Plans of Local procurement through Procurement Policy: Defence; Correctional Services and Health Departments briefing

Small Business Development

05 August 2015
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

The Department of Correctional Services (DCS), National Department of Health (NDOH) and the Department Military Veterans (DVM) briefed the Committee on their plans for local procurement, following the pronouncement by the President in the State of the Nation Address (SONA) that 30% of each government department’s budget, state-owned entities and private businesses should be spent with small, medium and micro enterprises (SMMEs) and cooperatives. This formed part of government’s policy, which meant that the government’s target on the procurement of goods and services and infrastructure should be focused on SMMEs and cooperatives. Departments would be asked to inform the Committee how much their budget was, what 30% of that was, and what percentage was currently procured from SMMEs and cooperatives. If departments had not reached the 30%, what were their plans to reach this target?

The DCS stated that its total budget was R20.6 billion for the current financial year, and a large portion of this budget went towards compensation, because it was a labour-intensive operation. The budget for goods and services amounted to R5 billion, which was about 26% of the total budget. The DCS had a skills development programme which aimed to encourage the establishment of SMMEs by offenders once they were released, rather than focusing only on securing employment.

The Department of National Health stated that it would be targeting SMMEs and cooperatives on the basis of proven abilities and a commitment to future improvement, in order not to compromise value for money. It pointed out that the majority of its SMMEs were at levels 3 and 4 of Black Economic Empowerment (BEE), and 60% of these were owned by historically disadvantaged people.

The Department of Military Veterans stated that it had not had direct engagement with the Department of Small Business Development (DSBD). However, it formally engaged with the Department of Trade and Industry (DTI), the Small Enterprise Development Agency (SEDA) and Small Enterprise Finance Agency (SEFA). Steps taken by the DMV to achieve the target of 30% procurement included the development of the database for military veterans (MVs), where they were registered for exposure to business opportunities, and organised tender training for MVs. The DMV was also planning to host a military veterans’ co-operatives indaba to outline what they needed to do to comply for an enhanced scope of procurement from them.

Members asked for more explanations on the relationship between the DCS and the offenders that received training once they were released from prison. What were the criteria for inclusion in the Department's skills development programme? They asked if the DCS had performance indicators relating to inmates who had been released and if so, was there any relationship between the programmes the Department had been talking about throughout the years – in other words, were the programmes effective? What were the rates of re-offending compared to other countries? Members were also concerned about the DCS’s concept of a social impact bond as a way of funding skills development programmes for former offenders.

Members raised concerns about what the NDOH was doing in the areas of enterprise and supply development, and proposed that it should not only focus on purchasing goods and services from small businesses, but should actively intervene in the supply chain to develop and train these enterprises.

Members agreed that the DMV should not be looked at as a department which would procure from SMMEs like other departments, but rather one with which the DSBD could collaborate to open opportunities for military veterans that were not working, and to provide assistance when one of them passed on. Thus the two respective Departments needed to have a common understanding of the nature of their relationship. The DMV was a department that needed to be assisted because it looked after military veterans in destitute situations.

Meeting report

Cooperative development model

The Chairperson briefed the meeting on the background to the establishment of the Department of Small Business Development, which had been started after the 2014 elections. In the past 20 years, South Africa had produced a number of millionaires, but the approach to reduce poverty and improve livelihoods had been flawed. If the objective was to build a developed state, the focus should have been on the reduction of dependency of poor families on the government’s social grants and free services.

The economy was comprised of three sectors -- the government sector, the private sector and cooperatives. The latter was not focused on generating income, but rather focused on improving society. The Committee had thus adopted a cooperative development model, with the focus on reducing poverty and creating jobs. Because of this, the Committee had decided to include ‘cooperatives’ within the name of the Department of Small Business Development (DSBD), changing it to the Department of Small Business and Cooperative Development.

The measurement of the Department’s performance would therefore be based on its ability to create a permanent exit for those that were on the social grant register and registers of municipalities. The National Development Plan (NDP) had indicated the three challenges facing South Africa -- poverty, unemployment and inequality. In line with this, the Department’s focus in developing small, micro and medium-sized enterprises (SMMEs) and cooperatives was primarily on these indicators.

