Reporting to the Portfolio Committee in a virtual meeting on material irregularities identified in national, provincial and municipal departments, the Auditor-General of South Africa (AGSA) said it had recorded huge amounts of irregular expenditure by the Department of Public Works and Infrastructure (DPWI) and its entity, the Property Management Trading Entity (PMTE). They recommended that the Committee regularly monitor the actions taken by the accounting officer to fast-track the implementation of measures to address the irregularities. More specifically, the Committee should insist on decisive action that would see a culture change within the Department's leasing, construction and infrastructure divisions.
Agrément South Africa presented its 2023/24 annual performance plan (APP), and said it prided itself in being a leading regulator of non-standardised construction products and systems in South Africa. They had come up with a risk management plan that aimed to control risks in various departments of the organisation. They were fostering environmentally friendly construction processes through eco-labelling and green building rating tools, leading to a green economy.
In presenting its APP, the Independent Development Trust's budget showed that there would be a deficit in the 2023/24 period, and they would need the help of government grant to fund it. They had created conditions they needed to meet internally and externally to achieve their plans, including implementing a good organisational culture and building a strong business portfolio to attract more clients. They were always striving to deliver efficient infrastructure for the public by being competitive and collaborative.
In presenting its APP, the Construction Industry Development Board said they were trying to achieve a transformed, inclusive, ethical construction industry that contributed to a prosperous South Africa. There had been improvement in the entity's supply chain management and performance information, but a regression in their financial statements due to the new revenue stream for BUILD project fees, as all the construction contracts awarded during the current year qualified for a best practice fee were not declared on the register of projects by infrastructure client departments.
The Committee was concerned about officials and executives involved in misconduct but were left unpunished. The Department had let many of its officials go free without any disciplinary action for their irresponsible actions -- they were either allowed to retire or were moved to other departments. The Committee had looked into the matter of the Mamelodi Magistrates Court, but felt that the Department had undermined their impact as there had been a lot of miscommunication, and recommendations were not implemented.
They were happy with the improvement in the performance of the four entities of the Department, and commended them for a job well done.
AGSA report on material irregularities
Ms Corne Myburgh, Business Unit Leader, Auditor-General of South Africa (AGSA), said that the entity had changed its strategy in 2022, naming it the #CultureShift2030, where they were aiming to move a critical mass of their auditing to doing good and reducing the limitations of the improvements with audit outcomes. They had noted a misuse of state resources and the negative impact on citizens' life experience, where there was an outcry for better services. They wanted to gain more insights to influence better delivery in the future, improve the working environment and hold people accountable.
Mr Londoloza Songwevu, Audit Manager, AGSA, said that the entity had noted a R52 million worth of financial losses, of which R9.6 million was by the Department of Public Works and Infrastructure (DPWI) and R39.4 million was by the Property Management Trading Entity (PMTE).
Material irregularities by DWPI
State Funerals: Expenditure on state funerals between May 2018 and December 2018 exceeded the contract amount, and the Department had implemented a manual system where officials from the Prestige Unit and the Provisioning & Logistics Unit would manually compare quotation prices against scheduled prices before purchase orders were issued.
State Events: The prices charged on the invoices for three state events from July 2018 to November 2018 differed from the prices quoted on the pricing schedule submitted by the supplier during the tender process. The Department had drafted cost norms and standard documents and submitted them to the Presidency for inputs as part of the review of the State Official and Provincial Official funeral policy manual.
Material irregularities by PMTE
Beitbridge borderline infrastructure project: Establishment costs were incorrectly included in the bill of quantities due to ineffective internal controls to prevent the inclusion and payment thereof. The national adjudicating committee approving tenders above R75 million has been increased from one, to four different committees.
PMTE lease overpayments: Payments made on the lease of office accommodation and parking (lease no:140280) were based on expired lease agreements with higher rates than those provided for in the renewed lease agreement. Monthly reconciliations before payments were now made to the landlord according to lease invoices/lease obligation, as per the signed lease contract.
