Public Works on its reviewed Annual Performance Plan; Stakeholder consultation, with Deputy Minister

NCOP Economic and Business Development

20 June 2017
Chairperson: Mr M Rayi (ANC, Eastern Cape)
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Meeting Summary

The Committee met with senior officials of the Department of Public Works (DPW), including Deputy Minister Jeremy Cronin and the DG of the Department, to be briefed on the reviewed Strategic Plans and 2017/18 Annual Performance Plans (APP) of the Department and the Property Management Trading Entity (PMTE). Prior to the presentation getting underway, the Deputy Minister spoke to the Committee on various aspects of the work of the Department including its turnaround strategy, in response to disclaimer audit outcomes, the decision to establish the PMTE, role of the Department in the regulation of the built environment and coordination of the Extended Public Works Programme (EPWP) and challenges still faced such as audit qualifications of the PMTE, immovable property asset register, evaluating the property portfolio, derelict buildings and maintenance.

The presentation of the revised Strategic Plan and 2017/18 APP of the Department covered the external environment influencing the work of the Department, internal environmental dynamics, areas for improved performance, allocation to the provinces and the Departmental budget allocation. The presentation also covered the strategic objectives and targets for the programmes of the Department, namely:

  • programme one: administration
  • programme two: intergovernmental coordination
  • programme three: EPWP
  • programme four: property and construction industry policy and research
  • programme five: prestige policy

The PMTE 2017/18 APP presentation discussed the external environment influencing the work of the Entity before moving onto the strategic objectives and targets of the Entity for the following programme areas:

  • programme one: administration
  • programme two: real estate investment services
  • programme three: construction project management
  • programme four: real estate management services
  • programme five: real estate information and registry services
  • programme six: facilities management

The presentation also looked at budget allocation, long-term infrastructure plans for provinces and key strategic risks.

The Chairperson stated that in the future, when the DPW scheduled briefings with the Portfolio Committee on Public Works, briefing documents should be sent to the Select Committee as well. This would allow Members to peruse the documents well ahead of time before the DPW briefed the Committee. Members questioned whether funds allocated towards the refurbishment of the NCOP Building should rather be used for the provision of toilets at schools as previous attempts at refurbishment of the building still left electronic equipment in venues non-operational. The DPW was asked to put pressure on its contractors not to do shabby work. Members stressed the importance of fairness and transparency when it came to the process of allocating EPWP jobs to members of the public. The EPWP had always been plagued by implementation issues by implementing bodies. Implementation was not done fairly. Councillors often had a hand in deciding who got jobs. The DPW was asked to provide the Committee with the guidelines it used for the appointment of persons for EPWP jobs. Were EPWP jobs only meant for certain groups of people? Members of the opposition felt that it seemed as if only cadres of the majority ANC party were hired.

Another concern of the Committee was that the salary scales of EPWP employees varied from province to province. The DPW was asked why the construction of the Winnie Mandela Clinic in the Free State Province was not complete. Contractors in the Free State were also not paid by the Province and by municipalities. Members asked whether there were DPW properties affected by the recent devastating fires in the Knysna area. Members felt it important to inform the DPW on what the Committee had observed on oversight in the Mpumalanga Province, which was found to be disturbing, and that the Committee would be doing a follow up with the DPW over the matter. Due to time constraints, the Committee provided Members with the option of posing further questions to the DPW in writing to which the Department was expected to respond.

 

Meeting report

Opening Remarks by the Chairperson

The Chairperson stated that in the past, former Minister of Public Works, Mr Thembelani Nxesi, attended Committee meetings. On 13 June 2017, the Committee decided to defer the briefing by the Department of Public Works (DPW) because neither the Minister nor Deputy Minister were present. The Committee however appreciated that Deputy Minister Jeremy Cronin was able to make it today. Minister of Public Works, Mr Nkosinathi Nhleko, extended apologies to the Committee for not being able to attend today.