Prior to the Department’s establishment had come the pronouncement of the President, in the State of the Nation Address (SONA), that 30% of each department’s budget, state-owned entities and private business should be spent on SMME’s and cooperatives. This pronouncement was also informed by the resolution taken by the ruling party at its 53rd Congress held in December in Mangaung. This resolution had stated: “We will promote and develop cooperatives and SMME’s through public procurement and infrastructure spend”. As a result, this resolution became the government’s policy, and this meant that the government’s target on procurement and infrastructure should be on SMME’s and cooperatives’ goods and services.

The responsibility of the Department and its entities was to align its development processes to the market, which comprise the other departments of the government. The Committee had called a meeting of the departments, as the market for SMME’s and cooperatives, and therefore the questions which the departments were expected to answer were:

- How much is your budget?

- What is 30% of that?

- What percentage are you currently procuring from SMMEs and cooperatives?

- If you have not reached 30%, when are you planning to reach this target?

- What discussions have taken place between your Department and the Department of Small Business and Cooperative Development?

She said that the Department of Small Business and Cooperative Development had to respond to these questions:

- What was its plan on focusing in underdeveloped areas to develop SMMEs and Cooperatives?

- Why had it not engaged with the other departments?

She said that the National Department of Health (NDOH) was the only one that had been honest and informed the Committee that they had not engaged with the Department of Small Business and Cooperative Development. The Department had set targets, and these included the creation of 11 million jobs by 2030. This would start in the 2016/2017 financial year, and of these, 90% would be from SMMEs and cooperatives. 760 jobs needed to be created each year to reach this target by 2030. The approach of the Department of Small Business Development was to have an understanding of:

- how many jobs needed to be developed;

- the group being targeted;

- areas that were underdeveloped and affected seriously by poverty, unemployment and inequality;

- the budgets of Departments that were going to buy from SMMEs and cooperatives;

- what goods and services were bought by these Departments.

The Department would align its development programme to the above mentioned.

Department of Correctional Services presentation

Mr Nick Ligege, Chief Financial Officer, Department of Correctional Services (DCS), said that they had not engaged with the DSBD. The Department’s presentation was based on the specific questions asked by the Committee and also some of the constraints that the Department had.

The DCS dealt not only with the aspect of custodial services, but also the rehabilitative element. One of its objectives was to enhance the productive capacity of the production workshops. The NDP was the basis of the Department’s policy mandates.

The three strategic outcome-oriented goals the Department were:

  • Remand .detention processes are effectively managed by ensuring that remand detainees attend courts as determined by relevant legislation and are held in secure, safe and humane conditions, and provided with personal wellbeing programmes; relevant services are provided to awaiting trial persons (ATP's), thus contributing to a fair and just criminal justice system (CJS).

  • All sentenced offenders are incarcerated in safe, secure and humane facilities and are provided with health care needs, and effective rehabilitation programmes in line with their Correctional Sentence Plans (CSP) to enable their successful placement into society after their lawful release.

  • Offenders, parolees and probationers are successfully reintegrated back into their society as law-abiding citizens through the provision of social reintegration programmes.

The budget entailed five programmes -- Administration, Incarceration, Rehabilitation, Care and Social Reintegration. The total budget for the Department was R20.6 billion for the current financial year, and a large portion of this budget went to compensation, because it was a labour intensive operation. R5.5 billion was allocated to Head Office, and this included centralised services such as office accommodation, and public private partnerships for two prisons, one in Mangaung and one in Limpopo. The Department was divided in six regions that were not necessarily aligned to provincial boundaries and each of these was allocated its specific budget for the financial year. The budget was divided according to the amount of offenders in each region.

The budget for goods and services amounted to R5 billion, which was about 26% of the total budget.

Mr Joey Coetzee, Deputy Commissioner, Department of Correctional Service (DCS) said the Skills Development programme aimed not only to equip offenders with marketable skills and knowledge, but also to inculcate positive attributes and attitudes. These would encourage offenders to jettison undesirable behaviour and embrace norms and morals acceptable in society. Furthermore, the programme aimed to encourage the establishment of SMMEs by offenders once they were released, rather than focusing only on securing employment.

