DOD 2019/20 Quarter 3 performance; Military Discipline Bill process; Defence Amendment Bill: NCOP amendment

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Defence and Military Veterans

26 February 2020
Chairperson: Mr V Xaba (ANC)
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Meeting Summary

The Department of Defence (DOD) reported that 16 of its 21 performance indicators for Quarter 3 were achieved (76%). It provided a report on its Strategy; Human Resources; Financial Management; Defence Diplomacy; Armaments Acquisition and Technology Development; Command of Forces; Financial performance; Status on Budgetary Review and Recommendation Report (BRRR); its Audit Action Plan.

Members noted that Defence Sustainability Strategy was not sustainable and asked if it will be reconsidered as the 2015 Defence Review is unachievable. They asked what constitutes a fall-back position to mitigate Defence decline; how the R2.7 billion short-fall on DOD force strength will be funded; how a single maritime patrol in three months can be adequate. They noted that the number of reserve forces has been cut to zero for Jan, Feb and March. They asked if the 2020/21 budget had been approved by the Minister of Finance. The Committee had visited and seen the state of equipment. How can DOD report an 86% equipment functionality rate? Members said for oversight purposes they require more information on the classified Special Defence Account (SDA) and requested a closed session after being vetted. Questions were asked about the refurbishment of 1 Military Hospital and the 83% payment of invoices within 30 days.

On the introduced Military Discipline Bill [B21 -2019], the Reserve Force Council (RFC) had made a submission but objected to them not being consulted on the 2019 version of the Bill as is stipulated in Section 48 of the Defence Act (No. 42 of 2002). This despite the Memorandum of the Bill stating in the Consultation section that it had consulted the RFC. The RFC requested a two/three-month consultation period.  Another submission was submitted in terms of the Protected Disclosures Act (No. 26 of 2000) and the Committee was advised to safeguard the identity of the individual who submitted the submission. After advice from legal advisor, the Committee agreed that the Minister will be requested to withdraw the Bill, as section 48 is peremptory, thus strict compliance was required otherwise the ensuing act will be null and void.

The Committee approved the NCOP amendment of the Defence Amendment Bill as B18B-2017. 

Meeting report

The Chairperson noted apologies from the Minister and the Secretary of Defence as they were at a cabinet meeting and the Deputy Minister was indisposed.

Department of Defence (DOD) Quarter 3 performance & Audit Action Plan progress
Dr Thobekile Gamede, Chief Director of Policy, Planning and Strategy, Department of Defence, introduced the DOD delegation.

Ms Carine van der Berg responsible for DOD Monitoring and Evaluation said that DOD reports against 140 performance indicators over 2019/20 with 21 in Q3. They aim to support the main outputs of Defence, including Administration, Force Employment, Landward Defence, Air Defence and Maritime Defence.

Strategic Overview: Defence Review 2015 implementation remains totally dependent on an improved funding trajectory for the DOD. Two processes are particularly pertinent to note:
• The Defence Sustainability strategy is a strategic approach and policy framework for sustainability and was developed to assist the DOD in coping with the expected funding deficits over the next two MTSF periods as indicated in Treasury's 2019/20 MTEF Allocation Letter. The conceptual approach to the Defence Sustainability Strategy is constantly assessed and adjusted, in case it should be necessary to develop a “fall-back” position on the “Revised Plan to Arrest the Defence Decline”.
• DOD and Armscor have continued to contribute to the Revised Plan to Arrest the Defence Decline. A Special Plenary Defence Staff Council (PDSC) was convened on 13 Nov 2019 to discuss the Treasury Allocation Letter concerning the 2020/21 MTEF Defence Allocation. It was decided that the Secretary for Defence will work with the Director General in the Presidency to convene a high-level meeting to discuss the future size and shape of Defence. A high-level presentation, based on the 15 Jan 2019 briefing to the President, will be developed for the meeting.

