Performance Audit Reports

8/20/2019 Performance Audit Reports

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PERFORMANCE AUDIT REPORT

ACQUISITION AND USE OF LANDS FOR

GOVERNMENT PROJECTS

Ministry of Housing and Lands

July 2015


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Acquisition and Use of Lands for Government Projects i

CONTENTS

Page

ABBREVIATIONS AND ACRONYMS iii

EXECUTIVE SUMMARY1

CHAPTER ONE: INTRODUCTION

1.1 Motivation 3

1.2 Audit Objectives 3

1.3 Auditee 3

1.4 Time Coverage 3

1.5 Geographical Coverage 4

1.6 Assessment Criteria 4

1.7 Audit Methodology 4

CHAPTER TWO: DESCRIPTION OF THE AUDITED ACTIVITY

2.1 Role and Responsibility of MHL in the Acquisition Process 7

2.2 Requests for Lands and Vesting Procedures 7

2.3 Organisation Structure of MHL 8

2.4 Key Players and Their Activities 8

2.5 Recording of Vested Lands 8

2.6 Project Plan Committee 9

CHAPTER

THREE

: FINDINGS

3.1 Land Acquisition 11

3.2 Land Use 15

3.3 Recording of Vested Lands 18

3.4 Monitoring of Vested Lands by MHL 20

3.5 Land Acquisition Recording and Payment System 20

CHAPTER FOUR: CONCLUSIONS AND RECOMMENDATIONS

4.1 Land Acquisition 21

4.2 Land Use 22

4.3 Recording and Monitoring of Vested Lands 23

TABLES

1 Sections of the LAA used as Assessment Criteria 4

2 Time Taken to Complete Acquisition Procedures 11

3 Effect of Late Handing Over of Site 13

4 Number of Corrigenda Published 14

5 Reply from the Valuation Department Exceeding Five Months 14

6 Examples of Interest Paid 15

7 Examples of Vested Lands not yet Developed 168 Examples of Vested Lands not Recorded at LIU 19


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Acquisition and Use of Lands for Government Projects ii


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Acquisition and Use of Lands for Government Projects iii

ABBREVIATIONS AND ACRONYMS

BOA Board of Assessment

DSLR Digital State Land Register

LAA Land Acquisition Act

LAVIMS Land Administration, Valuation and Information Management System

LIU Land Information Unit

MHL Ministry of Housing and Lands

MOFED Ministry of Finance and Economic Development

MOLG Ministry of Local Government and Outer Islands

MPI Ministry of Public Infrastructure and Land Transport

MFRS Mauritius Fire and Rescue Service

MYS Ministry of Youth and Sports

NAO National Audit Office – Mauritius

NDU National Development Unit

PBB Programme Based Budget

PPC Project Plan Committee

RDA Road Development Authority


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Acquisition and Use of Lands for Government Projects iv


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Acquisition and Use of Lands for Government Projects 1

EXECUTIVE SUMMARY

The Ministry of Housing and Lands (MHL) acquires privately owned lands on behalf of

Ministries and Government Departments for construction of roads, drains and other projects1.

Lands are acquired through private agreements and compulsorily. Compulsory acquisitionsare carried out within the legal framework of the Land Acquisition Act (LAA) 1982, as

amended in 2013.

The objective of this Performance Audit is to assess whether lands acquired by MHL and

vested in Ministries and Government Departments have been used for the intended purposes.

Further, it seeks to establish whether the acquisitions were done on a timely basis and in the

most economical manner. The recording system was also reviewed.

Key Findings

For the past 10 years, MHL had disbursed some Rs 2.2 billion on acquisition of lands for

various Government projects. Several plots of land acquired on or prior to year 2010 have

remained undeveloped. Information on the extent of lands acquired, but not developed

was not readily available as there were no established procedures for Ministries and

Government Departments to give feedback on the current statuses of the lands. Moreover,

it was not clearly defined as who should ensure that lands vested were used on a timely

basis and for the intended purposes.

Prior to year 2010, there was no mechanism in place at the MHL to ascertain that the

requesting Ministries and Government Departments had the required funds forimplementing their projects before initiating acquisition for land. However, MHL has

recently taken initiatives to ensure that the implementing agencies have the necessary

fund for the project at the time of request for land.

As for the plan of the project, MHL is still not ensuring the availability thereof at time of

request. For a few cases examined, the structural designs of the buildings were not yet

completed, and in other cases, the requesting Ministries and Government Departments did

not carry out a proper need analysis of the projects.

For a few cases regarding construction of roads, MHL could not ensure availability of the

lands on time. Hence, Government had to disburse additional funds. This was attributedto the fact that owner identification was time consuming.

Lands acquired by MHL were not always in the most economical manner. The LAA

provides for the offer of compensation to beneficiaries after the publication of notice

under Section 8 and transcription of the land. However, the time frame to accept or reject

an offer is not mentioned. A beneficiary made a counter claim to the original offer some

seven years later, and MHL had to disburse interest amounting to some 73 per cent of the

compensation payable.

1Other projects include construction of stadiums, swimming pools, Fire Stations, and Multipurpose buildings.


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The records for lands vested in the selected Ministries and Government Departments kept

at the MHL were incomplete. For instance, several plots of land acquired and vested in

the National Development Unit (NDU) were not found in the database kept at the Land

Information Unit of MHL.

Conclusion

The acquisition of land for Government projects involves significant Government’s funds and

impacts on the development of the projects. The timely acquisition of land at least cost is

therefore essential. However, MHL has not always been able to acquire land on a timely basis

and in the most economical manner. A complete database of all vested lands was not

available. Information on their statuses was also not readily available. There are several plots

of land that have been acquired, but have not yet been developed.

Key Recommendations

A mechanism should be put in place at MHL to ensure that land acquired is used for the

intended purposes on a timely basis. Ministries and Government Departments should be

requested to submit regular feedback on implementation of projects. In this respect, the

role and responsibilities of MHL and requesting Ministries and Departments need to be

clearly defined

Recently, MHL has taken initiatives to ensure that the implementing agencies have the

necessary fund for the project at the time of request for land. This measure could be

extended to include availability of design of the project. In that respect, a consultative

platform needs to be set up by the requesting Ministry/ Government Department bringingin all stakeholders so that there is a constructive dialogue and everyone knows his role,

responsibilities and obligations. This will minimise any future unproductive vesting.

Time lag for reply from beneficiaries also needs to be established

MHL should ensure that all vested lands are properly recorded. The land acquisition

system needs to be automated. A complete database on their current statuses should be

maintained.


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CHAPTER ONE

INTRODUCTION

During the past years, with the increasing public investment in the fields of education, road

infrastructure and sports in particular, the demand for land from Ministries and Government

Departments has increased considerably. State Lands that may be used for development are

becoming scarce and Government has to acquire privately owned lands.

1.1 Motivation

The National Audit Office (NAO) has often reported that several plots of land acquired by

the Ministry of Housing and Lands (MHL) on behalf of Ministries and Government

Departments were not developed. Further, adverse press reports have highlightedGovernment projects kept in abeyance since the year 2005, thus indicating non achievement

of the objectives set.

For the past 10 years, the expenditure on land acquisition has been constantly increasing to

reach a cumulative amount of some Rs 2.2 billion. For the period 2009 to 2013, more than 80

per cent of the expenditure was meant for projects relating to construction of roads.

In view of the sum spent and the adverse press reports, the NAO carried out this Performance

Audit on “Acquisition and Use of Lands for Government Projects”.

1.2 Audit Objectives

The audit objectives were to assess whether:

MHL ensures the availability of lands for the implementation of Government Projects at

the right time and in the most economical manner

The vested lands have been used for the intended purposes

Records for lands acquired and vested are complete and reliable and their use monitored

effectively.

1.3 Auditee

The auditee is MHL as it is responsible to acquire privately owned lands before vesting them

in Ministries and Government Departments for implementation of projects.

1.4 Time Coverage

The audit covered acquisitions for the period 2009 to 2013.


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1.5 Geographical Coverage

The audit covered the Island of Mauritius.

1.6 Assessment Criteria

The Performance Indicator as set in the Programme Based Budget (PBB) Estimates 2010

regarding completion of all procedures for acquisition of private lands for public projects

within five months, and the Sections of the LAA as shown in Table 1 were used as

assessment criteria.

