SAPS on Contract Management; Irregular Expenditure; Consequence Management; SITA Contracts; Bid Committees

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07 November 2018
Chairperson: Mr F Beukman (ANC)
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Meeting Summary

The Committee met with the SA Police Service (SAPS) to be briefed on matters relating to contract management, status of the bid committees, irregular expenditure and to get a sense of the broader governance matters and plans in place which led to qualified findings in the past to avoid possible risks going forward.

The Committee was first updated by the National Commissioner on three matters in the public domain, namely, vacancies of the post of Provincial Commissioner of Gauteng and KZN, owing to the early retirement and resignation of these Commissioners respectively, media reports related to the forensic report into SAPS contracts, following leaking of the interim report, and four senior SAPS members issued with warrants of arrest by the Independent Police Investigative Directorate to appear in court today.  

Members briefly engaged on these matters – with the vacancies of the posts of the two Provincial Commissioners, the Committee emphasised the most experienced and well qualified candidates must progress forward as both provinces need serious attention in terms of crime profile. Questions were asked about the criminal process underway regarding the former Provincial Commissioner of KZN and her husband.

It was said to be regrettable that senior SAPS officials would be appearing in court and Members requested the names of these officials. It was emphasised the law should take its course but that the police should also speedily investigate any malpractice or allegations of corruption.

Members said the leak of the forensic report put the police management in a difficult position because on one hand it was important to move forward on the matters contained in the report while on the other hand it raised questions of transparency. Members found the forensic report to be the elephant in the room as there were senior officials named in the report which were present in the meeting sitting in the view of Members. There were concerns raised about where the leak occurred.

SAPS then briefed the Committee on its contract management strategy in terms of background to the contract management committee, implementation and monitoring of the strategy, key performance areas of the implementation plan, contract management inventory, identification and classification of contracts, uniform management of contracts and progress on implementation. The presentation also covered alignment of contractual agreements with the strategic objectives and priorities of SAPS, improvement of contract management capability, promotion of sound contract management administration and developing a communication strategy within SAPS.

Members were briefed on the SAPS’ Bid Committees, namely, Bid Specification Committee, Pre-advertisement Committee, Bid Evaluation Committee (BEC) and Bid Adjudication Committee (BAC). The presentation also covered details of the vetted BAC officials.

The Committee expected that drastic steps be taken to deal with matters under investigation relating to procurement which presented a challenge to the governance and image of SAPS. There was concern that the money, focus and reconfiguration spent on this internally would detract from core service delivery and Members wanted to be assured that SAPS was cognizant of this and there were measures to deal with it. Questions were posed about terminating of the review of major contracts in 2012, the risk of single suppliers, looking at individuals outside of the organisation to deal with challenges and legal advice the National Commissioner was recommended to obtain in dealing with individuals implicated in the forensic report. Members asked about the extension of contracts and the value-add of end users in terms of feeding in specifications ensure what is ultimately procured through supply chain is responsive to the needs of stations and operations in general – the concern was the discrepancy seen between the needs analysis on the ground and what was supplied to ensure there was value for money. This was seen in stations which did not have the adequate vehicles for the environment they served. In this regard, SAPS was asked to consider a decentralised approach to spread the risk and that there was not a long wait for resources at local level.

Members asked about the bid committees and why its meetings were not recorded on camera, establishment of the procurement forum, appointment of bid committee members, opening of tenders and the mandate of the Pre-advertisement Committee. There was discussion on what changes and difference would come from the reviewed contract management strategy to prevent the same challenges from cropping up. The idea of organisational management planning, monitoring, evaluation and review was emphasised. There was concern about the vetting capacity and the role played by counter intelligence as part of the solution to detect organised collusion.

The Committee also emphasised the need for a competent CFO as many of the current problematic areas is due to not having a competent CFO in place. It also questioned the slow response to findings of the Auditor-General, national instruction on contract management, suppliers not delivering on time and the risk of “rank overriding rationality” in a hierarchical organisation such as SAPS where, given policing culture and supremacy of rank, lower ranking officers would likely comply with the orders of a senior rank – this was especially risky given misinterpreted directives.

SAPS then briefed the Committee on irregular expenditure by looking at the definition of irregular expenditure, processes for the condonation of irregular expenditure, threshold values and regulatory framework and processes in place to prevent irregular expenditure. The presentation also addressed irregular expenditure in the 2017/18 Annual Financial Statements and irregular expenditure in 2018/19.

Members noted many items of irregular expenditure related to travel arrangements of high ranking officers involving travel agencies and asked how this would be tightened up. Members also questioned the National Excellence Awards, SAPS vehicles towed and boarded and how the outcome of irregular expenditure was arrived at.  Members again raised the concern of single suppliers which posed the risk of essentially holding SAPS hostage by simply naming their price. Another concern was consequence management where in many cases of irregular expenditure it was a slap on the wrist or a note in the file. A Member was worried about political inference noting that civil servants followed the lead of political leaders in committing corruption.

In conclusion, the Committee noted it the engagement was important in providing clarity and assurances on contract management to address the environment and current challenges. It is pertinent that the necessary advice be obtained by the National Commissioner on current investigations underway for decisions to be taken timeously. Matters in the public domain to be referred for criminal investigation and internal disciplinary processes should also be done timeously as matters of priority. The Committee would monitor the renewed change strategy of contract management and bid processes. Other reputational risks cannot reoccur as it was not good for SAPS or good governance – tight measures were required to deal with this and the National Commissioner must crack the whip and act without fear or prejudice – the Committee would support this. Matters of irregular expenditure would also be monitored by the Committee going forward.

Meeting report

Chairperson Opening Comments
The Chairperson noted the focus for the day was for the Committee to look at contract management, status of the bid committees, irregular expenditure and to get a sense of the broader governance matters and plans in place which led to qualified findings in the past to avoid possible risks going forward. The Committee met previously with the Department on 14 June 2018 where there was an indication that all procurement approvals above R300 000 were finalised at national Supply Chain Management (SCM) and all requirements for bids above R500 000 are done at national level. There was another engagement on 21 August 2018.

Matters in the public domain
Gen. Khehla Sitole, National Commissioner of Police, brought the Committee’s attention to two posts of Provincial Commissioner that have officially become vacant – the Provincial Commissioner of Gauteng has retired early on a package and the KZN Provincial Commissioner has resigned. The position of the SA Police Service (SAPS) Chief Financial Officer (CFO) has also been advertised and the process of filling it has begun. The filling of the two Provincial Commissioner posts has also commenced but there was a certain procedure to follow such as consultation with the provincial government.

Unfortunately yesterday, the Independent Police Investigative Directorate (IPID) issued two warrants of arrest for four senior SAPS officers who are appearing in court today. The internal investigative process would commence today with regard to the matter.

The Committee might also have been surprised to see a forensic audit report in the media. SAPS proactively requested the report not be presented because of its content but there was some misunderstanding between SAPS and the Standing Committee on Public Accounts (Scopa). The Chairperson of Scopa then took a decision to retract the report but unfortunately some media already had it in their possession. SAPS did not leak the report to the media and it was unfortunate that this occurred. The report presented to the Scopa last week did not contain all details of the forensic report. SAPS is now managing implications of this leak because members who are witnesses are already under threat and huge damage control would have to be done.

The Chairperson noted the situation with the vacancies – it is necessary that the most experienced and well qualified candidates progress forward as both provinces need serious attention in terms of crime profile. It is regrettable that senior SAPS members are before the courts but the legal process must follow and any allegations of corruption or malpractice must be investigated properly. He welcomed the initiative of an internal investigation. The leak of the forensic report put the police management in a difficult position because on one hand it was important to move forward on the matters contained in the report while on the other hand it raised questions of transparency. The Committee would await further reports on this.

