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More details emerge in Datacentrix’s tiff with BEE partner

Read time 5min 50sec
Ahmed Mahomed, Datacentrix CEO.
Ahmed Mahomed, Datacentrix CEO.

Systems integrator Datacentrix says it does not condone unethical practices and will not be coerced into paying its black economic empowerment (BEE) partner an inflated amount of money.

This after ITWeb exclusively reported yesterday that the Alviva Holdings subsidiary is entangled in a dispute with its BEE partner – The IT Advantage (ITA).

At the centre of the dispute is payment from work conducted by TIA in a government tender valued R16.7 million.

Tammy Moodley, director of ITA, told ITWeb the stand-off between her company and Datacentrix had dragged on for about eight months and she has since escalated the issue with the National Treasury as well as the media to get her money paid.

She claims that after ITA was contracted by Datacentrix for two years in the tender, her company was replaced after only two months.

“They have not paid me for any of the services we provided, nor their commitment on the partnership agreement.”

She says the directors she is dealing with at Datacentrix are Ahmed Mohammed, Johann Coetzee and Herman Taljaard.

Although acknowledging the dispute with its BEE partner, Datacentrix has strongly denied Moodley’s claims.

Threats of ‘exposure’

In a separate statement yesterday, the systems integrator says: “Throughout the entire process, the partner has threatened Datacentrix in writing to ‘expose’ Datacentrix’s alleged unethical behaviour and misconduct to the client, the vendors and the media, unless we settle their claim.

“Datacentrix will neither be coerced nor tolerate unethical behaviour. If anyone has any knowledge or evidence of unethical behaviour, they should come forward to Norton Rose Fulbright to facilitate Datacentrix to take appropriate action.”

Datacentrix has always integrated B-BBEE with its strategic objectives as a part of its commitment to enterprise development and in line with government’s stated objectives, the company says.

It adds that Datacentrix engages B-BBEE SMME partners wherever possible and, as such, enters into agreements as deemed appropriate with B-BBEE SMME organisations as part of this engagement process.

Lately, it notes, quite a few public and private sector organisations have started to specify B-BBEE SMME participation as a tender requirement. As a result, the number of engagements with B-BBEE SMME partners has been increasing, it adds.

“This increases the risk profile of the organisation, creates complexity and can create a new set of challenges. In responding to this, and being cognisant of the events unfolding in the country, Datacentrix continuously reviews and refines its processes, including ensuring that a stringent vetting and engagement process is in place.”

It explains that Datacentrix responded to a tender at a client for the maintenance of out-of-warranty IT equipment.

In line with the tender requirements, Datacentrix points out it put forward a particular B-BBEE SMME company (ITA) in its bid as one of its potential B-BBEE SMME business partners.

“It was understood that if Datacentrix was awarded the tender, it would enter into a specific agreement in line with the tender requirements with the selected B-BBEE SMME partner.

“Datacentrix was subsequently awarded the tender by the client. After this award, Datacentrix duly undertook the vetting process of the selected B-BBEE SMME partner. The partner failed the vetting process and was notified as such.”

Given that Datacentrix had a teaming agreement and had engaged with the relevant B-BBEE SMME partner, the company says it deemed it proper to ensure the partner was not unduly prejudiced for cost already incurred and for any value it had added to date in relation to the award.

Offer refused

Datacentrix says it made a rational offer to the partner that in effect would have put it in the same position as if it had continued as a partner.

It alleges the SMME partner declined the offer and requested a settlement without providing the necessary detail to substantiate the validity of the claim.

Datacentrix then appointed Norton Rose Fulbright, a reputable firm of attorneys, to conduct an investigation and provide an assessment, it notes.

“Datacentrix subsequently engaged directly with a service provider the B-BBEE partner was going to utilise to continue providing services to the client. The third-party service provider also delivers specialised services to Datacentrix in other engagements.

“The original quote from the B-BBEE partner used in arriving at the costs for the tender response has been reviewed and compared to the quote supplied directly to Datacentrix by the service provider.

“Norton Rose Fulbright has determined that whilst the proposal from the third-party service provider is largely similar to that of the partner, there is a material differential in price between the price the B-BBEE-partner submitted to Datacentrix and that of the third-party service provider directly to Datacentrix.”

According to the systems integrator, the intention generally of these B-BBEE engagements is to provide all input cost at cost, and for profit margins to be shared based on agreed terms.

Further allegations

It explains Norton Rose Fulbright has asked, on numerous occasions, that the partner provide a breakdown of its costing to enable a proper assessment to be made of the claim put forward.

“The B-BBEE partner has, however, not been forthcoming with the detail, and as a result, Datacentrix is unable to make a clear assessment of the partner’s claims. The initial offer made by Datacentrix to place the partner in the same position as it would have been if it had continued with the contract, however, remains in place. In the interest of settling this amicably, Datacentrix has offered to take this matter to arbitration as per the terms of the teaming agreement.

“In light of the fact that the input cost was inflated by the B-BBEE partner, Datacentrix has concluded that the margin levied on the transaction is not reasonable and is in the process of crediting the client.”

In addition to the above dispute, the B-BBEE partner has made allegations of wrongdoing against Datacentrix, says the firm.

“Datacentrix takes this very seriously and again proceeded to appoint Norton Rose Fulbright to launch an independent investigation, and once again the partner has refused to co-operate or provide any substantive evidence of the allegations made. Norton Rose will continue with the independent investigation into the allegations irrespective of the partner’s willingness to cooperate or not.”

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