Presentation to the PCD&MV 10 September 2014 Department of Defence Administration Programme Overview, 1st Quarterly Non-Financial and Financial Performance Reports for FY2014/15 Presentation to the PCD&MV 10 September 2014

AIM To present an overview of the Department of Defence Administration Programme, 1st Quarterly Non-Financial and Financial Performance Reports for FY2014/15 to the Portfolio Committee on Defence and Military Veterans RESTRICTED

ADMINISTRATION PROGRAMME OVERVIEW INTRODUCTION Develop policy, manage and administer the Department of Defence; and provide political oversight over the Department of Military Veterans. This Administration programme is charged with the overall management of the Department and discharges the responsibilities of the Accounting Officer, pursuant to the Minister’s policy direction, as well as the development of departmental norms and standards within the respective areas of responsibility. 3

CONSTITUTIONAL AND LEGISLATIVE MANDATES ADMINISTRATION PROGRAMME OVERVIEW CONSTITUTIONAL AND LEGISLATIVE MANDATES Constitution of the Republic of South Africa, 1996 Defence Act, 2002 (Act No 42 of 2002) Defence Amendment Act, 2010 (Act No 22 of 2010) National Strategic Intelligence Act No 39 of 1994 Public Service Act, 1994 Public Finance Management Act, 1999 (Act No 1 of 1999) 4

CONSTITUTIONAL AND LEGISLATIVE MANDATES (CONT) ADMINISTRATION PROGRAMME OVERVIEW CONSTITUTIONAL AND LEGISLATIVE MANDATES (CONT) Military Ombud Act, 2012 (Act No 4 of 2012) Castle Management Act, Act 207 of 1993 ARMSCOR Act No 51 of 2003 National Conventional Arms Control Act 41 of 2002 5

ADMINISTRATION PROGRAMME OVERVIEW 6

ADMINISTRATION PROGRAMME OVERVIEW DEFENCE PROGRAMMES The Department of Defence programme structure consists of the following main programmes: Administration Force Employment Landward Defence Air Defence Maritime Defence Military Health Services Defence Intelligence General Support 7

ADMINISTRATION SUB-PROGRAMME PURPOSE AND OUTPUTS ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION SUB-PROGRAMME PURPOSE AND OUTPUTS The sub-programmes that represent the contribution of the various divisions in the Administration Programme to the overall mandate of the DOD are provided below: 8

ADMINISTRATION SUB-PROGRAMME PURPOSE AND OUTPUTS ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION SUB-PROGRAMME PURPOSE AND OUTPUTS Serial Number Administration Sub-Programme 1 Departmental Direction 2 Policy and Planning Defence Policy, Strategy and Planning Military Policy, Strategy and Planning 3 Financial Services 4 Human Resources support Services 5 Legal Services 6 Inspection Services Inspector General Internal Audit Division 9

ADMINISTRATION SUB-PROGRAMME PURPOSE AND OUTPUTS ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION SUB-PROGRAMME PURPOSE AND OUTPUTS Serial Number Administration Sub-Programme 7 Acquisition Services 8 Communication Services 9 South African National Defence Force Command and Control 10 Religious Services 11 Defence Reserve Direction 12 Defence Foreign Relations/Defence International Affairs 13 Office Accommodation 14 Military Veterans Management 10

PROGRAMME 1: ADMINISTRATION BUDGET AND MTEF (FY2015/16 TO FY2017/18) ADMINISTRATION PROGRAMME OVERVIEW PROGRAMME 1: ADMINISTRATION BUDGET AND MTEF (FY2015/16 TO FY2017/18) The Defence Administration Programme is aimed at facilitating the overall management of the Department. The budget of the Administration Programme of the DOD amounts to 11.36% of the total Defence Budget Vote (These figures include the budget allocations of the Central Staff Divisions of the DOD, which includes Legal Services and Human Resources Services). 11

PROGRAMME 1: ADMINISTRATION BUDGET AND MTEF (FY2015/16 TO FY2017/18) ADMINISTRATION PROGRAMME OVERVIEW PROGRAMME 1: ADMINISTRATION BUDGET AND MTEF (FY2015/16 TO FY2017/18) Administration Budget Vote Percentage of DOD Budget Vote Medium Term Estimates Sub-programmes 2014/15 2015/16 2016/17 2017/18 R'000 % Ministry 77 438 0.18% 73 214 77 325 80 791 Department Management 62 370 0.15% 57 974 59 443 62 860 Policy and Planning 100 552 0.23% 91 973 94 107 96 251 Financial Services 315 995 0.74% 326 478 346 798 362 365 HR Support Services 688 169 1.61% 713 009 756 559 791 013 Legal Services 271 817 0.63% 289 504 307 304 321 520 Inspection Services 116 628 0.27% 119 201 125 963 131 733 Acquisition Services 49 809 0.12% 62 200 65 737 68 497 Communication Services 40 006 0.09% 41 706 44 125 46 208 12

