Department of Defence on its 1 Quarter 2016/17 & 4 Quarter 2015/16 performance; Defence Works Formation impact on maintenance

Meeting report

Defence Works Formation: maintenance and repair of infrastructure

The Department acknowledged that the visit of the Committee to Pretoria had encouraged it to improve its performance and work better. The Defence Works Formation was faced with the challenge of facilities which were not up to standard. The reason for this challenge was the inability of the Department of Public Works (DPW) to cope with the management of the Defence Department’s estate portfolio. This had resulted in the South African National Defence Force (SANDF) to abandon dilapidated facilities and move into leased facilities, which had escalated costs to R450 million in the 2016/17 financial year.

The second challenge had been the large number of soldiers who had reached a career plateau. This made it difficult to rejuvenate the division by recruiting younger soldiers. The soldiers whose careers had reached a plateau were those who had dedicated over 20 years of their lives to serve the SANDF and the country. They belonged to the bottom layer group. They had not advanced in their careers to reach the middle management level. They did not have portable skills to sell to the private sector, except their military fighting skills. The SANDF required a large number of young and agile troops at the bottom of the pyramid. The challenge was how to utilise these soldiers who had not progressed to the next level.

As a result of these challenges the Department of Defence (DOD), had taken a decision to establish the Defence Works Formation, with the aim of recruiting soldiers who reached a career plateau, to re-skill and utilise them to repair and maintain the DOD’s dilapidated facilities, and oversee the management of the Defence estate portfolio by the DPW. The DOD would derive the following benefits:

• Trained career soldiers would become qualified artisans, engineers and technicians;
• Under-utilised soldiers would be used to refurbish facilities at lesser cost than using outside providers;
• By taking soldiers who had reached a career plateau from the services and divisions, it would be possible for services and division to be rejuvenated;
• Upon retirement, the re-skilled members would be able to participate profitably in the construction industry.

The Defence Works Formation had been given a military house in Waterkloof to refurbish, after the DPW had costed the work involved at R5.2 million. The Defence Works Formation had completed the house at a cost of only R2.2 million, taking into account the DOD’s labour and material costs. It had also executed a demolition project at 1 Military Hospital, under the supervision of Tectura Consultants, which had been estimated by industry to cost R8 million, but the Defence Works Formation had completed it for R1 million, taking into account salaries and material costs. It was now working towards making sure that those soldiers who had been under-utilised could end up as business people who were able to participate in the greater economy.

Discussion

Mr S Marais (DA) said the Department should go back to basics. It was very wrong to prepare one for life after the military. It should address the issue of the decline. The question of refurbishment costing R8 million compared to R1 million should be related to how the Department had utilised its human resources previously, and what they would have done otherwise. The execution of facility maintenance and repair included construction at two main levels -- basic and more technical. Did the basic level include fencing and the maintenance of grounds? When the Committee visited Pretoria, it had noticed that some fences were lying down, and with regard to ground maintenance, the grass had not been not cut. The Department should elaborate on this.

What was the focus and plan of the Department on security? There had been breaches of security at Simonstown and other places. The alleged theft in Simonstown had been linked to the non-payment of the service provider, and the Department should elaborate on this.

With regard to mining, what was the DOD’s business and strategic plan that would assist the Committee to convince the National Treasury? Where would the money be coming from?

Mr S Esau (DA) asked what had happened to the training of the military veterans who had moved out of military service? Were there agreements in place, and a relationship between colleges and the Defence Force? The Military Skills Development System (MSDS) course of rejuvenating the Force could not use only the Defence Works Formation as an exit mechanism for people. What about the engineers, the people that were not being used, people used on a rotational basis -- they were complaining that they did not have jobs or income? The Reserve Force had a number of engineers, so why could the Defence Works Formation not link up with them and put them to good use, for the log book to be accredited? Was the Department getting money from the Sector Education and Training Authority (SETA)?

On the procurement challenges faced by the Department, there should be an assessment because it was a new department that did not have all the skills. There was a problem at each site and project, and as such it was necessary to identify the problem in each one. A matrix of the issues on projects should be sent to the Committee, so that it could be guided.

The Department should make a decision on the exit mechanism.

Mr D Gamede (ANC) said that Defence Force was a permanent structure, and every country had its own. The issue of property leasing should be prioritised. The Department should work towards having its own property. It could even get more properties, lease them and make more money. Something should be done with regard to the Department of Public Works so that they did not delay work for the DOD. A report should be sent to the Committee, listing the properties handed over to the Department, and the plan of how to utilise the properties. The procurement process for sourcing materials for building should be shortened, and the DPW should not be relied upon entirely, as it was not their core function to buy things like cement for the DOD. The DPW should hand over certain powers so that the Department was able to do its work more effectively. The Formation was a good form of exit mechanism for soldiers to keep them busy, but for it to be sustainable, it needed to be funded.

Mr N Khoza (EFF) said the DPW was fond of delaying matters, and this stalled the activities of departments. The Defence Works Formation should find a way to work around this. It should make sure that the institutions or departments it wanted to work with were ready to do the work, to avoid that long waiting period.

