July 2004
Issued in the Republic of South Africa by: National Office: Commission House Cnr Hamilton & Ziervogel Streets Arcadia 0083 Private Bag X121 Pretoria Tel: (012) 328 7690 Fax: (012) 325 8382 Email: info@opsc.gov.za www.psc.gov.za ISBN: 0621350842 RP:33/2004
FOREWORD The aim of the Subsidized Motor Transport Scheme is to enable public servants to undertake essential and approved official journeys in those cases where the use of other available transport is not practical or economical. However, it is a very expensive scheme with huge financial implications for the State as employer. As is the case with similar other work facilities, it is furthermore susceptible to abuse by corrupt officials. A need was therefore identified by the to monitor and evaluate the management of the Scheme and to report thereon to Parliament. A special word of thanks is extended to the following persons and institutions for their assistance to and cooperation with the Project Team: Me Lize Hoole at the National Department of Transport for her assistance during the planning phase of the project. PERSAL for the data provided. Representatives of WesBank First Auto, Auto Fleet Services and Fleet Africa for their inputs and contribution towards the investigation. The transport officers and heads of components administering subsidized vehicles in the provincial and national departments that participated in the survey. The Specialist Team of the dealing with Human Resources and Senior Management and Conditions of Service. Officials from the Office of the responsible for executing the investigation and the compilation of the report. CHAIRPERSON PUBLIC SERVICE COMMISSION i
Contents LIST OF TABLES...iv GLOSSARY...v EXECUTIVE SUMMARY...vii 1 INTRODUCTION 1.1 Background to the investigation...1 1.2 Mandate...6 1.3 Scope of the investigation...6 1.4 Investigation methodology...6 2 SUBSIDIZED MOTOR TRANSPORT SCHEME PRESCRIPTS 2.1 Introduction...11 2.2 Policy for the Subsidized Motor Transport Scheme A...11 2.3 Differences between Scheme A and B...14 2.4 Conclusion...15 3 PARTICIPATION IN THE SCHEME 3.1 Introduction...17 3.2 Occupational fields of officials participating in the SMTS...17 3.3 Financial implications of the SMTS to the State as Employer...17 3.4 Steps in the process of participation...21 3.5 The use of the prescribed Z 81 application form and supporting documentation...22 3.6 Role players involved in the process of approval/management...23 3.7 Issues taken into account when evaluating applications...25 3.8 The availability of prescript...26 3.9 Conclusion...27 4 MECHANISMS IN PLACE TO CONTROL PARTICIPATION IN THE SMTS 4.1 Introduction...29 4.2 Control over distances traveled...29 4.3 Role and responsibility of line managers...31 4.4 Inspection of vehicles...32 4.5 Amending and renegotiation of individual contracts...32 4.6 Keeping of records...33 4.7 Conclusion...35 5 THE USE OF INFORMATION FOR MANAGEMENT PURPOSES 5.1 Introduction...37 5.2 Utilization of PERSAL...37 5.3 Availability of information...38 5.4 Information needs...39 5.5 Conclusion...40 ii
6 CONSTRAINTS IN THE ADMINISTRATION AND MANAGEMENT OF THE SCHEME 6.1 Introduction...43 6.2 The awarding of subsidized vehicles to officials who do not qualify...43 6.3 Incorrect logsheet information and problems with claims...44 6.4 Inadequate record keeping...45 6.5 Misuse of subsidized vehicles...45 6.6 Policy related problems...46 6.7 Maintenance and insurance related problems...46 6.8 Problems with vehicles...48 6.9 Conclusion...48 7 RECOMMENDATIONS 7.1 Introduction...51 7.2 Provisioning of effective and efficient resources...51 7.3 Establishment of advisory committees...52 7.4 Tariff related recommendations...52 7.5 Amendment of the policy for the SMTS...53 7.6 Keeping participants in the SMTS informed at all times...54 7.7 Electronic processing of claims...55 7.8 Revision of National Contract RT 77...55 7.9 Safeguarding and record keeping of information...55 7.10 Conclusion...56 8 SUMMARY...59 ANNEXURE A: Questionnaire used to gather data from transport officers...61 ANNEXURE B: Checklist used during the inspection of subsidized transport files...69 iii
List of tables Pg Table 1: Number of SMTS participants in the Eastern Cape 1 Table 2: Number of SMTS participants in the Free State 2 Table 3: Number of SMTS participants in Gauteng 2 Table 4: Number of SMTS participants in KwazuluNatal 2 Table 5: Number of SMTS participants in Mpumalanga 3 Table 6: Number of SMTS participants in North West 3 Table 7: Number of SMTS participants in the Northern Cape 3 Table 8: Number of SMTS participants in Limpopo 4 Table 9: Number of SMTS participants in the Western Cape 4 Table 10: Number of SMTS participants in national departments 4 Table 11: Summary of the number of SMTS participants 5 Table 12: National departments that participated in the survey 6 Table 13: Provincial departments that participated in the survey 8 Table 14: Main generic differences between Scheme A and B 14 Table 15: Total expenditure regarding subsidized transport for the 1999/00 financial year 18 Table 16: Total expenditure regarding subsidized transport for the 2000/01 financial year 19 Table 17: Total expenditure regarding subsidized transport for the 2001/02 financial year 19 Table 18: The cost of insurance premiums of subsidized vehicles for the period 1 May 1999 to 31 March 2000 20 Table 19: The cost of insurance premiums of subsidized vehicles for the period 1 April 2000 to 31 March 2001 20 Table 20: The cost of insurance premiums of subsidized vehicles for the period 1 April 2001 to 31 March 2002 20 iv
Glossary HoD Head of Department Insurer Glenrand M.I.B Empowerment Company Kms Kilometers Maintenance providers Auto Fleet Services (a subsidiary of AVIS Fleet Services) Fleet Africa, previously known as Super Fleet National contract RT 77 Contract between the State and various vehicle manufacturers whereby vehicles are bought in accordance with special discount prices NDoT National Department of Transport Odometer reading Distance traveled by a vehicle, as reflected on its odometer PERSAL Personnel and Salary Administration System Policy Policy for the Subsidized Motor Transport Scheme Reading number The number of times that an odometer reading was taken Service Provider WesBank First Auto SMT Subsidized Motor Transport SMTS Subsidized Motor Transport Scheme VAT Value Added Tax v
