The Secretary of Defence presented the 4th quarter 2012/13 expenditure and performance report for the Department of Defence (DoD). Prior to presenting the report, he gave a summary of the yearly performance, against unaudited figures, up to 21 March 2013, noting that the DoD had spent 99.51% of its total allocated budget, but acknowledged significant over and under spending in certain programmes. A rollover of R186.3 million was requested from National Treasury but the DoD was still awaiting confirmation. The under-spending was mainly due to administration transfer payments being less than anticipated, the Force Employment programme being unable to meet requirements and non-finalisation before year end on goods and services.
The 4th Quarter report showed 99% spending, on average, although it later emerged during question time that these figures were based to some extent on averages so they were not fully accurate. DoD deliberately tried not to spend in full, hoping to have some funding left over should it run short in the next year. It had achieved on about 74% of targets overall. The “high” or “low” risk ratings for the various programmes were explained, and a detailed indicator was given as to how each of the sub-programmes was classified for risk. Matters requiring more attention included the DoD research capability status, DoD expenditure on research and development, the fiscal framework, and the Strategy of the Defence Industry reports. The DoD had not received sufficient budget allocation for renewal of the DoD main equipment in relation to the total DoD vote. Other areas marked as not met in full and therefore requiring closer attention included the DoD Foreign Relations strategy status, the Human Resource Development Strategy and Plan, with the HR Retention Strategy, and the low level of morale in the Defence Secretariat. Litigation settled in favour of the DoD was also marked as high risk, and well as the percentage of improvement of public opinion of the DoD as far as value for government spending was concerned. The particular goals and targets for each of the programmes was given and explained.
Members noted that some programmes were still on hold pending the finalisation of the Defence Review and asked for an update on this, as also on the Board of Inquiry into events in the Central African Republic. They questioned the force employment and aircraft hours, as well as the discrepancy between targets and achievements for the maritime strategy. Members also expressed concern that despite the fact that the DoD claimed to be under-funded, there were substantial surpluses in the Special Defence Fund, and R5.5 billion for capital acquisitions, and asked for full explanations. Questions were also raised about the seemingly small allocations to Defence Intelligence, and the reasons why the Navy seemed to be concentrated at one point. The suggestion was made that rather than always hearing from the top management, the Committee would like to get input from the lower ranks to find out what exactly was happening at the Department. Further explanations were sought on the foreign relations strategy, the draft of the Defence Framework Fiscal policy, and monitoring of grievances, which were largely linked to human resources issues, since there had apparently been problems with high levels of disrespect being shown to officers. In relation to human resources, Members also questioned the delays in appointments, the morale and what was being done to improve it, and the Military Skills Development Service appointments and training. Members asked why the DoD was not making all payments within the required time frame, why it was not making full financial disclosures, and wanted more detail on the litigation. It was clear that insufficient time was allocated, and further questions and responses would be made in writing.
Preliminary in Year Monitoring report: to 21 March 2013
Mr Sam Gulube, Secretary of Defence, firstly gave an overview of the preliminary in Year Monitoring Report on spending and performance, up to 21 March 2013. He stated that the Department of Defence (DoD or the Department) spent 99.51% of its total allocated budget, but acknowledged that some sub-departments had significantly over or under spent. The Department had requested the National Treasury to re-allocate the R186.3 million unspent, and add it to the following year’s budget to enable the Department to meet its financial obligations in that year. National Treasury had not yet announced its decision on this request.
Mr Gulube outlined the main reasons why the Department had under-spent. The Administration Transfer payments had been less than anticipated. The Force Employment programme was unable to meet the DoD requirements, and he General Support Programme items for goods and services had not been finalised before the financial year end.
Department of Defence (Defence Secretariat and South African National Defence Force) report on 4th Quarter 2012/13 performance
Mr Gulube explained that the Defence Secretariat consisted of seven sub programmes, and explained that the coloured performance indicators of red and green represented, in turn, high and low or no risk programmes. 36% of the Defence Secretariat programmes were considered areas of high risk, and 64% areas where there was low or no risk. The performance did not really affect the risk rating, so that even if a subprogramme achieved 99% of its goal it was still given a “High Risk” result.
