The Competition Commission wants the Competition Tribunal to investigate two SA Air Force (SAAF) suppliers for possible cartel conduct.
The suppliers in question are, according to a Commission statement, K.F. Computers CC and SAAB Grintek Defense, and the conduct relates to a 2016 tender for the provision of network maintenance and support services for the SAAF’s ground command and control systems (GCCS) and current intelligence system (CURIS).
“Both are crucial systems handling all SAAF operational intelligence and planning. Additionally they have been in service for many years, are old and difficult to maintain, requiring deep domain knowledge,” according to African Defence Review director Darren Olivier.
As far as possible collusive conduct on the contract is concerned, Olivier maintains it was a “very low margin contract with SITA (State Information Technology Agency) squeezing suppliers to come in as low as possible and supposedly not properly pricing in the needs of that kind of constant support for a legacy system”.
“Pretty much every part of it is custom.”
Olivier notes that K.F. Computers was a specialist programming consultancy which, with SAAB Grintek Defense, has been maintaining GCCS and CURIS for more than 30 years.
“This includes upgrades on the system and it’s pretty much a given nobody else can do the system maintenance without substantial upfront costs and delays.”
He is of the opinion the tenderers “might have colluded” to protect margins against unforeseen circumstances on a contract that “realistically only they could fulfil”.
The Competition Commission plans to ask for a fine of 10% of both company’s turnover. To this, Olivier said: “They broke the rules and deserve the fine”.
There is no indication in the Competition Commission statement of when the case will be heard by the Competition Tribunal.