Table 1 Sections of the LAA used as assessment criteria

Sections Brief

6 Issue of investigation notice in respect of land likely to be

compulsorily acquired

8(2) & 8(3) Publication of notices

14(1) Compensation to beneficiaries

18(6) Interest payable on compensation to beneficiaries

Source : LAA

1.7 Audit Methodology

The audit was conducted in accordance with relevant standards of the International Standards

of Supreme Audit Institutions. The following methodologies were used for the audit to

understand the audit area, along with gathering sufficient, relevant and reliable audit evidence

to support the conclusions and recommendations.

1.7.1 Documents Reviewed

The audit team collected data mainly through file reviews. The data from the TreasuryAccounting System for the past 10 financial years were extracted to examine the trend of

expenditure on the acquisition of privately owned lands. The procedures for compulsory

acquisitions and those through private agreements, as established by MHL were also

reviewed. Further, as the land acquisition process is regulated, the different Sections of the

LAA 1982, as amended in 2013 were referred to.

1.7.2 Sampling

A sample of acquisitions for the implementation of road projects for the Road Development

Authority (RDA) over the period 2009 to 2013 was selected.


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Another sample of plots of land acquired and vested on or prior to year 2010 in the following

selected Ministries and Government Departments was also referred to in view of taking

cognizance of their planning and recording systems, as well as their statuses as of February

2015.

Ministry of Local Government and Outer Islands (MOLG)

Mauritius Fire and Rescue Service (MFRS)

National Development Unit (NDU)

Ministry of Youth and Sports (MYS)


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CHAPTER TWO

DESCRIPTION OF THE AUDITED ACTIVITY

This Chapter describes the role and responsibilities of MHL and the activities of the other key

players in relation to acquisition of land. It also briefly describes the responsibilities of selected Ministries and Government Departments for requesting lands from MHL and those of RDA regarding acquisition of lands for construction of roads.

2.1 Role and Responsibility of MHL in the Acquisition Process

MHL acquires lands on behalf of Ministries and Government Departments through private

agreements and compulsorily. Compulsory acquisitions are carried out within the legal

framework of the LAA 1982, as amended in 2013.

Sections 8 and 9 of the Constitution provide for the protection of the rights of any personfrom the deprivation of property and privacy of home and other property. The LAA confers

on the State the right to compulsorily acquire any land provided, amongst others, the

conditions laid down in the Constitution are fulfilled and adequate compensation is paid.

2.2 Requests for Lands and Vesting Procedures

2.2.1 Road Development Authority (RDA)

The RDA is involved in land acquisition for construction of roads. Its Surveyors carry out the

following tasks.

A preliminary survey of ownership is carried out and the land owners are notified by

letter. A list is prepared providing all details on ownership, and the area required for the

project

Searches are carried out at the Registrar General’s Department to confirm the legal

ownership of each plot

Notices as required under Sections 6 and 8 of the LAA are prepared by RDA and sent to

MHL for vetting, approval by Minister and publication

2.2.2 Other Selected Ministries and Government Departments

The process starts with the identification of projects. All project proposals are sent to the

Accounting Officers of respective Ministries and Government Departments for approval. The

requests for lands are then addressed to the Senior Chief Executive of MHL. A joint site

visit, involving the Ministry or Government Department and other stakeholders, is organised

by MHL to assess the suitability and location of the land. Upon satisfaction, MHL undertakes

acquisition and vesting procedures.


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2.3 Organization Structure of MHL

The mission and objectives of MHL include the management and the control of development

on State Lands. To achieve the mission and the objectives, the activities of MHL are

organized within several Divisions. The Planning and Survey Divisions are relevant for this

audit.

2.3.1 Planning Division

The main activities of the Planning Division include the identification of land for

Government projects in consultation with the relevant stakeholders.

2.3.2 Survey Division

The Survey Division provides information on availability of State Lands. Where State Landsare not available, it helps in identifying privately owned lands for acquisition. The Division

includes the Land Acquisition and Project Unit, which carries out all the activities from

notification to award of compensation to beneficiaries, and also monitoring same. It records

the land acquisition data, such as date of request, the current statuses of different notices

issued as required by the LAA and payment of compensation to beneficiaries.

2.4 Key Players and Their Activities

Besides MHL, there are other key players involved in the acquisition of lands, namely

Registrar General's Department

The registration and transcription of title deeds is done at the Registrar General’s Department.

Valuation Real Estate and Consultancy Services (Valuation Department)

The Valuation Department assesses compensation payable to land owners.

Attorney General’ s Offi ce

It appoints Public Notaries on behalf of MHL and issues instructions for the drawing up of deeds of sale, as well as providing legal assistance for cases referred to the BOA.

2.5 Recording of Vested Lands

The Land Information Unit (LIU) at MHL maintains records of State Lands leased and

acquired lands vested in Ministries and Government Departments for implementation of

projects in “Microsoft Office Access”. Some of the data that are input include Parcel ID,

District, locality, file reference, type of lease, purpose, rent amount and name of lessee.

Reports are generated accordingly.


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With a view to coming up with a complete register of all private and State Lands throughout

the country, MHL acquired in December 2008, the Land Administration and Valuation

Information Management System (LAVIMS). It consists of four components, and has two

main objectives, namely establishing an efficient and cost-effective land administration and

online information register, and to set up a general valuation roll of some 350,000 residential

properties, private or State owned. The System, which had cost some Rs 600 million inDecember 2008, would be a powerful web-based information management system to allow

efficient interaction, retrieval and analysis of the data by all its potential stakeholders.

2.6 Project Plan Committee

A Project Plan Committee (PPC) was set up in the Ministry of Public Infrastructure and Land

Transport in 2009. Its main objective is the assessment of the infrastructure needs of the

various sectors of the economy. Its functions include the examination of the feasibility and

cost benefits of infrastructure project proposals. All investment proposals above Rs 25

million, excluding cost of land, have to be reviewed by the PPC, in consultation withimplementing agencies and other concerned Public Bodies prior to the development of a

pipeline of projects. An Investment Project Proposal from the requesting Ministry and

Government Department estimated at below Rs 25 million does not require the approval of

the PPC, but are submitted to the Ministry of Finance and Economic Development (MOFED)

for approval.


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CHAPTER THREE

FINDINGS

This Chapter describes the findings related to land acquisitions and use, recording and monitoring mechanisms at MHL and the selected Ministries and Government Departments.

3.1 Land Acquisition

MHL has not always been able to acquire land on a timely basis and in the most economical

manner. This was mainly attributed to long procedures, as well as the absence of a time frame

for other parties to respond to MHL.

3.1.1 Long Procedures

During the past years, with the massive investment on Government projects, the demand for

land has increased considerably. Hence, the timely acquisition and vesting of lands in the

requesting Ministries and Government Departments is vital to ensure that projects are

implemented on time.

Targets not Met

One of the Performance Indicators of MHL, as stated in the PBB Estimates for 2010, was the

completion of all acquisition procedures within five months.

In the cases listed in Table 2, MHL has taken more than five months for completing the

acquisition procedures.

Table 2 Time Taken to Complete Acquisition Procedures

Project Funding

Ministry

No. of Lots

Acquired

Request

Date

Transcription

Date

Time

TakenConstruction of Football

Ground at Quatre Bornes MPI - NDU 1 28.06.11 13.12.121 year 5

months

Widening of Belle Vue

Road (B22) from Petite

Retraite to LaventureMPI - RDA 35 26.02.10 28.06.11

1 year 4

months

Extension of Trois Ilots

Cemetery MOLG 1 19.11.07 15.05.124 years 5

months

Construction of Cremation

Ground at Clavet MPI - NDU 1 30.01.03 29.03.1310 years 2

months

Incineration Project at

Beau ChampMPI - NDU 1 23.05.12 18.03.13 9 months

Source: MHL’s Records


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Requests not Met

In other cases, for example the relocation of the two Fire Stations at Quatre Bornes and Port

Louis (Case Studies 1 and 2), lands initially identified for the projects in years 1984 and 2010

respectively were found unsuitable. Although MFRS made several requests for alternative

sites, as of February 2015, MHL has not yet identified the appropriate lands for the relocationof the two Fire Stations. Government has already approved the required funds needed to

implement the projects.