Leeuwkop Prison: Boilers were not appropriately safeguarded during construction, resulting in them being damaged due to exposure to severe weather conditions. No action had been taken, and recommendations had not been implemented yet due to a disagreement between AGSA and the Accounting Officer (AO).
Mamelodi Magistrates Court: The PMTE had approved the contract extensions in the construction with adjustments to the contract value which were not in line with the contract with the Joint Building Construction Committee. The trading entity had implemented workshops as an intervention to prevent future material irregularities (MIs) of a similar nature.
Provincial material irregularities
Mpumalanga: Overpayment by exceeding Bills of Quantity (BoQs).
Gauteng: Refurbishment costs of a private hospital without a refund -- and not used.
Limpopo: Irregularities amounting to R1.6 million.
Northern Cape: Expenditure exceeding budget.
North West: Irregularities amounted to R53 million.
Pro-active reviews help the PMTE to assess the completeness of relevant indicators relating to its prioritised core functions.
The DPWI's review of the annual performance plan (APP) included the following indicators:
- Percentage of approved land reform projects provided with post-settlement support;
- Percentage share by gender, age and disability of hectares of land acquired for redistribution, restitution, tenure reform and access to title deeds;
- Number of government-owned land parcels released towards spatial transformation and spatial justice;
- Number of government-owned land parcels released towards spatial transformation and spatial justice.
The sector report for the 2021/22 period would cover the budget on key strategic objectives, the strategic objectives and achievement of the set targets, State property management, infrastructure project management, and privately leased properties used by the state.
Agrément South Africa (ASA) Annual Performance Plan 2023/24
Dr Jeffrey Mahachi, Acting Chairperson, ASA, said that the entity was executing its mandate, although there was room for improvement, as there had been an uptick in innovative building technologies. They had partnered with a number of entities and were providing support to the Department of Human Settlements (DHS), engaging them about emergency housing solutions and trying to see how innovative technology could be utilised in that regard.
Mr Richard Somanje, Chief Executive Officer (CEO), ASA, said the priorities of the entity were:
- Economic reconstruction and job creation;
- Education, skills, and health;
- Consolidating the social wage through reliable and quality basic services;
- Spatial integration, human settlements, and local government;
- Social cohesion and safe communities;
- A capable, ethical, and developmental state;
- A better Africa and world.
ASA’s annual performance plan for 2023/24 included three sub-programmes that were the core projects of the entity for this period.
Indicators include the number of eco-labels issued; the percentage of Agrément certification projects managed and finalised within agreed timeframes; the number of ASA certificates issued; the number of market and usage analysis reports; the number of agreements entered into with specifiers to promote non-standardised construction-related products or systems; and the percentage of quality and compliance inspections conducted for valid issued certificates.
Indicators include the audit opinion issued; the percentage of expenditure spent against the approved budget; the percentage of payments made within 30 days; the percentage change in irregular expenditure; the percentage change in fruitless and wasteful expenditure; the amount of training provided to small, medium and micro enterprises (SMMEs); and the percentage of procurement spent on designated groups.
Indicators include the percentage of training implemented in line with the approved training plans and the budget, and the vacancy rate being at 10%.
The entity had come up with a risk management plan that aimed to identify and manage the strategic, operational and financial performance, and the financial reporting and compliance risks to which ASA was exposed. They wanted to promote effectiveness and efficiency in the ASA operations, reliable performance and financial reporting, and compliance with laws and regulations. The executive management, the audit and risk committee and the internal audit team had all been involved in implementing the risk management framework.
Ms Lebogang Madumo, Chief Financial Officer (CFO): ASA, outlined ASA's revenue and expenditure budgets for the 2023/25 medium term period.
(See presentation document for details on the APP)
Independent Development Trust (IDT) Annual Performance Plan 2023/24
Ms Karabo Siyila, Chairperson, IDT, introduced her team and said that in the past 18 months, the Board had set ambitious goals that had turned it into becoming a provider of services on time and within budget. They had a set of strategies that would make them a high-performance entity. They had already reached some milestones and were in the process of achieving the rest of their goals.
