ANALYSIS OF THE DEPARTMENT OF DEFENCE ANNUAL REPORT FOR 2013/14 15 October 2014 Wilhelm Janse van Rensburg Researcher: JSC on Defence wjansevanrensburg@parliament.gov.za 021 403 8276 1

Strategic Outcomes and Outputs DOD 2013/14 Annual Report Strategic Outcomes and Outputs 2

Strategic Outcomes and Outputs DOD 2013/14 Annual Report p.2 The DODMV’s strategic outputs is aligned to the MTSF priorities of the Government. The majority of these were achieved: MTSF Outcomes Number of Targets Actual Achievement Outcome 2 3 3 Achieved Outcome 3 6 1 Achieved; 2 under achieved and 3 information classified Outcome 5 3 Over achieved Outcome 11 11 2 Over achieved; 3 achieved; 3 under achieved; and 3 information classified. Key concerns: Only 17 of the planned 25 number of incidents of corruption and fraud reported for detection were achieved. Serviceability of equipment for external operations was only at 77%.

Strategic Priorities of the Minister DOD 2013/14 Annual Report The MoD identified eight strategic priorities for 2013/14. Most were achieved, but a number of concerns remain. p.3 Key concerns: Enhancement of Landward Defence. A Prime-mission Equipment and Technology Support Plan was drafted. Revitalising the Reserves. There has been slow-down in the recruitment of reserves. The Defence Works Capability. Although functional, capacity building is still under way, only 1 383 of 2 517 funded posts filled.

Performance Indicator SANDF Selected Performance Indicators DOD 2013/14 Annual Report A number of additional Main Performance Indicators for the SANDF is listed. Several of these were under achieved: Performance Indicator Target 2013/14 Achievement 2013/14 Achievement 2012/13 Compliance with SADC Standby Force 100% 79% Target Under Achieved Underachieved (Lack of Capacity) Total number of Defence Attaché Offices 40   43 Target Over Achieved Achieved Number of joint, interdepartmental and multinational exercises 9 5 Under Achieved Number of Reserves utilised per year 24 243 96 137 call-ups (14 668 members utilised) 14 285 Over Achieved Number of force employment hours flown per year 6 300 4 471 11 696 Number of sea hours per year 22 000 11 080 7 338.55 Number of landward sub-units deployed for border safeguarding 13 11 Percentage of approved Capital Works Plans completed (9) 22.22% (2) Percentage compliance with DOD refurbishment 100% (36) 67.8% (24) 52% Percentage compliance with self-sustainment of personnel 83% Not measured Percentage litigation settled in favour of the DOD 60% 44% 14.9% p.5

Programme and sub-programme performance evaluation DOD 2013/14 Annual Report Programme and sub-programme performance evaluation 6

Performance evaluation: An overview DOD 2013/14 Annual Report An overview of all eight programmes p.7 Key concerns: Percentage of budget spent versus percentage of targets achieved. Dramatic reduction in the number of targets compared to 2012/13. The number of classified targets

Performance evaluation: Programme 1 DOD 2013/14 Annual Report p.8 Notes: Quarterly spending was in line with general targets. The number of targets decreased from 106 in 2012/13 to 88 in 2013/14.

Performance Indicator Performance evaluation: Programme 1 DOD 2013/14 Annual Report Performance Indicator Target 2013/14 Actual 2013/14 Percentage Budget allocation for DOD Main Equipment renewal 30% Target Under Achieved 10% p.10 Selected under-achieved targets in Programme 1. p.12 Percentage of PSAP disciplinary cases finalised in 90 days. 80% Target Under Achieved 29% (58 out of 203) Percentage compliance with planned staffing of funded posts 90% (69 585) Target Over Achieved 113% (78 864) p.12 p.13 Percentage litigation settled in favour of the DOD 60% Target Under Achieved 45% p.15 Percentage of Reserves budget spent 100% Target Under Achieved 94% The number of Defence Provincial Liaison councils’ structures to be established 9 Target Under Achieved 7 Number of planned staff visits to Defence Attache offices to provide direction and monitoring compliance 10 Target Under Achieved p.16

