The Department of Defence (DOD) and the Department of Military Veterans (DMV) briefed the Committee on their 1st quarter performance reports, for the 2013/14 financial year. Both reports highlighted the partially achieved and non-achieved targets as well as the financial performance, broken down by programme and economic classification. .
A summary of the first quarter 2013 spending, by programme, for the DOD, noted that it had planned to spend 20.3% from its total budget allocation of R40.243 billion, but spent 21.05% because programmes spent slightly more than the vote. A variance of more than 8% was found in the Force Employment Programme, Air Defence Programme, Maritime Defence Programme and General Support Programme. Further, a summary of expenditure per economic classification also showed and explained the over- and under-spending. Under compensation of employees, the amounts were due to higher personnel remuneration increases than expected. Goods and services showed a 3.6% underspend because outstanding invoices were not finalised by Armscor. Transfers and subsidies was over budget in this quarter because an early payment had been made to Armscor. Rollovers from previous financial years brought the spending in capital assets above the target, by 12.1%, and there was overspending of R14.8 million under financial assets and liabilities, because of a variety of reasons. The Department explained that some matters required substantial intervention, and these were marked with red shading, as high risk, whilst those of lesser import were shaded in green. In relation to the Defence Secretariat, it was explained that eight of the 32 performance indicators needed some substantial work, including the research policy capability, renewal of DOD equipment and foreign relations. Other items fell under human resources, and ranged from performance agreements not being signed to the retention and grievance strategies. The performance of the South African National Defence Force (SANDF) showed that 52% of targets needed more work; but here, lack of budget had severely hindered the training targets, in Landward and Maritime Defence. The SANDF fell below target on number of external operations and numbers of planned joint exercises. Seven of the nine performance indicators, which were explained, had fallen short under Joint Logistics services. There was not compliance with the ICT portfolio requirements of the Command Management Information Systems, and targets under Military Police were not achieved.
Members questioned the quarterly expenditure and total funding for the Air Defence Programme, asked why the Defence Review was not included, questioned the composition of the Defence Force Service Commission, the flying hours of the South African Air Force, and how they were set and assessed, and the project costs for acquisition and Project Phidisa, and complained that it was surely not correct that they were mentioned in the quarterly report, yet no questions were answered in this meeting on these costs. Members asked (but did not receive an answer) whether the tender for commercial transport services was being investigated, asked how savings were re-allocated, and how budget cuts affected the targets for the Military Skills Development System. Members also reiterated concerns about the low performance in the works capability and urged that it be implemented urgently to be able to take over from Department of Public Works. The assertions around the audit were questioned, particularly whether the DOD would be able to get an unqualified certificate now that the waiver had come to an end. Members also questioned the performance agreements, retention strategies, and procedures around grievances.
The Department of Military Veterans noted that most of the programmes and targets could not be met because funding had not been granted by Treasury, and in some cases the DOD had had to fund salaries for failure to make the necessary transfers to the DMV in time. The list of targets not attained included the building of houses for military veterans, events honoring military veterans per year, the ICT strategy was not met, and HR skills plans were not drawn. The report on quarterly performance had not been tabled as it was still with the Executive authority, and the finalisation of the agreement with the service provider to treat veterans for post-traumatic stress disorder was still pending. Military veterans receiving the pension fell short, and the agreements with higher education institutions had not been met. Members became quite emotional as they related that the delays in providing services, twenty years after democracy, were causing great distress and inconvenience to the military veterans whose actions had achieved that same democracy. One Member asked how the Committee might engage with National Treasury, but another thought that the DMV was attempting to shift all the blame to National Treasury when its own actions had been at fault, and said that if officials had been veterans, they would never allow this to happen. Members believed that the sharing of functions with other line departments was part of the problem, commented that the vacancies must be filled, and asked how the formations were recognised. They suggested that the DMV must communicate better with veterans and investigate a call centre. Two members indicated that they would be discussing military veterans’ issues with the President, and would report back.
