1. Presentation to Portfolio Committee on Defence and Military Veterans November 2014 Presented by the Secretary for Defence DEPARTMENT OF DEFENCE 1

2. 2 AIM To brief the Portfolio Committee on Defence and Military Veterans on the status of Defence Infrastructure projects.

3. 3 SCOPE Overview on all Maintenance Needs Infrastructure Projects undertaken by NDPW for the DOD from 2009 to 2014 Infrastructure Projects Planned from 2014 to 2019 Management of Projects through Partnership with NDPW Management of Projects with own Capability Status Update on the Internal Capacity to Manage, Maintain & Repair Facilities Challenges Remedial Actions Discussions

4. 4 OVERVIEW ON ALL MAINTENANCE NEEDS DOD Facilities are spread throughout the country and include both state owned and privately leased accommodation but exclude facilities in foreign countries, military operations and several houses that are Government Owned (under the Prestige Account) and therefore controlled by DPW. Most of the facilities are utilised to their full extent with an average utilisation rate of 93%. Some facilities are however very old and were built to suit the erstwhile military environment, and therefore do not comply with the current requirements and do not meet OHS standards.

5. 5 OVERVIEW ON ALL MAINTENANCE NEEDS (CONT) NDPW under expenditure in the past years has resulted in huge backlog of maintenance and repair on DOD Facilities. Significant sections or elements require repair of a specialist nature. However some facilities require slight alteration to address issues of statutory compliance.

6. 6 OVERVIEW ON ALL MAINTENANCE NEEDS (CONT)

7. 7

8. 8 INFRASTRUCTURE PROJECTS UNDERTAKEN BY NDPW ON BEHALF OF DOD FROM 2009 TO 2014 2008/092009/102010/112011/122012/132013/14 Capital Works Budget (Whitebook) R 111 656 223.00 R 96 297 034.00 R 90 025 986.00 R 94 527 284.00 R 99 253 649.00 R 104 216 331.00 Capital Expenditure R 121 191 377.00 R 141 006 274.00 R 94 635 738.00 R 92 977 589.31 R 470 859 973.17 R 188 841 665.49 Total Under/Over Expenditure R -9 535 154.00 R -44 709 240.00 R -4 609 752.00 R 1 549 694.69 R -371 606 324.17 R -84 625 334.49 % Under expenditure 1.6 % % Over expenditure 8.50 %46.40 %5.10% 374.40 %81.20 % CAPITAL The increase in FY2012/13 and onwards was as a result of projects not delivered according to planned schedule and rollover of payments.

9. 9 Examples of major Capital Works undertaken included: 1 Military Hospital 2 Military Hospital 3 Military Hospital Military Health Depot SAMHS Nurses Training College Air Force Base Waterkloof Runway INFRASTRUCTURE PROJECTS UNDERTAKEN BY THE DOD FROM 2009 TO 2014

10. 10 INFRASTRUCTURE PROJECTS UNDERTAKEN BY THE DOD FROM 2009 TO 2014 2008/092009/102010/112011/122012/132013/14 Refurbishment Budget (Whitebook) R 486 250 000.00 R 426 653 749.00 R 636 461 319.00 R 382 053 856.00 R 958 518 249.00 R 813 702 487.00 Refurbishment Expenditure R 308 106 020.00 R 262 932 270.00 R 294 478 887.00 R 265 093 852.00 R 296 017 602.85 R 392 088 136.75 Total Under Expenditure R 178 143 980.00 R 163 721 479.00 R 341 982 432.00 R 116 960 004.00 R 662 500 646.15 R 421 614 350.25 % Under expenditure 373945316952 REFURBISHMENT

11. 11 Examples of major Refurbishment Projects undertaken included: SA Army Combat Training Centre 10 SAI Bn Naval Base Simonstown 21 SAI Bn Military Academy A-Mess Thaba Tshwane INFRASTRUCTURE PROJECTS UNDERTAKEN BY THE DOD FROM 2009 TO 2014

12. 12 INFRASTRUCTURE PROJECTS PLANNED BY THE DOD FROM 2014 TO 2019

13. 13 INFRASTRUCTURE PROJECTS PLANNED BY THE DOD FROM 2014 TO 2019

14. 14 STATUS UPDATE ON THE INTERNAL CAPACITY TO MANAGE, MAINTAIN & REPAIR Skills Development

15. 15 MANAGEMENT OF PROJECTS THROUGH PARTNERSHIP WITH NDPW The DOD backlog on facility maintenance and repair was an estimated RB12 in 2014. Refurbishment: In the past 5 FY RB3.2 was available to NDPW and NDPW underspent RB1.7 (NB: NDPW showed inability to spend more than RM 400 year on year for the past 5 years). Capital: In the past 5 FY RM 484 was available to NDPW and expenditure was RM 988. The Nurses Training College, 1 Military Hospital and the Military Health Depot were the major cost drivers.

16. 16 MANAGEMENT OF PROJECTS THROUGH OWN CAPABILITY Ser NoRWUProjects Completed FY2013/14 Projects Planned FY2014/15 - FY2015/16 Total abcd 1Gauteng103545 2Free State122840 3Limpopo72431 4North West111829 5Northern Cape81321 6Western Cape201838 7Eastern Cape52126 8Kwa Zulu Natal52126 9Mpumalanga0 (New Structure) 55 In one of the projects NDPW costed construction at Rm5.2 and DW Fmn completed it at Rm1.2

17. 17 CHALLENGES External NDPW has not been able to deliver projects on time resulting in DOD underspending. Internal The DW Capability is staffed at 57% and an attempt to secure funds from NT to increase staffing levels up to 90% was unsuccessful. Governance Processes are not yet mature and we are not yet ready to undertake complex projects without outsourcing. Procurement Processes are not yet fully aligned to support the Built Environment. Engineering Professional Skills Levels are not yet on par with the task at hand

18. 18 REMEDIAL ACTIONS TAKEN External DOD and NDPW agreed to devolve functions on Defence Endowment Properties to the DOD. NDPW has agreed to transfer the refurbishment of 1 Military Hospital (1 st Floor) to the DOD, as a matter of urgency. Internal The DOD is engaging National Treasury and NDPW to allow DOD to fund the staffing of the DW Fmn through withholding Accommodation charges. Treasury notified the DOD that Rm375 will be withheld from NDPW as requested The DOD has embarked on the review of the Joint Departmental Procurement Policy to address Governance Processes. The DOD has started a process to develop a HR Acquisition Policy to capacitate the DW Fmn with Professional Masterings.

19. 19 DISCUSSIONS DISCUSSIONS / QUESTIONS DISCUSSIONS / QUESTIONS