Strategies to reduce the use of consultants: Department of Transport briefing

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25 March 2013
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

The Committee had previously been briefed by the Auditor-General South Africa on the use of consultants in government, including at the Department of Transport (DoT) and now heard from the Department itself on what strategies it had adopted to reduce its use of consultants. The DoT emphasised that it had taken steps in two main areas: reducing its reliance on consultants firstly, to perform risk assessments and secondly, to assist with strategic planning. Within these two major areas, the DoT then reported further on the steps it had taken internally to improve the management of contracts, how it was now using of internal capacity to monitor, and how it had improved its own capacity through filling posts on a permanent basis. It was also auditing all existing and planned contracts, including eNaTIS maintenance and development, and explained also what it had done and what policy was applied to the Driving Licence Card Account and the area of taxi recapitalisation.

Members complained that the first part of the presentation was not really about consultants directly. The Department was asked by several Members to explain whether there was a direct correlation between the filling of 58 posts, and the hiring of personal assistants for those new appointees, and the attempts to lessen the use of consultants, and whether new entities were being created by the new staff. They asked when the posts would take effect, and commented that the general statement “to improve capacity in the Department” perhaps suggested that an audit was needed, and asked about the scale or depth of the contracts that were going to be terminated. They asked if there were specific plans around monitoring processes, whether there had been policy development, and suggested that the HR Unit must read the Committee’s report on the visit to China. Members welcomed the creation of internal capacity to monitor the implementation of the National Transport Master Plan, stressed that although Gautrain was a good project it was also necessary for the Department to plan to address the challenges of poverty and unemployment for those other than the middle classes, and ensure that the government looked after all users. The Chairperson thought that clear career pathing plans were missing from the HR plan, and asked the DoT to check whether consultants were effectively running the entities. Members questioned the taxi recapitalization and said that urgent follow-ups were needed on this, and the S’Hambe Sonke and scholar transport were briefly touched upon. It was noted that consultants ran the e-Natis programme, although provision had been made for specialist skills to be phased in, internally, and the Driving Licence Card project was described, with its current income of R135 million per year currently. Finally, Members adopted minutes of the meeting on 19 March 2013.

Meeting report

Chairperson’s opening remarks
The Chairperson said that this was a follow-up to the meeting held in February, when the Auditor-General South Africa (AGSA) had briefed the Committee on the use of consultants in government generally, and particularly within the Department of Transport (DoT or the Department). At that stage, there was insufficient time to allow the Department an opportunity to respond, but this meeting would now allow for this. The report from AGSA pointed out a number of areas that required corrective action, and she also hoped that this meeting would afford the DoT the opportunity to report on its progress.

Strategies to reduce the use of consultants: Department of Transport briefing:
Mr Mathabatha Mokonyama, Deputy Director-General: Public Transport: Department of Transport, apologised to the Committee that the document was only ready three hours before this meeting.

He noted that the DoT had taken steps to reduce the use of consultants, and this was specifically outlined as reducing the reliance on consultants to perform risk assessments, and to assist with strategic planning.

Within these two major areas, he then reported more specifically on the improvement of the management of contracts, the use of internal capacity as a monitoring tool, and the improvement of capacity in the DoT through staffing.

The current developments that DoT had undertaken by scaling down the use of consultants, the auditing of all existing planned contracts, eNaTIS maintenance and development, Driving Licence Card Account and Taxi recapitalisation were also explained. In each of these areas, he attempted to explain the policy related to the use of consultants. (see attached document for full presentation)

Mr I Ollis (DA) said that the first part of the presentation was not really about consultants directly. Risk assessment normally was done by in-house accounting units, and indeed this was the right way to proceed, because there should be internal controls to ensure that future risks, such as those around the taxi recapitalisation programme, were managed.

Mr Mokonyama said that it was true that the last part of the presentation was more important. The DoT was attempting to pick and choose the major findings, and show where interventions had already been made, hence the current layout of the presentation.

He explained that the Internal Audit was regarded as a specialised skill in the main, and that he did not know reason behind Transnet’s motive, but normally a number of regions outsourced their internal audit functions. The DoT had never intended to outsource this whole function. This unit’s posts were filled, with internal staff. He assured Members that the internal audit was a permanent feature of the Department, as DoT agreed that it was better to build this function internally.

Mr Ollis asked for assurance from the DoT that the filling of the additional 58 posts was one of the attempts to move away from DoT using consultants. He asked further if management functions had actually been outsourced, because the DoT was saying that functions were being outsourced. He made the point that it should only ever be functions and not a director’s post, that could be outsourced.

Mr Mokonyama responded that the presentation had made an attempt to list all the positions, including those 58 mentioned. In government, from level 13 onwards, the person appointed also needed to have a Personal Assistant. The Department provided the office, not necessarily the individual.

Mr G Krumbock (DA) said that with the planned 58 posts, everyone seemed to get a personal assistant. This was confusing, and he asked if it meant that new entities would be created in the Department. He also asked for a closer link between whether the capacity building was meant to reduce the number of consultants.

