Department of Public Works Annual Report 2008/09

Meeting report

Chairperson’s opening remarks
The Chairperson noted that specific matters raised by the Auditor General (AG) had caused concern to the Committee, and that the Department of Public Works (DPW) had been asked to report on these matters, and progress towards correcting them. The Committee was also concerned about the Departmental entities.

He noted that only Mr Sam Vukela, Acting as Director-General in the absence of the Acting Director-General, was present, and he noted that the Committee took a poor view of this, for it meant that the Committee could not engage with the accounting officer, the Director-General. In his absence, the Portfolio Committee was not in a position to exercise proper Parliamentary oversight and explore the use of public funds in the national interest. He had anticipated that the usual “lack of capacity” excuse would be raised, but if the top official had not attended Parliament then he wondered how far the lack of capacity descended into the DPW.

The Chairperson reminded the Portfolio Committee that of the entities, only the Independent Development Trust (IDT) had produced a report that was anywhere near satisfactory. The Council for Scientific and Industrial Research (CSIR) had been problematic.  e reminded the Portfolio Committee that a workshop, to be attended by the Minister, was to take place on 18 or 19 November 2009, where Parliamentary oversight issues would be clarified and strengthened and the assistance and co-operation of the DPW at such meeting would be required.

Department of Public Works (DPW): Annual Report 2008/09
Mr Sam Vukela, Acting as Director General confirmed that he was acting at the moment on behalf of the Acting Director General. He handed in a letter dated 26 October 2009, advising that the Acting Director General would be indisposed through illness on 3 November 2009, and that thus confirmed that his appointment in a temporary Acting capacity was properly made.

The Chairperson expressed concern that a sick note could be pre dated for a future occasion.

Mr Sam Vukela proceeded with his presentation. He noted that the Expanded Public Works Programme (EPWP) had created more than 1.6 million job opportunities, thereby exceeding the target established in 2004, that the Vuk'uphile programme promoted the Small Micro and Medium Enterprises (SMMEs) and that 76 projects had been registered through the regional offices. He noted that an internal dedicated unit had been established to focus on the Asset Registration Enhancement Programme (AREP) and that much progress had been made although this was still very much a work in progress. He said that guidelines for Custodian Immovable Asset Management Plans (C-AMPs) and User Immovable Asset Management Plans (U-AMPS) had been developed for implementation. There had been collaboration with the Departments of Defence and Foreign Relations for the exhumation of war graves of soldiers in Kaweweta. During the year, the DPW had attended to  the minor upgrades, repair, maintenance and facilities management at several named land ports of entry. It had launched the national Infrastructure Maintenance Strategy of May 2008. The upgrading of the Civitas building as a new Head Office was nearing completion. The old Government Garage facility had been turned into a high-tech printing facility for the Government Printing Works in Pretoria. DPW had also completed the refurbishment of the runway at the Waterkloof Air Force Base in Pretoria, on which he was pleased to say the Presidential jet had landed during the previous week. In addition the establishment of a Construction Transformation Charter Group (CTCG) and the Property Sector Charter Council (PSCC) had received attention. DPW  and the DPW had also contributed to the national skills development and national human resource development strategies through learnerships, internships, artisan training and developing young professionals. About 107 Cuban technical Advisers (CTAs) had been recruited.

He reiterated that in 2003 the Department had formulated a new vision, mission and value statement to develop its serious commitment to Government's vision of a better life for all the country's citizens, “To be a world- class Public Works Department. ”

To this end, the DPW would endeavour to manage the asset life cycle of immovable assets under the Department's custodianship, and would also be providing expert advice to all three spheres of Government and Parastatals on immovable assets. It would contribute to the national goals of job creation and poverty alleviation through the co-ordination of public works, and develop programmes nationally, of which the EPWP formed an integral part. It would also provide strategic leadership to the construction industry.

