SITA & Domain Name Authority on their successes and challenges

Telecommunications and Postal Services

29 August 2014
Chairperson: Ms M Kubayi (ANC)
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Meeting Summary

The Committee was informed that ZADNA was a non-profit company that managed and regulated the .ZA namespace.  Its key highlights included a ccomprehensive .ZA Policy that had been released for public comment in 2007/8.  The Registry and Registrar Licensing Regulations had been released for public comment in 2009/10 and two legal opinions from the State Law Advisor were obtained in 2009/10.  The 2010 Central Registry Benchmarking Study had clarified the project scope, business model and implementation framework.  The aim of the study had been to take the second level domain (SLD) from the different operators and allocate it to a single operator.  After establishment of the Central Registry in 2012, ZADNA became self-funded, because domain name fees were then paid to ZADNA.  This had given rise to an opportunity to put forward the dotAfrica application in 2012 with the African Union Commission’s endorsement.  ZADNA had already started the dotCities launch, and dotCapeTown, dotDurban and dotJoburg were launched on 1 July 2014.  The SLD charter had been developed in 2013/14.  The SLD had been re-launched and Web.za, Net.za and Org.za were now open to applications for registration.

The Central Registry was committed to the leveraging of existing assets and Internet Protocol (IP), and the transfer of management and operating capacity.  For the current year the focus would remain on policy development through SLD charter development, with the focus on other SLDs that had not been yet finalised.  It was also important to build an inclusive domain name market that focused on .ZA marketing and awareness, internet governance dialogue and .ZA market research.  Work on the development of a national domain name strategy was planned to guide any future local top level domain (TLD) applications.

The Committee discussed the importance of education and awareness, especially for the youth.  A focus area was clarification on the funding model of the entity and how the Central Registry impacted on it.  Members were specifically interested in the recourse available to an existing brand, if it was found that someone had registered their name.  This became an issue in light of the newly developed dotCities domain which could expose companies to trademark abuse.

The Minister of Telecommunications and Postal Services said the SITA Act was clear on the mandate of the Agency, but the President had stressed the importance of SITA to drive e-governance in an affordable and secure environment.  Keeping the key targets of the National Development Plan (NDP) in mind, e-governance was seen as a mechanism for service delivery.  As infrastructure was rolled out, SITA would drive the process of ensuring connectivity for all government departments.  SITA was running the backbone of government’s network, as well as the government databases.  

SITA’s key highlights were the approximately 7 000 public service outlets connected on a government secure network, the secure hosting of government systems that ensured on-time transactions and the roughly 740 000 IT Help Desk calls per year.  SITA processed about 562 000 Senior Certificates annually, was the primary contributor to the Government IT Officers Council (GITOC) Government Wide ICT Strategy and 2 000 young South Africans benefited from SITA’s learnerships, internships and bursaries.

Procurement challenges included long delivery timeframes to complete procurement processes due to limited staff capacity and capability, limited transaction progress visibility and lack of a customer-centric approach.  The Agency was often locked into contracts after expiry because of the lack of effective contract management, and tenders were cancelled because of poorly defined specifications, evaluation criteria and limited supply market intelligence.  The strategic interventions to address some of the procurement issues were to improve capability and capacity through training and recruitment, to ring-fence procurement functions through a new business unit, and to introduce automated transaction tracking systems. 

The root causes of ICT service delivery challenges could be attributed to a poorly defined e-government strategy, limited bandwidth to support transaction-intensive applications, outdated controls to address the rise in cyber security threats and insufficient capability to deliver on new customer requirements. Other causes were high power consumption, poor rural coverage and fragmentation and duplication of networks.  Strategic interventions were partnerships with government agencies, the development of a strategic framework for implementation of e-government, and the adoption of a top-down approach on e-government initiatives.

