Secretary of Defence on 2012/13 Department of Defence Annual Report

This premium content has been made freely available

Defence and Military Veterans

15 October 2013
Chairperson: Mr A Mlangeni (ANC) (Acting)
Share this page:

Meeting Summary

The Committee was briefed on the 2012/13 performance of the Department of Defence and Military Veterans. The scope of the report included MOD&MV Priorities; Evaluation of DOD, Ministry, Defence Secretariat, SANDF performance; and the Action Plan to address the qualified audit opinion.

The Department of Defence and Military Veterans' priorities were:
▪ Enhancement of the SANDF’s Landward Defence Capabilities: The modernization of the Landward System had remained stagnant, pending the finalization of the Defence Review which would inform the required future Landward Defence Capabilities of the SANDF. Initiatives to enhance the SANDF landward capabilities in the areas of human resources, prime mission equipment (PME) and infrastructure were compromised by a variety of institutional challenges central to which was the limited budget (Defence Vote).
▪ Maritime Security: The focus of the SA Navy remained on the preparation of naval forces for operations in support of the Maritime Strategy, including patrols in support of Border Safeguarding Operations, Safety and Security Support Operations and Counter Piracy Operations. Currently, active partners in respect of the execution of Assistance to the Mozambican Defence Force with Counter Piracy Operations in the Mozambique Channel were Mozambique and Tanzania.
▪ Job creation remained a Ministerial priority in support of the Government’s initiative to enhance job creation. A total of 8 955 young South Africans were recruited to the Military Skills Development System (MSDS). A total of 14 285 Defence Reserve members were called up. The creation of job opportunities within the Defence industry would be informed by the pending finalization of the White Paper on Defence Industry (Policy) and subsequent Defence Industry Strategy.
▪Enhancement of the SANDF’s Peacekeeping Capability (SANDF Deployability): The role of the SANDF in promoting peace and security in the region and on the continent necessitated the enhancement of the SANDF’s peacekeeping capability that would include the SANDF’s Forward Deployment Capability.
▪Revitalisation of the Reserves: Additional call-ups were made to supplement peace support operations, border protection, courses as well as support to the Departments of Home Affairs and Military Veterans for the registration of veterans.
▪Restructuring and Support of Defence Industry: To support the transformation of the Defence Industry, a White Paper on Defence Industry was compiled and submitted to the Defence Review Committee as Chapter 15 of the Defence Review.
▪Department of Defence Works Capability: Bilateral engagements between the DOD and the Department of Public Works have as yet not resolved the deadlock, as such facilities continue to deteriorate unabated.

The performance of these priorities was evaluated as was the performance of the DOD, Ministry, Defence Secretariat, and SANDF. Each performance indicator provided a baseline, the target and actual performance and reasons were provided for under or over achievement. For example,  Number of Reserve Force members utilised was 14 285 instead of a target of 12 400 (baseline of 12 362) and the reason for the over-achievement was due to the increased requirement, specifically in the Army for internal and external deployments. The additional call-ups were made to supplement peace support operations, border protection, courses as well as support to the Departments of Home Affairs and Military Veterans with the registration of veterans.

Of the total number of 247 targets planned for that year, 51 of the targets were not substantially achieved. These 51 targets not substantially achieved represented 21% of total planned targets for the year under review. This was mainly due to budget constraints. However, it was marked improvement over last year where 43% of total planned targets that were not achieved.


The Department had received a qualified audit opinion. Reasons for this was it did not disclose all movable tangible capital assets as prescribed by National Treasury. Consequently movable tangible capital assets were understated by approximately R818m. Secondly, the Auditor-General was unable to obtain sufficient appropriate audit evidence that all Intangible Capital Assets were disclosed in accordance with the framework prescribed by National Treasury. Action plans had been drawn up by DOD to correct these deficiencies plus some findings about the reliability of some of the reported performance information.

Members of the Committee asked by when DOD intended to register all its heritage assets, what informed the demand for defence advisers, raised concerns about the poor performance of DOD's Legal Services, what was meant by the Revitalisation of the Reserves.

