Joint investigation report into strategic defence procurement packages: Adoption of committee report

Meeting report

DEFENCE PORTFOLIO & JOINT STANDING COMMITTEES
5 December 2001
JOINT INVESTIGATION REPORT INTO STRATEGIC DEFENCE PROCUREMENT PACKAGES: ADOPTION OF COMMITTEE REPORT

Chairpersons: Ms T Modise (ANC); Mr J Mashimbye (ANC)

Relevant Documents
Joint Investigation Report into the Strategic Defence Procurement Packages

SUMMARY
The Committee effected a few changes and then accepted the Committee Report with the reservation that the Department of Defence and Armscor still had to interact with the Committee on the matters raised on the JIT Report.

MINUTES
Mr Theron (DP) remarked that none of the members of his party had not received the draft committee report timeously and thus had not had an opportunity to prepare themselves and could not make any inputs. He added that they had not had an opportunity to question the DoD on the Report. Hence there were grave problems with this process and the Democratic Party was raising a strong objection to this process.

Ms Modise replied that Mr Theron's point was noted. She pointed out that committees have a right to determine their agenda and whatever they want to do. The two committees had decided to continue with the consideration of the report and had taken the step of coming up with a drafting committee which had produced the report that was on the agenda. Both committees had a right to call for a meeting in terms of the Rules.

Mr Theron replied that his party would prepare a minority report on the matter.

Ms Modise (ANC) replied that the rules of the two houses do not allow for minority reports.

Mr V Ndlovu (IFP) remarked that he found it very strange that the Democratic Party chose to have its own separate conference and do the work that both committees were elected to do in regard to the Report. The preparation of a minority report was not advisable for two reasons:
- The report before the committee was not a final report. Therefore, in principle a minority report cannot be had on a working report. One can only have a minority report on the finalisation of the working report.
- It was not standard practice to allow minority reports on working reports.

Mr Mabetha (UDM) remarked that had the DP wanted to table a minority report, one of its representatives would have at least sat through the entire meeting in order to have sufficient locus standi (legal capacity to act) to table a minority report. His remarks were based on the fact that the Democratic Party representative had stormed out of an earlier meeting after he had sounded a complaint to the committee about the working report.

Mr Ndlovu submitted the draft eport as it stands to the committee and asked if there were any questions at that stage.

Mr Oorsthuizen (NNP) remarked that the last line of the last sentence on the paragraph of "the role of Parliament" on page 2 of the report should read "necessary resources to equip themselves capably" rather than "necessary resources to acquit themselves capably".

Mr J Ngculu (ANC) differed and said that "to acquit themselves capably in the execution of the functions in terms of the planning etcetara in order to ensure that they do better".

Mr Oorsthuizen agreed with the above explanation by Mr Ngculu.

Mr Mohlala (ANC) suggested that the word "acquit" should rather be changed to "acquaint" because he did not know what the underlying meaning of 'acquit themselves' in the circumstances meant.

Mr Ngculu replied that he had just explained the meaning.

The Committee finally agreed to the explanation of the term "acquit".

Mr Ngculu commented that the last sentence on the first paragraph under subheading "Acquisition Policy" should be changed to read "This will require the institution of appropriate training and workshops as well as Standard Operating Procedures within Armscor and the DoD to ensure that this is accomplished".

This was agreed to by all members of the Committee.

All parties accepted and approved the interim report on the basis that it was still a working report and on the understanding that the DoD and Armscor still had to interact with the Committee on the matter. It was adopted with the effected amendments and it was noted that it would be tabled with Parliament.

The meeting was adjourned.

Appendix 1:
Report of the Joint Standing Committee on Defence on the Joint Investigation Report into the Strategic Defence Procurement Packages, dated 6 December 2001:

The Joint Standing Committee, having considered the matters in the Report falling within the parameters of its portfolio, in particular Chapters 3-7 and 10-12 and having to report on the relevant findings and recommendations before 6 December 2001 (ATC, No.153, p. 1441), reports as follows:

INTRODUCTION

On the 15 November 2001, the Joint Investigative Team (hereafter the Agencies), which investigated certain aspects of the Strategic Defence Packages presented its report to Parliament. Although aspects of the investigation are still underway, the Agencies managed to complete most of the tasks within its mandate. We note the findings of the Report and congratulate the Agencies for their work in compiling the Report.

This report of the Committee strives to make concrete suggestions regarding the following:

a. Identifying the key strategic issues raised in the Report, which require consideration by both the executive and the parliamentary committees on defence.

b. Making various process recommendations as to how the findings of the Report can be taken forward.

ROLE OF PARLIAMENT

According to the Defence Review (chapter on Acquisition), the Committee has a key role in monitoring, overseeing and advising the MoD, Armscor and the DoD on any acquisition process. This role should be strengthened through the institution of appropriate Standard Operating Procedures between the relevant parliamentary committees on defence and the MoD regarding the management of any acquisition process.

The rationale for involving the parliamentary committees on defence in these decisions is as follows:

All major procurement programmes are capital-intensive by nature and, as such, require substantial financial outlays from the fiscus. Parliament approves the defence budget and therefore has an interest in ensuring that any financial outlays are managed according to the budget.

ii. The mandate of the parliamentary committees on defence is to provide oversight over the key policy processes and developments within both Armscor and the DoD and any acquisition project as such represents a major policy position for both Armscor and the DoD.

iii. All major procurement programmes are fundamentally strategic by nature and as such the parliamentary committees on defence have a responsibility to oversee both Armscor and the DoD on the strategic implications of such packages.

iv. Sub-optimal equipment will not only affect the SANDF's combat readiness but also the lives of those persons operating such equipment. Parliament and its committees, as the political custodians of the national defence function, have a moral and a political responsibility to ensure that all acquisition purchases conform to basic operational and security standards.

The parliamentary committees on defence should play an important role in advising the MoD, ARMSCOR and the DoD on the strategic aspects of such packages and the political sensitivity of any proposed purchases. To perform these tasks adequately it is critical that the parliamentary committees on defence in particular and other related parliamentary committees in general should develop the necessary capacity, planning schedules and receive the necessary resources to acquit themselves capably.

SECURITY CLEARANCE

The status of security clearances within both ARMSCOR and the DoD needs to be investigated as a matter of urgency. Updates of existing security clearances and vetting of non-security cleared personnel needs to be effected as a matter of priority.

RECORD KEEPING

Control over internal Armscor and DoD documentation and record keeping needs to be improved in accordance with those procedures governing the control of classified information as set out by the counter-intelligence function of the DoD. An audit trail of all processes linked to procurement processes need to be maintained and managed at all times.

ACQUISITION POLICY

Current Armscor and DoD procurement policy compares favourably with previous procurement policies that pertained within both Armscor and the DoD in the past. Aspects of the procurement policy do need to be fine-tuned, and personnel within both Armscor and the DoD need to be made conversant with the content and the importance of this policy. This will require the institution of appropriate training workshops as well as Standard Operating Procedures within the Armscor and the DoD to ensure that this is accomplished.

Each phase of the procurement process should be concluded according to policy prescripts before proceeding to the next phase. Furthermore, proper authorization should be obtained at each phase before continuing. Such authorizations should determine whether the next phase is embarked upon

Considerations such as the strategic objectives of the DoD that impact on the procurement process should be weighted and form part of the value system. It must then be applied consistently throughout the process.

Future defence procurement packages need to be critically assessed against the needs of the current strategic and global environment.

The Defence Review states that procurement should, as far as possible, attempt to make use of local defence industry capabilities. The Report notes that foreign defence capabilities were privileged over domestic capabilities. The parliamentary committees believe that this situation needs to be avoided if local defence capabilities, an undisputed national strategic asset, are to be maintained.

ARMSCOR ACT

A Work Group that had to deal with the drafting of the Armscor Act was established the Ministry in January 2000. We are concerned that not sufficient feedback to parliament has taken place. This should be attended to as a matter of urgency given certain observations by the Agencies.

The role of Armscor and the DoD with regard to subcontracting needs to be clarified. We understand in the Report that it is not the policy of Armscor and the DoD to interfere with subcontractors, yet numerous instances of interference are mentioned. This issue should be dealt with on the basis of government policies vis-a'-vis affirmative procurement, black empowerment and strategic and technical reasons.

Armscor as the procurement agency of the DoD, as mandated by law, should resume this responsibility when the DoD procures defence equipment.

CHEETAH FIGHTERS

The Report observes that the SAAF indicated that the lifespan of the Cheetah fighters to be around 2012. What will be the position of the Cheetah in the light of the acquisition of the Gripens ?

IMPLICATIONS FOR SAAF'S OPERATIONAL BUDGET

The Chief of the SAAF allowed the amount of R l76 m to be deducted from the budget of the SAAF, notwithstanding his awareness of the 30% shortfall with regard to the readiness of the Air Force. We will need to be briefed on this aspect in particular with regard to the impact on the total budget of the SANDF.

STRUCTURES

We note with concern a plethora of structures and committees involved in the acquisition process. We refer inter alia PCB, SOFCOM, JPT , IONT, AAB, AACB, Technical Team, etc. Furthermore we observe the following with regard to these structures

o Individuals occupying a number of positions, thus blurring the lines of accountability and authority,

o lack of race and/or gender balance,

o people given incompatible functions to perform.

CONFLICT OF INTEREST

The issue relating to Conflict of Interest needs to be dealt with resolutely and decisively within the public service in general and by both the DoD and Armscor in particular. This will require institution and/ or amendment of appropriate legislation to govern and control the activities of serving public servants.

Persons named in the Report as having been involved in a Conflict of Interest and/or engaged in activities deemed unprofessional from the perspective of the procurement process should be debarred from service in any civil service or parastatals.

The Chief of Acquisition occupied a position of Chief Director within the DoD. Given the fundamentally political nature of procurement, it is felt that a person at that level should not have been given such incompatible function to perform. This applies too to other officials from e.g. DTI. It is felt that in future a person with more political and institutional seniority should manage such processes.

Real and apparent conflict of interest did emerge between various senior officials of the DoD, Armscor and DTI (particularly those directly involved in the acquisition packages) and members of the bidding teams for the various equipment within the SDP.

The determination of responsibilities within the acquisition process needs to be rationalized and streamlined. It came to the attention of the parliamentary committees on defence that senior DoD and Armscor officials frequently "wore a number of hats" thereby limiting their ability to act impartially and to avoid a real or perceived conflict of interest. In our opinion this impeded good governance. This is not only limited to the DoD and Armscor, but includes officials of other state departments.

An investigation needs to be conducted by the DOD and Armscor against those individuals whose professional behaviour was queried in the Report.

CONCLUSION

To ensure that the above-mentioned recommendations are applied in a consistent and rational manner the Joint Standing Committee on Defence will compile an implementation framework that will specify, amongst other things, the following:

a. The co-coordinating responsibility for the implementation of the diverse recommendations contained in this report.

b. The Executing Authority/Authorities responsible for implementing those recommendations, which have been assigned to them within the context of this report.

c. The ongoing oversight monitoring of these responsibilities and their execution and the authorities responsible for this monitoring role.

Report to be considered.

MR JN MASHIMBYE, MP

Chairperson: Joint Standing Committee on Defence