Case Study 1 - Relocation of Quatre Bornes Fire Station

The relocation of Quatre-Bornes Fire Station dates back to 1976, in anticipation of the expiry of the

lease agreement. It was also found that the Fire Station is situated in the middle of the town, being

most of the time heavily congested due to numerous commercial activities taking place in the vicinity.

Hence, the fire trucks are often found to be obstructed in traffic jams. A plot of land in Quatre Bornes

vested for relocating the Fire Station in 1984 was found unsuitable for the project by the then

Ministry of Works, being triangular in shape, thus offering no training and drilling facilities. The presence of a bus lay-by would also hinder visibility, and no direct access on St Jean Road was

allowed. On 20 August 2009, MOLG expressed no objection to the release of the plot of land subject

to an alternative site be identified for the relocation of the Fire Station.

On 25 March 2014, a plot of land of an extent of about 1A35P at Avenues des Tulipes, Quatre Bornes

was identified. However, on 9 June 2014, MHL informed that the site was found inappropriate, due to

sensitive uses in close proximity thereto. MFRS was requested to identify three alternative sites for the

eventual relocation of the Quatre Bornes Fire Station. As of February 2015, the appropriate land was

not yet identified.

Case Study 2 - Relocation of Port-Louis Fire Station

On 22 November 2006, MPI submitted a structural investigation report, which stated that the building

suffers from structural defects and is unsafe and beyond economic repair. On 29 October 2009, the

Occupational Safety and Health Unit submitted a report which stated that the wooden structure could

not be restored. Two sites were identified, one at Roche Bois to cater for a sub-station, and the other

one at Colline Monneron for a main station. At a meeting held on 21 June 2010, mention was made

that the site at Roche Bois was located on a busy round about which could hamper the rapid turn out

of the fire fighting vehicles. Further, RDA did not agree to have a direct access on the roundabout as

it represented a safety hazard.

In March 2012, the Ex-Sea Training School at Victoria Square was being considered. At a meeting

held in April 2012, it was decided to seek the views of the Traffic Management and Road Safety Unit

as the site is found in a congested area with the existence of Victoria Bus Station and narrow roads.

On 1 November 2012, MFRS agreed to take possession of the 16A30 of State Land at Jin Fei in view

of accommodating a Fire Station and the new Head Quarters and a Training Academy. The Colline

Monneron Site was rejected by the PPC in 2010 and revived by the ex-Government Fire Services in

2013. The project was submitted to the PPC, which stated that a feasibility study was required.

At a meeting held on 23 July 2013, mention was made that it was not convenient to relocate the Port-

Louis Fire Station at Jin Fei because the city of Port-Louis harbours intense trading activities which

imply all sorts of fire hazards. If the time taken to reach the spot is too long, this may result in

magnitude of fire taking shape becoming out of control and which in turn could lead to paralyzing the

capital completely. As of February 2015, the appropriate land was not yet identified.

Source: Selected Ministries and Government Departments


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Late Handing Over of Sites

There were also cases of lands not available on time to RDA that caused late handing over of

sites to Contractors for the construction of roads. This caused RDA to extend completion

dates of the projects and to incur additional costs. Examples are given in Table 3.

Table 3 Effect of Late Handing Over of Site

ProjectNo. of

Days

Additional Costs

Rs

Phoenix-Beau Songes Link Road 60 2,433,378

Goodlands Bypass 123 12,603,815

Port-Louis Ring Road 35 3,884,094

Construction of Bidirectional Lane from St Jean to Pont Fer 67 4,829,857

Schoenfeld Bypass II 63 4,941,482

Upgrading of Avenue des Tulipes 14 408,748

Source: RDA

Publication of Corrigenda

Compulsory acquisition under the LAA involves the publication of Notices by MHL as

required under Sections 6 and 8. However, for construction of roads, it is the practice forRDA to carry out the preliminary survey of ownership on site, and title deed searches at theRegistrar General’s Department, and also to prepare Notices.

Owner identification is time consuming. At times, after the notices were issued, errors were

detected mainly regarding ownership of land and which required corrigenda to be published.

These corrigenda involved use of additional resources in terms of money and take additional

time for the republication of notices. In a few cases, MHL had to send several reminders for

correction and resubmission of notices for finalizing acquisition procedures (for example in

the case of the project for the Construction of Bidirectional Lanes from St Jean to Pont Fer,

and enlargement of Belle Vue Road B22).

During an examination of a sample of projects, several cases were noted where corrigenda

were published as illustrated in Table 4.


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Table 4 Number of Corrigenda Published

Project No. of

Portions

No. of

Corrigenda

Terre Rouge - Verdun Link Road 332 23

Phoenix – Beau Songes Link Road 256 13

Triolet Bypass 205 17

Access Road to New Triolet Market 55 15

South Eastern Highway Project 107 39

Source: Land Acquisition and Project Unit

3.1.2 Absence of a Time Frame

The current LAA does not cater for the situations as described below. This resulted in lands

not available on time and at least cost.

Time for Reply from ex Valuation Department not Prescribed

Compensation payable is assessed by the ex Valuation Department. A request for assessment

is made to the Department in writing after the land has been transcribed, and as soon as a

reply is received at MHL, an offer is made to the land owner. However, the LAA does not

prescribe the time within which the Department should reply to MHL. In a few cases, repliesfrom the ex Valuation Department were received after more than five months, and this has

caused delay in the completion of the acquisition procedures. Examples of such cases are

given in Table 5.

Table 5 Reply from the Valuation Department Exceeding Five Months

Project Request for

Assessment Reply Date

Months

Taken

Enlargement of Pamplemousses-Grand

Baie Branch Rd 07.12.10 19.05.11 6

Construction of Triolet BypassAug/Sep 09 Oct 09/ June 10 2 - 9

Verdun-Trianon Link RdJan 11/Apr 11 Sep 11/July 12 8 - 15

Construction of Bidirectional Lane from

St Jean to Pont Fer Aug 10 April 12 9



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Time Lag for Reply From Former Landowners not Defined

The offer for compensation to the former landowners is made after the publication of Notice

under Section 8 of the LAA and transcription of the land. However, the time lag to accept or

reject an offer is not mentioned in the LAA. For example, one former landowner of a

particular project was offered Rs 898,000 for his land on 21 May 2002. On 15 May 2009, thatis some seven years later, the landowner made a counter claim of Rs 4,474,024 for the land.

After deliberations, the claim was reduced to Rs 1,691,700, and in March 2011, a sum of

Rs 2,937,949, including interest of Rs 1,246,249 (73 per cent of compensation) for the period

April 2002 to October 2010 had to be disbursed by MHL.

Payment of Interests

In some cases, MHL had to disburse additional funds in terms of interest payments on

compensation because of the time lag between the transcription date and the payment date.

The cases listed in Table 6 are examples where interests had been paid. The time lag ranges

between 311 to 543 days.

Table 6 Examples of Interest Paid

Date of

Project Transcription Appointment

of Notary

No. of

Days

Compensation

Rs

Interest

RsPhoenix – Beaux

Songes Link Road 05.01.10 21.04.11 472 22,000,000 2,275,945

Verdun Trianon

Link Road 11.04.11 05.10.12 543 35,200,000 4,189,282

Port-Louis Ring

Road 16.07.10 03.08.11 384 18,000,000 1,514,959

Port Louis – Plaisance Dual Way 19.07.11 25.05.12 311 1,180,000 80,434


MHL contended that these interests were paid because the owners were deprived of their

rights on the acquired lands. However, the longer the time taken to pay the compensation, the

higher will be the interests. LAA does not provide for a time frame so as to reduce to a

minimum the interests.

3.2 Land Use

3.2.1 Statuses of Lands Vested

The requests for lands by the ex-Government Fire Services, now MFRS, to MHL were

initiated following a review carried out in 1991, whereby the construction of additional Fire

Stations was recommended. As regards MYS, the requests for lands were made for the

construction of sports infrastructures in view of promoting sports in different regions of the

country, and to cater for both national and international sports events. Details are given inTable 7.


