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Confusion looms in wake of cancelled SA Connect tender

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As government backpedals on SA Connect, the industry believes the project is better left to the private sector.
As government backpedals on SA Connect, the industry believes the project is better left to the private sector.

The cancellation of the tender for the ambitious SA Connect broadband policy adds to the growing anxiety around government's ability to execute the project.

Earlier this month, the State Information Technology Agency (SITA) confirmed six companies responded to the request for bids for the SA Connect tender. These included Broadband Infraco, EOH, MTN, Neotel, Vodacom, and Tradepage & Galela Telecommunications as a joint venture.

It was said a service provider for phase one would be announced soon; however, SITA unexpectedly cancelled the tender. The cancellation was published on 18 November, in the Government Tender Bulletin.

According to the agency, "none of the six companies that responded to the bid had met all six technical mandatory requirements (bidders were expected to meet all six mandatory requirements) to enable them to proceed to the next phase of pricing evaluation".

George Kalebaila, IDC senior manager for telecoms, media and Internet of things in Africa, points out the criteria the bidders did not meet was "not well articulated".

Not up to the challenge

According to Kalebaila, SITA's decision adds to the industry's belief that such as a project is better left to the private sector. "The longer the project is delayed, the more it loses its shine and risks being overtaken by private initiatives, especially in urban areas."

Naila Govan-Vassen, ICT industry analyst at Frost & Sullivan, says from the time SA Connect was published, there was confusion around the implementation and role of the lead agent.

"Cancelling the tender to implement phase one of SA Connect justifies government's uncertainty and to some extent the lack of understanding around the benefits of having a 'connected' country."

Richard Hurst, director of enterprise research at Africa Analysis, believes SITA found itself stuck between a rock and a hard place.

"In this instance, the agency found itself in an uncertain environment as to how it would proceed to the next step. This is even though all the bidders would have probably been able to deliver on the initial objectives; perhaps it is the changing regulatory environment that prompted this sudden about-turn."

SITA explains

According to SITA, after it was approached by the Department of Telecommunications and Postal Services (DTPS) to appoint a suitable service provider for phase one, it worked closely with the department to develop and approve the specification. The DTPS is overseeing the national broadband project.

The approved specifications contained six mandatory requirements that all bidders needed to comply with, said SITA.

The agency explained it conducted the screening process in the presence of the independent auditor to determine if all the prospective bidders had submitted compliance documentation to proceed to the technical evaluation stage.

SITA said in a statement: "At the conclusion of the technical evaluation process, which was also subjected to probity by the independent auditor, none of the six companies that responded to the bid had met all six technical mandatory requirements (bidders were expected to meet ALL six mandatory requirements) to enable them to proceed to the next phase of pricing evaluation. As such, the bid had to be cancelled in terms of clause 32.4.1 (4) of the SITA Supply Chain Management Policy."

However, "realising and acknowledging the importance of SA Connect and its intended impact on the achievement of the National Development Plan milestones, SITA and the client will still meet to discuss and decide on a way forward and the public will be kept informed", it added.

Need for clarity

Soon after it was revealed the tender had been cancelled, Democratic Alliance MP and shadow minister for telecommunications and postal services, Marian Shinn, wrote to telecoms minister Siyabonga Cwele.

The rapid provision of broadband Internet structure is critical, says the DA's Marian Shinn.
The rapid provision of broadband Internet structure is critical, says the DA's Marian Shinn.

In a statement, Shinn said she requested the minister urgently explain why the tender was cancelled and what steps are being taken to revise the procurement phase and implementation.

Shinn added that DTPS deputy minister Hlengiwe Mkhize twice avoided questions as to whether Telkom had submitted a bid. ICT analysts previously said the tender was tailor-made for Telkom.

"The first phase, for which National Treasury has allocated R1.5 billion in the current Medium-Term Economic Framework, was to be a pilot phase to connect 6 235 government facilities in eight district municipalities," she said.

"Phase two, for which there is no available funding, was to rollout broadband connectivity to 35 211 facilities in the remaining 44 district municipalities by 2020 to meet the SA Connect target of 90% population coverage."

"The rapid provision of broadband Internet structure is critical to give all those living in SA access to online government services, educational and economic opportunities. Government must now be innovative in requesting broadband solutions from a wider spread of small and large network service providers to deliver affordable and sustainable internet access to all," Shinn stated.

Competitive processes

Majority state-owned Telkom was initially pegged as the lead agency to assist with the project.

Neither Telkom nor SITA provided reasons as to why the state-organ did not submit a bid, leaving pundits scratching their heads.

Kalebaila says the industry favours a competitive bidding process rather than anointing a preferred agency, as it was first promulgated.

"My sense though is that Telkom through OpenServe has the capacity and capability of executing such large projects and may as well come out on top through an open bidding process. Why Telkom didn't bid in the first place is a matter of conjecture. In the meantime, Telkom has proceeded with its own rollout plan and may be reluctant to get entangled in the politics of SA Connect."

Hurst adds: "I think it was a bit of surprise that Telkom had not been a bidder on the project, but the opportunity to roll out the network should not be forced on a network operator. However, when one looks at it, Telkom does and will continue to have a role to play in the local broadband markets."

The way forward for SA Connect would be to create a consortium of all electronic communications network service licence-holders, including original equipment manufacturers (OEMs) and the regulators themselves, to increase infrastructure reach in rural areas by leveraging existing infrastructure, says Govan-Vassen.

"The only company that would have met the six mandatory technical requirements is Telkom, which is already lead agent for SA Connect. In order for SA Connect to be a success, SA needs the collaboration of all key stakeholders from the government, regulators, operators, OEMs to citizens.

Money down the drain

Meanwhile, tendering consultancy firm TaranisCo Advisory says the cancellation confirms its view that bidders should stop wasting time and money on submitting tenders.

Gerrit Davids, lead advisor at TaranisCo Advisory, says as a standard, tenders that are collected from the state are charged for, and this could be anything from a few hundred or thousands of rands.

The general practice is that potential bidders pay for the documentation, he says. Organisations also incur further costs when preparing their bid documents.

Davids says SITA issued clear and unambiguous mandatory requirements that needed to be met; however, one can only assume all the bidders submitted their bids having their own interpretation of this mandatory instruction.

In addition, all bidders had a false belief the bid evaluation committee would be lenient and overlook certain shortcomings within their respective bids, otherwise they would not have submitted a bid knowing they are not complying with these "mandatory requirements", he explains.

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