Department of Public Works on 1st Quarter Performance for 2014/15

Meeting report

Department of Public Works on First Quarter Performance for 2014/15
Mr Dhaya Govender, Service Delivery Improvement Plan team leader and facilitator said this was the first time they had presented a quarterly report after a substantial outcome of their stabilisation phase. A report on the turnaround had been presented to Cabinet and endorsed.  It was seven-year turnaround plan.  For the first part of their stabilisation phase, they focused on four major areas -- a clean audit, getting the immoveable asset register completed, focusing on correcting lease management and fighting fraud and corruption. They then moved on to the efficiency phase of the turnaround.

There were a number of areas that they would also kick-start in terms of stabilisation. These included the construction project management areas of asset investment that were not focused on in the first phase of their stabilisation, such as the vesting processes, immoveable asset framework etc, and the disposals.  A significant focus would occur in respect of the construction management in this period of the turnaround. 

Cabinet had endorsed the business case for the creation of the Property Management and Training Entity (PMTE) into a government component.  The key was to officialise the PMTE within the next two months and then to work towards its transformation into a government component.

Mr Govender discussed the Department’s vision and outlined the five strategic goals to aid them to realise this vision. One of the strategic goals was strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development for built environment professionals, focusing on black built environment professionals.

Programme 1 was Management and Administration, with six sub-programmes which were internal audit and investigation services, strategic management unit, monitoring and evaluation, intergovernmental relations, finance supply chain management and corporate services. The achievements of Programme 1 were their completed audit reports, where the Department had achieved an unqualified audi. The target was to improve in respect of management findings related to the unqualified audit.  In respect of the PMTE, they had moved from a disclaimer to a qualified audit, and the target for this financial year was to achieve an unqualified audit. Risk registers had been updated and 100% investigation of allegations completed within 30 days. Further there had been a reduction in irregular expenditure, where they have exceeded their target of a 5% reduction, to 15%. In respect of payment of invoices within 30 days, 85% of invoices had been paid within 30 days. This was important not merely as a compliance requirement, but as a necessity to strengthen and empower suppliers and boost the economy.  Skills Development Programmes had seen 755 beneficiaries, with 229 artisan trainees, and as they were an organisation which required a lot of technical skills, all of them could potentially contribute to improving service delivery through the service artisanal workshops, so developing internal capacity to maintain and repair the Department’s buildings.  They have an approved human resources (HR) plan, but the approval of the PMTE changes may require some adjustments to the plan.

Program 2 constitutes the core of PMTE activities.  It includes Immovable Asset Management and strategic asset investment analysis, Project and Professional Services -- which was the construction programme  management function -- Inner-city Regeneration, which was focused on Tshwane and contributes to supporting the development of rural areas, operations management, key accounts management and prestige management. The achievements were an asset register with 22 514 properties, against a target of 14 214 properties, with information fields compliant with Generally Recognised Accounting Practice (GRAP), which was an achievement in excess of the target. The value of Immovable Assets had seen a 104% increase, and was also an achievement in excess of the target.  Budget variation on completed projects had also seen significant success, given the history of variation orders and sky-rocketing costs for infrastructure development. Lease agreements had seen a 97% achievement rate, and the Tshwane Inner City Development, through which the Department had contributed by way of the Salvokop spatial framework, was an area in which they hoped to develop a precinct for government and to provide national headquarters for many departments.

In respect of vesting, the Department had under-achieved quite significantly. Vesting was a process led by the Department of Rural Development and Land Reform (DRDLR) for finalising who were the custodians of property – the DRDLR, the DPW, or the province. There was a target of over 11 000 vestings that needed to be finalised this year. In respect of the immoveable asset framework they were yet to appoint a service provider, partly because they needed to await the endorsement of the operationalization of the PMTE, which had been achieved only the week before last. In respect of the disposals of land, their targets were not achieved. In respect of school construction, they had a target of designing 18 schools in relation to the topography of the land, and none had been done to date.  They had a target of 136 construction projects and had completed only 27. 

