1. BRIEFING TO THE STANDING COMMITTEE ON APPROPRIATIONS (SCOA)
22 NOVEMBER 2017

2. Q2 2017/18 ACTUAL OUTCOMES VS BUDGET PER CLASSIFICATION

3. Q2 2017/18 ACTUAL OUTCOMES VS BUDGET PER CLASSIFICATION

4. SIGNIFICANT VARIANCES
The department underspent by R244 million against the projected budget in the second quarter and the main contributor to the variance consists of:
R40 million - Integrated Financial Management System (IFMS) project relates mainly to the planned system configuration and consultancy services, which was no longer required due to the change in the IFMS programme implementation approach, resulting in a reduction in the number of service providers. Furthermore, a decision was taken on August 2017 to suspend IFMS related payments pending internal investigations.
R28 million - Office of the Chief Procurement Officer (OCPO) relates to delays in the finalisation of the Terms of Reference (ToR), resulting in the postponement of the advertising of a number of projects, the following of which are being addressed:
Procurement Bill;
Data mining;
g-Commerce;
Anix Consulting;
Eskom coal; and
The following has been cancelled:
Media buying for print and radio for supplier information regarding the PPPFA Regulations.

5. SIGNIFICANT VARIANCES
R125 million - Neighbourhood Development Partnership Grant (NDPG)
The direct grant to municipalities due to non-renewal of contracts with existing service providers at municipal level and the withholding of the grant disbursement due to non-compliance with Division of Revenue Act (DoRA) and the NDPG framework.
R44 million - Jobs Fund (Unspent funds)
These are unspent funds surrendered to the National Revenue Fund (NRF) during the 2017 AENE process due to:
The Jobs Fund projects have experienced implementation delays. Some projects have requested an extension of implementation period and this has impacted on the scheduling of grant disbursements; and
Projects that have not complied with the Jobs Fund Operating Guidelines and Disbursements Framework requirements have had to take corrective measures, which has resulted in a delay of disbursements.

6. VIREMENT AND ADJUSTMENTS THAT REQUIRE PARLIAMENT APPROVAL
R4.792 billion – Appropriation of expenditure earmarked in the 2017 budget speech for future allocation
An additional R4.792 billion is allocated for the recapitalisation of South African Airways.
R5.208 billion – Use of funds in terms of Section 16 of the PFMA
An additional amount of R5.208 billion has been allocated to the vote to defray expenditure in respect of South African Airways’ debt obligations.
A report was provided to Parliament and the Auditor-General detailing the approval by the Minister of Finance, as required by the PFMA.
R22.5 million – Self-financing expenditure
Programme 2: Economic Policy, Tax, Financial Regulation and Research R22.5 million relates to the Emolument Attachment Orders project. The amount will be paid to the service provider in respect of services rendered on this contract.
R24 million – Compensation of employees
The department's compensation of employees was increased by an amount of R24 million during the 2017 Adjusted Estimates process. The increase was due to:
The Senior Management Services cost of living adjustment of 5.5% which was higher than projected;
The Cost Of Living Adjustment (COLA) payment was backdated from April 2017 resulting in expenditure being higher than expected; and
The payment of salary progression to the eligible employees after the performance evaluation outcomes.

7. SUMMARY OF VIREMENT/SHIFTS IMPLEMENTED
FROM: PROGRAMME
AMOUNT R'000
TO: PROGRAMME
AMOUNT R'000
Programme 1
(1 102)
1 102
Programme 2
(2 474)
2 474
Programme 3
(354)
354
Programme 4
(5 844)
3 000
2 844
Programme 5
(15 588)
10 745
4 843
Programme 6
(9 711)
4 338
4 382
991
Programme 8
(27 400)
11 016
1 842
12 561
957
1 024
Programme 10
(90 649)
90 649

