1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON CORRECTIONAL SERVICES ON CERES, VANRHYNSDORP AND BRANDVLEI CORRECTIONAL CENTRE'S 22 FEBRUARY 2012

2. PURPOSE To respond to observations made by the DCS Portfolio Committee during their oversight visit to Ceres Correctional Centre on 6 February 2012. 2

3. OBSERVATION: Inter-Departmental SLA. DPW / DCS Service Level Agreement (SLA) signed by DPW on 17 October 2011. Forwarded to DCS HQ on 24 October 2011. DCS signature awaited. Regular DPW follow-up. 3

4. OBSERVATION: Builder’s holidays as unforeseen cause of project delay. Before receiving bids, when a contract period is determined, the duration of the actual works determines the initial contract period. This initial period is evaluated and it is established how many builders holidays falls within the period. The amount of builders holidays are added to the initial period in order to determine an all inclusive contract period. Extension of the contract period is calculated in working days. 4

5. OBSERVATION: Builder’s holidays as unforeseen cause of project delay cont. Scenario: Awarded: 03/11/2008 Contract period:24 months Contractual Completion date:` 02/11/2010 Public Holidays: 16/12/2010, 25 & 26/12/2010, 01/01/2011. Builders Holidays:16/12/2010 to 09/01/2011 Should the contract be extended with 40 working days: 20 working days are up to 30/11/2010 15 working days are up to 15/12/2010 5 working days are up to 14/01/2011 Hence the contract completion date moves to 14/01/2011. 5

6. OBSERVATION: Builder’s holidays as unforeseen cause of project delay. Builders holidays are factored into the contract period before tender. Once the contract extends over a builders holiday the time is added to the contract due to extensions being calculated in working days. It is for this reason that the amount of builders holidays were listed amongst the causes as it is added to the period in order to determine an extended completion date. 6

7. OBSERVATION: Inclusion of escalation clauses in the contract. The escalation clause/s is/are contained in the contract documents for all projects where the contract period exceeds 6 months. The Contract Price Adjustment Provisions (CPAP) allows the contract to be adjusted as set out in accordance with the JBCC 2000 Principal Building Agreement Edition 4.1 of March 2005, and in the Indices Application Manual as referenced for the individual work groups for different installations. 7

8. OBSERVATION: Management of under-performing contractors. According to conditions of contracts (JBCC or GCC), when the contractor is under-performing contractually, he is in default for failing to perform & complete project on time. The condition applies to under-performance which is without justification and without valid reasons. Contractor should first be placed on terms (in mora) in line with conditions of contract be it JBCC or GCC which are commonly used in the Department. Where contract was reviewed as result of under- performance by the contractor, details are forwarded to National Treasury through the office of CFO & CD-SCM for further attention. 8

9. OBSERVATION: Limit to cost escalations in deviating from original scope. According to the conditions of contract (JBCC or GCC) there are no limitations to cost escalations resulting from deviations from the original plan with the proviso that the deviations are approved by the client (DCS) and if additional funding is needed the funds must be provided There are also no limitations to cost escalation as a result of the Contract Price Adjustment Provisions (CPAP) which is adjusted as set out in the JBCC 2000 Principal Building Agreement Edition 4.1 of March 2005, and in the Indices Application Manual as referenced for the individual work groups for different installations. 9

10. OBSERVATION: Poor planning and monitoring in relation to excavations. Trial holes are dug in selected areas and in different positions during investigation phase of the project. Ground conditions recorded are the basis and gives direction to the design of foundations, floors and walls etc. At Ceres the ground conditions were tested prior to construction, during construction different ground conditions were experienced which influenced the project. At Brandvlei the unexpected under ground water in certain areas caused changes to the project. At Vanrhynsdorp some underground structures were encountered which could not have been detected during planning of the project. 10

