District Six land restitution: DRDLR status report; Upgrading of informal settlements & services for backyard dwellers: City of Cape Town

Human Settlements (WCPP)

19 June 2018
Chairperson: Ms M Maseko (DA)
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Meeting Summary

The Phase 3 of the redevelopment Project of District Six, which was part of government’s restitution programme, had been placed on hold following the termination of the contract with Fikile Construction. This was due to the inability of the construction company to fulfil its legal obligations, as well as quality issues. The Department said 139 housing units had been built between 2006 and 2018, while 108 units were due for completion next month. The Department of Rural Development and Land Reform (DRDLR) would evaluate the extent of the work done by Fikile Construction, and take appropriate steps to give the contract to the second tenderer. This would help the Department to shorten the supply chain management process.

According to the Commission on the Restitution of Land Rights, 2 760 claims had been lodged, 139 housing units had been allocated, 1 062 claimants were still awaiting allocation and 110 claims had been dismissed. 1 449 claimants had opted for financial compensation, while 1 201 had opted for the redevelopment. The total budget approved for the project was R333.4 million, and the remaining funding was R153.1 million.

The Department of Rural Development and Land Reform (DRDLR) said that the project had been marred by delays and quality issues. The contract with Fikile Construction could not be terminated abruptly because the consequences of terminating such huge contracts could be dire. It had been appointed as the contractor because it was the biggest black-owned construction company at the time of appointment, and did not have any financial challenges. Sub-contracts had been awarded to local companies in order to strengthen local contractors, and preference was given to local workers on the construction project.

Members were concerned about a variety of issues that had led to the current state of the project. Why had the contract been awarded to Fikile Construction at the expense of local companies? At what point did the Department realise that Fikile Construction had challenges? What did the Department do to help the contractor when the challenges became obvious? The Department should appoint a new contractor and speed up the construction of Phase 3 so that successful claimants could move in.

Members expressed dissatisfaction with some of the responses given by the Department. It was agreed that outstanding issues should be put in writing and forwarded to the Department so that the officials would be better prepared for the next meeting.

Meeting report

Opening remarks

The Chairperson referred to the interaction the Committee had had with community members of District Six. She spoke about the aspiration of the community members, especially the older ones, to return to their land or to be given houses. The community members sought updates on the redevelopment project. The purpose of the meeting was to get the update from the Department. The Committee also expects the Department to give clarity on several areas of concern that the community members had complained about, especially in terms of the difference of opinions that occurs between different departments on the issue of restitution, redress and land claims. The Committee expected the Department of Rural Development and Land Reform (DRDLR) to give answers to questions posed by the Members so that the Committee would be better equipped to update the community of District Six. She tendered the apologies of the Minister of the Department of Rural Development and Land Reform, who was in a Cabinet meeting at the time of the Committee meeting. She emphasised the importance of effective coordination among the various spheres of government in order to address key issues and to accelerate the completion of the project.

Commission on Restitution of Land Rights: District Six Development Project

Mr Benjamin Mars, Chief Restitution Adviser, said the Restitution Act had been promulgated to deal with the restitution of rights in land to persons or communities dispossessed of such rights after 19 June 1913 as a result of past racially discriminatory laws or practices by the apartheid regime. The enactment of the Act had resulted in a large number of claims from people who had lost their rights as a result of racial discriminatory acts and practices. The people who chose restoration of rights in land had come to an agreement that District Six should be redeveloped on developable land of approximately 40 hectares in close proximity to the Central Business District (CDB).

The process and procedures for the redevelopment project had been secured by the tripartite agreement between the City of Cape Town, the Department of Land Affairs (now the Department of Rural Development and Land Reform) and the District Six Beneficiaries and Development Trust. The Development Trust had managed the redevelopment project until it withdrew from the agreement following the completion of Phase 1 (2008) and Phase 2 (2013). The Department of Rural Development and Land Reforms (DRDLR) currently managed Phase 3 of the redevelopment project, which comprised 108 units of superstructures for qualified claimants. The building of the superstructures had begun in 2015, and the expected period of completion was July 2018. However, the contract with Fikile Construction, the construction company in charge of Pilot Phase 3, had been terminated due to its failure to fulfil specified legal obligations.

