Expenditure on consultants, outsourced services & slow spending trend under Compensation of Employees, Goods, and Services; with Minister

Public Works and Infrastructure

10 November 2020
Chairperson: Ms N Ntobongwana (ANC)
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Meeting Summary

The Department of Public Works and Infrastructure (DPWI) presented its 2020/21 mid-year financial performance to the Committee in a virtual meeting, with a focus on the compensation of employees and its expenditure on goods and services. The presentation covered the changes that had taken place in the budget adjustment process, the shifting of funds between different programmes, and its procurement plans. The Minister provided additional information regarding the establishment of the Infrastructure Department resulting from the reconfiguration of government.

Questions were posed regarding the high vacancy rate in the Department, and how the secondment of experts from the private sector would work. The continued presence of a large number of officials in contracted positions was highlighted as an issue, given that it reduced stability in the Department and side-stepped the proper procurement processes. The number of ‘acting’ positions also concerned Members, and an update was requested regarding the appointment of the permanent staff members, such as the Deputy Director-General (DDG) position. They asked why the process of appointing the DDG had not been followed in accordance with the regulations of the Department of Public Service and Administration (DPSA).

The Committee asked for clarity regarding the status of the Independent Development Trust (IDT), given that it continued to receive budget allocations. The low first and second quarter spending was highlighted as concerning, given that in the past ‘fiscal dumping’ had occurred toward the end of the financial year. The under-expenditure in the Expanded Public Works Programme (EPWP) was particularly worrying, as it was aimed at bringing relief to the poorest of the poor in the country.

The low ratio of females to males within the Department was highlighted as an issue, given the demographics of the country. Questions were also raised regarding specific budgetary items, such as the sources of funding for Infrastructure South Africa, the National School of Government and South African Airways.

Meeting report

The Chairperson said the Committee would deal with the issues that related to the expenditure of the Department of Public Works and Infrastructure (DPWI), especially on the programmes that the Department was budgeting for. At the last meeting, when the report of the first quarter was presented, they had found that the Department was not spending on some of the programmes that had been budgeted for. The Committee had requested a breakdown as to why there had been under-expenditure on some of the goods and services.

Ms Patricia de Lille, Minister of Public Works and Infrastructure, communicated apologies on behalf of the Deputy Minister who was representing them on a Cabinet Committee, and the Acting Director- General, who was representing the Department at a disciplinary hearing in the bargaining council. She said those in attendance were Mr Mandla Sithole, Chief Financial Officer (CFO), Mr Clive Mtshisa , Deputy Director-General (DDG): Corporate Services, Ms Carmen Joy Abrahams, Acting DDG: Expanded Public Works Programme (EPWP), and Mr Thabo Tladi, Supply Chain Management Director for Infrastructure,.

DPWI midyear expenditure review

Mr Sithole handed over to Mr Aaron Mazibuko, Chief Director: Financial Management, DPWI, who presented the 2020/21 mid-year financial performance on the compensation of employees (CoE) and goods and services. The presentation covered the adjusted estimates of national expenditure, mid-year financial performance, the CoE expenditure analysis, the expenditure on goods and services per programme, the expenditure on consultant business advisory per programme and the expenditure on agency-outsourced services per programme. 

Funds amounting to R149.713 million had been moved within and between programmes, as well as between and within the same economic classifications through virements and the shifting of funds approved by the National Treasury and the Accounting Officer. Included in the virements was the funding allocated to the Independent Development Trust (IDT), funds reprioritised for the establishment of Infrastructure South Africa (ISA), with the shortfall offsetting over-spending on the Commonwealth War Graves Commission transfer expenditure.

Funds shifted between votes/departments had amounted to R278.580 million, of which R234.280 million had been approved for transfer to the Department of Public Enterprises (DPE) for financing South African Airways (SAA). An amount of R44.3 million was approved to be transferred to the National School of Government (NSG) for financing the budget deficit to meet its operational obligations. Appropriation of expenditure earmarked in the 2020 Budget speech for future allocation amounted to R45.694 million in budget reductions.

An amount of R181.023 million had been declared as unspent funds, and would be surrendered to National Treasury. The declared amount was related to the savings realised under the funds declared on transfers to the Property Management Trading Entity (PMTE), machinery and equipment, the Construction Industry Development Board (CIDB), Agr─Śment South Africa (ASA) and the Council for the Built Environment (CBE), due to planned activities that were halted during the nation-wide lockdown.

