Department of Labour ICT TRANSITION AREAS OF CONCERN 10 September 2013
AREAS OF MAJOR CONCERN Has the Do. L ICT strategy been finalised? Yes the Do. L ICT Strategy has been finalised and approved. Is the strategy being implemented? Components of the strategy are being implemented eg. governance, inhouse resourcing etc, but implementation is dependent on available resources eg. finances Is the Do. L still going on tender for services? No. The Do. L cannot go on tender due to budgetary constraints, as well as Section 197 of the LRA mandates that current resources providing the IT services must be taken over by Do. L. When this happens, most IT services will be provided in-house.
AREAS OF MAJOR CONCERN Why was the PWC process stopped, and does this construe wasteful expenditure? There were initial delays with the PWC process, as the scope could not be agreed. PWC wanted to play a Transition Advisor Role, rather than a Transaction Advisor role. The PWC process was stopped because the funding for this project was not rolled-over from the previous financial year to the current. The work done by PWC was the specifications for the IT services required by Do. L and this is being used by SITA to understand the detailed Do. L service requirements which is a form of contingency. The specifications drafted will always be required as they form a framework of IT services in the Do. L and will be used in future. Can the work done by PWC be re-used? Yes. The work completed will be re-used, and is currently being used by SITA to review services required by Do. L. It will also be used when other services are required eg. systems development.
AREAS OF MAJOR CONCERN Why did the Department not know about the deviation factors? This was relooked and reviewed, when re-alignment was being done against the strategy. It was then that it was realised that these factors were not fully considered during strategy development, and were constraints to the initial plan. When did the Department know that it was no longer going to issue an ICT tender? After considering all the necessary requirements eg. SCM processes, budget, SIAT Act etc, the Department decided not to issue tenders in July 2013. Why were these factors not highlighted as strategic constraints or raised at executive structures? The issues raised at operational management level, did not filter through to executive level. This has been addressed through a full time team being appointed to manage the ICT Transition.
ICT CONCERNS What will happen to ICT services post the EOH Termination support? The Do. L and EOH are engaging on the take-over of IT resources who are providing the current services. SITA is assisting with service gaps that cannot be provided as in-house services. Will all the deliverables of the Termination Support be met? The development of the outstanding deliverables are in progress. However, there is a high possibility that some of the deliverables may not be met, due to the limited time left, which was hampered by the suspension of EOH for four months, which did not allow them to focus on systems development.
ICT CONCERNS Was EOH paid for the period when they were suspended? Yes. Due to contractual obligations, EOH ensured that IT services continued and that systems and infrastructure was available for Do. L to continue delivering services. How many systems are outstanding? Five systems – The Human Capital Module, business desk, CF Management Information Systems reporting, the Inspection and Enforcement system and Financial system for UIF. Progress has been made with some of these systems already in the testing phase.
RISK MANAGEMENT What are top 5 priority risk areas? 1. Disruption of service delivery due to discontinuation of IT services 2. Litigations arising from EOH employees due to failure to finalize S 197 3. Budget constraints 4. Political Risk 5. Reputational Risk
HUMAN RESOURCE CONCERNS What is the position of EOH employees involved with the daily ICT services of the Department? We are negotiating with EOH on the possible takeover of those employees involved in the daily provision of ICT services to Do. L. Will Do. L takeover all the EOH employees employed on the PPP contract? The worst case scenario is that Do. L might have to take-over all the resources of EOH on the PPP contract. How will the EOH employees be accommodated at the Do. L? The Do. L will accommodate the employees on the approved ICT structure. Non -ICT employees will be accommodated in their fields eg. Finance, HR etc.
FINANCE CONCERNS What budget has been approved in the 2013/14 financial year for ICT? The ICT budget is located under Programme 1: Administration, subprogramme: Corporate Services. R 135, 3 million has been allocated to ICT for the 2013/14 financial year – which includes Compensation of Employees of R 30, 4 million, Computer Services of R 87, 6 million and R 4, 2 million for capital equipment procurement. What is the estimated cost for the Termination support from Eo. H for the period December 2012 until November 2013? In terms of the Termination Support agreement entered into between the Do. L and Eo. H, an agreed service charge of R 16, 4 million per month was negotiated. The total value will be R 194, 8 million for the termination support period. The Do. L will pay 37%, the UIF 32% and the CF 31%. This equates to R 72, 1 million, R 62, 3 million and R 60, 4 in respect of the Do. L, the UIF and the CF respectively.
FINANCE CONCERNS What is the total amount paid by the Department in respect of the IT-PPP contract? As reported in the Do. L Annual Report for 2012/13, the total value of the ITPPP contract over the ten (10) year period was R 2, 02 billon. R 1, 85 billion related to the Unitary Fee payments for the IT-PPP contract and R 164 million related to additional services procured from the Private Partner. The expense in relation to the Unitary Fee was split equally between the Do. L, the UIF and the CF. This equates to R 619, 8 million in respect of the Do. L, the UIF and the CF over the ten year period.
FINANCE CONCERNS Should LRA S 197 be implemented, what will the estimated financial impact be in respect of the transfer of Eo. H staff to the Do. L? The Do. L and Eo. H are currently engaged in discussions relating to the implementation of LRA S 197. Current indications from Eo. H are that the current wage bill in respect of all staff connected to the Do. L contract equates to R 12, 4 million per month. This calculates to an annual wage bill cost of R 148, 8 million. When subjected to the Do. L, UIF and CF split, R 55, 1 million, R 47, 6 million and R 46, 1 million will need to be defrayed by Do. L, the UIF and the CF respectively.
FINANCE CONCERNS Have all outstanding claims emanating from the IT-PPP been completed by the Do. L? The only outstanding claim is in respect of the implementation of SAP. The parties are engaged in discussions to clarify the basis for this claim and to reach an agreed settlement. In this respect, the Eo. H Account Manager and the Do. L OCFO have had various interactions and a final meeting between the Do. L – DG and Eo. H – CEO has been proposed. Post this interaction, it is believed that this matter will be amicably concluded.
LEGAL CONCERNS Will there be any litigation between EOH and the Do. L? The parties are trying to address all issues amicably and resorting to compromise where possible and where allowed. However, if necessary the Do. L will litigate or defend itself.
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