Opening remarks by Deputy Minister of Public Works Mr Jeremy Cronin

Deputy Minister Cronin extended his apologies to the Committee for not being able to attend the meeting of 13 June 2017. He had been in a Cabinet committee meeting and was under the impression that Minister Nhleko would be attending the meeting. DPW officials had, at the time, tried to contact him but the Cabinet committee meeting did not allow those present to take their cellphones into the meeting. By the time the meeting adjourned it was too late. He added that the DPW Director General, Mr Mziwonke Dlabantu, on 13 June 2017, had represented the Minister at a property conference. On the same day the Chief Financial Officer (CFO) of the DPW, Mr Cox Mokgoro, had also lost his son due to illness. He noted that he would provide a short background as the briefing would cover the substance. Since 2012, under former Minister Nxesi, the DPW was engaged in a major turnaround effort. The DPW had problems and received disclaimers from the Auditor General of SA for three years. As a consequence, the turnaround was set in motion. He noted that former Minister Nxesi had three stacks of files on his desk. They were from the Special Investigations Unit (SIU), the Hawks and from the Public Protector’s Office. Referring to the DPW team present he said that, with the exception of one person, the team was fairly new. The good news was that the disclaimers had disappeared. The decision was taken to set up the Property Management Trading Entity (PMTE). There was thus the DPW and its government component the PMTE. He pointed out that there were shared services but that the PMTE’s accounting was ring fenced. The PMTE accounted in a separate way and did not have a separate board. The PMTE accounted directly to the Minister and DG of the DPW. The main business of the Department was to be the landlord of property of national government. This critical task was ring fenced. The DPW was also tasked with the regulation of the built environment as well as with coordinating the Expanded Public Works Programme (EPWP). The DPW had, over the past few years, had a clean audit opinion. There had however been some qualifications on the PMTE. There were issues relating to the immovable property asset register needing to be in order. The DPW also embarked on valuing its property portfolio. The DPW had by far the largest property portfolio in SA. The private sector’s Growthpoint had the second largest. The work of the DPW was nowhere near completion and there was still a long way to go. There were many derelict buildings and maintenance was a major issue.

The Chairperson noted that the DPW requested an opportunity for interaction with the Committee. The Committee would deal with the briefing and thereafter give the DPW the opportunity for interaction as requested.

Mr Mziwonke Dlabantu, DG, DPW, responded that the correspondence to the Committee spoke to an opportunity to meet with stakeholders regarding the DPW’s service delivery improvement plan. It was not necessarily meant to take place in the present meeting. It would at least take one and a half to two hours of the Committee’s time. The request was for the Committee to accommodate the DPW thereon. The intention was to have a full service delivery improvement plan to ensure that the DPW’s turnaround was properly done. He proposed that the briefing on the Annual Performance Plans (APP) of the DPW and the PMTE continue as planned. He reiterated that the DPW regulated the construction and the property environment. There was also the coordination of the EPWP. All support functions were shared by the DPW and the PMTE.

Briefing by the Department of Public Works (DPW) on its revised Strategic Plan and Annual Performance Plan 2017/18

The delegation comprised of Mr Dlabantu, DG, Mr Imtiaz Fazel, DDG: Governance, Ms Anbigay Naicker Director: Strategic Planning, Mr Samuel Thobakgale DDG: Project Management Office (PMO), Mr Aaron Mazibuko, Chief Director, Ms Swanzie Matheus, DDG: Immovable Asset Register, Mr Stanley Henderson, DDG: EPWP, and Mr Herman Pienaar, Director of Financial Planning: PMTE.

Mr Fazel undertook the briefing. The Committee was provided with insight into how the external environment affected the work of the DPW and how it responded to it. Some external factors included the global environment, SA’s Gross Domestic Product (GDP) growth as well as the construction and labour environments. On the internal front the DPW wished to strengthen its governance, improve service delivery, strengthen its research and policy development capacity and reduce fraud and corruption. On the performance side the DPW wished to integrate risk management into planning processes, improve efficiency through Information Communication Technology (ICT), pay suppliers within 30 days and improve supply chain management. Members were provided with figures for allocations to the nine provinces on the DPW’s grants. These included the EPWP Integrated Grant and the Social Sector EPWP Incentive Grant. For 2017/18 the budgeted allocation was just over R7 billion.

Programme 1: Administration

With the strategic objective being to improve governance processes within the DPW and the PMTE, the target for 2017/18 was to have 100% of investigations initiated within 30 days in respect of validated allegations. The plan was also to have four interventions recommended for mitigation of fraud risks within the DPW and the PMTE.