There was a significant intervention program proposed in the turnaround programme which would fundamentally overhaul the construction programme’s management of delivery, and this would also deal with the fact that the DPW had service providers and contractors who were failing to deliver.  The Department had decided on means of mediation and in litigation to deal decisively so that the courts or the DPW could determine a resolution and, if necessary, appoint alternate service providers to complete the projects. In terms of the number of user departments with approved infrastructure programme implementation plans, they had a target of two -- the Department of Agriculture and the Department of Arts and Culture -- and they had achieved zero.  These were all areas that were now prioritised in respect of their turnaround programme in this financial year. The backlogs they had in respect of disposals were quite significant.  They estimated they would finalise the quantification in the next few weeks and have an expedited programme to ensure that the delivery requirements from the DRDLR and the Department of Human Settlements were disposed of within this financial year.

Mr Stanley Henderson, Deputy Director General, PWD, presented Programme 3.  He said the Department had presented on it to the Committee recently and had given a basic overview of the programme, as well as the paradigm shift in terms of EPWP Phase 3, which broadly entailed particular emphasis on the impact of the programme beyond the numbers.  The paradigm shift entailed broader community participation, community ownership and an impact in terms of assets created and services delivered.

The Expanded Public Works Programme (EPWP) had seen large successes, with 423 387 work opportunities created through the EPWP against a quarterly target of 262 000.  This was at least 40% of the target for the year, which was just under 1.1 million work opportunities. Of the 423 387 opportunities created, 318 089 had been created in rural municipalities.  A key component of the programme was training beneficiaries in relevant sub-programmes, where 898 had been trained. There were quite a few challenges, such as the low capacity in many municipalities -- especially in rural areas.  The Department was responding to this by providing technical support to ensure these municipalities were able to implement the programmes so that the poor and unemployed could get some income into their households. Another problem was the under-reporting linked to low capacity and the lack of mainstreaming.  Municipalities often looked only at the EPWP incentive grant as targeted funding, but that was miniscule compared to the equitable share allocated to municipalities. It was important that municipalities used their entire budget to optimise job creation.

Mr Govender resumed by discussing programmes four and five. In programme four, the Property and Construction Industry Policy Regulation grant was a process, or chain event-driven programme, and was very dependent on stakeholder feedback on policy and political considerations, as well as on the parliamentary programme, which could result in delays. It had a huge impact on transformation in the built environment. It had seen a number of achievements. The Agrément South Africa Bill had been finalised for submission to Cabinet. Agrément SA supports and promotes the process of integrated social economic development by facilitating the introduction, application, utilisation, innovation and technology development of alternate construction material. It was an entity that needed to be formalised by way of an act. Significant consultation had commenced with the development of draft amendments to the legislative framework for the built environment professions. This matter had been prioritised as part of the turnaround of the DPW.
In programme five, Auxiliary and Associated Services, the primary intervention was in respect of prestige services.  There had been a number of achievements by way of infrastructure support to prestige events, such as the State of the Nation Address and other state functions.

The challenges faced by the Department included the election and settling in of the new administration. The election period was in the middle of this quarter and parliamentary programmes could not be determined up front. In respect of the supply chain, there had been delays in procurement processes, and these had been addressed in support of the key business. The two key functions performed by Public Works were programme management and procurement.

The Department had participated with National Treasury to ensure that they reformed their procurement processes so that they were specific to the business they had, as they currently utilised general procurement processes inappropriate for their services. There had also been capacity constraints in respect to HR and also have budget constraints, however the endorsement of the PMTE and its ring fencing and componentisation would provide a new HR plan for DPW and the PMTE. The developments over the last few weeks were that they had had meetings with National Treasury and had restructured the DPW programme structure as well as for the PMTE.

The DPW was going to focus on intergovernmental coordination, regulatory policy functions in respect of public works in areas that they had never given specialised attention to in the past. This would mean revising their HR plan and dealing with their constraints in relation to the new structure. Budgetary constraints existed, just like in all government departments. However, they had contributed to under-expenditure in respect of the construction programme management delivery, and these were matters they were addressing as part of the turnaround. 

While acknowledging these challenges, Mr Govender said there had been some improvement in how the department dealt with performance information, and they had taken into consideration recommendations made by the Committee, SCOPA and other organs of parliament regarding their financial reports. The Department, as part of their seven-year turnaround plan, continued to find ways of improving in areas of concern in order to contribute effectively to service delivery.

