The use of consultants in the public sector and the need for review

South Africa is faced with tough fiscal choices in an economic environment characterised by high inflation, subpar economic growth, and currently, with the ugliest record of income inequality and youth unemployment numbers. Some argue that we are on the edge of a precipice and these difficult choices cannot be deferred any further. A clear low-hanging fruit is improving public sector spending efficiencies without compromising the quality of the delivery of basic services such as health, sanitation, education, and roads infrastructure.

A key area of interest is the optimisation of spending on consultant fees. It is no secret that our public service is heavily reliant on consultants for the delivery of critical public goods and services. According to National Treasury’s consolidated financial statements for the year ended 31 March 2022, over R15 billion was spent on consultants, contractors, and outsourced services in the 2021/22 financial year. This figure is a conservative aggregate considering that services relating to capital projects, training, travel, repairs and maintenance, which are usually outsourced, are not included. These costs are increasing at above inflation without any tangible value-add that accrue to the public.

The use of consultants by the government is driven by several factors, including budget constraints, vacancies in key positions, and a lack of qualified personnel responsible for critical areas, to name a few. Consultants are meant to supplement these shortcomings by bringing in expertise and specialised knowledge, flexible additional resources, efficiencies, and costs savings, whilst transferring the capabilities, knowledge and building internal capacity for that particular organ of state, where applicable. However, this rarely occurs, as this relationship has been characterised by costly low-quality service delivery outcomes with increased dependency on consultants. All this to the detriment of the public sector agent mandated to deliver goods or services and ultimately, the citizens.

In its general reports the Auditor-General of South Africa has consistently raised concerns regarding the effective use of consultants. These include inadequate documentation, ineffective contract management, and poor project management that results in goods or services delivered at poor quality or not delivered at all − the root cause being public officials that are not qualified or capable to deliver on the critical responsibilities assigned to them, and they continue with zero consequences.

As part of the professionalisation of the public service, a skills and competency audit is critical to identify areas where there are capacity challenges and areas for development. The question must always be asked, and answered, as to why a service is outsourced if there is currently an incumbent employed to fulfil those duties. This includes an objective review and scrutinisation of the needs assessment done to motivate for the need to use an expert. Public sector would perhaps need to radically shift the manner in which contracting for expert use is governed. This must include robust performance management and consequence management for transgressions and waste of resources to promote responsibility and accountability for public officials involved. This could be coupled with a focused talent management strategy to develop and capacitate the talented, motivated, and dedicated civil servants.

Indeed, there are no sacred cows. There is no need to remind anyone of the involvement of big firms implicated in the Zondo State Capture Commission, such as Bain and Company, KPMG, McKinsey and Company, Swissport … the list is endless. Even ‘post’ state capture, public sector CFOs continue to experience instances of overpriced goods and services, poor quality work, lack of good faith in contracting with hidden terms and conditions that inflate costs significantly above budget, manipulation of outcomes to guarantee future dependency, etc. All these factors combined have a significant influence on the poor service delivery we see today and further erode public trust and confidence in the government.

National Treasury issued a practice note to guide the appointment of consultants a few years ago, however this has not had the desired impact as discussed above and may need to be reviewed. Some of the recommendations to improve on the use of consultants from the public sector perspective are:

• Having clearly defined project goals and needs assessment approved at a more accountable level of delegation
• Open, competitive and centralised (for big-value contracts) procurement and contract management
• Effective testimonial-based evaluation of bidding consultants on their expertise prior to appointment
• Clearly defined performance metrics
• Retainer fees for knowledge transfer with stringent conditions, and
• Regarding the relationship with consultants, a memorandum of understanding between respective industry bodies and the public sector must be established. It must emphasise the need for principled and honest contracting that elevates provision of sustainable public services as a common goal for all parties to the contract

In conclusion, there is no doubt that South Africa is facing several significant challenges that require tough choices to be made sooner rather than later. This includes a focus on efficient spending to ensure value for money and a review of the business relationship between the public sector and its consultants. Given the capacity challenges faced by the state, with robust performance management for non-performing officials, the use of consultants will remain integral to the government’s resource planning and delivery of basic services. However, the business interaction with consultants must be principled, fair, in good faith and in the public interest to ensure public goods and services are provided optimally.

AUTHOR Bulelani Makunga CA(SA) MBA, Public Sector CFO and Board Member