The Committee, in the presence of the Minister and Deputy Minister, was briefed by the Department of Public Works and Infrastructure (DPWI) and the Property Management Trading Entity (PMTE) on their 2019/20 Fourth Quarter Financial (Cumulative) and Non-Financial Performance. The five programmes of non-Financial performance of the DPWI and the PMET were introduced to the Committee. The targets for the DPWI showed 100% targets achieved for management, inter-governmental coordination and professional services; and 58.8% of its quarterly overall performance outcome in the 4th Quarter. The PMTE achieved a 50% overall performance outcome in the 4th Quarter.
Members were disappointed to hear that among the risks for the DPWI was inadequate service delivery leading to the erosion of the Department’s mandate, and breach of key legislation prescripts, acts, regulations and policies. The Department’s total expenditure as at the end of March 2020 was R5.7 billion and equivalent to 98% of the total budget allocation of R7.9 billion. While the DPWI was commended for 100% for targets of full compliance of invoices settled within 30 days and creating 994 699 work opportunities; 36% of the funded prioritised vacancies filled and “lack of capacity” as a reason for its inability to develop its Public Works Bill mildly dampened the commendation. Members found the under-performance on the Construction Project Management programme shocking coupled with their concern about the ‘only’ 49% of lease agreements entered into with landlords. Members asked why was there a 10% reduction in accommodation charges for freehold-private property.
Of grave concern was underspending (in this case R42 million) and irregular expenditure. Members questioned saying: ‘the planned budget was R193 million but the Department spent R427 million, how is that underspending’? Members said that the irregular expenditure baseline was not good and the explanations provided were also not convincing. The Minister explained that the DPWI had made tremendous progress in curbing irregular expenditure, and were reminded that irregular expenditure amounting to R 34 billion had now been significantly reduced. The Department explained further that irregular expenditure to which the presentation refers are those transactions that did not have supporting documents. The Department has now begun a process to identify irregular large payments made to service providers. Due to the large quantity of such payments, the irregular expenditure amounted to R114 million for the DPWI and R1.7 billion for the PMTE. The Committee was assured that the Department is detecting irregular expenditure and referring fraud cases to its corruption unit. The majority of irregular expenditure in the system was those without documents. Members felt that the Department needed to disaggregate Irregular Expenditure and the DPWI was committed to do this
Members asked who was investigated and ‘Are these people still being employed at the DPWI’? The Member recalled an incident in which those that were under investigation were found to be employed by the Department. When the Department was interrogated, it came up with a response by providing a list of names which did not include those under investigation. In light of that, Members questioned the credibility of this report. They insisted on answers on those people being investigated and where they were now.
The Committee commended the Department on the 900,000 jobs created in the Expanded Public Works Programme and said that it has always been the objective to encourage the DPWI to employ more people to help them ‘put food on the table’ especially important under COVID-19. Members did however question why currently there was no accreditation for those skills given that the EPWP is a programme that trains its participants.
Members asked how the DPWI recoups funds from its client departments for the work that it does on infrastructure. Members heard that the responsibility of the recovery of funds from client departments lay with the National Treasury. The Department had approached the Treasury around February but it took long for the Treasury to respond because the current priority for the Treasury is to tackle the lockdown budget reprioritisation. Given Treasury’s important role in serving as the link between stakeholders and client Departments on budget allocation, the Department needed to hear their response first. The request that the Department has made was twofold: first, it requested Treasury to allocate an infrastructure budget exclusively to the DPWI; second, the DPWI needed Treasury to reference the budget for accommodation charges. . So now the outstanding amount due to the DPWI from client Departments was slightly above R5 billion whereas it was about R7 billion in the last quarter. Also, the DPWI has developed a billing framework which requires all client Departments to pay in advance before any work can be done. The CFO reassured the Committee that there are strategies developed to recoup funds but they will only be realised once funds are beginning to be reimbursed. Members suggested that the PMTE could use the buildings that it leased out to accommodate client departments to save some money.