A total of 2 760 claims had been lodged, verified and validated in respect of District Six, of which 1 449 claimants had opted for financial compensation, and 1 201 for redevelopment. 139 had been allocated housing till date, and 1 062 were still awaiting the allocation of dwellings, while 110 claims had been dismissed. During the re-opening of the new claim lodgement from 2014 to 2016, a total of 749 people had submitted claims for restitution of the right in land in District Six. However, the process had been interdicted in terms of the Land Access Movement of South Africa (LAMOSA) Constitutional Court judgment, which had ordered the DRDLR not to process new-order claims until all claims lodged before 1998 hS been researched and finalised. Housing units had been allocated to successful claimants in District Six redevelopment Pilot Phase 2 based on the criteria set by relevant stakeholders. The date of the claim lodgement was the primary criterion, while age, poverty and chronic ill health were the secondary criteria. A further submission would be forwarded for approval of the allocation of housing units for Phase 3 Redevelopment, as the first memorandum had limited applications only to Phase 2 dwellings.

The various concerned groups in District Six included the District Six Beneficiary and Redevelopment Trust, the District Six Community Forum, the District Six Reference Group and the District Six Working Committee. The Land Restitution Commission of the DRDLG had had various engagements and negotiations with the various interest groups. There had been no contestations but there were areas that needed improvement.

The redevelopment project had been subject to a number of unlawful occupations of dwelling places that were not occupied by the successful claimants. The illegal occupants mostly cited pressing accommodation needs for their invasion. The Constitutional Court, in April 2018, had ruled that illegal occupants of the redeveloped buildings should be evicted.

The total budget approved for the District Six redevelopment project had been R333.354 million in respect of Phases 1, 2 and 3. The remaining funding available from restitution for development to date was R153.105 million, which included the cost to finalise Phase 3.

The DRDLR was currently the development manager for District Six Phase 3 project, which comprised 108 housing units for successful claimants. The building of the superstructures had started in May 2016 and was expected to be completed next month. However, the Fikile Construction Company, the initial contractor, had its contract terminated due breaches of contracts and lack of performance. The DRDLR, through its Principal Agent, would evaluate the performance of Fikile Construction. Once the process was finalised, new specifications, bills of quantities and tender documents would be drafted. A new tender process would then follow the proper supply chain management process and the timelines thereof would be made available at a later stage. The obligation of the DRDLR stopped at the allocation of land and the finalisation of claims, and ultimately the transfer of properties to the beneficiaries.

Progress report: DRDLR

Mr Kelvin Naidoo: Director: DRDLR, gave a historical background to the District Six Claim.  He also outlined the DRDLR’s role and progress with the redevelopment, and presented the current draft implementation framework.

He said District Six was a post-settlement restitution project comprising 2 670 owners and tenants. The dispossession of the District Six community had occurred as result of the implementation of the Group Areas Act 77 of 1957 and the Community Development Board Act 3 of 1966. A record of understanding between the Regional Land Claims Commissioner for the Western Cape (RLCC: WC), the City of Cape Town (CoCT) and the District Six Beneficiary Trust (D6BT), had been concluded on 13 September 1998. This had paved the way for the restitution of the claimants.

A total of 2 526 claims had been approved in 14 Section 42D submissions. Some of the 1 274 claimants who had opted to return to District Six had laid claim to more than one property. Based on an agreement reached between CoCT, the DRDLR and D6BT on 26 November 2000, approximately 40 hectares of land had been set aside for the redevelopment project. The D6BT had been appointed as the developers and project managers of the project. A total of 139 housing units had been built as of 2012, of which there were 24 housing units in Phase 1 and 115 housing units in Phase 2. Target Projects had been appointed as project managers and were responsible for the development of the business plan for the roll out of the development. The draft business plan had been developed by Target Projects, and R700 million had been pledged for the accelerated phase. The D6BT had approved the principle of cross-subsidisation, which allowed land to be used for residential, retail and commercial purposes. This had led to overall subsidisation of the development.