The Department conducted workshops primarily on agriculture because this was an area where it could provide work opportunities for offenders within its premises. The furniture that the Department manufactured was for both this Department and others, as regulated in Section 133 of the Correctional Services Act.

The objectives of the workshops were to enhance self-sufficiency and generate income/revenue for government, to create work opportunities for offenders and skills utilisation of offenders, to contribute to the development of offenders, to use agriculture production and workshop manufacturing processes to impart skills and work ethics that would expose offenders to the norms and requirements/expectations of the workplace, and to promote the self-employment of offenders upon their release.

He pointed out that there were 21 farms within Correctional Services (mixed animal and plant production farming) as well as 92 small sites for vegetable production. There were also 19 textile, ten wood and ten steel workshops, one shoe factory and six bakeries. The pricing of self-produced products were in accordance with a price and tariff structure approved by National Treasury. This was where the Department encountered some challenges from the other departments, and had requested National Treasury to do away with the 25% profit margin. Even without this margin, the Department could not compete with other institutions in terms of getting their raw material.

Market opportunities for SMMEs included the supply of production inputs to the Department, such as animal feed, medicines, fertilizers, seeds, etc for agricultural purposes, and wood, boards, steel, textile material, machinery and equipment. The Department also required a supply of goods and services such as perishables, office supplies, etc. The procurement of most of these inputs was decentralised to the regions and management areas. Opportunities existing for SMMEs as partners for the benefit of offenders and parolees included training, cooperatives, funding and start-up kits.

Mr Coetzee said that initiatives to promote SMMEs for offenders included the Exhibition & SMME Event that the Skills Development Directorate was planning to host, at which all relevant external stakeholders would be invited to take part. These stakeholders included the Small Enterprise Development Agency (SEDA), the Department of Trade and Industry (DTI), the Quality Council for Trades and Occupations (QCTO), Sector Education and Training Authority (SETAs), and the Department of Small Business Development. The DCS also forges strong partnerships with all relevant business institutions and organizations to promote SMMEs and cooperatives to assist offenders upon their release.

Mr Mollet Ngubo, Deputy Commissioner: Supply Chain Management, DCS said the Department did not have a transversal agreement with the DSBD but after the invitation to the meeting, the Department had been in contact with the DSBD to get more details on a way forward. The Department was trying to achieve the 70% it had initiated to comply with the regulations and legislations of supply chain management (SCM). Regarding the material used for the workshops, the DCS invited bids for textiles, clothing, leather and footwear with a specific condition that only locally produced goods would be considered. The Department had transversal contracts with National Treasury because of the quantity required throughout the year.

To stimulate the participation of SMMEs within public sector procurement, the DCS had a list of prospective suppliers at each SCM unit. This included SMMEs for requirements that did not need to be advertised in the Government Tender Bulletin, in accordance with general delegated powers. To establish a list of prospective suppliers, SCM units had to advertise annually in local representative newspapers or by any other means to invite prospective suppliers to apply for listing as a supplier. Some of the things that were explained in the supplier workshops about qualifying to be exempted included that Exempted Micro Enterprises (EMEs) were deemed to have a Broad-Base Black Economic Empowerment (B-BBEE) status of "level four (4) contributor," and could claim 12 points in accordance with the 80/20-principle, and five points in accordance with the 90/10-principle. In instances where EMEs were more than 50% owned by black people, such EMEs qualified as "B-BBEE status level three (3) contributors".

At this stage, the DCS had not done anything relating to corporate social responsibility to assist underdeveloped areas, but would be working towards this. Moreover, the DCS did not have dedicated capacity with knowledge and understanding in order to support cooperatives. For the 2014/15 financial year, 1 957 contracts to the value of R289 million had been awarded. The number of contracts awarded to SMMEs (levels 3 and 4 contributors), and the value thereof were: Level 4 -- 252 contracts worth R27 million; Level 3 -- 846 contracts worth R129 million. The Preferential Procurement Regulations were currently being reviewed by National Treasury and the matter with regard to supporting SMMEs, persons with disabilities, females and local economic development had already been incorporated in the draft regulations.


