State’s rushed request for quotes has tech firms seething over an irregular process that saw one firm prepared ahead of time – and duly selected
The Gauteng government has been accused of using the cover of the Covid-19 coronavirus to rush through a big information technology (IT) contract without proper tender processes.
The R30 million contract to provide Gauteng’s e-government department with IT services, including cybersecurity, was concluded within 24 hours.
This, after Nomantu Nkomo-Ralehoko, the MEC for finance and e-government, requested permission from Communications and Digital Technologies Minister Stella Ndabeni-Abrahams for a deviation from following normal procurement processes.
The contract was won by In2IT Technologies, the sponsor of National First Division side Moroka Swallows.
The matter has now landed on the desk of President Cyril Ramaphosa after a whistle-blower wrote a letter of complaint to the Union Buildings.
Enraged technology companies which lost out to In2IT Technologies have also lodged complaints with Ndabeni-Abrahams, saying the 24-hour window period suggests that the award may have been predetermined.
The tender was previously advertised twice through the state information technology agency (Sita), but a service provider was not appointed after Treasury warned that tender specifications were being flouted.
That resulted in GSOC Security Services, the then incumbent, continuing on a month-to-month basis.
This extension has been flagged by the Auditor-General as irregular expenditure.
Senior departmental officials told City Press that they suspect the urgency was meant to benefit a specific company.
However, Tshepo Shawa, spokesperson for Nkomo-Ralehoko, denied this.
She said everything was conducted in a regular manner. In2IT Technologies also said that, as far as it was concerned, correct internal processes were followed.
THE 24-HOUR TURNAROUND
The request for quotations reveals that service providers were, in effect, given two business hours to respond to the invitation to tender.
An email was sent at 17:17 on March 25 by internal procurement buyer Mampho Mgcina, who sought a quotation for a 12-month contract to provide services to the Security Operations Centre. The transition from signing the contract to starting work was to be “no longer than seven days”.
Mgcina added: “Closing date and time for submission of quotation: March 26 2020 at 10:00. Hope all is in order.”
In2IT Technologies responded promptly, submitting a detailed quotation of more than 100 pages for the amount of R22 482 500. The company was then awarded the contract.
The award has outraged other service providers, who have questioned the process.
Halga Ninow-Cohen, the director of outgoing service provider GSOC Security Services, wrote a letter to Ndabeni-Abrahams on March 27, saying the time frame was impossible.
She said she was “extremely disheartened” that her company “was either deliberately or mistakenly excluded” from the request.
She added: “Further to this, I am the current service provider and would like to understand from the department why I was excluded.”
Ninow-Cohen told Ndabeni-Abrahams that, given “the enormity of this quote ... no party would be able to adequately meet this requirement, especially without prior information”.
“A large component of hardware and software required for this quote is based on international currency rates,” she wrote.
“Acquiring these pricings in this time frame is extremely difficult and e-government is risking its entire environment by rushing this process.”
Another service provider that received the invitation but was unable to meet the tight deadline told City Press that the fact that the request was published after hours broke “the expectation that the recipients would be freely available to read and respond to the tender in the first place”.
“It takes days or weeks to secure special government pricing,” explained the service provider. “That pricing is often considerably lower than what would be made available to the private sector. Without access to that pricing, the only response that can be cost-effective or competitive is one that was prepared in advance. It also takes a while to get updated letters of reference from other clients. This cannot be done in a single evening.”
The company executive said it seemed as if “a rushed tender of this size and complexity could only have been prepared for a responder who was already prepared to submit”.
“Ask any tender office in the country, and they will tell you that it is virtually impossible to respond to a complex tender overnight; and if they somehow managed to piece it together, they would likely have made a critical mistake that would result in the submission being disqualified.”
RAMAPHOSA DRAWN IN
In an email sent to Ramaphosa by a whistle-blower on Tuesday, which City Press has seen, Ndabeni-Abrahams and Sita executive caretaker Luvuyo Keyise are accused of wrongly granting approval to Gauteng’s e-government department to go ahead with the tender.
