PARLIAMENTARY QUESTIONS

QUESTION NO.: 1777
Date.: 27 Jul 2012

Mr M M Swathe (DA) to ask the Minister for the Public Service and Administration:

  1. Whether (a) her department and (b) all entities reporting to her make payment to (i) suppliers and (ii) service providers within the 30 day payment period as specified by the Public Finance Management Act (PFMA), Act 1 of 1999; if not, in each case, (aa) how many service providers are awaiting payment, (bb) what is the monetary value of outstanding payments and (cc) how long is payment overdue;
  2. whether (a) her department and (b) all entities reporting to her are liable for any interest charged on overdue payments in any of the cases mentioned; if not, what is the position in this regard; if so, in each case, what is the (i) percentage and (ii) monetary value of interest charged;
  3. whether (a) her department and (b) all entities reporting to her have negotiated revised payment schedules with each of the service providers mentioned; if not, why not; if so, in each case, what are the relevant details;
  4. what are the reasons for (a) her department and (b) all entities reporting to her not making payment within 30 days as specified by the PFMA;
  5. whether (a) her department and (b) all entities reporting to her have implemented any measures to (i) ensure full compliance with the PFMA and (ii) facilitate immediate payment for overdue accounts; if not, why not; if so, in each case, what are the relevant details?

REPLY


DEPARTMENT OF PUBLIC SERVICE AND ADMINISTRATION (PSA)

(1)(a) The Department of PublicService and Administration has put processes in place to settleinvoices for (i) suppliers and (ii) service providerswithin the 30 day payment period.

(aa) One service provider namely GovernmentPrinters is awaiting payment of two invoices.

(bb) The monetary values of the invoicesare R278, 064.10 and R98, 173.55.

(cc) The invoices are 174 and 130days old, respectively.

(2) No interest has beencharged on the invoices.

(3) The Department has notnegotiated any revised payment schedule with the service providersbecause the investigation on the above two invoices is still inprogress.

(4) (a) The unpaid invoices are under dispute andthe invoice for R278, 064.10 is under an internal investigation.

(5)(i)(ii) In an effort to ensure compliance to the PFMA, theDepartment has a register where all payments are tracked andprioritized not to exceed 30 days. The Department has checklists inSupply Chain Management (SCM) and Finance which includes issuesrelated to 30 day payment delays, tightening the prioritizationprocess on payments and meetings are scheduled between SCM andFinance to determine root causes and put in place additionalcontrols. Suppliers are also requested to submit their invoices toSCM as the point of entry to fast track payment process.

GOVERNMENT EMPLOYEES MEDICAL SCHEME (GEMS)

(i) GEMS confirms thatall our suppliers are paid within 30 days.

(ii) GEMS is registered as aMedical Scheme in terms of the Medical Schemes Act 131 of 1998 andis therefore governed by the provisions of the Medical Schemes Act.The Public Finance Management Act (PFMA) does not apply to MedicalSchemes.

(aa) No service providers are awaiting paymentfrom the Scheme.

(bb) Nil

(cc) No payments are overdue.

GEMS makes payment to providers within 30 days. The Scheme has notpaid interest due to overdue invoices as a result of non-payment.

No revised payment schedules were discussed with suppliers.

(i) ThePublic Finance Management Act (PFMA) does not apply to MedicalSchemes and hence to GEMS.

GEMS confirms that all our suppliers are paid within30 days.

(5) There are no overdue accounts payableby GEMS.

STATE INFORMATION TECHNOLOGY AGENCY (SITA)

(1) (i) and (ii) All suppliersfor which payment requirements are met are paid within 30days. Other suppliers are paid as soon as paymentrequirements are met.

(aa) and (bb) Out of a total creditors balance of R776.3m, 215service providers and suppliers are owed R540m which areoutstanding for more than 30 days and 189 service providers andsuppliers are owed R303m which is outstanding for more than 60 daysor more.

(2) (i) and (ii) Any interestcharges for overdue payments are levied as per the individualcontracts and amount to R15m.

(3) Contractual payment termsfor some international suppliers (software licensing) arenegotiated to 60 days as allowed by the PFMA. All other suppliersare paid as soon as payment requirements are met.

(4) Reasons for late payment includethe following:

Disputes. The time delay in resolving disputes with regard toverifying services delivered.

Inappropriate tasking of service providers – Time delay increating purchase orders after invoice has been received fromservice providers.

Payment requirements not met - Services delivered for whichinadequate documentation is submitted with the invoice.

(i) and (ii) To ensure full compliance with the PFMA, governanceover the Procure to Pay process is improved inthe following manner:

Accounts Payable Policy which prohibits the tasking of a serviceprovider without a purchase order has been approved and is beingimplemented.

Contract Management was improved to identify contracts that is dueto expire to ensure that timely action is taken in thisregard.

Service Level Agreements are put in place to prevent unnecessarydisputes relating to deliverables.

PUBLIC ADMINISTRATION LEADERSHIP AND MANAGEMENT ACADEMY(PALAMA)

PALAMA ensures that necessaryactions are always complied with, to ensure that (i) suppliers and(ii) service providers are paid within 30 days of receipt ofinvoices.

Table 1 below provides details on the each case for (aa) the numberof service providers awaitingpayments (bb) monetary value and (cc) number of days, the paymenthas been overdue.

Table 1

No

(aa)

Service Provider

Amount

(bb)

No of days the payment is overdue (cc)

1

Absol Internet Business Solutions

2 565

6

2

Captain Sterling Investment

14 040

3

3

Pretoria University

42 040

27

4

OASIS

1 140

21

Total

59 785

PALAMA does not have liability to pay interest on overdue paymentsand service providers are regularly updated of the status of theirpayments especially those that are likely to be paid after 30 days.

(3) No payment schedule has been negotiated with the service providersbeyond what contractually agreed to. Individual service providersare constantly updated on the progress for the payment ofrespective invoices.

The reasons for late payment are as follows:

Required details for new suppliers are not always available in thefinancial system to facilitate payments due to inadequatecompletion of registration forms by suppliers. Suppliers sometimestake time before they submit all necessary documents requested thusincreasing the lead time for payment;

Major discrepancies between the quoted amount and invoiceamount at times do take time to be resolved;

System related challenges; and

Goods and services not delivered to the satisfaction of thedepartment.

PALAMA is implementing measuresthat ensure compliance to PFMA, Treasury Regulations andInstruction notes issued by National Treasury to facilitateimmediate payments of invoices. These measures include log sheetattached to every invoice to record all instances that result incontravention of stipulated actions and failure to ensure that theinvoice is processed within the 30 days lead time.

CENTER FOR PUBLIC SERVICE INNOVATION (CPSI)

Payments for CPSI are done by DPSA.


*Having trouble viewing this site? Please make sure you are using Internet Explorer version 7 or later or Firefox version 3 or later.