MS WINNIE MADIKIZELA-MANDELA HOUSE PROJECT PRESENTATION TO THE SELECT COMMITTEE ON EDUCATION AND RECREATION 15 NOVEMBER 2017

TABLE OF CONTENTS PURPOSE BACKGROUND CHALLENGES WITH THE CONTRACTOR NON- PAYMENT BY IDT IDT INVESTIGATION REMEDIAL ACTION RESOLUTION OF LEGAL RISK. WAY FORWARD

1. PURPOSE To brief the Select Committee on the status of the Ms Winnie Madikizela-Mandela House Project

2. BACKGROUND The Department of Arts and Culture (DAC) entered into a tripartite Memorandum of Agreement (MoA) with the Free State provincial Department of Sport, Arts and Culture (DSACR) and the Independent Development Trust (IDT) in July 2012. IDT was contracted as an implementing agency to develop plans for the renovation and conversion into an Interpretative Centre of the Winnie Madikizela-Mandela house in the Free State Province, Brandfort. The Winnie Madikizela-Mandela memorial project plan comprised the construction of a new structure, refurbishment of the old bombed clinic, and turning it into an interpretive centre. An amount of R6 000 000, that includes 4% IDT’s management fee was made available for the implementation of both the Wesleyan Church - complete (Waaihoek) and Winnie Madikizela-Mandela projects. To date the project stalled.

2. BACKGROUND… cont Winnie Mandela House Budget was used as follows: Allocation   Budget approved 2 509 719.12 Amount transferred 1 858 195 .71 Amount paid to Principal Agent 476 078.60 Amount paid to DM-DMZ Contractor 117 543.69 TOTAL EXPENDITURE TO DATE 593 622.29 Balance brought forward (unspent funds) 1 264 573.45 Estimation to completion by Rubiquant Quantity Surveyors 1 457 302.71 (as of 2016)

3. CHALLENGES WITH THE CONTRACTOR NON-PAYMENT BY IDT IDT appointed DM-DMZ Construction to renovate the house and the bombed clinic and erect the new extension to the property. On 08 November 2014, DM-DMZ Construction moved to the Winnie Madikizela-Mandela house site to start work implementation. The contractor left site for two months due to non-payment by IDT. In a meeting held on 03 July 2014 IDT reported that the contractor came back to site and resumed work. On 21 July 2014 the Heritage Unit received a media query from the Daily Sun newspaper. The Daily Sun wanted to know the timelines towards the completion of the project. The query alluded to the situation on site and said that the project site is utilized by alleged criminals for various criminal acts.

3. CHALLENGES WITH THE CONTRACTOR NON-PAYMENT BY IDT…cont On 21 July 2014, DAC replied to the media query, based on the information received from IDT, as follows: a. The contractor has submitted a revised programme indicating that the work will be completed on 30 January 2015. b. The contractor is on site and there is security during the night to secure the site, therefore the aforementioned activities cannot happen. In August 2014, the Contractor issued a letter of suspension of works addressed to the IDT, with a possible termination of contract; by 01 September 2014 the contract was terminated by IDT.

3. CHALLENGES WITH THE CONTRACTOR NON-PAYMENT BY IDT…cont The contract cancellation was based on the JBCC clause 39 which states that: a contract can be cancelled by either party due to cessation of the works for a continuous period of ninety calendar days or intermittent period totaling 120 calendar days due to circumstances beyond either party. Where such party considers cancelling this agreement notice shall be given to the other. Should the party receiving the notice not object in writing within 10 working days of the date of issue of such a notice the cancelling party may give notice of cancellation. Such cancellation shall be without prejudice to any rights that either party may have. IDT indicated that the main reasons for the contract cancellation were: a. the delayed payment issues that IDT experienced in the changeover of IDT’s financial systems; and b. a Principal Agent who was not strong on contract management During the process of IDT requesting permission from the DAC to appoint an alternate contractor, new information emerged regarding IDT managed projects that then halted this engagement

4. IDT INVESTIGATION Following some allegations on a different project, the DAC appointed a firm of Quantity Surveyors, Rubiquant QS, to look into how the IDT had managed all the DAC projects. DAC sent a letter to IDT dated 09/11/2016 communicating the findings of Rubiquant QS, regarding the valuation on all the previously IDT-managed projects. Subsequent to several engagements, the DAC confirmed the termination of the Memorandum of Agreement between the DAC and IDT in respect of all projects managed by IDT. This was based on time lapse as well as the report findings of both a prior forensic investigation as well as the findings of the Quantity Surveyor. This amongst others indicated that the DAC did not receive value for money and was overcharged on professional fees. The Free State projects overseen by the IDT, including the Winnie Madikizela- Mandela House Project, were affected by this termination as no further funds could be transferred until the dispute had been resolved. IDT contested the contract termination and the 2 parties began a process of arbitration as is required by the MOA. The current status is that the IDT and the DAC are joined in a court action, due to the IDT pulling the DAC in as a Third Party.