Mr Cox Mokgoro, Chief Financial Officer, DPW, discussed the financial performance of the Department.  The total budget allocation for the year was R6.121 billion, and they had spent R1.782 billion (29%) as of June 30 2014.  They were in a better position in terms of their spending on compensation of employees, which was slightly lower than last year, at 23% for the quarter. This meant they were in a better position to control their expenditure on the compensation of employees. With respect to office accommodation expenditure, they had spent more because they had improved their billing procedures with respect to the PMTE.  Their transfers and subsidies expenditure was greater than the 25% target, sitting at 38%, due to the fact that they were bound to a particular time schedule -- the transfers were according to agreed timelines to transfer the money to the relevant bodies.  Infrastructure expenditure was R79 million against a budget of R510 million. This was where there was often serial under-expenditure, but there had been a 3% improvement since last year. The Department had spent only 7% of their inner-city regeneration project budget because the bulk of the budget allocated was for payment that had to be made to the city of Tshwane, as well as paying for bulk services in respect to the Salvokop Project.

Mr Mopkgoro gave details of the DPW’s programmes and pointed out that around 85% of their total allocation was earmarked, which did not allow for the funds to be moved around. They had R245,6 million earmarked for their turnaround process, which included all the processes geared towards improving the Department’s performance.

He presented the budget and expenditure report for the Property Management Training Entity (PMTE). The PMTE had the largest operating leases for any one entity, with about 3 000 leases to date.  Property rates had taken only 1% of the allocation, due to the fact that invoices for property rates were issued only on July 1 of every year by municipalities, so expenditure increased significantly from August to November, after invoices had been verified for correctness. Of a total allocation of R8.619 billion for the year, to date R1.62 billion had been spent. Bloemfontein and Cape Town had spent the highest percentages of the total budget for planned maintenance, along with the Head Office.

The revenue of the PMTE was R8.449 billion made up of state accommodation charges. They collect the rentals and charge client departments for the offices and accommodation given to them.  97% of this revenue comes from the top ten clients, against a portfolio of 50 clients.  Private accommodation charges amounted to about R3.7 billion. The top ten clients accounted for R 496 million, indicating a skewed client base in terms of their business. In respect to private leases they were doing a better job of following up on their debtors. Management fees for payment of municipal services on behalf of client departments were usually 5% of the actual charge. Augmenters, such as subsidies and grants coming from the main vote, allowed PMTE to survive and grow. The ratio between revenue and expenditure was almost 1 to 1.  Total debt was sitting at just over R2 billion, with this year’s debt sitting at R1.047 billion and almost half stemming from the previous years’ R 1.012 billion, indicating the difficulties that the Department had had previously in terms of collection and proving to clients how much was owed in terms of services delivered. They had since entered into a collaboration with National Treasury for the collection of this money, and an improvement would soon be realised.

Discussion
Mr K Sithole (IFP) asked about the Commonwealth War Graves Commission.  There was a budget for close to R21 million, about which nothing had been said. He asked about the mechanisms in place to collect from non-paying departments. He referred to the inner city development project geared towards rural development, saying its prospects were worrying, given their struggles in performing in metropolitan areas, and asked what the problem was. He asked why the Department was so quiet about their overseas immovable assets. As for their capacity woes with respect to municipalities especially those in rural areas, he asked what the Department was doing to address these capacity challenges. In the built environment professions, he asked if there was a timeframe for the proposed amendment.

Mr K Mubu (DA) asked for clarification on what a dolomite project was. He asked what sanctions were meted out to departments who failed to pay, or who failed to pay on time. He asked if there was a time of year when municipalities had financial problems because they were not getting their rates payments, especially since rates provided the bulk of funds to municipalities. When rural municipalities failed to get rates from individuals, they relied on the government to recover it. He asked what the irregular expenditure was, and whether there were plans to avoid this in the future. Lastly he asked if the Department was responsible for leases, why there had been a problem a few years ago with a police commissioner and a lease agreement with a private individual -- why was this lease agreement not between the individual and the Department?

