DPWI/PMTE Audit Outcomes; DPWI/PMTE 2022/23 Annual Reports

Meeting report

The Chairperson welcomed all to the meeting, and apologies were acknowledged.

The Committee adopted its fourth term programme (9 October – 2 December)

Auditor-General on DPWI/PMTE 2022/23 annual performance

Mr Londoloza Songwevu, Senior Audit Manager, Auditor-General of South Africa (AGSA), took the Committee through the Budgetary Review and Recommendations Report (BRRR), indicating that the continued misuse of state resources and persistent weakness in systems of transparency, accountability and performance were significant concerns for South Africans. All key stakeholders, including leadership and decision-makers, had a role to play in the accountability ecosystem.

The portfolio had seen an improvement in the overall audit outcomes, as the Property Management Trading Entity (PMTE) had resolved the prior year's disclaimer opinion due to producing a reconciliation for the change made to the asset register. The Construction Industry Development Board (CIDB) had improved from a qualified opinion in the prior year to an unqualified opinion with findings by adjusting revenue during the audit to the current year and prior year misstatement.

On the findings on planning for service delivery, it was mentioned that the Expanded Public Works Programme (EPWP) indicator had been changed, and a number of reports were produced that reflected the work opportunities created. Since the Department was now reporting on progress reports, there was a requirement to establish a process for compiling these progress reports. However, adequate processes had not been established to consistently prepare, review, and authorise the EPWP progress reports.

At the Independent Development Trust (IDT), the public was not able to discern the full extent of the service delivered, as the entity was not able to adequately monitor its performance. The sector was not able to successfully track and monitor the impact the work opportunities created, as well as the training provided, had on the upliftment of the unskilled, marginalised and unemployed people of South Africa. The DPWI did not provide the designs of projects timeously, which contributed to project commencement delays. This therefore frustrated the client departments to the point that they had started to look more and more for alternative options. Enough savings were not realised from private lease arrangements, resulting in the continuation of funds from the fiscus going to private individuals.

Although 86% of the budget was spent on the programme that was key to service delivery at the DPWI, only 20% of the planned targets were achieved. Infrastructure projects would not be ready for use by the intended users on time, which delayed the service delivery and there was a chance of requesting additional funds to complete the projects, which would put a strain on the fiscus. The CIDB's best practice was able to achieve all the targets set for the year due to regular monitoring. However, it still needed to ensure that the entity impacted the entire industry to ensure that all construction companies complied with the CIDB Act and the regulations.

The Auditor-General (AG) was in the process of issuing a material irregularity (MI) notification due to the underutilisation of the Telkom Towers complex. This property was purchased for R694 million in 2016, but only one of the nine buildings forming part of the complex was utilised. Furthermore, an auditee would quantify the full loss due to the overpayment on the purchase of bridge materials and delivery costs for the Welisizwe rural bridges projects.

It was mentioned that the MI had caused the intended impact. For example, the PMTE had increased its oversight of procurement and contract management of special or emergency infrastructure projects to prevent recurrences. R17 million in likely financial loss had been prevented due to the MI. The PMTE had been able to recover R16.2 million in lease overpayments. The DPWI had developed a specific policy to govern state funerals or events to prevent recurrences. Furthermore, the Department was embarking on buying its own events infrastructure and developing internal capacity to implement events/funerals.

On the quality of financial reporting, it was mentioned that internal control systems developed to address prior-year qualifications were ineffective in certain instances. Issues around leases at the PMTE remained, leading to overpayments being made. Weaknesses in financial management controls relating to programme assets and liabilities and prior year irregular expenditure at the IDT were still a concern. Action plans should be intensified to address all weaknesses and be monitored regularly. Further, non-compliance with laws and regulations had been reported within the portfolio. Repeat findings plus new issues were noted. Preventative controls had not been prioritised, but the portfolio had been reactive in responding to compliance issues.