Chairperson’s opening remarks
The Chairperson welcomed the teams from both the Department of Defence (DOD) and Department of Military Veterans (DMV). He said that Members were particularly interested in hearing about certain specific issues, including adherence to legislation, effectiveness of management systems to meet objections, whether targets or objectives were met as presented in their Strategic Plans and where the Committee could intervene to make the Departments’ work more effective and efficient. He therefore asked that the presentations should highlight these areas.
Department of Defence (DOD) 1st Quarter 2013/14 Performance Report
Mr Dumisani Dladla, Chief Director: Strategic Management, Department of Defence, tendered the apologies of the Defence Secretary, the Chief Financial Officer and the Chief of Policy and Planning, who were unable to be present, due to other commitments. He indicated that he would try to report on the priorities that the Chairperson had mentioned.
Mr Dladla outlined the legislative imperatives for the Department of Defence, and noted that it had complied with its constitutional requirements. He then gave a summary of the state of expenditure, per programme, for the financial year from 1 April to 30 June 2013 and stated that DOD had planned to spend 20.3%, from a budget allocation of R40.243 billion. However, it spent 21.05%, because some programmes spent slightly more than the vote.
The unaudited expenditure of Department of Defence as at 30 June 2013 was R8.470 billion (21.05%) against the approved planned expenditure of R8.183b (20.3%), out of the appropriated budget. This meant that in the first quarter there was over-expenditure of R286.6 million (0.75%).
Factors that contributed to negative or positive balances of more than 8% of actual drawings per programme were Force Employment Programme, Air Defence Programme, Maritime Defence Programme and General Support Programme.
He then summarised the expenditure by economic classification and noted that Compensation of Employees had an over expenditure of R115.7million (2.3%) against the approved drawing schedule of R5,042 billion. This was mainly due to higher personnel remuneration increases than the budget allowed for. Goods and Services had an under spending of R71.6 million (3.6%) against the approved drawing schedule of R1.965 billion within the Air Defence Programme, due to outstanding invoices not finalised by ARMSCOR. Transfers and Subsidies had an over expenditure of R220.4 million (19.7%) against the approved drawing schedule of R1.116 billion, due to an early transfer payment made to the ARMSCOR in June 2013.
Payments for Capital Assets incurred an over expenditure of R7.197 million (12.1%) against the approved drawing schedule of R59.530 million, mainly due to roll overs of payments from the previous financial year. Payments for Financial Assets and Liabilities incurred an over-expenditure of R14.850 million, due to transactions that created or increased outstanding debtors amounts, foreign exchange losses, thefts and other items.
Mr Dladla then set out some performance indicators and priorities, and noted that the items coloured in red in the Report (see attached presentation) meant that they were a high risk and major intervention was required. Those coloured in amber showed a moderate risk, where remedial or corrective action was required. Those coloured in green were low risk and on course, with not much action required. He indicated that he would concentrate mainly on the unachieved or red targets. The ‘red’ targets for this quarter were the compliance with number of ordered commitments (external operations) and number of planned joint, interdepartmental and multinational military exercises conducted per year.
Summary of Quarterly Performance Targets: Defence Secretariat
The Chief Director informed the Committee that out of 32 performance indicators for the Defence Secretariat, 23 (72%) were green, 1(3%) were amber and 8 (25%) were red.
Among the red performance indicators, needing some substantial work, were the established DOD policy research capability falling under Defence Policy, Strategy and Planning, the percentage of budget allocation for the renewal of the DOD main equipment under Defence Material, and the DOD foreign relations strategy status, under Defence International Affairs.
The other red performance indicators fell under Human Resources Support Services. These were the percentage of DOD skills audit completion status, the percentage achievement of signed and admitted performance agreements by DOD Senior Management Service (SMS) members, armed forces day policy framework, DOD Human Resources (HR) retention strategy, and percentage of collective grievances and disputes that were resolved.
South African National Defence Force (SANDF) performance
The Chief Director informed the Committee that SANDF had seven programmes, of which 48% were marked with green and 52% were red.