Ms D Kohler Barnard (DA) said the forensic report is the elephant in the room – there are officials named in the report who are present in the meeting looking at Members which is very awkward. It is a massive taxpayer-paid and funded forensic investigation and while she understood keeping it under wraps for security purposes, she was actually glad the report was out there because everybody needs to know what is going on. When would the Committee know the names of the four members arrested? She believed the former Provincial Commissioner of KZN should face criminal charges – what was the status of this matter? Does the former Commissioner go out on a full pension to enjoy a happy retirement knowing full well she destroyed the lives she had? The former Commissioner also took great delight in parachuting her husband up the ranks – he still on duty and acting as though he runs the province. She requested feedback on this, what the status of the husband was and why he was not equally suspended and criminally charged. She asked for the National Commissioner’s input on the remarks of the Minister that the police can now go around kicking down doors – given the high contingent liability of SAPS currently, she would have thought such interesting directive by the Minister would run contrary to good policing policy. Are police now being encouraged to kick down doors if it had any suspicion? The Member said if anybody kicked down her door there would be a big problem. 

Gen. Sitole responded that the board of inquiry was in progress and criminal and departmental investigations were running concurrently with the board of inquiry. The board of inquiry process now seized because the Provincial Commissioner resigned. The resignation was dealt with in terms of the relevant internal prescripts within SAPS. The criminal and internal investigation continues. This includes matters relating to the husband. The Minister is politically responsible for the police and the National Commissioner is responsible for command – operational instruction comes from the Commissioner. The Minister gives the direction but the Minister did not instruct the police to kick down doors. The Minister was sending a message that SAPS would leave no stone left unturned – how no stone would be left unturned is subject to the operational directive of the Commissioner. The operational directive is for the police to do anything and everything within the framework. The names of the senior members would be released once they have appeared in court.

Ms A Molebatsi (ANC) was concerned by the leak of the forensic report and asked if it came from the National Commissioner’s office.

Gen. Sitole explained the forensic report would have been presented at some stage to the Committee but the timing was not yet right because the investigation still continues and so the report has not yet been finalised. The report in the possession of the media was not yet signed off by the National Commissioner. Details of the report only started leaking after it was distributed to Scopa last week. The report is not authentic because it remained unsigned. The report has not even been presented to the Minister yet. The report was not leaked by SAPS. He did not want to say who leaked the report but the leaking happened after it was distributed to Scopa. The public would have been entitled to the report once it was finalised.

Ms P Mmola (ANC) asked that a thorough internal investigation be done regarding the senior SAPS members in court – she did not want to see a situation where the case was withdrawn because of insufficient evidence which opens the state up to be sued. Who distributed the forensic report?

Gen. Sitole answered that Scopa instructed that SAPS avail the report to Members within an hour – it was then handed to the secretariat of the Committee who distributed it to Members.

Ms Kohler Barnard asked if SAPS handed the report to Scopa although it did not want to do so but did so and then the report was retracted after it was already seen by Scopa? This seemed bizarre.

Gen. Sitole said two reports were provided to Scopa – the progress presentation and the forensic report which was not yet finalised. The forensic report was not presented after SAPS requested it not be presented. The Committee wanted the forensic report and SAPS was given an hour to avail the report to Members.

Contract Management
Brig. CB Mitchell, SAPS Head: Strategic Management, provided the background to the Contract Management Committee where the purpose of it is to enhance effective co-ordination and collaboration on the performance of SAPS, act as an advisory body to the National Commissioner and provide strategic direction to the Service. The Committee is a sub-committee of the Board of Commissioners (BOC) and the role of the Committee is to monitor and review implementation of the Contract Management Strategy, oversee management of contracts concluded by the Service and enhance accountability for public funding expenditure accountability, ensure steps are taken to address challenges that may impact on the Contract Management Strategy, advise on the turnaround strategy for the Service and continuously evaluate the performance of SAPS.

In terms of composition, the Committee comprises of the Deputy National Commissioners (the Deputy National Commissioner: Asset and Legal Management will be the chairperson of the Committee), CFO, Divisional Commissioner: Supply Chain Management, Divisional Commissioner: Technology Management Services and Chairperson of the Finance Committee. In addition to the members of the Committee, the National Commissioner may also designate other Divisional Commissioners to form part of the Committee.

With the guiding principles, the Committee will engage in an open and transparent process where the collective vision of the Committee and objectives are shared, and where roles and expectations of the team members are clearly understood. The Committee will be a collaborative and equitable platform where members draw upon individual skill sets to mutually and meaningfully work towards the organisation’s vision and ensure improved service delivery by the Service.

Looking at decision making procedures, the Committee will take its decisions by consensus.  The Committee will ensure financial and legal implications of a matter were considered before a decision is taken. The Chairperson may refer a matter to the Senior Executive Forum, BOC or any other governance structure if the Chairperson is satisfied that it will be in the interest of the Service for the matter to be considered by the said body. A decision adopted by the Committee will be confirmed by signature of the Chairperson. All decisions taken by the Committee will be minuted.  With reporting guidelines, the Chairperson will inform the Senior Executive Forum and BOCs of the decisions taken by the Committee and will report to such governance structures on performance of the Committee.

Brig. Mitchell then discussed the contract management strategy implementation plan noting the National Commissioner has appointed the Deputy National Commissioner, Asset and Legal Management, as Chairperson of the Contract Management Committee, which will be a subcommittee to the BOC. The Committee will ensure accountability and oversight and will comprise of:
-All DNCs
-Divisional Commissioner: Supply Chain Management
-Chairperson of Finance Committee
-Divisional Commissioners, Chief Risk Officer and the Chief Audit Executive will be co-opted as and when the need arises or as determined by the Chairperson

Terms of reference were developed to clarify roles and responsibilities. The Committee will monitor the Contract Management Strategy Implementation Plan and will provide quarterly reports to the various structures as highlighted in the terms of reference including monitoring of the mitigation of identified risks. 

The presentation then looked at key performance areas of the implementation plan, contract management inventory, identification and classification of contracts and uniform management of contracts. Also addressed was the alignment of contractual agreements with strategic objectives and priorities of SAPS, improvement of contract management capability, promoting sound contract management administration and communication within SAPS.   

Progress on implementation included:
-Terms of Reference were drafted
-Contract Management Committee was established
-Instruction was issued to business units to compile lists of all contracts under their command in order to start with population of the Contract Inventory
-Specifications for the centralised database is in the process of being finalised by Technology Management Services
-Business units are finalising action plans
-Contract managers are being appointed by all business units
- National Instruction is in the process of being drafted
-Importance of the Contract Management and implementation of the Contract Management Strategy was discussed at the national SCM strategic session held on 23 and 24 August 2018 as well as at the national procurement forum conducted on 19 to 21 September 2018.

Bid Committees
Brig. Mitchell took the Committee through the presentation outlining the SAPS Bid Committees consists of:
-Bid Specification Committee
-Pre-Administration Committee
-Bid Evaluation Committee
-Bid Adjudication Committee

In the Bid Specification Committee, end users are invited to the specification committee meeting. Specifications are compiled in conjunction with the end users and, where applicable, with external consultants. All specification committee members are required to declare their interest. The specification should be written in an unbiased manner to allow potential bidders to offer their goods or services. Therefore, committee members are required sign a certificate confirming the relevant specification was written in an unbiased manner.

