Department of Defence _DOD_ Annu

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					DOD ANNUAL REPORT FOR THE FY 2006/07




   PRESENTATION OF THE DOD
ANNUAL REPORT FOR THE FY2006/07
            TO THE
SELECT COMMITTEE ON SECURITY AND
     CONSTITUTIONAL AFFAIRS
       20 NOVEMBER 2007



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       DOD ANNUAL REPORT FOR THE FY 2006/07

                          AIM


• To present to the Portfolio Committee on Defence( PCD),
  the non-financial and audited financial performance report
  on the work of the Department of Defence for the financial
  year ended on 31 March 2007, in compliance with section
  40(1)d of the PFMA,1999 ( Act No. 1 of 1999)




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       DOD ANNUAL REPORT FOR THE FY 2006/07



             DECISION REQUIRED

It is requested that the Portfolio Committee on Defence
approves the DOD Annual Report for the FY2006/07.




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      DOD ANNUAL REPORT FOR THE FY 2006/07


              SCOPE & APPROACH
•INTRODUCTION
•OUTLOOK OF THE REPORT
•PROGRESS MADE
•ANNUAL PERFORMANCE AGAINST THE PLAN FY2006/07
•TIMELINES
•CONCLUDING REMARKS
•QUESTIONS AND ANSWERS
•FINANCIAL PERFORMANCE INFORMATION FY2006/07




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             DOD ANNUAL REPORT FOR THE FY 2006/07



              Introductory Statement
The year under review has marked an important chapter in the history of the
Department of Defence. It has seen the affirmation of our commitment to
the vision of ensuring a better life for all and an entry into the Age of Hope.


This commitment has been realised through those activities which
best equip the Department to pursue its strategic intent and, in so doing,
support the consolidation of democracy in the country, the region and the continent.




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              DOD ANNUAL REPORT FOR THE FY 2006/07

                            INTRODUCTION

The DOD has demonstrated its commitment to ensuring effective Defence for a
   democratic South Africa through enhancement and maintenance of the strategic
   defence packages which include:
• Strengthening of maritime capabilities through the commissioning of three MEKO
   Class frigates, the SAS ISANDLWANA,SAS SPIOENKOP, SAS MENDI, and one
   Type-209 submarine, the SAS MANTHATISI
• Strengthening of air capabilities marked by the arrival of sixteen Hawk MK 120
   lead-in fighter trainers and sixteen Augusta Westland A-log light utility helicopters
Contribution to strengthening the African Agenda as demonstrated by participation in
   the following:
• Election processes in the Comoros, the DRC, Lesotho and Madagascar
• Peace support and post-conflict reconstruction operations in Burundi,Ethiopia,
   Eritrea, the Sudan and Côte d‟Ivoire.




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            DOD ANNUAL REPORT FOR THE FY 2006/07


                         INTRODUCTION
Contribution to security - related objectives of the AU as epitomized by increased
  participation in bi and multilateral agreements as well as the establishment of
  the African Standby Force for the SADC region.
Contribution to NEPAD through participation in redefining the Defence industry
  sector strategy and widening of participation within this regulated industry
Embracing the Skills Revolution Agenda and Accelerated Shared Growth Initiative
  through:
• increased participation within the MSDS and the Youth Foundation Programme
• strengthening the DOD‟s contribution towards social responsibility through the
  Works Regiment and re-skilling of ex - combatants through the National Skills
  Fund
Commitment to gender mainstreaming has been demonstrated through the
  increased female appointment to higher ranks.
Compliance with corporate governance prescripts on sustainable planning, and
  accountability reporting



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          DOD ANNUAL REPORT FOR THE FY 2006/07


               OUTLOOK OF THE REPORT
The Draft DOD Annual Report covers the following :
Chapter 1:     Strategic Overview
Chapter 2:     Defence Administration
Chapter 3:     Force Employment
Chapter 4:     Landward Defence
Chapter 5:     Air Defence
Chapter 6:     Maritime Defence
Chapter 7:     Military Health Support
Chapter 8:     Defence Intelligence
Chapter 9:     Joint Support
Chapter 10:    Special Defence Account
Chapter 11:    Organisational Structure and
               Human Resources Management
Appendices A:Status of the SANDF reserves
            B:Defence Diplomacy
            C:Report on foreign aid assistance

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                DOD ANNUAL REPORT FOR THE FY 2006/07

           Subprogramme : Political Direction
     CHAPTER 2: PROGRAMME 1: DEFENCE ADMINISTRATION
Highlights
The Minister of Defence provided political direction to the DOD ensuring that required defence commitments
were met and appropriate defence capabilities were provided within the allocated budget.
     • Issued ministerial priorities for the FY2006/07
     •The Minister„s worksession was held during the period under review.
     •The Minister provided strategic direction to the finalisation of the White Paper on
       Defence, Defence Review (Defence Update 2007)
     •Service and Divisional Chiefs were compelled to continuallly review their State of Readiness in line with
     the MOD theme” Are we ready”.
     •Identified gaps in terms of State of Readiness had to be addressed as per MOD instruction.
     •Focussed attention was directed to the ongoing transformation of the Military Justice System as well as
     restructuring of the Department for greater effective and efficiency.
     •The MOD gave direction to the transformation of the Defence Industry in conjunction with the Mninister
     of public Enterpises
     •Contributed to global security by giving political direction to and participating in the peace processes in
     the DRC, Burundi and Ivory Coast and provision of Mil Obs in Sudan, Ethiopia and Eritrea.
     •Contributed to deepening of democacy in Africa through series of initiatives notably supporting election
     in Comores, Madagascar and Lesotho

Output detail – Table 2.1


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                 DOD ANNUAL REPORT FOR THE FY 2006/07

           Subprogramme : Departmental Direction
Highlights

•Guidelines of the Minister of Defence were analysed and translated into clear DOD deliverables.
•Ensured alignment of DOD priorities, plans and processes with broad Government priorities,
trajectory, strategies, plans and programmes
•Interrogated and optimised the funding priorities which were presented to National Treasury for
consideration during the MTEC hearings
•Implemented perfomance improvement mechanisms in order to optimise compliance with
Government prescripts and accountability.
•DOD activities refocused in terms of DOD strategic objectives and performance against plan.
•Extensive progress has been made in realising the Minister‟s directive regarding the
transformation of the Department to provide for optimal functionality in terms of internal, external
and allocative efficiency

Output detail – Table 2.2
Challenges
Balancing the allocated resources with government commitments
Impact of the delayed implementation of the IFMS on the integration of the Departmental
systems
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            DOD ANNUAL REPORT FOR THE FY 2006/07

                         Subprogramme GITO

Highlights
•   Departmental Enterprise Information Systems (DEIS) formalised and approved
•   Review plan for the DEIS regulatory framework completed

Output details – Table 2.3
• Most objectives and targets met as planned


Performance and Service Delivery Improvement- Table 2.4

Challenges

The DOD CMIS Policy Development and Maintenance Plan is under continuous revision.




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              DOD ANNUAL REPORT FOR THE FY 2006/07

               Subprogramme Policy and Planning
Highlights
•The subprogramme managed to render policy advice to the Department, as well as drafted,
negotiated and concluded bilateral and multilateral defence agreements with other states.
•Ensured that all statutory documents are consulatively developed , approved and timeously
submitted to the appropriate oversight functionaries and organs of state
•Provision of research and analytic support to defence policy and planning actvities was
rendered in line with domestic and international law
•Spearheaded the DOD structure management, refocusing of Command bodies, as well as the
systemic perfomance management through the Balanced Score Card
•Coordinated the development, consultation and finalisation of the update of the White Paper
on Defence (1998) and Defence Review (1996) which was approved by the Minister on 11
December 2006
Output details – Table 2.6
Performance and service delivery improvement are shown in Table 2.7
Challenges
•There is lack of clarity on nodal points in respect of functions that relate to cluster and
multilateral commitments.
•Organisational readiness to ensure successful implementation of the Balanced Score Card. A
targeted orientation programme is planned for the current financial year, which is focused on
senior management as well as services and divisional planners.
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                 DOD ANNUAL REPORT FOR THE FY 2006/07
                    Subprogramme Financial Services

Highlights
•The provision of a cost-effective financial management service to the Minister of Defence,
Secretary for Defence and the Chief of the SANDF
•Development and incorporation training module on section 45 of the PFMA, 1999 to ensure
compliance with the evolving regulatory framework
• Provision of a professional financial management service
Output details – Table 2.8
Performance and service delivery improvement are shown in Table 2.9
Challenges
•The old financial management information system resulting in the DOD‟s current inability to
achieve unqualified financial statements unless exemptions from reporting requirements are
authorised by National Treasury.
•The delayed implementation of the National Treasury‟s initiatives of the Financial Management
Improvement Programme (FMIP) and the Integrated Financial Management Information System
(IFMS).




