SITA Amendment Bill: briefing
Public Service and Administration
19 June 2002
Meeting Summary
A summary of this committee meeting is not yet available.
Meeting report
PUBLIC SERVICE AND ADMINISTRATION PORTFOLIO COMMITTEE
19 June 2002
STATE INFORMATION TECHNOLOGY AGENCY AMENDMENT BILL: BRIEFING
Chairperson:
Documents handed out:
Briefing on the SITA Amendment Bill
SITA Amendment Bill [B24 - 2002]
SITA Act, 88 of 1998, with proposed amendments inserted (Appendix)
Transforming SITA to enable service delivery in Government
SUMMARY
Adv Empie Van Schoor outlined the various amendments that need to be effected to the State Information Agency Act. The Department of Public Service and Administration felt that in order to improve service delivery and to cut costs some amendments to the Act were desirable. The amendments are largely technical in that some only seek to address some ambiguity in current section whilst others provide for orderly layout of the Act. The Chairperson made the point that Telkom has an interest in the amendments and would therefore like to make some presentations. Consequently there was no decision whether to approve or reject the proposed amendments. The Committee would wait until 26 June so as to allow Telkom and any other stakeholder to make representation.
MINUTES
Adv Empie Van Schoor (Department of Public Service and Administration) briefed the Committee on the objects of the State Information Technology Agency Amendment Bill. The Department of Public Service and Administration seeks to improve service delivery. In this regard SITA has a tremendous role to play and it would therefore be appropriate to amend the Act so as to enable it to deliver good quality services.
It was proposed that the long title of the Act be amended so as to remove superfluous words in the current title. The proposed amendment also makes the purpose of the Act clearer. The Department also seeks to insert new definitions into the Act. Some unnecessary definitions like the definition of "the President" would be struck out. It was felt that some definitions refer to matters of common knowledge and it is therefore unnecessary to retain them. Given the many functions that SITA perform it was the Department wants to make it possible for the Agency to establish subsidiaries. Consequently a new section 3A was proposed to facilitate this. The proposed section will also deal with issues of transfer of shares in the subsidiaries.
Adv Van Schoor noted that there has been some problems concerning the acquisition and procurement of services by government authorities. It is unclear when authorities are obliged to use the services of the Agency. Consequently the Department proposed the substitution of section 7 with a new section. The proposed section clearly specifies when it is compulsory or optional to acquire services from or procure services through the Agency. It was indicated that at one stage the Department had to pay over R3 million to a private entity for data management services in hospitals only to find that the military hospitals had one of the best data management systems. By and large the proposed section will help cut costs.
The composition of the board of the Agency also raised some problems. The Department also seeks to substitute section 10 of the Act. The general feeling was that as a business entity SITA needs experts in financial management, IT and many other areas. The Department seeks to acquire expertise in such areas by increasing the number of the Agency's non-executive directors. The proposed new section also provides for the appointment of alternate members of the board by the Minister so as to ensure that the Board is not prevented from carrying on with its business due to the unavailability of some members.
Shareholding in the Agency was also one of the many areas where amendments were proposed. It terms of the Agency's Memorandum of Association the State agreed to take up one billion shares with a value of R1 per share. However, it was never the State's intention to transfer assets of that value to SITA. It remained uncertain whether all the shares had actually been issued to the State. The problem is to be solved by a new section 17 that provides that SITA has a share capital of R1 represented by one ordinary share with a nominal value of R1. The state will remain the sole shareholder in the Agency. Other important proposed amendments deal with the transfer of assets to SITA and business agreement between the Agency and government departments.
Discussion
Ms ML Da Camara (DP) asked a set of questions.
In terms of the proposed section 7 the Agency must provide wide area information technology networks. Will SITA apply for a network licence?
Adv Van Schoor replied that it has not yet been decided if the Agency will be applying for a licence. We inserted the provision to make it possible should we decide to apply.
Ms Da Camara noted that by leaving the possibility open the Department would be creating uncertainty. If they do apply for a licence will SITA become another telecom operator?
Adv Van Schoor said no they would not. In Parliament, for instance, there is a switchboard which enables contact between persons in different offices and no one accuses Parliament of running a fourth telecom operator. The envisaged networks will only be for government Departments.
Why does the Department what to give exclusive rights to the Agency to perform functions listed in section 7 (5)(c)?