The Pre-advertisement Committee for a specific bid is composed of SCM practitioners and end-users. The departmental delegation of powers, in terms of procurement, provides for the Section Heads: Procurement Management: MGP and Facility Management to appoint employees in writing to serve as chairperson of a Pre-advertisement Committee. The Pre-advertisement Committee finalises all special conditions and ensures the basis for bid evaluation and selection (prescripts of the Preferential Procurement Policy Framework Act (PPPFA) and its regulations) is clearly outlined in the instructions to bidders and/or in the specifications as bids may only be evaluated according to the criteria stipulated in the bid documentation.

In the Bid Evaluation Committee, the departmental delegation of powers, in terms of procurement, provides for the Section Heads: Procurement Management: MGP and Facility Management to appoint (in writing) employees to serve as chairperson or committee members on a specific BEC. These BECs are cross-functional and compose of SCM practitioners and officials from the user departments which are appointed by the Divisional Commissioner: SCM. The appointed BEC is responsible for evaluation of bids received from industry. The capability/ability of bidders to execute the contract forms part of this evaluation process. Separate BECs are appointed per advertised bid. During each BEC meeting members are required to declare their interest and also sign a declaration of confidentiality. BEC members are also required to sign the SCM Code of Conduct prior to commencement of the meeting. The BEC is responsible for the submission of a report and recommendation to the Bid Adjudication Committee. Bids are only evaluated in accordance with criteria as specified in the bid documentation.

With the Bid Adjudication Committee, the power to designate an employee to serve on a Bid Adjudication Committee resides with the Accounting Officer. The Bid Adjudication Committee must ensure all necessary bid documents have been submitted, disqualifications are justified and that valid and accountable reasons/motivations were furnished for passing over of bids, scoring has been fair, consistent and correctly calculated and applied and bidders declarations of interest have been taken cognizance of. The departmental delegation of powers in terms of procurement provides for the BAC to approve a bid after considering recommendations of the BEC. The BAC also considers and rules on all recommendations/reports regarding the amendment, variation, extension, cancellation or transfer of contracts awarded. All members, as well as secretary of the BAC, should be cleared at the level of “confidential” and should be required to declare their financial interest annually. Each member, as well as all officials rendering administrative support, must sign a declaration form at each BAC meeting. Members are to declare they will accept confidentiality of the meeting, not make known anything regarding the meeting, unless officially authorized, and not purposefully favour or prejudice anybody.

Brig. Mitchell took the Committee through the details of vetted BAC officials.  

Gen. Sitole added he has issued a direction to work on developing a handbook on control measures to link contract management and enterprise risk management strategy. The gap was that the enterprise risk did not cover strategic risk and the type of risk experienced with contracts was strategic risk. The other area to look into is how contracts are entered into to avoid exposure to national security risks and risking sovereignty of the state. Another area to look into is SAPS’ future relationship with SITA to mitigate risk. Also being looked at is appointment of a Chief Risk Officer to have full control over risk in the new structure. With appointment of a new CFO and implementation of the structure, the committees presented today might be reviewed in terms of their composition.

The Chairperson noted that given matters in the public domain relating to the forensic investigation, the whole procurement system of the police is problematic in terms of governance and image. The Committee expected that drastic steps be taken to deal with this. Current matters might continue for the next two to three years – the risk is that a lot of internal focus, reconfiguration and money would be spent on this but what would the impact be on service delivery and the core function be? The situation presented itself as a Chinese Wall. The National Commissioner would have to take legal advice but who would provide this advice and ensure it did not compromise good governance? The Commissioner is dependent on people present today to run the organisation – what mechanisms would be put in place to ensure the organisation moves forward on one hand, and ensure objective decision making processes to exude confidence, on the other hand? Also on the one hand there was the daily governance of the police and on the other, having to deal with matters under discussion today – how would the Commissioner do this?

The Chairperson asked what would be done about dealing decisively with high ranking officials involved in malpractice in procurement. He asked the Commissioner what his thoughts were on bringing in outside people to mitigate some of the high risk. There could be a containment policy but the emphasis must be on dealing with route causes. In a previous interaction with the Committee, the chair of the SAPS audit commit indicated the review/evaluation of major contracts was terminated in 2012. Gen. Sitole then said he would investigate why this happened – the Committee required an update on whether this investigation was done and what the outcome was. Were these big contracts currently being reviewed? The other matter is the risk profile of some of the contracts where one supplier was relied on to provide many services, for example, FDA and the DNA kits. This showed risk was not spread – the dilemma is that if the one supplier relied on could not provide the service, this created service delivery backlogs, administrative challenges, under spending and many other problems. What is the strategy around this going forward? Would the pool of suppliers utilised be increased?

Gen. Sitole responded that not everything that pertained to contract management resided in SAPS. The responsibility of SAPS is policing. SAPS is in discussion with Treasury for the two to work together on these matters and for Treasury to assist in directing SAPS to ensure the correct people were in the correct places. The current situation required drastic head-on transformation – the National Commissioner had no choice but to do this. The sooner the current situation was transformed, the sooner the organisation would be cleaned. Unfortunately this involved eradication because the organisation is already contaminated – the system which allowed for this would need to be changed. The audit evaluation committee and other independent processes of evaluation were instructed to immediately be restored because SAPS cannot be a player and referee. Majority of structures required the correct refereeing. Most of the people complicit in wrongdoing have been doing so undisturbed because some processes were not in place. Vetting requirements would be a prerequisite when working in the supply chain, procurement or finance environments to ensure the people working in these environments were clean.  SA has a wide spread of suppliers which needed to be investigated in order to overcome the challenge of sole suppliers. Risk management processes, and contract management, have been ordered to look into the sole supplier challenge because the challenge had a direct impact on service delivery.  The other order is to develop an integrated resource matrix to ensure requirements are informed by the users to meet operational requirements. The Committee needs to ask the correct questions based on what is happening but for the Committee to do this, SAPS needs to give as much information as possible and be as open as possible especially when it comes to strategy – this would assist SAPS in identifying whether things might not be going correctly.  80% of time should be dedicated to policing instead of dealing with irregularities which could have been avoided hence the importance of having the correct systems in place.

The Chairperson reiterated the importance of looking at outside individuals to deal with these challenges otherwise SAPS would always be confronted with the acting situation.

Gen. Sitole agreed – someone with a neutral view could look at the system differently and this would assist. In the past, assistance was provided by Ernest and Young where a very positive report was provided on areas requiring change – such an approach would be explored.

Ms Molebatsi noted the forensic report provided to Scopa last week recommended the Accounting Officer of SAPS obtain legal counsel on the appropriate steps to take regarding implicated individuals – she asked Gen. Sitole how far he was in this regard. Why are the BEC and BAC meetings not captured on CCTV and only voice recording? Has the procurement forum been established and has the first meeting taken place? Is appointment of the bid committee members aligned with policy requirements?

Gen. Sitole said legal advice is already underway regarding the report.

Brig. J Smit, SAPS Section Head: Procurement Supply Chain Management, noted there was no prescript for having BEC and BAC meetings on CCTV but the process of procuring cameras for BAC committee rooms have begun – BAC meetings are held in separate rooms. The national procurement forum was held from 19 – 21 September 2018 in Port Elizabeth where all procurement practitioners from divisions and provinces attended where important matters were discussed including irregular expenditure, prevention of irregular expenditure, new contract management strategy and new prequalification criteria in terms of the PPPMA.

Ms Mmola asked if the user requirements for centralised contract management were completed before the deadline of 13 October 2018. How will vetting capacity of SAPS be enhanced to ensure all SCM practitioners are vetted? Does SAPS have clear procedures for opening tender bids? It was previously indicated the process was implemented whereby a Brigadier at SCM oversees the opening of bids receives – how effective is this process and is it monitored?