Members asked about the underspending in the Prestige Policy Projects. The Department explained that the Prestige Projects consisted of infrastructural developments done at the PMTE and state functions such as funerals and presidential functions. The project that was referred to and marked as underspent was on state functions.
Members expressed concerned about the Immovable Asset Register and heard that the integration of the Immovable Asset register remains a serious challenge in the Department. The Department’s enhancement work has been ongoing and there is extensive work to be done on the project. Currently the DPWI’s Immovable Assets Register consisted of 81,573 buildings and 30,494 land parcels. The DPWI is intending to consolidate Asset Registers at the municipal, provincial and national levels. The Department is also hoping to get an opportunity to present the work to this Committee. Members heard that the underspending was apparently linked to the Immovable Asset Register as there was R50 million which was ear marked by the National Treasury specifically provided for the Department to work on the Immovable Asset Register.
On the non-achievement for the Contractor Incubation Programme, she found it unacceptable that the DPWI used lockdown as an excuse. She argued that since this is a continuous process, the Department needed to put in continuous quarterly targets. Members disagreed with the reason given to explain the under-performance on the Contractor Incubation Programme and said: ‘Lockdown had only started at the end of the financial year, so what was the Department doing prior to lockdown’?
Introductory remarks by the Chairperson
The Chairperson informed the Committee of the passing of Ms Dorah Dlamini, a Member of the National Assembly from KwaZulu-Natal serving on the Portfolio Committee of Public Enterprises. She and other Members had a moment of silence to show their respect.
The Chairperson informed the meeting attendees that virtual meetings will continue under the pandemic. She hoped and prayed that this pandemic will eventually go away.
The Committee Secretary said an apology was received from Ms S Van Schalkwyk (ANC) saying that she was feeling unwell but she was logged in to the meeting. An apology from Mr M Tshwaku (EFF) was also received. He had indicated that he was unable to attend the meeting. The Secretary noted that Mr T Mashele (ANC) and Mr E Mathebula (ANC) were not on the Microsoft Teams platform.
The Chairperson informed the Committee that Mr T Mashele had begun his exams from yesterday. He will only finish by Friday so he will not be attending any Committee meetings during this period.
The Chairperson welcomed Ms L Mjobo (ANC) back to the Committee.
The Minister’s introductory remarks
On behalf of herself and her Department, the Minister, Ms Patricia De Lille, sent her condolences to Ms Dorah Dlamini’s family.
The Minister acknowledged the need for the entire world including the South African society to now have to learn to live with this new normal under the pandemic.
She Minister introduced the Department’s delegation. She was joined by the Deputy Minister, the Director-General, the Chief Financial Officer (CFO), the Chief Director: Monitoring & Evaluation and all the Deputy Directors-General in the Department.
She remarked that it has been over a year since the Deputy Minister and herself had been appointed to their posts and engaged with this portfolio. She thanked Members for their continued support and assured the Committee of her Department’s dedication to service delivery and to put the people of this country first.
Briefing by the DPWI and PMTE on the 2019/20 Fourth Quarter Financial Performance
Adv Sam Vukela, Director-General (DG), briefed the Committee on its 2019/20 Fourth Quarter non-financial performance.
The non-financial performance of the Department of Public Works and its entity the Property Management Trading Entity (PMTE) were provided to the Committee.
Under Department of Public Works, non-financial performance consisted of five programmes:
- Programme 1: Administration
- Programme 2: Intergovernmental coordination
- Programme 3: Expanded Public Works Programme (EPWP)
- Programme 4: Property and Construction Industry Policy and Research
- Programme 5: Prestige Policy.
The non-financial performance of Property Management Trading Entity consisted of:
- Programme 1: Administration
- Programme 2: Real Estate Investment Services
- Programme 3: Construction Project Management
- Programme 4: Real Estate management services
- Programme 5: Real estate information and Registry
- Programme 6: Facilities management
The summary of the Department of Public Works in relation to its targets achieved for each programme was:
- 100% targets achieved for management, inter-governmental coordination and professional services
- 66.7% of its targets achieved on finance and supply chain management and on prestige policy;
- 60% of its targets achieved for Expanded Public Works Programme
- 33.33% of its targets achieved for corporate services
The Department of Public Works had 58.8% of its quarterly overall performance outcome.
