DPWI 2021/22 Quarter 1 & 2 performance; with Ministry

Meeting report

The Chairperson welcomed the Minister and Deputy Minister. The Committee was meeting for the first time after a devastating fire had destroyed Parliament that stood as a symbol of hope for many South Africans. This event is even more devastating for this Portfolio Committee as the buildings of the state belong to Public Works which has to ensure they are in good condition and are serviced and maintained.

Part of the Committee programme was to deal with a most important Bill, the Expropriation Bill, and ensure that it will see the light, be presented to Parliament and be discussed by all.

Introductory remarks by Minister
Minister Patricia de Lille said she was joined by the Acting Deputy General and other Deputy Director Generals. The much needed report about the Parliament fire will be handed over to the Committee and they are awaiting a date from Chairperson to brief the Committee.

DPWI and PMTE Quarter 1 & 2 performance
Acting Deputy General, Mr Imtiaz Fazel, said the presentation reflects DPWI performance and its financial performance for the first six months.

Mr Lwazi Mahlangu, Deputy Director-General (DDG): Governance, Risk and Compliance, spoke to the performance indicators and achievement against targets for the first two quarters. He went through each of the 11 programmes, with five in DPWI and six in Property Management and Trading Entity (PMTE).

Mr Aaron Mazibuko, Chief Director: Finance, DPWI, and Chief Financial Officer, Mr Mandla Sithole, presented the finance report (see document).

Mr Fazel made reference to the DPWI initiative to improve performance by convening a legotla over three days. The Audit Committee participated as it was involved in examining DPWI weaknesses that prevented it from achieving its targets. This assisted in developing a strategy for the underperforming areas to develop catch up plans for the last quarter of the financial year.

The Minister provided an update on the Draft Public Works Bill and apologised for its delay due to problems with the drafter. However, the state has appointed a senior counsel to assist DPWI to complete the draft and it will be made available before the end of the financial year.

The Minister also updated the Committee on the Lanseria Smart City development. The Greater Lanseria Master Plan (GLMP) is being concluded with the Gauteng provincial government with a R30 million contribution. A full time project management unit via the DBSA has commissioned to drive the implementation. The waste water treatment works tender is planned to go out in the first quarter of 2022/23 and a special purpose vehicle has been established to drive project financing.

Discussion
Ms S Graham (DA) raised a concern about DPWI programmes that a lot of the service delivery reports and assessments are done but the decisions stemming from these are not shared with the Committee. In the presentation some slides show a cumulative quota for both quarters and others show individual quotas for each quarter. Why there is a difference in reporting?

Ms Graham noted Slide 7 gives a provincial capacity building report and how this translates into change in the province. North West is under administration and it appears there is a lack of capacity that is not addressed. How does the Provincial Capacity Building Programme actually translate into a change in service delivery in the province and what is the measurement of success. “Where do we see what the results are for the capacity building that you have done?”.

On several occasions the presenters used Covid-19 as an excuse such as on Slide 12 Property and Construction Management. “I’m sorry I don't think Covid-19 is an excuse anymore there are projects that are being delivered on time within budget by departments.”

For her, the issue is around project management and this is costing money, credibility and affecting DPWI’s ability to deliver services to the people. She also expressed concern about the payment of consultants who are not managing the process. Some consultants were hired five years before the project started and are still being paid two years after the final project handover. “Why are we paying consultants what are they there for and why are they not doing what they should be doing in ensuring we are completing projects in time and on budget?”

Ms Graham said the delay in lease renewals end up costing DPWI more money. She highlighted the importance of improving lease management to ensure DPWI gets value for money. The lack of facility management is also a very big problem given. Look at what happened to Parliament. Fire safety is a priority for the DPWI facility management programme. Will it ensure that every single state owned building is now fire safety compliant going forward?

Ms Graham said municipality rates and services were not being paid by DPWI. She gave the example of Port St Johns Municipality where DPWI owes the municipality a substantial amount of money. She asked for a comment from the Minister about the refurbishment of heritage buildings. How does the private sector benefit from doing the refurbishment and handing the building back to DPWI?

