ATC180301: Budget review and recommendation report of the Portfolio Committee on Defence and Military Veterans on the 2016/17 annual report plan of the Department of Defence (DoD), dated 1 March 2018

Defence and Military Veterans

Budget review and recommendation report of the Portfolio Committee on Defence and Military Veterans on the 2016/17 annual report plan of the Department of Defence (DoD), dated 1 March 2018

The Portfolio Committee on Defence and Military Veterans (PCODMV), having considered the financial and service delivery performance of the Department of Defence (DOD) for the 2016/17 financial year on 1 March 2018, reports as follows:

Description of core functions of the Department

The Constitution (1996) in Section 200 sets out the mandate of the South African National Defence Force (SANDF), while Section 204 establishes a civilian secretariat for the Department. The mandate is to “defend and protect the Republic, its territorial integrity and its people in accordance with the Constitution and the principles of international law regulating the use of force”. In pursuance of this mandate, the DOD provides, manages, prepares and employs defence capabilities commensurate with the needs of South Africa, guided by the Constitution, relevant legislation and Executive direction.

1.2 Mandate of the Committee

The Portfolio Committee on Defence and Military Veterans (PCODMV) is mandated to oversee the Department of Defence and Military Veterans (DODMV) to ensure that the Department fulfils its mandate through the monitoring of the implementation of legislation and adherence to policies, such as the Defence Act (No. 42 of 2002), the White Paper on Defence (1996) as well as the Defence Review (1998). The 2015 Defence Review will be instrumental to guide the Defence Force over the next 20 to 30 years and thus forms an integral part of the Committee’s oversight consideration. It must scrutinise legislation which supports the mission statement of Government; the budget and functioning of DODMV; and the employment of the SANDF.

1.3 Purpose of the BRR Report

Section 5 (2) of the Money Bills Procedures and Related Matters Amendment Act (Act 9 of 2009) allows for each Committee to compile a Budgetary Review and Recommendation Report (BRRR) which must be tabled in the National Assembly. Section 5(3) provides for a BRRR to contain the following:

an assessment of the department’s service delivery performance given available resources;
an assessment on the effectiveness and efficiency of departments use and forward allocation of available resource; and
recommendations on the forward use of resources

In October of each year, parliamentary portfolio committees compile a BRRR that assess service delivery performance given available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on the forward use of resources. The BRRRs are also source documents for the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTBPS). The comprehensive review and analysis of the previous financial year’s performance, as well as performance to date, form part of this process.

1.4 Methodology in compiling the report

The Report is compiled from the various activities of the Committee. It is inclusive of the Committee’s meetings, oversight visits, reports on budget votes, strategic plans, annual performance plans and annual reports, as well as previously published Committee reports.

The Portfolio Committee on Defence and Military Veterans (PCODMV) engaged with the South African National Defence Force’s (SANDF) Gauteng Regional Workshop, the Council for Science and Industrial Research (CSIR), 1 Military Hospital, the South African Air Force (SAAF) Headquarters, and the Special Forces Headquarters on an oversight visit in Pretoria, Gauteng, over the period 19 to 23 September 2016.

1.6 Information used to compile the Report

Besides the information on the Oversight visit, other information used in the assessment of the service delivery and financial performance included:

Committee reports on the 2016/17 budget hearings, strategic plans and annual report;
The National Development Plan and the Medium Term Strategic Framework 2015 - 2020;
The 2016 Estimates of National Expenditure;
The 2016 Budget Speech of the Minister of Finance;
The 2016 State of the Nation Address; and
The Auditor-General of South Africa (AGSA) Report on the Department of Defence.

1.7 Structure of the Report

This report comprises seven sections:

Section 1: An Introduction which sets out the mandate of the Committee, the purpose of this
report (BRRR) and the process to develop this report.

Section 2: Provides an overview of the key relevant policy focus areas.
Section 3: Provides an overview and summary of previous key financial and
performance recommendations of Committee (2016/17).
Section 4: Provides a broad overview and assessment of financial performance of the
Department for 2016/17.
Section 5: Overview of service delivery and performance.
Section 6: Key Committee findings.
Section 7: Key Recommendations.

Overview of the key relevant policy focus areas

2.1 State of the Nation Address

The President delivered the 2016 State of the Nation Address with the theme of “Following up on our commitments to the people,” on 11 February 2016. The Address was delivered against the background of inter alia the 26th anniversary of the release of President Mandela from prison, 50th anniversary of the declaration of District Six as “whites-only” area and the 20th anniversary of the signing into law of the Constitution of the Republic. Emphasis was also placed on the fact that “the journey to a nonracial society has not yet been completed.”[1] Some of the defence-related issues include the following:

Battle of Delville Wood

Reference was made to the marking of a century since the Battle of Delville Wood in France which took place during the First World War. “Scores of soldiers died there, including black soldiers who fought in the war but were treated badly due to the colour of the skin, including receiving separate burials in separate places. A memorial that will restore their dignity and humanity is scheduled to be unveiled in July this year in France.”

State owned enterprises

The President stated that “We have heard the concerns raised about the performance of state-owned enterprises and companies. Many of our SOCs are performing well.” It is in this context that the implementation of the recommendations of the Presidential Review Committee on State Owned Enterprises (PRCSOE), which outlines how the institutions should be managed, is raised. The PCODMV considered its input to the PRCSOE in 2011 and adopted a report on it in 2012. It raised the endeavors by the then-Minister to bring Denel back to the Department of Defence’s fold.[2] The Committee on 14 March 2012 adopted the Report and specifically stressed that “Armscor and the Castle of Good Hope were correctly positioned where it is currently located, and that legislation be amended, to reposition Denel into the Department of Defence and Military Veterans.”[3]

Cost containment measures

The SONA referred to the announcement by the Minister of Finance in 2013 about a number of cost containment measures. The President stated that although excessive and wasteful expenditure has been reduced, there is still more to be done to cut wastage. Measures announced include:

Overseas trips should be curtailed and those requesting permission will have to motivate strongly and prove the benefit to the country.
The sizes of delegations will be greatly reduced and standardised.
Further restrictions on conferences, catering, entertainment and social functions.
Parliament and the Judiciary should consider the implementation of similar measures.

South African National Defence Force

The President stated that the African continent remains central to our foreign policy engagements. In this sense he referred to South Africa continuing to support peace and security and regional economic integration through participation in the African Union and the Southern African Development Community initiatives. South Africa is also assisting sister countries in resolving their issues for example in Lesotho and South Sudan. “The South African National Defence Force represented the country bravely and remarkably well in peacekeeping missions on the continent. We are truly proud of our soldiers. The appointment of Lieutenant General Derrick Mgwebi as the Force Commander of the United Nations Organisation Stabilisation Mission in the Democratic Republic of the Congo (MONUSCO) announced by the UN Secretary-General, Ban Ki-moon, should be noted in this regard.[4] He was also the Force Commander of the United Nations Operation in Burundi in 2004.