Under Force Employment, two indicators were red. These were the percentage compliance with number of ordered commitments (external operations) and number of planned joint, interdepartmental and multinational military exercises conducted per year.
Under Landward Defence, there was only one indicator, and it was not achieved due to insufficient budget allocation. The indicator was the compliance with DOD formal training targets, or number of learners on planned courses.
Under Maritime Defence, compliance with DOD formal training targets (judged by the number of learners on planned courses) was also not achieved due to budget cuts.
Under Joint Logistic Services, seven out of nine performance indicators were red. These were as follows:
- Codification of items of supply, which was not achieved due to insufficient numbers allocated to do so by the Codification Bureau.
- The percentage of ammunition tones disposed of was not in line with the plans, because the Alienation Committee was just being set up.
- Under capital works, the expenditure was not in accordance with the facilities plan, but Mr Dladla stressed that this would have been achieved by the end of the second quarter.
- Payment of accommodation in accordance with the facilities plan, for payment of leases, was not achieved, due to late submissions
- The Payment of accommodation in relation to the plans for municipal services was not achieved, because the Department of Public Works (DPW) had delayed in putting through the invoices
- Under logistics training, which included logistics, ammo, hospitality, training, facility, firefighting and codification” had failed to meet its targets, as budget constraints prevented the number of people anticipated being sent for training
-Procurement services requests were not fully completed within 60 days, because the procurement services were not fully staffed.
Under Command Management Information Systems (CMIS), Mr Dladla noted that the percentage of compliance with the DOD ICT portfolio of the Defence Enterprise Information System Master Plan was marked with red, but Members would see that this would have been corrected by the end of the second quarter.
Both of the targets under Military Police were not achieved, largely due to the deployment of military staff where the best staff were picked, hence affecting targets for finalisation of criminal cases, and the projected number of deliberate crime prevention operations.
Mr D Maynier (DA) was concerned that the quarterly expenditure on the Air Defence Programme was 15.1%, instead of its expected 25%. He wondered if the programme was over-funded, or what the reasons were for such significant under spending.
Brigadier General T Kundu, Director: Planning, Department of Defence said 32% of the air force budget was committed by the Minister of Finance and other financial authorities and the time frame to pay could take 1 to 3 years depending on the contractual arrangements. Therefore, to say the air force was underfunded or over funded was not a good measurement. He suggested that the Air Defence must rather be assessed on the progress made on maintenance and upgrade of specific aircraft.
Mr Maynier asked the Department to explain why the Defence Review was not part of the Defence Policy and Planning Strategies, despite it being very critical. He also wanted to know about the stage that the department had reached with the Defence Review was concerned.
Mr Dladla explained that the Minister appointed a Commission in 2011, headed by former Minister Roelf Meyer, to undertake the task of the Defence Review. This Commission reported directly to the Minister. The Department was aware that there were ongoing deliberations between the Commission and Cabinet hence he was not able to comment confidently, because it was matter between the Minister and the Head of the Commission.
Mr Maynier asked that the Department explain what was meant by the Defence Fiscal Framework Status under the quarterly targets of the Defence Secretariat.
Brigadier Kundu answered that the aim of the Defence Fiscal Framework was to ensure an equitable distribution of the Defence budget within the various areas, services and programmes. However, only once approved would the fiscal framework be implemented.
Mr Maynier referred to the acquisition services for the Defence Secretariat, and wanted to know the total project cost of project Phidisa, the total cost per year on the Medium Term Framework, and the unit cost per vehicle.
Mr Dladla noted that the acquisition process, and its projects, delays and all other issues related to it were not part of the DOD report to Parliament and were considered as being outside the parameters of this meeting. However, he also stated that they were matters that the Department considered as very serious and as such would like to engage the Committee in a different forum, where that could be addressed.
Mr Maynier at this point raised a point of order to the Chairperson where he argued that there was no way the Department could be allowed to mentions aspects in the report and then refuse to answer questions later on. He quoted the quarterly report, and demanded an answer.
