Department of Public Works + PMTE Budget Review and Recommendations Report

Meeting report

The Chairperson noted that the agenda of the meeting was to consider the Budget Review and Recommendations Report (BRRR), and stated that the Members were welcome to add their recommendations for the report throughout the discussions.

Furthermore, the Chairperson said that Mr Shuaib Denyssen, Content Advisor, Parliament, would take the Committee through the draft report with the hope that they could then pass the report by the following day (Wednesday, October 11th) which would satisfy the deadline of Friday, 13th October.

Ms E Masehela (ANC), raised the issue of having the relevant documentation made available to Members of the Committee in a timely and accommodating manner so that they could go into meetings well informed and acquainted with the material to be discussed.

The Chairperson noted this point and further advised Members to also find out from their secretaries about the availability of such documents. He also pointed out the fact that time constraints in this matter probably affected the timely delivery of the draft report Members. This led the Chairperson to commend the staff for working diligently under pressure to put together the draft report in the short period of time that they had.

Draft BRRR presentation Section 1

Mr Denyssen said that the BRRR process was a key part of the oversight responsibility of the Committee, and referred to legislation which indicated that this report had to be done and what had to be done in the report. Furthermore, the Committee focused on the policy imperatives that the National Executive Authority, which was the Minister, put in place to guide government leadership over the built environment and construction sector. He mentioned that these policies had to be translated into funded programmes that ensured its implementation. The Minister could also be referred to as the “policy arm” and the Department and entities could be viewed as the “implementing arms” of the Public Works sector.

He stated that the Public Finance Management Act and the Constitution established an Executive Authority whereby the Department had to translate the policy into workable programmes and allocate money from the budget to implement them. He then went onto to explain the importance of the “implementing arm”, submitting the Annual Performance Plan (APP) in which it stated properly defined targets and timeframes in which these targets should be met. Furthermore, the Minister’s office (policy leader) had to in turn monitor and ensure that implementation took place with the allocated targets. This happened through regular meetings with top management to ensure that quarterly performance reports showed progress towards the stated targets. The Minister further held regular meetings with members of the Executive, Councils and MECs that functioned as provincial policy leaders. He noted that through these structures of the Minister, top management of the Department, and MECs, it was clear that the first level of oversight over the implementing arm was the Minister as the policy leader. The second level was oversight that the Committee exercised over the Minister. The Minister and Department then reported to the Committee through their Annual Reports on the Public Works policy and financial performance to show whether it reached the targets stated in the performance plan.

 

Mr Denyssen reiterated the fact that the report dealt with the Committees work in maintaining oversight over the Minister, even though there were other oversight mechanisms such as the Appropriations Committee, SCOPA and others, this report did not pertain to that per se, which was why he only mentioned the two levels of oversight (Minister over Department and Committee over Minister), even though others existed. Regarding the mandate of the Department, Mr Denyssen referred to Schedule 4 Part A of the Constitution which described the functional areas of concurrent national legislative competence which was said to be the first legal mandate of the national Department. Moreover, he stated that the Department was responsible for the official accommodation of all national departments and that it was mandated to provide construction, maintenance, and property management services to all client departments at national level. This included the rendering of expert built environment services that were related to the planning, acquisition, management, and disposal of immovable assets. Furthermore, the Department was also mandated to provide strategic leadership of employment creation through the implementation of phase 3 of the Expanded Public Works Programme (EPWP). He said that the Department played a coordinating and capacity announcement role with provincial and local government counterparts to ensure the implementation of the third phase EPWP.

Mr Denyssen said that the Department was also responsible for following built environment and construction entities; the first being Agrément SA, then the Construction Industry Development Board (CIDB), Council for the Built Environment (CBE), and the Independent Development Trust (IDT). He then listed the evidence that the Committee used which included the Department’s Five Year Strategic Plan (2014 to 2019), the Annual Performance Plan, and the Annual Report, the Strategic Plans and Annual Reports of the entities, Quarterly Expenditure Reports, and the Financial Performance Statements in the 2016/17 Annual Report.

