Maintenance devolution from Public Works to Defence, with Public Works Minister

Standing Committee on Appropriations

20 November 2018
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Appropriations Standing Committee had resolved in September 2018 that an inter-ministerial task team be set up to consider handover of the infrastructure maintenance and refurbishment function from the Department of Public Works to the Department of Defence. The Ministers of Public Works and Defence considered the matter and directed DPW and DoD Accounting Officers to process the resolution. The immediate focus would be on challenges at facilities in the Bloemfontein area. The Department of Public Service and Administration and National Treasury would advise on procedures and policies to govern the function shift. The DPW, DoD and National Treasury engaged. Matters to be considered were the relevant legislation, DPSA involvement and for DoD to confirm that it aimed to become the custodian of the entire Defence portfolio and that all financial implications of the function shift should be specified. The briefing outlined progress with registered projects at Defence and Air Force bases in the Bloemfontein area.

In discussion, the Chairperson argued forcefully throughout that some of the timelines for maintenance and repair of military facilities at Bloemfontein would have to be reviewed. Such matters as leaking hospital roofs and lack of fencing around strategic areas needed immediate attention. Contractor performance and capability provoked considerable discussion. It was stressed that a balance had to be found between empowerment of emerging black companies and the upholding of standards. There were questions about precedent setting; use of implementing agents and consultants; poor management at ground level; budget allocations vesting in DPW or DoD, what functions were to remain in DPW, and if DoD had capacity to cope with devolution. An EFF Member argued for the building of capacity in DPW.

Meeting report

Introduction by the Chairperson
The Chairperson welcomed the Minister of Public Works. The meeting was to receive a progress report on two critical matters: the poor state of military facilities in the Bloemfontein area in the Free State; devolving the maintenance and refurbishment function from Public Works to DoD. The Committee had paid an oversight visit to military facilities in August, and Members were overwhelmed by the poor conditions. It was concluded that DoD was better placed to maintain and refurbish of its own facilities. This was confirmed with stakeholders such as the Department of Health and National Treasury. At a meeting on 4 September, it was resolved that an inter-ministerial task team be set up to deal with the devolution from DPW to DoD. The military was the last line of defence and deserved the best. She hoped for constructive engagement. Apologies were received from the Minister of Defence; Secretary of Defence and Public Works DG.

Maintenance and refurbishment devolution
The report back was presented by Mr Jacob Maroga, DPW Director: Property Management Trading Entity (PMTE), with an introduction by Minister of Public Works Thulas Nxesi. At a meeting with the Standing Committee on 4 September 2018, it was resolved that an inter-ministerial task team be set up to consider handover of the infrastructure and refurbishment function from DPW to DoD. The Ministers of Public Works and Defence considered the matter and directed DPW and DoD Accounting Officers to process the resolution. It was resolved that the immediate focus would be to address matters observed at facilities in the Bloemfontein area. The DPSA and Treasury would advise on procedures governing the function shift. It emerged from an engagement between DPW, DoD and Treasury that matters to be considered were the relevant legislation, DPSA involvement, and for DoD to confirm that it aims to become the custodian of the entire Defence portfolio, and that all financial implications of the function shift should be specified. The briefing gave progress on registered projects at Defence and Air Force bases in the Bloemfontein area.

The Chairperson thanked the task team for the progress report. It was clear that the team had worked hard, and that there was a good working relationship. The Constitution emphasised the value of timeliness. She was concerned about timelines that stretched into 2020/21. The Committee was overwhelmed by the extent of the crisis during its oversight visit. Crisis intervention was called for, and such timelines did not conform to a crisis description.

Mr A Shaik Emam (NFP) asked if the devolution from DPW to DoD could set a precedent. Other departments like Water and Sanitation might decide that they wanted to do likewise. Implications had to be considered. The Minister had made mention of international relations. Buildings in other countries had to be identified. The capacity in DPW to deal with Defence buildings was a challenge. There had to be more engagement with DoD, Police and Health. There had to be experts on health matters in DPW, for instance, and the same applied to DoD. He asked what could be done to cut down on the use of implementing agents (IAs) and consultants. What was to be done about contractors that did not deliver on time. Project delays led to cost escalations. He asked about the implications of moving money and staff between projects.