Meeting report

Secretary of Defence on Department of Defence & Military Veterans performance for 2012/13
Dr Sam Gulube, Secretary of Defence: Department of Defence (DOD) thanked the Committee for the opportunity to present to it. He said that they had had distributed the report on time to the Committee so that Members could familiarise themselves with it. It was a long report and their duty was to highlight issues that were important for the Committee to note and pay attention to.

The Defence Secretary said that the purpose of the briefing was to present the annual report of the DOD for 2012/13 financial year to the Portfolio Committee on Defence and Military Veterans. The scope of the presentation would cover the Overview, Statutory and Legislative Requirements, Defence Outcomes and Outputs, Annual Report (Performance Information), MOD&MV Priorities, DOD Selected Performance Indicators, Ministry: Service Delivery Objectives and Indicators (Output Detail), Defence Secretariat: Service Delivery Objectives and Indicators (Output Detail), SANDF: Service Delivery Objectives and Indicators (Output Detail), Annual Report (Report of the Auditor-General), Qualified Audit Opinion, Action Plans to address Qualified Audit Opinion, Findings on Predetermined Objectives, and Action Plans to Address Predetermined Objectives

The Defence Secretary said that the DOD derived its mandate primarily from Section 200(2) of the Constitution of the Republic of South Africa, 1996. This mandate was given substance by the Defence Act, No 42 of 2002, the White Paper on Defence (1996), the Defence Review (1998) and delegated legislation. The DOD comprised of the South African National Defence Force (SANDF) and the Defence Secretariat. Defence Outcomes were that RSA was defended and protected and there was enhanced civil control of Defence. Defence Outputs were defence commitments ordered in accordance with government policy and strategy, provide mission ready defence capabilities, provide sound defence direction, and ensure defence compliance with the Regulatory Framework.

The Defence Secretary said that, in terms of the Annual Report Performance Information, the MOD&MV priorities were the enhancement of the SANDF’s Landward Defence Capabilities; Maritime Security; Job creation; Enhancement of the SANDF’s Peacekeeping Capability; National Youth Service; Revitalisation of the Reserves; Restructuring and Support of Defence Industry and Department of Defence Works Capability.

• The modernization of the Landward System had remained stagnant, pending the finalisation of the Defence Review which would inform the required future Landward Defence Capabilities of the SANDF. Initiatives to enhance the SANDF landward capabilities in the areas of HR, prime mission equipment (PME) and infrastructure were compromised by a variety of institutional challenges central to which was the limited budget (Defence Vote).

• In terms of Maritime Security the focus of the SA Navy remained on the preparation of naval forces for operations in support of the Maritime Strategy, including patrols in support of Border Safeguarding Operations, Safety and Security Support Operations and Counter Piracy Operations. Currently, active partners in respect of the execution of Assistance to the Mozambican Defence Force with Counter Piracy Operations in the Mozambique Channel were Mozambique and Tanzania.

• Job Creation remained a Ministerial priority in support of the Government’s initiative to enhance job creation. A total of 8 955 young South Africans were recruited to the Military Skills Development System (MSDS). A total of 14 285 Defence Reserve members were called up. The creation of job opportunities within the Defence industry would be informed by the pending finalization of the White Paper on Defence Industry (Policy) and subsequent Defence Industry Strategy.

• Enhancement of the SANDF’s Peacekeeping Capability (SANDF Deployability): To promote peace and security in the region and on the continent necessitated the enhancement of the SANDF’s peacekeeping capability that would include the SANDF’s Forward Deployment Capability.

• National Youth Service (NYS): A total of 2 891 members completed their training, of which 903 were at SAS Saldana, and 1 988 at 3 South African Infantry Battalion (3 SAI Bn).

• Revitalisation of the Reserves: Additional call-ups were made to supplement peace support operations, border protection, courses as well as support to the Departments of Home Affairs and Military Veterans for the registration of veterans.