Adv Van Schoor said this did not mean that they would not outsource any services. It was necessary to reserve such rights for protectionist reasons.
Mr Baloyi (ANC) asked a further set of questions.
What are wide area networks? Since such an expression is not found in everyday language will it not be better to define it in section 1?
Adv Van Schoor replied that the people in the IT sector knew what was meant. It is different from a local network due to the area that it covers. The Department is prepared to define it.
In terms of the proposed section 20, Mr Baloyi noted that there must be business and service level agreements. Who is responsible for drafting the agreements?
Adv Van Schoor said that both SITA and Departments are responsible.
Section 19(4) provides that "the Agency may sell assets with the approval of the Board in Consultation with the Minister". Mr Baloyi suggested that the section be amended to say in "consultation with the Board with the approval of the Minister".
Adv Van Schoor said the suggested wording really made no difference. The section really meant that the assets must be sold only if the Minister has agreed
Mr PJ Gomomo (ANC) asked, with regard to the composition of the Board, where would the alternate members come from? Could the Department specify from which level in the Departments they would come?
Adv Van Schoor explained that they were looking at appointing directors general as representatives but the directors should be free to nominate someone if they are not available.
Mr Mohlala, RJB (ANC) asked the following questions.
The Act makes no provision for the appointment of a member to chair the meeting in the absence of the Chairperson. What happens if the Chairperson is not in the meeting?
Adv Van Schoor said that the Department will look into the question.
Secondly, the amendments provide for the permissible maximum number of members of the board but no mention is made of the minimum number. It would be preferable to include the minimum as well.
Mr Mohlala said the amendment to section 23 provides that the Minister must make regulations after consultation with all executing authorities. Could this not be limited to consultation with the Cabinet?
Adv Van Schoor noted that the Department did not object to including a minimum number and were in fact open to suggestions.
He said that the problem with consulting Cabinet only is that there will be complaints that the Departments do not make any input. The idea is that there should be consultation with the users.
Lastly, Mr Mohlala asked what happens when the executing authorities do not bring feedback? Would the Department wait until the last minute when such feedback has been received?
Adv Van Schoor said the Department was looking at stipulating a time period within which such feedback should be made. If they heard nothing within that period it would be assumed that there is no feedback.
An ANC Member said it was welcome that the government wanted to cut costs. With regard to wide area networks will one provincial government be able to contact another without first connecting to Telkom? It is necessary to clear this to avoid a duplication of costs.
Adv Van Schoor explained that they are looking into facilitating direct contact. A toll-free number has also been suggested.
The Chairperson drew attention to the fact that Telkom wanted to make representations to the Committee. It was decided that a decision whether to adopt or reject the amendments would be made on 26 June 2002. In the meantime the Committee would wait, but without necessarily calling, Telkom and other stakeholders to make representations.
The meeting was adjourned.
Appendix:
STATE INFORMATION TECHNOLOGY AGENCY ACT
NO. 88 OF 1998
as proposed to be amended by
the State Information Technology Agency Bill [B 24-2002]
To provide for the establishment of a company that will provide information technology, information systems and related services to, or on behalf of, participating departments and in regard to these services, act as an agent of the South African Government; and to provide for matters connected therewith. To establish a company responsible for the provision of information technology services to the public administration and to provide for matters connected therewith.
