The State Information Technology Agency (SITA) has flagged the multimillion-rand biometrics contract ceded by the Department of Home Affairs (DHA) to French multinational IDEMIA for violating procurement laws.
SITA, which procures ICT products and services for government departments, says the move by the DHA to hand over the R400 million contract to IDEMIA as of 31 March, does not comply with procurement law and regulations, and sets a bad precedent in government.
The critical contract − to migrate data on the current Home Affairs National Identification System, which only records photos and fingerprints of South African citizens, to the new Automated Biometric Identification System (ABIS) − was previously held by EOH.
The final implementation of the system would provide the country with a single source of identification for citizens across state institutions and private-sector entities.
However, execution by EOH stalled after the Auditor-General flagged the contract as potentially irregular because of suspected collusion in the bidding process.
The agreement was initially sealed at R400 million, and to date, R224 million has already been spent on services, infrastructure and software but the system is not yet live.
The botched ABIS system was supposed to be up and running after 12 months but this hasn’t happened. The contract was awarded in 2015.
Shouting match
The wrangle between the DHA and EOH spilled into Parliament in August last year, and at that point, the JSE-listed technology services company opted out of the deal, suggesting the contract be handed over to its sub-contractor, IDEMIA.
In November, DHA minister Aaron Motsoaledi fired a broadside to the suggestion that IDEMIA was the preferred company to take over the project from EOH. However, he said legal opinion obtained by the department suggested that ceding was permissible, subject to certain requirements being met.
Subsequently, Motsoaledi said, after meeting with officials from the Department of Telecommunications and Digital Technologies, it was decided that the DHA proceed with the ceding, provided the cession is approved by National Treasury.
Treasury then agreed to hand over the contract to IDEMIA, according to SITA.
The cessation came into effect on 31 March, EOH announced last week, when it presented interim results for the six months ended 31 January.
Disregarding the law
Nonetheless, SITA executive caretaker Luvuyo Keyise has strong objections to the move, saying besides breaching procurement laws, it is unconstitutional.
He says communications and digital technologies minister Stella Ndabeni-Abrahams and SITA did not grant the approval to cede the contract.
“SITA and the minister were asked to concur with the cession of the contract, as supported by National Treasury. The SITA Act does not make provision for such a concurrence. The minister and SITA have not been informed of the reasons behind this cession of the contract, including all documentation provided to National Treasury for their support of this.”
According to Keyise: “The cession is anti-competitive as it does not comply with the Constitution, the Preferential Procurement Policy Framework Act, and other procurement laws and regulations, as IDEMIA will be taking over the contract without any tender process. This cession would also create an unfortunate precedent, as EOH wishes to move away from overall eight contracts in government.”
EOH is in the middle of settling controversial public sector contracts, a sector it says remains core to its operations.
Furthermore, Keyise says the forensic investigation report on the EOH contract with the DHA advised among other things “that the DHA seek legal advice on the legality of the contract, due to it having been awarded in a possibly anticompetitive and/or corrupt manner”.
Asked to comment, EOH says it has not yet seen the report.
“EOH confirms that it has not received any forensic report regarding this matter,” Fatima Newman, chief risk officer at EOH, tells ITWeb.
Responding to the concerns, IDEMIA declined to address specific questions about the ceded contract.
“As a policy, IDEMIA does not comment on its contracts. Please direct all questions on the DHA contract to the South African Department of Home Affairs.”
However, the company defended its black economic empowerment credentials, which had become subject to scrutiny as they were a key component of the tender requirements.
“IDEMIA would like to take the opportunity to clarify that we are certified at level two for BEE in 2020; we are undergoing re-certification at the moment. As a company that operates in over 180 countries, IDEMIA is deeply committed to giving back to the communities that we work in.
“Our technology has supported the growth and development of the country for over two decades – we are proud that our solutions, such as contactless payment cards and SIM technology, can be found securing and enabling the everyday activities of South Africans.”
As of today, IDEMIA says, it has grown to over 180 persons that are located in Linbro Park, Johannesburg.
The DHA ministerial spokesperson confirmed receipt of ITWeb’s request for comment, but the department had not responded by the time of publication.
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