Mr H Kruger (DA) asked what percentage of the budget was spent on skills development of staff and offenders, as well as on skills development outside the DCS, such as potential SMMEs.

Ms N November (ANC) thanked the DCS for their willingness to work with small business departments in terms of integration. She stated her concern about tendering, which was becoming a problem and retarding the progress of small businesses. She proposed that there should be someone responsible to make sure that everyone was doing their job.

Rev K Meshoe (ACDP) asked if offenders that had been given skills and encouraged to establish a small business received mentorship to ensure their success after they had left prison. He asked what the percentage of the offenders participating in the skills development programme was. How transparent was the process of selecting offenders that participated in the skills development programme? He asked what the average value for the start-up kit that the DCS provided to the offenders was.

Mr R Chance (DA) asked if the DCS had performance indicators relating to inmates who had been released and if so, was there any relationship between the programmes the Department had been talking about throughout the years – in other words, was the programme effective. What were the rates of re-offense, compared to other countries? He asked if the Department had encountered the concept of a social impact bond as a way of funding those types of programmes for former offenders. He questioned the Department’s regarding itself as a business operation, and asked why there was no income line in their budget. How much income did the Department generate, and did it measure this process itself or was this done by the Department of Treasury?

He asked how the Department leveraged its resources to generate output for the Department. He proposed that the DCS should think about giving prisoners a start to their business while they were in prison, as some were serving many years’. He also suggested that the Department update its presentation, as the scoring on SMMEs had changed. He asked what the Department regarded as the impact of the table of regulations by Treasury on 50/50 procurement, on the cost of that procurement.

Mr X Mabasa (ANC) asked if there was a relationship between the Department and the offender after they had been released. When doing business with SMMEs and cooperatives, was there a way of geographically visiting all the areas so as to get them into the Department’s database? He asked if training was decentralised countrywide, and whether there was a way of comparing and establishing the differences between the offenders that received training and those that had not received any training.

Mr S Mncwabe (ANC) asked if offenders that were provided with training received funding when they left prison. Did they get support from the Department? He also wanted to clarity on whether, in the Department’s pool of services, there were no cooperatives. He asked who were employed on the farms and textile companies that the Department had mentioned.

Mr T Ramokhoase (ANC) asked about the process of buying textiles from SMMEs, taking into consideration the prejudices that were currently affecting the SMMEs. Were there any criteria to make sure that those who participated in the skills development programme graduated at some point? He also suggested that the Department acquaint itself with the model that the DSBD had adopted.

Mr T Mulaudzi (EFF) apologised for arriving late and said he was impressed by the Department’s presentation on the training of offenders and cooperatives, and the funding thereof. He asked for clarity on how much was spent on each of these aspects annually. How was the Department managing staff members doing business with them?

Mr T Khoza (ANC) asked for clarity about the other means of advertising that the Department mentioned they also used. Were prisoners allowed to have cell phones? He asked if the Department assisted those inmates who were mostly interested in entertainment.

The Chairperson said that some of the questions asked by Members were actually supposed to be answered by the DSBD. It was unfortunate that they had not engaged with other departments like the DCS, as well as SEDA and the Small Enterprise Finance Agency (SEFA). The Development Finance Institution (DFI) would have aligned its funding to what had been by described by the DCS. She said that when offenders left prison, they were no longer the responsibility of the DCS but rather became the responsibility of the DSBD. The DSBD was supposed to interact with the DCS to find out the skills prisoners possessed so that when they left prison, the DSBD could assist them further in forming small businesses or cooperatives. The DCS did not cooperate at community level, and therefore would not be responding to questions relating to offenders outside the Department. Also, because the DCS was not mandated to form cooperatives and small businesses, it was the DSBD that had to engage and provide training to offenders that wanted to form them.

The relationship between the NDOH and schools was the responsibility of the DSBD, to realise the linkage between the services that could be provided by offenders to the schools. The same applied to the linen market. The question of access to funding was also the responsibility of agencies of the DSBD, and it had to align its funding instruments to address this problem. The DCS trained offenders, but when they came out into society again, it was the responsibility of the DSBD.