• Restructuring and Support of Defence Industry: To support the transformation of the Defence Industry, a White Paper on Defence Industry was compiled and submitted to the Defence Review Committee as Chapter 15 of the Defence Review.

• Department of Defence Works Capability: Bilateral engagements between the DOD and the Department of Public Works have as yet not resolved the deadlock, as such facilities continue to deteriorate unabated.

The Defence Secretary said that the Defence Secretariat consisted of the following Sub-Programmes: the Departmental Direction, Government Information Technology Officer (GITO), Policy and Planning (Defence Policy, Strategy and Planning), Financial Services, Acquisition Services (Defence Material), Defence Supply Chain Integration, and Defence International Affairs.

The outputs, performance indicators and targets for the MOD&MV priorities and for the Ministry, Defence Secretariat programmes were discussed (see document for details). Of the total number of 247 targets planned for that year, 51 of the targets were not substantially achieved. These 51 targets not substantially achieved represented 21% of total planned targets for the year under review. This was mainly due to budget constraints. However, it was marked improvement over last year where 43% of total planned targets that were not achieved.

The Defence Secretary noted that the Department had obtained a qualified audit opinion. Reasons for this was it did not disclose all movable tangible capital assets as prescribed by National Treasury. Consequently movable tangible capital assets were understated by approximately R818m. Secondly, the Auditor-General was unable to obtain sufficient appropriate audit evidence that all Intangible Capital Assets were disclosed as prescribed by National Treasury. An action plan had been drawn up by DOD to correct these deficiencies and some findings about the reliability of some reported performance information.

The Defence Secretary explained the Action Plans to address qualified audit opinion. The Department would expedite the finalisation of the following asset policies: the Management of Moveable Tangible Assets in the DOD, the Management of Leased Assets in the DOD, the Management of Heritage Assets in the DOD, the Inventory Management, the tagging of all assets – major and minor – to enable the unique identification and inclusion in the assets register, Update / review the Moveable Tangible Assets Register, and interface with the Command and Management Information Systems (CMIS) on the digitization project to ensure availability of supporting documentation. The benchmarking nationally (aviation industry) and internationally (other defence forces) had to obtain and implement best practice on specific areas. DOD Internal Audit would valuate moveable tangible assets within the Department to ensure compliance with the Reporting Framework prescribed by National Treasury. For Intangible Capital Assets, DOD had established a nodal point to facilitate audit enquiries within the Department. It approved and promulgated the draft policy, process and procedures on the management of defence intangible capital assets. The DOD Internal Audit was to evaluate intangible capital assets within the Department to ensure compliance with the Reporting Framework prescribed by National Treasury. DOD would also correct the reliability of some of its performance information.

On Moveable Tangible Assets, it was noted that DOD was allowed departures from the reporting framework by National Treasury on Heritage assets and Capital components. These would not be available in 2013/14. On Intangible Capital Assets, it was noted that structure follows policy and therefore the DOD will only be in a position to alter/expand its structure to properly address the management of Intangible Capital Assets after the approval of the policy.
Discussion
The Chairperson thanked the Secretary of Defence for the presentation and asked Members to interrogate the report.

Mr L Diale (ANC) welcomed the report. He asked when the department intended to register all the heritage assets of the country. Was there a timeframe to register those assets as that was a very important process.

Ms N Daniels (ANC) also welcomed the report. Comparing the Annual Reports of 2011/12 and 12/13, there was indeed an improvement but they would like the department to get a clean audit. The Audit Committee of the Department should do the work needed for everything to be in order, before the Auditor-General's audit.

She noted the Auditor-General’s qualified audit opinion report. In the presentation dealing with performance indicators, she noted that even if one had achieved 99% it was still highlighted as "red" and unachieved. She asked what the role of the Internal Audit Committee would be when that happened. What was the view of the department about the Auditor-General's report? They appreciated the uniqueness of the Department - when one audited DOD&MV one needed to be security cleared. She asked whether that process was catered for when the department was being audited in sensitive areas. What about  in areas where assets were registered as inventory instead of independent assets. The Internal Audit Committee understood the terrain and dealt with it every day. She asked what they had advised the AG since the qualified report came about as a result that some assets were not audited for one reason or the other.

