DEPARTMENTOF

DEFENCE (DOD)

ANNUAL REPORT FY 2008/09

27 October 2009

DOD AR FY 2008/09 2

AIM

To present the DOD Annual Report FY 2008/09 to the Portfolio Committee on Defence

DOD AR FY 2008/09 3

SCOPE• Introduction.

• DOD Approved Organizational Structure.

• Minister of Defence’s Priorities for FY 2008/09.

• Defence Strategic Objectives.

• DOD Programmes as per DOD SBP FY 2008/09 and ENE.

• DOD Appropriation Statement.

• Overview of DOD Programmes.

• DOD Corporate Risks.

• DOD Audit Qualifications.

• Discussions/Comments.

DOD AR FY 2008/09 4

INTRODUCTION• The DOD performance report is submitted in compliance with

legislative requirement (PFMA and TRs).

• The report reflects the DOD’s performance against the DOD SBP and the ENE for FY2008/09.

• Covers all DOD programmes.

• The format of the report follows the NT guidelines on Annual Reports.

• The Annual Report was approved by the DSC on 25 May 09.

DOD AR FY 2008/09

DOD APPROVED STRUCTURE

LEVEL 0

LEVEL 1

LEVEL 2

LogisticsDivision

SA Army SA Air Force SA Navy

SA Militar

y Health Servic

es

Defence Intelligence

Division

Corporate Staff Division

Defence Secretariat

Human Resource Division

Defence Legal Service

Division

MilitaryPolicy,

Strategy & Planning

DefenceReserves

ChaplainGeneral

Department of Defence

Joint Operations

Division

DOD CENTRAL STAFF

Command & Management Information

Systems Division

MilitaryPolice

Division

Ministry of Defence

Defence Materiel Division

Financial Management

Division

Defence Policy, Strategy & Planning Division

SA National Defence Force

Defence Foreign

Relations Division

Defence EnterpriseInformation System

ManagementDivision

Defence International

Affairs

Internal AuditDivision

Defence Inspectorate

Division

DOD AR FY 2008/09 6

DOD PROGRAMMES• Defence Administration (Prog 1).

• Force Employment (Prog 8).

• Landward Defence (Prog 2).

• Air Defence (Prog 3).

• Maritime Defence (Prog 4).

• Military Health Support (Prog 5).

• Defence Intelligence (Prog 6).

DOD AR FY 2008/09

DOD PROGRAMMES

• General Support (Prog 7)

• Joint Logistic Services.

• Command Management Information Systems.

• Military Police.

7

DOD AR FY 2008/09

DOD STRATEGIC FOCUS

• In line with Govt direction, the DOD focuses on the following key imperatives:

– Meet ordered the ordered commitments stipulated in the Constitution, of defending and protecting the Republic of South Africa and its people.

– Support Govt’s diplomatic initiatives on the continent and in the region.

– Provide support to other Govt departments when required.

DOD AR FY 2008/09

DEFENCE STRATEGIC OBJECTIVES• The following strategic objectives were identified as being critical to

the achievement of the DOD’s mission:

– The execution of defence commitments as ordered and funded by the Government.

– The provision of contingency-ready and cost-effective defence capabilities as specified by approved policy.

– Sound management of the Department.

– The administration of the DOD within the prescripts of the law, the regulatory framework and Government policy.

– The assurance of sustainability, the continuous improvement of output quality and the reduction of the cost of DOD processes as well as the accounting thereof.

DOD AR FY 2008/09

DEFENCE STRATEGIC OBJECTIVES

– The assurance of the continuous quality improvement of people in the DOD.

– The assurance of quality command and management information in the DOD.

– The assurance of continuous quality improvement of DOD equipment and facilities.

DOD AR FY 2008/09

MOD PRIORITIES FOR FY 2008/09• The Minister of Defence’s priorities were issued together with the

Defence Strategic Objectives and formed the strategies and Plans of the DOD Services/Divisions for the MTEF as follows:

– Rejuvenation and upgrade of the Landward Programme.

