Defence procurement system a prevalent challenge: Minister Modise

Wednesday, May 24, 2023

Defence and Military Veterans Minister Thandi Modise has acknowledged that the single most prevalent problem in the department is the defence procurement system.

“We simply cannot continue with non-compliance in the procurement of goods and services. We have agreed that any form of corrupt activity must be rooted out and pursued vigorously.”

The Minister was speaking during the debate on the Defence and Military Veterans Budget Vote on Tuesday. 

According to Modise, she has since instructed the Accounting Officer to conduct a complete and rigorous review of the whole procurement system, identify the root causes, and put in place a robust and high-integrity procurement system.

“In the main, this has not happened, as we are awaiting the new Procurement Bill by National Treasury, which will have a significant impact on the way forward.

“Nonetheless, there has been some progress in that the Acting Secretary for Defence has entered into a Memorandum of Agreement with the National School of Government to enhance procurement training.”

The Minister believes that effective governance and accountability cannot be achieved if the defence procurement system is not modernised and digitised.

“As a national security organ, it is incumbent upon the department to ensure digital sovereignty over the information it manages.”

She said her department has since agreed that consequence management is a Commander’s function.

“It is the Commander’s responsibility to initiate the disciplinary process or register a criminal proceeding with the South African Police Service or the Military Police. Thereafter, a disciplinary system and/or criminal justice system must take its course.

“I have made it abundantly clear to the department that wrongdoers will not be protected, that the investigations will be thorough and that the necessary consequences will be expedited. Where Commanders are tardy, it is incumbent on firstly the Chief of the SANDF and then the Accounting Officer to take all reasonable steps to ensure that the matters proceed speedily.”

Shifting her focus to material irregularity, as well as other high-level reports by the Auditor General (AG), the Public Protector, the Special Investigative Unit (SIU) and the Hawks, she said the Accounting Officer must take immediate steps to expedite the required consequence management.

“The reputation of the Department of Defence hinges on this matter.”

According to the Minister, the department received a qualified audit opinion on four balances from the AG in the 2021/22 financial year.

Excluding matters related to the underfunding of Compensation of Employees (COE) during the 2022/23 financial year, the department incurred unaudited irregularities.

These include R1 million in fruitless and wasteful expenditure and R475 million in irregular expenditure.

In addition, the department received nine material irregularities from the AG at the end of the same financial year.

The department also had a qualified audit opinion on the completeness of the its movable tangible assets. 

To date, Modise said a considerable amount of the current R126 billion assets have been physically verified for existence.

“This situation is less than satisfactory. The root causes are threefold… The department is running legacy common IT [information and technology] systems that are unable to integrate and blend financial and logistics information.”

In addition, the Minister told Parliament that the corporate structure for asset management within the logistics division was inadequate.

She also raised concerns about some unit Commanders who are not performing their responsibilities regarding resource management.

“Furthermore, a special audit needs to be done on all firearms, weapons and other statutory items in the department.”

The Minister said the legacy common IT systems in the department are “fragile and a material risk” to the department.

“These legacy systems are not integrated. They are not compliant with the standards of the PFMA [Public Finance Management Act], and they do not support good governance and accountability.

“I instructed the department to make a strategic assessment of this matter and to come to the Council on Defence on a Defence Digital Strategy for the way forward, including considering bespoke Defence Enterprise Systems in the interim.” –