FEEDBACK IN RESPECT OF DISPOSAL OF EXCESS MATERIEL INCLUDING AMMUNITION IN THE DEPARTMENT OF DEFENCE

12 September 2005

INTRODUCTION

1.Since October 1998 the Standing Committee on Public Accounts (SCOPA) has expressed its concern in respect of the Department of Defence's (DOD) large amounts of stock on hand and the use of multiple logistic computer systems to account for the stock.


2.The DOD has taken as a priority the requirement to transform its asset management, as required by the Public Finance Management Act, 1999 (PFMA) in which effective, efficient, economic and transparent asset management is mandated. To achieve this aim, a number of different actions have been taken by the different entities within the DOD.


3.During the Portfolio Committee on Defence meeting of 26 August 2003 the DOD gave feedback in respect of plans scheduled to reduce stock levels. These plans have been converted into actions and feedback in this regard is given in this document.


AIM

4.The aim of this document is to inform the Portfolio Committee on Defence on the progress made in respect of disposal of excess materieI including ammunition in the DOD.


SCOPE


5.The following matters are discussed,

a. Progress on the disposal of excess stock.

b. Progress on the disposal of ammunition.


PROGRESS ON DISPOSAL OF EXCESS STOCK


6. Discussion Points. The following items are discussed:


a Modus Operandi.


b. Focus on Disposal.


c. Situation on March 2005 for 2004/05.


d. Progress since March 2005 up to August 2005.


e. Glossary of terms used in document.


f. The progress made by the Services since August 2003. SA Army


ii. SA Air Force.


iii. SA Navy


iv. SA Military Health Services.


7.Modus Operandi. In order to ensure a common approach in the addressing of the problems it was of utmost importance that meetings be held with each stakeholder individually to explain the impact of excessive stock levels within the DOD.


a. Meetings were arranged with all stakeholders to discuss the process for the disposal of equipment. During the meetings the best and most cost-effective ways to reduce stock by all were discussed.


b. The Services are responsible to determine their own minimum stock levels according to their force design. Constant management of material by the various Product System Managers ensures that location, stock levels, administration and disposal items are handled on a day-to-day basis. Although this function is working the optimal effectiveness has still to be obtained.


C. Stakeholders are required to draw up plans as to how Stock levels will be reduced. These plans are then forwarded to the Chief Logistics who monitors compliance of the plans with policy.


d. Since the implementation of the new disposal process through Armscor various items have been transferred to Armscor. Some of the equipment has been sold whilst others are still in the Marketing process.


8.Focus on Disposal. The main focus of effort is the Auditor General's concern that excessive stocks are carried in the Depots of the DOD. Capital Equipment is concentrated on in an effort to decrease the monetary value of such stock. Other Systems and equipment are however handled concurrently in an effort to decrease the number of items in this regard.


9.Glossary of items used in document The following terms are used in document where progress is given;


a. The DOD is presently still busy with the phasing out process and have not yet offered the items to Armscor for marketing.


b Armscor - Items have been offered to Armscor for marketing.


c. Continuous -Disposal is being done on a continuous basis through auctions by the DOD.


d. Amounts not underlined next to items are book values.


e. Amounts underlined next to items indicate revenue from sales.


10.Situation in March 2005 for 2004/05. At present there are three specific ways of alienating equipment from the Department, these being; Auctions. Tenders and Marketing through Armscor. The situation with the afore-mentioned was summarised during March 2005 for the 2004/05 financial year. Revenue earned during the mentioned period was as follows:


a. Equipment sold at DOD auctions for R26 839 309.00.


b Equipment sold by means of DOD tender for R482 680.00.


c. Nett income of RM4.9 received through Armscor sales directly from the DOD Inventory.


d. Nett income of RM 64 realised through sales from the Armscor Managed inventory.


e. Nett value of approved and invoiced sales of RM 77 from the Armscor managed inventory.


