Department of Defence on its Annual Performance Plan

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Defence and Military Veterans

17 May 2017
Chairperson: Mr M S Motimele (ANC)
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Meeting Summary

The Department of Defence (DOD) broadly classified the 2017 situational analysis for its annual performance plan (APP) into external and internal categories.  The external category spoke to the political environment, the economy, technology, sustainable development goals, legal issues, climate change and a few other factors which ranged from the military to demographic patterns and health service delivery. With regards to the internal environmental factors impacting on the DOD and its contribution for the 2017/18 financial year, the focus was on corruption and fraud, supply chain governance and financial management.

A lot of attention was paid to the DOD’s approach to the issue of cyber-attacks and cyber warfare. It was also highlighted that the DOD, in support of the Department of Rural Development and Land Reform (DRDLR) and as a service provider to other government departments for the Youth Leadership Development and Character-building Module, planned to train approximately 2 000 youths during the 2017/18 financial year through its current departmental infrastructure and resources. An overview of the budget and medium term expenditure framework (MTEF) estimate for the DOD showed that the spending trend was geared towards the maintenance of defence capabilities, expanding and maintaining DOD infrastructure, safeguarding South Africa’s borders and territorial integrity, participating in peace support operations and establishing a cyber security institutional capacity.

The MTEF estimates for 2017/18 showed a total budget of R48.619bn, increasing to R50.61bn  and R53.966bn over the following two years. For the 2017/18 financial year, there was a projected shortfall of R36.2m, and a total of R76.9m would be spent on consultants.

Members of the Committee wanted answers on the planned over-expenditure of the Department. They asked if the Department worked in close collaboration with State Security. The feasibility of the planned training of the 2 000 youths was questioned, and the DOD was also questioned on how it was tackling fraud and corruption. The need for cyber security was highlighted. Discussion was also focused on why the Department was cutting some programmes and adding others. Questions on the local procurement policy were also raised, as was the payment of suppliers within the 30-day approved timeline. 

Meeting report

Department of Defence: Annual Performance Plan

Mr Michael Cox, Acting Chief Director: Strategy Management, Department of Defence (DOD) began with the updated 2017 situational analysis, which informed subsequent planning processes of the Department and the applicable planning processes of the public entities and organs of state. The analysis was divided into two categories, the external and internal environment. The external environment was further divided into several sub categories. In terms of the political environment, the DOD continue to defend and protect the sovereignty and the related priorities of territorial integrity, constitutional order, the security and continuance of national institutions, the well-being, prosperity and upliftment of the people, the growth of the economy, and demonstrable good governance. Regionally, the Republic of South Africa would continue to contribute to the stability, unity and prosperity of the Southern African region and the African continent in general. The DOD would continue to support resourced peacekeeping support operations of the United Nations (UN) and African Union (AU) on the African continent, as ordered by national government and the national security strategy.

Lower economic growth for South Africa was expected for the year 2017, and the weakening of the currency against major currencies would further affect economic growth. Foreign investment in the economy was expected to slow down due to political instability and the possible announcements by rating agencies. Job reductions within the traditional work force sectors, namely mining and agriculture, may contribute to industrial strikes, which would further affect the economy and the national security situation. These economic factors may slow job creation in the country, which would increasingly create the possibility of conflict emanating from the unemployed youth.

Referring to the DOD budget allocation, Mr Cox said the South African National Defence Force (SANDF) spending was approximately 1.02% of the 2017 gross domestic product (GDP). The DOD budget allocation for the 2017 MTEF may not adequately fund the SANDF’s preparation and renewal in support of the required defence commitments ordered by Government. The DOD would continue to consider the disjuncture between its current budget allocation, its level of ambition as articulated by government through the SA Defence Review 2015, the collective requirements of the UN, AU, Southern African Development Community (SADC), and its constitutional and legislative mandate.

