140317. Cape Town. MyCiti bus in upper Long street. Picture Henk Kruger/Cape Argus

Cape Town - Lumen Technologies has hit back at the City of Cape Town for cancelling its R234 million MyCiTi contract, saying it will take legal action to be reinstated and compensated for damages of more than R50m.

It has accused the city of “prejudice” and of costing Lumen work opportunities by erroneously listing a sub-contractor as the supply company on the bus tender. “The cancellation is disputed. The only glitch was an issue on a foreign company system which Lumen got a notice to correct by February 28,” said Lumen’s Sedicka Chilwan. The company had been ready to load the local IT solution a week earlier than the deadline, on February 21.

“Lumen has over-performed on the tender. The (transport) plan has been checked by a leading independent expert and approved by the city after one-and-a-half years of foot-dragging.”

The city said it had cancelled the MyCiTi contract because of “non-performance”. An investigation into alleged fraudulent invoicing by one of Lumen’s subcontractors was also under way, said the city’s mayoral committee member for finance, Ian Neilson.

But Chilwan said: “The city worked to undermine Lumen at every turn, running interference for subcontractors and interfering with Lumen’s management of them.” She alleged that the city had not paid Lumen for maintaining its MyCiTi feeder buses since they were commissioned in April.

Transport for Cape Town commissioner Melissa Whitehead said the overall contract, with a value of R234m, was awarded to Lumen, which then subcontracted most of the work.

“The city is concerned with the overall finalisation of the system, which Lumen was accountable for and failed to do. Even after numerous notices to correct and attempts of assistance, Lumen failed to provide the consistency in the system.”

She said the system was devoid of data for a full six weeks at one stage. The city had therefore not signed off on the whole system, despite aspects of it having some functionality.

Neilson said he could not provide more information about the fraud allegations while the investigation was under way.

But Chilwan said it was Lumen that had blown the whistle about possible corruption in December. The city then proceeded to cancel its contract after Lumen refused to hire one of the companies it had flagged for fraudulent activities.

“Only after Lumen threatened to intervene was that process halted.”

But Whitehead said Lumen was accountable for the information supplied by its contractors. “The allegations regarding the industry protocols are incorrect. Lumen has been removed and the city is now in the process of analysing the gaps and will be going out on a Request for Proposal within a week so as to enable the completion of the outstanding work so that the MyCiTi can operate optimally and the management of the system can be authenticated – something that the city cannot do at present due to the non-performance of Lumen.”

Meanwhile, Chilwan said Lumen had only been paid about R141m for the work it had done for the city, and of that more than 80 percent was paid to its subcontractors and employees.

“Lumen wants the contract reinstated. The ratepayers are at risk of a damages claim estimated to exceed R50m.” Experienced staff who were trained to schedule buses and control the systems would lose their jobs as a result of the city’s decision.

Chilwan said a legal dispute with one of its subcontractors, Questek, for an outstanding payment of R6.5m had been settled. Questek filed an application earlier this year to have Lumen liquidated, which would have put the company’s R174m contract with the Nelson Mandela Bay Municipality on the line.

Responding to reports that Lumen overcharged the Nelson Mandela Bay Municipality for similar services as those provided to the Cape Town metro, Chilwan said it was appointed through “well-established procurement regulations” with the approval and support of the City of Cape Town.

Mhleli Tshamase, project manager of infrastructure and engineering for the Nelson Mandela Bay Municipality, said the court case against Lumen Technologies to have its R174m contract set aside was still pending.

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Cape Argus