The purpose of this report is to provide the Portfolio Committee with an overview of the process followed in appointing the Facilities Management Company, WSP Sidibene Joint Venture in Cape Town.

The DPW came under severe criticism for poor service delivery during the 1990’s and this prompted the department to look at alternative means to achieve the levels of service that would satisfy its clients’ demands at affordable costs. Alternate forms of delivery became the subject of intense discussions among senior managers within DPW. This led to DPW visiting various departments of Public Works in other countries such as the United Kingdom, Canada and Australia.

The following business and project objectives were identified as a basis for the outsourcing process for facilities management.

• To provide an economic facilities management service at satisfactory and agreed level of service that is to industry norms
• To continually drive down costs of providing a facilities management service while maintaining the level of service
• To continually improve the level of service in provision of FM services while maintaining cost
• To provide mechanism for adequate risk transfer in the provision of services
• To provide clients with a healthy safe and productive place to work.

• Improve responsiveness and service to its clients to agreed industry levels of service
• To establish an accurate and reliable management information system
• To address maintenance backlog
• To have a single point of contact between DPW and the provider of facilities management service.

The Department considered two possible approaches to Facilities Management - either through employee-owned-business (EOB) or by contracting with the private sector. After careful investigation the EOB option was rejected because of the risks it posed for the long term security of employees and because it lacked the necessary economies of scale, hence the decision to proceed directly with a Request for Qualifications and Proposals from the private sector for facilities management.

The scope of the contract was carefully developed and defined. It had fixed costs for the provision of FM services namely, building, mechanical and electrical services, gardening services, cleaning at 120 Plein Street, and pest control. In addition a call down rate was used for identified projects from the annual building plans and for services above R5 000.

Contract duration was considered to be a key factor in achieving the desired working relationship and any further cost reduction as outlined in the business case. A submission was made to the ‘Tender Board to waiver the ST 37 regulation of only 2 year contracts so that we could enter into a 5 year contract. The Board unfortunately turned this down and a two year term was approved.

A two-stage procurement process was utilised so as to ensure that the eventual partner in the delivery of services would be the most suitable. The first stage was the Request for Qualification (RFQ) and the second was the Request for Proposals (RFP). The evaluation committee short-listed the RFQ’s received after which the RFP of the short-listed companies were evaluated and WSP-Sidibene joint venture was appointed as the successful company. The contract was awarded on 18 December 2002 at a value of R82 million. The joint venture consists of WSP FM who have 55% share holding, ACG Architects with 17.5%, GVK Siya Zama with 17.5%, Ubunye Engineering Services with 5% and Nibu Construction and Project Management with 5%.

7. EXPERIENCE TO DATE

The Portfolio consists of approximately 1100 structures varying from guard huts, ablution facilities, sports facilities, basic single residential housing units, the Presidential house, flats and multi-storey office accommodation. Following the Annual Building Plans of 2004 all identified health and safety risks were rectified before embarking on the backlog maintenance projects. Whist there is a still outstanding backlog maintenance to be done, much of this work has been completed. Completed work includes renovations of 9 ministerial houses, 114 houses at the Parliamentary Parks, external renovations to externals of Rygersdal Flats, replacement of window frames at 25 Mouillie Grange Flats, internal renovations to 8 multi storey office buildings, construction of translation booths, conversion of single residential units to two bed-roomed units and many others (a complete project list is available upon request.)

As a result of this initiative, the Department now has accurate data on all of these facilities.

Each month since the inception of the contract the figures have increased and the latest figures that are available indicates that 63.3% and 67.8& of all payments were made to black and women in construction companies for routine facilities management and project work respectively. Originally the target was 40% of contract value implying that this has been an over achievement.

The services were delivered to international best practice specifications with a payment mechanism designed to penalize poor performance. However, the contract using the General Conditions of Contract for Civil Engineering Construction with special provisions and FM specific conditions was found to be cumbersome and not ideally suited for the purpose. Consequently, the department has developed an improved contract.

The need to develop an improved contract resulted in a delay in the tendering of the facilities management for Parliament and other prestige facilities, and the existing contract was extended until this could be completed. The tendering process was initiated on 11 June when Requests for Qualification were issued. The Request for Proposals on the shortlisted bidders will commence during July.