ATC120903: Report of the Portfolio Committee on Basic Education on a Joint Oversight Visit to Mthatha and Libode, Eastern Cape, dated 28 August 2012.

Report of the Portfolio Committee on Basic Education on a Joint Oversight Visit to Mthatha and Libode , Eastern Cape , dated 28 August 2012.

The Portfolio Committee on Basic Education, having undertaken a joint oversight visit to Mthatha and Libode , Eastern Cape from 21 to 22 June 2012, reports as follows:

1. Introduction

The Portfolio Committee on Basic Education received an invitation from the Standing Committee on Appropriations to join them during their oversight visit to the Eastern Cape . The visit by the Standing Committee on Appropriations was to identify sites for the Accelerated School Infrastructure Delivery Initiative (ASIDI) programme. The visit was to establish and investigate whether there had been any progress in the implementation of ASIDI under which 49 schools would have been constructed by the Department of Basic Education by the end of August 2012 as promised. An amount of R 700 million had been allocated to the ASIDI programme for the 2011/12 financial year. It was further promised that the Department of Basic Education would construct 185 schools by the end of the 2012/13 financial year. A further 300 schools were planned to be constructed during the 2013/14 financial year.

During the week-long oversight programme, the Standing Committee on Appropriations aimed to meet with the Department of Basic Education on 21 June 2012 in Mthatha to receive a briefing and update on progress in respect of the ASIDI programme in the Province. The Standing Committee on Appropriations would also visit some of the ASIDI sites in Mthatha, Libode and Lusikisiki. It was for these engagements that the Portfolio Committee on Basic Education was invited to participate. It was therefore incumbent upon the Committee, in line with its mandate and oversight responsibilities to form part of the oversight and monitoring in the areas mentioned.

2. Background

Subsequent to the reporting and undertakings on the implementation of ASIDI by the Department of Basic Education to the Portfolio Committee on Basic Education and the Standing Committee on Appropriations in 2011 and 2012, the two Committees undertook an oversight visit to the identified sites to assess progress on the implementation of the ASIDI programme. The visit was in relation to the building of 49 schools in the Eastern Cape , through the School Infrastructure Backlogs Grant, as part of the mud school eradication endeavour across the country affected by the government.

Necessitating this oversight was the undertaking to construct 49 schools and to provide water and sanitation to 84 schools, and electricity in 104 schools in Lusikisiki, Libode and the Umtata regions. When the Portfolio Committee on Basic Education met with the Department of Basic Education on the 49 schools, some issues emerged. The Portfolio Committee was not satisfied with the apparent continued non-implementation of the programme which was marked by the continued shifting of the implementation and finalization of the dates of the programme. Upon further enquiries, it emerged that the Portfolio Committee was constantly receiving conflicting information regarding the implementation of the programme. At some point the Portfolio Committee realised that reporting offered by the Department of Basic Education differed between the Portfolio Committee on Basic Education and the Standing Committee on Appropriations, particularly in terms of the implementation dates of the programme.

In November 2011 the Department of Basic Education appeared before the Standing Committee on Appropriations for a briefing on the budget adjustments and related matters; and the issue of the building of 49 schools, as part of the process of the eradication of mud schools, in the Eastern Cape was pursued further. During this engagement it was mentioned that the budget of R700 million in the form of the Schools Infrastructure Backlogs Grant had been unallocated in the 2011 Division of Revenue Act. The budget was only allocated in the adjustments period; which was a cause for concern given the Department’s insistence on the completion of 50 schools in the Eastern Cape by 31 March 2012. Even more concerning for the Standing Committee on Appropriations was the fact that none of the 50 school had been built at the time, but the Department insisted that building would commence in the festive season. The Committee was further informed that the Development Bank of Southern Africa (DBSA), which was the implementing agent, had given an undertaking that the availability of building materials would not be a challenge.

3. Composition of the delegation

3.1 Portfolio Committee on Basic Education - The delegation from the Portfolio Committee on Basic Education comprised of Hon H H Malgas MP (Chairperson) (ANC), Hon F F Mushwana MP (ANC), Hon A C Mashishi MP (ANC), Hon A Lovemore MP (DA), Hon W Madisha MP (Cope), Hon A M Mpontshane MP (IFP), Mr D Bandi (Content Advisor), Mr L Mahada (Parliamentary Researcher) and Mr L Brown (Committee Secretary).

