First Quarter Performance & Operations Management: briefing by Department of Correctional Services

Meeting report

Department of Correctional Services first quarter expenditure report for the 2012/13 financial year
Mr Siphiwe Sokhela, DCS Chief Financial Officer, took the Committee through the Department’s expenditure per programme.   There had been overspending in the administration programme, due to higher than anticipated expenditure on agency and support, and under-spending in the incarceration programme, due to low spending on contractors and buildings.  Under-spending in the rehabilitation programme was due to outstanding general salary increases from May 2012, resulting in under-compensation of employees.  There was also under-spending in the care programme, due to non-clearing of stores items and unimplemented general salary increases, and in the social reintegration programme due to unprocessed invoices, and delays in the clearance of government guarantee (GG) expenditure under goods and services.

With regard to expenditure according to economic classification, there had been under-spending on compensation of employees; goods and services; and payments for capital assets. There had been overspending on transfers and subsidies.

A serious challenge was posed by the fact that the LOGIS system had been down, and could not process entries.

Discussion
Mr J Selfe (DA) referred to the LOGIS system being down, so that certain items could not be processed. He asked which items and which system had been down, and when it was going to be fixed.

Mr Sokhela replied that LOGIS had been down for one month. The National Secretary was doing a classification of items. It had had an impact on the processing of invoices.

Mr Selfe referred to under-spending on employee compensation. The Committee had hammered home the importance of filling vacant posts, especially in the skilled categories. There were not enough pro-active measures. The DCS had to go out and find the skills they needed.

Mr Sokhela replied that when the DCS received applications for posts, they did not always get the skills they needed. It sometimes became necessary to re-advertise. There had been communication with the Treasury, to encourage future accountants and people who had completed articles. People left after initial attraction, and there was attrition due to people retiring. The vacancy rate in the finance branch was 2,8%. The DCS vacancy figures were sometimes inconsistent with those of the Treasury, because people employed in the finance branch were classified under security.  Human resources (HR) had to correct the information.

Mr Selfe referred to the implementation of Occupation Specific Dispensation (OSD) and 7-day establishment agreements. He had received mail from disappointed employees who had complained that the agreements had not been implemented. He asked if contingent liability was involved.

The Chairperson asked Mr Sokhela about vacancy rates. The Committee was not in favour of virements on under-spending.    The Committee could ask that money be taken from the DCS and given to other departments, because of DCS under-spending.  He asked about a target date for the filling of vacancies.

The Chairperson said that DCS excuses would no longer wash. The Department had offered the wrong classification of finance staff – under security – as an excuse for the discrepancy in figures.  The public saw vacancies as challenges. The DCS would say that they were doing something, and come back a year later and say the same thing.  The DCS had been receiving qualified reports from the Auditor General for 18 years. It had become necessary for Parliament to blame and shame.  In terms of the Public Finances Management Act someone had to be dismissed.  It was no use blaming the high vacancy rate on someone else, or to blame the DPW for the delay in invoicing, when the DCS was at fault for having a bad working relationship with them. The DCS consistently procrastinated.  Posts had to be filled or money would be taken away.  The DCS had an HR department.  Attrition could be anticipated. HR surely knew who would be retiring soon.  South Africa was burning because of unemployment. It was not a matter of appointing rocket scientists. He would tell the Minister that the Committee was not happy about the vacancy rate.

Ms J Ngubeni-Maluleka (ANC) asked about the vacancy rate of 2,8% --  it was 2,8% of what?  She advised the DCS to develop a retention strategy. Many people were leaving. The DCS had to find out why.

Ms W Ngwenya (ANC) asked how people were being attracted to fill posts. She was worried about the fact that finance staff had been classified under security. It could cause serious problems with the SARS regarding tax deductions.

Mr V Magagula (ANC) said that there had to be a turnaround, otherwise the same problems were bound to turn up the next year.  Compensation of employees was a massive problem. The HR department had to explain. There was a common outcry about problems with salaries. Yet huge sums were sent back to the Treasury. Officials were not even getting uniforms.

