The Minister of Justice and Correctional Services commented on a matter that the National Treasury wanted raised in the meeting, concerning an investigation into a tender issued by the Department of Correctional Services (DCS). The Minister objected that this could imply that Treasury was setting itself up as a tender review panel. The same could apply to the Standing Committee on Public Accounts. Due procedure was not followed. He advised that SCOPA seek legal advice. He pointed out that matters were being raised that had not yet been the subject of a finding by the Auditor-General. The Chairperson asked for a comment by Auditor-General South Africa (AGSA), who agreed that the issue had to be deferred until the Auditor-General had reported on it. The Committee accepted that position.
In his briefing the Minister emphasised the importance of ICT interventions for the turnaround of DCS. A transversal ICT platform had to be created to re-engineer business processes. There were challenges of outdated and obsolete technologies, and a silo environment with multiple legacy systems. Consultants in the ICT environment had been radically reduced. The DCS historically had its own artisans and technicians, but the Department of Public Works became responsible for major infrastructure projects. There were failed projects and delays by the DPW. The DCS had poor monitoring of infrastructure projects. Consequence management was never a simple matter of firing people. People fought back through litigation. There was a shortage of bed spaces in facilities. He suggested 44 000 remand detainees could be dealt with as a justice matter, in order to claw back bed space. The DCS needed technical capacity to deal with scope changes and cost escalations of infrastructure projects. Technical capacity was needed to advise on nutrition outsourcing.
In discussion, a Member suggested the ICT briefing was futuristic, SCOPA wanted a historical account of what had killed the patient. It appeared to some Members that the DCS was making contradictory statements about the phasing out of ICT consultants. The Minister provided clarification that there was a concern that the number of days worked by consultants during the year could be overstated. Members noted that a disaster recovery plan for DCS ICT was not yet in place. There was a demand for clear timelines regarding the phasing out of consultants. Cost escalation due to changes in project scoping was due to poor planning. Cost escalation, along with consequence management, was a major concern for the Committee. It was suggested that a fencing contractor had deliberately ‘captured’ the DCS. Outsourcing of nutrition was also a concern. Increased technical capacity to oversee infrastructure projects was recommended.
Introduction by SCOPA Chairperson
The Chairperson welcomed the Minister Masutha and Deputy Minister Makwetla and the DCS leadership, National Treasury and the Auditor-General. There had been a meeting two weeks before, and it was agreed to meet again. The DCS had to agree that there had been more engagement with it over the preceding months than with any other entity. There had to be continual engagement to collectively take the Department forward. There had been other meetings besides in the Committee. Heads of two facilities were visited, and there was an exchange of documents. The DCS had a sense of what the areas of concern where for SCOPA. Committee members had a fair sense of the state of affairs in the DCS. These matters had to proceed in the right direction at the political leadership level. The Minister was asked to brief them on four items. There was also the Treasury matter that had to be looked at.
Minister’s comments on the Treasury tender enquiry
Minister of Justice and Correctional Services, Mr Michael Masutha, noted that the DCS had appeared two weeks before. The Committee was not satisfied with his input about ICT. The core issue was information management. He would deal with that more elaborately.
The Treasury matter alluded to was not mentioned in any committee correspondence to him. It dealt with an investigation conducted by National Treasury into the issuing of a tender by DCS. It had caught him unprepared. He had not yet received correspondence from the Finance Minister on the Treasury enquiry. The National Commissioner wrote to the Director General of the Treasury. There had to be clarity about a framework. It could not be between the Accounting Officers of two departments. Treasury had created the instrument of the Chief Procurement Officer, but there had been no correspondence from that quarter. It was not known who had authorised the initiation of the investigation, and what kind of enquiry it entailed. Treasury itself was assuming the status of a tender review panel. It could be asked what the terms of reference might be. If Treasury wanted to make SCOPA into a review panel, there had to be guidance according to the SCOPA terms of reference. There had to be rules of procedure, and he was concerned about the lack of clarity. The appropriate authority had to sanction the process. These proceedings were irregular and did not follow established practice. Treasury had written to the Accounting Officer in the previous year alluding to complaints from Parliament about a contract. Proceedings were to be instituted about bid evaluation. If that was the intention, questions had to be asked about the regularity of the process. There were irregularities in the manner the process was conducted. Documents were opened by Treasury, which was not according to law. There was to be an investigation into the conduct of a DCS official. The relevant official received a list of questions on the previous Friday at midday, and a response was required by 10h00 on the following Monday. He himself received a pile of documents via the DCS Parliamentary Liaison officer, which was to be tabled today for response. It was an irrational demand. There was not a fair opportunity to engage. SCOPA had to get legal advisers on board to see if there were irregularities.