The Committee focused on the irregular expenditure cited by the Auditor-General.   The cancelled tenders and SITA’s legal obligations to expired contracts were a cause for alarm, and had a negative impact on service delivery, as they wasted allocated government resources.  Members discussed the challenges SITA had had with its past leadership, and the long-standing difficulties the Agency had with implementing a turnaround strategy.  Other concerns were vacant posts, the approach to project management and the lack of transparency in the presentation.  The Committee was keen to have a follow-up meeting with the organization, and highlighted some of the gaps in the outdated SITA Act.

The Minister said there would be some changes of emphasis, and there had already been engagement with the Speaker on possible amendments to the strategic plan.  The real challenge was the procurement problem, and systems needed to be in place that detected and identified irregularities beforehand.

 

Meeting report

Introductory remarks

The Chairperson welcomed everyone to the meeting.  She said the briefing by the Minister on all outstanding Special Investigating Unit (SIU) investigations for affected entities would be a closed session, and apologised for the fact that the administrative staff had not been able let people know in time that the session would be closed.

Ms M Shinn (DA) said the public had every right to listen in on the meeting.

The Chairperson said that the necessary permission had been granted to have a closed session.

Everyone except for Members of Parliament was excused from the session.

Briefing by .zadna (Domain Name Authority) on its successes and challenges
Mr Vika Mpisane, Chief Executive Officer, ZADNA, explained some of the popular acronyms used, and also outlined the active and dormant second level domains (SLDs).  ZADNA was a non-profit company that managed and regulated the .ZA namespace.  Following successful negotiations between the South African government, Uninet and Namespace ZA (an entity earmarked to take over management of .ZA from Uninet), the establishment of the .za Domain Name Authority (ZADNA) was included in the then Electronic Communications and Transactions Bill.  The Bill became an Act of Parliament known as the Electronic Communications and Transactions Act of 2002.  In 2004, with the support of Uninet and the South African government, the administration of .ZA was re-delegated to ZADNA.

Mr Mpisane illustrated the value chain, according to ZADNA policy and regulation.  Key highlights of the company included a comprehensive .ZA Policy that had been released for public comment in 2007/8.  The Registry and Registrar Licensing Regulations was released for public comment in 2009/10 and two legal opinions from the State Law Advisor were obtained in 2009/10.  The 2010 Central Registry Benchmarking Study clarified the project scope, business model and implementation framework.  The aim of the study was to take the second level domain from the different operators and allocate it to a single operator.  After establishment of the Central Registry in 2012, ZADNA became self-funded, because domain name fees were then paid to ZADNA.  This had given rise to the opportunity to put forward the dotAfrica application in 2012, with the African Union Commission’s endorsement.  ZADNA had already started the dotCities launch and dotCapeTown, dotDurban and dotJoburg were launched on 1 July 2014.  The SLD charter was developed in 2013/14. The SLD was re-launched and Web.za, Net.za and Org.za were now open to applications for registration.

The Central Registry was not just a name change, but a total transformation that included governance, structure and mandate, and that provided leadership on the Continent.  It was committed to the leveraging of existing assets and Internet Protocol (IP) and the transfer of management and operating capacity.  For the current year, the focus would remain on policy development through SLD charter development, with a focus on other SLDs that had not yet been finalised.  It was also important to build an inclusive domain name market that focused on .ZA marketing and awareness, internet governance dialogue and .ZA market research.  An internet governance debate was an opportunity to take leadership in Africa, and globally.  It increased local internet uptake and encouraged .ZA and dotCities domain name registrations.  Work on the development of a national domain name strategy was planned to guide any future local (top level domain) TLD applications.

Discussion
Mr C Mackenzie (DA) asked for the funding model to be clarified, and how the money derived from registration was shared among the various players.  Who set the domain name fees, on what basis were the fees increased annually and what sort of guidelines were used for the increase of the fees?  Given that cities and provinces were now registering domain names, it would be a big burden on a big company like ABSA, for example, to register their domain name in each of the cities or any other networks and domains before cyber squatters claimed that space.  He asked if there was any sort of protection for existing brand names that could be used to give them an opportunity when these additional domains were rolled out.  If it was found that somebody in Johannesburg or Cape Town had registered another brand’s domain name, was there any recourse without having to pay huge amounts of money to have a cyber squatter move off your domain name?