– Infrastructure and DOD Works Regiment.

– Operationalisation of the Defence Review Update.

– Revitalisation of the Reserves.

– Information Technology.

DOD AR FY 2008/09

DOD ANNUAL FINANCIAL

STATEMENTSFY 2008/09

12

DOD AR FY 2008/09

APPROPRIATION STATEMENT

Final Appropriation Expenditure

2008/09 2008/09 R’000 R’000

Administration 2 480 152 2 480 151Landward Defence 6 958 701 6 958 701 Air Defence 8 018 779 8 018 779 Maritime Defence 1 837 191 1 837 191 Military Health Support 2 177 208 2 176 940 Defence Intelligence 506 752 506 752 General Support 4 006 334 3 908 862 Force Employment 1 913 910 1 913 910 Total 27 899 027 27 801 286

13

DOD AR FY 2008/09

APPROPRIATION STATEMENT

2008/09 R’000

Final appropriation 27 899 027Less: Actual expenditure 27 801 286Under spending on vote 97 741

Under spending reasons:Delay in appointment of contractor AFB Waterkloof = 82 154

Capital Works = 8 065

Planned maintenance and repair on buildings = 7 253

Unspent as % of Vote = 0,4%

14

DOD AR FY 2008/09 15

MINISTERIAL DIRECTIONOVERVIEW

• The MOD focused on the following objectives during the period under review:

– Enhancement and maintenance of defence capabilities.

– Provision of political direction to the DOD through issuing guidelines and setting of priorities.

– Promotion of regional security through participation in peace missions and defence foreign relations.

– Support to govt diplomatic initiatives in Africa through participation in multi-national organisations.

DOD AR FY 2008/09 16

• Reduction of SANDF’s routine internal deployments by April 2009, in accordance with Cabinet instructions but maintained sufficient internal deployment capability to respond to security requirements for international events like the 2009 Soccer Confederation Cup as well as the 2010 Soccer World Cup.

MINISTERIAL DIRECTIONOVERVIEW (Contd)

DOD AR FY 2008/09 17

DEFENCE SECRETARIATAchievements, Challenges and Corrective

Actions

DOD AR FY 2008/09 18

DEF SECRETARIAT ACHIEVEMENTS

• Management of various stakeholder relationships.

• DOD Policy advice to the MOD and management of defence policy in the DOD.

• Management of DOD parliamentary activities and engagements.

• Management of DOD’s participation in Clusters’ activities and DGs meetings.

• Ensured the DOD’s implementation of Cluster obligations.

DOD AR FY 2008/09 19

• Effective management of NCACC’s support activities.

• Managed the DOD’s defence diplomacy activities through participation in bilateral and multilateral defence engagements.

• Managed the strategic planning and performance management in the DOD.

• Significant progress was made towards achieving the Minister of Defence’s strategic objectives as well as resolving the key issues identified in the reporting year.

• Drafted and processed two Bills through Parliament i.e. Prohibition or Restriction of Certain Conventional Arms Control Act and the NCAC Amendment Act.

DEF SECRETARIAT ACHIEVEMENTS (contd)

DOD AR FY 2008/09

DEF SECRETARIAT ACHIEVEMENTS (contd)

• Implemented measures to address the issues that led to a qualified audit in FY 2007/08.

• Ensured the SANDF deployment authorisation (Presidential Minute).

• In the area of structural management completed various structural reports and transactions.

• Serviced 16 standing international legal instruments and facilitated the signing of 7 MOUs.

• Presidential Project 19 - reduction of case backlog by 28%.

DOD AR FY 2008/09 21

• Delivery of 5 Augusta helicopters, Hawk and 5 Gripen aircrafts and a submarine to the SANDF.

• Establishment of a dedicated financial support office in the CSANDF office.

• The successful workshop to determine progress wrt implementation of UN Resolution 1325 (Role of women in decision making positions on conflict resolution)

• The successful launch of the South African Military Veteran’s Association in September 2008.