11 Progress made since March 05 up to 15 August 05


a. DOD Disposals


i. Auctions; RM7,005


ii. Tenders; R43 447


b. Armscor


i Issue approvals for stores sold from SANDF inventory:


(1) SAAF Stores ; R184 000


(2) CMI Stores : R8 000


(3) Army Stores : R2 636 275


12.Progress made by the Services:


a. SA Army.


i. Summary of progress on 15 August 2005.


(1) Number of current disposal plans: 26.


(2) Total book value of current plans: RM1, 77.


(3) General progress made in respect of the whole:


(a) 74,2% on all plans have been completed by the SA Army and has been handed over to the DOD Log Sup Formation for administration disposal action and finalisation.


ii. Detail progress since 26 August 2003.


(1) Armoured vehicles Systems;


(a) The Army has standardised on the following Armoured Systems; Rate Mk3, Rooikat Mk1 and Olifant Mk1A for the medium term and Olifant Mk1 B in the long term.


(b) During the period a total of 474 Ratel lnfantry Fighting Vehicles Mk1, 2 and 3 were identified for disposal. Of the aforementioned number 354 of the vehicles were sold whilst 120 were withdrawn for further investigation. Revenue of RM1,132 was earned from the sale of the 354 vehicles,


(c) A total of 28 Rooikat Armoured Car PPM were identified for disposal. 14 of these vehicles were destroyed due to the fact that they were not marketable, The remaining 14 is still in the disposal process (Armscor).


(d) The following armoured vehicles were also identified for disposal and are still in process;


(i) Rooikat Armoured Car Mkl 6. (DOD).


(ii) Eland Armoured Car 80. (Armscor).


(iii) Olifant Tank Mk 1A = 14. (Destroyed).


(2) Infantry

(a) 134 000 Rifle magazines were identified for disposal. The disposal process in this regard has not yet been finalised and is ongoing. (DOD).


(b) 2300 Parachutes were identified for disposal and was sold for R64 000.00.


(3) Artillery.

(a) GV1 25 pounder ammunition was identified for disposal. However all 25 pounder were downgraded and is now utilised for ceremonial State and military funeral duties.


(b) GV2 140 mm Guns were identified for disposal. The guns were destroyed and sold as scrap metal.


(4) Air Defence Artillery.


(a) The Air Defence Artillery has standardised or the 35 mm Mk 5 system and thereby making all other 35 mm Systems now obsolete. 100 Mk1 35 mm guns were identified for disposal and were sold for $500 000.00.


(b) The following guns were identified for disposal and are still in the disposal process:


(i) 20 mm (117 Guns) (DOD).


(ii) 14,5 mm (24 Guns) (DOD).


(iii) 23 mm (32 Guns) (DOD).


Clothing/General Commodities.


(a) Nutria Clothing. All nutria clothing identified for the disposal process has been withdrawn from disposal. Nutria clothing will now be utilised by Military Skills Development (MSD) members.


(b) Woman's Clothing. Various items have been identified for disposal and are being disposed of on a continuous basis.


(c) General Commodities. Various genera commodities have been identified for disposal and are being disposed of on a continuous basis by means of auctions/tenders.


(6) B-Vehicles (Non commercial vehicles). The following B-vehicles have been identified for disposal:


(a) SAMIL -Vehicles in Vehicle Reserve Park.

SAMlLS have been disposed of and 1704 disposed of and transferred to Armscor for sale, 837 of these vehicles have already been sold for RM31.9. The remainder are presently in the marketing process (Armscor).


(b) SAMIL vehicle spares. Various SAMIL vehicle spares have been identified for disposal and are at present being prepared for disposal. (DOD).


(7) (c) SAMIL Vehicle at Units. 1C49 SAMIL vehicles kept at the different units have been identified for disposal; A total of 450 SAMILS have since their identification been donated to Uganda.


C Vehicles (Earth Moving and Equipment Handling).


(a) 580 C-Vehicles have been identified to be phased out over the short and medium term The vehicles are at present being prepared for disposal.


(b) 73 C-Vehicles identified to be phased out have been disposed of and were sold for RM 5.8.


b. SA Air-Force.


i Summary of progress as on 15 August 2005.


(1) Number of current disposal plans: 210.


