Health's dirty bill

Although Gauteng’s health department has struggled to pay key suppliers to provincial hospitals in the past financial year, it dished out R229-million to one consultancy firm in 2008-09.

3P Consulting was awarded a R60-million-a-year contract in June 2007 for the establishment of a programme management unit in the department to enhance technical ability and skills. Consultants, lawyers and technical experts have since worked in the department at rates ranging from R300 to R1 700 an hour.

In its first financial year 3P’s bill increased to R80-million. In 2008-09 Gauteng paid 3P R229-million (R169-million more than the contracted R60-million a year) and a further three-year extension was signed between the provincial health department and 3P in February this year for R273-million.

This means that Gauteng will have paid 3P R582-million by May 2012 if there are no further increases.

The Mail & Guardian reported two weeks ago that the province’s public hospitals were languishing because of non-payment to critical suppliers of food, medicine and medical equipment.

Complaints have also been received from contractors to Gauteng’s departments of housing and public works about non-payment and the devastating effect it has on the future of their businesses.

Following the M&G‘s article, the Treatment Action Campaign announced that it will meet hospital bosses to assess the severity of the crisis and give the department a deadline for solving the problem.
“Otherwise we will resort to legal action,” said provincial TAC coordinator Lefa Tlhame.

Gauteng finance minister Mandla Nkomfe announced on Monday that payments to small, medium and micro enterprises will be “prioritised” and that he aims to have all outstanding payments finalised by the end of next week. He also called an urgent meeting of all chief financial officers in the province on Monday to prioritise payments.

The M&G is in possession of the contract between the Gauteng health department and 3P and other correspondence that shows what services the company has provided and how its bill has escalated.

According to a well-placed source, much of the consultancy firm’s work relates to the “normal jobs” of state doctors and staff. Departmental staff are also asking questions about the relationship between 3P and health MEC Brian Hlongwa.

Business Day reported in August last year that Hlongwa and 3P managing director Richard Payne have known each other for years and that 3P also benefited from Hlongwa’s position when he was a member of the mayoral council in the City of Johannesburg. Both have denied impropriety.

Hlongwa told Business Day: “The fact that I know them [3P]—what does it mean? If people who know me must not work with the Department of Health, I can tell you a lot of firms will be out of business. I know him [Payne]. He has a relationship with the department, but outside of the department I think I’ve known him for more than eight years. So the relationship has been strictly professional.”

Health spokesperson JP Louw confirmed last week that Hlongwa doesn’t regard his relationship with Payne as a conflict of interest. Payne was abroad and could not be contacted.

The first contract between 3P and Gauteng was signed on July 2 2007. It included variation and extension clauses, allowing for higher billing than the original R60-million a year and for the contract to be extended for another two years after June 2009.

The M&G has seen three requests submitted between September and December last year by senior department official Hans Ramogale for the increase in 3P’s bill. 3P was eventually paid R229-million for the year’s work.

At the same time head of department Sybil Ngcobo placed an embargo on filling all non-critical vacancies at hospitals, nursing colleges and other healthcare facilities.

On February 17 this year the departmental acquisition council approved the extension of 3P’s contract for three more years at a total value of R273-million.

The M&G has seen a list of projects 3P presented to Gauteng to motivate the extension of its contract. These include:

  • “Beach football/volleyball” at R7-million;

  • “Auditor General report” at R8.5-million;

  • “Review of expenditure” at R20-million; and

  • “Fixed asset management” at R45-million.

According to Louw the department “needed to address efficiency, innovation and the coordination and management of projects to introduce new benchmarks and industry best practices. Coupled with this is the need to deliver within the constraints of limited funding.”

These factors led to 3P being contracted and the establishment of a programme management unit.

According to Louw, 3P’s functions include enhancing technical ability, to “develop and implement a strategy to develop partnerships with sister departments”, to provide legal and financial expertise and to assist the department with efficient planning.

An independent evaluation confirmed that 3P has met its objectives.

Louw denied that work already done by state officials is duplicated by 3P and said some payments to 3P have also been delayed. Asked whether it was not exorbitant spending in light of the shortage of funding for basic supplies he responded: “Generally speaking, consultants used by the department have been able to prove their value and those who do not have had their contracts terminated. Furthermore, the use of consultants is an internationally accepted norm.”

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