A R1.2 billion tender for the provision of Local Area Network (LAN) services to Western Cape schools hangs in the balance after a comprehensive forensic investigation conducted by Cliffe Dekker Hofmeyr Inc. has exposed significant irregularities.
The State Information Technology Agency's (Sita) R1.2 billion tender for maintenance and growth of LANs in Western Cape Education Department (WCED) schools has been recommended by the report to be set aside.
However, the Western Cape Education Department has said that it had not yet received the report - which is dated October 3. IOL has a copy of the damning 171-page report.
Tlali Tlali, the spokesperson for Sita, in a response to questions from IOL, said that the agency would address the independent report's findings by implementing its recommendations in collaboration with the customer and shareholder.
However, Tlali clarified that Sita does not have the authority to revoke the award to the winning LAN bidder BNC, as it is not the accounting authority in this instance.
The timeline for any potential action remains uncertain, he said, as the client, presumably the WCED, has yet to review the report and decide on the next steps.
A forensic report by Cliffe Dekker Hofmeyr Inc. into the tender, found that the process was marred by confusion and alleged non-compliance with local content requirements.
This led to a call from Communications and Digital Technologies Minister, Mondli Gungubele for an investigation by the Portfolio Committee on Communications and Digital Technologies.
The investigation was prompted by claims from an unsuccessful bidder, and concerns raised by the Portfolio Committee on Communications and Digital Technologies.
The findings call on the Western Cape government to re-evaluate the award of the tender due to the material nature of the irregularities.
According to the report, the Western Cape Government (WCG) had previously contracted for LAN services in 2014, which was nearing its end in November 2021.
To maintain and grow the LAN infrastructure, a new tender was initiated but later recommended for cancellation by Sita due to irregularities, including non-compliance with procurement prescripts and mandatory requirements not being met by the recommended bidder.
A subsequent new tender was issued with updated specifications, including the removal of specific brand requirements and a lowered threshold for bid evaluation.
However, the National Treasury halted all bid publications following a Constitutional Court judgment, leading Sita to seek an exemption to proceed with its procurement process, which was eventually granted.
The tender attracted 11 bids, and after a comprehensive evaluation process, Blue Networks Consortium (BNC) was recommended as the winning bidder with a proposal of R873,743,936.98.
Despite procedural concerns, the Sita Board approved the recommendation, and a contract was awarded to BNC.
The Cliffe Dekker Hofmeyr forensic investigation, however, found four key irregularities with the awarding of the tender.
These included:
Alternative Solutions and Pricing Options:
The tender did not clearly allow for multiple price proposals, leading to an unfair evaluation process, as not all bidders were aware they could submit different pricing options.
BNC's submission of two price options was evaluated, giving them an unfair advantage.
Local Content Requirements:
Only three out of 11 bidders correctly responded to local content requirements.
The evaluation committee's decision to assess non-compliant bids using a hybrid model was improper, as it altered the submissions instead of seeking clarification from the bidders.
Disqualification of Dimension Data:
Dimension Data was unfairly disqualified based on a technicality regarding Microsoft certification addressed to its parent company.
The investigation concluded that Dimension Data met the mandatory requirements and should not have been disqualified.
Governance and Notification Issues:
The round-robin voting process used by Sita's Board did not meet the required threshold, and the Western Cape Education Department was notified of the award before the Board's resolution was operative, indicating a breach of Sita's governance processes.
The report recommends that Sita's board re-evaluate the award of the tender due to the material nature of the irregularities.
It emphasises the need for clear and unambiguous tender drafting, adherence to adjudication procedures, and accountability for the evaluation of local content submissions.
It also highlights the necessity for Board members to be fully engaged and informed in procurement processes and for the Company Secretariat to ensure proper execution of Board processes.
The report calls for accountability from the Company Secretariat and Chief Procurement Officer for prematurely communicating the award decision.
Furthermore, it stresses the importance of integrity in the review process and the risks of altering bidder submissions, which could lead to challenges against Sita's procurement decisions.
Sita responds
Tlali said that Sita would improve its policies and procedures in response to the irregularities identified, particularly those concerning multiple price proposal submissions.
To prevent future submission of non-compliant bids, Sita plans to provide clearer tender instructions and ensure strict adherence to defined policies, Tlali added.
In terms of governance, the agency is set to review and enhance its policies and procedures to align with the organisation's Memorandum of Incorporation (MOI) and applicable legislation.
He said the Ministry is currently reviewing the report to determine how to hold Sita's Board members accountable for their role in the procurement process.
Meanwhile, Sita has committed to addressing the risks of having its procurement decisions challenged by refining its audit processes.
Regarding the premature communication of the award decision to the WCED, Tlali indicated that an internal HR review process is under way to hold the Company Secretariat and Chief Procurement Officer accountable.
In a response to detailed questions from IOL, Bronagh Hammond, the spokesperson for the WCED said: “The WCED had not yet received the report through official channels. The report is being verified. Once confirmed, the WCED will study the contents thereof.”
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