Department of Correctional Services qualified audit: hearing with Ministry of Justice and Correctional Services

Meeting report

The Chairperson greeted the Minister and Deputy Minister of Justice and Correctional Services, officials from the Department of Correctional Services, National Treasury and other stakeholders who had been present in the meeting of May 2015, where it was agreed there will be continual engagements with DCS. The Committee has not yet written a report to Parliament  as it felt the executive authority of the Ministry was yet to be given a chance on what it has done, how it wants things to be done and what it envisages as a shift from what they currently were. The invitation letter sent to the Minister focuses on four main issues: infrastructure‚ human resources‚ the use of consultants and contractors‚ and the information and communication technology plan of the Department of Correctional Services. The Committee would want to hear from the Minister on these issues.

Mr V Smith (ANC) said that a letter had been received from National Treasury on the Integrated Inmate Management System (IIMS) tender and it would be good if National Treasury officials brief the Committee so that when the Minister speaks, he can also respond to issues raised by National Treasury.

The Chairperson said National Treasury wrote to the Committee, and sent the letter to DCS, and the National Commissioner wrote back to the Committee making his analyses on why the tender must continue and how he envisaged this going forward. National Treasury has not yet responded to the issues raised by the National Commissioner. Perhaps, it was good to give National Treasury a chance first.

Mr Solly Tshitangano, Chief Director: Governance, Monitoring and Compliance, National Treasury, said the tender in question was not properly evaluated and adjudicated. He delegated an official to look into evaluation and adjudication. The tender was a two envelope tender. Evaluation was done by DCS. On a tender, you look on the administrative side and the functionality of the tender, but at the functionality stage only one bidder was remaining. The problem with this was the bidder gave an amount of R378 million. In order to comply with section 217 of the Constitution, tenders must be cost effective and competitive and the amount must be reasonable. The process that DCS did was transparent, but the problem was that DCS budget and the amount offered by the bidder do not match. With experience from other institutions, officials from Departments tip service providers on the budget estimate so as to inflate their amounts to such a level. As he was preparing for the SCOPA, it asked DCS to open other envelope to compare with the preferred bidder. The preferred bidder offered R378 million, followed by R342 million, R178 million and then others. Suppliers often take advantage of government and inflate the amount and any procurement needs to comply with section 217 of the Constitution.

The Chairperson asked what National Treasury regulations say on procurement.

Mr Tshitangano replied National Treasury regulations were guided by section 217 of the Constitution which speaks of transparency, equity and competitiveness. First it looks on the administrative requirements and functionality then at 90:10. If the amount was higher, one can do a market analysis and then negotiate with the preferred bidder.

Mr Smith asked if National Treasury knew that Integration and Fence and Gate shared the same premises, and have the same auditors. He asked if administrative requirements include such verification.

Mr Tshitangano said administrative requirements include this because if suppliers are from the same group of companies, they collude to fix prices. The directors of those companies also need to be checked as some of them may be on the restricted database.

Mr Smith said DCS own procurement policy in section 2.8 notes requirements about documents including BEE certificates, auditors and certified ID copies of directors. The Minister needs to respond if DCS flouted its own regulations. DCS only budgeted R16 million and it went on to commit to a tender of R378 million and he asked the implications of committing to a project without the money – as it does not make any sense.

Mr Tshitangano said DCS has responded that there was a budget that could add up to R280 million and this information can be extracted from the strategic plan. If the money was not there, section 38.2 of the Public Finance Management Act discourages commitment together with documents on money management.

Mr Zach Modise, National Commissioner, DCS, replied that the DCS received confirmation from the Department of Justice that it will receive money as part of the mechanisation program. National Treasury should have responded that he wrote to the Director General asking what was really wrong about the tender, made a follow up and did not get a response.

The Chairperson asked how much was to be received from Department of Justice

Mr Modise replied R86 million this financial year, and R120 million and R150 million in the subsequent two financial years respectively.  

The Chairperson asked if this amount was for this project only and why the amount was not indicated before.

Mr Modise replied the money was for this project and the Integrated Justice System was a cluster project

The Chairperson asked if project evaluation was done at cluster level.

Mr Modise replied the evaluation was done by DCS. The automation project was being done by Police, Justice and Correctional Services.

Mr Smith said Parliament should not have asked DCS its own information.

Mr M Booi (ANC) said the meeting today was for the Minister and the focus on the Commissioner derails the process. Had he talked that it was a cluster project, there would not have been a need for the meeting. The Commissioner is misleading the Committee.

In response to the Chairperson asking how long National Treasury needed in order to finalise its report on this tender, National Treasury said two weeks.

