USAASA overpays, under-serves

The Universal Service and Access Agency of SA (USAASA) paid a service provider R15 million even though it only provided one out the expected 20 access centres for the first quarter of this year.

The agency reported on its first quarter performance on five key projects at a Parliamentary Portfolio Committee meeting last week.

The projects are the administration of the government subsidies for set-top boxes; the pilot projects in the Limpopo province to provide broadband infrastructure; the provision of public access facilities in under-serviced areas; the monitoring and evaluation of the effective utilisation of social appropriation; and policy, strategy and research.

Thandeka Mngadi, executive manager of performance management at USAASA, said the project to provide new public access facilities in under-serviced areas is now under review. The annual target is for 44 centres to be completed in 2011/12, according to the executive manager.

The target for the first quarter was 20 centres. Only one centre was completed before the end of the first quarter. The budget for the access centres during the first quarter was R19.8 million. It was only the Ulwazi centre in the Western Cape that was completed.

Mngadi added that the service provider for the public access centres had managed to complete 23 of the 36 centres required for that period.

She said this was a good achievement as the service provider was only appointed in the third quarter of the previous year. Discussions with the municipalities and tribal authorities took longer than the three weeks that had been anticipated.

Committee members strongly disagreed that the service provider had done a good job.

Committee chairperson Sikhumbuzo Eric Kholwane asked how many service providers had been appointed and if provision had been made for penalties if the service provider failed to complete the contract on time. He wanted to know how much had been paid to the service provider.

Mngadi confirmed that only one service provider had been appointed. The amount paid to date was R15 million. The project was put under review after input was received from stakeholders and the committee's oversight visits.

Mngadi said the adequacy of the budget provision is being assessed and USAASA wants to derive the maximum possible benefit from the available funding. She added that experience had been gained and the review of the project involved the lessons learned, addressing the failures, appointing more service providers and reviewing the memoranda of understanding.

USAASA CEO Phineas Moleele added that USAASA preferred to take remedial rather than punitive action. He said sites for the additional centres have been identified and a procurement process is in place. The contract with the current service provider has not been renewed and the completion of the remaining centres is on hold.

According to the Parliamentary Monitoring Group, Kholwane was scathing in his condemnation of the failure of USAASA to deliver on the targets that had been set.

He wanted to know what recourse was available to hold the service provider accountable for the failure to complete the contract on time. He asked who would carry the cost of appointing new service providers.

Moleele said the contract with the service provider included the quarterly targets and penalties. This was the first project to provide the access centres and much has been learned that was not originally anticipated.

Committee members asked if the service provider had the necessary capacity to complete the contract. Concern was also raised about the service provider having been paid a substantial amount despite failing to complete the contract. There were questions about whether USAASA had legal recourse against the service provider.

Moleele said the agency has recourse in common law and can take legal action to reclaim penalties from the service provider.

USAASA appears to lack the capacity to spend the funds that had been made available and so additional funds would not be made available if the entity failed to spend its budget, said Kholwane.

Members also raised concerns about USAASA under-spending an amount of R17 million, despite the need for services.

The agency's total budget for the first quarter was R21 million and its actual expenditure was R3.9 million. The variance of R17 million was mainly attributed to under-spending on training and skills development (R1.3 million), the broadband infrastructure project (R9 million) and the provision of access centres (R6 million).

Committee members said the issue of defining “universal access” and “universal services” is a long-outstanding one and needs to be finalised. USAASA, in February 2010, about 13 years after being established, defined what universal access means.

However, member of the USAASA board Shaun Pather said the definitions were gazetted, but subsequently withdrawn to correct an error. The corrected definitions are now ready to be gazetted.

The agency this year defined what comprises an under-serviced area. Moleele said the agency is very pleased with this achievement, because it has been a long time coming.

He said the definition of an under-serviced area is an important milestone, because it clearly identifies the areas that operators are obligated to service, and project grants are allocated to the most deserving areas. In addition, National Treasury can now be informed about costs for the agency's work in an entire area and funding from treasury can be stabilised.

An under-serviced area is where there is no infrastructure at all, where the infrastructure is not sufficient to carry services, or where the infrastructure does not reach or benefit the whole community, according to USAASA.

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