Independent Development Trust and Agrément SA 2019/20 Annual Performance Plans; with Minister and Deputy Minister

Public Works and Infrastructure

28 May 2020
Chairperson: Ms N Ntobongwana, (ANC), and Mr M Mmoiemang, (ANC, Northern Cape)
Share this page:

Meeting Summary

Audio: Independent Development Trust & Agrément SA 2019/20 Annual Performance Plans                                                Part 2
Annual Performance Plan (APP) of Government Departments & Entities 20/2021

Deputy Minister Kiviet said there was no possible recovery for the Independent Development Trust (IDT). The extension for one year was not granted, as this would only have perpetuated the status quo of poor performance, with a structure failing for over six years, losing money, and not providing a good service. The Deputy Minister said an extension of only four months was granted. Attached to the extension is a caveat that IDT embarks on an exit strategy. The extension is also subject to the Task Team producing a report before 15 June 2020.

During the four months, the Department of Public Works and Infrastructure (DPWI) will fund the operational cost shortfall of IDT. The amount will be not more than R21 million, subject to a detailed breakdown of the operational costs which will be scrutinised and assessed by the Chief Financial Officer (CFO) of DPWI, prior to such payment.

The Deputy Minister said the IDT has, to date, lent its support to the Ministerial Task Team by providing information it needs to do its work successfully and unhindered. As a way forward, the Interim Board and Executive Management of the IDT advised the Executive Authority, the dissolution of the Trust (the IDT) must follow due legal process as set out in relevant clauses of the Deed of Trust.

The legal position is that the current Board is not properly constituted. This is because it does not enjoy a quorum. According to the Labour Relations Act (LRA), there must be consultation with employees or a registered Trade Union representing the employees who are going to be affected by the dissolution of its organisation.

The Committee was disappointed at hearing about IDT’s dissolution through the media. The Ministry assured the Committee it was not intended to disrespect the Committee.

Regarding Agrément South Africa (ASA), in 2015, it was under administration of the Council for Scientific and Industrial Research (CSIR). It had to become an independent organisation and had to recruit more people into the organisation. Through the Equilibrium Certification project, the entity was trying to generate more income for operational costs. ASA was not visible. It is trying to be more visible and is looking into partnering with more organisations.

Meeting report

The Chairperson said she was disappointed to learn about a departmental report through the media, instead of from the Department itself. It does not look good in the public eye when the Portfolio Committee and the Select Committee do not know about any matters in the Department.

The Chairperson welcomed the Department of Public Works and Infrastructure, Minister Patricia de Lille, Deputy Minister Noxolo Kiviet, and Chairperson of Agrément SA.

The Committee adopted the meeting agenda which was to consider the Annual Performance Plans (APPs) and Strategic Plans of the Independent Development Trust (IDT) and Agrément SA.

Agrément SA (ASA)

Minister Patricia de Lille said it was an honour to engage with the Portfolio Committee. The Minister informed the Committee about media reports, saying the Department only replies to the media’s requests in writing.

The ASA chairperson presented the entity’s Strategic Plan 2020-2024 and Annual Performance Plan 2020/2021 (for full report, see powerpoint presentation attached). The presentation focused on:

  •  business continuity during the period of Covid-19 pandemic, and
  • a detailed report of the Annual Performance Plan.

The presentation was to:

  •  remind the Committee of Agrément South Africa’s mandate,
  • how it responded to government’s strategic outcome priorities, as well as to highlight ASAs response to environmental issues.
  • ASA developed protocols for the return of staff members to the office, which include:
    • Screening staff on entry to the premises
    • Prohibiting visitors to the offices during Level 4 lockdown
    • Staff’s requirement to wear masks all the time
    • Suspension of physical meetings
    • Providing hand sanitisers at strategic locations
    • Providing perspex screens around desks in shared offices, and
    • Managing office space by making configurations to allow for physical distancing around common areas.