Mr Dladla reiterated that some matters in the Report were sensitive and required a different forum to be explained further. He indicated that the comment in the quarterly report was thus a generic one.
Mr Maynier then stated that what he needed were just figures and that he would get hold of them somehow and make them public.
Mr Maynier asked who the current head of the Defence Force Service Commission was, and also wanted the names of members serving on the Commission.
Mr Dladla confirmed that the Minister had made appointments and he would gladly submit the names of the members in writing to the Committee.
Mr Maynier noted the mention of the Joint Logistic Services in the presentation and cited a public controversy over awarding of a tender for commercial transport services. He wanted to know if the Department had launched an official enquiry into that.
Mr A Mlangeni (ANC) requested an explanation of CMIS and was told it referred to Command Management Information Systems.
Mr S Esau (DA) referred to a deployment that was cancelled and the savings made. He wanted to know where they were reallocated.
Mr Dladla said that the savings made from the cancellations on Vimbezela would be redirected to the Force Intervention Brigade to ensure smooth operations and replace some ammunition spent during operations, as the Brigade had a shortage of R250 million.
Mr Esau heard the DOD’s concerns over the budget cuts, and the effect that this had on the number of recruits being taken in for training, but asked how that effected the Military Skills Development System (MSDS) and how the budget cuts balanced out, when the MSDS subscribed to the powers set in terms of monies.
Mr Dladla responded that there was underachievement on the recruits, but explained that the target set was 4208 MSDS members in the system by the end of the financial year on 31 March 2014. However, because it was a two year system, members who started two years ago, when the Department had the highest intakes, were still in the system, and the target for them was at 5047. Some MSDS members were expected to go out this year and a new intake would start in January 2014. However, due to the budget constraints, it would be a small intake, thus bringing the target down to 4208 from the original 5047.
Mr Esau referred to the flying hours for the year and wanted to know if they were based on the international benchmark, or were set in line with the budget constraints faced by the Department.
Mr M Nhanha (ANC) was concerned with the areas where the Department would not meet its targets, such as flying hours. He therefore, wanted to know the impact that that would have on the quality of pilots produced and also the impact on the general operations and status of the air force.
Major General M Ramantswana, Chief: Military Policy, Strategy and Planning, DOD, indicated that there was some degree of benchmarking, but the Department did not actually set its flying hours based on those benchmarks, but rather on a number of other issues including resource availability. More importantly, he said the Department did not want to compromise safety of the pilots and the security of the state.
Mr Esau expressed concern over the low performance regarding the Works capability and said the Committee wished that the Works Capability was introduced as soon as possible because of the complications with the Department of Public Works. He also mentioned that while the Committee appreciated that some targets were met, others achieved nothing at all.
Mr Esau noted the indications about no adverse audit findings and the Committee was concerned at that assertion because it was aware that the Department received a waiver, in particular, regarding tangible assets. Since the waiver had now ended, it meant that the Department would be again qualified because it had not concluded the asset registers and requirements in line with the requirements and findings of the Auditor-General (AG). He therefore wanted to know what measures had been put in place to overcome that.
Major General Ramantswana noted the comment on the audit findings and said that for the remainder of the year, the Department was making sure that its assets, both tangible and intangible, were properly identified, bar coded and recorded in asset registers. He was confident that the Department would be successful in that regard and obtain an unqualified audit opinion.
Mr Esau commented that he found the issue of performance agreements highly unacceptable. He stated that if people were seconded, their new organisations took full responsibility for them. If they were deployed, however, they remained under the original organisation’s structure. Performance agreements were supposed to be in line with this. He wondered why that was not the case for SANDF and whether it was so difficult to put up performance agreements.
Mr Dladla said that in relation to the performance agreements, there were a lot of interactions in place and about 89.4% of performance agreements had been signed and submitted. Furthermore, he stated that those who were deployed were required to conclude performance agreements with the new departments, while those who were seconded did so with the organisations where they were seconded. He said at present, the rules indicated that even if a person was seconded, s/he needed to be accounted for in the Department, but these rules were changing.