ARRANGEMENT OF SECTIONS
CHAPTER 1
STATE INFORMATION TECHNOLOGY AGENCY (PTY) LIMITED:
ESTABLISHMENT, INCORPORATION AND RELATED MATTERS
1. Definitions
2. Establishment of Agency
3. Incorporation of Agency
4. Application of Companies Act to Agency
5. Certain provisions of Companies Act not applicable to Agency
6. Objective Objects of Agency
7. Powers and functions Duties and powers of Agency
GOVERNANCE OF AGENCY
8. Board of Directors
9. Roles and responsibilities of Directors
10. Composition of Board
11. Terms of office of members of Board
12. Service conditions and remuneration
CHAPTER 3
MANAGING DIRECTOR
13. Functions of Managing Director
CHAPTER 4
STAFFING OF AGENCY
14. Staff of Agency
15. Staff of participating departments
CHAPTER 5
FINANCIAL MATTERS
16. Funding of Agency
17. Shareholding
18. Nature of financial interest of State
19. Transfer of assets
CHAPTER 6
SERVICE DELIVERY
20. Business Agreement Business and service level agreements
CHAPTER 7
GENERAL AND MISCELLANEOUS PROVISIONS
21. Intellectual property
22. Dissolution of Agency
23. Regulations
24. Accountability Public Finance Management Act binds Agency
25. State bound by this Act
26. Short title and commencement
CHAPTER 1
STATE INFORMATION TECHNOLOGY AGENCY (PTY) LIMITED:
ESTABLISHMENT, INCORPORATION AND RELATED MATTERS
Definitions
1. In this Act, unless the context otherwise indicates—
"Agency" means State Information Technology Agency (Pty) Ltd contemplated in section 2 (1);
"authentication products or services" means products or services designed to identify the holder of an electronic signature to other persons; [See s7(5)(c)]
"Board" means the Board of Directors of the Agency contemplated in section 8;
"Companies Act" means the Companies Act, 1973 (Act No. 61 of 1973);
"department" means a national department, provincial administration, provincial department or organisational component listed in Schedules 1, and 2 and 3 of to the Public Service Act, 1994 (Proclamation No. 103 of 1994), and for the purpose of this Act, the entity known as Infoplan will be regarded as a department;
"electronic signature" means an electronic representation of information in any form which is—
(a) attached to, incorporated in or logically associated with other electronic representations of information in any form; and
(b) intended by the user to serve as a signature; [See def. of "authentication products and services"]
"executing authority" means executing authority as defined in section 1 ofthe Public Service Act, 1994; [See s16(2)(a) & 23(1)]
"incorporation date" means the date on which the Agency is incorporated as a company in accordance with section 3;
"information systems" means applications and systems to support the business whilst utilising information technology as an enabler or tool;
"information systems security" means to preserve the availability, integrity and confidentiality of information systems and information according to affordable security practices;
"information technology" means all aspects of technology which are used to manage and support the efficient gathering, processing, storing and dissemination of information as a strategic resource;
"Managing Director" means the Managing Director of the Agency contemplated in section 13;
"Minister" means the Minister for the Public Service and Administration or any Minister appointed by the President and assigned the power in terms of sections 91(2) and 92(1) of the Constitution 1996 of the Republic of South Africa, 1996 (Act No. 108 of 1996), to be the shareholder on behalf of the State;
"organ of state" means—
(a) a constitutional institution or public entity as defined in section 1 of the Public Finance Management Act, 1999 (Act No. 1 of 1999); or
(b) a municipality contemplated in section 155(1) of the Constitution.
"participating department" means any department making use of services provided by the Agency; [Linked to deletion of s3(5) & (6) and new s7]
"President" means the President of the Republic of South Africa.
Establishment of Agency
2. (1) A juristic person to be known as State Information Technology Agency (Pty) Ltd is established.
(2) The Agency will be incorporated as a private company in accordance with section 3.
Incorporation of Agency
3. (1) The Minister must effect the incorporation of the Agency as a private company in terms of the Companies Act.
(2) Despite the provisions of the Companies Act or any other law, the State will be the sole shareholder of the company. [Now in s17(1)]
(3) Despite the provisions of the Companies Act—
(a) the Minister, on behalf of the State, must sign the memorandum of association, articles of association and all other documents necessary in connection with the formation and incorporation of the company; and
(b) the Registrar of Companies must—
(i) register the memorandum of association and articles of association as signed by the Minister;
(ii) incorporate the company as a private company under the name "State Information Technology Agency (Pty) Ltd"; and
(iii) issue to the company a certificate to commence business with effect from the date of the company's incorporation.
(4) The Agency will initially comprise of—
(a) the Central Computer Services of the Department of State Expenditure;
(b) Infoplan;
(c) the sub-component Information Systems within the Department of Safety and Security; and
(d) any other department approved by the Minister.
(5) Departments must participate in the formation of the Agency, subject to subsection (6).
(6) Participation will be phased in over a period of time as determined, from time to time, by Cabinet on recommendation of the Minister. [Departments use of SITA's services dealt with in s7 & 20]
(7) The Agency must, at incorporation, be exempt from the provisions of sections 63 and 172 of the Companies Act.
Subsidiaries
3A. (1) For purposes of achieving its objects, the Agency may establish one or more subsidiary companies in terms of the Companies Act.
