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SITA 'serves no purpose'

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 04 Nov 2014
SITA has made several achievements over the past financial year, says CEO Freeman Nomvalo.
SITA has made several achievements over the past financial year, says CEO Freeman Nomvalo.

The State IT Agency (SITA), which is being sued by suppliers over non-payment, is not living up to its mandate and serves no purpose because it is costing the state more than if government went directly to vendors.

The state's IT procurement arm missed about two-thirds of its targets in the last financial year. It does not appear to add any value to government, instead boosting costs because it makes a profit on the goods and services it provides to the state.

SITA's profitability is noted in a recent presentation made to the Parliamentary portfolio committee on telecommunications and postal services. Its financial performance notes it turned over R4.7 billion in the year to March, and made R843 million profit on goods and services - a 17.97% margin.

Although this is lower than 2013's 23.98% margin, the Democratic Alliance's shadow minister for telecommunications and postal services Marian Shinn scoffs at the concept of an entity that is meant to save government money making any sort of a profit.

Shinn says SITA is "ineffective" at handling government IT, instead costing the state more. "Its profit margin shows it serves no purpose," she says, adding government entities are better served by going directly to vendors.

Missed goals

The presentation also notes SITA had 39 performance measures, of which it only achieved 11. It partially met 10 goals, and totally missed 18. It states: "Numerous interventions and corrective actions have been identified and were implemented to ensure favourable performance in the current financial year."

Among the goals it missed was a target on debtors' days, and another on creditors' days, which it says is currently at 25.

SITA's inability to pay suppliers on time has led to several taking it to court and it is collectively been sued for R33 million and has spent close to R5 million defending itself since 2002.

SITA is also preparing a new bid for the much-awaited Integrated Financial Management System, which the state scrapped in May. Other missed goals include the ICT Academy, which is being aligned to government's "National School", and its cloud computing and productivity suite tenders are being finalised.

The IT procurement arm has also scrapped measuring supplier satisfaction, and is instead focusing on improving contract management processes. Improved supply chain management turnaround times - long an industry bugbear - was another missed target and is on 86 days but is set to be automated.

Taking steps

SITA received an unqualified audit opinion from the auditor-general (AG), as there was an emphasis of matter because of the lawsuits it is involved in, and the R28 million in irregular expenditure, which is still an issue although this has been trimmed from R120 million. The AG also noted several instances in which the procurement arm did not comply with laws and regulations when it came to procurement, and questioned the reliability of reported information.

Shinn says SITA is a "totally failed entity" and serves no purpose as it does not add value, and has admitted to losing customers. ICT veteran Adrian Schofield previously echoed Shinn's sentiment, saying although it makes sense there is a SITA, it supplies ICT services to parts of government by default, rather than design. "With hindsight, it is easy to say that SITA was doomed to fail."

However, CEO Freeman Nomvalo says SITA has made several achievements, including maintaining and supporting the movement control system, protecting the voters' roll, maintaining and supporting systems that pay social grants, and enabling banks to verify IDs on the National Population Register.

SITA has said it is busy with several actions to resolve issues, some of which are legacy matters, which include an approved strategy and revised procurement processes that create a more transparent and proactive system. It is also in the process of automating processes to ensure a better line of sight for contracts and procurement transactions. It intends to remain being a "fully-fledged self-funding, liquid and financially sustainable public entity attaining unqualified audit reports".

The agency also notes irregularities will be addressed and procurement practices strengthened through its new strategies. Nomvalo adds SITA has taken the necessary action in instances where legislation was not complied with.

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