SIGNING OF THE MEMORANDUM OF UNDERSTANDING (MOU) WITH CLIENT DEPARTMENTS AND OTHER ENTITIES Briefing to the Portfolio Committee of Public Works 13 November 2012

PRESENTATION OVERVIEW. 1.Background to MOU’s and SLA’s. 2.Purpose of SLA’s. 3.SLA: General conditions Items SLA: General conditions Items SLA: General conditions Items SLA: General conditions Items Status Quo: 30 September New departmental clients. 9.Observations on SLA compliance. 10.Effects of SLA non-compliance. 11.PMTE debtors analysis as at the end of September Way forward. 2

BACKGROUND TO MOU’S AND SLA’S. The Department sought to regularize its relationships with User Departments and Entities through the conclusion of Memoranda of Understanding (MOU’s). During the Department’s development and implementation of its Zimisele Service Delivery Improvement program (SDIP) from 2005 to 2007, client satisfaction surveys revealed that User Departments were not happy with the level of services provided by DPW, and identified the need for the development of Service Delivery Standards (SDS) defining the level of services rendered by DPW. 3

BACKGROUND TO MOU’S AND SLA’S. contd/… A more robust form of MOU known as a Service Level Agreement (SLA) was developed as the preferred form of agreement to bind User Departments and DPW in terms of agreed Service Delivery Standards. Service Delivery Standards were developed and are included as an attachment to the SLA’s. Both the SLA and the SDS documents entrench the delivery of accommodation services according to agreed turnaround times, performance measures and business processes. 4

PURPOSE OF SLA’S. To govern the relationship between DPW and User Departments and entities serviced by the Department of Public Works regarding the provision of accommodation through the immovable asset life cycle (planning, acquisition, maintenance and disposal), To provide the basis to ensure ongoing service delivery at acceptable standards, The duration of the agreement is 3 years from date of signature by both parties, and will be reviewed every three years. 5

ITEMS 1 – 4: GENERAL CONDITIONS. Definitions: –Defines the acronyms and related immovable asset management terminology used in the agreement. Purpose: –Defines the reason for the SLA and SDS. Parties: –Defines the parties concluding the agreement. Duration: –Defines the applicable period of the agreement. 6

ITEMS 5 – 9: RESPONSIBILITIES: USER DEPARTMENT. Immovable asset requirements: –GIAMA compliance and compilation of UAMP’s. Financial requirements: –User Department’s responsibilities on funding accommodation requirements. Role of the Accounting Officer: –Responsibilities of the User Department’s Accounting officer in relation to accommodation requirements. Obligations of the user as tenant in a state-owned building: –Responsibilities of the User Department as tenant. Obligations of a user in a leased property: –Responsibilities of a User Department as tenant. 7

ITEMS 10 – 12: RESPONSIBILITIES: PUBLIC WORKS. –Defines general responsibilities of DPW as provider of accommodation. Financial requirements: –Defines specific responsibilities for DPW in relation to expenditure and recoup thereof from User Departments in relation to accommodation services. Service delivery standards: –Defines the applicable service delivery standards between DPW and the User Department in respect of the provisioning of accommodation. 8

ITEMS 13 – 16: GENERAL CONDITIONS. Meetings: –Defines the frequency of DPW / User Department meetings. Breach and dispute prevention: –Defines the modalities to resolve disagreement. –Disputes are referred to Accounting officers for resolution, and elevated to Ministerial level where further intervention is required. General: –Provides for the inclusion of matters of general applicability. Addresses: –Provides for the domicilium and details of signatories. 9

STATUS QUO: 30 SEPTEMBER /132011/12 DEPARTMENTENTITYTOTAL Users: SLA’s signed: SLA’s not signed: * SLA’s not required :1455 Level of compliance:48%54%50%61% 10 * Note: a number of national departments and entities currently do not require SLA’s for a variety of reasons (e.g. where services are rendered through the parent department, where they are co-located in premises with other departments).