Mr Mike Silber, ZADNA board member, said an application was usually made to a hosting company to have a domain name registered.  This company could either charge an annual amount, or bundle it together with the hosting fees.  ZADNA did not regulate these fees, but regulated only the wholesale price that the database operator offered to the retailers, and they in turn might have resellers underneath them.  Typically the charges would be from about R100 to R200 and the amount paid to the Central Registry was R35, and a fee was paid to ZADNA as the regulator.  This funding model was similar to most models used globally, and it provided for a competitive environment while also ensuring the security and stability of the domain name system.  It ensured that there was enough money for ZADNA and the Central Registry to operate.

Mr Mpsisane said it was difficult for companies to deal with the extra domain names and with the process of registering across these names, but this was largely beyond ZADNA’s control.  There were at least 1 300 new Top-Level Domains (TLDs) in the process of entering the internet.  It was important that businesses strategically defined where and how they wanted to protect themselves.  ZADNA did not advise the public not to register .COM domains, but rather encouraged them to register .ZA as well.  They did, however, advise trading under .ZA, because it carried the South African brand.  If they did not register under .COM, chances were that somebody else would, and it could lead to trademark disputes.  The same principle applied to the 1 300 TLDs, where a business like ABSA should decide where it wanted to register its brand name.  If someone registered their name, they could utilise the alternative dispute resolution mechanism to get their name back.  In the three newly launched city domains, as well as the .Africa domain, the Internet Corporation for Assigned Names and Numbers (ICANN) -- which gave the right to establish these name spaces -- had clear requirements and guidelines in place that allowed businesses first opportunity to register before names became publicly available.

Dr Hasmukh Gajjar, ZADNA Chairperson, said the role of ZADNA was to manage the actual domain name and to make sure that the domain name was available and accessible at all times.  There were a number of related issues around the internet that ZADNA really had no jurisdiction over, nor mechanisms to influence, manage, dictate or control whatsoever.  Some domain names were moderated, while others were open.  Domain names like .GOV or .LAW were moderated, but open domain names were globally regulated on a ‘first come first serve’ basis.  If someone registered an open domain name, it became extremely difficult to exercise any influence over that.  The manner in which registrations were done, were largely automated.  However, under the Electronic Communications and Transactions Act, an alternative dispute resolution mechanism had been established that allowed for recourse for those who had had their brand names occupied by cyber squatters.  Before the alternative dispute resolution mechanism, it was very costly to institute a dispute and it could be done only through the legal system.  With the mechanism, the aggrieved party could table their issues and go through an arbitration process, where the decision by the arbitrator was final.  There had already been a number of companies and individuals that had successfully disputed a domain name through this process.

Ms L Maseko (ANC) said if the .ZA domain name was not used, revenue went to the .COM domain name and she asked what could be done to encourage people to use the .ZA domain name.  She asked whether the organisation had the legal capacity to protect the extra domain names being registered, since not many legal practitioners had that specific expertise.  Were there any road shows planned, because this was an area of specific interest to young people?  There was a concerted effort to ensure that every school going child had an IPad, and she asked if the capacity existed to facilitate the roll out of this programme.

Mr Silber said promoting the local industry was very important and within South Africa some registrars also registered international domains.  If a company or individual in South Africa needed to have a .COM, it should be registered by a registrar in the country so that at least some of the money stayed locally.  This was one of the reasons ZADNA planned to spend a substantial amount of money on marketing to make people aware they should be proud to register under .ZA.  At the same time, it was a global environment and people had the right to register under any domain name.  Although people did not pay to have the .COM domain name, they promoted the name when sending electronic mail and this was also part of the reason for ZADNA’s planned marketing and awareness campaigns.

