The Committee met to discuss the challenges the Department of Defence faced with the repair and maintenance project (RAMP) at the 1 Military Hospital. In a virtual meeting, it also discussed allegations of corruption levelled against the former Minister of Defence and the former Secretary of Defence.
The Department reported that unauthorised and wasteful expenditure and the failure to follow procurement processes were among the misdemeanours uncovered in a forensic investigation into the RAMP at the hospital. It provided details of the work done on the refurbishment project, as well as the budget and the time frame needed to complete it. The project would take approximately 29 months to conclude. There had been a change to the initial scope of the project due to the inability of the Department of Public Works and Infrastructure (DPWI) to meet certain technical requirements. There had been no value for money, so the Defence Works Formation had taken over certain components of the project.
The former Minister of the DoD had commissioned a task team to investigate corruption allegations in relation to the RAMP. The report had made findings including the reasons for the current status of the RAMP, costs incurred from outsourcing, and irregularities in the procurement process. The executive summary of the investigation was with the current Chief of Defence, and the DoD was ready to share the executive summary as well as the complete report with the Committee.
Members expressed shock at the status of the RAMP. The project had started in the 2005/06 financial year, and although over R1 billion had been spent, one could hardly see the work done. It was apparent that some individuals had turned the project into a "milking cow." The DoD needed to provide the Committee with the report on the forensic investigation. The Committee would plan a second oversight visit to 1 Military Hospital, and all the role-players would be expected to be on the ground to provide lasting solutions to the various challenges.
An allegation of corruption against the former Minister of Defence turned out to be frivolous, at least in the interim. All attempts to extract information from the supposed whistle blower had proved futile. The Committee undertook to approach claims by whistle blowers with caution in future.
Co-Chairperson Nchabeleng welcomed Members of the Parliament and officials of the Department of Defence and Military Veterans (DoDMV) to the meeting. He said the Minister of Defence could not attend the meeting due to other official engagements.
RAMP at 1 Military Hospital
Ms Sonto Kudjoe, Secretary of Defence, introduced the DoD delegation, led by Lt Gen Jabulani Mbuli, Chief of Logistics, to the Committee. The DoD had considered and addressed the concerns and matters raised by the Committee at the meeting held on 3 June.
The Department reported that the cost of RAMP for the first floor of 1 Military Hospital stood at R567 million, as of 2019. The quantity surveyor and the architect had worked out the estimate. The DoD had incurred a cost of R52.6 million after it took over the project from the Department of Public Works and Infrastructure (DPWI).
The cost to procure medical equipment and furniture was estimated at R839 million, but this figure could vary depending on various considerations. The cost was estimated by health technologists. The DoD had paid R182.4 million for patient outsourcing in the 2019/20 financial year. It had utilised internal human resources, within their specialties and under the supervision of professionals, to accomplish certain components of the project. For example, internal personnel were deployed for the demolition of the internal walls of the first floor for reconfiguration.
The DoD had paid R2.5 million as a professional fee to the Council for Scientific and Industrial Research (CSIR) to conduct an assessment of the entire Military Hospital from January 2015 to May 2015. The DPW had transferred the Tectura professional team to the DoD in 2015 at a cost of R4.2 million. Tectura, in ongoing work from September 2015 to date, had corrected the work from stage 1 to stage 4.2(a) at the cost of R36 million.
The DoD had contracted a health technologist (DLM) for 20 months to do planning specifications for medical equipment, costing, and advising on procurement. This had cost R9.8 million in professional feed. It had paid R45.9 million for medical outsourcing in the 2010/11 financial year, R98.2 million in 2015/16, R177.8 million in 2017/18, and R182.4 million in 2019/20. The total expenditure of the DPW from 2006/07 to 2014/15 amounted to R479.2 million.
The Departments involved had finalised plans to complete the project. It would take approximately 29 months to conclude -- one month for the project implementation plan, four months for procurement of work contract packages and health technology work packages, and 24 months to complete the construction phase.
