The Gauteng Health Department has been instructed to pay over R40 million to 3P Consulting for breach of contract and outstanding payments - delaying any decisions on the progress of its R609 million health smart card tender.
Health MEC Qedani Mahlangu noted that she would fight the decision of the Gauteng South High Court, and added that the money the department would have to pay 3P consulting would affect other projects.
“The effect of the decision is that public resources allocated for medicines, to employ more health professionals including nurses and doctors, and to provide patients with food, will have to be diverted to pay consultants. This cannot be acceptable,” says Mahlangu.
The department previously outsourced administrative duties to the private consultancy firm, allowing it to establish the Programme Management Unit (PMU). Following a damning report by the auditor-general citing over R300 million worth of irregular contracts, Mahlangu cancelled the multimillion-rand consultancy contracts.
The department then embarked on a clean-up project, which would result in a review of all major contracts carried out by the PMU and the reprioritisation of projects. While the MEC has not officially decided on the fate of the health smart card tender, she has indicated that it is one of several projects that do not fall within the department's mandate.
The aim of the project is for patients to be issued with health cards that store their medical records on an embedded smart chip. The cards were expected to improve the accuracy of patient records, speed up check-in times, and streamline the process of transferring patient information from hospitals to doctors and pharmacies.
Last year, the health department awarded the tender for the project to a KOPM Logistics-led consortium, at a cost of R609 million. The consortium included empowerment companies iNathi and Ideco, along with Sagem SA.
Changing priorities
While former Health MEC Brian Hlongwa hailed the smart card project as a solution that would improve the health information and electronic record systems, the PMU and the project have been surrounded in controversy.
In June 2007, 3P was awarded a R60 million-a-year contract to establish a programme management unit in the department. In 2008/9, Gauteng paid the consultancy firm R229 million. Contractually, 3P was only supposed to have been paid R60 million a year, but was paid R169 million more than was contracted in a single year.
In January 2008, the department under Hlongwa's leadership began piloting the smart card project. The pilot was scheduled to end in March 2008 and was supposed to have been fully implemented in April.
Later that year, the pilot phase was expanded after the provincial government said early tests had gone off without a hitch - but the project was never fully implemented.
The total amount for the budget was R605 million. About R36 million had been paid out for the proof of concept and equipment, such as computers.
In February 2008, the department then extended the contract with 3P for a total of R273 million over three years.
“We cannot afford to have any cent going to consultants while health institutions run short of basic necessities,” says Mahlangu.
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