He tabled a complete listing of the sub-programmes of the Defence Secretariat, with their divisions, and noted the respective green or red performance indicators (see attached presentation for full list). Some of the highlights were that the DoD had good compliance with the six portfolios in the Defence Enterprise Information Systems Master Plan, that there was coordinated defence engagagement in clusters and that there was support and resourcing given to the Defence Review process. The Defence Secretariat was on target for the percentage of departmental policies authorised for promulgation and its enterprise risk management maturity level status was satisfactory. Matters requiring more attention included the DoD research capability status, and here it was also mentioned that the percentage of DoD expenditure on research and development was also too low, the fiscal framework status, and the Strategy of the Defence Industry Status. The DoD had not received sufficient budget allocation for renewal of the DoD main equipment in relation to the total DoD vote. The White Paper on the Defence Industry Status targets had been met. The DoD was complying with the supply chain regulatory framework. It was also compliant with the African Union (AU) and United Nations (UN) requirements for rules and regulations for peace missions. Other areas marked as not met in full and therefore requiring closer attention included the DoD Foreign Relations strategy status, the Human Resource Development Strategy and Plan, with the HR Retention Strategy, and the low level of morale in the Defence Secretariat. Litigation settled in favour of the DoD was also marked as high risk, and well as the percentage of improvement of public opinion of the DoD as far as value for government spending was concerned.
Mr Gulube then moved to the performance indicators of the South African National Defence Force (SANDF) , which was divided into seven sub-programmes. The SANDF achieved 80% of its performance goals. He also tabled a list of the sub-programmes, their divisions and their respective performance indicators, showing, in each case, how many targets were achieved (listed in green) and how many were not (listed in red). Force employment achieved on five targets, but not on one. Landward Defence achieved fully on 18 targets, and not on five. Air Defence achieved all 14 targets. Defence Intelligence achieved both its targets. Joint Logistic Services listed 16 achievements and 8 under-achievements. CMIS listed four achieved and two under-achieved targets. Military Police achieved all six targets.
In total, Mr Gulube therefore concluded that in this quarter, the SANDF had achieved 74% of its total target goals
Mr D Maynier (DA) noted that certain programmes were “on hold” mode because of the Defence Review that was still pending. He therefore called for an update as to exactly where the DoD was with that Review, when it would be submitted to the Cabinet, and when it would be submitted and tabled for a full review by Parliament.
Mr Gulube stated that the Department was fully aware of the process that were taking place, but he was not sure as to when the policy was going to come out of the Cabinet and when it would be presented to Parliament.
Mr Maynier noted that Parliament had been informed that there was a Board of Inquiry into the events in the Central African Republic (CAR) but he wanted more detail on the scope of that inquiry.
Mr Gulube said that such Boards of Inquiry were used in the Department of Defence if there was a suggestion of non-compliance with a particular military doctrine, in which case a Board would be instituted, and a procedure would be followed that eventually resulted in publication of the recommendation of the Board. This was a very formal structure in the Department of Defence. It must be distinguished from an internal Review Board. An internal Review was an assessment of the actions of the Department by Parliament, which then led to recommendations on how the DoD should move forward.
Mr Maynier pointed out that the presentation had indicated, under Force Employment, that the total number of hours worked for deployment for JAOPS was zero, but this could surely not be correct as this division was deployed in the aftermath of the deployment to the CAR. Additionally, the number of hours worked for the Gripen aircraft was also given at zero, and again this could not be correct, given the fact that the Gripen were deployed in the CAR.
Mr Gulube reminded the Committee that this was a quarterly report and the deployment hours from April to June would not appear in this report.
Mr Maynier further pointed out that when giving his report, Mr Gulube had stated that there was a discrepancy between the total number of target hours and hours achieved for the Maritime Strategy, and he would like more detail on this matter. The member also stated that the report reference eight medical battalions as virtual structures, he would like more detail on this as to why it is referenced this way.
Mr Maynier expressed his concern that, year after year, the DoD had been under-funded, but this year it was showing a surplus, with stored funds of up to R4.5 billion in the Special Defence Fund ,and an additional R5.5 billion for capital acquisitions. He questioned how this came about and whether the figures were correct.
Mr Gulube assured the Committee that the money that was being held in the Special Defence Fund was in excess of R5 billion, but assured the Committee that the funds would be used. The expenditure for the Department of Defence was highly variable from year to year, and because of this, it was difficult to budget accurately year on year. It was also precisely because of this high variance that the DoD would be foolish to spend all of its allocated funds in every year.
Ms H Mgabadeli (ANC) asked why are there was so little funding allocated to Defence Intelligence, as it would have serious implications should negative reporting be given against South Africa on this point, both internally and externally.
Mr Gulube responded that the South African Intelligence infrastructure was actually embedded throughout the South African Defence Force, so it was not really visible as a completely separate entity.
Ms P Daniels (ANC) understood fully that there was a chain of command within the DoD but she sometimes wanted the lowest members in that chain to be at Committee meetings to give a first-hand account of what was actually happening at the DoD.
Mr Gulube responded that this point would be taken into consideration but the DoD would need to think about how the logistics of including non-commissioned officers in the delegation could work.
Ms Daniels wanted to know why so much of the Navy was situated in the upper corner of Africa where there was no action, when it should surely be deployed elsewhere.