3.2 Standing Committee on Appropriations - The delegation from the Standing Committee on Appropriations comprised Hon EM Sogoni (Chairperson of the Committee, ANC); Hon R J Mashigo (ANC); Hon J P Gelderblom (ANC); Hon NNP Mkhulusi (ANC); Hon GT Snell (ANC); Hon N Singh (IFP); Hon M Swart (DA); and Hon L Ramatlakane (Cope), Mr D Arends (Committee Secretary), Mr M Zamisa (Committee Researcher), and Ms T Majone (Committee Assistant).

3.3 National Department of Basic Education – Ms V Diale and Mr R Mafoko.

3.4 Eastern Cape Department of Education – Hon M Makupula, MEC for Education, Mr Q Msiwa and Ms N Duntsula.

3.5 Eastern Cape Provincial Legislature – Mr P Van Vuuren MPL, Ms M Matomela MPL, Ms V Limba MPL, Ms M Michael-Peter MPL, Ms A Ponco MPL, Ms J Bici MPL, Ms M J Daniels and Ms N Myataza.

3.6 Development Bank of South Africa – Mr A M Katsana, Mr C W Ramphele, Mr R L Matlala and Dr P K Kibuuka

4. Engagements with the National Department of Basic Education on the School Infrastructure Backlogs Grant [also referred to as the Accelerated School Infrastructure Delivery Initiative (ASIDI)]

The Department gave some background to the School Infrastructure Backlog Grant and indicated that the purpose of the grant was to eradicate the entire inappropriate schools as well as providing basic levels of water, sanitation and electricity to schools. The Grant was also referred to as ASIDI (Accelerated School Infrastructure Delivery Initiative). The targets for ASIDI were as follows:

Infrastructure Category	Baseline	2011/2012	2012/2013	2013/2014
Inappropriate Structures	496	50	100	346
Water	1257	188	1069
Electrification	878	164	714
Sanitation	868	354	514
Specialist Classrooms			50

The budget allocation for the ASIDI programme over the MTEF period was R8.2 billion and allocated as indicated in the table below:

MTEF ALLOCATIONS
2011/12	R 700
2012/13	R2 315
2013/14	R5 189
TOTAL	R8 204

In the 2011/12 financial year the budget split to R420 million towards the eradication of 50 entire mud schools and R280 million towards the provision of water, sanitation and electricity to schools. The Department gave a breakdown of the work implemented during the 2011/12 financial year as follows:

	Inappropriate	Electricity	Sanitation	Water
Province
Eastern Cape	50	104	58	84
Free State	0	26	13	32
Gauteng	0	2	7	0
KwaZulu Natal	0	0	82	10
Limpopo	0	4	40	38
Mpumalanga	0	47	0	0
North West	0	0	0	0
Northern Cape	0	0	16	6
Western Cape	0	7	21	3
Total	50	190	237	173

It was indicated that the Development Bank of South Africa ( DBSA) was the appointed Implementing Agent (IA) for the 50 inappropriate schools in the Eastern Cape . However only 49 schools were being implemented as one school was being implemented by the Eastern Cape Department of Education. The Mvula Trust was appointed to implement water and sanitation projects in Limpopo and the Eastern Cape and Eskom was the appointed Implementing Agent for the electrification of schools in the Eastern Cape , Mpumalanga and Limpopo Provinces . The Free State , Gauteng , KwaZulu-Natal and Western Cape were the Implementing Agents in the 2011/12 financial year.

According to the Department, approximately R1.058 billion was committed in contracts for the implementation of ASIDI during the 2011/12 financial year. The Department went on to give the Committees a comprehensive breakdown of the total expenditure in relation to allocations per project, expenditure as at 31 March 2012, expenditure as at 20 June 2012 and the percentage spent.

The Department alluded to some of the challenges facing ASIDI. Progress had been delayed on the construction of the 49 schools due to the following challenges:

· Procurement of Implementing Agents took longer than anticipated.

· Negotiations with the DBSA started in April 2011.

· There were delays in the finalisation of the Memorandum of Agreement (MOA) with the DBSA as the bank had to receive approval from the Minister of Finance before the MOA could be concluded.

