The Department of Defence (DOD) third-quarter expenditure was today scrutinised by the Portfolio Committee on Defence and Military Veterans, who heard that the department’s wage bill remains one of the largest concerns.
While the department requires an average human-resource strength of 77 000, the committee heard, the average strength of 75 000 will be maintained in order to assure a more sustainable defence capability. The committee also heard that even at a strength of 74 104 for the financial year 2019/20, the department still has a shortfall of R2.7 billion for the compensation of employees. One of the methods of addressing this shortfall has been to transfer R1.6 billion from goods and services, but the department is yet to recalibrate funds to make up the rest of the shortfall.
One of the recommendations in the committee’s Budget Review & Recommendations Reports (BRRR) requires the department to provide feedback on current projects, including Projects Biro, Hotel and Hoefyster, which are under threat given the limited funding in the Special Defence Account (SDA). The committee heard that the department is in a quagmire, given that the SDA budget will be cut by R5 billion and it is currently engaging with National Treasury on the matter.
In addition, the Armaments Corporation of South Africa is engaging with suppliers to ensure that the department does not incur fruitless and wasteful expenditure, or be held liable for paying penalties on defaulted contracts. The department was requested to submit within the next week a detailed report, including the nature of the service level agreements and the financial implications of defaulting on contracts.
With regards to the department’s Audit Action Implementation Plan, the committee was told that the DOD and National Treasury have reached an agreement on how work in progress for capital projects will be disclosed, in order to achieve fair presentation in the annual financial statements. These agreements are also supported by the Auditor-General.
The committee Chairperson Mr Cyril Xaba requested that the department submit within the next week a detailed report on its irregular, fruitless and wasteful expenditure, and the consequence management mechanism initiated by the department.
Meanwhile, the committee has adopted its report on the Defence Amendment Bill [B18 – 2017]. The Bill was passed in the National Assembly (NA) on 11 November 2018, but subsequent changes to section 103(1) by the National Council of Provinces resulted in the Bill being sent back to the NA. The amendments suggested the number of days of absence of a 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.
The committee agreed that the amendment to section 103(1) will ensure numerical alignment between the two Sections and will have no significant impact on the content of the Bill itself, as this is a technical amendment.
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