Department of Public Works Quarter 3 & 4 performance; with Deputy Minister

Meeting report

Department of Public Works: Performance report

Mr Imtiaz Fazel, Deputy Director General: Governance, DPW, gave a brief overview of the briefing, in which he delineated the current shared-services nature of the relationship between the DPW and the Property Management Trading Entity (PMTE), as the latter continued on its journey of evolving ultimately into an independent government agency with its own budgetary, organisational and legislative accountability. The shared services between the two entities currently were finance and supply chain management (SCM); corporate services; governance, risk and compliance; and inter-governmental coordination.

Mr Lwazi Mahlangu, Chief Director: Monitoring and Evaluation, DPW, began with a disclaimer that while non-financials for the third quarter had been verified, the same could not be said for the fourth quarter information, as the process of consolidating the DPW’s  annual report was still under way. His presentation covered performance information for both the PMTE’s six main programmes (see document) and the five main vote programmes (the rest of DPW).

Although the presentation outlined a picture of overall positive, modestly improving performance for both the main vote and the PMTE, four key areas were flagged as potentially vulnerable to adverse opinion from an audit point of view. These were:

• the Expanded Public Works Programme (EPWP);
• the DPW’s Prestige policy;
• the PMTE’s Real Estate Management Services programme;
• the PMTE’s Facilities Management programme, where there had been zero achievement during quarters two and three.

To directly address the above and strengthen other areas of weakness, Mr Mahlangu recommended that the DPW and PMTE take the following measures:

• to follow up on weak performance and work out a possible catch-up plan on lagging key performance targets through a sub-committee of the audit steering committee;
• to employ a stringent monitoring and evaluation system that collects, collates and analyses performance information consolidated in the required portfolio of evidence to support reported performance across the Department;
• to promote effective oversight over regional offices in relation to performance measurements and realisation of objectives;
• to periodically audit performance information and address findings before they become significant at the end of the financial year.

Mr Aaron Mazibuko, Chief Director, Finance, DPW, reporting on the DPW’s financial performance on the main vote, disclosed that as of 31 March 2018, unaudited data indicated that R6.927 billion (99%) of the budget  had been spent. This showed an improvement in expenditure compared to the last financial year where on most expenditure areas of the budget there had been more under-spending.

Mr Mandla Sithole, Acting Head of Finance, PMTE, reported that by 31 March 2018, R14.468 billion (97%) of the budget allocation had been spent, with over-expenditure on repairs and compensation of employees. Areas of under-spending included municipal services; transfers and subsidies; machinery and equipment; capital infrastructure; client capital projects and goods and services.

Discussion

Mr D Ryder (DA) said the briefing had been a warning shot as to what to expect during the Budget Review and Recommendations Report (BRRR) process later in the year. However, he also conceded that some good work had been done by the DPW in the period under review, especially targets reached in the PMTE’s Real Estate Investment Management programme. He asked why in some parts of the presentation, the percentages of performance targets achieved were rendered as either cumulative figures or specific quarterly figures, which was confusing. He requested that consistency of reporting format be a strong feature of briefings on planning and actual performance against planned targets.

He observed that there had been a tailing off in the level of achievement towards the end of the year. Of the targets not met, he highlighted the EPWP and the White Papers Review as particularly disappointing. He was concerned that only three out of 56 tender process bids (5%) had been allocated during the last quarter of the year. Another big worry was on leases, with the report showing zero percent achievement in both quarters. Had these been unrealistic “Hail Mary” targets which the DPW had hoped some kind of divine intervention would deliver? What interventions were in place to ensure these targets were met in the next financial year? He also revisited the issue of ARCHIBUS, a professional property database management system, which was supposed to have been installed by the PMTE earlier in 2018, and asked what the status of the project was.

Citing the reported number of DPW-approved infrastructure project designs (117) and those ready for tender (174), Mr Ryder made a proposal that the Committee get a list of these projects and undertake on-the- ground oversight visits. These visits would help the Committee to get in touch with communities and thus greatly enhance its practical knowledge base regarding the work of the DPW and its real impact on the lives of South Africans.

Ms E Masehela (ANC) wanted to know why the number of “interventions recommended for mitigation of fraud risk within DPW and PMTE” had been limited to four. She commended the DPW on the number of beneficiaries that had taken part in the Department’s skills development programme, but was unimpressed with the number of management trainees and bursary holders. She also urged that people living with disability be allowed to participate in the EPWP. Despite being recipients of a grant, young people with disability had families to support and were capable of work – exclusion from the EPWP was disadvantageous, and the Committee should look into this matter.   

