This really SUCKS
Crippling vacancy rate in civil service fuels multi-million rand consultancy racket
AMULTI-MILLION RAND consultancy industry has been fashioned by, and is now feeding off, crippling vacancy rates government is battling to contend with at a time when the political promise is to step up delivery – dramatically. Government managers find themselves with more money than skill. They’re throwing money at consultants to do the job – from the menial to core functions, financial management and internal audits.
Vacancy rates (of between 10 and 46%) coupled with the fact that departments aren’t spending anywhere near as much on training and performance incentives as they are on consultants, means that officials with any skill and ambition are incentivised to leave the civil service and contract back to it, at much higher pay.
While the over- and irregular use of consultants is regularly flagged in Auditor General reports (at national, provincial and local level), the South African Municipal Workers Union’s Jeff Rudin warns that the
government’s increasing dependence on consultants is a self-perpetuating circle and will remain so as long as the pay differentials between the private and public sectors remain unchanged.
The problem is glaring enough to have dominated a few debates at the ANC’s Polokwane conference. The party resolved to craft a law to regulate a problem that’s essentially growing a community of consultants (in number and experience) and leaving a government that’s increasingly dependent on paying others to do its work.
The entire turnaround project in the embattled department of home affairs, which has been outsourced to Fever Tree Consultancy and its international counterpart AT Kearney, is an example of how few skills government has at its disposal. This contract was awarded without going out to tender. Treasury gave permission for this to be done based on the urgency of the turnaround project as well as the fact that Fever Tree had managed the South African Revenue Service turnaround successfully and AT Kearney had international experience with home affairs turnarounds. To be fair, the Public Finance Management Act (PMFA) does allow for contracts to be awarded without going to tender in an emergency and when the consultant is deemed to be the “sole supplier”.
Nevertheless, this three-year contract is worth a whopping R800m and includes the entire turnaround project from IT systems and human resources, to communications and refurbishing offices. Former politician Cyril Ramaphosa chairs Fever Tree with its co-founder, director and former politician Roelf Meyer.
There are many examples of former politicians and bureaucrats who now work for or have founded consultancies that bid for government contracts. Other members of the ANC, including its top leadership, are also involved in consultancies. For example, former Premier of Mpumalanga and current ANC Treasurer General, Mathews Phosa chairs Vela VKE, an engineering consultancy that bids and wins for a lot of work across government, as government tender bulletins confirm.
There are also several high-profile bureaucrats who have raised eyebrows because of the work they got involved in very soon after leaving government. For example, the Limpopo provincial government’s public accounts (Scopa) committee has ordered Premier Sello Moloto’s office to cancel two contracts that were awarded to former bureaucrats. Jack Mokobi, former special advisor to Moloto, resigned to join a consortium that won a R115m contract to finish building nearly 3 000 houses. Ben Mphahlele resigned as head of the department of finance, economic affairs and development to drive this very programme as a consultant at a fee of R16m for the two-year contract.
Rudolf Phala, an ANC member of the legislature who chairs the province’s Scopa committee, says that he was waiting for a report from Moloto’s office about whether this instruction has been followed. “It is a big problem this. Bureaucrats getting big contracts from the departments they used to work for. The case of Mphahlele – who headed the department for 10 years and then got a contract to do the same job one month after he resigned – makes it obvious. He resigned when he knew he had the contract,” says Phala.
What is clear is that there appears to be a direct correlation between the vacancy rate and the use of consultants. The Eastern Cape’s department of health, which spent R464m last year on consultants, contractors and special services, is a good example. It has a 35% vacancy rate. In 2006/07 the department hired 3 500 new health professionals. In the same period 1 700 staff left. In the department’s 2006/07 audit report, the Auditor General singles out the use of consultants, especially the reliance on consultants to do internal audits (provincial auditing services, for example, are some of the hardest hit by the skills shortage and are having to operate with a vacancy rate in excess of 40%).
Aside from appointing consultants without adhering to tender regulations and paying consultants without their having completed the job – even making duplicate payments to them – this provincial health department outsourced its internal audit function to a consortium of consultants last year. The R7m contract was awarded with bidding irregularities and, in the end, the consultants didn’t do a proper job. The Auditor deemed their work to be “inadequate” and not compliant with the Institute of Internal Auditors’ Code of Ethics.
The Public Service and Accountability Monitor’s Jay Kruuse says alarm bells must start ringing when departments have to outsource core or internal control functions. A lack of skill coupled with high vacancy rates would also mean that there’s an inability to monitor consultants and engage with the work they produced. Last year, for example, the national department of trans-
port discovered that one of its consultants had been working without a contract since 1993. While the national department spent R332 830 000 on consultants last year (compared with R223 371 000 the previous year), the KwaZulu-Natal department of transport spent R304 387 157 on consultants last year against R196 119 308 the previous year. The departments did not respond to questions about this.
An official working at the Development Bank of South Africa, who also asked not to be named, says: “When consultants come up with a report, officials often don’t even read it, they just take the consultant’s word for it.”
The official agrees with Samwu’s contention that municipalities that battle with some of the highest skills shortages are most reliant on consultants, especially built-environment specialists. Minister in charge of provincial and local government Sydney Mufamadi did not respond to questions about consultants.
On one level, it can be reasonably argued that one of the main objectives of bringing in consultants is for them to teach officials how to do the work. But that’s clearly not the case. DA representative on Scopa in Parliament, Eddie Trent, says: “The lack of transfer of skills is a frequent issue. It is always said to be part of the consultant’s contract but the consultant is back the next year doing the same work.”
