Public Works & Defence Department progress in moving infrastructure/maintenance function to Defence

Standing Committee on Appropriations

27 February 2019
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Committee convened to listen to arguments presented by the Department of  Defence (DOD), National Treasury and Department of Public Works about the transfer of the DOD maintenance function from Public Works to DOD. The Department of Defence outlined the required number of personnel and the subsequent additional budget required and discussed the challenges it faced.

Members questioned the feasibility of DOD employing additional people as this would place further constraints on its tight budget; what work military personnel did and why DOD outsourced its guarding function to private security companies when the troops should be doing this; the cause of the budget underexpenditure for refurbishment over the past two years; the decade-long delay in the utilisation of unused land for DOD; and if it is necessary to have such a large number of SANDF personnel while the country is not at war.

In response, DOD said military personnel were engaged in patrolling porous borders. It said there was an urgent need for the funds to complete the transfer of the infrastructure development function.

The Department of Public Works explained that the budget shortfall was caused by negligence in the maintenance of government assets. The set budget was only for the building of infrastructure but maintenance of the built projects had not been included in the budget.

The Chairperson urged the government officials to submit a written report after the meeting and urged them to expedite matters. She expressed her displeasure at the length of time it took to fix a roof at a military hospital. An emergency provision should be applied in urgent situations in order to serve the people.

Meeting report

Apologies were received from the Ministers of Defence and Public Works.

Department of Defence presentation
The SANDF presenter noted that the Committee had asked SANDF to speak to the progress made by the Inter-ministerial Task Team with the Department of Public Service and Administration (DPSA). The Inter-Ministerial Task Team had met and an agreement was reached to continue with the infrastructure development function transfer from DPW to the DOD. Current items that need to be addressed:
- Due diligence on properties to be transferred and finalisation of User Immovable Asset Register (UIAR)
- Funding for capacity creation within the DOD Defence Works Formation
- Funding for current shortfall in DOD Lease Portfolio, Refurbishment and Capital Works

He spoke about the financial impact to implement the Facility Management Strategy including the transfer of the infrastructure development function from DPW. They must approach DPSA with a sound plan showing the capacity which SANDF needs, the funding they have and the request for structure for capacity creation. Following professional and industrial norms, DOD personnel requirements for the shift are:
Program and Project Managers (30),
Architects/Engineers/Quantity Surveyors/Geometricians/Landscape Architects (59)
Construction/Facility Legal Staff (4)
Condition Assessors/Building Inspectors (116),
Factotums (371),
Construction Workers and Grounds men (733),
Utility Management Support Staff (52).
DPSA is to assist and guide DOD staff increases based on the function shift.

The operational support budget was noted for logistics and ICT requirements such as response team vehicles, equipment and tools,  repair and maintenance material, IT software and hardware.

Emerging challenges identified were:
• Finalisation and due diligence on the extent of the portfolio to be transferred to the DOD. SANDF denied the rumour that DOD was not doing anything. The Committee was assured that DOD was engaging in activities to alter the current situation. However, facilities were not in good condition.
• Increase in lease costs. In less than 10 years time DOD would be paying R1 billion for leases. This is unacceptable as the government has land which can be used to deal with the lease challenge. DOD must embark on a lease replacement/reduction program to build its own facilities on state owned land. DOD would be spared of lease costs which can be used for the revamping project.
• Funding for Capacity Creation: The 2016/17 and 2017/18 under-expenditure for refurbishment was noted on slide 10. Thus DOD was not asking for an increase but rather asking for this unspent funding then DOD would be fine on their own.
• DOD Facility Challenges: The facilities had to be revamped. If a leaking pipe is not fixed in time, it causes bigger damage. This is the DOD approach to have an intervention before bigger damage takes place.
- Thaba Tshwane Bulk Services and Dolomite areas must be addressed immediately to prevent further deterioration and destruction
- Rapid increase of lease hold portfolio (Tshwane Metro Area make up 90% of leasehold expenses).
- Sewage systems need urgent attention at DOD facilities
- Refurbishment and replacement of security infrastructure at military facilities.
• Capital Works and Refurbishment Shortfall

The Chairperson asked for National Treasury to comment.

