Department of Labour
ICT TRANSITION
AREAS OF CONCERN
10 September 2013
AREAS OF MAJOR CONCERN
Has the DoL ICT strategy been finalised?
Yes the DoL 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 DoL still going on tender for services?
No. The DoL 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 DoL. 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 DoL and this is being used by SITA to understand the
detailed DoL 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 DoL 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 DoL. 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
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.
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 DoL 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 DoL 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 S197
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 DoL.
Will DoL takeover all the EOH employees employed on the PPP
contract?
The worst case scenario is that DoL might have to take-over all the resources
of EOH on the PPP contract.
How will the EOH employees be accommodated at the DoL?
The DoL 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. R135,3 million has been allocated to ICT for
the 2013/14 financial year – which includes Compensation of Employees of
R30,4 million, Computer Services of R87,6 million and R4,2 million for capital
equipment procurement.
What is the estimated cost for the Termination support from EoH
for the period December 2012 until November 2013?
In terms of the Termination Support agreement entered into between the DoL
and EoH, an agreed service charge of R16,4 million per month was negotiated.
The total value will be R194,8 million for the termination support period. The
DoL will pay 37%, the UIF 32% and the CF 31%. This equates to R72,1 million,
R62,3 million and R60,4 in respect of the DoL, 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 DoL Annual Report for 2012/13, the total value of the ITPPP contract over the ten (10) year period was R2,02 billon. R1,85 billion
related to the Unitary Fee payments for the IT-PPP contract and R164 million
related to additional services procured from the Private Partner.
The expense in relation to the Unitary Fee was split equally between the DoL,
the UIF and the CF. This equates to R619,8 million in respect of the DoL, the
UIF and the CF over the ten year period.
FINANCE CONCERNS
Should LRA S197 be implemented, what will the estimated
financial impact be in respect of the transfer of EoH staff to the
DoL?
The DoL and EoH are currently engaged in discussions relating to the
implementation of LRA S197. Current indications from EoH are that the current
wage bill in respect of all staff connected to the DoL contract equates to R12,4
million per month. This calculates to an annual wage bill cost of R148,8
million. When subjected to the DoL, UIF and CF split, R55,1 million, R47,6
million and R46,1 million will need to be defrayed by DoL, the UIF and the CF
respectively.
FINANCE CONCERNS
Have all outstanding claims emanating from the IT-PPP been
completed by the DoL?
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 EoH Account Manager and the
DoL OCFO have had various interactions and a final meeting between the DoL
– DG and EoH – 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 DoL?
The parties are trying to address all issues amicably and resorting to
compromise where possible and where allowed. However, if necessary the
DoL will litigate or defend itself.