Modise tasks DoD with reviewing its problematic procurement system

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Defence and Military Veterans Minister Thandi Modise has said that to root out financial irregularities in the Department of Defence (DoD), she has ordered a review the entire procurement system.

The Minister was speaking during the debate on the Defence and Military Veterans Budget Vote on 23 May.

“We have traced irregularities straight back to procurement. So the Secretary for Defence, Acting, has been instructed to look and find solutions…The whole procurement system has been reviewed,” Modise said, adding that a lack of skills in procurement was identified and an agreement signed with the School of Governance to train soldiers regarding procurement to avoid misstatements and misreporting.

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

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

The DoD is awaiting the new Procurement Bill by National Treasury, which will have a significant impact on the way forward.

“A defence force which cannot look after its own resources cannot in the long term be responsible for taking care of the bigger business that is looking after the resources of south Africa,” Modise told Parliament.

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

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

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

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

According to the Minister, the department received a qualified audit opinion on four balances from the Auditor General in the 2021/22 financial year. Excluding matters related to the underfunding of Compensation of Employees (COE) during the 2022/23 financial year, the department incurred unaudited irregularities.

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

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

In the current financial year, due to the underfunding of the Compensation of Employees, the SANDF is likely to overspend by R3 billion, Modise said.

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

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

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

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

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

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

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

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