Accelerated Schools Infrastructure Development Initiative (ASIDI) performance challenges in Eastern Cape

Standing Committee on Appropriations

18 October 2012
Chairperson: Mr E Sogoni (ANC)
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Meeting Summary

The Department of Basic Education presented the Progress on Accelerated Schools Infrastructure Delivery Initiative to the Members. It outlined the background, targets and achievements of ASIDI in 2011/12. A breakdown was given of ASIDI’s progress on 49 schools as well as its 2012/13 targets. ASIDI’s progress on fixing 100 inappropriate schools and providing on basic services was discussed. Finally, ASIDI’s expenditure and budget estimates for the 2012/13 plans were outlined.

Members expressed extreme dissatisfaction at the schools not being completed despite assurances from the Department under oath. Members felt as though the Department was misleading them and the community. The Department insisted that it had never been their intention to mislead the Committee as the Department was only repeating the dates given to them by their implementing agents.

Members expressed their concern at the budget being affected due to the continual shifting of project completion dates for these schools. They insisted that penalties be invoked against contractors  responsible for the non completion of schools. The Committee asked about not appointing Eastern Cape contractors and and accused the Development Bank of Southern Africa of incapacity.

From the figures provided by the Department, it was evident that the schools would not be completed by the end of 2012. Members and the Department agreed that the dates provided by the Development Bank of Southern Africa for the completion of the schools were not realistic.

Members asked about escalation prices and the conditions under which extensions were granted to contractors. They asked for the number of children who would be affected due to the schools not being opened  was discussed. Members pointed out that the basics should be covered first before the Department focused on quality. The Committee decided that a further meeting was required with the Department in order to ascertain the way forward. The Chairperson concluded by saying that people working in Government had to start taking responsibility and that programmes had to be clear so that there could be accountability.

Meeting report

The Chairperson opened the meeting by saying that the Committee’s job was to ensure that the resources allocated by Government were spent. Those resources were meant to address the challenges of the country, that was why the Committee wase concerned about the ASIDI programme. During the time of budget adjustments last year, the Department of Basic Education received R700 million with which to build the schools. They were supposed to be built by 31 March 2012. From there the target was moved to August, and then to November.

The Chairperson said the Department had been invited so it could update the Committee on the progress of the building of the schools for the 2011/12 programme. He also wanted to be informed of any progress in light of the 2013 financial year. He pointed out that when the Committee had met with the Department in the Eastern Cape in August, they were informed that service providers had been appointed. This was a concern for the Committee because it meant that it was going to be difficult to get even one school built by the end of the financial year.

The Chairperson continued that the problem the Committee was sitting with was budgeting, as they were not kept abreast with the budget side of the current issue. He expressed his remorse for not inviting the Minister to inform the Committee as to what was going to transpire. Further challenges facing the Committee were that in 2013/14, they had to approve a budget for the building of the same schools. He wanted to know how the Committee could approve a budget when they knew that the previous budget had not been spent. In September, the Committee had said that they could not stop the cycle of the budget as Government had committed itself to building the schools due to the great need for this. He inquired about the Department’s plans for 2013/14.

The Chairperson concluded by saying that contractors in the Eastern Cape felt like they were being overlooked as other contractors were being brought in from outside the province. The Committee knew that the reason was so that progress could be accelerated and that the local contractors did not meet the required standard, but it was not the only programme that the Government had. There were other programmes at provincial level where those contractors could be engaged. He wanted to know how it would be ensured that this programme remained an Accelerated Schools Infrastructure Delivery Initiative and how it would be ensured that this money was spent by the end of each financial year so that the Committee approval of the budget could be credible.

Accelerated Schools Infrastructure Delivery Initiative (ASIDI) briefing
Mr Bobby Soobrayan, Director General, Department of Basic Education (DBE), headed the presentation. He outlined the background, targets and achievements of ASIDI in 2011/12. He gave a breakdown of ASIDI’s progress on 49 schools as well as its 2012/13 targets. He discussed ASIDI’s progress on 100 inappropriate schools and on basic services. Finally, ASIDI’s expenditure and budget estimates for the 2012/13 plans were outlined.

Discussion
Mr M Swart (DA) said that at the end of 2011 the Committee was promised that schools would be finished by the end of March 2012. By the end of November 2012 they would still not finished. He did not accept the reasons being advanced for non completion. He insisted that penalties should be invoked where there was non performance. He noted that the cost per school was R15 000 per square metre. He remarked that there was no chance that 30 schools would be finished this year. He felt that the Committee had been misled all along and that they always had to deal with such promises from the DBE.