(2) A subsidiary company may, on behalf of the Agency, perform such functions as the Agency may delegate to it subject to such conditions as the Agency may impose.
(3) (a) The Agency may, with the approval of the Cabinet, transfer to any person the shares of the Agency in a subsidiary company in accordance with the Companies Act.
(b) The Cabinet must approve the number of shares to be transferred, the transferees and the manner and terms of the transfer.
Application of Companies Act to Agency
4. (1) The provisions of the Companies Act will apply to the Agency, except where otherwise stated in this Act.
(2) The Companies Act will not apply to the Agency where the Minister of Trade and Industry has issued a declaration under section 5 of this Act.
Certain provisions of Companies Act not applicable to Agency
5. (1) The Minister, on the recommendation of the Agency, may, from time to time, request the Minister of Trade and Industry to declare any particular provision of the Companies Act not applicable to the Agency.
(2) (a) The request must be fully motivated, and the necessary particulars about the request and the motivation be made known by the Registrar of Companies by notice in the Gazette.
(b) In that notice the Registrar must—
(i) invite interested persons who may have any objections to such a declaration to submit their objections and representations to a person named in the notice; or
(ii) if sent by post, not later than 21 days after the date of the notice, place that person in possession of their objections and representations.
(3) The Minister of Trade and Industry may, by notice in the Gazette, after having considered the objections and representations received, if satisfied on reasonable grounds that the non-application of that provision to the Agency will—
(a) contribute to the efficiency of the Agency or will reduce its operating costs;
(b) not reduce or limit the accountability of the Agency as a public institution or detract from the requirements of transparency regarding its functioning and operations; and
(c) not be prejudicial to the rights or interests of employees of the Agency or of any other interested party, or to the claims of the creditors of the Agency,
declare, with effect from the date stated in the notice, the whole or part of a provision of the Companies Act not applicable to the Agency.
Objective of Agency
6. The objective of the Agency is to provide information technology, information systems and related services in a maintained information systems security environment to, or on behalf of, participating departments and organs of state and in regard to these services, act as an agent of the South African Government.
Objects of Agency
6. The objects of the Agency are—
(a) to improve service delivery to the public through the provision of information technology, information systems and related services in a maintained information systems security environment to departments and organs of state; and
(b) to promote the efficiency of departments and organs of state through the use of information technology.
Powers and functions of Agency
7. (1) To achieve its objective, the Agency may—
(a) provide data processing services;
(b) provide information technology and information systems training;
(c) provide application software development and maintenance services;
(d) promote the effective utilisation of information technology to enhance the efficiency at all levels of the Public Service;
(e) provide technical, functional and business advice and support regarding information technology;
(f) provide information technology and information systems management services;
(g) with regard to any of the above functions act as procurement agency in respect of information technology requirements, in accordance with State procurement policy; and
(h) perform any other function which the Minister may, from time to time, determine to give effect to the objective of the Agency.
(2) The Agency must in the execution of its functions maintain a comprehensive information systems security environment according to approved policy and standards.
(3) The Agency must in the execution of its functions adhere to the policies on information management and information technology and a framework of norms and standards to give effect to such policies, as well as regulations made in this regard by the Minister in terms of the Public Service Act, 1994 (Act No. 103 of 1994), and this Act.
Duties and powers of Agency
7. (1) To achieve its objects, the Agency—
(a) must, in respect of every department, and may, in respect of an organ of state—
(i) provide wide area information technology networks;
(ii) acquire, build or maintain transversal information systems; and
(iii) provide data-processing or associated services for transversal information systems; and
(b) may, in respect of a department or organ of state, provide—
(i) training in information technology or information systems;
(ii) application software development;
(iii) maintenance services for information technology software or infrastructure;
(iv) data-processing or associated services for departmentally specific information technology applications or systems;
(v) technical, functional or business advice or support, or research, regarding information technology; and
(vi) management services for information technology or information systems.
(2) Despite any other law to the contrary, every department must, subject to subsection (3), procure all information technology goods or services
through the Agency.
(3) A department that wishes to acquire a service contemplated in—
(a) subsection (1)(a), must—
(i) acquire that service from the Agency in accordance with business and service level agreements concluded in terms of section 20; or
(ii) procure that service through the Agency in terms of subsection (2) if the Agency indicates in writing that it is unable to provide the service itself;
(b) subsection (1)(b), must either—
(i) acquire that service from the Agency in accordance with business and service level agreements concluded in terms of section 20; or
(ii) procure that service through the Agency in terms of subsection (2).