The 4th quarterly non-financial performance for PMTE is:
- 100% of PMTE’s targets achieved on Real Estate Investment Management;
- 83% of its targets achieved for Finance and Supply Chain Management;
- 67% of its targets achieved on Planning and Precinct Development;
- 50% of its targets achieved on small harbours and coastal development, real estate and facilities management;
- 25% of its targets achieved on real estate management
- And 11% of its targets achieved on construction project management.
The PMTE had a 50% overall performance outcome in the 4th Quarter.
The top five risks of the Department of public works and for the Property Management Trading Entity were identified and provided to the Committee.
For the DPW, those risks were:
- Inadequate service delivery leading to the erosion of the Department’s mandate.
- Breach of key legislation prescripts, acts, regulations and policies (e.g. PFMA, GIAMA, etc.).
- Lack of good governance to ensure accountability by the public works sector including entities.
- Untransformed built environment disciplines, construction industry and the property sector.
- Credibility of EPWP eroded due to non-adherence to EPWP prescripts by participating and/or implementing public bodies.
For the PMTE, those risks were:
- Inadequate service delivery leading to the erosion of the Department's mandate;
- Inadequate maintenance and safeguarding of State assets.
- Inadequate delivery of national Government priorities.
- Weakening financial viability and sustainability of PMTE.
- Inabilities to maintain a reliable and accurate immovable asset register (IAR).
Mr Mandla Sithole, Chief Financial Officer, DPWI, took Members through the 4th Quarter financial information for the Department of Public Works and Property Management Trading Entity.
The Department’s total expenditure as at the end of March 2020 is R5.7 billion and equivalent to 98% of the total budget allocation of R7.9 billion. The variance between expenditure and the drawings amounted to R147 million. The variance (1.9%) between drawings and expenditure is detailed below per economic classifications:
Compensation of employees’ expenditure as at the end of March 2020 is R503 million, and the expenditure is equivalent to 90% of the budget allocation of R557 million. Against the drawings of R557 million, R54 million remain underspent at the end of the financial year, and the variance is due to delays in the filling of posts prioritised for filling because of the moratorium and those vacated in the current financial year.
Goods and Services’ expenditure amounts to R365 million and is equivalent to 81% of the budget allocation of R452 million. Against the drawings of R452 million, the expenditure is equivalent to 78% (or R87 million positive variance). The variance between drawings and actual expenditure relate to low spending in Programme 1 (communication, computer services and office accommodation items), 3 (outsourced services item) and 5 (state functions).
Transfers and subsidies expenditure for the financial year ended March 2020 is 100%, and all transfers including conditional grants were in full compliance to conditions of the transfers.
Machinery and equipment expenditure as at the end of March 2020 is R18 million, and the expenditure is equivalent to 75% of the budget allocation of R23 million. Against the drawings of R23 million the expenditure of R5 million remains underspent and the under spending is linked to delays in posts prioritised for filling including higher than projected spending for Prestige Management.
The underspending of budgets on compensation of employees, goods and services, capital infrastructure expenditure and machinery and equipment for the PMTE were explained to Members.
Mr W Thring (ACDP) welcomed the DPWI’s 100% for targets of full compliance of invoices settled within 30 days.
He found the irregular expenditure at the Property Management Trading Entity (PMTE) unacceptable and urged the Department to use consequence management to address that.
He asked how 83% could be regarded as targets achieved when the targets for percentage of quotations awarded within 30 days from the requisition date was at 90%.
He found the 36% of the funded prioritised vacancies filled as per the approved recruitment plan shocking and unacceptable. The moratorium in place does not address the unemployment in the country. The DPWI needs to think in the context of the unemployment bottom line.
He criticised the Department for not having finalised its asset register.
On behalf of the ACDP, he commended the Department for having created 994 699 work opportunities. He further called on the Department to try to convert these works into accredited skills acquired by the participants.
He found it unacceptable that the Department gave “lack of capacity” as a reason for its inability to develop its Public Works Bill. The lack of capacity situation in the Department cannot continue.