Regarding transfers of funds and subsidies to various entities within the legislative mandate of the DPW, Ms Masehela again commended the Department for achieving its targets. However, she also wanted to know whether the transfers had been made in accordance with the planned time-lines, as set out in the annual performance plan. Referring to the under-spending on the municipal services budget, reportedly due to municipalities that did not submit invoices on time, she suggested that further investigation be done as to why this was the case.

Dr C Madlopha (ANC) also asked for an explanation on why the fraud risk intervention target had been restricted to only four instances. She also wanted to know what had caused the delays in the signing of leases, which was the reason given for the zero achievement of targets in both the third and fourth quarters. She felt the reason given was just an excuse and as far as she was concerned, it was not acceptable. It would also help if the actual number of leases were provided, instead of just a percentage.

Mr M Filtane (UDM) said the presentation had convinced him that as long as the Committee continued to sit in cosy offices listening to briefings from the DPW, it might as well forget about performing an effective oversight role. The current approach was a waste of taxpayers’ money. Unlike the Department of Finance which, for example, dealt exclusively with numbers, the DPW’s core business revolved around physical structures: buildings, facilities, pieces of land, etc. This meant that any oversight role regarding the work of the DPW had to be physical – involving the visiting of actual places where these structures were located. He said the DPW officials called to appear before the Committee must be laughing all the way back to Pretoria at how clueless the Committee was about what was really going on. He hoped his proposal could influence Parliament to review the one-size-fits-all approach that it had to its oversight role. 

To demonstrate his skepticism regarding information provided by Departmental officials, Mr Filtane cited a number of instances in the presentation. Referring to the percentage of compliant invoices paid by the DPW within 30 days in the period under discussion, he expressed deep suspicion at how the difference between the two quarters was just a single percentage (94 and 93 percent respectively), as if someone had made a slight adjustment just so the numbers did not look the same. He was willing to bet that an in-depth investigation of those figures would confirm his view that they were doctored.

Mr Filtane said the same could be said of the reported percentage of prevented default judgements against the Department  – it had been 100% in both quarters, except that someone had decided to change the word “prevention” in the third quarter to “prevented” in the fourth. Another instance involved the number of work opportunities created in the EPWP. The presentation showed “very interestingly” that the annual target of 1 406 736 had been met in six months – 658 329 in the third quarter, and 809 149 in the fourth! 

Referring to targets achieved in respect of beneficiaries for the DPW’s skills programme, Mr Filtane mentioned a complaint he had come across on social media, where young professionals who had been temporarily hired to do work for the DPW were saying the Department was now using the same people over and over again. Did the Department have a strategy on how the young beneficiaries of its bursary programmes could be assisted in ways that advantaged the DPW and industry, as well as the young professionals now sitting idle at home?

Mr Filtane said the above question was important as it related to a major gripe of his regarding the way the DPW operated. He believed it was not strategic for the Director General (DG) and Deputy Directors General (DDGs) to be part of the day to day operations of the Department, or even to be part of delegations appearing before Parliamentary Committees. Their main role was to analyse trends and produce strategic plans on how to exploit the prevailing environment in order to chart the way forward. 

Mr Filtane also slammed the DPW for having set no third quarter targets regarding the increased percentage of revenue through rentals of harbour-related properties, and similarly for term contracts awarded to black-owned companies. Referring to the latter issue, he said this meant the Department had decided for three whole months to “forget” the plight of desperate black entrepreneurs, despite its mandate to eradicate poverty and inequality, and to transform industry in favour of the historically excluded. In summary, the DPW had made some poor strategic decisions and it was time the Committee took a more hard-line approach regarding its oversight role by going out to communities to verify for itself the information provided by the DPW on performance reports.

After having intervened to tell Mr Filtane that his time was up, the Chairperson turned to Adv Sam Vukela, DG: DPW, and his delegation and told them he was in full agreement with Mr Filtane’s sentiments. He went as far as to say he knew that other Members of the Committee also endorsed Mr Filtane’s position, although they might be more “diplomatic” about it. The DPW had a lot to answer for, especially on its record regarding transformation. He was looking forward to how the DPW would respond to Mr Filtane’s comments. Like Mr Filtane, he also believed that the DPW was “taking advantage” of the Committee by giving unhelpful, abstract briefings that had no connection to actual physical projects on the ground. He agreed that most of the time, the Committee really had no clue as to what the briefings were talking about.