Discussion

Mr M Filtane (UDM) inquired about the extent to which the Department of Public Works, in maintaining oversight, used allocated funds to perform its mandated functions. He further stated that there would always be the prevalence of someone asking for evidence of socio-economic impact, therefore, he wanted to know whether it was constitutional to ask for that or not. He further asked whether it should not rather be a mandated requirement for evidence to be provided regarding something like the socio-economic impact so that in future, there could be no valid reason for not providing such evidence or answering questions on that matter.

Mr D Ryder (DA), asked about who set the deadlines for submission, and whether it was the Speaker’s prerogative to extend that deadline. He also suggested including the presentation the Committee had the previous week as well as their interactions with the Department because a lot of that information could prove to be important when analysing the state of the Department.

Ms E Masehela (ANC) posed a question to the whole Committee asking whether they really saw themselves missing the given deadline.

The Chairperson responded to Ms Masehela by noting the speediness and diligence of the Committee’s administrative staff, ensuring that based on their work up to that point, he did not see how they would be late at all in the delivery of the report. He further noted that due to their speedy progress, the Committee was in fact ahead of time and that it was up to the Committee to then empower the staff by carrying out the necessary changes and additions to the Draft Report, for the final draft to then be passed possibly on the day of the meeting if not the next.

Furthermore, regarding Mr Filtane’s point of inquiry, the Chairperson stated how the Public Works Committee, unlike most of the other Committees, was evidence driven and outcome-based showing that Mr Filtane was indeed not wrong for requesting what he did because if they disregarded the evidence, they would have failed in their function. The activities of entities such as the IDT had social impact like job creation (or lack thereof), and if things were either good or bad in that regard, the Committee needed evidence supporting such so they knew how to deal with and eradicate problems, while keeping up good work. Thus, the whole issue for the Chairperson, in support of Mr Filtane, revolved around being substantially informed on the outcomes of the Department and reasons behind those outcomes. His suggestion was for the Committee to have a workshop through which they could formulate a revised strategic approach to their oversight function to include this request for evidence-based facts from the Department.

Mr Denyssen referred Mr Filtane to a page in the Draft Report (page 2). He then said it was possible that the omission of such evidence may have been due to a previous late submission by the Department. The Department obtained the authority of the Speaker to submit its report by a certain date. The Minister was also requested to submit by this date along with approximately 14 other departments that had to adhere to this request as well. Furthermore, he reiterated Mr Filtane’s sentiment on the question of socio-economic impact, noting that Mr Filtane had in fact asked that question many times past without receiving a clear answer. Mr Denyssen said that the whole Committee should support Mr Filtane even though this Committee, like the others, consisted of Members from different political parties. To ask for evidence of the socio-economic impacts of a programme was correct because of the money that was taken from every person’s salary and purchases (VAT), that was then used to fund these programmes. He concluded his response to this by imploring Members to keep asking for the evidence of such, with the addition of being more specific in their inquiry to make it less possible for these questions to be avoided when asked. Some of the evidence was mentioned to be in the Draft Report with the note that it should in fact be contained in the Departments Quarterly Report instead.

Mr Denyssen confirmed that it was indeed the Office of the Speaker which set the deadlines because all the reports had to go to the Speaker first, who then tabled them and send them out to the various Committees. He then noted the removal of a sentence in the Draft Report and replacing it with one that stated that in conducting oversight over the Department and how the National Executive gave effect to its mandate, the Portfolio Committee on Public Works would watch over whether and to what extent the DPW used the allocated funds to perform its mandated functions to ensure the necessary socio-economic impacts.

In response to Mr Ryder’s suggestion, he said that he would then insert something to the effect of saying that the oversight events of the Portfolio Committee on Public Works for period under review would include the interactions with the presentations and annual reports of the Department.

