Sharp focus on IFMS contracts as SITA is added to probe targets

The beleaguered State IT Agency (SITA) is facing yet another probe, this time over its involvement in National Treasury’s integrated financial management system (IFMS) project.

This, as the scope of the Special Investigating Unit’s (SIU’s) investigation of the IFMS tender has been broadened, with president Cyril Ramaphosa signing proclamation 281 of 2025.

In 2020, Ramaphosa instructed the SIU to investigate contracts around National Treasury’s bungled IFMS project, going back as far as 1 January 2016. Based on the president’s mandate at the time, the investigation solely focused on the affairs of National Treasury.

At the time, SITA and the Department of Public Service and Administration (DPSA) were not identified as part of the investigation, until now.

The new proclamation also extends the period for the investigation, according to the SIU.

The probe, which initially focused on alleged misconduct starting from 1 January 2016, now allows the corruption-busting unit to investigate issues dating back to 1 July 2013.

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“The central focus remains on procuring and contracting for the IFMS,” says the SIU.

As part of the investigation, the SIU is mandated to investigate any alleged serious maladministration in connection with the affairs of SITA and the DPSA; improper or unlawful conduct by employees of the institutions; unlawful appropriation or expenditure of public money or property; and unlawful, irregular or unapproved acquisitive act, transaction, measure or practice having a bearing upon state property.

It will also probe intentional or negligent loss of public money or damage to public property, and corruption-related offences as outlined in the Prevention and Combating of Corrupt Activities Act.

“The investigation will specifically scrutinise whether these procurements and contracts were fair, competitive, transparent, equitable, or cost-effective, and whether they violated any applicable legislation or Treasury instructions,” says the SIU.

“Furthermore, the investigation is no longer limited to the main IFMS contract. The amended schedule details a series of associated tenders and requests for quotations (RFQs) that are now included in the probe.”

The RQFs under investigation include, but are not limited to:

• Appointment of a service provider to review the IFMS tender specifications (technical and functional), to ensure the tender meets the full solution requirements.

• Appointment of a service provider to provide probity services for the IFMS project.

• Appointment of two service providers to lead the programme, stakeholder management and strategic business planning.

• Appointment of service provider(s) to assist with organisational change management and communications concerning the IFMS programme.

• Appointment of service provider(s) for strategic systems planning regarding the IFMS.

• Appointment of a service provider to assist with probity services and assurance regarding the IFMS.

“The SIU will also investigate the main tender for the appointment of a service provider to establish and operate a project management office for the IFMS programme.

“The probe will look at any irregular, unlawful, or improper conduct by officials or employees of the institutions, suppliers or service providers, or any other person or entity implicated.”

Approved in 2005, the IFMS project was launched in the hopes it will resolve financial system problems and replace aging and fragmented financial, supply chain, payroll and human resource management systems.

A public sector joint initiative − led by Treasury in partnership with the DPSA and SITA − the project aims to deliver an integrated financial management system to be used throughout national and provincial government. SITA was appointed as project manager of the IFMS.

The project has been described as critical to tightening financial control, eradicating corruption and improving public sector efficacy.

Government’s initial strategy was to procure a bespoke system, developed specifically for its requirements. A decade later, however, Parliament was told the resulting system was not viable and should be abandoned. The failed effort cost the country in excess of R1.2 billion.

In its place, government decided to pursue a commercial off-the-shelf solution. SITA put the new specifications out to tender in 2014 and again a year later. In 2016, Treasury announced enterprise software giant Oracle had been awarded the contract.

In May, Ramaphosa directed the SIU to investigate claims of procurement irregularities at SITA.

The investigation order came as the agency experienced delivery and capacity challenges, as well as investigations by the Public Service Commission and Public Protector into governance issues.

SITA is an entity of the Department of Communications and Digital Technologies, under the leadership of minister Solly Malatsi.

It is considered as a central pillar of the state’s IT procurement, acting as the backend office of government ICT. Its responsibilities include developing, operating and/or maintaining ICT services consumed by government departments. It was founded to provide services to government departments at a much-reduced rate.

However, its governance, performance failures and existence have continuously been called into question, amid delayed tender awards, irregular spending and high staff attrition.

The Department of Home Affairs (DHA) has expressed interest in severing ties with the agency because of system downtime issues, for which it blames SITA.

DHA minister Dr Leon Schreiber previously slammed SITA as an “artificial construct that stands squarely in the way of technological progress, not only at home affairs, but across government”. He blamed SITA for impeding the DHA’s ambitions to become a modern, digital department.

The South African Police Service, justice and constitutional development and basic education departments have also previously expressed their frustration with SITA.

Despite all its troubles, the government ICT procurement agency has indicated it is putting its house in order and actively implementing reforms to restore trust and service excellence.