SAP R413m licensing agreement set aside

Software producing company Systems Applications Products (SAP) has been ordered to pay back at least R431 million in contract fees to the Department of Water and Sanitation (DWS).

This after the Special Tribunal declared a 2016 software license and support agreement between the two parties unconstitutional and invalid.

Furthermore, the tribunal ordered that:

• The Department may not use any of the software licensed under the 2015 and 2016 license agreements.
• SAP must pay the department an amount of R413 121 383 which represents the total amount the company received pursuant to the agreement.
• SAP must pay back at least R68 million in yearly maintenance fees paid by the department.
• SAP must pay the Department an amount of at least R263 million within five days of the order.

“For the avoidance of doubt, if the Special Tribunal determines that SAP is required to pay the Department more than R263 282 173. 78, because the Special Tribunal determines that SAP may not make some or all of the deductions that it submits it is entitled to make, then that further amount will be payable, together with interest running from the date of this order,” the court said.

The tribunal highlighted that the other issue that remains in dispute is if the software company is entitled to deduct payments it made to a third party during the execution of its duties.

“To enable the Special Tribunal to determine the issues, SAP will, within 15 court days of this order, file an affidavit solely dealing with the payments made to third party software companies and the factual basis for its contention that these expenses ought to be deducted from the amount to be paid to the Department of Water and Sanitation.

“[Within] 10 court days of receipt of the SAP’s affidavit, the SIU and the Department of Water and Sanitation will file their affidavits in answer thereto. The Presiding Member of the Special Tribunal shall be requested to convene a case management meeting within 10 court days of the expiry period thereto,” the court said.