In order to achieve such programmes DPW had already implemented an intensive capacity building programme focusing on learnerships, internships, artisan training and the development of young professionals, with the object of addressing the skills shortages within the built environment professions. Four young professionals obtained professional registration whilst four learnership programmes were completed. In addition 107 CTAs in the disciplines of Engineering, Architecture and Geology had been recruited and, of the CTAs, 95 had been deployed to IDT, the Provinces and National Public Works. There had also been an extensive recruiting campaign, and in the current financial year 764 posts were advertised and 841 appointments made, whilst about  14 senior management members participated in the training programme, which included deployment at the coalface of service delivery. DPW had compiled and submitted an Employment Equity status report to the Department of Labour (DoL).

 He conceded that high staff turn over remained a challenge and that the recruitment and retention of qualified professionals in programmes had been difficult to manage, which hampered service delivery. Although this did not appear in his presentation, he amplified that the DPW was also concerned about representation for gender and persons with disability. Independent contractors reported that the DoL regulations precluded the utilisation of persons with disability, and also that there were problems with having women on many construction sites.

The Chairperson asked for clarification why 764 posts were advertised but 841 appointments were made.

Mr Vukela explained that this arose because of inter government support.

Mr Vukela then continued with the presentation, noting that the DPW had four public entities. He categorically stated that increased funding would be a help.

The Information Technology (IT) Department played a very critical role in the achievement of matters by the DPW, and, despite all its efforts to get the best, the technology was constantly needing to be improved, which meant that the DPW lagged behind to some degree. The Legal Services Department was a support department involved with litigation, ensuring that there was proper and adequate response, and also attended to testing the viability and validity of the contracts drawn across the country. Although this department was doing sterling work it would be improved with additional funding. Approximately 1 083 legal opinions had been provided, 268 new litigation maters against the DPW had been instituted, of which 168 had been settled out of court, and 188 matters were proceeding. Two Bills had been introduced. However, the Expropriation Bill had been withdrawn in 2008, followed by the withdrawal also of the Built Environment Bill, to allow for further consideration and consultation. 186 new contracts had been drawn, 420 contracts had received comment, 1 049 contracts had been signed, 80 contracts had been released and 9 guarantees had been called up. The challenges were a lack of secure storage for contract files, missing hardware relating to contracts, a lack of hardware such as printers and copiers, the lack of timeous instruction from other units, a lack of legal resource material, an over reliance on the Sate Attorney and an inadequate budget.

With regard to International Relations he had already referred to the soldiers graves. However, there were also CTAs and the skills transfer programme, in which young professionals would be placed under the mentorship of the CTAs in various private companies doing business with the Department. There had been a signing of a Memorandum of Understanding (MOU) with relevant countries. This had led to the design and construction of the pavilion for the Shanghai Expo in 2010, facilitation of the OR Tambo School of Learnership in Uganda, and the facilitation of diplomatic villages or embassy compounds in Lesotho, Nigeria, Malawi, Tanzania and Botswana, recreation and residential units in Swaziland, and a chancery in Rwanda. Eleven of the CTAs had been returned for one or other reason and this had required attention and negotiation. Not only was the DPW assisting with the refurbishment of the ambassadorial or diplomatic compounds, but was also assisting the Department of International Relations and Cooperation with the refurbishment of the local ports of entry, especially in view of 2010, when the One Stop entry at Mozambique was expected to play a big role, as the Brazil soccer team would be based in Mozambique and the Ghana team at Nelspruit.

Above all, there was an ongoing question of the security management of entry into and of the buildings to prevent vandalism. There were efforts to compel the departmental clients to liaise with DPW on such matters, especially when they left a building.

Ms Sasa Subban, Acting Deputy Director General: Asset Management, DPW, explained how the DPW was proceeding with the compilation of an asset management register, which was regarded as a key tool of the DPW since it had 33 000 buildings to be listed on the register. This was believed to be a source of many job opportunities and was the source of many of the concerns raised by the Auditor-General (AG). There were 24 client departments, each of which had to be treated differently and which required different contracts of varying complexity.

