PROGRESS REPORT: Infrastructure Development Function Transfer Minister of Public Works Hon TW Nxesi, MP Minister of Defence and Military Veterans Hon N Mapisa-Nqakula, MP PROGRESS REPORT: Infrastructure Development Function Transfer STANDING COMMITTEE ON APPROPRIATIONS 27 February 2019

FUNDING SUMMARY 582 000 000 Total Required 1 194 196 606 1 139 744 504 Financial impact to implement the Facility Management Strategy including the transfer of the Infrastructure Development Function from DPW Compare White Book to Required Funding 582 000 000 Total Required 1 194 196 606 1 139 744 504 1 121 042 485 RESTRICTED

INTRODUCTION SCOA – 27 February 2019 The Standing Committee on Appropriations (the Committee) invited the Department of Defence, National Treasurery and DPW to brief it on the progress made regarding the shift of the Infrastructure Development Function from the Department of Public Works to South African National Defence Force (SANDF). In its submission, the SANDF is requested to include the following: Progress made by the Inter-ministerial Task Team to Outcome of discussions with the Department of Public Service and Administration (DPSA); The number of its budget allocation towards Compensation of Employees; and It List of emerging challenges (if any).

Inter-Ministerial Task Team Progress Inter-Ministerial Task Team The Inter-Ministerial task team had met and cooperation established. Agreement Reached: Continue with the Infrastructure Development Function transfer from DPW to the DOD. Current issues to be addressed: Due diligence on properties to be transferred and finalisation of User Immovable Asset Register (UIAR) (In some cases municipalities will be involved) Funding for capacity creation within the DOD Defence Works Formation Funding for current shortfall in DOD Lease Portfolio, Refurbishment and Capital Works

Number of its budget allocation towards Compensation of Employees Current Personnel Number of its budget allocation towards Compensation of Employees Current Number of DOD Members involved in Facility Repairs and Maintenance. Facility Repair and Maintenance Personnel is RM 845.2 represent 21.9% of the DOD Facility Budget as reflected within the White Book.

Personnel Requirement DPSA: DOD Organisational Structures and Personnel Increases – Defence Works Formation DOD in process to develop organisational structures to accommodate: Construction Professionals: Program and Project Managers (30), Architects/Engineers/Quantity Surveyors/Geometricians/Landscape Architects, (59) and; Construction/Facility Legal Staff (4). Infrastructure Development Function Support Staff to take over repairs, planned maintenance and infrastructure development administration: Condition Assessors/Building Inspectors (116), Factotums (371), Construction Workers and Grounds men (733), and; Utility Management Support Staff (52). DPSA to assist and guide DOD staff increases based on the function shift.

Logistic and ITC Requirement OPERATIONAL SUPPORT REQUIREMENT FOR CAPACITY CREATION WITHIN THE DOD FOR THE INFRASTRUCTURE DEVELOPMENT FUNCTION TRANSFER Logistics: Procurement of Response Team Vehicles, Equipment and Tools, Repair and Maintenance Material Information Communication and Technology: Software and Hardware (UIAM, BIMS, Project Management, BI, etc.) Without the required funding to capacitate the DOD with capability and capacity it would be worse off after transferring the Infrastructure Development Function

Emerging Challenges Finalisation and due diligence on the extent of the portfolio to be transferred to the DOD Funding for Capacity Creation Current DOD Facility Challenges: Thaba Tshwane Bulk Services and Dolomite areas must be addressed immediately to prevent further deterioration and destruction Rapid increase of Lease Hold Portfolio (Tshwane Metro Area make up 90% of Leasehold Expenses). Sewage systems need urgent attention at DOD Facilities Refurbishment and replacement of Security Infrastructure (Fences, Guard Towers, etc.) at Military Facilities.

Projection based on Lease contract renewal and escalations Emerging Challenges DOD LEASE PORTFOLIO Projection based on Lease contract renewal and escalations DOD must embark on a Lease Replacement/Reduction Program to built own facilities on state owned land. (90% of Leases is within Tshwane Metro) Refer: Minister of Finance Budget Speech 2018)

Capital Works and Refurbishment Shortfall Emerging Challenges Capital Works and Refurbishment Shortfall Note: The Capital Works Program exclude funding for the Lease Replacement Program Note: The original White Book figures indicate previous underspending by DPW.

Way Forward Facility Repair and Maintenance approach Emphasis on: 1st Line Repair and Maintenance Preventative Maintenance Less complex capital works and refurbishment Current To Be Condition Capital injection Proper Repair and Maintenance Program Time Facility Repair and Maintenance approach Older buildings become more costly to repair and maintain Buildings to be refurbished Buildings to be demolished and replaced Deterioration of Facilities without maintenance increase exponentially in cost to repair

Opportunities DOD have adequate land available to develop own facilities for the Lease Replacement Program. The DOD has developed a Lease Replacement Strategy that if funded it could reduce the Lease expenses up to RB1 per annum within 10 years. Support staff could be recruited from current Career Plateau Members in providing a second career in Facility Management, Construction Professions, Trades and Administration.

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