He found the under-performance on the Construction Project Management programme shocking. He highlighted the important role that the construction sector could play in transforming the unemployment situation in South Africa.
He expressed concern over the 49% low percentage of lease agreements entered into with landlords.
He expressed concern about the under-performance in reduction in water consumption. He urged the Department to explore innovative ways and shifting to clean renewable energy.
He enquired about the reduction of accommodation charges freehold-private property: why was there a 10% reduction in fees collected?
He enquired about the under expenditure of the Department. 'Why is there huge under expenditure compared to the previous financial year’?
Ms M Hicklin (DA) said that she could not accept that only a feasibility study has been done on the Integrated Immovable Asset Register. She stressed the importance of the register as it served to both inform the Property Management Trading Entity to plan maintenance work, and for the Committee to plan its budget.
On the Expanded Public Works Programme, she expressed concern about its R42 million underspent expenditure. It shows a lack of cohesive and concerted effort to ensure that contractors fulfil their obligations. She asked if the Department has any plan to ensure that non-compliant contractors are not allowed to return to the programme. She also asked if there are any processes to ensure the upskilling of EPWP workers given the unemployment situation. It is concerning that only 1054 jobs were created out of the 2000 targets.
She indicated that the performance on construction project management shows poor workmanship and late approval issue. She asked if the Department has a system to identify those contractors who perpetually deliver poor performance to ensure that they not to be used again.
Construction projects on slide 27 there are challenges Department is doing to ensure quality control. There should be mechanisms in place to flag those under-performing contractors. She suggested a register that would indicated that a particular contractor would not be used again
She expressed her confusion on the underspending on the Prestige project. ‘The planned budget was R193 million but the Department spent R427 million, how is that underspending’?
Mr E Mathebula (ANC) appreciated that the DPWI is addressing the corruption issue head on. He commented that it is something that has been going on for years in this Department and described it as a “destructive weapon to deny people service delivery”.
He remarked that the Department’s 1% 4th quarter performance on percentage change in the irregular expenditure baseline was not good. The explanation provided was also not convincing. One of the explanations provided is that the Department is still waiting for the National Treasury’s (Treasury) approval. He understood that some issues needed to be referred to the Treasury, but there are some other issues that the DPW could surely pick up themselves. The issues that can be resolved within the Department itself should not wait for the Treasury’s instructions. He understood that not all irregular expenditure was lawful, but can the DPWI provide the Committee with a report to identify what expenditure was unlawful?
On tender awards to designated groups, he was uncertain about which designated groups because there are quite a few in ‘designated populations’ and the Department has only achieved one target. He resented aggregating designated groups. He would like to see more designated groups being considered and included in future reports.
He recommended that government precincts need to be focused on bringing government to rural areas. He emphasised it because that is where people need the government the most.
On the Immovable asset register, he commented that there was no indication on the register. He asked the Department how many immovable assets the DPWI has. This issue has been going on for a while, but the Committee still has not received a favourable and satisfactory report so far. It is concerning that billions of rand have been spent on assets in the past few years. He urged the DPWI to inform the Committee about whether it has the capacity to carry out the work or otherwise it must tell the Committee so that the Committee could assist.
He raised concern about the poor performance on unscheduled maintenance incidents. He commented that although the Department has given lack of control systems as the cause for that, the Department did not include its proposed plan of action to address the issue. In fact, the whole report is full of those inconsistencies. Sometimes a solution is included in underperformance but other times no solutions are provided.
He commended DPWI on the improvement in its spending which has gone from below 60% to 70%. He encouraged the Department to keep it up.
On behalf of the ANC, he commended the DPWI on the 900,000 jobs created in the Expanded Public Works Programme. It had always been the ANC’s objective to encourage the DPW to employ more people to help them put food on the table. This is particularly important under COVID-19.
Mr M Nxumalo (IFP) commended the DPWI on its job creation under the Expanded Public Works Programme. He pointed out that the EPWP is a programme that trains its participants so that they can graduate into the labour market with skills. However there is currently no accreditation for those skills.