Mr Lucky Masilela, ZADNA Board member, said ZADNA had a campaign that would ensure that every child had a domain name.  Connectivity had been provided at Chesterville High School in Durban and over 1 000 domain names had been provided to the learners.  An example of an electronic mail address provided to learners would be [email protected], which was an example of how the new TLDs would be applied.  ZADNA did have the capacity to provide electronic mail addresses to South Africa, especially with the dotCities launch.

Mr Mpisane said ZADNA had an education and public awareness campaign that would start the following week.  It would be focused on the youth and the greater public.

Ms Shinn said she was a little concerned about the lack of transparency of ZADNA’s website.  It did not show a list of the board members or the executive personnel.  In the last presentation before the Committee, ZADNA had talked about a major investment in their information technology (IT) systems and that was one of the reasons fees had been increased.  She asked if the transition to the new system had been completed, and for more elaboration on what was happening in the internet governance space, especially if ZADNA was participating in the conference in Turkey the following week.

Dr Gajjar said when the Central Registry was established, a new technical mechanism was also established for the registration of domains.  The channel in which domain names could be registered had been formalised, and the fee for registration had actually decreased from R50 to R35.  This R35 was shared between the Central Registry and ZADNA.  To encourage people to move from the old system to the new system, the fee was raised on what was called the ‘legacy system,’ to enhance the automation of registrations and to get registrants to work through intermediaries like the internet service providers (ISPs).  The IT system had been more than successful and the rate to which people had moved from the old system to the new system had impacted the budget positively.

The Chairperson asked whether Parliament should have the .GOV domain name, since it was a separate arm of the state.  She asked if there were any mechanisms in place that would prohibit people from registering other people’s domain names, especially for use in criminal activities.   Were there public awareness campaigns for the public in this regard?  This particular sector would be of great interest to the youth – were there any activities or strategies in place that ensured active participation of young people in this space?

Mr Masilela said the appropriateness of .GOV for Parliament needed to be assessed once the SLD charter was developed.  The rights protection mechanism in place, allowed for a brand name to be validated in a period termed ‘sunrise’ -- that was, before the actual application process started.  After the application, the name was released after the whole process was completed, to verify whether premium names really belonged to the applicant.

The Chairperson noted that the ZADNA board was male dominated, and asked if there were not any capable women available.

Dr Gajjar said the board consisted of nine members, two of whom were female.

The Chairperson said the Minister should address the matter.

Dr William Rowland, ZADNA Board member, said he had served on the Board of the National Library of South Africa and as part of the 20 years of democracy celebration, it had been decided to list 20 achievements in the 20 years.  If the same was to be done in government and in South Africa, the achievement in the internet space would be on the list.  It was an accessible, affordable and equitable internet, and as a blind person, he knew it had great value for people from the disability constituency.

Mr Mackenzie asked, regarding internet regulation on spam mail, how it was possible that someone with a fnb.co.za domain name could send an electronic mail and the domain name would register as such, even if it was ‘returned to sender’.

Dr Gajjar said there were many issues related to the internet ZADNA was not mandated to control or to regulate.  Such a concern was categorised under the broad cyber security space, and it was the downside of having an open internet system.

Dr Siyabonga Cwele, Minister of Telecommunications and Postal Services, said any concern that could be legislatively addressed would be addressed in the Electronic Communications and Transactions Amendment Bill.

The Chairperson thanked everyone for their input

Briefing by State Information Technology Agency (SITA) on its mandate, successes and challenges
Opening remarks by the Minister
The Minister said the State Information Technology Agency (SITA) was one of the new agencies under the new Department of Telecommunications and Postal Services.  While there may be successes and challenges, a definite process had been started to deal with the challenges faced by the entity.  The SITA Act was clear on the mandate of the Agency, but the President had stressed the importance of SITA to drive e-governance in an affordable and secure environment.  Keeping the key targets of the National Development Plan (NDP) in mind, e-governance was seen as a mechanism for service delivery.  As infrastructure was rolled out, SITA would drive the process of ensuring connectivity for all government departments.  SITA was running the backbone of government’s network, as well as the government databases.  