2.2 The National Development Plan (NDP)

A close link exists between the NDP and the Medium Term Strategic Framework. (MTSF). The MTSF can be interpreted as a medium-term version of the National Development Plan (NDP), identifying similar priorities, but limiting the goals to the next five years rather than up to 2030 as is the case with the NDP. The National Development Plan (NDP) presents a number key aspects related to the DOD. The specific aspects of the NDP, Vision 2030 relevant to the defence portfolio inclusive of the envisaged contribution by defence are as follow:

Chapter 3: Economy and employment

The DOD will continue to support the Governmental Imperative by providing support to the Department of Rural Development and Land Reform towards the Youth Leadership Development Programme through the current defence inherent capabilities and available capacity on a cost recovery bases.[5] The Department contributes to the outcome through the employment of the youth as a service provider for other Departments for the Youth Leadership Development and Character-building Module where it trained 2 008 youth in FY 2014/15 and 1 916 youth during FY 2015/16.[6] It envisaged that it will train around 2 000 youth from 2016/17 going forward.[7]

Chapter 7: South Africa in the Region and the World

Through its peacekeeping operations the Department is assisting to create a more conducive environment on the Continent in order to attract more investment and business opportunities. South Africa is also supporting the combating of maritime piracy along the East Coast of Africa. South Africa’s involvement in an anti-piracy role has been lauded but has been scaled down and is currently intelligence driven. The possible extension of this role to the western coastline of Africa is a concern, especially because of the limited naval vessels and funds available.[8]

Chapter 9: Improving education, training and innovation

The Department is strengthening its national research and development capacity. The establishment of the DOD strategic research capability has been long in coming and has been placed on hold during the Defence Review development processes. The Committee will follow up on developments in this regard, especially since the 2016/17 target is only referring to “Policy Research Unit Concept document approved.”[9]

Chapter 10: Health care for all

The DOD through its Military Health Service provides comprehensive medical care for its personnel at the various military hospitals and sickbays around the country, contributing directly to the achievement of this objective. Recently, the Department – through the South African Military Health Support (SAMHS) - has also started to extent these health services to qualifying military veterans in terms of Section 5 of the Military Veterans Act (No. 18 of 2011).

Chapter 13: Building a capable state

The Department embraces the principles of the King III Report on Governance and emphasises Ethics and Integrity. It also states that it will establish a programme on ethics management to strengthen Departmental measures for managing ethical conduct and promoting integrity.[10]Given some of the lapses regarding full compliance with for instance the submission of SMS Financial Disclosure,[11] the numerous disciplinary lapses, both internally and abroad, the Department was advised to prioritise this objective and keep the Committee informed around developments in this regard.

Chapter 14: Promoting accountability and fighting corruption

Given that the Department is serious in tackling corruption and fraud, the suggested programme on Ethics Management will assist it in addressing this challenge, especially around Supply Chain Management. The importance of an integrated ICT system has once again been highlighted and it is imperative that the various stakeholders address this situation.

It needs to be noted that while the Department has in its previous annual reports, given attention and details as partly reflected above, the current Annual Report FY2016/17, gives scant attention to the National Development Plan. It is assumed that this is because, as stated in the introduction of paragraph 2.2, due to fact that a close link exists between the NDP and the Medium Term Strategic Framework. (MTSF). The latter can be interpreted as a medium-term version of the National Development Plan (NDP).

2.3 The Medium Term Strategic Framework (2015 - 2020)

The Medium-term Strategic Framework Outcomes are fundamental to the Defence function, and more specifically, to the attainment of the defence Mission namely “To provide, manage, and employ defence capabilities commensurate with the needs of South Africa as regulated by the Constitution, national legislation and parliamentary and executive Direction”. The MTSF provides fourteen approved MTSF Outcomes with their associated performance indicators and targets for achievement during the MTSF 2015– 2020 period. The relevant MTSF Outcomes have been integrated into the output deliverables of the DOD. The MTSF Outcomes to which Defence will contribute, by virtue of its legislative mandate and inherent capabilities are as follow:[12]

Outcome 3: "All people in South Africa are and feel safe."

Sub-outcome 3: South Africa’s borders effectively defended, protected, secured and well-managed. During the FY2016/17, the DOD contributed towards this sub-outcome through the development of the Border Safeguarding Strategy. A Border Management Framework has been developed and is undergoing consultation within the DOD, where after it will be completed and submitted for approval and promulgation through the Departmental approval process. During FY2016/17, the SANDF continuously deployed 15 sub-units to execute Operation CORONA (Border Safeguarding) in Limpopo, Mpumalanga, KwaZulu-Natal, Free State, Eastern Cape, Northern Cape and North West Provinces in an endeavour to safeguard and maintain the integrity of the country’s borderline.[13]

Sub-outcome 4: Secure cyber space. The development of a Cyber Warfare Strategy will be undertaken through a phased approach. A Draft Cyber Warfare Strategy was completed and is in the Departmental approval process, prior to submission to the Justice, Crime Prevention and Security (JCPS) Cluster for approval. During the period under review, the Cyber Roadmap, Awareness Programme, Cyber Doctrine and Implementation Plan were developed. The establishment of a Cyber Command Centre (Phase 1) was not achieved during FY2016/17 due to financial constraints and will roll-over to FY2017/18. With respect to the DOD’s contribution towards the development of a Sensor Strategy, a draft Sensor Strategy has been developed and is in the Departmental approval process. It is foreseen that this Strategy will be submitted for consideration to the JCPS Cluster Ministers during FY2017/18.[14]

Sub-outcome 7: Corruption in the public and private sectors reduced. The DOD conducted anti-corruption and fraud prevention awareness road shows with the main focus to attend to DOD corruption and fraud related cases where prevalent. During this campaign, DOD members were educated on anti-corruption and fraud prevention awareness. These awareness sessions contributed positively to assist members to report on fraudulent activities on the Whistle Blowing Hotline, which supported Government’s imperative on zero tolerance to corruption and fraud related incidents. During FY2016/17, no corruption and fraud cases of R5 m and over were reported in the DOD.[15]

Outcome 11: "Creating a better South Africa and contributing to a better and safer Africa in a better World."

Sub-outcome 3: Political cohesion in Southern Africa to ensure a peaceful, secure and stable Southern African region. The DOD contributed towards this sub-outcome by means of the deployment of the SANDF for peace missions as well as the deployment of 10 Defence Attachés (DAs) in the Southern African Development Countries (SADC). During the FY2016/17, the DOD fully complied with all ordered commitments.[16]

2.4. Overview of DOD Strategic Plan and Annual Performance Plan

The DOD Strategic Plan flows, in part, from the NDP and MTSF objectives and also informs the Annual Performance Pan (APP).

2.4.1 Strategic Plan: Policy Priorities for the Minister of Defence

The Minister indicated that the focus of the DOD during FY2016/17 would be to ensure the continued execution of the 5-year programme as set out in the DOD’s Strategic Plan for 2015 to 2020. The Minister’s priorities for FY2016/17 were directly related to the 2015 Defence Review and gave impetus to the implementation of the 2015 Defence Review. The priorities for FY2016/17 were as follow:[17]

Defence Strategic Direction.
Strategic Resourcing Direction.
Organisational Renewal
Human Resources Renewal.
Capability Sustainment Direction
Ordered Defence Commitments Direction

Importantly, the Annual Report indicates that these priorities have directed the Defence Review 2015 Milestone 1 envisaged implementation in FY2016/17 onwards, within allocated resources. A technical team was constituted which developed the Implementation Framework of the Defence Review. The DOD Plan to Arrest the Decline was completed and on 01 March 2017, and approved by the Minister at the Council on Defence (COD) on 07 March 2017. Option 2 of the Plan (Arrest the decline within a 6-year period) was accepted as the most feasible path to follow. Option 2 to the Plan is thus the basis for further engagement with the Portfolio Committee on Defence and Military Veterans, Joint Standing Committee on Defence, National Treasury and political decision makers.[18]

The Department states that it has made progress with the following Defence Commitments:

Maritime Security

The transfer of the Dockyard to the SA Navy is underway as recommended by the Defence Review 2015. The multi-lateral agreement between the DOD, Denel and ARMSCOR was signed and Denel is awaiting National Treasury approval. The SA Navy has continued to deploy vessels in support of the Maritime Security Strategy. Over the period under review, the SA Navy has conducted three protracted patrols in the Mozambican Channel, utilising a Frigate, an Offshore Patrol Vessel and the SAS DRAKENSBERG. During the period under review, the SAS AMATOLA, one of the SA Navy Frigates, successfully participated in the SS MENDI Centenary Commemoration in the United Kingdom and Ex GOOD HOPE in Germany.