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                  DOD ANNUAL REPORT FOR THE FY 2006/07
                      Subprogramme Acquisition Services
Highlights

•First two aircafts were delivered to Gabon.
• A minimum of 14 000 orders were processed amounting to more than R1. 867 billion.
•Four (4) Public Private Partnerships involving different arms of Services, were considered during
the period under review
•Public Public Partnership with Armscor for the transfer of the Naval Dockyard was finalised and the
handing over is planned for September 2007.
•Within the Alternative Service Delivery (ASD) 28 approvals were processed out of 30 requests for
outsourcing received, thus translating to 93,3 % throughput.
•A total of 11 fully certified A-09 Light Utility Helicopters were delivered to the SA Air Force during
this period.
•Production of all four maritime helicopters has been completed.
•The first production Hawk aircraft was delivered to 85 Combat Flying School at Air Force Base
Makhado.
•Delivery of the first Gripen Aircraft to Test Flight Development Centre (TFDC).
•The Mirage F1 package was successfully sold and a 5-year purchase contract was signed.
•Sixteen Hawk aircraft were delivered to AFB Makhado.


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              DOD ANNUAL REPORT FOR THE FY 2006/07


        Subprogramme Acquisition Services( contd)

Highlights
•   Four audits conducted by the Auditor General, as well as the office of IG DOD, on
    Procurement Service Centres (PSC) and the reports received were favourable.
•   Arrival of the first submarine, SAS‟MANTHATISI, in April 2006 and acceptance of the
    second submarine in Germany in March 2007.
•   Commisioning of frigate SAS ISANDLWANA in September 2006 and handing over SAS
    MENDI in February 2007
Output details – Table 2.10
 improvement are shown in Table 2.11
Challenges and interventions
• Delay in the establishment of the Defence Matériel Division results in lack of structure and
    capacity to address policy imperatives.
• Ground-based Air Defence System (GBADS).
Non-performance by the main contractor (Denel)remains a serious problem. The
    consequences are:
-a delay of some three years in contractual deliveries; and
- a major deviation from planned cash flow, which is managed through redirection of funds in
    the short term.

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               DOD ANNUAL REPORT FOR THE FY 2006/07

                 Subprogramme Inspection Services
     HIGHLIGHTS
     – The Defence Inspectorate Division hosted the consultative conference from 3 to 7
       July 2006 wherein the SADC Defence Inspectors General Forum which will be an
       arm of the Association of Defence Auditors Conference (ADAC) was established

Output detail – Table 2.12
• Performance and Service delivery improvement are shown in table 2.13
Challenges
•   Full implementation of the audit tool system, whose phased roll out is currently
    aggressively pursued in collaboration with SITA.




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              DOD ANNUAL REPORT FOR THE FY 2006/07
                             Subprogramme EO and AA
     HIGHLIGHTS
     – Mission Readiness Training. Programmes conducted in order to raise
        members awareness of human rights and equity issues.
     – Gender Audit. A reliable database is now available on women in terms of their
        military and academic qualifications.
     – 2nd National Conference on Women in Defence. EOCD hosted the
        Second National Conference on Women in Defence, at the Kopanong Hotel
        Conference Centre from 24 to 26 May 2006.
     – SADC Women‘s Peace Table. EOCD also hosted this seminar in Tshwane
        from 27 to 29 November 2006. Ten countries participated. Best practices on the
        promotion of gender equity in the regional armed forces were shared.
        Output detail – Table 2.14
•   Most objectives and targets were met as planned
•   Performance and service delivery improvement are shown in Table 2.15
Challenges
•   While the set target of 53,7 % of Blacks in Senior Management has been achieved,
    gender transformation remains a challenge. Remedial strategies are being implemented.


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          DOD ANNUAL REPORT FOR THE FY 2006/07
              Programme 1: Defence Administration (SANDF)
Command and Control (C SANDF)
Highlights
• Details in Chapters 2 to 8
• Output details – Table 2.5
• Readiness of military capabilities maintained which is in accordance with
   employment requirements
• Operations were conducted successfully
Challenges
• Mismatch between resource allocation from the Government and the expected DOD
   readiness levels explained in Chapters 2 to 8
• Military capabilities required for Peace Support Operations are approaching sub-
   critical levels

Corporate Staff Division

Corporate Staff Office

•   Output details – Table 2.16

Strategy Plan Office (SPO)
• Output details – Table 2.17
• Crisis Communication Centre migrating to CJ Ops/CDI
• Improved provision of management information to the DOD command cadre as a
   result of strategic planning and reporting enabler “GEJIMA”
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              DOD ANNUAL REPORT FOR THE FY 2006/07
                Programme 1: Defence Administration SANDF
                               (Continued)
Defence Legal Services Division
Highlights
•   Output details – Table 2.19
•   Establishment of amalgamated Defence Legal Services Division
•   Participation in 20 exercises, 24 and 26 shorter deployments
•   Recruited 14( mainly Reserves) as military legal practitioners into Regulars
Challenges operations
•   Lack of skilled military legal practitioners, trained interpreters
•   Non-availability of members of Courts of Military Appeal – snr military practitioners not always
    available on scheduled dates as determined by the chairperson of the Court of Military Appeal

Religious Services
Highlights
•   Output details – Table 2.20
•   Moral Regeneration Conference on 28 Jan to 1 Feb 07 – Dep Pres keynote speaker
•   Involvement with SADC wrt religious matters/HIV/AIDS CHATSEC programme
•   Support to deployed members and families
•   7 Chaplains deployed
•   4 Reserve Chaplains‟ workshops held in various regions




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                DOD ANNUAL REPORT FOR THE FY 2006/07
                 Programme 1: Defence Administration SANDF
                                (Continued)
Defence Corporate Communication

Highlights
•   Output details – Table 2.21
•   Favourable media coverage received on the rejuvenation and re-equipping of the South African National
    Defence Force (SANDF)
•   Research indicating increased public support for the role of the DOD in peace support operations in the
    region.
Challenge. Lack of competent communication functionaries.
Reserve Force Office
Highlights
•   Output details – Table 2.23
•   Increasingly successful participation of the Reserve component in external deployments of SANDF
•   Increasing institutionalisation of the Reserve Force component through internal and external marketing
    initiatives
Challenge. Military Skills Development System (MSDS) not operating as an optimal feeder for the Reserve
    component in accordance with the design strategy.

Defence Foreign Relations

Highlights
•   Output details – Table 2.25
•   Increasing consolidation of the DOD presence regionally and internationally
Challenge.
Organisational structure is not yet fully aligned outputs
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               DOD ANNUAL REPORT FOR THE FY 2006/07
                  Chapter 3: Programme (8) Force Employment


CHAPTER 3: PROGRAMME (8): FORCE EMPLOYMENT
Highlights
•   Output details – Tables 3.1 to 3.4
•   All primary force employment commitments have been met
•   To enhance and maintain comprehensive Defence capabilities
      – Detail in tables on joint and multinational exercises: 3.2 & 3.3
•   Supporting People of South Africa
      – Details in Table 3.1
•   Promote Peace, Security and Stability in the Region and Continent
     - Detail in Table 3.1
Challenges
     – Capabilities required for Peace Support Operations are constrained by the mismatch
       between allocated resources and government ordered commitments.




