DMV & Armscor 2021/22 Annual Performance Plan and Budget for 2021/22

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Defence and Military Veterans

11 May 2021
Chairperson: Mr C Xaba (ANC)
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Meeting Summary

Annual Performance Plans
ATC201202: Budgetary Review and Recommendation Report of the Portfolio Committee on Defence and Military Veterans on the 2019/20 Annual Report of the Department of Military Veterans (DMV), Dated 2 December 2020
ATC201202: Budgetary Review and Recommendation Report of the Portfolio Committee on Defence and Military Veterans on the 2019/20 Annual Report of Armscor and the Castle Control Board (Ccb), Dated 2 December 2020

The Committee was briefed by the Department of Military Veterans (DMV) in a virtual meeting on their annual performance plan for 2021/22 financial year, and also received a presentation from ARMSCOR on its corporate plan and 2021/22 budget.

Members expressed concern over the lack of responses from the DMV to their questions in the meeting. They also advised the Department to adopt realistic targets that could be achieved, taking into account the budget cuts. The Committee was told that the DMV sought to continue providing burial support services for military veterans, recognising and honouring them posthumously. Members asked about the role being played by the Presidential task team, as it seemed as if they were taking over control of the Department. The DMV denied that the presentation made to the Committee had been influenced by the task team. The Department had experienced employees, and what might be lacking was the leadership that was needed to coordinate and work well with the team, so that their attitude could change.

ARMSCOR reported that it was financed mainly through income appropriated by Parliament and received via the defence budget, and was payment for services rendered to the Department of Defence. The funding amounted to 79.5% of the budget, and was not sufficient to sustain the capabilities required, and was supplemented by income from commercial services rendered (13,1%), investment income (3,3%) and other income (4,1%). Some of the issues that had been reported to Parliament had been attended to, and there had been progress. Memorandums of understanding (MoUs) had been signed, and this was positive. However, the maintenance of submarines and the dockyard was still an issue, and Armscor had realised that they were being charged exorbitant amounts for spares. Through consultations, they had now discovered new channels that were cheaper, and were looking at maximising their budget.

Meeting report

Department of Military Veterans: 2021/22 Annual Performance Plan

Mr Sandisa Siyengo, Chief Director: Research and Policy Department, Department of Military Veterans (DMV), said the Department had been working on an updated situation analysis on the external environment. Working to actively integrate military veterans in communities through integrated human settlements planning, this would assist in working together for the attainment of shared goals, designed and agreed upon to improve the living conditions for all citizens. Through honouring and memorialisation of military veterans’ lives through the archiving of their stories, this would assist in re-writing the history of the struggle, as well as leaving a strong legacy for future generations.

The DMV Infrastructure and the core systems and applications had a lot of limitations, and as a result the Department was planning on optimising its operations and services through the use of digital technologies. The Department had planned technology investment, initiatives and improvement plans, and this was due to its limited information communication technology (ICT) infrastructure and devices that were obsolete. Critical ICT-related projects included the establishment of well-connected and secured and geographically widespread networks, connecting all the nine provincial offices to the main head office network.

In the internal environment, they have been ensuring that there was enabling legislation, regulations, policies, relevant systems, infrastructure and organisational design to ensure an effective and efficient functional Department, with capable human capital that would assist in improving service delivery to the military veterans’ community. It was working on its gender mainstreaming as a key catalyst in achieving the 50% equal opportunity for women as stipulated in the strategy 2030's developmental goals.

In terms of the beneficiary support services (BSS), the directorate was responsible for receiving a new application of a force member who retired from the army and wanted to be included in the national military veterans’ database. After receiving the application form with the required documentation, the BSS would confirm the information on serving from the Department of Defence human resources (HR) section. The results would be approved or not approved, based on the content of the information on the application form. The BSS would either approve or reject the application.

