NEC heads to court over R400m DHA biometric saga

The battle to control the lucrative and essential multi-million rand biometrics contract handed over by the Department of Home Affairs (DHA) to EOH’s French multinational IDEMIA is now heading to the courts.

The R400 million contract was awarded by the DHA to JSE-listed EOH in 2017 after a controversial tender. The implementation was to be completed in November 2018.

A forensic report by auditing firm Nexia SAB&T revealed how senior executives from EOH and the National Information Technology Agency (SITA) orchestrated an illegal scheme to ensure that the company lands the lucrative contract.

The dispute over the contract escalated in April last year, when SITA reported that the contract breached public procurement laws when it was assigned from EOH to IDEMIA with the consent of the DHA.

SITA, which buys ICT products and services for ministries, said at the time that the DHA’s decision to hand over the R400 million contract to IDEMIA until March 31, 2021 was not in line with laws and regulations, and sets a bad precedent in government.

At the time of the sale in March, the project (which was due to be completed in 2018) was still very far from complete. At that time, R224 million had already been spent on services, infrastructure and software.

Since the assignment of the contract to IDEMIA, a new contract of R191 million has been signed between the DHA and IDEMIA for the realization of the project, with a deadline of October 31, 2021. Despite the time lapse of four years from the initial allocation, the system is not yet operational.

Three companies – NEC Africa, Accenture SA and Ernst & Young Advisory Services – missed the EOH bid, and now one of the companies, NEC, is fighting back.

In court documents viewed by ITWeb, NEC states that it has filed a new court petition seeking an order declaring the Master Service Agreement (MSA) entered into between DHA and EOH Mthombo as illegal and unconstitutional and void; in the alternative, immediately declare null and void and cancel the assignment of the unlawful contract to IDEMIA; declare illegal all payments made by DHA to EOH; and force EOH to return all such payments or at least the profits made by EOH to DHA.

The company claims that there is “no doubt that the award of the ABIS tender to EOH Mthombo was obtained through the corruption of certain employees of EOH Mthombo and therefore it is not disputed that the genesis of the contracts currently in place – the awarding of the ABIS [Automated Biometric Identification System] submission to EOH Mthombo – is illegal”.

He adds that if the contact is allowed to continue, “then a government contract worth hundreds of millions of rand will be left to an entity that has not been involved in a tendering process and is carrying part of the responsibility for the failure of the project at Date”.

“The DHA, as the state agency charged with implementing a project of national significance, was obligated to properly and critically consider and interrogate all options available to it and to choose the one that offered the best overall value and was most likely to succeed,” says NEC Africa.

“The DHA’s evaluation of options before it was materially wrong. Having chosen his preferred option through a materially flawed process, he obtained approval of his choice from the National Treasury through a process that was not appropriate and without informing the National Treasury of all relevant facts. »

The key contract is to migrate data from the current National Home Affairs Identification System, which only records photos and fingerprints of South African citizens, to the new ABIS.

Eventual implementation of the system would provide the country with a single source of identification for citizens across state institutions and private sector entities.

The contract is one of those highlighted by the State Capture Commission as having been fraudulently awarded to EOH five years ago.

In response to NEC’s request, DHA does not object to refund relief, provided that it is not required to return hardware or discontinue use of software purchased under the MSA and does not object to restitution relief, provided that EOH Mthombo actually made a profit under the MSA.

Asked for further comment by ITWeb, DHA departmental spokesperson Siya Qoza said, “We respectfully decline to comment as the matter is before the courts.”

NEC declined to comment further for the same reasons.

EOH and IDEMIA oppose legal action and accuse NEC of acting in its own business interests.

Resource unavailability

In his affidavit, Paul Jeremias, Country Director of IDEMIA, said, “Project completion is over 90% as the first six workflows are the most workload intensive and are nearing completion. The two outstanding workflows are for testing and implementation. These two work streams could not be completed due to the unavailability of key DHA resources.

“IDEMIA has substantially fulfilled its obligations under the Amended and Restated Turnkey Solutions Master Agreement between IDEMIA and DHA. Additionally, IDEMIA would have completed the implementation of ABIS by the time this application is determined. »

Jeremias confirmed that he received ITWeb’s request for comment but IDEMIA had not responded at the time of publication.

The parties are awaiting a new hearing date after the case was adjourned to February 7 by mutual agreement.

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