5. REMEDIAL ACTION DAC is committed to seeing these projects through. As a result, DAC has since undertaken and concluded a procurement process to appoint a new implementing agent to complete the revised scope of Winnie Madikizela- Mandela project. These projects will be implemented as per agreement between DAC and the Department of Housing and Human Settlements (DHHS) to participate in that Department’s transversal contract for the outstanding legacy projects including the Winnie Madikizela-Mandela project, as allowed for by National Treasury Regulation 16A6.6 as follows: “The accounting officer or accounting authority may, on behalf of the department, constitutional institution or public entity, participate in any contract arranged by means of a competitive bidding process by any other organ of state, subject to the written approval of such organ of state and the relevant contractors.”

5. REMEDIAL ACTION…cont 26 June 2017, the HDA CEO responded via email that he has no objection to DAC’s request for participation and agreed that the information related to documents that were used in the procurement of the service providers be shared with DAC. On 27 June 2017, DAC confirmed that 76 HDA Professional Resource Team (PRT) companies had been appointed through a competitive bidding process as required by paragraph 16A6.6 of Treasury Regulation of 2005. Letters to each of the 76 HDA PRT companies inviting them to bid were signed by Acting DG and sent out. DAC sent out the Bid Specifications to the 9 out of 76 companies identified by HDA as per their rotation system as a having the required capabilities specified by the DAC

5. REMEDIAL ACTION…cont 22 AUGUST 2017 - DAC sent the Terms of Reference to the 9 selected companies and invited them to a compulsory site briefing; it took place on 22 August 2017 at the project site in Brandfort. Five companies and the Free State Department of Sport Recreation Arts and Culture (DSRAC) officials attended this site briefing session. After the compulsory site briefing, 4 of the 5 companies that attended the compulsory site briefing submitted proposals by the 31 August 2017 closing date. This was evaluated by the DAC’s Bid Evaluation Committee (BEC) that sat on 26 September 2017. SEPTEMBER 2017 - A service provider was recommended for appointment. A risk emerged – the status of the previous professional team. This required a legal resolution and led to time delay in the appointment of the identified service provider.

6. RESOLUTION OF LEGAL RISK In September 2017 the DAC received correspondence where the Principal Agent, ArchLive Architects requested clarity on the standing of the IDT- appointed professional team. The professional team included the Principal Agent, Architect, Civil/structural Engineers, Electrical Engineers, Quantity Surveyor, Heritage Architect, Health and Safety consultants. The Principal Agent indicated that one of the tasks of the new Implementing Agent is to appoint the professional team, but according to the appointment letter that has been received from IDT, the professional team appointment is still in existence. DAC has terminated its contract with IDT. As a way forward the Heritage Promotion and Preservation section engaged the Legal Services Unit about the status of the then-Principal Agent, ArchLive Design Lab Architects. As is customary in matters of law, the matter was referred to the States Attorney by Legal Services, DAC.

6. RESOLUTION OF LEGAL RISK cont. On 03 November 2017, the DAC Legal Services indicated that it had received the legal opinion from the State Attorneys. The State Attorneys have advised that : ArchLive (or any of its appointees) do not have a contractual right to demand that the DAC retains them as architects or principal agents to appoint a quantity surveyor and electrical engineer on the Winnie Mandela or Dr JS Moroka projects. The DAC did not appoint ArchLive. The appointment of Arch-Live by the IDT does not create any contractual connection or rights and obligations between ArchLive (or any of its appointees) and the DAC. In conclusion that means that the DAC is under no contractual obligation to retain ArchLive or any of its appointees.

7. WAY FORWARD As the legal opinion has been received, DAC is now able to appoint the recommended service provider to commence with the restoration work on site. There is no obligation to the prior professional team, including ArchLive. Although the FSDSRAC had the option of taking over the rights and obligations in terms of the contract between IDT and ArchLive, subsequent engagement between DAC and FSDRAC has resulted in consensus that the DAC will exercise the preferred option to drive the project to completion using a new implementing agent. This is due to the stature of the project and Provincial fiscal constraints. DAC and FSDSRAC will discuss the exercise or otherwise of the option referred to above, if at all. A contract will then be entered into between the DAC and the appointed service provider, if the option regarding ArchLive is not exercised. The appointed service provider will be asked to establish site immediately after appointment. The revised scope of work is expected to be concluded within 18 months. The estimated budget for completion is R 2 703 144 In the mean time DAC is appointing a service provider to immediately put up a perimeter fence, provide 24-hour security for the site.

DEPARTMENT OF ARTS AND CULTURE 9/11/2018 THANK YOU