The Department of Defence (DOD) briefed the Committee on its third quarterly performance and expenditure report for the 2017/18 financial year, and also gave a presentation on the Defence Amendment Bill.
Performance indicators showed that the total number of achieved targets was significantly lower in the third quarter than in the second quarter. Expenditure was on track, although analysis showed instances of both under and over-expenditure. The delegation came in for some sharp criticism from Opposition Members for serious under-performance in relation to key security deliverables, despite high levels of expenditure in these areas. They asserted that funds allocated for key DOD commitments such as maritime operations and air search and rescue, had been diverted to other non-strategic areas. More criticism was levelled at the high ratio of expenditure on employee compensation at the expense of important capital projects, thus rendering the financial state of the DOD unsustainable.
The Defence Bill presentation raised no serious concerns, except for appeals that the proposed amendment clause around health support should investigate the growing allegations that members of the Regular Force who had retired after 1994 and who could not access health benefits, were being transferred to the Military Veterans’ database.
Third Quarter performance report
Dr Sam Gulube, Secretary of Defence, Department of Defence (DOD), said that of the Department’s eight main programmes for 2017/18, administration was by far the most dominant (70 indicators), compared to general support (nine), force employment (seven) and defence intelligence (six). The remaining four programmes -- military health support, landward defence, maritime defence and air defence -- all came in at two indicators each.
All in all, the analysis showed that for the period under review, the DOD had achieved a 61% performance rating. This was down from the previous quarter’s 73%, but this was hardly surprising given that the third quarter coincided with the end of the year. He was therefore confident that the fourth quarter results would make up for the slump. In reality, the Department had already met 70% of its non-financial performance targets, when analysed against the overall annual targets. He also pointed out that information regarding11 classified targets could not be disclosed.
An analysis of financial performance disclosed that the DOD had already spent 72% of its budget allocation, with expenditure standing at R35.517 billion. The total amount still available from the budget was R13.482 billion. Expenditure by economic classification showed over-expenditure of R136.6 million in respect of payments for capital assets (mainly software and other intangible assets), while under-expenditure of R630.1 million was reported, mainly due to savings within the accommodation charges portfolio, in addition to protracted procurement processes involving United Nations mission equipment.
Dr Gulube said he had seen no need to present the analysis for the second quarter, since it had been incorporated into the third quarter presentation.
Mr S Marais (DA) said a 61% performance score was problematic when compared against the total expenditure figure of 72%. It was an imbalance or anomaly, which suggested either over-spending or spending on non-strategic priorities. To illustrate his concern, he selected one of the performance indicators, namely the number of reserve man-days. If 97% of the Reserve Force man-days had already been spent in the third quarter, what impact would that have on the fourth quarter, especially knowing that the Reserve Force was heavily used in border patrols and also deployed for international peace-keeping missions? Did this not mean that currently South Africa’s borders were defenceless?
There were no indications in the report of the needs and requirements of the Defence Force compared to its actual capacity to meet those demands. Giving the example of Operation Arabella, which was designed for search and rescue at sea, Mr Marais said it was common knowledge that there was no aircraft at 35 Squadron to respond, that there was very limited availability of C130s, and that helicopters could go only so far, yet there was no clear indication of how far behind the Defence Force was in many areas. He also wanted to know why such a low number of VIP flying hours had been clocked - only 40% of the number target -- which was surprising given that 76% of the total Air Force budget had already been spent. This led him to suspect that money meant for the Air Force had been spent somewhere else.
Mr Marais also questioned the figures given for expenditure on aircraft charters. He pointed out the Minister of Defence had recently said in Parliament that R30 million had been spent on charters, whereas Dr Gulube’s report gave a figure of R61 million, reflecting a huge difference. This could be the reason why many planes were grounded. The same anomaly had occurred regarding the maritime indicators. The navy had spent only 31% of its targeted number of hours at sea, yet 76% of the budget was already spent. If the navy was supposed to defend South Africa’s coastal and fishing waters, what had happened to the bulk of its budget when only about a third of its work had been spent on the actual water? He asserted that this was a grave problem for South Africa.
He also referred to the under-expenditure of R228 million on force employment, which was said to be due to stalled procurement processes between the DOD and the United Nations Peacekeeping missions, of which SA was part. Citing the example of the three Rooivalk helicopters used by the UN in the Democratic Republic of Congo (DRC), he was concerned at the possibility of the aircraft being forced to come back home simply because the UN could no longer afford them.