The government had identified infrastructure investment and implementation as one of the lead sectors in the reconstruction economic recovery plan following the severe economic recession and the Covid-19 pandemic. South Africa’s infrastructure investment plan, as approved by Cabinet on 27 May, would result in a sharp focus on skills development and training throughout the skills pipeline. Twelve special projects had been gazetted as strategic integrated projects (SIPs), in terms of the Infrastructure Development Act No 23 of 2014, paving the way for an overall infrastructure-led economic recovery, job creation and training opportunities within the construction sector.

On 21 April, the President had announced a R100 billion fund for job protection and creation. DPWI had submitted final proposal to National Treasury on 26 August, and on 5 October it had been granted an amount of R158.880 million, linked to the 2020/21 financial year cycle. The Department’s beneficiaries’ recruitment had been aligned to the district development model (DDM), with a total number of 2 084 short term opportunities being identified.

The Department had developed, approved and was currently implementing a recruitment plan to facilitate the filling of funded vacant positions by 31 March 2021. A portion of the projected under-expenditure had been reprioritised towards funding the establishment and capacitation of the ISA. The Department was fast tracking the procurement processes and appointment of the services providers to ensure improved deliverables and to ensure funds were spent by the end of the financial year.

The Department was also ensuring the service providers were paid on time, and that the spending was aligned to the current financial year. The Department had implemented consequence management for managers not duly complying with the processing of payment within 30 days.

Minister De Lille provided additional information regarding the establishment of the Infrastructure Department because of the reconfiguration of government. While they were setting up this Department, they had proceeded with the project preparation for the implementation of the infrastructure plan that had been adopted by the Cabinet at the end of May. They had brought in technical specialist support from the Presidential Infrastructure Commission (PIC) technical task team, as well as about 40 seconded from the private sector to assist. The creation of the Department had taken a bit of time, because they had had to work with the Department of Public Services and Administration (DPSA), which had finally signed off the structure at the end of September.

Thereafter, the Department of Public Service and Administration (DPSA) together with the DPWI, had to create job descriptions and evaluations. That had been concluded, and they had started advertising to fill those posts over the last week. They had targeted the Sunday newspapers and the government website. They hoped that by the end of the financial year, they would be able to bring professionals from the built environment on board, so that they developed the internal capacity of Department. While they were doing that, the implementation of the plan was proceeding, with the help of seconded members of the private sector and the Presidential Infrastructure Coordinating Commission (PICC) technical task team.

Discussion

Ms L Shabalala (ANC) raised the issue of the timing of the communication of the presentation document the night before, which was not enough time to engage with it. She expressed concern about the vacancy rate, given the current socio-economic situation in the country post-COVID-19. She asked what the vacancy rate was, and if the entities were included as well. Had the DPWI been able to spend the allocated budget for research? She requested that they be practical in considering whether it was possible to spend the allocated amount by the end of the year. Goods and services were the catalyst to mitigate the inflation caused by COVID-19. Job creation, goods and services and the filling of vacant posts should be prioritised by the Department. Outsourcing of consultants was also a concern, given the number of vacancies. She requested clarity regarding the budget allocation for the State of the Nation Address (SONA), given the current economic situation.

Ms M Hicklin (DA) expressed concern regarding the yearly spending pattern. There was low budget spending during the first three quarters of the year, and a ‘massive rush’ to ensure that the budget was spent in the final quarter, to ensure that the budget was allocated the following year. They were seeing exactly the same trend now. Things were being shrouded by ‘COVID-19.’ The problems posed by COVID-19 were very real, but the DPWI was supposed to be the job creation arm of government. This was their mandate -- to facilitate projects, specifically for the poorest of the poor. Those jobs were created through the Expanded Public Works Programme (EPWP).

She said she was ‘immeasurably concerned’ by the low amount of budget that had been spent by the EPWP. They had not empowered people enough through the EPWP programme. This was one of their most important programmes as the DPWI. They needed to get the programme up and running properly, even if this involved more time being spent in empowering the non-governmental organisations (NGOs), so that their reporting structures were better. This would enable the national Department to spend the allocation appropriately, not in the last three months of the yearn but throughout the year, with the purpose of achieving job creation and putting food on the table of those who were desperate.

