Construction Industry Development Board Bill: negotiating mandates

NCOP Public Services

21 September 2000
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Meeting Summary

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Meeting report


21 September 2000

Documents handed out:
Construction Industry Development Board Bill [B 59 - 2000]
Written mandates from:
Free State (see Appendix 1)
Gauteng (see Appendix 2)
Northern Cape (see Appendix 3)
Northern Province (see Appendix 4)
Western Cape (see Appendix 5).
Eastern Cape
North West

Department of Public Works representatives: Mr Spencer Hodgson, Ms Botha and Mr Jerome Govender.

The provinces presented their written mandates except for Mpumalanga which asked for more time to consider the Bill.

All the provinces were in support of the Bill but some suggested amendments and required clarity on certain issues. A number of provinces felt that the three-year period was not sufficient for the Board to finish its work. The provinces suggested that the term of office for members of the Board should run for a maximum of five years. The Board should give a contractor whose name is to be removed from the Register an opportunity to give their side of the story. The Western Cape felt that representation on the Board should be considered regarding the different categories and organisations. The Eastern Cape proposed that the Board should be inclusive of all key stakeholders such as business, government and the trade union. The Chairperson hinted that a political decision would have to be taken in the Committee on the issue of provincial representation on the Board as it seemed the concern of all the provinces.

Representatives read the voting mandates of their respective provinces. Mpumalanga did not have written mandates but instead submitted a request for extension of time. Its representative Mr Mkhaliphi said they have had briefings on the Bill and support it but that their only problem with the Bill is the procedure followed, namely that there were no hearings held on it.

The Chairperson said Gauteng also had made a request to be given more time to consider the Bill. It was agreed that Mpumalanga and Gauteng would be given next week which is constituency week to consider the Bill and to come up with written mandates.

Department of Public Work's Response
The Chairperson proposed that the Board should respond to all the questions at once since the various provinces might raise the same issue.

Clause 5(10)(c) the Board's ability to contract certain of its powers and functions
Mr Spencer sought the direction of the Committee on whether what is provided for in this clause should be in regulations or legislation.

Clause 6(3) representation in the Board
The Department said it originally came up with a formulation that tried to spell out representation in the Board. However one of the difficulties it grappled with was to come up with a list that is exhaustive and all-inclusive. When one looks at the size of the Board, it is in keeping with the size of other Boards. If one begins to define sectors that have to be represented, the result may be to either restrict others or not be exhaustive enough. The stakeholder forum should be where all the categories of stakeholders should be catered for. The Board should be constituted on the basis of leadership and expertise.

The Chairperson said the Committee would take a decision on the issue of provincial representation as it seems that almost all the provinces want it included in the Bill.

The Department cautioned that the Board should not be another negotiating forum as the stakeholder forum is there to ensure that all categories are represented.

Mr Maloyi (ANC - North-West) said the representatives are not arguing for provincial representation along political lines but that even if expertise is the criterion for choosing Board members, people with the requisite expertise should be chosen from the various provinces. The Board should not be a bastion of just one province.

Clause 6(4) the publication of invitations for nominations for appointment to the Board
Mr Hodgson said newspaper advertisements are expensive but if members want them, the provision that these should appear in more than one newspaper that is widely read can be put in.

Mr Sulliman (ANC -Northern Cape) suggested that instead of any newspaper that is widely read, it be said: national newspapers.

Clause 6(8)(b) eligibility of political office bearers for nomination as Board members
The Department said it was agreeable to Eastern Cape's suggestion that political office bearers may be nominated to the Board but once they accept nomination they step down as political office bearers.

Clause 6(8)(e) composition of the Board
Mr Hodgson said issue of a nominated person having been convicted of an offence has been extensively discussed in other legislation that the Department was involved in. Members were especially concerned that people who were convicted prior to 1994 (for political reasons) might be excluded by this provision. He suggested that the Department would forward to the Committee a clause that was drafted for that legislation which is comprehensive enough to accommodate the cases prior to 1994 and even mentions cases abroad.

Clause 7(1) term of office of members of the Board
Mr Hodgson said the Department had a problem with the proposal that the three years term for which members must hold office be extended to five years. He said clearly the Board would not be able to finish its work in three years but what they are trying to create is that there should be "new blood" coming into the Board regularly. Certain members may be retained for their expertise at the discretion of the Minister.

The Department clarified that the evaluation that the Board has to do in five years is to say whether it is doing what it was intended to do. There would still be yearly reports and business plans the Board would be required to submit. Thus it is not necessary that the term of office of members of the Board should reach the evaluation period in five years.

Clause 7(2) a board member may not serve for more than two consecutive terms.
Regarding the replacement of "unless" with "if" the Department said the mischief that the clause seeks to prevent is a Board member serving two consecutive terms "unless" the Minister decides considering the skills of a particular member. "If" would miss the intention of the provision.

