Human Settlements

R 3 278 000

Non-compliance with regulation 9 [1] of the Preferential Procurement Regulations of 2011 resulted in irregular expenditure being incurred.

The payments were irregular because the contractor commenced work without a valid contract.

This irregular expenditure was caused due to Blizzard Trading commenced work during the 2017/18 financial year without a valid contract with the Department of Human Settlement according to the KPMG report.  Blizzard Trading were one of those contractors that was appointed by the Peoples’ Housing Projects [PHP] Support Organizations during the 2016/2017 financial year whereby contractors commenced work without formal contracts.  Settlements did not suffer any losses because the contractor carried out the construction work in terms of the requirement. No malice or negligence could be determined. Hence no disciplinary actions were considered.

Irregular expenditure amount condoned by PT.

R135 071 000 [prior years]

R127 457 000 [2019/20]

Treasury Regulation [TR] 16A.3.2 [a] states: “A supply chain management system referred to in paragraph 16A3.1 must–

[a] be fair, equitable, transparent, competitive and cost effective”.

Specifications in its nature restricted other potential suppliers to respond to the tender invitation as the specifications stated that bidders that do not have an office in the Western Cape will not be considered. The specifications were drafted in a biased manner as they did not allow all potential suppliers to offer their services.

The irregular expenditure was caused due to non-compliance to Treasury Regulation [TR] 16A.3.2 [a]. The fact that the advertisement stated only suppliers that have an office in the Western Cape will be considered was part of Department’s procurement strategy to promote professional service providers of the Western Cape.

The irregular expenditure was subsequently condoned by Provincial Treasury.

Irregular expenditure amount condoned by PT.

R2 227 000

Treasury Regulation [TR] 16A.9.1 [c] states: “The accounting officer or accounting authority must –

[c] Check National Treasury database prior to awarding any contract to ensure that no recommended bidder, nor any of its directors, are listed as companies or persons prohibited from doing business with the public sector”.

The department extended the contract with Comwezi Security Services who at the date of award of the extension was listed on National Treasury’s [NT] database of restricted suppliers

This irregular expenditure was caused since the department extended the contract with Comwezi Security Services who at the date of award of the extension was listed on National Treasury’s [NT] database of restricted suppliers.

At the time of the extension Department of Human Settlements was not aware of the non-compliance status of the appointed service provider. The department appointed the service provider from the security framework of the Department of Community Safety as custodian of provincial security services.

The non-compliance should be seen as an administrative compliance oversight. No malice or negligence could be determined. Hence no disciplinary actions were considered.

Irregular expenditure amount condoned by PT.

sesurityreemenR401 000

In terms of section 17[1] of the Division of Revenue Act [Act 16 of 2019 [DoRA] “Despite a provision of other legislation to the contrary, an allocation referred to in Schedules 4 to 7 may only be used for the purpose stipulated in the Schedule concerned and in accordance with the applicable framework.”

Payment made from the Human Settlements Development Grant relating to a Bulk Infrastructure [Electrical services] project of the City of Cape Town should have been paid using the Urban Settlement Development Grant.  The payment made from the Human Settlements Development Grant was not budgeted for in terms of the grants schedule.

This irregular expenditure was caused due to transfers and subsidies payment that was paid from the Human Settlements Development Grant relating to a Bulk Infrastructure [Electrical services] project of the City of Cape Town. It should have been paid using the Urban Settlement Development Grant.  This was done to expedite the project as we had a contractor on site.

The non-compliance should be seen as an administrative oversight and internal control deficiency as the wrong funding vote was used for the allocation of the expenditure. No officials were found guilty of negligence and subjected to disciplinary action. Hence no disciplinary actions were instituted.

Irregular expenditure amount condoned by PT.

R89 095 000

Treasury Regulation [TR] 16A.3.2 [a] states: “A supply chain management system referred to in paragraph 16A3.1 must–

[a] be fair, equitable, transparent, competitive and cost effective”.

Specifications in its nature restricted other potential suppliers to respond to the tender invitation as the specifications stated that bidders that do not have an office in the Western Cape will not be considered for the tender. The specifications were drafted in a biased manner as they did not allow all potential suppliers to offer their services.

The irregular expenditure was caused due to non-compliance to Treasury Regulation [TR] 16A.3.2 [a]. The fact that the advertisement stated only suppliers that have an office in the Western Cape will be considered was part of Department’s procurement strategy to promote professional service providers of the Western Cape

No malice or negligence could be determined. However, Provincial Treasury already condoned Irregular expenditure to the amount of R78 090 940.

Awaiting condonement from PT to the amount of R11 004 060

R1 036 000

Treasury Regulation [TR] 16A9.1 [d] states:” The accounting officer or accounting authority must reject any bid from a supplier who fails to provide written proof from the South African Revenue Service that the supplier either has no outstanding tax obligations or has made arrangements to meet outstanding tax obligations”.

It was an administrative oversight as these awards were done on an urgent basis by using the emergency delegations.

Corrective measures were put in place to ensure compliance in future.

Awaiting condonement from PT.

R189 061 000

Treasury Regulation [TR] 16A.6.1 states:” procurement of goods and services, either by way of quotations or through a bidding process, must be within the threshold values as determined by the National Treasury”

Non-compliance was identified in relation to the contract with Red Ants.

Payments to the security company were irregular because security services were not for the department’s properties as per the original terms of reference of the tender. Services delivered falls outside the scope of the contract entered between the department and the security company.

This was done to assist other organs of state to safeguard their assets given the scourge of land invasions during covid.  All expenditure incurred on behalf of the other organs of state was reimbursed to the Department.

A new tender to address the short coming was advertised and is in effect from 1 April 2021. 

No malice or negligence could be determined.

Awaiting condonement from PT.

R5 360 000

National Treasury regulation 16A6.3 [a] [iii] states that “The accounting officer or authority must ensure that bid documentation and the general conditions of a contract are in accordance with the prescripts of the Construction Development Board, in the case of a bid relating to the construction industry.”

Due to the replacement of the initial contractor and the urgency of the services required, resulted in the department not applying the applicable Construction Industry Development Board [CIDB] requirements by appointing another service provider to finalize the project.

The irregular expenditure was caused due to non-compliance of stipulating the relevant CIDB grading in an invitation to quote.

The department invited the services subcontractor that had a CIDB grading of 7 CE as per the main contract to complete the contract for the services and did not find it necessary to stipulate the CIDB grading [7CE] required to do the services.

The non-compliance should be seen as an administrative compliance oversight and internal control deficiency. The department did not suffer any loss and the contracts was completed within the timeframes and within budget.  Hence no malice was intended and does not warrant any disciplinary action.

Awaiting condonement from PT.