The Chairperson noted that a substantive matter had been raised. The matter was a leftover from their engagement in November. The clarification required was administrative. Correspondence between Treasury and the National Commissioner had to be reviewed to tie down loose ends. SCOPA received the information in the previous week, and would wait to hear Treasury’s conclusions. The question was whether SCOPA would review a tender process. He did not wish to speak on that yet. SCOPA would decide after hearing what Treasury had to say. The DCS could decide how it would respond to issues.
Mr V Smith (ANC) remarked that the Minister had asked how the item came to be on the agenda. At the SCOPA hearing it was noted that for 2014/15 and the year preceding, the department had spent taxpayer money on a tender. The SCOPA brief was informed by the DCS Annual Report and information from Treasury. The Government Information Technology Officer' Council (GITO) was asked about the integrated corrections management system, which was said to be 99% completed. The question was how much was spent, as GITO had given two conflicting reports. This upset the Committee as it thought GITO had misled it at the time. The system for capturing inmate information was said to be partially completed. It was the responsibility of SCOPA to interrogate the Annual Report and to decide if there was value for money. In 2014/15 and before it was stated that work was being done on inmate management. The question was if there was value for money. SCOPA worked with information from the AG and Treasury. Information held the DCS and the Minister accountable. There could not be doubts about money requested, that was given by the public. The issue was in the public domain. The ANC was responsible for service delivery. Every cent of taxpayer money had to be geared to that. SCOPA would take the matter further. He as a member of the ANC had an obligation to do that.
Mr M Booi (ANC) said that he had thought that there would be time to deliberate on the process to seek clarity. SCOPA did not interfere with Treasury. The Committee expected that the AG would give guidance. In engagement with Treasury, Treasury supplied information solicited by SCOPA. The Minister was called in because if satisfaction could not be found in the Department, the Public Finance Management Act (PFMA) allowed for engagement with the accounting authority. There had been eight engagements with the DCS. The DCS record was not good in terms of contributing to a capable state. The DCS had problems in terms of the NDP. If solutions could not be found, guidance had to be sought from the Minister. He objected to the Minister implying that SCOPA could not apply its mind to what was in front of it. Treasury and the AG were engaged with it for clarity. He was not in favour of getting legal advice. The legal document in front of the Committee was the PFMA. He told the Minister that SCOPA would proceed as always. Unless the Minister was saying that he did not want to account to Parliament. He asked the Minister not to act in that manner towards SCOPA. SCOPA would not do that to him. Taxpayer money had to be protected. SCOPA was following correct procedures.
The Chairperson said that he would like the matter to be tied down.
Mr C Ross (DA) noted that Mr Smith had referred to the concerns of the ruling party. The DA endorsed value for money, and considered the AG report important. The DA also shared concern about the DCS consistently qualified audit opinions in the past. The DA supported the interventions needed.
The Chairperson noted what the Minister had said. Yet the Committee would want to allow Treasury to talk to it about its findings. The question was how the DCS interacted with the findings. The matter also had to be checked with the AG. The tender was not part of what was requested from the Minister. It was as yet a small thing but it could spiral outwards. It had to be contained where it was supposed to be. There had to be a focus on the meat of it.
The Minister responded that what Treasury had presented two weeks before was clearly based on information that had to be investigated further. Whatever report Treasury would currently present would not contain DCS responses to its questions. It was not possible to be objective. SCOPA had every right to consider the Annual Report and AG findings. The current matter did not proceed from the AG findings. The financial year was not concluded. Treasury wanted to act as auditor in the matter. The question was if SCOPA was prepared to hear an audit outcome that Treasury proposed to present. There was as yet no audit report related to the contract. He therefore wanted to raise it as a procedural issue. SCOPA should have allowed Treasury, and Treasury should have allowed itself space to complete its process, and if necessary to invoke any investigative authority, to ensure that a completed process was dealt with. Unless SCOPA wanted to constitute itself into as such an authority.
The Chairperson said that it was in order to raise procedural issues. SCOPA wanted to come to the Minister after hearing Treasury, but there had as yet been no input from them. The Minister had struck first on procedure. It was a single item related to a transaction in the previous year. Treasury was supposed to present on that day.
The Chairperson asked for comment from Auditor-General South Africa (AGSA).
The AG representative replied that the AG could not comment on transactions not subject to audit. Once the AG had given an audit report, it could engage with SCOPA on audit findings. He suggested that a conclusion be based on the 2015/16 audit report. If the transaction was in the audit report, it could be dealt with in the normal manner.
The Chairperson asked that the AG speak to SCOPA, and not for itself. He asked whether the Treasury report had to be heard or not.
The AG representative suggested that the matter be concluded before SCOPA dealt with it at that level.
The Chairperson asked if “concluded” meant audited.
The AG representative replied in the affirmative.
The Chairperson said that the advice from the AG was fair and correct. It would set a precedent that findings could only be dealt with once the audit was concluded. He asked that the AG take note of the transaction. He asked if the presentation by Treasury would still serve a purpose if heard on that day.
