A simple case of “mistaken identity” is believed to be the cause of an IT contract suspension within the Department of Labour, following the restructuring of its ICT strategy.
A name change from the contractor has led to confusion within the department resulting in the internal procurement processes of the Department of Labour being questioned and subsequently put under review. This is according to listed IT service provider, EOH.
In November 2012 EOH acquired Siemens information Services (SIS) at a time when a R2 billion public private partnership (PPP) between the Department of Labour and Siemens was nearing completion.
EOH Holdings was appointed by the DoL to provide termination support for a period of 12 months as the government body took steps towards modernising its ICT strategy.
When EOH acquired SIS, it essentially stepped into the “shoes of SIS”, EOH said in a statement on Wednesday (13 February).
“The PPP agreement provides for a transitional termination period during which period the service provider hands over the various services, contracts and assets to the Department ensuring a smooth transition and no disruption to services,” it said.
However, EOH said that it has been informed by the Minister of Labour, Mildred Oliphant, that the internal processes governing the provision of Termination Support Services by EOH is under review.
“We understand that when EOH changed the name of SIS to EOH Managed Services, it created the perception that a new service provider (EOH) had been appointed, which resulted in the internal procurement processes of the Department being questioned. It appears to be a simple case of a ‘mistaken identity’,” the group said.
“EOH is continuing to deliver services to the Department under a perfectly scrutinised valid agreement. We are engaged with the Department to resolve this misunderstanding,” the IT company said.
DoL ICT strategy
In October, the DoL said it aimed to enter a new phase of modernisation “to increase its operational efficiencies and strengthen its institutional capacity following the unveiling of a new five-year (2012-2017) ICT strategy.
The department said it would work to recruit staff, issue and award new ICT tenders, and initiate new business projects.
On Wednesday (13 February), the DoL said in a statement that the termination of the ‘Siemens’ contract did not mean that the services would come to a halt.
“In fact, the department is now focussing on a personnel recruitment drive with a view to enhance internal capacity alongside the process for new service providers for Information Technology services.”
Nkosinathi Nhleko, DG at the Labour Department conceded in a briefing given to the Parliamentary Portfolio Committee that management of the R2-billion IT provision over the past 10 years did not fully meet expectations.
As a result, one of the unintended consequences of the PPP was that it decimated internal capacity and had no proper governance structures in place.
“The DoL had no capacity to manage the scale of the project. It was like a boat that was allowed to flow without direction. Going forward the department should take the lead in developing a business imperative that suits its delivery objectives,” Nhleko said.
The DG assured the Portfolio Committee that work will not be interrupted. He said a departmental information communication (ICT) strategy was finalised last year and that the recruitment of ICT personnel has already started. He said by the time 2013 falls, substantial progress would have been made to build capacity in the office of the CIO.
“Going forward, we will have a clearly defined ICT environment,” Nhleko said.
DoL on EOH
Nhleko also confirmed that on the directive by Labour Minister Mildred Oliphant, the department had suspended the services of EOH.
Nhleko said he was not at liberty to forward reasons for the suspension.
Labour Deputy Director-General Lerato Molebatsi said the termination support transition phase was already underway and the department was in the process of appointing new service providers in the next few weeks.
Molebatsi said, unlike in the past, the days of over-reliance on one service provider were over.
Molebatsi said in excess of 120 people will be employed to build capacity in the office of the CIO. She said this would also include the appointment of vendors in specialised areas.