Mr Marais reserved his strongest comments for the part of the report that summarised the DOD’s expenditure per economic classification. According to him, the whole picture revealed how unsustainable the financial position of the Department was. In stark contrast to the National Treasury regulations and the Defence Review’s 40%-30%-30% expenditure model, the DOD now stood at 59%-20%-18,8%-2,4%, with each figure in the equation representing expenditure on compensation of employees; goods and services; transfers and subsidies; and payments for capital assets. This clearly indicated that the DOD was fast going downhill and about to “hit a wall without even knowing why.” He implored the DOD to seriously consider using the thousands of hectares of unused army land to recapitalise itself, before that land was taken away through expropriation without compensation.
Ms B Dambuza (ANC) commended the DOD delegation on its monitoring and evaluation role. She asked for more information on the reported under-expenditure around software, as well as the over-expenditure on communication and advertising. She also enquired whether the problems highlighted in the second quarter report in connection with the DOD’s suspense account had since been addressed.
Mr S Esau (DA) said he had observed a large increase in the number of targets allocated for the fourth quarter -- 93 outstanding -- compared to the 36, 41 and 31 for the first three quarters. How did the DOD propose to achieve such a high number of targets in the same amount of time as the other quarters, during which the Department had achieved fewer than half that number? He also noticed a possible discrepancy around the number of deployed military attaches. The DOD’s strategy document had mentioned 46, yet Dr Gulube’s report mentioned only 44. Clarification was needed.
His next question was, if the average age for the Regular Force was 34 and for the Reserve Force 40, and given that a large contingent of the Reserve Force was utilised for border patrol and peacekeeping missions on the continent, what was the average age of the men and women deployed in these campaigns? What were the problems, if any, and what had been the performance, besides the reports of sexual abuse that had emerged?
On the UN reimbursement, which he observed was now classified – “everything problematic was now classified” -- he wanted to find out what impact the delay had had on the Defence Force itself. He also spoke about the challenges experienced by DOD staff regarding access to health services, specifically when they had to resort to private medical facilities for treatment and other related matters. Several of these employees found themselves in debt because of the accruals on their accounts.
Revisiting the Rooivalk issue, he declared that should the UN decide to withdraw the helicopters from the DRC mission, that would have serious consequences for the relationship between SA and the world body, because South African National Defence Force (SANDF) commanders in the DRC would not allow troops to engage the enemy without air support.
He was pleased to note that the Electronic Document Management system was now in place. This was a great relief since the lack of an efficient IT system had been a serious problem for the DOD.
Responding to Mr Marais’ criticisms that the DOD had spent large parts of its budget without meeting its stated targets, Dr Gulube argued that it was possible that in the first place, the targets were not aligned to the budget allocation. This was a familiar problem which he knew from personal experience. Another reason was that, because these were third quarter results for annual targets, it was still possible to achieve the outstanding results in the last quarter.
Regarding the Reserve Force man-days, Dr Gulube said that for the sake of efficient deployment of forces, 30 to 35% of the personnel called up for maritime and border patrol missions came from the Reserve Force. This would actually be the norm going forward.
He conceded that the high cost of employees was a long-standing problem, with no prospects of a solution any time soon. However, this had already been discussed at Cabinet level and was now before Parliament. He saw the issue as a South African historical legacy, inevitably tied up with the need to integrate large numbers of soldiers from different armies as part of a national project in pursuit of full demographic representativity.
To rejuvenate the SANDF, and also to align it with an annually declining budget allocation, the DOD had to exit around 10 000 army personnel over the next three years. This was no easy task, because it actually cost money to reduce the Defence Force. National Treasury had suggested a process of thorough consultation with the Department of Public Service Administration (DPSA). The idea was to work out a rejuvenation strategy and exit mechanism that could see the DPSA reduce the cost of employees. As things stood now, with the cost of employees sitting at 54% of the budget, there was practically nothing he could do as head of the Defence Secretariat to change the situation. In the meantime, the expenditure on the cost of employees continued to exceed its budget allocation by the hundreds of millions, and each financial year, he had to approach Treasury to authorise extra funds.
Mr Siphiwe Dlamini, Head of Communication: DOD, responded to a request for information
regarding the work done by the communications arm of the Department, and to account for what had led to over-expenditure. He said it was a misnomer to classify the work he did as advertising, since his section produced no adverts. He informed the Committee that during the last three quarters of the financial year, three major communication campaigns had been undertaken by the DOD. These had been the 350-year celebration of the Castle of Good Hope in Cape Town; the 100th anniversary of the sinking of the SS Mendi in 1917 near the Isle of Wight in the English Channel -- which saw the SS Isandlwana tracking the journey of the SS Mendi, and the event being presided over by Minister Jeff Radebe of the DPME as a representative of the SA government -- and President Zuma’s visit to France to commemorate the Battle of Delville Wood in 1917, where a number of South Africans had been among the fallen.
Brigadier-General Godfrey Thulare, SANDF, responded to some of the outstanding questions from Mr Marais. He said he needed more time to respond to the question on Operation Arabella. Regarding the number of VIP flying hours, he replied that the Air Force responded only according to requests, and the number of flying hours in the report therefore reflected the number of requests received.
The discrepancy between the low number of hours spent by the navy at sea and the high budget spend on maritime missions was because some of the budget had been spent on force training. The hours spent on this exercise did not count as navy man-hours, but as training. The expenditure had also included administration and all other activities of the Navy.
On the military attache question, the Brigadier-General confirmed that the number was 44, not 46. He also denied that Reserve Force members were deployed externally – only regulars were deployed both internally and externally.
Military personnel resorted to private hospitals only because the army had personnel and equipment shortages, and not for any other reason.
Regarding speculation about the fate of the Rooivalk in the DRC, discussions were still ongoing between SA and the UN on this matter.
Ms Ngam Tyibilika, Chief Director: Budget Management, DOD replied to the suspense account question. She said the second quarter problem had been resolved and the account was cleared each month.
Defence Amendment Bill
Dr Gulube presented the Defence Amendment Bill, and sketched its background. It had already been presented to Cabinet a year ago, and was now in Parliament for further discussion and approval. It sought to amend 15 clauses of the Defence Act of 2002. The amendments included:
- Formalisation of the position of the Chief of Staff of the Defence Force (Clause 1);
- Clarification of the delegatory powers of the Secretary of Defence (Clause 2);
- Provision for the Defence Force to conduct its own security vetting of service providers and contractors (Clause 5);
- Incorporation of national labour legislation into the administrative regulations governing the termination of service of members of the Regular Force (Clause 8);
- Inclusion of prohibitions of access to military areas and the offences related to them (Clause 15);
- Clarification that in order to join the Reserve Force of the Defence Force, a person does not need the consent of an employer (Clause 7).
The Chairperson said the Bill would be referred to the Parliamentary Legal Adviser to test its constitutionality. In addition, public hearings must still be scheduled. He asked Dr Gulube to give more detail on the new process of vetting of service providers envisaged by the Bill.
Dr Gulube said the current process was that National Treasury puts out bids and draws up a final short-list from which any state organ can choose a service provider ‘at face value’. The DOD now wanted to set up its own internal vetting process in order to distinguish for itself who had been vetted or not.
Mr Esau asked for clarification on clause 7, raising a concern that when a member of the Reserve Force was called up by the army, this might result in a breach of contract with his/her employer, leading to dismissal.
Adjutant-General Eric Mnisi, SANDF, replied that the clause referred only to joining the Reserve Force and was not meant to interfere with a member’s contractual relationship with his/her employer. At call-up, a member of the Reserve Force could then make arrangements with the employer to be allowed to perform the duties the army had deployed the member for.
In connection with Clause 13, which was meant to allow the DOD Minister to promulgate certain regulations around the health benefits of retired members of the Regular Force, Mr Esau drew attention to a growing problem. He said an increasing number of DOD employees who retired after 1994 were now being put on the Military Veterans’ database, which was meant for those who had retired before 1994, because for some reason the former’s health benefits could not be provided by the current Regular Force health regime. The Military Veterans’ data base had seen a huge increase as a result of this, and was therefore a source of concern.
Mr D Gamede (ANC) referred to the vetting issue, and wanted to know if those who dealt with service providers were vetted themselves as well.
The response from Dr Gulube was that vetting was really a Defence Intelligence competency. The section had systems and procedures that dealt with the various levels of security clearance, depending on the type of work being performed.
In his closing remarks, the Chairperson told the delegation that from time to time, Members of the Committee met individuals who had complaints or issues they wanted taken up by the Department of Defence through Parliament. He urged Members to forward these issues to his office so they could be investigated by the DOD. He suggested that this be made part of the ground rules of engagement, and that in the interests of good communication and accuracy of information, the release of information to the public should follow a thorough investigation.
The Chairperson also announced the draft programme details for a planned oversight visit to the Democratic Republic of Congo in late March, and urged Members to provide their input before departure.
The meeting was adjourned.
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