Human Resources: Correspondence from the Minister of Finance dated 25 Oct 2019, referred to the 19 Oct 2019 Magoebaskloof meeting with the SANDF commanders. During the meeting it was indicated that Government’s Wage Bill remains unsustainable and re-emphasised that a Rejuvenation Plan is to be submitted to Treasury. The final Letter of Allocation from NT dated 08 Nov 2019 emphasised the urgent requirement of a high-level meeting between the President, the Ministers of Finance, Public Service and Administration and Department of Defence and Military Veterans. The DOD requires an average HR strength of 77 000. For a more sustainable defence capability, an average HR strength of 75 500 will however be maintained. The DOD reduced its strength from 78 632 from 31 Mar 2014 to 72 768 by 31 Dec 2019. Planned average strength for 2019/20 is reduced from 74 901 to 74 104 at a cost of R31.89 Billion, resulting in a shortfall of R2.7 Billion.

Financial Management: During Q3, DOD achieved 83.3% payment within 30 days of legitimate invoices. Legacy DOD information systems are the main factor hampering payment of invoices within 30 days.

Defence Diplomacy: DOD was able to ensure the 100% validity of the international agreements mandating the conducting of bilateral and multilateral engagements with Europe and America (USA, Brazil, Italy, Canada), Africa (Chad, Zimbabwe, Kenya, Togo, Ghana, Egypt), Asia and the Middle East (Thailand). DOD participated in multilateral engagements in UN, AU and SADC initiatives such as, during Q3, the SANDC Double Troika & UN FIB Troop contributing countries in DRC, in Dar Es Salaam on 12 to 13 Nov 2019.

Armaments Acquisition and Technology Development: At the Nov 2019 National Defence Industry Council (NDIC) meeting, the NDIC Task Team on Denel was instructed to compile a report on the causes, remedies and recommendations on Denel liquidity and operational challenges. The Task Team presented the Report to the Defence Deputy Minister and Treasury during Q3.

Command of Forces: SANDF deployed 15 sub-units to execute Operation Corona (border safeguarding). Various operational successes have been achieved. In support of government departments (Operation  Prosper) SANDF provided infrastructure support to North West Department of Water and Sanitation by maintaining essential services as well as safety and security support against gang violence to SAPS on the Cape Flats since 12 Jul 2019. Operation Chariot provides Disaster Aid and Relief with SA Air Force assisting in various operations. Operation Arabella does search and rescue but SANDF was not requested to provide assistance in Q3. Operations Mistral and Ukuwela were also discussed.

Q3 Performance Indicators: 16 of the 21 targets were achieved (76%). Overall numbers were reduced for DOD hours flown and hours at sea per year. Hours at sea were reduced due to underfunding for refits.

Financial performance: DOD Q3 planned expenditure by 31 December was set at 71.7% and paid expenditure was 72.4%. Over expenditure of R351.6m was mainly due to the Cost of Employees ceiling set by Treasury not supporting the current strength of the Department. Payments for refurbishment of 1 Military Hospital (managed by Public Works & Infrastructure and the Defence Works Formation) were higher than the original cash flow plan.

Status on Budgetary Review and Recommendation Report (BRRR) as on 31 Dec 2019: Feedback was provided on the eight Portfolio Committee October 2019 recommendations (see document).

Audit Action Plan: DOD received a qualified audit opinion on the basis of: movable tangible capabilities, Movable Tangible Capital Assets (Inventory), Intangible Capital Assets (Software Licenses), Goods and Services and Investments (Sensitive Projects), commitments and irregular expenditure. Feedback was provided (see document). For example:
- Movable Tangible Capital Assets: Treasury guidelines on capital assets have been updated to give all departments discretion on the extent of the components to be included in asset registers.
- Irregular expenditure / Supply Chain Management: SCM practitioners are being trained. Regular meetings are held with procurement units to share best practice and to improve on procurement practices. A DOD oversight committee has been established to monitor procurement across the country where findings occurred and intensifying the effective function of bid committees and evaluation committees.

Discussion
The Chairperson thanked them for the presentation and noted its three components. He asked for questions and said he wanted to deal with the Audit Action Plan last.