ASA staff will for the most part continue to work remotely, complying with government regulations. The organisation will apply the Business Continuity Strategy. This incorporates digital platforms to hold meetings, applies digital options for different areas of ASAs operations, and explores the feasibility of using electronic media such as drones, to conduct scheduled quality inspection at sites where ASAs approved products are used.

The Chairperson said the Annual Performance Plan (APP), had a number of key strategic objectives it addressed to strengthen the organisation. ASA also had a number of plans to ensure delivery at its maximum capacity.

Minister de Lille spoke of the new ideas the Department of Public Works and Infrastructure was working on with ASA. She said she, as the Executive Authority, and along the lines of the seven national priorities, deems it necessary to add a number of interventions for ASA to focus on in its Strategic Plan. This is for ASA to be realigned to its legislated mandate and for it to provide the value-add it was established for.

ASA, in partnership with the Department of Public Works and Infrastructure, must develop modular solutions for government facilities. Through its research on the development of a school, clinic or government infrastructure, the Department often finds designing starts from scratch. This is especially so with designing a new school. As a Department, it needs a modular school, so the Department does not waste time on starting a project. 

Minister de Lille said, in the alignment with the Department of Public Works and Infrastructure, ASA will ensure there is eco-labelling and green rating tool projects to the PV and Water Savings Programme for all Government Buildings. The Department wants to work with the ASA to improve the built environment. ASA specialises in innovative technologies to offer previously marginalised individuals such as women, youth, military veterans, and disabled persons opportunities to participate in the industry. These designated groups of people were previously excluded from the construction industry.

The ASA chairperson said, according to the Act, the objects of ASA are to:

  • Support and promote the process of integrated socio-economic  development in the Republic, related to the construction  industry;
  • Support policy-makers in minimising the risk associated with the use of a non-standardised construction related product or system; and
  • Be an impartial and internationally acknowledged South African centre for the assessment and confirmation of fitness-for-purpose of non-standardised construction related products or systems

ASA’s requirements involve making the rules, determining the processes, procedures and forms for, and related to issuing, amendment, suspension, reinstatement, withdrawal, or renewal of an ASA Certificate. The ASA issues a certificate in the prescribed form, if it is satisfied a non-standardised construction related product or system is fit-for-purpose, subject to the payment of the required fees.

ASA also:

  • monitors such certificates,
  • manages renewal of all certificates,
  • establishes and maintains a public register of the applications rejected, certificates issued, amended, suspended, reinstated, withdrawn and renewed

ASA ensures its work is in alignment with the National Development Plan (NDP), the New Growth Path (NGP), and Medium-Term Strategic Framework (MTEF). ASA fully supports these initiatives and believes the fit-for-purpose certificates awarded by the organisation will contribute toward economic development. This will indirectly support the seven priorities.

ASA operates within the built environment sector of South Africa. The Board of ASA is the Accounting Authority. ASA reports to Parliament through the office of the Executive Authority, and the Minister of Department of Public Works (DPWI) according to the Public Finance Management Act (PFMA).

ASA contributes toward the national imperatives and global sustainability by undertaking technical assessments of innovative construction products. ASA is an authoritative technical assessment of system performance which:

  • Contributes towards fast-tracking economic development by allowing safe introduction of appropriate and suitable products.
  • Facilitates the safe introduction of improved construction products.
  • Facilitates the global acceptance of South African produced products.
  • Provides independent and authoritative technical assurance of fitness for purpose.

Independent Development Trust (IDT)

The Deputy Minister said, in the Sixth Administration, the Honourable President Cyril Ramaphosa created the Department of Public Works and Infrastructure (DPWI). According to Proclamation 49 of 23 August 2019, the President assigned, amongst others, the Infrastructure Development Act, No 23 of 2014 as amended to DPWI. It includes its entities, one of which is the Independent Development Trust (IDT). IDT is required to implement the National Development Plan, the seven key priorities, and ensure it is aligned to the objectives of the DPWI.