Performance evaluation: Programme 2 DOD 2013/14 Annual Report p.16 Notes: Low spending on the Defence capability management (41.7 per cent) and Support to the people (53.0 per cent) sub-programmes by the end of Q3. One of only two programmes to show an increase in targets set. Key concerns: The cancellation of four International Military Exercises (Three of which were also cancelled in 2012/13). The deployment of SA Navy personnel for Naval Control and Guidance of Shipping training to other SADC countries. The alternative utilisation of re-allocation funding.

Performance evaluation: Programme 3 DOD 2013/14 Annual Report p.17 Notes: Quarterly spending on track with planned targets and only a limited virement Key concerns: Reduction in targets from 23 in 2012/13 to 4 in 2013/14.

Performance evaluation: Programme 4 DOD 2013/14 Annual Report p.18 Notes: Slow spending throughout the year (67.8 % by Q3). Large virement of R317m made to Programme 4 during Q4. Thus, R2.125 billion (or 35.23 per cent) of the final allocation was spent in the last quarter alone. Key concerns: High spending in the last quarter. High spending, but low achievement on flying hours. Reduction in targets from 14 in 2012/13 to 4 in 2013/14.

Performance evaluation: Programme 5 DOD 2013/14 Annual Report p.20 Notes: Slow spending throughout the year (67.7 % by Q3). Large virement of R145m made to Programme 5 during Q4. Thus, R1.089 billion (or 33.48 per cent) of the final allocation was spent in the last quarter alone. Key concerns: High spending in the last quarter. High spending, but low achievement on hours at sea Reduction in targets from 14 in 2012/13 to 4 in 2013/14.

Performance evaluation: Programme 6 DOD 2013/14 Annual Report p.21 Notes: Spending slightly lower than planned throughout the year. Virement in Q4 may have contributed to overspending by the end of the financial year. Key concerns: Slight overspending on budget. Reduction in targets from 15 in 2012/13 to 6 in 2013/14. Outsourcing to private medical facilities. Patient footprint misaligned with the health care facilities

Performance evaluation: Programme 7 DOD 2013/14 Annual Report p.22 Notes: Slow spending throughout the year (66.6 % by Q3). Large virement of R6.7m made to Programme 7 during Q4. Thus, R270m (or 34.86 per cent) of the final allocation was spent in the last quarter alone. Increase in the number of performance targets. Key concerns: High spending in the last quarter. Decrease in the target for vetting decisions from 7000 in 2012/13 to 4000 in 2013/14.

Performance evaluation: Programme 8 DOD 2013/14 Annual Report p.23 Notes: Spending throughout the year in line with planning. Large virement away from the programme in Q4. Key concerns: Reasons for the large virement away from the programme in Q4? The number of learners on courses. Low number of crime prevention operations by the Military Police. Reduction in targets from 38 in 2012/13 to 17 in 2013/14.

Organisational Structure and DOD 2013/14 Annual Report Organisational Structure and Human Resources 17

Human resources Employment and vacancies by critical occupation DOD 2013/14 Annual Report p.26 Employment and vacancies by critical occupation Critical occupation Number of posts Number of employees Vacancy rate Air Space Control 537 527 1.86% Aircrew 612 491 19.77% Anti-Aircraft 970 972 -0.21% Artillery 1 289 1 416 -9.85% Combat Navy 658 572 13.07% Engineer 179 123 31.82% Medical Professional 1 660 1 432 13.73% Nursing 1 655 1 747 -5.56% Technical 8 568 7 125 16.84% Total 16 128 14 405 10.68% Key concerns: Low retention of core skills. Low rate of appointment of engineers and aircrew.

