Remunerated Overtime Management; SITA; provincial tours: committee reports

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Meeting report

MANAGEMENT OF REMUNERATED OVERTIME IN PUBLIC SERVICE, SITA'S BUSINESS PLAN, PROVINCIAL VISITS: COMMITTEE REPORTS

PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
26 May 2000
MANAGEMENT OF REMUNERATED OVERTIME IN PUBLIC SERVICE, SITA'S BUSINESS PLAN, PROVINCIAL VISITS: COMMITTEE REPORTS

Documents handed out:
1. Draft report of PC meeting on implementation of the Basic Conditions of Employment Act, 1977 (Appendix 1)
2. Summary of the report on the management of remunerated overtime (Appendix 2)
3. Report on SITA's Business Plan for 2000/1 (Appendix 3)
4. Executive summary of Provincial Visits

SUMMARY
The draft reports on Management of Remunerated Overtime in Public Service, SITA's Business Plan and on the Provincial Visits, were adopted with no objections.

MINUTES
The noted that the recommendations in the report on Provincial Visits was based on the findings by the delegation. He highlighted the second recommendation, "That DPSA develop initiatives relating to the recruitment and retention of managers and professionals in the provinces, including the introduction of appropriate incentives for skilled personnel to take up posts outside the main centres, and report thereon to the Committee during the third quarter".

He said that the Portfolio Committee has a duty to balance issues with regard to the development of a retrenchment tool. He emphasised the need for a consistent plan. This report was adopted with no objections.

The report on the Management of Remunerated Overtime in Public Service was adopted with no objections. The report on SITA's business plan was adopted with no discussion or amendments. The meeting was adjourned.

Appendix 1:
DRAFT
Report of the Portfolio Committee on Public Service and Administration on the measures taken in anticipation of the implementation of the Basic Conditions of Employment Act, 1997 in the Public Service, dated 29 May 2000.

The Portfolio Committee on Public Service and Administration, having received a briefing on the measures taken in anticipation of the implementation of the Basic Conditions of Employment Act, 1997 in the Public Service.

Introduction

On 9 November 1999, The Public Service Commission (PSC) briefed the Committee on two reports, on the Management of Remunerated Overtime in the Public Service [RP171/1999] and on the Management of Leave in the Public Service [RP172/1999].

The PSC's investigations and reports were prompted by the realisation that the costs to Government of paying leave and overtime were considerable, that these costs had been increasing rapidly in recent years, and that they were likely to increase further after the coming into force for the Pubic Service of the Basic Conditions on Employment Act, 1997 (BCEA) on 1 June 2000.

The PSC Report on the Management of Remunerated Overtime was formally tabled and referred to the Committee for consideration and report on 11 April 2000. The Committee would like to inquire in greater depth into some of the management and policy issues relating to leave and overtime, and will therefore report in terms of the referral at a later date.

In the interim, however, with 1 June 2000 rapidly approaching, the Committee decided to obtain a briefing from the Department of Public Service and Administration (DPSA) on the measures taken in anticipation of the coming into force of the BCEA in the Public Service. Mr Alvin Rapea, recently appointed Deputy Director-General of Labour Relations and Conditions of Service at the DPSA, accordingly briefed the Committee on 24 May.

Briefing by DPSA

  1. Background

The BCEA was enacted on 1 December 1997. In terms of the transitional arrangements of the Act the Public Service was afforded an extension of 18 months from the date of the commencement of the BCEA. The BCEA commenced on 1 December 1998 and the implementation date for the public service is therefore 1 June 2000.

The BCEA is divided into 11 chapters and regulates a variety of substantive standards of employment. The following are importance for the public service:

  1. Working time
  2. Leave
  3. Particulars of employment

The provisions of the BCEA, except for the core rights, can be varied through collective bargaining in terms of section 49 of the Act. Applications for determination may also be made to the Minister of Labour, subject to the requirements of section 50 of the Act.

  1. Core rights
  1. The employer's obligation to arrange working time taking into account the health and safety and family responsibilities of employees
  2. The 45 hour working week
  3. The protection afforded to employees working between the hours of 23:00 and 06:00
  4. 21 days' paid vacation leave
  5. sick leave
  6. maternity leave
  7. prohibition on certain types of child labour
  8. regulations issued by the Minister to regulate hours for work for health and safety reasons

Mr Rapea affirmed that the Public Service respects the core rights and will adhere to them.