Draft BRRR presentation Section 2

Mr Denyssen proceeded with the presentation to deal with the alignment between the Strategic Plan, Annual Performance Plan, Annual Report, and the Medium-term Expenditure Framework that were submitted to the Committee. He mentioned that the aim with this was to say if these reports were to be compared, there was evidence that a reasonable effort to align the legal mandate, the policy and planned initiatives to give effect to them was indeed made.

Discussion

Mr M Filtane (UDM), mentioned how the Minister’s statement started by referring to the policy of the ANC. He asked how correct that was as opposed to just mentioning the NDP and the other instruments that influenced policy.

Ms E Masehela (ANC), stated that she did not see any problem as such because the ANC was the ruling party which meant that it was more likely for the policies of the ANC to be used.

The Chairperson concurred with Ms Masehela noting that in most instances, the policy that was implemented normally went hand in hand with the ruling party which was why they had policy conferences and all those events. He further mentioned the function of a multiparty system where the smaller parties, through Committees, could also give input which also informed Parliament’s decisions on certain matters.

Mr D Ryder (DA), spoke about the Minister’s mention of “outcomes 12 and 6” which were not listed in the Draft Report, therefore, he wanted clarification as to whether they were excluded on purpose because of a possible overlap, or whether they should be mentioned in the Report.

Mr Denyssen reiterated that what they were doing was looking at the strategic priorities as stated in the 2014 to 2019 Strategic Plan, the link with the APP, the Annual Report and what the Minister done was an interpretation of the 2014 to 2019 Strategic Plan, nonetheless they were willing to insert the 12 and 6 even though an overlap existed in the report.

Draft BRRR presentation Section 3

Mr Denyssen mentioned that from the previous financial year 2015/16, the Annual Performance Plan and Annual Report referred to the separation of the functions of the Property Management Trading Entity (PMTE) from that of the Department so that the regulatory policy and monitoring functions remained with the Department, in other words, closer to what he referred to earlier as the “policy arm” which was the Minister’s function. On the other hand, the service delivery function fell under the PMTE. He further stated that this separation of functions was an outcome of the turnaround strategy that was unfolding over the Medium-term Expenditure Framework period which was 2014 to 2019. The turnaround strategy was necessary to reduce the historically poor performance of the Department.

He mentioned that in 2015, the Department came up with a revised Strategic Plan which was what he referred to from that point as the 2015 to 2020 Revised Strategic Plan. This turnaround strategy was also meant to help the Department to realign and secure a better focus on its mandate as custodian and portfolio manager of government’s immovable assets. Mr Denyssen noted that the Department would also be focused on improved oversight over policy formulation, coordination, regulation, and oversight related to the provision of accommodation and excellent built environment services to client Departments. For this reason, the Committee noted a substantial decrease in the financial and staff allocations of the programmes falling under the DPW, with a concomitant increase in that of the PMTE. He further noted that the section he just read to the Committee came from the Annual Report of the previous year, and he had done so purposefully to say that what they noticed in the current year and what Mr Ryder was referring to in the presentation, is that it was very clear that there was a regression to what was before the turnaround strategy. He also mentioned how the turnaround strategy proceed with “quiet chaos” within the DPW and PMTE with nobody having said anything about it or raised the issue which then only became evident when they looked at the figures. What this ultimately meant was that there were issues of capacity and efficiency which were not being addressed which tied back into what Mr Ryder raised regarding the outcomes 12 and 6 mentioned by the Minister in the NDP.

 

On the overall expenditure of the DPW over the course of the current financial year, the Department received R6.5 billion to accomplish policy priorities established by the Minister of which they reported 32 targets. 19 of those were achieved and 12 were not achieved. The Department reported a rate of expenditure of 98.3% which meant that R109 million of the R6.5 billion that was allocated to it was not used. Mr Denyssen further mentioned the provision of a list of the programmes where the money was not spent. He mentioned that if they looked closely at what that R109 million was not spent on, they would realise that a lot of it was not spent on staffing and compensation of staff. He continued to mention an underspending of R66 million on programme 1, compensation of employees at R13 million as positions remained vacant during the financial year and were not filled. Furthermore, a review of the organisational structure remained incomplete on which Mr Denyssen specifically mentioned that the Committee needed to say whether they were pleased with this fact or not. Good and services were reported at R45 million, due to lower municipal services costs because of the implementation of the energy and water efficiency programme. Departmental spending on audit fees decreased significantly.