Mr James Smalbenger, Deputy Chief Commissioner, (DCS) thanked the Chairperson for her comments. He said that the presentation had been the Department’s first and had received the full attention of each Member. He pointed out that the delegation had been assigned on the basis of the questions they had been asked as a Department, but some questions had been very wide and the people with the relevant expertise might not have been in the delegation to respond to them.

He said the DCS was responsible only as and when a court had sent someone to their facility, up until the stage that the imprisonment or detention had ended, at which stage other departments had to come in. The ex-offender’s conference which had been called by the Minister and Deputy Minister had been to establish what could be done for ex-offenders, who had not been the DCS’s responsibility, to ensure that they did not come back. This was not a mandate for the DCS, but for the government.

There were currently about 158 000 people behind bars, of which roughly 30% were remand detainees. About 116 000 were sentenced offenders, and of this group approximately 12 000 were serving sentences of 24 months or less. About 3 000 to 4 000 had fine options, meaning they could either serve six months in prison or pay a R400 fine. Of the remand detainees, there were those that also had the option to be bailed out, but were not being bailed out. The Department had tried to use the paying of stipends as an encouragement for offenders to attend educational programmes and attend school. Members of Parliament had been angry with the Department because of the payment criminals received to attend school, whereas children were not being paid to go to school.

The Department had services and programmes for correcting offending behaviour, where the offender’s behavioural thinking was targeted, and also the skills programme. Therefore there were questions coming from the communities, asking whether people had to come to prison to enjoy such benefits. Furthermore, there was a problem of overcrowding in South African prisons, with 158 000 offenders occupying space for 120 000.

The aim of the DCS was to provide skills that were market related, as well as to be relevant with the skills programmes that the Department was presenting. Its main purpose was not to operate as a business to make an income, but rather to rehabilitate and provide programmes and services to offenders to allow them to change their offending behaviour. The question of the effectiveness of the programmes offered to offenders had been asked many times. Since the white paper on Correctional Services was given by Cabinet in 2005, there had been many transformational developments within the Department. Some of South Africa’s tertiary institutions had been sourced to assist in measuring some of these programmes, and they were currently providing this service for free.

The question of re-offending had been a difficult one, because of the definition of re-offending in itself. The issues was whether it should be taken as a re-offense, if one’s first offence was different from the second, and also considering the timeframe between the two offences. Other countries adopted different approaches. In South Africa, it had been decided that re-offending would be measured within a ten year period, and for the same crime.

In all the Department’s farms, offenders were the only people used to expose them to skills. Prisoners were not allowed to have cell phones. In the past, the Department had confiscated over 100 000 from offenders and action had been taken against them.

Mr Ligege thanked the Chairperson for the opportunity, and extended an invitation to Members of the Committee who would like to see the programmes the DCS provided for offenders.

Department of National Health presentation

Ms Dikeledi Tshabalala, Chief Director: Supply Chain Management, National Department of Health (NDOH) said that they had received an invitation from the Portfolio Committee with questions the NDOH had to address, and the presentation therefore sequentially addressed these questions. The NDOH had never had any engagement with the DSBD before.

Chairperson asked Mr Mojalefa Mohoto, Acting Deputy Director General, DSBD why there had been no engagement with the various departments regarding the 30% procurement from SMMEs and cooperatives.

Mr Mohoto said there are two reasons for this. One was the issue of capacity, because the DSBD was engaging with other government departments. The other was the lesson learned through engagement with other departments. The 30% procurement was very critical, as it assisted the DSBD to go to other government departments with a practice note. The Department was currently working with the National Treasury on a review of the National Procurement Act, because it has been discovered through engagement with certain departments that the DSBD had to beg due to the lack of a practice note that instructed the Department to procure 30% from SMMEs. The DSBD was therefore awaiting the practice note as something that would empower it when discussing procurement issues. The capacity issue was being fixed.

The Chairperson said that there were 38 government departments, so if the DSBD were to group them in threes as Parliament did, it would not take more than two months to engage with them and get an understanding of the markets that existed in each of them.