The Deputy Minister said the IDT received a qualified 2018/19 audit because of:

  • Insufficient management of its assets and liabilities
  • IDT did not have adequate systems and processes in place to identify and accurately record all programme expenditure incurred, on behalf of client departments
  •  

Among other failures, IDT failed to appoint the required 340 Non Profit Organisations NPOs for eight months into the 2019/20 financial year, even though funds were allocated to it. In November 2019 when IDT eventually began appointing NPOs, it did not appoint the required amount. To date, not all NPOs are signed up and operational. There have been numerous litigation claims against IDT for poor performance, project cost escalations, time delays and quality. Deputy Minister Kiviet said an instruction was issued for all of DPWI’s implementing agents to complete the projects currently on its books, and no new projects will be allocated. This also relates to IDT, which has over 2000 projects running.

Financial bailouts

The Deputy Minister said the IDT is an entity established to make a profit, yet in the past six months alone it has not only not made a profit but required DPWI to bail it out:

  • At the end of 2019, IDT was unable to pay staff salaries and DPWI was forced to provide financial assistance.
  • In contravention of the Public Finance Management Act (PFMA), IDT attempted to illegally utilise funding in a dormant account from a historical project, funding to pay salaries. If the Minister, together with National Treasury did not intervene it would have resulted in this.
  • There is a recent court case where the Minister was named as the Respondent. In January, IDT utilised allocated funding to pay salaries instead of paying creditors.
  • IDT asked the Minister to extend all contracts for one year and over, and asked for DPWI to assist IDT with an amount of R21 million. This is its shortfall in operating expenditure every month.

Deputy Minister Kiviet said there was no possible recovery for IDT. The extension for one year was not granted, as this would only have perpetuated the status quo of poor performance, with a structure failing for over six years, losing money, and not providing a good service. The Deputy Minister said an extension of only four months was granted. Attached to the extension is a caveat that IDT embarks on an exit strategy. The extension is also subject to the Task Team producing a report before 15 June 2020.

During the four months, DPWI will fund the operational cost shortfall of IDT. The amount will be not more than R21 million, subject to a detailed breakdown of the operational costs which will be scrutinised and assessed by the Chief Financial Officer (CFO) of DPWI, prior to such payment.

During lockdown, the Expanded Public Works Programme (EPWP) was executed utilising the NPOs under IDT. IDT has billed the DPWI an astronomical amount of R11 million as its management fee, even though the majority of the work was undertaken by the Department’s Officials. Deputy Minister Kiviet said actions were taken by the Executive Authority appointing an Exit Strategy Task Team. There was consultation with the Interim Board, who has agreed to the Exit Strategy within the 2020/21 financial year. There is a process which must be followed.

The Deputy Minister said the IDT has, to date, lent its support to the Ministerial Task Team by providing information it needs to do its work successfully and unhindered. As a way forward, the Interim Board and Executive Management of the IDT advised the Executive Authority, the dissolution of the Trust (the IDT) must follow due legal process as set out in relevant clauses of the Deed of Trust.

The legal position is that the current Board is not properly constituted. This is because it does not enjoy a quorum. According to the Labour Relations Act (LRA), there must be consultation with employees or a registered Trade Union representing the employees who are going to be affected by the dissolution of its organisation.

In conclusion, Deputy Minister Kiviet said the role of the Portfolio Committee is to conduct oversight over the Executive Authority leading the Department and its entities. In this case, IDT is fully accepted. The IDT Interim Board agrees to proceed with an exit strategy plan. This is why it cannot sign-off this entity’s Strategic Plan or APP for the 2020/21 financial year.

Discussion

Ms A Siwisa (EFF) said it was disappointing to learn about the Department’s developments and reports first through the media, before any discussions took place before the Committee. She asked what amount was spent on the IDT’s Strategic Plan before it was retracted. She also wanted to know how much was spent on the legal advice, when the three member Board could not make decisions.

Ms Siwisa said she was also disappointed by the report the Committee received. It was disappointing to hear of failure within the entity and wanted to know why the entity had to be dissolved. She asked why there was a decrease in the budget allocation towards monitoring and evaluation, if there are so many challenges in the IDT. She asked who will take over from the IDT if it is being dissolved.

