Noloyiso Ntwana, a former director in the department, had breached the procurement policy and appointed an unregistered quantity surveyor, the paper reported.
The charges related to events after Jacob Zuma became president in May 2009. Houses for Cabinet ministers were available but needed to be renovated.
An investigation was carried out by the Special Investigating Unit (SIU) in 2011, which linked her to the fraud. She did not attend the disciplinary hearing.
Ntwana approached the Labour Court to try and stop the charges being brought against her but failed.
Phillip Masilo, legal adviser of Public Works Minister Thulas Nxesi, confirmed to The Star that SIU evidence was used to prosecute Ntwana.
Masilo said a similar investigation was being carried out in Cape Town into the renovations of 10 ministerial houses which cost the department around R100m.
Ntwana did not respond to queries by the newspaper.