Against the current global economic climate, the national economy and the country's fiscal position, as well as the need to fund the implementation of the South African Defence Review 2015, the DOD intends to possibly alleviate the funding burden on the national fiscus by developing alternative funding solutions for the short-, medium- and long-term defence trajectory. The Defence funding model was at an advanced stage of development and would form the basis of discussion with internal and external stakeholders to enable the identification and attraction of financial resources through various streams of revenue generation to fund the Defence portfolio. The development of an integrated DOD costing, budgeting and control tool would ensure the integrity of defence financial management moving forward as the basis of stakeholder discussions and negotiations.

Talking about technology, he reported that during the 2016/17 financial year, the DOD had developed a comprehensive departmental cyber warfare strategy aligned with the national policy regarding South Africa’s posture and capabilities related to offensive information warfare actions. It was envisaged that the cyber warfare strategy would be submitted for consideration by the Justice, Crime, Prevention and Security (JCPS) cluster Ministers for approval during the 2017/18 financial year. The DOD Cyber Security Incident Response Team (CSIRT) would be established to prevent or recover from an information warfare incident through the establishment of a Cyber Warfare Command Centre Headquarters. For the 2017/18 financial year, the DOD would address phases 2 and 3 of the Cyber Warfare Implementation Plan which entailed finalising functions and structures of the Cyber Warfare Command Centre Headquarters.

With regard to sustainable development goals (SDGs), the DOD by its legislative mandate and inherent defence capabilities would indirectly support selected SDGs into the future trajectory of defence. The DOD would indirectly contribute to Goal 16, which was to “promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.”

On the legal aspect of the situational analysis, the DOD would continue to execute its border safeguarding function by addressing security threats and vulnerabilities such as illegal cross-border movement of people, goods, services and hostile elements that threaten the territorial integrity of the state and the well-being of its people. The SANDF would be required to continually ensure that it operates within the requirements of applicable international law, implying that SANDF personnel involved in military operations would be required to ensure that all members were fully conversant with applicable international laws regulating the use of force, and would continue to improve the effectiveness of the interface between the Defence Legal Services Division (DLSD) and the State Attorney, as well as services/divisions to ensure timeous compliance with court decisions.

On climate change, the current global climate changes and the associated impact on weather patterns and conditions may result in increased regional flooding and/or drought. Government may in the foreseeable future require the SANDF to provide increasing humanitarian assistance and disaster relief during General Military Assistance (GMA) operations in the Southern African Development Community (SADC) region.

Still on the external environment factors, with regard to demographic patterns, in the envisaged world of 2030 with an estimated 8.3 billion people, four primary demographic trends would fundamentally shape the economic and political conditions in most countries and relations among countries. These trends are: ageing of populations, youthful societies and states, migration, and growing urbanisation. Demands for skilled and unskilled labour would spur global migration, and there would be a tendency for people to migrate across borders. Trans-national and crime syndicates continue to increase their illicit activities, contributing to instability. The resourced responsibility of the SANDF in terms of border safeguarding would be continued, with the deployment of 15 sub-units during the 2017/18 financial year, and would remain constant during the medium term expenditure framework (MTEF) in support of the National Security Strategy full requirement.

From a health service delivery perspective, it was foreseen that health service delivery to the SANDF may be adversely affected by the high frequency of SANDF deployments in an ever-growing complex and psychologically stressful environment. In future, this deployment frequency may lead to a higher incidence of health issues amongst SANDF members that may include emotional stress, social adjustment problems, suicide and low morale, thus influencing military commitments both internally and externally.

During the 2017/18 financial year, it was expected that student protests would remain high to ensure that the government implemented policies towards free education. An increase in social protests and service delivery protests may be expected during the 2017/18 MTEF, in the build up to the 2019 national elections. The SANDF may be required to co-operate on a more regular basis with the South African Police Service (SAPS) to ensure domestic peace and security.

On National Health Insurance (NHI), the implementation of the NHI programme would impact on the SANDF once the rollout begins. The NHI was prescriptive of what was required of a health facility to be registered, but also provides a clear indication as to what the government believes the minimum standard of a health facility should be for patients making use of public health infrastructure. Although the SANDF was not a public health service provider, it could be argued that members of the population who were entitled to access to a military health service should at least be provided with the minimum standards prescribed for the non-funded population at an even higher standard.