Clause 10 chief executive officer
The Department said in terms of the Public Finance Management Act the Board is the accounting authority unless the Minister of Finance decides otherwise.

Clause 16(1)(a) whether it is possible to provide for names of the directors of contractors' business to be disclosed in the register
Mr Hodgson said he believes there should be disclosure. This would also enable the Board to pick up if directors are involved in "fronting" or schemes whereby companies owned by the same person compete against each other for a bid.

Clause 18(2) fining the unregistered contractors instead of the Board which is responsible for registering contractors
The Department said people would always find loopholes in legislation, and although the Board is responsible for registering the contractors, it is possible that through an oversight an unregistered contractor carries on construction work under a public sector contract. What the clause attempts to do is to show that the legislation is serious and that is why it provides for a fine.

The Department agreed that the responsibility for registering contractors lies with the organ of state. The provision is to place a double check to safeguard against the possibility that a contractor that is not registered carries on work under a public sector contract.

Mr Hodgson suggested that the clause be left out and included in regulations.

Clause 18(4) unregistered contractors being allowed to continue work
Mr Sulliman said he does not think it would be a good idea to let a contractor that is not register, and perhaps did not even qualify in the first place to continue with building.

The Department said because of the complex nature of construction contracts and operations, this might be necessary. One complication that is unique to construction is that there is a provision for a period of five years liability for work undertaken. Other contractors might not want to begin work on a construction that is left unfinished because this would tend to result in the blurring of liability.

Clause 19(2) removal of names from the register
On the proposal that the principle of audi alteram partem rule (hear the other side) be included in the Bill, Ms Botha said it is not really necessary to provide for this as the Constitution and the Promotion of Administrative Justice Act provides for this. This could be included in the regulations to be made by the Department instead of being included in the Bill. She said she would be hesitant to include specifics in the Bill because once that is done, it tends to narrow down the application of legislation.

Inclusion of a provision for appeal
Ms Botha said the appeal procedures were left out deliberately to be included in regulations. The review procedure is only for where there has been an error so that this can be rectified.

Clause 21 best practice contractor registration scheme
The register of contractors should be complete within three years but "a reasonable period" is provided for the establishment of a best practice contractor recognition scheme because stipulating a time period might actually give the Board more time than is necessary.

Clause 22(4) the manner in which the fee would be prescribed and whether stakeholders forum representations would be allowed.

Mr Hodgson said these are fees paid by clients which enable them to enjoy benefits such as knowing what projects are going on. He said the Stakeholder Forum would be able to make representations to the Minister and advise both the Minister and the Board. A fee would be prescribed after the Board has assessed the cost of registering and making recommendations to the Minister who would then prescribe it.

Clause 31 whether the immunity granted to members would not open them to litigation.
The Department said the inclusion of the clause granting Board members immunity against prosecution is specifically to protect them against unnecessary civil suits.

Clause 32 consultation
A member said the inclusion of only the MECs in the Bill might result in local government being excluded. The Department was asked to look at this.

Clause 33 regulations
The Department said the provision on regulations in the Act comes as comfort to a number of stakeholders since it assures them that there would still be more consultation on issues that concern them even if there is no detail in the legislation. The reason for allowing regulations to be mentioned in the Bill is to communicate that there are issues that cannot be regulated in the Act but signal that detail would be carried in regulations.

The Department agreed that tender documents need to be simplified and that this should also be provided for in the Construction Industry Development Board Act. In fact this is one of the functions of the Board as defined in terms of standardisation of contracts.

How the Board will ensure sustained growth of the industry needs.
The Department said the issue of sustained growth of the building industry has been dealt with fairly extensively in the White as well as the Green Papers. This is something that has to be ongoing and there has to be research into why people do or do not invest in the industry.

The Department said technical issues such as the definition of "emerging contractor" are to be dealt with in regulations.

All other proposed amendments the Department found reasonable and acceptable.

The Eastern Cape appealed that since there has been no hearings on the Bil,l there should be public education taking place. The national government should provide for informing people about the provisions of the legislation.

The Department undertook to write down responses to the provinces' questions and voting mandates and forward them to the Committee Clerk by 26 September 2000 together with a redraft of the Bill with the amendments proposed.

Appendix 1:

Report on negotiating mandate on the Construction Industry Development Board Bill [B 59 - 2000]

1. Terms of Reference

The Construction Industry Development Board Bill [B 59 - 2000] has been referred to the Technical Committee by the Speaker on 29 August 2000.

2. Briefing

(a) On 18 September 2000, Adv.J.Machaka, Assistant Legal Advisor to the Free State Legislature, briefed the Committee on the content of the Bill.