Ms Tebogo Malaka, Acting CEO, IDT, said that the state continued to experience alarmingly huge capacity deficits to meet the demand for public infrastructure delivery. Disjointed implementation mechanisms, non-compliance with established delivery systems, and implementation inefficiencies undermined demands for fiscal prudence in delivering public infrastructure. The IDT's past challenges had had an adverse impact on its revenue generation and ability to fund its operating costs, threatening its going concern status.
She said the APP's approach to targets was to:
- Balance the need for long-term sustainability and current capacity;
- Ensure delivery of work-on-hand and provide scope for growth to enhance both public infrastructure delivery and the entity’s financial performance;
- Target growth of the business portfolio, supplemented by a commitment to increase delivery capacity;
- Allocate resources to align its strategy commitment towards growth and effective delivery of current obligations; and
- Inform targets by past performance, and SMART (specific, measurable, achievable, relevant and time-bound) principles regarding applicable planning standards and guidelines.
Four outcomes would measure performance. These were:
- A compliant and fit-for-purpose entity;
- Optimised job opportunities;
- A transformed built environment; and
- Increased access to quality social infrastructure.
Ms Clarinda Simpson, CFO, IDT, estimated the 2023/24 revenue to be R390.1 million, and operational expenditure to be R455.2 million, leaving a deficit before the capex items of R65.1 million. Capex items included a human resources (HR) information system, incident management system, Teammate audit software, a project management system, head office furniture, and a finance enterprise resource planning (ERP) system enhancement and equipment. The capex items amounted to R81.8 million, and required additional critical mass projects to break even, amounting to R1.635 bn.
See attached for detailed APP presentation
Construction Industry Development Board (CIDB) Annual Performance Plan 2023/24
Prof Susan Bouillon, Deputy Chairperson, CIDB, said that in the third quarter, they had achieved 89% of their targets and were working towards achieving the remaining ones. They continued engaging with their stakeholders to improve compliance with the CIDB Register of Projects and the BUILD Programme, a best practice project. The public sector compliance ratio was between 16% to 40%, and there had been an invitation to nominate representatives from the contractors, clients and stakeholders to serve on the national stakeholder’s forum (NSF). The new Minister was scheduled to meet with the NSF on 30 April.
Mr Sfiso Nsibande, CFO, CIDB, said the Board had added four new output indicators for the 2023/24 financial period. During this period, they aimed to achieve:
- 70% of audit issues resolved;
- A board performance assessment conducted;
- 100% of invoices paid within 30 days;
- 97% system uptime;
- Two research studies conducted;
- A report on amendments to registration criteria;
- 80% of contravention notices against detected non-compliance on CIDB prescript issues within 30 days;
- 98% of Grade 1 to 9 contractors registered within 21 working days for compliant applications;
- Four industry monitoring reports;
- A transformation status report;
- An industry performance standard submitted to the Board;
- Development of four construction industry transformation guidelines;
- Development of two construction industry development guidelines;
- 40% of B.U.I.L.D funds spent on development;
- A report on enterprises receiving development support;
- Four construction industry development interventions' implementation reports provided;
- Four transformation intervention implementation reports provided.
- 72 industry capacitation sessions conducted on CIDB prescripts.
For the 2023/24 period, the budgeted revenue and expenses were estimated to be R 218 million, leaving no surplus or deficit.
Key CIDB interventions (Areas of focus)
- Amendment of the CIDB Act
This would be achieved by extending the Register of Contractors to the private sector, firming up the provisions for establishing the Register of Professional Providers, improving compliance and enforcement provisions, and assessing options for establishing a Construction Ombud.
- Amendment of the Register of Contractors regulations
- Implementation of the BUILD programme
- Support to the DPWI in developing the construction industry recovery plan
- Further automation of the CIDB’s core services, such as online contractor registration.