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Executive Summary 1. Introduction The provision of subsidized vehicles to officers is a work facility that enables them to undertake essential and approved official journeys in those cases where the use of other available transport is not practical or economical. Participation in the Subsidized Motor Transport Scheme (SMTS) is regulated by the Policy on the SMTS. Although the Policy stipulates specific qualifying criteria and allocation requirements, no provision is made for monitoring and evaluation mechanisms. It was therefore the intention of this investigation to establish whether specific qualifying criteria and allocation requirements set by the National Department of Transport (NDoT) in the Policy are adhered to; whether control measures are in place to ensure the effective management of the Scheme; constraints experienced by transport officers/departments with the administration of the Scheme; the financial implications of the Scheme for the State; and the availability of consolidated management information, as well as possible needs in this regard. Information was obtained from departments by means of interviews as well as inspection of SMTS files. For this purpose an interview questionnaire and inspection checklist were developed, thereby ensuring consistency with the type and quality of information obtained. The questionnaire and checklist are attached to this report as Annexure A and B respectively. 2. Subsidized Motor Transport Scheme prescripts Participation in the SMTS can be in accordance with either Scheme A or B, depending on the number of official kilometers traveled per annum by the relevant official. Paragraph 2.2 of this report provides a summary of the main issues addressed by the Policy whilst the main generic differences between Schemes A and B are indicated in Table 14 of the report (the investigation mainly focused on the participation in Scheme A). 3. Participation in the Scheme 3.1 Financial implications of the Scheme The total expenditure incurred in respect of the payment of monthly capital remuneration, cost of maintenance and fuel allowances to participants in the Scheme amounted to R81 million, R122 million and R213 million during the 1999/00, 2000/01 and 2001/02 financial years respectively. Details of this expenditure are contained in tables 15 to 17 of the report. In addition to the payment of monthly capital remuneration, cost of maintenance and fuel allowances to participants in the Scheme, monthly insurance premiums are also paid to the Insurer. Tables 18 to 20 of the report provide an indication of such payments made at national and provincial levels. vii
3.2 Steps in the process of participation The process of application for participation in the Scheme is normally initiated by the relevant official. Upon completion of a Z 81 application form by the official, the application is forwarded to the Advisory Committee via the Transport Officer. Such applications are always endorsed by the official's direct supervisor and/or the manager of the component. Paragraph 3.4 of the report deals with 14 steps, identified as part of the process to participate in the Scheme, in detail. 3.3 The use of the prescribed Z 81 application form and supporting documentation The prescribed application form Z 81 is used by officials when applying to participate in the SMTS. The form is used to provide an advisory committee with information on, amongst others, particulars of the applicant, the duties of the applicant, specifications of the vehicle currently used by the applicant, specifications of the vehicle that is required and the official distance that the official has to travel per annum to perform his/her duties effectively. Provision is also made in the last part of the Z 81 form for the capturing of the advisory committee's recommendation. 3.4 Role players involved in the process of approval The role players that are involved in the process of approval to participate in the Scheme include advisory committees, chairpersons of such advisory committees and, in some instances, risk management committees. 3.5 Issues taken into account when evaluating applications The investigation found that various issues are taken into account by advisory committees when evaluating an application to participate in the SMTS. These include, amongst other, the reasons motivated in the Z 81 application form, budgetary constraints and the reason(s) for the termination of a previous contract. 3.6 The availability of prescripts It was found that most departments have their own departmental policy or procedure manual, in addition to the national Policy issued by the NDoT. Transport officers in departments, responsible for administering and managing the SMTS, familiarized themselves with the content of such policies mainly by means of formal training sessions, telephone enquiries to the Service Provider, procedure manuals and workshops. Departments are also informed of the relevant rules and measures regulating the SMTS, as well as amendments to the tariffs, either directly by the NDoT or by the various provincial transport departments. The heads of the various components in which participants are employed are informed by departmental transport officers of the rules and measures regulating the SMTS, as well as amendments thereto. viii