Programme 2: Intergovernmental Coordination

The strategic objective was to ensure integrated planning and coordination of concurrent functions. The planned target was to have two performance review reports for the 2017/18 Sector Programme of Action presented to Ministers and Members of Executive Councils Meeting. Twenty agreements signed for joint service delivery with provinces and municipalities were also targeted.

Programme 3: Expanded Public Works Programme

With the strategic objective to monitor and evaluate the implementation of Public Employment Programmes (PEPs) within the EPWP, the target for 2017/18 was to have 1 406 736 work opportunities reported in the EPWP-RS by public bodies. On percentage EPWP participation amongst designated groups reported on the EPWP-RS by public bodies, the planned targets were Youth-55%, Women-55%, and Persons with Disabilities-2%.

Programme 4: Property and Construction Industry Policy and Research

The strategic objective was to research and develop policies and legislative prescripts for the construction and property sectors. In relation to the Public Works Bill the planned target for 2017/18 was to have a Draft Public Works White Paper gazetted for public comment by the end of the financial year. On the amended Construction Industry Development Board Act and the amended Council for the Built Environment Act, the plan for 2017/18 was to have stakeholder consultations.

Programme 5: Prestige Policy

With the strategic objective to improve the delivery of services to prestige clients, the planned target for 2017/18 was to only take 15 working days within which to resolve mechanical breakdowns after logging of complaints by prestige clients. The plan was also to only take two working days to resolve emergency breakdowns after prestige clients logged complaints. The intention was also to have four prestige policies approved.

The DPW targeted service delivery areas for improvement included, for instance on the EPWP, to improve recruitment procedures by way of awareness campaigns. Some strategic risks that the DPW faced were loss of resources through fraud and corruption and the failure by the DPW and the PMTE to achieve its EPWP, Broad-Based Black Economic Empowerment (B-BBEE) and skills development targets.

Briefing by the DPW on the Property Management Trading Entity’s (PMTE’s) 2017/18 Annual Performance Plan

Mr Fazel touched on the external environment that the PMTE took into consideration when it did its planning. These were more or less the same external factors that the DPW took into consideration i.e. the global environment, SA’s GDP growth, the construction sector etc. Due to time constraints the briefing went straight into the APP.

Programme 1: Administration

With the strategic objective to provide compliant Supply Chain Management (SCM) services, the 2017/18 target was to have 65% of bids awarded within 56 days of closure of the tender advertisement. The plan was also to have 88% of quotations awarded within 30 working days from the requisition date and to have savings of 24% for built environment consultants.

Programme 2: Real Estate Investment Services

The strategic objective was to ensure that user management plans were produced in compliance with relevant prescripts. The plan for 2017/18 was to have 42 User Asset Management Plans received from user departments. In addition, there was a target to have ten signed off infrastructure worklists.

Programme 3: Construction Project Management

With the strategic objective to develop detailed construction plans that direct the execution of construction projects, the planned targets for 2017/18 were to have 117 approved infrastructure project designs, 174 approved infrastructure projects ready for tender and 117 infrastructure sites handed over for construction.

Programme 4: Real Estate Management Services

The strategic objective was to provide functional leased accommodation for user departments. The planned 2017/18 targets were to have 60% of lease agreements signed with prescribed timeframes, R100 million savings realised on identified private leases and 25% of new leases awarded to black owned companies.

Programme 5: Real Estate Information and Registry Services

With the strategic objective being to maintain a compliant Immovable Asset Register, the planned targets for 2017/18 were to have 70% of disposals approved in 2016/17 and processed for transfer, 100% of immovable assets updated on the Immovable Asset Register for completed infrastructure projects and 800 parcels of land vested.

Programme 6: Facilities Management

The strategic objective was to manage maintenance programmes in accordance with an approved plan. The planned targets for 2017/18 were 450 facilities with maintenance contracts in place, 10% unscheduled reported maintenance incidents resolved within the agreed timeframe and 30% term contracts awarded to black-owned companies.

The PMTE’s total budget allocation for 2017/18 was around R19.79 million.

