The Auditor-General (AG) has confirmed that the infamous telephone upgrade contract that the Herald has repeatedly reported on was irregular.
In the audit finding of the contract, a copy of which the Herald has seen, the AG noted that the procurement process was not properly followed in awarding the R13 174 069 contract to Indlela Data for the hardware and installation and an additional R59 649 per month, excluding Vat for standard services and VoIP (voice over Internet Protocol) services.
The previous municipal manager, Dr Nomathemba Blaai-Mokgethi, who recently resigned following questions surrounding the legitimacy of her appointment initially rubbished claims that there was anything wrong with the awarding of the contract.
She later argued that it was on legal advice that the normal tender procedure was not followed.
‘We realised that a contract for similar work had already been awarded to a contractor in Ventersdorp; the legal opinion was that we should extend the work of that contractor to include Tlokwe and, thereby, avoid duplication of work,’ she said at the time.
The AG, however, found that the procurement process was not followed, even in the awarding of the contract at the Ventersdorp local municipality.
In the 2015/16 audit, the AG found that the R700 000 contract awarded to the Klerksdorp-based Indlela Data in Ventersdorp was irregular because the bid evaluation and adjudication criteria were not the same as indicated in the original bid invitation and that no proof of the municipal account was provided.
The AG report also noted that, from the documentation available, it was unclear whether the agreement was an extension of the existing contract or a new agreement between the parties.
Either way, the awarding of the contract would have been irregular.
Even if it had been an extension, the municipal finance management act (MFMA) circular 62, prohibits contracts to be expanded or varied by more than 20 per cent for construction-related goods, services and/or infrastructure projects and 15 per cent of the original value of the contract for all other goods and/or services.
The extension of Indlela Data’s contract from Ventersdorp to NW 405 clearly exceeds the limit of 15 per cent.
The Herald launched its own investigation into the amount that was paid for the contract.
According to various sources within the industry, R13 million was an absurd amount to pay for this system.
Quotes obtained from four other businesses came to between R2 and 3 million.
According to Blaai-Mokgethi, NW405 Municipality asked the Rustenburg municipality for their opinion as they were also upgrading their telephone system.
They noted that the amount paid by NW 405 was reasonable. One company that gave the Herald a quote of R3,2 million noted ‘It’s really excessive. From our side, we would be making very good money on this.’
Another quotation obtained by the Herald through Du Pont Telecommunications, a leading provider of telecommunication systems based in Johannesburg, came to about R2 million including industry-related profit margins.
Answering previous questions about where the money for the upgrade would come from, Blaai-Mokgethi said Cogta (Ministry of Cooperative Governance and Traditional Affairs) had made an amalgamation grant of R13 million available for any expenses relating to the merger.
In January this year, the municipality announced that this grant from the Treasury had been depleted.
The mayoral spokesperson, Victor Boqo said at the time that the municipality would write to treasury and submit a new business plan to obtain funds so that the second phase of the amalgamation could be started.
The municipal spokesperson, Willie Maphosa, said in January that the amalgamation task team was in the process of finalising a report with the cost breakdown for the department and council.
To date, this report and breakdown have not served before the council.
In the same month, the municipality received an email from Indlela Data, which the Herald has seen, warning them that services had been suspended because of non-payment.
By the time of going to print, the municipality had not yet responded to the Herald’s questions on why the service provider was not paid, whether the money spent on this irregular contract would be collected from those responsible for awarding it or how much money had been recovered in the last three years in terms of contracts that were found by the AG to be irregular.
Indlela Data also did not respond to the Herald’s questions about the amounts that the company charged the municipality.

Read the previous articles here

https://www.citizen.co.za/potchefstroom-herald/36423/legal-not-always-right-says-expert-telephone-contract/

https://www.citizen.co.za/potchefstroom-herald/33620/r10-m-telefoon-kontrak-waarde-vir-geld/

https://www.citizen.co.za/potchefstroom-herald/34615/telefoonkontrak-billik-se-munisipale-bestuurder/

https://www.citizen.co.za/potchefstroom-herald/29807/niks-fout-met-telefoonkontrak-nie-se-munisipale-bestuurder/

https://www.citizen.co.za/potchefstroom-herald/29731/r10-miljoen-telefoonstelsel-vir-munisipaliteit/