SAPS Information Technology requirements and concerns about State Information Technology Agency (SITA)

Meeting report

Lt-Gen Layton Tshabalala, SAPS Divisional Commissioner: Technology Management Services, said the division was the service provider of various information technologies to national and provincial offices. Between 70% and 80% of these technologies were sourced from SITA.

He gave a detailed breakdown of the division’s 2009-10 total expenditure of R2 274 million, which was made up of annual licensing obligations (R70,7m), annual maintenance obligations (R1 085,2m), projects (R54,2m) and ring-fenced projects (R1 062,3m).

Various challenges had been identified and discussed with SITA. These included contracts about to expire, but for which no new contracts had been put in place; the need for a network upgrade to improve bandwidth, as the current system slowed down operations; the identification of 20 ring-fenced projects, but receiving commitment for only nine; the addition of systems which were not compatible with existing technology; the need for a back-up system for the Automated Fingerprint Identification System (AFIS); and delays in finalising service level agreements (SLAs). As a result, all contracts were to be reviewed.

The Commissioner expressed concern at the number of consultants employed at a high cost by SITA, suggesting that they could be employed at all levels within the public service, promoting teamwork and the transfer of skills. Directors in the division did not even have “the authority to buy a pencil,” and needed to be empowered to make decisions and participate fully in the management process. Those involved in police operations should have a say in determining the type of technology required.

Computer literacy was a problem within SAPS, with “technology phobia” afflicting particularly older members of the service, who were finding it difficult to adapt to modern requirements.

Mr Andile Pama, Acting Chief of Business Operations at SITA, said the organisation’s total revenue for 2009 was R3 914,8 million, of which R1 432,4 million was derived from SAPS SLAs and projects. The gross surplus derived from SAPS operating activities was R133,7 million. Negotiations with SAPS to consider its 2010-11 requirements began in February, and a revised proposal at a reduced cost, with reduced services, was submitted in May. However, a final SLA had not been signed, and as it was still providing services, it had operated on interim orders of R700 million since then.

SITA’s proposals were based on SAPS’s requirements, and these had been reduced from R1 337 million for recurring ICT support services, to R1 185 million, and from R751 million for projects and ad hoc transactions, to the current proposal of R501 million. SITA’s prices were driven by the amount of equipment it supported, and this had risen from 90 000 in 2003-04 to a projected 170 000 for 2010-11. Service costs were increasing rapidly. A total of 699 SITA employees were dedicated solely to servicing SAPS’s requirements, while industry partners were used to augment its capacity, at a cost of R450 million.

Responding to criticism that its prices were too high, SITA had commissioned Gartner, an IT management advisory service company, to conduct a benchmark analysis covering infrastructure, networking and hosting. Overall, SITA had been found to be 11,6% more cost effective than equivalent companies.

Outlining support of SAPS strategic projects, Mr Pama said that E-docket capability had been deployed to a current level of 363 police stations, compared to 107 in June last year. Development of the Integrated Case Docket Management Systems (ICDMS), which was central to SAPS’ interface with the Integrated Judicial System, was on track.

During strategic discussions with SAPS, it had been made very clear in what areas support was expected from SITA. An area of focus was the provision of bandwidth to handle E-docket and firearms permit systems. SITA had the capacity to provide the necessary bandwidth on its upgraded Government common core network, but SAPS had a separate network system for security reasons. This posed an integration challenge, which was currently being addressed with SAPS.

In the past, there had been an “operational relationship,” where SITA had simply delivered what SAPS had asked for. This had now changed. Issues were being discussed at a strategic level, and advice was being sought on which direction to follow, which would enable SITA to deliver on SAPS’s 10-point plan.

Discussion
The Chairperson commented that while SITA’s report indicated all was well, the recent Auditor-General’s (A-G’s) report had painted a different picture.

Mr G Schneemann (ANC) said he could not accept Gartner’s findings that SITA was cost effective when one heard from many sources that its charges were “way above” what was required. He referred to SAPS contributing to SITA’s overhead costs, mark-ups on procurements, and the possible purchase of the most expensive equipment (to improve its mark-ups), and cast doubt on whether SAPS was getting value for money from SITA. He asked for more information on the benchmarking exercise.

Ms Zodwa Manase, Chairperson of SITA’s board of directors, said more information would be prepared to deal with this issue.

Mr Schneemann said that according to SITA’s website, there were tenders going back to 2008 and 2009 which had not been awarded. He asked why it was taking so long.

