Substance Abuse Treatment Centre in Free State construction delays; DSD lease agreement

Social Development

13 March 2019
Chairperson: Ms R Capa (ANC)
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Meeting Summary

The Portfolio Committee on Social Development met with representatives from the Department of Public Works (DPW) and the Department of Social Development (DSD) to discuss the causes of delay in securing suitable premises.

DPW said the Head Office of DSD is situated in the Human Science Research Council (HSRC) Building at 134 Pretorius Street, Pretoria. The premises are leased, and that the lease had expired on 30 April 2017. The DSD’s Independent Appeals Tribunal is housed in another lease facility, located at the Harlequins Office Park in Groenkloof, Pretoria.

Both leases were renegotiated with the landlord during the course of 2018. Resulting from these negotiations were lease options of a 3, 5 and 9 year, 11 months lease, respectively, which were presented to DSD. DPW and DSD are currently considering the viability of these short, medium and long-term options, bearing in mind the preference for a long-term solution.

Of the considerations taken into account, the rental costs applicable to these options are fairly reasonable for the Pretoria area. The consideration of the size of accommodation in the Pretoria area was decisive, as there were not many options that could cater to the needs of the DSD. The costs of relocating the DSD was considered to be around R2 000 per official and the costs related to IT infrastructure, which is covered to an extent by the landlord, in excess of which the DSD would have to cover.  Other factors considered, especially in terms of the long-term option, included the positioning of the building, traffic flow to and from the premises; as well as, security concerns.

Focussing specifically on the long term solution, DSD registered a Public Private Partnership (PPP), with National Treasury during February 2016. In terms of the long-term option, DPW assisted DSD with location options, preferring the Salvokop Precinct for a consolidated Head Office for the DSD, including the Independent Appeals Tribunal; the South African Social Security Agency (SASSA); and, the National Development Agency (NDA). This plan is in line with the DPW’s Inner-city Regeneration Programme.

The consolidated head-office option was considered in light of the medium term solution, which is the proposal of a 3 year lease. This would allow for the installation of, already acquired, IT infrastructure relevant to DSD; and, time to engage with National Treasury regarding the proposed long-term solution, she said.

Members wanted to know who exactly was responsible for the delays and asked why this matter was only brought before the Committee now. The Committee asked questions around due diligence, feasibility, cost implications and standard processes.

Meeting report

The Chairperson commenced the meeting by welcoming all in attendance, especially the representatives from the Departments of Social Development and Public Works. She went on to allow invited parties to introduce themselves and to relay apologies received, for ease of reference.

Presentation by the Department of Public Works (DPW)

Mr Mzolisi Toni, Acting Director-General, Department of Social Development (DSD), introduced the discussion and provided some background of the facts leading to the appearance before the Committee. He said that DSD had presented its third and fourth quarter report and concern was raised in relation to its IT infrastructure to which the Department informed the Committee of its accommodation challenges. The Portfolio Committee, requesting a comprehensive report of the challenges encountered, invited representatives from the Department of Public Works (DPW), the Free State Provincial Department of Social Development and Treasury to attend.

The Chairperson, agreeing with Mr Toni, said the Committee had serious concerns about the non-spending of designated funds.

Mr Sam Vukela Director-General, DPW, said the presentation is a shortened version thereof, but that it will still address the accommodation needs of DSD as well as its provincial Free State premises. In respect of the provincial Free State offices, he said he would liaise with the Head of Department directly on the matter.

Ms Sasa Subban, Deputy Director-General, DPW, said the presentation is a response to “part B” of the report from the Committee that raised concerns about the accommodation of the DSD’s provincial Free State offices. She went on to say that in this regard short, medium and long- term options had been compiled in consolidation with DSD.

Providing some context and referring to the tabulated information on page 2 of the presentation, Ms Subban said the Head Office of DSD is situated in the Human Science Research Council (HSRC) Building at 134 Pretorius Street, Pretoria. The premises are leased, and that the lease had expired on 30 April 2017. The DSD’s Independent Appeals Tribunal is housed in another lease facility, located at the Harlequins Office Park, Groenkloof, Pretoria.

Both leases were renegotiated with the landlord during the course of 2018. Resulting from these negotiations were lease options of a 3, 5 and 9 year, 11 months lease, respectively, which were presented to DSD. DPW and DSD are currently considering the viability of these short, medium and long-term options, bearing in mind the preference of a long-term solution.

Of the considerations taken into account, the rental costs applicable to these options are fairly reasonable for the Pretoria area. The consideration of the size of accommodation in the Pretoria area was decisive, as there were not many options that could cater to the needs of the DSD. The costs of relocating the DSD was considered to be around R2 000 per official and the costs related to IT infrastructure, which is covered to an extent by the landlord, in excess of which the DSD would have to cover.  Other factors considered, especially in terms of the long-term option, included the positioning of the building, traffic flow to and from the premises; as well as, security concerns.