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                     DOD ANNUAL REPORT FOR THE FY 2006/07
                            Chapter 3: Programme 8: Force Employment
                                            (continued)
   External Force Employment Achievements 2006/07
       Operation        Members                                            Achievement
                        Deployed
Op MISTRAL, DRC          1 214     Continuous replanning to adjust to the changing situation of the mission. The repatriation of
                                   the Ferry and Well Drill units. One successful rotation was completed in October/November
                                   2006
Op FIBRE, Burundi        1 319     Op terminated in Dec 06. Change-over from UN to AU mission. Op CORDITE
Op PRISTINE, Cote          45      Complement prepared, but not deployed from Jul 05 until termination in Dec 06. Op
d’Ivoire                           terminated owing to reasons associated with peace - process in Cote d’Ivoire
Op ESPRESSO,               6       Staff officers/mil observers according to UN/AU requirements
Ethiopia/ Eritrea
Op TEUTONIC I, DRC         47      Two Brassage Centres established, assistance with integration of 147 000 former
                                   belligerents. African Renaissance funds used for post - conflict reconstruction
Op TEUTONIC II, DRC        63      Two training facilities constructed. Mission concluded in Sep 06
Op TEUTONIC III, DRC       2       Senior members deployed to coordinate SANDF assistance to the Congolese Defence Force
Op TRITON, Comoros        318      AU appointed South Africa as lead nation in AU mission in the Comoros. Mission
                                   commended and received recognition from AU Peace and Security Council
Op CORDITE, the Sudan     648      AU requested increased force levels, from 2 companies to battalion strength being deployed.
                                   Two successful rotations were completed. Sustainment flights were and remain a problem
                                   due to Sudanese authorities not giving over-flight and landing clearances
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                     DOD ANNUAL REPORT FOR THE FY 2006/07

                             Chapter 3: Programme 8: Force Employment
                                             (continued)

   External Force Employment Achievements 2006/07 (continued)

      Operation          Members                                             Achievement
                         Deployed
Operations SOLITAIRE        26      A total of 2 165 tons of ballot material were distributed. 200 observers from DFA were
I, II, III and IV. DRC              successfully deployed and supported by the DOD
Op CURRICULUM,            1 110     Protected the Burundi leader element returning from exile. New mission with a temporary time
Burundi                             frame and anticipated to end in 2008.
Op MARINER                  30      29 November to 12 December 2006. All objectives with regards to transportation and general
Madagascar                          assistance were achieved. The mission was commended and received recognition from the
                                    international community.
Op INDAWO, Lesotho          27      15 February 2007 to 20 February 2007. All ballot papers for the Lesotho election were
                                    successfully distributed and collected by the SA Air Force. The SANDF used its own air
                                    capabilities for the deployment.
Op LITCHI II,               80      6 March 2007 and remains current. A total of 630 tonnes of food and 2.5 million litres of
Mozambique                          purified water were distributed. Three SA Air Force aircraft as well as water purification plants
                                    were deployed.
Op BAPISA,                  53      From 26 March 2007. The successes of the operation will be made visible in the FY2007/08
Mozambique                          report


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                       DOD ANNUAL REPORT FOR THE FY 2006/07
                              Chapter 3: Programme 8: Force Employment
                                              (continued)
   Internal Force Employment Achievements 2006/07

     Operation           Members                                             Achievement
                         Deployed
Op INTEXO Borderline       1 111     Borderline control was executed along the Zimbabwe, Mozambique, Swaziland and Lesotho
control                              borders. Successes include: 46 weapons found; 15 676 kg marijuana confiscated; and 727
                                     criminals arrested. Force decreasing on continuous basis in accordance with the agreed
                                     SANDF Exit and SAPS Entry Strategy between the SANDF and the SAPS.
Op STIPPER, Rural        197 ATR     The target was fully met in compliance with SAPS requirements. Successes include: 170
safeguarding                         weapons found 2 657 kg marijuana confiscated and 2 742 criminals arrested.
Op HUMAN Support to      84 mostly   The Dept of Agriculture was assisted in the containment of classical swine fever in the Eastern
Government               Reserves    Cape, KwaZulu - Natal and the Free State. A total of 13 352 pigs were killed. Supported the
                                     Marine and Coastal Management by conducting coastal patrols to curb abalone poaching, and
                                     routine fishery patrols. A total of 40 abalone poachers were arrested. The SA Air Force
                                     patrolled the maritime coast of the RSA (Operation NEPTUNE- RSA West Coast and
                                     Operation ORCA at the RSA East Coast).




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                           DOD ANNUAL REPORT FOR THE FY 2006/07
                      Chapter 3: Programme 8: Force Employment
                                      (continued)
  Joint Exercises 2006/07
                        Exercise                                                                    Achievement


SA Special Forces Exercises                               Three exercises to rehearse contingencies were executed as planned
SANDF Communication Exercise                              This exercise was integrated with other planned exercises to ensure effective communication skills
                                                          and radio procedures
Ex MATHOLE. Command post exercise (CPX) to test           The exercise was cancelled due to the non-availability of force structure elements. Focus on
rapid reaction capability and develop SANDF doctrine      planning and preparing of forces for Exercise NDLOVU planned for 2009
and procedures in peacekeeping. Prepare forces
training exercise in 2007
Ex MATHOLE                                                The exercise was cancelled due to non-availability of force structure elements. The focus will be
SANDF joint Peace - keeping Operations exercise           placed on planning and preparing of forces for Exercise NDLOVU planned for 2009
(field training exercise) to test and evaluate doctrine
on peace support operations
Ex OXIDE. (GERANIUM). Enhance preparedness of             The exercise was cancelled due to unavailability of French forces. The last exercise was
the SANDF to render support to the Dept of Transport      conducted in May 2005.
in search and rescue, in conjunction with French
forces based in La Reunion as per MOU
Ex EMEX. To render support to the National Nuclear        The exercise at the Koeberg nuclear plant in March 2006 was attended by military observers.
Regulator in dealing with a nuclear incident at           Different scenarios were simulated whereby contingencies were confirmed and rehearsed.
Koeberg nuclear plant as required by legislation
EXERCISE AFFIX. To render support to the Airports         The exercise at O.R. Tambo Airport In Johannesburg in March 2006 was attended by military
Company of South Africa in dealing with aircraft          observers. Different scenarios were simulated and contingencies were confirmed and rehearsed
disasters at South African airports, as required by
legislation
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                      DOD ANNUAL REPORT FOR THE FY 2006/07
                                   Chapter 3: Programme 8: Force Employment
                                                   (continued)
  Multi-national Exercises 2006/07
               Exercise                                                               Achievement

Ex AIR BORNE AFRICA. Airborne forces               This exercise was cancelled, as no host nation for the exercise could be found
competition
Ex BELL BUOY. Military (naval) control of          The maritime exercise was conducted with the Navies of Uruguayan, Brazilian and
merchant shipping in times of emergency            Argentinean. All the objectives for the exercise were met. The exercise took place
(Indian Ocean)                                     in Brazil in Sept 2006.
Ex TRANSOCEANIC. Military (naval) control          Exercise TRANSOCEANIC took place from 14 to 25 Aug 06 in South Africa.
of merchant shipping in times emergency in         Participating countries were Brazil, Argentina, Uruguay and SA. SA Navy Reserve
participation with South American countries        teams stationed at the six main ports of SA participated in this exercise.
(South Atlantic Ocean)
Ex INTEROP EAST and WEST. Naval                    INTEROP EAST was conducted as part of Exercise BOURBON from 28 Oct to 14
exercise with Africa countries on the east and     Nov 2006. Due to the operational commitments of the SA Navy the force structures
west coast of Africa to build trust capacity and   were changed at very short notice. No helicopters were deployed as originally
capability in the navies in the SADC regions       planned due to the SA Navy’s Operational Commitments. INTEROP WEST took
                                                   place in 2006. SAS AMATOLA visited four African countries; Nigeria, Cameroon,
                                                   Gabon and Sao Tome. Participated in the Nigerian Navy Presidential Fleet Review
                                                   to mark their 50th anniversary.
Exercise BOURBON. Combined search and              This exercise was conducted as part of Exercise INTEROP EAST. The exercise
rescue exercise between the DOD, DTA and           took place at Reunion from 29 Sep to 14 Nov 2006 with the French Indian Ocean
Environmental Affairs as well as French forces     Navy. The objectives of the exercise were achieved. The same vessels were
in La Reunion                                      utilised in both exercises.
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                      DOD ANNUAL REPORT FOR THE FY 2006/07
                                  Chapter 3: Programme 8: Force Employment
                                                  (continued)
  Multinational Exercises 2006/07
                   Exercise                                                         Achievement

