The department of home affairs has hailed the settlement it reached over the weekend with JSE-listed IT group Gijima, saying the agreement is in the best interest of the state and taxpayers and could save the department in the region of R2bn.

Gijima was appointed in 2008 to modernise the department’s IT infrastructure in a project known as “Who Am I Online?”.

The project is meant to digitise most of the key processes of the department. This includes producing an enhanced national population register and processing ID, passport, visa and other permit applications more efficiently. It’s also aimed at enhancing “movement control” for South Africans and foreigners at the country’s borders.

Gijima won the R2,1bn bid in 2008, but by 2010 the cost of the project had escalated to R4,5bn, leading to an investigation by the department.

In April last year, home affairs notified Gijima — as well as IBM and Hewlett-Packard, which had provided lease financing for the project — that it regarded the contract as invalid. The department then entered into negotiations to allow for the “urgent completion of the project in line with its original requirements and in line with the original cost estimates”.

In terms of the settlement between the parties, the agreed final cost of the project to the department will be R2,27bn, in line with the budget allocated by national treasury of R2,23bn, which was conditionally approved in 2009.

Government has paid R391m to date, including interest on leases of R945m between Gijima and the department. IBM and Hewlett-Packard purchased the revenue streams accruing from these leases. Home affairs has agreed to settle R815m of these leases early, saving R234m in capital and interest.

Home affairs says Gijima has agreed to contribute R375m under the settlement. This money comprises the “writing down of invoices and the future rendering of support and maintenance services”.

“The settlement opens the way for the urgent resumption of the project and represents a potential R2bn in saving to government against the R4,5bn estimated cost to complete the project under the current disputed contracts.”

Once the outstanding lease settlement costs have been paid, the department says it anticipates spending R1,3bn in completing the project. The vast bulk of this funding will be paid to subcontractors working with Gijima to deliver the outstanding components of the project.

Home affairs says a key factor that allowed for completion of the project at close to the original tender amount is the use of existing state IT infrastructure and systems developed in recent years. “Among these is the highly successful enhanced movement control system developed and implemented ahead of the 2010 World Cup.”

The project will also build on a number of systems currently in use by the SA Revenue Service, including its service management system used in branches and in its call centre. — Staff reporter, TechCentral