Outsourcing briefing by Auditor-General SA; Parole Boards briefing by Department Correctional Services

Meeting report

Outsourcing: Briefing by Auditor-General South Africa (AGSA)
Mr Z Bakkies, Project/Liaison Officer, Auditor-General of South Africa, provided a brief history of outsourcing. Over the past two decades, government departments had been under pressure to act more like market-driven enterprises. To reduce costs and improve service delivery, the outsourcing of particular non-core activities and the monitoring of service providers was introduced. A “best value” or “value for money” approach had been widely adopted. Reasons for outsourcing were to improve the quality of service and to help senior managers focus more clearly on core competencies of organisations, among others. Disadvantages cited were the loss of knowledge and skills for the department providing the particular services, and the poor use of in-house staff.

Mr Bakkies provided figures on the outsourcing performed by the Department of Correctional Services (DSC). R839.3 million had gone towards catering. Security fences and provision of closed-circuit television (CCTV) had cost R436 million, and the maintenance of these for 48 months had cost a further R50.7 million. Television systems and monitors had cost R159 million and maintenance for 12 months had cost a further R65.4 million.

Cleaning services at Head Office had cost R2.5 million, and the transaction advisor services for Public/Private Partnership (PPP) projects had amounted to R20 million.

It was noted that DCS had embraced Public/Private Partnership (PPP) strategies to deliver five 3000 bed correctional centres in line with the DCS White Paper.

A feasibility report was submitted to National Treasury for the Treasury Approval 1 (TAI). A Request for Qualification (RFQ) documentation was prepared and submitted to National Treasury for authorisation. A Request for Proposal (RFP) document was submitted to Treasury for approval, and the Request for Procurement was issued to pre-qualified bidders. The project was currently at the procurement stage, but had been suspended by the Minister since May 2009, so that she could familiarise herself with project details.

Mr Solomon Jiyana, Senior Manager, added that outsourcing need not be abused. The principle that must be adhered to was that Departments should only outsource where there was a lack of capacity to deliver. DCS faced overcrowding challenges, which the PPP facilities project would help to meet.

Discussion
Ms W Ngwenya (ANC) remarked that a lot of money had been spent on Public/Private Partnership (PPP) projects. She asked what procedure was adopted to deal with tenders, and whether tenders were studied closely, with a view to saving wherever possible.

Mr Bakkies replied that the Auditor-General of South Africa (AGSA or the AG) did not generally involve itself with monitoring the adoption of best practices, and the effective utilisation of monies spent. The use of consultants was being investigated, and there would be reports on that.

Mr A Fritz (DA) referred to huge sums that had been allocated, as apparent from page 7 of the report. He asked if the AG had mechanisms to measure the effective utilisation of sums, like the R839 million spent on catering. He also asked if it would be possible to unpack the specification process for the Committee. He ventured that sums like R20 million spent on items like transaction advisor services for PPPs were extravagant.

Mr Z Madasa (ANC) enquired if the AG was satisfied with the feasibility of PPP projects. In regard to operational requirements, he asked if the legality of outsourcing was taken into consideration. Finally he asked how independent the advisors were.

Mr Madasa then interrogated the issues of value for money and cost-effectiveness. He asked if the AG was satisfied that services procured had been necessary, for instance the R20 million paid for transaction advisor services. He queried whether the cleaning services for Head Office, costing R2.5 million, were really necessary, pointing out that it was perfectly possible that inmates could have been utilised for this work. With regard to catering, he opined that the DCS had to improve in its capacity to provide for itself. A breakdown was needed of food supplies that had to be outsourced in the different regions.

Mr J Selfe (DA) remarked that there were two types of audit, namely the auditing of proper procedure, and the auditing of value for money. He asked who made the judgment in each case, whether the Department or the AG, and who made the final decisions whether outsourcing should take place.

Mr Selfe drew attention to the fact that there were three cases where initial installation of security fences or television systems was followed by the provision of a maintenance service at great cost, like the R50 million spent on maintenance of CCTV and fencing for 48 months. He asked where the accountability for managerial decisions lay. He asked about the reasons why the New Generation PPP facilities had been removed from the agenda.

Mr Bakkies replied that the AGSA was primarily a finance regulation auditor. The first concern was whether the financial reporting of the Department was backed by sufficient evidence. Reports on service delivery were checked to ascertain if information was reliable. There had to be compliance with laws and regulations that impacted on figures.

The division of special audit services in the Office of the Auditor-General looked at performance, and enquired after effectiveness, efficiency and economy. However, generally the AGSA did not scrutinise matters such as best practices adopted, or the effective utilisation of funds. As to whether outsourcing was justified, or whether the best agents had been selected for PPP projects, AGSA could not provide an answer. He explained further that AGSA had to ensure that Treasury regulations were complied with. Some value-for-money audits were done, but not much. Qualifications were received when report frameworks were not complied with, or when evidence was lacking, with regard to tangible assets, for instance.

The Chairperson asked what procedure the Committee could follow, given that the AG could not comment on such things as value for money. He noted that 15% of the DCS budget went to outsourcing, and asked if this was considered to be reasonable, and whether the Special Audit Services unit could provide answers.