She expressed concern regarding the Prestige Programme, and questioned whether it should be prioritised, given the current socio-economic situation. They needed to look at relieving the suffering of the country. She restated the importance of their role in Parliament in providing for the poorest in the country. Vanity projects should be put on hold, and the allocated money should be re-prioritised to ensure that starving people ate and were no longer referred to as ‘starving people.’

Ms L Mjobo (ANC) highlighted that the Minister’s team was largely made up of males. She suggested that the Minister prioritise females in positions, as the majority of the South African population was female.

Mr P van Staden (FF Plus) referred to slide 21, and asked what the reason behind the 11 service terminations was.

Ms A Siwisa (EFF) referred to the presentation’s statement that money had been moved to assist the Department of Public Enterprises to bail out SAA. Did the DPE not have its own budget? She asked why this had been done, given that the DPWI was already struggling. She said it seemed as if everything was going to be blamed on COVID-19, although there had ‘always been a mess in the Department.’

Ms S van Schalkwyk (ANC) expressed concern that the presentation had been sent to them the day before at 4:00pm. This had made it difficult for the Members to engage with it properly. This was not a new issue, although there had been some improvement in the recent past.

She said it seemed as if they had a Department ‘full of actors,’ with respect to the ‘Acting’ DG and several ‘Acting’ DDGs. They could not have effective service delivery to the people when they only had people in ‘acting’ positions. How did the Department plan to ensure that the full-time positions were filled, specifically senior and middle management positions? She was aware that there were many contract positions -- people who were working on contracts that were continually renewed for years, without being full-time employees – and said that they could not have a situation like this. In the current climate, they needed some swift action by the Ministry to ensure that they had full-time positions. What was the current vacancy rate? How many people were the in ‘acting’ positions? How many people were on contract? How did they plan to ensure these people were employed full-time?

She expressed concern about the low expenditure -- less than 50% -- on goods and services, and the overall expenditure performance and compensation of employees and goods and services. She referred to the money that was predicted to be unspent towards the end of the financial year, which was being surrendered to Treasury. Given that they were complaining at the end of each quarter that they did not have enough money, she was concerned about the areas of low expenditure, where they were predicting that they would spend the money. These were areas where only 30% of the allocated funds had been spent by September, yet they were anticipating being able to spend the rest of the allocated budget by the end of the financial year. Were they then not looking at fiscal dumping? Was this money going to be allocated correctly?

She referred to slide 31, where it detailed the expenditure on consultant services. Why were they using consultants? What did it entail? Did the internal auditors have the capacity to fulfil their duties? With reference to programme three, what did ‘5.8 million in terms of technical support’ entail in terms of labour intensive methods? She referred to the Minister’s reference to 40 people being seconded from the private sector, and requested a proper explanation as to what that entailed -- who was paying for those people, and the salaries they were looking at.

Mr W Thring (ACDP) referred to slide 14, where it showed a 26% expenditure on goods and services, and a 30% spending on machinery as at 30 September. He suggested that these low percentages had a snowball effect on the rest of the economy. This money could have been used to help stimulate the economy. The low percentage spending negated what the President was trying to do in terms of the reconstruction and recovery of the economy. They had declared unspent funds of R181.023 million and 158.8 million, which had been sent back to National Treasury. This would have a negative effect on the economy. He stated that it had the potential to cause the loss of more jobs, where money could have been pumped into the economy. Within this constrained economic environment, it was unforgivable that they were not using the money to put food on the table for those who were economically depressed.

He referred to slide 17, dealing with policy, research and development, which was at a mere 19%. He said that this entrenched South Africa as a poor investment destination. When they invested in research, it had the potential to lift the economy and give the country a competitive advantage. When they spent so little on research and development, they lost their competitive edge.

He said that ‘not paying service providers on time,’ should never be an item on the agenda. The time for talking about consequence management for not paying service providers on time, was over. Consequence management should already have been implemented. How far were they in implementing the plan to reduce under-expenditure? Why was it that they could not source the necessary skills here in South Africa?

