Durban – ACTION has been recommended against senior government officials in the wake of damning findings relating to a contract that never worked out despite a service provider having pocketed more than R23 million in payments.
Financial recoveries should also be instituted since the contract for an electronic procurement system for KwaZulu-Natal government departments failed to yield the intended results, a forensic report has recommended.
Dubbed the “e-procurement tool”, the programme was entered into between the Provincial Treasury (PT) and company Adapt IT despite National Treasury (NT) regulations against it.
The report, presented before the finance portfolio committee this week, shows that several failed attempts were made by the then PT head Simiso Magagula to bypass NT regulations that eventually saw Adapt IT paid R23.1 million between the period of July 2014 to May 2016.
A submission supported by the Chief Director for the Supply Chain Management (SCM) within PT and aimed at getting the contract off the ground, which was initially set to cost R14 million, was approved by Magagula in November 2011.
The award was only made in April 2014, at which point, the cost of the contract had ballooned by 112% to R29,8m.
A meeting involving the PT’s HoD and the then provincial Acting Accountant General (AAG) was set up, after which the AAG sought to regularise the contract through the State Information Technology Agency (SITA), but to no avail as SITA pointed PT to the NT.
In terms of Regulation 17.3.1, NT instructed that “Institutions may not amend existing or institute new computerised systems that will affect financial administration without the prior written approval of the National Treasury”.
Magagula later submitted a request to bypass the NT moratorium and this attempt was declined.
An official from NT told investigators: “The request from KZN came to me as a post-facto request – in other words, they already procured the system (without prior approval) and wanted me to rubber-stamp the process.
Not only did I decline (sic) the process, I also indicated that disciplinary action should be taken against those involved for not adhering to the NT instruction. This was because we were denied the opportunity to check whether the legacy systems could assist and/or to see the functions that would make the system unique.”
On March 30, 2017, a newly appointed Accountant General of the PT stopped the project.
The report said: “We could not find any payment schedule that provides a breakdown of each deliverable and or provide the details thereof against agreed milestones.”
“There are no details of the activities that were performed, or which deliverables were produced when the payments were approved and processed as there appears to be no alignment to specific deliverables as should be required.”
“The expenditure to date on the e-procurement tool should be classified as fruitless and wasteful expenditure.”
“Disciplinary action is recommended against the former PT HOD, the former CD for SCM, the Director for Information Technology, the Director for SCM, the Deputy Director for SCM, three officials who were members of the Technical Bid Evaluation Committee, a former consultant and an Accounting Officer for PT during the period 1 February 2011 to 31 July 2015,” recommends the probe, adding that civil recovery should be considered against Adapt IT and or any officials from PT for fruitless, wasteful and/or irregular expenditure.
Adapt IT chief executive Sbu Shabalala said he was confident his company had conducted the work well within the contractual obligations signed with PT.
He said was not aware of any further internal processes or breaches involving NT since their customer was PT, adding that he had not seen the report.
Magagula said he believed the intentions of the project were noble in that they were meant to eliminate corruption in procurement processes, and asked to be recused from commenting further since he had left the PT.
Provincial government spokesperson Lennox Mabaso declined to comment, saying only the findings remained an internal report still being processed.
“We are not commenting on this report. With a report like this, all parties implicated need to be given an opportunity to respond first before we can go public,” said Mabaso.
Concerned over the six-month long period it had taken the Premier to share the report after having been requested to do so in terms of the Public Access to Information Act, DA leader Francois Rogers called on Premier Sihle Zikalala to take action against the officials.
“The DA expects the Premier to act without delay in terms of the recommendations of this report. This must include disciplinary action against those identified within the document.”