Ms P Adams (ANC) asked what the reactions were when reminder letters were sent to clients about their outstanding balances.  She asked for further information about the meetings the DPW had with client departments in this regard, and about the outcome of their meeting with Treasury, because this would give the Committee an idea as to when the outstanding amounts would be paid. She asked when the Built Environment Professionals draft amendments would be brought before parliament, and when they would be brought before the Committee. What kind of delays was the DPW experiencing in the procurement process, and what kind of measures had been put in place to account for these delays?  She commended the monthly interrogations, as she believed this was the only way to deal with the budgetary constraint challenges. She asked why only 12% had been spent on the Special Investigating Unit (SIU) during the first quarter, and sought further clarification on the 0% spent on other earmarked entities. The DPW should give their presentations with more depth and information so that the Committee could understand how the budget had been spent and interrogate it.  The DPW was the custodian of the EPWP programmes, and it was through these sorts of programmes that they tried to speak to South Africa’s three major challenges, unemployment, inequality and poverty. According to the news, less than 20% of the Black African and Coloured population was skilled. She commended the DPW for their job creation efforts, however, asked what sort of skills were transferred in the EPWP, and whether they made a dent in the unemployment rate in South Africa. She asked if the DPW helped with technical support, especially in the provinces. She asked if they kept proper track of the funding they gave to provinces. With respect to under-reporting, she asked what measures were in place to curb this challenge.

Mr S Masango (DA) asked about the capacity constraints experienced by the Department especially in their HR department. He asked how many vacancies needed to be filled, and in what positions. He said that when the DPW did their annual performance plan (APP), it was based on the budget so he did not understand why they were complaining about budget constraints. He asked why the targets for infrastructure were not doing well. Infrastructure was critical to job creation, which was one of their primary targets. He asked what IDT (Independent Development Trust) intermediaries were. Regarding the turnaround strategy, he asked if there was a consultant working on irregular expenditure, or on the Limpopo intervention and with the immoveable asset register. He asked if these consultants were doing the job on behalf of the DPW.  He asked where the 1% property rates expenditure came from, as invoices were only issued in July. He asked what a land parcel is.  The DRDLR was looking for land and were very far from reaching their target because there were so many claims. Therefore this was a matter that the Department should urgently attend to.

The Chairperson responded that a land parcel was several allocations of land or lots.

Mr F Adams (ANC) asked if the turnaround strategy took account of the Department’s previous challenge of paying their contractors on time, and whether they were now, or would soon be, able to pay their contractors within the 30-day period.

The Chairperson called on the DPW to respond to the questions raised.

Mr Govender responded on whether their management was male dominated, he said this was the case, though they had a fair representation of women, with three female Deputy Directors General, who were meant to be present but unfortunately were not. He apologised for their absence and said that the Department had 50% female representation. In relation to the turnaround he said they had identified many projects and the SIU was one of their key service providers who had done a lot of work, but had not billed the Department timeously. There had been a meeting between the Department’s Director General and the new head of the SIU and one of the issues raised was timely billing.

He said that the DPW did use consultants. In the finance and supply chain area, given the significant challenges which had rendered them virtually dysfunctional, they had been forced to bring in a service provider and over 100 interns who could be developed, and 45 of those interns had now been employed. When service providers were brought in, they realised they needed to bring in qualified graduates, train them for over a year and a half and employ those who were successful on a full time basis. They had had to bring in service providers for the immovable asset register, who had themselves employed staff on a fixed term contract to deal with the significant challenge of determining how many land parcels the government owned. They now realised they had 189 000 land parcels, some of which were yet to be surveyed. In this regard he said they would keep the committee posted as they completed the asset register project. On the lease project, part of the requirement was to employ 18 staff so that when the project was completed, there would be permanent people qualified to continue with it.   Public Works had hit rock bottom, and so they had had to use consultants.  They had about 6 000 staff, many of whom were not in the areas of core service -- for example, in property management they had only one person on duty in some divisions, but in others they had more, so they had a significant problem.

Mr Govender said they should be operating on budget and they hoped that in the development of the new structure, they would be able to identify what should be their core business and where staff should be prioritised, and they could begin to develop in accordance with that.  The current HR plan was outdated and needed to be reworked once they had approval from Treasury on the PMTE budget structure.  In the period of October to February, they would be able to articulate their new capacity constraints. The Minister had said from the work they had done, it was apparent that they lacked professional and technical skills in their construction programme management office. It was said in the presentation they had a target of 20 projects to one professional manager, but it was currently operating at 1 to 45, so with the current compensation budget they could not achieve this target. They would have to engage with Treasury on a new compensation budget. They were developing 229 artisans, as these were the technical skills they required.

