Gauteng Online spending still a mystery

Despite a new tender for Gauteng Online being cancelled, the contractor who supplied the project is still being paid millions to keep school computer labs running. In a reply to questions asked by the DA in the Gauteng legislature, Finance MEC Mandla Nkomfe said the department was spending R126-million to extend the contract this year. Nkomfe announced in March that a tender advertised to continue the school computer project for a further five years had been cancelled. This came after allegations of unfair competition which favoured the current supplier, CloudSeed (previously known as SMMT Online). CloudSeed had rented all the computer equipment to the government, and all the hardware and software of the system belongs to them. If a new company received the tender, it would have to buy equipment to cater for the project.

Nkomfe said at the time that the contract would be extended by only “a month or two” before the project was taken over. The successful bidder was supposed to be announced at the beginning of last month, but this has not happened yet. But the R126m budget suggests the extension will be for far longer than “a month or two”. In the now expired contract, CloudSeed was paid R2-billion to roll out the project, but there have been allegations that the project was not running effectively, with some school communities nicknaming the project “Gauteng Offline”. CloudSeed main director Tebogo Mogashoa is a businessman known for his ability to receive government tenders. Aside from Gauteng Online, some of his better known projects include the Gauteng government garage contract, where he supplies tracking devices for government vehicles.

Nkomfe admitted at a press conference that the department had cancelled the new Gauteng Online tender because it wanted to redesign the project so that tablet computers are used. He said the school computer labs were no longer needed. Nkomfe said in his replies to the legislature that the extension to the contract had the same terms and conditions as the original contract, and the department was exploring alternative solutions for sustaining the service “without creating a dependency on any service provider”. “However, we are in no position to elaborate thereon at the moment as we are negotiating with various parties, and our deliberations are at a sensitive stage,” said Nkomfe. Last month, The Sunday Independent reported that the government still owed CloudSeed R200m, which it described as “historical arrears”.

A source who knows about the project intimately, but who did not want to be named, said CloudSeed would also receive around R200m from Rand Merchant Bank as a retention that would be paid out when the company received its final payment from the government for the project. He said he could not understand why the government was spending a further R125m on extending a contract for computer labs when Nkomfe had said this was not their future plans for IT education. “At around R2m for a school of 500 pupils, the government could have supplied around 60 schools with a tablet for every child, a wiFi network and content. This seems like a waste of money,” the source said.