NEW DEPARTMENTAL CLIENTS. From 1 April 2012, the Department has been approached by a number of departments and entities in relation to the possible rendering of accommodation services: –Department of Economic Development, –Department of Monitoring and Evaluation, –National Planning Commission, –Companies Tribunal, –Special Investigations Unit, –CCMA. Possible relationships are in discussions and the signing of SLA’s will depend on agreements reached. 11

OBSERVATIONS ON SLA COMPLIANCE. The compliance level of 50% for signature of SLA’s by User Departments and Entities is viewed as very low owing, in part, to insufficient departmental championing and follow-up of the SLA initiative in previous years. Since SLA’s form the basis of managing relationships with Users and the delivery of services by DPW, there has been a concerted effort since January 2012 to ensure signature of all outstanding SLA’s and/or compliance thereto in the form of verbal interaction and written communication. There is inadequate adherence by User Departments, Entities as well as DPW with the Terms & Conditions of SLA’s, where signed, possibly as a result of the SLA not being internalized at all levels. 12

EFFECTS OF SLA NON-COMPLIANCE. Adherence to the provisions of the GIAMA legislation is further compromised currently by: –The lack of commitment and sense of urgency amongst those User Departments and Entities that have not concluded SLA’s with the Department, –User Department skepticism on the value-add of concluding SLA’s, owing largely to DPW’s track record on poor performance, and –Authority derived from allocation of funds to User Departments and Entities which affords them decision-making power and influence over DPW as the agent which is in service to them. 13

EFFECTS OF SLA NON-COMPLIANCE. Contd/… Users do not compile and / or submit User Asset Management Plan’s (UAMP’s) as required by legislation, to enable DPW to fulfil its Custodial obligations and deliver the range of required accommodation services on time, qualitatively and within budget. Consequently, accommodation requirements are provided in a reactive manner impacting on delivery timeframes. Inadequate competency and resources within User Departments and DPW are the primary contributing factors to the non-compilation of UAMP’s. 14

EFFECTS OF NON-COMPLIANCE. Contd/… Following the devolution of infrastructure budgets to Users from 2005, DPW has been carrying the financial debt as a result of non- compliant Users not reimbursing DPW within 30 days for: –Expenditure incurred for new acquisitions (per SLA item 6.1.1), –Accommodation charges in state-owned buildings (per SLA item 6.1.1), –New / existing leases (per SLA item 6.1.3), –Tenant installations (per SLA item 6.1.4), –Security measures, IT, telecom infrastructure (per SLA item 6.1.5), –Municipal services, (per SLA item 6.1.6). The Billing dilemma is attributable in part to the non-existence of an itemized billing system within DPW and inaccurate information as the basis on which invoices are levied. 15

PMTE DEBTORS ANALYSIS AS AT THE END OF SEPTEMBER

PMTE DEBTORS ANALYSIS AS AT THE END OF SEPTEMBER The PMTE has an debtors balance of R 3.1 billion as at the end of September R 1.1 billion (36%) relates to debts from Prior years. R 2 billion relates to debts outstanding for the current financial year. These amounts are mainly Current or less than 60 Days. Focus meetings will be held with Clients during December to January to analyze the individual accounts. 17

WAY FORWARD. In order to address inadequacy of service delivery arrangements within DPW which have not been sufficiently responsive to the needs of individual User Departments for many years, the Department has conceptualised a Turnaround Strategy. It has adopted a Client-Centric model, as a fundamental pillar of the Turnaround, in order to offer dedicated resources as far as possible to all key customers across the accommodation value-chain. Additional resources to capacitate the Department’s client- centric model are currently being procured. 18

WAY FORWARD. Contd/… Interaction will be intensified with User Departments and Entities to compile User Asset Management Plans (UAMP’s) on annual basis (3 years in advance) indicating the immovable assets which the User uses or intends to use. This will assist the coordination of the use of immovable assets, and improved service delivery by the DPW as a result of proper planning, The UAMP’s will become a bidding process document with National Treasury, as originally intended. DPW KAM will continue to provide training on compilation of UAMP’s to Users. 19

WAY FORWARD. Contd/… The need for User Departments, Entities and DPW to adhere with the Terms & Conditions of signed SLA’s will be promoted, Levels of compliance by User Departments and Entities on signature of SLA’s will be regularly reported. Support will be leveraged from Parliament to ensure outstanding SLA’s are concluded as soon as possible. DPW will acquire and implement an account billing system that enables itemized billing to facilitate payment for services by Users. 20

WAY FORWARD. Contd/… Focused meetings will be held with User Departments and Entities from December 2012 to January 2013 to analyze the individual accounts and ensure the collection of payments due to DPW. 21

THANK YOU. Secret 22