general Dondo Mogojane, it found that Sassa jumped the gun by excluding the Post Office from three of the four services Sassa required.

Bengu had requested Mogojane's input on November 1.

"Sassa should not have approved the disqualification of SAPO on three areas but rather seek to engage and explore options on possible ways to close the capacity gap or seek the intervention of the inter-ministerial committee," the letter read.

Three other conclusions were just as damning:

- The specification (request for proposal) developed by Sassa was "biased".
- The Council for Scientific and Industrial Research due diligence report used to disqualify the Post Office was "not used for its intended purposes".
- Sassa took more than 60 days to evaluate and adjudicate one proposal.

Treasury ultimately found that both Sassa and the Post Office do not have enough time or resources to manage the entire process on their own.

Just under five months remain to meet the Constitutional Court's March 31, 2018 deadline.

They therefore suggested that:

- Sassa, the Post Office, the Reserve Bank and Treasury meet with the Banking Association of South Africa (Basa) and Payment Association of South Africa (Pasa) to seek an interim solution.
- A hybrid model be implemented where all banks, including Postbank, can play a role in distributing grants.
- That Sassa makes arrangements with a clearing and settlement bank to utilise the national payment system infrastructure.

Parliamentarians heard on Wednesday that the elusive deal now has until next Friday, November 17, to be signed.

An agreement for Sapo to build an integrated IT payment system for the new system would be fast-tracked, inter-ministerial committee (IMC) chairperson Jeff Radebe said.

However, no mention was made of the other three services required by the hybrid system: banking services, production of new cards and cash distribution of grants.

The details of the agreement will now be negotiated and drafted by an "intervention team" chaired by director-general of the Department of Planning, Monitoring and Evaluation, Nompumelelo Mpofu.

"The approach will focus on the consolidation of the respective strengths of each entity and possible additional capacity from other parties."

Essentially, if a deal can't be agreed on, like banking services for instance, Sassa will look at bringing in other partners, such as commercial banks, following its meeting with Basa.

Sapo CEO Mark Barnes told journalists afterwards that he is more hopeful, but the deal is not done and dusted. They must still decide on what aspects the Post Office will manage, and it needed to make economic sense.

He was happy though that the IMC had pronounced on the matter.

Democratic Alliance MPs Tim Brauteseth and Lindy Wilson told News24 afterwards that the major victory is that the deal is no longer in the hands of Social Development Minister Bathabile Dlamini.

Radebe wanted to assure South Africans that no Sassa cards would expire on the December 31 deadline.

Government is now the main driver of the process, he added.

They will worry about the other three services once the agreement with the Post Office is signed.

Dlamini has been roundly criticised for her handling of the Sassa saga for the past 12 months.

The Economic Freedom Fighters (EFF) on Tuesday warned Dlamini they would take her to court if she "brought her friends" in to assist with the grants scheme.