  1. Regulation of working time (Chapter 2 of the BCEA)
  1. Ordinary hours of work

Generally a 40-hour week prevails in the Public Service. In those instances where employees work more than 45 hours per week, the Public Service will be able to comply by obtaining agreement to either averaging hours of work or compressing the working week as contemplated in section 11 and 12 of the BCEA.

  1. Overtime
  2. The BCEA limits the number of hours that an employee may work overtime to 3 hours per day and 10 hours per week. The Public Service would be able to comply once the limits have been varied by collective agreement.

  3. Meal intervals
  4. The BCEA requires that an employer must give an employee who works continuously for more than 5 hours a lunch break of at least one continuous hour. It may be reduced by agreement to not less than 30 minutes. A minimum lunch break of 30 minutes presently applies and an agreement is therefore required to confirm current practices.

  5. Rest periods
  6. In terms of the BCEA an employer must allow a daily rest period of 12 consecutive hours and a weekly rest period of 36 hours. Generally the Public Service complies. In specific instances variation must still be negotiated. (For example, the Health sectors: 10 hrs, SAPS: 6 hrs.)

  7. Night work
  8. Night work between 18:00 and 6:00 may only be worked by agreement, the payment of an allowance is required and transport must be available (though not necessarily provided by the employer). Variations are required to deem night work from 19:00 to 7:00, which is the current practice. (Eg Correctional Services, SAPS.)

  9. Obstacles
  1. The current overtime rate is 1 1/3, whereas the required rate is 1½. The employer is currently negotiating to retain the current overtime rates.
  2. The BCEA rate for Sunday work is 1½ for those who normally work on a Sunday and double for those who don't normally work on a Sunday. The Public Service currently pays double for those who don't normally work on a Sunday and the normal rate for those who do normally work on a Sunday. The employer is currently negotiating to retain the current overtime rates.
  1. Leave (Chapter 3 of the BCEA)
  1. Annual leave
  2. Generally in terms of the BCEA an employee will be eligible to 21 days paid leave in a 12 month leave cycle. Presently in the Public Service employees receive in general 30 days or 36 days after 10 years' service.

  3. Sick leave
  4. An employee is entitled to 36 days sick leave over a three-year cycle. The Public Service sick leave dispensation exceeds this requirement by far, since 120 days are afforded with pay, a further 120 with half pay within a three-year cycle, and a further 92 at the discretion of the head of department.

  5. Maternity leave
  6. In terms of the BCEA an employee is entitled to at least four consecutive months' maternity leave (unpaid) Presently in the Public Service employees are entitled to paid maternity leave for two confinements. Paid maternity leave may also be granted in exception cases. Vacation leave and unpaid leave may be used for further confinements.

  7. Family responsibility leave

An employee may be granted three days' in a leave cycle when an employee's child is born, or when her or his child is sick, and in the event of death. Presently in terms of Resolution 3 of 1999 of the Public Service Coordinating Bargaining Council (PSCBC), individual departments negotiate their own policies on special leave.

In terms of leave therefore, the Public Service's leave provisions are currently more favourable than those require in the BCEA and the Public Service therefore complies.

  1. Particulars of Employment and Remuneration (Chapter 4 of the BCEA)
  2. The BCEA requires that certain particulars be provided and maintained in respect of an employee and that information be made available with regard to the employees' remuneration, deductions etc. The Public Service Regulations, 1999 require that such information be provided to an employee.

  3. Implementation Process
  1. The implementation process in the Public Service was launched in May 1998 with a workshop comprising of employer representatives and employee organisations. Major employing departments/sectors such as Police, Education and Health have been assisted through the Department of Labour to identify their needs for purposes of variation by collective agreement in terms of section 49 of the BCEA.
  2. A workshop was also held to assist other departments and provinces.
  3. An implementation guide has been made available to assist departments.
  4. Sectors/departments are presently in the process of negotiating the variations as required to implement the BCEA.

Findings

  1. The Committee notes that the Public Service will implement the BCEA on 1 June 2000, "except for the areas being negotiated". The Public Service already complies with the BCEA to a large extent (in terms of leave and particulars or work).
  2. The Committee is concerned that the negotiations have not been completed in advance of the implementation date, but accepts that the State as employer commenced an implementation process in May 1998, six months after the enactment of the BCEA, and 2 years prior to the commencement date for the Public Service.
  3. The State as employer is seeking variations in the regulation of working time and remuneration, as follows:
  1. Maximum daily and weekly overtime
  2. Specific instances relating to rest periods
  3. Night work between 19:00 and 7:00
  4. Retention of current overtime pay rate of 1 1/3
  5. Retention of current Sunday work pay rate of ordinary pay

Recommendations

The Committee accordingly recommends that the DPSA brief the Committee on the extent to which the Public Service is complying with the BCEA in three months' time (end of August 2000), or when negotiations have been successfully concluded, if agreement is reached before the end of August.

