The Auditor-General has released its report into the awarding of the controversial Companies and Intellectual Property Registration Office (Cipro) enterprise content management (ECM) tender and found some deficiencies in the procurement processes followed by both the State IT Agency (SITA) and Cipro.
The report found that the procurement process followed by SITA in accrediting suppliers for the contract had a number of deficiencies.
"No business case had been approved for this tender by the Department of Public Service and Administration after consultation with the Government Information Technology Officers Council. SITA and the Department of Public Service and Administration did not comply with SITA's regulations," according to the report.
"Inaccuracies were noted in the calculations on the scoring sheets completed by SITA's bid evaluation committee during the evaluation of tenders for contract 398.The sheets were not signed and it was not possible to determine whether the scores were combined scores or the scores of individual members of the bid evaluation committee. The AGSA was therefore unable to confirm the correctness, fairness and accuracy of the scores calculated by the bid evaluation committee to decide on the recommendation of service providers to be listed on the transversal framing term contract," it adds.
"No evidence could be submitted that SITA had evaluated the financial position /status of the bidders before successful suppliers were placed on SITA's approved supplier list. Clearly neither SITA nor the user department ( CIPRO) had evaluated the financial position of service providers listed on contract 398 before the contract for the Enterprise Content Management system was awarded."
Cipro was also rapped over the knuckles, with a number of procurement deficiencies also noted.
"The estimated vendor cost (excluding Cipro's indirect cost) according to the business case for the tender was R141-million. Allegations were made that the business case had been furnished only to the successful tenderer for the Enterprise Content Management system," the report states. "Although the investigating team could not confirm these allegations, some information in the proposal of the successful tenderer was almost exactly the same as the information in Cipro's business case, for example the tender price of the successful tender amounted to R138-million (excluding extras), which differed by 1,78% from the estimate in the business case.
"The evaluation of the functional specifications was conducted by the two evaluation teams. However, the bid evaluation committees were not appointed according to the prescripts. Scoring by the two evaluation team s on certain functional criteria varied as much as 67 % per criteria in instances where the scores were expected to vary very littl.
"In evaluating the tenders, Cipro did not evaluate the financial position of bidders as part of the process. According to Cipro they accepted that, as part of SITA's transversal framing term contract process, the financial stability of the various bidders would have been verified to ensure continuity and sustainability of project implementation.
"According to the bid proposal, the design phase includes the design of a blueprint. After approval, the software could be procured. However, in the contract signed on 27 March 2009 the stipulations of the proposal were changed and the software licences amounting to R 56 million were paid on 7 April 2009, although the blueprint was only approved in June 2009."
The auditor-general recommends that SITA's board of directors improve procurement processes and regulations in a number of areas.
"Measures should be put in place to ensure that SITA complies with the procurement regulations as non – compliance with regulations in evaluating and recommending poses a potential risk for various government departments," it states.
"SITA should improve contract administration by ensuring that scoring sheets are processed accurately and are properly safeguarded and should hold those responsible accountable in cases where this standard practice is not adhered to.
"Regulations should be improved to clearly state the responsibilities of SITA and that of its client with regard to a transversal framing term contract and the evaluation of the financial sustainability of suppliers."
In addition, the report suggests some action that could be taken by Cipro's accounting officer.
These would include assessing the risk of a supplier not being financially sustainable and should implement measures to address the related risks; assessing the significance of non-compliance with procurement processes in awarding the contract to the successful bidder and regularise accordingly; determining whether the successful bidder had received information not available to other bidders, since this was the only bidder whose proposal was within a range of 2 % of the estimated price as contained in the business case; and obtaining the reasons for the variances in the points scored between the two evaluation teams, assessing the reasonableness thereof, and taking appropriate action in instances where variances cannot be justified.