Ms S Graham-Mare (DA) echoed the sentiments of Ms Van Schalkwyk about receiving the documents so close to the scheduled meeting. Within the document, there was a lot of shifting of money, and it had been hard to keep track of where it was going and how it was being used. She was concerned about all the shifts, given that they were the only Department that did not vote on an adjustment budget. They were not given enough time to interrogate the document, nor enough information to make proper inputs on what they were being told during the meeting.

She referred to the 40 people from the private sector. Who was paying for them? At what cost? Where were they based and where were they working? Had they moved into the Department’s buildings? Were they working in the DPWI, or were they working within their own companies? Were they dealing with DPWI information -- was this allowed? How was this being managed?

She commented that in every presentation they received different allocations to the IDT. They had signed off on a budget at the beginning of the year, and there had been a certain amount allocated to the IDT. Presently, it was in a state of paralysis. It was unable to generate its own money because of the decision to close it down. They had been told in May that there would be four tranches of R21 million paid to the IDT, totalling R84 million, to assist them with operational costs. She had asked on several occasions whether that had happened. At the last meeting, they had been told that around R72 million had been paid to the IDT, and now there was R128 million allocated to it. She requested clarity regarding how much the Department had funded the IDT, and why. What amount was the IDT able to generate on its own, despite the issues it was facing? Where were the funds for SAA, the Department of Public Enterprises and to the National School of Government (NSG) being taken from? What impact was that having on the budget of the Department? What areas were being cut in order to make those tranches?

At the beginning of the year, the budget that they signed off on had included no funding allocated to Infrastructure South Africa. Where had that money come from? How was it that they were now funding a whole new Department when no funds had been made available at the beginning of the year? What impact was this having, and where was it coming from? Surely, that money had already been allocated to other projects?

The R158.8 million for the presidential employment intervention was a new allocation that had come from National Treasury. The condition was that they confirm each milestone, and it needed to be reported on. Would the Committee be getting those reports? Would it be given full details as to how that R158.8 million was being spent, and where?

The Chairperson told the Minister and CFO that she had appreciated the presentation. Moving forward, the Committee expected to receive presentations and reports, as they needed to support and oversee how the budget would be implemented. She echoed a number of the issues raised by other Committee members, and reiterated that the documents needed to be communicated to them well in advance of the presentation. There had been some improvement in communicating these documents timeously in the recent past, but the communication timeframe for this meeting had been very disappointing.

She commented that there had been a number of shifts of money that the Committee intended to follow-up on. She requested clarity regarding issues relating to the budget items which were unclear. They needed to compare a number of items with what they had been given earlier in the year, to check exactly what had happened. The Minister had mentioned that there would be employees seconded to the newly added branch in the Department, including some specialists. She wanted to check whether the 40 that had been mentioned would be specialists, and if they going to be paid by the Department, or whether they would be paid by the companies from which they would be seconded.

DPWI’s response

Minister De Lille apologised that the documents had been received so late. She had been checking up on the situation in the recent past, to ensure that the documents would be with the Members at least 72 hours before the time. Again, there had been a slip-up, and she would investigate the reasons for it.

She responded to a question raised by Ms Shabalala on the projected spend for the SONA. For the past two SONAs, they had cut the budget substantially. It did not mean that the full R5 million would be spent on the SONA. She did not think that they would have a full SONA in February -- that was just the projected spend. The Department and CFO could give more details.

She agreed with Ms Hicklin about low budget spending during the first two quarters, and then the increased spending during the third and fourth quarters. They had reported to the Committee on the first and second quarter expenditure, and were about to finish the third quarter spending at the end of December. She suggested that in early January, as soon as Parliament reopened, they could report on the third quarter. Some of the shifting that the Members were seeing had resulted from the assessment of the first and second quarter spending, when they could see that some of the projects would not be completed within the financial year. They had shifted some of the money to projects where they could spend the money.

The point made by Ms Hicklin on the EPWP had been very relevant and true. The DPWI was the conduit to pass the money to the municipalities, provincial governments and the non-profit sector. The week before, she had given a report to another inter-ministerial committee, where she had a list of all the provinces where the spending was low. Some provinces were at between 15% and 18% of their expenditure. What the EPWP did was to withhold the next tranche of money until the first tranche of money was spent. The reporting on the EPWP spending also left a lot to be desired. Every single year, there would be an audit query from the Auditor-General (AG), because the AG would go and do spot checks on the beneficiaries. This financial year was no different. There had been a query by the AG. When they failed with EPWP, they were taking bread and butter from people who did not have jobs. The whole EPWP system had become a bureaucracy where things moved very slowly.