(4) An organ of state may—
(a) acquire a service contemplated in subsection (1)(a) or (b) from the Agency; and
(b) procure any information technology goods or services through the Agency.
(5) The Agency—
(a) must set standards regarding—
(i) the interoperability of information systems between departments, subject to the approval of the Minister; and
(ii) a comprehensive information systems security environment for departments, subject to the approval of the Minister and the Minister of Intelligence;
(b) must certify every acquisition of any information technology goods or services by a department for compliance with those standards;
(c) may, despite anything to the contrary in any other law, exclusively—
(i) sell or provide authentication products or services for all departments and organs of state; and
(ii) apply to the relevant authority for the accreditation of such authentication products or services in terms of any law; and
(d) may carry out research regarding the use of information technology to improve the efficiency of the public administration.
(6) In the performance of its duties and exercise of its powers, the
Agency must—
(a) eliminate unnecessary duplication of information technology goods or services;
(b) leverage economies of scale to provide cost-effective service; and
(c) comply with—
(i) government policies on information management and information technology and any framework of norms and standards which give effect to any such policies;
(ii) any applicable regulations made under this Act or the Public Service Act, 1994 (Proclamation No. 103 of 1994);
(iv) the standards referred to in subsection (5)(a); and
(v) the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000).
(7) For purposes of protecting the security of the Republic, the Minister of Intelligence may exempt any intelligence service established as envisaged in section 209(1) of the Constitution from any provision of this Act.
CHAPTER 2
GOVERNANCE OF AGENCY
Board of Directors
8. (1) The Agency will be governed and controlled, in accordance with this Act, by a Board of Directors appointed by the Minister after consultation with Cabinet.
(2) The business and operational plans of the Agency must be approved by the Board of Directors in consultation with the Minister.
(3) The Board of Directors will represent the Agency.
Roles and responsibilities of Directors
9. A Director of the Agency must carry out his or her duties in accordance with the provisions of this Act and the Companies Act.
Composition of Board
10. (1) The Board must consist of not more than ten members appointed by the Minister, consisting of—
(a) a non-executive Chairperson;
(b) not more than three executive Directors, one of whom must be designated as the Managing Director;
(c) additional non-executive members, consisting of—
(i) one member representing the Department of Public Service and Administration;
(ii) one member representing the Department of State Expenditure;
(iii) one member as a legal expert; and
(iv) other members on the grounds of their expertise.
(1) The Board consists of not more than 14 members appointed in the following capacities:
(a) A non-executive Chairperson;
(b) executive members, one of whom must be designated as the Managing Director;
(c) additional non-executive members, consisting of—
(i) one person representing the Department of Public Service and Administration;
(ii) one person representing the National Treasury;
(iii) one person as a legal expert; and
(iv) other persons on the grounds of their expertise.
(1A) The majority of the members of the Board must be non-executive members.
(1B) (a) For each non-executive member of the Board, other than the Chairperson, the Minister may appoint an alternate member, who may attend and vote at meetings of the Board on behalf of a member if that member is unable to attend.
(b) The term of office of an alternate member is the same as that of the non-executive member in respect of whom he or she is appointed and such alternate member vacates office if the relevant non-executive member vacates office.
(c) The provisions of sections 11 and 12 regarding remuneration and other conditions of appointment applicable to non-executive members of the Board apply with the necessary changes to an alternate member.
(2) A majority of the appointed Directors members of the Board forms a quorum.
(3) The Chairperson has a casting vote in addition to a deliberative vote, and on an equality of votes he or she must exercise the casting vote.
Terms of office of members of Board
11. (1) A non-executive member of the Board—
(a) holds office for a period of three years which can be extended, unless a shorter period is stipulated in the letter of appointment of the member;
(b) serves as member on the terms and conditions determined by the Minister and specified in the letter of appointment of the member; and
(c) may resign by giving one month's written notice to the Minister.
(2) An executive member of the Board may resign by giving notice as stipulated in his or her employment contract.