Ms R Mashigo (ANC) said that the Committee was promised that 12 schools would be handed over. The process of handing over needed to be clear because at one stage the schools were going to be handed over to the Development Bank of Southern Africa (DBSA). The Committee wanted to see the schools being handed over to the community in the Eastern Cape, and at the given time. She wanted to know how many times she was going to hear the same story from the DBE

Mr Soobrayan replied that schools were handed over to the community. A school was recently handed over by the President in the Eastern Cape. He acknowledged that a school was an asset of the state but the school was owned by the community.

Ms Mashigo expressed her dissatisfaction about ASIDI’s budget being affected. When the Committee approved the money, it was to make sure that children were in classrooms by the end of March, but that did not happen. She questioned whether the Committee was being taken advantage of because the DBE assured the Committee under oath that this would not happen and DBE insisted that the money be passed by Parliament. She demanded clarity about the situation as the Committee and the community were being misled. This was not a planning session. The DBE’s plans were supposed to be in place months ago.

Mr G Snell (ANC) thought that the reason given for not appointing Eastern Cape contractors was because of a lack of capacity. How were the lessons learnt from a lack of capacity around the country going to affect the contract for the Eastern Cape. Availability of materials was a problem. Materials would be a problem if their finishing schedule for every single school was identical. He asked why the earthworks tender could not be put out prior to the construction tender.

Ms
Tsholofelo Diale, Programme Manager: ASIDI, DBE, replied that some contractors were from the Eastern Cape and others were from elsewhere. Appointments were made based on if they complied with DBE’s processes. Regarding materials, the DBE specified a certain quality of materials and contractors were to comply. The DBE did not go into specific details, therefore contractors were free to obtain the materials from a variety of suppliers.

Mr Soobrayan added that the DBE prioritised contractors from the Eastern Cape and that those with a proven track record were appointed. He agreed that tenders should go to site commissioners beforehand.

Mr Snell did not understand how after seven months, the DBE had still not gone out to tender even though their documentation was ready. It was not as if buildings had to be re-measured or redrawn. He knew the DBE had a contract with DBSA, but as an implementing agent, the DBSA was failing the DBE horrendously. He asked if there was anything in the contract that the DBE could hold DBSA accountable for because there was no guarantee that the DBE would get that money in the outer years, and how many people had suffered because of that. He remarked that it was almost as if the project was being stalled on purpose so that there could be a continuation of jobs for people.

Ms L Yengeni (ANC) said that when the Committee met the DBE in the Eastern Cape the previous year, they made the Director General speak under oath because it reached a stage where everything the DBE said was questionable. She wanted to know what the implications were of misleading under oath and if there was a reason the Committee should continue approving the money of the DBE.

Mr Soobrayan confirmed that he did speak under oath but that there was no intention to mislead the Committee at any time. The dates given were the result of a process and he had also received assurance pertaining to the dates.

The Chairperson referred to page four of the presentation stating that 12 schools were between 20% and 40% complete. Given those figures, he agreed with the Committee that those schools would not be completed by the end of the year. 17 other schools were between 40% and 60% complete. It would be difficult to ascertain whether those schools would also be completed as it was now the rainy season.

The Chairperson raised the issue of unrealistic targets, as the Committee did not want to come back after December 31 to ask how far the building was. Five schools running over to 2013 and the financial implications thereof were of serious concern to the Chairperson. He indicated that the Treasurer should have been invited to the meeting so that the financial implications could have been illustrated to the Committee.

Mr Soobrayan agreed that the shifting of deadlines was indeed a big problem. The DBE had worked on specific dates based on plans that were developed in the plans given to them by their implementing agent. Dates set were based on information given to the DBE by their implementing agents. The various Ministers and Treasuries were actively involved in the process regarding this problem. The DBE was taking all the steps they could to make sure that the information represented to the Committee was based on the best information available to the DBE. They implored the DBSA to give them the correct dates. The DBE was very concerned about ensuring that they got the dates right but it was true what the Committee had said, that in spite of all of that, the dates they gave were not achieved. That was the material reality they were facing. Due to dates shifting, the information given did not turn out to be correct. He agreed that the current dates were not realistic.

Mr Swart wanted to know if there were penalties for contracts that were discontinued, how much they were and had they been invoked.

Ms Diale affirmed that the DBE did have penalties levied against contractors. There had been a number of claims from contractors. Those claims were based on the weather conditions which had affected them. An extension was given to all contractors because there was inclement weather and other related factors which pushed the dates from August, to 20 days later. Some schools had more than 20 days. The extension of time was levied with the contractors in accordance with the contracts the DBE had with them.

