Briefing to the Portfolio Committee on Police, National Assembly Good Hope Chamber, Ground Floor,...
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Briefing to the Portfolio Committee on Police, National Assembly Good Hope Chamber, Ground Floor, Good Hope Building, Parliament 1 Wednesday, 23 November 2011 09:30 – 13:00 LEASE OF ICD HEAD OFFICE BUILDING, PRETORIA
Briefing to the Portfolio Committee on Police, National Assembly Good Hope Chamber, Ground Floor, Good Hope Building, Parliament 1 Wednesday, 23 November
Briefing to the Portfolio Committee on Police, National
Assembly Good Hope Chamber, Ground Floor, Good Hope Building,
Parliament 1 Wednesday, 23 November 2011 09:30 13:00 LEASE OF ICD
HEAD OFFICE BUILDING, PRETORIA
Slide 2
Index Introduction: Why did the ICD move to the City Forum
building? Answers to questions raised by members of the Portfolio
Committee at the meeting on 15 November 2011 Conclusion 2
Slide 3
Introduction: Why did the ICD move to the City Forum building?
Two buildings occupied by ICD were leased during 2009 to the
Department of Rural Development and the South African Social
Security Agency (Sassa) at higher lease amounts while the ICD was
in occupation. The ICD became aware on 27 January 2010 of legal
action instituted against it for R2,443,471.56 (plus interest at
15.5% p.a.) by the owner of the OMB building for failure to vacate
the building. Refurbishment of the OMB building and ICD House for
occupation by new tenants was carried out while the ICD was in the
buildings. Structura was not ready for occupation despite numerous
agreed dates from May 2009 to January 2010. A swop was proposed by
DPW on 29 January 2010 ICD to move to City Forum and Dept of Human
Settlements to move to the Structura building. 3
Slide 4
Introduction continued: Why did the ICD move to the City Forum
building? A copy of the lease for the City Forum building was
requested by the ICD from DPW on 3 February 2010. The copy of the
lease was received in November 2010 after the ICD had occupied the
building. A request was made for alternative accommodation and
reimbursement for costs incurred at the Structura building. DPW
responded that if ICD does not occupy the City Forum building,
there would be fruitless expenditure. No alternative accommodation
was offered to ICD despite a formal request. Threat of litigation
for continued occupation of the OMB building was raised by DPW.
4
Slide 5
Q 1:What is the square meter cost of the City Forum Building?
The cost of the City Forum building is currently R116/m 2. This
price includes parking cost of R19.10/m 2. 5
Slide 6
Q 2:What is the comparison between the ICD House, Old Mercedes,
Structura and City Forum Buildings? ICD budget commitment:
R6,190,000.00 PropertySize (m 2 ) Annual Escalation Annual rent as
it would have been on 23 Nov 2011 Old Mercedes
Building12258%R1,053,975.19 ICD House21988%R2,019,093.35 Structura
Building38879%R4,614,804.71 City Forum
Building761410%R10,589,157.22 6
Slide 7
Q 3:What was the role of ICD in the procurement of leased
buildings? As a client department, the ICDs role in the procurement
of lease buildings is limited to: Identifying a need for
accommodation; Submitting a needs analysis to DPW; Planning and
budgeting for estimated expenditure; and Providing the DPW with
confirmation that funding is available. This role does not include
any involvement in negotiations or conclusion of property leases.
In the case of the City Forum building, no choice was provided
despite ICD having requested the availability of alternative
buildings. 7
Slide 8
Q 4:How did the ICDs staff complement change since 2007 and
what additions are planned? Head office staff complement as at -
2007: 80 2008: 83 2009: 89 2010: 99 Current head office staff
complement: 108 Proposed IPID staff complement by 2014/2015: 142
8
Slide 9
Q 5:What were the needs expressed by the ICD and communicated
to the DPW? 2007 NEEDS ANALYSIS (Annexure A) In October 2007 the
ICD communicated its need for 3133.20 square meters and 27 parking
bays. The DPW approved 3246.25 square meters. 2008 NEEDS ANALYSIS
(Annexure B) In August 2008, the ICD expressed the need for 23
additional parking bays. This addition was approved in September
2008, bringing the revised approved space to 3333.75 square meters.
2010 NEEDS ANALYSIS (Annexure C) In February 2010, the ICD revised
the needs analysis to 4641 square meters and 105 parking bays.
9
Slide 10
Q 6:Why was the 2007 needs analysis revised? The revision of
the needs analysis in 2008 was with regard to the addition of 23
parking bays (at that point in time the head office staff
complement was already at 83). The needs analysis was revised in
2010 due to the impending increase of staff in anticipation of the
Independent Police Investigative Directorate (IPID) Act. 10
Slide 11
Q 7:What was the cost and the conditions related to the
Meintjies Building? The Meintjies Building was one of 8 buildings
proposed by the DPW. Client departments are only informed about the
price of the buildings upon receipt of a cost analysis by the DPW.