Brig. Smit responded the Bid Administration Committee attends the bid box at 11 o’clock where all bids are taken up to a floor. A checklist is compiled for each and every bid document received with the name of the bidder, price, Black Economic Empowerment (BEE) certificate and other important matters. The checklist is then sealed in a sealed evidence bag and locked away in a safe up until the time the BEC is appointed and ready for evaluation. The bids in the sealed evidence bag would then be handed over to the BEC chairperson with the compiled checklist to compare what was received at the closing date and time of the bid is exactly what was before the BEC for evaluation processes.

Gen. Sitole said the vetting capacity was part of the vetting project currently implemented. The same instruction was given for review of the vetting capacity – the personnel plan did not clearly cater for the structure of vetting but the Deputy National Commissioners for Crime Detection and HR are working on capacitation of vetting.

Ms Kohler Barnard asked how likely it was that these people would be vetted in the near future given that the National Commissioner admitted he was still working on capacitation of the vetting section. This raised alarm bells for her.

Gen. Sitole answered that the current capacity is priority-driven – supply chain and finance are the most critical components and as a result have received priority attention.  Beefing up of vetting capacity is to ensure there is the correct size of vetting vs. size of the organisation. For the priority areas the size was fine but for the overall organisation, requirements of the Strategic Intelligence Act needs to be aligned with HR requirements – an instruction was already issued for the  personnel plan to talk to vetting requirements. A directive was issued to the Deputy National Commissioner for Crime Detection to identify all vetting practitioners which have left the organisation, who have been promoted or transferred for them to go back to beef up vetting capacity.  The personnel plan would look into beefing up vetting capacity for the future. Vetting is also complemented by lifestyle audits in the environment. 

The Chairperson questioned counter crime intelligence – vetting is part of the solution but there is also detection of organised collusion which required that counter be effective. Is the necessary resources and budget in terms of re-oganisation of crime intelligence part of the plan?

Gen. Sitole responded that in the turnaround strategy of crime intelligence, special capacitation of counter intelligence is a separate deliverable. The strengthening of counter intelligence is a priority in view of infiltration and contamination in all environments. Beefing up of this programme is in progress.

Mr J Maake (ANC) noted there are contract management strategies everywhere, in all departments, yet there were always problems with contract management. What difference would come from the strategy Members were briefed on today? There is risk management in everything but it appears the risk management strategy itself is not applied. Are the strategies watertight or would the same problems still be experienced?

Gen. Sitole responded that it took too long for top management to look at the status of contract management in the organisation – it would now be a standing item in every BOC meeting to get a status report on the state of healthiness of contract management in the organisation. SAPS were looking at improving its relationship with SITA as this was another area of risk regarding contract management. The gap between SAPS and Treasury was also closed so that everything SAPS did was in compliance with Treasury prescripts and part of sound financial administration. Another basic area was ensuring the correct people were in the correct places. When something wrong happens, it was not personal when dealing with matters affecting the organisation or country.

Mr Z Mbhele (DA), while understanding the primary mandate of SAPS itself is policing, noted that given the size of the organisation, its scope, work and administration, management is key. Is it explicit and conscious in SAPS management that the core of organisational management is planning, monitoring, evaluation and review? This is the essence of how a system is run. If there was no planning, monitoring, evaluation and review and things fall through the cracks, he had no idea what has been happening.

Gen. Sitole said the organisation has had some strategic gaps including the contract management strategy – before the strategy, all processes were in place but there was a bit of a silo approach so there was no synergy in linking a risk from the contract environment to the risk management strategy to mitigate and prevent the risk. Another gap was linking to performance management to ensure the contracts performed and impacted policing performance. The contract management strategy is at the centre of reform to close all gaps and to form the matrix connection to link all other strategies to ensure the environment was effective. 

Ms Kohler Barnard asked about circumstances under which contracts were extended above 15% or R15 million and how a contractor or supplier was not held responsible for overrunning a due date or were the two not related. She did not see how any individual could have the right to simply extend a contract – what was the outcome for those who have done so? As far as she could see there was simply a tap on the wrist and a letter in the file. Who in SAPS took the decision to stop independent reviews which were standard practice up until 2012? Someone must surely have benefitted from the stopping of this practice. Was an analysis done of high level contracts awarded from that time up until today? How are the bid committee members appointed? This is the time in which corruption could creep in. The court appeals were seen – it was like a daily occurrence under Riah Phiyega who would not like the person who won the bid and she would then award it to number two or three. Who polices the police on these committees? What was the progress on the work study to improve contract management? How close is the connection between the contract management committee and bid committees?

Had the Committee done oversight over contract management and bids awarded over the years, the Grant Thorton forensic investigation might have been avoided. The minutes of the bid committees should be out in the public – why was this not done? Was current irregular expenditure compared to amounts in past years? It struck her that the same people could well be behind the same irregular expenditure over the years. She was sure those responsible were shaking in their boots to get verbal warnings or little pieces of papers in their file – this was laughable. She was shocked to see an amount of R4.7 million spent on accommodation for a sports day and asked how this would be explained to citizens being slaughtered in their homes. This was not acceptable.

Brig. Smit explained the 15% or R15 million was applicable to fixed term contracts. SAPS tried its utmost best not to extend contracts if it was not important. In contracts where quantities are not guaranteed and the value is estimated, the rule of 15% is not applicable as per National Treasury instruction. Contracts are not extended simply for the fun of it. Sometimes drafting of specifications for new requirements takes longer. Sometimes bids are advertised and there is no response back or the responders did not meet specifications – the only option would be to extend the current contract for service delivery purposes. 

Gen. Sitole said the Accounting Officer took the decision to stop the independent review. According to analysis and findings, the Accounting Officer did not take an explicit decision to end the review but other accounting structures brought in would override the review. This could only come from decisions taken by the Accounting Officer as no one else had the mandate to do so.

Ms Kohler Barnard wanted to know if this decision was taken after 13 June 2012 – the date Riah Phiyega was appointed. She wanted to know who was to blame. If the decision came from the Commissioner prior to Phiyega, it would be very awkward.

Gen. Sitole could not attach the decision to a particular individual but to a function or responsibility. In 2012 a different governance structure came into place.  

Ms Kohler Barnard needed to know if the decision then fell under the term of Bheki Cele or Phiyega. 

Gen. Sitole said the governance structure was reviewed in 2012 and moved forward thereafter – he has since take a decision to reinstate this review.

Brig. Smit indicated the Bid Specification Committee meets as and when required – the Committee is organised by the section head: supply chain management and consists of members of the end user (technical expertise) and SCM. The BEC is appointed by the SCM Divisional Commissioner and normally comprises of the same people as the Specification Committee to evaluate responses to the specification at the closing of the bid to make a recommendation to the BAC.  The BEC is an ad hoc committee which is comprised of different members for each and every bid and requirement. The BAC is a permanent Committee appointed by the Accounting Officer to adjudicate and consider recommendations made by the BEC to either make an award or not – if the award was not made the matter would be referred back to the BEC or Accounting Officer for a final decision.

Gen. Sitole said the work study is part and parcel of the implementation process and is at an advanced stage. A progress report can be provided to the Committee.