There had been a movement in the disclosure note of the irregular, fruitless and wasteful expenditure (IFWE) that had been moved from the annual financial statements to the annual report. Because the disclosure of IFWE (historical balances and movements) was no longer required in the annual financial statements and no audit assurance was provided thereon, the oversight structures would need to engage directly with the information disclosed in the annual report to exercise their oversight responsibility.

Concerning compliance with key legislation, the AG said that the lack of proper internal controls for the PMTE and the IDT had led to qualified financial statements. These entities also did not collect their revenue as required, which impacted their financial viability. The lack of dealing with irregular expenditure had a negative ripple effect, in that there would be a recurrence of similar instances of irregular expenditure that continued to result in leakages to the fiscus.

Due to its poor track record, user departments had lost confidence in the DPWI's capabilities to deliver quality infrastructure promptly and within budget. As a result of delays and poor construction work by the PMTE, more user departments were assuming functions which were designated for the DPWI, such as the construction of infrastructure, maintenance of state property and the payment for municipal services. For example, the restoration of the burnt-down Parliament was being done by the Development Bank of Southern Africa (DBSA), while 87 Defence major projects and 159 South African Police Service (SAPS) projects were not being handled by the DPWI.

Some of the weaknesses identified that hamper progress in infrastructure delivery include inadequate needs assessments and ineffective use of feasibility studies. Ineffective monitoring of project milestones, project costs and build quality; intergovernmental coordination and collaboration failure; and ineffective utilisation of facilities and poor conditions of state buildings. In response, the AG recommended that key role players should plan together the long-term turnaround strategy of SA infrastructure; projects should be adequately planned to reduce delivery delays, unnecessary extensions, and cost increases; the segregation of coordination, monitoring and custodianship roles among multiple role players prevented clear accountability and consequence management on the state of SA infrastructure; and the CIDB should utilise its enforcement powers as one of the regulators of the construction industry.

The public works and infrastructure sector had used most of its allocated maintenance budget. However, the sector was more reactive, rather than proactive, in its response to the client department emergency requests that could have been addressed through regular preventative maintenance of state buildings. The Department's goal over the strategic period under review was to achieve an 80:20 ratio of scheduled to unscheduled maintenance. Contrary to the set goal, the Department had not achieved this goal, as expenditure on unscheduled maintenance had consistently exceeded scheduled maintenance.

While the trading entity was making progress in identifying overpayments, there were still concerns in the control environment due to the controls being reactive and ineffective in preventing overpayments. There were currently 3 MIs on the overpayment of leases. In the past, these overpayments were due to capturing and system deficiencies, where payments were not following the lease agreements. In the current year, it had been noted that the PMTE was overpaying landlords on parking bays. Where the parking bays per lease did not exist. This was a concern, as these should be confirmed before the lease commences.

One of the medium term strategic framework (MTSF) goals of the public works sector was to provide a dignified client experience for its user departments. Where a department was not able to provide this from the asset register, the DPWI leases from private landlords. There were, however, concerns noted from user departments where the quality of leased buildings, especially those that provide key service delivery, were in poor condition. The Office of the AG had noted instances where even the leased buildings were not in good condition.

It was noted that the ARCHIBUS project was initiated in 2015, but eight years later, only two of the eight modules were live and being used by the PMTE. This was despite two appointed suppliers and a cumulative expenditure of R36 million. The project had been significantly delayed due to poor contractor performance relating to the software development. However, no penalties had been issued to these suppliers. The AG recommended that the appointed supplier should be monitored on progress made and held accountable for any delays or poor workmanship. Furthermore, regular reports should be made to the Minister and the chief financial officer (CFO) on progress to ensure that the project is completed and brought to use. Disciplinary action should be taken on any poor contract management by internal officials.

On governance issues, the AG indicated that the DPWI had not had a permanent Director-General (DG) since 2019. Since then, three officials have occupied the position in an acting capacity. This led to a lack of consistency and follow-through on commitments that were longer than a year. This had a ripple effect on the stability and effective functioning of the organisation. Further, the DG of the DPWI was the standing chairperson of the Parliamentary Villages Management Board. However, there was currently no functional board.