Exercise COMBINED ENDEAVOUR.                     The multinational interoperability exercise took place during March, May, Sep, Nov
Partnership for Peace Communications and         2006, Jan and March 2007. The exercise was executed in Georgia, Germany, the
Information Systems technical demonstration      Netherlands, Armenia, Slovakia, Ukraine and Germany. 24 members of the CMIS
                                                 Div were involved in the planning and execution of the exercise.
Exercise AFRICA ENDEAVOUR. African               CMIS Div conducted the African interoperability exercise in Jul 2006 at
communications and information systems           Wonderboom Military Base. Planning was done in Nov 2006 and Jan 2007 to host
interoperability exercise                        the second Exercise AFRICA ENDEAVOUR in the RSA in Jul 2007. The United
                                                 States European Command (USEUCOM) invited most of SADC to participate. The
                                                 aim is to establish SADCBRIG interoperability
EXERCISE ATLASUR. Maritime exercises             The maritime exercise took place in Uruguay from 28 Oct to 7 Nov 2006. The SA
between SA Navy and South American               Navy as well as Uruguayan, Brazilian and Argentinean navies participated.
countries to enhance multinational
conventional naval warfare capabilities in the
South Atlantic Ocean
Exercise BLUE RUVUMA. Humanitarian               The SAAF conducted the exercise in Tanzania supported by other services and
relief exercise based on a flood disaster        divisions. The exercise took place from 9 to 13 Oct 2006.
scenario in one of the SADC member states




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               DOD ANNUAL REPORT FOR THE FY 2006/07

                       CHAPTER 4: PROGRAMME 2: LANDWARD DEFENCE
Highlights
•   Output details – Tables 4.1 to 4.3
•   SA Army Future Vision – SA Army Strategic Profile which defines the desired effets and capabilities was completed
•   Successfully provided forces for 11 external and 3 internal operations
•   4 638 Infantry conventional Reserves were utilised for external and internal deployments, administration and guards.
•   As a contribution to the rejuvination of the Army Conventional Reserves,transferred more than 1 000 volunteers from
    Army Territorial Reserves to Army Conventional Reserve
•   Provided 2 Reserve coys and combat support elements for external deployment
•   Rejuvenation of SA Army (MSDS) 2 421 from Jan 2005 intake appointed in Core Service System. Jan 2006 intake 3
    000 trained in first cycle. Jan 2005 MSDS intake completed force prep cycle with Exercises SEBOKA and YOUNG
    EAGLE
•   Training
      – Infantry:                         131/129 learning opportunities 6719/7073 learners
      – General Jnr Leader:               15/18 learning opportunities 1 466/1 825 learners
Challenges
•   Mismatch between allocated funds and ordered commitments
•   Revitalisation of SA Army’s Technical Service Corps capability
•   state of readiness is compromised by shortage of ammunition and general commodities
•   Attrition of skilled technical personnel to the private sector.




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                  DOD ANNUAL REPORT FOR THE FY 2006/07
                           CHAPTER 5: PROGRAMME 3: AIR DEFENCE
Highlights
•   Output details – Tables 5.1 to 5.2
•   37 160 hours were flown of which 9 788 hours were in direct support of Joint Operations
•   Support to Italian and Brazilian air forces, trained VIP protectors for Pakistan
•   Air Force Reserves delivered 52 496 man-days, flew 2 737 hours
•   Exercise BLUE RUVUMA, Exercise NEW HORIZON (NH) 5, Air Capability Demonstrations
•   HR transformation - increased numbers of black candidates for training,
•   2 pupil pilot courses completed : 33 learners, 30 males, 3 females while 67% were black
•   MSDS – altogether 613 learners trained
•   Vigorous initiaitives to retain scarce skills implemented.
•   Training
      – Air Space Controllers:              16/9 learning opportunities - 99/65 learners
      – Pilots:                             2/2 33/34 learners
      – Flying Instructors:                 2/2 learning opportunities – 16/12 learners
Challenges
•   Significant levels of under-funding of operating budget
•   Impact of late release of the Hawk Jet Trainer caused disruptions to the planned training and conversion schedule
•   Deterioration of operational infrastructure and facilities.




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                  DOD ANNUAL REPORT FOR THE FY 2006/07

                       CHAPTER 6: PROGRAMME 4: MARITIME DEFENCE


Highlights
•   Output details – Tables 6.1 to 6.2
•   1 frigate and 2 strike craft – exercises in East/West Africa
•   Exercise TRANSOCEANIC, ATLASUR, DIVE EX 06 , INTEROP EAST/WEST
•   Four frigates and 2 of 3 new submarines are in service
•   Involvement in SADC maritime matters, trained over 40 learners from various African countries
•   Maritime Reaction Squadron established
•   Increased representivity in combat domains
•   Progress in rejuvenating the SA Navy as demonstrated by 480 MSDS recruits joining the Naval Reserves
•   Public Private Partnership for Sea Safety Training Centre – Transaction Advisor appointed
    Training
      – Functional and warfare: 135/169 learning opportunities 1 847/2 185 learners
      – Technical: 74/74 learning opportunities 646/835 learners – 216 technically trained
Challenges
•   Current funding level - maintained only facilities required for force preparation
•   Loss of technical skills and expertise – diving and technical domains in spite of measures to retain
•   Continuing deterioration of facilities.




                                                         CONFIDENTIAL                                      30
                   DOD ANNUAL REPORT FOR THE FY 2006/07
                       CHAPTER 7: PROGRAMME 5: MILITARY HEALTH
                                      SERVICE
Highlights
•   Output details – Tables 7.1 to 7.3
•   Supported all operations and exercises
•   Force preparation consolidated through Exercise LANCET
•   Intergration of the Health support systems with the requirements of the Strategic Defence Packages.
•   Optimised alignment between Strategy and Plan roll-out
•   Renewal and maintenance of health facilities prioritised and commenced with at the three military hospitals
•   Race and gender demographic configuration of the SAMHS realigned.
•   Interdepartmental training cooperation reinforced through the training of MSDS and other health care workers (Dept of Health)
•   Military Psychological Institute (MPI) made significant strides in developing developing health readiness measurement instrument
    for military needs
•   Training:
      – Nursing diploma: 237/280 diploma students (Year 1 to 4).
      – 40 learners completed diploma in Dec 2006
      – Military Health Training 190/250 learning opportunities 2 989/4 047 learners
      – Military Training. 3/2 MSDS intakes 2 974 /1 945 learners.
Challenges
•   Availability and retention of health care practitioners
•   SAMHS facilities and renewal of main medical equipment




                                                        CONFIDENTIAL                                                           31
              DOD ANNUAL REPORT FOR THE FY 2006/07
              CHAPTER 8: PROGRAMME 6: DEFENCE INTELLIGENCE



Highlights
•   Output details – Table 8.1
•   Positive feedback from national clients - DI supports national intiatives on African continent, level of
    assessment – national benchmark
•   Support provided to SANDF operations/exercises as required
•   Training agreements with SAPS
•   Training. Functional intelligence courses and skills programmes addressing the analysis, collection and
    counter-intelligence domains 17/18 216/90 learners
Challenge. Recruitment and retention of personnel




                                               CONFIDENTIAL                                                    32
                 DOD ANNUAL REPORT FOR THE FY 2006/07

                        CHAPTER 9: PROGRAMME 7: JOINT SUPPORT
CMIS Division
Highlights
•   Output details – Tables 9.2 to 9.3
•   Supported 12 operations and 3 exercises
•   Received additional Rm50 to initiate implementation of DEIS Master Plan
•   Participation in joint/multinational exercises, Exercise Combined ENDEAVOUR
•   Upgrading of main equipment – projects
•   Reserve man-days 43 133 increased to meet division’s needs
•    Training
     – 309/184 learning opportunities - 1 774 /2 159 learners
Challenges
•  Loss of expertise – ICT domain greater reliance on contracted services provided by SITA
•  ICT obsolescence
•  Lack of personal and signals equipment, serviceability of vehicles
•  National moratorium on destruction of records – Dept of Arts and Culture manages submission to Cabinet




                                                     CONFIDENTIAL                                           33
                   DOD ANNUAL REPORT FOR THE FY 2006/07
                                     CHAPTER 9: PROGRAMME 7: JOINT SUPPORT
DOD Logistic Agency                                (Continued)
Highlights
•   Output details – Table 9.6
•   Good progress with migration of fragmented log info systems to OSIS
•   1 000 tons unserviceable ammo demolished, 5 of 7 demolition ranges qualified
•   Good progress with capturing of assets in register
•   Successful purchasing of materie’l handling equipment
•   Environmental issues incorporated during operations. Env practitioners deployed
•   Transfer of Technical Service Corps function/units to SA Army started
•   Training of 761 MSDS recruits in all logistic - related fields
•   Trg 187/191 learning programmes 98% learning opportunities has been achieved, 3 043 learners (104%)
Challenges
•   Maintenance backlog of facilities concern about DPW services
•   Asset accounting management system not fully compliant with GRAP
•   Backlog in disposal of redundant and unserviceable ammunition
•   Renewal and transformation of Reserves, lack of specialist logistic personnel
•   Training Institutions – non-alignment with SAQA, lack of competent ETD practitioners, deteriorating facilities
•   DOD Air Supply Unit – deteriorating facilities and lack of equipment
•   Land reform and restitution, delays in finalising: Regional Land Claims Commissioner’s priorities in conflict with DOD’s.
    Unexploded ordnance at Hell’s Gate/Madimbo corridor
•   National Codification Bureau not fully established – Dec 08
•   Lack of a single DOD Log management info system

