R2bn on consultants in two years

A lack of management and a failure to follow prescribed processes characterises many of the contracts awarded to consultants by the department of correctional services, MPs heard on Wednesday. The department had spent R2 billion on consultants from 2008/9 to 2010/11, senior manager in the office of the Auditor General, Gratitude Ramphaka, told members of Parliament's correctional services portfolio committee. This amount was the total spent on out-source services, consultants, and contractors, grouped together. Briefing the committee on the findings of a performance audit on the use of consultants by the department, Ramphaka said her office had audited a “selected sample” of 27 projects, with a total value of R214 million.

Among these was a 2007-to-2009 contract awarded by the department to the State Information Technology Agency (Sita). A statutory body, Sita was established in 1999 to consolidate and co-ordinate the state’s information technology resources. Ramphaka said a first finding of the audit was that no cost-benefit analysis was done on the appointment of consultants for this R58 million contract. “The department was not able to provide us with evidence that this was the most cost-effective route they could have taken. “There was no strategic planning to reduce IT dependence, so for the most part the department was comfortable to continue to use the services of Sita.” The department had used some of these consultants for two decades.

“Consultants were used for up to 20 years. We found instances where consultants managed other consultants, so there was no departmental representative on the project management. “There were payments that were made before the SLA (service level agreement) was signed; that means there was limited monitoring. And payments to the Sita consultants was not monitored. “The department ended up spending about R18 million more than was originally contracted. The payments were not monitored.” On another major IT contract, an R11.7 million so-called “virtualisation project” awarded to Stortech, the project had been paid for but not completed. “The project was not completed as at January 1/8last year 3/8, although the full contract amount was paid. This was mainly due to lack of monitoring.”

The department's “open view project”, awarded to Hewlett-Packard, was also not completed, though the full amount was paid. It was five years late. “There was (also) no competitive bidding process for this particular contract. For a R21.1 million contract they had only one quote instead of going out on tenders. “The consultant was actually the consultant that performed the needs analysis for the project, which is not allowed,” Ramphaka said. Referring to smaller contracts among the 27 audited by her office, she said numerous problems had been picked up. These included a lack of monitoring and that “invoices were certified without checking that services were rendered, the progress and quality of work done was not checked, there were overpayments, and projects were completed late”.

Responding to a question on who in the department was accountable for managing consultant contracts, Ramphaka said “various” officials were involved. “There are various people who actually authorised the transactions, so I can't go into detail with that. There were some that obviously went all the way to the accounting officer, but there were also problems with the authorisation that was given by the accounting officer and how it was actually implemented.” Committee chairman Vincent Smith said the department had not had a stable leadership. There had been several accounting officers over the years. “We really have to start sending the message that if it happened in your time, even if you are not in government any more, we should be able to pursue you,” he said. Wednesday's briefing comes ahead of hearings on the matter next week by Parliament's standing committee on public accounts.