BAE Systems, Saab done with SDP NIP & NIP


Anglo-American defence multinational BAE Systems and Swedish aerospace company Saab have effectively completed their defence industrial participation (DIP) obligations to South Africa 19 months ahead of schedule.

They have almost fulfilled their non-defence or national industrial participation (NIP) obligations – with 31 months still to go before deadline.

That`s the word from Engineering News, which adds the two companies had total DIP obligations of $1.5 billion* and NIP obligations of $7.2 billion related to the 1999 acquisition of 24 BAE Systems Hawk Mk120 fighter-trainers and 26 Saab JAS39 Gripen advanced fighters as part of the government`s R47.4 billion Strategic Defence Package.

All the Hawks have been delivered as have all nine two-seat Gripens on Order. The first of 17 single-seaters will arrive next month. Deliveries will be complete in2012.

Engineering News adds that the Department of Defence`s Armscor arms acquisition agency that is responsible for monitoring DIP delivery, will formally confirm by year end that the task is done.

NIP was divided into $2 billion in investment and $5.2-billion in sales (divided, in turn, into local sales and export sales) from these investments.

The two companies had to effect this investment, not necessarily provide it themselves, although they did make temporary investments in a number of local companies.

“The South African offsets were worth 400% of the contract value,” said BAE Systems executive vice president South Africa John Williamson.

“This is still the biggest offset programme we have been involved with. We had 40-odd projects to which we loaned money or made equity investments. We’ve reached the $2-billion investment target. In terms of local sales, we’re already in excess of our obligation. In export sales, we’re very close to reaching our target.”

But it was not easy. “About five years ago, we were running into serious problems with regard to meeting our DIP obligations,” he reports.

* NOTE: The amounts were contracted in dollars and were to be discharged over 12 years. During to currency fluctuations since 2000 it would be difficult to determine a Rand value for the investments.

Pic: Four BAE Systems Hawk Mk120 aircraft on a cross-country training run.