The South African Revenue Service (SARS) renewed Microsoft and IBM technology contracts worth R2.75 billion in 2025/26 without running its own competitive tender, its annual report shows.
The two renewals, each for three years, make up about 97% of the R2.85 billion that SARS committed through sole-source awards in the year to 31 March 2026. They also account for about 70% of the R3.93 billion in all deviations from its normal bidding process. TechCentral reported the contracts on Monday.
The annual report ties each renewal to a framework agreement that the State Information Technology Agency (SITA) had negotiated in advance. At R1.58 billion, the larger award keeps SARS on Microsoft’s enterprise licence agreement and Unified Support Service for another three years. SARS said that process was “aligned with the terms and conditions of the pre-negotiated SITA Framework Agreement”. The R1.17 billion IBM award runs for the same period and spans hardware, software, maintenance, support and professional services.
SARS classed both as sole-source limited bids. The report describes sole source as a case where “there is no competition in the market and only one supplier can provide the required goods or services”.
Deviations from competitive bidding
SARS concluded 61 deviations from standard procurement in 2025/26, worth R3.93 billion in total, and 62 competitive bids. Nineteen of the deviations were sole-source awards worth R2.85 billion. Another 37 were single-source awards worth R1.08 billion.
Source: SARS Annual Report 2025/26, Annexure 2. Chart: Rand Desk
Office space and leases made up much of the rest. The biggest was R458.5 million for turnkey offices in Brooklyn and nearby areas, in a property owned by the Public Investment Corporation, and the list also includes leases and fit-outs in towns from Edenvale to Mossel Bay.
Other technology entries were smaller. The largest was R141.6 million for Vodacom over 24 months, from 1 April 2026 to 31 March 2028. Security contracts included R55.0 million to Orange Cyberdefense for three years of penetration testing and R18.5 million to CyberAntix for a 12-month security operations centre service. Altron Security was awarded R18.4 million over five years for Entrust digital certificates, and Dell EMC maintenance and support was renewed for R63.8 million over three years.
SARS also approved 51 expansions and variations to existing contracts, worth R2.11 billion in total, which it said was 22% less than a year earlier. Twelve of those changes, worth R398.2 million, were classed as ICT. The changes included a R95.0 million variation to a Software AG subscription.
SARS said it reported every deviation, expansion and variation to National Treasury and the Auditor-General under a 2021/22 Treasury instruction on supply chain management. The Auditor-General of South Africa gave SARS a clean audit for 2025/26, the report said.
Digital channels
The annual report shows how much of SARS’s contact with the public now happens on screens and phones. It puts the number of taxpayer questions answered by Lwazi, SARS’s AI assistant, at more than 2.7 million since the service became available on 15 November 2024. Of the feedback Lwazi received, 82.9% was positive.
WhatsApp requests climbed to 4.4 million in 2025/26 from 1.8 million the year before. USSD requests rose to 22.4 million from 14.9 million. Queries logged through the online query system increased to 6.9 million from 5.6 million. Website page views fell to more than 65 million from 67 million.
The report sets out SARS’s strategic intent as voluntary tax compliance supported by a modern, intelligent and data-driven administration. In his message in the report, Finance Minister Enoch Godongwana said National Treasury had given SARS additional funds for its modernisation. More technology and telecoms news is on our Tech and Startups page.
SARS said it negotiated savings of R441 million in 2025/26, which will accrue over the remaining periods of the contracts concerned in future financial years.