• Development of a new procurement framework for the DOD.

DEF SECRETARIAT ACHIEVEMENTS (contd)

DOD AR FY 2008/09 22

DEF SECRETARIAT CHALLENGES

• Untimely passing away of Sec Def Mr J.B. Masilela and appointment of the A/Sec Def.

• Lack of office space.

• Human resources capacity constraints.

• Lack of secure IT infrastructure as well as legacy resource mgt systems.

• Lack of project officers with appropriate experience on project management for Defence Acquisition.

• Unfunded mandates iro limited financial resources.

DOD AR FY 2008/09 23

DEF SECRETARIAT CORRECTIVE ACTION

• Implementation of CSIR Project (iro office space) .

• Implementation of Project Clean Audit to enhance internal controls and good corporate governance.

• Engagement with CMIS and SITA on IT systems support.

• Delays in the staffing are being addressed through HR Strategy 2010.

• Proposals on readjustment of financial allocations.

DOD AR FY 2008/09 37

SANDF Achievements, Challenges and Corrective

Actions

DOD AR FY 2008/09 38

SANDF ACHIEVEMENTS• The execution and sustainment of 6 Peace Support Operations:

• DRC (Op MISTRAL), support to the UN Mission in DRC.

• Burundi (Op CURRICULUM), support to the AU Special Task Force in Burundi.

• Sudan (Op CORDITE), support to the UN Mission in Sudan.

• Ethiopia and Eritrea (Op ESPRESSO), Support to the UN Mission in Ethiopia and Eritrea.

• Uganda/Southern Sudan (Op BONGANI) support to the AU peace process in northern Uganda and

• Nepal (Op INDULI), support to the UN Mission in Nepal .

DOD AR FY 2008/09 39

• 3 General military assistance in Uganda (Op TSHOLO II), DRC (Op TEUTONIC) and CAR (Op VIMBEZELA), continued sustainment was, however, problematic in the last two.

• Eleven Infantry Companies and four Engineer Troops were deployed in Peace Support Operations.

• Continued post conflict reconstruction support – DRC and CAR.

• Military training opportunities provided for countries in the region and continent.

• Eight multi-national maritime exercises were successfully executed.

SANDF ACHIEVEMENTS

DOD AR FY 2008/09 40

• Supported 3 Internal Operations:• Op INTEXO (Borderline Control) • Op KGWELE (Support to the SAPS) • Op HUMAN (Support to other Government departments)

• Reserves Medical officers provided health support to Mpumalanga Dept of Health during shortages of health care workers at Rob Ferreira Hospital in Nelspruit.

• Health services provided to 1 200 displaced foreign nationals in the Western Cape.

• Increase in Reserve numbers from 17 749 (FY07/08) to 22 062 (FY08/09).

SANDF ACHIEVEMENTS (contd)

DOD AR FY 2008/09 41

• Water, water bunkers and water purification systems provided to alleviate drought conditions in the fight against the cholera outbreak.

• Significant progress on the reorganization of the SA Army command and control according to NATO “General Staff” system.

• First black Special Forces Regimental commander and Brigade Sergeant Major appointed.

• MSD System is improving the HR composition of the SANDF.

• Reserve and MSDS members utilised for both internal and external deployments.

• SA Army qualified 17 685 learners in its Centres of Excellence, which included 91 members from other defence forces.

SANDF ACHIEVEMENTS (contd)

DOD AR FY 2008/09

SANDF ACHIEVEMENTS (contd)

• Provided air defence capabilities and generated a total of 34 840 hours with no major aircraft accidents. (Reserve Squadrons flew 2 706 hours).

• 362 hours flown transporting President and Dep President and total of 1 570 hours flown by VIP fleet .

• Progress in logistics processes for support and sustenance.

• SAS Spioenkop’s visit to PRC in commemoration of 10 year diplomatic relations between PRC and RSA.

• Biennial Africa Aerospace and Defence (AAD) Exhibition 2008.