The Defence Works Formation (DWF) had concluded plans to finalise the 1 Military Hospital first floor project. However, the plans could be executed only if two outstanding matters were resolved. Firstly, the funding must be sorted out. Secondly, a lot depended on the outcome of the forensic report. The current professional team may be suspended if it was found guilty of corruption. On the other hand, the professionals may qualify to continue on the project if exonerated. In that case, the DoD would need to apply to the National Treasury to release the funds.
Ms Kudjoe said that the Former Chief of the South African National Defence Force (SANDF) had commissioned an investigation into the matter last year, and the investigation had finalised in July 2021. Officials from both DoD and DPW, as well as some contractors, had been mentioned in the report. Both Departments had agreed to assess the report and decide on the way forward. The report was currently with the South African Police Service (SAPS) for further processing. The SAPS was currently investigating the contractors responsible for the first floor, theatres and pharmacy. It would be difficult for the DoD to continue with any implicated contractors, and this could negatively affect the progress of the project.
Mr Thabang Makwetla, Deputy Minister of the DoD, shared the frustration expressed by the Secretary of Defence. The report was currently with law enforcement agencies, and appropriate actions were being taken. The main issue with the report had to do with the way it had been drafted. It was not user-friendly; the figures in the report were huge and not commensurate with the job on-site; and the report was riddled with contradictory values. For example, it was not clear whether the R567 million estimated in 2019 was the total amount required to fix the first floor, given that the medical equipment alone cost R839 million. From these figures, it could be suggested that the cost to renovate the first floor was R1.4 billion, which was huge and disproportionate to what was seen on ground. He suggested that the report be formatted more appropriately to give more clarity to the Committee.
The project implementation plan was not well-designed from the inception. The decision to use in-house resources was not in the initial implementation plan.
Co-Chairperson Nchabeleng said the outcome of the investigation would depend on the terms of reference with the investigation team. The DoD and the Committee would try to schedule a meeting to discuss the intention of the report. The Department should always submit user-friendly and clear reports to the Committee. This ensured accountability. The DoD and relevant stakeholders must prevent double dipping by the contractors. It was appalling that over R1 billion had been spent on the renovation of a single floor, yet without success. That sum of money should be sufficient to build an entirely new hospital.
Mr S Marais (DA) expressed frustration with the DoD's presentation, saying that it was not being transparent on the matter. The Committee had raised this matter for a long time without any result. The 1 Military Hospital project and the associated report reflected negatively on the image of the DoD, as well as the Committee. The Committee needed a forensic report to clearly know the truth. The matter needed to be finalised as soon as possible. This was taxpayers' money, and the DoD should be able to account for its expenditure.
He agreed with the Deputy Minister regarding the duplication of work by both departments. This amounted to wasteful expenditure which had to be thoroughly investigated. The work done on the first floor of the 1 Military Hospital, as seen during the oversight visit, was a far cry from the amount reflected in the report. He expressed concern about the medical equipment being ordered. Had any of it arrived? If not, when would it come?
The DoD and the Committee needed to plan the budget for the new financial year in order to procure items needed in the hospital. It was inappropriate for the DoD to keep presenting the same old figures to the Committee. Inflation was an important factor that one should consider when budgeting, especially for hi-tech equipment, which was very expensive. He requested the DoD to update the Committee on the current status of the radiology department as well as the equipment.
The challenge with the 1 Military Hospital was not limited to the renovation of the first floor. There as a range of other aspects, including the repair of the roof, the renovation of the seventh floor, the renovation of the radiology department and the procurement of equipment. The Development Bank of Southern Africa (DBSA) had been responsible for the renovation of the roof at some point, but this entity was not reflected in the DoD's report. What had its role in the project been? The DoD should give the Committee an indication of the start date of the project. Had the budget provided for the funds, or were there other funding sources?
Co-Chairperson Nchabeleng commented that some internal walls in the 1 Military Hospital were marked for demolition because the medical equipment could not get through. Where was the equipment currently? Was it still usable?