Mr Gulube noted that the Navy followed South Africa’s broad Maritime Strategy. South Africa was the only country in the world that had both the Atlantic and the Indian Oceans on its coastline, which put some considerable stress on the strategy. In order to address security needs, the Navy needed to be deployed to secure South Africa’s interests.
Ms Daniels wanted an explanation as to what had been happening over the last few years with the draft of the Defence Framework Fiscal Status, and when it would be finalised.
Mr Gulube noted that when the DoD received the audit finding in 2011/12 financial year, it had an expectation that the Department would be fully audited, so that everything would be accounted for.
Ms Daniels wanted more explanation on the Foreign Relations Strategy status. She assumed that the Department of Defence was supposed to be working with the various other intelligence agencies but wanted more details.
Ms Daniels commented on the DoD Quality Grievance results, and stated that the spouses of some of the armed members had been showing disrespect to other officers, which was a great pity, and asked what would be done to address this.
Mr Gulube was aware that there were problems with the levels of disrespect, and that these directly related to the grievances procedures that had been brought up at many levels. He believed that the Department of Defence had to do more to deal with it. Many of the grievances that were reported were linked to human resources. The Department of Defence had its own internal review committee that monitored the grievances and made recommendations to him as to how best they could be addressed.
Mr E Mlambo (ANC) commented on the figures for the level of morale and asked what was being done, or what was wanted, by the DoD to increase morale levels in its members.
Mr S Esau (DA) also had concerns with the morale of the soldiers, and said that the study appeared to have indicated the averages, which he thought was not the most effective way to present it, as the report needed much more detail.
Mr Gulube said that although the level of morale was not as high as it ideally should be, it was also not so low. Members of the DoD had been asked what they wanted, and they had indicated that it would be good to receive more recognition for the work that they did. The DoD internal review programme was also making many more recommendations for the next term and they would be implemented as soon as possible.
Mr Mlambo wanted more detail on the funding allocations for the Landward Defence and the Air Force Defence, particularly asking if there were new purchases of armaments or new infrastructure.
Ms N Mabedla (ANC) made reference to the number of Military Skills Development Service (MSDS) members in the system per year, and asked how the students were being placed after the two-year training, whether they were placed in the Department of Defence or in other industries, and in what skills the majority were being trained. There were concerns in both the Navy and Air Force with the MSDS programme, and in order to address the problems, the Committee would need a full report.
Mr Gulube stated that the MSDS was different from other youth programmes. It was one of the many different routes that a solider could take when joining the Department of Defence, and the options included that the soldiers could opt to join any branch of the Forces, or even be deployed to specific areas.
Mr S Esau (DA) stated that one key point was that all reports would be heavily impacted upon by the defence industry, which would influence the decisions and policies taken on the SANDF.
Mr Esau noted that the report indicated that the DoD was not making all payments within the required 30 days, enquired why not and if there were particular challenges that it faced in this regard.
Mr Sithiwe Sokhela, Chief Financial Officer, Department of Defence, said that the Department was aware that it should be paying every invoice within the required period and was addressing the issue. The problem was that the Department of Defence was all over the country, and thus making purchases in a number of different places, and that created a problem. It had also been taking measures to improve the training of employees in handling invoices.
Mr Esau noted, under Foreign Relations Strategy, that the financial disclosures were also sitting at 99%, but stressed that the DoD had to make full and complete disclosure, as this was part of the performance contract.
Mr Esau wanted to know the costs of all of the Department of Defence litigation cases, and who was responsible, and had instituted the litigation.
Mr Esau wanted to know what had been done, so far, to address grievances of the soldiers, and what it might have planned for the future.
Mr Esau noted that on average there had been 99% spending of the Department’s allocated funds, but he felt that more detailed numbers were needed. He also wanted to see the plans behind the budget and whether the Department of Defence was meeting its obligations in how it was spending its money.
Mr Sokhela said that in 2010/11, and again in the following year, the DoD had experienced budget cuts both at the start of and in-year. For the 2012/13 year, the DoD had planned around having additional cuts, but it “got lucky” on the transfer of payments, so the net result was that although the DoD seemed, on paper, not to be spending, it actually was within its predictions.
Mr Esau needed an update as to the challenges the Department was facing on filling vacancies, and whether, for the current employees, there was any personnel development plan. The Committee needed to see where the skills were lacking.
Mr Gulube responded that it was not so much finding the employees, but the whole process of hiring employees that took so long. He had already brought this concern to management, who was working on a solution to improve.
The Chairperson noted that it was now obvious that more time had to be allocated so that the concerns being raised could be fully addressed. He asked that any additional questions, comment and follow up should be submitted in writing.
The meeting was adjourned.
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