ICD's Move to City Forum Building

1. Briefing to the Portfolio Committee on Police, National Assembly LEASE OF ICD HEAD OFFICE BUILDING, PRETORIA Wednesday, 23 November 2011 09:30 – 13:00 Good Hope Chamber, Ground Floor, Good Hope Building, Parliament

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

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.

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.

5. Q 1: What is the square meter cost of the City Forum Building? • The cost of the City Forum building is currently R116/m2. • This price includes parking cost of R19.10/m2.

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

7. Q 3: What was the role of ICD in the procurement of leased buildings? • As a client department, the ICD’s 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.

8. Q 4: How did the ICD’s 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

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.

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.

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.

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.

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.

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 ICD’s 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.

15. Q 9: Why agree to occupy the City Forum building without sufficient budget? • The amount budgeted for the ICD’s 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.

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.

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.

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.

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.

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:

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 DPW’s procurement process in which client departments are not involved. • The ICD can, therefore, not comment on this assessment.

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.

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.

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.

25. Q 18: Were any of the previous buildings owned by Mr Roux Shabangu? • This information does not fall within ICD’s knowledge.

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.

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.

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.

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 DPW’s responsibility.

30. Q 23: Breakdown of Operating Leases 2010/2011?

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.

32. Q 25: Why were the backdated invoices later adjusted? • The backdated invoices were adjusted as a result of complaints arising from incorrect invoices.

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.

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.

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.

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.