Mr M Dangor (ANC, Gauteng) said part of DPWI’s work concerns policy formulation and policy re-formulation. This means the Department has to look into the future. He asked if the Department has looked into creating technical brigades from people in cooperatives to go and build for themselves.

Mr T Brauteseth (DA, KZN) thanked the Minister and the presenters for the presentation. He said he was glad the IDT will be dissolved due to its failures. He was concerned about the report and said he did not have a full picture of what happened in the entity especially with regard to consequence management. He asked the Minister to paint a full picture and asked for a list of all the officials in the IDT who engaged in illegal activities or illegal activities in contravention of the Public Finance Management Act (PFMA). He wanted to know what action was taken against them according to criminal law and civil law. This will send out a clear message to the public service administration, that the Department can take an entire entity and dissolve it.

Ms S van Schalkwyk (ANC) posed a question to ASA. She said the entity currently had new indicators. She asked if it will need additional staff members for the new indicators and how it will use its current resources. She welcomed the efforts made to transform the built environment. The Committee needs the Minister to have a joint venture with organised labour to sort out the issue of IDT so an amicable decision can be reached. She said the Interim Board wasted money somehow, applying for legal opinion on a matter already known to the Committee. She asked what measures this interim board has in place to ensure it is a functional board according to presentation and governance.

Mr T Mashele (ANC) said he was disappointed with the IDT. Instead of receiving a report, the Committee received an overview of what happened in IDT. If the Minister told the Committee about dissolving the entity beforehand, the meeting would not have been necessary. He shared the sentiments as the other Members about the document the Committee received. The Committee was not told what the Department was doing regarding dissolving the entity.  He asked why the Minister was quick in dissolving the entity without informing the Committee about the failures of the entity over the years.  He asked why there were turnaround strategies if it could not be implemented.

Co-Chairperson Mmoeimang said the two entities placed the Committee in a better position to understand what was taking place. There was a concern over the understatement of the strengths and weaknesses of ASA in its SWOT analysis. He asked the Chairperson of ASA to reflect on these challenges and asked how it is going to respond to it. He shared his concerns over the Annual Performance Plan, and the withdrawal, and statements.

Mr M Tshwaku (EFF) referred to Ms Siwisa’s questions, and said most of his questions were asked. He said the Minister of Human Settlements was currently building temporary structures to combat COVID-19, with this said, he wanted to find out what role ASA played in this project. He also asked what the industry is doing and has done so far. He wanted to find out about the certification involving the SABS and if this work was carried out by National Home Builders Registration Council (NHBRC). Regarding the IDT, he said the Committee wants to have a look at the asset register.

Chairperson Ntobongwana shared her concerns over what was happening in Human Settlements. She asked if this was not the perfect time to implement the innovations of ASA, during this period of the pandemic, since Human Settlements began its work on building structures. It is the responsibility of the Minister to influence her colleagues to use the innovations of these entities.

Regarding the IDT, she said the media was at the forefront of receiving information before the Committee. It was concerning to see the Committee was not taken into the Department’s confidence. She reprimanded the Minister about the matter of the reports, saying it was wrong. The Chairperson further shared her concerns over the interim board. She asked if it is a solution to drive infrastructure development. She thanked everyone for the opportunity and handed over to the Minister.

Minister Response

The Minister said where the Department and entities could not respond, a written response will be given. Minister de Lille said ASA was established by an active Parliament in 2015. The interaction with the entity was through the active Parliament. The IDT was established in 1991 on a founding trust document. A board was established together with judiciary duties of the board of IDT.

Minister de Lille said to understand why the entity was being dissolved, it was important to observe the founding document of 1991 and the basis on which it was found. The Minister referred to the new Public Audit Amendment Act of 2019, and said the Department will wait on the Auditor-General to do the audit of the entity. The Department will be guided by the findings and recommendations of the audit.

