Gijima files urgent application against SITA

JSE-listed outsourcing company Gijima has filed papers against the State IT Agency (SITA), in a bid to stop it from cancelling a contract that has been running for more than five years.

Gijima wants SITA's cancellation of its contract to supply and maintain hardware for services to the South African Police Services (SAPS) put aside, as it is entitled to at least one month's notice. It also wants to stop SITA hiring another company to take over the contract “during the period of operation” of the deal.

Gijima says in its application for an urgent interdict, a copy of which is in ITWeb's possession, that the agency unlawfully cancelled a contract and prevented the company from providing services to the SAPS by revoking electronic access.

The company alleges SITA binned the deal with only five days' notice, instead of the required one month. Gijima argues that this will cost it revenue of about R20 million, and is likely to damage its reputation in the public sector and cause its skilled staff to be poached by competitors.

The deal was entered into in September 2006, and came into effect the next month. In November last year, the R19.6 million a month contract was extended on a month-to-month basis, “until further notice for termination”.

However, on 25 January, SITA wrote to Gijima and gave the company five days' notice that the contract was being canned. Gijima responded, indicating this was not acceptable, but its access to the project was terminated on the evening of 31 January.

However, subsequent to Gijima lodging the urgent application with the North Gauteng High Court last Wednesday, the company still seems to be providing services to SAPS. In a statement, Gijima says: “SITA together with SAPS are still Gijima clients.”

CFO Carlos Ferreira confirms the application has been filed, but that “at this point in time, this is a confidential matter between the client and ourselves”.

Ferreira notes Gijima has been working with SAPS for the past 10 years and has delivered in accordance with the contract in question. “Gijima has and will continue having a sound relationship with our client, the SAPS.”

Moneyweb reports that the application has been postponed pending settlement discussions between the parties, which ITWeb unsuccessfully attempted to confirm. Gijima would not provide any further information on the status of the urgent application, while SITA did not respond to repeated requests for comment.

Willem Hatting, Gijima's public sector: business management executive, argues in an affidavit accompanying the urgent application that cancelling the contract will undermine “the efficiency of the South African Police Services”.

Gijima has about 100 “dedicated maintenance personnel” with the required security clearance working on the project.

The listed company argues it will lose out on a month's revenue and faces the loss of highly-skilled staff, which it had security-cleared. “Information technology staff is difficult to hire as there is a massive shortage of these skills in the country and the costs of retaining them to the applicant is of the order of R10 million a month.”

Hatting writes that, because of the cancellation of the contract, it is likely that this staff will be poached by a competitor. In addition, says Hatting, Gijima's reputation in the public sector will be “irreparably damaged by the summary termination” of the agreement.

Gijima also alleges the contract was apparently awarded to an IT company called Khauzela “in secrecy”, Gijima's lawyers argue in a letter to SITA disputing the cancellation.

Gijima's legal representative, Nicqui Galaktiou, COO of Brian Kahn Inc Attorneys, writes “rumours in the market are that the 433 contract was awarded to Khauzela, but this has never been confirmed by SITA”.

Khauzela MD Raymond Risk would not comment as the matter is before the courts.