There had been an Acting DDG for the last few years. They had finally advertised the post and gone through the interview process, and the qualified candidates had been sent to DPSA, which did all the final security checks. After having gone through the process to appoint two candidates -- one for the EPWP and one for Policy and Research -- six months later, they had received a letter from the DPSA which had stated that they had not followed due process in terms of the procurement regulations, and therefore the process for the post DDG had to be started over. There had also been some points raised with regard to the DDG for Policy and Research, but they had been able to clear that up, together with DPSA. The Public Service Commission (PSC) had tracked these processes and had also sent some queries to them about the procedure, which they had to answer to. Six to eight months later, they had not filled those two DDG posts.

With regard to the acting positions, every time the Department requested her to allow for an extension of an acting DDG, she would always state in the submissions that it was only approved for six months, and the post should then be filled permanently, only to find six months later that the same request would come. She had now said to the Human Resources (HR) Department that they could not continue to have people acting permanently in those positions. She commented that they did have some challenges there. The DDG for HR and Corporate Services should also account to the Committee about the problems they were facing.

The Prestige Programme’s budget had been reduced. They had been engaging with the presiding officers around the Prestige projects. Many of those projects had been conceptualised in 2006, as she had observed when she had looked into the history of removing the asbestos unit. They would take advice from the Committee Members, because it impacted on the Members, their living conditions, and living in an asbestos house was not safe at all.

She agreed with the Committee regarding the dominance of males in the Department. In filling the posts, both she and the Deputy Minister agreed that they needed to have a bias towards bringing in more females. She commented that this was a general trend in government as a whole. They had a plan to bring in more women into senior positions.

All departments had been requested to make a contribution to the R10.5 billion required for SAA because National Treasury had not been able to raise that funding from commercial banks. Part of the R10.5 billion would be used for the retrenchment of workers, specifically the retrenchment packages. They had been told that this was the last restructuring before SAA created a new entity, a new airline.

With regard to the question about the R234 million transferred to the DPE, she requested that the CFO and members of the finance department answer this question.

Responding to a question raised by Ms Graham-Mare about the R158 million, she said this was part of the economic stimulus package from the Presidency. She offered to provide a full report to the Committee. They had advertised in early October, and were currently busy with interviews, which would create 1 067 posts.

The Department continued to fund the IDT because they had to minimise the impact on service delivery. They required permission from the National Treasury, as they had reported two weeks previously to the Committee, as the support to the IDT was conditional, subject to Section 49 and 38 of the Public Finance Management Act (PMFA). The contracts for all the professionals and the core of the IDT had been extended until the 31 March 2021. They had ongoing processes with IDT which had been discussed at the DG’s Forum and the Economic Cluster the week before. The following week it would be discussed at the Cabinet Committee. She hoped that they could then get a ‘Cab Memo,’ considered by Cabinet.  IDT had not closed down. The options available to the IDT would be discussed by Cabinet, where a final decision would be made.

She agreed on the issue of continuous contract renewal, saying that it was not fair for the people working in the contract positions as they also had expectations. She suggested that the DDG could respond to that issue.

She said the 40 people seconded by the private sector were not paid for by the Department -- they were professionals who were part of eight working groups. They were time specific, i.e. four hours of work, and were not reporting full-time to them and were not coming to the office on a daily basis. They were experts from the multi-lateral development banks and commercial banks, as well as other technical experts in the infrastructure delivery value chain. They had retired professionals who were being seconded by the private sector institutions. ISA had a component of delivery management, and the technical and financial side of that working group was a combination of the expertise within government and the Presidential Infrastructure Coordinating Commission (PICC) task team. All of those officials were working together. They had a full-time secretariat within ISA to coordinate the 40 professionals and how they worked within the working group. It was on a needs basis -- when they needed specialist advice, such as from a property economist or land economist, they could draw on this expertise. They were not being paid by the Department -- the Department only paid the secretariat that was coordinating them.

Policy and research was another example where they had had an ‘acting’ person for almost two years. That was one of the posts they had hoped would be approved by Cabinet before the end of the year. It had gone through the DPSA processes and the Public Service Commission process, which was driven by the Minister of the DPSA, who would finally take it to Cabinet.

