DPWI & PMTE 2019/20 Quarter 3 performance; with Minister

Meeting report

Department of Public Work’s Non-Financial Performance Information

Mr Imtiaz Fazel, Deputy Director General (DDG), Governance and Risk Compliance, Department of Public Works and Infrastructure (DPWI), spoke about the non-financial performance information of the DPWI. He discussed Programme 1, and told Members about the strategic objective of the sub-Programme on management, which is to improve governance processes within the Department and the Property Management Training Entity (PMTE).

In Quarter 3, nine targets were set by the Department to accelerate their transformation agenda, and all nine targets were undertaken. Three out of three investigations were instituted within 30 days of the allegation laid. The Department told the Committee they will keep trying to meet such targets.

On the sub-Programme, Finance and Supply Chain, 97% of compliant invoices were settled within 30 days but there is a delay in certification and submission of invoices for processing by line managers. To address this Mr Fazel said that the Department was putting in place controls to ensure that there is a timeous submission of invoices.

On the Corporate Services sub-Programme, Mr Fazel listed statistics. He said that 32 out of the 53 funded prioritized vacancies were filled within 6 months from the date of the advertisement. The reason for this 60% success rate is the delay of panel approvals for positions to be filled for a period longer than 6 months, and also because of the moratorium on positions which was put in place in June.

Touching on Programme Two, Mr Fazel spoke about the Professional Services sub-Programme. They managed to achieve the target of developing a draft Programme for capacity building. However, on the Public Works Academy, the Department targeted that by the end of Quarter 3 they would have revised the Academy's business process and create training manuals but that revisions were not done as they lack funding for the implementation of Academy Programmes. The Department has thus put the Academy plan on hold and all activities relating to the Academy, including the business process revision are also on hold.

The Expanded Public Works Programme (EPWP) is the focus of Programme 3. The Department said that 742 969 work opportunities were reported by public bodies in the EPWP Reporting System. This came about through system training and data capturing work sessions which were provided extensively as support measures to improve reporting on the EPWP Reporting System.

Out of the 350 Non Profit Organisation’s (NPO’s) targeted to implement the Non-State Sector NPO Programme, 340 were contracted and supported. Most NPOs in the regions did not meet the selection criteria for participation in the Programme, and only the NPO’s that met the tender requirements were contracted.

Programme 4 is about Property Construction Industry Policy and Research. The Department had a target of developing a Public Works green paper but they did not develop the paper. Mr Fazel said given the transition from the fifth to the sixth Administration, the Comprehensive Policy Review Report was presented to the Minister in August 2019. The Approach towards the finalization of the project has been reviewed so as not to include the development of the Green Paper, but rather to use two existing White Papers towards the development of the Public Works Bill.

The Prestige Policy, which is in Programme 5, has a target of getting one prestige policy approved, but the Department failed to achieve that. Mr Fazel attributed the failure to Stakeholders consultations and engagements on the policy which took longer than expected.

PMTE Non-Financial Performance Information

Mr Fazel said, while the success rate is high, the client departments are not confirming funds timeously. There are delayed verification and certification by line managers, delays in updating banking details, services are rendered without an order and subsequent ratification thereof and there are delays in the approval of the day to day expenditure budget.

He advised the Committee that 12 out of the 60 bids were awarded within 56 days. The low success rate as a result of several factors, including:

• Dependency on the State Security Agency to clear service providers
• Turnaround time for client departments to confirm funding for tenders
• The inability of Bid Committees to make quorum due to competing priorities
• Capacity constraints in terms of Project Managers to deal with the high volume of tenders received

Mr Fazel said, on quotations, there were negative responses from the market when invited to quote. This results in Supply Chain Management (SCM) having to re-invite tenders. Some quotations are technical in nature so are advertised for longer periods to allow potential service providers a reasonable time to submit their offers.

On Programme 3, Construction Project Management, Members were advised that 23 of the 26 targeted infrastructure projects were approved. Failure to get the others approved was a result of slow progress in achieving sketch plan approvals. This was because of Consultants not meeting required specifications, delay in the approval of the drawings by the clients and designs that were completed late due to design changes by the clients.

Department of Public Works Financial Information

Mr Lungile Mazibuko, Chief Director in the Finance department, DPWI, gave a summary of the financial information of the Department. Members were advised that the total budget allocation was R7.9 billion and the total expenditure as at the end of December 2019 is R5.7 billion. This is equivalent to 72% of the total budget allocation.

PMTE Financial Performance Information 

Mr Mandla Sithole, Chief Financial Officer (CFO), DPWI, presented the financial performance to the Committee.  He gave the budget analysis including the following points:

Cleaning and Gardening: Expenditure is at 64% at the end of December which is below the guideline. The expenditure has not increased during the last two months and it is unlikely that the full allocation will be spent.

Private Leases: Expenditure is at 73% of the allocated budget which is just below the expenditure guideline. This budget might under-spend by 2%.

Maintenance: Expenditure is at 95% and has increased significantly as regions are requesting additional funding. Funding will have to be identified on other budget items to finance this. Based on current expenditure trends this budget will still be overspent by R365m. The Department made a recommendation that the envisaged under-spending on property rates be utilized to cover this shortfall and the reallocation to this effect be done.

Repair: 65% of the budget has been spent. This is a significant increase from the previous month. This is still projecting an under-expenditure of R165m.

 Municipal Services: The expenditure is at 79% of the budget which is above the guideline. The expenditure fluctuates monthly based on consumption. Regions have requested additional funding during the reallocation exercise which was approved. The Members were notified that the budget is still under pressure although the expenditure has reduced. A possible over-expenditure of R23m is projected.