Appendix 2:
REPORT ON THE MANAGEMENT OF REMUNERATED OVERTIME

EXECUTIVE SUMMARY

1. INTRODUCTION
1.1 The performance of remunerated overtime poses significant financial implications for employers in the public and private sectors. In accordance with figures obtained from the Personnel and Salary System (PER SAL) R986 million was spent in the Public Service on remunerated overtime in the 1997/98 financial year alone.
1.2 In view of the substantial financial implications attached to remunerated overtime, the Public Service Commission decided, in pursuance of its Constitutional mandate, to conduct an investigation into the management of remunerated overtime in the following eight (8) national departments in the Public Service:

• Agriculture.
• Environmental Affairs and Tourism.
• Foreign Affairs.
• Justice.
• Land Affairs.
• Public Works.
• Trade and Industry.
• Water Affairs and Forestry.

2. MEASURES REGULATING COMPENSATION FOR OVERTIME
2.1 As background to the findings of the investigation a brief summary is provided of the measures that regulate compensation for overtime and of future developments in this regard. Officials were, in accordance with Chapter D.VI of the Public Service Staff Code (PSSC) (the measures which applied when this investigation was conducted), remunerated according to -

• an hourly tariff calculated as one and one-third times the salary of the person concerned for overtime performed during the hours before 20:00 and after 06:00 from Monday to Saturday; and
• an hourly tariff calculated as twice the salary of the person concerned for overtime performed on Sundays, public holidays and hours between 20:00 and 06:00.

2.2 The new Public Service Regulations (PSR), implemented on 1 July 1999, places an obligation on heads of department to establish overtime policies for their departments and differs in two very important aspects from the PSSC and old PSR. Firstly it places the responsibility to manage and control overtime firmly in the hands of heads of departments by requiring the development of departmental policies. Secondly, it places limitations on the level at which persons may be compensated for overtime as well as the monthly compensation that employees may receive for overtime.

2.3 The Basic Conditions of Employment Act (BCEA) 1997 becomes applicable to the Public Service on 1 June 2000. According to the Act an employer must pay an employee at least one and one-half times the employee's wage for overtime worked (as opposed to the one and one-third times the wage currently applicable in the Public Service).

3. BACKGROUND TO THE PERFORMANCE OF OVERTIME IN THE PUBLIC SERVICE

3.1 Reasons for the performance of overtime
3.1.1 The performance of remunerated and voluntary overtime are common practice in the departments investigated. Overtime is generally performed as a result of the following:
• Work environment where a continuity of services is required on a 24 hour basis.
• Additional tasks must be performed.
• The technical and unique nature of work.
• Shortage of staff.
• Lack of trained staff with appropriate experience.
• Inefficient work procedures.
• High absenteeism.
• Backlogs in work.

3.2 The frequency of overtime
3.2.1 The performance of planned overtime in the Public Service occurs either on an ad hoc basis (during certain periods of the year) or continuously throughout the year. The officials interviewed performed an average of 472 hours overtime per person in 1997 (a combination of remunerated and voluntary overtime).

3.2.2 The performance of remunerated overtime has become part and parcel of many officials lifestyles, especially where it was performed for long continuous periods. The income generated through remunerated overtime in such cases is viewed by officials as part of their salary packages and many admitted that it would be to their detriment, financially, to suddenly stop performing remunerated overtime.

3.3 Financial implications of remunerated overtime
3.3.1 Overtime expenditure increased significantly in the 1996/97 financial year and even more dramatically in the 1997/98 financial year. The total amount of overtime expenditure for the eight (8) departments investigated increased from R9 million in the 1993/94 financial year to R13 million in the 1997/98 financial year, as indicated in Chart 1. Overtime expenditure in these departments individually increased between 179% and 10012 % during this period.

Chart 1: Combined overtime expenditure
1993/94 to 1997/98 [not included]

3.3.2 The reasons for the increase in overtime expenditure since 1996/97 are two-fold. Firstly, there has been an increase in the number of hours overtime performed per annum by officials. Secondly, the basis for the calculation of the overtime tariff was adjusted with effect from 1 July 1996.