The DOD, in support of the Department of Rural Development and Land Reform (DRDLR), was a service provider to other government departments for the youth leadership development and character-building module, and plans to train approximately 2 000 youths during the 2017/18 financial year through current departmental infrastructure and resources. In the 2017/18 financial year, the DOD would pursue the approval and promulgation of its internship policy, which would direct the DOD in terms of the management of the internships. It was envisaged that the Department would continue with an internship intake of approximately 200 during the 2017/18 financial year.

Mr Cox told the Committee the external deployment of military personnel under the requirements of international law had necessitated the SADC to heighten awareness of the legal implications of the actions of deployed forces and a requirement for more sophisticated training, led by an objective and authoritative doctrine. South Africa supported the UN Secretary-General’s efforts to explore the needs of the next generation of UN peacekeeping missions while promoting reforms to improve planning, troop deployment, and strengthen measures to prevent sexual exploitation and abuse. During the 2017/18 financial year, the SANDF deployment in peace support operations (PSOs) in the Democratic Republic of the Congo (DRC) under the auspices of the United Nations Mission (MONUSCO) would continue, with an infantry battalion plus supporting elements, supported by Rooivalk and Oryx helicopters. Selected specialist SANDF elements, amongst them combat and construction engineers, military observers and staff officers, were deployed in and around the capital city of Kinshasa, whilst the bulk of the SANDF elements were deployed as part of the Force Intervention Brigade (FIB) in the eastern parts of the DRC.

With regard to border safeguarding, the SANDF would continue to deploy 15 sub-units to execute resourced border safeguarding in the Limpopo, Mpumalanga, KwaZulu-Natal, Free State, Eastern Cape, Northern Cape and North West Provinces. The SANDF would continue drought relief support by the provision of water bunkers to assist Provincial Disaster Management Centres through the delivering of water to communities in times of crisis and to provide search and rescue operations at sea and on land.

Referring to the internal environmental factors impacting on the DOD and its contribution for the 2017/18 financial year, Mr Cox paid attention to corruption and fraud, supply chain governance and financial management. The DOD, through its established corruption and fraud nodal point, and the implementation of the approved DOD management of anti-criminality policy, would continue to manage issues relating to corruption and fraud ranging from awareness training to the structured reporting of incidents through the ‘whistle-blowing’ mechanism and other established departmental channels.

The DOD supply chain governance framework would provide a policy framework for all policies related to the Defence supply chain management that would be implemented during the 2017/18 financial year. The DOD procurement policy would support the procurement of commodities from local suppliers and contribute to supporting Small, Medium and Micro Enterprises (SMMEs) in the areas where the SANDF was deployed. The absence of an integrated Financial Management System (FMS), with a lack of appropriate technical support for the outdated FMS, remained an on-going departmental risk. The DOD would continue to strive to pay legitimate invoices within 30 days through its invoice tracking system.

Referring to the 2015 Defence Review, he said the approved DOD strategic plan (2015 - 2020) provided focus to the process of implementation over the first milestone  period of arresting the decline within the available resource allocation. The plan to arrest the decline of the SANDF would be addressed by identification of the minimal cost-driven interventions that would improve efficiencies and effectiveness within the DOD and the identification of cost-driven funding interventions for those capabilities that were required to support existing ordered operational commitments. The calculated cost implications for the deliverables identified to arrest the decline in the DOD had also been scheduled over a period of seven years, starting from the 2017/18 financial year. During 2016, the DOD had completed the ‘DOD Plan to Arrest the Decline,’ which had been approved on 7 March 2017. This plan was fully costed and contained five work packages that would inform the departmental focus over the remainder of the current MTSF and the subsequent MTSF period.

The approved DOD Plan to arrest the decline would form the basis of a strategic level negotiation process between stakeholders, the DOD and National Treasury (and other stakeholders where so identified) to ensure the appropriate resourcing of the defence portfolio. In addition, this plan would also inform the development of the national mandate paper that would guide both government’s and Parliament’s resource allocation from the fiscus to Defence. Notwithstanding this, the DOD would continue to implement the interventions that could be achieved within the MTEF defence allocation.

