State Information Technology Agency Amendment Bill State Information Technology Agency Amendment Bill [B 24B -2002] September 2002

Content  Main purpose of Bill  new business model  Substantial amendments  Subsidiaries, objects & functions of SITA, Board’s constitution, transfer of staff & assets, rates for service, auditing, exemption, share capital, regulations  Consultation

Main purpose of Bill  incorporate new business model  amend share capital  increase number of Board members

New business model (1)  IT House of Value  security  interoperability  economies of scales  elimination of duplication  Aims of House of Value  lowering costs  increasing productivity  enhancing service delivery

New business model (2)  Establish subsidiaries to realise IT House of Value  Redefine compulsory & optional services of SITA to align it with IT House of Value  Duty on SITA to uphold & enhance IT House of Value in performing functions

Subsidiaries Substantial amendments (1): Subsidiaries  Express provision for SITA to  establish subsidiaries, eg e-Services to procure IT goods & services through IT Acquisition Centre (ITAC)  Subsidiary performs such functions as SITA (holding company) may delegate to it  may impose conditions  transfer shares in subsidiaries to 3rd persons  requires Cabinet’s approval for  number of shares to be transferred  persons to whom shares are to be transferred  conditions of transfer Clause 3: section 3A

Objects of SITA Substantial amendments (2): Objects of SITA  Adjust objects of SITA to emphasise its role in using IT to—  promote efficiency of departments & public bodies (ie constitutional institutions, public entities, municipalities & legislatures)  improve service delivery Clause 4: section 6

Duties & powers of SITA Substantial amendments (3): Duties & powers of SITA mustmay  Services that SITA must & may render are redefined (compulsory services),  Certain listed services must, if required, be rendered to national & provincial departments (compulsory services), provision of—  private telecommunication network or value-added network service ito Telecommunications Act (wide area networks)  transversal information systems  data-processing or associated services for transversal information systems Clause 5: section 7(1)(a)

Duties & powers of SITA Substantial amendments (4): Duties & powers of SITA (optional services)  Certain listed services may, if required, be rendered to departments (optional services)  training in IT or IT systems  application software development  maintenance services for IT software/infrastructure  data-processing or associated services for departmentally specific IT applications/systems  management services for IT or IT systems  Public bodies have choice whether to use any of listed services Clause 5: section 7(1)(b)

Duties & powers of SITA Substantial amendments (5): Duties & powers of SITA cont procurement agency  Under current Act SITA must act as procurement agency for IT requirements sole IT goods & services procurement agency  unequivocally establish SITA’s role as sole IT goods & services procurement agency for all departments compulsory service  Departments requiring compulsory service must—  acquire it from SITA or  if SITA can’t provide it, procure it through SITA optional service  Departments requiring optional service may choose to acquire it from SITA or through procurement, ie not obliged to use SITA flexible arrangement  Current system of phased-in (full) participation by departments are replaced by more flexible arrangement Clause 5: section 7(3) &(4)

Duties & powers of SITA Substantial amendments (6): Duties & powers of SITA cont business & service level agreements  Departments must conclude business & service level agreements with SITA to regulate compulsory & optional services that it intends to use  Compulsory terms  Compulsory terms of business agreement to be prescribed by regulation  Existing  Existing business & service level agreements to be phased out within 36 months  Department & SITA must conclude new BA & SLA Clause 13: section 20

Duties & powers of SITA Substantial amendments (7): Duties & powers of SITA cont must continue  Services used by department in respect of which component initially constituted SITA must continue to use those services (s3(4) of current Act)  unless terminated by agreement between by relevant department & SITA  “component” = Central Computer Services, Infoplan, sub-component Information Systems in Dept of Safety & Security  Assets of these components transferred to SITA (ito current s19(2)) remain SITA’s assets & its return may not be requested Clause 2: section 3(4A)

Duties & powers of SITA Substantial amendments (8): Duties & powers of SITA cont standards  SITA must set standards for—  interoperability of information systems  subject to Minister for Public Service & Administration’s approval  information systems security environment  subject to said Minister & Minister of Intelligence’s approval certify  SITA must certify all acquisition of IT goods/service for compliance with these standards Clause 5: section 7(6)

Duties & powers of SITA Substantial amendments (9): Duties & powers of SITA cont  SITA may— authentication products or services for all departments  exclusively sell or provide authentication products or services for all departments requestpublic body  on request, sell or provide such products or services for public body accreditation  apply for accreditation of those products/services ito E- Communications & Transactions Act procurepreferred authentication service  If not provided by SITA, department must & public body may procure it through SITA from preferred authentication service providers (s28(2) of E-Com & Trans Act) Clause 5: Section 7(6)(c) & (7)

