The document discusses the outsourcing of services by the Department of Correctional Services, detailing the reasons for outsourcing, methods, legislative frameworks, and services currently outsourced. It highlights the economic impact and benefits of outsourcing, such as improved service delivery and risk transfer. Additionally, the document outlines improvements in the procurement system and areas for further enhancement in contract management and stakeholder analysis.

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OUTSOURCING OF SERVICES : DEPARTMENT
OF CORRECTIONAL SERVICES
14 October 2009

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SCOPE OF PRESENTATION
1. WHAT IS OUTSOURCING ?
2. WHY DO WE OUTSOURCE ?
3. METHODS OF OUTSOURCING IN PUBLIC SERVICE
4. LEGISLATIVE FRAMEWORK THAT INFORMS METHOD OF
SOURCING
5. SERVICES OUTSOURCED
6. OTHER SERVICES SOURCED FROM OUTSIDE DCS
7. ECONOMIC IMPACT OF OUTSOURCED SERVICES IN
ACCORDANCE WITH PPPFA
8. BENEFITS OF OUTSOURCING
9. IMPROVEMENT IN PROCUREMENT SYSTEM
10. WHERE CAN WE IMPROVE

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1. WHAT IS OUTSOURCING?
Outsourcing refers to the practice of turning-over
internal Departmental functions/services to an outside
service provider.

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2. WHY DO WE OUTSOURCE ?
• To source expertise and skills that are not available
within the Department;
• The high turn-over and the inability to retain and
match what the private sector is offering in terms of
salary;
• Prolonged process of staffing;
• To allow the Department to refocus on its core
mandate;
• Improve service delivery of the Department on the
core mandate;
Cont …

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• Enhance better compliance to statutory requirements
linked to the core mandate of the Department, e.g.
Correctional Services Act, Act 111 of 1998
• Give effect to other statutory requirements such as
PFMA, PPPFA, Health and Safety Act, etc.;
• Cost benefits for the Department.
• Enhance effectiveness, efficiency and economical.

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3. METHODS OF OUTSOURCING IN PUBLIC
SERVICE
• Public Private Partnership informed by PFMA and
Treasury Regulations, Chapter 16
• Convectional Procurement through the use of
Treasury Regulations, Chapter 16A (Supply Chain
Management)

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4. LEGISLATIVE FRAMEWORK THAT INFORMS
METHOD OF SOURCING
Both these methods involve the application of the
following Acts:
– South African Constitution (Act 108 of 1996)
– Public Finance Management Act (Act 29 of 1999) and its
Regulations in Chapter 16 (PPP) and 16A (SCM)
– Broad Base Black Economic Empowerment Act (Act 53
of 2003)
– Preferential Procurement Policy Framework Act (Act 5
of 2000) and its Regulations, 2001
– Correctional Services Act (Act 111 of 1998)
– White Paper on Corrections.
– Departmental Policies and Procedures.

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5. SERVICES OUTSOURCED
5.1 PPP Prisons
• Two prisons are outsourced by this method, namely
Kutana Sinthumale in Makado and Mangaung in
Bloemfontein.
• These Centres are outsourced on the following:
- Design of the centres
- Building of the centres
- Financing of the centres
- Operating of the centres for a maximum period of
25 years
Cont…

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SERVICES OUTSOURCED
• Currently four (4) bids are running on PPP for the design,
build, operate, finance, maintenance of the following
Centres :
-East London
-Paarl
-Klerksdorp
-Nigel
• The Minister has suspended the processing of the PPP
until further studies and recommendations on best options
especially on how to manage the operations should these
services be outsourced.

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5.2 Rendering of catering and training services at various
Management Areas. 36 Months. R839 393 000-00
• DCS does not have the facilities or the infrastructure to continue
with meal preparation while closing down the current kitchens for
upgrading.
• DCS does not have access to suitable training programmes that
are accredited by the authoritative bodies.
• Because of not having access to suitable training programmes,
DCS is experiencing staff shortages and courses are not structured
to meet critical needs.
• DCS does not have a controlled computerised meal planning
system.
SERVICES OUTSOURCED

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5.3 Service Provider to assist Internal Audit of the Department of
Correctional Services with all internal audit related tasks as a
co-sourced partner. 30 Months. ±R20 000 000-00
• The Service Provider is regarded as an extension of the Internal
Audit Unit to conduct certain audits as approved by the Audit
Committee on the Annual Work plan.
SERVICES OUTSOURCED

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5.4 Training of Junior and Middle Managers on Management
Development Program. R4 950 000-00
• DCS did not have the internal capacity to develop accredited training
programmes for Junior and Middle management.
• PALAMA training centre was approached and did not have a
programme that is suitable for DCS needs
• DCS had no option but go out on tender and ensure that all the
needs are contained in the tender specifications.
SERVICES OUTSOURCED

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5.5 Development and training of Executive and Senior Managers on
Leadership Development Program. R4 632 500-00
• As a result of past transformation processes and the new paradigm
which is fully detailed in the White Paper towards which all
operations have to be steered.
• It is emerged that a need assessment process is critical to inform a
customized DCS programme that would target specific leadership
development skills.
SERVICES OUTSOURCED