There had been finalisation of the housing policies, a review of the memorandum of understanding (MoU) with the Department of Human Settlements (DHS), and service level agreements (SLAs) with the provinces. Relations had been strengthened with stakeholders participating actively in the establishment of project committees as well as the monitoring of projects. There had been a follow-up on a request to the Ministry to issue a directive to allow the DMV to provide the housing benefit to widows and orphans, to align the branch to the prioritisation of women and children. The DMV would do proper profiling of applicants for housing to ensure that people with disabilities were identified earlier, to ensure that their houses were disability friendly.

The DMV sought to continue to provide burial support services for military veterans, recognising and honouring  them posthumously. It facilitated and coordinated the identification, protection and maintenance of liberation struggle military veterans' graves, in collaboration with the relevant line function departments.

Sections 7, 10 and 20 of the Military Veterans Act establish three organs of state. These were the National Military Veterans Association, the Advisory Council and the Appeals Board. Despite their existence since 2013 for the National Military Veterans Association and for five years from 2015 for the Advisory Council and the Appeals Board, these plans had not been developed, whilst funds had been expended. These statutory bodies of state were required to have cost-linked medium term expenditure framework (MTEF) planning instruments to enable strategic budgeting. The administrative process that was initiated in 2013/14 to realise the recognition of these in terms of the schedules of the Public Finance Management Act (PFMA) remained an unfinished task. Further formalisation of these governance protocols would be achieved through the delegated legislation that was currently being developed to give substance to section 24 (2) of the Military Veterans Act 18 of 2011.

The DMV`s mandate was to facilitate delivery of benefits and coordinate all activities that recognise and entrench the restoration of dignity and appreciation of the contribution of military veterans to the country's freedom and nation building, which made the Department a recipient of services from different government departments through the agreements entered into. It had partnered with front departments which were currently implementing the service delivery projects at the district level.

In the meantime, it was engaging intensively on this model for the delivery of benefits to military veterans and their communities. The DMV's 2021/22 APP would form the basis for measuring the performance of the Department.

The critical success factors for high performance were a well-structured and staffed organisation housed in good facilities with the best policies and systems, including ICT systems. The whole government approach would go a long way in assisting and supporting the Department to progressively realise the national mandate to serve military veterans who qualify for benefits and support services.


Mr T Mafanya (EFF) wanted to know if the revised approach was an outcome of the presidential task team, or the incompetency of the Department. What had been the input of the presidential task team in the presentation? He asked about the issue of offices around the country, because there were inconsistencies from the Department and the Deputy Minister, since the presentation had stated that there were offices around the country. He also asked if there had been any improvement on the issue of incompetence within the Department.

Mr M Shelembe (DA) was of the view that the presentation had some good points, but he was also concerned about the issue of offices around the country, and asked if the offices around the country were accessible and which provinces they were located in. He said that the timeframes were not highlighting when the offices would be working again and what services would be available for military veterans so that they could avoid running around. Mr Mafanya had said that there were a number of military veterans who were not able to access their services, and it was very concerning. The Department should be able to take care of these issues because they had been raised before, and there was no need to continue with correspondence without action being taken.

He was of the view that nothing would change from the Appeals Board, because the board was under the Department and they were in charge of the funding, which meant that it would be difficult for it to be transparent and fair.

Mr Mafanya asked if the issue of the budget could be addressed. The Committee should know the current economic status of the Department.

Mr S Marais (DA) started by commending Lt Gen Derrick Mgwebe, the Director-General, for what he had done. The reality was that if any policy was not funded, then there was no impact and it would not work. Money and time would be wasted, which meant that there would be no benefit to the DMV and there would come a time when the Department needed to work on the reality of the situation and look at the recommendations from the presidential task team. Mr Marais raised his concern for the DMV, because of how the Committee had trusted it, but the presidential task team had shown it the middle finger, and this meant that everything was now centred on the task team. He wanted to know how the task team was going to affect the Department, as it came across as the superior body that determined everything that happened within the DMV, so it would be good to have the task team appear before the Committee.

