R378 million IT tender scandal rocks SA Correctional Services

The Department of Correctional Services (DCS) wanted to overpay a company by more than R300 million for providing IT services that should have cost the taxpayer R50 million.

The government’s Chief Procurement Officer (CPO) Kenneth Brown revealed in Parliament on Wednesday that the DCS had signed-off on a contract for R378 million to supply and maintain an integrated inmate management system.

Briefing Parliament’s Standing Committee on Appropriations, Brown said: “We did [an] assessment and we saw the tender should have been awarded for around R50 million.” Brown heads the relatively new Treasury-based division which tracks and streamlines government tenders.

He told News24 on the sidelines of the committee that the bid was selected through a “two envelope process”.

The bid was aimed at updating and expanding the department’s IT capacities in line with modern innovations like electronic fingerprinting, electronic monitoring for parolees, and even to allow it to use IT to let victims know more about parole hearings.

He explained that in that particular tender, the first envelope bids submitted contained information on whether the bidding company met all the administrative and functionality requirements that stipulated they could do the job if chosen.

The second envelope contained the price that they would charge for doing the work.

“So, if you fail on the functionality side, then the price [second envelope] doesn’t get opened.”

‘Why was this company disqualified?’

He said only one bidder – Integritron Integrated Solutions – met the “first envelope” functionality requirements, so only their envelope was opened to establish pricing.

Brown said there was no clear information yet on how the bid was deemed to be competitive.

“Did the department [of correctional services] do market research to say ‘for infrastructure of this nature, how much would this actually cost?’.”

Brown said that during the evaluation phase, “we [government] opened the other documents and the lowest price was R90m, by a company doing fairly the same thing in the prisons already. Why was this company disqualified?”

On further investigation, the CPO’s office, which does not award tenders, said it should actually not cost more than R50 million.

Brown explained that, as an interface system, it plugs into the departments of police and justice.

“It is similar to the system already used on the CPO’s central data base, which drops into other systems and draws information.

“We put this system in for R8 million. How is it possible they can put this system in for R378 million?”

SITA not consulted

Solly Tshitangano, chief director for governance monitoring and compliance in the office of the CPO, said that there was also no evidence yet that the State Information Technology Agency was consulted, which is a requirement for state IT-related tenders, in terms of the SITA Act.

He said, once they had been asked to look into the tender, they sat in on a meeting at which the company made its presentation after having passed the first two hurdles.

“During the day of the company’s presentation, we went to observe the process and, looking at the minutes, that is where we intervened, ourselves.”

By that stage, administrative processes had already been done and evaluation had already been done.

“After we looked at the documents and the amounts, we advised the department and said if we conclude with this tender, it will not comply with Section 217.1 of the Constitution.”

Earlier during the sitting of the committee, Brown said “draconian” new laws were about to be introduced to cut down on tender manipulation.


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R378 million IT tender scandal rocks SA Correctional Services