The entity planned interventions to improve infrastructure spending. These included client capacitation on CIDB prescripts, the infrastructure delivery management system (IDMS) and the framework for infrastructure delivery and procurement management, to drive transformation in infrastructure procurement, including awareness of procurement reforms, with 72 capacitation sessions targeted across the country in 2023/24. They also planned interventions to improve compliance by coming up with a proactive approach to monitor awarded tenders on infrastructure clients’ websites.
See attached for detailed APP presentation
Ms S Graham (DA) told the AGSA that the issue of state funerals not being resolved in two years was unacceptable, and that something had to be done to ensure a speedy resolution. It should be noted that the public’s money was involved, and the people involved in the misuse of it must be penalised. It was unacceptable that the former Minister had not been disciplined for the Beit Bridge incident, when the officials that were involved were disciplined, especially as the saga had emanated from her going against Public Finance Management Act (PFMA) regulations by issuing direct instructions to the Department on who to appoint. She asked whether the suspended members of the National Bid Adjudication Committee had been reinstated, and if there were regulations in the PFMA that banned one from being part of the committee for a certain period. She could not understand why the Accounting Officer from Leeuwkop Prison had waited five months before informing the AGSA that they disagreed with its recommendations, and that the Department had not done anything about the irregularities by the entity that involved taxpayers' money.
She asked the IDT if they had explored the alternative funding models they presented in slide 14, if they had implemented them, or how they planned to commence with implementation. How many of the people that had been recruited were built environment professionals, and what was the primary reason for an increase of staff members from 110 to 229? The going concern status did not make sense if the entity ran at a deficit. The DPWI's APP had no allocation for the IDT, so the R2 million injection represented in the revenue did not make sense. R24 million was an extreme amount for litigation fees, and she needed clarification on whether the amount was a projection or not. It had been confirmed by the former Minister last year that the Board had stopped the procurement of leasing office space due to irregularities that were constantly found to be involved. It was alarming that the Board would plan to incur a lease expense of over R21 million on a building they already owned, when the only expenses they should have should be related to maintenance.
Ms M Hicklin (DA) agreed with the concerns about the former Minister’s misuse of power. The AG’s recommendations of holding her to account for her actions would no longer be implemented as the government had moved her to another portfolio. She asked what additional costs had been incurred for the litigation between the former DG, Mr Sam Vukela, and former Minister De Lille, as well as the AG's findings for state funerals. Would the amount be recovered, considering that the DG has retired now? She emphasised her concerns about the trend of people running to retirement or moving to other portfolios when they saw that they were about to be held accountable for their irresponsible actions. She commended the AGSA for their good work, and asked for assurance from the Department that the money that had been wasted would be recovered.
She commended ASA for the work that they were doing, and said she would be going to its premises on 14 April with three representatives of different portfolio committees. There were vacant positions in stakeholder relations, an eco-labelling manager, a quality assurance specialist, and a manager for monitoring relations -- to what extent did these vacancies affect the ability of the entity to function, as these were significant positions? What contributed to the fruitless and irregular expenditure, and how was this going to be mitigated in the future? It was concerning that the DPWI was the main source of income for ASA, and she suggested that they find other ways to sustain themselves and not depend on the Department. She asked how the DPWI could help ensure the ASA Act was implemented.
She noted a conflict of interest within the DPWI regarding the projects handled by the IDT in collaboration with the Development Bank of Southern Africa (DBSA). She asked if the R24 million for litigation in the IDT’s budget included contesting the Commission for Conciliation, Mediation and Arbitration's (CCMA’s) decision that was in favour of the staff member who had taken them to the CCMA.