Mr Henderson said the problem of low capacity in municipalities was often the result of staff rotation and capacity constraints. The question of technical support was also linked to the issue of capacity. As the DPW, they were responsible for the overall coordination, and as part of this coordination role they provided clarity on the problems critical to the implementation of the EPWP, as well as technical support. This entailed a variety of things, such as designing the programmes, assisting on implementation, and assisting with reporting on what was being done. The DPW provided a whole range of services to all 278 municipalities.  With respect to what skills were transferred in their training programme, they were artisanal, such as electrical skills. They had had a fair degree of success although it was not enough and they were working with the Department of Higher Education and Training and the SETAs to ensure more funding.  They were  working with municipalities so they could prioritise training within their own budgets.

In respect to under-reporting, he said it was the result of a lack of capacity and their own departmental systems problems. They had had to approach the community because they were in a cyber-age and web-based reporting was the order of the day, but they would like to improve on the system that was currently operating. They had embarked on this phase already to improve the systems and so address their problems with reporting. They tracked the disbursements in terms of incentive funding. Payments were made by the implementing bodies, not the DPW, but they followed up on all queries and conducted their own regular site visits. They put emphasis on the issues raised by the Auditor General with regard to record keeping in municipalities, as they often did not do proper record keeping.

The IDT was an intermediary, and this was a particular project management fee paid with regard to the IDT implementation of the Non-Profit Organisation programme. 

Mr Mokgoro responded to the question about the Commonwealth war grave memorials. They had a budget of R21.7 million and had spent about R22.5 million already. This was a transfer to an overseas entity as part of their contribution to the maintenance of the war graves, and had exceeded the budget because of exchange rate differences. 

He responded to the question about non-paying clients and said that when the DPW first started with the turnaround project they had done a diagnosis on a number of things, one of which was the reason why had such high levels of outstanding amounts from client departments. It had been determined that a lot of their claims were being disputed by their clients. They had decided they needed to do a reconstruction of the accounts and look for supporting documentation, and substantiate their claims against this documentation. Much of this stemmed back many years.  Some of the disputes were resolvable and some not, because in some instances the supporting documentation had been lost. He said they had fought with these clients extensively, reconstructed their accounts and were now starting to engage in client forums to discuss these matters. They had engaged the services of National Treasury for assistance as a mediator on the matter. On the issue about the collection of the money, given the fact that the outstanding money that would have been paid to the Department would have been returned to National Treasury, the DPW had had extensive assistance from thel treasury and had monthly meetings on this issue.  R1 billion of their debt stemmed from previous years and of this amount, R350 million was in dispute.  However it was not a problem. Lease income was the capital expenditure they needed to recover from clients. How they were collecting these amounts was not in issue -- only the historical amounts to be collected were in dispute.

On the question about property rates, he said that payment for property rates and taxes was done in advance so the municipalities would issue an invoice and all that money was paid upfront so it was not out of pocket.   However there were government departments who owed municipalities for their services, such as refuse collection and electricity. The issue related to the payment of services such as refuse collection and electricity, and the amount that had been quantified by National Treasury was about R4.6 billion owed.  As a Department, they were the main coordinator to work closely with National Treasury, COGTA, and other entities to try resolve this. They had an interdepartmental task team which met every second week to try resolve the matter. Property rates and taxes were both paid up front and this would further improve once they were done with the asset register, because they needed to be able to link the charge from the municipality for the rates and taxes, to the assets in the asset register so the payment could be made against an asset they were sure they owned.  This had been a challenge between themselves and the municipalities, as they were being charged for properties they did not own.

In reference to the question about irregular expenditure, he said they were not budgeting for irregular expenditure.  They were merely running a project that sought to do away with the irregular expenditure audit findings that required them to look back on their transactions over the years and determine whether each was irregular or regular.  They had to engage additional assistance to attend to this, because they were looking at no fewer than 1.2 million transactions, to the tune of almost R98 billion. This process was complete and they would see in their future reports what the outcome of this exercise was.  External support was there to help them achieve a particular purpose, mostly around issues of audits and the like. A significantly improved audit outcome would require them to conduct a number of processes over time and would require supplemented assistance.