Mr S Marais (DA) referred to the Strategic Overview on slide 12 on the Defence Review. The Defence Sustainability Strategy was not sustainable. Will it be reconsidered? He understood that the 2015 Defence Review is unachievable. What constitutes a fall-back position to mitigate defence decline? Has the Committee been given that information? On the R2.7 Billion short fall after reduction of the planned average DOD force strength, how will that be funded? On slide 19, he noted reference to a single Operation Corona maritime patrol. Is this patrol adequate and/or necessary? Will one patrol make any difference given the amount of maritime traffic off the east coast? Could we see the report on the successes on the Cape Flats? Has there been a withdrawal from the North West province?

Mr Marais referred to the performance indicators on slide 25 and noted the mandate for the number of reserve forces has been cut to zero for Jan, Feb and March. Is that so, how vulnerable does that leave the country? We know that we cannot conduct the DRC and border operations without them. On sea hours, to refit a frigate, at R400 million per sub, there are three to be done. How is this being paid for? Can we have an indication on contracts - how will this be reallocated? On slide 49, he had seen the state of equipment in the DRC. How can we have a supposed 86% equipment functionality rate but still have this list of complaints about inadequate equipment? On the SDA, we have oversight to the extent that we see the ballpark figure - but we do not have access to the rest of this information as it is classified. We sit with a vacuum between Parliament and the DOD. We need more details. We must be able to ask questions in a closed session after being vetted.

The Chairperson asked that DOD first reply to these questions.

Dr Gamede replied that the DOD is not cutting the mandate as per our Annual Performance Plan; we are referring to the indicators which were not achieved due to funding.

Mr Marias noted that there were reserve force cuts for Jan, Feb and March and asked for elaboration.

Dr Gamede replied that according to the Plan they have not been cut. We have not revised the mandate. On the Cape Flats, we do have some stats that we have provided in responses. On serviceability of equipment, details can be provided by the CFO in writing. On the sensitive information on the Special Defence Account, she requested the CFO to comment.

Mr Siphiwe Sokhela, CFO, DoD, referred to Projects Biro and Hotel. The SDA budget would be cut by R5 Billion but there is a continuous engagement with National Treasury, discussing this. Defence is in a quagmire at present. There is a contract in place and engaging with suppliers. Nobody knew that we would be in this quagmire when contracts were signed. Therefore, we need to engage with Treasury.

The Chairperson suggested that the DOD ought to talk about what it has, not what is promised. The question is what are the financial implications?

Mr Sokhela replied that the budget will be cut by R5 Billion. Some of the remaining budget will allocated to Projects Biro and Hotel.

The Chairperson asked for a detailed report on the exact details of surface-level agreements.

Mr Marais cautioned that the DOD should also take into account payments needed for penalties. The DOD ought to spend with caution.

Lt Gen Jabulani Mbuli, SANDF Chief of Logistics, replied on the status of equipment serviceability, saying they had invited the Committee to come and see what has been done to improve and preserve equipment. Externally, in the DRC, we have trained staff to assist in bringing equipment to a serviceable state.

Maj Gen Michael Ramantswana, Chief of Military Policy, Strategy and Planning, DoD, said that the military is operating in the Western Cape in support of the police. Thus far, there have been weapons and ammunition rounds found and confiscated. Suspects have been arrested. There has not been a withdrawal from the Cape Flats or North West so far. Mr Marais is quite right about the insufficient maritime patrol. We note that the patrol is intelligence driven. Once intelligence has been given, we do our best to ensure there is a way that we can respond appropriately. On the frigate refits, we have been doing work to keep frigates operational to the best of our capacity. The Defence Force has been very clear on the constraints that it is has. It has thus far not failed in executing its missions.

Mr Edem Abotsi, Chief Director: Compliance, DoD, noted about the Special Defence Account that the auditors with the right level of clearance have full access to this. When the SDA Act was written, unspent committed funds would be rolled over to the Department when there are assets being developed,

Ms Nangamso Tyibilika, Chief Director: Budget Management, DoD, explained that DoD had received R1.6 bn to cover the Cost of Employment (CoE). If there is a newly calculated number, it will be that number.