It had initially been planned that 1 500 housing units would be built for successful claimants. 1 000 housing units would be constructed for land reform beneficiaries.1 000 housing units would be made available to the open market. The Minister of the DRDLR had convened a community meeting to address the unrest in the claimant communities. The unrest had resulted from inappropriate representation of the claimants, especially at the meeting held during September 2012. The Minister Nkwinti had assured claimants that restitution would be claimant-centred. He had then decided to democratically appoint representatives from the claimant community to form the District Six Reference Group (RG). The technical and social working groups had been elected by the claimants.

The Reference Group had been given the mandate to finalise the business plan. The DRDLR had given technical support to the Reference Group in terms of the development of the business plan. Between 2012 and 2015, the Reference Group had met weekly to discuss progress and make key decisions about concepts and designs, amongst others. An inter-governmental technical steering committee, which meets monthly in recent times, oversees the process.

Minister Nkwinti had stressed the need to separate the restitution process from the business plan. Nevertheless, the process of finalising the business plan had to continue and it should run parallel with the settlement of claims. The political task team had formally appointed the Department as the developer for the District Six Phase 3 Project on 24 August 2013 to fast-track housing delivery and the return of ageing claimants.

The various committees that had been established for the redevelopment of District Six included:

  • the DRDLR working group;
  • the task team -- involving the DRDLR, the Department of Human Settlements (DHS), the Department of Public Works (DPW), Treasury, Province, CoCT, RG and D6BT;
  • the Inter-Governmental Technical Steering Committee (IGTSC) -- involving the DRDLR, DHS, Province, CoCT, RG and D6BT;
  • the Technical sub-committee -- involving the DRDLR, PM, CoCT, WCHS, RG and D6BT;
  • the Legal sub-committee  -- the DRDLR, Province, CoCT, RG and D6BT;
  • the Communication sub-committee -- the DRDLR, Province, CoCT, RG and D6BT;  
  • the Project Team -- DRDLR consultants; and
  • the Project Steering Committee -- the DRDLR, CoCT consultants.

The Project Team was chaired by the project manager and the team meets weekly to drive processes that would accelerate the construction of Phase 3 of the project. The Project team consists of the contractor, architect, engineers, quantity surveyors and the DRDLR. The Project Team issues site-related instructions, and implements and monitors all construction and development-related activities for Phase 3.

The Project Steering Committee was chaired by the project manager. It consists of technical experts from the DRDLR, CoCT and consultants. Its role was to fast-track the approval of plans.

The technical Sub-Committee, which comprises representatives from the three spheres of government, meets weekly and was also chaired by the DRDLR. It consists of technical experts from the DRDLR, CoCT, WCHS, RG, D6BT and the project manager. The role of the Committee was to drive the construction programme.

The IGTSC Committee meets weekly and is chaired by the DRDLR. The Committee plays coordinating and oversight roles in the entire redevelopment process. It requires regular updates on the construction roll-out for Phase 3 without getting involved in the technical issues. The Committee may be required to resolve certain aspects that cannot be agreed upon by the sub-Committee in charge of technical matters.

The DRDLR continues to maintain its role as the Developer. It continues to empower the RGs through timely workshops. The Rural Infrastructural Development (RID) branch of the DRDLR works with the RGs to develop conceptual plans and models for Phase 3 on sites that have been approximately zoned for housing development. The RID works with various professional service providers to obtain the necessary planning and design work required in developing housing typologies and layouts for the project. The majority of the claimant communities have agreed with the plans and 3-D models that were presented in March 2013. This marked a significant milestone in the progress of the project. Approval for the housing typologies had been obtained in late August 2013 following extensive engagements with RGs.

A spatial design workshop had been held with the RGs in the District Six Museum on 8 December 2012 to understand the housing needs of the claimants and to develop housing options that met the aspirations and the needs. It was important to acknowledge the older people who had passed on while waiting to move to District Six, and to move forward with speed to get people back to the area.