4. Mechanisms in place to control participation in the SMTS 4.1 Control over distances traveled Record of all official kilometers traveled is kept by officials themselves and/or their supervisors in logbooks. The prescribed logsheets (form Z 79) are also completed on a monthly basis and submitted to the relevant transport officer. These logsheets are in all cases signed by the official him/herself, the official's supervisor and/or the head of the relevant component as well as the relevant transport officer. However, not in all cases is it verified that the kilometer distances indicated on the Z 79 logsheets corresponds with the kilometer distances on the odometers of the subsidized vehicles. 4.2 Role and responsibility of line managers The role and responsibility of line managers are mainly to approve official journeys prior to the undertaking thereof and to verify, on a monthly basis, all official kilometers traveled by also signing the Z 79 logsheets. However, it was found that not all line managers in provincial departments are required to approve official journeys before they are undertaken. 4.3 Inspections of vehicles Not all departments perform inspections on subsidized vehicles in order to determine whether the contracted kilometers have been traveled or not. In those instances where inspections are performed, they are usually done on a biannual basis. Should any anomalies be detected, they are reported to the delegated person responsible for managing the SMTS. 4.4 Amending and renegotiation of individual contracts Some transport officers interviewed indicated that in the past it has been necessary to amend and renegotiate some of the individual contracts due to a constant monthly deviation of more than 20% from the official kilometer distances initially contracted. This, however, was the exception rather than the rule. 4.5 Keeping of records A sample of 10 files in each department that participated in the survey was inspected. The files inspected were all very neat and in good condition, especially at national level. During the inspection it was found that a file is opened and maintained for each official participating in the SMTS. However, not all files at the various departments contain the same documents. In some cases three separate files were opened for (a) applications to participate in the SMTS, (b) decisions taken by advisory committees and (c) monthly completed Z 79 logsheets and accompanying trip authorizations. The fact that there are certain issues that are specified in the Policy for the SMTS that could not be verified or found on any file, such as suspected driver misuse or the annual renewal of vehicle licenses for example, is of concern. ix
5. The use of information for management purposes 5.1 Utilization of PERSAL PERSAL is utilized to administer the SMTS, including payments made in this regard. It is in fact the only computerized system currently used by departments to administer the Scheme. 5.2 Availability of information Information pertaining to numerous issues with regard to the management of the SMTS is available on PERSAL. During the interviews that were held with departmental transport officers, questions were posed to them regarding the availability of such information. These officials were, however, uninformed about information relevant to the management of the SMTS available on PERSAL. 5.3 Information needs PERSAL related information needs, such as accurate information, the decentralization of PERSAL to all provincial departments, more training on the utilization of PERSAL, etc. were identified by transport officers. They also indicated a need for a simple and quick process for approval of subsidized vehicles as well as the ability to determine when a claim was processed in instances where fuel claims are paid out. The possible accommodation of additional information needs identified was also discussed with representatives of PERSAL. An important aspect that emerged during these discussions is that the accuracy of information available on the system depends on the correct capturing of the relevant data by departments. 6. Constraints in the administration and management of the Scheme Constraints identified by departments with regard to the management of the SMTS include the awarding of subsidized vehicles to officials who do not qualify, incorrect logsheet information, inadequate record keeping, misuse of subsidized vehicles, policy related problems, maintenance and insurance related problems and problems with the delivery of vehicles as well as the choice of vehicles available on National Contract RT 77. 7. Recommendations In order to address the shortcomings and constraints identified with the management of the SMTS, recommendations pertaining to the following are made in Chapter 7 of the report: Provisioning of effective and efficient resources. Establishment of advisory committees. Tariff related recommendations. Amendment of the policy for the SMTS. x
Keeping participants in the SMTS informed at all times. Electronic processing of claims. Revision of National Contract RT 77. Safeguarding and record keeping of information. 8. Summary From the survey it became evident that the SMTS is in general administered and managed by departments in an effective and efficient manner. From the findings of the investigation it can be concluded that vehicles are allocated to officials on grounds of sound motivation, monthly records of both official and private distances traveled are kept and that strict control over fuel and maintenance claims is exercised. Certain shortcomings, problem areas and needs were, however, identified during the investigation. In this regard the lack of provincial advisory committees is of particular concern to the. Vehicles are not always inspected, distances traveled are not in all instances verified and record could not be found on all the files of the relevant documentation. Information available on PERSAL that could assist with the management of the SMTS is also not utilized optimally. xi
1. Introduction The concession to qualifying officers to participate in the Subsidized Motor Transport Scheme is not a service benefit, but a work facility
Introduction 1.1 Background to the investigation According to the Subsidized Motor Transport Policy (the Policy), the provision of subsidized vehicles to officers is a work facility that enables them to undertake essential and approved official journeys in those cases where the use of other available transport is not practical or economical. The concession to qualifying officers to participate in the Subsidized Motor Transport Scheme (SMTS) is not a service benefit but a work facility, which cannot be construed as a right. The Policy has been revised previously by the National Department of Transport (NDoT) in order to eradicate problems experienced with the control and management of the Scheme and to prevent fraud and corruption. Although the latest version of the Policy stipulates specific qualifying criteria and allocation requirements, no provision is made for monitoring and evaluation mechanisms. In addition to policy issues, the () became aware of allegations of