                                                         CONFIDENTIAL                                                           34
              DOD ANNUAL REPORT FOR THE FY 2006/07
                   CHAPTER 9: PROGRAMME 7: JOINT SUPPORT
                                 (Continued)

Human Resources Support Centre
Highlights
• Ouput detail – Table 9.8
• Processed 78 783 applications for career opportunities in DOD
• Exit Administration of 5 393 members who left service of DOD
• Updated more than 7 000 records on miliary veterans database
• Processing of 1 469 applications for the recognition of previous NSF service for pension
   purposes
• Ceremonial support for all SANDF Ceremonial activities
• Implementation of Operation Clean Audit for the FY 05/06 AG report
Challenge
• The implementation of the NSF Pension dispensation ito the approved Legislation and GEPF
   Pension Fund Rules
• Migration of HR Satelite Centres back to Services and Divisions



                                         CONFIDENTIAL                                        35
              DOD ANNUAL REPORT FOR THE FY 2006/07
                  CHAPTER 9: PROGRAMME 7: JOINT SUPPORT
                                (Continued)

Joint Training
Highlights
• Output detail – Table 9.9
• Batho Pele compulsory Frontline training Programme roll out : 383 DOD employees trained
• A high level of readiness was mantained
• Mil Acad - 4 staff members appointed as Professors by University of Stellenbosch
• Full accrediation status accorded to Warrant Officer’s Academy as a learning provider
• Youth Foundation – 240 learners with 98% pass rate. 180 learners employed in DOD
• Trg Institutions presented 304 programmes for 1 688 learners, 30 learners not found competent
Challenges
• Establishment of SANDF Trg Institute (Project BRILLIANT) slow due to number of stakeholders
   to take appropriate action. It is envisaged that this Institute will improve the human capital
   development and support as a hub.
• DPW’s lack of capacity to maintain the facilities at an acceptable level as these are learning
   environment that need to comply with specific provisions of the OSH Act, 1985



                                           CONFIDENTIAL                                             36
                DOD ANNUAL REPORT FOR THE FY 2006/07
                     CHAPTER 9: PROGRAMME 7: JOINT SUPPORT
                                   (Continued)

Military Police Agency
Highlights
•   Output details – Table 9.10
•   56 Military Police members deployed at any given time
•   Expansion of ceremonial motorcycle fleet, soft - skin vehicles and radio communication equipment
•   Joint training with SAPS and traffic depts
•   Improved representivity at middle management level
•   56 MSDS members recruited
Challenges
•   Implementation of the new Military Police Agency Organisational Structure




                                                 CONFIDENTIAL                                          37
                  DOD ANNUAL REPORT FOR THE FY 2006/07
                             CHAPTER 9: PROGRAMME 7: JOINT SUPPORT
Service Corps                              (Continued)
Highlights
•   Output details – Table 9.11
•   Total training to 1 622 learners including 107 learners from Mozambique
•   Center for Advanced Training (CAT), trained to 225 of the 250 planned learners.
•   Reskilling, placement and training of more than 95 military veterans. ABET to 261 veterans Conversion training
    for SANDF members to transfer to SAPS
•   Reskilling assistance to 130 SANDF members – MEM (968 registered but not all reported)
Challenges
•   CAT not yet accredited by SAQA
•   Implementation of the Works Regiment concept in conjunction with the SA Army
British Peace Support Training Team
•   Output detail – Table 9.13
•   Support to J Ops Div /J Trg
•   Mission ready training to all rotating forces
•   UK funding of fitting out of class room facility at Mob Centre and PMTC [MOU]
Property Management
•   Output detail Table 9.14
•   Devolution of PWD‟s budget for payment of accommodation charges, leases and municipal services
                                                   CONFIDENTIAL                                                      38
          DOD ANNUAL REPORT FOR THE FY 2006/07


    Subprogramme Special Defence Account
Highlights
•    General Defence Account (GDA) funds were spent according to corporate
     priorities to ensure cost - effective solutions to requirements

Output details – Table 10.11 to 10.12
Performance and service delivery improvement are shown in Table 10.3


Challenges
•    97,9% of the target was achieved due to outstanding invoices that will be
     addressed during the next financial year.
•    The new submarine project has underspent on project management due to
     invoices not being submitted to the project team.




                                    CONFIDENTIAL                                 39
          DOD ANNUAL REPORT FOR THE FY 2006/07


              Chapter 11: Organisation and
              Human Resource Management
•   Chapter Content
     – Organisational Structure
     – Service Delivery Improvement
     – Personnel Expenditure and Personnel Statistics (Table Format)
     – HIV / Aids and Health Promotions
     – Labour Relations
•   Graphs on HR Evolution ito Personnel Expenditure, Appointments, Attritions, Promotions
    and Equity




                                        CONFIDENTIAL                                         40
                    DOD ANNUAL REPORT FOR THE FY 2006/07
Personnel Expenditure as a % of Total Expenditure
                  2006/07 FY
         Personnel as % of Total Expenditure
                                                                  Personnel Expenditure per
   Rest of
                                                                        Programme
 Expenditure
    61%
                                                                               Landward
                                                                                Defence                     Air Defence
                                                                                 80.10                          55.60



                                                                    Admini-                                               Maritime
                                                                    stration                                              Defence
                                                                     33.80                                                 61.10


                                                                 Force
                                                               Employment
                                                                 48.10
                                                                                                                      Military
                                                                                                                       Health
                                                                                                                      Support
                                                                    Joint Support                                      63.80
                                                 Personnel              50.00
                                                Expenditure
                                                    39%                                        Defence
                                                                                             Intelligence
                                                                                                85.70


                                                               80.10% of the DOD‟s personnel expenditure is utilised
Personnel expenditure is 39% of the total DOD expenditure
                                                               by Landward Defence
                                                       CONFIDENTIAL                                                              41
                        DOD ANNUAL REPORT FOR THE FY 2006/07

     Macro Personnel Evolution by Salary Band for 2006/07
                             FY
         Number of Employees - 1 April 2006                             Number of Employees - 31 March 2007
                                        Levels 9-12;                                                    Levels 9-12;
                                           11%                                  Levels 6-8;                11%
           Levels 6-8;                                                                                            SMS Levels
              31%                                      SMS Levels                  32%
                                                                                                                   13-16; 0%
                                                        13-16; 0%

                                                  MSDS; 11%                                                     MSDS; 11%
                                                                                                                     Levels 1-2;
                                                      Levels 1-2;
                                                                                                                        9%
                                                         10%
                                           Prof's Levels                                                   Prof's Levels
          Levels 3-5;                                                   Levels 3-5;
                                            13-16; 0%                                                       13-16; 0%
             37%                                                           37%



Total = 77858                                   Appointments/Attritions                                       Total = 77518




                                                                         5053
                                       5393




                                               Appointments         Attrition


          The DOD‟s personnel strength from 77858 to 77518. The turnover rate during the financial year was -0.4%
                                                      CONFIDENTIAL                                                         42
                       DOD ANNUAL REPORT FOR THE FY 2006/07
               Macro Personnel Flow ito Appointments,
               Promotions and Attritions by Salary Band
              Appointments per Salary Band = 5053                                Attritions per Salary Band = 5393
                                                                               Levels 1-2;                   Levels 3-5;
                                  Levels 1-2;
                                                                                  6.7%                         30.4%
                                     1.0%
MSDS; 88.9%
                                  Levels 3-5;
                                     2.1%                                  MSDS; 17.5%
                                  Levels 6-8;
                                     5.2% Levels 9-12;
                                              2.7%                    Levels 13-16;
                                                                          0.6%                                       Levels 6-8;
                                Levels 13-16;
                                                                       Levels 9-12;                                    29.1%
                                    0.1%
                                                                          15.8%


