Department of Public Works Turnaround Strategy, 2nd Expanded Public Works Programme Summit resolutions

Meeting report

Department of Public Works: Turnaround Strategy briefing
Ms Mandisa Fatyela-Lindie, Acting Director-General, Department of Public Works, presented the Turnaround Strategy of the Department of Public Works (DPW or the Department). This strategy would aim to stabilize the Department and ensure that it continued to transform and fulfil its function in a sustainable manner, in line with its mandate. She acknowledged that the Department was currently in a difficult position, but assured the Committee that she would aim to ensure that a clear path was set for the future.

She noted that the Department was the custodian of the wealth of the nation, since it managed the immovable assets of the country. DPW was mandated with a large scale of work and its portfolio was about seven times larger than any other portfolio in any other sector.

Ms Fatyela-Lindie alluded to the inherent instability in the Department, arising largely out of the numerous Directors-General who had held office over a number of years. The increasing rate of change of both executive and administrative leadership had posed severe challenges. Workshops that the Department at one stage conducted to facilitate artisan training had been discontinued. There had also been under-spending and incorrect spending of the budget. Organisational reviews had been done, but not followed through. She also noted limited success in the implementation of essential policies, as well as inherent issues arising from inappropriate recording, monitoring and evaluating systems, resulting in the collection of unreliable data. The Department has also experienced widespread client dissatisfaction, and faced allegations of corruption. The last audit disclaimer provided an opportunity for the Department to turn around its current situation, but noted that in order to achieve this, a bold and committed approach was required.

Ms Fatyela-Lindie dealt with budget and financial challenges. She conceded that under-spending of the budget could be attributed to a lack of proper project planning. The DPW had fallen into the habit of shifting away budgets from projects that were failing, to other projects, resulting in the situation where the funds were not used by either project to any advantage. She added that when controls were loosened, and there were attempts to “push” spending through, this created the opportunity for corruption. The audit disclaimer showed that there had been violation of National Treasury requirements for supply chain management. Delayed project implementation very often resulted in escalating project costs, displaying lack of planning, and lack of proper capacity in the quantity surveyors. All of this drew funds away from other areas where spending was needed. The DPW had also been unable to produce credible numbers of jobs created from the infrastructure projects.

Ms Fatyela-Lindie then addressed service area challenges. Firstly, she made the point that there was an inherent conflict of interest because DPW was required to serve both as an implementer and a regulator. DPW had now requested the accounting firm of Ernst and Young to assist in creating a credible asset register, and it would report directly to the Office of the Acting Director-General. She conceded the very poor planning and management offered by DPW even to its prestige client, the Parliamentary Villages. She had made a commitment, and carried it out already, to visit the Villages to assess their condition. DPW had issues in property management and facilities, and this included proper management of the maintenance backlog, an inherited difficulty, but one that was perpetuated by the shortage of proper skills. There were several concerns around leasing. The entire leasing system needed to be overhauled, to correct the leakages in this system. The construction project management section was under resourced and was suffering from a serious shortage of skills.

She then made special mention of the challenges that the Department faced with regard to the Inner-City Regeneration (ICR) programmes. These programmes were approved by Cabinet to ensure that all government departments were based in down-town Pretoria. The ICR was linked to urban regeneration projects, to create new economic opportunities in areas, but some departments had objected to being relocated in areas that they deemed non-aesthetic.

The Expanded Public Works Programme (EPWP) of the Department had been marred by many issues, including poor reporting, but in this regard she stressed that it was not within the mandate of the DPW to ensure that municipalities were functioning properly and adhering to the demands placed by the programme.

Another serious issue related to human capital skills. Most of the DPW’s employees were not technical staff, although they were needed to help the DPW move forward. The internal audit structure was also under-resourced, and needed to be strengthened.