ADMINISTRATION PROGRAMME OVERVIEW Percentage of DOD Budget Vote PROGRAMME 1: ADMINISTRATION BUDGET AND MTEF (FY2015/16 TO FY2017/18) Cont Administration Budget Vote Percentage of DOD Budget Vote Medium Term Estimates Sub-programmes 2014/15 2015/16 2016/17 2017/18 R'000 % SANDF Command And Control 144 636 0.34% 148 828 157 896 165 072 Religious Services 12 566 0.03% 13 386 14 172 14 808 Defence Reserves Direction 25 223 0.06% 26 342 27 852 29 173 Defence Foreign Relations 212 417 0.50% 17 616 17 961 18 328 Office Accommodation 2 244 741 5.24% 2 361 972 2 487 157 2 611 515 Military Veteran Management 504 160 1.18% 606 841 641 071 679 598 Total 4 648 015 11.36% 4 950 244 5 223 470 5 479 732 13

PUBLIC ENTITIES REPORTING TO THE EXECUTIVE AUTHORITY ADMINISTRATION PROGRAMME OVERVIEW PUBLIC ENTITIES REPORTING TO THE EXECUTIVE AUTHORITY The DOD has a legislative oversight function in terms of Public Entities and Organs of State, which are accountable to the Executive Authority (EA) and categorised within Schedules 2 and 3 of the PFMA (Act No1 of 1999). The following Public Entities report to the Executive Authority: ARMSCOR Castle Control Board (CCB) The following Organs of State report to the Executive Authority: Department of Military Veterans. Defence Force Service Commission (DFSC). Office of the Military Ombud. Reserve Force Council. 14

ADMINISTRATION PROGRAMME ACHIEVEMENTS ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME ACHIEVEMENTS Enhanced civil control and oversight through the following: A departmental planning and execution framework to enable the implementation of national imperatives (MTSF 2014 -2019) – Outcome 3, 5, 11 & 12. Governance structures enabling legislative compliance. Defence diplomacy consolidated through bi-national and multi-national agreements. Achievement of a Clean Audit on Movable and Immovable Assets for FY 13/14. 15

ADMINISTRATION PROGRAMME ACHIEVEMENTS (CONT) ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME ACHIEVEMENTS (CONT) Enhanced civil control and oversight through the following: Provision of departmental direction guided and aligned with national imperatives (Defence Review, Strategy, APP) Defence Accountability “Controls” - 1st Quarterly Performance Report. - FY 2015/16 Plans and Strategy. - Financial accountability documents 16

SANDF ACHIEVEMENTS SANDF ACHIEVEMENTS Supported national elections and the inauguration of the commander-in-chief (President) The SANDF continued to roll-out its border safeguarding plan and achieved substantially to curb illicit movement of weapons, livestock, contraband and illegal foreigners A Joint Aviation Safety workgroup with the SAPS was held and a workgroup was formed to streamline cooperation between the SA Air Force – SAPS on missions in the airspace The SANDF continued to implement the Maritime Security Strategy through the deployment of two vessels in the Mozambique channel to combat piracy 17

SANDF ACHIEVEMENTS (Cont) The SA Navy participated in an Ex NYAMINYAMI held in Zimbabwe in the northern part of the Kariba Dam. The purpose of the exercise was to build a common regional maritime concept to enhance interoperability and the security of inland water bodies The SANDF continued to support regional and continental peace initiatives in the Sudan & DRC inclusive of the FIB In an effort to enhance the DOD internal capacity to manage facilities, 646 DOD members have qualified as artisans. 348 are currently busy with artisan training at civilian institutions. 18

ADMINISTRATION PROGRAMME CHALLENGES: HUMAN RESOURCES ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME CHALLENGES: HUMAN RESOURCES Challenge Mitigation Action The disproportionate percentage budget allocation between Human Resource, Operating and Capital remains a departmental challenge adversely impacting on departmental mandate execution National commitment on the level of funding of defence, ie 2% of GDP as envisaged in the Defence Review 2014. HR posts to be based on sound organisational design principles (to determine the right number of members required for defence. Right-sizing of the SANDF through an appropriate exit mechanism and stages as envisaged in the Defence Review 2014 19