Mr Mbhele asked what has been happening to date in the contract management environment in the absence of the strategy – was there no monitoring, control, oversight framework in place? Or was there a previous version of the strategy which was now being reviewed and refined? It would be terrifying for organisational management if there was no such framework in place before. He was worried about the Bid Specification Committee in terms of the value-add of end users feeding into formulating specifications to ensure what is ultimately procured through SCM is responsive to the needs of stations and operations in general. The value-add of this process was however not visible on station level and the bang-for-buck was not seen. He highlighted an example of an oversight visit he conducted at a station where detectives only had one computer for the entire branch – this is simply unfathomable because a computer is an essential tool of trade for a detective. There is the theoretical framework on how SCM and contract management is supposed to work but what was going wrong resulting in the framework not working?

Mr Mbhele questioned the huge and demonstrated risk of centralising processes – if one thing went wrong at the centre, as was seen with the DNA kit challenge, the entire system would be affected as there was no spread of risk or alternate contingency to compensate so part of the environment was still functional. Should there not be a move toward an informed, strategically astute localisation of resources and management authority so that one station did not wait weeks, months or years for tools of trade because provincial or national SCM is tied up in bureaucracy? This is a fundamental, radical reform to policing which absolutely has to happen. He feared that if this shift did not occur towards localisation, there would be a risk of implosion of SAPS as a system.

The presentations spoke to the explicit reporting requirements of the Contract Management Committee to the BOC but he did not see any reporting requirements for the BAC – is there provision for this? Is this a standing item on the agenda of the BOC? The question was about top management overseeing the work of the BAC – it is in the BAC at the all the nitty-gritty of how money is spent is decided. It is important that management’s finger is on the pulse as certain evidence suggested this was not the case to date.

Gen. Sitole responded that the value-add is linked to the turnaround vision of migrating resources down to police stations. A further directive issued is to ensure the correct user requirements at station level. Quality control and ratification of user requirements is at national level to ensure resourcing of stations do not suffer. This goes hand in glove with the proposal of a decentralised approach – a process was underway at MICMEC where MECs provide input. The other approach is to ensure vehicles do not spend too much time at the garages – SAPS was looking at a model to fast track this. This also speaks to supplier location to ensure vehicles did not travel a long distance to do a small repair – this is also part of the model. Another decentralised approach is to bring quotations below R500 000 closer to local level. This is a strategic process to drive because centralisation went with the equal responsibility to develop capacity and accountability. It is important to look into the input provided because service delivery cannot be compromised.

Mr P Mhlongo (EFF) recalled the Committee’s visit to the UK where the observation was that the functioning of the BOC laid a very strong foundation for accountability, transparency and value for money on the side of the state. Sometimes the oversight function of Parliament failed when it comes to early warning of wrongdoing and this is worrying. With the current SAPS structure, some of the senior members were there when wrongdoing occurred right under their noses– he doubted whether any of them raised the red flag on what was done. It just seemed to be business as usual. What guarantee was there then that the current structure would raise the red flag to the National Commissioner? The Commissioner would be sitting thinking all was well until a booby trap went off in his face.  The same people were recycled who were there even during the time of Phaalane when wrongdoing occurred. The Member questioned what kind of National Commissioner surrounded himself with provincial members from North West – it was clear something was amiss. Because of the culture of the police operating in secrecy, nothing was said yet the state was compromised.

In the UK, the Committee learnt the BOC was elected and had a time to serve – would such be implemented by the National Commissioner? Or would members of the BOC continue to serve without time limits until they formed networks with service providers? At times it is not the structure as a whole that has failed but that somebody within the structure has failed – how will it be determined where the chain has broken? The number one enemy of the country now was corruption, nothing else. The cycle must be broken – if this was not done he was afraid there would be no country. He especially hoped this was dealt with in his province of KZN. Convicted criminals were kept in the covert sections of Crime Intelligence because of high levels of secrecy – in this way corruption is awarded and it inflicted serious harm on the country.

Gen. Sitole said the organisation is equally responsible for planning, organising and control – processes and structures must align in terms of what is to be achieved. The National Commissioner and Deputy National Commissioners, as the executive, crafted the direction before it moved to the BOC and was then cascaded down. The performance management system was being reviewed to assist in dealing decisively with what is happening and hold people accountable. The performance management system must also assist in quickly identifying those not playing by the rules. Review of the risk management would assist in early warning to correct the situation. There is an obligation to clean the organisation.

The Chairperson noted the Commissioner highlighted certain gaps present over the last few years would now have to be filled. In 2015, one of the big matters the Committee was confronted with was the vacancy of the CFO and those who had their reservations about the appointment were proved right. Going forward, it is critical there is a competent CFO – many of the current problematic areas is due to not having a competent CFO in place. With the criminal investigations regarding FDA, who is conducting these investigations? It was recently brought to the Committee’s attention that the advertisement for the audit committee was withdrawn – what was the reason for this? He emphasised the need for a link between the need and bid. Three years ago, the Committee raised the matter of the changing policing environment for SAPS to really look at the matter of vehicles and safety of members. On Monday, the Chairperson visited two police stations where the station in Lwandle was below 50% in terms of vehicles and vehicles available were inadequate for the terrain in which they would be used. The environment of doing visible policing in informal settlements required a different approach – there is still disjuncture between filtering this and the needs analysis down to the bid committees. Visible Policing Commanders do not know what to do because vehicles are boarded and vehicles available are not suitable for the environment. The safety of members were at stake. While Members heard of the changing strategy but when would results be seen? The same station was identified as a high risk station – it was said an analysis and assessment of CCVTV was conducted in August but since then, nothing has happened while members were still at risk. The Auditor-General found the response of management in most of these cases to be too slow. What would the response be with regard to FDA and operational linking to ensure the bid committees were responsive to current needs in the current environment? Without this, the crime environment would not be successfully turned around. 

Gen. Sitole replied the CFO must account directly to the Accounting Officer by virtue of the position. The line of responsibility has now been corrected. The organisation is big and requires a seriously competent CFO to tackle the responsibility. It is not necessary that the CFO be known, as long as it was someone who could do the job. Input from the Committee and elsewhere would be appreciated. The presence of Treasury was requested on the panel as Treasury knows what is required from a CFO. A combination of internal and external capacity would be looked at in terms of evaluation of the CFO to ensure the individual was not specifically selected by someone. The Committee should also be convinced by the outcome of the process.

Gen. Sitole said the approach to the FDA matter was a multi-disciplinary investigation. Included in the value chain would be IPID, the Directorate for Priority Crime Investigation (DPCI), Treasury and detectives. This approach was adopted deliberately to share information from all angles and from different sides. Running concurrently is the forensic audit to ensure the investigation becomes continuously effective.

The advert for the audit committee was disposed of correctly according to the prescripts. A report was demanded on the status of the audit committee. The prescripts were clear that the audit committee can serve a second term. The formal report showed the committee already served two terms. Formal adverts would then be submitted. One member of the audit committee who did not serve a second term remains. The process would be speedy to ensure there was no gap.      

Gen. Sitole said the Provincial Commissioners should determine which vehicles they wanted according to demographic demand. The national crime combating forum and national support service forum were called to deal with this aspect correctly. In terms of dynamics of the current arrangement, R6 million was provided to Provincial Commissioners to acquire their vehicles. Looking at the demographic analysis of the province, the Provincial Commissioner might decide 70% of vehicles needed to be 4x4s because of the environmental design but this would mean the R6 million would be overspent because of the price difference. There would then be a need for compromise. Because of this, the SAPS resource management strategy was reviewed for the strategy to talk to accurate resource requirements. Where there was a shortage of vehicles, this would be escalated to the business case to be able to respond. Environmental design is deteriorating so the number of 4x4s required increased year-on-year – this meant the further deteriorating environment design must be catered for. This makes policing more expensive each year. A cost-effective approach to policing is adopted. In some cases environmental design was unavoidable but the plea to the Committee is for more attention to be given to spatial development which could reduce the demand and ensure there was alignment with what the police is doing. Environmental designed would be bettered with a structured approach and management of uncontrolled development – the appeal to the Committee is to assist SAPS in this regard and to collaborate with other parties. This factor also affected the safety of police members as some environmental design posed a serious danger. There is an instruction to review the existing fleet. He was honest in saying certain vehicles were left in the system as if they were operational but these vehicles are no longer operational and would need to be boarded and removed from the system. Replacement of these vehicles would need to be fast tracked as part of the instructed resource review. 

