Bureau of Standards on road to recovery, MPs told
The SABS was in a state of disarray when DTI minister Rob Davies removed the board in July due to poor governance and complaints of underperformance
Stability has been restored at the South African Bureau of Standards (SABS), which has reintroduced the testing of products in accordance with customer specific requirements, acting CEO Garth Strachan said in parliament on Wednesday.
The bureau was in a state of disarray when trade and industry minister Rob Davies removed the board in July 2018 due to poor governance and a deluge of complaints over its underperformance in conducting tests and issuing certificates for products.
Backlogs and long delays in performing these functions have resulted in businesses losing export orders for products that require a quality assurance from the bureau, which is responsible for assuring the quality and safety of products.
The SABS CEO resigned shortly after the board was removed and Davies then appointed a team of administrators from the department of trade and industry to turn the organisation around. The six-month term of the administrators has been extended to the end of October 2019.
The SABS received a disclaimer from the auditor general on its 2017/2018 financial statements and it made a loss of R48m on revenue of R760m. Strachan said while there had been strong improvements, the SABS was expected to make a loss of about R24m in the 2018/2019 financial year. He expected it to return to profitability in 2020/2021. SABS currently maintains 7,430 standards.
Strachan said he and his administration team had dealt with “mission critical” issues such as reintroducing partial testing, filling mission critical posts and upgrading infrastructure. SABS was also working closely with the auditor general to strengthen audit compliance and working to improve its relationship with stakeholders. Turnaround times were also being addressed.
“There has been progress but there is still a lot of work to be done,” chair of the administration team, Jodi Scholtz, told MPs.
The turnaround plan for SABS has been approved by Davies.
In a media statement, Strachan said that “a key element in stabilising the SABS was to address the laboratory turnaround and this presented a need to resolve the vexing issue of ‘partial testing’, which we abandoned in 2015”.
"This business decision, to limit all testing activities to a full South African National Standard, had many unintended consequences. As a result, the SABS and the department of trade and industry were inundated with customer complaints and requests for us to reinstate the provision of partial testing.
"We had to change our strategy and create the capacity to deliver on our customer’s business needs. As a result the SABS turnaround plan has introduced a risk-based approach to customer specific requirements testing,’’ Strachan said.
“We still have a long journey ahead but initial industry engagements have validated our decision.”
Strachan said the SABS had budgeted R300m for capital expenditure, of which R58m had been approved for the upgrading of critical testing infrastructure in the petroleum, chemicals and materials, agro-processing laboratories, R80m for the digitisation of business processes and the remaining R95m earmarked for maintenance of infrastructure which includes the National Electrical Test Facility in Olifantsfontein.
The SABS has also revitalised the local content verification programme though this was still dependent upon an approved government funding model which could open new verification opportunities in the mining sector.