The DPW Turnaround Strategy spoke to essential core issues and highlighting essential role players. A Technical Advisory Committee would be tasked with dealing with some issues. The accounting firm Ernst and Young would fall under the Deputy Director General: Asset Management unit. Various people would be playing a role, from public and private spheres. She tabled a list of the Support Team composition (see attached presentation), noting that its function was to oversee the stabilisation projects and set out a performance framework, with timeframes, and provide a structure for the systemic reviews in each business area. It was further tasked with developing the framework for transformation, based on further diagnostic feedback, including the successes in the stabilisation process and systemic reviews. Special emphasis must be placed on human resources. The main tenet would be an effective change in management, and the proper nurturing of capabilities within the existing staff. Emphasis would be placed on effective recruiting, as well as building effective Corporate Services. There would be a need to increase the capacity in the Department, but this would encompass actions to achieve stability, systemic reviews and following a transformation agenda (see attached presentation for further details). Instances of maladministration and corruption would be dealt with decisively.

Discussion
Ms A Dreyer (DA) sought clarity on redundant staff who were not performing effectively, saying that they needed to be removed from their posts, but suggested that the DPW should engage the services of labour law experts, to achieve this efficiently and correctly. She was pleased to hear the commitment to deal decisively with maladministration and corruption, and emphasised that any actions must be expedited.

Ms Fatyela-Lindie concurred, stating that DPW had already secured the services of an expert in Human Resources (HR) and legal issues, to manage the process of dismissals or changes, to ensure that DPW stayed within the bounds of the law. In order to address corruption and maladministration, the Department needed to deal with supply chain management and tighten the controls.

Mr K Sithole (IFP) voiced his concern about having yet another Acting leadership appointment, asking when this would be made permanent. He asked how the DPW intended to boost worker morale and correct worker mindsets.

The Chairperson also raised the question of low staff morale.

Ms Fatyela-Lindie noted that no permanent appointments could be made until issues surrounding suspended officials had been resolved. In response to the comment about low worker morale, she pointed out that the Department did have thousands of employees who were honest and dedicated to serving their country. There were only a few who were corrupt or who colluded with outsiders, and they would be isolated.

Mr M Swathe (DA) wondered how a staff of 400 in a private entity was able to achieve more than the DPW staff of thousands.

Mr Swathe asked if the DPW was subsidising the Expanded Public Works Programme (EPWP), or what exactly its involvement was.

Ms Fatyela-Linde answered that there had been Ministerial intervention into the local government issues. Most municipalities lacked the requisite technical capacity, and provision of technical support was often not effective.

Mr Swathe asked what the DPW was doing, on the ICR project, to ensure that other departments were complying with the Cabinet decision.

Ms Fatyela-Linde noted the Department’s intention to construct a government precinct. However, she agreed that tensions have arisen around the compliance of some, including the Department of Correctional Services, and this had caused unnecessary delays.

Mr L Gaehler (UDM) said that the Turnaround Strategy looked good on paper. However, he was particularly concerned about the lease agreements and the construction projects. He contended that the main issue was that the same Deputy Directors-General were still in their posts, despite criticisms about their performance, giving rise to low staff morale, and he suggested that these senior officials be moved around. He asked how the Department intended to address the skills shortage issues.

Ms Fatyela-Linde responded that the Minister had stated that the DPW had not been using the performance appraisal system properly, and this was exacerbated by the numerous changes in the Director-General’s office. The skills market was very competitive, and if the DPW intended to recruit some skills, it would have to be prepared to pay the market rates. The DPW was prioritising technical skills.

Mr Gaehler suggested that anyone obtaining a public works contract worth more than R1 million should, as a term of the contract, be obliged to offer skills training to workers on that project.

Ms Fatyela-Linde agreed.

Ms N Madlala (ANC) sought clarity whether the Department intended to adopt a specific strategy with labour unions on potential dismissals.

Ms Fatyela-Linde stated that the whole country, including Unions, must make a choice between supporting continued employment of those who had been corrupt, or fully backing attempts at stabilising issues. The two were mutually irreconcilable.

Ms Madlala asked about the Inter-Ministerial Committee (IMC), wondering if it would really be feasible, given the amount of work that the Ministers faced in their own portfolios. She asked what initiatives by this Committee would assist the DPW.