He asked how the DPWI recoups funds from its client departments for the work that it does on infrastructure. He further asked what mechanism the DPWI uses to make projections on maintenance.
Ms A Siwisa (EFF) enquired about who was investigated. ‘Are these people still being employed at the DPWI’? She recalled an incident in which those that were under investigation were found to be employed by the Department. When the Department was interrogated, it came up with a response by providing a list of names which did not include those under investigation. In light of that, she questioned the credibility of this report. She wanted to know who were those people being investigated and where they are now.
She made reference to leasehold and state owned accommodation charges and asked the Department why it could not use the buildings that it leased out to accommodate client departments to save some money.
On the non-achievement for the Contractor Incubation Programme, she found it unacceptable that the DPWI used lockdown as an excuse. She argued that since this is a continuous process, the Department needed to put in continuous quarterly targets.
Ms Siwisa enquired about the selection method for the Department’s non-profit organisations (NPO). She requested the Department to provide a list of all the NPOs registered in the Department’s database. She further asked about the Department’s plan to advance the programme and people’s interests.
She commented on the summary expenditure per economic classification saying that it clearly shows the lack of monitoring and evaluation at the Minister’s office. If there is a lack of an internal audit now, she wanted to know what other measures are in place to close the gap.
She said that she was still waiting for the Department’s response and plan on how it planned to recoup money from its client Departments
She noted that the mandate of the Department did not show the integration of infrastructure and the Department. ‘All the things that presenters were talking about were around the Department of Public Works, where is the part on infrastructure’.
Mr P Van Staden (FF+) agreed with other Members and expressed his grave concern that the 6th Administration has been in office for one year now and nothing has changed much. It looks like the performance of the Department has not improved but regressed.
He drew the Committee’s attention to the DPWI’s Investment in properties and buildings and urged the Department to look after them. He commented that the presentation does not show the Department’s dedication to its investment and hoped that it could in future have some sort of financial sustainability from the investment.
Ms S Graham (DA) reminded the Department that they might have made a mistake on the 83% achieved against the 90% targets on percentage of quotations awarded within 30 days. The Department has not achieved its target.
She asked the Department to provide a time frame for when the Expanded Public Works Programme policy would be concluded.
She did not understand why the Department cited incapacity as the cause for its stagnation in developing and researching policies and legislative prescripts for the construction and property sectors and sought clarity on this. On incapacity she asked: ‘is that because the DPWI has not appointed the right people, or has it not spent funding on external service providers for the right kind of services’?
She enquired about the underspending in the Prestige Policy.
She sought clarity on the Emergency Procurement procedure.
She indicated that the poor performance of EPWP contractors was worrying. She said that the DPWI has a responsibility to make sure that contractors are fulfilling their roles and responsibilities.
She disagreed with the reason given to explain the under-performance on the Contractor Incubation Programme. ‘Lockdown had only started at the end of the financial year, what was the Department doing prior to lockdown’?
She enquired about the 49% under-performance of the Department’s lease renewals. Which party should be held accountable for that? ‘Are the landlords to be blamed for the Department’s under-performance’?
She expressed her concern about the 492 job opportunities created against the target of 1000 in the Fourth quarter on Small Harbour project. She emphasised the importance of letting out small harbours to create jobs which is what the country needs at the moment.
She disagreed with the Department’s perimeters for good performance. In her view, anything below 60% quarterly performance cannot be a good performance.
She said that it was disingenuous that the DPWI would brand its successful transfer to Property Management Trading Entity as achieving targets. 55% of the expenditure and 99% of the budget was spent of which most were transfers.
She sought clarity on the expenditures spent on goods and services and on Compensation of Employees. She asked further how does the Department incorporate this underspending into the White Paper which the Department should be busy drafting?
She agreed with Ms Siwisa that the Committee still has no idea where infrastructure fits into the Department. ‘Does it fall under the PMTE or under the Department of Public Works’? ‘Where and how does this budget come into the matter’? She recalled a meeting with the Department of Defence in which that Department was using the budget to build infrastructure. She urged the Department to investigate and avoid losing budgets to other Departments for fulfilling the DPWI’s mandate. She asked further what the DPWI has done to ensure that client departments have budgeted for their own repair and maintenance work in the new financial year.
