Gauteng security contract flagged for R100m irregular expenditure

The cumulative irregular expenditure incurred by Gauteng’s e-government department over its cyber security contract now stands at R104 million.

This was revealed by the e-government department in documents sent to ITWeb.

The ambitious provincial security project has been incurring irregular expenditure unabated over the last four years, with the contract being renewed multiple times without going to open tender.

The disclosure by the department comes on the back of auditor-general Kimi Makwetu’s revelations to Parliament just over three months ago that irregular expenditure in government and other state entities is up. At the heart of the problem is the continued failure to comply with regulations.

Makwetu revealed that irregular expenditure by national and provincial departments, including the expenses of state-owned entities, increased from just under R51 billion in 2017/2018, to R61.3 billion for the 2018/2019 financial year.

The Gauteng cyber security contract has, to date, cost the provincial government over R200 million, of which more than half has been flagged as irregular expenditure.

The latest development has further imperilled the provincial cyber security project that is already battling allegations of corruption.

The Gauteng government has a broader plan to protect the provincial government against increasing threats of cyber attacks. The e-government department had initially planned to launch its own Security Operation Centre (SOC) but the services were later outsourced. No reasons were provided.

The department told ITWeb it incurred the following irregular expenses: in 2017/18, the expenditure stood at R29 478 094, R27 558 046 in 2018/19 and R22 938 436 in 2019/20.

It adds the initial five-year contract, from April 2011 to 31 March 2016, to GSOC Security Services, was awarded for R90 million. It was then extended for two more years, from April 2016 to 31 March 2018, at a cost of R56 million. Another two-year extension was granted from April 2018 to 31 March 2020, costing the department another R56 million.

Adding to the woes are damning letters the provincial treasury has written to the e-government department, chastising it for trying to sanitise the extensions by seeking a deviation from the procurement process after already appointing a service provider.

In one letter seen by ITWeb dated 8 July 2019, acting HOD Gauteng provincial treasury Ntina Themba writes to Boy Ngobeni, the then e-government HOD, saying: “e-Gov confirmed this service is continuing to date since its contract expiration in March 2019. This, in effect, infers that e-Gov did not obtain Gauteng Provincial Treasury‘s (GPT’s) approval prior to the service being obtained but only began its process in April 2019.”

Ngobeni has since left the department after his contract expired December 2019.

The letter notes National Treasury rules are that prior written approval must be obtained from the provincial treasury.

“e-Gov herein seeks approval post giving the instruction to the service provider to continue with service, and the service provider has already performed the services from April 2019 to date. In light of the contents of the aforementioned, the GPT does not have the necessary vested authority to consider this request retrospectively, as it does not have any legislative mandate to approve a variation post factum,” reads the letter.

The Department of e-Government has acknowledged the contract extension but says it was necessary.

“Due to the critical nature of the services provided by the SOC, e-Gov had to resort to the continuation of the service by the incumbent service provider on a month-to-month basis.”

It explains further: “In accordance with the State Information Technology Act (SITA) Act, as amended, the Gauteng Department of e-Government had requested SITA to procure SOC services to secure the ICT infrastructure and data of the Gauteng Provincial Government as a whole. However, SITA was not able to source a new contractor within the stipulated time frame.”

The department adds: “SITA had informed the department that their external auditor had recommended that the tender be cancelled, as SITA advertised the bid on the 80/20 preferential point basis; instead the bids were above the R50 million threshold.”

ITWeb is also in possession of another letter that acting SITA CEO Ntutule Tshenye sent to Ngobeni in December. It reads in part: “The procurement process will take approximately three to four months; therefore, we will not be able to meet the service effective from 1 December 2019. The timelines are impacted by the length of time it takes to get quotes and the contracting process with Microsoft as it takes a few weeks due to their internal approval processes.”

The department has acknowledged the irregular expenditure but said it reported it.

In a statement to ITWeb yesterday, it said: “[In respect of] the 2016/17 and 2017/18 irregular expenditure, the request for condonation was not approved by the National Treasury; however, the expenditure was de-recognised from the financials as per National Treasury Irregular Expenditure guideline of April 2015 Section 28.4.”

It adds: “This allows the accounting officer to de-recognise the expenditure in a case where no official was found not liable and such irregular expenditure was not condoned by the relevant authority. All the above-mentioned irregular expenditures were disclosed properly in the departmental annual financial statements.

“The irregular expenditure has been reported to the auditor-general, Gauteng Treasury, Gauteng Provincial Legislature’s Standing Committee on Public Accounts and Finance Portfolio Committee.”