Ms Fatyela-Linde noted that the Minister of Public Works had already managed to meet with the Minister of Finance, and saw no reason to suggest that other meetings with other ministers would not be possible. The IMC would provide strategic leadership and would not be involved in operations.

Ms C Madlopha (ANC) noted the importance of measurable objectives and plans and asked how the DPW intended to measure the effectiveness of the strategy, since several senior DPW officials did not have performance contracts. She also asked how the Department intended to balance all competing interests to make the Turnaround Strategy effective. Ms Madlopha also asked what the DPW was doing to ensure that contracted-in service providers were really transferring skills to the DPW’s internal personnel in the department.

Ms Fatyela-Linde said that there would indeed have to be a proper balance found in respect of performance appraisals, to ensure that measurable objectives were set and met. She re-emphasised the need to completely overhaul the leasing system, as flawed leases were continuously coming to light. The internal auditing was prioritised, and she conceded that external service providers were called in, and that issues of conflict of interest would need to be addressed.

Ms Madlopha asked how the DPW intended to improve monitoring and evaluation of the implementation of the EPWP incentive grant, as well as the infrastructure development, and maintenance of immovable assets.

Mr N Magubane (ANC) sought clarity as to what constituted “unusable land” and wondered if this land could not be better used to sustain the unemployed in some other way.

Ms Fatyela-Linde said that there was engagement with the Departments of Agriculture, Forestry and Fisheries, and Department of Mineral Resources. “Unusable land” was generally land that either was not arable and could not be used for agriculture, or land where houses could not be built.

Ms N Ngcengwane (ANC) echoed the concern of other Members about how effective the Turnaround Strategy would be if the same employees who had contributed to the problems remained in their posts, and how this would be monitored.

Ms Fatyela-Linde responded that the Minister was of the view that the ongoing investigations would most likely spark voluntary resignations of corrupt officials, and the strengthening of performance reviews would make further corruption or laziness less likely. The stabilisation team would be monitoring all the deliverables.

Ms Ngcengwane asked when the Property and Construction Charters were going to be presented to the Committee.

Ms P Ngwenya-Mabila (ANC) said that debt collection from client departments was a serious issue an asked how DPW intended to remedy the large outstanding debt. She also wanted to know how the department intended to capacitate its internal audit unit and committees. She wondered if it was preferable for the DPW to maintain or dispose of buildings that were presently unused, noting that maintenance of these buildings may amount to fruitless and wasteful expenditure. She also wondered why, instead of allowing other departments to identify premises that they may wish to lease, the DPW did not circulate a list of options.

Ms Fatyela-Linde conceded that there was a large debt, exacerbated by the fact that the User Asset Management plans were not enforced, and incapacity issues had made the situation even worse. The Minister was considering the policy around disposal of unused buildings, which had yet to be approved.  

Ms N November (ANC) voiced her concern on escalating prices, and wondered how the DPW would avoid this in future.

Ms Fatyela-Linde responded that the Department needed to hire qualified property surveyors to resource its core staff appropriately.

The Chairperson sought clarity as to who made the decision on where offices in Pretoria should be located, and whether client departments could decide not to honour Cabinet decisions.

Ms C Madlopha wanted to know if the Turnaround Strategy took the President’s State of the Nation Address (SONA) into account.

Ms Fatyela-Linde confirmed that the SONA had indeed been taken into consideration when formulating the building programmes and the infrastructure development plans. .

Mr Swathe asked who paid for the buildings that departments occupied, if they did not comply with the DPW recommendations on where they should be located.

This question was not answered.

Mr Gaehler sought clarity on how costs could vary so hugely from the original scope and costing of the work. He asked what consequences would attach to those who did not do their jobs properly.

Ms Ngcengwane wanted to know if the National Youth Service were still being utilised in certain projects. She also wanted to know what was happening with pending corruption cases.

Ms Fatyela-Linde noted that the change in leadership had affected ready availability of reports, and the DPW needed assistance in finalising some pending cases.

