R1.2bn IT contract not put out to tender

Msunduzi Municipality’s decision to award an “unknown company” a R1.2 billion contract spanning 12 years, without it being put out to tender, has raised questions. The contract is to build and run Pietermaritzburg’s fibre cable network. Ashin Singh, the convener of the SA Minority Rights Equality Movement, a group in Pietermaritzburg, said he was applying to the municipality in terms of the Promotion of Access to Information Act to get access to the records relating to the agreement with Duzi Wired. He said he would ask the public protector to investigate. Singh said the municipality had been under administration last year and remained “technically” bankrupt, but had entered into a contract that he said appeared to be illegal.

Singh said there had been no public participation over the contract. It is believed Duzi Wired would start receiving payment for the contract after three years, when the infrastructure was in place. But it remains unclear how the company would fund the infrastructure. By then, said Singh, most of the politicians in the council would have moved on, but the municipality would be saddled with debt that would, no doubt, escalate. DA councillor Mergan Chetty said the party had objected to the contract being awarded to Duzi Wired and the process that was followed. “Also of serious concern is that Duzi Wired is solely reliant upon the municipality’s contract for its operation.

“If the council did not enter into this contract, would Duzi Wired be embarking on this venture? I believe not.” Chetty said the council had, once again, failed to ensure that a proper consultative process was held before awarding a contract. He said the same thing had happened when the contract for the operation of hand-held parking meters had been awarded by the municipality to Panzascore. “Had the council opened this contract (for the fibre optic cable network) to tender, it would have offered other companies the opportunity to tender, and would have shown that the process was transparent,” Chetty said. Municipal spokesman Brian Zuma said this was a public-private partnership that would see the eventual transfer of ownership of the network to the municipality.

Zuma said that as soon as the infrastructure was working, the municipality would start paying - the equivalent of R100 million a year - for Duzi Wired to operate the system. He said the contract had been awarded in terms of a section in the supply chain regulations that did not require that the project be put to tender. He said the municipality was spending on communication services it did not own. “The beautiful thing is that we will eventually own the infrastructure, which will also become a source of revenue for us when other departments procure the services from us,” he said.

Zuma said the company was working with a “very experienced” company in Joburg that had done the same job in that city. A list of questions was sent to Paris Dlamini of Duzi Wired last week, but he did not respond.