4. ABILITY OF DEPARTMENTS TO EFFECTIVELY MANAGE REMUNERATED OVERTIME
4.1 Knowledge of and accessibility to the relevant prescripts
4.1.1 The extent to which officials are conversant with the relevant prescripts were probed. The following problems were observed:

• The national prescripts are not always accessible to all managers.
• Newly appointed managers are not provided with the necessary training.
• A minority of the managers interviewed were neither familiar with the basis for the calculation of the tariff for overtime nor familiar with the requirements regarding control prescribed in the PSSC.
• Senior officials perform the same work during overtime as subordinates but are remunerated at higher rates calculated according to their salaries.

4.2 Departmental policies
4.2.1 A definite need exists for departmental policy frameworks to guide the management of remunerated overtime. The following four departments investigated have already developed such policies or are in the process of developing and implementing such a policy:
• Environmental Affairs and Tourism.
• Land Affairs.
• Trade and Industry.
• Water Affairs and Forestry.

4.2.2 Although the departmental policies prescribe the relevant control measures to be utilised by managers, these control measures in the majority of cases amounted to no more than a summary of the prescripts contained in the PSSC. Guidelines are not provided on how to deal with unique circumstances and problems encountered in departments.

4.3 Strategies to limit overtime expenditure
4.3.1 The following attempts to limit the financial implications attached to remunerated overtime were detected in the investigation:
• Limiting approval for the performance of remunerated overtime.
• Appointment of casual employees.
• Expedited filling of vacancies.
• Assessment of work procedures and the utilisation of staff.

4.4 Process for the funding and approval of remunerated overtime
4.4.1 In the majority of the departments investigated, inputs for allocations in respect of remunerated overtime are made by each of the components in which overtime is/will be performed. Not all components, however, budget for the payment of remunerated overtime. Another practice observed in certain of the departments studied was to fund overtime from savings on personnel expenditure.

4.4.2 Approval for the performance of remunerated overtime, in respect of components where overtime is performed on a continuous basis, is linked to the budgeting process. Ad hoc approval for overtime is also obtained for the performance of overtime when the need arises.

4.4.3 Once approval has been obtained the details thereof are captured on the Personnel and Salary System (PERSAL) The field provided on PERSAL limits the payment of overtime to the officials, number of hours, costs and period in respect of which approval has been obtained.

4.4.4 Top management in all of the departments appears to be strict in granting of approval for remunerated overtime.

4.5 Control over the performance of remunerated overtime
4.5.1 The basic control measures utilised by departments are the keeping of overtime registers, the verification of claims for overtime payment by supervisors and the limitations placed as captured on PERSAL.

4.5.2 The levels of supervision in a large number of the components were not adequate. Personnel are allowed to perform remunerated overtime at home or without supervision at work. Additional control measures include the following:
• Registers kept by security divisions
• Provision on overtime registers for personnel to indicate exactly
what they have done and the quantity thereof.
• Control mechanisms on computer networks.
• Strict planning of overtime and the allocation of time frames to complete tasks.
• Components to investigate fraud.
• Audits of overtime claims.

4.6 The role of managers
4.6.1 Managers have an integral part to play to ensure that overtime is managed effectively. According to the managers interviewed remunerated overtime is open to manipulation if the necessary control measures are not applied. Certain managers in the absence of departmental policy, limit the hours of overtime performed per day, week and month as well as the number of personnel that perform overtime to the absolute minimum required. Overtime is generally scheduled well in advance by managers and officials are informed timeously of the need to perform overtime.

5. CORE PROBLEM AREAS IDENTIFIED
5.1 The following is a list of the most significant problems identified during the investigation:
• The financial implications of remunerated overtime are alarming due to a sharp increase in expenditure since 1996/97.
• Officials view income generated through overtime as part of their basic salary.
Departments do not strategise on how to curb overtime expenditure.
• Managers are not trained to manage remunerated overtime.
• Prescripts are not accessible to all managers and where accessible are not understood.
• Prescripts are not adhered to.
• Control measures are inadequate.
• Criteria for the approval of remunerated overtime are not consistently applied.
• The need for remunerated overtime is sometimes fictitious.
• Time off is not utilised as an alternative to compensate personnel.

6. OVERTIME MANAGEMENT AS APPLIED BY OTHER lNSTITUTIONS IN THE PUBLIC AND PRIVATE SECTORS
6.1 The manner in which institutions in the public and private sectors manage overtime was investigated with a view to determine whether any lessons could be learned in respect of the Public Service. It was found that, as in the Public Service, the effectiveness of the control measures applied by their institutions depends largely on the consistent application thereof by managers. Certain of these institutions have, however, instituted systems which, although not fool proof, assist managers with their responsibilities in respect of control (such as an access control and clock card system).