Mr E Kekana (ANC) said that the Chairperson always dealt fairly with matters. The concerns of the Minister and the comment by the AG could not be ignored. The matter could not be proceeded with. Every detail had to be with the Committee, for that to be done.
Mr Smith agreed. As the Chairperson had commented, it was one transaction. The Committee had to get to the meat. The point made about the transaction had yet to be proved. He suggested the matter be postponed, to give an opportunity to deal with maladministration. Business had to be proceeded with.
Mr Kekana agreed that the AG advice was good. Other issues could be dealt with.
The Chairperson noted that the AG had followed what was said and would supply additional information. He thanked Treasury for always being on hand to talk to issues. What Treasury did created a precedent. The Committee had to decide how to deal with it. The situation was without precedent. What Treasury had done on the day was correct, and did not present a problem. Treasury could be released, as it was only there for one item, unless it was interested in the other issues.
Ms N Khonou (ANC) said that Treasury was invited for comment in strategic situations. It was fair to allow them to comment, as long as it did not lead to an argument.
Mr Booi remarked that the question was how to reach out to Treasury. It would be better to take leave of the issue.
The Chairperson said that Treasury should have been allowed a comment during the discussion. Whatever Treasury did was because SCOPA had requested it. But for the Committee the main point was the one made by the AG. The Annual Report that SCOPA dealt with contained AG findings. Hence the Committee was ready to wait. However, Treasury’s presence in the meeting was not in vain. Treasury had to help SCOPA to establish a precedent. For today, the main issues had to be returned to. The Minister had spoken to human resource issues two weeks before.
Minister’s briefing on the state of the Department of Correctional Services (continued)
ICT in the DCS
The Minister remarked that there had been a two-week pause before dealing with ICT issues. It was the second item the Committee had to be addressed on. He had talked about the Integrated Inmate Management System (IIMS) information management system, which was related to the subject of the procurement system. There was a key strategic intervention that was intended to modernise the automation of the information management system. A single transversal system had to be created, in response to audit findings over time and challenges SCOPA had alluded to.
The Chairperson reminded him of the time factor.
The Minister replied that he could give a high level input. SCOPA had asked for the whole ICT plan to be provided. It was an elaborate subject. He asked if he should stick to that.
The Chairperson told him that he could talk as long as he wanted on any point, as long as time management was kept in mind.
The Minister continued that he could not accept the role of the Accounting Officer. He was not an ICT expert. Audit findings about the ICT environment was the subject of many engagements. ICT challenges in the DCS had a long history. It was a complex landscape. There had to be planning with regard to procurement, data integrity support and management. Delays were caused by slow procurement. Technologies were outdated. There were still challenges that would require huge capital outlays. The failed Remand Detainee Offender Management System (RDOMS) had cost R43 million. The architecture of the inmate tracking system was inadequate. The DCS did not own the intellectual property linked to ICT. There was a silo environment with multiple legacy systems. A lot of the systems had become obsolete. It was a scrap yard legacy. There were obsolete technologies. It was not possible to integrate business processes because systems lacked flexibility. That also prevented integration in the Justice system. The Department of Justice had centralised the budget for rollout. R356 million was set aside for a DCS integrated system. He had spoken to the Director General of Justice. A branch Government Information Technology Office (GITO) was instituted in 2012. The GITO had to position itself to achieve White Paper objectives on remand detention. There would be a special focus on internal procurement. Capacity building was required for the ICT environment. AG findings pointed to a heavy reliance on consultants. DCS systems had to be modernised to provide a reliable integration and communication system. The turnaround strategy emphasised the critical role of ICT. Transformation required the development of a GITO allied to the DCS value chain. There had to be research and development and innovative solutions. The GITO had to help enhance core management objectives. A service delivery model was developed. ICT had to interface with core business, to move to an integrated business solution model. Business value had to be created. A new organisational structure and skills set were required, linked to corporate management of ICT.
The Minister continued that the DCS had reduced consultants in the ICT environment. There was a reduction from 100 in 2009 to 30 in 2016. There was a further reduction since 1 January 2016. Business projects had to be re-engineered to reduce bottlenecks. He had mentioned two weeks before that he was responsible for considering parole applications. He had been able to see the inefficiency of the offender management system. The administrative process had to be streamlined, and the value chain of offender management had to be evaluated. Data had to be integrated into one single database, to develop DCS enterprise architecture. The idea was to develop a single integrated system for Justice, as opposed to the current silos. Enterprise architecture had to improve government functioning through IT resources. The government enterprise architecture framework was a general one, not resident in the DCS. Installing the Virtual Private Network (VPN) would reduce network traffic at head office. Different business processes could be communicated. A disaster recovery plan, referred to by the AG, was developed and approved. An inmate management system for identity verification would be developed to prevent identity fraud and duplication. ICT would become a flagship and a central solution. Rollout would be over the Medium Term Expenditure Framework (MTEF). Each facility would operate as an entity to communicate to the central database. There would be a phased implementation system over the following three years. A standard operational model for the security system was planned. Rollout of the new security infrastructure would give priority to high risk profile areas. Implementation would depend on the budget: 243 centres nationwide could not be dealt with at once. The AG had raised the issue of budget expenditure. ICT expenditure had to be closely monitored and managed through Departmental policies. Over the MTEF period 2015/16 to 2017/18, R730 million could be made available. The Integrated Justice System (IJS) could add R360 million to the budget. The question was asked why R370 million was spent when only R357m was awarded. The ICT baseline barely covered maintenance of an ageing system. New projects would be paid for with IJS assistance.