He continued that the Committee wanted an independent view. If the DCS were to be asked to comment, it would naturally try to justify its position. If the Department held to one view, and an independent observer held quite another, the two positions had to be reconciled. There had to be criteria of transparency with regard to value for money and cost-effectiveness. He asked whether the type of outsourcing currently in place become the norm, and whether it would continue.

Mr Bakkies replied that some major outsourcing contracts were currently running. The special performance audit department investigated the use of consultants, but its attention was currently focused on such agencies as the South African Broadcasting Corporation. Internal audits looked at internal issues, and a report on that was needed.

The Chairperson asked about the findings of the most recent AG report.

Mr Jiyana replied that there had been problems around asset management. When declared assets had been traced back to the asset register, there were items that could not be accounted for. The DCS had to deal with the question of whether its financial statements provided a true reflection. If there were discrepancies, the AG wanted reconciliation. Adjustments had been made to financial statements  that were not backed up by documentation. There was a lack of accuracy. The Department could furnish more detail.

Mr Bakkies added that there had been some improvement over the preceding three to four years. During the previous and current years, the Department had only been qualified on tangible assets. He stressed that the fixed asset register had to contain everything. It had to be possible to locate all assets. All declared assets had to concur with the fixed asset register. If there were discrepancies, the Department received a qualification. A new fixed asset system had been introduced in the previous year, but was implemented at different times in the various regions, and this had caused some problems.

Parole matters: Briefing by the Department of Correctional Services (DCS)
The Chairperson told DCS delegates that the Committee had met with parole board representatives on the previous day, had asked them to report on the effectiveness of the parole board system, and had heard those Chairpersons highlighting challenges and frustrations. Their concerns would be shared with the DCS. Parliament was wanting to know exactly what was happening on the ground, as it wanted the correctional justice system to work. The Committee had an understanding of the role and functions of parole boards, but wanted to question how effective they were, and what constraints were hindering them. For instance, matters like vacancies were a cause for concern.

Mr Teboho Motseki, Chief Deputy Commissioner, DCS, remarked that the presentation might not be in line with what the Chairperson had referred to, as it concentrated more on the way the system worked.

Ms Sharon Kunene, Deputy Commissioner, Social Reintegration, DCS, defined parole within a local context as a placement option from prison into the system of community corrections, subject to certain conditions. Since 1 October 2004, parole boards had been community based and consisted of a Chairperson and Vice-chairperson from the community; a member of the DCS who acted as secretary; two more community members and a co-opted member from the South African Police Services (SAPS).

Day parole was not widely used in South Africa, due to capacity problems. Medical parole was for inmates diagnosed as being in the final phase of terminal illness, so that they could die at home with their families. Medical parole challenges included lack of proper care and support; the fact that foreign nationals could not be deported, and the dilemma created for medical practitioners, whose aim was to prolong life.

Risks associated with ordinary parole included public concern about re-offending, and vulnerability of victims.

Challenges to parole boards included lack of management involvement in the functioning of parole boards; lack of clarity regarding the contracts of board members; the poor appointment rate in some areas, and the participation of members.

Discussion
Mr Abram enquired about undue influence. When parole board decisions were taken, he asked whether the Department acted as a “Big Brother” breathing down the necks of the board. He had also received the impression from parole board representatives that there was a lack of contract clarity. Members of the Boards had to assured of security of tenure.

Mr Selfe noted that the meeting of the previous day had disclosed problems of independence, interference and intimidation. It was clear from the Act that parole boards had to be independent, but in practice it was possible to have interference with that independence, as illustrated by a range of matters such as directives, to having to continually ask for cars, or signatures. He pointed out that some parole board members had been suspended or dismissed. That could constitute a form of intimidation, which in turn affected the independence of the boards. No one serving on the parole boards seemed to know if their contracts would be renewed, which could be construed as intimidation, also. He asked that the Department give some further information around the independence of the boards.

Mr Motseki responded that parole boards in their current form, were without precedent in the country. Parole board appointments only dated back to 2005. The problem was that appointment on anything other than a contract basis would compromise the independence of the boards. The contracts of Chairpersons were decided on by the Minister. The Minister had been given the discretion to appoint for a term of two to five years. Anyone who had left the public service with a package could not be appointed again. Contracts were not automatically extended. A new contract had to be applied for.

He conceded that there instances where Vice-chairpersons were members of the DCS. Conflict between DCS deputies and the public had in some instances been severe.

In relation to independence, he noted that in terms of policy the law required independence, but a parole board was not intended to be a parallel body. The boards took their own decisions based on reports by social workers and others. There had been litigation cases resulting from parole board decisions, largely around matters of procedure. A policy had been set up that required the boards to follow sound procedures. Where decisions had not been recorded, the parole board had to answer in court. The Department would provide training about the proper procedural steps to be taken, and the need to document proceedings. In the event of a review of parole board decisions, a judge had to preside. If a Chairperson misreported, a decision would be reviewed.