6.2 An advantage that these private sector institutions have is that the majority of managers operate, manage and take full responsibility for their own budgets. The same limitations which apply to Public Service managers are therefore not applicable to them. The fact that they have the authority to approve remunerated overtime within the limits of their budgets, increases their awareness of the need to effectively control the performance of remunerated overtime.

7. PROPOSALS TO IMPROVE THE MANAGEMENT OF REMUNERATED OVERTIME
Emanating from the findings of the investigation and the provisions of the new PSR, the following proposals are made on how the management of remunerated overtime can be improved:

7.1 Development and implementation of comprehensive departmental policies on overtime
Based on the problem areas that were identified proposed that the following be included in departmental policies on overtime:
• Provision should be made for the system of time off as an alternative form of compensation for overtime.
• The number of hours overtime that may be performed should be limited.
• The process for the approval of remunerated overtime should be clearly defined.
• Guidance should be given to managers on specific control measures that can be utilised.
• Strategies to limit the performance of remunerated overtime should be developed.

7.2 Training should be provided and access to prescripts improved

All personnel involved with the management of overtime should be provided with training and management should be specifically provided with guidance on their responsibilities in respect of the management of overtime.

7.3 Managing overtime with due regard to basic employee rights
Departments are encouraged to proactively start preparing for the implementation of the BCEA, 1997, in the Public Service. It is pointed out that the basic employee rights enshrined in this Act should be taken into consideration when departments draft their departmental policies on overtime.

8. CONCLUSION
8.1 The investigation revealed that the control mechanisms applied by departments should be strengthened to avoid the possible manipulation and abuse of remunerated overtime.

8.2 Managers should be provided with guidance to approach the control of overtime with the seriousness that it deserves.

8.3 The Department of State Expenditure should devise a monitoring mechanism to determine if the trend in expenditure on remunerative overtime is increasing or decreasing over the current and next financial years.

Appendix 3:
Report of the Portfolio Committee on Public Service and Administration on SITA's 2000-01 Business Plan, dated 26 May 2000:

The Portfolio Committee on Public Service and Administration, having considered the Business Plan of the State Information Technology Agency (SITA) for 2000-01, reports as follows:

A. Introduction
At a meeting of the Committee on 12 April 2000, the Chairperson of the Board of SITA, Mr Sello Rasethaba, and the Acting Managing Director, Mr Sello Mokale, briefed the Committee on SITA's Business Plan for 2000-01. The briefing was given in compliance with a resolution of the Portfolio Committee on Public Service and Administration of the previous Parliament, which was tabled on 21 September 1998 and adopted by the National Assembly on 23 September 1998.

B. Background: Report of Presidential Review Commission
In March 1998 the Presidential Review Commission (PRC), established by Pres Mandela to investigate the Public Service, reported that in respect of information management, systems and technology (IMST), South Africa's current Public Service practice lagged behind the private sector, which itself was slipping behind developments elsewhere in the world.

The Commission felt that the State should have a major role to play in promoting the information society, but that the Public Service had not used IMST in a systematic manner to improve service delivery, public participation, government transparency or accountability. The PRC stressed the need for greater integration and inter-operability of Public Service data banks, which would require the setting of basic standards first and the formulation of a more comprehensive set of standards later.

The PRC argued that technology must be driven primarily by the business objectives of the State, and not the other way around. The PRC believed that "IT can significantly change the manner in which the Public Service conducts its business, and indeed should be used to radically re-engineer its processes, but this transformation must be shaped by the strategic and operational needs of the Public Service, particularly in relation to the provision of efficient, effective and equitable service delivery" (p 192 of PRC report). Important decisions regarding IMST should therefore not be delegated or outsourced, but taken by the senior political and managerial leadership of the State.