The question of energy savings was of equal importance. By introducing changes in glazing and light bulbs,  3 981 kilowatts had been saved, which in money terms translated to R4.5 million. The valuation of the properties was associated with the Asset Register compilation. However, since there were only 79 posts authorised for valuers, with 72 appointments, there were delays because of the skills shortage and lack of capacity. This also  impacted upon the intended disposal of those properties deemed surplus to the requirements of the DPW, as there could be no disposal without a proper and correct valuation being established.

In this area of operation the chief challenge was the attraction and retention of suitable skills. Funding was another problem, since without adequate funding the DPW was not able to offer competitive remuneration.
 
The Chairperson then asked whether the broad range of management issues all depended solely upon remuneration levels.

Ms Subban stated that the Civitas building had been refurbished, the Government garage had been refurbished and made available as a secure printing facility to the GPW, Military Hospitals 1 and 2, were currently being refurbished, and the local or internal ports of entry were being up graded in anticipation of the demands of the 2010 Soccer Tournament. In addition, the Head Offices were being attended to. She said that DPW was concentrating on building internal capacity and the stimulation of the growth and retention of skills.

A representative from DPW, gave an operational overview, stating that the operations were in line with the State of the Nation Address (SONA). DPW had exceeded the targets set out in the SONA. Government policy dictated that departments should be concentrating on improving the circumstances of the disabled. However, the disabled sector was slow in identifying itself, nor did the identification, when it happened, always assist the DPW in achieving targets. Even though integrated committees were set up, those in need often escaped the net or perhaps pride prevented their need being expressed.

In regard to the one-stop local entry point to Mozambique, he noted that this was expected to play a major role, since the Brazil soccer team, which had recently qualified for the 2010 Soccer World Cup, had elected to be based in Mozambique. The Ghana team, which had also qualified, had elected to be based in Nelspruit. This border post would concentrate on the facilities for pedestrians, then the facilities for heavy vehicles, trucks and buses, and then the facilities for passenger vehicles. It was felt that this was the most economical approach and DPW was well on track to meet the demand.

Mr Stanley Henderson, Chief Director: EPWP Monitoring and Evaluation, DPW, then stated that there was a misconception about the meaning of this programme, because public expectations were greater than the reality of the EPWP. The intention was to improve the lives of the unemployed by giving them work opportunities, not jobs. The experience gained from such opportunities would then assist them to obtain more regular employment. He explained that the programme concentrated on providing work opportunities for women, the youth and the disabled. However, the nature of the work opportunities realistically meant that the disabled did not achieve an immediate benefit. Many benefits targets were set, but even at the maximum, these were low, and it required a great deal of planning and design to ensure that those taking up the work opportunities could get to long term benefits.

Ms Lydia Bici, Deputy Director General: Policy, DPW, stated that empowerment policies and strategies had been outlined for implementation within the DPW, as stated on pages 30 to 33 of the Annual Report. A Construction Transformation Charter Group (CTCG) and the Property Sector Charter Council (PSCC) had been established. The CTCG, supported by the Minister, had applied to the Department of Trade and Industry (dti)  for the finalisation of a Construction Sector Code in terms of Section 9 of the Broad Based Black Economic Empowerment (BBBEE) legislation, together with the finalisation of the Property Empowerment Strategy on BEE. Poverty alleviation and job creation strategies, and a draft on Small Towns Development Concept had been developed. 126 contractors, 53% of these being women,  were  registered on CIP. 17 schools had been recruited, which led to the number of learners in the Foundation doubling from 80 to 160. In addition 3 school holiday camps had been held, where learners had been exposed to a variety of activities such as professional addresses in the fields of architecture, engineering and town planning, and careers guidance and visits to construction sites.

The Built Environment had been extensively reviewed preparatory to the development of the Bill. There was draft research on compliance, and there had been implementation of an HIV AIDS strategy by the contractors working on the DPW sites. The DPW had further developed guidelines for the Custodian Immovable Asset Management Plans and User Immovable Asset Management plans. There was approval of a Rental Debtors Management Policy, and two policy documents on the advertising of State owned properties and the letting out of non-core space, and on the maintenance of State owned properties had been completed. It was recommended that 15 State owned properties be released for land redistribution policies.

