ByMr A. Visser

Chief Director Strategic Management

15 March 2005

PRESENTATION TO PORTFOLIO COMMITTEE ON

DEFENCE

DOD STRATEGIC BUSINESS PLAN FY2005/06

DOD

AIM

To brief the PCD/JSCD on the DOD Strategic Business Plan for FY05/06 before it is tabled in Parliament in

April 2005

DOD

SCOPE

• Timelines

• Background

• DOD Programmes

• Risks per Programme

• Options for Funding

• Discussion DOD

TIMELINES

DOD

Cycles vs. Financial Years

2002 2003 2004 2005 2006 2007

0-2 0-1 0 0+10-2 0-1 0 0+1

0-2 0-1 0 0+10-2 0-1 0

Cycles

Legend:

0 = Year of Expenditure

0-1= One Year prior to Year of Expenditure

0-2 = Two Years prior to Year of Expenditure

0+1 = One Year after Year of Expenditure

PLANNING CYCLE - EXAMPLES

0-2

[2003]

0-1

[2004]

0

[2005]

0+1

[2006]• Environmental

Analysis

• Worksessions:

– MinDef W/session (Guidelines

– DOD W/session

– DefSec & SANDF w/session

• Planning & Budgeting Seminar (September)

• Jan Lekgotla, SONA & Budget Speech

• May DPBEC (Plans & Budgets)

• MTEC & MinComBud

• Medium-term Budget Policy Statement (MTBPS)

• Allocation & Adjust plans

• Table Plan in Parliament

• Execute Plan

• Quarterly Reports

• Annual Report (FY2004/05)

• Prepare Plan for FY2006/07)

• Prepare Guidelines for FY2007/8

Annual Report (2005/06)

BACKGROUND

• The earliest draft DOD Strategic Business Plan FY05/06 was presented to the Portfolio Committee on Defence on 01 Feb 05.

• Plan was presented to and approved by the Defence Staff Council (DSC) on 23 Feb 05.

• DOD Budget presented to Portfolio Committee on Defence on 08 Mar 05

• Plan will be tabled in Parliament on 08 Apr 05.

• Programme Structure remains generally the same, except Force Employment (formerly called Command & Control - Joint Ops)

DOD

Background…

• Focus:– Conclusion of the First Decade of Democracy– First Year of Second Decade of Democracy– Progress on Strategic Defence Package (SDP) weapon systems

• Overview by the SecDef & CSANDF separate.• Reference to Parys Resolutions (Strategic Decisions),

including new DOD Vision & Defence Update• Minister of Defence’s Strategic Guidelines• Defence Strategy is still in process• Plan is in process of being printed DOD

DOD PROGRAMMES

DOD

RmDefence Administration 681Landward Defence 3 575

Air Defence 2 395Maritime Defence 1 212

Military Health Service 1 578Defence Intelligence 149Joint Support 2 490

Force Employment 1 364Special Defence Account 9 015Total 22 459

RISKS PER PROGRAMME

PROGRAMME RISKS MITIGATING ACTIONS

DEFENCE ADMIN

• Funding for the servicing of MOUs

• Funding for IT-based internal control systems (HR, finance and procurement)

Reprioritisation

FORCE EMPLOYMENT

Operational risk – gap between funding of force-providing services and ordered commitments.

Reprioritisation

LANDWARD DEFENCE

• Capabilities for external ops & joint/combined trg requirements – due to health status and ageing HR profile of serving members.

• Provision for the renewal of SA Army prime mission equipment

• Deteriorating facilities

MSDS intakes & reprioritisation

RISKS PER PROGRAMME

PROGRAMME RISKS MITIGATING ACTIONS

AIR DEFENCE - Deteriorating main equipment, weapon systems & ground- support infrastructure

- Decline of suitably qualified and experienced personnel

- Loss of local industry expertise

- Delay in the delivery of Agusta helicopters

Implementation of SAAF Strategic Transformation Plan Towards Vision 2012; SAAF HR Strategy; & penalties on supplier for late delivery

MARITIME DEFENCE

Costs associated with acceptance and qualification of SDP vessels

MSDS intakes, additional funding that has been provided by Treasury and Risk Abatement Plan

RISKS PER PROGRAMME

PROGRAMME RISKS MITIGATING ACTIONS

MILITARY HEALTH SERVICE

- Deterioration of hospital buildings, facilities and equipment- High medical inflation rate- Compliance with legislation in respect of depots and warehousing

Limited additional funding provided by NT and reprioritisation

DEFENCE INTELLIGENCE

- Deteriorating Defence Intelligence HQ building

- Outdated IT-systems, esp in collection

- Outflow of skilled and experienced personnel

Reprioritisation

RISKS PER PROGRAMME

PROGRAMME RISKS MITIGATING ACTIONS

JOINT SUPPORT

- Maintenance and repair of facilities, vehicles and

equipment- Unsafe and unstable ammunition due to lack of

disposal plant- IT-based internal control

systems (PERSOL, FMS, etc) need upgrade

Reprioritisation and limited funding from NT

SPECIAL DEFENCE ACCOUNT

- Adequacy of funding levels and local industrial

capabilities

- Ageing of SA Army prime mission equipment

-

FUNDING OF RISKS FY2005/06

DOD

BACKGROUND

• 316 Risks listed in SBPs• 76 Identified as DOD risks• 37 Identified as critical • 14 Options based on 37 risks developed• Options prioritised and top 4 selected• Presented to MTEC• Partially funded by NT

DOD

NATIONAL TREASURY FUNDING

Option 05/06 06/07 07/08

Req Allo Bal Req Allo Bal Req Allo Bal

Ammunition Disposal 10 5 5 50 10 40 50 50 0

Maintenance of Facilities

275 10 265 440 50 390 620 250 370

Integration of SDPs 47 26 21 40 22 18 31 13 18

Health Legislation 152 20 132 146 12 134 139 14 125

Peace Support Operations

300 300 300

IMPLICATIONS

• Ammunition Disposal – Lack of safety of depots and personnel due to unstable ammunition.