(2) Total book value of current plans: RM3 853 613.


(3) General progress made in respect of the whole:


(a) Ninety-one (91) disposal plans have beer completed. Book value RM2 552.

(b) Seventy four (74) plans ready to be transferred to the Armscor (DM0) Managed Dispose. Account. Book value RM1 238.


ii Detail progress since 26 August 2003. The equipment currently being addressed in disposal plans are listed below per type rather than per individual disposal plan.


(1) lmpala Mk I and II Aircraft. Thirty-eight aircraft were identified for disposal of which eleven have beer placed on tender in March 2003. A partial sale of RM 4~06 has already taken place whilst the remainder i' still in process. (Armscor).


(2) Mirage E Aircraft. Twenty one aircraft including spare parts were identified for disposal. Gabon have indicated an interest in acquiring six of these aircraft but no finality has been reached on the matter as yet. Marketing by Armscor Is still in process. (Armscor)


(3) Cheetah C and D Aircraft. Three Cheetah dual-seal and seventeen single seat aircraft are on disposal. Brazil has indicated an interest in acquiring fourteen of these aircraft, but their decision is still dependant on a comprehensive evaluation of the aircraft. Five aircraft have been sold for RM 2,07. Armscor still in process of marketing the remainder


(4) AIuette Ill HelicoDters. Three aircraft plus seven stripped-down airframes were identified for disposal. The seven airframes were placed on tender in March 037 but have yet to be allocated due to regulatory delays at the National Conventional Arms Control Committee. One aircraft was sold for R~2 000.00 Remainder is still being marketed by Armscor.


(5) Boeing 707 Aircraft. Two Boeing 707 aircraft in an unserviceable condition with spare parts are planned for disposal. A Spanish company has registered an interest in acquiring both these aircraft. Preliminary discussions have been held in order to examine ways of returning the aircraft to a flying condition in order for the sale to proceed. One of the aircraft has since been withdrawn from the disposal process by the


(6) C-47 TP Dakota Aircraft. Two complete aircraft and one aircraft fuselage were identified for disposal, two aircraft have been sold with the finalisation of the sale administration still pending. Aircraft sold for RM3,42.


(7) Other. A large variety of spares, engines, armaments and tools are contained in 40 disposal plans. The contents of eleven of these plans were placed or tender in March 2003 and are still awaiting finalisation. A large quantity of armament has beer sold for R982 000.00. The remainder of the equipment is still in process. (Armscor)


SA Navy


i Summary of progress as at 15 August 2005.


(1) Number of current disposal plans: 36.


(2) Total book value of current plans: RM 569.


(3) General progress in respect in respect of the whole


(a) The SAS Outeniqua was disposed of as a going concern in a record time due to extremely good co-operation by all parties and good support from the higher levels of management. The vessel was sold for RM 40.


(b) The identification and removal of submarine spares from various venues to one centralised facility is progressing well.


ii. Detail progress since 26 August 2003.


Ordnance Spares at Depots. Seven disposal boards were convened for the following commodities:


(a) Explosive Ordnance Disposal/Improvised Explosive Device Disposal (EOD/IEDD).


(b) Mk 44 Torpedoes.


(c) Non Ops Small Arms.


(d) R4 Rifle Accessories.


(e) 40/60 Weapon System.


(f) Gun Mountings 40160 Mk 5.


(g) 2Omm Guns and Mountings.


Outstanding Disposal actions for the above mentioned still in process. (DOD and Armscor).


(2) TON Class Minesweepers. The following Minesweepers were disposed.


(a) Messrs SA Metal and Machinery Co (Pty) Ltd demolished SAS KIMBERLEY and SAS WINDHOEK to scrap. Revenue earned for scrap was R64 000


(b) SAS EAST LONDON and SAS WALVISBAAI have been sold to an international company, for R649 000,00.


(c) The influence Sweep Gear has been handed over to the DOD Log Support formation for the necessary disposal process bmo tender through Armscor. Outstanding: Still in process. (Armscor)


(d) The inventory for the Minesweepers stilt being processed and the completion date for hand over to the Log Support Formation for disposal was 26 March 2004. Outstanding: Still in process. (Armscor).