While there is, of course, no real incentive for consultants to impart skills, Scopa frequently objects to asking officials questions only to be told that no one knows the answers as consultants have been employed to do the work.
All the same, Home Affairs is adamant that the Fever Tree/AT Kearney contract is structured in a way that will see officials learning tangible skills from the 165 odd consultants working in turnaround teams with officials. But, chairperson of Parliament’s home affairs committee, Patrick Chauke, has seen one too many consultants come and go at the department. He’s sceptical and worries about the department “collapsing” when the consultants leave. Referring to the Home Affairs Information System (Hanis), which has been over a decade in the making and is not yet fully functional, he says: “Over 30 consultants have been involved in this and the result is zero. Everyone is just rushing for the money.”
Director of African EPA, Gwen Theron, who consults to government, agrees that dependence on consultants is a concern, especially for functions that are core and should be done by government officials. Another ex-bureaucrat who now consults back to government and who spoke to Finweek on condition of remaining anonymous says: “Consultants are doing an extraordinary amount of core government work. I have been asked to do presentations that a junior bureaucrat should be able to do. Consultants tend to be called in to fix things at the last minute. But, you must understand that while there are some serious ‘skelm’ consultants, there are also excellent ones who produce amazing work. Some really brilliant work also just goes nowhere because there is no internal buy in. There are some real profanities committed in the name of delivery which, at the moment, is all about numbers and not at all about actual outputs.”
“While consultants are paid slightly more than we could earn in the civil service, we work extremely hard under very tight deadlines. We are also resented and subjected to all kinds of nonsense,” says the consultant, who also stresses how some officials had been promoted into positions they could not cope with and so these officials tended to fall back on consultant knowledge to get through.
Theron says the lack of capacity in several government departments and provincial governments is such that when there is a change in legislation, officials are often not able to review applications so that they are in line with the changes. “A consultant is
then called in to review the work for government. This consultant is often privy to almost copyrighted information belonging to other contractors and often review work and applications done by their competitors,” says Theron, who laments the lack of institutional knowledge required to run a department.
There is also the problem of consultants being employed and, by the time they have completed their work, the civil servant who commissioned the work is no longer there. Someone new is running the show. New appointees often scrap the consultant reports and appoint their own that come up with different opinions. For example, in the City of Tshwane a report on the quality of life of the city has been overturned by new officials in the environmental unit.
“People do not know this. They are going to wake up when they see the trees being removed. There is a lack of institutional knowledge and stewardship in these departments,” says Theron.
Enter the problem of those who see an opportunity to make quick cash. Deputy Director General in the department of land affairs Mdudusi Shabane agrees that: “There are many people out there who take chances, claim to be consultants and see this as an opportunity to make a quick buck.”
While he confirms that business plans written by consultants for the Land Bank had been turfed out last year as they were not “worth the paper they were written on”, he points to the problem of government’s ability to screen what consultants could do or what they claimed to be able to do. The so-called Land Bank dossier compiled by the bank’s chief financial officer Xolile Ncame who was suspended by Minister Lulu Xingwana two days after presenting the dossier to acting Land Bank chief executive Saki Zamxaka, reveals that one consultant was allegedly paid R1,6m to test the functionality of financial systems. A second consultant allegedly received more than R3,3m for “communications planning” and a “turnaround strategy”.
While tender bulletins also confirm that there tends to be a flurry of contracts awarded and consultants employed in June each year, politicians and bureaucrats have been instructed to tighten up on consultants. Parliament’s correctional services portfolio committee, for example, has instructed the department that it’s no longer allowed to use consultants, especially not those who used to work for the department.
“Take recruitment for example: why was the department outsourcing this function when it employs 1 000 people at head office and has a dedicated human resources desk at every provincial office?” says chair of the committee Dennis Bloem, who also objected to the department outsourcing primary responsibilities like security at prisons. He’s also asked for an inquiry into why the two private prisons in Mangaung and Khutama Sinthumule are run by ex-correctional services officers who worked at the department head office during deliberations on outsourcing services.
The new director general of the department of water affairs and forestry (dwaf), Pam Yako, is in the process of shifting funds set aside for contractors, consultants and special services so they can be used to fill vacant posts. Dwaf spending on consultants ballooned to R691m last financial year compared with R286m the previous year. “This (review of procedures and shifting of funds) will go some way toward reducing the number of consultants contracted to the department. We must, however, bear in mind that the shortage of skills being a national concern also plays a role,” says Yako, highlighting the tension between the instruction and expectation to deliver and the civil service’s inability to do so with the staff it is able to attract and retain.
Time will tell if these initiatives manage to circumvent a Catch 22 driven by vacancy rates, high staff turnovers and skills deficits in government. An Auditor General investigation into the department of trade and industry’s (27% vacancy rate) use of consultants points to another aspect of the problem – actual posts are filled temporarily with consultants. For example, in 2005, the DTI appointed a consultant in the vacant position of chief financial officer when it “experienced difficulties in filling the position”. The two-year contract was worth R8,7m. According to the AG report, the consultant did not fulfill the requirements of his contract.
Politically connected. Roelf Meyer
Questionable tender. Cyril Ramaphosa
Believes consultants impart skills. Nosiviwe Mapisa-Nqakula
Sacked the messenger. Lulu Xingwana
Inquiry into outsourced services. Dennis Bloem Beneficiary of patronage. Mathews Phosa