Progress Report to Portfolio Committee on Social Development SASSA PAYMENT SYSTEM Progress Report to Portfolio Committee on Social Development 22 February 2017

Purpose The purpose of this report is to update the Portfolio Committee on progress made towards implementation of the recommended route for ensuring payments of social grants on the 01 April 2017

Background On the 01th February SASSA presented its plan towards ensuring that social grants are paid by the 01 April 2017 The presentation highlighted the six (6) options that were considered by the organisation; the advantages and associated risks for each of the 6 options; and that each of the six options has advantages and disadvantages, varying probabilities of successful payment on 1 April and risks. The Agency also reflected on the option that was preferred by National Treasury including its Pros and Cons SASSA reported that it seeks to pursue option 1 since it carries the least risk in terms of service delivery failure.

Reflection of the Six Options Considered Option 1: Procuring the service from the current service provider Option 2: Procuring the service from the Bank that services the majority of the beneficiaries (i.e. Grindrod) Option 3: Procuring the services of all banks wishing to comply with SASSA requirements Option 4: Procuring the services of all banks wishing to comply with SASSA requirements for those (~60%) beneficiaries who have access to banking infrastructure, and procuring the services of the current service provider for grant recipients who are currently using cash pay points. Option 5: Procuring the services of the South African Post Office Option 6: Cash beneficiaries: Appoint a service provider for cash distribution to grant recipients who are currently using cash pay points; and Banked beneficiaries - utilise existing their bank accounts to disburse grants through the banking sector.

Option 1- unpacked In order to pursue this option 1, SASSA planned to: Negotiate terms and conditions for the new contract including agreement on the feasible timeframe (up to 2 years) Approach constitutional court; Apply for procurement deviation (i.e., procurement in relation to NT practice Note 3 of 2016/17 will need to be followed); and Enhance its communication to beneficiaries

Progress to date: Procurement Process SASSA committed to send a Request for Deviation to National Treasury by the 07 February 2017 A letter requesting deviation to enter into new contract with CPS was sent to National Treasury on the 07 February 2017 SASSA team met with the OCPO staff on the same date to discuss the process and implementation of other parallel processes involving mainly the RFI The ratification for deviation submitted to National Treasury was approved by the BAC on the 09 February 2017 National Treasury (OCPO) responded indicating that they will consider request favourably only if the ConCourt accedes to SASSA request

Progress Report: Constitutional Court Report SASSA undertook to approach the Constitutional Court by the 08 February 2017. The Agency further indicated that it will consult with the lawyers with regard to the most appropriate legal approach. Pursuant to legal advice : SASSA was advised that the Constitutional Court has discharged its supervisory role; However, SASSA was further advised to file a supplementary report i.e. a report that supplement the progress report filed on the 05 November 2015 The report will further, clarify the drastic changes on its plan from the one filed from the onset New terms and conditions stemming from negotiations will also be outlined including the timeframes

Progress Report: Negotiations Negotiating document reflecting issues to be negotiated has been completed Key issues to be negotiated: Period of contract (Timelines); Costs; Unfavourable conditions (e.g. deductions); special beneficiary payment accounts; and Phasing-in of services over the period of the new/revised contract Negotiation dates has been set National Treasury has been requested to nominate officials to form part and support negotiation process

Progress Report: RFI RFI for payment services has been issued (09 December 2016) . The process closed on the 10 February 2017 18 responses were received from various stakeholders including Banks, Private Companies and Government entities Analysis of responses is underway and will inform the closed bid process

Other Processes Biometrics for system users Other Engagements the RFP advertised on the 9th December 2016 closed the 7 February 2017 Bid Evaluation Committee has been appointed Other Engagements Held meeting with NT, SASSA, SARB and Bankserv to explore option of SASSA directly depositing into account of beneficiaries receiving grants through their bank accounts Alternative Cash distribution mechanism are also explored

RECOMMENDATIONS It is recommended that the Portfolio Committee notes progress made towards ensuring that Social Grants are paid by the 01 April 2017

THANK YOU