Updating it manually from the VMs work well.
2017-03-13 12:19:56,415::INFO::repoman.common.stores.RPM::Adding package /var/lib/lago/reposync/centos-updates-el7/Packages/selinux-policy-targeted-3.13.1-102.el7_3.15.noarch.rpm to repo Non persistent RPMStore
2017-03-13 12:19:56,786::INFO::repoman.common.stores.RPM::Adding package /var/lib/lago/reposync/centos-updates-el7/Packages/selinux-policy-targeted-3.13.1-102.el7_3.15.noarch.rpm to repo /home/ykaul/ovirt-system-tests/deployment-basic-suite-master/default/internal_repo
2017-03-13 12:20:01,901::INFO::root::Saving /home/ykaul/ovirt-system-tests/deployment-basic-suite-master/default/internal_repo/el7/noarch/selinux-policy-targeted-3.13.1-102.el7_3.15.noarch.rpm
Y.