She asked CIDB what they were doing about the dramatic decrease in grades 2 to 6, how grades 7 to 9 were dramatically increasing, and if investigations were being done. How was it possible that women-owned contracting businesses were decreasing by 12%, and budget requests across the Board were increasing? It was disturbing that the national entities' contribution to construction was so ridiculously low at 6% for 2020/21, yet the municipalities' spend had been at 80%. Low compliance was noted with provincial departments, metros and local municipalities. She asked what the CIDB was doing about that, as failure to act on this matter indicated a failure of its core mandate. There was a record of contractors who would have tenders awarded to them, failed to deliver and comply, and then reapplied as a new entity after dismissal due to under-delivery.
Mr E Mathebula (ANC) said he had a problem with the officials involved in the R3.7 million irregularity being only given verbal warnings. This was not punishment at all -- it was spitting in the face of taxpayers, irrespective of the recovery that had been made. He wished there would be a process to appeal this decision, and warned the Department that the punishment should be equivalent to the offence that had been committed going forward. It did not make sense that some officials were qualified to do their job but let things like paying the wrong person happen, which gave the Department a bad reputation. The disciplinary actions taken against people involved in misconduct were unreasonable, such as disciplinary actions taking years to be resolved. It was concerning that when they took long periods to resolve matters, unusual things like evidence and witnesses disappeared, leading to offenders being let go from the accusations they faced.
Ms M Siwisa (EFF) said she was also concerned about people who were not disciplined for their wrongdoings, and that people who held executive positions were not punished while all the blame went to the staff at lower levels. She asked if the AGSA had made any audit on the Telkom Towers and the collaboration between the DPWI and the provincial Department of Transport in Kosi Bay. She asked if the AGSA audited everything that was under the period of review, or if they audited according to the Department’s instructions, working with what they were given.
She asked ASA when, and in which areas, they planned to start with the training of SMMEs and what demographics they were targeting, considering that women were not given enough opportunities in the construction industry. Were there any plans to invite contractors on site to oversee what ASA was doing as a state entity so that they could sell the ideas they had to generate income, other than that they received from the Department?
She asked the CIDB what plans they had for how district municipalities should deal with operations, directed to them as a board. The performance plan was good, but it was not wise for the performance to be tracked annually -- she recommended that there should be consequence management in place, and that performance should be tracked regularly.
Ms L Shabalala (ANC) suggested that the Committee have talks with Minister Sihle Zikalala about limiting the ability of the Department’s entities to contest the audit findings by the AGSA, because AGSA was an entity trusted by government. She asked what the amount of money was that the Department had used so far to fund the litigation by former employees and contractors. Could the Committee not influence the Department to have a panel of service providers that would help with funerals on a constant basis, as this could be an advantage to the Department as they could limit the amount of money they paid for funerals so that irregularities may be limited.
A construction site at the border connected Maputo in Mozambique, and Empangeni in South Africa had not been completed for a long time. There were no developments following investigations that had been started on this matter, considering that dead bodies had been found at the site because of people speaking against criminal activities.
Ms L Mjobo (ANC) asked why there was no allocation for women and youth in the 2023/24 budget, and why there were no graduates from the continuing professional development (CDP) contractors' programme.
The Chairperson commented that the Committee had emphasised that the state funerals' expenditure should be capped, but nothing had been done about it. The Department had written in its report to the Committee that they would regulate the month-to-month leases, but according to the report by AGSA, it looked as if nothing had been done about it.
She said that the deceased who were found, as stated by Ms Shabalala, had been involved in capping crime related to vehicles that were illegally sold to Mozambicans through Kosi Bay because of DPWI not finishing the construction of the border walls. She was expecting a detailed report from the Department on this issue. The R52 million recorded in losses could have financed many projects, especially in the rural areas, and she asked what the progress had been in recovering the material irregularities identified by AGSA.
She appreciated ASA for acknowledging the Committee’s presence at the stakeholders’ forum, as it showed that the entity took into consideration the recommendations of the Committee about spreading the word about the existence of ASA. She emphasised that open posts should be filled, as it was not a good image for an entity that was doing so well. She pointed out to the Department that the Parliamentary Villages in Cape Town, where Members of Parliament stayed, were very old and had very outdated asbestos roofs, but they failed to use the services of ASA to reconstruct those buildings. She did not understand why they did not use the ASA's alternative ways, as they were cost effective and timely.