Service conditions and remuneration
12. A member of the Board, except the executive directors and any appointed member who holds a post or office in a department, or any institution, organisation or body established by or under any other law and funded wholly or partly by the State, will be remunerated, on a daily basis at a rate determined by the Minister, from time to time, with the concurrence of the Minister of Finance.
CHAPTER 3
MANAGING DIRECTOR
Functions of Managing Director
13. (1) The organisation of the Agency and its day to day business and operations will be under the charge and general management and control of the Managing Director, subject to the general or special directions and instructions that the Board may, from time to time, issue to the Managing Director.
(2) The Managing Director is accountable to the Board, and is the chief administrative and executive officer of the Agency.
CHAPTER 4
STAFFING OF AGENCY
Staff of Agency
14. (1) The Managing Director may appoint staff to perform work for the Agency, subject to any general or special direction of the Board.
(2) The remuneration, allowances and service benefits of the staff of the Agency must be determined by the Board.
(3) The normal rules of non-disclosure of information in the Public Service will apply to personnel of the Agency.
(4) In the making of appointments and the filling of posts, the evaluation of persons must be based on training, skills, competence, knowledge and the need to redress the imbalances of the past to achieve an Agency broadly representative of the South African people, including representation according to race, gender and disability.
Staff of participating departments
15. (1) All employees involved in the information technology function of the participating departments contemplated in section 3 (4), and practitioners in the information technology function of departments contemplated in section 3 (5), will be made an employment offer by the Agency, unless otherwise agreed to between the Agency, an employee and the department concerned.
(1) If a department or organ of state concludes a business agreement for the acquisition of a service contemplated in section 7(1)(a) or (b), the Agency must, on the date stipulated in that agreement, make an employment offer to every practitioner of that department or organ of state who is responsible for information technology functions in respect of that service, unless the Agency, practitioner and department or organ of state agree otherwise.
(2) The offer will be subject to the following principles:
(a) The total remuneration package, including the comparable monetary value of the service benefits due to them, offered by the Agency, may not be less than those payable or due to them by the previous employer immediately prior to their transfer to the Agency, but the remuneration package must be reconsidered within six months after the offer was made to employees contemplated in section 3 (4);
(b) all vested rights accrued to the employee must be acknowledged and transferred from the previous employer and associated funds to the Agency;
(c) transfer of Infoplan employees who are members of a pension fund registered in terms of the Pensions Fund Act, 1956 (Act No. 24 of 1956), must be done in terms of section 14 of the said Act;
(d) prior to the transfer of the personnel, an agreement must have been reached among the current employers, the Agency and the Minister, and with the concurrence of the Minister of Finance, where applicable, as to whether—
(i) certain benefits such as accrued leave and sick leave should be wholly or partially carried over to the Agency; or
(ii) the monetary value of such benefits should be payable wholly or partially to an employee prior to transfer, and the agreement must furthermore stipulate which portion of the costs of the transferred benefits are carried by the previous employer and which portion by the Agency;
(e) the agreement must also deal with the handling of any contractual obligation between the employer and the employee;
(f) the offer will only be made to employees who are in the service of the respective employers at the time of the conclusion of the agreement;
(g) personnel in the service of the State and to whom an offer is made and who accept that offer, will not be entitled to voluntary severance package;
(h) an officer who is a member of the Government Employees' Pension Fund and who is employed by the Agency may—
(i) choose to become a dormant member of such Fund, and from the date of exercising such a choice, such an officer must, despite the provisions of any other law, be regarded to be a dormant member of the Fund; or
(ii) choose to remain a member of the Fund, in which case the Agency will be responsible for the employer's contribution to the Fund; or
(iii) request to become a member of any other approved pension fund and withdraw from the current Fund in accordance with the Government Employees Pension Law, 1996 (Proclamation No. 21 of 1996).
(3)(a) The Minister or any other Minister may, at the request of the Agency, second an officer to the Agency in accordance with section 15 (3) of the Public Service Act, 1994.
(b) For as long as that officer is seconded to the Agency, the Agency must reimburse the relevant department for the remuneration and allowances paid by the department to that officer, and for any other moneys spent by the department on the officer's other service benefits and any other costs to the department arising from the secondment of that officer to the Agency.
CHAPTER 5
FINANCIAL MATTERS
Funding of Agency
16. (1) The Agency is funded from monies received for services rendered that are stipulated in the service level agreements entered into with participating departments and organs of state.