The Minister continued that the AG had commented on reliance on consultants. Reliance on consultants peaked in 2009, with a 9:1 consultant-to-official ratio. Some consultants also performed administrative tasks. There were inadequate resources to monitor consultants. There were initiatives to reduce dependency, and efforts to attract and retain lower level staff. The appointment of a GITO Chief Deputy Commissioner (CDC) contributed to a reduction in the ratio from 9:1 in 2008/09 to 1:1 by December 2015. It was reduced further in January 2016. Funded vacant positions would be filled. The challenge was the hiring and retention of ICT skills. ICT auditing would still at times require consultants, but hiring was controlled. Internal resourcing was through contract workers. Confirming a staff establishment could be a cumbersome process. Where skills were needed, there was retention through contract work.
Ms Khonou remarked that the DCS would help the Committee if it could provide an action plan along the lines of who would do what by when. Committee oversight would be easier then. If there was a blanket strategic plan there would be problems and SCOPA would be back to square one. She asked the Minister if he had such an action plan.
The Chairperson added that Ms Khonou referred to an action plan with timelines.
Mr Smith asked if the Committee was to understand that the 2014/15 Annual Report would not be referred to. The Minister had given a futuristic account. But SCOPA dealt with what had killed the patient. With regard to consultants he would only talk to what was audited on that day. Software Consultation Systems was a company hired in the previous year. It was one of two companies hired. It was stated that the two companies had worked 264 days in the previous year. Software Consulting Systems was paid R17 million, and the other company R7 million. If one took the calendar year to be 365 days, it had to be noted that there were 50 weekends in a year. If that was subtracted, and counting public holidays, there were 112 days in a year when consultants did not work. He asked how DCS arrived at 264 days worked by consultants during 2014/15. The figure inflated the number of days worked and consequently inflated their pay. He assumed that the GITO, who was head of remand detention, sat on the board level of the Justice cluster. The question was who sat at the operational level and did the day to day work, to contribute to the IJS team. He asked if it was expected of consultants to do the hands-on work. It was two weeks from the year end. The disaster recovery plan would only be ready by November. The question was if the AG would again have to make a finding of a lack of a disaster recovery plan in 2015/16.
Mr Ross referred to the ratio of consultants to full-time staff. The DCS was supposed to be a security cluster department. He noted that the critical technical team only started out in January. The Minister had claimed that the appointment of engineers, quantity surveyors and construction managers would address problems. He appreciated the intervention of the Minister, and his attempt to explain the turnaround strategy. There were complexities related to the functioning of 243 facilities. There had to be timelines for moving away from dependency on consultants. He had seen the damage done when supplier contracts did not adhere to legislation with regard to supply chain management (SCM). 75% of procurement was against legislation. He asked the Minister if he could turn the Department around, especially with regard to IT.
Ms Khonou commented that the annual plan had to contain particulars on the phasing out of consultants.
The Chairperson reminded Members that interaction with the DCS had occurred often, and that most Annual Report issues had been questioned. The Minister had been futuristic at the political level, and it had to be remembered that SCOPA had discussed the Annual Report extensively.
The Minister responded that he agreed with Mr Smith that SCOPA enquiries had to deal with audit findings before a futuristic account became possible. It was the responsibility of the Accounting Officer to account administratively, and he did not want to overshadow the Accounting Officer in that role. The Accounting Officer had to explain how 264 days of work by consultants was arrived at, and what computation methodology was used. There was a shift to in-house resources, away from consultants, for IT. It was important that contractual relations entered into allowed the DCS to retain intellectual property. He had asked the DCS to provide a blueprint and an action plan, with documents for evidence. He cautioned DCS not to allude to things it did not have. He told Mr Smith that when he alluded to implementation of the disaster recovery plan, he was referring to testing. There had to be a shutdown to do that. There would be disruption and risk if it were to fail. The DCS had to work out a date in the current year when it could be tested.
The Chairperson asked when the testing would be done.
The Minister replied that it would be around June, so as to cause the least disruption. Risk had to be absorbed during a test. The approach would be to create a disaster and recover from it. He had spoken about Integrated Inmate Management System (IIMS) two weeks before. The Disaster Recovery Plan (DRP) was a key feature in that. The Committee had asked about a comprehensive ICT environment. The DRP spoken to currently was in relation to the silo system. Currently each of the 243 centres had its own.
