Briefing on the operation and management of Public Private Partnerships (PPP)

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Briefing on the operation and management of
Public Private Partnerships (PPP)
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• SCOPE
• Introduction
• Fundamental principles
• Parties to the concession contract
• Current status
• Scope of operations
• Risk profile
• Management of operations
• Budget
• Challenges

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• INTRODUCTION
• The two PPP Correctional Centres were opened in
  2001 2002 respectively.
• The main rationale behind the initiative was to
  improve on the cost effectiveness of the
  correctional system by making additional
  accommodation available, more quicker and
  flexibly than would otherwise be possible.

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• 2. FUNDAMENTAL PRINCIPLES
• Value for money
• Accomplished by significant risk transfer and
  quality of services that are procured.
• Risk transfer
• Design
• Construction
• Maintenance
• Funding
• Affordability

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• PARTIES TO THE CONTRACT
• MANGAUNG PPP CENTRE

LENDERS Investec Bank Ltd ABSA Bank Ltd
RSA GOVERNMENT
25 year custodial services

• SHAREHOLDERS
• Old Mutual (20)
• G4s (20)
• 10 Alliance Mangaung (20)
• Fikile Mangaung (20)
• Ikhwesi Community Trust (20)

BLOEMFONTEIN PRISON FINANCE TRUST
BLOEMFONTEIN CORRECTIONAL CONTRACTS (Pty) LTD
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3. PARTIES TO THE CONTRACT KUTAMA-SINTHUMULE
CENTRE
LENDERS First Rand Bank Ltd BOE Merchant Bank
RSA GOVERNMENT
25 year custodial services

• SHAREHOLDERS
• South African Custodial
• Management
• Kensani Corrections (50)

SOUTH AFRICAN CUSTODIAL SERVICES SECURITY TRUST
SOUTH AFRICAN CUSTODIAL SERVICES (Pty) LTD
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• 4. CURRENT STATUS
• Mangaung Correctional Centre
• Contractor G4S( previously GSL)
• Date opened 01 July 2001
• Certified normal accommodation 2928
• Population 2928
• Type of Correctional Centre Maximum
• Contractual period 25 years

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• 4. CURRENT Status( Cont)
• Kutama-Sintumule Correctional Centre
• Contractor SACM
• Date opened 01 March 2002
• Certified normal accommodation 3024
• Population 3024
• Type of Correctional Centre Maximum
• Contractual period 25 years

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• 5.SCOPE OF OPERATIONS
• Schedule A, B, C
• Construction
• Equipment( quality quantity)
• Maintenance
• Schedule D
• Operational Specification
• Goal 1 keep inmates in safe custody
• Goal 2 maintaining order, control, discipline
  and safe environment.
• Goal 3 providing decent conditions and meeting
  inmates needs.

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5.SCOPE OF OPERATIONS (continue) Goal 4
providing structured day programme Goal 5
preparing inmates for their return back to the
community Goal 6 delivering prison services Goal
7 community involvement
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6. RISK PROFILE

• Design and construction
• Delays in construction- no payment until
  completed
• Failure to provide facility as specified
• Cost overruns on construction
• Maintenance
• Facility not properly maintained
• Costs related to maintenance more than
  anticipated
• Operations
• Contractor fails to meet performance standards

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6. Risk Profile ( cont)

• Insurance
• Insurance against third parties
• Availability of bed spaces
• Less available places than contractually
  specified DCS pays only for available spaces
• Technology changes
• Improvement in technology which reduces the
  operational costs DCS secures reduction in
  contract fee.
• Financial
• Increase in the CPI increases contractor fees
• Residual Value
• Facility reverts back to DCS but has a designed
  life of 50 years
• Staffing
• Contractor solely responsible for Human Resources
  matters

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7. MANAGEMENT OF OPERATIONS
DIRECTORATE CONTRACT MANAGEMENT
DIRECTOR CONTRACT MANAGEMENT (MJ MAAKO)
DEPUTY DIRECTOR CONTRACT INFORMATION PROVISION (VA
CANT)
DEPUTY DIRECTOR CONTRACT POLICY FORMULATION (MJ
KOTO)
DEPUTY DIRECTOR CONTRACT COMPLIANCE (JDE BASSON)
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• 7.1. QUALITY QUANTITY CONTROL OF SERVICES
• Governed by contract (concession direct
  agreement) between the two parties.
• Contracted operators to function independently.
• DCS Contract Management Directorate to act as a
  regulatory body that must manage the contracts
  and ensure that inspections and audits are
  performed regularly at the two PPP Correctional
  Centres.
• Regional Commissioners to have oversight function
  on the management of the two centres.

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• 7.2. MONITORING
• Correctional Services Controller
• Monitors operations
• Monitors empowerment related issues of contract
• Supervisory Committee
• To rule on the merits of the notices of breach
  and the extent of penalties
• To undertake the annual review
• Inspectorate, Audit AuditorGenerals Office
• To conduct inspections and audits on the two
  Correctional Centres
• Judicial Inspectorate
• To facilitate the inspection of the Correctional
  Centres report on the treatment of inmates in
  prisons and on conditions and any corrupt or
  dishonest practices.

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7.2. Monitoring (cont)

• Directorate Contract Management
• To monitor contract compliance( operations
  empowerment)
• To conduct site visits
• To attend to operational and empowerment meetings
  with contractors
• To attend quarterly meetings with Corrections
  Contractors
• Penalties
• Fixed penalties 0
• Variable penalties 0

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• 8. BUDGET ACTIVITY PPP CORRECTIONAL CENTRES
  FINANCIAL YEAR 2009/2010
• Goods Services
• Indexed fee R 566 459 700,00
• Payment on Capital Assets
• Fixed fee R 194 734 273,00

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• 9. CHALLENGES
• Gang fights
• Hunger strikes
• Re-classification of inmates
• Requests for transfers
• Provision of ARVs
• Medical releases

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Business Unusual all hands on deck to detain,
rehabilitate and reintegrate offenders for a
safer South Africa