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MEC, DA call for urgent probe into Gauteng IT security tender

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Gauteng finance MEC and head of the Department of e-Government, Nomantu Nkomo-Ralehoko.
Gauteng finance MEC and head of the Department of e-Government, Nomantu Nkomo-Ralehoko.

Gauteng MEC for finance and e-government Nomantu Nkomo-Ralehoko has ordered an investigation into allegations of irregularity in the Gauteng Security Operation Centre Contract.

ITWeb revealed last week that cumulative irregular expenditure incurred by Gauteng’s e-government department over its cyber security contract now stands at R104 million.

However, it has since emerged the department incurred an additional irregular expenditure of R200 million between 2009 and 2011 on the same contract.

For the two years, the department paid R199 708 523, which was declared irregular, according to documents seen by ITWeb.

Nkomo-Ralehoko has confirmed the expenditure incurred through the contract which was held by Gauteng Security Operation Centre (G-SOC), and its predecessor.

Adding pressure on the department is a call by the Democratic Alliance in the province to probe the tender.

According to a report in The Star today, the opposition party wants the company, which previously traded as Lefatshe Technologies, investigated.

The newspaper says the company has been mired in controversies regarding its operations with Gauteng municipalities and Bitou municipality in the Western Cape.

G-SOC has been providing cyber security services to the provincial government for the past 16 years and is alleged to have been paid over R1 billion during that period.

Red flag

The contract was first flagged in 2018 when head of treasury in Gauteng, Nomfundo Tshabalala, wrote to the then head of e-government, declining requests to extend the contract.

Tshabalala said in light of the deficiencies identified in the contract, Treasury cannot approve because: “This contract and all related expenditure is declared irregular on the basis of poor planning that resulted in continuous extensions.

“This poor planning was not addressed by the department in issuing a tender that was subsequently cancelled.”

Documents seen by ITWeb show that at the time, in an attempt to address the continued extension, the department issued a new tender that was “subsequently cancelled at the evaluation stage due to a material irregularity identified by the probity auditors as a result of negligence by the department”.

Tax compliance

Now, in a statement, Nkomo-Ralehoko says initially: “The scope of work expanded for a period of two years from 20 November 2008 to 20 November 2011.

“The contract was extended for another five years from 1 April 2011 to 31 March 2016. Thereafter, Lefatshe Technologies changed its name to G-SOC Services in 2017, from here on the contract has been on a month to month until its termination.”

The MEC says further: “In the 2016/17 financial year, the auditor-general’s (AG’s) departmental findings stated the Security Operation Centre (SOC) contract and all extensions after the contract expired in March 2016 were declared as irregular expenditure.

“The SOC irregular expenditure was also raised by the Gauteng Provincial Legislature Finance Oversight Committee and Standing Committee on Public Accounts.”

According to Nkomo-Ralehoko, even after the AG’s findings, the department continued with the irregular expenditure on a month to month basis until the contract was terminated.

“It was also established through the Basic Accounting System which is linked online to the Centralised Supplier Database that the service provider is not tax compliant.”

According to documents seen by ITWeb, G-SOC, registered as supplier MAA0163677 in the department’s supplier database, is “non-compliant” on tax.

The National Treasury rules say: “It is necessary for persons conducting business with the state are tax compliant at the date of submission and award of a bid as well as for the full duration of their respective contracts.”

Department officials say because of tax non-compliance, this means the accounting officer can terminate procurement contracts if it is found there are irregularities and were concluded in contravention of the applicable legislation.

Rushed contract

Consequently, the MEC says as a custodian of the Public Finance Management Act in the province, Nkomo-Ralehoko is “committed to ensure that proper administrative and financial accountability are adhered to by departments and urges all her counterparts to act against irregular expenditure”.

Over the weekend, it was reported that after cancellation of the contract, officials in the department, using the cover of the COVID-19 pandemic, rushed through the appointment of a new service provider without proper tender processes.

A City Press report says the R30 million contract was concluded within 24 hours.

In2IT Technologies, the company that won the tender, has since denied the allegations of impropriety regarding how the contract was awarded.

The company, which has global presence, says it has a strict governance structure and processes to ensure compliance with the “Public Finance Management Act and Municipal Finance Management Act of South Africa, as well as Sarbanes-Oxley compliance, in addition to being fully compliant with the Foreign Corrupt Practices Act”.

According to In2IT, on 25 March 2020, the company, in addition to numerous other companies, received an urgent e-mail request for quotation (RFQ) from the Gauteng Department of e-Government.

“The RFQ called for the same IT security services that were previously issued by the Gauteng e-Government in July 2018 (Request For Proposal (RFP) No GT/GDeG/095/2018) and then again by the State Information Technology Agency (SITA) in May 2019 (RFP – No RFB 1926/2019),” it says.

It says In2IT participated in both these RFPs; however, both requests were later recalled.

The company explains: “Consequently, In2IT Technologies was able to revert within 17 hours to the open tender in March 2020 from the Gauteng Department of e-Government as it had the same requirement as RFP No GT/GDeG/095/2018 as well as No RFB 1926/2019 and it would therefore be the third iteration of this request.”

Furthermore, In2IT has been accused of controlling the City of Tshwane’s tender to provide security services.

It has denied the allegation, saying: “In2IT is not a service provider to the City of Tshwane. We have not been on any panel on City of Tshwane. This is an inaccurate statement.”

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