Parliament’s Joint Standing Committee on Defence (JSCD) is “concerned by the return on investment (ROI)” the SA National Defence Force (SANDF) receives for its prime mission equipment (PME) expenditure, primarily with Denel.
This conclusion was drawn by the JSCD following presentations by Armscor, Denel and the SANDF into what a Parliamentary Communication Services statement termed the “satisfaction levels” experienced regarding PME serviceability and mission readiness.
The statement, issued by committee co-chairs Cyril Xaba and Mamagase Nchabeleng, said the committee “considers a symbiotic relationship between the SANDF and Denel of critical importance” adding it requires focused analysis and monitoring to ensure value for money from the SANDF investment SANDF in Denel. “In line with this, the committee welcomes the establishment of a Department of Defence (DoD), Armscor and Denel steering committee to monitor co-operation and improve co-ordination.”
The JSCD acknowledged an increase from 6.45% to 38.10% in delivered capital and technology contracts and wants it sustained to ensure PME is ready for deployment going ahead. “Nonetheless, the committee is concerned that operational readiness of PME remains largely unserviceable. Additionally, the committee is alarmed to hear the majority of contracts given to Denel Aeronautics were satisfactory, according to the SANDF, the reality is that a majority of the aircrafts remain grounded and Denel has resorted to cannibalising parts to service aircrafts needed for mission deployment (sic).”
“This situation,” the statement has it, “leads the committee to question the financing model currently utilised and the value for money the SANDF is getting”.
Kobus Marais, Democratic Alliance shadow defence minister, told the JSCD that just six of the SA Air Force’s 36 Oryx helicopters are operational compared to 17 last year, and only two Rooivalks are operational out of a fleet of 11. This is largely because Denel Aeronautics is unable to service them.
“At the rate at which things are deteriorating, next year we will not have a single Oryx helicopter working,” Xaba warned, and said Parliament needs to find a better way to equip the SANDF and hold Denel accountable.
“The committee acknowledges that the delivery of contracts might be system specific and not holistic in getting the aircrafts airborne, it nonetheless underscored the need for general solutions in getting PME ready. It urged the department to utilise specifically allocated funding efficiently and effectively to enhance the performance of strategic mission equipment (sic),” the JSCD said in its statement.
SANDF Chief of staff, General Michael Mantswana, told the JSCD on 11 May that Denel only met 53% of the prime mission equipment orders from the SANDF over the past year. Out of 104 active contracts and orders for equipment totalling R21.9 billion, Denel has fully delivered on 45 orders and received R11.7 billion in payments for the operational and capital equipment. More than R10 billion in orders is still outstanding, mostly covering maintenance and support.
Denel Land Systems has R8.8 billion in outstanding orders, mostly relating to the Badger infantry fighting vehicle for the SA Army.
The presentation to the JSCD last week followed a 27 March meeting between the Military Command Council and Armscor and Denel to discuss Denel’s turnaround strategy and the support it can provide to the SANDF. This was followed by a Military Command Council visit to Denel plants on 3 and 4 April, and on 12 May, 200 senior members of the SANDF visited Denel facilities to see how the company was restarting production following the arrival of bailout money for the struggling state-owned company.
The Defence Materiel Division of the SANDF warned that Denel’s performance may not drastically improve soon. “The impact of the new Denel turnaround strategy is not yet felt in the readiness levels of the DoD’s PME.”
It also warned that “the country can no longer afford to lose the remainder of the skills sets vested within the employees at Denel. Employees with scarce skills that form part of the manufacturing of arms for the SANDF should as far as possible be retained.”
The SANDF acknowledged that in spite of Denel’s troubles, “the underfunding of the SANDF does contribute to the situation in which the Defence Force finds itself in.”
Defence expert and Director at African Defence Review, Darren Olivier, believes “it’s difficult to overstate how serious this situation is. Defence capabilities are not just shrinking, they’re collapsing and at risk of being lost entirely. We’ve been warning about this for years, as have the DoD’s senior staff and the 2015 Defence Review. It was all ignored.”