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Table 7 Examples of Vested Lands not yet Developed

Ministry Vesting Date Purpose Extent

(m2)

Cost

(Rs million)

MOLG – MFRS 01.09.1999 Fire Station at Montagne Blanche 4,010 1.2

06.05.2003 Fire Station at Goodlands 4,221 4.5

MYS 19.01.2005 Gymnasium at Lallmatie 9,554 5.7

15.04.2002 Swimming Pool at Camp Garreau 8,572 2.2

09.03.2010 Swimming Pool at Riviere Des Anguilles 8,006 1.3


As indicated in Table 7, these lands were acquired and vested in the Ministries and

Government Departments on or before year 2010, and as of February 2015 they were not yetdeveloped. This was attributed to unavailability of funds to implement the projects.

3.2.2 Funds for Projects

MHL has taken good initiatives regarding confirmation from implementing agencies of

availability of funds before embarking on the acquisition process. However, the procedures

need to be revisited because one of the conditions is that the implementing agencies should

have land readily available for their projects before the proposals are submitted to the PPC.

Funds for the implementation of projects are disbursed by MOFED after it has been approved

by PPC. On the other hand, MPI has stated that unless there are appropriate funds available, itwill not embark on the conception of the preliminary drawings.

Presently, there is no mechanism at MHL to ensure that the requesting Ministries and

Government Departments have properly planned the projects implementation and that

appropriate structural designs for the buildings are available at the time of request (Case

Studies 3 to 7). In the case of the proposed Swimming Pool at Camp Garreau, MHL had to

spend additional resources for carrying out site surveys on several occasions, upon request of

MPI.

Case Study 3 – Construction of Rose Belle Fire Station

Two plots of land of 3,000 m2 and 1,200 m2 were vested on 16 July 1998 and 5 September 2001

respectively for the construction of the Rose-Belle Fire Station. The lands were acquired from the

Rose Belle Sugar Estate under the Sugar Industry Efficiency Act, which implied that no funds were

disbursed for acquiring the plots of land.

Acquisition and vesting procedures had to be carried out twice. This was attributed to the non-

availability of structural designs at the time of request, and as such, the extent of land needed for the

construction of the Fire Station could not be ascertained.

As of February 2015, the drawings for the Fire Station were completed, and tender procedures will be

launched during the year.


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Case Study 4 – Construction of Goodlands and Montagne Blanche Fire Station

Two portions of land of 4,010 m2 and 4,221 m2 costing some Rs 1.2 million and Rs 4.5 million were

vested in the years 1999 and 2003 respectively.

In August 2012, following a request from MPI, MHL submitted a detailed survey of the land and

location plan for both sites. MPI was requested to prepare the preliminary drawings and to submit a

cost estimate to seek funds from MOFED. As of August 2014, the preliminary drawings for the Fire

Station were not ready and reminders for that purpose were sent to MPI.

In its reply, MPI stated that it is awaiting completion of design for the Rose Belle Fire Station as same

might be used as a prototype for the new Fire Station at Montagne Blanche and Goodlands. As of

February 2015, the two plots of land were still not developed.

Case Study 5 – Proposed Swimming Pool at Camp Garreau

A plot of land of an extent of 9,999 m2 at Camp Garreau was compulsorily acquired in March 2002

and vested in MYS April 2002. In December 2004, the preliminary drawings were approved with

amendments, as it was proposed that the size of the swimming pool be increased from 25 metres x 20

meters to 25 meters x 25 meters in order to accommodate eight lanes instead of six lanes so as to meet

greater demand from the public.

In January 2005, MPI submitted estimates of cost for both six and eight lanes swimming pools of Rs

46.5 million and Rs 49 million respectively. In July 2010, the specifications of the swimming pool

were revised to 50 meters with eight lanes, and MPI was again requested to prepare preliminary

designs, drawings, scope of works and cost estimates.

In a letter dated 10 December 2010, MHL informed MYS that due to encroachment on the land, the

extent was reduced to 8,572 m2. In May 2011, MPI stated that the 50 metre swimming pool together

with ancillaries could not be adjusted on the given site.

In August 2011, in view of the site constraints, MYS proposed to go ahead with the construction of a

25 metre long swimming pool instead of a 50 metre one, and MPI was requested to prepare relevant

design and cost estimates to enable an early implementation of the project. In January 2012, MYS

requested MHL to acquire additional land to cater for an access to the site from the main road, and

for the construction of a kid’s pool. In March 2012, MPI worked out a tentative implementation

schedule of the project.

In April 2012, MYS submitted the Project Request Form (PRF) to MPI to be considered by the PPC.

The PRF made mention of the construction of a 50 metre swimming pool, inclusive of changing

rooms, showers, toilet, administrative blocks, a stand for spectators, parking facilities and toilets. The

estimated total cost was Rs 123 million. In August 2012, the proposal was approved by the PPC.

Although the PPC approved the construction of a 50 metre swimming pool, MYS decided in February

2014, to revise the size to 25 meters. As of February 2015, the plot of land was still not developed.


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Case Study 6 - Proposed Swimming Pool at Riviere des Anguilles.

In March 2010, a plot of land of an extent of 8,006 m2 was vested in MYS for the construction of a

swimming pool. MYS intended to proceed with the construction of a 50 metre swimming pool with

eight lanes, and in July 2010, requested MPI to prepare preliminary designs, drawings and scope of works together with cost estimates.

The swimming pool would include a Grand Stand to accommodate 1,000 persons together with

parking facilities. Following a survey of the site, MPI informed that additional space would be

required for the provision of parking facilities. On 15 October 2010, MHL was requested to acquire

an additional extent of land. On 4 February 2011, a site of an extent of 1,500 m 2 was identified and

agreed.

In May 2011, MYS informed MPI that due to constraints as regard the size of the site, it has decided

to go ahead with the construction of a 25 metre instead of a 50 metre swimming pool. As of February

2015, the plot of land was still not developed.

Case Study 7 - Multipurpose Gymnasium at Lallmatie

In January 2005, two portions of land of extent of 4,686 m2 and 4,868 m2 respectively were vested in

MYS for the construction of a Multipurpose Gymnasium at Lallmatie. In April 2006, it was agreed

that the project would be of international standard, including parking facilities.

In November 2007, MYS requested MPI to include a Boulodrome in the drawings and the

modifications to drawings were made in December 2007. In February 2008, MPI was requested to

proceed with the preparation of scope of works and breakdown of cost estimates. As of February

2015, the plot of land was still not developed.


3.3 Recording of Vested Lands

It is important to have a complete and accurate record of all vested lands as it helps to

enhance and to support effective asset decision-making.

3.3.1 Recording of Vested Lands at MHL

The records of vested lands in Ministries and Government Departments kept at the LIU were

not complete. The current system of record-keeping at the LIU is not appropriate to cater for

the increase in number of plots of land acquired over the years. For example, the following

plots of land acquired and vested in NDU, as mentioned in Table 8, were not found in the

database. This was mainly attributed to insufficient input and monitoring controls.


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Table 8: Examples of Vested Lands not Recorded at LIU

Projects Extent (m2) Vesting Date

Football Ground at Quatre Bornes 10,552 18.01.13

Cremation ground at Clavet 1,913 10.05.13

Extension of Trois Ilots Cemetery 11,448 06.06.12

Extension of Edgard Millen Government School 584 01.07.13

Source: MPI-NDU

3.3.2 Land Administration, Valuation and Information Management System (LAVIMS)

Most of the components of the LAVIMS were completed in September 2011. Thereafter,

digitization process of properties deeds was initiated. It was decided that this process would

cover a period of past 30 years from the year 2008.

However, it was reported that all the deeds could not be uploaded onto the System, and this

was attributed to the absence of a valid site plan attached to the deeds. The System could not

also generate requested statistical reports and the input process excluded data on all State

Lands completely.

Digital State Land Register

Due to the limitations with the LAVIMS, MHL has initiated the Digital State Land Register

Project (DSLR). This Project would entail a detailed inventory of all State Lands.

Subsequently, in August 2012, the possibility of incorporating the DSLR into the LAVIMS

was discussed. It was decided to create a program within LAVIMS to cater for State Lands.

However, MHL would have to see if the contractor of LAVIMS would be agreeable to give

the relevant codes.

In October 2013, a meeting was held with an officer of the Central Informatics Bureau to

discuss on the drafting of the Terms of Reference for the setting up of a DSLR. It was

proposed that the tool would require to be well defined to meet all the requirements in respect

of retrieval of information for various purposes. It was agreed that the base should beLAVIMS wherein the DSLR would only be a component.