During the 2016/17 financial year, the DOD had encountered various challenges that hampered the achievement of the Department’s mandate and could possibly continue to impact on the performance delivery of the defence portfolio during 2017/18. The challenges include the reduction of the compensation of employees (COE) ceiling by R1.897 billion for 2017/18, R2.912 billion for 2018/19, and R4.809 billion for 2019/20, which may have an adverse impact on the ability of the DOD to achieve its constitutional mandate and the security of the country. The DOD was not able to reduce members due to the absence of a viable exit mechanism to exit those members no longer meeting the operational profile of the SANDF. Approximately 50% of the regulars in the DOD have a contract until retirement age, and can not be exited without a viable exit mechanism. The Commander-in-Chief (government) had also not reduced the operational commitments of the SANDF, and therefore the SANDF can not withdraw from its ordered commitments without Cabinet approval. The DOD would continue maintaining an average strength of 77 500 and a reserve force of 2 700 000 to execute its mandate throughout the 2017 MTEF.

The University Reserve Training Programme (URTP) was one of the mechanisms in the SANDF that seeks to address the ageing of the current Reserve Force members and provide a sufficient number, as well as improving the quality of junior leaders in terms of both officers and non-commissioned officers. The short-term focus of the South African Army was to ensure that members currently in the system complete their functional and corps training and that appropriate candidates were offered core service system contracts. The lack of an integrated DOD human resources information technology (IT) system, as well as the ageing departmental human resources PERSOL system, was another challenge which hampered the DOD during 2016/2017 financial year. Due to prevailing resource constraints, progress with the development and promulgation of the DOD corporate governance of information and communication systems policy was not made during the 2016/17 financial year.

An overview of the 2017/18 budget and MTEF estimates for the DOD showed that the expenditure trend was geared towards the maintenance of defence capabilities, expanding and maintaining DOD infrastructure, safeguarding South Africa’s borders and territorial integrity, participating in peace support operations and establishing a cyber security institutional capacity. The MTEF estimates for 2017/18 showed a total budget of R48.619bn, for 2018/19 the estimates show a budget of R50.610bn, while for 2019/20 there was an estimated budget of R53.966bn. For the 2017/18 financial year, there was a projected shortfall of R36.2m, and a total of R76.9m would be spent on consultants.


Mr D Gamede (ANC) began his engagement with the DOD by saying the Department was making plans for a policy which was not implementable. He was referring to the DOD’s plan to employ 2 000 youths. He was very confident that policy was unrealistic and would not be implemented. He pointed out that in the organogram of the Department, the Deputy Minister was not represented and he though it looked inconsequential, it may have unintended consequences for the Department. He was not happy the Department was planning for over-expenditure instead of thinking of ways to deal with overspending. He advised the Department to plan with the available resources, and not with unseen resources. He wanted the Department to set targets within a shorter timeline than 30 days to pay suppliers, as this was impacting negatively on small and medium enterprises (SMEs). He wanted a clearer policy statement on local procurement plans. Referring to defence intelligence, he expressed his worry on the approach being adopted by the Department, and wanted to know if it could work hand in hand with other relevant departments to share intelligence.

Mr S Marais (DA) agreed with Mr Gamede with regard to policies which were not implementable, referring to them as “pie in the sky plans”. He drew the attention of the DOD to the economic outlook of the country. Recalling the position of the CFO in an earlier presentation made on 12 May 2017, he was of the view that since the economy was not growing, the defence needs of South Africa had changed and therefore the DOD would not get the Defence Force it required. He wanted to know who was driving the cyber warfare initiative, and the financial implications for the budget of DOD. He pointed out financial management with respect to the payment of suppliers within 30 days, and other financial commitments, where there had been missed targets. He raised concerns about the deviations in the budget of the DOD and wanted an explanation on how this impacted on the defence of the nation. He did not appreciate the fact that the DOD always came to the Committee with a budget proposal which spoke to things they planned to do, but not things they could do. In his opinion, the only way the Committee could assist the DOD was if the DOD told the Committee what it could do and not what it planned to do.

