JSE-listed information technology company EOH Holdings on Wednesday said the Department of Labour (DoL) had not replaced EOH’s newly acquired subsidiary with another service provider.

EOH, which took over a public–private partnership (PPP) agreement with the DoL when it acquired Siemens Information Services from multinational conglomerate Siemens in November, had renamed the unit EOH Managed Services.

“… it created the perception that a new service provider (EOH) had been appointed, which resulted in the internal procurement processes of the department being questioned,” the company said in a statement.

EOH asserted that it continued to deliver services to the department under a valid agreement and had engaged the DoL to resolve the “misunderstanding”.

“It appears to be a simple case of a mistaken identity,” EOH said.

However, during a briefing to the Parliamentary Portfolio Committee on Labour, the DoL said it had suspended the PPP as the department worked towards internalising capacity.

The reason for the suspension had not been disclosed; however, DoL deputy director-general Lerato Molebatsi commented that a termination support transition phase was already under way and that the department was in the process of appointing new service providers in the next few weeks.

“… unlike in the past, the days of overreliance on one service provider are over,” she said, adding that the department would no longer completely outsource information and communication technology services.

DoL director-general Nkosinathi Nhleko said the management of the R2-billion contract over the past ten years did not fully meet expectations, owing to the department’s inability to manage the scale of the project.

“It was like a boat that was allowed to flow without direction. Going forward, the department should take the lead in developing a business imperative that suits its delivery objectives,” Nhleko said.

By the end of 2013, in excess of 120 people would be employed during capacity building in the office of the chief information officer, the DoL said.