On 25 August 2014, MHL sought advice from the Attorney General’s Office and MOFED as

to whether the former contractor of LAVIMS might be contacted directly without having

recourse to open tender exercise. As of February 2015, no reply was obtained.

I am given to understand that a high level committee will be set up to work on the technical

specifications of the DSLR


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3.4 Monitoring of Vested Lands by MHL

Several plots of land acquired on or prior to year 2010 have remained undeveloped.

Monitoring of these plots of land is important as MHL had disbursed funds to acquire same.

Information on the extent of lands acquired but not developed was not readily available at

MHL, as it does not have a complete database on the statuses of vested lands. It was notclearly defined as who should ensure that lands vested were used on a timely basis and for the

intended purposes. Moreover, there were no established procedures for Ministries and

Government Departments to give feedback on the current statuses of the lands.

3.5 Land Acquisition Recording and Payment System

The land acquisition process consists of different steps from the time requests are received at

MHL to payment of compensation to beneficiaries. Bottlenecks at one or more steps result in

long delays in the acquisition of lands. Monitoring of the activities, based on appropriate and

readily available information, at each step is therefore essential for timely acquisition of theland.

However, information relating to outstanding payments of compensation, outstanding

requests, outstanding cases to BOA and follow-up of replies from other stakeholders was not

readily available at the Land Acquisition and Project Unit. This did not help the Ministry to

monitor the different activities and to identify bottlenecks in the acquisition process. These

are illustrated in the examples below:

Improvement of the Quartier Militaire Road (B6) and the construction of a Bypass at

Valetta SN11 – The Valuation Department recommended the case to be referred to the

BOA on 23 August 2011. It was only one year later, on 27 August 2012, that the Ministry

initiated action to refer the case to the BOA.

Cremation Ground at Clavet - MHL initiated the purchase of land for the project in

January 2003. The acquisition procedures went on till July 2006. Thereafter, there was no

follow up on the project till June 2008, when NDU sought information from the Ministry

about the status of the project.

3.5.1 Present Acquisition and Payment Systems

Government acquires lands through either private agreements or compulsorily. Compulsory

acquisitions are carried out as per the provisions of the LAA. Presently, all requests for land

acquisitions from Ministries and Government Departments are directed to MHL and

payments to the land owners are effected by MHL from funds under its Vote. Under the

current system, Ministries and Departments disbursed funds under their Vote only for the

infrastructural works, whereas MHL paid for the land. There is no single Ministry/

Government Department accountable for the whole project, including the land.


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CHAPTER FOUR

CONCLUSION AND R ECOMMENDATIONS

Several plots of land acquired and vested in the selected Ministries and GovernmentDepartments on or prior to year 2010 were still not developed. Acquisitions were made

without a firm commitment to implement projects. Hence, the objectives set have not been

achieved. This has resulted from the absence of a proper mechanism at MHL to ensure that

the requesting Ministries and Government Departments had funds and structural designs

available at the time of requests. For few cases regarding construction of roads, MHL could

not ensure availability of the lands on time and in the most economical manner. Records of

vested lands and their current statuses at MHL were incomplete.

In the light of the audit findings and conclusion, hereunder are the recommendations

4.1 Land Acquisition

4.1.1 Funding

Consideration may be given for the requesting Ministry and Government Department to make

provision for the payment of compensation to land owners in their respective budgets. The

latter will be accountable for the implementation of the project, including the acquisition of

land. MHL will effect payment on receipt of a Departmental Warrant from them.

4.1.2 Time Frame for Acquisition and Reply

MHL should attend to all requests for land acquisitions and ensure that acquisitions and

vesting are completed within a reasonable time. As regards the relocation of the two

existing Fire Stations at Quatre Bornes and Port Louis respectively, the appropriate lands

need to be identified and acquired

Time frame for reply from beneficiaries also needs to be established.

Ministry’s Reply

MHL has considered the regularization of a time frame for the acceptance/ rejection of an

offer.

4.1.3 Time Frame For Payment of Compensation

Procedures need to be established to reduce the time lag between the transcription date and

payment date so as to minimize interests.


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4.1.4 Computerised Land Acquisition System

MHL needs to improve its monitoring and follow-up of requests at each step in the

acquisition process. This will require more up to date and readily available information. A

better approach could be to automate the land acquisition system. This would have the added

advantages, such as:

Improving the time taken to complete the land acquisition process

Records are updated automatically

Keeping track of the land records will become less complicated

Better monitoring and follow-up to eliminate bottlenecks

4.1.5 On-line Facilities of LAVIMS to RDA

Owner identification is time-consuming. To speed up procedures and to facilitate RDA to

search for ownership of land and title deeds, the latter needs to be provided with an access to

LAVIMS.

Ministry’s Reply

As RDA is not within GIN Network, no access could be established with LAVIMS server.

However, RDA’s officers are granted full access to LAVIMS at the Cadastre Unit to carry

out searches.

4.2 Land Use

4.2.1 Responsibility for Administration of Vested Lands should be Established

The role and responsibility of MHL and requesting Ministries and Government Departments

in respect of project implementation on vested lands should be clearly established. It should

also be defined who should ensure that lands vested are used on a timely basis and for the

intended purposes.

4.2.2 Preparation of Need Analysis Before Requesting for Land Acquisition

Need Analysis and project design and description should be prepared much ahead before

embarking on request for acquisition of land for a project. Appropriate extent according to

project specifications should be acquired so that there is judicious use of land.

4.2.3 Setting up of a Committee for Project Implementation

Ministries and Government Departments should have recourse to MPI for the preparation of preliminary designs, drawings and scope of works together with cost estimates only after it is


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confirmed that MOFED would disburse the funds. A consultative platform needs to be set up

by the requesting Ministry/ Government Department bringing in all stakeholders so that there

is a constructive dialogue and everyone knows his role, responsibilities and obligations. This

will minimise any future unproductive vesting.

As regards lands vested and which have so far not been developed, Ministries andGovernment Departments should liaise with MOFED as soon as possible to ensure that funds

would be disbursed for implementing the outstanding projects.

Land acquired and vested should be utilized within reasonable time. If not used, MHL should

be notified so that the lands can be retrieved and vested in other Ministries and Government

Departments to ensure their optimum economic use.

4.3 Recording and Monitoring of Vested Lands

A database of lands acquired is not enough to exercise proper control over land utilization. Acomplete database on status of all lands vested in Ministries and Government Departments

should be built up. Ministries should then be requested to submit feedback at regular intervals

on implementation of projects. To ensure that Government funds are used effectively and

efficiently, it is vital that MHL maintains control on all State Lands. The DSLR should be

developed.

Ministry’s Reply

Action is being taken for updating the records.


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PERFORMANCE AUDIT REPORT

LEASE AND USE OF

GOVERNMENT OFFICE ACCOMMODATION

Ministry of Public Infrastructure and Land Transport

July 2015


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Lease and Use of Government Office Accommodation i

CONTENTS

Page

ABBREVIATIONS AND ACRONYMS iii

EXECUTIVE SUMMARY 1

CHAPTER ONE: INTRODUCTION

1.1 Government Office Accommodation 3

1.2 Motivation 3

1.3 Audit Objective 3

1.4 Audit Scope 3

1.5 Selected Ministries 4

1.6 Methodology and Sources of Information 5

CHAPTER TWO: GOVERNMENT OFFICE ACCOMMODATION IN MAURITIUS

2.1 System Description for Renting GOA (New Request) 7

2.2 System Description for Renewal of Lease Agreement and/ or Renting of AdditionalSpace within Same Building

7

2.3 Responsibilities and Functions of Stakeholders 8

2.4 Audit Criteria 8

CHAPTER THREE: FINDINGS

3.1 Expenditure Relating to GOA 9

3.2 Initiatives Taken 12

3.3 Government Office Accommodation Policy 15

CHAPTER FOUR: CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion 19

4.2 Recommendations 19

TABLES

1 International Benchmarking and Audit Criteria 6

2 Expenditure Incurred on Rent of GOA during the Past Five Years 9

3 Annual Cost per Employee – Year 2014 10

4 Occupancy Rate per Employee at some Ministries and Government Departments 11

APPENDIX

Clearances from Stakeholders before awarding Contract to Lessor 21


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Lease and Use of Government Office Accommodation ii