See attached for full presentation

Discussion

Ms A Siwisa (EFF) indicated that the issues raised in the presentation were issues raised previously by the Committee, but they seemed not to have been attended to by the Department.

She was happy with the recommendations made, especially on the issue of the Telkom Towers. This was mainly because there seemed to be a long way to go before the issue of Telkom Towers was sorted out.

She was also happy that the DPWI had informed the Committee that it had a maintenance plan in place, but it seemed like this had never materialised into anything. It was, however, encouraging that this was something that had been noted and raised in the presentation.

Ms Siwisa commented that the conditions of state properties were shocking, including the overpayments. She cited an example on the issue of the Welisizwe rural bridges programme, indicating that there was no way that in the whole province of KwaZulu-Natal (KZN), no other company could have been involved in the project. Having a local company would have been beneficial in promoting and identifying other businesses in the province to benefit, which would inevitably have created job opportunities for the local people. This would also have limited overpayments. If the Department ordered the bulk of things from one province to be used in another, it meant there was no consideration for the local people who were in the same business.

Funding to the PMTE had been cut off, and it had been said that the people who could intervene were AGSA. This was a concern, because the report presented indicated little progress in what was being done.

Mr I Seitlholo (DA) agreed that the outline of DPWI challenges raised by the AGSA were not new, and had previously been discussed by the Committee. The biggest concern was that often, the responses to questions given to the Committee by the Minister's office were in contradiction with what had been presented by the AG. For example, on 7 June, there had been a discussion about a leasing circular of the Department. When issues were raised, the Minister somewhat defended the state of DPWI-owned properties. When looking at the current state of PMTE, and based on the previous Committee's experience, it was known that the PMTE used a 2016 framework. The Committee had raised a question on how it was possible that an outdated framework was still being used considering the current challenges highlighted by the AG, particularly as it related to the current state of DPWI-owned properties. 

The issue of the Telkom Towers could be used as an example to show the failures of the Department, including the failure to curb the illegal occupations of properties under its custodianship. In response, the Department had indicated that there were security services to safeguard vacant state-owned properties in various municipalities. It was further mentioned that the Department lets out vacant properties at reasonable rental rates to avoid illegal occupation. However, the AG’s presentation disputed these claims made by the DPWI, as it had been mentioned that some of the properties owned by the Department were not even known by the Department.

Another issue that must be tackled as far as the PMTE was concerned was around the funding received, including the challenges that had been raised several times. Why was the DBSA used as an implementing agent when the PMTE was available to undertake such programmes as far as infrastructure was concerned?

Mr Seitlholo noted the improvements, particularly at the CIDB. However, when looking at the overall service delivery outcomes of the PMTE and DPWI, there were surely enormous challenges still being faced. Noteworthy were the governance-related issues as far as the leadership instability was concerned, and it was unacceptable that DPWI had not had a permanent Director-General (DG) since 2019. This meant it did not have institutional memory, which resulted in poor accountability measures, including dealing with the Public Works Bill.

What commitments had been made by the executive of the DPWI, particularly the Minister, and the AG, in resolving the long-standing issues that the AG had highlighted?

Mr E Mathebula (ANC) commended the work done to curb irregular and wasteful expenditure in the Department. It had been mentioned in the presentation that the AG had moved the irregular and wasteful expenditure from the financial statements to annual reports, and that helped as a control measure. The Committee should applaud and support the AG, as the issue of irregular and wasteful expenditure was a serious matter.

There had been a lack of compliance with key legislation, particularly procurement processes. The corruption and non-compliance with key legislation resulted in the government being unable to fulfil all its obligations in other projects because there was no money due to the corruption and non-compliance in procurement processes.

It was worrisome that irregular and wasteful expenditure cases had grown by about 250%, with no consequence management on irregular and wasteful expenditure that amounted to R2.5 billion. This was a worrying trend, and hopefully, it was being dealt with.

