Bungling of contracts haunts Sita

The State Information Technology Agency’s (Sita) persistent bungling of contracts has pitted it against a company that is owed R3.7 million since 2003.

Harebueng Holdings has been trying, unsuccessfully, to negotiate an out-of-court settlement with various Sita chief executive officers and board members over the years, since the agency breached the terms of the desktop auditor pilot project contract.

The project ensured that government departments had an up-to-date electronic inventory.

Harebueng is now taking the matter to court.

Sita’s job is to offer information technology services to government departments.

It has been inundated with court cases, for allegedly breaching contracts or even taking the initiative to review contracts its own officials awarded, but who flouted Sita’s procurement policies.

According to papers before the Pretoria High Court, Harebueng, previously called Osiricom, submitted a written proposal about the inventory of government information system (the desktop auditor) to Sita on April 13 2003.

As per their agreement, Harebueng provided Sita with an enterprise licence on April 30 2003, for which the agency had to pay R4.5 million and a 15% maintenance fee based on the licence value for updates and upgrades of the software.

The company then ceded and assigned all its rights and obligations under the licence to Sita.

Sita breached the agreement in 2005, when it decided to extend the use of the licence to all government departments instead of the three – social development, public enterprises and transport – that both parties had agreed to as part of the pilot project.

Harebueng managing director Litisha Richardson said the other departments that were not part of the pilot project were using the software illegally and this constituted a breach of the contract with Sita.

“Sita kept on making offers to pay us all these years, which they did not keep. By such offers, they stopped us from suing the departments for illegally using the software. The board and management have also been changing while the matter was on and we have been dealing with new people all the time,” Richardson said.

“Certain individuals have tried speaking to me and promised me a lot of things. I was treated very badly because I refused to cut deals with certain individuals. I have evidence to prove this,” she said.

Robertson said Sita board chairman Zukile Nomvete was the only individual who had been at the agency long enough to know the details of the dispute since she took Sita to court in 2009.

Sita received a R17 million grant from the Development Bank of Southern Africa for the project. It is unclear what happened to the money.

Sita spokesperson Anthea Summers did not respond to questions emailed to her about two weeks ago, despite promising to do so.

A number of documents and emails City Press has seen indicate that Sita officials accepted the debt and had been willing to settle since 2014. For some reason, they ended up not doing so.

One example is a letter former chief executive officer Freeman Nomvalo, wrote to Robertson on March 20 2014, to present a counter-offer.

“For the purposes of pure settlement, and in order to avoid costly litigation and the costs involved thereof, Sita hereby presents the following counter-offer for your consideration: Payment of the capital amount of R3 694 513.50 in full and final settlement and each party to pay its own legal costs,” Nomvalo wrote.

Another email that former Sita board chairperson, Mavuso Msimang wrote to Joe Mazibuko, one of his executives, indicates that officials lied when they said that Harebueng had been paid. Msimang was responding to Richardson’s complaint about not being paid.

“I should be grateful if you would, as a matter of urgency, attend to this matter and advise me of the outcome by close of business today,” Msimang wrote.

“I would like you to know that I personally spoke to Mckay (position not mentioned) last week and he was categorical in his statement that the payment had been made.”

Other bungles

Sita has gone to the high court to review and terminate a contract awarded to forensic investigators iFirm on May 21 2014.

The company was appointed to investigate the theft of computers, but after doing that job, Nomvalo extended their scope to probe alleged irregularities pertaining to a R1 billion cloud computing tender awarded to US multinational IBM South Africa in 2013.

Cloud computing is advanced IT technology that was intended to improve government’s data centre and infrastructure.

IBM’s bid for the cloud computing tender was disqualified in November 2012, but officials embedded the tender in the three-year integrated supply agreement (ISA) that IBM signed with Sita in 2013.

This means that IBM did not have to bid for the tender as received it through the back door.

City Press has documents indicating that Sita officials tried to reverse former president Jacob Zuma’s 2014 Special Investigating Unit proclamation that authorised an investigation of the ISA.

Last year, Sita lost its bid to get the Constitutional Court to review and reverse a multimillion-rand contract it awarded businessman Robert Gumede’s Gijima Holdings on September 27 2006.

Sita terminated the information technology services contract for the SA Police Service in 2012 and, as an out-of-court settlement for Gijima to abandon a R20 million damages claim, Sita offered Gijima another contract to service the defence department.

However, Sita awarded the defence contract without following tender procedures and assured Gijima that everything was above board.

Although the Constitutional Court found that the defence department’s agreement was constitutionally invalid, it found that Gijima ought not to be divested of its accrued rights under the agreement.

The court ordered that Gijima be paid R9 million owed and its legal costs.


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