11. OBSERVATION: Breakdown of additional costs for Brandvlei Prison. Laundry:R19,380,000.00 Link Passage:R 5,124,440.00 Extensions granted to the contractor: R22,477,380.00 Prison Management system: R 3,983,160.00 In addition to the above, the following contract instructions (variation orders): Change to floor specification R 9,696,840.00 Supply air conditioning in admin buildingR 5,769,540.00 Prison furnitureR 5,523,300.00 Additional CCTV equipmentR 4,674,000.00 Prison bedsR 2,975,400.00 Planting mediumR 2,451,000.00 Day & control rooms AC and ventilationR 2,109,000.00 Replace contaminated earth with topsoilR 2,017,800.00 Additional food trolleys at segregationR 1,932,300.00 Imported topsoil for rehabilitationR 1,763,580.00 Additional urnsR 1,303,020.00 Stabilizing of topsoil on sport fieldR 1,175,340.00 Smoke detection R 1,174,200.00 11

12. OBSERVATION: Breakdown of additional costs for Vanrhynsdorp Prison. Solar water system:R 2,865,970.24 Extensions granted to the contractor:R 19,012,358.22 Scope Changes:R 18,500,598.91 See through passage:R 1,080,516.30 PMC Flooring:R 2,810,092.25 Offender management system: No instruction received to install this system. In addition to the above, the following contract instructions (variation orders): Door, gate & window re-measurementR 1,700,874.85 Upgrade CCTV system - R 5,174,510.00 Ventilation & air conditioning re-measurementR 1,193,973.02 Structural steelwork re-measurementR 1,950,539.48 Revised design to steel cell table setsR 1,414,335.60 Hot water generation change & re-measurementR 1,060,740.71 Steel mirrors & desks quantity & spec changeR 946,029.00 12

13. OBSERVATION: Breakdown of additional costs for Ceres Prison. Solar water system: R 7,742,743.35 Extensions granted to the contractor:R 20,643,684.97 Scope Changes:R 20,627,657.90 Offender management system:R 3,369,449.09 PMC Flooring:R 2,969,093.86 In addition to the above, the following contract instructions (variation orders): New water reservoirR 793,229.03 Change to surface beds construction R 740,050.00 Removal of asbestos roofingR 657,143.32 Permanent shade structures R 515,213.32 Revised specification food trolleysR 377,468.80 Drainage in roads and parking areaR 354,577.52 13

14. OBSERVATION: Reasons for scope change and additional costs. DCS provided DPW with a generic layout plan for the “new generation” facilities. The Brandvlei, Vanrhynsdorp or Ceres projects could not be implemented exactly as per the generic layouts and changes / adaptations were required in each instance: The generic layout had to be adapted to suite the each specific site to accommodate existing ground slope, roads, stormwater fallout, buildings etc. The different site conditions also impacted on the architectural form and design. As the shortcomings were identified during construction, approval was granted by DCS HQ to effect such changes. 14

15. OBSERVATION: Monitoring of cells from control room at Ceres Prison. Should the monitoring of the inmates inside the cells be required, the Department of Public Works would commission a full investigation to determine the best method to accommodate this requirement. It is envisaged that the scope of works in this regard entails the installation of additional cameras, cabling, controls, monitors and recording equipment. The Department of Public Works would act based on an instruction from the DCS. 15

16. OBSERVATION: Size of Ceres, Vanrhynsdorp and Brandvlei centres. Brandvlei : 29974 m² Ceres:10619 m² Vanrhynsdorp:11380 m² 16

17. OBSERVATION: Initial and projected final costs of Ceres, Vanrhynsdorp and Brandvlei centres. CentreInitial costProjected final cost Difference BrandvleiR315,623,000.00R390,000,000.00R74,377,000.00 VanrhynsdorpR219,989,562.45R286,537,773.90R66,548,211.45 CeresR212,464,407.00R242,683,385.31R30,218,978.31 17

18. OBSERVATION: Adequacy of electrical supply. Ceres, Vanrhynsdorp and Brandvlei centres are constructed on existing correctional sites, which currently have power connections to the supplier grid. Brandvlei: Application for increase in power has been submitted to Eskom. the project also has energy saving measures in place: hot water spring water is being distributed to the hot water usage points creating a saving in the hot water generation. The new kitchen facility will take over all the cooking requirement of the site and the satellite kitchens will not be used for cooking purposes hence consumption will become much less. Eskom can provide the power that will be equal to the maximum demand measured on site. Further increase in consumption will require an additional application to increase the network leading to the site. 18