The Commission made several recommendations relating to IMST, summarised as follows:
1. A short-term procurement moratorium on all large (above R5 million) IT systems and technology must be imposed until some basic standards are agreed upon to facilitate future data exchange and data operability.
2. Basic standards, most immediately the standards required for exchange of information (the "unique identifier" and network standards), should be established.
3. A more holistic business, information, systems and technology architecture, derived from the current IT Business Architecture and/or subsequent projects, must be developed.
4. The above projects should be consolidated into a national information management strategy, information systems strategies and an IT strategy for the Public Service.
5. The post of Chief Information Officer (CIO) should be created in the Office of the President, the incumbent of which would head a Policy Committee and a Technology Forum.
6. The "lead agency" concept, whereby a particular State agency would be given primary responsibility to co-ordinate a whole-of-government IMST initiative in relation to a specific set of IT functions in conjunction with other participating departments, should be accepted and implemented. Personnel and resources would need to be shared on a programme and/or project basis, but ultimately the Minister and senior management responsible for the lead agency would be held accountable for performance.
7. The current functional differentiation of the Public Service needs to be addressed on the basis of business process re-engineering, using the National Crime Prevention Strategy as a model.
8. A systematic skills development plan needs to be designed and implemented to train new entrants to the information management and technology field, including a four-year internship programme to produce an accelerated but equivalent qualification to those offered at tertiary institutions.
9. The government should give serious consideration to migrating completely to electronic communication within the next five years.
10. New procurement models should be used in the development, operation, maintenance and upgrading of information management systems and technology. "Alternative service delivery" models and the "request for solution" method should be explored to ensure that risks and rewards are appropriately shared between the public and private sectors.
(Pp 226-228 of PRC report.)

C. SITA Bill and Committee's Report
In August and September 1998, the Committee considered and reported on the State Information Technology Agency Bill [B 96 - 98], which was introduced by the Minister for the Public Service and Administration, in line with the recommendation of the PRC (see B.6 above) regarding the establishment of a "lead agency" to consolidate and co-ordinate the State's IMST interests.

The primary reasons for the creation of SITA were the government's difficulty in -
1. recruiting, developing and retaining skilled IT personnel;
2. managing IT procurement and ensuring that the government gets value for money;
3. using IT to support transformation and service delivery;
4. utilising effectively expensive IT resources; and
5. integrating IT initiatives.

In reporting to the National Assembly on the SITA Bill (ATCs of 21 September 1998), the Committee expressed concern that the legislation was preceding a policy framework for IMST. A more orthodox progression would have been that the policy would inform any legislation that was required. The Committee, however, accepted that the establishment of SITA was a matter of urgency, and therefore agreed to postpone a review of policy.

The other key recommendation of the Committee was "that the Board of Directors of SITA present SITA's business plan... to the Standing Committee on Public Accounts once it has been finalised". The Standing Committee on Public Accounts conducted a review of the roles and responsibilities of the various IT role-players in government (see ATCs of 23 July 1998). The Committee itself followed up on its resolution regarding SITA's Business Plan.

D. Establishment of SITA
The SITA Act was gazetted on 16 October 1998 and came into operation on 2 November 1998. SITA's role was to provide IT, IS and related services in a maintained information systems security environment to, or on behalf of, participating departments and organs of state (sec 6 of the SITA Act).

To achieve this objective, SITA may -
1. provide data processing services;
2. provide IT and IM training;
3. provide application software development and maintenance services;
4. promote the effective utilisation of IT to enhance efficiency at all levels of the Public Service;
5. provide technical, functional and business advice and support regarding IT;
6. provide IT and IS management services;
7. with regard to any of the above functions, act as procurement agency in respect of IT requirements, in accordance with State procurement policy; and
8. perform any other function that the Minister may, from time to time, determine to give effect to the objective of the agency.
(Sec 7 of the Act.)

The Minister for the Public Service and Administration is the sole shareholder on behalf of the State (sec 17 and 18). Initial components to be incorporated, were the Central Computer Services (CCS), a chief directorate in the Department of State Expenditure, ISSAPS (the SAPS IT component) and Infoplan (a division of the parastatal Denel) (sec 3(4)).

Participation by departments in SITA was to be phased in, as determined by Cabinet on recommendation of the Minister (sec 3(6)). Participation is in terms of a business agreement between SITA and the department concerned, and such a business agreement must be supported by a service level agreement (sec 20).

SITA (Pty) Ltd was established in terms of the Companies Act on 1 April 1999. In November 1999, the Board of Directors was restructured in line with the tenets of good governance expounded in the King Report on corporate governance. The Board of Directors is reflected as follows:
Non-executive directors
Chairperson Mr Sello Rasethaba
DPSA nominee Mr Robinson Ramaite
Department of Finance nominee Vacant
Department of Communications nominee Mr Andile Ngcaba
Legal expert Ms Khomotso Moroka
Finance expert Ms Lindiwe Mthimunye
Organisational development expert Mr Gavin Pieterse
Executive directors
(Acting) MD & CEO Mr Sello Mokale
COO Ms Makano Mojapelo
CFO Vacant

E. Initial briefing by SITA on 8 September 1999
In an initial briefing by SITA to the newly constituted Committee on 8 September 1999, Mr Sello Rasethaba, Chairperson of the Board of SITA, took issue with the requirement in terms of sec 16(9) of the SITA Act that the books and records of account must be audited by the Auditor-General. Mr Rasethaba argued that SITA itself could more effectively promote the empowerment of SMMFs. The Committee investigated the Auditor-General's procurement processes (with the co-operation of the Auditor-General and mindful of sec 181(3) of the Constitution) and expressed its approval of the affirmative procurement policies of the Auditor-General (ATCs, 12 October 1999).

