Siemens has declined to comment on a decision by the department of labour to terminate its 10-year IT contract with the German-owned firm, saying it has not seen a report which recommended the company’s services be terminated.

Labour acting director-general Sam Morotoba tabled a KPMG report in front of parliament’s portfolio committee on labour on Wednesday. The report recommends that the department not renew the contract and that it should seek to redress alleged failures by Siemens. The contract term expires 22 months from now.

Siemens SA head of corporate affairs, Sithembile Mokaeane, says the company has not seen the KPMG report presented to the portfolio committee. “Currently, we cannot comment on the facts,” she says.

However, she says the company is “obviously interested” in discussing any issues the department has with the company’s service, with the “clear goal of finding a solution to the successful implementation of all projects covered by the contract”.

Morotoba told the committee this week that the cost of the contract had increased from an initial R1,2bn to R1,9bn as a result of interest and inflation. He also said the service the department received from Siemens had not been up to standard, partly because internal restructuring at the company resulted in it outsourcing delivery to a subcontractor.

The department said it had not agreed to this arrangement. KPMG said it constituted a breach of contract by Siemens.

The department enlisted the help of national treasury, the State IT Agency (Sita) and the state attorney, to handle the talks with Siemens, Morotoba said. It was also taking advice from Sita on setting up a new IT management system once the contract with Siemens ends. — Staff reporter, TechCentral, with Sapa