Mr Naidoo said that a number of meetings had been held between the DRDLR and claimants from March 2006 to May 2018. He spoke about the delicate nature of the redevelopment in terms of the heritage and architectural designs. At the spatial design workshop, the RGs had been taken around the site in order to get acquainted with the proposed plan for the redevelopment. The RGs had expressed apprehension in respect of flexibility and the ability of the claimants to adapt to the new structure over the long term. In March 2013, the design and housing typologies had been presented to the claimants at a meeting held at the City of Cape Town Convention Centre (CTICC). The plan to forge ahead with the redevelopment project had been adopted at this meeting.

Phase 3 was located on land presently owned by the Cape Peninsula University of Technology (CPUT) and the Department of Higher Education, which had to be transferred to the DRDLR for the redevelopment. A power of Attorney had been granted for the development to start. Site Q and Site P would be developed on the remainder of erf 9929 and erf 153779, respectively. The Phase 3A of the project, which consisted of bulk earthworks of portion Q2 of the site had been completed. However, the contract for Phase 3B had been terminated, and the appointment of a new contractor required the approval of the National Treasury. The construction work in this Phase entailed bulk services and internal services, as well as top structures for portion Q2 of the site. The Phase 3C, which involved earthworks, services and buildings for portions P2 and P3, was at the planning stage. The architectural intent had considered flexibility in the design of the redevelopment project. Though the DRDLR could not meet all the demands of the claimants, it had given attention to the ability of the claimants to adapt to the design over the long term.

The buildings had been designed in such a way that the claimants had access to the ground floor. Attention had also been given to the kitchen for the elderly, and paths for wheelchairs.

The following achievements had been recorded under the DRDLR:

  • Unit typologies and layouts approved by the claimants;
  • Bulk services reports commissioned;
  • Heritage impact assessment undertaken and approved;
  • Environmental authorisation received to proceed with the project;
  • Power of attorney for land signed by CPUT;
  • An internal technical committee had been put in place within the CoCT to give special attention to District Six;
  • Site development plan had been approval by CoCT;
  • Appointment of a new contractor to be concluded in the next month, amongst others.

The Phase 3 Project had been awarded to Fikile Construction and had begun in July 2015.The total Contract amount for Phase 3 had been R167.104 million, and R74. 041 million had been spent over a period of 21 months. The project had been marred by many delays regarding quality issues and the DRDLR had terminated the contract with Fikile Construction. It was in the process of appointing a new contractor.

Discussion

Mr R McKenzie (DA) expressed concern about the protracted delay in the project. He sought clarity on the status of Fikile Construction in terms of the Phase 3 Project. At what stage had the DRDLR realised that Fikile Construction was not going to deliver on the project? Were measures in place to prevent breaches of agreement and poor performance? Given the number of housing units that were targeted, where would the Department get the funding from? He guessed about R1.6 billion would be needed to build the targeted number of housing units. He sought to know if there were associations among those that sat on the various committees representing the different interest groups. Did they have legal rights to land in District Six? Where did they come from and what was their identity? What were the plans of the DRDLR to fast-track the Phase 3 project in order to prevent people from taking to the streets? He spoke of the dismissed claims. Why were the claims dismissed? He sought an explanation on the total budget for Phase 3 project (R333.35 million) with respect to the remaining R153.11 million. Was the R153.11 million meant to settle all aspects of the remaining project? If not, where would the additional funding be obtained? The DRDLR should expedite action because some of the claimants were dying, and those alive among them must be given District Six Beneficiary Trust (D6BT District Six Beneficiary Trust (D6BT dwelling places when Phase 3 of the project was completed.

Mr M Mnqasela (DA) noted that the day coincidentally marked the 105th year since the adoption of the Natives Land Act of 1913. Despite the challenges, he acknowledged the progress that had been made in terms of restitution in South Africa. He expressed concern about the number of people that had opted for compensation, however. This could defeat the very essence of restitution, reconciliation and redress. He urged the DRDLR and every stakeholder to come up with a creative as well as an integrative approach that would address the social challenges that may come up.