Ms Tshabalala said the NDOH tried to accommodate SMMEs through its database. The NDOH had traded and awarded tenders to the value of R150 000, and had programmes that were involved in striving to eliminate poverty, unemployment and inequality, although it needed to be guided. At the national level, the Department was currently busy with tenders for infrastructure, and these were clustered from minor soft maintenance that took place on a day to day basis at health facilities. The Department advertised to develop a database of service providers that were categorised, as there were rules in place on infrastructure that SCM had to comply with. The Department targeted and developed SMMEs that were between P2 and P9, and also on the basis of proven abilities and commitment to future improvements, in order not to compromise value for money. A proper diligence study was carried out before doing business with SMMEs to avoid compromising the health of the public.

The total budget of the Department for goods and services the previous year amounted to R1.518 billion. This budget had increased to R1.578 billion for 2015/16. The majority of the SMMEs and cooperatives that NDOH contributed to developing were at level three and four, and more than 60% of them were owned by the historically disadvantaged. The Department was working on increasing this amount to meet its procurement target.

The Department advertised through tender bulletins and newspapers, and anyone who had the ability and capability to undertake the tender could apply. The total value of the bids by SMME’s and cooperatives had been R104 million, and majority of SMME’s that were exempted were at level three and four, where the total value was about R10 million. This was very low, considering the total amount that the Department had awarded.

The NDOH had an internship programme for skills development, and available market opportunities for SMMEs were in the following commodities:

- Gardening services;

- Sub-contracting of fast food -- bread, milk, etc;

- Laundry services;

- Security services;

- Soft maintenance, such as air conditioners (not medical equipment);

- Cleaning and catering services;

- Travel and accommodation;

- Furniture, stationery and office equipment.

To achieve the target of 70% local procurement, the Department was promoting the local procurement of most medicines by advertising and putting a condition for designated local content and manufacturing pharmaceutical companies to bid when such tenders were advertised. For the 30% procurement from SMMEs and cooperatives, the Department was intending to implement procurement of designated products such as catering services, furniture, stationery and printing works.

To encourage the investment of suppliers in underdeveloped areas, national events such an HIV/AIDS day or a TB day were organised and the NDOH made use of service providers around the host area. The new BBBEE codes also provided for new entrants into the market through the enterprise and supplier development element on the score card. Annually, the NDOH invited SMMEs and other service providers to come and register in the supplier database. The NDOH strategic plan adhered to the National Development Plan in so far as public health sector service delivery was concerned. However, however it should be noted that it has never engaged with the DSBD to align the NDOH strategy with the DSBD’s envisaged plan for the development of SMMEs and cooperatives.


Chairperson thanked the Department for its presentation. The Department seemed to think there were very limited services that could be provided by SMMEs, but there were a number of other services that had been omitted from its list, such as linen, soap, sanitary pads, etc. She realised that the Department's definition of SMMEs and cooperatives was very limiting, and therefore requested it to broaden it. There were two policies being dealt with here, the first being 70% local procurement which replaced imported goods, and the 30% procurement that targeted SMME’s and cooperatives, and the Department’s presentation indicated it represented 0.07% of its procurement. Why was this so?

Mr Chance said that the Committee should not be very disturbed about the 0.07%, because looking at the numbers that had been presented by the Department, the total procurement from SMMEs was R150 million. If one included the competitive and non-competitive bids, which were also SMME’s, they make up 15%. Ms Tshabalala had identified only the level 3 contributors as small businesses, which was totally incorrect. They were all small businesses, so the Department was actually doing a good job, although they had not reached the target of 30%. What he found interesting was that by far the majority of the micro businesses were not compliant, and he asked why this was so. In the BEE codes of practice, the private sector was supposed to invest in 30% for supply development, procurement and enterprise development. Therefore, what was the Department doing in these areas -- enterprise development and supply development -- not just taking goods and services from small businesses, but actively intervening in the supply chain to develop and train these enterprises.

The Chairperson said she had received a letter from the only condom manufacturer in South Africa, stating that it had not been paid since November. It would be interesting to hear what the NDOH proposed as a tracking system for invoices.

Mr Ramokhoase asked about the Health Department’s functions being concurrent to the provinces, and how it related to the provinces when it came to general health issues, because there seemed to be a huge gap between the national Department and the provinces.

