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Gauteng defies Treasury directive to reinstate former IT security contractor as SIU begins its own probe into rushed R30m contract
The controversial Gauteng information technology (IT) tender that was advertised and awarded in a record time of 24 hours has resulted in a standoff between National Treasury and the provincial government.
While Treasury has instructed that the R30 million contract with In2IT Technologies be cancelled, and that the outgoing contractor be given a three-month extension, the Gauteng government has put its foot down, saying it will seek its own legal opinion.
Public Protector Busisiwe Mkhwebane is also waiting on the sidelines to check whether her office will get involved in areas not included in the Special Investigating Unit’s (SIU’s) scope of investigation.
Following a City Press exposé last week, Gauteng Premier David Makhura requested the SIU to probe the express tender. Investigators have been seconded to his office.
Read: Outrage over Gauteng’s 24-hour, R30m express tender
The tender to manage the Security Operations Centre (SOC), which includes cybersecurity, was advertised in an email at 5.17pm on March 25.
The submission deadline was stipulated as 10am the following morning.
While other technology firms protested that this was irregular and was meant to benefit a pre-identified winner, In2IT submitted its detailed tender on time and was immediately awarded the contract.
Read: EFF, DA out for Makhura and Nkomo-Ralehoko’s heads over R30m tender
The contract of the previous holder, GSOC Security Services, expired in 2016.
It has been renewed on a month-to-month basis since then. This extension has been flagged by the Auditor-General as irregular expenditure.
The standoff
Treasury supply chain head Basani Duiker wrote to Gauteng’s e-government department last weekend, telling officials there to cancel the contract because “the time given to service providers to respond to a request for quotes that was issued after business hours is too little [and] may render the procurement process unfair”.
On Tuesday, the acting head of Gauteng’s e-government department, Rashid Seedat, responded by saying the department needed to consult its own lawyers before it could comply with the directive.
Seedat told Duiker that senior counsel had indicated that the opinion would be available by Monday.
After that he would provide “a comprehensive response to the various matters raised in your letter”.
Seedat said he had to take into account the fact that Makhura had also commissioned the SIU forensic investigation.
The legal opinion would enable him “to determine the appropriate course of action into the future”.
He was, however, “happy to immediately provide the National Treasury with the information and the reasons for deviating from the tender, the specification of the bid, the relevant Treasury approval for the deviation from the tender process, and the State Information Technology Agency’s (Sita’s) exemption allowing the department to procure the services”.
Gauteng government head of communications Thabo Masebe did not respond to specific questions about the history of the contract, but said the scope of the SIU investigation would cover even the historical matters – including the alleged irregular expenditure linked to GSOC’s services since 2016.
“The SIU scope of investigations will cover all other matters related to the IT security services,” Masebe said, adding that the SIU was “empowered to take necessary steps to recover any public funds that may have been misappropriated”.
He said there was a memorandum of understanding between the SIU and the province, where the unit could start work even before President Cyril Ramaphosa signed the proclamation enabling them to do so.
A government source with knowledge of the issues said the Treasury’s instruction that GSOC be retained until a new tender process was followed would not fly.
The source, who is sympathetic to Gauteng’s MEC for finance and e-government, Nomantu Nkomo-Ralehoko, said the MEC had told her senior staff that she did not support the instruction to bring GSOC back for three months.
A Gauteng government insider said the issue had caused rifts within the department.
“You have people who want continuation regarding what has been happening with the month-to-month contract. And you also have people who want to replace that with a flawed process,” said the person.
A high-level meeting this week between senior department officials could not resolve the matter.
Mkhwebane steps in
Meanwhile, the Public Protector sent “an enquiry letter” this week to Makhura’s office on the matter.
Mkhwebane’s spokesperson, Oupa Segalwe, said she was “awaiting information on the scope of the investigation. She will reassess once the scope has been received to avoid a duplication of efforts and a waste of resources.”
Belated letter to Ndabeni-Abrahams
It has emerged that Gauteng e-government went ahead with the tender before receiving the required permission from Communications and Digital Technologies Minister Stella Ndabeni-Abrahams to deviate from procuring through the Sita.
That permission came five days after the emailed requests went out and after the contract had been awarded.
Even then, the permission was conditional on regular procurement procedures being followed.
In a letter dated March 30, Ndabeni-Abrahams indicates that she received a letter the previous day (March 29) requesting permission to be exempt from the Sita route.
In granting permission, Ndabeni-Abrahams writes: “Having taken into account the undue delays that occurred in the procurement of the SOC services, and the resultant unabated irregular expenditure that you are faced with, I hereby grant the exemption sought to procure the SOC services from an institution other than the Sita.”
She adds that, among other things, the exemption is valid on condition that “all public service procurement prescripts must be adhered to”.
A long history of controversy
The Auditor-General’s report on the e-government department shows that the GSOC contract posted R28 million in irregular expenditure in 2016/17, and another R30 million in 2017/18 because of “noncompliance with procurement processes”.
This related mainly to the month-to-month extensions, which the Auditor-General frowned upon.
This week, former Gauteng finance MEC Barbara Creecy could not explain why the irregular expenditure was allowed to balloon under her watch between 2014 and last year. She said that, as MEC, she was not involved in the awarding of tenders.
Creecy’s predecessor, Mandla Nkomfe, who held office between 2008 and 2014, echoed the sentiments, adding that he was unaware of the Hawks’ investigation of the contract in 2012.
The Hawks, according to reports then, conducted their probe in response to allegations that “the contract was given to Lefatshe Technologies without going through a tender process”.
Lefatshe Technologies ceded the contract to GSOC, according to former department official Lemmy Chappie, who worked closely on the SOC until he left the department in 2012.
Chappie also could not recall the procurement fraud investigation by the Hawks, saying it might have happened after his time.
The Hawks had not responded to requests for comment at the time of going to press.
According to records obtained from the Companies and Intellectual Property Commission, Lefatshe Technologies, which is under voluntary liquidation, was registered in August 2005.
But a state memorandum showed that in May 2005 the firm was awarded the cybersecurity contract for three years, until May 2008, for an undisclosed amount.
The 2005 contract was awarded under the former Gauteng Shared Services Centre, which reported to the then MEC for finance and economic affairs, Paul Mashatile, who is now treasurer-general of the ANC. Questions sent to Mashatile were not responded to.
Both Lefatshe Technologies and GSOC, which was registered in May 2011, have a common director: Cheslyn Mostert. He has been dubbed the “mysterious” kingmaker in President Cyril Ramaphosa’s 2017 #CR17 campaign to become the president of the ANC.
After Mostert resigned from GSOC, the company was left in the hands of director Halga Ninow-Cohen.
Ninow-Cohen, who had complained to Ndabeni-Abrahams about the awarding of the contract to In2IT Technologies, declined to comment.
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Abram MashegoSenior journalist | City Press | ||||||||||||||||||||||||||
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