The Chairperson noted that the rest would come from remaining funds in the Special Defence Account.

Mr T Mmutle (ANC) asked if the DOD had had its budget approved.

Maj Gen Ramantswana confirmed the meeting with the President did take place but the DOD needs to meet with the Minister of Finance to get approval.

Mr Mmutle referred to the Q3 payments for 1 Military Hospital refurbishment and asked why there was over expenditure that quarter. What are you doing to ensure judicious spending in conjunction with the Department of Public Works? Invoices are supposed to be paid within 30 days. How is the difference of R16.3 million legitimate?

Dr Gamede replied about the 1 Military Hospital refurbishments that the Department of Public Works will take responsibility for municipal concerns. This will happen progressively as the DOD builds capacity in the Defence Works Formation.

Lt Gen Mbuli replied that DOD has been told by Department of Public Works that assessments are being made.

Ms Tyibilika added that when DOD conducts its reconciliation on the 1 Military Hospital, they look towards reconfiguring that.

Mr Mmutle questioned if their response was that the DOD is still within budget.

Mr Marais noted that three years ago it was indicated that R1 billion was required for construction work and another  R1 billion for refurbishment/equipment at the 1 Military Hospital.

Lt Gen Mbuli replied that SANDF has medical technologists to assist with the specifications of the machines that need to be installed in 1 Military Hospital. The full refurbishment of 1 Military Hospital will be another process.

The Chairperson suggested a visit to see the refurbishments. We want to understand if the DOD has timelines on the migration from the Department of Public Works to the DOD’s Defence Works Formation.
 

Gen (ret) B Holomisa (UDM) asked what constituted a 'legitimate' invoice. He added that the old weapons and transportation are an embarrassment. There needs to be a briefing on updating weapons.

Mr Sokhela replied that legitimate invoices are invoices that meet required procedures.  If an invoice does not match what has been delivered, then payment might be delayed. Treasury recommends that matching invoices be paid.

Maj Gen Ramantswana informed the Committee that he had a meeting with the President and was given guidelines for a future meeting with the President and the Treasury. In this meeting, we will raise questions about equipment.

Mr Mmutle asked if a breakdown can be provided on the cost and timeframe for the 1 Military Hospital.

Mr Marias requested more details on the fall-back position should the budget not be granted.

Dr Gamede replied that this is still a document that is being discussed at staff level. We are still determining details.

The Chairperson noted that some letters for deployment of forces to assist UN missions have expired.

Ms A Beukes (ANC) asked what is being done to improve control of the submission and monitoring of the audit action plan. She noted that DOD is still in the process of implementing the audit action plan. The Auditor General found that a significant number of suppliers are not being paid in time.

Mr Marais asked if the AG would be satisfied with the agreements and amendments to meet requirements.

Mr Shelembe referred to the Supply Chain Management oversight committee which has been established only now. That type of committees is very important. His concern was what was it in the SCM that failed in previous years that requires this committee only now?

Mr Abotsi emphasised the difference between the DOD and the AG. We have an audit action plan for the AG. We presented the audit action plan to the AG in October 2019. The implementation is a work-in-progress.

Ms Beukes commented that the AG is insisting that the DOD development of the audit action plan had been months in the making.

Mr Abotsi maintained that the AG presented the first six months that ended in September. We are reporting further improvements. National Treasury sets standards and the AG audits based on these standards.

The Chairperson noted that the DOD does not have an updated SCM policy in place. It was also noted that, based on the Defence Review, the DOD ought to synergize committees to provide a singular report. The supply chain policy was based on a workbook that stipulated requirements for differing committees. When the workbook is completed the Committee will still see problems but we have specific directions.