Ms November asked if small contractors were being provided with the necessary support to expand. Were skills being transferred to others so as to avoid having to go overseas to get skilled professionals who could perform the services required? She proposed that the NDOH try and advertise on local community radio stations so the opportunities could reach a broader audience.

Mr Mulaudzi mentioned his concern about the presentation by the Department, which dealt only with the Department's budget and had nothing about the provincial level. He proposed that the Department should include the nine provinces it dealt with the next time they were presenting their work. He asked what percentage of small businesses and cooperatives the Department had managed to assist in the 2014/2015 financial year.

Mr Kruger proposed that the Small Enterprise Development Agency (SEDA) must provide training for departments like Health, since such departments were not business-oriented. This could help them in terms of marketing.

Ms Tshabalala said that the opportunities presented in the presentation covered only what they offered at the national level, which meant that opportunities were not limited to only those mentioned in the presentation. The Department's travel agency had been accessed from an SMME that was owned by a historically disadvantaged person, and it was further developing other businesses by outsourcing other services to emerging companies. She said the NDOH welcomed the suggestion of not just taking goods and services from small businesses, but actively intervening in the supply chain to develop and train these enterprises, and would look into it as a Department.

Ms Gail Andrews, Chief Operations Officer, NDOH said the Department sets guidelines and standards of practice which can be adapted by provinces if they want to, and the Department has to monitor, evaluate and track progress. The Department would go back and do a better job in procurement, and also in the development of new hospitals and clinics, which was specialised. The Department had also taken note of other questions that had not been answered and would take them back to the relevant DDGs and get information to address them.

Mr Mabasa said that when the Department interacted with the provinces, it must make sure that the guidelines been informed partially by what the current meeting entailed, were being followed. This was to ensure that when the Committee was doing oversight visits to the provinces they were well informed about issues around SMMEs and cooperatives, and fulfilled what the Portfolio Committee expected from them. If both the Committee and the departments did not go all out, it might be hard to reach the target of 30% procurement, so it was important to instil the importance of this target in the departments and municipalities, otherwise the distribution of wealth would not be fulfilled and the inequality gap would not be closed.

Department of Military Veterans presentation

Mr Vernon Jacobs, Acting Deputy Director General, DMV, said that there had been no direct engagement with the DSBD. However, the Department formally engaged with the DTI, SEDA and SEFA as their agencies. A Memorandum of Understanding (MOU) had been concluded with SEFA, and a draft existed with SEDA, and the DMV would welcome further interaction with the DSBD.

He said the DMV offers skills and business development and training programmes for all military veterans, as per Section 5(1)(d) of the Military Veterans Act and Section 11 of the Military Veterans Benefits Regulations. Military veterans’ (MVs’) cooperatives were registered into the DMV’s SCM database, and MVs were trained in the establishment of cooperatives and how to develop business plans by SEDA in all provinces, and by service providers of their own choice. The DMV had also attended the International Co-operatives Day in Taung with a group of 40 military veterans, to expose them to what the essence of a co-operative was.

The DMV’s total budget expenditure was R263 Million. The steps taken by the DMV to achieve the target of 30% procurement included:

- The development of the database for MVs, where they are registered for exposure to business opportunities;

- Organised tender training for MVs;

- Plans to host a military veterans co-operatives indaba to outline what they need to do to comply for an enhanced scope of procurement from them.

He added that the DMV had not played a role in using its influence with big companies to use their corporate social responsibility budgets, as it still needed further engagement with big companies. However, at the present moment there were MOUs in place for training and job opportunities for MVs. The DMV was also planning to host a Cooperative Indaba during the current financial year.

To answer the question of whether the Department was adhering to the 30-day payment policy, he said the DMV only legitimised invoices which were compliant for payment within the 30-day period, as espoused in the Forum of South African Directors-General (FOSAD) implementation plan. The Department had not necessarily engaged with the strategic plan of the DSBD, but there was resonance with the goals of the NDP.

The Department’s facilitation of employment placement included 97 co-operatives being registered during 2014/15 for MVs, and 140 MVs had been trained on cooperatives.