· Subsequently, the DBE signed the MOA on the 13th June 2011 and the DBSA only signed on the 06th July 2011. The DBSA submitted the implementation Plan on 03 August 2011

· The DBSA planned to use Preferred Service Providers (PSPs) to undertake scoping work which was crucial for determining the extent of the scope of work.

· The process for procurement of the PSP to undertake the work had to be rescinded at the end of August after issues of conflict of interest were discovered between the companies bidding for the PSU and project scoping.

The DBSA then started another process to appoint PSPs for scoping, planning and detailed designs which was concluded on 15 September 2011 and resulted in a delay in the finalisation of the scope before going out on tender in October 2011. A strategy adopted for the procurement of contractors was to initially pre-qualify contractors and appoint them from a pool of pre-qualified contractors. The process was halted due to a dispute by contractors from the Eastern Cape who requested consideration of Grade 6GB instead of Grade 7GB. The procurement of contractors resumed on the 25th October 2011 and was concluded on the 4th and 29th November for 28 of the 50 schools and 22 of the 50 schools respectively. Tenders received were based on the generic scope of work due to the delay in the development of project scoping per school. As a result the tendered amounts for the first 28 of 50 and 22 of 50 schools were R 711 million and R 595 million respectively. This resulted in a prolonged adjudication process and appointment of successful contractors. Sites were handed over to the contractors on the 12th and 13th January 2012 for a contraction amount of approximately R 675 million (excluding professional fees, etc).

4.1 Progress – ASIDI 2011/12 Inappropriate Schools Progress

The Committees received a breakdown of the overall contractors’ physical progress as at 11 June 2012, showing the percentage progress achieved for all contractors. Further, the Committees were given a detailed breakdown of progress for each contractor, which included the number of schools allocated, the names of these schools and the percentage building progress to date for each school.

a) Overview of progress

In its analysis of progress, the Department indicated that the programme was behind schedule in all of the schools. Contractors were behind schedule by between 15 and 77 days based on their baseline programmes. Progress at six of the schools was between 3.2 percent and 10 percent. Progress at 16 of the schools was between 10.1 percent and 20 percent. Progress at 17 of the schools was between 20.1 percent and 30 percent. Progress at six of the schools was between 30.1 percent and 40 percent. Progress at three of the schools was between 40.1 percent and 50 percent. Progress at one of the schools was over 50 percent. The Department indicated that contractual provisions had been invoked for non performing contractors.

From the Department’s close monitoring and analysis, it was evident that not all schools would be completed by the end of August 2012. Construction work at all schools would be completed on, or before November 2012. Table 1 below shows the new indicative practical completion dates supplied by the Department for the completion of the 49 schools in the ASIDI Schools Building Programme, based on the current rate of progress of contractors.

Table 1: Indicative practical completion dates for the 49 schools in the ASIDI Programme

Number of schools	Completion date
5 schools	August 2012
11 Schools	September 2012
22 Schools	October 2012
11 Schools	November 2012

b) Reasons for the slow progress

The Department alluded to some of the factors influencing the slow progress in respect of the inappropriate schools as follows:

· The difficulty in obtaining material supply - Suppliers were not in a position to meet the demand placed by ASIDI contractors

· Adverse weather conditions (Inclement weather)

· Difficult terrain requiring unusual earth works and poor access to schools, particularly those in remote areas in the Eastern Cape

· The redesign of site drawings due to unforeseen physical features on site e.g. graves

· The non performance by contractors – contractors under-estimated the resources required on an accelerated programme

· Competition with other business sectors for transportation of bulk materials.

In conclusion, the Department reported that the DBSA continues to engage the contractors with the view of a practical approach to expedite the work to ensure that more schools are completed by the end of August 2012. Contractors who had shown poor performance had been issued with notices of defaults, and in one case a contract had been terminated. Termination would be the last resort as it had the potential of serious costs overruns.

4.2 Progress – ASIDI 2011/12 Water and Sanitation: Mvula Trust

4.2.1 Limpopo - The Department indicated that Thirty-three (33) of the 40 sanitation projects had achieved practical completion. All thirty-eight (38) water projects had been completed.