National Treasury input
National Treasury said that it agreed with the approach of the Departments of Public Works and Defence about moving the function to the Department of Defence. The role of Treasury is to facilitate the transfer of budget. Nevertheless, they cautioned the Department of Defence that everything must be kept in order when functions were shifted from one department to the other.

National Treasury has allocated a R1 billion budget to the Department of Defence for accommodation challenges when the property maintenance function was devolved from the Department of Public Works. Since the budget is already in the books of National Treasury it was for the Committee to decide which part of the budget remained in the Department of Defence and which part of it should be transferred back to the Department of Public Works. The Ministers of Public Works and Defence signed a memorandum in 2015 about the movement of the endowment property function. In that very memorandum of understanding, it clearly states that even if the maintenance function is moved over to the Department of Defence, the Department of Public Works still has the disposal function.

National Treasury was in full support of the resolution of the Committee and would work with the two departments. National Treasury will also step in if there are budget disputes between the two departments.

In conclusion, it was emphasised that it was up to the two departments, not National Treasury, to decide on the details of the movement of function.

Department of Public Works (DPW) presentation
DPW referred to the Funding Summary slide on page 2 of the joint presentation which was handed out to the Committee belatedly. The “White Book” means the actual budget being allocated. The “Required” is what DOD requires. If DOD is to take over the maintenance function in 2019/20, DOD would be R1.194 billion short in budget.

Discussion
Mr A McLaughlin (DA) expressed displeasure at the massive delegation which consisted of 24 people. The country does not have money to waste on public servants and government officials. He asked why 24 people had to come for this meeting while only three were needed. He complained about the incomplete document handed out to the MPs which was a sign of contempt for the Committee.

Mr McLaughlin asked for the properties referred to in the meeting, in whose name it was registered now, whether it was under the Department of Public Works, DOD or the Republic of South Africa.

Mr McLaughlin asked about the line of authority for the maintenance of properties in the agreement between two governmental departments.

Referring to the 2 411 personnel working on maintenance in DOD, Mr McLaughlin asked what types of work these 2 411 people had been doing. He questioned DOD’s request to recruit 1 365 additional staff to the Department of Defence despite budget constraints. He asked the Department of Public Works if they agreed to that proposal. It was unconscionable that the Defence Department would recruit such a huge number of workers without thinking about what those 2 411 members they already had, were doing.

Mr McLaughlin questioned the Department of Defence why they pay hundreds of millions to private security companies to guard their facilities. Why could their troops not be asked to perform that duty. When he was in the army, guarding facilities had always been the troop’s responsibility.

Mr M Shackleton (DA) asked the Department of Defence by how much SANDF staff costs exceeded the available budget as the Committee had often been told. He asked if the number of staff had fallen within budget and the staff shortfall cost only occurred after the announcement of the budget cuts. Under this constrained budget, how would DOD come up with a solution for this new personnel proposition.

Mr Shackleton raised the point that DOD did not look at the current value of the land which they proposed to use for their own purpose. DOD should compare the value of the government land to the current lease that DOD was paying.

Ms D Senokoanyane (ANC) was not sure about the role of Treasury in the transfer of the function. She asked if other challenges been identified and if those challenges had been attended to.

She referred to slide 10 on the DOD refurbishment programme shortfall in 2018/19 and asked what the funding had been spent on. She was confused by the RM in the brackets on the slides.

Mr N Gcwabaza (ANC) referred to slides 4 and 5 and questioned the feasibility of the budget for the additional staff required by DOD.

Mr M Manana (ANC) noted that the utilisation of unused land had been raised in 2007 already and he asked why this still remain unresolved after a decade.

Mr N Paulsen (EFF) arrived and the Chairperson acknowledged his presence.

The Chairperson stated that the issue at hand was urgent and could not be delayed. She asked for a concrete short-term and medium-term timeframe for preliminary maintenance plans.

The General began his response with an example. He stated that if a small thing is not attended to, it will spread exponentially. He responded that the Defence Force personnel did work and that it was economically more affordable to do things on their own rather than outsource to a third party. The general was adamant that the slides were clear in indicating it was more affordable to hire additional personnel than outsourcing the function of maintenance to a third party. DOD was indeed taking over an important function from Public Works.