Minister de Lille drew the Committee’s attention to the question posed by the National Council of Provinces (NCOP) about the process. On 18 May 2020, the Minister wrote a letter sent to, amongst others, the NCOP, and cc’d in the Chairperson of the Select Committee of Transport and Public Administration, Public Works and Infrastructure, the Deputy Minister of Public Works and Infrastructure, as well as the Director-General of Public Works and Infrastructure. In the letter, she, the Minister, gave an explanation of the non-submission of the Strategic Plan and APP of the IDT. The Minister said what she could do was give the Chairpersons of the NCOP and the National Assembly (NA) the deadline of the submission of the APP and Strategic Plan for engagement. The original meaning unclear.

Looking at the points made by the Chairperson of the National Assembly, Minister de Lille said she will try to pull up responses from the media, and allow both the NA and NCOP, together with the media, to engage on the reports. If there was any perception the Minister was trying to ignore the Portfolio Committee, it was certainly not the intention. Minister de Lille said she had to look at the billion Rand investment government made into the IDT. She said she could also provide the interaction of the correspondence with IDT starting from 30 August 2019, a few months after her appointment as Minister. There are a number of reports about the IDT, from Committees, made prior to her appointment as Minister. This is not an excuse and she is prepared to engage with the Committee on this matter.

Regarding the issue of monitoring and evaluation, Minister de Lillle said the Director-General was on the line with the role-players who interact very closely with all the entities within the Department. The Department works very closely with these role players. The Department had no answers, but will reply in writing to this query. With the permission of the Chairperson, Minister de Lille asked to hand over to the chairperson of ASA to reply.

The ASA chairperson said he will try to combine the responses where possible. He agreed with Mr Thring that the slides only replied to one priority. However, there are other links to human settlements, education and health, as well as skills. In the future, the entity will add other links to other priorities to show it is not only focusing on one priority. Regarding the relationship between the South African Bureau of Standards (SABS) and NHBRC, the chairperson said he wanted to highlight the relationship the entity had with these cooperatives, to make the roles clear. SABS is the writing standard authority, the responsibility of SABS is to write standards and the SABS developed the South African National Standards. Before 2007, SABS had the role of writing standards and regulating the industry, and those roles were split. This is why there is now the SABS and the National Regulator for Compulsory Specifications (NRCS). SABS is now not relevant and its only role is to write standards for the conventional building materials, where its behaviour is understood.

This is also in line with the rest of the world. ASA deals with the assessment and certification of products where those assessments are not available. Regarding NHBRC, it is in the home building industry. It regulates and protects housing consumers. Its role is to ensure the protection of consumers and its focus is on implementation. These three entities are linked. One is a writing standard, the other provides certification of products, the last one protects consumers, and regulates and implements.

ASA will be involved in the Equilibrium Certification process. The first target will be on public service buildings, where it will ensure compliance. ASA has already developed performance requirements.

In 2015, ASA was under administration of the Council for Scientific and Industrial Research (CSIR). It had to become an independent organisation and had to recruit more people into the organisation. Through the Equilibrium Certification project, the entity was trying to generate more income for operational costs. ASA was not visible. It is trying to be more visible and is looking into partnering with more organisations.

Regarding equity, there is a balance in gender equality in the organisation. The weaknesses are not mentioned because it was converted into opportunities. The entity will take into cognisance some of the weaknesses mentioned.

Replying to the question of temporary accommodation, the chairperson said ASA worked closely with NHBRC and Human Settlements.

An ASA official responded that ASA currently has 380 posts. ASA received 10 applications for certification. The certificate will be withdrawn where there is no compliance. ASA is not a profit making organisation, and is not charging too much for certification. It is looking into other income revenue streams.

There is a marketing plan in place but it has not been able to execute it because of budget constraints. The current global pandemic has seen a 25% reduction in the budget for the 2020/2021 financial year. ASA appointed someone in a post for social media marketing, to increase the entity’s visibility.

Responses by DPWI and IDT

The APP was submitted to the Department on 28 February 2020. Currently, the staff complement is 217. About three years ago, the staff complement was around 400. The plan to protect employees will be addressed by the Acting CEO, as it is in the Exit Strategic Plan. Staff will not be disadvantaged and have been assured of this. The Committee heard the contract with the former CEO came to an end at the end of March.