4.2.2 The Eastern Cape – F ifty-one (51) of the 58 sanitation projects in the Province had achieved practical completion. All eighty-four (84) schools had been provided with rain water harvesting tanks and related infrastructure. Thirty-one (31) of the 32 projects had been connected to municipal bulk supply. None of the 49 projects identified for borehole connections were completed yet.

4.2.3 KwaZulu-Natal – The Department stated that the Province was the Implementing Agent. There were 88 schools identified for this Programme, after assessments, five schools were taken out after it was found that they were already addressed. Out of the 83 schools only 28 schools had been completed, 17 projects were in progress and were between 60 and 90 percent completed. There were 38 projects that were handed over in March and April 2012, and were between 1 percent and 20 percent complete.

4.2.4 Western Cape - The Western Cape Department of Education was the appointed Implementing Agent. The project scope entailed the upgrading of water, ablution facilities & electrical and sanitation facilities. The targets were seven schools for electrification. 21 schools for sanitation and three schools for the upgrading of water. All projects had achieved final completion.

4.2.5 Gauteng – The Gauteng Department of Education was the appointed Implementing Agent. Seven sanitation projects were implemented and two electrification projects. All nine projects had achieved practical completion.

4.2.6 Free State – The Free State Department of Education was the Implementing Agent. The scope in implementation was 32 water projects; 13 sanitation projects and 26 electrification projects. Eleven water projects; 11 Sanitation projects and 22 electrification projects had achieved practical completion.

4.2.7 Northern Cape – The Northern Cape was the Implementing Agent. The scope in implementation was six water projects and 16 sanitation projects. All schools were in construction.

In their analysis of the progress in respect of water and sanitation, the Department indicated that m ost of the projects had been completed by the end of the 4 ^th Quarter. Delays in Limpopo were mainly due to work stoppages due to non-payment which was as a result of scope change processes. Payments had been processed and anticipated completion date was end of May. Delays in the Eastern Cape were generally due to delayed manufacturing of some of the materials (e.g. Urinals). Only one supplier was manufacturing the specified quality and therefore had to provide large quantities of orders.

4.3 Progress – ASIDI 2011/12 Electrification: ESKOM

The Department gave a breakdown of the progress in respect of electrification of schools as follows:

Province	Total Planned Connections	March Planned Connections	March Actual Connections		YTD Planned Connections	YTD Actual Connections
Eastern Cape	104	17	5		53	18
Mpumalanga	18	0	0		0	0
Limpopo	3	3	0		3	0
Grand Total	125	20	5		56	18

The Department mentioned that this sub-programme was behind schedule and ESKOM was planning to complete the work at the 125 schools by September 2012. The main reason cited for the delay was the late signing off of the Memorandum of Agreement and advance payments. The following risks have been identified in the Eastern Cape :

· Bush Clearing Teams - There was a shortage of registered bush clearing teams within Eskom in the Eastern Cape Province .

· The Indigenous Forest - A Survey to Gwexintaba Senior Primary School (500284) was hampered by the indigenous forest. A line through the forest meant cutting down trees which would also cause concern regarding the maintenance of the line.

In conclusion, the Department touched on the 2012/13 plans and master list. The scope of the plans included 100 inappropriate schools, 692 electrifications, 453 sanitations, 928 water and 50 specialist classroom projects. Scoping processes for inappropriate schools, water and sanitation was completed and cost estimations had been procured. Scoping for specialist class rooms was in progress. COEGA, Independent Development Trust, (IDT) and the Department of Public Works Eastern Cape (DPWEC) had been appointed for the implementation of the 50 schools in the Eastern Cape . Advertisements were out in the Tender Bulletin (4 May) for Implementing Agents, Build Environment Professionals (BEPs) and Contractors for the implementation of the ASIDI programme in the 2012/13 to 2013/14 financial years. Briefing sessions were held from the 21 – 23 May 2012.

5. Committees’ observations

Members noted the following key issues and concerns regarding progress in the ASIDI Programme:

· Members were concerned, and raised issue with the high target levels projected by the Department and were not convinced that they were attainable.

· The quality of the workmanship in the construction of schools needed constant monitoring.

· There was a need for clarity on the legal ramification of the agreements between the Department and its contractors.

