BLOEMFONTEIN SANDF: TEMPE MILITARY BASE: 3 MILITARY HOSPITAL: INFRASTRUCTURE REFURBISHMENT AND MAINTENANCE CHALLENGES Date: SEPTEMBER 2018 BRANCH HEAD: Mr BATHO MOKHOTHU

TABLE OF CONTENTS OVERVIEW SERVICE LEVEL AGREEMENT KEY CHALLENGES AND REMEDIAL ACTION CAPITAL WORKS, MAINTENANCE AND LEASING ASSET MANAGEMENT PLANS BUDGET AND SPENDING PERFORMANCE ROLLOUT OF INFRASTRUCTURE PROGRAMME OTHER MATTERS CONCLUSION AND RECOMMENDATION 2

SECTION 1 OVERVIEW

1.1 Purpose To brief SCOA on the Infrastructure Refurbishment and Challenges at Tempe Military Base – Military 3 Hospital 4

1.2 BACKGROUND The Standing Committee on Appropriation (SCOA) undertook an oversight visit to the Free State from 13 to 17 August 2018 SCOA conducted a site visit to the Bloemfontein 3 Military Hospital to assess the state of the infrastructure SCOA requested a list of priorities which need to be addressed SCOA formally invited DPW to prepare a presentation, focused on salient points including SLA, progress, asset management plan etc. 5

SECTION 2 SERVICE LEVEL AGREEMENT

2. SERVICE LEVEL AGREEMENT The Service Level Agreement is aimed at clarifying the relationship between the Department of Defence and DPW with regards to the provision and management of immovable assets. The SLA between the Departments were signed in September 2016 by both parties. According to the SLA (Item 10.1.8) DPW will be responsible to appoint service providers to operate the specialised facilities, installed equipment and systems and other such equipment associated with immovable infrastructure. 7

SECTION 3 CHALLENGES

3.1 KEY CHALLENGES AND REMEDIAL ACTION SOLUTIONS Turnaround time on Projects Task Teams establish to ensure governance, reporting and monitoring Project support (professionals, project management) based on needs assessment from Region Currently busy with the business processes re-engineering to eliminate long lead and delays in planning process Maintenance Backlog 3 Military Hospital (Hot water storage, security system etc) Bloemfontein Army support Base (Living Quarters, Married Quarters, Fencing, security system etc) Bloemfontein Air force (Boundary wall, security, fire detection etc) Hanger Aircraft Facilities (Refurb of Aircraft wash bays) Condition Assessment of facilities Quantification of the scope and cost Prioritisation of services Registration of a project(s) 9

3.2 HISTORICAL CHALLENGES ON ACCOMODATION CHARGES Accommodation Charges is a devolved budget from National Treasury. Annually the DPW is being given up to R1bn. DPW must use this budget to fund the Day-to-Day Maintenance, Planned Maintenance and Rates and Taxes for the DOD. DPW has annually underperformed on the Planned Maintenance Programme notwithstanding the budget was prepaid quarterly. The strategy from the Defence Works Formation (DW Fmn) is to ensure the following related to Accommodation Charges: DPW to make visible what Planned Maintenance Programme they are going to undertake for the MTEF in order to allow DW Fmn to monitor progress. RESTRICTED

3.3 FINANCIAL SUSTAINABILITY FUNDING CONSTRAINTS (MAINTENANCE FEEDBACK) IMPLICATIONS OF FUNDING GAP ON CONDITION OF PROPERTY PORTFOLIO AND PMTE BASELINE Upkeep of entire portfolio is not adequately funded in User Departments’ baselines which resulted in significant repair and refurbishment backlog which led to deterioration of the condition of portfolio The financial impact of addressing the condition of our portfolio to an acceptable level to operate a sustainable business will be significant to the PMTE EXAMPLE Based on 13 pilot properties in Pretoria, estimated accommodation charges required to implement a desired / sustainable FM strategy far exceeds funding currently available 17/18 ENE accommodation charges allocation for total portfolio is only R4.5 billion If the desired FM strategy for the piloted 13 properties is implemented, a capital injection of R650m would be required immediately – this excludes operating costs (rates / maintenance etc.) Per extrapolated ARV analysis an estimated that significant amount of money is required to uplift the condition of the entire portfolio through implementation of a Maintenance solution.

