Presentation to the Portfolio Committee on the Appointment and Utilisation of Consultants Report of the Auditor-General dated August 2002 30 October 2002

Introduction Four main reports regarding consultants Performance audit of the acquisition and utilisation of consultancy services in the PS - June 1996 Use of Consultants in the PS - June 2001 (Cabinet resolutions, progress with implementation) Performance audit Gauteng provincial administration - September 2001 (Presented at SCOPA Gauteng, workshop with Committee and HODs) Appointment and utilisation of consultants at certain national departments and provincial administrations - August 2002

Purpose of Presentation Facilitate public accountability by bringing audit findings as well as suggested corrective measures to the attention of Parliament Indicate progress with corrective measures concerning consultants in the PS

Key Focus Areas Appointment and use of consultants Monitoring and control of performance Responsibilities of Departments and implementation Interventions implemented and envisaged by the DPSA

Appointment and use of consultants: Consider alternatives Alternative ways of addressing needs such as training and capacity building not always considered - Consider filling of vacant posts, setting productivity standards for staff, networking, information sharing and work overtime

Appointment and use of consultants: Procurement Sound procurement principles not always applied - comparing tenders not only on the basis of price but also functionality, expertise and knowledge of tenderers Strengthening existing guidelines and procurement procedures for consultants and determining national norms and standards. National Treasury is finalising Standardised Operational Procedures for Supply Chain Management, which will include procedures for the appointment of Consultants. Procurement reform pertaining to consultants focuses on promoting competitive tendering and improving the quality of consulting work and contract management

Appointment and use of consultants: Competencies of Consultants Appointed without required experience of competencies Competencies not evaluated before awarding tender Resulted in staff having to be withdrawn from their functions to assist the consultants

Appointment and use of consultants: Competencies of Consultants Greater awareness of the internal cost of own staff's time in providing information and managing relationships References of consultants should be followed up Require consultants to provide proof of previous successes and the knowledge of consultants should be tested when tenders are evaluated The DPSA should consider introducing a code of conduct or system of accreditation

Appointment and use of consultants: Transfer of skills Contracts and TOR’s do not always provide for skills transfer Capacity building not closely monitored Provide opportunities for staff to learn from consultants by creating mixed teams Consider how the DPSA and the SAMDI could assist departments to follow best practice frameworks for skills transfer

Appointment and use of consultants: Appointment permanent basis Appointed on a permanent basis or contract periods were continually extended This often resulted in the approved establishment being extended and departments becoming reliant on consultants to perform certain primary functions

Appointment and use of consultants: Appointment permanent basis Vacancies must be filled as soon as possible The duration of the appointment of consultant must be limited to a reasonable period to ensure that the position is filled Consider cost-effectiveness of the appointment of consultants compared to the filling of vacant posts The DPSA should evaluate remuneration structures for positions in the public service in terms of similar job descriptions and remuneration structures in the private sector

Appointment and use of consultants: Unclear need of appointment Lack of detailed specification of - the services required available resources intended outcomes or product required expertise timetable for completion long-term implications and risks Tenders was extended thus not complying with the requirements of transparent, fair and competitive procurement

Appointment and use of consultants: Unclear need of appointment Rigorous assessment of the need to appoint consultants with prove of not meeting challenges internally Prospective tenders are appropriately briefed and the nature, outcomes, responsibilities and time frame of the work is clear Provide TOR’s that serve as a guide to consultants regarding the size and scope of the work.

Performance Monitoring and Control Poor monitoring and verification of consultants’ performance progress with projects extent to which set objectives were achieved before payments are made Thus the impact of the work of consultants on service delivery were not evaluated

Performance Monitoring and Control Undertake more regular evaluations while an assignment is in progress and when it has been completed Link consultants’ remuneration to achieved performance Evaluate performance by independent internal auditors Disseminate and implement lessons learned from evaluations.