The Committee was provided with insight into the PMTE’s long term infrastructure plans for various provinces. Some key strategic risks for the PMTE were weakening financial viability and sustainability of the DPW’s entities with an emphasis on the PMTE, deterioration in the value of the state’s portfolio of immovable assets and failure to provide quality accommodation within time and cost.

Discussion

The Chairperson pointed out the Committee only received the PMTE APP briefing document on 9 June 2017 and had not received the one on the DPW’s APP – this was only received on 12 June 2017. That meant Members would only have had one day to go through the document if the meeting of 13 June 2017 went ahead. As things worked out Members had sufficient time to peruse both documents. He asked the Committee Secretary, Ms Grace Dinizulu, to speak to her counterpart in the Portfolio Committee on Public Works that when the Portfolio Committee received briefing documents from the DPW that such documents be forwarded to the Select Committee as well. This would allow Members to peruse documents well ahead of when the Committee was supposed to be briefed by the DPW. Briefing documents presented to either of the Committees were more or less the same. He expected the DPW to table its Annual Report in the National Assembly after August 2017. The Annual Report should be provided to the Committee as well. By the time that the DPW briefed the Committee, information on provincial spread could be added to the briefing document.

Ms M Dikgale (ANC, Limpopo) noted that some Members were not present at the meeting of 13 June 2017 and hence had not received both briefing documents. Referring to the PMTE briefing document, she noted there was a huge amount of funds allocated towards the refurbishment of the National Council of Provinces (NCOP) building in the Western Cape. Not too long ago work had been done on the building and up until now the electronic machines in venues still did not work. Were there funds for maintenance? She felt the funds could rather be used for the provision of toilets at schools and hospitals in amongst other areas like in the Free State Province. Referring to the DPW briefing document, she asked why GDP growth was 1.2% and not 3%. She asked how the DPW assisted on the provision of remedial lessons. On the DPW’s Prestige Policy Programme, she asked what types of functions were budgeted for. Why could such funds not be used for the creation of jobs in the Limpopo Province?

Mr Dlabantu, on the economic projections regarding GDP growth, said that it was National Treasury who issued the projections. The projections had to be adjusted downwards as SA was in a technical recession. There was very old infrastructure in the NCOP Building and Parliament’s administration pressurised the DPW to address the issue of aging infrastructure. The figures were merely estimates. The actual cost could be less.

Ms Dikgale responded that the DPW had to also put pressure on its contractors to do proper work.

Mr Dlabantu assured Members that contractors would be monitored. The R116 million was not only to fix broken machines. He explained that schools fell under the equitable share allocated to provinces. The DPW faced a general infrastructure backlog which was a challenge.

Mr Stanley Henderson, DDG: EPWP, DPW, on the issue of job creation in the Limpopo Province, stated that 96% of municipalities had not used its infrastructure budgets to create jobs. The DPW engaged with these municipalities to design projects that were labour intensive. The hiring of locals had to be built into tender processes. The DPW provided technical assistance from design phase up until implementation phase.

Mr L Magwebu (DA, Eastern Cape), addressing Deputy Minister Cronin, stated that everyone was in agreement that the EPWP was the life line of the poor. However when jobs were allocated to members of the public there needed to be fairness. The problem with the EPWP was always on implementation by implementing bodies. The implementation was not done fairly. Councillors often had a hand in who got jobs. In 2015/16 the DPW had set out guidelines for the appointment of persons and he asked to be provided with the guidelines. There needed to be fairness and transparency on appointments. Everyone had to be given a chance. He was pleased to see that on good governance the DPW was dealing with fraud and had a strategy in place. He too was pleased that efforts on fraud prevention were also taking place. He asked what programs the DPW had in this regard.

Deputy Minister Cronin asked that Mr Magwebu provide him with affidavits and details where implementation on the EPWP was not being done fairly. He conceded that unfortunately there were instances of implementation of the EPWP not taking place as it should. There should be impartiality and fairness. These types of practises were illegal and criminal. He was a little cautious though about allegations that were made and said that allegations had to be investigated. In the Western Cape similar allegations were made by the ANC against DA councillors. People were desperate to get work opportunities. Processes however needed to be clear and fair. He confirmed there were recruitment guidelines on quotas and participation. It was hugely problematic if councillors were involved in the selection process. Given the levels of unemployment in SA, it was to be expected that allegations would be flung around. The recruitment guidelines set out the process. There were indigent lists that could be used as well as a zama zama draw. It would be ideal to develop local committees consisting of community leaders. He noted that the names of those participating should be made available. The idea was to build community cohesion.