Compensation of Employees: 66% of this budget was spent and a straight-line projection indicates possible under-expenditure of R237m.  Members learned that there are currently more than 400 vacant positions in the PMTE.

PMTE Debtors Information

Mr Sithole advised Members that the Department is owed R1.7 billion. The CFO informed the Members that Departments do not prioritize or pay their invoices hence such figure.

Discussion

Ms S Graham (DA) asked the Department if it could contract specialist contractors to do the maintenance at heritage buildings and not opt for the cheapest contractor.

Minister Patricia de Lille and the Director-General, Adv Sam Vukela, replied saying they welcome the proposal and will look for specialists to do work at these heritage sites.

Ms P Kopane (DA) asked if the Department can give clarity on why R3 million was shifted from Programme 1 to 4, and what has the Department done to assist Independent Development Trust (IDT).

Mr Mazibuko said if services are needed, it is legal for the sub-programme which needs it to be funded by the branch that can offer that service to them.

On IDT, Adv Vukela said a plan was drafted on how the IDT can be helped and the Department is working closely with it. If they owe any company a cent they are willing to clear their debt. There are compliance issues they are addressing with IDT.

Mr W Thring (ACDP) asked what the Department is going to do to avoid fiscal dumping, a question echoed by Ms L Shabalala (ANC), and asked about the asset register timeline, why the Academy cannot be used as an opportunity for nurturing the skills deficit the Department has, why the Elevated Work Platform (EWP) has not thought about roping in religious sects in their activities, and asked about action the Department is taking on under-spending.

The Minister replied that the Department is working on making sure it is tender ready by the time the financial year begins and is planning on introducing a schedule for maintenance work. If the Department does not plan properly it runs the risk the danger of not being able to reach its targets. This will lead to fiscal dumping.

On the asset register, the Department is in the process of creating a digital register and it will come and present it once it is done.

The Department found a person to work on a contract basis to create the scope of the Academy, but it was forced to remove this from the plan because it did not have a budget for it.

On engaging religious sects on EWP, the Director-General welcomed the proposal and said it was a noble idea as it will help them market and popularise it.

Mr Sithole said the Department is also worried about under-spending. It is working hand in hand with Project Managers around the country to emphasise project implementation and that invoices should only come once work has been completed.

Mr E Mathebula (ANC) asked why the Department did not allow procurement to take place in December and why there should be holidays for those who do this work, suggesting holidays be scrapped so that the work can be done. He asked for clarity on investigations which the Department undertook (specifically process and action taken), the awarding of 12 tenders out of 60 and the reason for such a poor performance, and steps taken to avert a repeat, and finally asked about clarity on the R10million allocated to the Parliamentary Board.

The Minister said the Department is guided by the Public Finance Management Act which recommends that such work not be done in December as most companies will be closed.

Mr Fazel proposed he come and give a comprehensive report on investigations taken by the Department. The issues range from fraud, corruption and some have been sent to South African Police Services (SAPS), Special Investigations Unit (SIU), and Labour.

On tenders, the Minister said according to the Public Finance Management Act, the Executive is allowed to interfere in as far as the drafting of these tenders is concerned so that they can look at issues such as quality and security.

Mr Mazibuko responded on the R10 million question and said the money was related to the transportation of Members of Parliament (MP’s) to villages and transporting their children to school. If there is a balance the Parliamentary Board is allowed to decide how it will be used.

Ms Shabalala welcomed the idea of the Department paying direct to Eskom and municipalities. She asked about the Telkom towers.

A Department official responded by saying the project was handed to the contractor who has also sub-contracted it to others. The Department aware of the disruptions made by the community and it has intervened and are currently resolving the issues found to be a problem between the contractor and the subcontractors.

Ms S Van Schalkwyk (ANC) asked about measures taken to ensure vacant positions are filled, why the youth percentage on EWP is very low and what is being done to address that, and if the Department has a Memorandum of Understanding (MOU) regarding the fact that by April, departments will be taking care of their accounts.

The DG said the delay in filling the positions was due to the moratorium, although it was a short term to allow them to align the Department. Work has started to ensure positions are filled.

On the low percentage of youth on EWP, Mr Devan Pillay, Chief Director: Expanded Public Works Programme (EPWP), Sustainable Livelihood, Convergence and Compliance, DPWI, noted that this has always been a problem for EWP as many projects do not attract the youth. However, the Department has drafted new projects, such as Information and Communications Technology (ICT), which it believes will attract the youth.

The CFO responded on the MOU, saying letters were sent where it was made clear municipalities would only be assisted if they committed to clearing their accounts.

Ms N Tolashe (ANC) was not happy with the 10 men member delegation which the Minister came with and there is a need to address this and add women.

The Minister said the Department employs more women and the deficit is only 12%.

The Chairperson asked why cleaners were used to deliver invoices to service providers and if the Minister is aware of the dilapidated state of Parliamentary villages.

The Minister said it is true that cleaners were used to deliver invoices. She explained that Cape Town had a backlog of undelivered invoices which totalled to 11 000 and as result cleaners were asked to help but an investigation has been instituted to find out who gave that order.

On the state of villages, she said she is aware, and renovations have started but the Chief Whip's Forum stopped this saying the money for the renovations should be given to the MPs for housing. The renovations have started again and the Committee would be given a monthly progress report.

The Chairperson said outstanding minutes would be adopted at the next Committee meeting.

The Chairperson adjourned the meeting.