Opening remarks by the Chairperson of the Board
Mr Jerry Vilakazi, SITA Chairperson, said one of the key functions of the Agency was to ensure government information was kept in a secure environment and accessed through a very secure network.  A critical function was securing of the population register in the data centre.  The Board consisted of 14 members that were appointed by the Minister, after consultation with Cabinet.  Six of the board members were female, and the members brought a variety of skills to the table.

SITA Chief Executive Officer, Mr Freeman Nomvalo, gave an overview of the mandatory and non-mandatory services of the Agency, as well as the new macro structure of the organisation.  The executive level was occupied mainly by males, and instructions had been received from both the Board and the Minister to address the gender transformation concerns as new vacancies were being filled.  SITA Employment Equity (EE) statistics showed that certain sections of the employment population were dominated by white males.  This had a historical context, because most of the employees in these sections had been integrated from the Defence Force and the South African Police Service (SAPS).

SITA had been in existence for 15 years, during which the Agency had faced many challenges, which were often discussed in the media.  There were some highlights as well, and these included the approximately 7 000 public service outlets connected on a government secure network, the secure hosting of government systems that ensured on-time transactions and the roughly 740 000 IT Help Desk calls per year.  SITA processed about 562 000 Senior Certificates annually, it was the primary contributor to the Government IT Officers Council (GITOC) Government Wide ICT Strategy, and 2 000 young South Africans benefited from SITA’s learnerships, internships and bursaries.

Mr Nomvalo gave an overview of the procurement challenges and the root causes of these challenges.  These included long delivery timeframes to complete procurement processes due to limited staff capacity and capability, limited transaction progress visibility, and the lack of a customer-centric approach.  The Agency was often locked into contracts after expiry because of the lack of effective contract management, and tenders were cancelled because of poorly defined specifications, evaluation criteria and limited supply market intelligence.  The strategic interventions to address some of the procurement issues were to improve capability and capacity through training and recruitment, to ring-fence procurement functions through a new business unit, and to introduce automated transaction tracking systems.  Other proposed interventions were the implementation of an effective contract management framework supported by an automated contract management system, the establishment of an independent specifications review committee, building supply market intelligence capacity to provide market insight, and the building of ICT competency within procurement.

The ICT service delivery challenges related to the digital government, security, transversal capabilities and managed infrastructure.  The root causes could be attributed to a poorly defined e-government strategy, limited bandwidth to support transaction-intensive applications, outdated controls to address the rise in cyber security threats and insufficient capability to deliver on new customer requirements. Other causes were high power consumption, poor rural coverage and fragmentation and duplication of networks.  Strategic interventions were partnerships with government agencies, the development of a strategic framework for implementation of e-government, and the adoption of a top-down approach on e-government initiatives. Specific partnerships with the State Security Agency (SSA) for regular review of SITA’s security, and with Telkom and Broadband Infraco (BBI) to improve broadband services, were needed.  Government-shared ICT infrastructure needed to be upgraded, security and reliability of the government network should be enhanced and the integrated security system needed to be implemented.

SITA’s transformation journey would be implemented through 23 initiatives across four key categories.  These were procurement, the IT service portfolio, business enablers and organisational health.  An overview of the 23 initiatives and of the 2013/14 audit findings was given.  An action plan for each of the findings had been developed and a dashboard had been developed to facilitate monitoring and would be updated monthly.

Mr Nomvalo said while there was room for improvement, SITA’s current financial position was nowhere near collapse.  The irregularities and malpractices reported on in the media were presented as an exposé, which had caught the leadership off guard.  These reports were actually part of the findings of internal investigations commissioned by the SITA leadership team with the precise objective of uncovering any potential irregularities.  The strategy had been geared towards reviewing and enhancing every aspect of operations, ensuring that SITA became completely customer centric, fully equipped and capable of delivering top-end services to clients.  SITA had in the last number of years, unfortunately, been subjected to large-scale staff and skills losses.  The strategy implementation programme had sufficient focus on efforts to build organisational capabilities to enable the Agency to deliver on its mandate while becoming an employer of choice within the ICT industry.