Mr Teboho Mokoena, Chief Deputy Commissioner, HR, replied that there were outstanding adjustments to be made about the under-compensation of employees. This applied especially to artisans. The DCS owed employees an estimated R47 million.  He had visited Kimberley and Bloemfontein the week before to outline the process to members. The Department had to get into the files of members.  A senior certificate was needed to move from learner to full member.  Learners could be contracted to fill gaps left by retirees. There had been a discussion with the Public Service Commission the previous week about advertising posts. Advertising had to happen inside the Department. It was not possible to get a person with full knowledge of the Correctional Services Act, from outside the Department. That had been suggested to the Public Service Commission the week before.

Mr Mokoena continued that the DCS was on the verge of releasing bursaries. Learning centres would be approached.

The Chairperson told Mr Mokoena that the Committee had suggested three years before, that universities had to be approached. He asked who had to take responsibility for the fact that the DCS had not yet acted as the Committee had suggested.

Mr Mokoena replied that the buck stopped with him. He had been responsible for stopping bursary advertisements in newspapers. That was not the appropriate way to advertise bursaries. The Department had met with Durban University the week before, and had entered into a Memorandum of Understanding (MOU) with them.
 
The Chairperson noted that it was the responsibility of the accounting officer to ensure prudent and efficient management. The DCS had to say who had stalled, so that the person could be dismissed. There were staff classified as “security” who were working in head office. The DCS had in fact admitted that they did not know where their people were. He asked how it was possible to fill vacancies in such a situation. The DCS had received qualified audits for being unable to identify assets, but it was clear that they could also not identify warm bodies.

Mr L Max (DA) said that he no longer believed the DCS. The new Chief Deputy Commissioner was telling the same story as the previous one had told the year before. There were the same excuses every year. He asked what the difference was in under-spending between the year before and the current one. The DCS only said what it was planning, but the question was how under-spending was being managed currently. The DCS had to know how they were going to spend money during the following March and April.

Mr Sokhela replied that total under-spending for 2010/11 had amounted to R728 million. Heads of finance currently had to account to the National Commissioner, to improve expenditure.
 
The Chairperson said that the Auditor General had been critical of the National Commissioner’s leadership. There had been failure to comply with Treasury regulations, and to provide effective and transparent management. Statements had not been drawn up. Fruitless and wasteful expenditure had not been prevented. The question was what had changed from the previous year to the current one. He told the DCS that they had a mountain to climb.

Mr P Cele (ANC) asked about learner qualifications.

Mr Mokoena replied that there were two groups of students.  Group 1 were qualified, and Group 2 were still in college and were ring-fenced.  People eligible for translations were in Group 1. The Department had determined the previous week, who were in which group.  At junior level, the requirement was Matric.

Mr Max remarked that arbitration in favour of POPCRU had challenged the DCS view on the matter. He asked if the DCS had taken the matter on review.

Mr Mokoena replied that since the award, the Department had launched a review in the Labour Court. In other matters, previous decisions were respected.

Mr Selfe asked if no one else had claimed for extra compensation resulting from labour bargaining chamber agreements, besides Groups 1 and 2.  He cited the example of nurses and psychologists.

Mr Mokoena replied that the matter was related to Phase 2 of the OSD.  It had to go back to the joint implementation committees.

Mr Selfe asked if the DCS had indeed gone back.

Mr Mokoena replied that the DCS had written to the Department of Public Service and Administration. They had asked the Department of Labour for people to serve on the committees.

Mr Selfe asked if there was a projected date.

Mr Mokoena replied that the task team had to pronounce on that.

The Chairperson asked the CFO to give clarity on operating payments. Actual spending had been R17 million, which meant that 130% of the budget had been spent in the first quarter. He asked how that was possible. Agency support services had spent 50% of the budget in the first quarter. He asked a member of the Audit Committee to comment.

