/ 30 July 2010

Department again in hot water

More tender irregularities are emerging from the beleaguered Water Affairs Department, amid allegations that a bidder for a multibillion-rand IT contract may have written the contract specifications.

Two weeks ago the Mail & Guardian reported that the department was struggling with tenders linked to “deals for pals”.

In the latest controversy an IT tender worth up to R5-billion was cancelled at the last minute, while an investigation by the auditor general, Terence Nombembe, also found that the suspended director general, Pam Yako, had irregularly extended the contract to the incumbent, Arivia.kom, for 49 months — effectively inflating its value by 587%.

The government’s procurement manual limits contract extensions to 12 months.

Yako was unavailable for comment, but the M&G understands that she believed that extending the original contract was the only way to fend off what she saw as improper interference from bidders for the new tender.

Well-placed departmental sources confirmed that there had been fierce competition over the contract and much pressure from bidders to gain a competitive edge.

Now allegations are surfacing that Arivia.kom tried to “monopolise” the contract, and may even have written the specifications for it, while planning to submit another bid.

The former public works director general, Sipho Shezi, whose company, Sirius, is part of a consortium contracted to water affairs, claimed to have discovered that Arivia.kom wrote the specifications.

Shezi said he had alerted the department’s chief financial officer, Onesmus Ayaya, and the chairperson of Parliament’s water affairs committee, Makhotso Sotyu, to the alleged irregularities.

But the department has denied this. Mava Scott, the water affairs spokesperson, said that the tender documents had been compiled by the State Information Technology Agency (Sita) for the department.

Amy Goren, of international company Netwise, an independent tender analyst asked by Shezi to analyse the bid documents, highlighted a number of problems. These included the claim that, in drafting the specifications, Arivia.kom ensured that the criteria matched the company’s profile.

Goren added that there were faults in the pricing model of services that could have led to “severe overpricing”.

Scott asked why the department would have contracted Sita, which, in turn sub-contracted a company of international repute, to develop the tender document, only for this document to be developed by Arivia.kom?

“If Arivia.kom had this power over the department, why did they wait until 2009 to compile this document?” he asked.

The water affairs department entered a three-year contract with Arivia.kom in 2003, but the IT company’s contract was repeatedly extended without a tender.

Arivia.kom has since been sold to a German information and ­communication technology company, T-Systems.

T-System’s corporate marketing and communications manager, Ronell Stutzer, said the company would not comment on Arivia.kom’s conduct.

“T-Systems can only account for decisions made post-acquisition in December 2009,” Stutzer said.

She said T-Systems inherited the Arivia.kom customer portfolio with its related commercial relationships, which included the Water Affairs Department.

But some department officials have been uncomfortable with the many contract extensions. In November last year the department’s bid adjudication committee wrote to Ayaya complaining that Yako had again extended the contract, this time to R976,1-million.

The original contract, signed in 2003, was valued at R180-million.

Scott said the real reasons for the extension were lack of IT expertise and inadequate planning. “The scarcity of these kinds of skills, compounded by the fact that the accounting officer’s time was consumed by the preparations for country’s general elections at the time and the transitional issues relating to the installation of a new administration, led to major delays,” he said.

It was becoming increasingly clear that “structural considerations” relating to the department’s IT organisation had not been taken into account when going to tender, Scott said.

Other bidders were unhappy that the tender was cancelled and the contract extended. They include Robert Gumede’s GijimaAst-led consortium, said departmental insiders close to the process.

Thoko Mnyango, Gijima’s managing director for marketing, communications and transformation, said the company had responded to all the tender requirements. After an extension of 30 days, Gijima had not heard from the department again.

But, she said, the company was “not dissatisfied” with the way the tender was handled and “respected government processes”.