She appreciated the IDT for their commitment, and said it was worrisome that there was no allocation of funds from the Department. It was concerning that the Department used other outside entities for services that could be delivered by the IDT, which suggested that they were against the success of the IDT. She asked for clarity on the project management systems classified as part of capex items.
She commended the CIDB for introducing new performance targets. There was a challenge with transformation, especially with business ownership, taking into account that fewer businesses were owned by women when they constituted the majority of the country’s population It was concerning that grade 9 levels did not include a lot of black people, when the majority of the country’s population was black, and she was expecting a change in this regard in the following year. She said the fine print of the CIDB Act did not favour black people, and called for its urgent amendment.
Response by AGSA
Mr Songwevu said that the Committee should increase the pace at which they monitored the DPWI, to make sure that they took the recommendations they received into consideration. He agreed that investigations should not take years, and that as they followed up with the Department, there should be regular discussions for it to provide an explanation as to why the processes took so long. The members who were suspended from the bid committees had not been reinstated, but AGSA would reconfirm that they had never returned to the committee, and the disciplinary actions of the Ministry must be discussed with the Presidency.
It was part of the audit process to include any additional expenses incurred in the financial losses that formed part of the irregular expenditure, so the expenses incurred by the litigation of the former DG, Mr Sam Vukela, should be part of the irregularities.
There was a separate team that was responsible for the auditing of Telkom Towers, as it fell under the Department of Police, but he would be in touch with the team to get more information about the audit report so that he could present it to the Committee.
He said that AGSA decided on how they would conduct an audit, basing their process on the risk factors surrounding a department and responding to them. The management of a department never guided AGSA on which areas they should focus their audit on. The final arbiter was the AGSA, as the audit process belonged to them. There was a committee within the entity to ensure whether the audit process had been done correctly, and if the findings were correct. They would look at how much had been spent on legal fees versus the amount of financial loss that had been recouped, and perform an analysis from there to track the implementation of action plans.
Ms Tintswalo Masia, Acting Deputy Business Unit Leader, AGSA, said they had previously audited the Telkom Towers. The insights they shared through the Budgetary Review and Recommendations Report (BRRR) were that there had been concerns about how the buildings had not been occupied, despite all the spending that had taken place. However, no information had been shared about material irregularities relating to the building.
The material irregularities from Mamelodi Magistrates Court, and losses from projects, had been shared with the Committee in the past, and the Department had been able to put in place the processes and programmes that managed the state funerals better and capped the prices so far.
Ms Myburgh assured the Committee that whatever AGSA did was independent, as stated by the Public Audit Act and following the risk-based approach. The MI process was also based on the risk from the environment, and they aimed to make sure that with the resources they had available, they focused on where they were going to have the biggest impact,
Response by ASA
Dr Mahachi thanked the Committee for their vote of confidence. He said that the ASA Act had been in operation for about eight years, and they had identified the factors they needed to investigate to improve their operations. They were focusing on various social infrastructures. In the human settlements domain, there was the National Home Builders Registration Council (NHBRC) that could not proceed with construction without a certification from the ASA. With schools and clinics, they had no authority to certify the construction of such buildings. They aimed to close such gaps with the Act, and were engaging with the Department to amend it.
He emphasised that there were a couple of business initiatives that they were interested in. Eco-labelling was the biggest service that could generate income for the entity, and they needed help from the Department to allow them to use their buildings so that they could be a testament to the work they could do when they pitched the service to potential clients.
He said there was a high impact associated with leaving positions vacant, as the current vacant positions were those involving strategic management, and decision-making was affected.
ASA had signed an agreement with the NHBRC, and had developed good relations with the Department of Human Settlements to ensure that they certified the projects they started. Implementing these technologies, particularly in the human settlements space, was more of a social than a technical matter, so it switched the perspective of ASA when they recommended them. More education and engagement were needed with the DHS so that ASA could meet their needs from their point of view.
