EXECUTIVE SUMMARY OF DRAFT DEFENCE SECTOR CHARTER

  1. The Draft DefenceSector Charter Scorecard has 6 elements. Namely:
  • Ownership
  • Management Control
  • Skills Development
  • Enterprise and Supplier Development
  • Socio-Economic Development
  • Localisation

Localisation is an industry specific element that was included by stakeholders.

  1. As in the Generic Scorecard Ownership, Management Control and Skills Development are priority elements.
  2. The weightings are the same as in the Generic Scorecardhowever the targets differ to suit the Defence Industry Scorecard.

Ownership

  1. The ownership targets are 25% in the first year, 30% in the second year,35% in the third year
  2. Black female ownership 10% in first and second year, 15% in third year.
  3. Companies that do not meet these targets will be considered non-compliant for the purposes of any tendering processes.
  4. Military Veterans as a designated group have been allocated separate points
  5. Multinational Enterprises must comply with ownership targets unless a proven global policy prevents them from so doing. In such an event they have to comply with the Equity Equivalent Programme of the Department of Trade and Industry.

Management Control

Board of directors

  1. Members must be 50% Black increasing to 60% in third year
  2. Members must be 25% Black female in the first and second year, increasing to 30% in third year
  3. Inclusion of Military Veterans at board level.
  1. Executive Management
  2. Members must be 60% Black.
  3. Members must be 30% Black female.

Skills Development

  1. Skills Development Expenditure to be distributed as follows:
  2. 4% on Learning Programmes for black people as a percentage of leviable amount.
  3. 1% on Learning Programmes for Military Veterans
  4. 1% to be transferred to establish the Defence Skills Development Fund for purposes of critical and scarce skills.
  1. Negotiations will be held with government to exempt companies in the defence industry from contributing a 1% due to the contribution to the Defence Industry Skills Development Fund.

Enterprise and Supplier Development

Private Enterprises

  1. Companies must procure a minimum of 40% of goods and services from black owned enterprises, and where not possible, exemption may be obtained from the Defence Charter Council.
  1. Companies must sub-contract not less than 30% of any contract exceeding R30 million to Black people, Military Veterans, youth and people with disabilities.
  1. Companies must implement Enterprise and Supplier Development initiativesin the context of examples set out in Schedule 1 of the Sector Charter.

Organs of State and State Owned Entities

  1. Organs of state must comply with the specialised scorecard annexed to the Sector Charter.
  1. Organs of state may set aside 30% of their annual procurement budget for Enterprise and Supplier Development suppliersand designated groups.

Enterprise and Supplier Development Fund

  1. A Defence Enterprise and Supplier Development Fund will be set up for purpose of funding ESD initiatives. It will be administered by the Defence Charter Council.
  1. Contributions to be made by all defence companies in the amount of 1% of the value of contracts with Organs of State.

Localisation

  1. This is a defence industry specific element designed to stimulate local production and increase global competitiveness.
  1. Recognition/ rewards will be given to companies that procure at least 60% ofdefence materiélproducts from local companies and procure fromcompanies thatintroduce new technology in the industry.

Socio-Economic Development

  1. Companies are required to make monetary and non-monetary socio-economic contributionsin the context of examples set out in the Sector Charter.Military Veterans have been included expressly as beneficiaries.

Monitoring and Evaluation

  1. Establishment of a Defence Charter Council
  2. The Minister of Defence and Military Veterans (MOD) will appoint the Defence Charter Council members after consultation with stakeholders.
  3. The Defence Charter Council will manage both the Skills Development Fund and Enterprise and Supplier Development Fund.
  4. The Defence Charter Council will measure the effectiveness of Charter implementation.
  5. Compile annual report on progress of BBBEE transformation in the defence industry and submit to relevant stakeholders including MOD, Minister of Trade and Industry, BBBEE Commission and NDIC.
  6. Not more than 8% to be spent on administration of the Defence Charter Council

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