Minister Michael Masutha, Minister of Justice and Correctional Services, said his comments will only be limited to four issues noted by the Chairperson at the start of the meeting. National Treasury has not yet approached the Ministry on the tender and after its report, if there was need to exercise authority, he will do so. DCS has over 40 attorneys which makes it one of the biggest law firms in the country, but these skills were rarely utilised especially on projects like these. The DCS has six regions, which were autonomous regions but it has bred inadequate accountability. There were about 240 correctional centres around the country and some of the area managers do not have the capacity to keep the area under check. DCS is an organization of 42 000 staff, currently with 38 000, while the recommended establishment was 66 000. However, year after year, resources were returned to Treasury for human resources support. It has advertised for 4 000 entry positions and received over a million applications; 600 positions for specialists had been advertised. Treasury has then instructed departments about the freezing of vacant posts. DCS has had mass resignations from officials in the past two years pending the new pension rules. It had lost staff with many years of experience, but addressing it through promotions was not the good answer.

Ms N Khunou (ANC) wanted to hear the Minister state how the present problems with staff can be resolved. The Director of Legal Services was not even aware of the number of people under his authority, or even his budget, when he appeared before the Committee.

Ms T Chiloane, (ANC) said the position of the chief internal auditor and the chief financial officer have not yet been filled. The CFO had been acting for a long period. She asked about the geographical spread for recruitment of entry positions.

Mr Booi said the DCS has been in a state of dysfunctionality for ten years. In terms of what was in the PFMA, he asked if the accounting officer had the capability to run the DCS.

Mr E Kekana (ANC) said that different oversight principles were applied in different regions and asked what DCS was doing to correct this. In 2014/15, DCS trained 24 500 as part of work skills plan and asked if this were in the scarce skills category. They were some good things DCS was doing, but he continues to hear the problems of under capacity.

Mr Smith said DCS was recruiting at entry level, but SCOPA’s interest was with financial management which had over 30% vacancies. In 2014/15, R600 million was taken from compensation of employees as a virement to goods and services and this had not been a once off trend. The money for salaries was being used for consultancies.

Ms N Louw (EFF) said the position of chief internal auditor was yet to be filled. She asked for how long had the National Commissioner been appointed as people cannot hold him to account if he had been in the position for a little time. She asked when the 205 hearings in the DCS would be completed and if DCS had any plans to retain scarce skills.

Mr C Ross (DA) was concerned with the ongoing qualified audit opinion due to non compliance with laws and regulations especially in supply chain management. This was evidenced by 18 cases of employees with private businesses. National Treasury would help if there was a need to appoint the Special Investigating Unit (SIU) to look into the tender in question.

Minister Masutha replied he would not act in haste by referring the matter to the SIU; he would wait for all the reports and if there was need to do so, he would do so. Nobody enjoys protection in the activities of the Department. It has over 40 attorneys and some managerial decisions taken do not benefit from the skills of these attorneys. Regions work autonomously and he was not surprised that the Director for Legal Services was unaware of the number of people under his authority. In the turnaround strategy, the National Commissioner must come up with a skills set on procurement, financial management and human resources. The matter of senior managers initiating hearings without merit needs to be stopped and DCS would not defend a case in court in its name in order to stop unnecessary hearings. DCS had advertised 4 000 entry positions and 600 specialist positions and the specialist positions were recruited from outside as no official will study to be a medical doctor after entering DCS. However, in sourcing need to be encouraged in filling of positions. Regions had a certain quota for employing people, but there was some nepotism and DCS must run a clean government without corruption. He has asked Legal Services to evaluate all disciplinary hearings to guarantee its human resources managed consequence management rather than ending up in court. The situation in DCS was improving; some of the issues were historical. The audit executive position was filled but the chief internal auditor had moved to SARS.

Minister Masutha said DCS has had challenges in the past with ICT as it had been given systems that ended up in the scrapyard. He had not come with the latest report on litigations after being provided with ICT systems that constantly crashed. There were fragmented ICT systems managed on site and DCS did not have a clear information strategy that permeates the whole organization hence the need for a system that transverses the whole system linked also to the Integrated Justice System. Government at large has an integrated ICT procurement policy. The Integrated Justice System must have a portal that was accessible to all and allows it to deal with fragmentation in Corrections and Justice. He would wait to see the report from National Treasury.

The Chairperson asked if this system was sufficient to cover all DCS ICT needs.

Minister Masutha replied the core business of DCS was managing inmates and there were other non-core ICT needs of the DCS.

The Chairperson asked if the disaster recovery plan was independent of the one he was referring to.