ADMINISTRATION PROGRAMME CHALLENGES: HUMAN RESOURCES (CONT) ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME CHALLENGES: HUMAN RESOURCES (CONT) Challenge Mitigation Action DOD members have reached a career plateau where individual profiles no longer match the DOD requirements (post profile) Approval and funding of an appropriate SANDF exit mechanism. Approval and funding of an envisaged new military career model. Development of military learning pathways in support of the new military career model. Development of an adequate feeder system for the Reserves through the Military Skills Development System (Split between Reserves and Regulars). 20

ADMINISTRATION PROGRAMME CHALLENGES: PROCUREMENT ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME CHALLENGES: PROCUREMENT Challenge Mitigation Action The decentralised procurement system is difficult to manage In process of acquiring an integrated central IT system to ensure standardised implementation Procuring through third party institutions is cumbersome (eg. SITA, NDPW, and NT) Have requested DOD exclusion from transversal contracts (eg. fuel) and third-party contracts such as SITA Possible non-compliance to pay service providers (30 days) in support of national imperatives Inter-divisional workgroup (CFO, SCM, C Log) investigating practical ways of shortening the payment cycle SUPPLY CHAIN MANAGEMENT 21

ADMINISTRATION PROGRAMME CHALLENGES: ASSET MANAGEMENT ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME CHALLENGES: ASSET MANAGEMENT Challenge Mitigation Action The DOD continues to experience a deterioration in the state of current facilities / infrastructure which is adversely impacting on the mandate execution. Continue with the engagement with NT and NDPW on the devolution of the facilities maintenance function. Works Regiment enhancement The Intangible Capital Asset (ICA) portfolio as part of the DOD asset portfolio has received an audit qualification for FY2013/14 mainly due to insufficient monitoring and control levels and the lack of providing appropriate audit evidence. Policy has been promulgated to manage ICA in the DOD. Established structures for ICA management. Improved accounting controls. SUPPLY CHAIN MANAGEMENT 22

ADMINISTRATION PROGRAMME CHALLENGES: INTERNAL AUDIT ADMINISTRATION PROGRAMME OVERVIEW ADMINISTRATION PROGRAMME CHALLENGES: INTERNAL AUDIT Challenge Mitigation Action Internal Audit Division is partially capacitated to deliver its full mandate. The MOD has prioritised the resourcing of the IAD function Staffing underway in respect of certain number of critical posts. Complexity of the defence function to apply generic audits and accounting standards Engagement with the AG and Accountant General wrt achieving common understanding. 23

ADMINISTRATION PROGRAMME OVERVIEW FINANCIAL CHALLENGES Challenge Mitigation Action Compensation of employees. Requesting the shortfall from National Treasury. As a last resort, departmental re-prioritisation to the detriment of other outputs. Budget pressures on various programmes including the FIB Request additional funding from NT RESTRICTED

FINANCIAL CHALLENGES (Cont) ADMINISTRATION PROGRAMME OVERVIEW FINANCIAL CHALLENGES (Cont) Challenge Mitigation Action African Capacity for Immediate Response to Crisis (ACIRC). ACIRC National Treasury to establish a contingency reserve to provide for the deployment cost as and when the African union commits the force to respond to a crisis situation. Defence’s budget to be increased with Rm1.562,8 for 15/16 to cater for force preparation. For 14/15, the DOD will reprioritize and shortfall to be funded by treasury. RESTRICTED

DOD Planned expenditure: 20.7% R'000 Budget Allocation 42,831,234 FINANCIAL PERFORMANCE REPORT Summary of State of Expenditure for the year to date: 30 June 2014 DOD Planned expenditure: 20.7% R'000 Budget Allocation 42,831,234 Less: Expenditure 8,300,544 Total Amount Available 34,530,690 Percentage Expenditure (Paid) 19.4% 26

FINANCIAL PERFORMANCE REPORT SUMMARY OF STATE OF EXPENDITURE FOR THE YEAR TO DATE PER PROGRAMME: 30 JUNE 2014 27

FINANCIAL PERFORMANCE REPORT SUMMARY OF STATE OF EXPENDITURE FOR THE YEAR TO DATE PER ECONOMIC CLASSIFICATION: 30 JUNE 2014 28

THANK YOU ANY QUESTIONS RESTRICTED 29