Ms A Siwisa (EFF) asked for clarity about the reasons for the dispute with some clients over money. She said DPWI should not see budget underspending as a positive because it is not a positive sign and shows that it does not know how to spend its money. She had expected a report about the success of maintenance plans and how the buildings are already maintained instead of hearing about plans to still maintain. She asked about the GBV shelters and where they will be placed.

Ms Siwisa asked about Telkom Towers and if SAPS is going to be moved from there. She asked for a breakdown of rental buildings and their owners. She asked for the reasons DPWI did not recruit enough people with disabilities and from the LGBTQI+ community to work in the Department.

She noted in the presentation that DPWI does not check compliance in the first three quarters but only at the end of the financial year and that is why it gets positive amounts. Monitoring compliance needs to happen each and every quarter.

Mr W Thring (ACDP) asked how many buildings DPWI was leasing from the private sector and what was the target to reduce those leases, especially buildings that are standing empty or need to be refurbished. He asked for the date when Telkom Towers would be ready for occupancy. He spoke about underspending and how it would contribute to an increase in unemployment if funds allocated for vacant positions are not used.

Mr Thring had concerns about the low targets reached for Machinery and Equipment. This impacts on the buildings owned by DPWI that are either condemned or are considered inhabitable but continue to be used nonetheless. This is a recipe for a disaster and DPWI will once again receive a negative audit outcome in the PMTE. Should this happen again, people must be held accountable.

Ms S van Schalkwyk (ANC) referred to the four main programmes that did not reach their expenditure threshold meaning that there is huge under expenditure especially on compensation of employees. This recruiting challenge happens each and every year. What impact does not filling these vacancies have on service delivery in each programme. What plans does DPWI have to solve this?

We need to have a solution once and for all to deal with this. DPWI must find a solution for youth employment and have real skills development initiatives to ensure youth employability.

Municipal services are not being paid as a result of not being compatible to the Division of Revenue Act (DORA). Measures need to be in place to ensure provinces and municipalities are better equipped to deal with their compliance challenges with DORA. She asked which provinces and municipalities are guilty of this so proper measures can be put in place.

Ms van Schalkwyk welcomed the effort to reduce consultants as this is a concern that the Committee had raised and requested DPWI address. She is happy with the efforts made to deal with this.

On preparation for future Covid-19 waves to avoid low expenditure on PPE provision, she asked if plans are in place to ensure that if Covid-19 stats increase, DPWI is ready to deal with that.

She emphasised the need to decrease debtors and having a debt collection function with dedicated staff to collect revenue and avoid having outstanding debt.

Mr E Mathebula (ANC) thanked DPWI for work well done. He raised his concern about ethics and fraud as DPWI still had to appoint this committee. Ethics is very serious not only DPWI but for the whole government. It really worries him that a department that has existed from the dawn of democracy is still putting plans in place to appoint an ethics committee.

He asked why DPWI did not provide percentages for their performance. If it has not done anything, it should put zero and let the Committee assess that but it should not leave it blank.

On capacity building and intergovernmental coordination, he asked what capacity building DPWI referred to. He commended DPWI for tackling recruiting capacitation graduates and he wanted more information about what exactly this meant. He disagreed with the statement that the youth are not attracted to the Expanded Public Works Programme (EPWP). There are high levels of unemployment and DPWI should do its job as he cannot see an unemployed youth passing up a lawful job.

The Committee is not happy about the saving of R29 million by DPWI due to delays in filling of vacancies. These delays mean that the person meant to be hired to do a certain job has not been. How does this affect DPWI? What percentage do these unfilled vacancies represent?

The municipal services from 2021 and this year as a result of ongoing disputes is a concern because of the high amounts. DPWI has not managed to resolve this. He asked how DPWI plans to deal with this and to provide timelines.