Mr Soobrayan added that contracts were terminated where schools were not completed. Contractors made promises and then broke them, but there was more accountability now because Ministers and Treasuries were involved.

Mr Thembinkosi Mathunda, Project Manager, also added that they strictly monitored projects on a month to month basis. Terminating contracts could be very costly and “messy,” therefore the DBE did not allow any deviation from original plans without a cause. If the contract was not completely adhered to, then the contractors would be liable for the delays.

Ms Yengeni asked the value of the cost of the contractors and how much the value of the price escalation was as a result of the issues at hand.

Ms Diale responded that the contracts for six schools were terminated. The DBE received R5.5 million from the contractors who
who would have completed the work. That would be a shortfall due to escalations but some of those escalations arose from a contractor defaulting. The DBE went through processes to ensure that they claimed their costs from the contractors so that they got the money with damages when the contractor did not perform.

Mr Soobrayan added that once a contract was signed, that amount did not change. Where the R5.5 million came in, was because the DBE terminated the contract. Once the contract was terminated, a new price was negotiated with a new contractor and the difference between the two amounted to R5.5 million.

Ms Yengeni wanted the details of the escalation costs in black and white.

The Chairperson suggested that infrastructure was the DBE’s problem. He emphasised that the Committee had been to the Eastern Cape three times that year and had faced the same issue of lack of progress. They did not want to return and have to ask about what happened to the other 29 schools. The DBE needed skills to be able to discern whether what they were being told was realistic.

Ms Yengeni wanted the DBE not to tell the Committee what DBE believed would happen, but rather how the final deadline would materialise

Mr Snell said he sympathised with the Director-General because he knew the DG was using those dates given to him by the implementing agents. He did not know if DBSA was doing their work free of charge or being paid to do it, but he was sure that if the Director-General was paying for this out of his own pocket and DBSA kept lying to him, he would have terminated that contract. Someone had to tell the truth because the DBE could not be led around by lies.

The Chairperson commented that the question which should be asked was how long it would take to build one school.

Ms Diale responded that schools took between nine and 12 months to be built, whereas bigger schools took 18 months. The DBE shared the same sentiments of concern as the Committee about the dates that continued to change. DBE spoke to their implementing agents and interrogated them regularly about the dates. What transpired was that recovery plans were received from contractors, and those recovery plans were supported with the necessary resources. The DBE saw significant progress on the one side, but they underestimated the resources that were required.

The Chairperson requested an example of when a contractor would be entitled to as an extension of time.

Ms Diale replied that they evaluated the number days given in extension according to a gauge of how many mm of rain fell and if there was inclement weather and roads that could not be used due to rain, meaning contractors could not receive their supplies on time. When the time extension lapsed, penalties would be levied. Due to the September extension, penalties would take effect in October 2012.
 
Ms Yengeni asked the DBE to give a specific example of a contractor being delayed due to rain.

Ms Diale replied that the she would provide the names of those contractors via email as she did not have those details with her.

Mr J Gelderblom (ANC) wanted the DBE to indicate how many children would be affected if the schools were not opened.

Ms Diale replied that in the 49 schools, there was an enrollment of 12 337. 1 000 children had been admitted to schools that had been handed over to contractors and 11 337 learners were yet to be admitted.

Mr Swart interjected that the DBE could not give that figure saying that those children would go to school – because they had heard those promises before.

The Chairperson acknowledged that 11 337 was a huge amount. A further problem was how to get those children to school because most of them were farm children without transport.

Ms Mashigo noted that there was talk of DBSA’s incapacity to do the work in question, but nothing was mentioned about Public Works and how much it could cost them to do some of the work.

Ms Yengeni remarked that just the basics should be done in the beginning. Quality was important, but that only had to be focused on after the contract was awarded, so that there were not delays just because the DBE wanted to ensure quality. She added that those contractors were costing the DBE and the nation huge amounts of money.

The Chairperson commented that the Committee had learnt lessons because they knew realistically now how long it took to finish a school. The Committee would have to meet with the DBE again in terms of understanding the way forward and the financial implications of that way forward.

The Chairperson mentioned that the budget was being revised but the Committee needed clarity on how this revision was going to affect the baseline. Further, the contracts needed to be tightened between the DBE, contractors and service providers.

The Chairperson concluded by saying that people working in Government had to start taking responsibility and that programmes had to be clear so that there could be accountability.

The meeting was adjourned.

 

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