Border Safeguarding

The SANDF continued to register operational achievements, particularly in the area of stock theft, recovery of stolen vehicles, and prevention of cross-border crime. The DOD will submit a Border Safeguarding Strategy to the JCPS Ministers for approval during FY2017/18. It remains a priority for the DOD to increase the required number of companies deployed on South Africa’s borders from 15 to 22, in order to make the borders more secure.

Collateral Benefits

The SANDF continued to assist during disasters, in South Africa and elsewhere on the Continent. During the

period under review, units of the SANDF participated in various rescue missions, including aircraft accidents.

Development of Cyber Warfare and Sensor Capabilities

During the FY2017/18, the DOD will provide a comprehensive Departmental Cyber Warfare Strategy and Sensor Strategy to the JCPS Cluster Ministers for approval.[19]

2.4.2 The Annual Performance Plan (APP) 2016

The evolving FY2016/17 Ministerial Priorities give impetus to the execution of the Defence mandate through Ministerial direction and specifically the implementation of the 2015 Defence Review over the short, medium and long term within available resources are confirmed as follows:

Defence Strategic Direction. This priority relates to ensuring the provision of Ministerial strategic direction to the DOD over the short, medium and long term. The following evolving End-states will, amongst others, be pursued in support of this Ministerial Priority:

Defence Command and Governance Accountability Relationships clarified in Policy.
Strategic direction provided to guide the implementation of the SA Defence Review 2015 (Milestone 1).
Strategic Communication direction provided to inform the conceptualisation and roll out across all levels of command, a departmental communication intervention.

Strategic Resourcing Direction. This priority relates to the directing of the developing of an appropriate Defence Funding Model thereby ensuring the adequate resourcing of the Defence function over multiple MTSF periods aligned with prevailing defence policy. The following evolving End-state will, amongst others, be pursued in support of this Ministerial Priority:

Direction provided to guide the development of a Defence Funding Model.

Organisational Renewal. This priority relates to the directing of the renewal of the defence organisation to achieve greater efficiencies and effectiveness across the defence functions. The following evolving End-state will, amongst others, be pursued in support of this Ministerial Priority:

Direction provided to inform the restructuring of the DOD (SANDF).

Human Resources (HR) Renewal. This priority relates to the directing of the renewal of the departmental human resource function to ensure that the personnel profile is able to meet both current and future defence obligations. The following evolving End-states will, amongst others, be pursued in support of this Ministerial Priority:

Direction provided to inform the DOD Human Resources Management function.
Defence Academy established.
Relationship established between the DOD ETD programmes and accredited tertiary Institutions for civilian and military members.
Military Discipline enhanced.

Capability Sustainment Direction. This priority relates to reviewing the Defence direction to the Defence Industry, technology development and directing defence acquisition in line with the four milestones of the SA Defence Review 2015. The following evolving End-states will, amongst others, be pursued in support of this Ministerial Priority:

Defence capability sustainment and renewal.
Defence facilities maintained.
Defence Industry engagement established.
Development and maintenance of strategic reserves.

Ordered Defence Commitments Direction. This priority relates to directing of the ordered defence commitments in line with the prevailing defence policy. The following evolving End-state will, amongst others, be pursued in support of this Ministerial Priority:

Sustained Ordered Defence Commitments. [20]

3.1 BRRR 2016 recommendations

In 2016, the Committee made the following recommendations in its BRR Report on performance and financial matters:

The Committee urges the DOD to present the Defence Review Implementation Plan to the PCODMV and/or Joint Standing Committee on Defence as soon as possible.
The Department should continue to attend to the matters of emphasis raised by the Auditor General and strive for a clean audit opinion in future.
The Department should report to the Committee within 30 days of the adoption of the BRR Report on how funds will be reprioritised in terms of the current funding to ensure the sustainment of defence capabilities and supporting ordered commitments.
National Treasury should consider the allocation of additional funds to the DOD to facilitate the deployment of additional sub-units for border safeguarding to increase it further beyond the current deployment of 15 sub-units for land border safeguarding. The Committee remains cognisant of the fact that 22 sub-units remain the ideal strength for border safeguarding. The Committee further encourages the DOD to increase the use of technology as a force multiplier for land and air border safeguarding.
The DOD should indicate to the Committee, in writing, what the financial constraints are in terms of the implementation of the Cyberwarfare strategy and how the Department aims to implement this Strategy.
The DOD should, on a quarterly basis, update the Committee on progress related to the finalisation of outstanding policies and strategies.
The Committee encourages the DOD to continue with efforts to fund and rejuvenate the Defence Reserves.
The DOD should, on a quarterly basis, inform the Committee of its achievement of the payment of service providers within the stipulated 30 days.
As part of the Defence Review Implementation Plan, the DOD should present its strategy to reduce spending on personnel to the desired levels of 40 per cent of total defence expenditure.
The Committee urges the DOD to continue with the high absorption rate of MSDS personnel into the Regular Force. Notwithstanding this achievement, the DOD should, as part of its presentation on the Defence Review Implementation Plan, inform the Committee of the means it will employ to rejuvenate the SANDF, including as aspects related to the Mobile Exit Mechanism (MEM).
The DOD should include two new targets related to flying and sea hours which should be reported on quarterly and annually. These targets should measure the percentage of total flying and sea hours achieved against planned hours (This should include all flying and sea hours planned by the DOD for a specific financial year).
The Committee urges National Treasury to provide additional funds to the DOD to be ring-fenced for aircraft and vessel spare parts to ensure the operational readiness and increased utilisation of these aircraft and vessels.
The DOD should finalise its revised Procurement policy to deal with the decentralisation of this function as a matter of urgency and present the Committee with the update on this matter as soon as the revised policy has been completed. Clear measures to reduce the 90-day procurement target should form part of this policy.
The DOD should provide the Committee with a report within six months of the adoption of the BRR Report, on plans to address the critical skills vacancies.
The Committee urges the DOD to put measures in place to drastically reduce the amount of Irregular, Fruitless and Wasteful expenditure.
The DOD should reduce the number of members that were remunerated at salary levels exceeding grade determination and report on this to the Committee on a quarterly basis.
The DOD should inform the Committee, within 30 days of the adoption of this BRR Report, of its plans, with detailed timelines and costing, for the finalisation of the 1 Military Hospital refurbishment project, including the appointment of the medical technologist required for the finalisation of the project.
The DOD should finalise the Military Disciplinary Bill as a matter of urgency and inform the Committee on when this Bill can be expected as soon as possible.
The DOD should provide the Committee with a report, within 60 days of the adoption of this BRR Report, on the work done by military judges on addressing the backlog in outstanding military court cases.
The Committee urges National Treasury to increase the reimbursement of the DOD for its participation in peacekeeping missions.
The DOD should, within 60 days of the adoption of the BRR Report, inform the Committee in writing of the status of litigation against the Department as well as other contingent liabilities.
The DOD should, within 60 days of the adoption of the BRR Report, inform the Committee in writing of the status of equipment left in the Central African Republic (CAR) and Sudan following SANDF deployment and subsequent withdrawal from these countries.
The DOD should, within 60 days of the adoption of the BRR Report, inform the Committee in writing of the status of the 20 investigations regarding SCM, procurement and contracting investigations.

3.2 Response by the Minister of Finance:

No responses to the 2015/16 BRR Recommendations by the Portfolio Committee have been received from the Minister of Finance.

3.3 Committee 2016/17 Budget Report

The Committee made the following recommendations which will be subject to monitoring by the Committee throughout the 2016/17 financial year:

The Department must ensure the resolution of the weaknesses relating to the payment of invoices within the prescribed 30-day period. It should set a target closer to 100 per cent compliance, and ensure that such target is achieved.
The Committee urges the finalisation of a military exit mechanism that will ensure force rejuvenation and the maintenance of skills. It further urges the development of other means such as reskilling to achieve the set target.
Scant details about the planned restructuring of the Department of Defence was forthcoming during the Committee’s interaction with the Department. The Committee will request a briefing from the Defence Review Implementation Team on how the restructuring is set to take place.

The Committee urges the urgent finalisation of the appointment of military judges. The Military Discipline Bill should also be prioritised and brought before Parliament before the end of the 2016/17 financial year. The finalisation of the Discipline Plan should be accelerated and the Department should report to the Committee on progress.
Additional funds, prioritised for the implementation of the Defence Review’s Milestone 1 will ensure that critical capacity in the SANDF is not lost over the medium-term. The Committee therefore recommends that the Department speed up its efforts to source alternative avenues to prevent such losses.
The Committee recommends that the Department ensures that skills are transferred by members of the Cuban Armed Forces who are assisting the Department to members of SANDF to capacitate them to do maintenance and repairs of defence equipment, in especially deployed areas.
The Committee recommends that the Department request additional funding or shift/reprioritise funds to ensure that additional flying hours are allocated to ensure, firstly, that pilots remain current in terms of flying hour requirements and, secondly, to ensure sufficient air support to SANDF operations.
The Committee expresses concern regarding the reduction in funds allocated to the maritime and transport sub-programme of the Air Defence Programme. It therefore urges the Department to prioritise the funding in this regard as well as for a strategic airlift capability in the SA Air Force.
The Committee expressed concern about R350 million reduction in funding to the Special Defence Account. It therefore recommends that this reduction should in particular not further delay the acquisition of offshore patrol vessels under Project BIRO, as these vessels are essential to ensure maritime territorial safeguarding.

4.1. Overview of Vote allocation for FY 2016/17

The Department’s Budget for FY 2016/17 amounts to 1.05% of the expected Gross Domestic Product (GDP) of the RSA. It has been allocated R47.169 billion for the FY 2016/17 against the R45.082 billion in the previous financial year. Included in the allocation is the funds for the Department of Military Veterans which is hosted in Programme 1: Administration to the amount of R597.6 million up from R582 million in the previous year, under Sub-Programme Military Veterans Management. As can be noted from the Table 1, the biggest allocation has been to the Landward Programme which consists of roughly 33% of the total budget, while the Air Defence Programme is second with 14.6%. The biggest nominal increase is in the Maritime Defence (R586.8m) followed by Landward Defence with R449 m.

Programme	Budget		Nominal increase	% of budget (2016/17)
Programme	2015/16	2016/17	Nominal increase	% of budget (2016/17)
Programme 1: Administration	4 862.4	5 151.1	288.7	10.9 (4)
Programme 2: Force Employment	3 813.3	3 899.6	86.3	8.25 (7)
Programme 3: Landward Defence	15 202.4	15 651.4	449.0	33.1 (1)
Programme 4: Air Defence	7 167.6	6 883.5	-284.1	14.6 (2)
Programme 5: Maritime Defence	3 769.1	4 355.9	586.8	9.2 (5)
Programme 6: Military Health Support	4 069.3	4 416.5	347.5	9 (6)
Programme 7: Defence Intelligence	831.5	900.2	68.7	2 (8)
Programme 8: General Support	5 372.6	5 911.1	538.5	12.5 (3)
TOTAL	45 088.2	47 169.7	2 081.5	100

Table 1: Programme increase and proportions

The main delivery programmes such as Landward Defence, Air Defence, Maritime Defence, and Military Health Support have received the bulk of the funding in line with MTSF Outcome 3 and 11. The decrease in Air Defence was viewed as concerning given its centrality in both border safeguarding and peace operations, although it still received the second largest amount of the budget. The Department has drawn the Committee’s attention to that fact that if the budget could be increased to 1.5% of GDP, this would assist in restoring capabilities as outlined in Milestone 1 of the 2015 Defence Review.

4.2 Observations made during the Four Quarters of the FY2016/17

The purpose of the quarterly reports is to highlight specific issues to the management of the Department of Defence that relate to observations and general concerns regarding the financial performance for the four quarters of the 2016/17 financial year.

For the First Quarter of FY 2016/17 the Department spent R10.843 billion (23 per cent) of its total allocated budget of R47.170 billion against the approved drawings of R10.426 billion. This translates to 0.9 percentage points slightly higher than the approved drawings of 22.1 per cent and 1.8 percentage points higher than the proportion spent in 2015/16. In terms of economic classification, the Department has recorded higher than projected spending on compensation of employees (R121 million), goods and services (R186.4 million) as well as machinery and equipment (R95.7 million). Expenditure on foreign deployments was 13.2 per cent of the available budget of R1.367 billion. The reimbursement received was less than the projected reimbursement of R178.5 million and R330.1 million, respectively.

By the end of the Second Quarter, it had spent 48 per cent of the allocated budget which is slightly higher than projected expenditure. Due to time constraints, the Department presented both the second and third quarter reports for FY2016/17 simultaneously, with the effect that the focus was on the third term, which is outlined below.

During the Third Quarter, the Department spent R34 billion (or 72 per cent) of the adjusted budget of R47.2 billion. This spending is R428.2 million higher compared to the projected expenditure of R33.6 billion. The higher than planned spending occurred mainly on Administration, Landward Defence, Military Health Support and General Support programmes. Post Adjusted Estimates of National Expenditure (A/ENE), the National Treasury approved a virement request by the Department of Defence to increase the compensation of employees ceiling by R267 million in the 2016/17 financial year. These funds were shifted from the Special Defence Account to provide for the contingent liability associated with the pending reinstatement of finance officials’ pension benefits. Concerns were expressed by National Treasury relating to over 100 per cent of the available budget having been spent on advertising, rental and hiring, machinery and equipment specialised military assets as well as software and other intangible assets. These expenditure items need to be monitored closely to avoid over expenditure at the end of 2016/17.

Regarding the Fourth Quarter, the Department has spent R47.199 billion or 99.9 per cent of the available budget of R47.236 billion for the 2016/17 year. This is 0.1 per cent lower than the available budget and this implies that the Department has underspent its available budget by R37 million in 2016/17. The underspending was recorded under Force Employment (R12.1 million) and Landward Defence (R24.8 million) programmes. Programme 2: Force Employment - the underspending of R12.1 million was as a result of unspent funds on the utilisation of aircraft chartering within the mission areas which was lower than planned, this is dependable on the operational circumstances which can only be scheduled once there is operational requirement from the United Nations. Programme 3: Landward Defence - the underspending of R24.8 million was as a result of austerity measures implemented by the department to remain within the compensation of employees’ ceiling approved by Cabinet.[21]

4.3 Final appropriation versus Actual Expenditure

The Department of Defence and Military Veterans (DODMV) actual expenditure for FY2016/17 was R47 197 094 billion against a final appropriation of R47.236 465 billion, indicating an under expenditure amount of R39 371 million, which is more than double against the previous year as indicated below and compared with the previous financial year.[22]

Programme R’000	2015/16			2016/17
Programme R’000	Final Appropriation	Actual Expenditure	(Over)/Under expenditure	Final Appropriation	Actual Expenditure	(Over)/Under expenditure
Administration	4 984 514	4 981 493	3 021	5 740 559	5 740 559	0
Force Employment	3 616 407	3 602 801	13 606	3 445 535	3 431 011	14 524
Landward Defence	15 118 951	15 118 951	0	15 557822	15 557822	0
Air Defence	7 085 719	7 085 719	0	6 782 585	6 782 585	0
Maritime Defence	3 732 748	3 732 748	0	4 323 232	4 298 385	24 847
Military Health	4 243 150	4 243 150	0	4 448 745	4 448 745	0
Defence Intelligence	830 060	830 060	0	881 289	881 289	0
General Support	5 467 612	5 467 612	0	6 056 698	6 056 698	0
TOTAL	45 088 161	45 071 534	16 627	47 236 465	47 197 094	39 371

Table 2: Final appropriation versus Actual Expenditure

4.4 Virements and variances

Programme (R Thousand)	Adjusted appropriation	Virement	Final Appropriation	Actual expenditure	Variance	Expenditure a s a final 5 of appropriation
Administration	5 740 559	392 608	5 740 559	5 740 559	0	100%
Force Employment	3 445 535	(227 100)	3 431 011	3 431 011	14 524	99.6%
Landward Defence	15 557822	(69 453)	15 557 822	15 557822	0	100%
Air Defence	6 782 585	(153 998)	6 782 585	6 782 585	0	100%
Maritime Defence	4 323 232	(63 583)	4 298 385	4 298 385	24 847	99.4%
Military Health	4 448 745	8 074	4 448 745	4 448 745	0	100%
Defence Intelligence	881 289	(18 959)	881 289	881 289	0	100%
General Support	6 056 698	132 411	6 056 698	6 056 698	0	100%
TOTALS	47 236 465	-	47 197 094	47 197 094	39 371	99.9%

Table 3: Virements and variances

No funds were rolled over from FY2015/16 and Virements were approved by National Treasury and the Accounting Officer, according to the Annual Report.[23] Those Virements amounts approved by Treasury include:

R10.012 m from the Maritime Defence Programme to Current Transfers and Subsidies: Households to cover the cost of employment social benefits due to Defence Members being separated from the Department through severance packages.
R28.924 m reallocated from savings within Goods and Services (R28,767 m) as well as Transfers

and Subsidies: Non-Profit Institutions (R0,157 m) to cover the cost of legitimate claims instituted against the Department by institutions or individuals.[24]

The Accounting Officer details the reason for under/over expenditure to the amount of R39.371 which were due to:

Operational requirements regarding aircraft chartering by the United Nations being less than what was required under the Force Employment Programme.
Austerity measures implemented in order to remain within the ceiling amount set by National Treasury.

4.5 Report of the Auditor-General of South Africa (AGSA)

The A-G issued the DOD with a qualified audit opinion for FY2016/17 due to four aspects namely:

Moveable tangible capital assets
Immovable capital assets: work in progress
Intangible capital assets
Fruitless and wasteful expenditure
Irregular expenditure.

Three aspects regarding Emphasis of matter were identified:

Special Defence Account

Restatement of corresponding figures
Accruals and payables not recognised.[25]

4.5.1 Irregular, fruitless and wasteful expenditure

Irregular expenditure: This amounted to R328.071 m for the year under review. Main contributors were three incidents amounting to R311.277 m, which apparently originated in the previous financial year. Irregular expenditure to the amount of R419 million was not disclosed by the Department, and the AG could not confirm completeness of this expenditure by alternative means.

Fruitless and Wasteful expenditure: This amounted to R659 000 and was a decrease of R6.521 m from the previous year. The biggest contributor was events that were cancelled on short notice and where expenditure could not have been avoided. The A-G found that R303 m was incorrectly reported. The AG could not confirm completeness of this expenditure by alternative means.[26]
Unauthorised expenditure: None was incurred for the year under review.[27]

The Department should be requested to explain the statement by SCOPA, that “The National Treasury has noted the suspected incidences of irregular, fruitless and wasteful expenditure, involving transactions valued at R370.7 million as at 31 March 2017. The reasons provided by the Department include among others, deviation from the procurement processes, double booking and payment of a bus ticket for the same person on the same date to the same destination as well as air tickets paid but not utilised.”[28]

4.5.2 Report on audit of compliance with legislation

The A-G reported under this section the following:

Annual financial statements, performance and annual report: The statements were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by the PFMA.

Expenditure management:

Contractual obligations and money owed by the department were not met and settled within 30 days, as required by the PFMA and Treasury Regulations.
Effective steps were not taken to prevent irregular expenditure, as required by the PFMA. Most of the disclosed irregular expenditure was caused by non-compliance with supply chain management prescripts
Effective steps were not taken to prevent fruitless and wasteful expenditure as required by the PFMA and Treasury Regulations. The expenditure disclosed does not reflect the full extent of the fruitless and wasteful expenditure. Most of the disclosed fruitless and wasteful expenditure was caused by cancelled events.

Procurement and contract management: Contracts were extended or modified in excess of the 15% threshold without the approval of a properly delegated official to enhance compliance monitoring and improving transparency and accountability in supply chain management.

Consequence management: Disciplinary steps were not taken against officials who had incurred ad/or permitted irregular expenditure and fruitless and wasteful expenditure, as required by the

PFMA.

4.5.3 Internal control deficiencies

Leadership: The A-G reports that the accounting officer did not exercise sufficient oversight on financial reporting on tangible capital assets, immovable assets, compliance and related internal controls. The developed actions plans were not adequately implemented/and/or monitored to prevent recurring findings. He did not timeously address the accounting requirements of the Special Defence Account.

Financial and performance management: Existing controls were not designed to ensure adequate record keeping to support accurate and complete reporting, resulting in material misstatements

Governance: Although management performs risk assessments on a regular basis, action plans were not timeously compiled, adequate and/or adequately monitored to addressed to prevent recurring findings and address significant matters.[29]

4.6 DOD Human Resources Overview

The number of members in the Department has become a central issue during the FY2016/17. This not only relates to the dwindling number of MSDS members for especially rejuvenation purposes, but also the guidelines in the 2015 Defence Review, that the number of members need to be decreased. More importantly, it relates to National Treasury’s instruction that government Departments need to reduce their wage bill. The 2017/18 ENE for instance states that almost 80 per cent of the department’s budget over the medium term will be allocated to spending on compensation of employees and related goods and services as the department’s core activities are labour intensive.[30] The DOD indicated that the reduction of the “compensation of employees” ceiling may have an adverse impact on the ability of the DOD to achieve its Constitutional mandate and the security of the country. “Currently the DOD… is only able to fund a total of 74 000 employees. Should the department continue with the average strength of 77,500 for the 2017 MTEF it will result in a departmental deficit on the compensation of employees with projected over-expenditure figures of Rb1, 930 in the FY2017/18, Rb3, 962 in the FY2018/19 and Rb3, 915 in the FY2019/20.” [31] The Committee expressed concern regarding the potential over-expenditure over the MTEF and noted that this should be addressed and plans to mitigate this be presented.

The following notes provide an overview of the key Human Resources focus points during 2016/17:

Personnel strength: The total personnel strength of the DOD for 2016/17 was 76 480 against a planned personnel strength of 78 686.[32]

Force rejuvenation: The Annual Reports states that the DOD was forced to reduce the Military Skills Development System (MSDS) Members intake and that it anticipates that it will still have to reduce these intakes in the future.[33] There were 1 842 MSDS members recruited in the year under review with 1 498 being black, 33 Indian, 246 Coloured, and 57 White, while those in the system amounts to 3 761.[34]

Personnel cost: As a percentage of total expenditure, the personnel cost was 57% for 2016/17. The highest percentages were for the Military Health Support (75%), Landward Defence (74% per cent), and Force employment (57 per cent).[35]

Vacancy rate: The reported vacancy rate for 2016/17 was 2.80% with the highest in Maritime Defence (8.36%), Administration (4.27%), Military Health Support (2.98%).

Vacancies Critical Occupations: There are a number of critical skills with high vacancy rates, including:

Combat Navy: 32 per cent vacancy rate

Nursing: 12.17 per cent vacancy rate

Aircrew: 9.65 per cent vacancy rate

Technical: 6.30 per cent vacancy rate

Reasons why staff left Department in 2016/17: The Report indicates that 3 641 members left the Department due to inter alia Death (427), Resignation (1 136), Contract expiry (886), and Retirement (854). Given that the highest percentage (31.20%) is with Resignation and that only 29 (0.80% is through MEM, this is concerning.[36]

Signing of Performance agreements by SMS Members: Only 195 (92%) out of 213 SMS Members signed their Performance agreements. Concerning is that it also shows 0% compliance at the highest level “Director-General/Head of Department where its shows a number of 6 posts. The second worst performers are at the level below namely Salary level 16, where there were only 59% compliance.[37]

Disability leave: The Annual Reports indicates that 1 143 employees used disability leave at 37 average days per employee with an estimate cost of R40 951 530. Questions were asked on the meaning of disability leave as well as the huge costs and number of average days per employee involved.[38]

Disciplinary Action: There were 61 (59 on page 194) disciplinary cases with 18 resulting in Written warnings, 16 in Final Written warnings, 7 in dismissal and 13 in their cases being withdrawn.[39]

Precautionary suspensions at a cost of R8 478 214:

Military personnel: 21 people have been suspended during the period under review and all of them had been suspended for more than 30 days at a cost of R6 205 956.00. Fifteen has been suspended with pay and six without pay.[40]

Public Service Act Personnel: 16 have been suspended and all of them had been suspended for more than 30 days, with the average number of days being 218 and at a cost of R2 272 258. [41]

Injury on Duty: There were 397 injuries on duty with most (330) only requiring basic medical attention. Temporary total disablement was 32 and Permanent disablement was 9 with 26 having been fatal.[42]

5. OVERVIEW OF SERVICE DELIVERY AND PERFORMANCE

The purpose of the DOD Annual Report for the FY2016/17 is to provide an analysis on the manner in which the DOD performed against its set targets in meeting ordered commitments, providing capabilities, ensuring sound administration and management of the DOD.[43]

The Department had 112 targets for the year under review, 14 of which was classified. Of the 98 targets left, 62 were achieved with a success rate of 63.2% against a success rate of 65% in the 2015/16 financial year.

Summary of all planned targets:

Total targets set: 112

Targets classified: 14

Remaining Targets: 98

Targets achieved: 62

Targets not achieved: 36

Success rate: 63.26%

The following sections will provide an overview of the performance of the eight programmes of the DOD. In addition, key observations on performance by the PCODMV during oversight visits are included. The increasing number of Classified targets is concerning especially since some of the these were earlier reported and the reasons for classifying it is not apparent if one had regard to the target, ie. the “Reimbursements to the DOD for SANDF deployment to the UN”, and the “Percentage available medical stock.”

5.1 Programme Performance

Programme 1: Administration

The Administration Programme has as its measurable objective, the regulation of the overall management of the Department and provides centralised support services. The Department met 42 of the 68 targets of this Programme giving a success rate of around 61.76 %. This should however be measured against the 100% spending of the allocated budget. Given that this Programme overall provides for the Management and Leadership of the Department, the success rate is concerning, especially as the A-G also refers to the challenges with Leadership and compliance.

The Programme’s allocation was R5 347 billion for 2016/17 and through a virement of R392 million it was increased to R5.740 billion. Four sub-programmes saw their allocation increase significantly through Virements:

Financial services received an additional R148.067 million. This relates to an increase of R154 million for Compensation of Employees.
Office Accommodation received an additional R121.952 million relating to Goods and Services.
Communication Services received an additional R55.537 million, which more than doubled its adjusted allocation of R45.211 million. The virement relates to Goods and Services.
Defence Foreign Relations received an additional R55.351 million relating to Goods and Services.[44]

5.2 Programme 2: Force Employment

The purpose of this programme is to provide and employ defence capabilities. This programme did well to achieve 11 of the 12 targets, excluding the five targets that were classified. The one missed target relates to the Border Management Agency Sub-strategy, which was hindered by the BMA Bill undergoing a parliamentary process at that stage.[45] The Programme spend 99.6% of its budget and the Department should be commended for its success rate in meeting 91.67% of its targets.

In terms of financial expenditure, it should be noted that R227.1 million was shifted away from the Programme through a virement. While this falls comfortably within the allowed framework, it should be noted that the funds were largely shifted away from the Regional Security sub-programme. R174.345 million was shifted from the adjusted allocation of R1.257 billion for this sub-programme. The impact thereof on the South African mission to the DRC as well as the potential impact on force readiness and subsequent UN reimbursements should be considered. [46]

5.3 Programme 3: Landward Defence

The purpose of this programme is to provide prepared and supported landward defence capabilities for the defence and protection of South Africa. For this programme, only three targets were set of which one was classified,[47] against 100% spending of its final appropriation of R15 557 billion. A total shift of R69.453 million was made away from the programme. The most affected sub-programme were the General Training sub-programme which had its allocation reduced by R172.719 million through a virement, reducing the allocation from R585.823 million to R413 104 million. This was largely due to a reduction in the Compensation of Employees for the sub-programme (R134.111 million). Similarly, the Operational Intelligence budget was also reduced from R252.520 million to R206.371 million, largely through a virement affecting compensation of employees. The Support capability received an additional R92.979 million through a virement. This was largely due to a virement to the value of R72.243 million for machinery and equipment as well as R29.884 million for buildings and fixed structures.[48]

5.4 Programme 4: Air Defence

The purpose of the Air Defence programme is to provide prepared and supported air defence capabilities for the defence and protection of South Africa. Three targets were set of which one is deemed classified.[49] The target that was not met relates to the Number force employment flying hours per year. Flying hours have been an issue of concern for the Committee and several questions were asked around this target, inter alia a further breakdown of these hours.

In terms of spending, a number of virements should be noted despite the 100 per cent expenditure (R6 785 billion) achieved. These shifts relate mostly to the core functions of the SA Air Force. It should further be noted that similar major virements away from the core functions of the SA Air Force were also made in 2015/16. This raises the question whether the SA Air Force is executing proper medium-term expenditure planning and whether they are struggling to effect expenditure.[50]

5.5 Programme 5: Maritime Defence

The purpose of the programme is to provide prepared and supported maritime defence capabilities for the defence and protection of South Africa. For FY2016/17, the Maritime Defence Programme had three targets, one which was classified. As with the Air Defence Programme, the target of the Number of sea hours per year, was not achieved. Given that one of the reasons provided is the vessel maintenance delays, and that the Committee has raised concerns around this issue, the status of the Naval Dockyard should be interrogated.

The Programme spend 99.33% of its Final appropriation of R4 232 billion. Spending was generally on track throughout the year, but three larger virements should be noted. The Maritime Logistics Support Capability’s allocation was reduced from R933.246 million to R841 751 million. This largely related to a reduction in Goods and Services. The Maritime Direction received an additional R18.475 million, largely for compensation of employees. Finally, the Maritime Human Resources and Training sub-programme received an additional R17.073 million, which almost exclusively related to increased funds for Compensation of Employees.[51]

5.6 Programme 6: Military Health Services

The purpose of the Military Health Support Programme is to provide prepared and supported health capabilities and services for the defence and protection of South Africa. The programme had six targets, of which four were classified. Of the remaining two, the training target of 80 per cent was not achieved while it achieved its target of Number of health care activities per year.[52]

The Programme spend 100% of its Final appropriation of R4 448 billion. Although the overall virements reflect only R8.074 million, significant shifts in the various sub-programmes are evident. The largest virement refers to the reduction of the allocation for the Military Health Training sub-programme which was reduced from R462.017 million to R335.060 million. This reduction related almost exclusively to Compensation of Employees. Furthermore, the Specialist/Tertiary Health Service sub-programme received an additional virement of R132.900 million, largely related to additional funds for Compensation of Employees and Machinery and Equipment. The Area Military Health Service sub-programme also received an additional virement of R123.266 million, mostly related to Compensation of Employees.[53]

5.7 Programme 7: Defence Intelligence

The purpose of Defence Intelligence programme is to provide a defence intelligence and counter-intelligence capability. The programme six targets of which it achieved three against a 100% of its Final appropriation of R881 million. It is interesting that this programme Defence Intelligence, does not have one target that is classified. The Programme failed to meet the targets of Developing a Cyber Warfare Strategy, Develop a Sensor Strategy, and the Establishment of a Cyber Command Center (Phase 1). [54]

For 2016/17, the programme spent 100 per cent of its budget. One large virement took place after the adjusted appropriation. A virement of R18.822 million was made away from the Defence Intelligence Support Services sub-programme, mostly related to a reduction in the allocation for Compensation of Employees.[55]

5.8 Programme 8: General Support

The purpose of the General Support programme is to provide general support capabilities and services to the Department. A total of 10 targets were set, as oppose to 14 the previous financial year. One target, Level of strategic reserves (ammunition) was classified. This programme achieved five of the remaining targets (9). The targets (4) not achieved related to the submission of the DOD Procurement Policy for approval, Finalising the Overarching Logistics Strategy, Modernised DOD ICT Integrated Prime Systems Capabilities, and Criminal cases investigated (in-year).[56]

The programme had a 100% spending of its Final appropriation of R6 056 billion. A virement of an additional R132.474 was made to the Command Management and Information Systems sub-programme. This included an additional R23.682 million for Machinery and Equipment as well as an additional R92.825 million for Software.[57]

5.9 Oversight visit reports: Summary of key performance matters

The Portfolio Committee on Defence and Military Veterans (PCODMV) engaged with the SANDF’s Gauteng Regional Workshop, the Council for Scientific and Industrial Research (CSIR), 1 Military Hospital, the South African Air Force (SAAF) Headquarters, and the Special Forces Headquarters during an oversight visit in Pretoria, Gauteng, over the period 19 to 23 September 2016.

Recommendations

Gauteng Regional Workshop

The Committee stated that it supports Operation Thusano and was impressed with the cost savings, the quality of the work and the skills transfer and undertook/recommended that:

It will assist them with addressing procurement challenges through interaction with SANDF’s Chief of Logistics;
The Department should tighten the contract with trained SANDF members to ensure it gets a return on its investment;
The Department should communicate such successes to the public through its own Departmental structures; and
The Department is encouraged to accelerate efforts to address those policies that hamper the effective functioning of Operation Thusano and related initiatives.

Council for Scientific and Industrial Research (CSIR)

The Committee recommended the information of the demonstration should be shared with the Portfolio Committee on Police in the Peace and Security Cluster at Parliament.

1 Military Hospital

The Defence Works Formation was commended for their assistance in the project and this role should be enhanced, whenever possible, to assist with cost-savings.
The appointment of a medical technologist should be prioritised as this is causing a bottle neck to any further progress. The Committee will raise this with the Minister and the Department’s leadership.
The lengthy procurement processes for essential medical requirements, especially medical consumables, should be investigated as soon as possible. In this regard the Committee is prioritising a meeting with the Chief of Logistics of the SANDF to assist, and to look specifically at the functioning of the Central Procurement Center.
Outsourcing is very expensive and the speedy completion of the RAMP should be prioritised to curb such expenses and to establish a facility that will be able to attract specialists.

South African Air Force (SAAF) Headquarters

There were lengthy discussions around the strategic importance of the SAAF, AFB Waterkloof, 21 and 28 Squadron and recommendations revolve around:

Addressing the lengthy procurement processes, especially around aircraft spares.
Increasing funding for aircraft spares.
Increasing the flying hours as a matter of urgency.
The SAAF should make the impact of aviation inflation much clearer for Treasury to appreciate its impact.
The contracts of pilots and aircrew should be tightened to ensure a return on investment for the SAAF.
The budget of the SAAF should be increased to address the retention of staff, training of staff especially the compulsory training interventions, the purchasing of additional aircraft for 28 Squadron, and shortening the servicing time through a shorter process to purchase spares.
Flying hours in the SAAF should be sufficient to provide assistance to other Arms of Service, notably the Paratroopers and Special Forces as per their requirements.
Discussions should be had with the Chief Human Resources to assist to address the appointment of PSAP members to replace those who have retired.
The bottlenecks to utilise more Reserve Air Force members, especially those assisting 21 Squadron, should be prioritised.

Special Forces Headquarters

Following the discussions, the Committee made the following recommendations with regards to the SANDF’s Special Forces:

That the Special Forces capacity be adequately funded to ensure its required expansion under Milestone 1 of the Defence Review.
If Milestone 1 is not immediately implementable, the operational requirements of the Special Forces should be carefully re-considered to prevent operational fatigue.
That female SANDF members be encouraged to enter to undertake Special Forces training.
That the levels of training be maintained at the highest standards.
The Special Forces should be reimbursed for training of foreign nationals.
Procurement processes for the Special Forces should be reviewed to ensure faster turn-around times.
That equipment acquisition, notably the purchase of signal equipment and vehicles, etc. be adequately funded and be promptly acquired.

6. COMMITTEE KEY OBSERVATIONS: DePARTMENT OF DEFENCE

The Committee made the following Observations on the 2016/17 Annual Report of the Department of Defence:

The Department did not report back to the Committee on the Recommendations made in the previous BRR Report as detailed on page 8 of this Report, especially those recommendations that had deadlines attached to it.
The Committee expressed its concern about the transfer of funds from the SDA to compensate personnel and indicated that it is concerned about this practice and especially its impact on the operational capabilities of the SANDF.
Concerns were expressed on the utilisation of SDA funds and where this is reported, given that such information is often classified.
The Committee highlighted the fact that few of the SAAF’s aircraft are serviceable and wanted know how much are being spend on chartering aircraft.
It was indicated that National Treasury and the Department of Public Service Administration are being consulted to draft a plan to exit members from the system, but it was not clear the number of personnel the Department plans to reduce the number of Defence personnel over medium term.
It was observed that little progress has been made with the roll-out of Milestone 1 of the Defence Review, even though Option 2 has been declared as the preferred Option.
The Committee felt that there is a disjuncture between the Special Defence Act and the preferred audit system that is being utilised by the A-G.
The Committee viewed the Border Management Agency (BMA) as very important and wanted clarity on the role of the DOD in this as it relates to its protection role and especially its law enforcement role by the SAAF.
The Committee is concerned about the regression of the audit opinion of the Department from unqualified to a qualified audit status, and notably the understatement of fruitless and wasteful expenditure as well as irregular expenditure.
Note was taken of the fact the Department has to exit around 16 000 members from the DOD, and that it is encountering challenges in this regard, due to inter alia few people using the exit mechanisms.
The 63% overall performance of the Department in meeting its annual targets were viewed as unacceptable, especially against the fact that 99.9% of its budget was spent.
The Committee noted the 178 new corruption cases with alarm although none of these involved amounts exceeding R5 million.
The Committee noted with concern that there are no developments regarding the transfer of the Naval Dockyard and that this impacts on the maintenance and servicing of SA Navy vessels, which in turn impact of sea hours and their operational responsibilities.
Concern was expressed about the funding shortfalls and how this will impact on the existing number of sub-units (15) deployed on our borders. The Committee further notes the need to increase this deployment to at least 22 deployed sub-units.

7. COMMITTEE Recommendations

The Committee made the following Recommendations on the 2016/17 Annual Report of the Department of Defence:

The Committee instructed the Department to provide feedback on the 2016 BRR Recommendations within 30 days of the publication of this Report.
The Committee recommended that the Department should clearly highlight the amounts drawn from the SDA, the reasons thereof and especially its impact of the Department’s operational capabilities. This should be reflected in quarterly reports by the Department to the Committee.
It was recommended that the Department in future give the Committee the assurance that classified information has been reported to the JSCI or that the Department request a closed meeting to share such information with the Committee for oversight and accountability purposes.
The Committee recommended that the maintenance and servicing of aircraft be prioritised as chartering of other aircraft are not only expensive but also “rob” SAAF pilots from accruing flying hours to stay current.
The Committee requested the Department to submit a comprehensive report on how the airlift capability challenges in the SAAF can be fully dealt with, with specific reference to the lack of serviceable aircraft at 35 and 28 Squadrons, Helicopter squadrons, as well as the reconsideration of the expensive and underutilised VVIP fleet at 20 Squadron. The objective must be to prevent non-essential chartering of transport, patrol and especially VVIP aircraft. This report should be submitted to the PCODMV within 4 months from the adoption of this BRRR.
The Committee requested the Department to provide details of the flying hours for training, operations, VVIP flights, and the amount of hours and money used and spend for charter flight for operations and VVIP transport. This report should be submitted to the PCODMV within 30 days from the adoption of this BRRR.
It was recommended that the Department prioritise the development of exit mechanisms in consultation with NT and the DPSA, and that such plans should be shared with the Committee as soon as it have been concluded. The objective must be to align this with the expenditure formula of 40/30/30 as per the 2015 Defence Review and NT requirements. This should be communicated to the Committee in a written report within 3 months of the adoption of this BRRR.
The Committee requires the Department to submit a comprehensive report on how the Department propose the DoD and the SANDF be repositioned and expenditures be reprioritised based on (a) requirements in terms of Section 200 of the Constitution and (b) the available and appropriated budget. Included must be recommendations on how current assets and properties be utilised, alienated and/or liquidated to sustainably fund essential capital and operational expenditures. This report should be submitted to the PCODMV within 3 months from the adoption of this BRRR.
The Committee recommended that the Department should clearly spell out the challenges it is encountering with the roll-out of Option 2 of Milestone 1, especially as it relates to those issues that do not require additional funding. During presentations on quarterly performance, the DOD should provide quarterly updates on the implementation of Milestone 1 of the Defence Review. The DOD should provide the PCODMV with a written report on the funding of Milestone 1, including the role of Armscor and the possible sweating of assets. This should be provided to the PCODMV within 3 months of the adoption of this BRRR.
It was recommended that the SDA Act and the accounting system should be aligned and that the Committee should investigate this issue further in order to address this disjuncture.
The Committee undertook to consider a Study Tour to developing and developed countries to benchmark how other countries approach their oversight over Special Defence accounts and the accounting systems that are being used.
systems that are being used.
It was recommended that the Department outline their challenges with the BMA to the Committee since the Bill is currently being finalised by the NCOP. Specifically, clarity is required of the SANDF’s Rules of Engagement when patrolling and enforcing the law in the South African airspace and land borders.
The Committee recommended that the Department should explain – besides the reasons presented by the AG – what led to the regression in the audit opinion by the A-G. The DOD should, by no later than 20 March 2018, indicate in a written report to the PCODMV the measures put in place to ensure that this will not re-occur for the 2017/18 financial year.
It was recommended that the Department provide the Committee, within 30 days, with information on the number of members exiting, the costs involved, how many contracts were extended beyond the retirement age, the costs involved with this as well as the reasons thereof. The report should also include means that will be used to ensure force rejuvenation and measures to address the top-heavy structure of the SANDF.
The poor performance (63.26%) of the Department was lamented and the Committee recommended that the Department should indicate who are the people liable and what kind of action has been taken against them.
The prosecution of corruption and fraud cases are poor and the Department should address this situation with the urgency and seriousness it deserves.
The Committee encouraged the Department to urgently address the situation at the Dockyard as delays impact further on the operational capabilities of the SA Navy, specifically with regards to Projects Hotel and Biro. Of particular relevance is the reported difficulties Denel is experiencing to secure the finances in terms of their responsibilities in these projects.
The Committee recommended that given our porous borders, the Department should not consider reducing the sub-units, but rather increase it given the sterling role it plays in preventing cross border crime and crossings. In this sense, the Committee also urges National Treasury to look at providing additional funds for the expansion of the SANDF’s borderline safeguarding operations. National Treasury should provide feedback on this recommendation within 3 months of the adoption of this BRRR.
The Committee notes the lack of cooperation between the DOD and the Department of Public Works. The Ministers of Defence and Public Works are encouraged to convene an urgent meeting to address maintenance backlogs, notably the renovations at 1 Military Hospital and security infrastructure at Silvermine Naval Base and 9 SAI Battalion. The Ministry of Defence should provide a formal written report to the PCODMV within 3 months of the adoption of this BRRR.

8. APPRECIATION

The Committee appreciates the support of the all the relevant stakeholders such as the Minister, Deputy Minister, the Secretary for Defence and his senior officials, the Chief of the Defence Force and his management team, as well as the external stakeholders consulted through the year under review. The leadership in the Office of the Military Ombud, Defence Force Service Commission, Armscor, and the Castle Control Board are commended for their contributions to enhance the oversight work of the Committee during the 2016/17 financial year. Special thanks goes to the Office of the Auditor- General.

Report to be considered.

[1] State of the Nation Address 2016 delivered by President Jacob Zuma on 11 February 2016 during a Joint Sitting in the National Assembly, Parliament of the RSA, Cape Town.

[2] Minutes of the PCODMV meeting of 7 March 2012.

[3] Minutes of the PCODMV meeting of 7 March 2012.as well as PMG minutes of the same date.

[4] Announced on 29 December 2015. See http://www.un.org/press/en/2015/sga1622.doc.htm.

[5] DOD, 2016. p. 16

[6] DOD, 2016. p. 3.

[7] DOD, 2016. p. 76.

[8] DOD, 2016. p. 7.

[9] DOD, 2016. p. 65

[10] DOD, 2016. p. 7.

[11] See for instance DOD, 2016. Annual Performance Plan 2016. p. 74.

[12] DOD, 2017. DOD. Annual Report 2016/17. p. 38

[13] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 39

[14] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 40

[15] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 40

[16] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 41

[17] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 46

[18] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 47

[19] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 48.

[20] DOD. 2016. Annual Performance Plan 2016. p.16 - 22

[21] The difference between the quarterly figures and those in Table 2 is that the quarterly figures are preliminary while those in the table are final.

[22] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 26.

[23] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 206.

[24] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 206.

[25] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 215.

[26] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 206 - 208.

[27] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 206 - 208.

[28] Standing Committee on Appropriations. 2017. 4th Quarter Expenditure Report 2016/17 Financial Year. Presentation by National Treasury.

[29] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 215 - 221.

[30] ENE 2017/18. Vote 19. Defence and Military Veterans. Abridged version. p. 2.

[31] DOD Powerpoint presentation on 2017/18 Budget and APP to PCODMV on 18 May 2017. p. 24.

[32] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 173.

[33] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 171.

[34] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 182.

[35] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 174.

[36] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 181.

[37] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 185.

[38] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 187.

[39] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 184.

[40] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 195.

[41] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 195.

[42] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 196.

[43] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 37.

[44] Janse van Rensburg, W. 2018. Summary and Analysis: Department of Defence Annual Report for FY2016/17. Research Unit, Parliament of the RSA.

[45] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 67.

[46] Janse van Rensburg, W. 2018.

[47] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 71.

[48] Janse van Rensburg, W. 2018.

[49] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 74.

[50] Janse van Rensburg, W. 2018.

[51] Janse van Rensburg, W. 2018.

[52] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 78.

[53] Janse van Rensburg, W. 2018.

[54] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 80.

[55] Janse van Rensburg, W. 2018.

[56] DOD, 2017. Department of Defence Annual Report, 2016/17. p. 82.

[57] Janse van Rensburg, W. 2018.

Documents

No related documents

ATC180301: Budget review and recommendation report of the Portfolio Committee on Defence and Military Veterans on the 2016/17 annual report plan of the Department of Defence (DoD), dated 1 March 2018

Defence and Military Veterans

Documents

What's wrong with this page?