“Treasury has advised against it, but approval was granted by the administrator and the minister. Please check the credentials of the company awarded. The quotation was published within 24 hours and awarded. This was the doing of the MEC [and] approved by the administrator and the minister against Treasury’s will.”
HOW IT UNFOLDED
Several senior departmental officials told City Press that the process to get In2IT Technologies on site seems to have begun as early as January, when e-government department managers wrote to the City of Tshwane’s supply chain officials, requesting access to their security service panel tender.
In2IT Technologies, which was on Tshwane’s panel, agreed to participate, but that process was scuppered by the metro being placed under administration.
They then turned to the SA Post Office, asking to piggyback on its existing contract with In2IT Technologies.
The post office responded by saying the service that In2IT Technologies was providing was very different from that which was sought by Gauteng’s e-government department.
Then in late March, after the national state of disaster had been declared, the bid adjudication committee requested permission from provincial Treasury’s head of department to deviate by going out to tender.
“This was done on an urgent basis, using the current national state of disaster management of the Covid-19 coronavirus pandemic as the reason for the urgency and circumvention of supply chain procedures,” said one official.
According to a letter seen by City Press, on March 23 Nomfundo Tshabalala, the head of Gauteng’s provincial Treasury, gave the e-government department approval to “deviate from inviting competitive bids and, instead, source quotations to provide government with Security Operations Centre services for a period not exceeding 12 months, within an estimated budget of R30 million”, saying it “is hereby supported”.
Then, on the evening of Wednesday March 25, the letter to potential bidders went out. The tender was to close at 10am the following morning, giving bidders just two working hours to submit.
By Friday March 27, the deal with In2IT Technologies had been concluded.
A letter from Max Ludwig, chief director of ICT Infrastructure in Gauteng’s e-government department, was sent to senior staff, informing them that “the new service provider is ready to start with the handover as from tomorrow morning. Please get your team to be on standby for this process.”
WINNING BIDDER SAYS ALL ABOVE BOARD
Andrew Hoseck, the chief operating officer at In2IT Technologies, justified the company’s voluminous submission within the few hours given for the tender process, explaining that the documentation had been ready from government’s previous botched attempt, in May 2019, to issue the tender.
The March 25 request had the same requirements, he said.
“That enabled us to respond quickly to this request for pricing,” he added.
Hoseck said the company was not aware of whether proper internal processes were followed or not as the same request was sent to “numerous other companies”.
“The wording in the request was to ‘please quote us urgently’. However, there was nothing to indicate that correct process was not being followed,” he said.
NO LINK TO COVID-19
Shawa denied that the emergency procurement was linked to Covid-19.
She said the department had previously approached provincial Treasury “for an exceptional case to procure Security Operations Centre services for a period not exceeding 12 months while finalising the open tender process”.
She said Treasury had supported this on condition that the department obtain written confirmation from Sita.
Shawa said the department had consulted with all key stakeholders, including Sita, adding: “All conditions were met prior to appointing the new service provider.”
She said the fact that the month-to-month contract with GSOC Security Services had been running since March 2016 was now tantamount to irregular expenditure.
She said GSOC was not invited because of its “noncompliant tax status”.
City Press has also obtained a letter from Ndabeni-Abrahams, written to a complainant, in which she says she cannot intervene in any procurement-related matters as such powers are assigned to the heads of departments.
“You are advised to table your objections with the head of department or the MEC responsible for e-government or the MEC,” Ndabeni-Abrahams wrote.
Sources close to the minister, who had oversight on the running of Sita, said she granted approval for the e-government department to procure directly from an institution other than Sita because the agency had conceded in January – before Keyise was even appointed – that it was still unable to service the provincial government after two years of delays.
The department cited irregular expenditure as motivation, not Covid-19, and her involvement ended there, said one of the sources.