Mr Marais asked about the offices, and said that he was confident that there had been an office in the Western Cape, and he wanted to know why it had disappeared, as this was affecting military veterans. He also asked if the Department was considering receiving advice from statutory and non-statutory forces on the acknowledgement of previous service. The Committee was aware of the budget cuts, and there was no point in discussing the wonderful ideas without any sources of funding.

Ms A Beukes (ANC) raised a concern on the fact that there was a long list of vacancies, which was worrisome. She wanted to know the timeframe for the appointments to these positions. She also asked about the planning of the Department with sister departments, because this was always mentioned but nothing concrete had come out of it.

Mr T Mmutle (ANC) said that if the mandate of the Department was to provide presentations, they would receive a gold star, but unfortunately their presentations did not translate to what was needed by the military veterans on the ground. Taking this into consideration, what the Department was doing to serve military veterans was worrisome. He referred to the high rate of unemployment, and wanted to know why the Department was slow in filling the vacant posts so that they could contribute to the employment growth rate in the country. He also emphasised that the Department could not hide behind budgetary constraints, because they had previously failed to meet their targets. For instance, the delivery of housing had been reduced from 1 000 because of their inability to deliver. He urged the Department to look into the serious service delivery issues, and not to blame everything on the budget.

DMV's response

Lt Gen Mgwebi told the Committee that the presidential task team had been set up by the President after a number of concerns had been raised by military veterans, and a march that took place in November 2020. The veterans had wanted socio-economic integration and a certain amount to be ring-fenced, and they wanted access to health care services for their families because at the moment, their dependents were not covered. Some of the concerns were also related to the education bursaries. The Department did not have the power to offer financial support in any way. The task team had been established to work with the military veterans, and the Department was there only to assist and facilitate the team so that everything ran smoothly in addressing the veterans' concerns.

Lt Gen Mgwebi said the presentation made to the Committee was not influenced by the task team. The DMV had experienced employees, and what might be lacking was the leadership that had to coordinate and work well with the team so that their attitudes could change.

Ms Nontobeko Mafu, Deputy Director-General (DDG): Empowerment and Stakeholder Management, DMV, said that the presenter had made an error, because only three provinces did not have offices. East London had an office, together with Bloemfontein, Nelspruit, Mafikeng and Mpumalanga. Through the Department of Public Works (DPW), offices had been acquired in KwaZulu-Natal (KZN). The Department had to embark on a service delivery model so as to have a mandate for the offices because they wanted to decentralise most of the work so that the national office would deal with major issues, and there was a pilot system for the education support. The Department had approached some provinces so that they could strengthen their work and provide services to military veterans in the different provinces, and presentations had been made in other provinces. The reason for these presentations was to assist military veterans with information so that they could be assisted efficiently. She said that each province had three bodies that dealt with the veterans' issues.

The Chairperson asked Ms Mafu to stop because time was running out, since he had allocated 1hr 30 mins for the Department, and they had exceeded their time. He suggested that they send the provincial office addresses and the persons to contact so that the Committee would have this information. He asked Members if this was an acceptable suggestion.

Mr Mmutle, Ms Beukes and Mr Marais all responded that their questions had not been answered.

The Chairperson said that the Department had responded only to the question of the task team, and it was difficult to give them more time, considering that there was another presentation to be made.

Mr Marais expressed his discomfort regarding how the Department was responding to the questions. They should take the Committee seriously, because it was not possible to answer all the questions in five minutes.

The Chairperson gave the Department five minutes to answer the questions raised by Members, and the rest would be provided in writing to the Committee.

