Britain courts SA defence companies

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The UK wants SA companies to bid for work on British defence contracts and projects, says the UKTI Defence & Security Organisation’s (DSO) operations director Malcolm Haworth.   
 
Haworth says his country is keen to build further reciprocal relationships in defence and aerospace.
 
“We have several large procurement projects ongoing at any one time. The British defence budget is the second or third largest in size after that of the US and we encourage companies from oversees to participate in our market.”
 
“Our website at www.contracts.mod.uk is the place for any company to see how our MOD (ministry of Defence) procures, where they can register their capabilities and get to talk to people in procurement who may be interested in what they offer…”
 
Haworth says the British MoD is keen to hear from companies both big and small – provided they offer quality. “No one gets a free ride. We’re not buying from SA just because we like you; if you have what we seek and you can deliver, then even small companies can benefit.”
 
The DSO director says one SA success story is KwaZulu-Natal based Canvas and Tent. “They’re are supplying to the UK forces and the project leader says he’s very pleased with what they produce. They came to our radar screen through a Defence Industrial Participation (DIP) offset.”
 
The DIP offsets he referred to relate to the 1999 Strategic Defence Package under which SA purchased 24 BAE Systems Hawk lead-in fighter trainers, 26 Saab JAS39 Gripen advanced lightweight fighter aircraft, 30 Agusta A109 light utility helicopters, four Meko A200SAN frigates and three Type 209 1400SAN submarines.
 
The contracts all required the winning bidders to invest in the SA economy generally (national industrial participation, NIP) and the defence industry specifically (DIP).
 
 
Offsets update
            
Haworth, in the country last month for the Africa Aerospace and Defence show, expressed himself pleased at the progress British companies had made discharging their offset obligations.
 
“The context for me is that that BAE and Saab obligation of 400% [of the contract price] is unique in the world Nobody else has committed themselves to anything near 400% IP and I’m not sure anyone will again,” Haworth says.
 
“India, a country I know well, has just introduced an IP policy with 30% offset and are contemplating 50% for a new fighter project … and that is regarded as very high…”
 
Haworth says the SA-scale offset projects can only work when “(a) the obligation is wider than defence, i.e. commercial [NIP] and (b) if all the partners work together in a positive way to make it happen.”
 
A key third aspect was basing a government official – in Britain’s case Paul Williams – in SA to monitor compliance.
 
“The British government has someone in country and so it is no surprise that British companies have done better than others, who have, quite frankly, struggled,” he says.
 
“Essentially, the obligations on the Hawk is fully completed, the obligations on Gripen are virtually complete and the obligations on Lynx will be completed by 2010.”
 
He also commended SA for not allowing companies to cop-out of offset obligations by paying penalties. Haworth said the approach of rather giving companies more time to comply made more sense and ultimately benefited the country.
 
“There are companies around the world who have a reputation for committing themselves to offset programmes and then building the penalty into their price and making no effort whatsoever to deliver.
 
Williams says the penalty is generally a fraction of the contract price, and if exercised, ends up in the Treasury’s coffers. NIP and DIP, by contrast, create real jobs and investment in the real economy.      
The DSO SA expert adds that lessons learned from offsets process include that “it is easier to settle a big obligation than a small one because with a big one you have the quantum that allows you to do something in country” like setting up production line.  
 
“NIP is the exact opposite, its easier to small than big… You are operating outside your area of core expertise.”
 
 
New business
 
Haworth also confirmed that British business was seeking new work locally as well. He says they may well bid for Navy projects Biro and Millennium – the planned acquisition of multi-purpose offshore patrol vessels and a “strategic support ship; in addition to keeping an eye elsewhere.
 
They are currently pitching frigates to Algeria “worth several billion pounds” and also pursuing undisclosed projects in Libya. 
 
In SA, a small British company, Kent Periscopes, is involved in the SA Army’s Project Hoefyster, a new infantry combat vehicle acquisition, says Paul Williams “Every single programme, every single tender, there is some British company interested,” he says.
 
Haworth adds that a new focus for the DSO is civil or homeland security. “It is not like we suddenly discovered security, its being going on for a period. Even before our recent restructuring from the Defence Export Services Organisation of the MoD to the DSO in the UKTI (UK Trade & Investment department), we noted that we had been broadening our scope beyond defence.”
 
“We are in the process of developing a coherent approach to market across the board, from the hard end of security where the customer is still the government to the soft end where the customer is a shopping mall or similar.
 
“Britain has several traditional strengths in civil security and we’re keen to discuss these with SA, especially in light of the upcoming world soccer events.
 
“We are also facilitating contacts between your police and our police to share knowledge to best deal with these problems,” Haworth says.
 
Mackay adds these links are in addition to growing military-to-military cooperation, such as that between the SAAF and Royal Air Force. “SA now has some of the most advanced Hawks in the world,” he says. “With the RAF acquiring the Mk128, we’re learning a great deal from the SA experience with their Hawks.
 
“The RAF has an instructor at [85 Combat Flying School in] Makhado… We’ll get a lot of value out of him when he returns because we’ll just be at that point where we’re introducing the same time of aircraft into RAF use. His expertise will be absolutely invaluable. We’ll also have SA instructors come to the UK to instruct us there. So, you see, it’s a two-way street,” Mackay adds.
 
“It used to be that way [before apartheid-era sanctions] and its good to see that return, we can all learn from one another.”
 
“In the same way we have a RN commander here with the Lynx, helping introduce them to service.”
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