              Promotions by Salary Band = 9882                                          Attritions per Exit Reason
                                                                         Contract                                   Dism issal Ill
                                      Levels 3-5;                         Expiry                        Transfer to    Health
                                        37.3%                             1 023                           Dept's        142
        Levels 1-2;                                                                                         830 Dism issal
                                                                                                                 Operational
           0.0%                                                                                                   Required
      MSDS; 5.2%                                                 Resignation                                          0 Dism issal
      Levels 13-16;                                                 1 104                                                Misconduct
           0.3%                                                                                                  Discharged 194
       Levels 9-12;                                                                                               Incapacity
          13.3%                                                                                                       0
                                                                                                                       Retirem ent
                                         Levels 6-8;                                                MEM / EISP             312
                                                                                Death
                                           44.0%                                                      1 008
                                                                                 780
   MSDS recruitment constitutes 88.9% of the appointments made during the financial year whilst the highest attrition rate was
   experienced from levels 3 – 8. Resignations and MEM/EISP was the main reasons for attrition.
                                                       CONFIDENTIAL                                                            43
   The most promotions were done for levels 3 -8.
                        DOD ANNUAL REPORT FOR THE FY 2006/07
   Macro Personnel Evolution by Critical Occupation
                   for 2006/07 FY
             Number of Employees - 1 April 2006                                  Number of Employees - 31 March 2007
                                                                                                               Technical
      Artillery                              Technical               Artillery                                   56.1%
       8.1%                                    51.8%                  7.2%
            Air Space                                                          Air Space
              Control                                                           Control
               3.6%                                                                                                  Engineer
                                                                                   3.4%
Anti-Aircraft                                        Engineer                                                          1.5%
                                                                     Anti-Aircraft
    5.6%Combat Navy                                    1.3%
                                                                         5.4%
                                                                                 Combat Navy
             3.3%                                Medical                                                               Medical
                                                                                      1.9%
   Aircrew                                     Professional           Aircrew             Nursing                    Professional
                        Nursing
     4.5%                                         10.2%                 4.6%               11.1%                         8.9%
                         11.5%

Total = 13595                                       Appointments/Attritions                                      Total = 13509



                                                                             759




                                             1361



                                                    Appointments        Attrition


                        In terms of critical occupations personnel strength was reduced from 13595 to 13509.
                        The turnover rate for scarce skills during the financial year was -0.6%
                                                              CONFIDENTIAL                                                      44
                     DOD ANNUAL REPORT FOR THE FY 2006/07
   Macro Personnel Flow ito Appointments,
Promotions and Attritions by Critical Occupation
    Appointments per Critical Occupation = 759                                Attritions per Critical Occupation = 1361
  Medical                                                              Medical
                                                                                                            Nursing
Professional                                                         Professional                                      Aircrew
                                         Nursing                                                             9.0%
   35.7%                                                                24.2%                                            3.1%
                                          12.6%       Aircrew
                                                        5.4%                                                          Combat Navy
                                                                          Engineer                                        3.5%
                                                   Anti-Aircraft            1.2%                                        Anti-Aircraft
Engineer
                                                       0.1%                                                                 4.0%
  2.2%                                                                                                                  Air Space
                                                     Combat Navy
                                                                                                                         Control
                                                          0.0%
                                                                                                                           3.5%
                                                        Air Space
     Technical                                           Control              Technical                                    Artillery
                                     Artillery
       33.2%                                              10.5%                 43.7%                                       7.7%
                                      0.1%

                                        Promotions by Critical Occupation = 2838
                                  Medical                Nursing
                                                           9%       Aircrew
                                Professional                                      Combat Navy
                                                                       5%
                                     5%                                              6%

                                  Engineer                                Anti-Aircraft
                                    2%                                         6%
                                                                                      Air Space
                                                                                        Control
                                                                                          4%


                                    Technical                                 Artillery
                                      49%                                       14%



                 The highest attrition was experienced in the Medical Professional and Technical environments.
                                                           CONFIDENTIAL
                 The most promotions were done in the Technical skills environment.                                              45
                      DOD ANNUAL REPORT FOR THE FY 2006/07
                 Macro Personnel Flow ito Equity (Race)
          Number of Employees - 1 April 2006                               Number of Employees - 31 March 2007

   21.19%                                                              19.31%


                                                                    1.19%                                             African
1.25%                                                African
                                                     Coloured                                                         Coloured
                                                                  12.72%                                              Asian
12.74%                                               Asian
                                                                                                                      White
                               64.82%                White
                                                                                                   66.78%



 Total = 77858                                                                                                    Total = 77518
                                                    Evolution within FY
                                              -1 536




                                             -51
                                                                        1 304
                                               -57
                                          African     Coloured       Asian      White


                  There has been an increase in the appointments of Africans during the financial year by 1.96%
                                                         CONFIDENTIAL                                                         46
                    DOD ANNUAL REPORT FOR THE FY 2006/07
           Macro Personnel Flow ito Equity (Gender)
         Number of Employees - 1 April 2006                             Number of Employees - 31 March 2007

  22.84%                                                         23.62%


                                                     Male
                                                     Female                                                          Male
                                                                                                                     Female




                           77.16%                                                           76.38%

Total = 77858                                                                                                   Total = 77518
                                                   Evolution within FY




                                          -871                            531




                                                      Male     Female



     During the financial year there was an outflow of male employees (-1.11%) and an inflow of female employees (0.68%)
                                                          CONFIDENTIAL                                                     47
                            DOD ANNUAL REPORT FOR THE FY 2006/07
                    Equity Evolution (Race) ito Appointments
             Number of Black Employees Appointed                              Number of White Employees Appointed
                     Unskilled                                                      Unskilled
     Semi-Skilled
                       1.0%                                                           1.4%
        2.1%                                                         Semi-Skilled
    Skilled                                                             2.0%
   Technical
     4.4%                                               MSDS                                                          MSDS
                                                        89.9%           Skilled
                                                                                                                      72.5%
                                                                       Technical
Prof Qualified                                                           17.3%
     2.5%                                                               Prof Qualified
                                                                             6.8%
                     SMS                                                                        SMS
                     0.1%                                                                       0.0%

   Total = 5053                                                                                                     Total = 5053
                                                      Appointments per Race


                                                                        295
                                                                        6%

                                                                                   Black Employees
                                        4758                                       White Employees
                                        94%




         During the financial year 94% of appointments consisted out of Black employees and the remainder (6%) was constituted
                                                               the largest percentage in all the race groups.
         of White employees. MSDS appointments constitutedCONFIDENTIAL                                                         48
                     DOD ANNUAL REPORT FOR THE FY 2006/07
           Equity Evolution (Gender) ito Appointments
         Number of Male Employees Appointed                             Number of Female Employees Appointed

                               SMS                                                           SMS
                               0.1%                                                          0.1%
                                      Prof Qualified                                                 Prof Qualified
                                           2.1%      Skilled                                              3.8%
 MSDS                                              Technical    MSDS                                         Skilled
 93.1%                                               2.4%       81.5%                                       Technical
                                                                                                              10.0%
                                          Semi-Skilled
                                             1.6%                                                        Semi-Skilled
                                                                                                            3.0%
                                   Unskilled                                                 Unskilled
                                     0.7%                                                      1.6%

Total - 5053                                                                                                    Total - 5053
                                                 Appointments per Gender




                                                                         1828
                                        3225                             36%
                                        64%




                                                       Males   Females


     During the financial year 64% of appointments were male employees and 36% female employees.
     MSDS appointments constituted the largest percentage.
                                                         CONFIDENTIAL                                                     49
                    DOD ANNUAL REPORT FOR THE FY 2006/07
               Equity Evolution (Race) ito Promotions
        Number of Black Employees Promoted                                 Number of White Employees Promoted
                                                                                                      Semi-Skilled
                               MSDS
Semi-Skilled                               SMS                                                          20.9%
                               5.6%
  40.7%                                    0.2%                                                     MSDS
                                                                Skilled                             3.0%
                                       Prof Qualified          Technical                                      SMS
                                           10.4%                 48.1%                                        0.7%


                                Skilled                                                            Prof Qualified
                               Technical                                                               27.3%
                                 43.2%


Total - 9882                                                                                                         Total - 9882
                                                    Promotions per Race




                                           8206                            1676
                                           83%                             17%