The Limpopo intervention had not been done by external persons, but was supplemented by officials from within government to assist with the section 100 intervention.  Most of the turnaround projects had one thing in common -- if they involved external bodies, one key deliverable was skills transfer and capacity building. They had achieved quite significantly in this regard. Of the 100 interns brought on, the 65 not employed by the Department have been absorbed elsewhere.

Mr Nkosi Vilakazi, Manager: Contracts, DPW clarified what a dolomite was, saying it was a condition of soil that had been discovered around the Gauteng area. It causes buildings to crack during construction, and they had dealt with this by way of classification. This was not the only issue causing problems. They had at least 38 projects with a budget of R39 million which had been spent. On the payment of contractors, he said they did have a challenge with paying them within 30 days, but they had improved. Often the invoices would come without supporting documentation, and this hindered their response time.

On the issue of under-expenditure, he said there were a number of reasons for this. One of them was an external factor, where service providers were not performing on time to the extent that the contract was terminated, resulting in the DPW needing to procure a proficient replacement contractor, or the targets set for themselves may not be achieved. Some of the issues were also related to planning. They sometimes needed to have their sites cleared by the municipality, and they had to deal with zoning and usage of the building to have the site cleared. Even if it was an existing building, this needed to be done, especially with regard to services and increasing capacity. This process could often take a lot of time -- sometimes there were delays and their projects started later than originally envisioned. Another key reason was scope changes -- the client departments may change scope. With respect to dealing with these issues, they had standing liaison meetings to address scope change with clients conducted through their account management on a monthly basis. The issue had improved, although sometimes the improvement was hindered due to policy changes, but they did discuss these issues with clients. In terms of planning they were improving, thanks to the turnaround and their lifecycle project so they could target accordingly and put out proper projects. Where they could get sites cleared more quickly, they did, although this process had its own bureaucratic requirements.

The Chairperson thanked the delegation for their responses and commented on the answer about dolomite. You have different strata of geographic layers. Dolomite was malleable and prone to movement, so houses built on such soil were prone to have faults.

Mr Mubu asked if government or any construction entity checked the condition of the soil when they tried to build a house. He has heard stories from Johannesburg where people had had to be moved from certain places because they had built on that kind of unsafe ground. They would save more money if they analysed the soil and curbed the development before, rather than after, the fact. He inquired as to why soil analysis was not conducted prior to construction.

The Chairperson responded that there were areas, such as in Pietermaritzburg, where people occupied a stretch of land and then built on it for themselves because it was close to town, forcing government to provide services in that area, but not doing away with the structural problem. Local government tried to convince people to move elsewhere, but the people would object until they actually saw the consequences of building on dolomite. So sometimes it was a function of both the ignorance of the people and the requisite studies of the soil.

Ms Florence Rabada, Chief Director, Asset Register, DPW said they did have track of the immoveable assets that were owned by the RSA but which were located outside the boundaries of the RSA. They currently had 101 land parcels and 108 improvements, meaning there were structures built on top of improvements, because in some cases more than one improvement was built on one land parcel. A land parcel was an entity that was surveyed, so before the register of deeds could register a land parcel, it had to be surveyed.

Mr Govender added that with respect to the turnaround and the use of consultants, part of the strategy was to begin to eliminate and minimise the use of consultants in the rebuilding of the DPW and the establishment of the PMTE. The consultants they had inherited. The clean audit project had come to an end they should now try to see how they could build capacity within the areas of finance and supply chain management (SCM).  As the Account Asset Register Project comes to an end, they would begin to build internal capacity. Government was clear on the point that they can not have consultants running government, nor can they have consultants delivering on what ordinarily should be done by employees. 

The DPW had to acknowledge that in respect of the inner city regeneration programme, which had been with them since before 2005, to date they had not made any significant impact in terms of building in Salvokop.  However, this was influenced by the manner in which Tshwane was willing to move.  Currently, the DPW can not build if there are no bulk services, as part of the turnaround, and in the case of the PMTE, they were creating a special project unit to focus on the development of towns and cities with a special focus on small towns and rural areas. To this extent, it would mean the current bureaucratic approach to delivery would have to change significantly. The private sector could put up a 40 000 m² headquarters in 24 months, and yet it takes government five to six years. The turnaround was pushing for the PMTE to be less bureaucratic and more service-oriented and yet absolutely compliant with laws and regulations. The frustrations of the Committee were acknowledged, but the Department should only be measured at the end of the 2015/16 financial year, because they would have significantly improved in this area by then.