Discussion
Ms N Ndongeni (ANC) said no time frames were mentioned in the presentation, and asked what was being done to address unauthorised and wasteful expenditure.  The audit findings should be detailed.  She asked for clarifications.

SITA Board member, Mr Zukile Nomvete, said from his previous experience in project management it was understood that the aim was to determine ‘who was going to deliver what and by what time’.  There should be definite time frames set against the action plans, and this spoke to discipline and accountability.  The Committee would be presented with the specific time-aligned action plans.  The audit findings were extensively unpacked, and he apologised for not including these details in the presentation.

Ms M Mafolo (ANC) asked for the status of the board to be clarified, especially in terms of recent resignations.  She asked how stability would be brought to the board, because it was a structure that supervised SITA.  What measures were in place to ensure the success of the organisation’s turnaround strategy?   How would SITA apply the lessons learned when supporting the elections to improve the functioning of the Agency?  What was the organisation doing to empower women and what was being done about the vacancy rate in terms of the funded posts?

Mr Vilakazi said there had been three resignations -- the Deputy Chairperson and two members -- from the board in the last three months.  The Minister, in consultation with Cabinet, would proceed to replace the members.

Mr Nomvalo said the vacancy rate had proved to be problematic.  Posts had been advertised, but SITA had not been able to find applicants with the right skills and qualifications for certain posts.  People also chose not to go to an institution where they could possibly feel their careers would not be enhanced.  The sooner SITA changed its image, the sooner it would attract suitable employees.

Ms D Tsotetsi (ANC) referred to the 2 000 young South Africans that benefited from SITA bursaries and learnerships, and asked if there was a breakdown available in terms of race and geographical spread to assess which provinces had not been covered.  She asked what role SITA played in job placement after beneficiaries graduated from these programmes, and what the financial implications of the procurement challenges were.  Job creation was a priority, and the limited growth of Small, Medium and Micro Enterprises (SMMEs) was a problem that did not seemed to be addressed.  The steps to address the audit findings needed to be clearly defined, especially in terms of irregular expenditure.

Mr Nomvalo said geographically the projects covered all provinces.  There was a report issued annually that provided a breakdown of the gender, race and geographical spread of the bursaries and learnerships.  The Techno-Girl programme was an all-female programme which saw 8 722 girls in job-shadowing programmes, 283 studying at higher education institutions, and 289 employed.

Ms Maseko echoed the importance of time frames, and said the supply chain management should be vetted.  Cancelled tenders and contracts cost the state a lot of money.  She asked if there was a report available that showed details of how effective the Help Desk was, especially in terms of SMMEs.  The upgrade of ICT infrastructure needed to be addressed, and e-governance was important to enhance collaboration between government departments.  There needed to be written commitments from staff to address the audit findings and also to create a culture of accountability.

Mr Nomvalo said the cancellation of tenders had a ‘knock-on’ effect, and SITA was as concerned about the situation as the Committee was.  Similarly, with the lack of SMME growth, the Board had commissioned tangible approaches to address the matter.  The efficacy of the Help Desk could then be assessed only at a future stage.