Mr Henderson too confirmed there were guidelines. The DPW was concerned about the issue Members raised. The guidelines essentially wished for communities to get involved on the placement of EPWP participants. The Committee would be provided with the guidelines. Wage ranges were also touched on in the guidelines. He explained that public employment principles did not wish for wage ranges to drive away permanent job placements.

Mr Fazel said that some of the programmes of the DPW dealt with day to day maintenance. These programmes were very susceptible to fraud and corruption creeping in. Fraud crept in on simple things like a repair to a geyser when it was later found that the building did not even have a geyser. The DPW needed to have better control systems. The DPW annually spent R1 billion on state maintenance. Proper Information Technology (IT) was needed to plug gaps. On the Integrity Maintenance Framework, one had to look at the organisation itself. Staff had to stick to the organisation’s code of conduct. On the appointment of participants on the EPWP, the DPW had received complaints from an opposition party Member through the Deputy Minister’s Office. Complaints had been received from Umhlazi and Durban in the KwaZulu-Natal Province. A great deal of the allegations was hearsay. Councillors had to follow processes to appoint persons. The DPW was ready to investigate allegations.

Mr W Faber (DA, Northern Cape), addressing Deputy Minister Cronin, asked what the R10 million allocated towards the Parliamentary Villages Board was to be used for. Years ago, the Member raised the issue of the South African Police Services (SAPS) houses in the Hartswater area in the Northern Cape being in a totally dilapidated state with former Minister Nxesi years ago. Also at Doringhof near Warrinton, there too was a building that was once in a good state but now was in a totally dilapidated state. He was also concerned about the 39% vacancy rate of critical positions in the DPW. On supply chain management he asked whether anything was happening at President Zuma’s residence at Nkandla. On the EPWP Integrated Grant for provinces he asked why allocations for some provinces changed so radically for 2016/17 and 2017/18. For example the allocation for the North West Province had decreased from R51 million in 2016/17 to R14 million in 2017/18. There were fluctuations on the budget allocations for compensation for employees which was R5.4 million in 2017/18, R2.7 million in 2018/19 and R6.2 million in 2019/20. He appreciated the work that the DPW was doing on its asset register but a point had to be reached where Members could know what the assets of the DPW were.

Deputy Minister Cronin responded that Mr Dlabantu was the chairperson of the Parliamentary Villages Board and could shed light on the matter. He noted that it was not the first time he heard complaints about the recruitment of employees and on the compensation scales of the EPWP. From the DPW’s side, there was nothing happening at Nkandla. The Minister of Public Works had responded to a written question over the matter.

Mr Dlabantu said that the R10 million allocation was for parliamentary transport i.e. buses. There was not a major increase. On key position vacancies, advertisements had been placed however, there was a moratorium on the filling of vacancies. He approved the appointment of the PMTE’s top brass. More positions would be advertised. The target for the process on the filling of vacancies was supposed to end by August 2017.

Mr Samuel Thobakgale, DDG: Project Management Office (PMO), DPW, on the issue of dilapidated SAPS houses at Hartswater, assured Members that the DPW would do a follow up. The matter would be discussed with the SAPS.

Mr Dlabantu pointed out that the DPW had engagements with other departments, like the SAPS, Correctional Services and Justice, on residential properties. It was the staff of these departments that abandoned the properties. The DPW was not informed when the staff no longer wished to use the properties. Sometimes the DPW also had to settle outstanding electricity bills.

Mr Faber responded that the matter was still unresolved. He had brought the matter to Minister Nxesi’s attention years before.

Mr Henderson, on the fluctuations on incentive grants, explained allocations were based on performance and reporting. Eligible bodies, like municipalities and provinces, had to use equitable share amounts and report on it. The issue was sometimes about poor reporting. The DPW checked on whether incentive grants were used as intended. The amounts would decrease if funds were not used properly.