Ms Manase said that in most cases, this happened when clients asked SITA to go to tender, but then advised there was no funding to support the tender.

Mr Schneemann asked why it took so long to finalise SLAs.

Ms Manase said SLAs were a problem for SITA. According to the SITA Act, it was not supposed to do anything without an SLA, but if it cut off its services, the government would not be able to operate. There were problems at both SITA and client level, and attempts were being made to rectify the situation.

Ms A van Wyk (ANC) said the Committee’s concern over the A-G’s report stemmed from the fact that SITA derived a high proportion of its revenue from SAPS. Its non-compliance with a number of legal requirements, including irregular expenditure of R240 million, was unacceptable.

Ms Manase replied on the irregular expenditure issue, that SITA had identified a long list of companies which for almost two years had been operating on a month-to-month basis because their contracts had not been extended. Action was being taken with SITA staff to “stop this rot.”

Ms Van Wyk said both SAPS and SITA had indicated a situation where a “ballpark” budget figure was provided and then the need was determined. She argued it should be the other way round. For instance, detective services was a priority, and yet what had been allocated would have had little impact on their operations. If technical advice was provided by the people who provided the equipment, they would recommend what was in their best interests.

Commissioner Tshabalala said that when he took office, he was told SITA’s attitude was “tell us how much you have, and we will help you spend it.” With new executives and a new board in place, this was being resolved.

Ms Van Wyk said that at the current rate, it would take ten years to deploy the E-Docket system to all of the country’s police stations, and asked what this would cost.

Ms Manase said she would report back later on this.

Ms M Molebatsi (ANC), Mr M George (COPE) and Mr G Lekgetho (ANC) all raised concerns about challenges identified in the presentations, and these were mostly covered in the SAPS and SITA responses later in the meeting.

The Chairperson said the two key issues were value for money and cost effectiveness. She quoted from the A-G’s report on SITA, describing a wide range of breaches of regulations. Furthermore, the Special Investigations Unit (SIU) was currently investigating four cases of procurement irregularities, while a further 20 cases of procurement irregularities were being investigated internally. This was a cause of great concern.

She said only nine of the 20 SAPS projects had been financed. What had happpened with the other 11?

She criticised the situation at forensic laboratories, where machines were stacked unused in boxes for years, and other items of equipment were discarded because they were time-expired. She attributed this to a system which “worked like robots” , with no follow-up. What sanctions were being put in place to deal with the people responsible for this state of affairs? She suspected that so many were involved that each held a “red card” that could be used against the other as protection against disciplinary action. This could not continue – those responsible should go to jail.

She suggested that in the light of the A-G’s report, departments should review whether they wanted to continue to do business with SITA.

Commissioner Thsabalala said SAPS management had resisted paying money to SITA at the beginning of the financial year because of concerns surrounding its overhead structure. This had been resolved in the past two months, although serious consideration had been given to other alternatives.

SITA had asked SAPS to check the composition of the evaluation committees, and it was found that the majority were members of SAPS. On the other hand, the people working for SITA, and who were handling the account, all came from SAPS. The Commissioner had asked SITA’s CEO why the two organisations had allowed “this Mafia to continue to run amok.” There needed to be a clean-up on both sides.

He assured the Committee that the “war rooms” project would be rolled out by the end of the financial year, with priority being given to the Gauteng province because of the challenges it faced.

The Commissioner said being new to his position, he was being made aware of contracts that were awarded more than two years ago, but which were not proceeded with because there was no budget available. In other cases, suppliers were allowed to proceed, but payment was delayed, to their financial detriment. He had found it took seven months after SAPS approval, for SITA to put a contract in place. These issues were all under discussion.

The requirements of the Department were determined via a multitude of forums. Some of these represented small units, such as the stock theft unit, which had specific needs, but all the needs were accumulated into a global figure and then prioritised, so that allocations could be made accordingly.

In an attempt to obtain an objective assessment of whether consultants, including those operating in the provinces, were providing value for money, an approach had been made to the faculties of technology at both Wits and Pretoria University.

Other challenges being addressed were the absence of a disaster recovery system for the Automated Fingerprint Identification System (AFIS), allegations of preferential awarding of tenders, and the non-payment of suppliers for services rendered.

Ms Manase dealt with a wide range of issues concerning SITA which had been raised by Committee members.