Mr N Gcwabaza (ANC) appreciated that the Minister had provided clarity about engaging with the DPSA and Treasury besides DPW and DoD. He asked if DPSA and Treasury were already engaged in discussion, and if not, when that would happen. The Chairperson had remarked that the process would continue into the next MTSF until 2021. He asked what besides the legislative process would require so much time. It was an urgent matter. The Committee had read the Defence Portfolio Committee report on military facilities across the country and it closely resembled the Standing Committee report. He was worried that it was going to take so long. He asked what was meant by slide 4 that a joint assessment of facilities was done by DPW and DoD, and anticipated cost estimates were based on a high level condition assessment. It also stated that funding for the projects would be sourced from the current allocation. He asked if the allocation was from DPW or DoD. There were no budgets attached where it listed progress with projects. It was stated that contractors were performing badly. He asked who the contractors were, and if their capacity was properly estimated. Contractors were known to declare themselves insolvent after three months, only to reappear later under a different name. He asked if technical and human capacity was ascertained.

Ms M Manana (ANC) commented that assessments by both departments were done at the national level, but there was confusion at local level. The Committee was depressed by what it saw during its oversight. The country was not safe. People from the location stole from the cottages. It was a laisez faire situation. There had been a lack of proper budgeting from the start. Hospitals and maternity wards were badly designed. She agreed with Mr Gcwabaza about contractors that were liquidated, adopted another name and were then contracted again. There was bad management at ground level. She asked who would confirm the funding for revamp of the living quarters at the Tempe military base. She was concerned about the leaking roof at 3 Military Hospital.

Mr M Shackleton (DA) remarked that costs could have been reduced if the Tempe base had been properly maintained. He referred to urgent replacement of five lead reinforced doors at radiology at Tempe base. The defective doors were installed by the contractor during the building of the facility. He asked if there was a way to recover the money spent on the defective doors.

The Chairperson commented that she was seeing a broad plan, but it had to be clear how it was going to be implemented. There were critical short term challenges. The sewer at Bloemspruit was supposed to be fixed in 2019, but the question was what would happen in the interim. The Constitution insisted on responsiveness. There was a leaking roof that had to be repaired. Hospital beds had to be moved from the third to the second floor. The ward would be overcrowded. There were pools of water on floor 3. It could not wait until 2020. Critical short term matters had to prioritised in the budget. The Committee would insist on value for money and response with immediate effect. She referred to fencing around the De Wet training area. Fencing was a priority, as assets were not safe. People were removing electrical gadgets and the like. A short term crisis like fencing had to be done immediately, it could not wait until 2021. Assets had to be protected.

Mr N Paulsen (EFF) referred to modalities of transfer. The question was what functions would remain with DPW. There was a need to build capacity in DPW, so that there could be less reliance on contractors. Contractors failed to adhere to SLAs, work done was incomplete or badly done. Skills could be built within DPW itself, in the form of engineers, bricklayers, plumbers and electricians, which would cost less than outsourcing to contractors. Proper state capacity had to be built. DPW was managing leases, but skills could be developed to do real work. It was shocking that military facilities were in bad repair, as the military had to protect the borders and the coastline. There was a golden opportunity to build real capacity so that the State could manage its own resources. The solution was to properly capacitate DPW, merely passing outsourcing onto DoD would amount to passing the problem on to that entity. The DPW could commence with that process and be ready for when his party would take over in 2019.

The Chairperson asked Mr Paulsen if his party still dreamed of being the governing party.

Mr Paulsen retorted that there was a time when his party dreamed of being in Parliament.

The Chairperson noted that the Committee had proposed that the maintenance budget be transferred to DoD for speedier maintenance. There had to be learning from the crisis. The Committee wanted to see an implementation plan.

