1. 1 BRIEFING TO THE PORTFOLIO COMMITTEE ON THE UTILIZATION OF CONSULTANTS BY DWAF 8 June 2005

2. 2 CONTENT Background DWAF PSP Policy Utilisation of Consultants by DWAF Total Summary Per Branch Reasons for Utilisation of Consultants Challenges and Responses Current Processes

3. 3 BACKGROUND Government uses consultants when the necessary skills and/or resources to perform a task are not available and officials cannot reasonably be trained or recruited in the time available. Section 217 of the Constitution requires national government departments to contract for services or goods through a system which is fair, equitable, transparent, competitive and cost-effective.

4. 4 The Constitution further requires a procurement policy providing for – categories of preference in the allocation of contracts; and the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination. The PFMA requires the Accounting Officer to ensure that the department has an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective. BACKGROUND (Cont.)

5. 5 DWAF’s current policy for the appointment of Professional Service Providers (PSP’s) was implemented in August 2002 & revised in March 2003 to give effect to new legislation dealing with BEE, BBBEE and PPPFA. DWAF PSP POLICY

6. 6 Purpose of new policy is amongst others to: Spread work amongst suitable PSP’s; Strengthen HDE and HDI through active capacity building and skills development, through participation rates and JV’s; In multi-disciplinary and complex projects select the PSP with the best technical capabilities and project approach (above R3m); Incorporate the Preferential Procurement Regulations, 2001 and a uniform evaluation system for project proposal evaluation. DWAF PSP POLICY (Cont.)

7. 7 The Policy is divided into five parts: Definitions, planning and control issues; Category 1: Contract value up to R150 000; Category 2: Contract value R150 000 to R3 million; Category 3: Contract value above R3 million; Evaluation system; and Monitoring system (Using the PSP Database) DWAF PSP POLICY (Cont.)

8. 8 I) Evaluation System: 80:20 and 90:10 evaluation systems of the PPPFA are applied. II) PSP Database: A PSP Database has been developed for search, appointment and management of PSP’s. III) Using the PSP Database as a search tool: The PSP Database records PSP’s by: Consulting discipline HDI ownership % Province Field(s) of specialisation. DWAF PSP POLICY (Cont.)

9. 9 Summary (Total DWAF) : 2004/2005 2003/2004 Number of Contracts- 184 130 Total Amount Spent- R 198.28m R 166.37m HDI Amount- R 78.78m R 84.76m % Contracts to HDI- 39.73% 50.9% Non HDI Amount- R 119.50m R 81.61m % Contracts to Non HDI - 60.27% 49.1% UTILISATION OF CONSULTANTS (PSP’s) BY DWAF

10. 10 UTILISATION OF CONSULTANTS (PSP) BY DWAF Branch#AmountHDINon HDI Corporate Services 7R2.97mR1.49m 50.13% R1.48m 49.88% Financial Management 10R5.40mR2.84m 52.60% R2.56m 47.40% Policy & Regulations 108R131.38mR42.34m 32.23% R89.04m 67.77% Regions47R51.14mR17.01m 33.26% R34.13m 66.74% National Water Infrastructure 12R7.39mR2.25m 30.45% R5.14m 69.55% GRAND TOTAL 184R198.28mR78.78m 39.73% R119.50m 60.27%

11. 11 Reasons identified by project managers and heads of directorates are that: “The necessary skills, expertise, capacity to perform a project are not readily available” “It is not possible either to train or to recruit officials in the time available” “No capacity to enable skills and knowledge transfer to officials due to high turnover rate” REASONS FOR UTILISATION OF CONSULTANTS

12. 12 CHALLENGES AND RESPONSES ChallengesResponses Fronting and the failure to achieve promised participation of HDI’s on contracts. Do physical visits to prospective PSP’s, interview noted HDI Directors and Owners and validate HDI status with DTI. Analyse complexity and frequency of projects to determine when to use consultants. Develop system to analyse projects according to complexity & frequency to enable prior planning and allocation of resources.

13. 13 CHALLENGES AND RESPONSES ChallengesResponses Scope and goals of the training & skills or knowledge transfer not achieved. Ensure Terms of Reference indicate detailed training programme and monitoring and evaluation arrangements. Cost of training programme to be included in the consultant’s contract Lack of project management skills and budget control to ensure effective consultant management. Conduct training, and workshops.

14. 14 The following processes are underway: Establishment of Supply Chain Management Office Updating of PSP policy. Approval and implementation of BBBEE Strategy. CURRENT PROCCESS BEING UNDERTAKEN

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