Publication: The Citizen Issued: Date: 2007-03-20 Reporter: Kim Helfrich

SANDF was Clean in Arms Deal

 

Publication 

The Citizen

Date

2007-03-20

Reporter

Kim Helfrich

Web Link

 www.citizen.co.za

 

PORT ELIZABETH – With attention being re-focused on the multi-billion rand arms deal, the users of the new armament have again stated they were not involved in any underhand deals or corruption *1.

Rear Admiral (junior grade ) Rusty Higgs, director Maritime Warfare of the SA Navy, said the various services of the SANDF submitted requests for new ships, aircraft and other equipment to Armscor.

“We told them what we wanted and from then on the acquisition process was out of our hands,” he said here yesterday, when the fourth and final frigate, SAS Mendi, was officially taken into the navy fleet. As a further pointer to the non-involvement of the SANDF in bribery or corruption, he said Project Citron – the frigate acquisition programme – had run “broadly” within budget for its eight-year duration *2.

Earlier this week the NPA and the Public Protector decided there was no need for a joint investigation into corruption around the strategic arms acquisition deal. To date the SANDF has taken ownership of the four frigates, one submarine, 17 Agusta light utility helicopters and 14 Hawk lead-in fighter trainers.

Still to be delivered are Gripen jet fighters, four Super Lynx maritime helicopters, two submarines and the balance of the helicopters and fighter trainers.


With acknowledgements to Kim Helfrich and The Citizen



*1      This is not true, the Chief of the SANDF and Chief of the SA Air Force received motor cars from a bidder.


*2      The junior admiral is a liar.

The cabinet-approved budget for the purchase of the corvettes was R6,001 billion yet the contract price was R6,873 billion.

The ceiling price for the combat suite was R1,47 billion, then escalation to R1,9 billion, but the contract price was R2,599 billion.

The corvette project officer is formally on the record as reporting that in April 1999 the price of the corvette combat suite had been agreed with the supplier during then current price negotiations at R2,3 billion, but the Chief of Acquisitions (who said he had recused himself from combat suite matters) piped up and said that the affordability study has indicated a price of R2,6 billion (just R1 million more than the final price). Me thinks that the difference of R300 million (okay, R299 million to be exact) went into some of Chippy and bumiputerian friends' offset pockets.

What the lying admiral also forgets or neglects to tell the paying public was that the only reason why a price of R2,599 billion was paid for the corvette combat suite was that the SA Navy had had to accept "reductions in the scope of supply (quantity) or performance (quality) from that originally offered", viz :

Letter from SA Navy project officer to SA Corvette Group dated 1999-03-31
"Your offer for the Corvette Combat Suite submitted for our consideration on 23 March 1999, and discussions with the Project Team week 23-30 March 1999 refer. Herewith a first-order list of cost saving measures determined by the SA Navy as a means of achieving an adequate and affordable Corvette capability. At least these measures are to be incorporated into a new Combat Suite cost baseline to be submitted to the Project Team on 7 April 1999. Kindly note that these measures do not necessarily represent the final SA Navy contract Combat Suite configuration specification, nor do they represent acceptance of the offered prices, scope of supply or terms and conditions.
You are reminded that these measures represent a considerable departure from the functionality required in the SA Navy Corvette Combat Suite Requirement Specification, and have been necessitated by the untenable price of the local Combat Suite offered in February 1999, the latter having been double the price provided by SA Industry in May-August 1998, for essentially the same baseline. As such these measures reflect the SA Navy's willingness to concede Combat Suite capability to achieve an affordable Corvette. As a totality, however, they do not yet solve the budget problem, and you are urged to vigorously and innovatively review all prices, including rates, markups, risk provisions, warrantee provisions, etc in order to achieve further cost reductions in the spirit of assisting the SA Navy to achieve a viable solution in the mutual interest.

[what follows is a list of reductions of scope of supply amount to some 40% of the original requirement]

Yet this still didn't work and the SA Navy project officer and Armscor programme manager had to send yet another angry letter to the French, as follows :

Letter from SA Navy project officer and Armscor programme manager to GFC and ADS dated 1999-05-06
"10. Since the initiation of discussions in December 1998, the process between us thus far has been characterised mainly by reductions to the cost of the Vessel achieved by reductions in the scope of supply (quantity) or performance (quality) from that originally offered *3. The SA Navy is prepared to accept these reductions and the considerable reduction in value that they represent in the spirit of achieving a viable, affordable solution within the budgetary constraints of the project. They are reflected in Annexures A and B.
11. Despite these efforts. however, the current overall price for the total vessel system to the Project (i.e. inclusive of taxes, duties. etc payable by the DOD and our own Project Management costs), still exceeds the overall Cabinet approved budget ceiling."

*3       Ouch.


The maritime helicopter is actually part of the corvette. Yet is was dropped out of the Arms Deal to keep the total 1999 contract price of R30,245 billion more-or-less the same as the 1998 cabinet-approved price of R29,773. The original price in 1998 was about R790 million, yet two or three years after the Arms Deal contracts were signed the Minister of Defence secretly signed a new contract with Agusta-Westland for four maritime helicopters at a price of about R1 000 million.

The 2003 Estimates of National Expenditure Vote 22 on Defence issued by the National Tresaury states as follows :
"Spending on foreign courses and visits is expected to increase substantially from 2003/04, to enable Navy personnel to master the new technologies being introduced, reflected in the increase of 21 per cent in the provision for administrative expenditure. Similarly, the quality assurance, naval weapons acceptance, and electronic warfare analysis sections in Maritime Defence have been allocated additional funding in preparation for the strategic armaments procurement programme delivery. Additional spending is projected for outfitting the first corvette, which includes ammunition, cryptographic equipment *4 and other specialised technical equipment. This shows in the increase of 26,1 per cent between 2002/03 and 2005/06 in Maritime Logistic Support Capability, as well as in the increase of 38,1 per cent in the provision for equipment.
While the above explanation is highly cryptic in terms of absolute Rand values rather than percentages (clearly proving the need for previously unbudgeted cryptographic equipment *4), the are indications that this increase amounted some R250 million.

So all in all the corvettes (read frigates) cost about R1,2 billion of 2% more than their original budgeted price.

And 20% in relative terms or R1,2 billion in absolute terms is not close to "broadly" speaking, even in naval language.

Other than the above, the SA Navy is particularly concerned about the amount of diesel fuel the corvettes use and there have been some very, very expensive costs of replacement of a diesel engine due to SA Navy operator error.


*4      Or was this to be able to communicate covertly and/or discreetly with the supplier of the R2,599 billion corvette combat suite, Thomson-CSF of France, by means of encrypted faxes..