subsidized vehicles being granted to employees as a result of their ranks rather than them meeting the qualifying requirements, especially at provincial level. During the initial planning phase of this investigation, it was established that ± 10 000 employees participated in the Scheme as at the end of February 2002. The following tables provide an exposition of the number of participants in the SMTS (number of open accounts) as per provincial and national department: Table 1: Number of SMTS participants in the Eastern Cape Financial year Department 1999/00 2000/01 2001/02 TOTAL Agriculture Departments & Land Affairs 37 Education Health 2 Housing, Local Government & Traditional Affairs Office of the Premier Provincial Safety, Liaison & Transport 32 Provincial Treasury, Economic Affairs, Environment & Tourism Roads & Public Works 16 Sport, Recreation, Arts & Culture Welfare Total 87 27 19 29 47 5 19 20 19 7 41 20 100 15 13 17 31 12 10 6 14 84 119 46 60 22 82 32 45 13 55 233 238 558 1
Table 2: Number of SMTS participants in the Free State Financial year Department 1999/00 2000/01 2001/02 TOTAL Agriculture Departments 1 9 34 44 Education 203 85 288 Environmental Affairs and Tourism 11 22 33 Finance, Expenditure & Economic Affairs 2 3 5 Health Services 46 14 60 Local Government & Housing 11 25 36 Office of the Premier 1 7 8 Public Works & Transport 52 40 81 173 Safety & Security 7 2 9 Social Services 1 14 4 19 Sports, Arts, Culture, Science & Technology 0 Total 54 344 277 675 Table 3: Number of SMTS participants in Gauteng Financial year Department 1999/00 2000/01 2001/02 TOTAL Agriculture, Departments Conservation, Environment & Land Affairs 10 69 79 Development Planning & Local Government 3 23 26 Education 1 45 46 Finance & Economic Affairs 0 Health 0 Housing 40 16 56 Office of the Premier 0 Provincial Safety & Liaison 1 1 Social Services & Population Development 2 8 10 Sport, Recreation, Arts & Culture 1 8 9 Transport & Public Works 54 86 140 Total 0* 111 256 367 Note:* No data was available on PERSAL in respect of the number of SMTS participants in Gauteng during the 1999/00 Financial Year. Table 4: Number of SMTS participants in KwazuluNatal Financial year Department 1999/00 2000/01 2001/02 TOTAL Agriculture Departments & Environmental Affairs 10 15 34 59 Education & Culture Finance Health Housing Office of the Premier Social Welfare and Population Development Traditional Affairs & Local Government Transport Works Total 62 178 250 200 429 644 243 17 2 284 13 1 18 10 622 443 0 17 2 891 13 1 18 10 1454 2
Table 5: Number of SMTS participants in Mpumalanga Department Financial year 1999/00 2000/01 2001/02 TOTAL Agriculture, Departments Conservation & Environment 30 80 45 155 Economic Affairs, Gaming, Tourism & Finance 12 28 4 32 Education 33 132 42 207 Health 188 69 9 266 Housing & Land Administration 12 50 33 95 Local Government & Traffic 22 52 74 Office of the Premier 8 21 11 40 Public Works, Roads & Transport 42 144 53 239 Safety & Security 5 4 2 11 Social Services & Population Development 16 20 36 Sport, Recreation, Arts & Culture 27 4 3 34 Total 357 570 274 1189 Table 6: Number of SMTS participants in North West Financial year Department 1999/00 2000/01 2001/02 TOTAL Agriculture, Departments Conservation & Environment 22 94 65 181 Development, Local Government & Housing 26 15 26 41 Economic Development & Tourism 1 20 21 Education 122 53 175 Finance 1 5 10 16 Health 9 83 92 Office of the Premier 1 1 Safety & Liaison 2 1 3 Social Services, Arts, Culture & Sport 8 60 81 149 Traditional & Corporate Affairs 6 9 15 Transport, Roads & Public Works 7 161 162 330 Total 64 475 511 1024 Table 7: Number of SMTS participants in the Northern Cape Department Financial year 1999/00 2000/01 2001/02 TOTAL Agriculture, Departments Land Reform, Environment & Conservation 2 47 19 68 Economic Affairs & Tourism 0 Education 2 4 6 Finance 0 Health 5 12 17 Housing & Local Government Office of the Premier Safety & Liaison Social Welfare & Population Development Sports, Arts & Culture Transport, Roads & Public Works Total 2 10 14 8 1 23 86 3 1 1 3 28 71 13 2 1 0 3 61 171 3
Overtime Table 8: Number of SMTS participants in Limpopo Department Financial year 1999/00 2000/01 2001/02 TOTAL Agriculture Departments & Environment Education 120 40 139 133 259 173 Finance, Economic Affairs & Tourism 32 62 94 Health & Welfare 84 288 372 Local Government & Housing 18 96 114 Office of the Premier 20 31 51 Public Works 84 234 318 Safety, Security & Liaison 1 6 7 Sport, Arts & Culture 1 24 25 Transport 61 151 212 Total 0* 461 1164 1625 Note: * No data was available on PERSAL in respect of the number of SMTS participants in Limpopo during the 1999/00 Financial Year. Table 9: Number of SMTS participants in the Western Cape Department Financial year 1999/00 2000/01 2001/02 TOTAL Agriculture, Departments Property Management & Works Community Safety 16 59 19 94 0 Education 0 Environment & Cultural Affairs 3 1 4 Finance, Business Promotion & Tourism, Office of the Premier 2 28 4 34 Health 3 29 6 38 Housing & Corporate Services 0 Local Government & Development Planning 4 11 4 19 Social Services & Poverty Relief 7 5 12 Transport, Sport & Recreation 1 3 2 6 Nature Conservation Board 21 10 31 Total 26 161 51 238 Table 10: Number of SMTS participants in national departments Financial year Department 1999/00 2000/01 2001/02 TOTAL Agriculture Departments Arts, Culture, Science and Technology* Correctional Services South African National Defence Force Environmental Affairs and Tourism Government Communications (GCIS) Home Affairs Independent Complaints Directorate Justice and Constitutional Development Labour Land Affairs 1 0 17 7 1 0 3 5 0 4 20 67 2 12 183 2 20 4 7 8 16 28 50 0 2 171 2 16 3 0 5 18 39 118 2 31 361 5 36 10 12 13 38 87 4