The Agency is funded from monies received for services rendered that are stipulated in the service level agreements referred to in section 20.
(2) The rates used for determining the cost of service will be reasonably market related and periodically approved by the Department of State Expenditure.
The Minister must—
(a) after consultation with all executing authorities; and
(b) subject to the approval of the Minister of Finance,
determine from time to time reasonably market-related rates for establishing
the cost of a service or product contemplated in section 7(1) and (5)(c).
(3) The Agency will focus on generating maximum efficiency and cost-effectiveness for the State and the Board will recommend to the Minister on the basis of a strategic plan what excess funds will be retained by the Agency and for which purpose.
(4) Funding and capital to start operating the Agency must be obtained from funds agreed to between the Minister and the Minister of Finance, after consultation with the participating departments.
(5) Payment for services provided by the Agency to a department or an organ of state will be made according to the stipulations of the business agreement between the parties.
(6) (a) Any special funding required or other special financial arrangement, including any government grants, may be negotiated by the Agency with the Minister, the Minister of Finance and any other interested party.
(b) The subsequent agreement will include all conditions to be met relating to such an arrangement.
(7) (a) The Agency may, with the approval of the Minister, accept donations and bequests.
(b) Particulars of each donation or bequest accepted by the Agency must be given in the annual report of the Agency.
(8) The Department of Public Service and Administration will be responsible for all transfer payments to the Agency approved by the Department of State Expenditure National Treasury.
(9) The books and records of accounts and financial statements of the Agency will be audited annually by the Auditor-General.
The Auditor-General must audit annually the accounts, financial statements and financial management of the Agency and each of its subsidiaries.
Shareholding
17. The rights attached to the shares of which the State is the holder will be exercised by the Minister on behalf of the State.
17. (1) Despite the Companies Act or any other law, the State is the sole shareholder of the Agency.
(2) The Agency has a share capital of R1, represented by one ordinary share with a nominal value of R1.
(3) The Minister must exercise on behalf of the State the rights attached to the State as shareholder.
Nature of financial interest of State
18. (1) The State will be issued with fully paid-up shares in the Agency as specified in an agreement entered into between the Agency and Minister, with the concurrence of the Minister of Finance, in exchange for the assets and liabilities invested in the Agency valued on a method acceptable to the State, but if the State is issued with shares which are less than the nett value of the assets and liabilities invested in the Agency, the Agency will be indebted to the State for the difference between the nett value of the assets so invested and the value of the shares so issued.
(2) (a) The debt contemplated in subsection (1) will be regarded as a loan by the State to the Agency, the terms and conditions of such a loan must be set out in the agreement.
(b) The agreement must make provision that the Agency may issue the State with debentures for the whole or part of the amount of the loan.
(3) For the purpose of this section, any reference to the nett value of the assets and liabilities invested in the Agency must be understood to mean the value of all the movable, immovable and other property or assets transferred to the Agency, minus the liabilities.
Transfer of assets
19. (1) Where an activity of the Agency was performed by a participating department and an asset was held or used by any of the parties referred to in section 3 (4) in connection with the performance of that activity, the relevant Head of Department in consultation with his or her Minister must transfer the asset to the Agency.
(2) The transfer of such assets to the Agency must take place by mutual agreement between the participating department and the Agency in consultation with the Minister of Finance, and in the case of a transfer of assets of Infoplan from Denel (Pty) Ltd, the provisions of the Companies Act will apply.
(2A) If a department or organ of state before the acquisition of a service contemplated in—
(a) section 7(1)(a) partly or fully carried out that service itself, any corporeal or incorporeal asset of that department or organ of state held or used in connection with that service, must be transferred to the Agency; and
(b) section 7(1)(b) partly or fully carried out that service itself, such corporeal and incorporeal assets of that department or organ of state held or used in connection with that service as agreed on by that department or organ of state and the Agency, must be transferred to the Agency.
(2B) The transfer of an asset in terms of subsection (2A) must take place in accordance with an agreement between the relevant department or organ of state and the Agency with the approval of the Minister of Finance
(3) Despite subsections (1) and (2), the State may transfer assets to the Agency in order to further the objective, powers and functions of the Agency.
(3) Despite any other provision of this section, the State may transfer assets to the Agency in order to further the objects and enhance the performance of the duties and the exercise of the powers of the Agency.