                                           Black Employees     White Employees


    During the financial year 82% of promotions were Black employees and the 17% White employees.
    Within Black employees most promotions were done in the Semi-Skilled and Skilled Technical environments.
    Within White Employees most promotions were done in the Skilled Technical and Professional Qualified environments.
                                                         CONFIDENTIAL                                                         50
                         DOD ANNUAL REPORT FOR THE FY 2006/07
               Equity Evolution (Gender) ito Promotions
        Number of Male Employees Promoted                                Number of Female Employees Promoted
          Semi-Skilled                                                                                    MSDS
                                                                         Semi-Skilled                     6.4%
            38.4%
                                                                           33.8%
                                         MSDS
                                                                                                            SMS
                                         4.7%
                                             SMS                                                            0.2%
                                             0.3%
      Skilled
                                                                                                          Prof Qualified
     Technical
                                         Prof Qualified                                                      13.4%
       43.3%
                                             13.2%                   Skilled
                                                                    Technical
                                                                      46.0%

Total - 9882                                                                                               Total - 9882
                                                  Promotions per Gender



                                                                          2405
                                                                          24%

                                        7477
                                        76%



                                        Male Employees         Female Employees


                  During the financial year 76% male employees and 24% female employees were promoted.
                  Most promotions were done within the Semi-Skilled and Skilled Technical environments.
                                                          CONFIDENTIAL                                                 51
                        DOD ANNUAL REPORT FOR THE FY 2006/07
                        Equity Evolution (Race) ito Attrition
             Number of Black Employees Exited                                    Number of White Employees Exited
             Skilled                                                                             Skilled
                                               Semi-Skilled
            Technical                                                                           Technical
                                                 41.9%
              19.9%                                                                               47.1%
Prof Qualified                                                                                               Semi-Skilled
     5.2%                                                                                                       7.8%
                                                                                                                Unskilled
            SMS                                                                                                   0.1%
            0.3%                                                    Prof Qualified                               MSDS
                                                                        36.3%
       MSDS                                   Unskilled                                                     SMS 7.7%
       22.6%                                   10.1%                                                        1.1%

 Total = 5393                                                                                                       Total = 5393
                                                          Attritions per Race




                                          3564                                  1829
                                          66%                                   34%




                                           Black Employees           White Employees


     Most of Black employees that exited was in the Semi-Skilled, MSDS and Skilled Technical environments whilst most White
     employees that exited the system was from the Skilled Technical and Prof Qualified environments.
                                                              CONFIDENTIAL                                                    52
                       DOD ANNUAL REPORT FOR THE FY 2006/07
                   Equity Evolution (Gender) ito Attrition
           Number of Male Employees Exited                                      Number of Female Employees Exited
               MSDS                       SMS                                                                SMS
               14.9%                      0.6%                                  MSDS                         0.3%
                                                                                25.8%
                                                 Prof Qualified                                                     Prof Qualified
      Unskilled
                                                    15.5%                                                               16.5%
        6.2%
                                                                    Unskilled
                                                                      8.2%
                                             Skilled
                                                                                                              Skilled
                                            Technical
        Semi-Skilled                                                     Semi-Skilled                        Technical
                                              26.8%
          35.9%                                                            12.7%                               36.4%


Total - 5393                                                                                                          Total - 5393
                                                    Attritions per Gender



                                                                            1296
                                                                            24%

                                         4097
                                         76%



                                          Male Employees          Female Employees


   The most attritions by male employees took place within the Semi-Skilled, Skilled Technical and Prof Qualified environments
   whilst most attritions be female employees to place within the Skilled Technical, MSDS and Prof Qualified environments.
                                                          CONFIDENTIAL                                                               53
DOD ANNUAL REPORT FOR THE FY 2006/07




  ANNUAL FINANCIAL STATEMENTS
     FINANCIAL YEAR 2006/2007

    Presented by the Acting Chief Financial Officer
       DOD ANNUAL REPORT FOR THE FY 2006/07



       AIM OF THE PRESENTATION

To present the:

• Financial performance of the DOD for the Financial Year
  2006/2007

• Financial position of the DOD at the end of the Financial Year
  2006/2007




                             CONFIDENTIAL                          55
          DOD ANNUAL REPORT FOR THE FY 2006/07


                            SCOPE
•   Appropriation Statement
•   Statement of Financial Performance
•   Statement of Financial Position
•   Notes to the Financial Statements
•   Special Defence Account
•   Challenges
•   Highlights




                               CONFIDENTIAL      56
       DOD ANNUAL REPORT FOR THE FY 2006/07

     APPROPRIATION STATEMENT
                                            Final
                                         Appropriation    Expenditure
                                         2006/07           2006/07
                                             Rm             Rm
Administration                           1 811,901         1 753,818
Landward Defence                           3 991,322       3 989,521
Air Defence                              2 513,893         2 513,893
Maritime Defence                           1 311,840       1 311,840
Military Health Support                   1 704,107        1 704,107
Defence Intelligence                         147,494         147,494
Joint Support                             2 671,544        2 646,108
Command and Control                       1 470,065        1 470,065
Special Defence Account                    8 280,738       8 280,738
TOTAL                                    23 902,904      23 817,584




                          CONFIDENTIAL                                  57
          DOD ANNUAL REPORT FOR THE FY 2006/07



        APPROPRIATION STATEMENT
                                         2006/07
                                           Rm
Final appropriation                      23 902,904
Less: Actual expenditure                 23 828,824
Variance                                     74,080
Plus: Fruitless and wasteful expenditure      0,494
Plus: Local and foreign aid assistance       11,240
Surplus                                      85,814

Variance reasons :      Property Man Portfolio   =    Rm58,083
                        Committed capital works =     Rm24,924
                        Unspent transfer payment =    Rm 0,512
                        Unspent                  =    Rm 2,295

Unspent as % of Vote = 0,36%

                                CONFIDENTIAL                     58
           DOD ANNUAL REPORT FOR THE FY 2006/07

      Statement of Financial Performance
             (Income Statement)
•   REVENUE
                                                     2006/07      2005/06
                                                      Rm             Rm
    Annual Appropriation                            23 902,904   22 670,482
    Departmental revenue                               492,792      729,136
    Local and foreign aid                                    -       38,750
    TOTAL REVENUE                                   24 395,696   23 438,368
•   EXPENDITURE
    Current expenditure                             14 511,711   12 563,888
    Transfers and subsidies                          8 882,837    9 715,847
    Expenditure for capital assets                     434,276      412,621
    Revenue to be paid back                           492,792       729,136
    Less: Local and foreign aid                         11,240            -
    TOTAL EXPENDITURE                               24 310,376   22 692 356




                                     CONFIDENTIAL                             59
           DOD ANNUAL REPORT FOR THE FY 2006/07

               Statement of Financial Position (Balance Sheet)
                                                       2006/07   2005/06

Assets                                                 Rm        Rm
   Current assets
   Unauthorised expenditure                            20,625    495,824
   Fruitless and wasteful expenditure                   0,959      0,472
   Cash and cash equivalents                           67,330     51,599
   Loans                                               12,362     12,362
   Prepayments and advances                            176,471   144,659
   Receivables                                         688,693   103,317
TOTAL ASSETS                                           966,440   808,233

Liabilities
Current liabilities
    Voted funds to be surrendered                      85,814     5,653
    Departmental revenue to be surrendered             37,919     54,099
    Bank overdraft                                     690,987   646,665
    Payables                                           42,347     28,115
    Local and foreign aid unutilised                        -     11,240
TOTAL LIAIBILITIES                                     857,067   745,772

NET ASSETS                                             109,373   62,461
• Represented by:
    – Recoverable revenue                              109,373   62,461

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            DOD ANNUAL REPORT FOR THE FY 2006/07


            Notes to Financial Statements
• Departmental Revenue

                                                   2006/07   2005/06
                                                      Rm        Rm
Sales of goods and services                        175,512   232,844
Fines, penalties and forfeits                        2,272     2,448
Interest, dividends and rent on land                 0,813     0,337
Financial transactions in assets and liabilities   314,195   493,507
TOTAL REVENUE                                      492,792   729,136




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        DOD ANNUAL REPORT FOR THE FY 2006/07


    Notes to Financial Statements (cont)
• Local and Foreign Aid Assistance received in cash

Received in 2005/2006                      Rm38,750
  Less: Utilised in 2005/2006              Rm27,510
Sub total                                  Rm11,240
  Less: Utilised in 2006/2007              Rm11,240
Local and foreign aid unutilised           Rm     0




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        DOD ANNUAL REPORT FOR THE FY 2006/07