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Service Value
Service Provider to conduct a survey on the
organizational culture within DCS
R2 429 650-00
Service Provider to conduct a comprehensive feasibility
study for the outsourcing of food provisioning services to
inmates within DCS
R1 148 162-40
Standard cleaning services to DCS Head Office for a two-
year period
R2 496 216-24
Appointment of an independent SANAS Accredited
Service Provider to assist DCS with the inspection and
testing of textiles, clothing, footwear, etc.
R8 050 000-00
6. OTHER SERVICES SOURCED
The following services are generally sourced out side the department
because they are not the core business.

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Service Value
Maintenance of control room after warranty R148 202 584-00
Supply, delivery, installation and commissioning of
security outer perimeter fences and CCTV surveillance
cameras
R436 185 110-35
Maintenance of above for a period of 48 months R50 752 800-00
OTHER SERVICES SOURCED

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Service Value
Supply, delivery, installation and commissioning of
television system and monitors at all Correctional Centres
R159 000 000-00
Maintenance of above after warranty for a period of
twelve (12) months
R65 364 480-00
Transaction Advisor Services for Public Private
Partnership
R20 000 000-00
OTHER SERVICES SOURCED

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7. ECONOMIC IMPACT OF SOURCED
SERVICES /ITEMS
Financial Year 2008/09
Total value of contracts R1 148 million
(886 contracts)
Value of contracts awarded to black enterprises with
more than 50.1% black ownership (including black
women)
R1 112 million
(743 contracts)
% of Contracts awarded to HDIs 83.86%
% of Rand Value awarded to HDIs 96.86%

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8. BENEFITS OF OUTSOURCING
• Capacity building during the running of the contract;
• Focus more on the core business of the Department;
• Risk transfer;
• Enhancement of the quality of service delivery;
• Value-for-money;
• Penalty clause can be effected on non-performance and poor
services.

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9. IMPROVEMENT IN PROCUREMENT
SYSTEM
• Effective from March 2004, Supply Chain Management
was implemented within the Department.
• Structures were put into place to ensure that
procurement is operated in the manner which is fair,
equitable, transparent, competitive and cost effective
in compliance with the Constitution, Section 217,
PFMA (section 38(iii)) and PPPFA.

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IMPROVEMENT IN PROCUREMENT
SYSTEM
• Structures are as follows :
- National Bid Adjudication Committee
Stationed at Head Office
Handles bids exceeding R5 million to infinity
Members are as follows :
* All Executive Managers at Head Office
Chairpersonship rotate amongst the CDCs

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IMPROVEMENT PROCUREMENT
SYSTEM
• Structures (Continue)
- Sub-Bid Adjudication Committee :
Stationed at Head Office and 6 Regional Offices
Handles bids exceeding R200 000 to a limit of
R5 million.
Head Office
* Managed by Senior Management at
Supply Chain Management
Regional Offices
* Regional Heads Finance and Supply
Chain Management officials

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IMPROVEMENT IN PROCUREMENT
SYSTEM
• All the members of the National and Sub-Bid
Adjudication Committees are appointed in writing by
the Accounting Officer.
• All Bid Adjudication members have signed the Code of
Conduct .

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IMPROVEMENT IN PROCUREMENT
SYSTEM
• Duties of Bid Adjudication Committees :
- Give final award based on the recommendation
of Bid Evaluation Committees;
- All necessary bid documents are submitted
- Ensure that disqualification of service providers
are justifiable and that valid and accountable
reasons are furnished for passing over of bids

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IMPROVEMENT IN PROCUREMENT
SYSTEM
• Duties (continue) :
- Ensure that scoring is fair, consistent and
correctly calculated
- Ensure that bidder’s Declaration of Interest has
been taken into consideration
- Ensure that members themselves declare their
interest in writing before commencing with the
adjudication of bids
- These committees can extend the period of the
existing contract and can also extend the scope
of work according to the delegated powers.

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IMPROVEMENT IN PROCUREMENT
SYSTEM
• Structures (Continue) :
- Bid Evaluation Committee
Evaluate and recommends bids/proposals to relevant
Bid Adjudication Committee
Members are appointed in writing by the Accounting
Officer
Members differ from case to case based on the nature of
the bid and the competency of the members in line with the
bid to be evaluated
This is an ad hoc committee
Members must declare their interest in writing and sign
Code of Conduct prior to the commencement of evaluation

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10. WHERE CAN WE IMPROVE
• Conducting of stakeholder analysis;
• Comprehensive feasibility must be conducted before
outsourcing any services;
• Promote the advantages of a proper procurement plan
linked to strategic plan, operational plan, MTEF and
budget;
• Maintain the gains and achievements;
• Improve contract management especially by end-
users;
• Retain and deploy skills accordingly;
• Build capacity of project officers on project
management.

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Together doing more & better to break cycle of
crime