Mr Somanje said ASA were ready to host Ms Hicklin and her team, and that they would take her to the certificate holders who would be on site at the time of her visit.
The two positions relating to monitoring and stakeholder relations were critical, and they were working towards filling them within the new financial year. There should also be a manager dedicated to managing the implementation of the eco-labelling skills. The reason why the position was still vacant was that the entity was doing job evaluations so that when the manager was appointed, their duties were clear. The interviews were done for the quality assurance position, and the position should be filled soon. The executive manager position had been readvertised until 11 April.
The training of SMMEs, targeting women, youth and people with disabilities, was conducted with various provincial departments as it moved from one region to another, with the help of invited contractors. The training had two parts -- to encourage women, youth and people with disabilities to participate in the entity’s procurements, and to take the attendees through the process of certification. They were creating a database that would identify the upcoming engineers and retired engineers that would be available to mentor them on technical aspects in technical committee meetings. Due to their projects, they hoped that in the next four years, the entity would have increased their self-generated income from 10% to over 50%.
Ms Madumo said that the items of irregular expenditure were related to non-compliance with the National Treasury’s prescripts about contract management, but they were currently working on the determination tests to get those items run through the proper processes. They were working closely with their internal audit team to recover some balances, as some wrongfully presented amounts were dated a few years back. The entity was working on new initiatives to have its own revenue-to-government grant ratio improve, to the extent of being a financially sustainable entity alongside the technical team and the Department.
They were planning to kick-start the eco-labelling programme on 1 April, and were confident they would generate income from it.
Response by IDT
Ms Malaka said the Board was interested in alternative funding to diversify their portfolio. They were talking to potential sponsors and funders that may donate to the Board. The CDP programme was a three-year programme in which each year was graded, so they presented the students who had not completed the three years but had achieved a grade by completing the first and second years.
They had signed a shareholder’s compact with the DPWI that stipulated that the Department would allocate R2 billion to the Board each year, so it had been allocated as part of the revenue.
A management report highlighted the state of the building that IDT owned. The cost of maintenance was very high, and it was currently not compliant according to occupational health and safety (OHS) and other compliance regulations. The Board had resolved to sell the building, as they had no funds to maintain it.
The R24 million for litigation in the budget was a projection that included the labour relations cases, and they could claim the legal costs incurred during the litigations from the Department. The CCMA case was related to contracts that had ended in September for employees who were not professionally registered, and the IDT had won three out of the four of them.
Ms Simpson said the process of achieving self-sustainability influenced the budgeted deficit. This was a journey that would take some time and it would include a few deficits. The AGSA required that an entity should be going concern, and they would achieve that by discussing with the Department about signing a letter of guarantee to indicate that they would assist with grant funding to limit the deficits. The IDT had been budgeting for a deficit for about six years, and although it was against the PFMA standards, it helped the entity to move towards breaking even.
The amount they needed to pay for the latest case where they were contesting the CCMA’s decision had not been included in the litigation fees because it was not part of the 2023/24 period. There were funds for that process amounting to R5 million.
Ms Naledi Molabeli (sp), Executive: IDT, said that there had been instances where employees had left the entity and where there was a rebuilding process, the governance structures needed to be concentrated on. There were also a lot of open vacancies in other divisions of the entity. They had to ensure that they recruited professionally registered individuals, which had contributed to the increase in staff members. This did not mean these positions were created out of nowhere, but were critical within the entity's structure.