Mr Denyssen wanted the Committee to take note of how these were described in the Draft Report as actual savings as opposed to where they should have been reported as “underspending”, which he described as meaning bad planning. He said that machinery and equipment of R6.8 million was not spent because of delays in the planned acquisition of assets of which reasons for this were not listed. In Programme 2 of Intergovernmental Coordination, there was a total underspending of R12 million. Mr Denyssen stopped there to reemphasise the fact that Schedule 4 of the Constitution made the DPW a key Department in coordinating Public Works facilities and EPWP. If it underspent by R12 million, it had negative impacts. On the compensation of employees in the programme, the figure was reported at R6.3 million of which the newly established branch was not capacitated by staff because no appointments were made. Goods and services were reported at an underspending of R3.8 million that spoke to low spending on planned activities for the newly established branches. This essentially meant that the Department did not travel nor rent cars to go and coordinate activities in provinces and regional offices. The underspending figure for machinery and equipment was reported at R1.7 million due to the delay in the planned acquisition of assets and that was the result of unfilled vacant positions from the branches. On programme 3 regarding EPWP, the Department underspent by R18 million. Goods and services underspending was due to a delay in the implementation of the social, environmental, and culture project. The reported amount in this programme areas also lied across the other spheres of government.

 

Furthermore, Mr Denyssen reminded the members of the Committee of a promise that was made to review White Papers. Some of the excuses given as to why this had not happened was the lack of requisite staff within the branches, to which the Committee replied asking the Department to indicate how much it would need to spend on consultants to do it. He noted how nothing happened since then, even though this programme received the most money. It did however get shared with CBE and CIDB but remained a serious problem according to Mr Denyssen. The underspending was reported at R5.8 million due to vacant positions. On the Prestige Policy Programme 5, the underspending was at R7.6 million which related to R5 million for compensation of employees, vacant positions, with the other R2.6 million being on machinery and equipment underspending. He then went back to Mr Ryder’s point raised about outcomes 12 and 6 noting that he was happy to include them in the Draft Report because of the aforementioned facts. The Department did not spend money to employ people.

Discussion

Ms E Masehela (ANC) had two issues to raise. The first one was to check whether it was not possible for the table referred to in the Draft Report, to also show the allocations of funds against what was spent for the previous and current financial years, to make it easier for one to comprehend. The second issue was overspending by government and how they could ensure curbing that or at least check it in their oversight function.

Ms D Mathebe (ANC) had a concern on the fact that the Department reported underspending on most of the listed programmes which had a negative impact, especially on the youth and unemployment. She wanted clarity on exactly why it did not spend the money to ensure that people were working, and opportunities were being created for work.

Mr S Denyssen agreed with Ms Mathebe on her point that if the Department did not spend, negative impacts would emanate from that. Responding to Ms Masehela, he clarified that the programme she referred to was part of the PMTE of which the current report they were dealing with did not have enough information on the budgeting of the PMTE. He further noted that they would certainly update the table to include Ms Masehela’s suggestions for easier comprehension.

Draft BRRR presentation Section 4

Mr Denyssen moved onto the section that dealt with some of the findings of the Auditor General’s office. According to the AG’s office, the Department received an unqualified audit opinion for the third year in a row since the turnaround strategy was initiated. He paused to emphasise the importance of this turnaround plan for the Department and the country. He mentioned how in most cases thing could go wrong without the issues being raised, until the financial report came back showing that things were indeed going wrong without being addressed.