Mr Esau asked what the retention strategy of the Department was, and why implementation had been delayed. Some critical posts needed to be filled, particularly in the technical, engineering and air crew areas.
Mr Dladla reminded the Committee that there had been a full briefing on retention strategies about a month ago. He explained that the major vacancies were in the engineering department, which also reflected the position in the broader labour market.
Mr Esau noted that there was apparently a policy in place in terms of grievances and wanted to know the challenges faced, because grievances had been delayed for years and people were complaining.
Mr Dladla said that the particular indicator in the quarterly report did not refer to individual grievances, but to collective grievances such as trade unions in the civilian environment. He said these were actually very few, but complex, hence the percentage risk was higher.
Mr Nhanha wondered if the staff of the DOD were expecting performance bonuses, in light of the fact that they had not managed to meet some targets.
Mr Dladla responded that the targets he termed as easy were not necessarily so, and a lot of work was done. In relation to targets that were harder to meet, the fact that the targets were not achieved did not imply that nothing had been done, but rather that the work that had been done in those areas was just not enough to meet the targets. The Department continued to work towards achieving those targets. Where targets had not been met, there were specific reasons for that. If the failure to meet the targets was due to factors outside the Department’s control, then there was little that it could do. However, if the failure was ascribed to the fact that the officials did not put in their best, the human resources department had a way of handling that. Without wanting to detract from matters mentioned earlier, he said that the green targets were generally those that were easier to achieve but those highlighted in red were “hard nuts to crack” and therefore it was conceded the Department should have done better in those areas - for example, establishment of DOD Quality Research Capacity.
Mr Mlangeni was pleased with the work that the Department was doing, stating that despite budget cuts, it was doing quite well and because of that, he actually felt safe as a citizen in the country.
The Chief Director informed the Chairperson that any outstanding questions would be responded to in writing.
Presentation: Department of Military Veterans (DMV) 1st Quarter 2013/14 Performance Report
Mr Tshepe Motumi, Director General, Department of Military Veterans, said he would present the first quarter results of his Department (DMV). He firstly listed a number of outcomes, and noted how they were linked to the National Development Plan (NDP), the Medium-Term Strategic Framework (MTSF) priorities and priorities of government, with an indication of the progress on them to 30 June 2013.
Some of the achievements made by the Department included the submission of monthly In-Year Monitoring Reports to National Treasury, the DMV strategic planning work session being conducted, DMV’s participation in the MTEF guidelines at Treasury, amendment of DMV draft regulations. The DMV had constructed two houses in Kraaipan for WWII military veterans. It had filled 21 vacant posts and recruited of 15 interns, and had also developed and finalised an MoU between DMV and the Department of Rural Development and Land Reform, to kick start the new enterprise project that empowered veterans.
Due to time constraints, the Director General then proceeded straight to the targets which were not achieved, or those that were highlighted in red.
The performance indicator on the total number of deserving military veterans provided with decent housing per year was not met as only two out of a targeted 300 houses had been built, due to insufficient funding from National Treasury.
The performance indicator on the number of events honoring military veterans per year was not met due to the fact that the scheduled parade was deferred by the Ministerial Directive.
The performance indicator on the promulgated DMV Information and Communication Technology strategy was not met, because the DMV ICT strategy had not yet been developed due to lack of capacity within the ICT environment.
The performance indicator on having an approved DMV Human Resource Skills Plan was not achieved because the plan had not been developed yet.
The performance indicator on having DMV quarterly performance reports approved and tabled in line with national reporting prescripts was not attained because the report was still waiting approval by the Executive Authority.
The performance indicator on the total number of military veterans with access to counseling and treatment of Post Traumatic Stress Disorder (PTSD) was not achieved as the finalisation of the Memorandum of Understanding with the service provider was still pending.
The performance indicator on the number of military veterans receiving the anticipated military veterans’ pension was not attained. However, the contractual support services were sourced to finalise its value.
The performance indicator on having an established and fully functional Special Purpose Vehicle (SPV) was not attained but discussions took place between DMV and National Treasury on how the SPV could be developed in line with the Public Finance Management Act.