Challenges had been identified as a lack of appropriate skills in both the construction and property industries, the slow transformation in both industries, despite the adoption of the Charters for the Construction and Property industries, and lack of adequate human resources and funding.

Ms Cathy Motsisi, Chief Financial Officer, DPW, reported that a Budget Committee had been established in order to work for improved resource allocation and to ensure that the budget cycle processes were completed on time, in accordance with National Treasury (NT) timeframes and other requirements. This had also led to the updating of the supplier database and the training of the regions on the Proquote system, and the development of internal policies and procedures, including a cell phone policy and frameworks for irregular spending. These were rolled out to the regions. A budget allocation input in relation to the Cuban professionals had been implemented. The Head of the trading entity, PTMME, had been appointed in the year under review, which had enabled increased focus and control on the activities of the trading entity. The challenges lay in alignment of all systems, which was critical to the production of up to date and timeous consolidated reports. This embraced the upgrading of the infrastructure in the regional offices, which in turn affected the rollout of the e-Procure system. The budgetary constraints and the low number of BEE property owners meant that there was slow progress in the implementation of policy interventions, as well as of the economic environment in the country, which had a negative impact on BEE stakeholders of the department.

Discussions
Mr G Radebe (ANC) expressed concern that the senior officials were not present and that “the juniors” had been sent to the Committee, without proper apologies or explanations.

Mr Vukela explained that there were processes and procedures that had to be followed. The health of the top officials was monitoried through the monthly meetings. However, the health of officials could change. He had produced a letter of authority.

The Chairperson noted that the letter in question was dated 26 October 2009 and read that the Acting DG would be off ill for three days, which he personally found inexplicable.

Mr Vukela said he had taken note of the Chairperson's concerns.

Mr Radebe requested an explanation for the discrepancy between R109 million unspent funds and R122 million unspent funds in the presentation.

The Chairperson agreed that this created a bad impression about establishing a culture of accountability.

Ms Motsisi apologised for the typographical error and confirmed that the correct number was R109 million unspent funds.

Mr Vukela explained that as different sub-entities had had control of the reporting there was duplication of reports, and this had led to certain errors not having been withdrawn.

The Chairperson stated that that might be so, but the important aspect was to answer the queries raised by the AG in his qualifications of the financial statements.

Mr C Kekana (ANC) said that it seemed that the Acting DG had been booked off for three days and he wanted to know what the policy and procedure might be for illness, especially of top management. Mr Kekana expressed unhappiness that the DPW, 15 years after independence, had yet to produce an acceptable asset register of immovable buildings, let alone moveable properties. In addition, he told Members that he was well acquainted with the Jabulani Station, which had been evacuated by its former occupants and which, although it was a Government building, had been vandalised, not only by removal of the odd item, but by windows and doors being removed, without the DPW taking any remedial action. Not only were dilapidated buildings ugly, but the cost of repair would be huge and there was never any attempt at cost-saving by DPW.

Ms Subban stated that the DPW did not have security guards in every building that was leased to client departments, and it some times happened in the past that client departments left a building without informing the DPW that they would be doing so, and then vandalisation could occur. Currently, client departments had to sign service agreements with DPW, which required that DPW would be notified timeously of any removals from buildings, so that proper and adequate arrangements for the safekeeping of building could be made. She conceded that this arose from capacity deficiencies.

Mr Kekana queried why, despite the extensive unemployment, DPW had only employed 300 people.

Mr Percy Molefe, Acting Deputy Director General: Community Services, explained that the figure of 300 had emerged after a needs analysis had been performed. He emphasised that the DPW was not merely looking to Cuba for such assistance, but was also approaching India, Ghana and Egypt, which had surplus trained people.
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Mr S Masango (DA) asked for clarity about the acting positions. He also asked why DPW was paying so much for so many outside legal opinions and contracts. He also enquired why the compilation of the asset register was taking so long.

Mr Molefe said that deputy directors-general were appointed at service level 11 and 12, but movement to service level 12 meant promotion for work well done. An Acting DDG post meant that the person would be doing slightly less onerous work or work of a less confidential nature, and these would be complementary to the deputy directors general. 