The Audit Committee member said that there were material issues and under-spending. The Auditor General had drawn attention to a poor working relationship with the DPW, and management had been asked how the matter could be resolved. Vacancy rates caused concern. The Audit Committee needed better tracking to know what it had to look at.  DCS’s critical strength had to be examined.

The Chairperson remarked that the Portfolio Committee had committed itself to a clean audit for the DCS, within its term, in 2009. The Minister had expressed a similar commitment the week before. If it proved necessary to get rid of some people to achieve a clean audit, that would be done. There was only one financial year left.

Briefing on operations management
There was no formal presentation. Discussion with reference to the document commenced after opening remarks by Mr Mokoena, the Acting National Commissioner.

Mr Mokoena stated that there was steady work in progress toward a turnaround, accountability and ownership. There was the challenge of information technology (IT) at centre level, with the replication of the national data base. There would henceforth be ownership at the Chief Deputy Director level. Information management would include data stored and accounted for.

Discussion
Mr Selfe asked what had been done about targets not met. He asked about the security fencing for 53 of 59 centres. He asked how the contract had been awarded, who to, and why that information was not in front of the Portfolio Committee.

Mr Zachariah Modise, Acting Chief Operations Officer, replied that the access control tender had been advertised, but the process had been managed by the Independent Development Trust (IDT). The tender had been awarded to SA Fence and Gate.

Mr Selfe said that two contracts were managed by the IDT. The PFMA prescribed that the tender process be open, competitive and fair.  The IDT was an institution under the Department of Trade and Industry. It could not be said to be open. He asked if government policy was being adhered to. He asked if access control would be re-privatised.  Access control did not work, and yet the DCS was employing former contractors.

Mr Modise replied that the IDT had been resorted to, to deal with subcontractors because of DCS under-spending. It was part of a turnaround strategy.  The IDT could speed up expenditure. With the fencing contract, IDT could fast-track a process which the Department of Public Works (DPW) had delayed.

The Chairperson reiterated Mr Selfe’s question of whether the access control tender had adhered to government policy. The question was whether the DCS had abdicated responsibility. He asked if the IDT would be blamed if the contract went wrong. The PFMA required that if the IDT did things underhandedly, the Portfolio Committee had to have jurisdiction. The question was how far the DCS had ceded their rights to manage budgeted money. He asked where the buck would stop, if there was underhand dealing. An amount of R476 million was involved.

Mr Modise replied that the IDT was a part of the DCS, and hence an implementing agent of government. The Department worked with the Treasury to ensure compliance with government policy. The process was fair and open, according to checkpoints.  He could not say what would happen if the process turned out to be underhand.

The Chairperson repeated that the question was: who would have to answer if things went wrong, the IDT or the DCS?  The Committee had a right to oversee money allocated to the DCS.

Mr Modise responded that the DCS would be held accountable for allocations from Parliament.

Mr V Magagula (ANC) protested that the problem was not out in the open. There was no document and no complete information.

Mr Cele added that other members did not have the document Mr Selfe had referred to.

Ms Ngwenya proposed that the matter be closed. There was no information.

Mr Selfe asked why the information was not in the operational report.

The Chairperson asked for detailed information, up until June, to be supplied.

Mr Modise responded that the tender for the access control equipment referred to on page 5, had long expired. There had to be a look at outdated software. The equipment currently belonged to the DCS and would be made functional.

Mr Max referred to cooperation with the SAPS for integrated ICT services. He asked how far the process had gone. He asked why there were always delays with signing proposals.

Mr Max asked about due dates for the internal/external consultation process for restructuring (page 2).

Mr Mokoena responded that consultations for restructuring were at the Chief Deputy Commissioner level. Ongoing meetings had been held on Fridays. The National Management Committee had met. The process had had to be suspended to allow the new Minister to adapt to the portfolio. Negotiations with unions were to be concluded by the end of the financial year.