Table 10: Number of SMTS participants in national departments (continued) Financial year Department 1999/00 2000/01 2001/02 TOTAL Minerals Departments and Energy 23 71 81 175 Public Works 1 34 59 94 Transport 11 2 8 21 Water Affairs and Forestry 119 507 389 1015 Total 212 963 843 2018 Note: * On 1 August 2002 (after the period covered by this investigation) the Department of Arts, Culture, Science and Technology changed to two departments, namely the Department of Arts and Culture and the Department of Science and Technology. Table 11: Summary of the number of SMTS participants Province /National Department Financial year 1999/00 2000/01 2001/02 TOTAL Eastern Departments Cape 87 233 259 579 Free State 54 344 374 772 Gauteng 111 353 464 KwazuluNatal 250 644 678 1572 Mpumalanga 357 570 376 1303 North West 64 475 631 1170 Northern Cape 14 86 93 193 Limpopo 461 1226 1687 Western Cape 26 161 65 252 National Departments 212 963 843 2018 Total 1064 4048 4898 10010 Given the number of users of the SMTS, the financial implications thereof and the susceptibility to abuse, there is a clear need for the monitoring and evaluation of its management. It was therefore the intention of this investigation to establish whether specific qualifying criteria and allocation requirements set by the NDoT in the Policy are adhered to; whether control measures are in place to ensure the effective management of the Scheme; constraints experienced by transport officers/departments with the administration of the Scheme; the financial implications of the Scheme for the State; and the availability of consolidated management information, as well as possible needs in this regard. 5
1.2 Mandate In terms of section 196(4)(f)(i) and (iii) of the Constitution of the Republic of South Africa, 1996, the may of its own accord or on receipt of any complaint, investigate and evaluate the application of personnel and public administration practices and report to the relevant executing authority and legislature, and monitor and investigate adherence to applicable procedures in the Public Service. 1.3 Scope of the investigation Participation in the SMTS can be in accordance with either Scheme A or B, depending on the number of official kilometers (kms) traveled per annum. The main generic differences between these two schemes are elaborated upon in paragraph 2.3 of the report. For purposes of this investigation, the focus was on participation in Scheme A. The reason for only focusing on Scheme A was that participants in Scheme B use their own private vehicles when official journeys are undertaken (and are compensated only for such distances traveled). 1.4 Investigation methodology Two departments that are the biggest users of the Scheme in each of the provinces were identified to participate in the investigation. For comparison purposes and in order to obtain a holistic viewpoint, the four departments that are the biggest users of the Scheme at national level were also included in the survey with a view to determine whether the same problems and needs are experienced nationally and provincially, as well as possible examples of best practices. The national and provincial departments that participated in the survey are listed in tables 12 and 13 respectively. Table 12: National departments that participated in the survey Department No of subsidized vehicles Agriculture Minerals & Energy Public Works Water Affairs & Forestry Total no of subsidized vehicles 118 175 94 1 015 1 402 6
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Table 13: Provincial departments that participated in the survey Province Department No of subsidized vehicles Eastern Cape Free State Gauteng KwazuluNatal Limpopo Mpumalanga North West Northern Cape Western Cape Agriculture Sport, Arts & Culture Education Public Works, Roads & Transport Agriculture, Conservation, Environment & Land Affairs Transport, Roads & Works Education Transport Agriculture Transport Local Government, Traffic Control & Traffic Safety Public Works, Roads & Transport Agriculture & Conservation Transport, Roads & Public Works Agric, Nature Conservation, Environ. Affairs & Land Reform Transport, Roads & Public Works Health Transport & Public Works Total no of subsidized vehicles 84 13 288 173 79 140 443 17 259 212 74 239 330 181 68 61 38 6 2 705 The Office of the 's regional offices in each of the provinces was responsible for the gathering of information at provincial level. Prior to activating the investigation, a workshop was held with officials from the regional offices where they were briefed about the investigation. The role they were to play during the investigation was discussed with them and inputs were obtained on the methodology to be followed and the proposed interview questionnaire. Information was obtained from the relevant departments by means of interviews with the transport officers and heads of components responsible for administering and managing the Scheme. For this purpose an interview questionnaire was developed, thereby ensuring consistency with the type and quality of information to be obtained by the various interviewers. The questionnaire is attached to this report as Annexure A. In addition to the interview questionnaire, an inspection checklist was also developed to assist with the inspection of individual files. The checklist mainly consisted of those issues addressed by the Policy that need to be contained in the individual files, for example a copy of the driver's license, completed monthly logsheets, etc. The inspection checklist is attached to the report as Annexure B. Upon the completion of the interviews, physical inspections of the records and files of a sample of 10 officials per department were done by utilizing the inspection checklist developed for this purpose with a view to determine the 8
motivation for granting a subsidized vehicle; nature of work performed by officials involved; control measures in place and its effectiveness; and the type of information available, both electronically and on the files. In order to supplement the information obtained by means of the investigation, the Personnel and Salary Administration System (PERSAL) was consulted to determine the financial expenditure (cost to the State) emanating from the Scheme for the 1999/2000, 2000/2001 and 2001/2002 financial years respectively; the type of information currently available on PERSAL; and whether information required by departments for management purposes can be accommodated by PERSAL. Discussions were held with the current Service Provider who is financing the Scheme, WesBank First Auto, as well as Fleet Africa and Auto Fleet Services who are responsible for maintaining the subsidized vehicles and administering logsheets. The purpose of these discussions was to determine their respective roles in the effective management of the Scheme; obtain their comment on problems identified by their clients, that is departments and users of the Scheme, during the investigation; determine subsequent problems they experience; and allow them an opportunity to make suggestions that could result in the better management of the Scheme in general. 9