· Was the issue of a material shortage factual or was it used as an excuse?

· There was further concern over the criteria for the appointments of contractors and what informed the decision to award some contractor’s one school and others more than one. It appeared that those awarded more than one school were not performing well. Of concern was whether contractors who had their contracts terminated were blacklisted or reconsidered for further contracts.

· Of importance was how the programme was aligned to the overall rationalisation/redesign of schools.

· It was agued that all schools needed to be built as per the Department’s minimum guidelines for construction.

· Of concern was whether the Department would have reached its target of completion by November 2012 as indicated.

· A further concern was the use of too many consultants.

· It was important that completed schools also received the necessary furniture.

· A major concern was the 22 schools whose construction completion had undergone less than 20 percent. What retention clauses were there in the contracts?

· It was important that material suppliers from the Eastern Cape be fully utilised to benefit from the programme.

· Members questioned the role of the Provincial Departments of Education and the Department of Public Works in the projects.

· Another issue was how the 49 schools identified had been initially chosen.

· Of concern was the delay in the digging of the boreholes at certain schools.

· It was important that the Department had a risk management plan in place.

6. Responses from the Department of Basic Education

In respect of inappropriate structures, the Department was dealing with all of them, focusing on total inappropriate structures (mud, prefabricated, metal etc.). There were many so-called inappropriate structures that were in a fairly good condition as compared to others. In respect of school construction, these followed the guidelines on norms and standards. The Department further mentioned that in respect of class-size, the smallest school comprised seven classrooms (135 – 300 learners) and included an administration block, laboratory, sports field and nutrition centre. Although the Department reported to Heads of Education Departments Committee (HEDCOM) and the Council of Education Ministers (CEM), there was a need to have regular meetings with provinces to address concerns as they emerged. When the Department provided the school, it was as a complete school with all furniture included. Of the R8.2 billion about R6 billion was allocated to projects in the province, but not to the province itself. The R8.2 billion was allocated entirely to the Department of Basic Education, and as such, was the accounting agent and the responsibility of the Department. The ASIDI programme was a supplementary programme to assist provinces in respect of dealing with infrastructure challenges.

All implementing agents had the necessary quality checks in place. The Department had regular meetings with the DBSA in respect of challenges faced with the programme. It was notable that the Department had shortened the procurement process and procedures by at least 80 percent. The DBSA had experienced many problems on site that were not envisaged e.g. gravesites and rock foundations. Because the project was an accelerated programme, there was a need to ensure high capacity companies. The DBSA erred in thinking that the bigger, more established construction companies would be able to cope with more than one school. Unfortunately this was not the case and there were many lessons learned. A huge problem was the unavailability of concrete and bricks. Many had now turned to procuring from other provinces. Many transport companies were refusing to transport building material to sites due to bad weather conditions and poor roads. Penalties of at least R32 000.00 would be applied where necessary and there was a 10 percent retention and 10 percent guarantee. To assist with effective monitoring, the DBSA had opened offices in the provinces. It was made clear that at least 70 percent of the contractors were from the Eastern Cape .

7. Summary of key findings

7.1 The completion date for the construction of the 49 schools under the Accelerated Schools Infrastructure Development Initiative (ASIDI) had been shifted to the end of November 2012. The initial completion date for the 49 schools was 31 March 2012, which had been shifted to the end of August 2012 during the Standing Committee’s oversight visit to the Eastern Cape Province in January 2012.

7.2 The Department of Basic Education reported that there were challenges with the supply of material in the Eastern Cape Province which had contributed to the completion date being shifted for the second time. This was a cause for concern given the fact that the Department initially assured the Committee in November 2011 that there would be a constant supply of material over the December festive period.

8. Recommendation

The Portfolio Committee on Basic Education, having conducted a joint oversight visit to Mthatha and Libode , Eastern Cape , with the Standing Committee on Appropriations, recommends that:

The Minister of Basic Education should ensure that the Department of Basic Education submit a report on the envisaged cost escalations that would arise as a result of the shifting of the completion date for construction of the 49 schools in the Eastern Cape Province as part of the Accelerated Schools Infrastructure Development Initiative. In this report, the Department should indicate whether provisions were made in tenders for the payment of penalties in the event of delays that came as a result of non performance.

Report to be considered.