(3A) When an asset is transferred in terms of this section, all contracts, rights and obligations existing at the time in respect of that asset must be assigned to the Agency. [Replaces s20(3) & 21]
(4) The Agency may sell fixed assets only with the approval of the Board in consultation with the Minister.
CHAPTER 6
SERVICE DELIVERY
Business Agreement
20. (1) A business agreement to regulate the relationship between individual participating departments or organs of state and the Agency must be concluded.
(2) The business agreement must be supported by service level agreements negotiated between individual participating departments or organs of state and the Agency.
(3) Contracts, rights and obligations existing at the time of transfer of assets from participating departments or organs of state must be ceded to the Agency.
Business and service level agreements
20. (1) (a) Every department must conclude a business agreement with the Agency to regulate their relationship for purposes of—
(i) the services contemplated in section 7(1)(a); and
(ii) those services contemplated in section 7(1)(b) that it intends to use.
(b) An organ of state must conclude a business agreement with the Agency in respect of those services contemplated in section 7(1)(a) and (b) that it intends to use.
(c) The Minister must prescribe the compulsory terms of the business agreement by regulation in terms of section 23.
(2) A department or organ of state and the Agency must conclude a service level agreement to support the business agreement concluded in terms of subsection (1).
(3) A business agreement or service level agreement referred to in section 20(1) or (2) which is in force immediately before the State Information Technology Agency Amendment Act, 2002, takes effect, remains in force until such date as the relevant department or organ of state and the Agency agree on, which date may not be later than 36 months after that Act takes effect.
CHAPTER 7
GENERAL AND MISCELLANEOUS PROVISIONS
Intellectual property
21. (1) Despite any provision in any other law, all intellectual property rights, in any product, service, item, method or any other thing of any nature vested in any participating department or organ of state relating to information technology or information systems will vest in the Agency.
(2) The Board of Directors is empowered to direct how such product, service, item, method or any other thing of any nature is to be utilised by the Agency in the achievement of its objective.
Dissolution of Agency
22. The Agency will be dissolved according to the terms and conditions determined by the Minister in consultation with the Cabinet.
Regulations
23. The Minister may make regulations regarding—
(a) the functions to be performed by the Agency;
(b) the appointment of Directors to the Board;
(c) the security requirements of the different departments and organs of state;
(d) the security clearance of staff;
(e) transitional arrangements with regard to the formation of the Agency; and
(f) any other matter which the Minister may consider necessary to prescribe in order to achieve the objects of this Act.
23. (1) The Minister, after consultation with all executing authorities—
(a) must make regulations regarding the manner in which procurement in terms of section 7(2) to (5) must take place, subject to the approval of the Minister of Finance; and
(b) may make regulations regarding—
(i) any matter that must or may be prescribed by regulation in terms of this Act;
(ii) the imposition of additional duties or conferment of additional powers on the Agency that are necessary to achieve its objects;
(iii) a procedure to resolve disputes between a department and the Agency;
(iv) information systems security applicable to all departments, subject to the approval of the Minister of Intelligence; and
(v) any other matter that is necessary to be prescribed in order to achieve the objects of this Act.
(2) Without limiting the generality of subsection (1)(a), such regulations—
(a) must provide for representation during the procurement process of the department that requires procurement;
(b) must provide for due consideration of suitable service providers located in the province in which the goods or services are required;
(c) may include provision for the circumstances in which procurement through the Agency is not required or procurement through another institution may occur; and
(d) may include a procedure to resolve disputes regarding the preferred service provider.
Accountability
24. (1) The Agency is accountable to the Minister.
(2) The Agency must compile an annual report and submit it to the Minister, who must table that report in Parliament.
(3) The Agency must comply with the Reporting by Public Entities Act, 1992 (Act No. 93 of 1992), as applicable to listed entities.
[Now dealt with in the Public Finance Management Act - eg s55]
Public Finance Management Act binds Agency
24. The Agency must comply with the Public Finance Management Act,
1999 (Act No. 1 of 1999).
State bound by this Act
25. This Act binds the State.
Short title and commencement
26. (1) This Act is called the State Information Technology Agency Act, 1998, and comes into operation on a date fixed by the President by proclamation in the Gazette.
(2) Different dates may be fixed in respect of different provisions of this Act.
(3) A reference in this Act to its commencement must be construed as a reference to the applicable dates so fixed.
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