Response by CIDB
Mr Nsibande said that the Board was putting sensitive mechanisms in place as part of the requirements of the register of projects (ROP) programme, as they worked to improve the ROP registration. Through the ROP registration, they could track the process of the contractors and ensure that the job was done on time and to the required quality. They were mindful that it might be difficult for the Board as a government entity to take another state entity to task, which was why they had partnered with the Department of Employment and Labour (DEL) and the AGSA to investigate non-compliance. If non-compliance was picked up, they relied on these entities to issue disciplinary measures. They wanted to start drafting a contractor performance report, which the client would be required to present to the Board upon completing a project so that the Board could evaluate the clients’ performance. They were planning to integrate their systems with the Companies and Intellectual Property Commission (CIPC) so that they could track the ownership of construction companies to prevent dismissed companies from reapplying under a different name.
The CIBD did monitor their Board on a quarterly basis, the reports were issued annually, and control measures were taken into consideration regularly. If there was non-compliance with government legislation or rules, they must all be disputed and managed through intergovernmental processes. Within the current year, there were about 22 client capacitations where they would be using the infrastructure delivery management system (IDMS) process.
He acknowledged the Chairperson’s endorsement of the new targets, and said the Board was specific about the issues they were planning to address. The Board was deliberate as to who they endorsed, primarily with the SMMEs, where they were focusing on ensuring that the CIDB paid the programme's first participant. 250 of those businesses were women-owned businesses, and they were determined to improve the numbers.
Mr Ebrahim Moola, Programme Manager: Construction Registers Service, CIDB, said that in the CIDB Act review, there was one opportunity to include the private sector in terms of compliance with the register of contractors. It would allow the Board to spread the developmental interventions to bring women and black contractors in as part of projects. There were opportunities for performance improvement by contractors, particularly in areas like the renewal of registrations and integrating competence into the registration criteria.
Remarks by DPWI
Dr Alec Moemi, Acting DG, DPWI, said that the Department had noted the Committee's concerns. They acknowledged that it took a long time to conclude cases. It was not for lack of wanting to finish cases on time, but was because each case was dealt with on its own merits and the limitations that took place during the cases. There were legal technicalities raised by defendants that delayed the closing of cases, and the opposition exercised their full rights during the proceedings of these cases. The Department had processed 470 cases in the previous financial year. Innovation was limited in this sector, as they were bound by the Public Service's wide regulations and the common and labour laws as they processed the cases, therefore, the delays were justified.
The Department did not have responsibility for staff members that had been appointed according to Section 12A. They had been reporting to the AGSA and the Committee about the case involving Ms Melissa Whitehead and Ms Patricia de Lille, but with the reshuffle, the Department had lost sight of the case.
The Code of Conduct created for the National Bid Adjudication Committee members indicates that the people to be appointed must be fit and proper persons. It precludes those found guilty of misconduct from being part of the committee.
He said the Department had investigated the Leeuwkop Prison matter, as recommended by the AGSA, and had contested their findings as they were not like the findings of their own investigation. They did not undermine the authority of AGSA, as they were the final arbiter, and they did not wish to go to court as it was deemed the final arbiter in instances where the Department did not agree with their decisions. There had been two cases where they had challenged the decisions of the chairpersons, and the courts had been frowning upon the Department’s contestations, forcing them to act on the recommendations made by the chairpersons. Employees had been given verbal warnings because they were first-time offenders, and a report was issued stating that they were not doing their own bidding.
The Kosi Border fence was not built by the DPWI, but was under the responsibility of the provincial DPWI, and there had been findings of irregularities. There had been discussions about transferring the project to the DPWI, but they had contended that it would be difficult to carry on with a project they had not started, especially because there were a lot of investigations surrounding it. Another challenge was that this border was an informal crossing that had been formalised by community members between the two countries, so taking over the building of the wall would have to be done after all the investigations had been completed.
He said the recommendations by the AGSA and the Committee about state funerals had been taken to consideration. The Department had capped the amount that went towards state funerals, and had inserted layers into the decision-making processes prior to the finalisation of allocations.
The month-to-month leases were tracked on a bi-weekly basis, and they were whittling them down from 1 817 in November 2022, to 134 currently.
The Chairperson said that the adoption of minutes from previous meetings would have to be postponed to a future time.
The meeting was adjourned.
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