R1.2 billion school network disaster

Law firm Cliffe Dekker Hofmeyr has presented its forensic report into a R1.2-billion tender for public school network services in Western Cape public schools, which resulted in the winning bidder losing the contract.

News of the irregularly awarded tender first emerged last year when the Western Cape Department of Education reportedly ignored a recommendation to withdraw the tender by 8 December 2023.

The Department of Communications and Digital Technologies (DCDT) and State Information Technology Agency (Sita) reportedly considered taking the provincial education department to court.

One of the losing bidders, Sizwe Africa IT, raised potential issues with the tender award.

These were brought to the attention of former communications minister Mondli Gungubele, who directed Sita’s board to appoint an independent law firm to investigate.

Following the outcome of the investigation, Sita withdrew its recommendation to award the tender to Blue Networks Consortium.

While Cliffe Dekker Hofmeyr’s report is dated 16 October 2023, it only presented its findings to the Parliamentary Portfolio Commission on Communications on 15 November 2024.

It raised four irregularities with the tender award.

Firstly, the forensic report noted that Blue Networks Consortium was the only company to submit two bids — a cheaper and a more expensive option.

“The fact that one out of the eleven bidders responded with two solutions and two pricing options in one bid is evidence enough that the requirement of the RFB was not understood by the bidders,” the report found.

It noted that questions were raised during the compulsory briefing session regarding the provision of alternative solutions, and even then it remained unclear whether it was permitted.

“The decision to evaluate both price proposals submitted by Blue Networks rendered the tender process unfair since the RFB was unclear on whether bidders were allowed to submit more than one price proposal,” the report stated.

“As such, not all bidders were provided with an equal opportunity of submitting different pricing options.”

The law firm also highlighted irregularities around how the executive bid adjudication committee handled the issue of local content requirements.

These requirements stipulate that a minimum proportion of certain materials must be locally sourced.

However, only three out of the eleven bidders responded to the requirement for local content correctly.

As a result, the adjudicating committee and Sita extracted the correct information from the submissions of the other eight bidders.

“The correct way of addressing this would have been to communicate with the bidders and request them to clarify their responses. The onus was and should have remained on the bidders to respond correctly,” the report found.

It also found that Dimension Data was unfairly disqualified from the bidding.

“Dimension Data was disqualified at the technical mandatory stage due to their Microsoft certification, on the basis that the certification letter was addressed to the parent company of Dimension Data, NTT, which was not part of the bidding structure.”

The final irregularity was how the voting for the winning bidder was conducted.

“Based on our review of the round robin results, the voting did not meet the minimum threshold of 70% as prescribed by Sita’s memorandum of incorporation (MOI),” the report found.

“This means that Sita did not comply with its own MOI and governance process.”

In its recommendations regarding corrective steps, the report also highlighted concerns surrounding the behaviour of the Sita board.

The report said some board members failed to attend meetings, did not familiarise themselves with the subject matter of the bid, and did not vote correctly or at all when the round robin process was undertaken.

“It is recommended that the board that made the decision… must, therefore, be held accountable for such decision,” it stated.

“Only one board member, Ms Jeanette Morwane, exhibited knowledge of the requirements of the tender and based on such knowledge, did not vote in favour of recommending the award due to the two bid pricing irregularity.”