The Department of Public Works will have to answer for contracts of more than R1-billion it awarded for the upkeep of parliament and Tuynhuys, the Cape Town office of the president, among other buildings.
President Cyril Ramaphosa on Friday authorised the Special Investigating Unit (SIU), to probe five contracts the department awarded over a decade ago.
The first contract that will be placed under the microscope is the R519-million “official office accommodation” tender awarded to AFMS Group.
The five-year contract was for office accommodation inside the parliamentary precinct.
Some of the services agreed between the parties included facilities management, waste management, grounds maintenance and pest control.
However, a 2020 report by accounting, tax consulting and business advisory firm BDO found that the project value surged from R357-million to R519-million due to the contract having lasted 16 months longer than was originally planned.
BDO found there was “irregular expenditure due to the misuse of authorisations and circumvention of internal procurement processes”. It also found there was “inadequate contract planning”.
Other issues flagged by BDO included that the contract did not make provision for refurbishment work.
“The contract creates gaps in maintenance – AFMS will maintain the garden, but will not plant new plants/fill open areas with existing plants,” the BDO report reads.
The second contract the SIU will zoom into is the R506-million residential accommodation contract awarded to property management company, Broll.
The contract covered Acacia Village, Laboria, Rygersdal and Groote Schuur.
BDO found the contract also went over budget by R194-million with the state ending up forking out R506-million instead of the R312-million budgeted for. The tender had similar specifications to the one awarded to AFMS.
BDO made the same finding as it did with the AFMS contract, that there was “irregular expenditure due to the misuse of authorisations and circumvention of internal procurement processes”.
The third project SIU will probe is the external renovations of the Marks Building.
The project, which was initially expected to take 18 months ended up lasting 48 months, costing R20-million more than budgeted for.
The 117-year-old building is located at 90 Plein Street in the Cape Town city centre. Due to its age, it was due for massiverepairs, which included replacing the roof, servicing and replacement of glass, among other requirements. The contract was awarded to llitha Painters and Decorators.
BDO found the project, which was completed in March 2019 after a 30-month delay, was 86.9% over budget.
BDO also found that “project contingency is calculated using unscientific method…”
The fourth project the SIU will probe is the R140-million contract awarded to Vusela Construction/Nolitha Electrical for refurbishments of residences of “sessional officials”.
The project went R62-million over budget and was delayed by 31 months.
BDO found that there was irregular expenditure in the project, and procurement processes were circumvented.
The last project Ramaphosa asked the SIU to investigate is the R25.9-million refurbishment of the sixth floor of 90 Plein Street.
The contract was awarded to Prema Raciti Construction.
This is the only project, according to BDO, that was within budget. However, BDO raised issues about the project and made recommendations.
These include:
- The refurbished space was vacant for 13 months, which indicates that “the refurbished space was not utilised, thus the expenditure was made in vain and could have been avoided had reasonable care been exercised;
- There was lack of planning, which resulted in fruitless and wasteful expenditure;
- The total cost of the renovations was R25.86-million and the floor space was 2 300m2, giving a cost of R11 243 per square metre. BDO found this was excessive; and
- BDO advised management to investigate the writing of this project.
Ramaphosa said the SIU must probe whether there was “intentional or negligent loss of public money or damage to public property” in the projects undertaken by the DPW.
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