The Chairperson asked about a blueprint and plan.
The Minister replied that there was a blueprint in place. The Committee could have access to documents. There was high level skills enlisting, with insourcing being rolled out. Time was needed to allow capacity building. Dependence on consultants had a history. The GITO could comment on the level of insourcing. The question was if the Department had the solid capacity to work without consultants. There was a request for deferral at the end of the previous year for insourcing, but it had since been accomplished, in January.
Ms Nthabiseng Mosupye, Chief Deputy Commissioner: GITO, replied that the DCS was fully permanent. It was in the process of filling 11 contract worker posts. Interviews had been conducted for four of those. Permanent staff would be complemented by contract workers as from 1 April 2016.
The Chairperson noted that the Minister had said that the ratio of consultants to staff was 1:1.
The Minister replied that that was at a particular point. He had indicated that the GITO would be able to pronounce by 2016. He asked if the GITO could answer about the 264 work days.
The Chairperson advised that it could be done when a report was received. He wanted the Committee to move on to other issues.
Mr Smith said that in his understanding of the IJS, foot soldiers were needed, also for RDOMS. He asked if the DCS had the capacity to contribute its part in the value chain, or whether it would be outsourced. There had to be people at the operational level, so that SCOPA could monitor.
The Chairperson reminded Mr Smith that the question had been asked before, and SCOPA got a response.
Ms Mosupye replied that she herself and the CDC from Remand Detention sat on the IJS board. There were project level committees peopled by the DCS from GITO and Remand Detention. The DCS was complemented by consultants until 31 December 2015. Configuration was currently being done by contract workers. Technology was available as part of enterprise architecture. The DCS was capable of integration with the IJS.
The Chairperson advised that the next item be proceeded to.
The Minister noted that 420 out of 600 specialised skilled positions had been filled. Most outstanding positions were in KZN. The process was being fast-tracked. The background to DCS infrastructure building was that historically the Department managed its own facilities and had its own artisans and technicians. Over the years the Department of Public Works (DPW) was involved in major infrastructure projects. There was a movement back to the use of inmate labour for skills development. The IDT had emerged as complementary to the DPW. But there were problems in implementation. There were many songs sung about the DPW. There were challenges of delays with implementation. The DCS had to rely on the DPW and the Independent Development Trust (IDT). His Deputy Minister had had an intervention with the DPW Deputy Minister. Turnaround was achieved with some projects. At Ceres, Warm Bokkeveld and Van Rhynsdorp, contractors had gone under. The DCS had to look deeper into projects that failed. Contractors would go bust after the first 10% was paid out. One wondered whether such contractors were prepared to render service, or if was just a ploy to milk the State. There were abuses in the procurement environment. There was an inability to reduce overcrowding in centres. Bed space had to be provided. No new centres were constructed recently. Planned public-private partnerships (PPP) projects were cancelled by Cabinet, who did not like the model. A Cabinet memo was drawn up for a refined model. There was a lack of internal technical capacity, and poor monitoring of infrastructure projects and maintenance. Strengthening of internal technical capacity would be achieved by appointing regional heads for facilities. A regional heads project management team would be appointed. There were project challenges around contractor liquidation. Six projects were stalled, between 2007 and 2014. Line function departments had little control over procurement processes, as the DPW did that. If things did not work out, the DCS had to take the rap. The lost capacity for in-house maintenance was being revisited.
Facility build projects
The Minister reported that at Van Rhynsdorp, a contractor was appointed and work was 99% completed. Warm Bokkeveld was 100% completed. North End was to be completed on 31 May 2017, and Escourt on 31 January 2017. There was no contractor at Tzaneen. The due date for appointment was 31 June 2016. There was no contractor for Kgosi Mampuru. The due date for appointment was 31 March 2016. The total value of infrastructure projects was R971 million, but R1.2 billion had already been paid. His approach was that pressure had to be placed on the DPW in terms of the Service Level Agreement (SLA). He wanted contractors for Tzaneen and Kgosi Mampuru, and C Max. Project managers needed more time to monitor DPW projects. He would meet with the Minister of Public Works, and indicate frustration on the part of the DCS, and also the Justice Department. There were challenges of non-responsiveness and security clearances. At Parys, the bids received were too high, so it had to be re-advertised in 2015. Delays were caused by negative responses to security screening of contractors. An integrated security system had to be installed at Pietermaritzburg. The contract had to be advertised five times. The contractor would start within four weeks. At Kokstad, the contractor was due to start within six weeks. The contract had to be advertised four times. The Standerton contract was awarded in December 2013, and would be completed by May 2017. Work at Rustenburg would be completed in 2017. 65 out of 243 centres were completed, concerning the Government Immovable Asset Management Act (GIAMA) compliance project. It was a legal requirement for all departments. Data obtained from the exercise could be used for further planning. He had asked that it be budgeted for over the MTEF.
