SITA tender delays cost industry

Constant top-level reshuffling at the State IT Agency (SITA) has thrown the ICT industry into turmoil, as companies have to wait for up to two years for tenders to be issued, negatively impacting service delivery.

SITA has been plagued by a lack of top-level stability, as several permanent and acting CEOs have come and gone since the agency's inception. The agency has also been beleaguered by large-scale corruption and irregular procurement practices.

In January, the agency finally appointed a permanent CEO, when Blake Mosley-Lefatola assumed control of the parastatal. His appointment followed that of another senior executive, COO Khumbudzo Ntshavheni, last November.

Public enterprise minister and administration Richard Baloyi announced last year that SITA would be turned around. However, despite the improvement plan, and much-awaited appointment of top-level leadership, delays in awarding tenders have thrown the ICT sector into turmoil.

Several companies highlighted the problem during recent financial results presentations, and at least one company has been waiting for tenders to be awarded for as long as two years.

According to a consolidated list of bids on SITA's Web site, the agency issued 68 requests for quotation last year, of which more than half, 47, are still being evaluated, 13 have been binned, another seven are still open to invitations, and only one tender was awarded. The consolidated list does not have any information available for tenders issued this year.

In October 2009, the agency claimed it had improved its turnaround times for tenders, with each now taking an average of 73.74 days to be awarded.

Awarding tenders quickly is a “high-priority area”, according to its 2010 annual report, the latest available. Chairman Zodwa Manase wrote: “It is critical that SITA's procurement arm is repositioned so that it can be responsive to client needs, without sacrificing sound corporate governance principles.”

However, Business Connexion CEO Benjamin Mophatlane says it takes about eight months for SITA to award tenders, a situation that has thrown the industry into “turmoil”. He says the delays impact on service delivery, because contracts aren't being carried out.

Under Mavuso Msimang, SITA CEO until early 2007, tenders took 90 days to wrap up, says Mophatlane. Now bids take about 250 days to be awarded, he says.

Mophatlane says the delays have been caused by constant changes in SITA's leadership and a clamp down on corruption within government departments, which means each bid is carefully scrutinised.

Datacentrix CEO Ahmed Mahomed says SITA is responding to bids, but contracts are “just not getting awarded”. He says the delays are impacting profitability, because resources are tied up, while companies wait for SITA's adjudication.

An industry insider, who declined to be named, because of the sensitive nature of the issue, says his company has been waiting for responses to some of its tender bids for two years.

The insider says it costs his company a substantial amount to respond to tenders, both in direct and indirect costs, with staff moved off other projects in order to bid. “It is a problem.”

Each time SITA changes management, there is no continuity, he comments. The lack of continuity makes the turnaround situation worse, the insider adds. “Every time they change personnel, it's back to the drawing board.”

The slow tender turnaround time has plagued the industry for the past two years, says the insider. He says this makes investing in the business difficult, because there is no assurance that contracts will be awarded.

SITA's delays also weigh on service delivery, and cause delays with other projects as many contracts are interrelated, notes the insider. “There is no doubt this impacts on service delivery.”

However, Black IT Forum (BITF) national chairman Darryl Dennis says, with new leadership in place, tenders are now being awarded as quickly as four weeks after invitations are issued, when previously it took up to a year to get contracts in place.

In addition, says Dennis, SITA has told the forum it is decentralising procurement, which will enable provincial offices to award tenders themselves without going to head office, which has previously delayed contracts.

Dennis expects this process to be wrapped up in the next few weeks. He adds provinces will only have the authority to award bids up to a capped amount, and procurement processes will have to be monitored to ensure good corporate governance.

The constant top-level instability impacted turnaround times, and has affected the industry, which bears the brunt of the protracted process. SITA has told the BITF the backlog will be cleared by July, he says. “It's been a bone of contention for all of us.”

The issue of slow decision-making dates back about two years, notes Dennis. He says this is a “common frustration” for the IT sector. Delays have impacted service delivery, he adds.

Long lead times result in technology being outdated by the time the bid is awarded, says Dennis. In addition, pricing changes, and there is no guarantee that vendors will have stock available by the time the deal is signed, he adds.

ITWeb has tried to get SITA to comment on the industry's concerns since last Tuesday. This morning, acting GM of corporate communications Amitha Ramlal indicated she would respond urgently, but failed to do so before going into a meeting set to end at 4pm.

However, the organisation's 2011/12 turnaround strategy highlights the need to clear the procurement backlog, with SITA conceding its service delivery levels have been poor.