Department’s response

A delegate from the Department of Defence said that the security breach was being taken care of, and interrogation was under way.

The department was making slow progress on budgeting. It was documenting and costing its challenges in order to simplify matters for the National Treasury. The Committee should convince the National Treasury to release funds generated through the leveraging of defence assets. This would go a long way in helping it. Pressures facing it needed to be prioritised. It was not a money-spending department. It added value, was a money generator, and a proactive and job-creating department.

There was an agreement with other technological institutions for training. SETA was a tough one for the department, because before they released funds for training interns, they required that the department absorb the interns into its employment. More programmes were needed for the exit mechanism, and these were being developed.

The DOD said the first thing to do was to capacitate the structure of the Defence Works Formation so that it would be able to function. The savings made by the Department should be utilised for this purpose. The funding for the maintenance could come from the Department of Public Works.

Mr B Bongo (ANC) suggested the DOD should arrange a meeting with the National Treasury and the DPW.

Briefing: Quarterly performance

The Department gave a briefing on its performance during Quarter 4 for the 2015/16 financial year and Quarter 1 of the 2016/17 financial year.

In the fourth quarter, most of the targets of the Department had been achieved.  The reasons for the non-achievement of targets included:

• Promulgation of policies which were dependent of the finalisation of the Defence Review 2015.
• Non-appointment of military judges.
• Non-compliance with the requirement for submission of senior management service (SMS) financial disclosures and performance agreements.
• Non-implementation of the Cyber Warfare Implementation Plan, due to monetary constraints.
• Number of Force employment hours flown and hours at sea per year were dependent on tasking received.
• Staffing-related constraints, due to verification and vetting procedures.
• Matters not within the DOD’s control, such as positions filled compared to the allocated quota for international institutions.

There had been under-expenditure in most programmes.

In Administration, the under-expenditure was mainly related to the transfer payment to the Safety and Security Sector Education and Training Authority (SASSETA). This was due to the payroll amount on which the budget calculations had been based, being less than anticipated.

In Force Employment, under-expenditure of R13.606 million would be reflected against the peace support operations due to a delay in the procurement of mobility packages utilised for border safeguarding operations.

In the first quarter, all the targets set for Ministerial direction had been achieved. Of the 35 targets set under the Defence Secretariat, 31 had been achieved, two partially achieved and two not achieved. Out of 23 targets set for SANDF, 17 had been achieved, and six not achieved.

Partially achieved targets fell under inspection and audit services, mainly due to deviations caused by a lack of human resources.

Targets which had not been achieved fell under human resources support services. Only one out of 24 cases had been finalised within the required 90 days, with the complexity of some of the other 23 cases requiring more time to be finalised.

The unaudited expenditure as at 30 June 2016, was R10.843 billion against the approved planned expenditure of R10.426 billion, resulting in an over-expenditure of R417.1 million. Factors responsible for negative or positive balance of more than 8% of actual drawings per programme included:

• Administration: over-expenditure of R91.7 million was mainly due to the payment of devolved funds for accommodation charges to the Department of Public Works which had not been included in the original cash flow plan submitted.
• Force Employment: under-expenditure of R86.9 million was mainly due to the outstanding payment of the internal claim to the South African Air Force (SAAF) for the Rooivalk and Oryx helicopters that had been deployed in the Democratic Republic of Congo (DRC) as part of the Force Intervention Brigade.
• General Support: over-expenditure of R102.9 million was mainly due to the payment made to the DPW for services rendered regarding the repair and maintenance programme, as well as the payment made to the State Information Technology Agency (SITA) for computer services rendered.

Discussion

Mr Marais said that the report was difficult to interpret, because there was too much to discuss and too little time to seek clarification on some issues. Percentages had not been quantified, and had been used in some cases to describe what had, or had not, been achieved. Military judges had not been appointed -- what was the progress in this matter? To what extent had that contributed to disciplinary and court cases being dismissed? Clarification was needed on inspections and internal audit services. The Department had said it had met its target on maritime defence with regard to number of times it had been to sea, but more clarification was needed.

Ms N Mnisi (ANC) commended the Department for managing its funding and spending. More clarification was needed for the high vacancy rate in the critical skills area. How much money had been spent on SITA, and what services had it rendered? 

A delegate of the Department apologised, and promised that it would work on clarification for the second quarter. It had looked into the cases of non-compliance. It would work on making sure that all allocated funds were utilised effectively. Advertising will be considered, because people needed to know the work of the Department. It was engaging with the Auditor General (AG) and the Treasury. The Treasury had indicated the need to look into the legislation of the Special Defence Account, because the account was not a standalone entity. The Chief Financial Officer (CFO) was investigating this aspect.

Mr Siphiwe Sokhela, CFO, DOD, said the exact amount spent on SITA would be sent to the Committee in writing.

The Chairperson asked the Department to submit its answers to the questions in writing to the committee. Members were also advised to submit their questions to the Department in writing.

The meeting was adjourned.