Lt Gen Mgwebi said that as far as funding was concerned, the National Treasury had agreed on what the DMV wanted, but they were looking at the structure and ICT systems of the Department. The President had also committed to assisting, and what needed to happen was that the Department had to have a structured framework. The strategic leadership was being looked at, and the timeframes had been sent to Cabinet. The Department had received feedback to correct two items, and they had done this. The Department was now waiting for the Minister and for a shortlist to be made for the vacant posts. The challenges of delivery within the Department were because of the lack of leadership and a structured arrangement to have employees who were willing to commit to the Department.

The Chairperson thanked the Department, and said he was aware that they had not presented and responded to all the questions, but they had to let Armscor make their presentation because of time constraints. He asked for Members to be patient as they waited for written responses from the Department.

Armscor 2021 corporate plan

Adv Solomzi Mbada, Chief Executive Officer (CEO), Armscor, said this was the seventh year that all the public entities had tabled their corporate plans in Parliament. The Department of Planning, Monitoring and Evaluation (DPME) had revised the medium term strategic framework (MTSF) for strategic plans (2019 - 2024) and annual performance plans. The Armscor corporate plan (2021) was aligned to the revised MTSF.

Armscor aimed to deliver a sustainable organisation that generates additional revenue, strengthens its partnerships, contains costs and delivers ground-breaking technologies.

The strategic plan included reducing group costs, including finance, capital and operating costs, to ensure a zero financial deficit and delivery of the identified cost reduction and savings. Strategic maintenance and a reduction of capital and operating costs would thereby improve its net financial position.

Acquisition management was a key enabler in service delivery, and the same key principles of delivering service within specifications, cost and timescales apply. Armscor had the mandate to provide services to other organs of state. It currently offered acquisition, research and development (R & D) and quality assurance services to other countries. It presented an opportunity for partnerships with other organs of state.

Military acquisition was the management and procurement process dealing with a nation’s investments in the technologies, programmes and product support necessary to achieve its national security strategy and support its armed forces. Its objective was to acquire products that satisfy specific needs and provide a measurable improvement to mission capability effectively, efficiently and economically.

Ergotech was a strategic institute that provided ergonomics solutions to optimise human performance, reduce work-related risks, and improve overall safety and productivity.

Hazmat manufactures and supplies respiratory filtering masks for protection against the majority of respiratory health hazards.

The Dockyard delivers an effective and efficient maintenance service to the SA Navy, consisting of planned preventative maintenance, corrective maintenance, reconstruction and repairs and upgrades, and the modernisation of ships and submarines.

Armscor continued to identify and pursue initiatives that could improve the financial sustainability of the organisation and the South African Defence Industry (SADI) while supporting industry development and building/strengthening long-term relationships with key stakeholders.

In terms of corporate social responsibility, its national footprint was based on the projects implemented in the 2020/21 financial year. In total 32 projects were funded. The projects were grouped into three categories -- social relief, human capital development and socio-economic upliftment.

Adv Mbada told the Committee that the financing of Armscor was mainly through income appropriated by Parliament and received via the Defence budget  which consisted of an allocation and payment for services rendered to the Department of Defence (79.5%). The funding was not sufficient to sustain the capability required, and was supplemented by income from commercial services rendered (13.1%), investment income (3.3%) and other income (4.1%).

The main expenditure as a service organisation remained personnel-related expenditure (74%). The 2021/22 group figures reflected a marginal surplus of R3 million. The group continued to experience reductions in its main allocation from National Treasury as the country looked to fund Covid 19-related expenditure. Commercial revenue was also under pressure due to the continued negative impact of Covid 19 global lockdowns on the general economic environment. The group continued to operate within strict cost containment measures to manage operational expenditure.

Armscor was actively engaged with improving the net financial position for future sustainability of the group. This included new revenue streams from the sweating of properties and providing services to other governments.

Some of the challenges, including the generation of new revenue streams, were slower than anticipated and projections had been reduced. Funding received through appropriations from Parliament were not sufficient to maintain strategic facilities managed by research and Development. Commercial revenue generated by the strategic facilities to supplement allocation continued to be under pressure due to lower global economic activities resulting from Covid 19 lockdowns. The planned revenue for the facilities and other sustainability initiatives were subject to risk and impacted by the coronavirus epidemic.

