BRIEFING TO STANDING COMMITTEE ON APPROPRIATIONS OFFICE OF

BRIEFING TO STANDING COMMITTEE ON APPROPRIATIONS OFFICE OF THE CHIEF PROCUREMENT OFFICER - 08 SEPTEMBER 2017

SUMMARY OF DEVIATIONS AND EXPANSIONS/VARIATIONS FOR 2017 -18 Q 1 DEVIATIONS APPLICATIONS RECEIVED 271 EXPANSIONS/VARIATIONS APPLICATIONS RECEIVED 231 2

SUMMARY OF EXPANSIONS 2017 -18 Q 1 QUARTER 1: 2017/18 FINANCIAL YEAR SUMMARY OF EXPANSIONS Rankings Entity Number of Applications 1 Eskom 43 2 Health 14 3 Petro. SA 13 4 SARS 10 5 SITA 10 6 ACSA 8 7 SAPO 8 8 Legal Aid SA 7 9 National Lottery Commission 7 10 MQA 6 11 SANRAL 6 12 Transnet 6 3

SUMMARY OF DEVIATIONS 2017 -18 Q 1 QUARTER 1: 2017/18 FINANCIAL YEAR SUMMARY OF EXPANSIONS Entity Number of Applications AEMFC 9 Environmental Affairs 9 Geoscience 9 SITA 8 SASSA 7 RAND WATER 7 Stats. SA 6 Water and Sanitation 5 TCTA 5 SARS 5 Rural Development and Land Reform 5 NHLS 5 4

COMMON REASONS FOR DEVIATIONS AND EXPANSIONS/VARIATIONS • Lack of planning by government institutions • Inadequate relevant skills and capacity • Lack of contract management • Amendments to scope during tenure of the contracts • Maintenance and support of existing infrastructure • Emergency and urgent procurement processes • Sole source suppliers 5

PROPOSED INTERVENTIONS BY OCPO • Review the entire deviation application system in terms of Treasury Regulation 16 A 6. 4 and attendant instruction notes. • Mapping applications for deviations to submitted procurement plans. Applications may be approved based on procurement plans. • Enforce accountability and compliance by Accounting Officers/ Authorities (we asking Parliament to support us in this regard). • Where deviations have been approved by Accounting Officers/Authorities, condonation process must be followed. • Provide technical support and capacity building to Accounting Officers/Authorities. 6

MAJOR PROCUREMENT ISSUES • There are procurement issues within some SOCs that the National Treasury is reviewing and which are already in the public space, for instance, according to SAA’s procurement plan for 2017/18 there are expenditure requirements, however, they may not implement all of them due to financial constraints. • On Eskom, for instance, National Treasury has already committed to commissioning forensic audit in some coal contracts. • National Treasury is implementing the revised PPF Regulations that came into effect on April 2017, to ensure that all state organs support black economic empowerment, small business development and local industrial development in all their procurements. 7

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