JSE-listed Business Connexion (BCX) has successfully bid for a R419 million, five-year outsourcing contract with the Department of Water Affairs, beating two other entities.
The previous deal, which spiralled beyond the initial agreed contract amount and came under the auditor-general's scrutiny, was tainted by allegations of theft and improper conduct.
BCX says it has put steps in place to avoid the pitfalls that stained the previous deal. The contract, which comes into effect next month, will add about R80 million a year to its services division, which usually turns over about R2 billion a year.
Three ICT companies - BCX, T-Systems SA and EOH - were shortlisted before BCX won the bid last month. CEO Benjamin Mophatlane says the deal shows BCX is "starting to reap the benefits of our overall business strategy to grow our business in the vertical space, in this case the public sector vertical".
AG probe
BCX, which turned over R5.8 billion in its last financial year and reported profit of R202 million, will provide services including desktop support, server support for Microsoft, Linux and Solaris Unix, security and patch management, as well as database management for Informix and Microsoft SQL, and storage and backup management.
"It's a deal we've been waiting for, and waiting and working on and working on," says BCX deputy CEO Vanessa Olver. She adds that it gives BCX a better footprint in the private sector, which is an area in which it is not traditionally strong.
However, the previous deal, inherited by T-Systems SA when it bought arivia.kom, was tainted by the AG's findings that the previous deal, initially with arivia.kom and then T-System SA, overran by R1 billion.
The AG found in 2010 that correct procedures were not followed and no corrective action has yet been taken. Despite the findings, the contract was still in place in September 2010.
The deal, awarded in 2003, was initially worth R180 million, but extensions pushed up the total value to about R1.2 billion. The AG found the department was not able to provide a copy of the signed contract dating back to 2003, and then extended it for an additional 49 months, hugely inflating the value, without following proper procedure.
In addition, in June 2011, a contractor seconded to the department by T-Systems, Pono Senokwane, appeared in court on charges of fraud after allegedly stealing from the department. It is alleged that Senokwane had tried to fleece the department out of R12 million in total.
The department has been attempting to recoup the R2.8 million that was allegedly stolen. Senokwane was originally contracted by CSIPER Consulting, a subsidiary of arivia.kom, in March 2009, with a contract extension until July 2010, says T-Systems. T-Systems SA bought arivia.kom in January 2010.
Avoiding past mistakes
Olver says when it comes to project consultants and permanent employees, the company adheres to a comprehensive recruitment and selection process as delineated in its recruitment policy.
"This constitutes a thorough pre-employment screening process, including criminal, credit, ID and qualification checks."
Olver adds that the policy has been scrutinised by BCX's internal auditors, which indicated it is "sound and comprehensive". External contractors, who are employed by labour brokers, are also included in the checking process as a non-negotiable.
Olver explains that water affairs appointed research company Gartner to ensure all governance was adhered to. Master services agreements were put in place, which BCX signed when it won the deal last month, she says. "This contract outlines the roles and responsibilities of all parties, and the commercials ensuring we are all on the same page with regards to the contract and price."
Olver adds that there are also service level agreements and any additional requested work will be properly recorded.
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