Five examples of silly spending

2013-01-27 10:01

1. The department of defence spent R10.4 billion on consultants over three years.

During the Auditor-General’s probe of consulting contracts in the defence department, no explanation was given for a contract signed in 1986 which remained open-ended, against Treasury regulations.

The department spent billions to supplement its skills shortage through this contract with an unnamed company, and spent R859 million between 2007 and 2009 on the contract.

The Auditor-General found that, despite a clear policy that all outsourced alternative service delivery contracts should cost the same amount of money to prevent over-spending and encourage the hiring of permanent staff, the department of defence spent more on this contract than it would have on employed permanent staff.

The department did not take steps to create permanent capacity by employing permanent staff, the Auditor-General found.

With only R866 million of the entire cost of the contract audited, the department could not provide financial documents to substantiate R133 million claimed for the contract.

Since the contract was signed 27 years ago, the Auditor-General found no evidence that it was monitored to ensure delivery.

It was extended last year to February 2011 for R38 million without a cost-benefit analysis being conducted.

2. The department of rural development and land reform spent R1 billion on consultants in three years.

In what deputy Auditor-General Kimi Makwetu describes as “bizarre” spending, the department outsourced its human resources recruitment process from 2006 to 2008 at a cost of R50.5 million.

The cost of the contract escalated from R28.8 million and the contract was extended without the consultants doing their job because the department did not have the capacity to manage all contracts.

The department, which has its own human resources department to recruit staff, was forced to extend the contract and incur a further expenditure of R21.7 million.

In another contract, the department was forced to spend over R5 million more to ensure that a claim validation and monitoring system could be implemented.

This was after the first consultant, who charged R4.3 million, did not complete the project.

The department only signed off on the project plan and charter a month before the consulting contract was due to have completed the project.

A separate contract for quality assurance of the claim validation and monitoring system also had to be extended because the project was incomplete.

3. The department of correctional services paid R2 billion to consultants.

In a move the Auditor-General describes as “outrageous”, the department appointed consultants to manage other consultants in nine information technology projects.

Although the department is managing all consultants, the decision to appoint consultants to manage other consultants affected the department’s “institutional memory”, leaving it solely reliant on consultants to run the IT system.

The department paid consultants R18.5 million more than the initial contract value for the contract because the department failed to create a “purchase order with a ceiling”.

A consultant was paid R78 375 per month to monitor media services in relation to the department.

No explanation was given as to why the price escalated after the previous media monitoring services consultant was found to have charged only R11 394 per month.

Almost five years later, and after the department had paid the consultant R21.1 million, the project was still not complete, despite the full cost having being paid.

4. The department of transport paid R1.8 billion to consultants.

A consultant appointed in 2007 to formulate the national airports development plan by October 2008, at a cost of R10 million, finalised the plan 13 months late and the project had not been completed by February 2012.

The Auditor-General found that another project, to develop the national transport master plan, was outsourced to consultants for R55.9 million.

It placed the department at “risk of reliance on consultants” when the consultants recommended that more temporary staff be appointed as consultants to oversee the project.

The cost of the department’s taxi recapitalisation project, where taxi owners were paid R50 000 for each old minibus taxi to be scrapped, escalated by R2.1 billion to R9.6 billion after the number of taxis to be scrapped were wrongly estimated.

The Auditor-General found the escalation of the project was also caused by inadequate planning which did not consider the cost of inflation.

A consultant was paid R640 million to scrap the taxis and deposit the proceeds from the sales of the scrap metal into a trust fund for the taxi industry.

But the department did not account for the trust account or the scrap metal proceeds.

5. The department of health spent R416 million on consultants.

The department paid a consultant R7.8 million to conduct an audit of all public sector nursing colleges

because there was no permanent staff member to do so.

The vacancy rate of 59% in the directorate responsible for nursing colleges was found to be the main cause for the expenditure and attributed to an “inadequate” human resources plan and the moratorium on the filling of vacant posts which was in place in 2010.

The department also appointed a university to develop a national infection prevention and control manual for R873 411, without ensuring that it had the people to implement the proposals from the manual.

The department could not provide reasons why a consultant who did not employ environmental and heritage specialists, as stipulated in the contract, was appointed ahead of more technically skilled consultants who tendered R5 million lower than the winning bidder.

The Auditor-General said the winning consultant also lacked skills and had delayed the project by more than 1 445 days.

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