1 OUTSOURCING OF SERVICES : DEPARTMENT OF CORRECTIONAL SERVICES 14 October 2009

2 SCOPE OF PRESENTATION 1.WHAT IS OUTSOURCING ? 2.WHY DO WE OUTSOURCE ? 3.METHODS OF OUTSOURCING IN PUBLIC SERVICE 4.LEGISLATIVE FRAMEWORK THAT INFORMS METHOD OF SOURCING 5.SERVICES OUTSOURCED 6.OTHER SERVICES SOURCED FROM OUTSIDE DCS 7.ECONOMIC IMPACT OF OUTSOURCED SERVICES IN ACCORDANCE WITH PPPFA 8.BENEFITS OF OUTSOURCING 9.IMPROVEMENT IN PROCUREMENT SYSTEM 10.WHERE CAN WE IMPROVE

3 1. WHAT IS OUTSOURCING? Outsourcing refers to the practice of turning-over internal Departmental functions/services to an outside service provider.

4 2. WHY DO WE OUTSOURCE ? To source expertise and skills that are not available within the Department; The high turn-over and the inability to retain and match what the private sector is offering in terms of salary; Prolonged process of staffing; To allow the Department to refocus on its core mandate; Improve service delivery of the Department on the core mandate; Cont …

5 Enhance better compliance to statutory requirements linked to the core mandate of the Department, e.g. Correctional Services Act, Act 111 of 1998 Give effect to other statutory requirements such as PFMA, PPPFA, Health and Safety Act, etc.; Cost benefits for the Department. Enhance effectiveness, efficiency and economical.

6 3. METHODS OF OUTSOURCING IN PUBLIC SERVICE Public Private Partnership informed by PFMA and Treasury Regulations, Chapter 16 Convectional Procurement through the use of Treasury Regulations, Chapter 16A (Supply Chain Management)

7 4. LEGISLATIVE FRAMEWORK THAT INFORMS METHOD OF SOURCING Both these methods involve the application of the following Acts: –South African Constitution (Act 108 of 1996) –Public Finance Management Act (Act 29 of 1999) and its Regulations in Chapter 16 (PPP) and 16A (SCM) –Broad Base Black Economic Empowerment Act (Act 53 of 2003) –Preferential Procurement Policy Framework Act (Act 5 of 2000) and its Regulations, 2001 –Correctional Services Act (Act 111 of 1998) –White Paper on Corrections. –Departmental Policies and Procedures.

8 5. SERVICES OUTSOURCED 5.1PPP Prisons Two prisons are outsourced by this method, namely Kutana Sinthumale in Makado and Mangaung in Bloemfontein. These Centres are outsourced on the following: -Design of the centres -Building of the centres -Financing of the centres -Operating of the centres for a maximum period of 25 years Cont…

9 SERVICES OUTSOURCED Currently four (4) bids are running on PPP for the design, build, operate, finance, maintenance of the following Centres : -East London -Paarl -Klerksdorp -Nigel The Minister has suspended the processing of the PPP until further studies and recommendations on best options especially on how to manage the operations should these services be outsourced.

10 5.2Rendering of catering and training services at various Management Areas. 36 Months. R DCS does not have the facilities or the infrastructure to continue with meal preparation while closing down the current kitchens for upgrading. DCS does not have access to suitable training programmes that are accredited by the authoritative bodies. Because of not having access to suitable training programmes, DCS is experiencing staff shortages and courses are not structured to meet critical needs. DCS does not have a controlled computerised meal planning system. SERVICES OUTSOURCED

11 5.3Service Provider to assist Internal Audit of the Department of Correctional Services with all internal audit related tasks as a co-sourced partner. 30 Months. ±R The Service Provider is regarded as an extension of the Internal Audit Unit to conduct certain audits as approved by the Audit Committee on the Annual Work plan. SERVICES OUTSOURCED

12 5.4Training of Junior and Middle Managers on Management Development Program. R DCS did not have the internal capacity to develop accredited training programmes for Junior and Middle management. PALAMA training centre was approached and did not have a programme that is suitable for DCS needs DCS had no option but go out on tender and ensure that all the needs are contained in the tender specifications. SERVICES OUTSOURCED

13 5.5Development and training of Executive and Senior Managers on Leadership Development Program. R As a result of past transformation processes and the new paradigm which is fully detailed in the White Paper towards which all operations have to be steered. It is emerged that a need assessment process is critical to inform a customized DCS programme that would target specific leadership development skills. SERVICES OUTSOURCED

14 ServiceValue Service Provider to conduct a survey on the organizational culture within DCS R Service Provider to conduct a comprehensive feasibility study for the outsourcing of food provisioning services to inmates within DCS R Standard cleaning services to DCS Head Office for a two- year period R Appointment of an independent SANAS Accredited Service Provider to assist DCS with the inspection and testing of textiles, clothing, footwear, etc. R OTHER SERVICES SOURCED The following services are generally sourced out side the department because they are not the core business.