Mr M Chabangu (EFF, Free State) asked when DPW was going to audit assets that belonged to the state. He pointed out that government buildings were looted in QuaQua and in Clarence. He asked when the Expropriation Bill was to be finalised. He asked whether the EPWP was only meant for certain groups of people as only cadres of the majority ANC party were hired. However other political parties were standing up against this practise. He pointed out the salary scales of EPWP employees varied from province to province. In 2016 EPWP employees had toyi toyed about low wages received. Why did EPWP employees in the Gauteng Province receive higher wages? Why was only the foundation phase of the Winnie Mandela Clinic in the Free State Province completed? Why was the Clinic’s entire construction not completed? He stated that in the Free State Province contractors had not been paid by the Province and by municipalities.

Deputy Minister Cronin explained that the Expropriation Bill had gone to the National Assembly in 2016 and had gone through a lengthy process with the Portfolio Committee on Public Works. A version of the Bill had been passed in the Assembly. The Bill was referred to the NCOP just before the Local Government Elections in August 2016. Efforts were made to complete the NCOP process on the Bill but some political parties felt the legislative process was flawed. A small amendment to the Bill was made by the NCOP. The Bill, with the amendment, was then referred back to the Assembly where it was accepted as amended. The Bill was then referred to President Zuma. The Presidency received a letter from the Institute of Race Relations which spoke firstly to the allegations of the DA that the process on the Bill was flawed and secondly that the House of Traditional Leaders were not consulted on the Bill. President Zuma wrote a letter to the Speaker of the Assembly, the Chairperson of the NCOP and the Minister of Public Works about the allegations on the process on the Bill. The Speaker of the Assembly and the Chairperson of the NCOP both felt the process on the Bill to have been fine. The DPW however felt it best to run the Bill again. President Zuma referred the Bill back to the Speaker of the Assembly who in turn referred it to the Portfolio Committee on Public Works. The Portfolio Committee referred the Bill to the House of Traditional Leaders. The State Law Adviser’s Office felt that, on the constitutionality of the Bill, it did not affect the House of Traditional Leaders. The DPW was awaiting a response from the House of Traditional Leaders. The DPW had to ensure that all boxes were ticked on the Bill. The issues on the Bill were procedural and not on its content.

Mr Fazel, on the auditing of state immovable property, conceded that buildings were being plundered. There was a programme called “Operation Bring Back” but it was not that effective. Nothing really happened. The DPW had a new programme which brought all provinces on board. Properties were being located. The DPW identified 2 000 properties that were not occupied for the purposes for which it should be. A total of 25 properties of the DPW were illegally transferred. This amounted to fraud. One big developer was involved. Illegal transfers were done via the deeds system. A huge marketing campaign was needed. The public needed to come forward and report such matters. Illegal transfers were reported to the DPW by whistleblowers. The DPW needed a whistleblower strategy. The issue required a great deal of work.

Mr Dlabantu said the asset register of the DPW was compared to the deeds registry. He informed Members that the asset register was not static. The DPW tried its utmost to prevent a period of flux in the updating of it. There was a unit assigned to the maintenance of the asset register.

Mr Magwebu asked whether there was any one DPW buildings that had been affected by the fires in Knysna. If there were properties affected, DPW needed to focus on it.

Mr Dlabantu responded that no DPW buildings were affected by the fire in Knysna. However a vacant piece of land was affected. There were however no major damages.

Mr Chabangu said that the DPW had not spoken to the Winnie Mandela Clinic matter.

Mr Dlabantu assured Members that the matter would be looked at.

The Chairperson suggested that if Members had any further questions for the Department, such questions could be forwarded to it. DPW was expected to then respond to the questions.

Mr E Makue (ANC, Gauteng) felt it important to inform the DPW that when the Committee went on an oversight to Mpumalanga, Members were disturbed by what they had seen. The Committee would do a follow up with the DPW on the issue.

Deputy Minister Cronin said that he appreciated the critical questions asked by Members. The Committee was, after all, the eyes and ears of the Department on the ground.

Adoption of Committee Minutes Dated 6 June 2017 and 13 June 2017

Draft Committee Minutes dated 6 June 2017 and 13 June 2017 were adopted without amendments.

Draft Committee Minutes dated 7 June 2017 was deferred for adoption until another time.

The meeting was adjourned. 

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