The Minister reported that there were challenges due to poor initial planning. The original scope of the work was changed. Eight centres were completed. There was a lack of internal capacity to monitor. A new Deputy Commissioner for facilities and property planning was appointed. A critical technical team was being assembled, that included chief engineers and chief quantity surveyors, and chief town planners. All critical projects were allocated funding. Over the following three years there would be budgeting for more bed spaces, better maintenance, and value for money services. For capital projects, R635 million was budgeted for 2016/17; R663 million for 2017/18; and R705 million for 2018/19. For repairs and maintenance the figures were R126 million for 2016/17; R159 million for 2017/18, and R168 million for 22018/19. For leasing of buildings, the figures were R87 million for 2016/17; R92 million for 2017/18, and R97 million for 2018/19.
The Minister remarked that contract management by the DPW was inadequate. There had to be closer cooperation with the DPW on penalty clauses in contracts and the leasing of buildings. The DPW and the IDT had to cooperate on turnaround. 628 bed spaces were created in the preceding five years through upgrading of facilities, in spite of liquidations and other challenges. Inmates had to be used for maintenance work. He was in favour of compulsory skills training for inmates. There were inmates who went into prison with standard three, and stayed there for twenty years, who had no skills at all. The Department had to develop a policy proposal across all centres. SLAs with the DPW were not effective. The DCS could develop an army of trained lawyers to address contractual disputes.
Ms T Chiloane (ANC) said that there had to be clarity about projects. The amount already paid for centres was already more than their value. At Parys bids were too high, and the project was re-advertised. Standerton would only be completed in the following year. In almost all the projects, dates were shifted. It led to cost escalation. She asked about value for money. The DPW was unfortunately not present.
Mr Smith remarked that SCOPA was not sympathetic if the DPW caused the DCS to overspend. Costs escalated from R971 million to R1.2 billion because in at least two instances contractors were not appointed. The fencing contract escalated from an original R476 million to R900 million. SA Gate and Fence had done something similar at PRASA. The contract was escalated from R200 million to R300 million and government was taken to court when it threatened to cancel the contract. It was the same company about whom the fight had been that morning. One company had deliberately “captured” the DCS. Corporate capture could not be allowed. Parliament had approved R1.2 billion for DCS infrastructure. The Department then did building variations and asked for another billion. It was a 100% escalation. The DCS was not worried about overspending, it simply did a variation. He asked if anyone in the DCS would be held accountable for Kgosi Mampuru. He asked if anyone in the DCS would be held accountable for escalated fence costs. It was not acceptable for overspending to be justified. The estimate for capital projects for 2016/17 was R2.7 billion. The SCM unit had not performed that far. The head of SCM had been there for ten years.
The Chairperson remarked that it was commendable that capacity challenges were being addressed. DCS personnel who were supposed to monitor the DPW were just not there. R900 million had escalated to R1.2 billion. It was imperative that there not be further spending. There had to be consequence management for officials who failed to take responsibility, if that translated into monetary terms. R25 million was budgeted for PPP projects. Cancellation meant that the non-delivery of infrastructure was brought back to the table. It was not a SCOPA area. There had to be changes to increase capacity, to decrease bottlenecks. Six projects were completed. He asked how many bed spaces were created, and whether PPP was still needed.
Ms Khonou commented that the Committee had seen the incomplete project at Kgosi Mampuru. The project had been paid for, but was still incomplete. The same applied to Tzaneen. The question was how to retrieve the money. The Minister had said that there was a team of 47 lawyers. She asked how they could assist with retrieval.
Mr Booi commented that his SCOPA colleagues had referred to the long time spent with the Department. The Minister was called in to help find solutions. SCOPA wanted to help with challenges pointed out by the AG. There were “no consequences” for people who had done wrong in the Department. People were shifted around between departments. It was embarrassing that the DCS had a long history of audit disclaimers. It did not augur well for government. The NDP required that departments had to help build a developmental state. The public were spending R20 billion on the DCS, in the form of revenue. SCOPA did not want the Human Rights Commission to say that the DCS was violating human rights. Commitment was needed. He asked if the strength of the Minister and the Deputy Minister could be relied upon. There had to be consequences for people. It had to be assured that there was no shifting of such people between departments. It hurt departments. There was an influx of new people who did not have a sense of what was raised in the past. The image and work of the DCS had to be improved.
Mr Kekana agreed with Mr Booi. He thought that the Minister would give a commitment with clear time frames. Officials had frustrated SCOPA by their inability to provide answers. He had thought that when matters were escalated to the Minister, there would be progress in all areas. There were as yet no clear answers about Kgosi Mampuru. He asked what direction would be taken about cost escalations.