Responsibilities of and Implementation by Departments Departments did not create an environment where consultants could perform their duties effectively Interventions proposed were not always implemented due to - inadequate human or financial resources a lack of commitment lack of computer skills

Responsibilities of and Implementation by Departments Create organisational climate and put processes in place that are supportive to achieving the objective for which the consultant was appointed Assess capacity to absorb outside assistance and implement proposals before tender specifications are finalised Management should accept ownership of the business plan before the project starts

Interventions implemented and envisaged by the DPSA Conducted research on the use of consultants in the Public Service - Report published and presented to Cabinet The findings of the research are similar to those made by the AG in this and previous performance reports Departments were informed to have approved guidelines on the use and management of consultants with due consideration to specific issues raised in the Report (compliance audit by sampling 10 Departments) These guidelines must take into consideration the different issues raised in the study on the use of consultants and must focus on the following specific issues: • Departments must undertake an institutional assessment of capacity to absorb outside assistance, to give effect to the implementation of proposals and to manage the consultants before tenders are issued. • Departments must prepare sound and realistic tender specifications, which match the ability to implement and sustain the outcomes of projects. • Skills transfer should be included in the contracts and must be monitored. • Audit committees must undertake regular performance audits of consulting assignments. • Intellectual property issues must be clarified in the contracting stage and must be shared across government. • Departments must assess the total cost of using consultants in relation to cost-effectiveness before a decision is made to appoint a consultant. • Total cost should not only include professional fees and subsistence, but also costs such as the use of government offices and equipment, impact of fluctuations in the exchange rates (where applicable), the time that public servants make available to work with consultants, the time it takes to prepare and evaluate tenders and appoint and manage consultants.

Interventions implemented and envisaged by the DPSA Amending the Public Service Regulations to (June 2002) to provide for - A definition of a consultant Departments to report in their annual reports on the use of consultants The MPSA to determine the format for reporting in annual reports The MPSA approved the format in which departments must report in their annual reports, namely - Report and analysis of consultant appointments using appropriated funds and donor funds, including historically disadvantaged individuals In terms of Public Service Regulation J.3, Part III: Planning, Work Organisation and Reporting of Chapter 1 of the Public Service Regulations, 2001, a consultant means "a natural or juristic person or a partnership who or which provides in terms of a specific contract on an ad hoc basis any of the following professional services to a Department against remuneration received from any source: (a) The rendering of expert advice; (b) the drafting of proposals for the execution of specific tasks; and (c) the execution of specific tasks which is of a technical or intellectual nature, but excludes an employee of a Department".

Interventions implemented and envisaged by the DPSA Provided substantive inputs into the draft National Treasury procurement framework, which will include procedures for the appointment and management of consultants Finalising a Guide on hourly fee rates for consultants based on PS remuneration levels Finalising a data base of 2113 consultant reports produced for the Public Service that will be made available to Departments The National Treasury is finalising Standardised Operational Procedures for Supply Chain Management, which will include procedures for the appointment of Consultants. Procurement reform pertaining to consultants focuses on promoting competitive tendering and improving the quality of consulting work and contract management. Only in exceptional cases where it is impractical or impossible to appoint consultants on a competitive basis will Departments be allowed to obtain the services of consultants by other methods. This Guide will form part of the mentioned Standard Operating Procedures in cases where consultants can not be appointed on a competitive basis..

Summary The DPSA is continuing to work with the Office of the AG and the National Treasury in order to promote the efficient and effective use of consultants in the Public Service in support of service delivery to our citizens The National Treasury is finalising Standardised Operational Procedures for Supply Chain Management, which will include procedures for the appointment of Consultants. Procurement reform pertaining to consultants focuses on promoting competitive tendering and improving the quality of consulting work and contract management. Only in exceptional cases where it is impractical or impossible to appoint consultants on a competitive basis will Departments be allowed to obtain the services of consultants by other methods. This Guide will form part of the mentioned Standard Operating Procedures in cases where consultants can not be appointed on a competitive basis..