2. Subsidized Motor Transport Scheme prescripts The National Department of Transport is responsible for the policy that regulates participation in the Subsidized Motor Transport Scheme, including its continuous amendment and updating 10
Subsidized Motor Transport Scheme prescripts 2.1 Introduction A new SMTS, together with a revised policy, was implemented with effect from 1 April 1999 in the Public Service. Employees participating in the former scheme were afforded the opportunity to either transfer their contracts to the new scheme, or to remain on the former scheme until the end of their present contracts. With effect from 1 April 1999 all applications for subsidized vehicles are handled under the new SMTS. The NDoT is responsible for the policy regulating participation in the SMTS, including its continuous amendment and updating. A summary is provided below of the Policy applicable to officials participating in Scheme A. This summary is followed by an indication of the main generic differences between Scheme A and B. 2.2 Policy for the Subsidized Motor Transport Scheme A The policy for participation in Scheme A is very comprehensive. The following is, however, a summary of the main issues addressed by it: 2.2.1 Approval: It is left to the discretion of the head of a department (HoD) to approve an employee's participation in the SMTS. Such approval is granted in accordance with the findings of an advisory committee, which is chaired by the HoD or his/her delegate. 2.2.2 Individual contract: An individual contract is negotiated between the State and Service Provider, stipulating the following: Capturing of logsheet data. Handling of shortfall/excess official kms traveled. Insurance to be paid by the State. Maintenance plan. Handling of suspected driver misuse/abuse. Termination of contract/disposal of vehicle. The individual contracts are reviewed biannually. Deviations of 20% (up or downwards) against contracted official kms could result in the State renegotiating the individual contracts. 11
2.2.3 Qualifying criteria: The applicant/official must have a valid driver's license and should travel a minimum of 21 000 and a maximum of 29 000 official kms per year. 2.2.4 Application process for participation: The applicant/official submits a Z 81 application form to the department, containing information on kms traveled with and daily utilization of official vehicle for previous 6 months; kms traveled in private vehicle for approved official service for previous 6 months; and total projected assigned kms to be covered per month which would be subject to changing circumstances. The full job description of the applicant must be attached to the Z 81 form (to ascertain the level of responsibility and type of work). The Z 81 form must be signed by the head of the relevant directorate, or his/her delegate. 2.2.5 Allocation requirements: Departments are responsible for procuring all subsidized vehicles through National Contract RT 77. This contract also indicates the price of benchmark vehicles and the associated monthly travel allowances. Should an employee purchase a more expensive vehicle (other than approved by the HoD) he/she must pay the difference between the purchase price + Value Added Tax (VAT) of the vehicle and the purchase price + VAT of the approved benchmark vehicle to the Service Provider. Payment in this regard must occur before the vehicle is delivered. The HoD must approve the make and type of vehicle, taking into consideration the nature of the official duty that it is required for; and installation of non standard accessories, if justifiable. The installation of non standard accessories which are not warranted must be paid for by the employee. 2.2.6 Official utilization period: Subsidized vehicles are to be utilized for a minimum period of 32 months and a maximum period of 42 months. 2.2.7 Official leaving the employment of the State: If an employee's service is terminated prior to meeting the contractual official kms, he/she must pay the Service Provider early finance termination charges; a higher interest rate; and the outstanding settlement value of the vehicle. 12
2.2.8 Logsheets and trip authority: Trip authorizations must be prepared prefacto and approved by the Responsibility Manager before an official trip is undertaken. Form Z 79 is to be completed by the employee on a daily basis indicating all distances traveled, both official and private. Logsheets are to be submitted monthly to departmental transport officers who must forward them to the Service Provider. In cases where only private distances have been covered during a month, reasons should also be provided. 2.2.9 Monthly travel allowances: A travel allowance is payable to participants by means of PERSAL. This allowance is based on the benchmark vehicles, as approved by the HoD. If an employee exercises the option to purchase a more expensive vehicle, he/she will be limited to the monthly travel allowance based on the vehicle approved by the HoD. The monthly travel allowance consists of the following 2 parts: Fixed cost element, that is capital remuneration and the cost of maintenance payable to the Service Provider by the employee (by means of a stoporder). Fuel allowance (c/km), calculated according to official mileage completed per month X the prescribed fuel allowance tariff. Employees are compelled to keep accurate record of their actual running expenses if they intend claiming tax relief in this regard (any amount not expended is viewed as part of an employee's taxable income). 2.2.10 Transfer of ownership: Transfer of ownership only occurs under the following conditions: When the full amount of the purchase price has been repaid by the employee; When the contractual official kms have been covered; and When the selected official utilization period has expired. 2.2.11 Control measures: The Policy provides for the following control measures in order to ensure the effective management of participation in the Scheme: Employees must exercise due care and diligence with regard to the custody and maintenance of vehicles. Vehicles are to be available for inspection by transport officers and/or the Service Provider. Risk management committees should be established in each province (residing under provincial transport departments). Employees may not make use of any Government Garage, Government owned workshop or Government contract for the maintenance of the subsidized vehicle. Employees are responsible for the payment of all fines. 13