Mr Ross remarked that oversight at C Max showed chaos with regard to infrastructure. The building was neglected. The Minister had to ensure better coordination between the DCS and DPW. The DA wanted a political commitment that the turnaround would work. SCM processes were neglected. The DA had asked for an intervention by Treasury about wasteful expenditure. He could sense political commitment on the part of the Minister, but the question was if it would filter down. Consequence management was important.
The Minister addressed this and said that there are institutions independent of the DCS that can institute corrective measures. The Special Investigating Unit (SIU) could do so for the recovery of money. The National Prosecuting Authority (NPA) could institute criminal proceedings. Other law enforcers acted on their own accord, except for the SIU. The Minister received information for all three cluster branches, which was referred back to the Department for decisions, after being processed. He could not determine who would be prosecuted. The MSW was a case in point. A contract issued at Higher Education ended up with the DCS. No formal procurement process was initiated at the DCS. The Accounting Officer took action, and the Chief Director for procurement was suspended, and the contract was suspended. He assumed that it would end up in protracted litigation. It was never a simple matter of firing people. They fought back. There could be litigation in the labour court. He was in court every week. An instruction was issued that people subjected to victimisation had to be freed. Those suspended on unreasonable grounds had to be returned to work. That included intimidation. Any contract suspected of irregularity was subject to the necessary processes. The DCS had been a milking cow for too long. Consequence management had to be taken seriously. There was no policy to resuscitate PPP projects. There was a DCS proposal about the serious problems with the DPW. He would propose that in-house capacity be restored through the appointment of engineers, town planners and quantity surveyors. There had to be more control over the infrastructure build and maintenance programme. The DPW could not be relied upon. People had to talk together and not gossip about each other. Cost escalation was a reality of public sector procurement. There was also the reality of genuine cost escalation due to inflation. Labour law was clear when there was delay through negligence. When he took office there was no Head of Legal Services, due to differences. The CDC for HR left in December. There was the conviction that it would be difficult to replace him, as he had much experience, and it would be difficult to train a replacement about how Corrections worked. The CFO was currently also acting in that capacity. There had to be a machinery for consequence management that could institute national control.
The Minister continued that the DCS was challenged in terms of bed space. The number of beds required was 166 000, but 120 000 had to suffice. There were 44 000 remand detainees (RDs). If RDs were to be removed there would be enough beds. The RD issue was a justice issue linked to delays in processing. 15% of RDs were there because they could not afford R500 or R1000 bail. It was eating into the DCS budget. There had to be a rollout of a programme that could eliminate the surplus population. Escalation of costs from R970 to R1.2 billion, and from R1 billion to R2 billion had to do with notorious contractors. The Department had to explain how it dealt with those, and whether it was justified or not.
Mr Zach Modise, National Commissioner, replied about price escalations and variation orders. When a project was planned the Department would stipulate what it needed. But on site the service provider would realise that there were omissions, and there had to be a change of scope. There were also escalations in the prices of building materials like steel. Problems regarding the Kgosi Mampuru contract were between the DPW and the contractor. Changes had to be worked out between the two parties. It was put into the SLA that when there were changes, the DCS project manager had to understand why there was a need for a change of scope. African gate and Fence works was recommended by the IDT. The IDT assisted in getting the best service providers. When the DCS provided the budget it wanted its people on the steering committee to be informed of changes, so as to inform the Executive. With regard to Kgosi Mampuru and Tzaneen, where the company went down, the DPW was asked about measures to appoint a new contractor, and to blacklist the old one. The DCS was not involved in the manner it was supposed to. It could not say coherently what had to be done. It needed the technical capacity to advise beforehand when problems with a project could be expected.
The Chairperson said SCOPA was concerned with cost escalation due to delays. Scope changes were due to poor planning. It was unacceptable for DCS to give money for a project and then stay away from it.
Deputy Minister Thabang Makwetla said that he wished to raise a point of procedure. He got the impression that the DCS was not given sufficient opportunity to answer. The DCS was subjected to a flurry of questions, and where those were not answered, it could create the impression that the Department had no answers to the questions.
The Chairperson replied that he had wanted all questions answered about consultants, but he also wanted to manage time constraints.
The Minister noted that the information on consultants was too small for him to read, and it had not been brailled. He asked if the Department could present it on his behalf.
Mr Smith asked if it was to be historical or futuristic.
Mr Modise replied that it would be historical, as the focus would be on 2014/15.
The Minister commented that there was information on the current state of arrears for contracts. The intention was to show how far the DCS had progressed with ICT.
Mr Modise noted that DCS would indicate services needed for business and advisory services, and infrastructure and planning.
The Minister commented that it was agreed to distinguish between services still procured, that had to be insourced, concerning contracts and consultants. The DCS would demonstrate reduced reliance where it was needed, as in ICT. It was a response to the AG finding that there was overdependence on external resourcing. There would be overarching feedback on how far DCS had come in response to the AG findings.