DPW Expanded Public Works Programme (EPWP) Municipal Summit Report
Ms Carmen-Joy Abrahams, Chief Director: EPWP Partnership Support, DPW, presented the report on the EPWP Municipal Summit (the Summit) that was held in November 2011. This Summit had aimed to accelerate delivery of the target of creating 4.5 million work opportunities for the poor. This target had included specific targets for the national and provincial spheres. The key reason for conducting the Summit was to inform the municipalities of the substantial increase in these targets.

The Summit had imparted technical knowledge and an understanding of the EPWP Phase 2. It had also allowed for consideration of the progress on the 2010 Summit Resolutions. Debates were conducted around the key policy principles of the EPWP, within the context of job creation imperatives, and the performance of the EPWP from the 2009/10 financial year. The Summit also considered best practice. Support was obtained from the political principals and technical staff for the EPWP Phase 2 targets.

She noted, and briefly discussed, the various key issues that were addressed in the Summit (see attached presentation for full details). These included the increased number of reporting municipalities, as well as those under-reporting. Challenges around the lack of suitably trained officials to implement the EPWP within the municipalities, and the need to expand the provision of technical assistance to municipalities were discussed. There would be increased focus on attaining the full-time equivalent targets. The issue of poor reporting in the Social Sector at the municipal sphere was debated.

One of the resolutions taken at the 2010 Summit was that protocol agreements would be prepared for signature by the Minister of Public Works, the Premier, and the Mayor of the Municipality, to confirm that each signatory would take leadership in their respective sphere, and appoint staff who would not only champion the EPWP, but ensure that this was included in the performance contracts of all staff. All these agreements should be signed by 31 March 2012.

Other resolutions were taken to the effect that municipalities must ensure that their Integrated Development Plans (IDPs) prioritised the EPWP approach and methodology in all projects, to optimise the creation of work opportunities. Municipalities should also optimise their budgets to deliver on the EPWP across all sectors, and should use labour-intensive methods in the delivery of projects to promote the creation of work opportunities. Eastern Cape, Western Cape, and Northern Cape had managed to create District Forums, and all other provinces were still being encouraged to establish similar forums. Best practices of developing policy were to be shared with all municipalities, while the DPW was to provide technical support across all EPWP sectors.

The 2011 Summit supported the review of the integrated incentive models. It resolved on the need for strengthened relationships between Non-Profit Organisations (NPOs) and municipalities to implement EPWP in municipalities. It again reinforced the obligation of municipalities to use labour-intensive methods in the delivery of projects, and their undertaking to intensify reporting on work opportunities. DPW must continue to develop, and make available, implementation manuals on EPWP.

After the Summit, there was more compliance with the signature of protocols. The West Coast District Municipalities cited lack of budget as a reason for not signing, but over-all there had been better reporting across all sectors. District Steering Committees were established in 2010/11, and these were expected to sit on a monthly basis, for the purpose of sharing experiences and performances. This would provide an opportunity to engage on essential EPWP reporting issues, and provide constructive feedback on performance.

She noted that there remained concerns over capacity and size in the various provinces, affecting their ability to report and to meet set targets. 41 of the 61 municipalities in KwaZulu-Natal were reporting. Ms Abrahams again highlighted the importance of providing technical support for the municipalities to meet the EPWP targets.

Discussion
Ms Ngwenya-Mabila was pleased to hear that the incentive issue was being reviewed. However, she remained concerned that some projects did not comply with the main tenets of EPWP, including the fact that there was no skills transfer, or use of labour-intensive methods. She asked who would monitor the implementation of the resolutions from the Summit. One of the problems was the lack of  officials dedicated to dealing with EPWP, and therefore lack of accountability. She also enquired who would be monitoring the employment equity requirements, for employment of women and disabled persons. She sought clarity on the nature of the reports.

Ms Abrahams said that monitoring and oversight were included in the performance agreements of all EPWP regional staff, and they were required to show evidence of their work. From April 2012, there would be increased oversight and monitoring, determined by the number of projects in an area. Her own office was already tasked with monitoring the implementation of the Summit resolutions and there were standing sessions with the Extended Partnership Support Committee. DPW was now calling for case studies from the provinces in order to ascertain why some provinces were not showing success in implementing EPWP. She added that there was progress in meeting the targets for employment of women, and this should continue.