Again referring to a concern raised by Mr Filtane around harbours, the Chairperson recalled the Committee’s oversight visit to small harbours earlier in the year, where Members had learned of the potentially transformative role harbours could play in the South African economy. Indeed, on its upcoming visit to Cuba, the Committee’s itinerary included a previously small harbour that was now threatening to rival that of the country’s capital, Havana. The Chairperson reminded the DG of a request the Committee had made for a briefing report on small harbours in South Africa, and asked that a discussion with the DPW’s Small Harbours Unit be scheduled for as soon as possible.

DPW’s response

Adv Vukela said that in principle he was also in agreement with Mr Filtane. He agreed that the DPW’s report had been all about figures, but it had also had information, like examples and names, on the actual physical projects mentioned in the briefing. He made a commitment that in all upcoming briefings, an effort would be made to provide concrete data such as photographs and other evidence-based material, along with the more intangible information on policy, planning, monitoring and evaluation.

Mr Mahlangu also agreed that more could be done to improve on the types of information included in the presentations. He responded to the frustration expressed by Mr Ryder and Ms Masehela concerning cumulative and non-cumulative targets by saying that a better reporting methodology would be looked into. There were sometimes instances where performance was process-driven, and therefore it was not easy to know in advance how to set quantifiable targets and how they would pan out in such circumstances.

Responding to concerns regarding the DPW’s target on fraud risk interventions, Mr Fazel explained that the number (four) referred to the DPW’s programme areas, where the risk of fraud and corruption was highest. These were facilities management (especially payments); supply chain management (deviations in tender processes and rotation of suppliers); project management (construction projects); and finally, term contracts on the maintenance of buildings and facilities. These areas were not cast in stone, and the DPW together with its anti-corruption unit would review the situation in the next financial year.

Responding to Mr Filtane’s query on the EPWP, Mr Fazel said it was not the case that the annual target had been met in six months. His explanation was that the figures for the first and second quarters had been collapsed into the last two quarters – unfortunately those figures had not been provided, since the presentation was focused on the last two quarters of the financial year.

Mr Jacob Maroga, Acting Head: PMTE, used a contextual argument to explain some of the non-achieved targets in the briefing. On leases, he pointed out that a policy dispensation in which lease agreements had been reduced to three years, had come to an end in the 2016/17 financial year. The long and painstaking National Treasury process of renegotiating those agreements was therefore responsible for the under-performance reflected in the briefing.

The Chairperson interjected at this point, saying that Mr Maroga’s explanation, while valid, still failed to explain why officials had not anticipated the dispensation coming to an end. He also took time to criticise the Department’s transformation record on leasing, again citing the Committee’s oversight visit to small harbours where it had found that big business was being charged “a cent”, while small black-owned businesses were groaning under a load of expenses on leases. He remarked that the DPW was provoking the anger of the people and “selling out” the Committee.

Ms Swanzie Matthews, Acting Head: Immovable Asset Register, PMTE, responded to Mr Ryder’s question on ARCHIBUS by reassuring the Committee that the system was indeed live, although ongoing improvements were being made.

Mr Clive Mtshisa, Acting Head: Corporate Services, PMTE, also responded to queries on the new organisational structure and the complex staff component issues that had been thrown up as a result of the operationalisation of the PMTE. He said that in the past 10 months there had been huge activity around capacitation and staffing. This had entailed the matching and placement of personnel by taking the old staff list and merging it on to the new organisational structure. As this was happening, appointments had to be made for critical positions that could not wait for the process to come to a conclusion. Further, those appointments could not be made against existing positions, since that would interfere with the matching and placement, hence the decision to make appointments on contracts, additional to the establishment.

Adoption of minutes

The meeting considered and adopted the minutes for the meeting of 22 May 2018, with Ms Masehela moving their adoption and Ms L Mjobo (ANC) seconding. 

Before adjourning the meeting, the Chairperson raised a concern around the DPW’s use of contractors. He said a lot of complaints had come from communities against the practice of using outside contractors at the expense of local ones. He urged the Department to have a serious look into the matter and ensure that everyone was uplifted instead of empowering the already empowered -- or those who were familiar or friends.  

The meeting was adjourned.