Despite claims budget too low, Defense Ministry paying suppliers more on time

The improvement in payments most obviously relates to more competently keeping track of payments.

May 21, 2014 21:00
2 minute read.
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IDF combat situation drill. (photo credit: IDF SPOKESMAN'S OFFICE)


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Despite repeated claims by Defense Minister Moshe Ya’alon that the ministry’s allotted budget is insufficient, Defense Ministry director-general Dan Harel told a Knesset Committee on Wednesday that the ministry was improving in paying suppliers on time.

The hearing before the Knesset State Control Committee was a follow-up to a state comptroller report that had shown that in 2012 the ministry was NIS 3 billion behind in paying its suppliers.

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In response to this report, committee chair Amnon Cohen (Shas) vigorously criticized the ministry for harming small-business interests that, unlike some major industrial players, such as Israel Aerospace Industries, cannot survive extended delays in payment for services.

Harel told the committee that a ministry study found that following reform efforts, the ministry had lowered the number of suppliers it was late in paying from 10 percent of suppliers to only 7.5% – a significant improvement of 20%.

The improvement in payments most obviously relates to more competently keeping track of payments, but it also could be counter-evidence to claims of budget shortages.

The ministry director-general explained that it was attacking the payment problem on a short-term and long-term basis.

In the short term, the ministry had used the comptroller’s report as a jumping off point for reorganizing and making sure that areas where payment had been slow were addressed.

Those ministry officials responsible for delayed payments are now listed, a move that is unpleasant and discourages officials from delay, and leads to a follow-up check and consequences if delays continue, Harel said.

In the long term, he said, the goal is to digitize all transactional documents with suppliers.

Harel said there was no other way for the ministry, the country’s largest spender, who has contracts with 11,000 suppliers involving around one million receipts, to keep up with making timely payments.

Cohen and a representative of an association of larger companies appeared to compliment the ministry on improvements.

But comptroller representative Brig.- Gen. (res.) Yossi Beinhoren emphasized that the problem was highlighted by his office as early as 2005 and that progress needed to be faster and to continue.

Motti Shapira, the director of an association of independent and smaller businesses, added that “the situation is problematic and very dire, but there is no chance that the suppliers will complain against the defense ministry. For small and minor businesses, the conduct of the ministry will be fatal.”

He said that a year ago the ministry had promised that the “phenomena of delayed payments was over,” but implied that reform was moving too slowly to save some of the small businesses.

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