Although the ICD recommended the Meintjies Building (as a result of
the unavailability of the Structura Building), the procurement
process related to this building never progressed to the point
where the DPW produced a cost analysis to the ICD. The conditions
stipulated for occupation of the Meintjies Building related to
extensive renovations to cater for disability access and to
restrict the pedestrian routes along the building. Other conditions
related to additional parking and structural changes with regards
to toilets and office layout. 11
Slide 12
Q 8.1:Was the ICD compelled to move into the City Forum
Building or did it have the right to refuse? The ICD was compelled
to move since it was occupying two buildings for which the DPW had
already entered into new leases. In January 2010 the owner of OMB
building instituted legal action against the DPW & ICD for the
difference in rental, as the rent negotiated by the DPW in the new
lease was more than twice that paid by the ICD. In addition, this
owner also attempted to evict the ICD from the OMB building. ICD
was supposed to occupy the Structura building in May 2009, which
was postponed to June 2009, and then to September 2009, as the
building was not yet ready for occupation. A meeting between ICD
& DPW was held on 29 January 2010 to discuss the way forward.
In the very same meeting DPW proposed that departments swop
buildings so that ICD will move to the City Forum building and the
Department of Human Settlements to the Structura building. 12
Slide 13
Q 8.1 continued: Was the ICD compelled to move into the City
Forum Building or did it have the right to refuse? ICD submitted a
letter showing interest to occupy the City Forum building, together
with a request for a copy of the lease agreement, advise on the
availability of alternative buildings and reimbursement of
expenditure incurred at the Structura building - (03 February
2010). DPW responded by indicating that if ICD does not occupy the
City Forum building, fruitless expenditure will be incurred, as DPW
will not have a justification of securing other buildings and
ignore existing commitments (City Forum and Structura) (05 February
2010). DPW confirmed in writing on 5 March 2010 that no options (of
alternative buildings) are available to ICD. 13
Slide 14
Q 8.2:Was the ICD legally obliged to move to the City Forum
building? A client department can refuse to move to a specific
proposed building, HOWEVER - According to the information at ICDs
disposal at that time, there were no valid reasons to refuse to
move to the City Forum building. In fact, in the light of the
letter by DPW (05 February 2010) DPW indicated that it is
compulsory for the ICD to move to the City Forum building. Further
reasons were: The expiry of the lease agreements in respect of the
two buildings that the ICD was occupying at that time (ICD House
and OMB); The incurrence of possible fruitless expenditure if
litigation against ICD was successful; and Inability to operate
efficiently as the tenant of ICD House and OMB already commenced
with the refurbishment of the buildings. 14
Slide 15
Q 9:Why agree to occupy the City Forum building without
sufficient budget? The amount budgeted for the ICDs National Office
accommodation in 2007 was R6.19 million. This was the amount
communicated to DPW. Contrary to the prescripts of a directive from
Key Accounts Management, DPW did not communicate a change in the
cost implications to the ICD. Furthermore, during a meeting between
ICD and DPW on 18 February 2010, the DPW confirmed that in respect
of the City Forum Building, there was no increase in the commitment
made in respect of Structura. 15
Slide 16
Q 9 continued:Why agree to occupy the City Forum building
without sufficient budget? Client departments decisions on leased
properties and the procurement process is informed and, in fact,
dependent on advice and information provided by the DPW. In fact,
in terms of the Service Level Agreement between ICD and DPW the
NDPW will obtain the written consent of user department [ICD]
before awarding any acquisition contracts at the value above the
amounts budgeted for the acquisition in the Implementation
Programmes. NDPW will also obtain the written consent of the user
department [ICD] before approving variation orders which increase
the value of any acquisition above the amount budgeted for. The DPW
did not in this case communicate the additional cost implications
of the City Forum building to the ICD. 16
Slide 17
Q 10:Did the ICD query the suitability of the City Forum
Building? The City Forum building is suitable and complies with
State Security Agency (formerly NIA) specifications and SAPS
physical security requirements. 17
Slide 18
Q 11:What are the NIA specifications for departments like the
ICD? Due to the legal mandate of the ICD, extra security measures
are required, such as secure offices and boardrooms (construction
and thickness of walls), door locks, strong rooms, access control
to the building and fire protection. The official list of
requirements is classified. 18
Slide 19
Q 12:Does the City Forum building comply with NIA requirements?