It was good that the issue of Beitbridge was being attended to, including holding those responsible to account. It was concerning, however, that only the officials concerned in the cases of mismanagement of state funds were dealt with, and not the companies that had received money but did not declare it, thus also being part of the corruption. What had been done to deal with the companies that had unduly benefited from the corruption?

Ms L Mjobo (ANC) asked for clarity on the Parliamentary Villages Management Board, where the presentation had mentioned that no financial statements had been submitted since 2013, while another report indicated 2014.

There were 107 delayed projects. In which province were those projects?

Mr W Thring (ACDP) referred to the underspending that was mentioned in the presentation, and said that although this had been permissible underspending, this was a tragedy given the high unemployment that was prevalent, as it meant that there were job vacancies that could be used to create jobs and employ many people.

The AG had mentioned that some of the irregular and wasteful expenditure issues involved consequence management and internal control deficiencies. What was being done by the AG to use its powers to close the gaps creating such issues?

The Chairperson echoed the sentiment that the issues raised by the AG were issues that had been raised previously by the Committee, though the Department had failed to attend to them.

Unoccupied buildings that belonged to the DPWI had become a den for criminals, while some were being vandalised. It had been suggested that some of the properties needed to be leased out, or even donated to departments that needed them instead of remaining unused. The Committee would echo these issues and recommendations made by the AG to the Department until they had all been corrected.

Responses

Mr Songwevu acknowledged the feedback and questions from the Committee, indicating that the issues raised provided insight to the office of the AG.

On the R52 million awarded to a supplier to be used to upgrade the ARCHIBUS system, he said that following a meeting with the DPWI Minister, it had been decided that there should be a specific focus on this system, including its effectiveness. The discussion had started, and further insight would be provided as the discussions continue.

On the issue of moving irregular expenditure from the financial statements to the annual report, this was a change brought about by a decision of National Treasury, not necessarily the AG. All government entities have been compelled to follow this change when it comes to irregular, fruitless, and wasteful expenditure. It was noteworthy that the presentation highlighted that if the audit had found material findings in the prior year that could not be resolved, they would not necessarily lead to the qualification or modification of the audit report.

Concerning criminal charges laid against the companies implicated in the mismanagement of state funds, Mr Songwevu said that as part of the AGSA's material irregularity processes, there would be recommendations made, or they would simply approach the Special Investigating Unit (SIU). It would then be the SIU that took action, such as opening a criminal case. A case on the Beitbridge issue had been opened, and follow-up on that was needed. This had been because of the material irregularity processes actioned by the office of the AG.

Regarding the issue of the Parliamentary Villages not submitting financial statements, the AG's report mentioned that no financial statement had been provided from the 2013/14 financial year. On the R11 million transfer received by the Parliamentary Villages from the DPWI, the AG clarified that this was received on an annual basis. Therefore, the R11 million was not a cumulative figure.

Mr Songwevu said that based on the evidence that AGSA had, the 107 delayed projects were spread across the country, so they were not concentrated in one province.

Responding to how the AGSA uses its powers to deal with issues of consequence management, he clarified that it did apply such power and authority as evidenced by the 11 material irregularities. AGSA was in the process of assessing whether some of the transactions met the material irregularity's criteria. He emphasised that the mate-ial irregularity criteria were quite stringent. In instances where there was irregular expenditure, it needed to pass these stringent criteria for a conclusion to be made that such expenditure had also led to a material irregularity,.

Adoption of minutes

The Committee adopted the minutes of the meeting of 20 September.

DPWI/PMTE briefing on the 2022/23 annual report

Ms Nyeleti Makhubele, Acting Director General, DPWI, introduced the delegation from the Department, and handed over to them to present.

Mr Lwazi Mahlangu, Acting Deputy Director-General: Governance, Risk and Compliance, DPWI, said that some of the key highlights in the 2022/23 financial year included the processing of 120 998 hectares of land for release in support of the land reform programme. R3.05 billion had been spent on contractors and consultants for infrastructure projects, about 95 infrastructure projects were completed, and 65 sites were handed over to contractors. Also, there was an unqualified audit opinion on the asset register.