In respect of the leasing environment, ordinarily a client should not be involved in the leasing process. A client department should identify a need, and test it against norms and standards that have already been developed. Public Works was using these norms and had developed specifications and procedures either from its own stock or from the public sector, either to lease or to build and lease. To this extent, the third party mentioned should not have been involved in the process at all.

In terms of the Built Environment Professions Bill, there were many issues. The inner city regeneration, Agrément SA and the Built Environment Professions were all part of a backlog which should have been attended to years ago. The turnaround would push to see them through. They hoped to do an analysis of the public comments received and to have it finalised by the end of September. They would then engage with the Minister to ensure that a revised policy was concluded by the end of November. Draft one of the amendments of that bill would be developed by the end of January 2015. Thereafter processes within government would have to be followed, both in terms of sub-committees and Cabinet Committees, before making its way through to Cabinet. There were deadlines and protocols to be observed. If all went well by 2015, with Cabinet’s approval it would be their first opportunity to serve the bill.  It may not be able to come to parliament before being approved by Cabinet. The DPW acknowledged that it was on their end that work was outstanding.

In respect of the vacancy rate, he said the old structure had vacancies but they could not rush to fill them. They would have to restructure the department in light of the new budget and the PMTE, and then working with the DPSA would become an appropriate function. This had to be implemented on 1 April 2015, and for this reason they had chosen to defer a hasty move to fill the vacancies. They would rather take a targeted approach and build their capacity in key areas.

In respect of municipal rates and taxes, the Department did not pay any significant attention to clearing the backlog. There were  currently two projects in operation -- one was with respect to the R200 million to be expedited in payment, and the other was the R 4.5 billion to be cleared in terms of rates and taxes. He said they were working with National Treasury in this regard. They could not promise what the outcome would be, because part of the difficulty was an accounting and billing issue and it was possible that the way to go was to try and negotiate a settlement in this regard

On the issue of training, many of the areas identified, such as construction, experience failure to deliver on infrastructure, meaning they were preventing government from having an appropriate service plan and creating the necessary jobs to put up this infrastructure. Part of the turnaround was to fundamentally overhaul how they delivered their infrastructure, trying to bring it closer to private sector delivery times, allowing them to speed up the economic job opportunities needed in SA. They have been around many parts of the country looking at service delivery points, whether at the office of Home Affairs or the Department of Labour, and the quality of the infrastructure was not to the standard expected of government. Every building leased was part of the backlog, because the building was meant to be a government building, so if they were leasing 2 700 facilities at a cost of R3.7 billion, this money could be used to put up government buildings which met the minimum standard. The turnaround would have to see this change. It would not happen at the end of 2016 -- that was only half way into the seven year programme -- so expectations going forward should be reasonable. 

The Chairperson responded that they understood what was said about their time period. However, Members had a “sell by” date of four years, and it was from this sense of urgency that their questions stemmed. They wanted to see progress while they were in parliament. The Department may say they had a turnaround strategy, but long-standing Members were aware there were departments who became notorious for having numerous turnaround strategies, and they should be careful of that.

Ms N Sonti (EFF) asked for the exact amount spent on the inauguration of the President. She also asked whether ward committees in formal settlements were handling the toilet projects. She asked if these ward committees were allowed to sell government articles to the people.

Ms E Masehela (ANC) commended the Department for the transfers and the manner in which they had already done them, as it had been indicated that 74% had been done already. It was often the case that the Department dumped funds on the entities, or the municipalities or the provincial departments at the end of the financial year. She thanked the Department for their efforts to deal with the problems in the billing system. Municipalities often get told that they would not be paid by the department due to their faulty billing system, but no one wanted to assist them to fix the problem. She asked about the artisans trained -- how many had been absorbed by the Department, and what had become of the ones who were not absorbed? She highlighted the issue of the asset register as very problematic to the provinces and the municipalities, and asked the department to assist. Lastly she asked about the staff. In light of the perception of high corruption in the DPW, she asked whether there had been any staff suspended for corruption and whether there was a turnaround strategy to address this and perhaps have the suspensions rendered in a short period of time, as they often took a long time.