Ms Shinn asked when Mr Nomvalo had been appointed Chief Executive Officer, because he could not be blamed for problems that preceded his appointment.  She was amazed at how non-IT smart SITA was -- basic systems were still being done manually -- and asked if the e-government strategy was in good hands.  The Department of Higher education had said SITA was pretty hopeless with the issuing of certificates and the Departments of Correctional Services, Water Affairs and Rural Development and Land Reform had decided to do their IT themselves.  She asked who owned the Government-Wide ICT Strategy and if there was a document available to see what SITA’s objectives were.  It was shocking that the Agency got locked into contracts after expiry because the process was conducted manually, since it was a very outdated practice.  The Agency was paying high prices for goods and services procured because they had a limited ability to leverage economies of scale.  The understanding was that SITA’s major advantage was their buying power, and she asked why they had a limited ability to leverage economies of scale.  On slide 6, it showed that SITA was a primary contributor to the GITOC Government Wide ICT strategy, but on slide 9 it said that there was no defined e-government strategy.  She asked what role SITA played on the Cyber Security Council, what specific government agencies would be partnered with -- and why only government agencies. There was a bonus provision of R50 million, which would amount to R16 000 per employee, and she asked why was it paid at all and why it was so high.   On the financial statements research and development was budgeted for, and she asked what research would cost R11 million.  According to the financial statements, the expected surplus for this financial year was R201 million, and she asked what the funding model of the organisation was, because SITA should not be making a profit out of government departments.  She asked who had set the goal of making at least 70% of public facing services online accessible to citizens by 2016, whether the goal was realistic and why SITA did not go out and tender for a cheaper and more efficient network.

Mr Vilakazi said Mr Nomvalo was appointed in June 2013 and his initial 12-month contract had been extended.

Mr Nomvalo said the Government Wide ICT Strategy document came from the GITOC, under the supervision of the Department of Public Service and Administration (DPSA).  SITA as an entity with a mandate to address some of the issues, needed to have a policy or strategy document that guided the Agency.  The reference to the lack of a defined e-government strategy referred then to the document that SITA should have had, to have a plan in place.  Currently, only the Department and SSA participated on the Cyber Security Council.  The partnerships with Telkom and BBI were the two partnerships that had been concluded, but the intention was to look at opportunities to fulfil the board directive to acquire a network that was quite open and could be accessed from the institution that provided the infrastructure through cost effective means.  The two partnerships were already beneficial in terms of costs, but the Agency was not averse to expanding partnership relationships.  It made sense to start where infrastructure was provided, to speed up some of the plan and projects.  The 70% target was high, but there were certain elements in the maturity profile of e-government services that could be facilitated a lot quicker.  The proposed alignments at executive and accounting officer level, down to the execution, should enable faster progress in some of the processes in meeting the target.  As an institution that was supposed to bring innovation to government, a lot more research and development should have been done.  It was an investment that would elevate SITA to thought leaders, and the focus was on areas for improving service delivery.  The bonus provision was for those individuals in the organisation that worked hard, and it was important to show that a high level of performance was recognised.  It would set a precedent to others that showed if the work was done, there would be appropriate rewards. 

It was indeed embarrassing that as an IT company, SITA was lacking in basic IT solutions.  The plan was not to wait until all the IT problems had been addressed, but to find a way to address the e-government strategy simultaneously, to fulfil the mandate of service delivery.  There had been some problems with the departments of Higher Education and Correctional Services.  Some of the problems had been addressed, and SITA had been able to redefine relationships with the departments.  The Premier of the Northern Cape, in her State of the Province Address in February 2014 ,did not have many positive things to say about SITA, but had given a lot of positive feedback in the June 2014 State of the Province Address. 

SITA could not be an institution that made super profits, but it also could not function by making a loss.  If the percentage of the profit was calculated against the turnover, it was not very big.  The objective was to drive costs down and to continue to be self-funding.  There needed to be a positive surplus to invest in and upgrade infrastructure.

Mr Mackenzie said it was essential that the time frames and deadlines be included.  He said he supported affirmative action, EE and diversity, and asked whether the employee population should not be more diversified, in addition to skills capacitating.   Communication with other government departments had been listed as a challenge, and he asked what sort of project management approach was being applied, because in modern business science a solid approach would encompass all these challenges.

Mr Nomvalo said SITA used the Project Management Body of Knowledge (PMBOK) project management approach, but the systemic problems in the Agency, with its history of unstable leadership, impacted on communication due to embedded and historical problems.