Mr Modise noted that the AG had said that consultants were mainly confined to IT. Consultant contracts came to an end in December 2015. Where services were still needed, contracts would be engaged in. There was a need for services of architects and engineers, and in the laboratory for blood tests and the like. The DCS would have to pronounce on where it needed nutrition services. There still had to be outsourcing at the large centres. Internal audit problems had to be outsourced. There was no structure to place internal auditors where work had to be done.
The Minister added that the outsourcing of nutrition was discussed with management. It had to be known when long-standing contracts would lapse. He had asked management to what extent options for insourcing had been exhausted, with regard to core business. There was a need for DCS to report and share on assessments of cost implications. There was aged infrastructure in the centres that had to be overhauled, which required huge capital outlays. Cost became prohibitive. These matters had to be gone through in detail. There was lost in-house capacity for infrastructure management There was movement towards restoration of previous infrastructure and maintenance ability. Some funds were not being fully utilised towards becoming self-reliant. Areas for in-house capacity development had to be explored.
Mr Smith agreed with the Minister that nutrition had to be dealt with. SCOPA had said that over the course of three National Commissioner terms, but it had not been done. The National Commissioner had mentioned that there still had to be outsourcing over the next three years, regarding the internal audit. He asked why. Everyone there had four year contracts. DCS said that outsourcing was needed for internal audit, architects and engineers. DCS handled some of the business, and the DPW the rest. The Department thought that justified. He did not agree with that, especially for the internal audit. He would submit that there was no justification for that. DCS said that contracts for IT systems development consultants were stopped on 31 December. The Minister had said that the ratio of consultants to staff was 1:1, yet the Department was saying that consultant contracts were finished?
Mr T Brauteseth (DA) noted that R519 million for consultants had doubled to R1.6 billion. The Accounting Officer could and would be held accountable.
Ms Khonou noted that the DCS employed 41 lawyers, yet legal consultants were still used. She asked why that was outsourced. There had to be communication about this. It was not only the DCS that was involved. People were contradicting each other in the same meeting.
Mr Booi referred to the inner capacity of South Africa. If good South Africans did the work there would be no need for duplication. If a capable State was desired, there had to be the ability to see if people did their work. Internal people had to do the work. The question was how to reduce duplication. Management had to apply its mind to challenges, and had to address inner capacity. SCOPA had had to repeat itself about work done professionally. It was necessary to engage with the Minister on turnaround.
The Minister said that he had spent the preceding two weeks with the Department to empower himself. The DCS was a complex organisation. There were 243 centres with their own servers. They were entities unto themselves. It was the intention to create a transversal ICT platform, to re-engineer the business process. He had spoken to the Accounting Officer and the GITO about frustration caused by the lack of ability to communicate consistently. There was not any deliberate attempt to deceive Parliament. He told the DCS that when communicating with politicians, they had to learn to communicate clearly and consistently. For example, it could have been stated on today that the ending of contracts for consultants applied only to ICT. The differences in phasing out of consultants had to be explained. It was not necessary to set up auditors at 243 centres. External audit services had to be moved closer to centre level. In-house capacity had to be developed for planning and monitoring engineers and such. The Department of Justice had the same problem with delayed projects. The DCS wanted the capacity to challenge the DPW. For that it needed capacity in technical expertise. The Accounting Officer had to demonstrate the shift away from outsourcing.
The Minister continued that the State Attorney provided legal services to the whole of government. Every department had a legal section, but they only did administration. Some were highly qualified. It could be possible to take all the lawyers and mold them into an invincible army. Part of the turnaround strategy was to consolidate skills in government to reduce reliance on external resources. Currently all matters requiring the service of an advocate was done through the outside. Government had to develop ability to go into court. The same applied to medical doctors and others. Billions could be saved for government.
Mr Modise added that the intention was for each management area to have its own resource team, to look into restoring maintenance capacity the Department used to have. There was a time when that capacity was deemed to be no longer necessary, but there was currently the realisation that it was needed. He told Mr Smith that those were historical facts, not futuristic ones. Nutrition was a sore area. The DCS used to provide its own nutrition. Infrastructure at facilities had gone down over the years. Some centres were 100 years old. The refurbishment programme replaced equipment. Pollsmoor contained 10 000 inmates, and Johannesburg 12 000. There could be serious problems if food was not ready on time. Bread had recently become unavailable at Baviaans. The Department sometimes had to depart from ordinary procedure. It had to go from region to region to refurbish. New boilers at Zonderwater had cost R58 million. There was a strike at Groenpunt because boilers had gone down. There had to be a maintenance plan for every centre. It had to be known what was needed to make each fully functional.
The Chairperson concluded that there would be continual spotlight on areas of concern, and sustained interaction. The DCS understood SCOPA concerns. It knew what the Committee wanted. He told the Minister that his presence gave impetus towards getting things right. He thanked the AG for its input, which helped the DCS. The focus on getting things right had to be sharpened.
The Chairperson adjourned the meeting.
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