Brief
South African Revenue Service signs R2.75 billion sole‑source AI contracts with Microsoft and IBM
The contracts are listed as sole‑source awards under framework agreements pre‑negotiated by the State IT Agency.
By Felo News Desk · Published
The South African Revenue Service (SARS) will spend roughly R2.75 billion on two sole‑source contracts with Microsoft and IBM, the agency’s 2025/26 annual report shows.
What happened
Microsoft’s deal, valued at R1.58 billion, renews the agency’s enterprise licence agreement and unified support service for three years – about R526 million per year. IBM’s contract, worth R1.17 billion, covers hardware, software, maintenance, support and professional services for the same period. Both contracts were awarded without open tenders, recorded under “procurement by other means” as sole‑source (limited bid) awards.
What the reports add
TechCentral notes that the contracts were bought under framework agreements pre‑negotiated by the State IT Agency, allowing public bodies to purchase from approved suppliers without running separate tenders. The report also lists other 2025/26 technology spend approved outside open tenders, including a R141.6 million Vodacom contract, a R95 million Software AG subscription change, R63.8 million for Dell EMC maintenance and R55 million for three‑year security testing by Orange Cyberdefense.
What was said
The article does not contain direct quotations from officials.
How it came about
SARS has been expanding artificial‑intelligence tools, launching the internal AI assistant Pulse in December 2025 and deploying Microsoft Copilot, as recorded in a parliamentary finance committee meeting. The agency’s AI chatbot Lwazi answered more than 2.7 million taxpayer questions by March 2026, up from 805 000 the previous year. Finance Minister Enoch Godongwana allocated an additional R7.5 billion to SARS in the May 2025 budget, and the commissioner, Johnstone Makhubu, told MPs the service is exploring a budget‑facility model to fund a R7‑10 billion modernisation programme.
Key facts
- SARS will pay Microsoft R1.58 billion for a three‑year licence and support deal. (techcentral.co.za)
- SARS will pay IBM R1.17 billion for a three‑year hardware, software and services contract. (techcentral.co.za)
- Both contracts were awarded as sole‑source (limited‑bid) awards without open tenders. (techcentral.co.za)
- The deals are part of framework agreements pre‑negotiated by the State IT Agency. (techcentral.co.za)
- SARS’s AI chatbot Lwazi answered over 2.7 million taxpayer questions by March 2026. (techcentral.co.za)
Sources
- [1] techcentral.co.za — originally reported as “Sars to pay Microsoft and IBM R2. 75-billion in sole-source deals”