Mr Sithole addressed the question relating to under-spending and the shifts within the budget. He acknowledged that there was a tendency to blame COVID-19, but it was a reality within the Department. They were all learning from this.

In the last financial year they had been able to spend about 98% of their entire budget. The shifting of the budget had been the result of Treasury asking them to declare the amount they were likely not to spend, given that in most departments’ spending would be affected, and the country was not doing well economically. They had done this twice, firstly to shift money, and then to reduce the budget in anticipation that they would not spend their full budget.

Consequence management was being implemented. There were more than 42 officials, including regional managers, to whom the DG had sent letters asking why they should not be charged for not paying service providers within 30 days, and they were awaiting their responses. A lot of actions had been taken. He had had weekly meetings with all the regions to make sure that service providers would be paid within 30 days. They had to report to the Minister on a weekly basis, and there was a lot of emphasis placed on that.

He said that the internal audit did have the necessary capacity, but at the year-end there was a lot of pressure. There were specific requirements that the audit committee expected internal auditors to fulfil on projects, so they needed the services of some accounting firms so that they could deliver on their mandate. He emphasised that the AG placed reliance on the internal audit, because of the quality of the audit that the internal auditors carry out.

Mr Mazibuko started by responding to the questions about the NSG and SAA. He referred to the shifting of funds, and said R18 million had been adjusted from programme one, and R225 million from programme three, which was the EPWP. R34 million had been adjusted from programme four. In terms of the economic classification, the R44 million that had been adjusted under goods and services had gone to the NSG. The balance of R234 million was the money that had been provided for SAA, made up of R34 million from departmental agencies and accounts, and R200 million from the non-profit institutions.

He referred to the reprioritisation section of the presentation, the funding for the establishment of the ISA. He referred to slide 18, under programme one, where the last sentence showed that they had implemented R9.2 million from programme one as reprioritisation, which had been moved to programme four to provide funding for the compensation of employees. This money was projected to be under-spent.

He then referred to slide 28, which gave clarity as to how much money had been moved from programme five. Expenditure at the end of September had been R2 million, or about 10% of the adjusted budget of 20.4 million. The original budget allocation had been R47 million, and the net amount of R21.7 million was the result of the adjustment process. Part of the adjustment had moved to programme four, while R11 million was provided to assist ISA.

Mr Mtshisa said he had deliberately asked his Corporate Services team to attend so that they could begin to experience the kind of challenges and pressures they received, not only from this forum, but from the Ministry. The main vote and the programmes under discussion consisted of 683 positions and 84 vacancies -- a total of 767. The vacancy rate was 11%, which was 1% above the norm set by the DPSA. They were unsure whether they could fill the 84 vacancy positions as a result of the adjustment, and stay within the allocated budget. They had gone through an elaborate process to determine the priorities of the various branches and units, including the regions, to ensure that they remained within budget. That process had been concluded, and the recruitment plan had been presented to the Executive Committee to be taken forward. At best, that work could have culminated only around June/July in terms of finalising recruitment.

There had been a report about the 11 people who had left the Department over this particular period. The Committee had wanted to know who these people were and what the reasons for their departure were. There was one person who had passed away, two resignations, two dismissals due to disciplinary processes, one retirement, and four transfers. This was for the period between the beginning of April and the end of September. The vacancy rate and the report about the vacancies did not include entities, as the independent entities reported separately.

The Department had prioritised the inclusion of gender balance and persons with disabilities in the filling of high level positions. The advertisement indicated that the Department would display bias in favour of female candidates and persons with disabilities. There was a drive from the Department to ensure that they met these targets. The recruitment section within the Department had engaged with each of the units in order to ring-fence a certain number of vacant positions that had to be set aside to be filled by female candidates and persons with disabilities.

Since COVID-19, there had been earnest desire to drive the recruitment programme. One of the challenges that they needed to get around was the inclusion of each of the units into the recruitment process. The HR unit could only do so much from a support point of view. It was important that each of the critical role players came to the party. He referred to the CFO an example, who had personally led the recruitment process from the side of finance. He had been able to fill all his critical posts during the period that was affected by the COVID-19 lockdown. His last selection process had taken place the week before. The Department was currently a beehive of activity to ensure they contributed to the recruitment process.