(3) Warrior Class Strike Craft The following Strike Craft were handed over to the DOD Log Support Formation for the necessary marketing through Armscor.


(a) SAS JAN SMUTS. (Platform sold for R50 000.00.)


(b) SAS SHAKA. (Platform was destroyed).


(c) SAS SEKUKHUNI. (Platform was destroyed)


(d) The following Strike Craft will be handed over to the DOD Log Support Formation for the necessary disposal process bmo marketing through Armscor on the dates as indicated:


(i) SAS RENe SETHREN: 16 September 2009.


(ii) SAS ADAM kOK: 11 Dec 2009.


(iii) SAS ISAAC DYOBHA: 7 July 2006.


(iv) SAS GALESHEWE, SAS JOB MASEGO and SAS MAkHANDA: 5 June 2009.


(e) The inventory for the Strike Craft will be handed over to the DOD Log Support Formation for disposal on 11 December 2009.


(4) Daphne Class Submarines


(a) Messrs SA Metal and Machinery Co (Pty) Ltd has demolished SAS SPEAR to be sold as scrap.


SAS UMKHONTO and SAS ASSEGAAI will be handed over to the DOD Log Support Formation for disposal bmo marketing through Armscor, after finalisation of the disposal process. (DOD).


The inventory and the weapons (torpedoes) for the submarines will be handed over to the DOD Log Support Formation for disposal.


(5) Support Ships. The Diving Support and Torpedo Recovery Vessel SAS FLEUR has been taken out of commission, and will be handed over to the DOD Log Support Formation for disposal bmo marketing through Armscor. (DOD).


(6) Small Boats. The following vessels have been disposed of or are in the process of being prepared for disposal:


(a) Harbour Patrol Boats (HPB's) Two HPB's have been donated to the Namibian Defence Force and arrangements are being made to hand over the other two HPB's to the Mozambican Defence Force. (DOD).


(b) Deutsche Schlauchbote (DSB's). These inflatable sea boats will be handed over to the DOD Log Support Formation for disposal ac soon as disposal process has been finalised.(DOD).


(C) Ferry Malgoga This ferry will be handed over to the DOD Log Support Formation for disposal. Outstanding, still in process. (DOD)


(d) Delta Boats (Qtv 6). handed over to the Formation for disposal. Process outstanding still in the process. (DOD).


(e) Vredenburg Boats (Qtv 4). These boats will be handed over to the DOD Log Support Formation for disposal Outstanding, still in process. (DOD).


(f) Obsolete Depot Stock. The majority of items have been identified bmo the Bill of Material (BOM) process and disposal schedules will on a continuous basis be forwarded to the DOD Log Support Formation for the necessary disposal requests. To date six disposal schedules have been forwarded to the DOD Log Support Formation. Schedules have been forwarded to Armscor. RM 39 has already been earned through sales. (Armscor).


d. SA Military Health Services (SAMHS).


i. Summary of progress as on 15 August 2005
.


(1) Number of current disposal plans; 22.


(2) Total book value of current plans: RM72.


(3) General progress in respect of the whole:


(a) Approximately 450 vehicles at the closing down TSU are awaiting disposal approval from C Log.


(b) Ministerial approval for the Rinkhals Ambulances has been obtained.


Detail progress since 26 August 2003.


(1) Nutria Material and Nutria Uniforms. Nutria Material Nutria Clothing has been withdrawn from the disposal process. SA Army is at present taking over all Nutria. Material and uniforms from other Services. The latter will be utilised by the SA Army for issuing to Military Skills Development members.


(2) SAMHS B- and D-Vehicles. Various vehicles have been identified for disposal and the disposal process is at presently continuing. 6 Generators have already been sold for R65 000.00 and the remainder is in process. The implementation of the National Transport Information System (NaTlS) is slowing down the disposal process. (Vehicles have to be registered on NaTIS before been made available for disposal).


(3) Signal equipment Various items have been identified for disposal. Process not yet finalised.(DOD).