 

He also mentioned how there were still issues raised by the Auditor General even with the unqualified audit opinions where they found that management and policy leaders were not giving sufficient attention to fixing the problems that existed. These problems were listed in the Draft Report. On that point, the Auditor General did not identify any material findings of usefulness in the reliability of the report on performance information for programme 2: Intergovernmental Coordination, and programme 4: Property and Construction Policy Regulation. The AG further identified material misstatements in the Annual Performance of programme 2, 3, and 4. Mr Denyssen said that when considering the AG’s opinion, the Committee had to note that this was not a new opinion of the Department. The Department knew about it for seven to eight months. Furthermore, he mentioned that financial statements were not fully prepared in accordance with the modified cash standard as prescribed by Treasury. He reiterated that from looking at this information, it was important to him to reemphasise the fact that the Director General, CFO and COO were bound to follow the PFMA in accordance with what Treasury set out as regulation, in alignment with the relevant PFMA sections. The financial statements then received an unqualified audit opinion after the correction of material misstatements. On expenditure management, steps taken to prevent irregular expenditure were not always taken as required by section 38 of the PFMA. Furthermore, management was not successful in addressing the high vacancy rate at senior management level. On financial performance management, proper record keeping was not implemented in a timely manner which was very important because if it was not carried out in a timely manner, then certain other things fell through the cracks. Leadership had to then continue to focus on expanding capacity in the risk management and internal audit units. Furthermore, the Department had to ensure optimal functioning of these units. Mr Denyssen mentioned some of the restatements from the previous year’s BRRR which were: the need for stable leadership, the need for the DPW leadership to ensure that it had an adequate information and telecommunications strategy and system in place and lastly, the need for management to have regular meetings.

Discussion

Ms Masehela said that there was a need to have a succession plan within the Department. She further made mention to how poorly the IT sections of the Department were handled in that if one member was unavailable or ill, the whole section collapsed.

Mr Ryder said that the buy in to the turnaround strategy did not seem to have sunk down the “food chain”. He gave the examples of the ICT systems and procurement of accounting packages at the PMTE where they were still using Excel spreadsheets even with the procurement of accounting packages. He emphasised that attention had to be drawn to this because obviously the systems in place were not working and the newly procured systems were not being implemented.

The Chairperson agreed with Mr Ryder especially on the Department shifting their responsibility to the PMTE for them to look good. He also emphasised to bring out the leadership capabilities within the PMTE and empower them.

Ms Masehela added that it was also the Committees responsibility to make the Department realise that it was the Departments responsibility to make sure that as it did well and succeeded, the entities around it like the PMTE follow suit.

Draft BRRR presentation Section 5

Mr Denyssen said that the aim of this part of the presentation was to “unpack” some of the things already mentioned before. He also mentioned that the focus would be more on the PMTE and not the DPW. He started by stating that an adverse opinion was expressed on the PMTE’s Annual Financial Statement. The entity was given time since July of the current year but no improvements were made. The main issues included property, plant and equipment. Furthermore, incorrect data was used to determine the value of assets in the immovable asset register. He mentioned that this alone was huge not just for the PMTE but for the sector as whole because all the data the Committee received before on the immovable assets register was now in doubt. Risk management also stagnated due to financial control and administration sections being under-resourced.

 

The root of the problem was the incapacity of staff. Mr Denyssen went through the weaknesses that led to the disclaimer which included the loss of key leadership in accounts and financial management staff which occurred in the previous year as well. Others included poor recordings of the internally contracted services. Issues in the financial statements identified by IDT included procurement project accounting and revenue management as areas that required specialised technical support to strengthen its controls and management of financial management records. It also experienced challenges with its accounting system. Furthermore, the Auditor General was unable to audit balances that were valued at R874 million and the explanation for this was that this was old information that had to be sorted out and that they were in the process of doing that. However, Mr Denyssen noted that the problem was that if it was not sorted out, every financial year would come up as bad which was the case in this current financial year as well.