The Committee was informed that the aim of the Bill was to provide for the establishment of the Construction Industry Development Board; to implement an integrated strategy for the construction, growth and development of the construction industry and to provide for matters connected therewith.

(b) On 18 September 2000, Adv. J. Machaka, Assistant Legal Advisor of the Free State Legislature advised the Committee on the legal substance and effects of the proposed amendments to the Bill.

3. Consideration

The Committee expressed the views that:

  1. In clause 6, page12, from line 20, up to including "Republic", the Committee is concerned that provinces will not be represented on the Board.
  2. In clause 14, page 18, in line 15, to omit "five years" and substitute it with "three years".
  3. In clause 18, page 20, from line 30, up to including "carried out", the Committee is concerned that a penalty clause is leveled against an unregistered contractor, whilst the responsibility to ensure that all contractors rendering construction work for organs of state are registered lies with the organs of state.
  4. In clause 21, page 22, in line 18, to omit "a reasonable period" and to substitute it with a specific period.
  5. In clause 23, page 22, in line 42, to omit "a reasonable period" and to substitute it with a specific period.


Whilst the Committee acknowledges the existence of the common law right of "review" available to a contractor where registration has been turned down by the Board, the Committee is concerned that the bill does not provide for an "appeal" provision against the decision of the Board.


The bill is silent about "transitional provisions" in as far as it does not provide for a timeframe within which contractors must be registered in terms of the Act.

5. Resolutions

(a) The Committee resolved that:

The following negotiating mandate be conferred:

To support the Bill, but to negotiate the for the amendments made under considerations.


Mr. .P.E Noe

Chairperson, Technical Committee

Free State Legislature

20 September 2000

Appendix 2:


NEGOTIATING MANDATE ON the Construction Industry Development Board Bill [B59-2000]

19 September 2000

1. Introduction

The Construction Industry Development Board Bill [B59-2000] was formally referred by the Deputy Speaker on 31 August 2000 to the Public Transport, Roads and Works Standing Committee in terms of Rule 6.49 (1) (c) of the Standing Rules for formal consideration for formal consideration and a report.

The Construction Industry Development Board Bill establishes such a board to bring new values and norms into the construction sector. The Board will promote quality output, professionalism and dialogue among those participating in the industry. It also facilitates the pursuit of 'best practices' and consultation.

2. Process followed

On 8 September 2000 the Committee heard a briefing on the Bill from the Provincial Department of Public Works and the National Department of Public Works. The Provincial Department of Transport and Public Works supported the Bill with no amendments

At a committee meeting on 19 September 2000, the Committee heard a briefing on the Bill from the permanent delegate and this negotiating mandate was adopted by a majority of committee members with the following suggested amendment:

Page 26 line 35 - to include the following words "and MEC's" after the word "Minister"

3. Implications of the Bill for the Province

The Bill is technical and has no implications for the Province.

4. Negotiating position adopted by the Committee

The Committee proposed the amendment mentioned above.

5. Principle of the Bill

The Committee supports the principle of the Bill.

Appendix 3:




That the Northern Cape's Permanent Delegates to the National Council of Provinces are hereby mandated to vote for the Bill with concerns:

  • Section 10(2) This section does not have enough power.
  • Why is the corruption clause, that is found in all Bills, omitted.
  • Section 19. What is the requirements to register? If a contractor is deregistered what will happen to him/her?
  • Section 31. If the board is given immunity, this will make them open for litigation.
  • Section 6(8)(e) The crimes mentioned should be that recognised in the RSA.




Appendix 4:


  2. The Construction Industry Development Board Bill (B59-2000) was referred to the Portfolio Committee on Public Works by the Speaker for consideration and scrutiny.

  4. The committee met on 18 September 2000 and was briefed by Hon Kgoshi Mokoena L.M on the objects of the Bill. The committee discussed and agreed to the provisions of the Bill without any amendmets.

  6. The committee supports the principles and provisions as introduced by the Minister without any amendments.

    Hon N. Mashabane

    Committee Chairperson

    Appendix 5:


    Report of the Standing Committee on Economic Development, on the Construction Industry Development Board Bill [B 59-2000] (NCOP), dated 20 September 2000, as follows:

    The Standing Committee on Economic Development, having considered the subject of the Construction Industry Development Board Bill [B 59-2000] (NCOP), referred to the Legislature in terms of the rules of the National Council of Provinces (NCOP), begs to report that it confers on the Western Cape's delegation in the NCOP a negotiating mandate to support the Bill with the following recommendations:

    1. That provision be made for the aldi alterem partem Rule to be inserted in subsection 19(2).
    2. That the representation in the Board be considered regarding the different categories of organisations.

M Louis


20 September 2000



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