He also spoke about the deployment of South African troops outside of South Africa. In his opinion, this did not contribute to the defence of the territory of South Africa and should not be a priority for the DOD, since it had financial implications. He noted the huge reduction in the budgetary allocation for air defence. He wanted to know how the DOD intended to work with the current budget with respect to border control, since there were cuts in the budget. He also asked what kind of defence force was needed in current day South Africa.

Mr J Skosana (ANC) talked about cyber security and wanted to know the plans of the DOD to contribute to the collective effort of the security cluster in fighting cyber crimes. He wanted to know the plans being put in place by the DOD for the implementation of the NHI. On the increase in fraud and corruption in the Department, he wanted to know the plans put in place by the Department to fight this trend.

Mr S Esau (DA), referring to the funding model presented by the DOD, said that there was no mention of plans for revenue generation by the DOD, and this affected a couple of its operations and joint ventures with other countries. For him, this was a very serious concern which had to be considered. He said there were deficiencies and a lack of coordination between the departments responsible for securing all border posts and border control. Talking about enterprise risks, he was of the view that there had been no commitment or indications in the budget to boost the morale of soldiers. He also commented on the increase in fraud and corruption. He wanted to know the exact position of the DOD on the high increase in litigation and the contingencies put in place to address these cases, and the measures put in place to ensure the success of these cases. He asked for a report from the DOD at the next meeting which would address the issues he had raised.

On the disciplinary cases, he asked about the problems casing the delays and why the performance was so poor. On the issue of the health care facilities, he stressed the need for the DOD to offer better services to the soldiers. What was the status of the military bases? He was of the view that the Military Discipline Bill should be speeded up because it was important to maintain discipline in the military. He asked how the huge reduction in the programme of air defence impacted on the pilots. This had made some of the pilots exit the air force to join commercial airlines, to keep their licences operational.

Mr Esau talked about human resources and the packages being offered to people when they exited the force. He wanted to know why the Department was highly dependent on consultants, because there had been a huge increase in their usage. What was the status of the military cases and judges? Why was there an increase in the budget for regional security? What were the implications of the reduction in the defence intelligence budget? Where would the huge increase in the maritime budget be used? Why was there a huge increase in the outsourcing of military intelligence? He also spoke about the issue of crime, corruption and fraud, and sought clarity on the procurement policy of the DOD. He stressed the importance of information communication technology (ICT) to the Department. Other issues raised were the compensation of employees, the impact of the reductions in air combat activities, the launch date for the maritime defence base, and the impact of the budget reductions on defence intelligence.

DOD’s response

Dr Thobekile Gamede, Deputy Director General: Defence Policy, Strategy and Planning Division, DOD responding to the issues of cyber security, confirmed that the DOD was working in close collaboration with state security, and said that it contributed to the programme of action and worked with all the departments in the security cluster. There was a common problem of funding among the various departments, and this had been raised with all the Ministers in the cluster. The departments in the security cluster were currently working on the total cost required for the cyber security framework which would be submitted to the cluster Ministers.

On the issue of exiting members, she noted this was a challenge in all government departments, since the budget cuts run across all the departments in government. The Minister of Public Service and Administration was working with National Treasury to come up with a strategy that would guide all departments on the issue of the HR budget bill. She told the Committee she would not be able to comment more on the issues related to the HR budget.

On the employment of youths, what the DOD did was provide support to the Department of Rural Development and Land Reform by providing a character module, which was done on a cost recovery basis.

Brig Gen T Kundu, Director: Planning, DOD, responding to the issue of the national youth development and the possibility of implementing the policy, argued that it was very much achievable and the numbers would be doubled by the time the DOD presented its annual progress report to the Committee. He told the Committee that spare instructors or trainers in the DOD were being used for the plan.