F. Briefing by SITA on 12 April 2000
Mr Sello Mokale, Acting Managing Director of SITA, briefed the Committee on SITA's Statement of Strategic Direction and Business Plan. SITA's statement of intent is as follows:
"Management is committed to demonstrate that the State Information Technology Agency (Pty) Ltd is:
* The vehicle for Government IT in effective service delivery to the citizens;
* Leveraging IT as a strategic resource for Government, fostering competitiveness and industry through best practice procurement processes; and
* Establishing South Africa as a global information and communications technology player".

SITA's vision is -
"to become a leading and respected public sector IT company in the world that:
* Provides relevant products and services to the Government cost-effectively;
* Is an employer of choice;
* Is an advanced user of information technology; and
* Delivers value for money to the stakeholder".

SITA's mission is to continually -
1. increase the speed of delivery of the products and services to SITA;
2. improve the return on investment on government IT expenditure;
3. improve the quality of the products and services of SITA;
4. improve the security environment in which SITA operates;
5. innovate with respect to its products and services; and
6. support the socio-economic policies of the government.
The "Business Plan to guide SITA Operations" uses each of the elements of the above mission statement as an individual goal statement. Goal 1, for example, is to increase the speed of delivery of SITA products and services, and outcomes are listed as follows:
- Reduced delivery times.
- Faster and guaranteed access to information required for decision-making.
- Improved business processes.
- Strategic partnerships.
- Interactive approach to IT services between all role-players involved in the upstream and downstream processes.

A number of short-, medium- and long-term initiatives, with specified targets in each case, are listed in respect of each of the identified goals. For example, one of the initiatives listed under Goal 1 is the "improvement of the procurement process", and a target emanating from this is a "30 per cent reduction in the time from the definition of the tender specification to the publication of the tender".

In addition to the six goals and various outputs attached to each, SITA has identified five "strategic projects":
A: Integrate organs of state.
B: Adopt best practices and standards.
C: Consolidate and rationalise.
D: Capacity-building through skills and knowledge development.
E: Adopt common applications across the government.

In terms of strategic project A, for example, it is projected that all IT functions of national and provincial governments will be incorporated into SITA by March 2003. A schedule for incorporation should be agreed upon with the DPSA by May 2000. The lessons learnt during the integration of the CCS, ISSAPS and Infoplan are currently used to establish the base that is required to effect a smoother integration of organs of state with less interruption.

The Eastern Cape Provincial Government signed up with SITA on 14 September 1999. Transfers currently under way include the following:
* DPSA (completed by April 2000).
* Department of Minerals and Energy (by May 2000).
* KwaZulu-Natal Provincial Government (by July 2000).
G. Key issues raised by SITA at briefing

Mr Rasethaba concluded SITA's presentation by drawing the attention of the Committee to a number of factors that were regarded by SITA as substantial obstacles to the efficient and effective performance of its duties and exercise of its powers:

1. IT procurement by government departments
The first issue raised, was IT procurement by government departments. Uncoordinated IT procurement had already resulted in the co-existence of three non-compatible identification systems: The bar-coded ID, the smart card and the driver's licence. (Mr Rasethaba compared this state of affairs with the United States, where one number, the social security number, provided access to the full range of identity systems.)

SITA's role was to ensure that duplication of this kind does not occur. However, while government departments remain free to conduct their own large system procurement, the problem of non-compatibility of systems will continue to escalate. Mr Rasethaba said he was aware that three different departments were intending to tender (separately) for a document management service.

He asked the Committee to consider recommending a moratorium on procurement, as recommended by the PRC in 1998 (see B above). In practical terms, a moratorium could be effected by requiring that departments wishing to procure IT goods and services would have to obtain a certificate from the Department of Finance. With such a requirement in place, SITA could achieve an immediate saving of 20% on IT procurement.

SITA is putting into place a procurement system that will be fair, equitable and effective. At the same time, it is necessary that the system be efficient in terms of costs and time needed to procure. Once the policy is in place, it will be submitted to Cabinet for approval. SITA will hopefully take over the procurement of IT in government after this process.