The performance indicator on the number of formal agreements with institutions of higher learning was not met but DMV had engaged the relevant entities of the Department of Higher Education and Training to address accreditation issues.
The Director General informed the Committee that of the approved cash flow for compensation of employees, only 36% was spent. He said this was due to the fact that DOD had paid salaries for DMV staff in April 2013, because funds were transferred late in May 2013 from DOD to DMV.
Further, goods and services had an expenditure of 29% because the refurbishment works for the new building did not commence in the first quarter, and DPW had not yet forwarded the bills for property management as earlier indicated.
Only 39% of the approved cash flow for payment of capital assets was spent. He explained that this was because the furniture and computers were normally purchased for staff members who assumed duties in DMV, and that filling of vacancies would be only now fast tracked.
Mr L Diale (ANC) was emotional and expressed how unhappy he was with the report, as a military veteran himself, because of the delays in providing services. He wondered what the time line or target could be to obtain a response from National Treasury because it was almost 20 years since the ANC took power, and military veterans were dying, without any help, despite the fact that they had fought for the country and were the very reason that Members were actually able to meet like this. He suggested that if there was no response from National Treasury, the Committee should find ways of engaging with it on the issues.
Mr Nhanha was also quite emotional and believed that DMV was putting the blame entirely on National Treasury. He wondered how many senior officials at DMV were actually military veterans because only then would they understand what the veterans were going through.
The Chairperson asked the Committee how they suggested that the Committee could proceed with Mr Diale’s suggestion on engaging with National Treasury.
Mr Esau stated that to begin with, a combination of factors needed to be considered, such as databases, MoUs and functionalities. He said that the fact that DMV still shared its functions with other line departments was a problem. He questioned when audits would be conducted, so that the Committee could know whether or not the financial position was in order. He felt that it was unacceptable that DMV had people engaged to work on contract, and others seconded, when it had a lot of vacancies within the organisation itself.
Mr Esau agreed with Mr Diale that too much time had passed and military veterans were not well looked after. The South African National Military Veterans Association had been granted an interdict by the courts because the process was not followed correctly, they were not consulted and therefore were unhappy.
Mr Motumi wanted to clarify that point and said that the court had actually not granted an interdict, but rather it ruled that in six months DMV must have set guidelines on the formation of military veterans associations, the thresholds and other matters. In fact, prior to the court application, all formations of veterans had actually been invited to a conference to participate in discussions; they simply did not vote, and it must be remembered that some did not attend, who were the ones who actually then launched the court action.
The Chairperson asked if that negatively affected the distribution of benefits to military veterans.
Mr Motumi said that it had not, and all the four frameworks were in order.
Mr Mlangeni wanted to know more about the court issue, and which formations took DMV to court.
Mr Motumi replied that it was three formations - former APLA members, Umkhonto we Sizwe War Veterans Associations and another group called SADF Black Soldiers Forum.
The Chairperson enquired why these formations were not recognised.
Mr Motumi indicated that the issue of recognition was done in terms of a formal process, whereby formations needed to submit their constitution, membership and other information which DMV would then verify on its database. The Minister was responsible for approving the formations.
Mr Nhanha commented that he had a number of military veterans calling him, and asking him a lot questions and raising issues and even allegations. He suggested that DMV had to find a better way of communicating with these people, and suggested even a call centre, for instance.
Mr Motumi noted Mr Nhanha’s suggestion on a call centre. He also requested that DMV be provided with information on those who had been calling Mr Nhanha.
Mr Mlangeni sympathized with DMV, saying he recognised that there were some difficulties with operating with the funds allocated. The year was coming to an end already, but nothing had been received from National Treasury. He informed the Committee that Mr Diale and himself had an appointment with President Jacob Zuma, and they would discuss issues of military veterans, among other issues.
The Chairperson noted that, and applauded the two members on their initiative. He hoped that they would update the Committee after their meeting.
The meeting was adjourned.
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