Over R3 billion had been spent on construction project management, which was about 86% of its budget allocation for the financial year. 97% had been spent on the budget operations of the Department. The vacancy rate was at 11%, which was an improvement from previous financial years. 1 100 beneficiaries had participated in the DPWI’s skills pipeline, while 18 candidates had obtained professional registration within the built environment.

Reporting on the entity’s performance information, Mr Mahlangu said that in Programme 1 (Administration), there were various challenges experienced in the period under review, such as disciplinary cases taking longer owing to a number of postponements and other unforeseen circumstances; the unavailability of suitable applicants with disabilities; and business solutions for digitisation being affected by the delay in approving the procurement strategy.

In Programme 3 (Expanded Public Works Programme), the challenges experienced involved the non-reporting by public bodies. However, the DPWI continued to offer and provide technical support to public bodies to increase the labour intensity of projects, leading to an increase in the creation of work opportunities.

In Programme 4 (Property and Construction Industry Policy and Research), a challenge experienced was that in the process of drafting the Public Works Bill, clarity had to be sought and provided by the Office of the Chief State Law Advisors on the trajectory of the draft Bill. This was being processed, and thereafter, the draft would be ready for gazetting. Also, the Infrastructure Development Amendment Bill had not been introduced to Parliament owing to extensive consultations with the National Treasury on institutional arrangements regarding the public infrastructure investment management ecosystem.

Reporting on the PMTE's performance information, Mr Mahlangu said that in Programme 3 (Construction Project Management), the underperformance concerning completed infrastructure projects was affected by late approval of funding by client departments, extensions requested by contractors, the cancellation of bids, contractors not performing, and slow progress by contractors because of financial difficulties.

In Programme 4 (Real Estate Management Services), the challenges faced included that the initial guidelines developed were inadequate, and had to be revised to suit the challenging environment.

In Programme 5 (Real Estate Information Registry Services), there had been efforts towards addressing the audit issues raised previously to improve the audit outcome for the period under review.

In Programme 6 (Facilities Management), there had been delays in the roll-out of the multidisciplinary technical team panel which had affected the critical components to be assessed in accordance with the target.

Discussion

Mr Mathebula congratulated the Department on the work done, especially on job creation. Against a target of 5 million jobs, 4.1 million had been achieved. This was commendable, especially in a country where unemployment was so high.

In the presentation, it was stated that fraud had been reduced to a single-digit percentage. However, fraud should be completely non-existent, and not remain even at a single-digit percentage. During an earlier presentation, the AG had reported on irregular and wasteful expenditure, and the PMTE had the highest irregular and wasteful expenditure. Although it was reported to have decreased, it should be non-existent.

According to the AG’s report, both the DPWI and its entity, the PMTE, had failed to comply with key legislation, especially regarding procurement processes. It was disappointing that there was little regard for key legislation on procurement, especially given that the Department and its entities had highly educated officials who knew how to deal with issues of procurement.

How many people have been taken to task on the issue of irregular and wasteful expenditure?

Ms Siwisa said some of the issues raised by the AG included that the DPWI would lose some of its properties to sister departments and the poor maintenance of state properties. The maintenance plan was unclear, and the worrying truth was that the DPWI and PMTE would end up not knowing what to do about all these issues. This was linked to poor consequence management, including unfilled vacancies which had resulted in poor control measures at the DPWI and PMTE.

Uncompleted projects were a serious issue that ought to be addressed urgently. It was unbelievable that a contract could be awarded to a contractor who, in the middle of the project, ran out of funds to complete it. This was an issue that had been raised with the Department.

The failure to follow key legislation on procurement processes continued to result in the Department being unable to deliver on its mandate. This included the late submission of invoices, which needed to be duly corrected to properly deliver services. She asked what was being done to ensure that those who did not fulfil their obligations as per legislation were held to account.  

On the Welisizwe project, what had been the reason for the Department to take a supplier from another province, which had resulted in the overcharging of the Department? Why were suppliers from KZN not utilised to reduce the costs? Did the Department not learn from the mistakes of the Beitbridge project?