The 2015/16 DMV projects for employment placement included:

- Project 1: 98 military veterans names had been provided for the selection of 45 personnel for DMV security posts;

- Project 2: 40 military veterans names had been provided for auctioneering training on the Department of Defence’s Obsolete Assets Disposal programme;

- Project 3: 12 military veterans names had been provided to DMV’s human resources for addition to the cleaning staff;

- Project 4: PiLog Project - Data Integrity Tender: 33 Names with CVs had been provided for consideration;

- Project 5: TransNet (Admin Posts): Three names and CVs submitted; and

- Project 6: South African Social Security Agency (SASSA) job opportunities in the Eastern Cape: 200 names had been provided for 76 Expanded Public Works Programme (EPWP) opportunities with SASSA in the Eastern Cape.

He said the Department facilitated advice on business opportunities in the following aspects;

- A draft plan had been developed for visiting provinces to provide training for MVs who had indicated an interest in registering cooperatives;

- The DTI and SEDA would provide the training, with the DMV funding training workshops, as well as the registration of the cooperatives;

- 636 MVs had been invited for Business Development Support Training, in conjunction with SEDA;

- 368 Military Veterans had undergone a co-operatives assessment and training programme, and were ready for registration with the Companies and Intellectual Property Commission (CIPC); Of this target, 228 had been assessed for registration on the SEDA support database and 140 had attended training. 268 had not responded to invitations for training;

- 97 MVs had been registered for co-operatives on the Business Development Support database; and

- A Memorandum of Understanding for providing access to business funding had been concluded with SEFA.


Mr Ramokhoase thanked the Department of Military Veterans (DMV) for a straightforward and informative presentation and extended appreciation for the Department’s efforts to meet up with the Department of Trade and Industry (DTI). He asked whether the infrastructure implementation project would only cover veterans, or would it also include other disadvantaged groups like the youth, women and the disabled.

Ms November asked if it would be possible, when the DMV held its road shows, if one of the members of the DSBD could be part of the show.

Mr Khoza asked whether the DMV had any specific data indicating how many veterans there were in each province.

Mr Mulaudzi said that the Committee wanted to meet with both the Department of Defence as well as the DMV so as to get an understanding of what the people who were suffering had to say. He also requested that the DMV extend its efforts to capacitate others who were not MVs, but had also played a role in the liberation of the country. He was happy with what the Department had presented and what the DMV was doing to assist those that had fought for the freedom of the country.

The Chairperson said that the DMV had been established after realising that military veterans of the country were disadvantaged, thus the approach of engaging with the DMV was twofold. The first one was to establish the needs of the military veterans outside, who could then be assisted by the DSBD with funding and training to access market opportunities. The DVM was different from other departments in the sense that it was raising people’s consciousness for the plight of those who had been at the forefront of the liberation struggle. Some of them were highly skilled but had been hindered by a lack of qualifications from accessing opportunities. She said that government facilities had security operations that were owned by those who had not participated in the liberation struggle, and it had been found that some of these were owned by illegal foreign nationals who could be rebels in their own countries.

The DMV should not be looked at as a Department to procure from SMMEs, like other Departments, but rather one with which the DSBD could collaborate to open up opportunities for military veterans that were not working, and to provide assistance when one of them passed on. Thus the two respective Departments needed to have a common understanding of the nature of their relationship. The DMV needed assistance because it looked after military veterans in destitute positions.

Mr Jacobs said that the DVM was wanted to get the companies of the military veterans to the point where they would be in line with what the Members had proposed. If the DMV could capacitate them to the point where they were successful, they could be employers in their community and improve it. Skills training was provided for the children of the military veterans and spouses as dependents, but the Act governed that the DVM had to work directly with them. The DMV wanted to make the military veterans the leaders that they were prior to 1976, with dignity, honour and respect.

He said when the Department went on road shows, it would definitely invite Members to join them.

He said that they had database of 70 000 military veterans, and could disaggregate them per province, but not per region.

Chairperson thanked the DVM for agreeing to come to the meeting without the Department of Defence. She proposed that the DSBD have a workshop with the DVM with the objective of understanding the needs of the military veterans, and come up with a programme that integrated the strategies of the two Departments to ensure that the 70 000 military veterans were assisted to improve their social and economic conditions.

The meeting was adjourned.


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