Mr Max asked about implementation of the gang management unit. It had been said that work would begin in the third quarter -- why only then?   A previous annual report had stated that the gang management strategy had been finalised, yet there were still problems.

The Chairperson remarked that it was already the third quarter. He asked where the process was.

Mr Modise replied that the gang management unit had been established, but still had to be rolled out to the regions in the third quarter.

Ms Ngwenya asked about the inmate tracking system for monitoring in centres. It had been stated that it commenced in the second quarter. She asked which second quarter, and whether it had been successful.

Ms Nthabiseng Mosupye, General Information Technology Officer, replied that the system would be integrated with integrated justice systems.  Interfacing programmes would be built.  Because of issues with the Remand Detainee Offender Management System (RDOMS), the DCS could not proceed. There was interaction with Home Affairs and the SAPS to see what they were doing at their end.  Fingerprints were kept at Home Affairs and could be verified. The DCS and the State Information Technology Agency (SITA) would upgrade bandwidth and networks.

Ms Britta Rotman Chief Deputy Commissioner, Remand Detainees (RD), responded that specifications had been developed for inmate tracking. A committee had been established. A memo had been sent to the Commissioner for appointment.

Mr Cele referred to 951 interns accepted, and 241 not accepted. He asked where the process was.

Mr Mokoena replied that 951 had been accepted out of 1200. Some interns did not accept the conditions of employment. There had to be a reserve.

Ms Ngwenya referred to Remand Detainees (page 7). The DCS had been unable to report about targets. There did not seem to be a system in place. She asked when it could be expected. There were RDs who had been in prison for 5 or 6 years.

Ms Rotman replied that a system was being developed in anticipation of a new section of the Act that required that sentences be reconsidered after 2 years. Alpha and Beta testing had to take place. There would be a rollout at the end of the next financial year.

The Chairperson remarked that there was a flawed Treasury system. The Treasury allowed the Department 60 days to report to the Committee. The Committee had to sit in the third quarter with the first quarter report. Oversight objectives were defeated. The Committee would talk to the Treasury about real oversight in real time.

The Chairperson continued that there had been no discussion of nutrition programmes in previous meetings. He had received a letter from the Acting National Commissioner on 2 October with a request that discussion on the issue be deferred, as the Treasury had to be convinced that in-sourcing was cheaper. He stated emphatically that it was not for the Department to determine the Portfolio Committee’s agenda. The request to defer discussion had to be brought to a meeting. There was pressure on the DCS and the DPW about nutrition outsourcing. The National Commissioner had previously committed the DCS to a blow-by-blow account of the matter. The National Commissioner and the Chief Operations Officer were not present at the meeting. Mr Moyane and Ms Jolingana had to come to a meeting about the issue.

Ms Ngwenya remarked that enough time had been granted. The National Commissioner had to report.

Mr Magagula agreed that the DCS could not shift the Committee’s programme. Kitchens were a serious matter.

Mr Selfe remarked that he was disturbed by the letter. Target dates had not been met. He suspected another sleight of hand. In-sourcing would become outsourcing by virtue of a crisis. The DCS would argue that outsourcing would have to be resorted to, otherwise there would be no food.

Mr Max remarked that like Mr Selfe, he smelt a rat. There had been an unequivocal promise from the National Commissioner in February that targets would be met. Inmates had been providing food for a long time. It was a mystery why cost implications had suddenly become relevant.

The Chairperson noted that the request for deferment was because the DCS had to ask a consultant for a cost benefit analysis. He drew the attention of the DCS to the fact that on 14 October 2009 they had said that R1,1 million had been allocated for a study of food outsourcing. The Committee could disprove the DCS argument with facts reported by the DCS themselves.

The Chairperson asked why the Chief Operations Officer was not present.

Mr Mokoena replied that there had been a breakdown in communication. She had been on annual leave. The Department thought that an apology had been tendered.

The Chairperson adjourned the meeting.