8. Q1 & Q2 2017/18: PERFORMANCE ACHIEVED BY PROGRAMME BY INDICATORS

9. Q2 2017/18: INDICATORS NOT ACHIEVED WITH REASONS
PROGRAMME
INDICATOR
TARGET
ACTUAL
REASON FOR NOT ACHIEVING
ACTION PLAN
P1: Corporate Services
Percentage completion of the business continuity plan
10%
8,3%
Insufficient ICT resources as a result of cost containment of compensation of employees.
An additional dedicated implementation resource has been allocated to resolve delays and accelerate delivery.
P2: Tax
Number of papers published in association with academic research institutions 40 21
The number of papers published by Economic Research Southern Africa is demand driven.
It is expected that this target will be achieved in the next quarter.
P3: Public Finance
Percentage adherence to timelines for PFMA and Treasury Regulations (TR) approvals, sectorial analysis and policy advice
100%
96,7%
3 Cabinet memos were submitted by departments subsequent to the stipulated submission date
PF will encourage departments to comply with stipulated submission timelines.
Number of monthly expenditure feedback reports to departments
135
104
Process completed however subsequent to the stipulated 15 days from recipe to response sent to departments .
Enhanced monitoring of process efficiency .
P4: ALM
Percentage of corporate plans of Schedule 2 and 3B State Owned Companies (SOCs), Development Financial Institutions (DFIs) and Water Boards (WBs) received and reviewed within four months of receipt
87,5%
One review fell outside of the stipulated four month review period.

10. Q2 2017/18: INDICATORS NOT ACHIEVED WITH REASONS
PROGRAMME
INDICATOR
TARGET
ACTUAL
REASON FOR NOT ACHIEVING
ACTION PLAN
P4:ALM
Percentage of complete PFMA Section 54(2), 52, 55 and 92 applications received from Schedule 2 and 3B SOCs, DFIs and WBs reviewed within stipulated timeframes
100%
75%
Review completed however administration not complete
Enhanced monitoring of administration efficiency .
P5:OAG
Number of assessments conducted of IA and state of readiness for quality assurance reviews and adoption of best practices to assess compliance with PFMA, MFMA and international professional practice standards 4
Delayed submission of comments by clients for finalisation of the reports.
It is envisaged that the reports will be signed off in quarter 3.
Number of public sector officials trained in risk management
200
192
Under-performance is attributed to resource constraints in this work area.
Revision of support model to better align with available resources currently underway
P5: OAG
Number of institutions of higher learning work-shopped on the risk management curriculum 1
Delays due to higher learning institutions schedules
It is expected that this target will be achieved in the next quarter.
Number of guidelines to assist with the implementation of Treasury Regulation, policies and Treasury Instruction developed
Dependent on publication of Treasury Regulations. 
The Revised Treasury Regulations are in the process of being reviewed. Guidelines will be developed once the regulations are published. 

11. Q2 2017/18: INDICATORS NOT ACHIEVED WITH REASONS
PROGRAMME
INDICATOR
TARGET
ACTUAL
REASON FOR NOT ACHIEVING
ACTION PLAN
P5:OAG
Number of information sessions provided to support PFMA institutions on the implementation of Treasury Regulations, Treasury Instructions and guidelines 2
Dependent on the finalisation of the FMCMM and Treasury Regulations.
The Treasury Regulations are in the process of being reviewed.
Number of cases referred and advisory services provided to law enforcement agencies/anti-corruption task team for criminal investigation 8 7
Delays in departments submission addressing NT queries.
It is expected that this target will be achieved in the next quarter.
Number of engagements held with public officials to address compliance and implementation of regulations, instructions and guidelines in a coordinated and consistent manner 1
Delays in the finalisation of Treasury Regulations.
P5:OCPO
Number of Instructions issued in line with policy interventions and proposed designated products or categories to enhance Supply Chain Management Policy (SCM) 3
Dependent on the dti finalising the investigation of the identification of commodities to be designated.
The dti process is currently underway.