Undue influence could be internal, in cases where chairpersons had an overblown sense of their own powers and responsibilities. But undue influence would remain subtle, as people did not want to be seen exerting it. Members of parole boards had been fired when there was a refusal to be held accountable through reports. That had been a case of the abuse of independence.

Mr Abram noted that life sentences currently ran to 25 years. He asked whether a person who had been given a life sentence fifteen years ago, at the time that the life sentence term was 15 years, could now expect to be eligible for parole.

Ms B Blaai (COPE) asked about the contracts of chairpersons. She asked what would happen to work performed and investments made, in cases where the contract was terminated after three years.

Mr Motseki replied that different regimes of parole boards were following on each other, so to speak. No regime could compromise rights conferred by a previous regime.

Ms Blaai remarked that the issue of SAPS members not attending parole board meetings had surfaced on the previous day.

Mr Motseki replied that the original intention had been that SAPS or Department of Justice members, who had information relevant to the case, would present that at a meeting. Where such board members had no information relevant to a case, this created the impression that they were superfluous to the meeting, especially if holding office only as ordinary member. Parole boards took up a lot of time, especially when viewed against the continuing responsibilities for SAPS or Justice personnel. He suggested that the legislation had to be reviewed to take possible clashes of responsibility into account. People were often invited to sit on boards without due consideration of other work responsibilities.

Mr Fritz referred to the statement that some chairpersons had “allegedly” been appointed according to one public service level, and others at different levels. He said that there was some vagueness on the issue, and asked who was finally accountable in this instance.

Ms M Mdaka (ANC) drew attention to the appointment of a DCS member as Acting chairperson of the parole board at Pollsmoor. The DCS was not supposed to provide chairpersons, and she asked how this had come about. She also noted that some chairpersons and vice-chairpersons had reportedly not received salaries.
 
Ms W Ngwenya (ANC) said that the chairpersons of parole boards were feeling desperate, but it seemed that proper attention was not given to their issues. She asked whether the Department really wanted to cooperate with parole board chairpersons. She pointed out that some chairpersons who had never received an office, although government was providing money for that purpose.

Mr Motseki replied that Chairpersons were appointed at the level of Assistant Director. He found it hard to believe that people did not get paid. It may have been that some had not received a thirteenth cheque.

He agreed that the appointment of a DCS member as Acting Chairperson at Pollsmoor, was problematic, and was a problem also for the Department.

He assured the Committee that the DCS took parole boards seriously, and was willing to cooperate with chairpersons. There were policy issues. Procedures had to be developed for an interaction relationship with the boards and their chairpersons. Tough decisions had to be made to appoint people of stature, who were also incorruptible.

Ms Nyanda said that it had been mentioned on the previous day that secretaries, who were members of DCS, were also absent from meetings.

Ms M Phaliso (ANC) commented on the structure of the parole boards, citing the fact that the DCS member was also the secretary, and asked how the independence of the parole boards could be measured.

Mr Motseki replied that no meeting was allowed to proceed without a secretary present. He noted that the position of the secretaries had been determined by the Act. He conceded that there was a need to review policy, and to discuss independence. There would be a review by the Open Society Foundation, as well as by the Department itself.

Ms Phaliso remarked that there had been several concerns expressed on the previous day about SAP 62 forms.

Mr Motseki replied that the SAP 62 contained a written record of decisions taken in court. It provided the parole board with a sense of whether it was dealing with a repeat offender and other issues about the person. The SAPS sometimes failed to supply the forms, not due to a DCS’s lack of efforts to obtain them. Every effort was made to obtain such forms.

Mr Madasa remarked that parole was a core function of the DCS, and that it was not being managed very well. He asked what the Department was doing with regard to interaction with the Justice cluster, and whether the DCS had met with the Department of Health about the dilemma that medical parole presented to doctors, as also whether there was interaction with Department of Justice and the SAPS.

Mr Selfe remarked that medical parole presented difficult issues, and that it was open to abuse. He wanted to know what safeguards there were that the system would not be abused.

Ms Phaliso referred to problems of medical parole for foreign nationals, and asked whether DCS would interact with the Department of Home Affairs about the matter.

Mr Motseki responded that the DCS could hardly expect Home Affairs to go to Mozambique and find out where certain persons stayed.

The Chairperson advised the DCS to pursue interdepartmental cooperation, especially with the SAPS, and Departments of Justice and Health. DCS could not fix things on its own.

The Chairperson asked about time frames with regard to the commissioned reviews of the parole board system. Medical parole had to be clarified, and issues around Awaiting Trial Detainees (ATDs) had to be attended to. The role of the Inspecting Judge had to be reconsidered. The position of children needed attention. The Act had to be cleaned up and tightened. The Minister would have to be called in to address issues. The Department and parole board representatives were contradicting each other.

Mr Motseki replied that a distinction had to be drawn between matters of administration and policy. The Minister could speak to that better than the Department could..

The Open Society Foundation could present its review to the Committee, to engage with the findings. The Department’s own review process was scheduled to be completed at the end of the calendar year. ATD issues would be engaged with, within a month. The same applied to the functioning of the review board. The Minister would engage with issues of children, also within a month.

The meeting was adjou