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Lease and Use of Government Office Accommodation iii

ABBREVIATIONS AND ACRONYMS

GOA Government Office Accommodation

GOMU General Office Management Unit

MOFED Ministry of Finance and Economic Development

MOHQL Ministry of Health and Quality of Life

MPI Ministry of Public Infrastructure

MFRS Mauritius Fire and Rescue Service

ESD Ministry of Renewable Energy and Public Utilities - Energy Services Division

NAO National Audit Office – Mauritius

OAS Office Accommodation System

OSHA Occupational Safety and Health Act

PMO Prime Minister’s Office

PPA Public Procurement Act

PPO Procurement Policy Office

TMRSU Traffic Management and Road Safety Unit

TAS Treasury Accounting System


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Lease and Use of Government Office Accommodation iv


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Lease and Use of Government Office Accommodation 1

EXECUTIVE SUMMARY

Government Office Accommodation (GOA) portfolio includes both owned and leasedpremises and is considered a key factor in supporting the general administration and

operations, including client service functions in Ministries/ Government Departments. Thetotal expenditure on rental of office accommodation for the years 2010 to 2014 was someRs 2.8 billion.

Key Findings

Rental of office accommodation remains a significant annual financial commitment forboth Ministries/ Government Departments. Most of the Government officeaccommodation is concentrated in the region of Port Louis, where Government leases itsdifferent office spaces located in some 50 privately owned buildings with an annualcommitment of some Rs 380 million in year 2014, that is, 76 per cent of the totalexpenditure on lease in Mauritius.

Cost per employee and occupancy rate are two metrics used to measure cost efficiency.An analysis of the data available for a sample of Ministries and Government Departmentsshowed that there are significant variations in these metrics.

Government decided in year 2000 to rationalize the use of office space for public servicesthrough the setting up of a Unit, namely, the General Office Management Unit (GOMU)under the aegis of the Ministry of Public Infrastructure, and Land Transport (MPI).

However, this Unit has not been able to take off. As of date (January 2015), MPI is stillcommitted to implement Government’s decision to set up GOMU.

Government in the past came up with some construction projects, mainly to cut downexpenditure on rent, to relocate some offices away from the City in order to ease the thengrowing traffic problem in Port Louis, and to decentralise the economy and business.However, these projects did not take off although provisions for some of the projectswere made in the Capital Estimates.

Government took the following initiatives to rationalise office accommodation, but wasunsuccessful in

setting up a database of all buildings, rented and owned

regrouping different Divisions of the same Ministry/ Government Department underone roof

developing guideline on standard space requirement for various grades of officers

GOMU was responsible to formulate policies and strategies regarding officeaccommodation for both owned and leased buildings. However, pending the setting up of GOMU, Government has not yet come up with a written accommodation policy paper,

accompanied with strategic and/ or long term plan.


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Conclusion

The cost of leased Government Office Accommodation is still significant, and is likely toincrease in future. The absence of an office accommodation policy and the current practice of leasing office space do not help Ministries and Government Departments to be cost efficient.

There have been several initiatives taken by Government but these were not successfullyimplemented.

Key Recommendations

A long term GOA plan should be developed to rationalize office accommodation. Theplan should have clear objectives, strategies and measurable standards, along withappropriate time frame for the implementation of the strategies.

Government may consider a coordinated, whole-of-Government approach in the planning

and management of GOA. This should be accompanied with clearly defined role andresponsibility for the development of appropriate policy and strategies. All potentialstrategies must be evaluated as a whole rather than separately in order to identify a set of preferred strategies.

Guidelines or directives on different aspects of office accommodation, such as areaoccupied per employee and the rental cost per employee could be developed andcommunicated to all Ministries/ Government Departments. A comprehensive database onoffice accommodation can help in the development of these guidelines. The database caninclude information, such as proportion of office owned and rented, location of buildings,rates, number of employees housed and details of lessors. A database of all potentiallandlords willing to lease their buildings could also be kept for greater efficiency.

All the above recommendations can be achieved by putting in place a mechanism that willoversee all the activities related to Government Office Accommodation.


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CHAPTER ONE

INTRODUCTION

1.1 Government Office Accommodation

Government Office Accommodation (GOA) portfolio includes both owned and leasedpremises, and is considered a key factor for supporting the general administration andoperations, including client service functions, in Ministries and Government Departments.

1.2 Motivation

The rental of office accommodation which is a major expense for Government has been

going up constantly over the years. Since year 2000, Government decided to rationalize theuse of office space for public services by taking several initiatives, but was not successful.

On the other hand, the National Audit Office (NAO) conducted two Special Reviews onrental of GOA in 1994-95 and 2005-06 respectively. Both reviews arrived at the sameconclusion that Government expenditure in connection with rental was on the high side asMinistries and Government Departments were disbursing large amount of funds on rental of office building.

This has prompted NAO to carry out this Performance Audit on GOA.

1.3 Audit Objective

The audit objective is to assess whether Government has adequate mechanism that ensuresoffice accommodation is leased and used in a rational way.

1.4 Audit Scope

1.4.1 Auditee

GOA is a subject that cuts across all the Ministries and Government Departments. The mainauditee is the Ministry of Public Infrastructure and Land Transport (MPI). The Ministry of Finance and Economic Development (MoFED) is another auditee in so far as funding isconcerned.

For the purpose of this audit, Parastatal Bodies, Mauritius Embassies, High Commissions andTourist Offices found abroad were excluded.

1.4.2 Audit Object

The audit focused on the mechanism put in place for acquiring and utilising office space.


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1.4.3 Time Coverage

Financial records relating to the years 2010 to 2014 were examined. These five financialyears were considered for trend analysis, and ease of comparison because of the transitionfrom fiscal year to calendar year basis.

1.4.4 Geographical Area

This report examines the existing processes and procedures to acquire and use GOA inMauritius as a whole.

1.5 Selected Ministries

The following Ministries and Government Departments were visited:

Prime Minister’s Office (PMO)

Ministry of Finance and Economic Development (MoFED)

Ministry of Public Infrastructure and Land Transport (MPI)

Ministry of Agro Industry and Food Security

Ministry of Fisheries

Ministry of Foreign Affairs, Regional Integration and International Trade

Ministry of Gender Equality, Child Development and Family Welfare

Ministry of Labour, Industrial Relations, Employment and Training (Labour Division)

Valuation Real Estate Consultancy Services (ex Valuation Department)Procurement Policy Office (PPO), and

Electoral Commissioner’s Office

These Ministries/ Government Departments were selected on the following basis

Offices of the Ministries and Government Departments in different buildings

Responsibility for setting policy/ strategy, and

Recent relocation of Ministries/ Government Departments in year 2010.

This sample, which represents some 30 per cent of the total number of Ministries andDepartments, allows a better understanding of the mechanism put in place for the acquisitionand use of GOA.


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1.6 Methodology and Sources of Information

1.6.1 Interviews

Interviews of officers from Senior and Middle Management, as well as Technical and

Support Staff were conducted across 10 Ministries/ Government Departments. The objectivewas to better understand their roles, responsibilities and involvement in the acquisition anduse of GOA.

1.6.2 Files and Documents Reviewed

Files were reviewed to corroborate information obtained through interviews. Proceduresfollowed by Ministries/ Government Departments to shift to another location were alsoassessed. Needs analysis, tender procedures, seeking clearances and approvals from otherGovernment Departments were some of the aspects that have been perused to ensure that

Ministries/ Government Departments comply with established procedures.

Files were also examined to obtain information regarding the terms of the lease, the areasrented, number of employees housed in the building, rates per square metre and the purposefor renting the building.

Ministries’ procurement plan, Programme Based Budget Estimates and tender documentsrelating to the rental of new office were reviewed.

Rent paid for the past years were obtained through the Treasury Accounting System (TAS).

1.6.3 Relevant Acts

Particular attention was given to the three Acts listed below:

The Public Procurement Act (PPA) was referred to obtain information on the functionsand powers of the PPO and the Central Procurement Board, the different types of procurement methods that Ministries and Government Departments can resort to for theprocurement of works and services and the bidding process. However, in year 2012, thePPA was amended, and procurement undertaken by any Public Body in respect of rental

of office space no longer falls under the purview of the Act.