Human resources DOD 2013/14 Annual Report Macro-Personnel Strength for 2011/12, 2012/13 and 2013/14 p.25 Financial year Planned Actual 2011/12 79 384 78 744 2012/13 80 379 78 725 2013/14 77 317 78 707 Notes: Personnel costs represents 53% of the DOD’s total expenditure. Sick leave came at a cost of R263m to the DOD. Highest level of sick-leave utilisation is at the Lower Skilled salary band. In terms of labour relations, no strikes by PSAP members were recorded. 137 cases of misconduct were finalised. 139 grievances were finalised while 644 remain unresolved.

DOD 2013/14 Annual Report Financial statements 20

Financial Statements Budget allocation for 2013/14 DOD 2013/14 Annual Report Budget allocation for 2013/14 p.27 Programme Main Appropriation (R million) Adjusted Appropriation (R thousand) Final Appropriation Actual Expenditure Programme 1: Administration   4 434.6 4 508 999 4 510 985 Programme 2: Force Employment 3 283.9 3 555 742 3 521 798 3 346 655 Programme 3: Landward Defence 13 853.8 13 604 853 13 599 123 Programme 4: Air Defence 6 250.2 5 714 433 6 031 523 Programme 5: Maritime Defence 3 171.1 3 107 341 3 252 562 3 226 378 Programme 6: Military health support 3 642.5 3 762 051 3 742 939 3 733 603 Programme 7: Defence Intelligence 762.4 767 940 774 683 Programme 8: General Support 4 844.8 5 636 825 5 224 571 Total 40 243.3 40 658 184 40 447 521 Additional funding: R60.872 million: To Programme 4 (Air Defence) for higher than budgeted personnel cost. R41.873 million: Paid to Programme 3 (Landward Defence) from sales of equipment and spares through the Special Defence Account. R6.830 million: Paid to Programme 4 (Air Defence) from sales of equipment and spares through the Special Defence Account. R1.654: Paid to Programme 8 (General Support) from sales of equipment and spares through the Special Defence Account.

Irregular expenditure Financial Statements DOD 2013/14 Annual Report Irregular expenditure p.29 Opening balance R1 015 188 million (+) Irregular expenditure from previous year R190 million (+) Irregular expenditure from current financial year R1 293 612 million (-) Amounts condoned (R957 480 million) (-) Amounts recoverable None (-) Amounts not recoverable Irregular expenditure awaiting condonement R1 351 510 Fruitless and wasteful expenditure: Increased from R9.531 million in 2012/13 to R307.497 million in 2013/14. This is, however, mostly due to a penalty of R303.347 million incurred for the cancellation of an unspecified contract. Other cases of fruitless expenditure include R141 000 Interest Charged, R24 000 of state funds utilised for private use, R21 000 forfeited funds, R13 000 storage charges for recover vehicle and R10 000 for other cases. Key concerns: Additional funds for Air Defence personnel remuneration. ‘Sale of goods and services other than capital assets’ remain unclear. Fruitless expenditure due to cancellation of a contract. Funds spent without PPPFA compliance.

Auditor-General Report DOD 2013/14 Annual Report Auditor-General Report 23

Auditor-General Report DOD 2013/14 Annual Report The DOD received a Qualified Audit p.30 Reasons: Intangible capital assets: The AGSA was unable to obtain sufficient audit evidence for intangible assets. Correction of errors from 2012/13: The 2013/14 financial statements provided corrections for errors made in the previous financial year with regards to the disclosure of intangible capital assets. The AGSA could not substantiate these corrections with supporting evidence. Additional matters of emphasis: Internal Audit: A fully functional internal audit committee was not in place. Financial statements: Financial statements were not prepared according to the PFMA. Expenditure management: No effective steps taken to prevent irregular expenditure. Leadership: The DOD did not exercise sufficient oversight responsibility regarding financial reporting over capital assets. Financial and performance management: Existing manual and automated controls were not designed to ensure adequate record keeping. Governance: The DOD is still in the process of capacitating the internal audit component.

Wilhelm Janse van Rensburg Thank you ~ Questions Wilhelm Janse van Rensburg Researcher: JSC on Defence wjansevanrensburg@parliament.gov.za 021 403 8276 25