Ms N Ngcengwane (ANC) sought clarity on the necessity of having three operations levels and the reference to the International relations and bilateral agreements.

Ms Motsisi explained that often people would not be available, and so provision was made for the three levels to facilitate progress. The international agreements were required to be bilateral to conform to international law.

Ms Subban explained that the Annual Report reflected that in Phase 1 enhancement of 33 000 buildings had occurred, and phase 2 was the verification of the remainder, which should be regarded as a work in progress. Phase 3 would start on its completion.

Mr Vukela explained that the DPW was striving to get value for money in all avenues of participation.

Ms Cathy Motsisi elaborated by explaining that the DPW was taking control over every aspect but that validation required certainty.

The Chairperson queried the legal capacity of the persons entrusted as internal auditor officers, and said that there were many complaints about the Department of Home Affairs, and that this would be flagged for future attention.

Ms Ngcengwane expressed surprise that the Annual Report contained reference to the creation of a toll free telephone number for complaints and alerts. She asked for the numbers and names of the persons who had provided information. She asked about the position or situation of assets outside South Africa’s borders. She also said that the Annual Report indicated that two companies had undertaken to assist with the Annual Report and she wished to know what had happened with Intersite. She also expressed unhappiness about the state of the asset compilation and the lack of co-operation from or with local Government. Finally she wished to have clarification on the slow pace of BEE.

Ms Subban explained that the software was not adequate for the call centre and investigations were still being undertaken. Intersite’s investigations were also continuing. The intention at all times was to get value for money.

Ms Bici explained that a BEE framework was being established. The Department would sign leases of only two years with landlords who were  not BEE compliant. The banks were only prepared to advance finance to landlords who could provide evidence of a five-year lease with DPW, so this was one way of forcing landlords to become BEE-compliant, or to withdraw from the market.

Mr Mandla Mabuza, Deputy Director: Special Projects, DPW, explained that clarity was needed on page 16 of the Annual Report. The IT systems selected differed, and before they could be used optimally, integration was needed. This was being attended to. The internal audit had impacted upon and highlighted the capacity problems encountered. He conceded that there was a real challenge, but was insistent that the challenges were being attended to.

Mr Molefe amplified that the DPW itself was merging 20 different IT facilities into an integrated system.

Ms Motsisi added that DPW was upgrading its internal audit capacity and fully expected to have a fully integrated unit shortly, able to do a full internal auditing, leaving the staff of the AG to merely monitor and approve of actions taken.

Mr T Magama (ANC) expressed concern that in a time of rampant unemployment the DPW had capacity constraints, which he suggested should be overcome by recruitment from the appropriate sources, so that the DPW would be able to deliver satisfactorily on its mandate. He was also concerned that the DPW was not setting an example to the country and the other government departments. He added that he had listened to the cry of under funding but he pointed out that the DPW had purchased computer software for R4 million, and yet the report indicated that this and other software purchased for R43 million, had been under utilised for two years. He said that there was clearly a problem and he was concerned that the DPW was not serious in its approach.

Mr Magama wondered whether DPW had contemplated calling upon the engineering capability or capacity of the SA National Defence Force (SANDF) engineers, rather than Cuban expertise, as this would give the SANDF engineers practical experience, and would provide capacity to DPW at a cheaper price. 
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Ms Motsisi explained that the systems were receiving attention and were being implemented between six or seven departments, although she conceded that concerted effort was being made only in this year.

Mr Mabuza elaborated that the DPW was the vehicle for the EPWP, not its master. The capital projects of the DPW were to be distinguished from the EPWP. The capital projects created jobs, while the EPWP created work opportunities. DPW was incontrovertibly committed to the creation of jobs.

Ms Subban amplified that in the early stages the engineers had concentrated on machine jobs, for a variety of reasons. However, it had been discovered that there was no decline in the standards of work produced under labour-intensive contracts. In future the engineers would, at the design stage of the projects, take into account the need for labour intensive designs.

The Chairperson reminded the Portfolio Committee and the Departmental representatives that what was required was not turf warfare but delivery.