Department of Public Works responded that the sewage line of normal households were provided by municipalities. However, the specialised sewage for the military forces is provided by the Department of Public Works. It was not ongoing maintenance but was a capital works project plan. Public Works had in the past built assets for government but maintenance had never been budgeted for. When new infrastructure is built, he urged the Committee to look at not only the initial capital but also take into consideration the maintenance of infrastructure.

The Chairperson highlighted the dilapidated state of governmental infrastructure. She emphasised the importance of maintenance.

Mr N Paulsen (EFF) asked the Department of Defence why South Africa needed 80 000 soldiers in the army since the country was not going to war. He asked what options soldiers have outside of a military career. What are the daily activities they engaged in every day since the country was not at war. He questioned why young people in South Africa were not interested in joining the armed forces and whether the military was not inspiring to them. Mr Paulsen briefly expressed confidence in re-visiting Section 25 of the Constitution.

Mr McLaughlin asked if the 1 300 additional DOD personnel were at the expense of the Department of Public Works. If that is the case, why is more funding still needed for these additional personnel since this would fall within the Public Works budget. If not, he asked the Committee to look at the budget constraints.

The Chairperson agreed and highlighted the issue of maintenance, thus, it is only natural and sensible that maintenance and initial fund should be budgeted together in the first few years, it is then afterwards the maintenance part can be separated. The Chairperson asked the Committee to think carefully about increasing internal capacity and contracting. The Chairperson suggested if it was possible to re-visit the current employed personnel and align their job responsibilities to the new task set. The Chairperson further suggested that on the job training programme could be arranged to train current employees should they say that they could not perform the expected duties. This could be a solution that can both satisfy the government’s policy of reducing public servants’ wage bill and have the necessary tasks completed.

Mr Gcwabaza expressed his confidence that the matter for extra fund can be resolved. He agreed with Mr Paulsen that if matter at hand can be resolved, it would not only save 2000 jobs but would also open up opportunities for youth employment. He asked DOD about current progress in maintenance work and how much still needed to be done.

Mr Gcwabaza stressed the importance of the SANDF in defending national sovereignty and thus supply to the SANDF is paramount.

The Chairperson reaffirmed that there was punishment for under-performance in government’s policy. That was why there was the budget shortfall. The shortfall was caused by punishment from government's side but not from irregular expenditure.

Public Works explained the urgent issue relating to sewage, trenches and leaking roofs at a military hospital. DOD stated that it handled the project with due diligence.

The Chairperson was concerned that the roof was leaking onto patients at the hospital yet DOD was still in the process of designing a roof. She expressed her displeasure at the lengthy process for fixing the roof. She pointed out that the tender process after the design would be even longer. Emergency provisions should be applied to respond to such situations.

The Director General of the Department of Public Works admitted that the process was long. From past experience, it would be more expeditious if there was internal capacity such as architects and engineers to solve issues. The DG assured the Committee that the matter raised would be solved as soon as possible.

The DOD Major General said that supply chain was an issue that was frustrating DOD.

Mr McLaughlin asked Public Works why DOD was unable to deploy their internal engineers to attend to this urgent matter. The Chairperson agreed.

The DPW Director General again assured the Committee that this matter would be urgently attended to.

The Secretary of Defence replied about the wage bill. Military personnel were engaged in various military duties such as being deployed to patrol borders. The Committee had to bear in mind that the country had porous borders. The Secretary stated that it was not unheard of for a government department to outsource a certain type of service to a third service provider. Military personnel were given the option to engage in whichever occupational path they chose such as engineers, architects, lawyers. A lot of them chose to be lawyers. The Secretary said that most people do not serve in the Defence Force for longer than 10-15 years.

National Treasury reassured the Committee that although the funds requested by the Department of Defence had not been found so far, Treasury was taking steps and had engaged with other departments to find the funds.

The Chairperson asked the committee members and department officials to put their conscience and people first. The Chairperson urged government officials to act in an expeditious manner and otherwise there would be court battles.

The Chairperson brought up military housing. The houses were in a terrible condition and she urged DOD officials to go these sites and assess the situation.

The Chairperson said that a report was required from each department to expedite the urgent issues. She stressed the importance of this meeting as the issues discussed were critical. She asked Members to find the balance between being efficient and cost-effective. Departments should do skills auditing. She emphasised the importance of service delivery.

The meeting was adjourned.

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