Ms M Hicklin (DA) spoke to the facility management contract renewal. These renewals do not come as a shock and is something that DPWI should know about well in advance. It is important that preparation steps are taken before a contract expires for client departments not to suffer as a result of the inefficiency and failures of DPWI. The PMTE has now become a property managing entity. They are not able to charge for services as the clients are not being serviced correctly. That is the biggest problem that PMTE is facing because it is not honouring its obligations to its clients.

The presentation noted that two of the nine provinces had incomplete immovable asset registers. Ms Hicklin asked which provinces are those. There are so many pieces of abandoned land that are National Department of Public Works land and not Provincial DPWI land that people want to purchase. This can bring money to the National Department which needs to be capitalised.

Ms L Shabalala (ANC) referred to the EPWP saying that the main focus of the Committee is job creation. It is important that DPWI diversify and with the lack of youth employed, this diversity will not be possible.

Ms Shabalala experienced network challenges but managed to ask for feedback on refurbishment which needs to come with a maintenance plan. She requested the name of the properties to be refurbished; what job is going to be done; and how many subcontractors will be hired so the Portfolio Committee can be aware. The involvement of private companies and the high rates they charge takes away from local economic development (LED) as no one locally will make money.

The Chairperson appreciated the DPWI report on Quarter 1 and 2 performance, noting that there were some improvements while there are areas that need to be looked at properly.

However, the Chairperson stated, ”I don't want to lie, Minister and DG. I am worried about the PMTE. I think that we have raised this several times.” DPWI must develop a tool that will enable it to collect debt from clients departments that owe PMTE.

The Chairperson agreed with Committee members about the unfilled vacancies because of the impact it has on service delivery.

The Chairperson told DPWI that it must understand that the EPWP is the only hope for many disadvantaged people out there especially women, young people, the disabled and now we have another sector which is the LGBTQI+ community.

It concerns her that DPWI can present that it understands EPWP yet it allow departments and municipalities to get away with not reporting as required by DORA. What is it doing to ensure that departments and municipalities report as expected.

Minister's response
The Minister said she shares the concerns Members raised about PMTE as its account is always in overdraft. Three months ago DPWI appointed a PMTE acting head and with this assistance DPWI was able to do a deep dive on what PMTE is about and what it is supposed to do. Her concern arose based on the fact that 76% of the DPWI budget goes to PMTE. DPWI cannot get an unqualified audit due to the audit findings on leases and the immovable asset register.

DPWI then discovered that when PMTE was established it was based on a decision taken by Cabinet and National Treasury. At the time PMTE was given six conditions to meet before it could become a fully established entity and operate as an entity. However PMTE never complied with four of those National Treasury conditions. As a result the Minister has sought legal advice if PMTE is a real entity and how to deal with it.

On the facility management concern, Finance is projecting that at the end of the fourth quarter DPWI will be overspent by R224 million. However she disagreed with this and put a stop to this projection.

On refurbishment, the private sector plans to put in money to fix the entities and in return they would like to do the facility management and maintenance. DPWI is now in discussion of putting the policy in place.

The Minister addressed the lack of a clean audit. This was the result of PMTE. They are making attempts to resolve this by developing a road map for leases together with the Audit Committee.

On the GBV shelters, DPWI has made available 16 additional properties in Kwazulu Natal, Free State, Northern Cape and Mpumalanga. Together with the Department of Social Development (DSD), DPWI has done inspections of the properties and is now awaiting approval from DSD.

The Minister noted that out of desperation DPWI turned to the Directors General of all departments about the outstanding municipal debt owed by client departments and it also reports on this debt to Cabinet.

On the recruitment of graduates, DPWI has a programme and has awarded 43 bursaries. These bursaries allow the students to become interns once they graduate as young professionals.

In closing she noted that she is prepared to present on the deep dive information and the research done on PMTE to the Committee. She asked Members to flag any private companies that are having problems with their government leases and she will provide feedback.