He expressed concern over Fikile Construction. This happened to be an established company and one of the giants of the construction industry. He suspected foul play in respect of the performance of Fikile Construction. He wanted to know if there were any relationships between the management of Fikile Construction and those who had been appointed contractors for the Phase 3 Project. He said racial sentiments should be avoided when awarding contracts. Contracts should be awarded to qualified companies. Also, smaller companies needed to be upgraded and awarded contracts so as to improve competition and healthy growth in the construction industry within the Western Cape Province. This helped to encourage historically disadvantaged contractors.

He expressed displeasure with the state of this historic project. Did the DRDLR have any measures in place to recover lost money? How much had been lost due to the poor performance of the contractor? Were there parts of the project that had been satisfactorily completed? What was the DRDLR doing to hold the project manager accountable? He sought clarity on the funding currently needed for the execution of the project. There would likely be an escalation in cost due to the current economic realities in South Africa. What was the source of the additional funding?

Ms S Davids (ANC) wanted to know the exact number of legitimate claimants to District Six. She had learnt from the presentation that the Minister, the Premier and the Mayor were part of the Political Task Team. Had any meetings occurred between the three spheres of government? What were the outcomes of the meetings? How often did the meetings occur? She sought clarity on the membership of each committee. She expressed concern about the restitution process as some of the claimants were already dying. She wanted to know who the first set of claimants were, and their age group. Why did some of the claimants go to court after the extensive public hearings that were held? Were the disgruntled claimants not part of the public hearings? She also asked why it had taken so long for the DRDLR to detect the poor performance of Fikile Construction. At what point did Fikile Construction begin to default?

Ms T Dijana (ANC) sought clarity on the specific number of housing units, based on the budget earmarked for the Phase 3 Project. She also asked about the agenda for the public hearings. What had the Commission discussed with the claimants? Why had some of the claims been dismissed? Had the DRDLR communicated the dismissal of the claims to the politicians that were involved? She sought clarity on important dates associated with the contracts of Fikile Construction Company. Why did the DRDLR give the letter of termination of contract to Fikile Construction four months after the termination of the contracts? Did Fikile Construction get paid during the four months?

The Chairperson spoke about the various interactions between the government and the claimants. She sought an explanation on the target audience at the public participations. Did the government hold discussions with representatives of claimants? Did people who did not belong to District Six partake in the public participations?

Response

Mr Mars expressed appreciation for the inputs of the Committee Members. He said that the various units within the DRDLR had different mandates and core businesses. The mandate of the Commission, in terms of the Restitution of Land Act, was the appropriate redistribution of property to successful claimants. The public hearings had dealt with discussions on the reallocation of land to the successful claimants.

The Chairperson insisted on the details of the information disseminated at the public hearings. Was there any feedback from the public to the DRDLR? She requested the DRDLR to discuss the way forward in order to get the project finalised in a good time.

Ms Nomfundo Ntloko-Gobodo, Chief Land Claims Commissioner: DRDLR, said that the Commission worked closely with the Department in order to resolve land-related claims. The public hearings and consultations had sought to address what the claimants were entitled to in terms of what land was available for restitution. She spoke about the different interest groups. She said that the new groups of claimants (claims lodged after 1998) had had their claims dismissed by the LAMOSA Constitutional court judgement due to concerns from other interest groups. The consultation had been prolonged because the Department had to consider and address the concerns of the various interest groups.

The DRDLR had had to put measures in place to ensure equity and fairness in the restitution process, because some of the claimants were owners whereas others were tenants. The Department had had to act cautiously because the land was not enough to accommodate all the claims. Some house owners wanted their housing units to be different from those of the tenants. Some claimants insisted on having more than one property. The DRDLR had considered the variety of interests in order to have an inclusive redevelopment project.

In response to Ms Davids’ question on who the DRDLR was negotiating with, Mr Naidoo said the Department was negotiating with the District Six Community Forum and the RGs. A number of groups were involved in the negotiation process. The Technical Task Team Steering Committee, comprising officials from the DRDLR and the Commission, met fortnightly to discuss progress made on the redevelopment of District Six. The political forum comprised the Minister, the Premier and the Mayor. The officials of the Department had consultations and engagement with the representatives of the beneficiaries on a bi-weekly basis.

