Johannesburg - IT company Dimension Data (Didata) is allegedly using backdoor antics to get a piece of a R362 million contract it lost through competitive bidding.
This is according to sources within the City of Johannesburg who have raised red flags with regards to Didata buying assets of corruption-besieged technology services company EOH.
The assets that will be bought include a ERP (Enterprise resource planning) contract which was entered into in July 29, 2020, by which EOH was to provide first and second line SAP support services.
Didata submitted a bid for the same contract but was disqualified due to non-compliance on key aspects of tender requirements. The company is said to have also not met the minimum functionality scores on certain service category requirements.
The ERP contract started in 2017 for three years but was extended by another 15 months. The two companies informed the City of the intended purchase and this resulted in the city seeking a legal opinion.
In an opinion by Bowmans, the law firm looked at the legal impediments of the transaction and indicated that “ceding a right awarded through a competitive procurement process risks appearing to be circumventing a fair and competitive process”.
Bowmans added: “Cessions have been used to facilitate corrupt practices and to channel public funds to businesses that could not have been awarded contracts through lawful tender processes.”
The legal opinion indicated that municipalities were not precluded from assigning or transferring contracts awarded through competitive processes but they were also not explicitly permitted to assign or transfer such contracts.
The lawyers informed the City that such a move could result in a lawsuit from bidders who lost out to EOH during the tender processes.
“On the other hand, third-party competitors may potentially object to the cession to Didata on the basis that the cession benefits a disqualified bidder, subverts the competitive procurement process undertaken and excludes competitors from offering the same services at a lower price or possibly on terms more advantageous to the city. There is a real risk that a cession or a subcontract between EOH and Didata would be reviewed and set aside if it subverts a competitive procurement process,” the lawyers said.
The ICT contracts of the city have come under scrutiny as many of them are said to have been entered into through corruption. Last week, the paper reported that the City of Joburg overpaid Didata close to R1 billion in what has been termed wasteful expenditure, according to a forensic investigation that looked into IT contracts the City had entered into between 2011 and 2017.
EOH has not been spared from allegations of corruption. Currently, the company’s dealings are being laid bare at the Commission of Inquiry looking into state capture, implicating deputy Minister of State Security Zizi Kodwa, Joburg mayor Geoff Makhubo, and other ANC officials.
Both companies declined to answer questions related to the acquisition by Didata. Fatima Newman, chief risk officer of EOH, said the company was in the process of testifying before the Zondo Commission based on investigations initiated by EOH, about the majority of the queries raised by us.
“Until such time as that process has been completed, we are not in a position to provide further comments. Without detracting from the above, we can confirm that EOH was successful in its bid for the ERP Agreement.
“In so far as your query in paragraph one is concerned, your attention is drawn to the notice published by the City of Johannesburg in terms of section 116(3) of the Local Government Municipal Finance Management Act 56 of 2003 on 20 November 2020,” said Newman.
Didata spokesperson Pearl Mngomezulu said questions should be referred to the City, which failed to respond.
Sunday Independent