The City of Tshwane has been found wanting, after a High Court judge ruled its actions around a SAP support contract, apparently worth R60 million a year, were not just.
Nambiti Technologies took the city, several of its officials, and EOH to court after the city binned a R180 million deal, and temporarily awarded SAP support services to EOH. The ruling, although a victory for the small SAP support company, is now being challenged by the city, which has filed for leave to appeal.
Nambiti, which has 80 staff around the country and turns over R150 million a year, took the matter on because it believed it was in the running to win the contract, and that the cancellation - and subsequent appointment of EOH - was not legal, says MD Kevin Paul.
The contract, published last year, was to support all SAP modules previously implemented in the city, including human resources, logistics, billing and finance functions.
Not fair
North Gauteng High Court acting judge Maake Kganyago found "no justifiable reasons to cancel tender CB204/2012, and that it was unfairly cancelled".
The judge said it seemed the bid was cancelled to give other "favoured" tenderers a chance to adjust their pricing in the new tender. He said the reasons for cancellation were "flimsy" as the new tender had minimal changes.
Kganyago added the fact that EOH was on site a day before the city agreed to appoint it, without following a tender process, gives credence to the argument that EOH's appointment was "rubber-stamped".
"In my view, the applicant [Nambiti] was justified in attacking the decision of the respondents to appoint the fifth respondent [EOH]."
However, Kganyago did not set aside EOH's contract as it was in its 10th month of the one-year deal. Cancelling the deal now would have "serious and prejudicial" consequences for members of the public and would interrupt services, he said.
"In my view, even though I find the decision to appoint the fifth respondent [EOH] warrant to be set aside, I am not inclined to do so." EOH will continue to provide services until the end of the year, when its contract expires.
Kganyago's judgement shows the city cancelled the bid, because it was no longer in line with the municipality's broader strategy, a decision that was taken after the appointment of a CIO. However, the judge said there were no material differences between the 2012 tender and the one the city subsequently issued.
The court decided against allowing the new tender, CB107/2013, to be adjudicated and set aside the city's cancellation of the previous bid. Kganyago ordered the city to inform short-listed bidders that the 2012 tender was again open, allowing them to adjust tariffs upwards to provide for inflation, and to award it within two months.
Tough going
However, Paul says this ruling has not been complied with, and the city has now filed for notice to appeal. He says the legal battle, ongoing since April, has cost the company millions and the setback over the contract made 2013 "tough".
Paul says based on the previous support contract that the company had won (in conjunction with Baraka Enterprises), the entire deal was probably worth around R60 million a year. Nambiti had won the preceding deal, which was similar in nature, and was part of the Accenture consortium that implemented SAP at the city, he adds.
Nambiti's contract, which preceded the 2012 tender, was set to be extended until August, but this decision was then reversed, says Paul. He says the cancellation and reversal of the tender extension coincided with the appointment of Dumisani Otumile as CIO.
Paul alleges the city used a "backdoor" in legislation to cancel the 2012 tender, and appoint EOH without following the proper process. He adds several companies responded to the 2012 bid, including Nambiti, Dimension Data, and EOH.
The city did not respond to a request for comment, although ITWeb appreciates its officials are involved in activities around former president Nelson Mandela lying in state. EOH also did not revert on a request for comment, but previously said it does not comment on matters involving clients.
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