Minister De Lille made two additional comments before the Committee Members posed further questions. She offered to make additional reports available to the Committee, including the procurement strategies that they had implemented, with the procurements and tenders. This outlined where they had subjected 105 procurement processes and 70 tenders to due diligence. This was part of their anti-corruption strategy. The second report was about the opening up of the national Bid Adjudication Committee (BAC) to the public, to ensure transparency. Some of the departments and regions had opened up since last year November. She remarked that it was a bit of a struggle to get the proper venues, where people could come and observe the procurement processes. The rest of the regions had started to implement the opening of the BACs to the public from 1 April 2020. She offered to provide that report as well.

She had also received a report of the briefing on the work being done by the International Labour Organisation (ILO) to the EPWP, to describe exactly what service they provided and where they could provide this to the EPWP. The report seemed to suggest that they were providing assistance with policy development, skills and capacity development, and some technical support to the EPWP on provincial roads. They also provided research support and advocacy support for public employment programmes. She offered to submit this report to the Committee. 

Additional questions

Ms Hicklin said that her ‘head had shot bolt upright’ when she heard the Minister say that yet again there had been problems in terms of the process not being followed in the appointment of the DDG. How was it possible that yet again they had a situation where due process had not been followed with the appointment of a DDG? She needed to raise this with the strongest condemnation that she could.

She referred to the supplementary development of the EPWP programme. They constantly spoke about what support they were going to be giving to both provincial and local legislators regarding assistance to NGOs, to ensure that they compiled their records correctly and fulfilled their obligations. They had to make it a priority, in the same way that ISA had suddenly found the ability to have 9 764 people appointed to do specific jobs. The DPWI needed to appoint one human being who would be able to effectively drive training in terms of the EPWP compliance. Until they did that, they were not going to achieve their objectives.

Ms Shabalala asked about the procurement plan. When one aimed to spend money in a short space of time, without fiscal dumping, one needed to have a clear procurement plan. She heard that the vacancy rate was at 11%, but she was concerned that if they included the entities it would be much higher. She asked where they were with regard to the Construction Industry Development Board (CIBD) that had come to the Committee and made a presentation which had been endorsed by the full Committee. Were you going to blame that on COVID-19 too?

She said it was very concerning that they had not followed the correct procedure in appointing the DDG. Was the DDG already at work? Should that individual be taken out? Should they re-start the process? They needed to do research with the Public Service Commission to understand such issues. No one had anticipated this from the Department. The only way they could achieve an economic recovery was to have a stable and professional Department. She was happy to hear the Minister state that they would discuss the matter of the appointments. The trend in the Department to renew contracts should not be the status quo, as stability was required. The issue of contracts had to do with livelihoods, with human rights and the dignity of each individual.

The Chairperson expressed concern about the mid-year budget expenditure. There were programmes that had spent only 3% to 7% percent of their budgets. Even if there were reasons for this, it was worrying. The reason the Committee had requested this presentation was because they could see after the first quarter that there was going to be a challenge.

In the response to programme four, regarding policy and research, nothing had been said about the public works deal. She suggested that the Minister ensure that in this term that deal would see the light of day. The new ISA branch had to be assisted properly, and when you hear that nothing had been said about that programme, then one gets worried. She requested that clarity be provided regarding the private sector seconding. Who were these people? What were their functions going to be? She understood that there was a structured team of technocrats that was going to be there. The Committee wanted to see the names. They did not want to see that white males were being seconded for those positions, as there were many young black female engineers out there. They could demand from the private sector that they wanted females. They could not continue bringing in white male personnel into the new Department.

DPWI‘s response

Minister De Lille said she had received a letter just yesterday from the DPSA as to why the DDG post had not been approved, and why the recommendation could not be tabled before Cabinet. She offered to share this letter with the Chairperson. It had indicated that there was non-compliance with a regulatory requirement in support of the recruitment process. She quoted from the letter, where it stated that ‘the Department was advised to conduct a job evaluation, as per DPSA Circular 31 of 2020, to ascertain the relevant requirements for the post, and thereafter re-advertise the post.’

