EOH Must Pay Back R40 Million Earned Unduly From Department of Defence

The Special Investigating Unit (SIU) has revealed that tech firm EOH must pay back over R40 million earned unduly from the Department of Defence (DoD). The SIU said this follows the investigations into the R250 million Microsoft Software Licences procurement contracts awarded by the DoD to EOH.
The investigation unit said the probe has uncovered irregularities relating to the procurement process and also overpricing of Microsoft Licenses amounting to more than R40 million.
On 12 July 2019, the SIU was directed to investigate the procurement of Microsoft software licences by the DoD and payments made to the tech firm for these licenses.
“The SIU found that the contract entered into was irregular,” said SIU.
The SIU conducted an intensive investigation which revealed the procurement irregularities and overpricing by EOH arising from the 2016 and 2017 procurement of Microsoft licenses.
“With specific reference to the overpricing of the Microsoft Licenses, EOH was confronted and acknowledged the said overpricing.EOH agreed to sign an Acknowledgement of Debt (AoD) & has since signed AoD with the SIU to the value of R41 676 493.92, which is to be paid back to the DoD,” SIU revealed.
“The signing or acceptance of the above mentioned AoD by EOH does not mean that EOH is exonerated from paying any further amounts due to the DoD that may be subsequently uncovered by the ongoing investigation of SIU.”

Also read: Tech Firm EOH Narrows Headline Loss As Turnaround Plan Starts to Pay Off

Legacy contracts

Significant progress has been made in closing out the previously disclosed problematic legacy contracts.

Five of the eight problematic public sector contracts have been settled, with one having been ceded to a sub-contractor with settlement currently in arbitration, another concluding at the end of April 2021 and one that has been terminated with handover discussions currently underway.

“We anticipate that all these contracts will be satisfactorily closed out by the end of the current financial year,” EOH said.

With respect to the overbilling uncovered in the ENSafrica investigation, EOH has settled with the Special Investigating Unit (SIU) on the Department of Defence contracts and has begun repayment. Furthermore, final negotiations with the SIU on the Department of Water and Sanitation contracts are underway and it is anticipated that settlement will take place in H2 2021. “This will bring to a conclusion the overbilling issues.”


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