Focussing specifically on the long term solution, Ms Subban said DSD registered a Public Private Partnership (PPP), with National Treasury during February 2016. In terms of the long-term option, DPW assisted DSD with location options, preferring the Salvokop Precinct for a consolidated Head Office for the DSD, including the Independent Appeals Tribunal; the South African Social Security Agency (SASSA); and, the National Development Agency (NDA). This plan is in line with the DPW’s Inner-city Regeneration Programme.

Ms Subban said the consolidated head-office option was considered in light of the medium term solution, which is the proposal of a 3 year lease. This would allow for the installation of, already acquired, IT infrastructure relevant to DSD; and, time to engage with National Treasury regarding the proposed long-term solution, she said.

The Chairperson thanked the delegation and said there had been no statement as to what the purpose of the presentation was and what the request for action from the Committee would entail.

Mr Vukela responded and said the purpose of the presentation was to inform the Committee of processes already underway in an attempt to solve the accommodation challenges of DSD.

The Chairperson responded and said it would be helpful if the delegation clarified what action is requested from the Committee in terms of the presentation; as well as, giving Members of the committee a breakdown of the costs involved.

Discussion

Ms B Masango (DA) asked for a contextual account of the delays. She went on to say that despite the lease agreement expiring during 2017, the matter is now only being brought to the attention of the Committee.

Dr C Madlopha (ANC) thanked DPW and DSD for the presentation. In agreeing with Ms Masango, and in referring to page 2 of the presentation, she asked when the “due diligence” had started and what it entails. She went on to ask whether DPW had started the process after the last meeting of the Committee, or earlier. Essentially, she wanted to know what the actions of the DPW were and how this affected the work of DSD; and an explanation as to the delay in renewal of the lease. She continued and said that getting to terms with the causes of delay would prevent the situation from occurring in future.

Referring to the Committee’s previous meeting, Ms Madlopha, wanted to know what the delay was in terms of the building of the Substance Abuse Treatment Centre in the Free State and when the feasibility study had been conducted. The purpose of the feasibility study was for government to ascertain the viability of a proposed project. She asked whether the project had commenced before the completion of a feasibility study.

Mr Vukela, in response, said there were State processes that had to be followed. DPW also had a responsibility to cater to their client’s (in this case the DSD) needs. Action by DPW is guided by the needs of DSD, and that one of the key steps was to align their needs with norms and standards. DPW had undertaken a feasibility study, but that documentation is in the possession of the DSD. He went on to say he would liaise with the Free State provincial head of department for the DSD on the matter, so that a consolidated explanatory report may be compiled.

Mr Bassie Kgasoane, Chief Director: Prestige, DPW, said the DPW had responded to the accommodation needs of the DSD. In terms of processes, he said, after receiving the request from DSD, alignment to the norms and standards are considered. This includes conducting a feasibility study in terms of the current lease. This was followed by a preliminary cost analysis that would provide the client (DSD) with suitable information so they make an informed decision.

Mr Kgasoane, continuing, said that when a client accepts any of the options presented, a DPW representative will “test the market” and or negotiate subsequent terms, should the client choose to remain in the leased premises. Agreeing with Ms Madlopha, he said these processes and options are in place to avoid delays later during the project. Thereafter, he said, an “Actual Cost Analysis” report would then be shared with the client. This document would aid the client in choosing the most suitable option.

Ms Krishnie Nadasen, Director, DPW, said National Treasury had approached to do a dispensation report, asking whether the DPW may liaise with the landlord directly, in an attempt to expedite the process which was approved during March 2018. Options generated from these engagements, including with prospective landlords, the DSD would then have to indicate its preference.

The Chairperson, intervening, asked whether the above process could be explained in principle; how it should unfold, according to policy. The Chairperson wanted clarity as to what the actual, standard process was, so such delays and challenges may be avoided in future.

Ms Masango asked for clarity as to how these interactions occurred. She went on to ask why this matter is being brought to the Committee’s attention now, given the cost implications.

Mr Vukela responded and said the “why now” is dependent on the client. He said the operational requirements of the client would at times delay processes.

Mr Toni agreeing with Ms Masango said the process had been taking too long. He said an amount of R10 million had already been spent, looking at the infrastructure requirements of DSD. At some ponit the HSRC had wanted to sell the building DSD was renting. The consolidated premises would save costs, as it would be shared with SASSA and the NDA.

The Chairperson asked who the cause of the delay was and said officials in attendance should be clear with the Committee, as it is simply protecting the public purse.

Ms Madlopha, agreeing with the Chairperson, asked who caused the delay. She said the delays had become an obstacle to service delivery, which has funding implications. She further went on to ask that in future, issues regarding lease agreements be raised beforehand, so the Committee may assist.

Mr Toni, in response, said the DSD’s contribution to the delay was in refusing to take up occupation of the building, was due to certain concerns, which includes the fact that the landlord had to complete an occupational health assessment.  

The Chairperson asked that better processes be followed, which would minimise delays. She asked that issues be brought before the Committee timeously, so there may be no unnecessary delays. The Committee will provide timeframes as to proposed progress of the project.

Ms Madlopha, agreed with the Chairperson.

This part of the meeting was adjourned.

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