Mr D Ryder (DA, Gauteng) expressed displeasure with the submission of the DoD. There had clearly been no value for money in the project. The Minister needed to address the Committee on the fate of the project as soon as possible. The Committee needed direction on the matter.
Mr K Motsamai (EFF, Gauteng) said 1 Military Hospital was one of the biggest hospitals globally, but it was currently an eyesore. Nothing had been done that would justify the money spent, as had been seen during the oversight visit. This project had started around 2010, and nothing significant had been achieved. The Committee needed a second visit to assess the current situation. People had to account for their roles in the project. The Committee needed to enforce a forensic report.
Co-Chairperson Xaba agreed with previous speakers that the DoD needed to share the outcome of the forensic investigation with the Committee. The former Minister of Defence had appointed a ministerial task team to investigate the factors that affected the functioning of three military hospitals. The investigation had been scheduled to last six weeks. The report had made some findings, including the reason for the current state of the military hospitals, especially the 1 Military Hospital, such as the repair and renovation of the first floor and the amount spent on outsourcing. It was unfortunate that the 1 Military Hospital had lost its accreditation to service the Africa Union (AU) and the United Nations (UN). The hospital used to service peace-keeping forces and peace enforcement operations.
It was important for the Committee to know exactly what the project had achieved and if there had been value for money. It was concerning that the former Defence Chief and the ministerial team commissioned by the former Minister had termed the RAMP a failed project. The outsourcing component of the project was especially concerning. It was important to follow up on the Commission's recommendation that the total sum of all outstanding invoices, amounts paid for external services and private health service providers, must be added to the public market Inquiry for further scrutiny by the Competition Commission, to determine if there was value for money. The amounts reflected in the DoD's report were quite astronomical, yet there was nothing to show.
It was concerning to learn that roof leaks in the hospital threaten the renovation of the first floor. It appeared there was an intention to destroy the hospital brick by brick.
The DoD should share both the reports of the Commission and the forensic investigation with the Committee. Had action been taken against individuals and companies implicated in the reports? Were the challenges identified in the reports being addressed?
Co-Chairperson Nchabeleng expressed concern that the project had become a milking cow for some contractors and individuals.
Maj Gen Godfrey Ledwaba, General Officer, Commanding: Defence Works Formation (DWF) responded to Members’ concern on the duplication of work by the DoD and DPW, and said that the DWF had taken over some components of the project from the DPW because the entity had failed to meet some technical requirements of the project. The DWF had also come into the picture to ensure value for money. The health technologist, which was not part of the initial implementation plan, was brought in to design appropriate space to accommodate the medical equipment. The DoD had used the CSIR to conduct an assessment, because the Department had lacked the capacity. The DBSA had come into the picture as a result of the challenges experienced with the DPW. The DoD had appointed the Development Bank as the implementing agent. Tectura happened to be the principal agent of the DBSA.
The continuation of the project would depend on the outcome of the ongoing investigation. For now, it was unclear if the DoD should continue with the DPSA or Tectura. In response to Mr Marais' question on the specifics of the 29 months of implementation, he said the eventual executing agent would determine the start and the end date of the project. The DoD would do components of the construction work for which it had the requisite capacity, and the cost of the exercise would be discounted against the overall cost of the project.
The professional team, comprising the quantity surveyor and the architects, was in the best position to determine the specific costs of the various components of the project. The DoD did not have the capacity to do such estimations at the moment.
Ms Kudjoe said the current Chief of Defence was in possession of the executive summary of the investigation commissioned by the former Chief of Defence. The report had made a number of findings, especially on cases of changed scope, procurement failures and outsourcing. These three had really cost the DoD a fortune. Some of the contractors on the project had existing agreements with the DPW, so it was important that the all stakeholders, including the DoD, DPW and the Committee, sit together to discuss the way forward. The Department was ready to share the 42-page executive summary with the Committee.