Duties & powers of SITA Substantial amendments (10): Duties & powers of SITA cont research  SITA may conduct research regarding use of IT to improve efficiency of public administration  In performing functions SITA must- unnecessary duplication  eliminate unnecessary duplication of IT goods/services  leverage economies of scale  leverage economies of scale to provide cost-effective service  comply with-  government policies  government policies on information management & IT  regulations  regulations made under SITA Act & Public Service Act  Preferential Procurement Policy Framework Act Clause 5: section 7(6)(d) & (8)

Constitution of Board Substantial amendments (11): Constitution of Board  Current Act 10not more than 3 executive directors  maximum of 10 members/directors with not more than 3 executive directors up to 6 executive directors  Aim of proposed amendment is to enable appointment of up to 6 executive directors on board, eg:  SITA MD (Group CEO)  chief operating officer & chief financial officer of SITA (holding company)  CEO of each of 3 subsidiaries Clause 6: section 10

Constitution of Board cont Substantial amendment (12): Constitution of Board cont  Proposed amendment requires— non-executive directors majority  increasing maximum to 14 to ensure non-executive directors remain majority in line with corporate governance limitation of 3 executive directors  replacing limitation of 3 executive directors with requirement that majority of directors must be non-executive  maximum of executive directors never more than 6 - eg 6 executive & 8 non-executive experts  Increase in non-executive directors - assist in ensuring experts in financial management, governance and IT networks, security, interoperability & procurement serve on board

Constitution of Board cont Substantial amendments (13): Constitution of Board cont alternate member  Provision made for Minister to appoint alternate member for every non-executive member  Aim: Absence of non-executive members should not prevent Board from continuing with its business  Alternate may attend & vote at Board meetings that member is unable to attend  Serve same term as member in respect of whom he/she is appointed & also vacates office with him/her  Majority of non-executive directors forms quorum

Transfer of staff & assets Substantial amendments (14): Transfer of staff & assets offer employment  SITA must offer employment to IT practitioner of department associated with compulsory/optional service when department uses SITA for that service Clause 8: section 15(1)  When compulsory services are used, all assets must be transferred to SITA  includes intellectual property rights  When optional services are used, only those assets that both parties agreed to, are transferred to SITA  Transfers exempted from transfer & stamp duty, etc Clause 12: section 16

Rates for services, auditing & exemption Substantial amendments (15): Rates for services, auditing & exemption  Minister for Public Service & Administration to determine rates for SITA’s services  after consultation with all Ministers & MECs  with approval of Minister of Finance Clause 9(a): Section 16(1) &(2)  Board may appoint own auditor to audit holding & subsidiary companies, ie no longer Auditor-General Clause 9(e): section 16(9)  To protect Republic’s security, Minister of Intelligence may exempt any intelligence service established by President ito s209(1) of Constitution from any provision of Act Clause 5: section 7(9)

Share capital Substantial amendments (16): Share capital  Current Act (s18) stipulates that State must be issued with fully paid-up shares  as stipulated in an agreement  in exchange for assets transferred to SITA valued on method acceptable to State  Requires valuation of assets and then agreement on value and number of shares

Share capital cont Substantial amendment (18): Share capital cont  Provision in current Act inappropriate for both current & proposed role of SITA  Current role  Requires transfer of all IT assets, but assets transferred from time to time, ie as & when departments participate - not once off transfer of assets of all IT assets of all departments  Proposed role  Does not require transfer of all IT assets, but only-  assets related to networks, transversal information systems & data- processing/associated services for such systems (compulsory services)  other IT assets but only if SITA & department agree (optional services)  also not once-off transfer of assets, but only as & when department requires a particular service

Share capital cont Substantial amendment (19): Share capital cont  Now proposing share capital of R1, represented by one share with nominal value of R1  share capital has no linkage to assets transferred to SITA  State remains sole shareholder of SITA  no provision for transfer of shares in SITA, but only its subsidiaries Clause 10: section 17

Regulations - clause 15 Substantial amendments (20): Regulations - clause 15  Minister for Public Service & Administration empowered to make regulations on—  IT procurement  IT procurement-  after consultation with all Ministers & MECs  subject to Minister of Finance’s approval  requiring participation of client departments in procurement process  requiring support of local economies  regarding exemption from procuring through SITA business agreement  compulsory terms of business agreement  additional functions  additional functions for SITA to achieve objects  information systems security  information systems security for all departments, with Minister of Intelligence’s approval  procedure to resolve disputes  procedure to resolve disputes between departments & SITA

Consultation process  Before Cabinet’s approval was sought, comment requested from all national & provincial departments, SITA & GITO Council  Those that submitted comment listed in Memorandum on Objects of Bill (par 5)

SITA Amendment Bill end