The dismissal of the claims had been a result of the LAMOSA Constitutional Court judgment that new claims should not be touched until the claims submitted before 1998 were investigated and finalised.

He said the participation of the National Council of Provinces was not in conformity with the constitution.

He briefly explained the involvement of the Beneficiary Trust in the redevelopment process. The Trust had been part of the tripartite agreement, but had to withdraw at a point. The claimants had been given various options during the restitution process. Some claimants chose to return to the land they were dispossessed of by the apartheid regime, whereas others had opted for financial compensation.

Mr Mars said that some of the successful claimants had not moved into their allocated dwellings. Once the key was received, successful claimants were expected to move in or make provision for the dwelling to be occupied. Four people had not occupied the allocated dwellings, which gave illegal occupants the opportunity to invade the dwellings.

He cited the case of the Khoi-Sans movement, who wanted their claims to be prioritised in the redevelopment project because they were the first indigenous people of Southern Africa. There were proper processes for the allocation. The primary criterion was the date of the submission of a claim, while the secondary criteria included chronic illness, poverty and age. The illegal occupants were evicted because they had not met the specified criteria.

In response to the question on old claims, Mr Mars said that that the potential beneficiaries of claims lodged prior to 1998 would have to tender documented evidence that they had been dispossessed of their land in terms of a racially discriminatory act or practice. Some claimants had left District Six voluntarily before the dispossession had occurred. There had been were extensive open-line discussions and engagements between the Commission and the affected claimants in order to verify the authenticity of their claims. The findings of the engagement had been reported to the Commissioner, who had the power to dismiss claims based on specified rules and regulations.

In response to the questions about the various concerned groups, Mr Naidoo cited a situation where the working group had taken the DRDLR to court in respect of the new-order claimants. There appeared to be a contestation between the officially recognised representatives and the working group. Some claimants had also accused the working group of taking decisions without appropriate consultation. The former Minister of the DRDLR had convened a public hearing with the representatives of the various concerned groups in order to resolve their differences and to fast-track the redevelopment project. The Department engaged all interest groups on specific issues in an inclusive manner.

Mr Mnqasela said the question on the number of people that had opted for financial compensation had not been answered. He sought clarity on why majority of claimants, on a national scale, usually opted for money instead of the property from which they had been dispossessed. What were the factors responsible for this? He requested the DRDLR to give the specific number of outstanding claims in the Western Cape.

The Chairperson cautioned that the Commissioner was still in the process of answering questions that had been posed by the Members of the Committee. She cautioned Members to be specific in their questions. She also asked all respondents to be succinct, as the meeting was running out of time and she did not want the meeting to encroach on a subsequent meeting.

The Commissioner said most claimants usually opted for financial compensation for different reasons, among which was pressing needs. Despite the effort of the Commission to redistribute land, most claimants went for money. In response to the question on why the project had been delayed, the Commissioner said there were various interest groups with conflicting perspectives. She cited the case of the Working Group who took the Commission to court, and the Khoi-San movement that wanted the Commission to prioritise its claims.

Discussion

Mr McKenzie spoke about the budget R331 million and the R155 million. It appeared the balance would not be sufficient to complete the project due to the amount of structures that were involved (108 units). What would be the source of the additional funding?

The Chairperson asked if the DRDLR had stuck to a business plan in the execution of the project. She sought clarity on the actual budget for the project (R700 million) and the amount that was available for the project (R331 million). Why had the R700 million changed to R331 million? She spoke about the various concerned groups and the 139 housing units built between 2006 and 2018. What was the plan of the Department to reinstate the claimants appropriately, especially in terms of the various categories of the claimants?

She said the Department could come back at a later date to answer pending questions, or the Committee could write to the Department to address aspects that were still of concern.

Mr Mnqasela expressed displeasure about the responses of the Department in relation to the questions he hadposed. He urged the Department to answer the questions, especially the one on Fikile Construction, before the end of the meeting.