She said most of the issues raised in the A-G’s report had focussed on procurement. These issues had been identified by SITA since 2008, and the A-G’s office had been called in to assist in reviewing the processes involved. In certain cases, it had been found that the required documentation had not been provided by SITA’s clients, such as the Department of Home Affairs. Agreement had been reached that for tenders in excess of R30 million, the A-G’s office would sit in throughout the procurement process. For tenders below R30 million, SITA’s own internal audit unit would carry out the necessary checks.

A common problem was that people resigned when faced with the threat of disciplinary action, and it was difficult to follow up and track them down. Since the beginning of the year, the Special Investigations Unit (SIU) had been contracted to assist, with their capacity to sub-poena and freeze bank accounts. Four employees were being prosecuted, and a number of executives were under suspension. One of these executives was involved in the irregular expenditure of over R200 million, where a contract had been signed without Board approval.

Another problem arose when suppliers, before they got a tender, entered into an agreement with SITA employees, and when they were awarded the tender, the employees joined the suppliers. Because they were IT people, it was legally difficult to prevent them joining IT companies. Consideration was being given to invalidating contracts when this happened.

Ms Manase said whereas the old SITA board was comprised mainly of civil servants, the new board was independent and able to “crack the whip.” It was taking actions that had not been done before, such as visiting its clients to address challenges, and was encouraged by the fact that SAPS was now thinking along the same lines as SITA. The board had found that costs were being inflated through the use of “middlemen”, or by missing discounts. It was also cutting back on labour brokers and consultants.

Mr Schneemann said the information provided by SITA was “horrifying”, particularly as its chairperson now admitted that its costs were higher than they should be, in direct contradiction to the presentation. One did not know if Commissioner Tshabalala was getting the right advice. He had heard that there were SITA employees who worked for other companies – without resigning from SITA – so it was little wonder prices were inflated. He asked whether the Commissioner would consider putting together an independent team which could analyse SITA’s recommendations and provide SAPS with expert advice on its IT needs.

The Committee’s Chairperson said she appreciated that the A-G’s report contained issues that had been raised by SITA’s board itself, but this was of little value when the A-G stated that the findings had not been substantially addressed. For instance, at its previous portfolio committee appearance, it had said it would not be dealing with labour brokers in future, but instead of now reporting on the impact this had had on reducing costs, it was still talking about something it intended to do. She also expressed concern about the cost implications of middle men and discounts.

Ms Nontobeko Ntsinde, Acting CEO of SITA, said the labour broker situation had persisted because the brokers were on fixed-term contracts, extending for up to three years. Once they had expired, they were not being renewed. The board was working hard to ensure all the areas identified by the A-G’s report were addressed.

Mr Peter Kgame, SITA board member, said the board’s turnaround strategy took into account that SAPS accounted for 30% of SITA’s revenue, and that most of these funds went to major original equipment manufacturers (OEMs). These OEMs had all been invited to make presentations on their products and prices, together with a matrix indicating the scale of their business with the Government, on the one hand, and with SITA on the other. The objective was to achieve economies of scale, and reduce costs. The OEMs would present their figures in November.

Ms Ntsinde responded to the Commissioner’s comment that SITA’s attitude was “tell us how much you have, and we will help you spend it.” This had been based on a regulation intended to ensure that SITA did not spend money if the customer did not have a budget. It had been introduced with good intentions, but had unfortunately been abused. The approach now was to plan ahead, and see what benefits SITA could provide.

Mr George said a meeting with both SITA and Commissioner Tshabalala was needed to address the question of conflict of interest, as well as the issue of how SITA spent money. There were wrongs on both sides, so both parties needed to come back to the Committee and explain how the problems had been eliminated. Many questions still remained unanswered, and the “cleaning” process could not go on for ever.

Mr Schneemann said SITA and SAPS needed to give an assurance that the SLA would be signed before the start of the next financial year, as no work could be carried out until it was signed, in terms of the Act. There was a need to engage with the Portfolio Committee on Public Service and Administration to raise some this Committee’s “extreme” concerns. It was apparent that at SAPS there was no determination of what was really needed in compiling the IT budget, and it should be a requirement that when SAPS presented its budget, it should describe what was required, item for item. He sympathised with the Commissioner, but suggested some of the biggest culprits were in his own department, and commended him for “shaking things up” since joining the department.

The Chairperson said serious challenges remained, and the time for talk was over. Action was needed so that the problems that had been identified, could be corrected.

The meeting was closed.