Storm brewing over canned IT deal

Lefatshe Technologies has accused the Bitou municipality of locking it off site for six months last year, leaving it unable to perform in terms of its contract with the municipality, and that it is still owed at least R3 million.

The technology company alleges the municipality - formerly Plettenberg Bay - manufactured an artificial crisis to justify replacing it with Dimension Data. Lefatshe is seeking legal advice to recoup unpaid invoices and to clear its name.

However, Bitou argues that the system Lefatshe implemented was not usable and it had no choice but to cancel the deal. Mayor Memory Booysen says the municipality had to act urgently to protect its systems once Lefatshe went off site.

Bitou cancelled its contract with Lefatshe in October last year, publicly claiming the financial system it implemented was a waste of R30.5 million, as it did not work. Lefatshe, which stopped providing services at the end of the year, says it was replacing the system when its contract was terminated.

The Western Cape municipality subsequently hired Dimension Data in a bid to stop its IT systems from collapsing after Lefatshe's contract ended, Booysen says in a letter.

However, “Lefatshe Technologies says it has been prevented from getting on to site for six months, which suggests that events were orchestrated to bring about an artificial 'crisis' that would eventually justify the gross flouting and breach of supply chain procedures”.

Lefatshe's group communications officer, Mbuso Thabethe, says the company is consulting its lawyers around the outstanding amounts and the public attack on its name. “We need to clear our name and protect our reputation.”

Booysen did not comment on Lefatshe's allegations that the company is still owed money, or that it was prevented from going onto site.

Bitou cancelled Lefatshe's contract in September last year, saying the systems did not work. However, the company says the cancellation letter did not refer to any issues with functionality.

DiData chairman Jeremy Ord, who lives in the area, offered the company's services to assess the situation later last year, at no charge to the municipality.

Booysen, in his 26 January mayoral letter, says DiData's investigation into the municipality's systems found that the “whole IT system was at a point of imminent meltdown”. He says there was “no time” to go out on tender as the “problem needed to be dealt with immediately”.

DiData was asked to quote and Bitou is “satisfied that what we are paying is in line with industry norms and standards, and that the service received so far is necessary and of an excellent standard”.

So far, the municipality has paid Dimension Data R4.1 million to “keep the municipality operational by replacing and implementing core equipment it was due to lose when [the] Lefatshe contract ended,” says Booysen.

However, Lefatshe says its contract was cancelled because of a lack of funds, and it is owed more than R3 million, yet Bitou “can afford to pay DiData just over R4 million”.

Bitou is set to complete a tender process in May and appoint a new contractor. The municipality has also asked local government to appoint a team to examine the processes followed in its emergency awarding of the deal to DiData without a tender process.

DiData referred all queries to Bitou.