Minister Masutha replied that developing a transversal system was critical before developing a disaster recovery plan for the Department and that a recovery plan will be offered as part of the new ICT roll out of the Department.

Ms Louw was of the view that the Minister was going to talk about ICT needs based on recommendations given by the Auditor-General. The meeting was not helping as the Minister seems to have other information. The basic questions were how, when and what was going to be done about the AG’s recommendations.

Mr Smith said he was not sure what DCS was saying about disaster recovery. He was not convinced what DCS was doing and the Committee was going to write a report to the House regardless of whatever the Minister was saying. He asked if the inmate management system was going to cater for disaster recovery and if not, he asked if the funds were there. He asked if ICT needs in the Correctional Services Amendment Act were covered in the IIMS. CCTV, jamming and access control were all IT issues.

Mr Booi asked if the cluster approach was part of the turnaround strategy.

Mr Kekana said it seemed the Department did not brief the Minister on the IT questions and asked if any management meeting was held.

Ms Khunou said the Minister must tell us what he has seen since his appointment.

The Chairperson said the Minister’s input on human resources was detailed, but he was shallow on ICT.

The Minister said the letter that brought him here was the invitation of 10 February and he thought that on ICT he was going to talk only about the IIMS. He conceded this and said he would ask the Department to brief him and come back on the specific issues wanted by the Committee.

The Chairperson said the Annual Report signed by the Minister put the Minister in the vantage point to ensure that there was political monitoring and leadership even if there were administrative weaknesses.

Mr Smith said the Deputy Minister was present at all relevant SCOPA hearings and the Minister’s support staff were always here and the Minister should have been briefed by the Deputy Minister and the National Commissioner. The Committee must give two weeks to the Minister and two weeks to National Treasury before the Committee can write a report to the House.

Mr Thabang Makwetla, Deputy Minister of Justice and Correctional Services, said the confusion was brought here by the budget available for the Integrated Inmate Management System of R16 million and whether it was the entirety of the ICT needs of the Department. There was no clarity provided that IIMS was a part of the Integrated Justice System project intended to provide capability for the Justice, Police and Corrections to deal with cases from one point. The IIMS was part of the project and that was why the budget was with Justice and Constitutional Development. It needs to be established if the figures provided by the National Commissioner were for the entirety of the Integrated Justice System project as IIMS was part of the Integrated Justice System. The IIMS was not the entirety of the DCS ICT needs. With respect to the other ICT needs, that was what was discussed by the Committee and the officials in their last engagement – one of which was the ICT disaster recovery plan for the DCS which was not in place at the moment. It had become obvious that there were gaps in the ICT needs of the DCS, but it not clear where the gaps where; what the DCS has procured in the preceding years, what was yet to be procured and whether there was value for money on what was procured. The audit committee which must assist the DCS into the IT inquiry did not have an IT specialist and was not competent to provide the terms of reference into the inquiry of the IT environment. This was separate from the IIMS. There was still validation of the propriety of the IIMS by National Treasury when the DCS has already appointed a service provider. He thought that in tidying up the environment, the IIMS tender must be put on hold and Treasury must satisfy itself before compounding the problem.

Mr Booi suggested that the meeting be suspended so the Minister can add fat to the bone and then come back to Committee, as the Minister has conceded.

Ms Khunou said before adjourning the meeting, the Committee must be clear on what it needs to hear about from the Minister.  She has a problem with contractors that were given other jobs before completing certain projects.

The Chairperson said as per the invitation sent, ICT plans were supposed to be discussed not in the clouds but on what was needed for ICT and the disaster recovery plan. The DCS acknowledges that IT was critical to its service delivery. The Committee has had various meetings with DCS. The Committee has heard from officials, but wants to hear from the political leadership that it is seized with matters in the Department. The Department of Performance Monitoring and Evaluation had just given a report on the non-performing departments in government and DCS was amongst the lowest five.

Mr Smith said the DCS must go to the Minister and update him on the concerns that SCOPA has. When the Minister comes back, SCOPA was going to prepare its report independently of the executive. The Committee was affording the Minister an opportunity to influence what was to be written in the report.

Minister Masutha said the further guidance will help him respond to specific issues that the Committee wants him to respond to. His response on IT was centred on the IIMS because he considered it central to the services rendered by Correctional Services, but it impacts on the broader services of the justice cluster. Many challenges may be of a historical nature. He does not agree with the Deputy Minister’s recommendation to suspend the contracts pending preliminary investigation as contracts have legal implications. If National Treasury wants to make such a recommendation, it can do so as it is in charge of procurement.

The meeting was adjourned.