(4) Rinkhals Ambulances. Ministerial approval for the Rinkhals Ambulances has been obtained. Disposal of Ambulances will now continue. 7 Ambulances have already been transferred to Armscor for marketing (DOD and Armscor).


(5) Old SAMHS Rank Insignia. Various items have bee identified and are still in the process of disposal.


PROGRESS ON DISPOSAL OF AMMUNITION


12. Discussion Points; The following points are discussed:


a. Problem Statement.


b. Current Status.


c. Priority at Jan Kempdorp.


d. Progress on risk reduction.


e. Planning - Jan Kempdorp


13.Problem Statement. Given the bad and dangerous state of ammunition at Jan Kempdorp a definite need for immediate disposal action exists. Current disposal action is only aimed at risk reduction (crisis management) and does not contribute towards resolving the problem.


14.In anticipation of the demilitarisation capability no or little disposal action other than selling was utilised. Conventional demolition methods by means ( mass explosion are not prohibited nor restricted by law and are therefore not utilised to alleviate the problem. It is important to note that only disposal b means of deep sea dumping is prohibited (London Convention) and the Bas Convention prohibits the export import of dangerous goods for disposal action.


15.the best site for this disposal capability must still be determined by proper study, including an Environmental Impact Assessment-(Act No 73 c 1998) and it is therefore foreseen that it will take more than four years to establish the proposed disposal capability.


16.It must also be born in mind that the disposal capability cannot reduce the amount of ammunition any faster than conventional destruction methods.


17.Current Status. Accurate scrutinising indicated that the total amount C ammunition is 68 000 tons. Only 24 000 tons are redundant or unserviceable and 44 000 tons are serviceable, the average age of this serviceable ammunition being 17 years old. The current stock of redundant and unserviceable ammunitions is distributed at the following Ammunition Depots:


a. 13 000 tons at De Aar.


b. 8 000 tons at Jan Kempdorp.


C. 3 000 tons at Mokgopong


18.Only redundant and unserviceable ammunition is stored at Jan Kempdorp since all serviceable stock was removed and transferred to other depots Ammunition stored at Jan Kempdorp is in the worst condition and is therefore considered as the highest priority for destruction.


19.Priority At Jan Kempdorp. Current storage conditions at Jan Kempdorp are neither favourable, nor suitable as a large amount of ammunition is still kept in dangerously non-protected field storage.


20.Temporary buildings do not qualify for Licensing under new legislation,


21.Repair actions are required on a large number of storage buildings (roofs are leaking). Older storage buildings need upgrading7 because security locks cannot be fitted to wooden doors and due to narrow doors normal cargo handling vehicles cannot be utilised to move stock in or out of buildings.


22.Storage capacity is less than 8 000 tons.


23.Due to the above mentioned reasons Jan Kempdorp is regarded as the first priority to be cleared from ammunition. A total of 500 tons are currently stored under unprotected field storage conditions and disposal by means of open burning and open detonations will commence soon with this ammunition.


24.Progress On Risk Reduction Plan. Several phases were identified to reduce the risk at Jan Kempdorp.


25.Phase one involved approximately two tons of ammunition that required immediate attention. Destruction of this ammunition is completed.


26.Phase two is broken up in two stages. Stage one is aimed at sorting and re-packing of ammunition returned from other depots as well as the old SWA /AngoIa campaign and was completed. Stage two targeted the demolition of 52 tons of ammunition that was in a slightly better condition than those mentioned in phase one. Due to financial delays this was not possible and the ammunition will now be used for the qualification of demolition ranges.


27.Planning - Jan kempdorp. Phase three has identified Vastrap bombing range as the main demolition range where the demolition of ~00 tons ammunition in open storage will commence. Before this can happen, the range must first be upgraded and qualified. Qualification will be completed in October OS and the destruction of the 500 tons will be completed by the end of January 06.


28.Planning -Other Depots. Phase four and five will deal with the rest of unserviceable and redundant ammunition in the DOD. Planning and execution will be done in conjunction with the envisaged demilitarisation capability and normal sales of stock.