12. Q2 2017/18: INDICATORS NOT ACHIEVED WITH REASONS
PROGRAMME
INDICATOR
TARGET
ACTUAL
REASON FOR NOT ACHIEVING
ACTION PLAN
P5:OCPO
Percentage of departments’/entities’ quarterly performance information reports reviewed
100%
99%
Underperformance due to outstanding information from departments/entities
Departments/entities required to submit information in order for outstanding reviews to be completed in the third quarter
Percentage of bid specifications reviewed for alignment with policy and other applicable procurement instructions
92%
Percentage of bid evaluations and adjudications reviewed to ensure compliance with the criteria/scoring specified in bidding documents
96,6%
Percentage of contracts awarded reviewed to verify if contract delivery is in line with the specifications
77,8%
P5: OCPO
Number of proposals for strategic sourcing opportunities 1
No proposal has been made. However, a request was received from DOH to continue with the strategic sourcing with other medical equipment categories.
A proposal will be finalised after analysing the request from DOH based on current resources.

13. Q2 2017/18: INDICATORS NOT ACHIEVED WITH REASONS
PROGRAMME
INDICATOR
TARGET
ACTUAL
REASON FOR NOT ACHIEVING
ACTION PLAN
P5:OCPO
Number of departments enabled on an centralised electronic quotation system 5 1
Under-performance is attributed to resource constraints.
A request for additional resources has been initiated.
Number of business processes defined for SCM stream of IFMS 3
Under-performance is attributed to resource constraints
Resources made available via SITA to compete these deliverables.
P7: GPAA
Percentage compliance with Service Level Agreement (SLA) between NT and GPAA specifically Programme 7 related indicators
97%
93%
A single audit finding remains to be addressed.
Process have been instituted that are addressing the remaining finding.
Percentage integrity of client data
80%
75%
Incomplete data within Injury on Duty (IOD), Medical Benefits Administration (MBA) and Military Pensions (MP) client information.
Measures are in place to ensure continuous monitoring and improvement of data in the affected areas of the programme. Weekly status reporting will be effected to ensure resolution of the exceptions identified by next quarter.
P8: GTAC
Number of performance and expenditure reviews 3
The review methodology required greater stakeholder consultations than initially anticipated, resulting in project delivery delays. In addition one of the targeted number of ten reviews was terminated due to the lack of support from the stakeholder department of the intended review.
Target to be better aligned to planning schedule / and resources available.

14. (new permanent jobs, permanent placements, short term jobs)
JOBS FUND – UPDATED OF PERFORMANCE
(AS AT 30 JUNE 2017)
R8.6 bn committed funding from projects
110 reporting projects
117 approved projects
R6.1 bn in grant funds allocated
54,769 vacant permanent positions filled
208,449 people completing training
27,323 short term jobs created
100,097 new permanent jobs created
17,244 people completing internships
Crowding-in additional funding
182,189 sustainable jobs
(new permanent jobs, permanent placements, short term jobs)
Key Challenges:
Projects may be negatively affected by economic downturn and perceived policy uncertainty.
SMMEs can be reluctant to take on the risk of expansion and job creation during uncertainty.
The cost of regulatory compliance for small businesses may often hinder growth.
Drought results in slowed agricultural activity, especially where infrastructure is needed to be rehabilitated or upgraded.

15. Agricultural Projects – Performance (as at 30 June 2017):
JOBS FUND – MITIGATING MEASURES
Proactive engagement with partners to ensure compliance on all provisions of the Grant Agreement.
Early identification of project challenges.
Projects with capacity issues are identified and supported prior to reporting.
Projects are encouraged to put in more than the required match-funding to cover unforeseen events.
Agricultural Projects – Performance (as at 30 June 2017):
The Jobs Fund continued to support agricultural projects during the drought.
The projects implemented through the drought, albeit at a slower pace and, in spite of challenges, have produced good results.
Indicators
37 Approved Agricultural Projects
Total Grant Allocated to 37 projects (R)
1,613,024,515
Total Matched Funding Committed to 37 projects (R)
2,149,234,838
Grant Funding Disbursed ITD (R)
905,791,630
Matched Funding Contributions ITD (R)
1,448,936,682
New permanent jobs created ITD
42,305
Placements in vacant permanent positions ITD
211
Short term jobs created ITD
11,508
Beneficiaries trained ITD
30,315

16. BRIEFING TO SCOA 22 NOVEMBER 2017
THANK YOU
BRIEFING TO SCOA 22 NOVEMBER 2017