He said that the entity promised that the errors would have been dealt with by this current financial year and that promise was not fulfilled. It was also not complying with the PFMA as was the case in the part of the report that dealt with the DPW. On procurement and contract management, the results also showed contraventions of the PFMA. Goods and services were also not always procured through the proper systems and processes. He also reported weak expenditure management which resulted in the loss of millions, of which the exact amount was still to be corrected. On revenue management, the IDT did not take the appropriate steps to collect the money due to it from current departments which was also illegal because if one provided a service, one had to have systems in place to collect and receive money due to from those services rendered. He also mentioned that the entity was not supposed to get money from government again. They were paid R15 million which was assured to be the last payment, however, the Committee heard during the previous week that they were given R111 million with a further R124 million that was also planned to be paid either later in the current year, or sometime during next year (2018). He stated that if something like this happened or was to happen then Parliament Committees had to know of such beforehand. In this case, the Committee was left out and its oversight authority was undermined. He reiterated that this should not be allowed going forward. Mr Denyssen then concluded his coverage of the IDT and invited Ms Inez Stephany, Researcher, Research Unit, to contribute her piece before the Members engaged the presentation.

Ms Inez Stephany, Researcher, Research Unit, suggested inserting the rescheduling of the IDT because how it was currently contained was that it was a Schedule 2 entity so it was not supposed to be receiving money from the Department, but one of the things that was supposed to happen was that it was supposed to be rescheduled as Schedule 3A. That decision was now being reviewed to suggest that it was best that it remained as a Schedule 2 entity so she suggested clarifying that detail in terms of the scheduling of the body.

Discussion

Mr Filtane reflected on the statements of the content advisor which were to the effect that the Committee was informed sometime in the previous year that no more money would be channelled to the IDT. His suggestion was that for clarity, the Committee staff should obtain the relevant report which stated exactly what Mr Denyssen eluded to and send that to the Committee long before they went to the National Assembly to deliver it, otherwise they would be working on dangerous territory if they did not have a precise report speaking to the fact that they indeed were informed that no more funding would be provided to the IDT. This was to ensure that when they questioned the subsequent funding of the IDT post the agreement, they were backed up by facts and were in good legal standing to do so. On the issue raised by Ms Stephany, Mr Filtane suggested reemphasising the point to the Minister to find out what the status of that process was so that they were well informed in compiling the report.

Ms Masehela mentioned how IDT in most instances was also frustrated by its “sister departments” who were not paying them on time. Her second point of concern was on the confusion about who identified the projects that were done by the IDT because at times it seemed as if people were blaming them (IDT) for not doing certain things, yet it had to wait for the sister department to inform them of any project that the IDT should go in and work on.

Mr Ryder said that the substantial risk highlighted by the IDT on the amount of litigation that they were currently embroiled in should be noted. He further stated that he took issue not with the litigation itself, but the culture of problems in the systems that were not addressed, which then led to the litigation. He also gave an example of an instance where the IDT stated having established a litigation team rather than dealing with the issues that caused them litigation in the first place.

Mr Denyssen assured Members that the staff would consider the issues raised to ensure that it was dealt with and addressed as far as the report was concerned. On the issue of departments not paying, this was also raised in a separate meeting that the Committee had and the general response in that meeting was that everything was going to be fine. This was because there existed a Treasury practice note that said that all departments had to pay within a specified timeframe. However, this was not satisfied. He said that this was an issue they would continue to consider gaining further clarification on especially with regard to the points raised by both Mr Filtane and Ms Stephany.

Draft BRRR presentation (CBE)

On the Council on the Built Environment (CBE), it received an unqualified audit from the AG and achieved 73% of its targets. There was also the matter of irregular expenditure amounting to R6.8 million in the previous financial year which was an increase of R2.3 million from the R4.5 million that it had in the previous financial year to that. Mr Denyssen noted the irregular expenditure was addressed by the CBE which gave the Committee the idea that the internal financial management of this entity was at least functional. He also noted that there were currently no new instances of irregular expenditure. On the CIDB, it established an Ad-Hoc Committee that started a process of interrogating manners in which the entity could deliver more effectively on its mandate, and the Committee noted that because of the work of this Ad-Hoc Committee the CIDB could report that it was giving attention to the five bullet points that followed in the Draft Report. Those dealt with:

• aligning the powers of the organisation with intended outcomes of the CIDB legislation,
• aligning the powers of the functions of the CIDB with the industry’s needs and expectations,
• strengthening the entity’s powers and authority to regulate the industry,
• removing areas of ambiguity in roles and responsibilities of the CIDB and
• reconciling the conflicting and contradictory dual role of the CIDB to both regulate and develop the construction industry.