Gen. Sitole then responded to the slow response to audit findings by saying performance management practitioners were instructed to look at how performance management held people accountable to ensure there is prompt response to audit findings. Further, repeat audit findings would be declared a misconduct if it happens in the same environment. Audit response was also escalated to become a top management matter in the BOC. While the audit used a sample size, SAPS was obligated to look at all stations to ensure the finding was corrected and did not happen at other stations. SAPS also aligned itself with the monitoring and evaluation of the Civilian Secretariat for Police Service. Relations were also improved between SAPS and the Auditor-General itself including orientation in terms of SAPS’ matters. 

Ms Kohler Barnard asked about the national instruction on contract management. Despite SAPS following all steps, how could it be that there were still suppliers not delivering on time? Why was SAPS going with suppliers who let it down? Was SAPS being forced to use a predetermined list of suppliers? No one in their right mind would go with a supplier who let them down – if someone lets you down, you can be sure they have a history of doing so. What is the mandate of the Pre-advertisment Committee? Has the Contract Management Committee already been reintroduced? Were there plans to do so?

Brig. Smit replied that the draft national instruction has been circulated for comments – once all comments and inputs are received, the instruction would be sent to the Accounting Officer for signing off and circulation in the organisation. Under the guidance of the Accounting Officer, prior to awarding of every contract, the instruction is that proper due diligence is carried out. In the past, awards were made based on specification and PPPFA points scored. Now, each and every award made by the BAC must be accompanied by a due diligence report. This involved the BAC physically going to the recommended bidders to see that they have the capacity and capability to fulfill contractual obligations. Poor performance does still sometimes happen but this was handled through issuing letters of demand however there are cases where poor performance is outside the control of the contractor. If this persists, details of the company are forwarded to National Treasury for restriction purposes. After receiving the technical specification document, the Pre-advertisement Committee adds the special conditions of contract to the bid document in conjunction with the general conditions of contract, which is a standing document from National Treasury. The special conditions of contract are determined for each specific bid. Important matters out of the specification would be taken and made a mandatory requirement – the Pre-advertisement Committee is responsible for this as well as determining the pre-qualification criteria as stipulated by the PPPFA issued by National Treasury. The Pre-advertisment Committee is between the Bid Specification Committee and BEC to formulate the special conditions of contract.

Mr Mbhele thanked the Commissioner and his team for substantive responses and the candor of Gen. Sitole regarding strategic gaps – this openness and transparency assisted the work of the Committee in terms of aiding scrutiny and oversight and for top management to have these matters refreshed so they can be addressed. One of the systemic risk factors of a hierarchical organisation like SAPS is rank overriding rationality where one Brigadier can walk into an office, give an instruction to a Colonel that goes against prescripts and protocols - the dilemma is adhering to the order of a superior or adherence to policy. Given policing culture and the supremacy of rank, lower ranking officers would likely comply with the orders of a senior rank. He was aware of a misinterpreted directive from a General effectively freezing an entire process because the directive came from a high ranking officer. What is the risk mitigation in this regard? 

Gen. Sitole said the attachment of ranks in certain functions in the organisation is something to be part and parcel of transformation – a CFO performed a certain function regardless of rank. The new structure of SAPS would be structured according to public sector requirements for positions to exercise the necessary responsibility. When he worked in finance as a Captain, Gen. Sitole said no General could instruct him around as he would read the financial handbook and quote it. Practitioners in these environments must be trained to understand the prescripts. Senior officers would be informed it is a misconduct to issue an incorrect instruction. Where it was found irregular expenditure was incurred as a result of a senior officer, this would be dealt with as misconduct.  This is how the rank matter would be dealt with.

Mr Maake wanted to know how operational policing could take place, such as the arrest and prosecution of criminals, if national management of SAPS was always before the Committee. He understood the question might put the Commissioner in a corner because if he was called to appear before the Committee, he could not decline. This meant the real criminals which needed to be arrested were not monitored. How could the gangsters be arrested if top management was before the Committee twice a week? Is the Committee not disturbing what needs to be done?

Gen. Sitole said it started with the strategic layout of policing and specifications of the Service – the resource management strategy is on the other side and different heads are responsible operationally. Looking back at the transformation of policing, he thought the aim was to get the National Commissioner over to the other side but this diverted. The current situation required serious planning and consideration. There was a request put forward to consider inter-Committee coordination – at times the National Commissioner would be called to appear in two Committees at the same time – there is an obligation for the Commissioner to appear at both Committees as both could fire him. Sometimes this Committee might asks a question which belongs to another Committee – an example is around the declassification of documents which belonged to the Joint Standing Committee on Intelligence. The National Commissioner would be put under pressure to declassify the documents within two weeks but if it was done, the Commissioner would be in trouble with the Intelligence Committee. Another example was presenting the same information to multiple Committees. Another proposal was made to the Justice Crime Prevention and Security (JCPS) Cluster to locate the Minister to policy direction while SAPS would account for strategy. The reality is that by the time the Committee meetings are done, there is 10% to respond to crime and 90% must return to the Committee. The question is tricky but the proposal is to look at more coordinated planning both on Committee and Cluster level. He appreciated that the Portfolio Committee on Police always held SAPS accountable and that there was no compromise – this helped the Service to pull its socks up. The Committee also provided input and direction which was appreciated despite the lashing, so to speak. Only the Portfolio Committee on Police could protect SAPS to ensure policing takes place outside – this protection could also be extended against other Committees. The Portfolio Committee should tell Parliament that policing is outside and communities are safe but if there is only 10%, the Committee could request Parliament allow the police more time to do policing out there. 

Mr Maake asked if this meant management being called before the Committee was not solving the problem but actually causing it in that only 10% of what must be done is actually done. The Committee then kept on lashing management for something it could not do? Did this mean there first needed to be a meeting on matters such as public works or women and children before something can be done? In the meantime management kept sleeping in hotels without solving the challenges, besides the 10%, because of the Committee?

Irregular Expenditure
Maj. Gen. Nelson said irregular expenditure comprises expenditure, other than unauthorised expenditure, incurred in contravention of, or that is not in accordance with. a requirement of any applicable legislation, including the Public Finance Management Act, 1999 (Act No. 1 of 1999), as amended by Act 29 of 1999, the State Tender Board Act, 1968 (Act No. 86 of 1968), any regulation made in terms of that Act or  any provincial legislation providing for procurement procedures in that provincial government.  In terms of the accounting policy, irregular expenditure is recognised as expenditure in the statement of financial performance. If the expenditure is not condoned by the relevant authority it is treated as an asset until it is recovered or written off as irrecoverable.

The presentation looked at procedures for discovery, investigation and reporting of irregular expenditure - if the irregular expenditure is subsequently condoned by the appropriate authority, no further action is required by the Department as the amount has already been expensed in the statement of financial performance. The register should be updated to reflect the fact that the irregular expenditure was condoned. If, however, the amount is not condoned by the appropriate authority, the Accounting Officer must take effective and appropriate action against the responsible person, these actions may also include disciplinary steps.

