South Africa: Home Affairs Saves Billions in IT System Saga
Government has saved over R2 billion in tax payers' money and averted a protracted court case by settling a dispute over the upgrading of the Department of Home Affairs' information technology infrastructure and systems.
The department aimed to modernise its systems through the "Who Am I Online (WAIO)" project, which was to process identity documents faster.
The project, now jointly managed by the department and that of finance through the South African Revenue Service (SARS), is set for completion in the next two years.
The department said that following transparent procedures, the tender for the project was awarded to service provider Gijima in 2006 at R2.1 billion. But the company failed to deliver by 2008 as agreed. By last year, project costs had sky-rocked to R4.5 billion, resulting in investigations by the department.
The Auditor General and the Forensic Auditor are set to issue two separate reports on what could have gone wrong when the tender was signed.
In the meantime, the department and SARS have started working together to ensure that the project is finished at a cost of about R2.4 billion, instead of the inflated figure and the attendant interests of R800 million.
SARS Movement Control Systems was highly successful during the FIFA World Cup and has to date processed 25 million movements across the country's ports of entry.
Gijima, IBM and HP, who are party to the settlement, would be involved in the completion of the project, which is bound to be strictly monitored on a daily basis.
Minister Nkosazana Dlamini Zuma, her Director General Mkuseli Apleni and SARS officials addressed the media on the settlement in Parliament today.
Dlamini Zuma said that in April last year, they notified Gijima as the prime contractor and IBM and HP, who had provided lease financing for the project, that the contract was now invalid.
In order to avoid "indefinite delays to the project and lengthy litigation," she said they had entered into negotiations in the last 10 months in order to amicably resolve the matter and see to it that the project was delivered not far from its original budget.
"In terms of the settlement agreement between the parties, the total final capital cost (excluding interest) of the items in the scope of the project, is estimated to be R2.27 billion. This is in line with the Treasury budget of R2.23 billion for the project, which was conditionally approved in 2009.
"Government has paid R391 million to date, including interests on lease of R945 million between Gijima and the department. The revenue streams of these leases were purchased by IBM and HP," said Dlamini Zuma.
She added that government would undertake to settle those leases in an amount of R815 million, saving itself roughly R34 million in capital and interest.