DPWI response
On recruitment, Mr Clive Mtshisa, DPWI Deputy Director General: Corporate Services, replied that there are no major problems in appointments to positions below Senior Management Service (SMS). The biggest challenge is at SMS level. Therefore DPWI has displayed a particular bias in SMS positions ensuring diversity in management both for gender and people with disability.

Mr Mtshisa noted that from 21 April 2021 to date in 2022 DPWI advertised and filled 298 positions of which 94 were internal candidates. He pointed out that hiring internal candidates does not decrease vacancies and it does not have a positive impact on the vacancy rate. However, he assured Members that DPWI is more drastic now about filling vacancies as well as ensuring that they continue to increase gender equality at SMS level.

Mr Lwanzi replied that DPWI has identified 20 problematic leases and are assessing the leases with SIU looking at the negligence of internal officials. As a result, in the first or second quarter of 2022/23 it should be able to present to the Audit Committee the requested progress on the problematic leases. DPWI is also looking at a comprehensive approach on how to deal with the entire portfolio of leases to lessen problematic leases.

Mr Lwanzi shared that by the end of Quarter 2, most programmes had reported increased diversity in gender and youth. DPWI is also working with organisations that represent people with disabilities to get more people into the programme.

Transfers to province and municipalities were withheld due to lack of compliance. DPWI monitors that on a monthly basis to see what has and has not been reported. According to DORA the province and municipalities are supposed to report and give their monthly financial performance to DPWI.

In the cases where municipalities have not been paid, DPWI has engaged directly with the accounting officer and it has had workshops and training to explain what the compliance requirements are. Since those engagements, the municipalities have since complied and DPWI has been able to do the transfers.

Acting DG Fazel responded that EPWP will use the recruiting programme which was successfully deployed for the Presidential Jobs Stimulus. Another initiative is the customised indicator in 2022/23 for all major public bodies to introduce a youth target into their Annual Performance Plan.

Ms Sasa Subban, DPWI DDG: Real Estate Investment Services, replied about land reform. The land parcels as documented in the performance for 2021 was included. In terms of Human Settlements and the submissions by the Housing Development Agency (HDA), 40 of their land parcels have already passed the first stage of processing and the rest will be done soon.
 
On the assessment of the immovable asset registers and provincial support, this particular verification is to ensure compliance with accounting principles. They have done four provinces so far and are planning on achieving two more provinces in Quarter 3 and another three provinces in Quarter 4.

Mr Batho Mokhothu, DPWI DDG: Construction Project Management, spoke about the DPWI underperformance due to the challenge of contractors who do not have cash flow especially since Covid-19 as well as the community disruptions that happen in DPWI projects. He assured the Committee that DPWI has put in measures for the capacitation of project managers.

The Minister asked permission to excuse herself and this was granted.

The Chairperson asked the Acting DG and his team to conclude due to time constraints.

Ms Nyeleti Makhubele, DPWI DDG: Facilities Management, replied that the number of leases DPWI is running is currently 2 496 leases. The SAPS has started moving into Telkom Towers and security is even provided on the property however there are still a few issues that DPWI is handling through its Facilities Management branch and Construction Management branch.

Mr Mandla replied about debt collection and the nature of the disputes. Why clients are not paying is dependent on the type of service. There was a meeting with the Forum of South African Directors-General (FOSAD) and there were some resolution and there has been an improvement on debt recovery. The types of disputes with client departments are cost savings at R2.3bn; leases at 853m: and projects at 134m. Clients that are paying is sitting at 73%.

The Acting DG concluded that many of the concerns raised are due to DPWI dealing with the symptoms rather than the root causes. The ten principles we have introduced to deal with ICT systems, business processes and the Infrastructure Delivery Management System (IDMS), change management programmes to deal with the root causes. He asked that DPWI engage the Committee on another occasion on its responses to tackling the root causes.

The Chairperson thanked the Department, along with the Minister and the Deputy Minister, acknowledging the improvements as well as reminding them that the Portfolio Committee has an oversight responsibility over DPWI. The responses to questions had to be rushed due to time constraints but he asked DPWI to respond in writing.

Meeting adjourned.