The Occupational Safety and Health Act (OSHA) was referred to understand the legalframework in connection with the minimum space allowed per employee at their place of work.

The Landlord and Tenant (Amendment) Act was consulted to take cognizance of themethod of calculating any increase in rent regarding business premises let on or before1 July 2005.


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1.6.4 International benchmarking

Benchmarking was carried out to understand how foreign countries and states are managingtheir office accommodation. (Table 1 refers).

Table 1 International Benchmarking and Audit Criteria

Country

Policy

Papers

Occupancy

Rate per

Employee

Whole of

Government

Approach

Interior

Design

Policy

Database Centrally

Managed

Space

New Zealand

Canada

United Kingdom

New South Wales(Australia)

South Australia

Western Australia

Victoria (Australia)

Queensland(Australia)

Source: NAO Analysis


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CHAPTER TWO

GOVERNMENT OFFICE ACCOMMODATION IN MAURITIUS

This Chapter describes the process for renting office space and renewing lease agreements, the

roles and functions of key players and the audit criteria used in pursuing the audit. It also

examines the expenditure incurred by Government with respect to GOA for the past five years.

2.1 System Description for Renting GOA (New Request)

The process of renting new accommodation is described below:

Accounting Officers of Ministries/ Government Departments are allowed to make theirown arrangements to find out appropriate accommodation to house different sections of their Ministries/ Departments. This is usually done through tender procedures

The need for office accommodation is specified in an Annual Procurement Plan. Thisinvolves the Public Body to engage in procurement planning with a view to achievingmaximum value for public expenditure

The Ministry/ Department sends a draft press tender notice to MPI for vetting purposesprior to the issue of a press communiqué

Tenders are invited through press notice giving precise specifications of the requirementson the building to be rented

Bidders are required to use the Standard Bidding Documents as prescribed by the PPO

A Bid Evaluation Committee is set up at the level of the Ministry/ Department to evaluatethe bids

Clearances from different Public Bodies (Appendix ) should be obtained before the Letterof Award is issued to successful bidder, and

Lease Agreement is vetted by Attorney General’s Office before being signed by lessorand lessee.

2.2 System Description for Renewal of Lease Agreement and/ or Renting of Additional

Space within Same Building

In case, a Ministry/ Government Department wishes to renew the lease for a further period orto rent additional space within same building, clearances must be sought from the PublicBodies which are listed below:

MoFED - on the availability of funds, that is, the rental cost is met either within theMinistry’s budget ceiling or additional funding is requested from MoFED

Valuation Real Estate Consultancy Services - on the quantum of rent payable


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Mauritius Fire and Rescue Service (MFRS) - on safety aspects

In year 2008, Ministries and Government Departments were advised by MPI to submit theirrequest along with the necessary clearances, as mentioned above, well before the expiry of the lease agreement for further approval. Location of building, purpose, area to be occupied,

monthly rent and period of lease are some information that are also required when submittingrequest to MPI. Finally, MPI gives its no objection, based on clearances obtained for therenewal of lease agreement.

2.3 Responsibilities and Functions of Stakeholders

There are several stakeholders who are involved when a Ministry/ Government Departmentdecides to rent a new office space. In the first instance, the Ministry/ Department itself isallowed to arrange for necessary office space. However, during the process, clearances fromseveral key players such as MFRS, Commissioner of Police, Ministry of Health and Quality

of Life, MPI and Valuation Real Estate Consultancy Services are required before awardingthe contract to the successful bidder.

2.4 Audit Criteria

The audit criteria are based on good practices related to policies and strategies identified inforeign countries. Emphasis has been laid on four Anglo-Saxon countries which havecommon socio-political heritage with Mauritius. (Table 1) They also have writtenaccommodation policy papers accompanied with strategies and long term plan.


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CHAPTER THREE

FINDINGS

This Chapter analyses the rent paid for office accommodation. It describes the initiatives taken,as well as constraints faced by Ministries/ Government Departments in acquiring, utilising and

rationalizing office space in view of minimizing cost and delivering better services.

3.1 Expenditure Relating to GOA

The rent paid for office accommodation remains a significant annual financial commitmentfor both Ministries and Government Departments. Expenditure incurred in respect of rentalduring the past five years totalled some Rs 2.8 billion as shown in Table 2.

Table 2 Expenditure Incurred on Rent of GOA during the Past Five Years

Year Rs

2010 514,334,348

2011 537,338,991

2012 573,325,860

2013 597,963,030

2014 630,836,639

2,853,798,868

Source: Treasury Accounting System and Statistics Mauritius

For year 2014, out of a total amount of some Rs 631 million spent, some Rs 501 million werefor office accommodation in Mauritius. This is likely to increase in the future.

One of the major factors that drive cost is the location of the offices. Our analysis of expenditure for the year 2014 showed that most of the Government office accommodation isconcentrated in the region of Port Louis. Government leases its different office spaces locatedin some 50 privately owned buildings in Port Louis, with an annual commitment of someRs 380 million, that is, 76 per cent of the total expenditure on office accommodation inMauritius. The remaining 24 per cent of the total amount was spent on office accommodationscattered over the island. Most of these buildings have been rented since a long time, withsuccessive renewal of contracts, some for more than 10 years. At present, each Ministry andGovernment Department manages its own office accommodation. This system hasencouraged the practice for most of the Ministries and Departments to locate in Port Louis.


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3.1.1 Variations in Cost per Employee

Cost per employee is one of the metrics used to measure the cost efficiency.

An analysis of a sample of rent paid by Ministries and Government Departments showed that

there are significant variations in the cost per employee as shown in the Table 3.

Table 3 Annual Cost per Employee – Year 2014

Ministries and Government Departments Annual

Lease Costs

(Rs)

No. of

Employees

Annual Cost

per Employee

(Rs)

Electoral Commissioner’s Office 9,493,428 76 124,913

Public Bodies Appeal Tribunal 1,089,851 15 72,655

Valuation Real Estate Consultancy Services 16,200,000 163 99,386

MPU- Radiation Centre 1,234,800 14 88,200

Pay Research Bureau 2,115,816 46 45,996

Employment Relation Tribunal 4,836,624 22 219,846

Source: TAS and PBB Estimates 2014

3.1.2 Variations in Occupancy Rate per Employee

Occupancy rate per employee is another measure used to assess the performance of anypublic entity. It is another factor that drives cost of office accommodation. Presently,Government does not have a prescriptive standard in occupancy rate per employee. Ananalysis of a sample of Ministries and Government Departments showed significantvariations in occupancy rate per employee, and it ranged from 12 to 32 square metres during2014. (Table 4 refers).


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Table 4 Occupancy Rate per Employee at some Ministries and Government Departments

Ministry /

Department

Location Space Rented

(sq metre)

No of

Employees

Occupancy Rate

per Employee

(sq metre/staff)ElectoralCommissioner’s

Office

Max City Bldg 2,402 76 32

Ministry of GenderEquality, ChildProtection andFamily Welfare

Chan Sui Ko Bldg 1,858 126 15

Newton Tower 752 32 23

Ministry of Fisheries

Trade andMarketing Center(CompetentAuthority)

272 16 17

Trade andMarketing Center(One Stop Shop)

186 15 12

LIC Centre 1,028 87 12

Ministry of Labour,

Industrial Relations,Employment &Training (LabourDivision)

Victoria House 4,831 198 24

Source: NAO Analysis

3.1.3 Scattered Offices

The activities of some Ministries and Government Departments have been growing over

time. Due to unavailability of the required space, they had to spread in different buildings tomeet their needs. This has resulted in variation in the cost per employee and occupancy ratein the different buildings. This has also added to the administrative inconvenience whenoperations are far from Head Office. Examples of Ministries housed in different buildingsinclude Ministry of Agro Industry and Food Security, and Ministry of Gender Equality, ChildDevelopment and Family Welfare.


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3.2 Initiatives Taken

Government has taken several initiatives to address the problems of rising cost of rentingoffice space, but has not been successful in implementing same. These are described below:

3.2.1 Setting up of GOMU

In December 2000, Government agreed on the setting up of the Government OfficeManagement Unit (GOMU) as a permanent structure under the aegis of the MPI to look intothe rationalization of office space for the public service.

