1. Department of Correctional Services NEW GENERATION CORRECTIONAL CENTRES BRIEFIENG SYNOPSIS DEPARTMENT OF CORRECTIONAL SERVICES

2. Department of Correctional Services Scope Developments since 2000 to Bidding Stage Bid adjudication and IQS report Current developments Second Group of New Generation Correctional Centres

3. Department of Correctional Services A Developments since 2000 to Bidding Stage Blue Print model developed by Private consultant. Through NDPW Consultant teams were appointed to develop the Blue Print further. Original Blue Print costs was estimated at R150 million Short comings were identified and resulted in Baseline 1 at a cost of R230 million. This followed by Baseline 2 and later Baseline 3 at R282 million. With escalation Baseline 3 increased to R350 million. Still further developments resulted in Baseline 4 which was 18% over Baseline 3’s cost of R350 million. Tender documentation was completed early in 2004.

4. Department of Correctional Services B. Bid Adjudication and IQS Report Three of the projects, Kimberley, Leeuwkop and Nigel were split into phases. * Phase I – Bulk Earth Works * Phase II – Main Contractor with Incubator program sub-contractors Phase I : Was fully completed on July 2005 at all three Centres with a total cost of R80.8 million Phase II: Bids were called for Klerksdorp 5/11/2004; Nigel 25/02/2005; and Kimberley 04/03/2005 and received for all three. Kimberley: Bid adjudicated in April 2005 and came to R571.7 million Klerksdorp: Only one Bid was received and rejected. Nigel: Bids received but not adjudicated. (Waiting for appointment of Private Project Manager)

5. Department of Correctional Services Bid Adjudication and IQS Report Continue Outcome of Bid Adjudication show that cost of centres is substantial higher than the budgeted amount.. In July 2005 DCS decided to appoint with the assistance of NDPW an IQS to evaluate the bids documentation and to provide both Departments with an assessment of the price escalation and compare it with market trends. The IQS report highlighted the following: The incubator procurement model. Increase in building costs. Timing of the tenders in respect of market conditions This negatively influenced the bidding process.

6. Department of Correctional Services C. Current Developments The following aspects were taken into consideration to continue with the bidding programme: Report of the IQS Repot from the Transactional Advisor on the refinancing of the existing PPP correctional centres. Interim report on the feasibility studies for the second group of Correctional Centres. Recent developments at Kuthama Sinthumule Correctional Centre. State of the Nation Addres.

7. Department of Correctional Services This lead to the following decisions: Decided to continue with Kimberley with the following difference Abandon the Incubator programme (Premium DCS is paying for this route is ± 14% of the cost) Adjust Bidding documentation to allow for main contractor and own choice of sub-contractors. Call for open re-bidding system to allow a larger sector of the contraction market to submit bids. Will be more competitive and to the advantage of DCS. Tender documentation will be published on 5 May 2006 with the target date to handover the site to the successful bidder in September 2006 Current Developments Continue

8. Department of Correctional Services On Klerksdorp and Nigel the following: The current bids received have lapsed. DCS will go a new direction of PFM (Public Finance Model) with these projects. PFM called for Public to design by concept construct finance and maintain the project while the Management is vested in DCS Terms of reference for the Transaction Advisor to manage this process was drafted with the assistance of NDPW and National Treasury. Tenders were called for a Transactional Advisor to do a feasibility study on this route.

9. Department of Correctional Services Leeuwkop is subjected to a viability study for the following: Long term feasibility of the complex. Direction to follow in regards to the Agricultural concerns currently established on the premises. Viability study on the whole asset management of the complex.

10. Department of Correctional Services D. Second Group of New Generation Correctional Centres Feasibility studies in process for the following East London, Paarl, Port Shepstone and Polokwane Areas. Sites earmarked for three of the four complexes. Polokwane still in a negotiating stage. DCS to follow the Project Finance Model on all these projects. The current Transaction Advisor agreed in principle to complete the process within the parameters of the project finance model.

11. Correctional Services values your role in breaking the cycle of crime: in making rehabilitation work. Thank you Together we can strengthen the social compact against crime, for a better life.