The Chairperson said the structure did not correlate with the 2012/13 Annual Report (AR) and the 2014-2019 Strategic Plan, and asked when the structure had been changed.  She sought clarification on the discrepancies regarding vacant posts in the presentation and the AR, and the disabled employee rate, which was below the government rate of 2%.   The presentation was vague in some instances, because there were no details about how many contracts the Agency was locked into, and the implications thereof.  It was the Committee’s job to oversee allocated funds and expenditure, and whether money was being used appropriately.  This presentation had been alarming, because there were elements of wasteful expenditure.  Cancelled tenders impacted on service delivery and it impacted the resources allocated by government.  She asked for details about the cancelled tenders, and said it reflected poor management.  SITA had been in existence for 15 years and most of the challenges had been identified in 2010, yet they were still presented as challenges.  If the same challenges were being flagged four years after a turnaround strategy had been introduced, it signalled an entity in crisis.  There had been no explanation of the mechanisms in place that would address the audit findings.  She asked what specific steps had been taken to address unauthorised expenditure and whether any disciplinary processes had been undertaken.

Mr Nomvalo said the structure of the organisation had been illustrated from the lowest to the highest levels, and that was why it seemed there were anomalies.

Mr Vilakazi said SITA had been facing many challenges in its 15 year existence.  Mr Nomvalo was the seventeenth Chief Executive Officer in 15 years and any basic book that talked about successful business would say that stable leadership was the key success factor.  Similarly, the Agency had been subjected to a number of turnaround strategies in the last 15 years, and had never been able to stabilise to deliver on its mandate.  When the board was appointed, the turnaround strategy had declared over 1 200 employees redundant.   SITA had started from scratch and the board had embarked on a project where almost 3 000 people had to be interviewed and placed.  Significant progress had been made in the skills assessment and placement of most of the employees.

SITA Board member, Mr Zeth Malele, said SITA had a difficult origin, and this had contributed to some extent to the challenges the organisation was experiencing now.  A number of entities had been consolidated to create SITA, and some of the challenges had been inherited from the different components.  Some of the components were from the defence and intelligence spaces that were involved during South Africa’s difficult history prior to1994.  All of these components had been housed within SITA, and there had been no ‘clean-up’ to address some of the HR issues that had arisen, where they affected not only performance issues, but security issues as well. The current structure had been approved by the Minister and the Board in April 2014.  It followed a process after the appointment of the board in October 2013, where certain sections like procurement and ICT security had been prioritised.  The board had identified the position of a Chief Technology Officer as a strategic and crucial position to be filled.  The strategic plan would be reviewed in light of the new administration and certain areas would be highlighted and prioritised going forward.

The Chairperson said there would be a follow-up meeting next month, and SITA would have to show what they hadcommitted to.

Closing remarks by the Minister
The Minister said SITA would engage with the board on issues in the following week.  The strategic plan should relate to the Medium Term Expenditure Framework, the State of the Nation Address (SONA) and to the intentions of the Department.  There would be some changes of emphasis, and there had already been engagement with the Speaker on possible amendments to the strategic plan.  The real challenge was the procurement problems, and systems needed to be in place that detected and identified irregularities beforehand.  The major source of SITA revenue was derived from the ‘complaining’ departments, and it was imperative for the Agency to prioritise service delivery.   SITA had to set some guidelines and standards to enable planning, and to leverage economies of scale.  The Committee should also take note that SITA had been subjected to a high turnover rate of chief executive officers, board members and Ministers.  It was also emphasised that a technical environment should employ technologically-skilled individuals and project managers with technical skills.  This had been an introductory meeting, and the Committee was free to call SITA back to come and explain on any issue.

The Chairperson said the SITA Act was outdated and needed to be amended.   This should be prioritised.  The entity needed someone to be able to flag the necessary amendments to legislation, especially in a technologically progressive environment.  At present, SITA did not have a schools connectivity legislative mandate, and this could create obstacles for the Agency.   This had been an introductory meeting, but it had flagged some very important issues that should be dealt with at a follow-up session, which would be confirmed at a later stage.  The board also needed to take a look at the issues that had come out of the meeting.

The meeting was adjourned.

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