She commented that DPWI should be a Department that is supposed to be profitable. Underspending was not a good thing for this Department.
Ms L Shabalala (ANC) commented that the pandemic should be a platform to present opportunity and to think out of box.
She suggested that the Expanded Public Works Programme could train and accredit some of its participants under disaster management. Also, she suggested that maybe the EPWP could consider insource construction workers since maintenance of buildings is always needed,’ would it not be better to insource these workers in the construction sector’?
She said that everyone in Switzerland has been trained in some form of disaster management and suggested that the Department look into this.
She enquired about what stage the Small Harbour Project is at in Kwazulu-Natal and in the Eastern Cape given its role to drive employment.
The Chairperson expressed her concern about the DPWI’s non-filling of funded vacancies. It has a negative impact on service delivery. She asked the Department for its plan to address that.
She asked if there is a way to recover outstanding fees from client Departments. She found that the financial state of the PMTE was unsustainable.
The Chairperson emphasised that the integration of the Immovable Asset register remains a serious challenge in the Department. The effect of being without an accurate Asset Register means that the DPWI cannot get a clean audit.
She asked how the Department budget’s for Infrastructural work done by other departments.
She expressed her appreciation that corruption is addressed in the presentation. But a detailed report was needed.
The Minister thanked Members for their inputs. She had made an inquiry into the Committee’s time slot for a briefing on the integration of infrastructure in this Department. The date has been scheduled for 30 June.
The Director-General accepted Members’ comments. He agreed that the Department needed to disaggregate Irregular Expenditure and the DPWI was committed to do this.
He responded that the Department has the information with detailed numbers for the Immovable Asset Register and land parcels which his colleague Ms Sasa Subban, DDG: DPWI will elaborate upon.
The DPWI did make a report around the investigative cases within the Department last year. He added that a further report will be provided to the Committee on the progress of these investigations.
The Director-General confirmed that the Department did make a submission on the Prestige project. The DPWI did not go ahead with some projects because the Department’s budget has to be reprioritised as well as some events having been scaled down. The DPWI’s Prestige Project and budgets are informed by client departments because they are the ones that plan and organised those events.
Mr Mandla Sithole, Chief Financial Officer: DPWI, commented on the Department’s irregular expenditure. He asserted the view that the DPWI had made tremendous progress to curb irregular expenditure. He reminded the Committee that the Department had irregular expenditure amounting to R 34 billion which has now been significantly reduced. The existing irregular expenditure to which the presentation refers are those transactions that do not have supporting documents. The Department has now begun a process to identify irregular large payments made to service providers. However, there are a lot of small amount payments made to service providers. Due to the large quantity, the irregular expenditure amounted to R114 million for the DPWI and R1.7 billion for the PMTE. He assured the Committee that the Department is detecting irregular expenditure and referring fraud cases to its corruption unit. The majority of irregular expenditure in the system is those without documents
Furthermore, he explained that the responsibility of the recovery of funds from client departments lay with the National Treasury. The Department had approached the Treasury around February but it took long for the Treasury to respond because the current priority for the Treasury is to tackle the lockdown budget reprioritisation. Given Treasury’s important role in serving as the link between stakeholders and client Departments on budget allocation, the Department needed to hear their response first. The request that the Department has made was twofold: first, it requested Treasury to allocate an infrastructure budget exclusively to the DPWI; second, the DPWI needed Treasury to reference the budget for accommodation charges. He pointed out that when the DPWI was under pressure, they would usually pay for service providers and ignore PMTE claims. The Minister had also sent a letter to ministers from other departments which have seen favourable outcomes. So now the outstanding amount due to the DPWI from client Departments was now slightly above R5 billion whereas it was about R7 billion in the last quarter. Also, the DPWI has developed a billing framework which requires all client Departments to pay in advance before any work can be done. This letter was signed by the Director-General and was sent to all client Departments. Lockdown started just as the DPWI was waiting for responses. Now that lockdown restrictions have eased a bit, the DPWI would do follow-up on that. There was also a decision taken for municipal services where a two-year transitional period was given for municipalities to get ready to pay for their municipal account. So the CFO reassured the Committee that there are strategies developed to recoup funds but they will only be realised once funds are beginning to be reimbursed.