The NIA (now SSA) indicated that the City Forum Building complies
with security requirements. 19
Slide 20
Q 13:Did ICD do any renovation of the City Forum Building? The
ICD did not do any structural renovations. However, below is a list
of refurbishments done by the ICD in the City Forum Building:
CompanyServiceExpenditure (R) Maximize Business SolutionAdditional
Network Installation 214,087.44 Maximize Business SolutionRaised
Floor in the Server Room 23,455.50 Ubuntu TechnologiesServer Rack
(Cabinet) X 254,366.14 Dep Techologies Computer removal,
Decommissioning and Commissioning of SAN system 59,999.79
PenbroRelocation of the UPS System 17,849.89 FiretechMagnetic
locks13,616.16 Bosiame TradingSecurity spikes9,111.51 DPWSecurity
Installations1,441,750.07 Tshwane AirAir conditioner13,765.68
TOTAL1,848,002.18 20
Slide 21
Q 14:Why was there a change in the eligibility of the Structura
Building after initially being BEE non-compliant? The assessment of
property bids in terms of its BEE compliance is part of the DPWs
procurement process in which client departments are not involved.
The ICD can, therefore, not comment on this assessment. 21
Slide 22
Q 15:How much was paid for the cabling at Structura Building?
The ICD spent R770,000.00 on the installation of network cabling in
the Structura building. The Department of Human Settlements (DHS)
spent R551,791.84 on cabling and security installations at the City
Forum building. A set-off for the recovery of R218,208.16 was
arranged with the DHS in this regard. 22
Slide 23
Q 16:Were any arrangements made to recover the costs incurred
on the Structura Building? The ICD has corresponded with the
Department of Human Settlements (DHS) for the recovery of
R218,208.16. DPW communicated to ICD that DHS has confirmed in
principle its willingness to reimburse the ICD. The ICD is
currently awaiting reimbursement. 23
Slide 24
Q 17:Why did the ICD spend money on the Structura building if
it did not comply with NIA requirements? The NIA indicated that the
Structura building can comply with security requirements if certain
refurbishments were done in respect of the building. However, the
landlord could not deliver in that regard. 24
Slide 25
Q 18:Were any of the previous buildings owned by Mr Roux
Shabangu? This information does not fall within ICDs knowledge.
25
Slide 26
Q 19:What is the legality of the City Forum Building
procurement process? The lease agreement was already entered into
by the DPW by the time that ICD became involved. Therefore, the ICD
did not take any part in the procurement process. However, the ICD
is seeking legal advice on the matter. 26
Slide 27
Q 20:Why not consider purchasing your own building? According
to the advice by National Treasury, the ICD is too small as a
department to purchase its own building and therefore it will not
be financially viable. 27
Slide 28
Q 21:What was the expense related to the disability equipment
for? The ICD held an internal disability event in 2009, for which
it required a wheel chair, the hiring cost of which amounted to
R150.00. 28
Slide 29
Q 22:Does the lease agreement comply with GIAMA? Lease
agreements are the responsibility of the DPW. Therefore, compliance
with GIAMA in relation to lease agreements falls within DPWs
responsibility. 29
Slide 30
Q 23:Breakdown of Operating Leases 2010/2011? 30
Slide 31
Q 24:What is backdated billing? Due to an administration error
on the part of DPW, the DPW did not bill departments timeously and
correctly. As a result, backdated invoices were issued for an
estimate on the total amount. 31
Slide 32
Q 25:Why were the backdated invoices later adjusted? The
backdated invoices were adjusted as a result of complaints arising
from incorrect invoices. 32
Slide 33
Q 26:What is the financial implications of the increased
rental? If the ICD proceed to pay the contractual amount of the
City Forum building, there will be financial implications for the
ICD. The legality of the Service Level Agreement between the ICD
and DPW and the validity of the lease agreement for the City Forum
building are currently subject to legal opinion. 33
Slide 34
Q 27:Is there a link between the high rent and the ICD not
achieving its targets? There is no link between the high rent and
the ICD not achieving its targets. 34
Slide 35
Q 28:Why is ICD requesting funding and not DPW? The ICD is
dedicated to fulfill its financial obligations. It is therefore
currently seeking legal opinion on the matter and is engaging with
National Treasury in order to sufficiently fund its current lease
commitments and to make provision for anticipated shortfall in this
regard. A formal request will be submitted as part of the ENE
process for sufficient funding for all leases. 35
Slide 36
Conclusion The ICD was not allowed to source its own
accommodation but had to rely on DPW. The process to secure head
office accommodation started in October 2007 and lasted almost 3
years. The ICD asked for alternative options none were presented.
ICD was facing a R2.4 million lawsuit which had escalated to R9
million. ICD was effectively facing eviction from the buildings it
occupied at that time. 36