Bhisho defies national Treasury

The Eastern Cape government has paid more than R170-million to connect its departments with a fast internet solution, despite national Treasury refusing to give the contract the green light.

The province had applied to “piggyback” on a 10-year multibillion-rand broadband tender between the Western Cape government and Gauteng-based Liquid Telecom.

According to documents seen by the Daily Dispatch, the Eastern Cape provincial government (ECPG) has been engaging the State Information Technology Agency (Sita) since last year about its intention to utilise cooperative procurement – or piggyback – from the Western Cape government for the rollout of broadband connectivity. Liquid Telecom has a tender with the Sita to provide the same for the Western Cape.

The Eastern Cape wants to connect all its departments with fast internet for service delivery purposes.

Currently, the province has 7170 sites to be connected with broadband, including 5701 schools and state administration offices.

It has now emerged that on December 6, Eastern Cape director-general Marion-Mbina Mthembu paid R171-million to Liquid Telecom in defiance of a letter, which the Dispatch has seen, from Treasury.

The Daily Dispatch has also seen a letter written in December last year by Western Cape director-general Brent Gerber advising the Eastern Cape to approach the Sita with the broadband piggybacking request.

However, the Sita delayed signing the letters to give ECPG the go-ahead on the piggyback.

In her letter to Sita CEO Dr Setumo Mohapi, Mbina-Mthembu says: “These repeated requests to participate in the agreement for Western Cape broadband roll-out arranged by means of a competitive bidding process would greatly reduce the delivery time-frames and ensure the best pricing currently available in the market for broadcast connectivity.

“Had Sita acquiesced to our request to use a co-operative procurement process using Western Cape broadband roll-out…current estimates suggest the monthly recurring costs of 160 sites would be approximately R320000 per month.

“It would be irresponsible of an accounting officer to accept a Sita proposal whose pricing is more than 20% of currently priced services that were procured on open tender.

“Should Sita provide no credible objection within five working days, it is deemed that Sita will support the participation of ECPG in the contract with the Western Cape government to achieve the intended vision.”

It was not clear yesterday if Dr Mohapi had given ECPG a go-ahead. However, 10 days later, Mbina-Mthembu wrote to Moss Gondwe, strategic and public sector GM at Liquid Telecom, requesting to piggyback in the tender.

“During engagements with Sita throughout 2016, the Eastern Cape provincial government learned that the Sita agreement provides the most optimal cost of rolling broadband in South Africa in government.”

She later wrote to National Treasury to ask for approval on the piggyback, using Treasury Regulation 16A6.6, which states that the accounting officer may on behalf of a department participate in any contract arranged by means of a competitive bidding process by any other organ of state. In one of her motivations, Mbina-Mthembu said “this was urgently for quality delivery of government service”.

However, a letter signed by Willie Mathebula, acting chief procurement officer at National Treasury, on November 23, said there was no proof that Liquid Telecom were the sole providers of the required broadband and refusing to support the request.

“We have considered your alternative request to be granted deviation to participate in the Western Cape provincial government broadband contract.

“It should be noted that the accounting officers may apply emergency procurement procedures or sole source status to justify dispensing with normal competitive bidding process.

“However, there is no evidence that there is any emergency in this project or that Liquid Telecom is the sole provider of the required broadband services,” wrote Mathebula.

“It is extremely difficult for National Treasury to grant approval to dispense with open competitive procurement processes in terms of the treasury regulations.”

Despite the letter, Mbina-Mthembu approved the R171-million payment to Liquid Telecom on December 6.

ECPG spokeswoman Mandisa Titi said Mbina-Mthembu had not approved the payment and has halted it until evidence of satisfactory delivery. “Sita tabled a proposal to utilise Telkom ...

“On closer inspection the DG picked up that this is not truly aligned to the services of broadband,” said Titi. —