2.2.12 Insurance: The State is responsible for the full cost of comprehensive insurance on behalf of the employee, subject to certain conditions. The State's liability in this regard is limited to the premium payable to the Insurer (Glenrand M.I.B Empowerment Company at the time of the investigation) in respect of the vehicle approved by the HoD. In cases where a more expensive vehicle was purchased, the employee is responsible for the additional premium payable. Payment of an insurance claim arising from official use of the vehicle will be for the State's account and, if the claim arose from private use of the vehicle, this will be for the employee's account. However, increased excess payments resulting from such claims shall in all instances be for the employee's account. 2.3 Differences between Scheme A and B Participation in the SMTS can be in accordance with either Scheme A or B, depending on the number of official kilometers traveled per annum by the relevant official. The main generic differences between Scheme A and B can best be illustrated by means of the following table: Table 14: Main generic differences between Scheme A and B Scheme A Scheme B Qualify for Scheme if a minimum of 21 000 and a maximum of 29 000 official kms are traveled per year. Doesn't qualify for Scheme A but use private vehicle for traveling between 6 000 and 21 000 official kms per year. Finance, maintenance and administration are done by the Service Provider. May raise a loan through the Service Provider. Participants receive a monthly travel allowance which includes a maintenance and fuel allowance. Is only remunerated for actual business kms traveled according to the applicable tariffs. Vehicles must be purchased through the existing National Contract RT 77. Cannot purchase a vehicle through the existing National Contract RT 77 Maintenance plan in operation for each vehicle administered by the Service Provider. Scheme A Annual insurance premiums payable by departments/provincial administrations. Maintenance plan not compulsory. Scheme B Insurance is the responsibility of the owner of the vehicle. Official utilization period of subsidized vehicle is between 32 and 48 months. An assigned annual km distance is negotiated per individual contract with the Service Provider. No fixed utilization period determined. No individual contract entered into. 14
Overtime 2.4 Conclusion From the above it is clear that the main difference between Scheme A and B is that participants in Scheme B make use of their own private vehicles when official distances are traveled. They are only compensated for such official distances traveled, whilst participants in Scheme A also receive an additional monthly travel allowance. It is for this reason that the investigation mainly focused on the management of Scheme A. In this chapter a summary of the Policy regulating participation in Scheme A was provided. In the next chapter, findings made with regard to participation in the Scheme are reflected on. 15
3. Participation in the Scheme This relates to the different steps in the process of participation, utilization of prescribed documentation, the various role players involved and issues taken into consideration when applications to participate in the Scheme are evaluated 16
Participation in the Scheme 3.1 Introduction In the previous Chapter a summary was provided of the prescripts regulating participation in the SMTS. It is, however, also important to look at how these prescripts are applied in practice. This Chapter, therefore, focuses on the different steps in the process of participation, the utilization of prescribed documentation, the various role players involved and issues taken into consideration when applications to participate in the Scheme are evaluated. An overview is also provided of occupational fields that represent the duties performed by officials participating in the SMTS, the financial implications of the SMTS to the State as Employer and the general availability of prescripts. 3.2 Occupational fields of officials participating in the SMTS During the investigation it was found that the following occupational fields represent the most general duties performed by the officials participating in the SMTS in the sample of departments identified to participate in the survey: Administrative. Agriculture. Economic personnel. Education Specialist. Engineering, construction and surveying. Forestry services. Information Technology. Law enforcement, including road safety. Legal services. Mining and occupational safety. Medical services, including veterinary services. Training. Water plant personnel. Workstudy. 3.3 Financial implications of the SMTS to the State as Employer As indicated in subparagraph 2.2.9 of this report, the Policy for the SMTS provides for the payment of monthly capital remuneration, cost of maintenance and fuel allowances to participants in the Scheme. 17
In this regard, the total expenditure incurred amounted to R81 million during 1999/00, R122 million during 2000/01 and R213 million during 2001/02. According to these figures, the expenditure for the State as employer increased with 50,6% in the 2000/01 financial year, followed by an even higher increase of 74,6% in the 2001/02 financial year. Graphically this could be illustrated as follows: 250 200 213 Rand/ million 150 122 100 81 50 0 1999/2000 2000/2001 Financial Year 2001/2002 Financial expenditure of the SMTS for the State as Employer The following three tables contain detailed information of expenditure incurred by the State in order to provide subsidized vehicles to qualifying public servants: Table 15: Total expenditure regarding subsidized transport for the 1999/00 financial year Provincial / National level Capital remuneration Maintenance allowances Fuel allowances Total (R/a) National Eastern Cape Free State Gauteng KwazuluNatal Mpumalanga Northern Cape Limpopo North West Western Cape Total (R/a) 16 332 739 2 506 054 8 432 617 7 643 975 7 790 116 11 398 853 1 051 556 10 934 774 11 222 620 1 751 656 79 064 960 133 925 96 007 0 0 66 465 692 2 650 0 0 6 243 704 583 296 213 249 629 0 0 0 551 994 7 146 0 2 399 24 120 1 131 501 16 762 877 2 851 689 8 432 617 7 643 975 7 790 182 12 416 539 1 061 352 10 934 774 11 225 019 1 782 019 80 901 044 18