20 Temporary buildings do not qualify for licensing under new legislation.


21.Repair actions are required on a large number of storage buildings (roofs are leaking). Older storage buildings need upgrading because security locks cannot be fitted to wooden doors and due to narrow doors normal cargo handling vehicles cannot be utilised to move stock in or out of buildings.


22. Storage capacity is less than 8 000 tons.


23. Due to the above-mentioned reasons Jan kempdorp is regarded as the first priority to be cleared from ammunition. A total of 500 tons are currently stored under unprotected field storage conditions and disposal by means of open burning and open detonations will commence soon with this ammunition.


24. Progress On Risk Reduction Plan. Several phases were identified to reduce the risk at Jan Kempdorp.


25. Phase one involved approximately two tons of ammunition that required immediate attention. Destruction of this ammunition is completed.


26.Phase two is broken up in two stages. Stage one is aimed at sorting and re-packing of ammunition returned from other depots as well as the old SWA/Angola campaign and was completed. Stage two targeted the demolition of 52 tons of ammunition that was in a slightly better Condition than those mentioned in phase one. Due to financial delays this was not possible and the ammunition will now be used for the qualification of demolition ranges.


27.Planning - Jan Kempdorp. Phase three has identified Vastrap bombing range as the main demolition range where the demolition of 500 tons ammunition in open storage will commence. Before this can happen, the range must first be upgraded and qualified. Qualification will be completed in October OS and the destruction of the 500 tons will be completed by the end of January 06.


28.Planning - Other Depots. Phase four and five will deal with the rest of unserviceable and redundant ammunition in the DOD. Planning and execution will be done in conjunction with the envisaged demilitarisation capability and normal sales of stock.


INVENTORY MANAGEMENT IN THE DEPARTMENT OF DEFENCE


Portfolio Committee on Defence 14 September 2005-09-22


DOD DELEGATION


Presenter:

Major General T.A.Ntsibande-Chief Logistics


Logistics Division Representatives:

Brigadier General A.F.D. Sixishe

Brigadier General Z.J.van der Merwe

Colonel G.L. Vosloo


AIM

To Inform the Portfolio Committee on Defence on the progress made in respect of the disposal of excess stock and ammunition in the Department of Defence


SCOPE


PROGRESS ON DISPOSAL OF EXCESS MATERIEL

Brig Gen Z.J. van der Merwe


DISCUSSION POINTS


Modus operandi


FOCUS ON DISPOSAL


SITUATION IN MAR 2005 FOR 2004/05


PROGRESS SINCE MARCH 2005 UP TO 15 AUGUST 2005

- SAAF Stores: Revenue R 184 000

- CMI Stores: Revenue R 8 000

- Army Stores: Revenue R2 635 275


GLOSSARY USED IN SLIDES


SA ARMY


SA ARMY CURRENT SITUATION


S A AIR FORCE


SA AIR FORCE CURRENT SITUATION

- Ninety one (91) disposal plans have been completed . Book value RM2 552.

- Seventy –four(74) plans ready to be transferred to the Armscor(DMD) Managed Disposal Account Book value RM1,238


SA NAVY


SA NAVY CURRENT SITUATION


Progress made:


SA MILITARY HEALTH SERVICE


SAMHS CURRENT SITUATION

Progress made:


CMIS CURRENT SITUATION

Progress made:


PROGRESS ON DISPOSAL OF AMMUNITION: COLONEL G.L. VOSLOO


DISCUSSION POINTS


PROBLEM STATEMENT


CURRENT STATUS

- 8 000 tons at Jan Kempdrop ( most critical ; 500 tons in open storage)

- 13 000 tons at De Aar

- 3 000 tons at Mokgopong


PRIORITY JAN KEMPDORP


PROGRESS: RISK REDUCTION (500TONS) (1)


Phase1:


Phase 2:


PROGRESS: RISK REDUCTION(500TONS) (2)


Phase3:


PLANNING : REMAINDER AT JAN KEMPDORP


Phase 4:


PLANNING: 16000 TONS AT OTHER DEPOTS


QUESTIONS?

Thank You!