Mr Marais sought clarity on the radiology department and the equipment. The data presented by the DoD on the matter appeared confusing and contradictory. The Committee also needed to know the start and end dates of the 29-month project. Did the DoD have cost estimates that cover the duration of the project, bearing in mind factors like price increases, changes in the exchange rate, as well as inflation? What was the cost implication of the DPWI being the implementing agent? Why could the DWF not be the implementing agent? It was unfortunate that the DWF did not have the required capacity, considering the enormous amount committed to the project. The DoD had not empowered the Committee with the necessary information. The DoD should be sincere on the matter in order to work closely with the Committee.
Mr Motsamai remarked that the matter was problematic. There had been absolutely no value for money. The Committee must pay a second visit to the 1 Military Hospital and conduct a forensic report so that the implicated individuals were brought to book.
Co-Chairperson Nchabeleng urged the DoD to take the Committee into its confidence and give a genuine report on the matter so that necessary interventions could be implemented before it was too late. The DoD should endeavour to provide answers to outstanding questions. It should also share the executive summary and the full report of the investigation with the Committee.
Co-Chairperson Xaba expressed his dismay at the report, and agreed with Mr Nchabeleng that the DoD had to present both the complete report and the executive summary of the forensic investigation with the Committee. The Committee should also plan a second oversight visit to 1 Military Hospital, and all the responsible parties, including the DoD and the DPWI, must be present to give account. It was appalling that there had been no value for money at all. The contractors had greatly robbed the DoD. Had the contractors perpetrated the alleged crime in isolation, or was the alleged crime committed in connivance with officials of the DoD?
Mr T Mmutle (ANC) said that the Committee should schedule a meeting with both the DoD and the DPWI. The Committee could not ignore what was happening on the project. The problem was not limited to 1 Military Hospital. The same fate applied to 2 Military Hospital in Cape Town.
Co-Chairperson Nchabeleng said all hands must come on board to solve the puzzle. The National Treasury, the Department of Monitoring and Evaluation (DPME), the SAPS and other entities in the security cluster, would need to work together to get to the bottom of matter.
Mr Marais pressed the DoD for the specific time to receive answers to outstanding questions, as well as the forensic report.
Ms Kudjoe said the answers and forensic report would be available in the second week of September.
Deputy Minister Makwetla urged the Committee to give the DoD sufficient time to consider the report first, in order to tackle the matter in a coordinated manner. The Ministry needed a full understanding of the history of the project so it could forge a way forward with the Committee.
Co-Chairperson Xaba agreed with the Deputy Minister's proposal. The Committee would interact with the DoD on the matter in either the third or fourth week of September.
Co-Chairperson Nchabeleng said the third week would be more appropriate. The Minister of the DoD, as well as other role-players, must be present at the meeting.
Report on investigation into alleged corruption against former DoD Minister
The Committee had commissioned a task team to investigate corruption allegations levelled against the former Minister of the DoD and the former Secretary of Defence. The report had been due at the end of August.
General Bantu Holomisa (UDM) had played an important role in handling the whistle blower.
Members expressed frustration with the attitude of the whistle blower, who at the eleventh hour had decided to withhold necessary information due to an alleged breach in confidence. Committee Members suggested the whistle blower could rather speak through a lawyer, or possibly alter the voice with technology to maintain anonymity. All efforts to get information from the whistle blower had proved futile.
Members concluded that the whistle blower's claim was not genuine, and decided to drop the matter. However, the case could be resuscitated if there was serious evidence that could stand scrutiny in a court of law.
Mr Mmutle urged the Committee to be cautious with claims from whistle blowers. Frivolous claims could permanently stigmatise the victims. He suggested that the former Minister could have been a victim in the matter, and the allegation might have played a role in her redeployment from the Ministry.
Adoption of minutes
Mr Marais moved the adoption of the minutes of 26 August, without amendments. Ms Beukes seconded.
Co-Chairperson Nchabeleng said the Committee would follow up with the Ministry and get every stakeholder to participate in the next discussion, in order to conclude the matter successfully.
The meeting was adjourned.
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