She noted that the Annual Report mentioned that there was a demand for defence advisers from lot of countries. She asked what informed that demand for defence advisers.

Ms H Mgabadeli (ANC) noted Slide 30 on the DOD Legal Services' under-performance and asked what they were doing if the courts had decided in the  matters against the DOD: 14 cases in favour and 90 cases lost. She also asked for clarity on the Revitalisation of the Reserves.

Mr Mnyamezeli Booi (ANC) said that they were worried about the standing of the Internal Audit Committee which seemed to be having no relevance. He asked what exactly they were doing to augment that particular report of the department. Secondly, a growing worry was that if they were dealing with peace keeping missions what the AG was going to say about those types of assets. It was quite clear listening to the Commander in-Chief that the role of the SANDF would be going throughout the African continent. How were they going to keep their fingers on the asset register with that development, and did the Internal Audit Committee understand the standards set by Treasury?

Mr P Groenewald (FF+) noted the SANDF clearly had financial constraints and it was difficult to achieve the targets when there was not enough money. Something needed to be done by Government to ensure more money was available. They could not give people tools without resources and expect them to do the job. Referring to the Defence Outcomes, he asked what had been done to enhance the civil control of defence. He referred to the MOD&MV Priorities and asked whether for Job Creation they were absorbing members into the SANDF in both programmes: the Military Skills Development System (MSDS) and the Defence Reserve. If they looked at the MSDS and the NYS, the idea was to get younger people into the SANDF, which one was the priority or were both suitable?

Mr D Maynier noted that the report stated that 12 air fighter jets were in storage but some weeks ago the Minister of Defence informed him when answering a  parliamentary question that in fact no Grippen Fighter Jets were in long term storage. Sometime after that a military officer quoted in the media said that in fact the jets were in short term storage. He asked if in fact the Grippens had been moved to long term storage and, if that was correct, why they had been moved to long term storage. And if the aircraft were in fact in short term storage, how many aircraft were in short term storage. What was the average period an aircraft would spend in short term storage because his hypothesis was there was no difference between short term and long term storage.

He asked with regard to the AMST Contract, who exactly had signed that contract. Why was the potential liability not disclosed in the Annual Report under contingent liabilities, which at some point in the three or four years since the contract had been signed, was estimated to be 54 million Euros? Most importantly, how was the Department going to fund that final award? Presumably the final award of R300m was going to be financed out of the existing defence budget. What was the opportunity cost of that award?

Mr Booi raise a point of order saying that he respected what Mr Maynier had raised but the information should be brought through the Committee Chairperson because the information he referred to had been seen in the newspapers and not presented to the Committee. They had asked him on several occasions that he should give the information to the Committee first so that all of them could be on par in terms of that information.

Mr Maynier responded that he was delighted that Mr Booi had raise that question because the contracts were clearly referred to on page 67 of the annual report.

Mr J Maake (ANC) said that he was worried about the Auditor-General’s report as the approach seemed different from that of the Secretary of Defence. Defence was audited just like any other department which was not workable, and it meant that DOD would always get a qualified report. How would they deal with that?

The Defence Secretary suggested that the Committee invite DOD's Internal Audit Committee to present to the Committee. They were audited by the Auditor-General as required by the Public Finance Management Act (PFMA). The auditing standards they were subjected to were those determined by National Treasury. But last year when DOD got an unqualified audit they had been able to say here were the key assets of the DOD (the weapon system, transport system, fixed properties) and were audited on those.

The Defence Secretary said that they had already started with the registration of heritage assets because the AG said they were going to audit them this year. There were three million assets which they would individually audit and come March 2014 that should be finished. He was consulting with the Minister and Members of Parliament so that they could help interact with the National Treasury and the Accountant General on the auditing standards they were subjected to as a department. Currently, there was no choice and they had to comply on their part.