Turning to the threshold values and regulatory framework, procurement of goods and services, either by way of quotations or through a bidding (tender) process, takes place according to threshold values as determined by the National Treasury. The threshold values in essence are:
-Up to R500 000 – quotations for each organisational unit to obtain and use to purchase goods and services (however to enhance governance, quotations between R300 000 up to R500 000 must first be submitted to the Division: SCM at national level for approval)
-Above R500 000 – bids (tenders) are put in place by the Division: SCM BAC at national or third parties such as SITA.  Organisational units then use these contracts to procure goods and services

In 2017/2018, SAPS paid 1 543 568 invoices, to the value of R16 604 billion. 99.72% of invoices paid were within 30 days. In addition to numerous supply chain (including procurement) prescripts and processes, an integrated detailed policy National Instruction 3 of 2014, titled “Administration of Supplier Payments”, exists. The said SAPS National Instruction prescribes in detail a sequential process with segregation: Financial Authority → Procurement Authority → Order →Delivery → Invoice → Payment → Archive.

Maj. Gen. Nelson then discussed processes in place to prevent irregular expenditure – action steps introduced by SAPS to mitigate incurrence of irregular expenditure are the following:
-National Treasury Instruction notes and circulars are communicated through national circulars to all procurement practitioners for implementation and adherence
-Annual Procurement Forums are held where procurement practitioners from all provinces and divisions are given lectures on the latest National Treasury instructions and also on how to deal with irregular expenditure
-Annual SCM Forums are held with Deputy Provincial Commissioners and Divisional Support Heads on the latest National Treasury instructions and also on how to deal with irregular expenditure. Divisions and Provinces are reminded to put action plans in place to prevent irregular expenditures, i.e. intervention sessions, local procurement seminars, or to request intervention sessions from SCM National Procurement, if need be.
-A pocket guide which spells out the procurement directives of SAPS for sourcing and approval of quotations was developed to assist procurement practitioners and to reduce irregular expenditure cases. Printed copies of this guide were distributed to procurement practitioners and it is also available on the SAPS Intranet
-New price quotation forms were developed with dedicated sections to force procurement practitioners to perform the required verifications (i.e. tax compliance verification, in the service of the state status, prohibitions status) prior to the award of the quotation
-Dedicated offices were established within the provinces and divisions who are responsible for the administration of irregular expenditure cases within their specific environments

Turning to annual financial statements of 2017/18 and irregular expenditure, note  24.1 and 24.4 of the Annual Financial Statements (AFS) contains the disclosure of irregular expenditure. Processes to deal with such matters, in essence, includes reporting of potential irregular expenditure (by end-user) with supporting documentation, enter into register, enquiry or investigation into the alleged irregular expenditure, confirmation or not by relevant authority (BAC/Accounting Officer), liability/discipline where applicable and condonation (conclusion). Note 24.1 of the AFS relates to 46 cases to the amount of R21.1 million. In essence, this irregular expenditure figure of 2017/2018 has an opening balance carried forward from the 2016/2017 financial year where one incident constitutes R19. 911 million.  If this is isolated, R1.189 million remains which predominantly relate to quotations where the procurement authority was not obtained before the order was issued according to the SAPS process (technical requirement). Of the 46 cases, disciplinary steps were taken in 40 instances, one is not concluded yet and five were not disciplined due to extended periods after incident.  In all instances good/services (value) were indeed required and received. Note 24.4 relates to irregular expenditure under investigation which consist of 65 cases to the amount of R799 377 000. From the 65 cases, 30 cases were identified by the Auditor-General of SA (AGSA) to the amount of R700 351 000 and 35 cases were identified by SAPS to the amount of R99 026 000.

Maj. Gen. Nelson then provided the Committee with an overview of irregular expenditure for 2017/18 – a   total of 28 cases of irregular expenditure, amounting to R6 261 278.25 was experienced during the first semester of 2018/19. All the cases are still pending.

Gen. Sitole added that he ordered an accurate budgetary planning exercise because if this is accurate it is unlikely that irregular expenditure would be incurred. He also directed that business planning, in terms of Treasury regulation five, must be signed off by Deputy National Commissioners to ensure accuracy. Regarding external factors, for example the funding of events, SAPS is driven into irregular expenditure by other departments because at the last hour the budget is confirmed. At this last hour, SAPS could not halt the deployment as the event would already start taking place. This is a matter to be brought into the JCPS in terms of policy. With the consequence management gap and a superior would instruct a junior to initiate a process which would result in irregular expenditure - the focus should be on both officials in terms of misconduct. In the review and alignment of the performance management system, it was discovered the weight allocated to irregular expenditure is too low so this would be reviewed.

The Chairperson noted many items of irregular expenditure related to travel arrangements of high ranking officers involving travel agencies – would this be tightened up? There was also R1.7 million spent on the National Excellence Awards this year pending investigation – it is presumed this event and dates would have been planned in advance so why was it seen under irregular expenditure?

Gen. Sitole responded that all processes were not subject to budgetary planning in compliance with Treasury regulations, current reviews and guiding principles. This also goes together with monitoring and continuous training for all practitioners to master the process.  

Ms Mmola asked when the 44 cases pending would be finalised – were these cases still under investigation? This is concerning because the amounts spent were large. What was meant by “corrective cancelling” under the item related to the SAPS Academy? She sought an explanation for the action of verbal warning in the cases of SAPS’ vehicles towed and boarded. In many of the cases there were verbal warnings. She sought more information on the R1.8 million spent to host the SAPS National Excellence Awards on 26 January 2018 – is this case under investigation?

Brig. Smit explained the National Excellence Awards followed an open tender process where the bid was evaluated and adjudicated. However a precondition of the contract was that the Durban International Convention Centre (ICC), where the event was held, wanted a 50% upfront payment to secure the booking, as in the norm in the hospitality industry. This was approved by the BAC on this condition. Two days prior to the event taking place, the venue requested the remaining 50% payment which was done. The irregularity occurred as the BAC only approved the 50% prepayment when in fact there was 100% prepayment.
Mr Maake noticed there was a lot of towing of vehicles but questioned how this would be classified as irregular expenditure. He would expect the towing of a vehicle to be an emergency situation. Should funds have been set aside for the towing of vehicles? This is tricky because one could not predict when a vehicle would breakdown. Was the money perhaps taken from somewhere else to fund the towing?

Gen. Sitole replied that majority of the cases were defined by emergency – presently the operational definition of an emergency is far different from how Treasury notes and other aspects interpret an emergency. SAPS rendered an essential service so if a toilet is blocked it is deemed to be an emergency. If the police are on the road and a vehicle breaks down, the vehicle could not simply be left there because of the national security risk so the vehicle would have to be towed. A delegation would engage Treasury on these matters on Treasury notes vis-à-vis the practical position SAPS found itself in so that most cases of irregular expenditure can be avoided.

Ms Kohler Barnard asked for detail on the total value of the FDA contracts and how it was divided. Why was there a reliance on FDA to provide equipment, maintenance and consumables to the forensic science division? In April, SAPS was faced with the situation of FDA switching off access to PCEM and the file permit system – basically the Service was held to ransom, or this was how she saw it. What was put in place to ensure SAPS was never put in this situation again? She questioned what happened in all these systems if there was only a single supplier of a specific item which SAPS has to have – would a global bid be put out if the item could not be manufactured in SA? Who would elect which country the bid came from? This could become quite dodgy quite quickly. The current situation is the running out of DNA kits – what is going to be done now that this contract is coming to an end? What was being done to get around the problem of single suppliers which could hold SAPS at ransom by simply naming their price?  