The main expenditure as a service organisation remained personnel-related expenditure. To mitigate against the reduction in the main source of income, employee compensation had been directly impacted.

A significant shortfall of about R81m was experienced in the post-retirement medical liability for Dockyard employees belonging mainly to the Government Employees Medical Scheme (GEMS). There was a declining capital budget for defence spending, and the risk of a further reduction in the main allocation from the National Treasury.

The declining budgets and transfer payments to Armscor from the government remained a huge risk towards its future sustainability. However, it had made optimal use of its allocation throughout the year under review. The allocation did not cover the personnel costs. The strategic facilities managed were also underfunded.

The way forward was for Armscor to position itself as a reliable service provider to its clients by reviewing how it engaged with them, providing advisory roles and influencing decision making.

Armscor was continuing to develop strategic partnerships with countries in the region and beyond to meet common requirements and standardisation. These include state agencies, national government departments, the defence industry and foreign governments

In summary, Armscor aimed to deliver a sustainable organisation that generates additional revenue through strengthening its partnerships, whilst containing costs and delivering ground-breaking technologies.


Mr Marais welcomed the presentation and asked about the potential revenue of Armscor, saying that it seemed as if it was moving out of the defence industry, and he wanted to know if that was their strategy. He was concerned about the lack of projects being given to the navy. He also asked for a comment on the Silvermine communications facility, since it was not mentioned in the presentation and Silvermine had been going down at an alarming rate. The strategic plan that was presented had not touched on the decay in the Northern Cape, and considering what was happening at Denel, some parties were considering moving overseas, but there had been no mention of Denel’s capabilities in the presentation.

Mr Marais was concerned about the solutions of other state departments, and it seemed like Armscor had not done anything yet. He asked about the maintenance and upgrades of the dockyard, as well as the three submarines. He wanted to know how the financial situation would affect the dockyard, considering that naval staff would be closely linked to the Pier. He asked about the logistics company that was doing a lot of work for Armscor, and wanted to know what its relevance was and how it contributed to the Department of Defence. Lastly, he asked about the current situation of bonuses for senior staff, considering the concerns that were raised last year.

The Chairperson asked Armscor to respond within ten minutes, because the Committee was running out of time.

Armscor's response

Adv Mbada started by saying that there was a maintenance programme for Silvermine, but it was affected by the budget constraints and they had decided not to procure everything since they had engineers who could design and develop the things needed to maintain Silvermine. He was not aware of the current situation of Silvermine, but there had been presentations to the Member of the Executive Council (MEC), and there were teams working on the strategy to revive Silvermine and reduce overspending. Armscor would not continue taking money offshore because they now had the capability to produce materials.

The Committee heard that some of the issues that were reported to Parliament had been attended to, and there was progress. MoUs had been signed, and this was positive. The maintenance of submarines and the dockyard was still an issue, and Armscor had realised that they were being charged exorbitant amounts for spares, but through consultations they had discovered new channels that were cheaper and were looking at maximising their budget and have a smart buying project.

The logistics was a division of Armscor, and there was an agreement with DOD that it dealt with ticket issues. There had been a meeting where the South African National Defence Force (SANDF) had agreed to provide an advance amount to avoid overspending. Just like any travel agency, they also looked at the place where the client was going and how much it would cost, and also considered the number of people travelling.

He told the Committee that the audit of Denel had not been completed because the relevant authorities who were supposed to have attended the workshop had not attended, but the process would be completed soon.

Regarding corporate social investment, there had been no presence in the Western Cape in the previous years. and Armscor was working with the local townships and schools to strengthen their presence in the province.

Adoption of minutes

The Committee considered and adopted the minutes of 24 and 25 November 2020, and 10 and 17 March 2021.

The meeting was adjourned.


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