On the reduction of the flying hours, he told the Committee the DOD and defence forces were instruments of government indebted to the guidelines set out by government, particularly on planning, programming and risk management. The DOD was regulated not only by the Public Finance Management Act (PFMA), but also by the resultant Treasury regulations and frameworks. There was a trilateral arrangement between the Presidency and National Treasury on selected performance indicators which determined if these indicators would be increased or reduced. In terms of the flying hours, the baseline information showed that the DOD had not being meeting the 5 000 flying hours threshold, but more than 4 000 hours had been achieved, and in the previous year about 3 800 flying hours had been achieved. The trilateral partners had been informed about the risk of compromising the maritime and air combat capabilities if these hours were reduced. The annual report would detail this information.

On the issue of border safeguarding, the government was developing and would promulgate a border safeguarding strategy. The training of the coast guards must be done by the appropriate authorities and the guidelines for this developed. Only when this was done could the entities approach the Department. At that stage, the Department would then be able to determine its level of involvement.

On the issue of the 15 sub units on the border ground and other sub units, the rotation system had been applied. There were 15 sub units which were involved in the normal force training activities.

With regard to the defence budget, the plan was to come up with creative measures to reduce the negative impacts. On the issues of fraud and corruption within the DOD, there was an anti-fraud and corruption strategy in place within the DOD. There was a nodal point that consisted of various participants and the military police.

On the reserve percentage, there had been some reprieve for the DOD, especially with regard to the withdrawal of some troops from foreign combat missions.

Dr Gamede responded to the issues raised with regard to the omission of the Deputy Minister on the organogram, and promised to look into the matter. With respect to the issues raised on the NHI, she said it was not a challenge, but it might impact on the DOD because there was no minimum standard prescribed. However, the DOD was prepared to implement the policy whenever it became implemented.

On the issue of the local procurement policy, she said that the policy would guide how procurement would be done within the local communities, since the aim was to support the local communities housing the military bases. She also spoke on the issue of fraud and corruption within the DOD, and said there was a fraud and corruption plan which stated the clear actions to be taken to prevent it and how to deal decisively with it if it happens. On the payment of suppliers within 30 days, there had been no change, but the Department was working hard to meet that target.

Mr Siphiwe Sokhela, Chief Financial Officer: DOD, said the issue relating to the payment of suppliers within 30 days was a sensitive matter. The problem there was the legacy system of the DOD. The system was not fully compatible with the requirements of the PFMA. The DOD had formed a committee of all the relevant stakeholders to meet monthly to ascertain the level of improvements made. The medical area was the most impacted area. He told the Committee the DOD was doing all it could to make these payments within 30 days. A task team, which was a committee of Directors General, had been set up to assist the DOD with these payments. He highlighted that if the current system used by the DOD was still in place, 100% attainment of the target would not be met. The DOD had not migrated to the new system when all the other departments migrated.

He said there was a need to find a way to avoid unauthorized expenditure, so the DOD moved funds around within its programmes. With regard to a local procurement policy, this would be in line with the approved guidelines of the National Treasury.

Maj Gen Malungisa Sitshongaye, Chief Director: Strategic Direction, Policy and Planning, DOD referred to the issue of over-expenditure, and said the Department did not plan for this. Referring to the budget cuts, he said this also affected the issue of personnel compensation. The DOD was in constant engagement with National Treasury as it affected personnel compensation and other labour-related issues. A tool was supposed to be developed to address these issues, but to date this had not been done by National Treasury.

Mr Esau put forward a follow up question on the exiting of soldiers from the army, noting that the directives given by National Treasury dated back and there was no need for setting up committees with unimplementable policies.

Mr Gamede was not convinced by the responses received with respect to the budget and overspending. He advised the DOD to make plans within its allocated resources.

Dr Gamede responded to that by saying there were no plans to overspend, but the overspending was a projected one which would be tied to human resources only. The DOD was working on a funding model, and this would be presented to the Committee as soon as it was ready. It would help in getting a clearer picture of some of the issues currently raised.

The meeting was adjourned.

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