If nothing was done about the challenges of the PMTE, the Committee would have failed the people of South Africa. There must be serious interventions to ensure the entity delivers on its mandate.

Ms Siwisa indicated the acting DG of the DPWI had said that Infrastructure South Africa (ISA) was responsible for intergovernmental strategic work. Before ISA, who had this responsibility?

Mr Thring referred to the irregular and wasteful expenditure which had been somewhat condoned because it had overlapped from one financial year to another, but emphasised that the reason for the overlap showed the seriousness of the irregular and wasteful expenditure issue in the Department and its entities. The consequence management and disciplinary actions did not match the level of the mismanagement of state funds prevalent in the DPWI and its entities.

If there was no turnaround strategy at the PMTE, then the DPWI was headed for a complete collapse of the entity or even a rescue intervention, which was not ideal for an entity that should be self-sustaining.

What was the status of the 24 bridges in KZN which were intended to be built and where payments had been made, but only four bridges were built? Could the Department provide details of the progress that had been made?

Mr Thring referred to material irregularities, such as the Telkom Towers. He said that if the Department was incapable of executing its functions, there were students in the country and sister departments who were paying exorbitant amounts of money. At the same time, there were buildings left vacant by the PMTE, and this was unacceptable. If there was an utter failure, these buildings should be given to students or sister departments who needed them.

Mr Seitlholo said that it must be noted that during the presentation of the AG’s report, it was emphasised that most of the issues raised at the DPWI and its entities were old and long-standing issues. There was a lack of compliance with the legal prescripts of the Public Finance Management Act (PFMA). When looking at Section 39 of the PFMA on budgetary control, if the acting DG had implemented this section, the Minister and National Treasury would have known about possible wastages long before October each financial year, and the weaknesses raised by the AG could have been duly addressed.

He said it was unfortunate that the Department's executive was not present in the meeting to provide clarity on the issues that had been raised. He then prompted the Committee to ask itself in terms of the meaning of executive action. Did executive action not mean doing oversight on how the Department used the allocated budget to implement policy? According to the PFMA, the Minister of the DPWI should receive a report to be aware of the policy weaknesses, and to ensure that they were attended to in time. Seemingly, this was not what was happening at the DPWI.

When the Minister was asked about the illegal occupation of properties under the DPWI, he indicated that the Department provided security services to safeguard state-owned properties in various municipalities across the country. This was not true, however, because of the failures of the PMTE, particularly with respect to the Department and the PMTE knowing where most of their immovable assets were, because the immovable asset register was not up to standard.

Regarding the EPWP, Mr Seitlholo said the DPWI was the funding agent. It was known in the various constituencies that the programme had challenges regarding vacancies, how the employment process took place, the amount of stipends or salaries received by EPWP employees, and questions about financial mismanagement. What was the best way to engage with the Department where financial irregularities were raised at a local level?

Four departments -- Transport, ISA, the South African National Defence Force (SANDF), and the DPWI -- had been responsible for the Welisizwe project. He requested a breakdown of the responsibilities as far as the project was concerned because it was impossible to listen to a presentation highlighting the Welisizwe project while some of the departments responsible were not accountable to the Portfolio Committee.

What had led to the 158 resignations at the PMTE? What critical positions were the resigned individuals occupying within the entity? What had been the impact of the resignations? In a previous report, it had been noted that some of the resigning individuals were going to the private sector -- what was attracting them to the private sector? What was PMTE's plan to respond to this issue?

Was the framework being implemented by the PMTE not outdated, and what were the plans to revitalise it to ensure that it was in line with the current needs and standards in the country?

Mr Seitlholo asked for a layperson's briefing on Circular 135. What did it intend to achieve from start to finish, and how could the citizenry engage with the Department concerning this circular?

He said the DBSA had been an implementing agent for many of the projects undertaken by the DPWI, including one of the biggest police stations in the Free State, the Park Road police station in Bloemfontein, as well as the Odendaalsrus police station. During oversight in Free State, it had been clear that the DBSA had not paid some of the contractors, and much of the work on these two police stations had come to a halt. Was this not part of the PMTE’s responsibility? The Department should provide a written response to the Committee on the current state of these two police stations and how it intended to ensure that these renovations were concluded and handed to the SAPS.