Mr Sithole sought clarity on the agreements signed, and asked why some municipalities were not complying. In particular, he asked why the City of Johannesburg had not signed and why the Cities of Tshwane and Ekhurhuleni had not met their Full Time Equivalent (FTE) requirements.

Ms Abrahams said that the City of Johannesburg had objected to the targets set, wanting instead to work to the targets it had set itself. This issue had since been resolved and the City of Johannesburg was soon expected to sign the agreement. In respect of the FTE requirements, she noted that the cities received incentive money, but they were not able to illustrate clearly how this had been used. Some cities were using funds on agricultural endeavours when they should be using them to create employment opportunities.

The Chairperson asked whose fault it was that the cities were not using their incentive monies for the proper purposes.

Mr Stanley Henderson, Deputy Director-General: EPWP, DPW, said that the reason behind introducing the incentive was to effect behavioural change, and incentivise the municipalities and cities to implement more labour intensive projects. However, it was clear that this was not being done. In order to address this lack of implementation, the monetary procedures had been tightened, and there would be more monitoring of how the monies were used. The DPW’s EPWP unit had introduced a Quarterly Data Quality project, to evaluate all data on a quarterly basis, and to check that people were performing their duties.

Ms Ngcengwane wanted to know exactly what the data capturers were doing, as she believed that they were not taking a hands-on approach but were merely making calls to get information, instead of actually visiting the sites to check what was happening.

Ms Abrahams said that there was a data capturing process. Consultants were employed to deal with the primary data. The Technical Support team would be ensuring that labour-intensive methods were being used in all EPWP projects.

Ms Ngcengwane asked for further clarity on the technical support, and who was monitoring it, as she had noted inconsistencies between what was being reported, and what was happening on the ground.

Ms Abrahams agreed that there was a need for increased monitoring, especially in the Eastern Cape, where the DPW had received numerous assurances that projects were being conducted, only to find that this was not correct.

Mr Gaehler also emphasised the importance of monitoring and said he was under the impression that the district offices would be facilitating the monitoring. He asserted that that technical assistance did not exist at the various sectors, and insisted that this must improve.

Ms Abrahams noted that technical support had taken the form of helping municipalities identify EPWP-compliant projects, as well as helping with the contract documentation. The DPW would now put out a tender to ensure technical support, which did not exist in the past.

Mr Swathe made reference to his own experience of EPWP failure and sought clarity as to the real situation on the ground, including the function of the district forums.

Ms November noted a disjuncture at the provincial level of monitoring.

Ms Madlopha urged that partnership between the municipalities and the DPW must be strengthened. She voiced her concern that municipalities’ views were not taken into consideration at the formulation phase, particularly since they were to be the implementers. She asked how it was intended to achieve 100 working days, if alternative building methods were to be used, and how EPWP would survive in the new model.

Mr Gaehler outlined that daily rates paid to workers differed from one area to another, and wondered if this discrepancy had been addressed. He too called for effective consultation to ensure that all projects, such as road projects, were in fact labour intensive. He also emphasised the need for monitoring, saying that if projects were described as “under way”, this must be checked. EPWP must employ practices that actually created jobs.

Mr Sithole sought clarity on the District Forum, noting that Gauteng was not compliant, and asking if the Forum was voluntary or compulsory.

Ms Madlala called for more effective monitoring to ensure that employment equity principles were upheld at municipal level.

The Chairperson used an example to question the use of two construction methods on a small landing strip on a farm, which seemed to be unnecessarily costly.

Ms Abrahams referred to a report sent to the Auditor-General, noting that there was no indication in that report that more than one method had been employed in that project.

Ms Ngwenya-Mabila said that some community-based projects were being described as EPWP projects, and this was misleading.

The Chairperson, in her closing remarks, reiterated the need for closer and more effective monitoring of the projects, which was essential to ensuring that funds were not misused.

The meeting was adjourned.