19. OBSERVATION: Adequacy of electrical supply cont. Vanrhynsdorp: The power to the site was increased to the maximum that the local municipality could provide. The engineers have implemented load-shedding devices between the kitchen and Laundry to control peak consumption. Ceres: The power requirement of the site has been connected to the supply authority grid and power is available and currently being used. It must also be noted that each of the facilities will have generator capacity to provide power to the essential loads in the event of a power failure. 19

20. OBSERVATION: Awarding of 2 nd contract on Vanrhynsdorp and Ceres. Vusela Construction (Pty) Ltd shareholding: Aldridge Fisher:Historical Disadvantaged Individual. 80% shareholder. Keziah Fisher:(Daughter to Aldridge). 20% shareholder. Project milestonesVanrhynsdorpCeres Advertised date27 July 200725 April 2008 Closing date12 September 200728 May 2008 Award date12 October 200711 July 2008 Site handover date7 November 2075 August 2008 Current statusIn progress 20

21. OBSERVATION: Awarding of 2 nd contract on Vanrhynsdorp and Ceres cont. At time of awarding Vusela the 2nd contract, the first contract was running for 9 months and Vusela was only 4,5 working days behind schedule. For a project of this nature and contract period this was not considered a risk to awarding the 2nd contract. It must be pointed out that the value of the EPWP/NYS initiative consisted of 1% of the anticipated final cost for Ceres and Vanrhynsdorp. However, the contractor had also employed additional labour. Vanrhynsdorp and Ceres are not considered rural centres. However, they are remote from the contractor’s base, although they were aware of this at tender stage. 21

22. OBSERVATION: Awarding of 2 nd contract on Vanrhynsdorp and Ceres cont. With regards to the additional instructions and omissions on the contracts:  Currently, Ceres has 247 and Vanrhynsdorp has 315 additional instructions each impacting on timeframes.  A further initiative employed on the contract is Contract Participation Goal (CPG) which affords the tenderer to indicate how much of the project would be subcontracted to Potential Emerging subcontractors registered with CIDB: Vusela has attained the CPG for Vanrhynsdorp and R44,8m was spent towards achieving the CPG. For Ceres this figure R36m constituting 67,9% of the CPG tendered value. 22

23. OBSERVATION: Delays attributed to inexperienced labour. EPWP/NYS: This National Government training initiative was part of the Ceres and Vanrhynsdorp project documentation and was implemented on the Brandvlei contract as an additional instruction to the contractor. This initiative of DPW is to contribute to the artisan skills development programme and is aimed at youth who want to develop their careers in the Built Environment. Ceres: 104 learners received training between 2008 to 2010. Vanrhynsdorp: 124 leaners received training between 2007 to 2010. Brandvlei: 65 learners received training between 2008 to 2010. 23

24. OBSERVATION: Delays attributed to inexperienced labour cont. Implementing the EPWP / NYS initiative does not grant the contractor a right not to employ qualified labour or artisans of his own or to only use the NYS learners on the project. The contractor had the knowledge at tender stage that this initiative was part of the project and could have influenced his tender price by making due allowance for the it. The contractor was not prevented from using more labour. 24

25. OBSERVATION: Details for shareholding of Vusela and Group 5. Vusela Construction (Pty) Ltd: Aldridge Fisher:Historical Disadvantaged Individual. 80% shareholder. Keziah Fisher:(Daughter to Aldridge). 20% shareholder. Joint venture:Group 5 Ltd.Bosasa Philiswe ButheleziGavin Watson Lindiwe BakoroJoe Gumede Lynda ChalkerJackie Levds John JobThandi Mokoko Stuart MorrisPapa Leshabane Kalaa MpingaCarol Oliveira Mike UptonIshmael Mncwaba Cristina TexieiraAndries van Tonder Angelo Agrizzi 25

26. THANK YOU 26