Controversy hits R153m Cipro tender

Audra Mahlong
By Audra Mahlong, senior journalist
Johannesburg, 07 Apr 2009

The Companies and Intellectual Property Registration Office (Cipro) has controversially awarded a tender to the value of R153 million - more than twice the original tender price.

The tender, which according to Cipro CEO Keith Sendwe, is the “largest and most significant tender ever to be awarded” by the office, was won by relatively unknown company, Valor IT (VIT).

The ICT professional services provider will be tasked with the implementation of an enterprise content management platform, which will be used to drive Cipro's electronic transformation process.

Only two companies were shortlisted for the tender by the Department of Trade and Industry (DTI), namely Faritec and VIT. While Faritec's bid was lower and within the range of the tender price - its R60 million tender bid lost out to VIT's R153 million proposal.

Faritec, which is 30%-owned by a BEE investment holding and management company, J&J Group, was left baffled by the decision. The company alleged the tender was awarded under dubious circumstances and questioned Cipro's decision.

In response, Sendwe declined to comment on the price variation and maintains Cipro followed correct tender procedures.

Signing off

Tender bids at Cipro are subject to a due diligence process from the tender evaluation committee prior to a final decision being taken by the bid adjudication committee.

The committee is drawn from the Cipro executive team - namely the CEO, CFO and COO. Melanie Bernard-Fryer, COO of Cipro, was not part of the committee - following her suspension by Sendwe.

Bernard-Fryer had refused to sign off on the tender, stating improper tender processes had been followed. She was suspended by Sendwe for “breach of confidence” after she forwarded e-mail correspondence regarding the tender to a person outside of Cipro.

Sendwe then instituted disciplinary proceedings against her and when she was reinstated two months later, VIT had been awarded the tender in her absence. The tender was signed off by Cipro's CFO, Renier du Toit, and the director-general of the DTI, Tshediso Matona.

“An evaluation report was submitted during December 2008 to the bid adjudication committee, consisting of Cipro's CEO, chief financial officer, chief information officer and chief internal auditor for consideration. The director-general thereafter approved the adjudication report. Cipro's internal audit department reviewed the completed process at each and every stage,” said Sendwe.

While Faritec was informed in December that it had lost the bid, Cipro has stated the final contract and service level agreement with VIT were officially signed off on Friday, 27 March 2009.

Who is VIT?

Sendwe maintains Cipro followed correct tender procedures and the process was transparent.

According to Sendwe, the tender was issued to service providers listed on the State IT Agency transversal tender database in September 2008. While eight service providers were asked to tender for the contract, only five responded by the closing date.

He adds that tenders were evaluated over a two-month period by two independent evaluation teams. Financial evaluation and legislative compliance requirements were conducted and only following those processes was VIT awarded the tender.

However, little information is available on the IT company awarded this contract. According to Cipro registration records, VIT was formed in 2005. Josias Molele and Jamila Seedat are listed as directors of the company.

The company's Web site is scant with detail on its management and ownership structures - stating only that the company is wholly black-owned and managed. The site also has no mention of VIT winning the Cipro tender and if it has been awarded any other major contracts.