Mr Seitlholo also asked for the database of the property and the landholdings that the acting DG had referred to as being dealt with as part of Circular 135, specifically those that were currently on the table of the DPWI.

Ms L Mjobo (ANC) commented on the issue of overdraft at the PMTE, and indicated that the Department should provide further details on this issue.

She said she was worried about the acting DG leaving the meeting early while the Minister and Deputy Minister were absent. She requested that this issue should be corrected.

The Chairperson indicated that the AG had provided a comprehensive report on the progress of the Department and its entities. In one of the slides, the AG mentioned that the Department continued to fail to deliver on its mandate, resulting in user departments losing faith in the DPWI and its entities. This was a concerning matter. Some long overdue projects have not been completed to date.

On the overpayment for parking bays, the AG had found that 209 non-existent parking bays had been paid for, for years. This was unacceptable and resulted from the lack of guiding departmental policy frameworks, which meant there were poor control measures. How would the money be recovered?

The lack of consequence management was serious, and showed a lack of interest in enforcing consequence management. This was a long-standing issue that continued to impact the Department and its entities. What was even more concerning was that the Committee had been raising these issues for a long time.

Responses

Ms Makhubele began the DPWI's response by referring to the ISA versus PMTE issue, and said that as previously indicated, the mandates of the two institutions were different. The DPWI agreed with the Committee that the funding mechanism of the PMTE might be the source of challenges for the entity. However, when looking at their mandates, ISA was responsible for strategic infrastructure and intergovernmental duties, which meant it works with various departments with strategic infrastructure. The PMTE, on the other hand, was responsible for state-owned facilities vested in the national Department of Public Works. The Department was thus responsible for asset management, construction, maintenance, and overall provision of accommodation. These were functions that were not mainly found in ISA. The only component of PMTE that could find solace within ISA was construction project management.

Regarding the safeguarding of state-owned properties, the deployment of security guards to guard properties was the Department’s default position. However, it agreed with the Committee that this approach was not sustainable, hence the formulation of Circular 135, which is currently in implementation. What the Department had decided to do was that instead of going searching in the market, it was better to start with the applications for properties that were already on the table. This would lessen the costs associated with the maintenance of the properties.

On the question of what ISA was doing now, Ms Makhubele clarified that this was a responsibility borne by the various departments and municipalities in every province doing their own infrastructure. ISA had been created to consolidate all the infrastructure efforts in the country to have one repository for ease of reporting and accountability.

Mr Mandla Sithole, CFO, DPWI, said the Department agreed with the Committee on the issues raised, including the holding to account of officials responsible for the mismanagement of government funds at the DPWI and its entities. 55 officials had been retrenched for mismanagement of funds in the Department. There was also a process in progress that was further looking at consequence management.

Ms Thembi Hlatshwayo, Chief Director: Human Resource Management, DPWI, responded on the employees who had left the Department during the last financial year. She said that when checking and analysing the exit interviews, it had been found that there was a notable number of former employees who had left because of the competitive salaries in the private sector, while others had left to work overseas. There were those whose contracts had ended, while others took early retirement. About ten former employees had referred to unfair treatment in the sections where they were employed. The vacancies of those who had retired because they were at retirement age had since been advertised. Others had transferred because of family reasons.

Regarding the vacancies at the PMTE, the Department has since advertised several positions, including the DG and DDG positions. However, due to National Treasury's cost containment circular, it had paused the recruitment process, awaiting the DBSA to provide guidance.

Mr Nkosana Kubeka, DDG: Small Harbours and Coastal Properties, DPWI, started by addressing the questions about the contractors. He said that when the Department issued a bid for construction services, the bidders would price as per the bill of quantities (BoQ) and submit a bid. Through the evaluation process run through the legal prescript, all bids were transparently and fairly evaluated. The recommended bid would undergo a risk assessment to check how far off the bidder was from the estimates. Once that process had been completed, a letter of award would be issued, and the contractor would start doing the job. Normally, the bidder who scored the highest was the one that had the lowest bid price.