Table 16: Total expenditure regarding subsidized transport for the 2000/01 financial year Provincial / National level Capital remuneration Maintenance allowances Fuel allowances Total (R/a) National Eastern Cape Free State Gauteng KwazuluNatal Mpumalanga Northern Cape Limpopo North West Western Cape Total (R/a) 21 842 812 4 435 521 9 111 342 9 044 327 12 754 264 16 704 748 1 899 483 7 959 488 12 188 671 2 520 960 98 461 616 3 007 394 890 635 862 737 82 269 4 224 3 266 049 294 633 392 047 1 061 245 450 047 10 311 280 3 569 528 1 364 302 1 295 448 24 282 19 720 4 002 402 386 249 307 732 1 692 333 305 614 12 967 609 28 419 733 6 690 458 11 269 526 9 150 878 12 778 208 23 973 199 2 580 365 8 659 267 14 942 249 3 276 621 121 740 504 Table 17: Total expenditure regarding subsidized transport for the 2001/02 financial year Provincial / National level Capital remuneration Maintenance allowances Fuel allowances Total (R/a) National Eastern Cape Free State Gauteng KwazuluNatal Mpumalanga Northern Cape Limpopo North West Western Cape Total (R/a) 31 923 672 8 496 737 11 180 891 10 227 569 20 593 574 21 348 301 3 310 774 20 765 930 18 971 341 4 232 989 151 051 777 8 393 894 2 558 911 2 736 363 1 113 727 6 856 6 538 913 946 511 5 818 607 4 425 116 1 205 980 33 744 879 2 953 799 3 672 172 4 062 639 123 542 23 387 6 849 613 1 252 420 3 633 813 5 613 237 131 551 28 316 172 43 271 366 14 727 820 17 979 893 11 464 838 20 623 816 34 736 826 5 509 705 30 218 351 29 009 695 5 570 519 213 112 828 Financial expenditure for the Employer in this regard does not only include capital remuneration and the payment of maintenance and fuel allowances to participants. It also involves the payment of monthly insurance premiums to the Insurer. The next three tables provide an indication of such payments made at national and provincial level. 19
Table 18: The cost of insurance premiums of subsidized vehicles for the period 1 May 1999 to 31 March 2000 Provincial / National level Unit premium Vehicle count Total premium National Eastern Cape Free State Gauteng KwazuluNatal Mpumalanga Northern Cape Limpopo North West Western Cape Total R 2 728 R 2 976 R 2 960 R 2 928 R 3 160 R 3 724 R 2 754 R 2 774 R 2 986 R 2 623 2 112 412 1 090 815 1 566 1 411 107 1 940 1 043 277 10 773 R 5 761 536 R 1 226 112 R 3 226 400 R 2 386 320 R 4 948 560 R 5 254 564 R 294 678 R 5 381 560 R 3 114 398 R 726 571 R 32 320 699 Table 19: The cost of insurance premiums of subsidized vehicles for the period 1 April 2000 to 31 March 2001 Provincial / National level Unit premium Vehicle count Total premium National Eastern Cape Free State Gauteng KwazuluNatal Mpumalanga Northern Cape Limpopo North West Western Cape Total R 2 743 R 2 868 R 2 868 R 2 868 R 3 041 R 3 121 R 2 769 R 2 789 R 2 868 R 2 638 1 842 401 1 108 887 1 474 1 351 107 1 851 1 143 255 10 419 R 5 052 606 R 1 150 068 R 3 177 744 R 2 543 916 R 4 482 434 R 4 216 471 R 296 283 R 5 162 439 R 3 278 124 R 672 690 R 30 032 775 Table 20: The cost of insurance premiums of subsidized vehicles for the period 1 April 2001 to 31 March 2002 Provincial / Unit premium Vehicle count Total premium National level National Eastern Cape Free State Gauteng KwazuluNatal Mpumalanga Northern Cape Limpopo North West Western Cape Total R 3 573 R 2 997 R 3 277 R 3 800 R 3 596 R 3 800 R 2 894 R 3 017 R 3 334 R 2 757 2 468 597 1 411 1 091 1 423 1 695 179 1 743 1 357 292 12 256 R 8 818 164 R 1 789 209 R 4 623 847 R 4 145 800 R 5 117 108 R 6 441 000 R 518 026 R 5 258 631 R 4 524 238 R 805 044 R 42 036 067 20
As depicted in tables 18 and 19 above, a slight decline in the payment of insurance premiums from the 1999/00 to the 2000/01 financial year occurred. This was followed by a 40% increase in insurance premiums paid by the State during the 2001/02 financial year (Table 20). Looking at the large number of participants in the SMTS, as well as the wide range of occupational fields within which they are employed, it is important to ensure that only those officials who really qualify to participate in the SMTS are indeed participating. The importance of ensuring that only such officials partake in the SMTS is further emphasized by the huge financial implications involved. The investigation team, therefore, focused specifically on the steps to be followed when applying to participate in the Scheme. These steps are highlighted in paragraph 3.4 below. 3.4 Steps in the process of participation The process of application for participation in the Scheme is normally initiated by the relevant official. This is understandable taking into account that the official is usually the one who knows best what the job requirements are and subsequent duties to be performed. Upon completion of a Z 81 application form by the official, the application is forwarded to the Advisory Committee via the Transport Officer. Such applications are always endorsed by the official's direct supervisor and/or the manager of the component. In some cases it was noted that an indication was also provided to the advisory committee as to the availability of the necessary funds to purchase and maintain a subsidized vehicle. However, from the policy regulating the management of the SMTS, as summarized in the previous section of the report, the following 14 steps can be identified as part of the process to participate in the Scheme: Step 1: A need for participation in the SMTS is identified and the employee initiates the process. Step 2: Step 3: Step 4: A Z 81 application for participation form is completed and submitted to the HoD or an advisory committee. If the application is approved a requisition is forwarded to the NDoT. The NDoT registers the participant on the Scheme and refers the matter to the Service Provider who performs affordability and credibility checks on the client (employee). 21