15 ServiceValue Maintenance of control room after warrantyR Supply, delivery, installation and commissioning of security outer perimeter fences and CCTV surveillance cameras R Maintenance of above for a period of 48 monthsR OTHER SERVICES SOURCED

16 ServiceValue Supply, delivery, installation and commissioning of television system and monitors at all Correctional Centres R Maintenance of above after warranty for a period of twelve (12) months R Transaction Advisor Services for Public Private Partnership R OTHER SERVICES SOURCED

17 7. ECONOMIC IMPACT OF SOURCED SERVICES /ITEMS Financial Year2008/09 Total value of contractsR1 148 million (886 contracts) Value of contracts awarded to black enterprises with more than 50.1% black ownership (including black women) R1 112 million (743 contracts) % of Contracts awarded to HDIs83.86% % of Rand Value awarded to HDIs96.86%

18 8. BENEFITS OF OUTSOURCING Capacity building during the running of the contract; Focus more on the core business of the Department; Risk transfer; Enhancement of the quality of service delivery; Value-for-money; Penalty clause can be effected on non-performance and poor services.

19 9. IMPROVEMENT IN PROCUREMENT SYSTEM Effective from March 2004, Supply Chain Management was implemented within the Department. Structures were put into place to ensure that procurement is operated in the manner which is fair, equitable, transparent, competitive and cost effective in compliance with the Constitution, Section 217, PFMA (section 38(iii)) and PPPFA.

20 IMPROVEMENT IN PROCUREMENT SYSTEM Structures are as follows : -National Bid Adjudication Committee Stationed at Head Office Handles bids exceeding R5 million to infinity Members are as follows : *All Executive Managers at Head Office Chairpersonship rotate amongst the CDCs

21 IMPROVEMENT PROCUREMENT SYSTEM Structures (Continue) -Sub-Bid Adjudication Committee : Stationed at Head Office and 6 Regional Offices Handles bids exceeding R to a limit of R5 million. Head Office *Managed by Senior Management at Supply Chain Management Regional Offices *Regional Heads Finance and Supply Chain Management officials

22 IMPROVEMENT IN PROCUREMENT SYSTEM All the members of the National and Sub-Bid Adjudication Committees are appointed in writing by the Accounting Officer. All Bid Adjudication members have signed the Code of Conduct.

23 IMPROVEMENT IN PROCUREMENT SYSTEM Duties of Bid Adjudication Committees : -Give final award based on the recommendation of Bid Evaluation Committees; -All necessary bid documents are submitted -Ensure that disqualification of service providers are justifiable and that valid and accountable reasons are furnished for passing over of bids

24 IMPROVEMENT IN PROCUREMENT SYSTEM Duties (continue) : -Ensure that scoring is fair, consistent and correctly calculated -Ensure that bidder’s Declaration of Interest has been taken into consideration -Ensure that members themselves declare their interest in writing before commencing with the adjudication of bids -These committees can extend the period of the existing contract and can also extend the scope of work according to the delegated powers.

25 IMPROVEMENT IN PROCUREMENT SYSTEM Structures (Continue) : -Bid Evaluation Committee Evaluate and recommends bids/proposals to relevant Bid Adjudication Committee Members are appointed in writing by the Accounting Officer Members differ from case to case based on the nature of the bid and the competency of the members in line with the bid to be evaluated This is an ad hoc committee Members must declare their interest in writing and sign Code of Conduct prior to the commencement of evaluation

WHERE CAN WE IMPROVE Conducting of stakeholder analysis; Comprehensive feasibility must be conducted before outsourcing any services; Promote the advantages of a proper procurement plan linked to strategic plan, operational plan, MTEF and budget; Maintain the gains and achievements; Improve contract management especially by end- users; Retain and deploy skills accordingly; Build capacity of project officers on project management.

27 Together doing more & better to break cycle of crime