She referred to the question posed by Ms Shabalala, and said the Department had attempted, from the beginning of the financial year, to ensure that what went into a budget when requesting an allocation, was tender ready. They must not request money and then still have to go and do an environmental impact assessment (EIA) or any other regulatory process. There were over 1 000 initial projects that had been submitted with requests for funding. She had sat with the Department and they had looked at what they had to do to deliver in terms of their annual performance plan. They had reduced the number of projects to just over 220 projects. They had attempted to put projects on the budget that they knew would at least be completed. There was a tender demand plan. Right upfront, before the financial year started, the tender demand plan had been there. What the Department then had to do was to prioritise the tenders to make sure that the big ones went out first. She said the tender demand plan could also be made available to the Committee.

The issue of building a capable state was one of the key priorities of the sixth administration. People liked to talk about a developmental state, and a developmental state had to be delivered by the public service. Had they made sure that the public service understood and internalised that the Department wanted to build a developmental state?

They had learnt many lessons with the establishment of the Infrastructure Department. They had had to look at many projects all over the country that were unfinished or had not been concluded on time. There were valuable lessons they learnt from that process, so that they would avoid the pitfalls of the fifth administration when delivering infrastructure. They had had to look at the whole pipeline, the value chain, where it started. That was why they had invested more money into project preparation so that one could pick up the problems before the projects started. National Treasury had allocated R440 million towards assisting the DPWI to make sure that they did proper project preparation. That amount was not enough, which was why they had had a project preparation round-table the week before. They had selected 25 projects for which they need funding, over and above the R440 million from National Treasury, and had pitched that to the international community. That was why the Deputy Minister and the Minister had not been at the meeting the week before. In the end, the capability of the state was tested, especially now, when they had to do things differently and more quickly. There were major weaknesses within the system that needed to be addressed.

She referred to a question raised by Ms Shabalala, relating to contracts. She was in agreement with the Committee Members that they should not have contract positions in addition to the staff establishment. It was an easier process to bring a person in on contract than to advertise that post. Right at the beginning of the financial year, they had sat down with HR and looked at all the departments, where they had 30 to 40 vacancies. They had more people on contract than what was supposed to be in the staff structure. This was a work in progress. She had had a discussion with the DDG Mtshisa, and they would speed up the issue of recruitment. She refused to appoint further ‘acting’ positions, but the administration would operate with the ‘acting’ positions until they filled them permanently. They would deal with the issue of all the additional contract staff in the staff establishment.

She said the Department was biased towards women because the built environment industry was very male dominated. Part of the first phase of the roll-out of the infrastructure investment plan was to bring in as many women as possible. They would report to the Committee regularly, on a monthly basis, on the progress with the implementation of the infrastructure investment plan. This was key for the whole economic reconstruction and recovery plan of government.

Closing remarks

The Chairperson said that as much as they appreciated that the added branch imposed a new responsibility, the socio-economic challenges that have arisen through the Covids19 pandemic and the state of the economy, needed to be prioritised in the country. The Committee knew that the infrastructure investment plan was the road to achieve that. However, this did not mean that all other responsibilities should be shifted or neglected.

The Committee could not accept an apology from the Minister regarding officials who were not doing their work. The Minister should not have to apologise because the Department had not appointed a service provider to deal with the regulations. The Minister needed to push the Department more. It had been indicated that some of the things discussed would be completed by the end of the year, and the Committee would follow-up on this. The fact that programmes were spending less meant that the officials were not doing their work. ISA could not take on everything that should be done by the Department.

She requested the Minister to follow-up on the HR issues with the DPSA. The reality was that the post of the DDG for the EPWP should be filled. The EPWP was responsible for the most vulnerable of society, who were the majority of the population of South Africa. That needed to be sorted out and they needed to ensure that it was up and running. Those adverts needed to go out, once everything that was highlighted by the DPSA had been corrected.

She thanked the Minister for the frank responses and the presentation. Any further issues or questions from the Committee would be communicated in writing to her. She acknowledged that the Minister would be making a statement on the infrastructure investment plan and the recovery plan in the Assembly, and. that all the parties would be responding to it.

Minister De Lille concluded by assuring the Committee that the Department would continue to support the Development Bank of Southern Africa (DBSA), the Coega Development Corporation (CDC) and the IDT as implementing agencies. ISA was not taking over the role of the implementing agencies.

The meeting was adjourned.
 

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