2. Funding for capacity-building and promotion of representivity
SITA's workforce is currently 70% to 80% white, a situation which had been inherited. Mr Rasethaba asked that its "operating profit" (funds not spent) of R64 million may be utilised for training. SITA's profile did not match the private sector profile. SITA would like to follow the example of the Scorpions and send certain employees on degree courses to address those shortcomings.

3. Necessary component not transferred to SITA
The SITA Act intended to transfer all IT-related components from the Department of State Expenditure to SITA. Yet only the CCS was transferred, and not the strategically important Centre for Applied Government Financial Management, a chief directorate in State Expenditure, which has responsibility for developing, implementing and maintaining an acceptable accounting and reporting system. Its directorates oversee the BAS/FMS financial management systems, the PERSAL salary system and the LOGIC provisioning system. Mr Rasethaba therefore requested this chief directorate's immediate transfer to SITA.

4. PFMA scheduling and related request
Mr Rasethaba said that SITA should have been listed as a Schedule 2 entity in terms of the Public Finance Management Act (PFMA), 1999, which came into operation on 1 April 2000. This would have enabled SITA to appoint its own auditors, provided it was done in agreement with the Auditor-General, had it not been for the specific provision in sec 16(9) of the SITA Act, which requires SITA to be audited by the Auditor-General. Therefore, Mr Rasethaba requests either that the Act be amended or that such change be effected by regulation, if it is deemed lawful by the State.

5. SITA's debtors
An amount of R339 million in outstanding debt was owed to SITA. The SAPS, Defence and certain provincial governments were named as culprits. Mr Rasethaba asked that the applicable rules be strengthened to ensure that government institutions settle all their obligations and pay all money owing within the prescribed or agreed periods. He said that under the current circumstances SITA's accounting officer was likely to be called by the Standing Committee on Public Accounts in terms of the PFMA to account for the uncollected debt.

H. Findings
1. SITA has substantially complied with the resolution of the Committee regarding the tabling of its business plan. The business plan's framework of goals, strategic projects and alignment with government priorities could be more effectively integrated. The business plan is largely at strategic level, and it is hoped that the operational plans which are due to be presented to the SITA Board this month will outline specific activities in more concrete terms.

2. The Committee remains concerned about the absence of a government IT policy. On 21 September 1998, it was recommended that such a policy be put in place, echoing an earlier resolution of the Public Accounts Committee. The PRC report and SITA's briefing make it clear that the absence of an IT policy/strategy may potentially undermine the government's efforts at achieving economy, efficiency and effectiveness in respect of governmental IT in a coherent and co-ordinated manner.

3. The Committee is broadly in support of the requests and recommendations made by SITA, as outlined in paragraph G of this Report and summarised as follows:
(1) The imposition of a moratorium on large (R5 million) government IT procurement/a centralised certification process for the approval of government IT procurement.
(2) The return to SITA of its operating profit of R64 million for the purposes of investment in training.
(3) The transfer of the Chief Directorate: Centre for Applied Government Financial Management from the Department of State Expenditure to SITA.
(4) The rescheduling of SITA as a schedule 2 entity in terms of the PFMA.

4. SITA did not provide sufficient reasons for the proposed change in the auditing arrangements, which would necessitate an amendment to the Act or a regulation. Nonetheless, it would appear logical that, if SITA were to be rescheduled as a schedule 2 entity, it should conform to the auditing arrangements applicable to such entities. A recommendation to that effect from the Committee would be dependent on the Auditor-General supporting such a course of action.

J. Recommendations
The Committee therefore recommends as follows:
1. That SITA present its business plan to the Committee on an annual basis at the commencement of the financial year.
2. That the DPSA table a draft IT policy/strategy for the Public Service by the end of October 2000.
3. That the Auditor-General offer his expert opinion to the Committee regarding the proposed change in the auditing arrangements for SITA, (as outlined in H.4 above), citing any factors he may deem relevant, by 30 June 2000.
4. That the Directors-General of Finance, of State Expenditure and of Public Service and Administration jointly submit the following in writing to the Committee by 31 July 2000:
(1) Their considered opinion regarding the requests and recommendations of SITA (summarised in H.3 above).
(2) In respect of each request/recommendation -
(a) details regarding any objections they may have to the expeditious implementation of those requests/recommendations; and
(b) a plan with timeframes for the implementation of requests/recommendations in those instances where there are no substantial objections.

Report to be considered.

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