DOD AR FY 2008/09

SANDF ACHIEVEMENTS (contd)

• New Defence Attaché office in Tunis.

• Opening of DOD VIP Lounge at O.R. Tambo International Airport.

DOD AR FY 2008/09 44

SANDF CHALLENGESLogistical Sustenance / Equipment

• Under-funding for integration and operation of SDP.

• Sustenance of operations and exercises.

• Lack of air and sea lift capability.

• Shortage of spares.

• Ongoing challenges of SA Army equipment.

• Deteriorating state of facilities.

DOD AR FY 2008/09 45

Human Resource

• Loss of Scarce skills.

• Incentive schemes to stabilize the rate of resignations attempted, however, resignations in key musterings remains a challenge.

• Inadequate numbers from MSDS joining Reserves.

Processes

• Internal Controls- DOD Qualifications.

SANDF CHALLENGES

DOD AR FY 2008/09 46

SANDF CORRECTIVE ACTION

• The DOD SCAMP re-prioritisation and utilization of RAMP by Services/Divisions.

• Establishment of the DOD Works Regiment.

• Logistics Intervention and Realignment Programme (LIRP).

• Various incentive schemes and new remuneration dispensation introduced and scarce skills addressed through special marketing/ recruitment drives.

• Increased MSDS and focus on development.

DOD AR FY 2008/09 47

• Internal Control processes under review and rectification. Corrective actions in place. However, impeded by:

– Lack of resources/capacity to implement new systems.

– Moratorium on enhancements to Information Systems, placed by National Treasury.

SANDF CORRECTIVE ACTION (contd)

DOD AR FY 2008/09 73

DOD CORPORATE RISKS

DOD AR FY 2008/09 74

DOD RISKS• Insufficient funds for the Rejuvenation of Landward Defence

Programme.

• Loss of scarce skills resulting in overburdening of existing capacity.

• Inadequate capacity to deliver on objectives.

• Poor state of facilities (support infrastructure, hospitals etc).

• Poor state of IT infrastructure (Fin, Log, HR).

• Poor state of military equipment maintenance due to budgetary constraints.

DOD AR FY 2008/09

DOD RISKS

• Limited funding for SDP equipment integration and operation.

• Execution of unfunded mandates.

• Delayed A400M aircraft delivery.

• Dolomitic areas where some defence facilities are located (SAAF).

75

DOD AR FY 2008/09

DOD AUDIT QUALIFICATIONS

76

DOD AR FY 2008/09

DOD AUDIT QUALIFICATIONSFY 2005/06 to FY 2008/09

FY 2005/06 FY 2006/07 FY 2007/08 FY 2008/09

24 16 7 6

77

DOD AR FY 2008/09

COMPARATIVE ANALYSIS OF AUDIT QUALIFICATIONS

78

Stream 2007/08 2008/09 Comments

Accruals

2008/09 balance accepted by AG. Qualification relates to comparative figure. If the OCA process is followed in 2009/10 and accurate information is provided by the units, this qualification should be cleared in 2009/10

AssetsQualification can only be cleared upon completion of all DOD assets initiatives

Contingent Liabilities Qualifications w.r.t. Housing Guarantees and NEMA cleared

ProvisionsQualification w.r.t. Capped Leave Provision cleared and qualification on General Leave Provision prevented

Related Parties Qualification cleared

Lease CommitmentsOne of the biggest challenges in this area is the availability of contracts

Revenue Adherence to policies and procedures is a concern

Irregular, Fruitless and Wasteful expenditure

Materiality = R0.01, lack of supporting information

Goods and services – consultant expenditure

Evergreen contract (orig 1980) with Air force – no reconciliations done and poor control – AMG Contract.

Red: Qualification/ matter of emphasis Green: Not included as a qualification/ matter of emphasis

DOD AR FY 2008/09

PLAN OF ACTION • In order to continue addressing the DOD qualifications, various

interventions have been undertaken including the Project Clean Audit.

DOD AR FY 2008/09 80

DISCUSSION/COMMENTS