The Chairperson clarified that Ms Sonti had posed a local government question, asking whether local officials had the authority to sell toilets.

Mr Govender said he would refrain from answering the question, since it did not pertain to the DPW.

In response to the question about the trained artisans, he said it took place across different implementing bodies, such as municipalities and national departments, so there were different spheres of government who took responsibility for it. The DPW monitored the programme closely and select people to keep in their ambit.  Last week he spoke of 100 trainees taken in who were at different stages of their skills development. There had been an effort to absorb some of them into the Department, but the relevant division in the department was HR, who could provide a more detailed answer in this regard.

In regard to the question raised by Ms Sonti, the Chairperson said in his constituency, which was a semi-rural area, there were councillors responsible for rolling out basic amenities such as the toilets, and in this area the issue raised was that in certain parts, toilets were rolled out in favour of some over others, and this should not happen. Government resources should be rolled out fairly to all people, and irrespective of political affiliation, people should be provided with toilets in a fair manner. It was the responsibility of Members of Parliament to report such cases, so they coould be addressed by the relevant government authorities. Also when they had constituency offices in various areas, they should be mindful that while they were Members of Parliament as a member of a political party, the offices they occupied were not party political offices. The party was open to the general public, so no matter what party people belonged to, MPs must service these people.

Mr Govender thanked the Chairperson for raising the concern about their fixed term in government. He said they were targeted to achieve the turnaround before 31 March 2019, so it should be completed within their term in government. Most targets should be achieved by 2017, but some would be achieved only in 2019.

In respect of the training of the 229 artisans, he said they needed to open workshop facilities throughout the country, so these artisans would definitely have work opportunities within the national or provincial DPW in the workshops, to repair and maintain government buildings. Like they had done with the 100 graduates, of whom over 45 had been employed, it was also their intention in this case to employ them, although they were still in training. With respect to providing assistance and services to provinces and municipalities, they could not resolve the asset register problems without working cooperatively and collectively with the provinces, and especially the DRDLR. So the municipalities and the Department would share with and assist each other. They were creating an asset registry service in the PMTE, and hoped this unit would be able to provide technical assistance to municipalities but they were not in a position today to be able to do that. They would develop this capacity and offer it. It was their intention that between the Department and the provinces, they would have completed their asset registers by March 2015 and then they could focus on the need to provide assistance to municipalities.

The project to expedite payment of municipal rates and taxes would look seriously into how to address some of the municipalities. This was why it was a joint project with National Treasury, and they were willing to bring in other entities to make it better. They were determined to address this issue and did not intend to allow it to drag on beyond the current financial year.

Mr Mokgoro responded that they had spent R40 million on the presidential inauguration.

Mr Govender said that currently the Department had no one on suspension. They had either formalised the disciplinary actions or concluded them, but they were likely to have some people on suspension, as they were finding discrepancies every day and their war on corruption was not over. They did not seek to have people on suspension for an extended period of time, and this was why they brought in outside capacity to expedite the process of putting together disciplinary charges and conducting those hearings.  Part of the problem was that they could not rely on the DPW staff to adequately attend to this challenge, as they would have delayed matters. In the turnaround, they were having this capacity built in, to allow for a high level of investigations to be conducted as necessary.

The Chairperson commented that the issues raised in the first quarter report were obviously ongoing but where the issues were particularly pertinent or urgent, or where a fuller report or engagement was required, they would request this. However thus far they had been provided with adequate information to go on. There were a number of aspects they could have engaged on, but time did not allow for this. There were issues such as the 449 leases, and which clients had concerns, and ancillary issues. They would continue to engage, and where there were ongoing issues they would interact with the Department to allow the Committee Members to be able to engage with their constituencies and vice versa. It was an interactive, constructive but critical relationship. The Committee would like to be kept informed, and would not like to find things out in the news. They must continue to work together to do the best for the citizens of South Africa.

He thanked the delegation and the members.

The meeting was adjourned.