Mr Denyssen said that it seemed like the CIDB was doing work that belonged with the DPW’s programme 4 which was construction, regulatory policy and research because the mentioned Ad-Hoc Committee’s work was the type of work that, that particular branch of the Department had to do. Matters that emerged from the deliberations were related to the Auditor General’s opinion and the following:

• reliability and accuracy of the financial statements,
• management of vacancies,
• daily and monthly processing and reconciling of transactions and
• non-compliance to the PFMA and Treasury regulations.

These were raised as matters that required future attention to prevent the entity from running into problems. The entity itself said that it planned to put systems in place to track and monitor the implementation of action plans. On the allocated budgets to reach targets, they (CIDB) reported that 71% of outcomes were achieved with the allocated budget. The annual report showed that the CIDB did not have adequate human resources to ensure that the target to provide an effective and efficient registration of contractors, and to manage that register, was achieved.

Mr Denyssen then noted to Members that the aforementioned sentence would be amended to be more succinct and clear for comprehension. On the issue of delayed transforming, it was mentioned that the CIDB was implored to ensure that it did the most to assist contractors from historically disadvantaged backgrounds, most of whom were at a rating of grade one to six, so that it could advance to higher grades. On the downgrading of contractors, Mr Denyssen reiterated that this exercise was meant to penalise contractors however it was stopped because this was supposedly going to “dilute the power of the CIDB”. He further stated that it unfortunately did not give another measure or alternative that it would then follow to stop contractors that transgressed. Regarding grading, it would no longer be used a risk management tool.

Discussion

Mr Ryder went back to the issue of the slow rate of transformation. He mentioned the DPW White Paper from 1999 which the CIDB did not reference at all in its presentation to the Committee so Mr Ryder wondered whether there was a mismatch or need to reassess or revaluate the White Paper and have a fresh one which was applicable to the CIDB as well. He also stated that the Department needed a thorough strategic overview. Furthermore, he did not agree with the statement by the CIDB that it was having a slow growth rate in transformation because of the state of the contracting economy.

Ms Masehela agreed with the idea of assisting the previously disadvantaged contractors that were currently sitting at a grading of one to six. She said that where reports talked about what percentage of an entity’s targets were achieved, it had to equally detail the percentage of objectives that were not achieved.

Mr Filtane wanted to know how the rest of the Committee viewed the decision to stop the process of downgrading contractors. He noted the possible impact of keeping a contractor at the same grade whereas they would have otherwise been downgraded or upgraded. How did this affect the awarding of contracts and quality of work emanating from that practice?

Ms Masehela responded to Mr Filtane by saying that downgrading in most instances only affected contractors that were from disadvantaged backgrounds. This had the effect of punishing those who were already down which made assisting them even more difficult.

The Chairperson responded to both Ms Masehela and Mr Filtane by first noting that sometimes doing good for someone in the spirit of protecting them could also be contributing to their harm, meaning that it would rather be better to mobilise the whole of the built environment sector to get together, communicate and come up with ways assisting the contractors that were in the lower grades, whilst still ensuring a certain standard of quality in the work being produced. Part of the solution as suggested by the Chairperson could be to pair up some of the higher-grade contractors with the ones needing assistance. He then noted that this did not have to be included right away but rather dealt with more substantially in their future engagements, subsequently resulting in recommendations.

Ms Masehela concurred with the Chairperson and further added her point of regulating the joint ventures due to the increased number of small contractors suffering from the downgrading. The suggestion was that the higher grades start partnering with the lower grades on projects so that the CIDB could come and grade them based on that project. It gave them an opportunity to work and receive a good grading as well through proving themselves alongside the higher grades.

