1. BRIEFING TO THE PORTFOLIO COMMITTEE ON POLICE ON THE REPORT OF THE AUDITOR GENERAL ON A PERFORMANCE AUDIT ON THE USE OF CONSULTANTS BY THE SAPS
19 MARCH 2013

2. SUPPLY CHAIN MANAGEMENT
REFURBISHMENT OF
200 NYALA VEHICLES

3. BACKGROUND
Focus of the contract was to refurbish 200 armoured Nyala vehicles to the original manufacturer’s specification
Armoured vehicles very specialized
Condition of the identified 200 vehicles varied – all vehicles older than 15 years.
Process for refurbishment included
vehicle being stripped from bumper to bumper,
physical inspection of all components,
physical inspection of the parts within these components,
obtaining quotations from sub-contractors (agents) and
the preparation of a final quotation amount.

4. BACKGROUND
Basket of 48 items identified for pricing and comparative purposes regarding the bidding process
Basket included items that most likely require replacement on all or majority of vehicles
Special conditions of bid required successful bidder to  compile a detailed quotation per vehicle for submission and approval to the SAPS prior to the repairs being conducted.
The procurement in essence took place through a bidding process, but also by way of quotations from the successful bidders
Bidding process – To appoint providers with relevant knowledge and skills to perform the service and focus on those items anticipated to be replaced or refurbished on the identified Nyalas
Quotations – once full assessment of the Nyalas were completed full quotations prepared (as per items in baskets AND additional items needed for refurbishment)
Bid was evaluated and awarded to 2 providers at an estimated cost of R based on the identified basket of 48 items.

5. FINDINGS Comprehensive needs assessments not done
Competitive procurement processes not followed
Expectations on milestones, timelines and cost not clearly specified
Effective oversight and internal controls not executed prior to payments
Lack of proper project management and monitoring
Cost overruns not motivated and approved
Failure to retrospectively analyse projects

6. RESPONSE
Expert Assistance could have been included during the planning process i.e. Armscor to support specification to avoid big escalation
Basket could have been defined better
Future projects will specifically address sub-contracting and associated fees
Ensure better contract management with clear milestone and deliverables
Monitoring mechanisms have already been implemented to monitor warranties and motor/maintenance plans (Early warning information on Asset Register)
The finding of possible irregular expenditure is currently being clarified with National Treasury

7. ABET PROGRAMME
HRD

8. BACKGROUND
Service Provider C in joint venture with D was appointed in 2006 to deliver the ABET Programme
Midstream, Provider C misinterpreted 9 sites not to be 9 Provinces which had been made clear from the start.
Provider C had promised at the beginning to use computer aided training and Midstream needed more money which HRD refused.
Provider C ceded the programme to Provider D to finalize what they had started.
Another bid was advertised and Service Provider D applied but fell off due to non-compliance and then contested the appointment of another provider.
This circumstance resulted in the late appointment of Consultant E in November 2008.
Training commenced in November 2008.
The contractual period for the full project was 3 years (36 months).

9. FINDING BY AUDITOR GENERAL
Terms of contract were amended without written agreement
How it happened?
Division : HRD agreed with Provider E to change contractual years to financial years.
It was agreed that the first year would have started in November 2008 and end 31st March 2009.
1st April 2009 was agreed by the two parties as the second financial year without documenting it.
ABET is priced per learner. The cost for the first year was:
R3 800/learner, 2nd year R4 085/learner and 3rd year
R4 510/learner.
From the 1st of April 2009, Service provide E was paid according to the 2nd year costs.
The AG in their finding indicated that we then overpaid the provider by R

10. RESPONSE/CLARIFICATION
True, terms of contract with service provider E were amended without written agreement.
Firstly, at the end there was no overspending in the full implementation project, instead savings were made because:
The project was completed in 29 months instead of 36 months which then offsets what appears to be overspending according to AG. The actual amount spent was R which is less than what was budgeted for.
An amount of R 5 million per year was allocated and ring fenced for ABET during the 2008/09 to 2010/11 years totalling R15 million over the 3 financial years.
Secondly, the Quality Service beyond expectation was delivered by the provider as it was delivering service based on the IEB – Independent Examinations Board) standard.
The Provider delivered some learners with GETC (full General Education and Training Certificate) – first ever beyond what is expected of the ABET programme.

11. INTERNAL AUDIT
The department co-sourced the Internal Audit function due to capacity and skills transfer and appointed a consultant on 4 December 2002 for a period of three years at a cost of R29.3 million. The contract cost increased by R due to an extension. The consultants was again appointed on 19 April 2007 to continue their service for another three years at a cost of R , which was extended at cost of R However, the total payments over the duration of the two contracts amounted to R77 million instead of the contracted R87 million.

12. Aloe Consortium R87.2 Million
Some contractual obligations relating to formal training initiatives were not achieved.
A lack of equipment specifically laptops within the Internal audit division resulted in the sharing of laptops which hindered the provision of training by the consultants and the completion of work by internal audit staff.
Non performance of retrospective analysis or assessment of the consultants' performance.

13. The training was initially not part of skills audit/plan but in future it will form part of it.
The contract was extended to transfer skills and train members because it was not yet sufficient.
Capacity has been built- SAPS Internal Audit has one of the largest staff establishments in government.
The procurement process in SAPS was very long with regard to the purchase of the laptops, but that it will be improved in future.
Responsible role player: Internal Audit and Technology Management Service.

14. Closing the project: Six contracts R169.3 million
Non performance of retrospective analysis or assessment of the consultant’s performance
Closing of projects will be done by means of a letter to SCM in future. The provisions of the contract will be compared to the value delivered and the impact will be monitored (impact assessment)
Responsible role player: Internal Audit and Supply Chain Management

15. TECHNOLOGY MANAGEMENT SERVICES
Audit findings: Division: TMS
Areas where deficiencies were identified during the audit
Training and transfer of skills
Performance Management and monitoring
Extension of contracts
Contract Specific Challenges
Addendums that gave rise to a total contract value of R412,542,779
FCS not completed within 70 months after the system was to be handed over to the department
Contract did not include a skills development plan to equip SITA resources to maintain the system after development and implementation

16. Current Contractual Status
Termination of Services rendered by Waymark Infotech
On 30 August 2012 Waymark Infotech was notified of the termination of the relationship between Waymark Infotech and
the SAPS with immediate effect.
Request for Legal Assistance: SAPS
Legal opinion was requested regarding the SLA’s and the Addendums
The matter is still with Senior Council

17. FCS Contract and Addenda
FCS CONTRACT & ADDENDA
DATE SIGNED
Projected
Completion date
VALUE
FCS Tender 232 Awarded R
FCS Contract (Original/Core) R
FCS Addendum 1 R
FCS Addendum 2 R
FCS Addendum 3 R
FCS Addendum 4 R

18. FCS Reasons for Addenda

19. Corrective Actions
An independent Audit on the FCS project deliverables as verification of the 80% of completed deliverables is in progress.
An investigation by the Directorate for Priority Crime Investigation is still in progress to assess if there was any wrongdoing by any member of SAPS, and if all procurement was legitimate.
A reconstituting internal project team will be established and the body shop tender will be used to obtain the necessary skilled consultants to finish the project. The project will be driven by the internal project team.

20. Thank you