The Commissioner said that 139 housing units had been built, and 108 units were being processed. She hoped that the Department would be able to provide sufficient resources for the completion of the project.

Mr Jimmy Freysen, Director: DRDLR, Western Cape, said there had been an interim report on District Six which he was willing to give to the Committee. The document explained the reasons for the delays, what the challenges were and the way forward. The reasons for the delay included the movement of cables on site and strike action, amongst others.

On why the project was not completed, Mr Freysen said there was a difference between what was written on paper and the results in the field. Regarding Fikile Construction, the company had met all the requirements before the contract had been awarded to it. However, the Department had had little control after the contract was awarded to the company. The main challenge with Fikile was over-commitment to various projects, which had drained it financially.

Regarding what the Department had done to intervene, Mr Freysen said the Department had engaged consultants in order to see areas where interventions could be made. Also, Fikile had a technical partnership with Wilson-Bayly Holmes-Ovcon (WBHO). WBHO even had staff on site to assist Fikile with some technical issues. There had been pressure on the Department to help Fikile out as much as possible. The Department could not terminate the contract with Fikile because of the technicalities involved in the project. The consequences of terminating such a huge project could be dire, as it then became difficult to hold a particular company responsible for the different aspects of the project. In light of the various challenges, termination of contract was the last thing the Department could do.

Mr Freysen said that the Department had achieved 51% of its target, with about 48% of the budget spent. It showed the amount under-spent was 3%. The Department was currently verifying the aspects of the project that had been completed and the aspects that should be condemned.  The Department holds up a guarantee of R60 million, and this would make up for the deficit in case the Department appointed another contractor. He assured the Committee that the Department had sufficient funding to cover for the additional cost that had been incurred through undone work.

The Department aimed to revisit the tender documents and re-award the contract to the second most favourable tenderer, and it would negotiate the price with the contractor in conjunction with the Treasury. This would help to shorten the supply chain process. Asking for new tenders would not be a viable way to sustain the project. Measures were being put in place to negotiate the best price with the potential contractor, despite the technical challenges that were involved.

Ms Dijana wanted to know why the contract had been awarded to a company outside of the WC Province at the expense of local companies. The Committee had always urged departments in the Province to give preference to local service providers, as this facilitated the improvement of local businesses as well as effective monitoring.

Response

Mr Naidoo said the project had been awarded to Fikile because there had been a lot of interest from the various groups, and the Department had wanted to be as transparent as possible. Fikile Construction had been awarded the project because it was one of the biggest black-owned companies and at the same time, the Department was careful in dealing with the various interest groups so as to avoid conflict. It had engaged the Office of the Chief Procurement Officer and the National Treasury in the tender process in order to avoid negative perceptions from any of the interest groups, and the entire process had been documented so that the Department could address whatever perception people had towards the project. The Chief Procurement Officer had suggested that the Department should appoint the contractor that would deliver the best quality. Fikile was the largest black-owned construction company in the country and it did not have any financial problems at the time of the appointment. The Department had ensured that a considerable portion of the sub-contracts were allocated to local companies within the Western Cape. There was also an agreement that preference would be given to people from the claimant communities to work on the project. He said that Fikile Construction had attributed the delay and poor quality of the project to the sub-contractors that had worked on the project. The Department had had to intervene to ensure that the local sub-contractors continued to work on the project.

The Commissioner suggested that the Committee put the outstanding questions in writing and forward them to the Department. This would enable the Department to prepare adequately for the next presentation. She also promised that the Department would avail the Committee of the relevant documents.

The Chairperson expressed dissatisfaction with the current state of the project, especially in respect of accountability. So many parties, including the major contractor, sub-contractors and the Department, were involved and it became difficult to hold any of them accountable for the various flaws that marred the project. She urged the Department to ensure active participation of the three spheres of government in order to bring the project to a successful completion.

She told the Department to note the outstanding questions, which would be discussed when the Committee met with it on 21 August 2018.

The meeting was adjourned.

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