Mr Paulsen remarked that unless the hole in the hospital roof was fixed, the problem would get bigger.

Minister of Public Works, Thulas Nxesi, responded that it would be wrong to assume that the transfer to DoD would happen the following day. Skills were not in place yet. Proper planning was needed. Maintenance was a challenge at all three spheres of government. If government property was not properly maintained, it degenerated. Cabinet charged DPW with maintenance for the whole of government, but there was the challenge of lack of money. Departments had to do day to day maintenance, but it was not done. Government had to develop a strategy for facilities maintenance. The DPW had worked haphazardly over the years. The DPW could not take the initiative to upgrade or maintain, it depended on what the client was saying. The DPW responded to that. There was a need for joint planning, where a department could indicate what was available in its budget. The situation with police stations was that it was not asked if money was available. It was only when the Portfolio Committee did oversight that it was realised that there was a need for more police stations. Government lacked money and proper planning.

The Minister had in the past proposed that joint teams be formed with Police and Justice, so that those departments could inform DPW of their needs. There had to be proper planning from both sides. Halfway through the building of a police station, there would be a directive to add elements not planned for; chopping and changing was costly. Poor planning was the sickness of government.

He answered Mr Gcwabaza that there was already engagement with Treasury. DPSA would come in at the end. It had to confirm that there was enough motivation for the devolution. Executive authorities had to express themselves. DPSA had to motivate to its Executive. Agreement amongst the Executive could be easy, but legislative changes would take longer. In the event of legislative change, there would first be a response to immediate issues, then the budget changes and transfer of personnel. Mr Emam had posed an interesting question on whether the devolution would set a trend. It depended on how it was handled. It was possible that other departments could demand devolution. During the Zuma era, it was argued that if Education and Health take over DPW functions, it could be asked what the function of DPW was to be. Departments could end up spending 30% of their time on what was not their main function. DPW dealt with social infrastructure, other departments were responsible for infrastructure like roads. A state construction company would be unable to do certain things, and it would be in competition with the private sector. Also with salaries, it would be hard to retain skills with more attractive prospects on the outside. Contractors failed to deliver because of lack of experience. Most experienced companies were white. The new black companies had not operated in that space for long. There were various forums that protested that work was not given to small and emerging black companies. But the problem was one of making sure that such companies were competent. His advice to black companies was to bring resources together to be capable of tackling big projects. But standards had to be upheld. If DPW had chosen to be harsh, it could have blacklisted some black companies. The advice given was rather to partner with established companies. There were people who posed as established companies.

Mr Paulsen interjected that the Minister was anti-black.

The Minister responded that he was not. The construction space was complex. People had to be empowered without compromising on standards. On the short term, legislative changes had to be dealt with. Officials could deal with that quickly. There was a lack of consequences, people worked through connections. Some leases stood at 145%. A framework was established together with the SIU and the Treasury, but it was then said that black landlords were being disadvantaged. There were deeply rooted practices. The advantage of devolution to DoD was that Defence worked through orders. He agreed that timeframes, especially for the hospital, might have to be revised.

Mr Maroga responded that it was agreed at the previous meeting that the military establishment was a unique client. Civilian management of military matters had to be reviewed. Elements in the legislation related to the role of the military in maintaining assets, had to be considered. IAs were mainly government entities that could augment other entities. For example, the Development Bank of South Africa was equipped with skills around infrastructure procurement. Contractor performance had to be reviewed. In terms of current SCM prescripts, a contractor could not be summarily excluded. If a contractor claimed capacity, it was not proper to exclude him. It was done in that way to prevent contractors being excluded on the basis of individual judgement. Prescripts had to be tightened up. The DPW made no profit from property maintenance. Spending on property maintenance was underfunded. He answered Mr Gcwabaza that allocations were vested in both DPW and DoD. When process were slowed down or could not be carried out but money was available, money was moved legitimately to other projects. Two teams went to ground to engage with people at that level, during the condition assessment. Revising timelines for crisis interventions could be problematic if the procurement process was circumvented. The Treasury would have to be engaged on deviation. A short term project implementation plan for crisis areas would have to be crafted, to proceed on an emergency basis.

