Eastern Cape, Sita set to do battle over broadband contract

The Eastern Cape provincial government and the State Information Technology Agency (Sita) are at each other’s throats over a multimillion-rand controversial broadband project.

Director-general of the Eastern Cape, Marion Mbina-Mthembu, has accused state agency Sita of giving the provincial government bad advice which would have seen the province paying three times more than what a similar project would have cost the Western Cape government.

This has resulted in a heated exchange between the two entities with Sita chief executive, Dr Setumo Mohapi, threatening legal action and calling for an investigation last week.

The broadband rollout project was meant to connect the Eastern Cape’s various government departments including those in rural areas with WiFi, through the provision of wide-area networks (WAN).

Mbina-Mthembu said they waited for almost two years for Sita to assist them in implementing their broadband project by “piggybacking” on a similar project the agency was doing with the Western Cape government, to no avail.

When Sita finally responded to them, the agency advised them to enter into a contract that would have seen the Eastern Cape government pay way more than what the Western Cape government was paying, which Mbina-Mthembu was not prepared to do.

“We still do not understand why Sita advised us to get into a contractual obligation that is more than three-fold than that which was afforded to the Western Cape government by the same state-owned enterprise that is supposed to safeguard the public purse.

“The Sita’s proposal worked against the principle of ‘affordability’ enshrined into the South African broadband policy vision statement,” Mbina-Mthembu told City Press.

Mohapi said they had reservations with the Eastern Cape approach to the project because it had a “pre-determined” service provider and was not following an open bidding process.

“We are calling a time-out on being abused and wronged for being principled. We are also saying to the world, the time to hide behind tales of delayed service delivery and high prices is behind us,” he said.

He said Sita had written to relevant agencies on the request for an investigation and that they would cooperate fully with all organs of state, without fear, favour or hesitation.

Mohapi said the Eastern Cape’s broadband services request through Mbina-Mthembu on December 19 2016, was for an “exclusive appointment” of a specific service provider and they refused to be part of that.

“The problem is that the request dictated at the onset who the service provider must be and as such it renders the entire process unlawful, as Sita would have to procure the services of the pre-determined service provider against the spirit of the Sita Act, Section 217 of the Constitution and consequently the Public Finance Management Act (PFMA).

Mohapi said such a request if acted upon would be in violation of the Sita Act, Treasury rules and regulations, the PFMA and the South African Constitution.

“Simply put, it is unlawful. The request from the Eastern Cape provincial government to Sita , to drive a pre-determined outcome at the start of the procurement process, is unlawful in terms of the PFMA,” said Mohapi.

Mbina-Mthembu also dismissed media reports that R228-million had been paid towards the project despite allegations of poor workmanship.

“The Eastern Cape provincial government did raise a purchase order of R171-million preparing to make tranche payments in line with the available budget of R218-million as is the practice done in the Western Cape broadband project, as well as throughout government.

“Upon further consideration, this purchase order was amended and split against the different deliverables. So far only R15.9million from R57-million has been paid,” she said.

The director-general also lashed out at National Treasury for refusing the Eastern Cape to piggyback on the Western Cape project, instead advising them to put it on an open bidding process. Mbina-Mthembu told National Treasury in a strongly worded letter last year that they did not need their approval and the project went ahead without their approval.

City Press has seen correspondence between Mbina-Mthembu on behalf of the Eastern Cape provincial government, with officials from Sita , the National Treasury and the Western Cape provincial government regarding the broadband project.

The documents reveal that National Treasury opposed the piggybacking by the Eastern Cape government, while the Western Cape government did not have a problem as long as due processes had been followed. Sita on the other hand aligned themselves with the position by National Treasury.

In a letter dated November 23 2017 by the National Treasury’s chief acting procurement officer, Willie Mathebula, directed to Mbina-Mthembu, the request for piggybacking was rejected on the basis that, the scale and scope of the projected warranted a competitive open bidding process in line with Sita procurement and treasury regulations.

Mbina-Mthembu in a letter dated December 11 2017, hit back saying she never requested approval from the National Treasury as the province does not require such.

“I am puzzled by the inconsistency in the way National Treasury interprets the piggyback process or cooperative procurement...and thus we all need to seek legal opinion to clarify treasury regulations once and for all,” Mbina-Mthembu said.

This week in a brief written reply, National Treasury confirmed that they had refused the piggybacking by the Eastern Cape provincial government. The department, however, did not want to be drawn into the details of the matter referring questions back to the Eastern Cape provincial government.

“Treasury Regulation 16A.6.6 assumes that the terms and conditions of the contract to which piggybacking is requested should be the same or similar and the accounting officer of the contract concerned must have authorised such piggybacking in writing,” said National Treasury, adding that they would engage with Sita and the Eastern Cape government for an update on the project.

Explaining the process of piggybacking, Mbina-Mthembu said: “In government, you can go on open tender, piggyback or do a deviation. We opted to piggyback after two years frustration by Sita.

“When you piggyback, it should be on a contract that was entered into by an organ of state through a normal tender process to satisfy Section 217 of Constitution provisions, the organ of state must agree to your piggybacking as well as the contracted party, the terms must be similar and you can only contract for the remaining term of the contract.”

Responding to the piggybacking that was requested by the provincial government, Mohapi said: “Sita is not in the business of ‘piggybacking procurement’ or manipulating legitimate regulations and processes to take advantage of government’s procurement system.”

He said Sita's procurement was done in line with all national prescripts, that are binding to all officials and regulated through government’s laws, rules and regulations.

“And we will not violate the Constitution, the Sita Act, Treasury regulations and or the PFMA, to engage in behaviour that is anti-competitive, manipulative or shadowy,” he said.

He said Sita would not be co-opted, shamed, or bullied into deliberately engaging in any form of illegal or manipulated procurement activity.

“An investigation will unveil the truth. It will clarify and make clear distinctions between the urgency for vital services versus the urgency for critical deviations. The investigation will be precedent setting for government on the use of broadband services in the country, and will again underline the standards around public procurement. Sita reserves its legal rights to approach the High Court for an interdict and setting aside of the procurement decision that was not done in accordance with the legislative prescripts,” Mohapi said.


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