• Maintenance of Facilities - Non-compliance with Occupational Health and Safety Act, which may result in closure of facilities.

• Integration of SDPs – SDP vessels not fully accepted to design specifications.

• Health Legislation – Cannot comply with pharmaceutical regulations and building of depots.

DOD

OPTIONS NOT FUNDED

• DFR – MA Alignment (RM28)• SAAF – Inkwazi (RM20)• Spec Forces – Recruiting and equipping (RM6)• SA Army – MSDS (RM107)• SA Army – Ammo stock levels (RM93 or RM332)• SA Navy – Compliance with stat prescripts (RM80)• SAAF – Air base infrastructure (RM157)• MLS – Pers retention (RM8)• SAAF – YPT runway (RM25) DOD

REQUIREMENTS: MTEF 2005/06

• Additional RM183, RM254 and RM288 provided by NT.• Four options developed

Requirement FY2005/06

(Rm)

FY2006/07

(Rm)

FY2007/08

(Rm)

SITA 37 39 41

DIDTETA 1 2 3

BPST 4 0 0

Special Forces Recruiting and Equipping 6 6 6

Inkwazi 20 21 22

IT Investment 80 84 88

Pharmaceuticals 40 42 44

Scarce Skills & Rural Allowance 95 38 40

SA Army (Ammunition) 44 46 49

SAAF (Air Base Infrastructure) 16 17 18

SA Navy (Statutory Requirements) 40 42 44

E-Procure 6 2 2

Total 389 339 357

ALLOCATIONS 05/06Requirement FY2005/06

(Rm)

FY2006/07 (Rm)

FY2007/08

(Rm)SITA 37 39 41

DIDTETA 1 2 3

BPST 4 0 0

Special Forces Recruiting and Equipping 6 6 6

Inkwazi 20 21 22

IT Investment 80 84 88

Pharmaceuticals 40 42 44

Scarce Skills & Rural Allowance 95 38 40

SA Army 15 33 44

SAAF 16 17 18

SAN 15 30 40

E-Procure 6 2 2

Total 335 314 348

INTERNAL FUNDING

DOD

Source FY2005/06 FY2006/07 FY2007/08

Capital 60 60 60

Merit Bonus 92 0 0

National Treasury 183 254 288

Total 335 314 348

OPTION 1 - AMMUNITION DISPOSAL

Additional Funding of Rm5 to be utilised as follows:

• Registration of project for Disposal Plant

• Disposal of critically unstable ammo iaw approved disposal plan

• Preparation of dilapidated demolition ranges and capabilities

The ammunition will be disposed of through conventional methods at approved demolition ranges. However, in the continued absence of a dedicated Disposal Plant the serious risks at Jan Kemp Dorp and De Aar still remain

OPTION 2 - FACILITIES

Additional Funding of Rm10 to be utilised as follows:

• Priorities were indicated to National Department of Public Works

(NDPW)

• NDPW will propose options to DOD in April 2005

• DOD will then instruct NDPW on utilisation of funds

The following risks still remain:• Lack of operational readiness and service delivery

• Possible closure of units due to Occupational Health and Safety Act

• Low morale due to unsafe and unsatisfactory working conditions

OPTION 3 - INTEGRATION OF SDPs (SA Navy)

Additional Funding of Rm26 to be utilised as follows:

Corvettes• Support contracts Rm1

• Qualification and acceptance trials Rm10

• Running costs Rm5,5

• Facility upgrades Rm3,5

Submarines• Additional spares and support equipment Rm2,5

• Support contracts Rm3,5

Total Rm26

Balance of risks to be managed through Risk Abatement Plan

RISK ABATEMENT PLAN

• Operational units at lower levels of readiness

• Disposal sale of OTQ (RM 50) to operating budget

• Strict discipline with ammo and fuel usage

• Non-replacement of missiles fired

• Re-phasing of activities

OPTION 4 - HEALTH LEGISLATION

Additional Funding of Rm20 to be utilised as follows:

• Changes to the Medical Health Depot to comply with the Pharmacy Act – Rm10

• Changes to pharmacies to comply with the Pharmacy Act – Rm10

The following risks still remain:• Depot not fully compliant with legislation

• Shortage of ambulances and vehicles required for clinical care

• Non-replacement of main medical equipment (Sonars, X-rays, scanners, etc)

• Security at facilities

These risks will be mitigated to some extent through internal reprioritisation

SUMMARY

• Alignment with Government Priorities (Ten-Year Review and SONA)

• Maintenance of the SANDF core capabilities• Strategic Defence Packages (Integration into SANDF)• Peace Support Operations(Support Govt Initiatives

and ASF) • Departmental Risks(37 risks -14 Options - 4 funded by

NT)• Strategic Decisions (Parys Resolutions)

DOD

DISCUSSION

DOD