On underspending, he explained that there was R50 million which was ear marked by the National Treasury. This fund was specifically provided for the Department to work on the Immovable Asset Register. The DPWI did not spend the money and Ms Subban will elaborate more on that.
He responded to the underspending on the Prestige Project. He clarified that Prestige Projects consisted of infrastructural developments done at the PMTE and state functions such as funerals and presidential functions. The project that he referred to and marked as underspent was on state functions.
He described the cooperation from client Departments as well-received and well-responded to but since there is no huge recovery so far, he could not comment further.
He clarified that the DPWI only leases facilities from the private sector when there was no facilities owned by the Department. He assured the Committee that more than 90% of its facilities are being used by client Departments.
The CFO also clarified that in the letter sent by the Director-General to client Departments, it was also stated that infrastructural work is part of the Department’s mandate and should be carried out by the Department exclusively.
Mr Aaron Mazibuko, Chief Director, explained to the Committee about the delays on why the Department was struggling to conclude lease renewals. He explained that when the DPWI had started this project, the lease portfolio consisted of 60% on a month-to-month basis but now it has been reduced to 12%. The 12% was caused because it is hard to obtain the landlords’ consent to get a short-term lease period which includes leases for under two or three years. This is why the Department only had a 49% achievement. Client departments dictate for the duration of the time that they wish to stay in the building and the DPWI only procures buildings for client buildings. The National Treasury does give approval for annual escalation but some landlords would aim at 8% for annual escalation but the DPWI would not be able to sign the lease. The negotiation between the DPWI and landlords is guided by the directive sent by the National Treasury that R800 million needs to be saved and the escalation rate needs to eb controlled and monitored.
On small harbours, the presentation has made reference to the project being at an advanced stage and is about to be concluded. Currently, the Department is renewing current leases but no new leases are being signed. The work opportunities created around the small harbours will be focused on youth, women and black owned small to medium businesses.
Ms Sasa Subban, DDG: Real Estate Investment Services, DPWI, responded to the question around the R 50 million underspent fund. The National Treasury allocated to the Department R150 million for a state facility domestic project to survey and to do sub division as well as to register land accordingly. The amount is planned to be spent in three years. The first payment of R50 million was received in October 2019 following which the Department had put in place relevant processes to go to tender and get service providers on board. However, it did not make the cut off line of the 2019/20 financial year which caused the under expenditure. But this project has been expedited this year and is currently at supplier chain management for approval.
She provided the Committee with more details on the Immovable Asset Register. She said that the enhancement work has been ongoing and there is extensive work to be done on the project. Currently the DPWI’s ‘s Immovable Assets Register consisted of 81,573 buildings and 30,494 land parcels. The DPWI is intending to consolidate Asset Registers at the municipal, provincial and national levels. The Department is also hoping to get an opportunity to present the work to this Committee.
She clarified that government precincts not only concentrate in urban areas but also in rural areas. The Department is well aware of the uneven distribution between urban and rural areas. So in the DPWI’s five-year strategic plan, it has outlined that the Department aims to establish 20 in urban areas and 50 in rural areas. Some of the challenges that the DPWI has met in this regard are around aligning development in rural areas with existing frameworks and to integrate the DPWI’s development plan in an integrated manner with client departments and government at the district and municipal levels.
Ms Nyeleti Makhubele, DDG Facilities Management, DPWI, responded to Members’ question on low performance in IT. She explained that the Department has acknowledged the Members’ input. The biggest issue in this respect is not what the Department does but rather on the Department’s reporting style. She ensured the Committee that her unit in the Department is working towards improvement in this regard.
