11 May 2010 | Neil Oelofse
South Africa’s Companies and Intellectual Properties Registration Office (Cipro) breached procurement regulations in awarding a R153 million (US$20.1 million) tender to an IT firm, according to an auditor general’s report presented to parliament.
The report said the State IT Agency (Sita) – responsible for most government computer procurement – also failed to ensure that the viability of a Cipro business case was checked before the contract was awarded. A computer services firm Valor IT won the Cipro deal for installation of management system software.
The IT firm, which has reported turnover of less than R2.2 million (US$288,440), was granted the R152.7 million (US$20 million) tender in December 2008, ahead of rival bidder Faritec, a stock exchange-listed company that offered to complete the contract for R63 million (US$ 8.3 million).
The auditor general report said Sita had broken public procurement rules when it failed to show proper evaluation of Valor’s financial status before the company was placed on an approved suppliers list.
Although allegations that the business case had been shown only to Valor IT had not been proven, “some information in the proposal of the successful tenderer was almost exactly the same as the information in Cipro’s business case,” the report said.
The opposition Democratic Alliance said giving a tenderer an advantage with the provision of such information would be highly irregular.
Trade and Industry Minister Rob Davies promised to deal with the allegations of irregularities at Cipro within a month. He will submit the results of a departmental investigation to the Standing Committee on Public Accounts by 18 May.
Davies said part of the investigation will be to determine if Valor IT was given inside information not available to the other bidders.
Cipro acting CEO Lungile Dikwana said Valor IT was continuing to fulfil the contract to install the management system despite the investigation.