Lt Gen Jabu Mbuli, DoD Chief of Logistics, responded that there had to be a plan to cope with the dangers of deteriorating facilities. Troops were leaving barracks to rent in the locations. The state of readiness was impaired, as it would be impossible to find them if they had to be deployed. If the maintenance function was devolved to Defence, issues could be addressed. Defence desired the handover. Treasury played an important role because of procurement.

Mr Emam asked if DoD had the necessary capacity.

Genl Mbuli replied that a Defence Works formation was set up to deal with the problems faced. A strategic facilities management plan was in place, with units in the nine regions. Capacity was being built through sending soldiers on engineering courses in Cuba and Vietnam. 15 engineers were being trained. It was not as yet fully fledged, but Defence was preparing to take full responsibility. There were also reserve force members who were trained engineers, who could be called upon.

The Minister remarked that it was not in accordance with international practice for a civilian department to be involved with matters such as military security. It had exposed DPW to criticism.

The Chairperson commented that the Committee had made a recommendation, which was currently a resolution of the House. Implementation of the resolution had to be monitored. There were no fences at Bloemfontein. Civilians could enter high security risk spaces. She asked for a task team perspective on how quickly assistance could be given. The budget was allocated and transferred, but an opportunity was lost during the Appropriations Adjustment. Reprioritisation could have been reflected in the Appropriations Adjustment. She asked Treasury to comment.

Mr Rendani Randela, Chief Director: Justice and Protection Services Unit, National Treasury, responded that Treasury agreed with the proposed model. Every time Treasury presented total expenditure reports, it came up that delays in the delivery of infrastructure by DPW was a reason for underspending. Whatever portion of the budget associated with the functions under review that was still sitting with DPW, could be migrated. As regarded precedent setting, caution had to be exercised. The Department of Correctional Services used inmates for maintenance as part of rehabilitation, and might call for devolution. The full financial implications had to be understood. When any function of a department was moved away from the mother department it seemed to be a simple function shift, but there were always hidden implications, like audit costs, for instance. There was going to be changes to the organisational structure of DoD. It could be that a costly model would be adopted. Total expenditure reports showed that DoD was overspending on CoE. There was an opportunity for an exit mechanism, as some members who were cited as undeployable, such as artisans, could still be deployed in the Defence Works formation.

The Chairperson emphasised that thinking had to guide the process forward. DoD had to be properly serviced. When there were no fences, assets were lost.

Mr Gcwabaza remarked that the Committee had raised the matter of empowerment of black companies before. But standards could not be lowered. Companies had to prove themselves. It had to be raised with all departments. Government had to propel the process. Government departments had to consider the capability and capacity of black companies who did work for government.

The Minister agreed that companies had to be given what they were capable of performing. There had to be a correct policy to empower the disadvantaged. The Treasury had advised that the full implications of what was done, had to be looked into. The opinion of the Executive had to be considered, regarding emergency issues. There was readiness to implement with speed, wherever possible.

The Chairperson concluded that the spirit of the engagement was appreciated. The goal was the transfer of the maintenance function to Defence, as it was a resolution of the House. She advised that large infrastructure companies subcontract emerging companies, so that they could learn. Conditions had to be attached to the awarding of subcontracts, as it posed high risks to emerging companies. When there were service delivery protests, government was blamed. Jobs were not to be created at the expense of government. Black companies had on occasion failed government. Government had to deliver quality services. She thanked the Minister, as his presence had added value. The Committee was pleased with the work of the inter-ministerial task team for devolution. It had to include changes to the legislative framework. She agreed that the Minister had to engage with all stakeholders, with the Minister of Public Service and Administration adding a voice. Work had to proceed in the spirit of cooperative governance. Government had to respond speedily to short term military needs at Bloemfontein. A way had to be found to deal with contractors who performed poorly.

The Chairperson adjourned the meeting.


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