Mr Clive Mtshisa, DDG Corporate Services, DPWI, responded to the filling of the DPWI’s vacancies. He commented that it was a tricky question. He asked members to recall the 99% targets achieved for the filling of vacancies in the 2019/20 financial year. He clarified that it did not mean that the Department is now making contractual appointments, but rather it was correlated to the types of events within the Department. The DPWI had come to a decision between April to June in 2019 that it would be too risky to recruit employees due to the election and decided to place moratorium on new placements. From the period June 2019 to September 2019, this was the time period that the 6th Administration began to settle in. The integration of the Department of Infrastructure - which expanded the Department’s mandate – had an effect on the Department’s targets. Currently the DPWI has set up a recruitment plan to reduce the high vacancies.
On Immovable Assets Registers, he clarified that the current project was to consolidate the provincial assets registers and the national asset register since currently provincial departments and the national department are operating on different asset registers.
Mr Batho Mokhothu, DDG Construction Project Management, DPWI, explained to the Committee the main causes for its under-performance:
- Contractors being behind in the cash flow. The DPWI is reviewing best practices available in order to provide technical support. For instance, there is provision for potentially emerging contractors to be provided with mentors to ensure sustainable cash flow management;
- Poor performance of consultants. The Department found that consultants were not very stringent and it is working with its legal services to provide some reforms in this area such as penalising consultants for non-performance;
- Under-reporting on the Expanded Public Works Programme, contractors need to be penalised for non-reporting financially;
- Contractor Incubation Programme was at an advanced stage prior to the lockdown and the DPWI needs to push it to the finish line accordingly; and
- The DPWI also experiences challenges in the supplier chain and construction environment.
The DPWI does not receive a budget for training participants on the EPWP programme. The Department receives funding from the National Skills Fund from the Department of Higher Education and Training which dictates the number of EPWP participants that can receive skills training. The DPWI does however train participants on accredited skills so that participants can graduate out of the programmes they enrol in and seek relevant job opportunities. Also, there is a unit within the EPWP called the Enterprise Development Unit where those participants who want to start their own businesses are provided with expertise, skills needed and information around access to finances.
For those participants who have been in EPWP programme for over a year, the Ministerial determination allows participants to re-apply for other projects once their current project comes to an end.
The DPWI is consulting with relevant stakeholders to finalise policy on EPWP policy.
The Minister thanked her team. On irregular expenditure, she said that she had arranged training for all senior managers in the Department through the Auditor-General’s office about the new Audit Amendment Act on 5 March this year. All senior managers were made to understand that there will be severe consequences for irregular expenditure under the new Audit Amendment Act.
The Minister assured the Committee that her Department is in the process of doing the feasibility study on both the Immovable Asset Register and Supply Chain Management procedures and will be reporting to the Committee on this at the end of the month.
In the same meeting, the Department will also be reporting on what the Department has done to integrate infrastructure into the Department as well as a report on the implementation of saving water in government buildings.
Consequent management and contract management have been implemented in the Department.
The Department has done an audit in the 6th Administration. The audit did find that a number of funded posts have not been filled but there were contract workers working at those positions. The Minister said that she had gotten permission from the Minister of Public Services and Administration to extend all the contracts to the end of December 2019 hence the process of filling those posts is a bit delayed. The posts for Deputy Directors-General for policy and EPWP had been advertised just before the lockdown. Now the Department is going to do interviews with the shortlisted candidates for these positions.
The Minister assured Members that her team would come to the Committee and brief them about the investigating cases on corruption.
Finally the Minister thanked the Committee for giving her Department the opportunity to brief them on the infrastructure issue.
The Chairperson emphasised the Department’s mandate on infrastructure: the DPWI must never allow other Departments to do/take over its mandate.
The meeting was adjourned
Ntobongwana, Ms N
De Lille, Ms P
Graham, Ms SJ
Hicklin, Ms MB
Kiviet, Ms N
Mashele, Mr TV
Mathebula, Mr EF
Mjobo, Ms LN
Nxumalo, Mr MN
Shabalala, Ms LF
Siwisa, Ms AM
Thring, Mr WM
Tshwaku, Mr M
Van Schalkwyk, Ms SR
Van Staden, Mr PA
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