In the delivery of the infrastructure, the successful bidder could experience problems because the site situation might change because the necessary projections had not been done, and they would thus run out of money to deliver. What the Department then did, as per the contracts, was to put the contractor on terms to give them the opportunity to recover the work and time, and side penalties were given. When it became clear that the contractor was unable to perform, the Department would terminate the contract. In the process of completing the outstanding work, a BoQ was developed to issue a second tender to replace the contract. Currently, the Department has developed a strategy of panels, and the strategy is being presented to the supply chain management (SCM). Once the strategy was adopted, the Department would go to the market to search for a panel of contractors and professional services.

Mr Kubeka said that when the Welisizwe project started, it had started in the provinces of KZN and the Eastern Cape. There were a few sites in both provinces, with one service provider appointed through a normal procurement process. The Department then made an application through the Budget Facility for Infrastructure (BFI) to increase the number of sites and provinces to implement the Welisizwe project. Currently, six provinces are linked into three clusters to make a business case. The contractor being used was ending soon, but the Department was already at the SCM stage, where the appointment of three material steel suppliers was underway. The Department issued a tender in each province, specifically for aggregates, cement, gabions, and other building materials. If all went well, by the end of October or early November, the Department intended to go to the market to look for bidders in the different provinces who would supply the building materials.

Regarding the overpayment issue, the Department was still within the contractual arrangements, although there had been overpayment in terms of transport costs. However, there had been an engagement with the service provider, and Mr Kubeka confirmed that an amount of R4.8 million had been recovered and paid back to the Department.

He explained the different roles of the Department of Transport, the SANDF, ISA, and the DPWI. The DPWI was the one that went to Treasury to apply for the budget facility for infrastructure (BFI), and was currently the programme manager -- including providing artisans and some technical resources to the programme. ISA was also key in the delivery through the provision of monitoring. The SANDF was the contractor and a professional service provider, specifically the skillset that was sitting with the engineering formation of the SANDF. When the award for the BFI was made, the agreement between the DPWI and the National Treasury was the legal authority for these bridges would lie either in the provincial Department of Transport, or in the local authority of the municipality. It was therefore agreed that the funds would be disbursed through the Department of Transport, which would then use the Provincial Road Maintenance Grant system to distribute the money to the provinces.

Responding to the Park Road police station issues, Mr Kubeka said there were contractual challenges with the contractor. However, the challenges were being addressed and the contractor was back on site. The DPWI, the DBSA and the contractor were dealing with the contractual dispute.

At the Odendaalsrus police station, the contractor had been terminated because of poor work performance. The Department was currently in the process of replacing the contractor -- the DBSA had already provided the cost estimate, and the DPWI was currently finalising the replacement scope. The replacement contractor would be appointed soon.

Ms Carmen-Joy Abrahams, Director-General: EPWP, said that EPWP had been working closely with the AG and the Department of Planning, Monitoring and Evaluation (DPME) on the review of the annual performance plan (APP). The DPME had advised that there was a need to add an annexure briefing on the consolidated indicator, listing all the public bodies and their contributions to work opportunities. In that case, the AG would then be able to see and audit each of the contributions of the public bodies which would improve accountability.

Regarding the recruitment of participants or stipends not being paid, she said Members were welcome to email her directly and provide more specific details of such cases. She would be more than delighted to help.

It was prudent for the DPWI to inform the Committee of what the Minister planned to do regarding improving service delivery within the mandate of the Department. The Department intended to implement an accelerated delivery model by using alternative forms of delivery, where projects were implemented through an accelerated process, yet was still not conflicting with the PFMA. This would be effective and promote the deliberate appointment of contractors, especially women, youths, and those living with disabilities.

The Chairperson said that the written submissions should be submitted to the Committee by Monday, 16 October.

The meeting was adjourned.