When does spending on consultants become excessive? This is a question that the Public Service Accountability Monitor recently set out to answer in a research report titled "Staff shortages, incapacity and the excessive use of consultants by the Eastern Cape provincial government".
The report found that the province's administration had spent between R1,86bn and R3,43bn on consultants over the 2002/2003 and 2003/2004 financial years. The difficulty of assessing exactly how much was spent by the provincial administration arises because of the contradictory way in which figures relating to spending on consultants are reported in the administration's publications.
The discrepancy seems to arise because the administration has no single definition of what consultant spending constitutes. This results in a mismatch between the provincial treasury figures for consultant spending and those in provincial annual reports.
Alarmingly, similar problems arise in national department annual reports. For example, the national department of education 2004/2005 annual report notes in its financial statements that it spent R29,4m on "consultants, contractors and special services" in the year. However, the same report notes under "utilisation of consultants" that it spent R87m. This failure to report consistently and openly prevents oversight bodies such as portfolio committees and the auditor-general from knowing how much each department spends on consultants.
Why is so much spent on consultants? The main reason is that provincial departments have crippling staff vacancy rates. The average vacancy rate in Eastern Cape departments in 2002/2003 was 31%, rising to 32% the following year. In critical posts ( essential for the smooth running of departments) the figures are 39% and 47% respectively. But there is little evidence to suggest provincial departments have any coherent staff recruitment and retention strategies.
In addition, even when funds have been put aside for the filling of critical posts, departments often fail to spend that money. One of the ironies of the Eastern Cape's recruitment crisis is that hiring was frozen last year because of "belt-tightening" measures introduced to enable the province to manage its R2,3bn deficit. The deficit was accrued due to poor planning and a failure to monitor spending - clear indications of a lack of capacity.
Given the vacancy rate within the provincial administration, it would seem to make sense to prioritise the training and capacity building of existing staff. But over the two years that the province spent R3,43bn on consultants, it spent only R219m on training its own staff. In short, nearly 16 times more was spent on consultants than on training.
National departments also labour under high vacancy rates and spend large amounts on consultants. For example, the national treasury had a 25% overall vacancy rate at the end of the 2004/2005 financial year, and managed to spend R128m on consultants that year. The education department had a 19% critical post vacancy rate and spent R87m on consultants. Even public service & administration, whose mission is "maintaining a functioning public service", had a 29% vacancy rate and spent R27m on consultants.
Another problem that contributes to the use of consultants is the lack of a performance culture within provincial departments. Despite public service regulations stating that performance management systems should be in place in all departments by June 2001, we found hardly any evidence of them. For example, the provincial social development department recently admitted that not even senior managers had signed performance agreements. Though the provincial treasury stated that 95% of its employees had signed agreements during 2003/2004, it said no reviews had taken place.
It is therefore not surprising that the interim management team sent to the province in 2003 by the president to improve service delivery found managers were "unwilling" to be held accountable for their actions, which accounted for their "inertia". Clearly, where accountability is lacking, opportunity arises for consultants to do work that paid-up employees are failing to undertake. Consultants do not offer departments a long-term solution to their problems.
Transformation of the public sector will succeed only if departments spend less on consultants and invest more in training. After all, affirmative action presupposes that capacity building will be given priority to enable a more representative public service to emerge in SA.
Neil Overy is senior research editor at the Public Service Accountability Monitor, and author of its recent report
