1. 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

2. 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
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3. 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

4. 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

5. 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

6. ADMINISTRATION PROGRAMME OVERVIEW6

7. 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

8. 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

9. 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

10. 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

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)
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

12. 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
0.23%
91 973
94 107
96 251
Financial Services
0.74%
HR Support Services
1.61%
Legal Services
0.63%
Inspection Services
0.27%
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

13. 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
0.34%
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
0.50%
17 616
17 961
18 328
Office Accommodation
5.24%
Military Veteran Management
1.18%
Total
11.36% 13

14. 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

15. 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 ) – 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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
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25. 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.
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26. 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

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

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

29. THANK YOU ANY QUESTIONS
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