Mr Ollis reiterated that the better or more important parts of this presentation were the last couple of pages, which were the ones that actually talked about how the DoT was going to deal with the fact that it had too many consultants and too many sub-contractors. He urged that departments should only hire consultants when they did not have the staff.

Mr L Suka (ANC) asked for clarity about the statements on pages four and five of the presentation. Page four spoke of internal capacity and page five spoke about the improvement of capacity in the Department.

Mr Mokonyama said that with regard to pages four and five and the synergy between the two, those were brand new allocations. There was now additional money for public entity oversight and grant monitoring.

Mr Suka asked if the posts that were going to be advertised would actually be advertised in this financial year or the next one.

Mr Mokonyama said that slide five talked specifically to matters around restructuring and how they had been dealt with. The majority of those positions were now filled. An appeal had been made to the National Treasury and the money could only be accessed from 1 April, at which stage all 58 positions could be filled. This was not part of restructuring but now the Department had the money and would create permanence in all those areas.

The reason why the structure was bloated at the top was because of the nature of the work that needed to happen there and of course to make sure that there was compliance with legislation.

Mr Mokonyama said that coincidentally policy development had been resolved very recently. The meeting was a maritime meeting so more emphasis was put on the finalisation of maritime policy. Also, two areas were merged or combined into one programme, to ensure that the area was attended to quickly.

Mr Suka said that Mr Mokonyama had spoken about R23 million for oversight and grant monitoring. He asked if there was a plan around the monitoring process.

Mr Suka also said that the five bullet points under ‘To improve capacity in the Department’ needed an audit because it gave the impression that a funnel like structure would emerge in the process.

Mr Mokonyama responded that grant management had been strengthened. In the hearings with the National Treasury, the DoT had indicated that the main reason that grants were not performing to expectations was because the Department lacked capacity for the technical monitoring of the grants, as well as in regard to public entity oversight.

He added that a skills audit was done at the Department. At the level of the Transport Education Training Authority (TETA), a skills assessment had been done. If the Committee needed more information, the DoT would ensure that Human Resources (HR) was thoroughly prepared.

The Chairperson asked if the HR unit could also be asked to read the Report on China, to familiarise itself on the issues that the Committee had raised there.

Mr Suka said that it was also stated that all contract posts were going to be terminated on expiration.  He asked what was the scale or depth of these contracts.

Ms D Dlakude (ANC) asked for specifics and time frames for the posts that were not going to be advertised to grow permanent capacity.

Mr Mokonyama responded that the contract positions, and their scale and depth, were also described on pages four and five of the presentation. He said the study into internal capacity and improvement in capacity looked into the new structure and how far the DoT had gone in filling each position. It also showed which positions were contract ones and which were changing to permanent posts. There would always be areas that would have once–off needs, and those posts were therefore not permanent and were additional to the structure.

The Chairperson said that creating internal capacity to monitor the implementation of the National Transport Master Plan was a good thing to ensure compliance, because at the planning level it was necessary for the Department to align the implementation plan with the major challenges of poverty, unemployment and inequality. Monitoring would deal with what had had been planned. One of the responsibilities of this directorate was to ensure that planning and implementation spoke to the three challenges she mentioned.

The Chairperson also said that the Gautrain Project was a good project, but urged the DoT to evaluate the progress and impact. It was important to be aware of the different classes at play and it was clear that this prioritised the middle class. She said that it was not only important to plan, but to plan specifically against the challenges that the Department wanted to address in the country.

Mr Mokonyama said that the observations about Gautrain were very true. People needed quality transport to get from the villages to access health and other important facilities. The issue around transformation did not mean that less needs would have to be filled. A subsidy that targeted the commuter was very necessary.

The Chairperson agreed that the user should be targeted, so that it was clear that the government was looking after the user.

The Chairperson said that the DoT might not want to respond to this question now, but it would be useful to consider it for another day. She asked if there were Members of the Boards of transport entities who had also consulted, and, if so, thought this might be a conflict of interest as they were not part of the Department’s personnel. There were institutional arrangements at different spheres of government and this could mean that consultants were actually running the show.

Mr Mokonyama said that there was awareness about people who had done work for the Department at the level of non-executive board members and they could have benefited somehow in terms of contracted work. Details would be provided to the Committee. He said that the question of whether there were instances where a conflict of interest arose would be referred to the legal section to get a legal opinion.

The Chairperson said that what was missing in the HR plan was a career pathing plan as there were gaps in the existing skills. Other countries had offered to help South Africa with skills development and to link to the plan to produce skills in the country in the transport industry.

The Chairperson also made the point that the Department of Economic Development in KwaZulu Natal was not governed by maritime laws, which in that province fell under the Department of Transport. Some of the responsibilities under the Department of Public Works had to be informed by the laws of this country.