The Defence Secretary said that they had previously mentioned the challenges about the asset register in general - including maintaining a register for peace keeping operations and even there they were expected to come with a complete asset register.

The Defence Secretary replied to what had been done to enhance the civil control of defence during the current financial year. The way the report was structured it referred mostly to the work that was done by the Secretariat council. The Defence Act stated clearly that the Ministry provided the civil oversight and the Secretariat Defence Council assisted the Minister to provide that civil oversight. This included all the work of the programmes mentioned under the Secretariat Council: developing defence policies, developing HR policies, preparing papers for deployment in Central African Republic (CAR) and in the Democratic Republic of Congo (DRC) which the Minister should sign and the President should sign as a presidential minute to deploy the forces. The Secretariat had to ensure that all of that was compliant with the Constitution and current legislation. Therefore, just the fact that there was a Secretariat ensuring compliance with existing legislation and regulations talked to what they did in exercising control oversight.

The Defence Secretary replied about the timeline for heritage assets, saying they were in the process of this registration and all would be registered by 2015. They would have to ask Treasury to give them exemption on heritage assets if it was not complete this year because they think it would be ready only in 2015.

The Defence Secretary referred to the Military Skills Development System (MSDS) and the NYS, saying the MSDS was meant to feed into the defence force. Therefore, they would have liked to take on 5000 every year to feed into the defence force because that was the attrition rate seen in the defence force but they were not able to do so. They were taking about 2000 reservists into MSDS where they were trained and taken up by various services either as permanent members or as reserve members of the defence force. So, with the MSDS when they get in, the only way they come out was as fulltime military personnel or reserve military force, which was not the same way as the NYS. The NYS was started in 2011 and it was a partnership with various provincial government/departments. They had partnered with KwaZulu-Natal Provincial Government where they had taken about 1000 youths and trained them in life skills development, physical exercise, health wellness and the participating department paid for the whole programme which was usually about six months. This year they were mostly working with the Department of Rural Development and Land Reform (DRDLR) which had provided about 2000 youths to participate in the NYS programme. After they had received the training, they returned to the DRDLR. Therefore, those were two different programmes for two different purposes.

Mr Groenewald asked whether the National Youth Service was not absorbed into the SANDF.

The Defence Secretary responded that they were not absorbed in the SANDF.

The Defence Secretary said when it came to Legal Services, as management of defence they were very concerned about the litigation they were receiving. Legal Services had been organised in Military Justice and Civil Justice. Military Justice had a General in charge of it for violations of regulations or military law. The military justice system operated like ordinary courts where there was a judge, prosecutor and defence lawyer. That took so much capacity that in the process DOD might had neglected the civil component of justice. The military justice system was highly efficient and could handle cases sufficiently and effectively. But when it came to Civil Justice that was where they encountered problems. Perhaps it was time for them to start focusing on the litigation side because the cases were building up. Everybody was taking DOD to court. This was a challenge because there 156 cases in court, dragging on and on without any end in sight, and draining the system. The only thing that they could do was to build capacity. They had to engage with the Department of Justice and Constitutional Development (DOJ&CD) to assist them with strengthening the capacity of state attorneys that were available to the DOD.

The Defence Secretary commented on the short- and long-term storage of aircraft. The military had to begin to cut costs according to what budget was available. If there were so many Grippens, it was very costly to get all 24 Grippens up in training operations and patrols. One could use six Grippens at a time and put them aside, and take another six and use them and put them aside, which was what they said they were doing. That matter should not cause a lot of confusion because the Grippens should be in various places for preparation.

The Defence Secretary said that in terms of the demand for the SANDF internationally, since they had operated in peace-keeping operations, South Africa was receiving a lot of admiration not only in Africa but elsewhere internationally.

The Chairperson thanked the Department for the presentation and responses to the questions. He asked that the questions that were not answered, response should be sent in writing by the following week.

The meeting was adjourned.
 

Present

  • We don't have attendance info for this committee meeting

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: