Department of Defence on its 2nd and 3rd Quarter 2015/16 performance

March 2, 2016

Chairperson: Mr M Motimele (ANC) Date of Meeting: 02 March 2016

Summary

The Committee met at the Castle of Good Hope, due to difficulties in securing a venue in Parliament, but the Committee commented that the senior staff should try to ensure that the Castle meeting rooms were more disabled-friendly. The Department of Defence (DoD) presented its second and third quarter reports for the 2015/16 financial year. In the year, the DoD had committed itself to 34 targets for non financial matters, under the Defence Secretariat and 33 targets for programmes under the SA National Defence Force. There was both overspending on some items, but underspending on buildings, which the DoD claimed was largely due to non-submission of invoices and problems with building on the part of the Department of Public Works. The presentation marked certain areas of the Department's work in green (showing that it was on track), amber (needed to be watched) and red (risky). Risk management was not part of the performance agreements. Corruption and fraud would only be examined at levels of over R5 million. National youth services had been discontinued as being outside the core business of the Department, although the DoD was liaising with other departments. The DoD had acceptable performance on the Chaplain's work, compliance with training, but had amber indicators for office accommodation, health care activities and holding sufficient medical stock. Overall, it had achieved 50% of targets but hoped to be up to 70% in the next quarter.

Members were concerned about the R5 million cut off for the fraud and corruption cases and asked that this target must be revised. A number of questions were asked about the building, the interface between the two departments and how the late invoicing by DPW affected the overall targets. They wondered how the targets were also affected by the cut-backs and the minimum cost of deliverables. They pointed out that these were not small discrepancies in spending, but large amounts and how this had happened in relation to the planning. Members also asked questions relating to the filling of critical posts, and how the current directives on staffing would impact on the Department and noted that there was nothing in the report indicating the gender of the latest recruits, which posed the question whether the DoD was complying with the Defence Review directives. Members noted that the National Conventional Arms Control Committee documents had not been received by the Committee and that the current presentation was not received on time and asked the DoD to pay attention to that. Members highlighted errors in the presentation and asked the DoD to be more careful when submitting presentations in future. The position of the Chaplain, the overspending on some visits and whether this was supported by other wellness programmes was questioned. Suggestions were made by Members as to adjustments to be taken into account on medical issues when reviewing the budget. One Member raised questions around reservists, claiming that there was a certain amount of cronyism around their deployment, but it was decided that this, and other questions relating to aircraft lost in Burundi, should be addressed separately as they were not issues arising out of the second quarter reports.

 

Minutes

Chairperson's introductory remarks
The Chairperson noted that due to the Committee Secretary's absence, venues in Parliament had been fully booked, hence the meeting at the Castle of the Cape of Good Hope. The CEO of the Castle was present. The Chairperson asked that the venue be upgraded as a matter of urgency to ensure that it was disabled friendly.

Agenda items
Mr S Marais (DA) highlighted that Minister alluded to the aircraft being stolen, that this was a serious issue and that should made clear.

The Chairperson said that was clear and assumed that Mr Marais was also going to talk about the Airforce 1 that got stuck in Burundi.

Mr D Gamede (ANC) agreed with Mr Marais that this matter needed to be discussed, but since it was not on the current agenda, this should stand over to a special meeting when all the issues could be discussed together.

The Chairperson agreed with Mr Gamede, and said that should be the standard way of dealing with matters.

Department of Defence 2nd and 3rd Quarter 2015/16 Performance Report
Ms Thobekile Gamede, Chief Director of Policy, Planning and Strategy, Department of Defence, noted that the second quarter report would cover the period July to September 2015. Part 1 would comprise non financial performance information and part two was financial information, and the report was drafted in terms of section 31(1)(a)(i) and (ii) of the Public Finance Management Act (PFMA), and the Treasury Regulations. The reports had been drawn in line with the Department of Planning, Monitoring and Evaluation Guidelines.

The Defence Secretariat report includes departmental direction, policy and planning as well shared programmes such as the Human Resource Support Services and Legal Services. The programmes under the SANDF that still have administrative programmes focus on key programmes such Military Health Support, General Support, Defence Intelligence and many others. Annual reports were submitted on time as well as the Annual Performance Plans PP. The Department's policies and strategies were successfully executed.

Ms Gamede explained that the presentation marked certain areas of the Department's work in green (showing that it was on track), amber (needed to be watched) and red (risky). For risk management processes the Department of Defence (DoD or the Department) is at level four, and revising that to level five. The reason why the Department received a level four is that the risk management was not part of the performance agreements. The percentage payments made within thirty days is 72%, the Department received 158 830 invoices and 138 619 invoices have been paid.

National youth services have been discontinued due not being part of the core business of the Department. However the Department is contributing through working with the Department of Rural Development and Land Reform and liaising with the National Youth Development Agency.

The Department showed green on several targets, including the percentage of cases of corruption and fraud prosecuted; the reason is that the Department only being required to report cases of fraud above the amount of R5 million. The Chaplin has achieved its performance. On the office accommodation, the Department was below the target of the overall quarter. R75 million worth of invoices had been paid and this would be reflected on the fourth quarter report. The percentage compliance with training showed the Department with a 75% overall. The number of health care activities in the 3rd quarter showed as amber; and this included anything to do with health.  She explained that safety and security referred to internal targets including disaster operations. The availability of stock also was marked as amber, and this was due to availability of funds, which was a national issue. There was also waiting time from pharmaceutical companies. The Department had been trying to improve its procurement process. Part of the issue may be because the details of the end user were not clear, which then caused delays.

Overall, she reported that the Department had achieved 50% of the overall targets, but the Department was hoping to be on or above 70% at the end of the fourth quarter.

She then set out the Departmental expenditures per programme. Overall, the Department had underspent more than R5 million for buildings, but this was because of late submission of invoices by the Department of Public Works.

Discussion
Mr Marais noted that on slide 11 the Department indicated minimum costs of deliverables. He asked how this affected the efficiency of the defence deliverable,  if the Department was not “going full out” but was focused on minimising costs. On page 17 the Department indicated the targets and achievements in relation to payment of invoices within 30 days. He asked how this tied in with the payments that were due to the Department of Public Works. He referred to slide 18, which indicated that the programme would not be approved in 2016. However, seeing that this was already 2016, he wondered if the information on there and slide 18 was correct.

Ms N Mnisi (ANC) said that the Portfolio Committee did oversight in buildings in Gauteng where it found some very old buildings. Under Programmes 2 and 3, there was an indication of slow spending on buildings. She asked if there were challenges between the Department of Defence and the Department of Public Works. She also wanted to know what had contributed to the slow spending (only 52%) on the “specialised asset”, and whether the Department had any remedies for this situation.

Mr S Esau (DA) stated that problem was that there was not incorrect spending by small amounts, but by huge amounts. He wanted to find out how that happened, and whether there was any planning on the side of the Department. He asserted that the Committee had a concern about the underspending on the buildings, since the soldiers should have decent accommodation. He wanted to know the percentage of military veterans accessing health. He noted that the funded posts were filled to around 96%. The Presidency had recently said that there would be no further filling of posts other than critical posts,with others being frozen. There was a cut in every department, because of financial constraints. He asked what the key vacant posts were, and how this directive would impact on the Department.

Mr J Skosana (ANC) stated that the Committee had been advising the Department to pay attention to invoices outstanding for more than 30 days and he wanted to know how far the Department had gone to rectify this. He also requested the Department to revise its target for only reporting on corruption and fraud of more than R5 million. He noted that some staff were qualified but not trained and asked how they affected the completion of the mandate.

Mr B Nesi (ANC) said that many issues that were raised and it seemed that nothing the Committee had proposed previously to rectify these issues had been taken into consideration. If this was the case, nothing would change. The Department had spoken of new people coming on board, but he noted that there had been no mention of their gender. He did not feel, from the report now presented, that the Department had made any changes in line with the Defence Review.

Ms Gamede answered Mr Marais said that the deliverables that were identified were low costs like the military strategies. The areas identified were limited to areas of strategies and policy. The Department did accept that if it were to get another injection of funding, then the milestones might go beyond the five year target. She asserted that the deliverables will not impact the milestone negatively as long as there is some injection, and that the Department was currently working on a costing and funding model. In relation to the question on the figures, she agreed that although the Committee was now sitting in 2016, the figures being referred to related back to 2015, so this was not an error.

Speaking to issues around the buildings, Ms Gamed noted that the Department of Defence was now renovating its own buildings.  An MOU had been signed by both Ministers, of Defence and Public Works. The issue had been outstanding for a while but the Department was considering what to do. Invoicing between the DoD and DPW was made separately and so those payments were not affecting the overall position.

Ms Gamede said that in relation to overspending, there was a distinction between overspending on the projections for the quarter, and overspending entirely on the voted amounts at the end of the year. The budget had already been submitted, for 2016/17, in February, so that the Department had not known what exactly would be taking place.

Ms Gamede said that in relation to the request to re-look at the policy around the R5 million figure for corruption and fraud cases, the DoD would be looking at all cases, as part of the Annual Performance Plan (APP). She reminded Members that in relation to the Review, the DoD had proposed setting up a structural committee but the Portfolio Committee had decided that it will do that. In relation to the staffing, she noted that issues of gender and transformation are addressed in the policy but the document speaks of being “balanced”, which means that it is to cater for all demographics. Any posts that are not funded will no longer be advertised; only critical positions will be recruited for and filled.

Mr Marais  asked whether the disciplinary cases have been finalised. He asked whether slide 45 referred to actual numbers or compliance. He noted that the National Conventional Arms Control Committee documents had apparently (according to slide 43) been submitted to Parliament, but this Committee has not received them.

Ms Gamede asserted that this was done directly by the NACC, not by the Department of Defence.

Mr Marais also asked a question of clarity on slide 45, saying that the figures did not add up, and Ms Gamede conceded that there was a typographical error and the figure should be R39 755.

Mr Esau asserted that the 2nd quarter figures were not submitted to the Committee, and noted that this report being presented today was also late in reaching the Committee. Mr Esau wanted to know the reasons for overspending in the unit undertaking religious visits. He was not happy with the position in relation to army reserves, and asked why these reservists were not used on a strictly rotational basis, claiming that there were opportunities for cronyism since some individuals were getting opportunities but others were not.

Mr Gamede raised a point of order, asking the Chairperson to rule on whether Members may ask questions not covered by today's report.

The Chairperson asked Members to raise questions only on points covered in the report. He asked the Department to send through the APP documents and the strategic plans for 2016/17 to the Portfolio Committee, to assist this Committee in helping the Department. He asked the presenters to be careful and ensure that numbers contained in reports were correct, and reports should be properly proof-read, as it wasted the Committee's time when they had to clarify errors.

The Chairperson eluded that the Department should be very careful and ensure that numbers are correct . He said the committee should not waste time to correct what the Department should have corrected. And said the Department should do proof reading prior to meetings.

Ms Gamede said that the Chaplin played a crucial role for all the different soldiers and their denominations and the Chaplin had an advisory board to deal with any problems aligned with the religion of the forces.

The Chairperson asked if there was no employment wellness programme, in addition to the Chaplain's efforts.

Ms Gamede said that there was a wellness programme which encompasses the role of psychologist and social workers, during visits by the chaplaincy to communities and families. She added that the Department had also been looking into the performance on the health activities. These had increased, and that was why, at the end of the 3rd quarter, there was a reflection of 50% medical stock. The turnaround time for the pharmaceutical companies to re-stock was around three months, and the DoD was hoping to be on track fully by the end of the 4th quarter.

Mr Esau asked whether the budget projection considered the increases in the stocks and supplied accordingly, and the Chairperson suggested that this should be taken on board.

The meeting was adjourned.

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