GROWING ACCOMMODATION CHARGES FUNDING GAP 3.4 FINANCIAL SUSTAINABILITY FUNDING CONSTRAINTS GROWING ACCOMMODATION CHARGES FUNDING GAP Investment required for capital backlog Operational requirement deficit Current user charges based on properties occupied before 2006 and does not take into account any new facilities built or upgraded in the last 10 years (these are funded from the PMTE baseline) Ideal

SECTION 4 CAPITAL WORKS, MAINTENANCE AND LEASING

4.1 CAPITAL WORKS, MAINTENANCE AND LEASING There are two projects registered for 3 Military Hospital facility namely the repair to storm damaged roof and facility management contract The contract for Bloemspruit complex comprises repairs and renovation of the sewer works There are no Leasing matters for 3 Military Hospital

4.2 (DETAILS) CAPITAL WORKS AND MAINTENANCE NO. REGION DESCRIPTION HISTORICAL CHALLENGES PROGRESS 1 BLOEMFONTEIN 3 Military Hospital: Repair to Storm Damaged Roof. WCS 054805 A project was registered in March 2016 after the Client reported that a storm damaged almost all the roofs in the hospital complex. This is registered against a Suspense Account / Damages and Losses.   Consultants were appointed and briefed. Consultant team busy with the design process, and quotations were invited to appoint a Consultant for OHS. Other details: Structural engineer, quantity surveyor have been appointed already. Appointment for the OHS is sent for adjudication at RBAC. Mid October 2018 sketch plans approval is planned Contractor award is planned 2 3 Miliary Hospital: Facilities Management Contract. WCS 050804 DPW identified the need for this contract when the project was in the final phase before completion of the construction of the new hospital.. The project was registered in May 2012 under the Planned Maintenance Implementation Programme. The final phase 4 of construction of the hospital was completed in October 2014.  The Facilities Management Contract is still in status 3 (Pre-design stage). The Procurement Instruction to be issued. The project will alleviate the challenges experienced in maintenance by having an appointed Contractor available at all times, in case of emergencies.

4.3 (DETAILS) CAPITAL WORKS AND MAINTENANCE NO. REGION DESCRIPTION HISTORICAL CHALLENGES PROGRESS 3 BLOEMFONTEIN Bloemspruit Complex: Repair and Renovation of Sewer WCS 047318 A project was registered and project in implementation   Site Handed over at 10 August 2016. Value of Contract =R 20 093 921.27 (Incl. 15% VAT from 01 April 2018). Practical Completion was taken on 10 July 2018, works completion planned to be taken 19 September 2018. Other details: Contractor busy with snagging before final completion 4 Air Force Base Bloemspruit: Refurbishment programme. WCS 049921 BLOEMSPRUIT AIR FORCE BASE, REPAIR & RENOVATION TO BUILDINGS 70, 81, 82, 83, 95, 104, 105, 107 AND 318: GROUP 5 The 1st Contractor was stopped due to poor workmanship. 2 x contractors were terminated due to non-performance. Tenders for the third replacement contractor closed on 12 June 2018. Bid Evaluation Committee members have appointed and evaluation process planned to take four weeks. Planned site hand over date: 20 Sept. 2018 Contract period: 12 months

SECTION 5 ASSET MANAGEMENT PLANS

5. ASSET MANAGEMENT PLANS Constant engagements with client to ensure UAMPS are completed CAMP submitted annually to National Treasury as per GIAMA DOD has submitted their User Asset Management Plan this year on 01 August 2018. DPW to meet user departments' accommodation requirements as per the approved Infrastructure Programme Implementation Plan (IPIP) (Annually) and Infrastructure Programme Management Plans (IPMP)

SECTION 6 BUDGET AND SPENDING FOR MAINTENANCE ACTIVITIES

6. BUDGET AND SPENDING PERFORMANCE No major maintenance is being done at 3 Military Hospital. All maintenance is done re-actively at this point in time. Term contract to replace the re-active maintenance

SECTION 7 ROLL OUT OF INFRUSTRUCTURE PROGRAMMES

7. ROLL OUT OF INFRASTRUCTURE PROGRAMME The availability of funding and clear direction on the implementation of the Facilities Management Contract This has created a challenge in the Region by not providing a maintenance plan for this facility to the Client. Lengthy response time when calls are logged. Current process are manual and unintegrated. Introduction of an enterprise resource planning (ERP) system (Archibus) will ensure the digitisation of the complete workflow from logging of calls to processing payments. Length of Contracts – Intermediate We are in process of implementing 24 month scheduled maintenance contracts for all critical components this financial year. Current Boiler operating contracts are also being revised for longer periods. Repairs and Refurbishments – Long term It is noted that capital is required to refurbish the facility critical component. The constraint on the capital reserve resulting from the devolution has created a significant maintenance backlog. Within the task team priorities have been identified and funding secured for immediate action.

8. OTHER ISSUES The implementation of the Facilities Management Contract will definitely assist with the NDPW’s mandate in providing a service to its Client. At the moment NDPW is not meeting that mandate. There is no maintenance plan in place currently, which is imperative at any Health Facility

9. CONCLUSION AND RECOMMENDATIONS It is recommended that SCOA notes the report 24

END National Department of Public Works (NDPW) Head Office: Public Works CGO Building Cnr Bosman and Madiba Pretoria Central Private Bag X65 Pretoria 0001 Website: http://www.publicworks.gov.za