In terms of governance, the entity put out advertisements in the last year for the position of Board Members. The process has come to a halt. The Board operates as three members. This is in no way by choice. It is something which happened over time.

Measures were put in place, along with a team of independent members who serve as an auditing and risk committee. These members initially resigned, and following an interaction with them, were reinstated to assist with achieving good results in the current and past financial year. Many of the decisions were taken in the task team where a number of issues were discussed.

Mr C Lombard, the Acting CEO of the IDT, apologised for not being present at the beginning of the meeting and said it was because he had connection problems.

An official from the Expanded Public Works Programme (EPWP) said 340 Non Profit Organisations (NPOs) were contracted and appointed by the IDT. One withdrew because it did not like the conditions set. It left the entity with 339 NPOs. These were reported in the system by the end of the financial year. There are only 339 active NPOs in the 2019/2020 financial year. The reported budget in the system is R594.8 million. The reported budget expenditure by the end of the financial year is 83%. The target for work opportunities is 554 000 for the financial year. The IDT achieved 71 000. This information comes from the annexures prepared by the Department of Public Works and Infrastructure.

Follow up Questions

Ms Siwisa went back to the issue of dissolving the IDT. She said in the previous presentation relating COVID-19, it was presented there are two specific facilities being refurbished. The report says IDT will be in charge of the refurbishment. She asked who did those refurbishments for the two entities. She also asked what the way forward is with other facilities.

Ms Siwisa referred back to the CEO statements about the Interim Board. She asked under whose budget it was going to take place. She shared her concerns about monitoring and evaluation in the entity.

Mr Thring said he echoed the Committee’s sentiments about hearing information from the newspapers and other media outlets. This must not be something that is repeated.

Mr Tshwaku said he respected the Minister for abiding by the law. The Committee must provide oversight over the Executive. The same is true for the Department by the Portfolio Committee. The Minister must ensure the statements are similar when it goes to Parliament.

Ms van Schalkwyk said there was no answer regarding ASA’s vacancies.

Co-Chairperson Mmoiemang asked for clarity on the submission of the report, as two dates were mentioned. He asked the letter be read to the Committee.

The Chairperson said, due to time constraints, she will ask the Secretariats of the Committees to send the letter to the Committee instead of it being read.

Mr Brauteseth asked if the Committee could be given a timeline regarding the report expected.

The Chairperson thanked the Minister and the two Chairpersons from the entities. She asked the Secretariats to distribute the letter and highlighted the letter was not withdrawing anything. However, it informed about the late submission. As the Committee playing the oversight role, it cannot be the case for information to be out in the public and the Committee has no knowledge of it. The Chairperson asked for a written submission of the list containing NPOs who are part of execution, and figures of the budget spent. She handed over to the Minister.

Responses by the Minister

Minister de Lille said the Department was willing to be held accountable. It is not trying to undermine anyone. For this reason, on 18 May 2020, the Department wrote to the Chairperson of the NCOP and the Speaker of Parliament. Minister de Lille said the Speaker referred back to her request on 21 May 2020.

What follows is to wait to hear the due process from Parliament. It cannot respond immediately, and will do so in writing. The Department said it will provide the Members with this. She asked Members to respect her Office and to pose questions in writing - she will correspond that way. The Minister said she was not prepared to answer yes and no questions and handed over to the Deputy Minister and the two Chairpersons to address any questions and give comments.

Deputy Minister Kiviet said it took eight months to realise IDT was a problem. The APP was drafted during the elections. There was no way it would have known what was drafted in the Plans. As such, it had to go with what was stated before it. According to the board, it was said, a board could only operate with less than eight members. The exception was in the confines of law. The lifeline of the current board was up to September 2020. She was a Speaker for two terms and had great respect for the work conducted in Parliament. In no way is the Department undermining the Committee.

The Chairperson said time is against the Committee. However, she wants to address the matter mentioned by the Minister, saying no one was disrespected and the Committee has every right to pose questions in the meeting. No one will be apologetic about asking questions.

The meeting was adjourned.

Audio

No related

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: