The Department of Defence and Military Veterans briefed the Committee on its 3rd Quarter expenditure and performance report. The targeted spend as at 31 December 2018 was R470.3 million but only R322.3 million (69%) was spent. The Cost of Employment (CoE) was 1% over budget due to imbalances on the Department of Military Veterans (DMV) organogram. Despite the overall underspend, there were cost pressures on Education Support and Healthcare and Wellness Support. Of the 11 targeted performance areas, five targets were achieved which was a 45% overall achievement for Q3.
Of the various benefits provided by the DMV, only 1% was spent on Compensation for Injury in Military Service, 6% on Social Relief of Distress, 10% on Housing, 11% on Skills Development; while Burial Support at 154% was over budget. 51% of the total budget was spent whereas the target was 75%. In Program 1: Administration, the Department achieved 40% of its targets. In Program 2: Socio-Economic Support (SES), the Department achieved 50% of its targets. In Program 3: Empowerment and Stakeholder Management (ESM), the Department achieved 50% also. The Department provided Human Resource transformation/ equity statistics for its permanent and non-permanent employees of which 93% and 98.5% respectively was African.
Members asked which posts still needed to be filled; when would they be filled; and when would the organogram be reviewed so that posts could be filled. Members said the SITA was a disaster and the Department should not use the SITA, as ICT was important to provide benefits for Military Veterans. Members said the Department could not shift money to healthcare and education support just because there was pressure to do so, unless and until they had the funds to increase the health and education parts of their budget. Members said there had been no movement in the amount of verifications done which remained at 43%. Members asked if there were contingency plans in place for late invoicing; if there were contingency plans if applications for burial funds became more than what was budgeted for; what was the backlog on burial claims; And what was the target to be reached in the 4th quarter. Members said Military Veterans were not getting information on how to access information And asked if employment equity was in line with policy; whether there were contingency plans in place for litigation costs in case one of the Departments’ cases had a serious impact on the budget; and what amount of military veteran’s housing funds in the Free State Province had vanished. Members said there were claims that the deliveries of services and benefits to non-statutory forces were better than that to statutory forces. What could be expected in this regard? Given that the budget for the year was announced, what was the outlook for the sustainability of the Department and the chances of the Department achieving its targets? How would the budget impact on programs?
Members wanted the DG to touch on the issues of the NSFAS (National Student Financial Aid Scheme) account, IT Governance, performance management, the amendment of current regulations, and irregular and fruitless and wasteful expenditure. Members asked what the bottlenecks were regarding the lack of verification guidelines and why the Department did not have them. Members said the SITA was being sabotaged and the next Parliament should give SITA time. Members cautioned that the Department was not doing well on their HR status regarding people with disabilities and therefore the Department needed to be seen to be doing something on disabilities. Members said 126 investigations still needed to be finalised and the overall performance of the Department was very low. The Committee appealed to the Department to investigate and put measures in place so that the 4th quarter results could improve.
Briefing by the Department of Military Veterans on their Q3 Performance
Lt. General D Mgwebi, Acting DG, said the targeted spend as at 31 December 2018 was R470.3m which was 75% of the total allocation of R627.1 million but only R322.3m (69%) was spent. The Cost of Employment (CoE) was 1% over budget due to imbalances on the Department of Military Veterans (DMV) organogram. This necessitated the use of contractors and interns to overcome the imbalance in structure and to ensure continuous delivery of service and hence the noticeable cost pressure on the CoE. He said the DMV was in constant communication with the National Treasury on lifting the ceiling on the cost of employment. The underspend on Goods and Services and Transfers and Subsidies was driven by less than expected delivery of key services as well as delayed payments on administration services such as the SITA (State Information Technology Agency), ICT support, and travel invoices.
Despite the overall underspend, there were cost pressures on Education Support and Healthcare and Wellness Support. Of the 11 targeted performance areas, five targets were achieved which was a 45% overall achievement for Q3.
Of the various benefits provided by the DMV, Lt. General Mgwebi said only 1% was spent on Compensation for Injury in Military Service, only 6% on Social Relief of Distress, only 10% on Housing, only 11% on Skills Development; while Burial Support at 154% was over budget. The cost pressure on Education Support and Healthcare Support were due to accruals from the previous financial year. This cost pressure was also driven by the increase in demand for Education Support and the submission of prior year invoices by the Department of Defence on Healthcare Support. He said 51% of the total budget was spent whereas the target was 75%.
Lt. General Mgwebi said in Program 1: Administration, the Department planned to achieve five targets during the 3rd quarter and two were achieved which was a 40% achievement. In Program 2: Socio-Economic Support (SES), the Department planned to achieve two targets and one target was achieved which constituted a 50% achievement. In Program 3: Empowerment and Stakeholder Management (ESM), the Department planned to achieve four targets and two targets were achieved which constituted a 50% achievement. The Department provided Human Resource transformation/equity statistics for its permanent and non-permanent employees of which 93% and 98.5% respectively was African.
Mr S Esau (DA) said he had asked about the turnaround strategy previously and the measurement of the Department’s performance against it. He knew that the Department would not present a good performance report in the third quarter because all the SLA’s (Service Level Agreements) were not in place as yet and because not all the posts had been filled. Which posts still needed to be filled and when would they be filled? When would the organogram be reviewed so that posts could be filled, as this was hampering the Department in attaining its goals? The SITA was a disaster and the Department should not use the SITA, as ICT was important to provide benefits for Military Veterans.. ICT skills should also be developed in-house. The Department could not shift money to health and education just because there was pressure to do so, unless and until they had the funds to increase the health and education parts of their budget. There had been no movement in the amount of verifications done which remained at 43%. Even if government placed Military Veterans under the pension scheme there would be no impact because of a lack of verification. Were there contingency plans in place for late invoicing? Housing also had a backlog of invoices. He said capacity was the issue regarding skills development. He asked if there were contingency plans if applications for burial funds became more than what was budgeted for. What was the backlog on burial claims? What was the target to be reached in the 4th quarter? Military Veterans were not getting information on how to access information. He asked if employment equity was in line with policy and whether there were contingency plans in place for litigation costs in case one of the Departments’ cases had a serious impact on the budget.
Mr S Marais (ANC) asked what amount of the Military Veteran’s housing funds in the Free State Province had vanished. He said there were claims that the delivery of services and benefits to non-statutory forces was better than that to statutory forces. What could be expected in this regard? Given that the budget for the year was announced, what was the outlook for the sustainability of the Department and the chances of the Department achieving its targets? How would the budget impact on programs?
Ms B Dambuza (ANC) wanted the DG to touch on the issues of the NSFAS account, IT Governance, performance management, the amendment of current regulations, and irregular and fruitless and wasteful expenditure. She asked what the bottlenecks were regarding the lack of verification guidelines and why the Department did not have them. She said the SITA was being sabotaged and the next Parliament should give the SITA time.
On the turnaround strategy, Lt. General Mgwebi said they had tried to incorporate the turnaround strategy and the most important thing was continuity and a stable strategic leadership needed to be in place. He said the post of DG was being advertised and a new DG would be in place when the new Parliament started. He said the challenge of having new people coming into the post was that the people coming in would want to interrogate the organogram. The service delivery model was also integrated and the Department was expected to move forward in this regard. Some MOUs and SLAs were just lying around not being serviced and not being prioritised. There was one on health but in looking closer the Department saw that they had their own challenges and SA military Health Services would not be able to deliver services to military vets. The Department had sought out alternative health service providers and were close to finalising that and had already briefed the Minister on this matter.
On NSFAS, he said a person had been appointed in Cape Town to deal with the military veterans students at NSFAS offices. There was no problem dealing with the established universities, but it was the TVET colleges that the Department was struggling to deal with. The Minister had assisted with linkages to the Minister of Higher Education to look at setting up MOUs between the Departments and to tap into the Skills Fund in terms of the skills gap.
On an increased spend on administration, while there was a decrease in spending on benefits, the DMV audit committee had raised the same point and this needed to be looked at by the Department.
On the position regarding strategic posts not filled, he said the DG post was advertised. One DDG post for socio-economic support was vacant. The appointment was at the Cabinet memo stage. The Department was waiting for the person to accept the post for Chief Director: Policy and Research; the post for Chief Director: Empowerment and Skills Development was at the short-listing stage and should be completed by the end of April. The Directors for Policy and Internal Audit were already in place. The post for appointment for Director: Benefit Support Services should be done by the end of March.
He said the Department noted the Committee’s comments on the SITA and had had engagements with the SITA and Treasury.
On where money was budgeted for and shifts of money within the programs, Lt. General Mgwebi said performance wise they were spending money where it was not meant to be spent and this was a challenge.
On the verifications process, he said there were currently 4 000 military veterans. A DMV verifications committee was established, and guidelines developed to assess whether applicants were military veterans or not. Of the 4 000 the Department estimated 1 500 verified because the rest were missing documents. The matter would be reported back to the individual and to the relevant association.
On the 30-day payment rule, Mr Sibongiseni Ndlovu, Chief Financial Officer (CFO), the Department of Defense and Military Veterans said the main issue on non-compliance was where there was a high volume of invoices on travel and accommodation and the use of manual systems to capture the information. A tracker had however been developed to keep track of invoices. Other issues were the non-use of LOGIS, which had been given by Treasury, but had not been used at all. The Department had a plan to use this going forward.
In terms of financial projections, Mr Ndlovu said the Department was at 51% spend at the end of Quarter 3. Program spend currently stood at 66% but this would increase to 87% by the end of the financial year.
He said the AG had reminded the Department of Consequence Management. The Department however needed to be fair and transparent. It had identified one Department, the DPME (Department of Performance Monitoring and Evaluation), which could assist the Department in the consequence management process instead of using consultants. Members from this Department would take over the process and allow the accounting officer to institute procedures against the people involved.
Lt. General Mgwebi said that, as a Department, it should not be outsourcing this work, but there had been a reluctance to do the work by the officials because of a lack of experience. The DPME would be doing the procedure together with Department officials involved so that they could learn how to do the process and be empowered to do the process themselves within the Department.
On the Free State Province matter, he said it had happened in Welkom amongst the AZANLA (Azanian National Liberation Army) and APLA (Azanian People’s Liberation Army) bodies. They wanted to know the value of housing contracts and had not been happy with the Service Provider (SP) because the SP had not subcontracted them to do work on the project and so work on the project had stopped. A similar thing happened in Port Elizabeth where military veterans said the contractor was not awarding subcontracts to military veterans and nothing had happened in terms of housing in that case also. In Gauteng the Department was trying to learn from those events and engaging with military veterans to incorporate them into subcontracts.
On the National Skills Fund (NSF), Lt. General Mgwebi said it was a challenging issue because Skills Fund members held the view that they had not been treated equally. It was a question of explaining to them how things worked. They had a house but would ask for a house based on the fact that they were Military Veterans. They also wanted to deal directly with the Department yet as a product of the SANDF they needed to go via the Council for Military Veterans' Organization (CMVO) and then through SAMVA and it was a challenge engaging them.
On strategy and planning there was a need to refine the Department’s strategy and program performance indicators to be realistic and smart.
Mr Ndlovu said that for this year there were already cost pressures from health and education spending. Had the Department been operating efficiently with all systems in place there would have been added pressure on the budget. The same trend would apply for the next financial year, but it might be possible to shift certain cost pressures via integration with other national departments like for example, transferring education beneficiaries to the Department of Higher Education and Training. He said half of the students had applied to be transferred while the rest appeared to prefer the DMV. Health care needed to find other efficient initiatives like subscribing to medical aids or making use of the government national health service. Therefore, before the next financial year the Department needed to prepare the direction it would take because the APP (Annual Performance Plan) was under cost pressures.
On the issue of communication at the regional and local levels, Lt. General Mgwebi said it was correct that there was a need to work at the local and regional levels so that these levels could communicate with their members. The challenge was that the structures there were not necessarily empowered to deal with these matters and SAMVA (South African Military Veterans Association) needed assistance of the Department to communicate with their own members at the local level.
On skills development, he said the Department had taken note of and had engaged with the relevant structures. It had also engaged with business partners because these business partners had come to realise that military veterans were also a special group insofar as procurement was concerned. The Department had approached the Department of Public Works on assisting in renovating government buildings and as part of the skills development fund.
On demographics, it was difficult to find races other than African. The other races were not there at meetings or did not respond to advertisements. Demographics were a challenge.
People had come to realise that there were benefits available at the DMV and so they were coming to get the benefits via refunds if they had used their own money.
Lt. General Mgwebi said security was a challenge. A contract had been lost and the Department was working on a month to month basis. The Department was also looking at moving to a new building to house itself. The building they were currently occupying did not have enough space. The Department was trying to manage performance management. The policy framework of the Department had been put in place and in the process the Department had picked up areas where there were no policies in place. The Department was also looking at a skills audit.
The Chairperson said the Department was not doing well on their HR status regarding people with disabilities. The Department should note that the policy had shifted from 2% to 7 %. The Department needed to be seen doing something on disabilities. 126 investigations still needed to be finalised
Mr G Skosana (ANC) said the overall performance of the Department was very low. He asked what measures had been put in place so that the 4th quarter results could improve.
Due to another meeting scheduled to use the venue, this meeting was adjourned.
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