Military Discipline Bill [B21-2019]
The Chairperson noted that discussion focused on the process. The Bill was published for public comment on the 26th of January 2020. Six submissions have been received so far. The SA National Defence Union (SANDU) did not make any submission. Three or four of the submissions were from the department. One was from the Reserve Force Council (RFC) which states that it was not consulted in the finalisation of the Bill. It suggested that, by law, they were supposed to be consulted. The extent to which this breach impacts on the process should be noted and they seek a three- month consultation process. Following this, a letter from the Minister seeks to attend to the RFC concerns. He invited the legal advisors to comment on the case.

The parliamentary legal advisor noted that two questions were asked. On the question of the protected disclosure, a submission was made that indicated that decisions requiring their consultation were not taken. On the regulatory framework, Section 48 of the 2002 Defence Act establishes the Reserve Force Council. Section 48(4) stipulates that the RFC should be consulted where a Bill affects it. What is the effect of this lack of consultation? There is a violation of the terms of this Bill; one ought to appreciate how this went through the Defence Council and to Cabinet. The Memorandum on the Bill states that all stakeholders were consulted even though the RFC was not consulted on the 2019 version of the Bill. The Committee therefore needs to consider how it moves forward.

On the question of protected disclosure, this person made information available in the interest of public disclosure. The disclosing party seeks protection under the Protected Disclosure Act. There is an obligation on the Committee to protect the whistle-blower. According to the legal advisor, the Committee must acknowledge the Protected Disclosure Act and communicate same to the person who submitted the submission. The Committee cannot reject the disclosed information on the grounds that it is an illegitimate disclosure. The Committee ought to deliberate on how it will take the matter further.

The Chairperson asked what might save the process. The RFC seeks more time to consider the Military Discipline Bill. They were granted two weeks but have since requested three months. If they need this time, would being granted this time satisfy the legal requirements?

The legal advisor from the Office of the Senior State Law Advisor, noted there is always the risk of the process being challenged at a later stage, though he could not think of a precedent. He suggested that Department of Defence be given time to reflect on the matter.

Gen Holomisa commented that it was embarrassing that the RFC had not been consulted. It nullifies the process. The requested time should be granted. Submissions should opened again too.

Ms M Modise (ANC) did not have a problem with the requested time being granted. Would opening the process for additional consultation help and allow the process to come back to Parliament in a sufficiently amended way?

Mr Marais noted that the intention of the Military Discipline Bill is to ensure cohesiveness. Extending the consultation process cannot nullify the mistakes made in the development of the Bill. Would it not save us time and trouble by referring this Bill back to the Defence Force? If we ask them to resubmit the Bill after they have rectified their process, we will have a presentable Bill that is less open to reproach.

The Chairperson asked about the process for sending the Bill back to the Department.

The parliamentary legal advisor maintained the Bill was certified because the Office of the State Legal Advisor was under the impression that the Bill had been properly consulted. He advised that the most dignified way with dealing with this is to request the Minister to withdraw the Bill, to be reintroduced after new consultations.

The Chairperson asked if the resubmitted Bill must go through the same process it had previously gone through in its first incarnation.

The legal advisor believed so. He maintained that the Committee has the power to approach the Minister with these concerns.

The Committee agreed that it ought to do so.

Defence Amendment Bill [B18B-2017]: voting on NCOP amendment
The Chairperson indicated that the version of the Defence Amendment Bill before them required a technical amendment and therefore ought to be republished. A public submission was received when the Bill was advertised in December but it did not deal with the NCOP amendment which it was required to comment on. It is therefore incumbent on the Committee to take the Bill further.

The Chairperson put the National Council of Provinces (NCOP) proposed amendment which stated that the number of days of absence of a Regular Force member in section 59(3) must be linked to the number of days in section 103(1), that is, exceeding 10 continuous calendar days of absence. He noted that B18A-2017 contains the amendment that when a Defence Force member has been absent for a continuous period of 10 days, a board of inquiry must be convened to enquire into that absence. He put the NCOP amendment to the Committee for approval.

The Committee had no objections to the NCOP amendment and the Bill [B18B-2017] was approved.

The meeting was adjourned.

 

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