Auditor-general report highlights failure of ANC government to manage contracts

Minister Alan Winde

Ministry of Finance, Economic Development and Tourism

Western Cape Government

Today, the Auditor General of South Africa (AG) tabled in Parliament a performance audit of the use of consultants at the Western Cape Departments of Health and Transport & Public Works between 2008 and 2011. Of the 31 contracts reviewed, 29 (97%) were initiated between 2005 and 2009, when the ANC governed the Western Cape.

This report shows unequivocally that under ANC rule, contracts in the above departments were being mismanaged, leaving the door for corruption wide open. Specifically:

  • There was no policy on the use of consultants;
  • A large proportion of contracts were awarded on limited bidding processes, where competitive bids were not invited;
  • Officials sometimes did not declare conflicts of interest;
  • Contracts were put in place that had no cost limit or expiry date; and
  • Work at the above departments was being outsourced to contractors at a high cost to taxpayers when it could have and should have been performed internally.

Of extreme concern is the AG’s finding that in some cases, no attempts were made to correct these administrative contraventions and no punitive measures were instituted against contractors when they failed to deliver.

These findings are hardly surprising. In 2008/09, the ANC-run Western Cape Department of Transport & Public Works received a qualification from the AG.

When we came to power in 2009, we witnessed many of these deficiencies first-hand and embarked on a programme to close any loopholes resulting in the wastage of public funds. Since 2009, we have also instituted a large number of forensic investigations into cases of alleged corruption involving officials.

Many of the issues highlighted by this report were dealt with swiftly and decisively by this administration as soon as we came to power. This included addressing the high spend on outsourced nurses, who are deemed consultants by this report. Since 2009, we have reduced our reliance on agency nurses by bringing down the vacancy rate of permanent nurses from 30 per cent to less than 1 per cent.

We agree with the AG’s statement in the report that ‘when used correctly, consultants can be beneficial and provide access to skills that are not cost-effective for a department to build or maintain itself’. Due to the nature of the services delivered by the Department of Public Works, for instance, it is imperative that certain specialised skills are outsourced. We cannot retain highly qualified, cutting edge specialists – including engineers and architects – on our permanent staff due to the high cost associated with these skills, and the fact that they are needed on a temporary basis to complete specific projects.

As a public sector institution, we have a duty to the citizens of our province to deliver services in a manner which is efficient and effective. We make use of reports such as this one to double check that we are constantly improving on this undertaking, in whatever spaces we can. Since coming to government in May 2009, we have radically overhauled the manner in which we manage our finances. With regard to contracts:

  1. We have instituted standard operating procedures for the  management of contracts, including a requirement that clear deliverables, time-frames and cost ceilings be set;
  2. Departments are now required to submit procurement plans as part of the budget cycle;
  3. Constant monitoring of contract work is undertaken to ensure that it is up to standard; and
  4. Punitive measures are pursued in cases of delay or under-delivery.

Our success in improving financial management across all Western Cape departments is demonstrated by the drastic improvement in our audit outcomes since 2009. This year, every Western Cape Government department achieved an unqualified audit finding, the best audit result in the country.

Despite these achievements, there is always room for improvement. In line with our goal of becoming the best-run regional government in the world, we will continue to put new systems and processes in place that ensure sound financial management within our departments and the efficient use of our human resources.