   Notes to Financial Statements (cont)
• Losses

                                              2006/07   2005/06
                                               Rm         Rm
  Losses through criminal conduct              0,006      0,392
  Other material losses written off           14,812     32,090
  Debts written off                            1,631     67,292
  Forex losses                                 1,508      0,334
  TOTAL                                       17,957    100,108




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           DOD ANNUAL REPORT FOR THE FY 2006/07


      Notes to Financial Statements (cont)
• Unauthorised expenditure

Balance at yearend 2005/2006                                Rm495,824
Less: Transfer to receivables for recovery (not approved)   Rm467,704
        Approved                                            Rm 7,495
Unauthorised expenditure awaiting authorisation             Rm 20,625




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         DOD ANNUAL REPORT FOR THE FY 2006/07


    Notes to Financial Statements (cont)
• Fruitless and wasteful expenditure

Balance at year-end 2005/2006                   Rm0,472
Fruitless and wasteful expenditure              Rm0,494

Less: Amounts condoned                          Rm0,007
Fruitless and wasteful expenditure
 awaiting condonement                           Rm0,959




                               CONFIDENTIAL               65
         DOD ANNUAL REPORT FOR THE FY 2006/07


    Notes to Financial Statements (cont)
• Cash and cash equivalents
                                            2006/07   2005/06
                                             Rm         Rm
Cash on hand                                39,941    32,961
Cash with commercial banks                  27,389    18,638
TOTAL                                       67,330    51,599

• Prepayments and advances
                                            2006/07   2005/06
                                             Rm         Rm
Travel and subsistence                       49,846    45,588
Prepayments                                 126,625    99,071
TOTAL                                       176,471   144 659



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          DOD ANNUAL REPORT FOR THE FY 2006/07


    Notes to Financial Statements (cont)
• Receivables
                                               2006/07    2005/06
                                                Rm         Rm
   Staff debtors                                46,652     39,389
   Other debtors                               630,405     57,938
   Claims recoverable                           11,636     5,990
   TOTAL                                       688,693    103,317

• Loans
                                               2006/07    2005/06
                                                Rm         Rm
   Public Corporations                          12,362    12,362

This represents a loan to the South African Forces Institute (SAFI) for
   the purpose of bridging finance


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        DOD ANNUAL REPORT FOR THE FY 2006/07


    Notes to Financial Statements (cont)
• Contingent liabilities

                                            2006/07     2005/06
                                               Rm          Rm
  MVA guarantees                                   -        0,246
  Housing loan guarantees                     115,290     123,026
  Claims against the department             1 301,853   1 002,321
  Other departments                            89,525      29,412
  Environmental rehabilitation                  7,170       7,100
  TOTAL                                     1 513,838   1 145,874




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        DOD ANNUAL REPORT FOR THE FY 2006/07

Disclosure notes to Financial Statements
                                         2006/07      2005/06
                                          Rm           Rm

• Commitments                            1 632,353   1 359,847

• Accruals                                272,966     155,100

• Irregular Expenditure                      0,481      0,955




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           DOD ANNUAL REPORT FOR THE FY 2006/07


           SPECIAL DEFENCE ACCOUNT
                         Balance Sheet
                                             2006/07      2005/06
                                               Rm           Rm
Advances                                        12,049        8,842
Trade and other receivables                    117,066       87,392
Cash and cash equivalents                    3 898,893    3 706,650
Investments                                      16,930      15,653
TOTAL ASSETS                                 4 044,938    3 818,537

Reserves                                     3 441,586    2 763,145

Creditors                                      605,202    1 055,392
TOTAL EQUITY & LIABILITIES                   4 044,938    3 818,537


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          DOD ANNUAL REPORT FOR THE FY 2006/07


          SPECIAL DEFENCE ACCOUNT
                        Income Statement
REVENUE

                                             2006/07     2005/06
                                             Rm          Rm
Transfer          received                   8 280,738   9 258 839
Other revenue                                   97,720     202 637
Interest received                                0,010       0,008
TOTAL REVENUE                                8 378,468   9 461,484

Less: Expenditure                            7 700,027   7 870,012

NET PROFIT FOR THE PERIOD                     678,441    1 591,472

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        DOD ANNUAL REPORT FOR THE FY 2006/07


         SPECIAL DEFENCE ACCOUNT
              Notes to the Financial Statements
OTHER REVENUE

                                      2006/07     2005/06
                                        Rm          Rm
Sales of strategic equipment          168,222      53,482
Forex on the SDPP                      51,366     192,636
Other                                   3,555      12,698
Subtotal                              223,143     258,816
   Less : Payable to the Revenue Fund 125,423      56,179
TOTAL OTHER REVENUE                    97,720     202,637




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       SPECIAL DEFENCE ACCOUNT
          Notes to the Financial Statements

EXPENDITURE

                           2006/07       2005/06
                             Rm            Rm
Major projects            6 512,874     6 727,245
Other projects              359,167       385,732
Operating projects          590,809       656,936
Other                       237,177       100,099
TOTAL EXPENDITURE         7 700 027     7 870 012




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        DOD ANNUAL REPORT FOR THE FY 2006/07


         SPECIAL DEFENCE ACCOUNT
               Notes to the Financial Statements

                                            2006/07       2005/06
                                             Rm            Rm

• Estimated future expenditure              17 494,992   18 686,150
  by Armscor

• Contingent Liability                        252,872       23,957




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          DOD ANNUAL REPORT FOR THE FY 2006/07



                       CHALLENGES
17 QUALIFICATIONS

•   Tangible and intangible capital assets
•   Irregular expenditure
•   Travel and subsistence
•   Prepayment and advances
•    Accruals
•   Lease commitments
•   Regional Services Council levies
•   Contingent liabilities
•   Misclassification of expenditure
•   Receivables


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         DOD ANNUAL REPORT FOR THE FY 2006/07



                   CHALLENGES
17 QUALIFICATIONS (continued)

•   Departmental revenue to be surrendered to Revenue Fund
•   Commitments
•   Clearing accounts
•   Fruitless and wasteful expenditure
•   Rank review audit
•   Comparatives
•   Local and foreign aid




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       DOD ANNUAL REPORT FOR THE FY 2006/07



            OTHER CHALLENGES

• Unauthorised expenditure
• Systems




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        DOD ANNUAL REPORT FOR THE FY 2006/07



                    HIGH LIGHTS

•   Insignificant under-spending
•   Development of financial statements
•   Submitted on time
•   Competency levels of team
•   Improvement of awareness among stakeholders




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             DOD ANNUAL REPORT FOR THE FY 2006/07


                  Concluding Remarks
Overview

•   During the period under review the DOD has managed to maintain a balance in so
    far as :
    - Ensuring that appropriate defence capabilities are provided in order to honour
    ordered commitments within available resources.
    - Ensuring that sound corporate governance is enhanced and institutionalised.
    -Promoting accelerated service delivery, while creatively managing the retention
    of scarce skills within a highly competitive labour market.
    -Finding creative means of developing sustainable and reliable accounting
    systems for its resources.




                                    CONFIDENTIAL                                 79
         DOD ANNUAL REPORT FOR THE FY 2006/07



                Concluding Remarks
Going forward
•   The DOD remains committed to protecting the integrity of the territory, its people
    and borders through diplomacy
•   Fasttrack the establishment of African Standby Force for the SADC region, a
    strategy to resiliently promote the philosophy of collective defence as a means to
    resolve conflict within the SADC region
•   Within the available resources, address the challenges presented by the South
    Africa‟s assumption of the non- permanent seat in the Security Council in pursuit of
    further strengthening compliance with international law.
•   Prioritise the modernisation of the landward defence capabilities as part of its
    affirmation of core business while creatively dealing with the misalignment between
    the defence policy and resource allocation through securing Cabinet approval of the
    Update of the White Paper ( 1996) and the Defence Review ( 1998) and the
    aggressive implementation thereof.




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          DOD ANNUAL REPORT FOR THE FY 2006/07



                Concluding Remarks
Going forward

•   The DOD will resiliently embrace the Government‟s concerted effort of deepening
    the Africa Agenda, leapfrogging strengthening the Africa Diaspora to realise the
    vision of a United State of Africa
•   The DOD will continue to raise its public image as an organ of state that” serves,
    belongs and cares” and as such an employer of choice




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DOD ANNUAL REPORT FOR THE FY 2006/07




            QUESTIONS




                  CONFIDENTIAL         82

				
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