Mr Filtane noted that the Draft Report did not speak to recommendation, thus he asked when the Committee intended to include those recommendations for the Department. He also concurred with the expressions of both Ms Masehela and the Chairperson.

The Chairperson rounded it up by saying that the Committees recommendations should be that the built environment should engage with each other to cut out the unnecessary and wasteful expenditure while also assisting the negatively impacted contractors.

Draft BRRR presentation (ASA)

Mr Denyssen then moved onto Agrément SA and noted that the information regarding this body was not yet inserted into the Draft Report but was nonetheless contained by the staff of the Committee. He noted the high level of cooperation between the Department and other entities, along with their engagement and reporting to the Committee. He also mentioned commending the Minister for stabilising the Department. Furthermore, he noted that a sentence needed to be inserted stating that the Committee was however concerned about the lack of timeliness in the Quarterly Report delivery to the Committee over the last financial year. He said that the DPW did not since 1999 and 1997 respectively, in light of the White Papers mentioned in the Draft Report that spoke to DPW as a department and its mandate as well as on transformation, done anything on reviewing the White Papers which was also raised in the previous Parliament where the Department promised to undertake a review process of the White Papers. Nothing was done after that and so Mr Denyssen stated that as part of the Committee’s recommendations, they should include a requirement for the Department to start the process of reviewing and redo the White Papers so that the large amounts allocated to programme 4 did not amount to futile expenditure. He reiterated the fact that their oversight function was not over the Department but rather the Minister which was why the recommendations were not made directly to the Department.

The Minister’s office, in exercising its authority over the Department, had to then enforce these recommendations. He acknowledged some issues raised by Mr Filtane on how to address the Minister and the Department in the report. The suggestions made were either to address the Department with the knowledge that the Minister was included in that phrase, because he headed the Department, or whether to use the words “Executive Authority” when referring to the Minister. The Committee settled on using “Executive Authority” to which Mr Denyssen and the Chairperson concurred.

Mr Denyssen noted the inclusion of Ms Masehela’s suggestion for the Committee to recommend that the Minister guide Agrément SA towards establishing strategies to ensure the marketing of its products and services. Furthermore, they recommended that the Minister ensured that the Department and PMTE timeously reported on their quarterly performance reports to the Committee. He also said that the Minister had to ensure that the Department and the IDT board reported on the scheduling of the entity and the latest payments to it. Furthermore, the Minister had to ensure that the PMTE reported to the Committee on a quarterly basis on its efforts to capacitate its financial and administration sections, financial control, and its ICT systems.

Discussion

Mr M Filtane noted the promises the Committee made to “the people” and wanted to ensure that the staff picked up on it so that they could include those as recommendations in the report to ensure that they delivered on their promises. He further noted “two standard items”, one being issuing timeliness to say the Committee wanted the reports from the Department within a certain period, and the second being to check that the Department was on time with regard to processing legislation.

Mr Ryder wanted to highlight three issues on the recommendations speaking about the PFMA. The first being to highlight the fact that “things are not right”, and there were too many things hidden away where PFMA was not implemented properly, so adherence to PFMA had to be emphasised. The second point was on the payments both in and out and the importance of taking responsibility and accountability to invoice appropriately as well as collect appropriately. The third was on the acknowledgement by the Deputy Minister that the Department did not really know what exactly it was supposed to be doing and how far it should be going. He mentioned that reviewing the initial White Paper on the DPW would help deal with this.

Ms Mathebe expressed her support of the resolution to deal with the issues of late payments by the Department because it handicapped the emerging contractors.

The Chairperson then concluded by thanking the staff of the Committee for working under difficult circumstances to put together the Draft Report. He also thanked Members for their observations and engagement. Furthermore, he reiterated the importance of holding the Executive to account because of the trickledown impact that it had on the Department.

Finally, the Chairperson formally put forth a proposal to adopt the BRRR. All Members of the Committee agreed with the proposal. The BRRR was adopted with amendments.

The meeting was adjourned.