The functions of GOMU are as follows:

To formulate policies and strategies regarding office accommodation for both owned andleased buildings

To develop and issue guidelines in respect of space requirements for various grades of officers

To issue standard lease agreement containing standard compulsory clauses, together withprovisions for other optional clauses

To formulate norms and standards of office buildings

To give final approval to the leasing of office accommodation

To build up and maintain a database containing relevant details of all rented and ownedbuildings

To build up and maintain a database of all landlords willing to lease their buildings toGovernment, and

To deal with all requests relating to office accommodation received from Ministries andGovernment Departments.

Up to now, Government has not been successful in setting up GOMU.

Ad – hoc Committees have been set up at the level of MPI to look into the setting up of GOMU, and also to find ways and means to carry some of its functions. The Committees hadmet on 23 occasions during the period 2001 to 2011.

The ad-hoc Committees took some decisions. However, they were either not fullyimplemented or not put in practice by MPI as GOMU has not been set up. These are

Developing draft guidelines in respect of the space requirements for various grades of officers (Guideline for renting of private building for Government use)

Developing a draft lease agreement duly vetted by the Attorney General’s Office


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Inviting Ministries and Government Departments to submit information required to buildup a database

Inviting potential landlords willing to lease their buildings to Government for use asoffice accommodation;

Developing an Office Accommodation System, on a standalone basis.

I am given to understand that MPI still intends and willing to set up GOMU. In this context,as of October 2014, a few officers were assigned to work on GOMU.

Despite the fact that GOMU has not been set up, some stakeholders took some otherinitiatives to rationalise office space used by Ministries and Government Departments, butthese were however not successfully implemented. These initiatives are described in theparagraphs below.

3.2.2 Initiatives to Rationalize GOA

Leasing versus Ownership

The issue of leasing versus ownership is influenced by several factors, such as Governmentobjectives, financial analysis, and economic development.The New Zealand Property Management Guidelines 2012 stated that the cost benefit of leasing versus owning its own office space must be robustly considered when acquiringspace. Similarly, according to Queensland Policy Guidelines 2009, when making decisionsregarding the acquisition of an asset, public sector entities should satisfy themselves that thebest-cost alternative is used.

Government in the past came up with the decision to construct its own buildings, mainly forthe following reasons:

to cut down expenditure on rent

to relocate some offices away from the City in order to ease the then growing trafficproblem in Port Louis, and

to decentralise the economy and business

Mention was made of the construction of some administrative blocks, such as Finance House,Agriculture House, Education House, Marine House and Youth Head Quarters toaccommodate offices. Provisions for some of the projects were made in the CapitalEstimates, but these projects remained at conceptual stage. This explains why, most of theadministrative blocks are still being leased in private owned buildings.

However, two of the disadvantages of leasing are the exposure to market rent fluctuations andrent increases after agreed time period. On the other hand, construction involves structuraland organisational issues regarding property management and maintenance. It is important to

consider these issues when developing policy and strategy in relation to lease or buy decision.


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Database

A database generating meaningful information would operate as a management tool to assistin decision making.

In year 2010, MOFED and MPI, through surveys, initiated action to set up a database of allbuildings, rented and owned, forming part of GOA. The database was considered necessaryin order to better manage office space in the public sector. At the request of MPI, the CentralInformation System Division, in year 2010, finalized the development of an OfficeAccommodation System (OAS) to accommodate data on office accommodation. Moreover,in April 2013, MoFED intended to set up a database for potential bidders in respect to rentalof office spaces. The aim was to ensure transparency and a reasonable time frame for theprocurement.

MoFED and MPI have in their custody a list of buildings rented and owned by Government,including the area occupied, number of employees and rent paid by each Ministry and

Department as of 2011 and 2012 respectively. The responsibility of keeping database wasassigned to GOMU. However, as at time of audit (January 2015), neither a database of potential landlords nor of office space rented and owned by Government has beenestablished. The OAS developed in year 2010 at the request of MPI has never been put in useas GOMU has not been set up.

Consolidation of Ministries and Government Departments Under one Roof

In year 2010, PMO and MoFED took laudable initiatives separately towards regroupingdifferent Divisions of the same Ministry under one roof. PMO, in August 2010, carried out asurvey. The aim was to regroup different divisions of the same Ministries, which are scatteredin different buildings, under one roof, while at the same time making maximum use of Government owned spaces. In December 2010, MoFED, also proposed to developappropriate policy measures to rationalize office space used by Ministries and GovernmentDepartments with a view to bringing efficiency gains and centralizing as far as possibledifferent Units of same Ministry under one roof.

Attempts have been made in this direction by both MOFED and PMO. However, the idea of consolidation did not materialize.

Procurement Regulations on Office Space

The Public Procurement Act (PPA) was amended in December 2012 whereby officeaccommodation no longer falls under its purview. Subsequently, in January 2014, the PPOprepared procurement regulations on rental of office space. As of date (March 2015), theregulations have remained at draft stage. Pending the finalisation of the draft, PPO has sinceJanuary 2013 been guiding Ministries and Government Departments on a case to case basison procurement of rental of office space.

Standard Occupancy Rate per Employee

A standard occupancy rate per employee helps to reduce rental costs and lower expenses for

office fit out, electricity, security and maintenance. Prescriptive space allocation standardmaximises an agency's capacity to determine its own internal office layout requirements. By


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calculating accurate occupation density, prime consideration is given in determining the costof offices and the potential for savings.

In year 2011, MPI prepared a draft guideline on standard space requirement for variousgrades of officers. As at time of audit (January 2015), the draft has not yet been finalized. In

other countries, standards set form part of policy paper, and this is considered in carryingneeds assessment when office space is required.

3.3 Government Office Accommodation Policy

A GOA policy is important as it ensures that Ministries and Government Departments makeoffice accommodation decisions in the best interest of Government. However, presently,Government does not have an accommodation policy accompanied with strategies and plans.

All the four Anglo-Saxon countries we benchmarked with have a written accommodation

policy accompanied with strategies and long term plan. On the other hand, a whole of Government approach is being adopted by several countries and states to develop strategiesand plans. (Table 1 refers). The objective of a well-functioning strategies and long-termaccommodation planning process is to ensure the availability of the right facilities at the righttime in the most economic manner to meet existing and projected demands. It also ensuresthe optimal use of existing facilities.

The foreign countries accommodation policy includes, inter alia, the process to acquireoffice, standard occupancy rate per employee, interior design policy, whether space has to becentrally managed, setting up of a database and whole of government approach (Table 1). Inthe local context, these issues, except for the interior design policy and whole of Governmentapproach, were already contemplated by Government. However, they were not fullyimplemented. In addition, they did not form part of a policy document as compared to othercountries.

The adoption of the above mentioned strategies by some foreign countries has resulted insome benefits as illustrated in Case Studies 1 to 3.


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Case Study No 1 - New Zealand

The Property Management Centre of Expertise of New Zealand developed a Property ManagementGuidelines for Office Space in August 2012. The Guidelines refer to principle on Government OfficeAccommodation policy, Whole-of-Government Approach, Office Space Occupancy Density Goal and

Interior Design Policy. In 2013, the Crown Office Estate of New Zealand reported that the adoption of these guidelines started to bring the expected benefits. For example

The Ministry of Business, Innovation and Employment’s agreement for its National Officeresulted in baseline savings of $60.62 million over 20 years, cost avoidance of $187.98 millioncompared to the projected status quo, and a space reduction of 36 per cent (32,906 m2 to 20,904m2). This was an area per person reduction from 21.4 m2 to 13.6 m2

The Ministry of Social Development’s agreement for its National Office would achieve areduction of 13 per cent in its property footprint (from 27,788 m2 to 24,255 m2), an occupancydensity of 12.8 m² per person from 17 m2, and achieves cost avoidance of $6.10 million comparedto the projected status quo.

Crown Law co-located with the Ministry of Justice, utilising surplus space and resulting in shared

facilities and a reduction in the overall Crown footprint of 4,800 m2

.

Source: New Zealand Crown Office Estate Report 2013

Case Study No 2 – United Kingdom

The UK NAO Report 2007 – “Improving the Efficiency of Central Government’s Office Property”assesses whether departments are effectively managing and achieving value for money from their ownoffice space. It considers whether departme