Ms Kohler Barnard was concerned to see that consequence management in many of the cases of irregular expenditure was a mere slap on the wrist. She found it hysterical that at an accountability session, they are being nailed for abusing the procurement process. She questioned the payment for medical treatment for a person in police custody of R318 which is now being investigated – why was this even looked at? It seemed bizarre compared to the fact that people found guilty of flouting the systems in contracts involving huge sums of money are never thrown out the SAPS. She asked if Gen. Sitole could put his hand on a Bible to say the people being investigated now did not do this wrongdoing months or years ago. Was the same batch of people involved in all these cases? These people are laughing when a little piece of paper was placed in their files or a tap on the wrist because it meant nothing – these people were cashing in. This would only stop when people are criminally charged or kicked out of SAPS.

Brig. Smit said the single supplier is a difficult matter but the instruction to end users is to start doing proper market analysis in terms of identifying possible alternative avenues and drafting specifications in such a manner that allowed other suppliers to participate where possible. If there really is no other option, in terms of certifying the price as fair and reasonable, profit margins were requested from the supplier along with price breakdowns to, where possible, compare with previous acquisitions to certify that the price is fair and reasonable. SAPS did this to the best of its ability to ensure suppliers did not hold it ransom.

Mr Mbhele prefaced that irregular expenditure must be handled with a degree of nuance as it fundamentally spoke to procedural compliance, in his understanding. As was said in the presentation, in almost every case, goods and services were received for the payment so there was some kind of value. He was concerned by the case of irregular expenditure involving the renovation of a guesthouse – he did not understand how this case related to policing work. Clarity on this is needed. How does one arrive at the conclusion of imposing some kind of disciplinary action versus condonation given that, broadly speaking, there is value for money  coming out of the SCM process even if it is irregular? He saw two cases related to plumbing work where the action was simply stated as “finalised” – what did this mean? The Member’s substantive question was how one arrives at the outcome of an investigation process because a generous reading of these investigations might say all cases are policing work but someone forget to cross an i or dot a t which might make the case for condonation. But what would the argument be when this conclusion was not arrived at? Is it that each case is investigated by a different panel? If so, this might speak to the need for training to standardise and harmonise approaches and actions applied by the different panels.

Maj. Gen. Nelson said that before the supposed irregular expenditure could be confirmed, there is a prescribed process. Once the transaction incurred, it needs to be reported if there is a possibility that irregular expenditure was incurred. The end user is responsible for obtaining the relevant documentation such as the invoice, procurement documentation and other necessary forms from the specific individual that incurred the expenditure that allowed for the BAC’s adjudication. The documentation also needed to be obtained from local level. The documentation would then be submitted to the BAC to assess. Recommendations would be provided to the end user for implementation of the necessary sanction or conclusion. The end user would determine the action which should be taken against the confirmed irregular expenditure and individuals involved in the process. When it comes to normal day-to-day operational requirements, these are basically quotations where there are aspects of non-compliance. For example, if there was an awaiting trial prisoner in a police holding cell requiring medical attention, the necessary forms would have to be filled in before the treatment could take place for the institution to render the medical treatment. There were interventions in the regions such training forums and interventions from the national supply chain office in order to enforce where serious discrepancies were picked up in a particular province or region. Cases identified by the Auditor-General were also recorded, investigated and formed part of processes outlined above.

Brig. Smit added that when it comes to determining disciplinary steps to take, each and every case is sent to the specific end user/business unit to look at the circumstances and come up with a disciplinary action. The input made on unifying the approach is noted to couple thresholds of the irregularity to a certain disciplinary action.   

 Mr Mhlongo said the people responsible for handling such matters were aware of guiding instructions and he was sure their files would show training has taken place on how the system should work. On top of this having been done, people still decided to flout the rules of engagement. While it might be that the goods were delivered when the rules of engagement were broken, the question was at what price this came. Sometime ago, the Committee was told that SAPS was paying R33 000 for a bulletproof vest after the price was inflated – it was like someone purchasing a loaf of bread for R10 but government was charged R1 000. It is telling that people were aware of how processes worked but still found ways of doing wrong. He was concerned by the reference to political interference and asked from which level it came – often it was civil servants who faced the brunt and no action was taken against political decision makers who could get away with murder. The Committee needed to know this information, shame these people and for law enforcement agencies to play their role. To fight corruption in SA, brutal action was required, as was seen in China, irrespective of how popular a person is. Corruption must be dealt with without fear or favour. There is no need to protect those who used their political influence for nefarious means. Civil servants take the cue from politicians when it came to carrying out corruption.

Gen. Sitole said there might have been political interference in the past but since he took over as National Commissioner, he has not experienced this. If he did, he would have a way of dealing with it or even bringing it to the attention of the Committee. All such matters are subject to the investigation. Measures were put in place to ensure there was no political interference.

The Chairperson noted it was reported in the media that there was communication between SAPS management and a service provider regarding fair ownership of the licensing or copyright of the product. If tnegotiations are ongoing, who is assisting SAPS management in determining the fair value? Is Treasury involved?

Gen. Sitole confirmed the discussions between SAPS and FDA. There is a court process involving SAPS/SITA and FDA so some of the matters under discussion are also part of the court process. While the court process was ongoing, FDA approached SAPS with an offer in writing indicating it was prepared to release the state sovereignty. A team is lead by legal services to handle the engagements. The team has asked FDA for a breakdown of the offer and further clarity. The matter was now at a point where Treasury must get involved along with thorough scrutiny of contract management. When the contracts were initially acquired, the property right was supposed to be included but the court would make a determination on this. If the court rules in SAPS’ favour, engagement with FDA would not proceed but if the court ruled in FDA’s favour their offer would continue to be engaged.

Gen. Sitole then provided the Committee with the names of the senior SAPS members appearing in court today, as the Committee requested to know earlier in the meeting. The members were the former Provincial Commissioner of Gauteng (Lt. Gen. De Lange), the current Divisional Commissioner of Supply Chain (Lt. Gen. Mokwena), the Deputy Provincial Commissioner of Gauteng (Lt. Gen. Napo) and Brig. Ramajalum, also from supply chain. 

Mr Maake noted his concern of the leaking of the forensic report, under discussion earlier in the meeting, which could happen again at any time. It would not be a mistake to refer some matters to this Portfolio Committee. When the police appeared before Scopa, it would benefit this Portfolio Committee to attend because it knew more about what the police do than Scopa itself. A Committee - not responsible for intelligence - could not enforce declassification of documents. He suggested SAPS refer some of these matters to this Portfolio Committee and requests from Scopa could be referred to this Committee or the Joint Standing Committee on Intelligence. This would avoid questioning of leaks by the police when it could be Members themselves that have leaked a document. The Portfolio Committee on Police is the central Committee.   

The Chairperson concluded the meeting by noting it was an important engagement in providing clarity and assurances on contract management to address the environment and current challenges. It is pertinent that the necessary advice be obtained by the National Commissioner on current investigations underway for decisions to be taken timeously. Matters in the public domain to be referred for criminal investigation and internal disciplinary processes should also be done timeously as matters of priority. The Committee would monitor the renewed change strategy of contract management and bid processes. Other reputational risks cannot reoccur as it was not good for SAPS or good governance – tight measures were required to deal with this and the National Commissioner must crack the whip and act without fear or prejudice – the Committee would support this. Matters of irregular expenditure would also be monitored by the Committee going forward.

Next week, the Committee would meet on public works matters and rural safety with the other relevant Portfolio Committees.

The meeting was adjourned.


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