Government spent R102bn on experts

Consultants are costing the government billions, and both officials and the private sector should clean up. That’s what emerged from a performance audit of government consultants released by the Auditor-General on Thursday. The report is littered with examples of badly managed consultant contracts. Fixing SAPS armoured vehicles for the 2010 World Cup cost more than double the planned price, and a fifth weren’t finished in time. The SAPS planned to spend R80 million refurbishing 200 armoured Nyalas, but costs hit R177m and 44 Nyalas were delivered late. The Correctional Services Department hired consultants to manage other consultants, and paid an IT consultant R12m in 2009, but three years later, the project still wasn’t finished.

The Department of Defence had the expertise to maintain the Limpopo border fence, but paid a consultant R18m to do it. Water Affairs signed 46 variation orders on 14 projects, adding up to R509m. An SAPS IT contract for a firearm-control system was signed for R93m, but the contract was extended four times to finally cost R413m and, five years later, wasn’t finished. Environmental Affairs had hired a consultant since 1999 in critical positions such as chief financial officer. The same department spent R9m on a consultant to advise it on procurement for its new building, more than R5m higher than the next bidder, and the hired consultant didn’t have all the skills needed. The report found that over three years, consultants have made R102 billion out of the government.

Of the R102bn, about a third (R33.5bn) was spent by national departments and two-thirds (R68.5bn) by provincial departments. The report looked at 2008/9, 2009/10 and 2010/11 and focused in particular on payments by national departments. Provincial spending will be dealt with in an upcoming report, and a look at local government spending will follow later. The government is continually urged to do more with less money, said Deputy Auditor-General Kimi Makwetu. “We are asking the question: if there is more that is being done with less, are we perhaps not achieving too little with too much?” said Makwetu, explaining the focus of the performance audit. A performance audit evaluates whether goods and services were obtained economically and used efficiently and effectively.

“There are elements of what is in our report which indicate that not all the full value has been achieved,” said Makwetu. This is a key problem in consultancies: somebody commits to delivering a particular service, they are paid, but later it emerges that what they were paid to deliver has not actually been delivered. “To me, that is no value for money, because the value for which the money was paid is not yet on the table,” said Makwetu. Consultants are largely people used to do work that should be done by government employees, but either there aren’t staff or they don’t have the skills. Plan properly before spending, recommends the report.

It also recommends: assess internal departmental capacity and fill key posts; use competitive bidding processes for all appointments; extend contracts only in exceptional cases, get contracts finished on time, and include provisions to transfer skills to department employees. Spending on consultants increased each year, indicating that skills were not being transferred. Some specialised skills are not transferable, but departments need some basic abilities. For example, if consultants install software, the department must have someone capable of monitoring the process effectively. Makwetu doesn’t believe all consultants are a problem, but wants the private sector to show a good corporate conscience. “It takes two to tango. The private sector also needs to come to the party,” he said.