Mr Ollis asked for a one sentence response to comments on page 8 under “Taxi recapitalisation” where it was stated that the “‘Current proposal by management…includes taxis in public transport subsidies”, and also that  “The cost of scrapping taxis will augment the amount available for public transport subsidies and services provided by the consultant will be terminated”. He said that this was quite a big step and quite a change in policy, because there had not been subsidies for taxis for a long time. The logic was clear, but what was unclear was the area of control. He asked what mechanism would be used to limit the total subsidy bill, so that there would not be comebacks from the National Treasury.

Mr L Suka (ANC) said the Taxi Recapitalisation Programme (TRP) needed special attention and a follow-up meeting was urgently required, especially with regard to the R1.2 billion.

Mr Mokonyama said that with the Taxi Recapitalisation Programme, the emphasis on was on the R35 billion, 90% of which was due to go  to entities, provinces and municipalities. This was the main reason why the Department had requested new capacity, because 90% of its money went to certain areas and it was then left “stranded” in its ability to then monitor performance. For S’Hamba Sonke, technical support from outside was used.

He also added that the Department was waiting for the final draft of the scholar transport policy. This policy had changed. After it had been signed off it would be forwarded to the Committee.

The Chairperson requested that this be included as part of the input for the Strategic Plan. She was of the view that what had been causing the problem was the question of who controlled the tender. That should not be considered as important at all, yet there had been fights about which department should be responsible for that. In her view, the important point was who bore the responsibility for oversight of the programme – and oversight must lie with the Portfolio Committee on Transport.

Mr Mokonyama said there was convergence with the Department of Education on the issue. Fortunately the Department of Public Service and Administration had differentiated structures with a model organogram which talked to uniformity. With consultants, it was always necessary to have a “super consultant” who would know whether the others were providing the work that the client department had actually requested.

Mr Mokonyama made the point that the DoT had approached this Committee on more than one occasion about the skills needs, but if there was a need for more clarity, the Department would be happy to provide it.

The Chairperson said that those who attended the meetings often did not understand what the Committee was looking for and gave the wrong information.

Mr Mokonyama said that in the top management meeting when preparations were discussed for the Strategic Planning meeting, perhaps the Chairperson of the Committee could invite all the provinces to come to the meeting. It would be useful if they could be included in a workshop so that there would be a ‘bigger’ voice to raise issues of concern and ask questions.

The Chairperson asked if information could be provided about how money was paid to consultants for work done, or if there was a flat rate

Mr Mokonyama said that the Department had tightened this area around its use of consultants.

Mr Ollis said that Mr Suka, Mr Krumbock  and himself had asked the same question in three different ways, and this was related to staffing on page 6 of the presentation. The question was what staffing had to do with shutting down and using contractors, or stopping the use of contractors. 

Mr Mokonyama replied that the Department had identified the functions that were once off, and those were the areas where DoT was reducing its dependence on consultants, mainly relating to functions that were permanent. Consultants ran the system on the eNaTIS programme.  When the DoT said that it was “ready”, it meant that it was ready on the contract side, with those people in place for running the system. The position would be different at a later stage. Provision had been made for specialised skills like engineers.

In slide 6 where the 58 positions were outlined, he reiterated that these positions were not only motivated by the use of consultants in those areas, but were also motivated the fact that the DoT actually lacked capacity to monitor grants and performance, and to do the proper oversight over  public entities.  The consultants had not formerly covered all 58 areas. However, now the Department no longer used so many consultants because it had more staff.

The Chairperson asked if the Driving Card was a revenue based programme in the DoT. She asked further if the Department could give a rough idea of how many people had licenses in the country, and approximately what income was derived from these licence cards.

Mr Mokonyama said that there were approximately seven million drivers in the country, which produced close to 2 000 300 cards each year. The DoT therefore had the ability and capacity to produce 7 000 cards per day. In terms of revenue, it was able to make R124 million per year after paying debts. The Department could operate like a Schedule 24 agency and would be able to trade and earn money. This was the idea with eNaTIS and transaction fees.

Mr Dan Pretorius, Acting Chief Financial Officer, Department of Transport, said that the eNaTIS programme generated R600 million per year.

Mr Mokonyama said that when the two entities’ amounts were added together, they generated around R750 million per year, and that could cover a lot of the operational costs. The trading entities for the drivers licence card were operational. There were some contractual problems with the eNaTIS programme.  

Mr Pretorius said that 1.8 million cards were issued per year, and this included new licences. The income was R135 million per year currently. The DoT was currently building up on the surplus, with the intention of replacing the live capture units. All the money was therefore going back to the entity to renew equipment and improve services at testing centres.

The Chairperson said that this could definitely be seen as revenue generation, and should be seen as an entity that would gain self-sufficiency and reliance.

The Chairperson thanked the Department for a well-focused presentation and expressed appreciation for the spirit in which Mr Mokonyama received comments.

Adoption of Minutes
Members adopted minutes of 19 March 2013.

The meeting was adjourned.


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