Mr Vukela reminded the Portfolio Committee that much was already being achieved. In the Eastern Cape, army Bailey Bridges from the SANDF were being erected. Further good news would be expected from 18 November.
He agreed that the engineers attending to design would need to use a paradigm shift. However, it was very difficult, if not impossible, to change from machine projects to labour intensive projects when the work was under way.

Mr Molefe gave an assurance that as far as was possible all such aspects were being taken into account for future projects.

The Chairperson said that for the unemployed labour pool at the site of the projects, it was cold comfort to be informed that there was no work since the designers had failed to consider human muscle power, preferring horsepower from machines. He viewed this as problematic. There was an expectation of increased use of unemployed people. He thought the answers were not really addressing the main issues. He  asked who were the major beneficiaries of the projects of the DPW.

Mr L Gaehler (UDM) asked whether the DPW had ever performed a job and labour audit, as he felt that such an exercise would reveal the necessity of concentrating on job creation. There was a pool of youth, with degrees or diplomas, who required job experience, yet they could not get experience without working. Unemployment and the need to find experienced workers were inextricably linked. He asked whether the employment of consultants by the DPW was achieving anything, and whether there was any transfer of skills from the consultants to the staff, to gradually enable the DPW to dispense with consultancy services. He asked whether the activities of the consultants, particularly with regard to skills transfer, were monitored. He stated that unless a change was made in 2009, the Committee would still be facing the same problems years down the line.

Mr Molefe agreed that an appropriate expanded skills audit was required and he stated this was being attended to by DPW and its entities, as well as other departments.

The Chairman expressed that it was high time this was done.

The Chairperson noted that since Government was the largest employer, and DPW was the biggest department the DPW should be setting the standard for BEE and building capacity. Many graduates could still be involved in manual labour, provided this was not the limit of their training. He thought that the problem lay at the bottom, not at the top and that the people on the ground, both as employees and recipients, were the real test of whether service delivery was happening. He asked what was being done about the 500 000 jobs mentioned in the SONA.

Mr Henderson stated that local advisory committees were being established, which were the responsibility of each sphere of government. In addition the EPWP Phase 2 would be coming on stream as soon as the key areas had been identified, and it would be run in conformity with community works programmes.

Ms Madlala pleaded for labour intensive projects that specifically concentrated on the youth, women and the disabled. In addition she stated that the DPW could not continue to contract with nine white contractors. She asked that the Cuban engineers must not neglect the transfer of skills to the youth as part of their duties. She pointed out that Limpopo had a large number of unemployed and needed projects to provide employment. She finally asked what developments there were on the Property Charter.

Mr Kekana repeated that he was aware of four State-owned buildings in townships that had been vandalised through lack of proper security. Members of the community had complained about the neglect by DPW. It seemed that the assets of the DPW were becoming a liability, and that the DPW was not working to the best advantage of South Africa and its people. Although there were assurances made that conditions were improving, he had reservations about this. He felt that, in regard to questions on expense and mentoring, there had been inconsistencies in the report. However, he wished to draw attention to the urban / rural area divide, in which he saw a great imbalance. He pleaded to DPW not merely to report routinely, but to report on actual success for the people in the communities.

The Chairperson stated there had been far too much repetition in the presentation and that the presenters had skipped from one topic to another, which made it difficult for Members to follow and to direct their questions. He believed that the DPW was not attending properly to cost saving, or maximisation of benefit from the expenditure made. He reverted to the R112 million previously referred to, and asked again what the intended use of this allocation had been, how the under payments had arisen and whether this allocation was intended for the poor.

He also expressed concern on the number of vacant posts and whether these would be filled. He said the Committee would bring up this issue in six months. There seemed to be a lacuna between the PFMA and National Treasury regulations and the asset registry requirements, and believed that legislation should be drafted to cover this lacuna. He said that the DPW clearly suffered from capacity challenges, linked to the question of existing and developmental skills, and looked forward to its turnaround.

Mr Vukela noted all the issues and looked forward to further engagement with the Portfolio Committee in the future.

The meeting was adjourned.