DOD contracts managed by Armscor and related matters & Presidential Extension Of Employment Authority; with Deputy Minister

Meeting report

The Chairperson said the meeting stemmed from the fact that in 2022, Armscor had briefed the Committee on the status of maintenance of the South African Airforce's aircraft fleets and other projects. Members had previously highlighted the low level of serviceability of aircraft and other projects where Armscor was the contracting agent. Armscor had indicated in its presentation that it had achieved most of its targets. It had also previously briefed the Committee on the status of maintenance of the aircraft fleet. The availability of spares was a concern. The Committee had been informed about a lack of spare parts and that South Africa did not form part of the spare parts pool with global manufacturers. This meeting was to allow the Committee to be informed about the outcome of engagements with Armscor, and to determine the way forward.

Deputy Minister of Defence and Military Veterans, MMMr Thabang Makwetla, stated that he would make comments at the end of the presentations.

DoD briefing on Presidential extension of employment authority

Mr Edem Abotsi, Chief Director: Compliance, Department of Defence (DoD), referred to Operation Mistral, and reported that the President had authorised the extension of the employment of the South African National Defence Force (SANDF) for service in fulfilment of an international obligation by South Africa towards the United Nations Stabilisation Mission in the Democratic Republic of Congo (MONUSCO) for a period of twelve months from 1 April 2023 to 31 March 2024. The SANDF forces deployed in support of the UN as part of MONUSCO consisted of 1 198 members, with a total estimated cost of R1.036 billion.

For Operation Vikela, the President had authorised the extension of employment of the SANDF for service in fulfilment of an international obligation by SA towards the Southern Africa Development Community (SADC) for a period of 12 months from 16 April 2023 to 15 April 2024. The SANDF was contributing force elements and equipment to the SADC Standby Force in support of the mandate of the SADC Mission in Mozambique (SAMIM) to combat terrorism and acts of violent extremism. The SANDF forces deployed consisted of up to 1 495 members, with a total estimated cost of R984 million.

For Operation Copper, the President had authorised the extension of the employment of the SANDF for service in fulfilment of an international obligation of SA towards the Southern Africa Development Community maritime security strategy (SADC MSS), to counter the threat of piracy and other related illegal maritime activities for a period of 12 months from 1 April 2023 until 31 March 2024. The SANDF forces to be deployed consisted of up to 200 members, with a total estimated cost of R35 million.

See attached

Discussion

Mr S Marais (DA) commended the presidency for this prompt letter. He said a meeting had been held over the reimbursements for Operation Mistral. The cost of the R1 billion meant that based on what was received last year and given, this would be a new trend -- R600 million would not be recovered from the United Nations (UN). That amount would come from South African taxpayers' funds. If it was said that it could be generally accommodated within the Department of Defence allocation, how much had been allocated and provided in the budget? Was it the one billion, or was it the recovery from the UN? In that case, there would be a shortfall. Were the default costs part of the difference between the authorised costs and the reimbursements from the UN? Had money been specifically allocated for using the Rooivalk helicopter, which was currently a challenge? How much had been provided in the provisions?

On the 1 198 members deployed, he said that that had been an employment authorisation. Sometimes there was a difference between actual deployment and the employment authorisation. Would all 1 198 people be deployed, or would it be fewer than that? That would have an effect on the eventual actual costs as well. On Vikela, how many of the 1 495 would actually be deployed? If one said it had been partially accommodated, how much had been provided to partially accommodate this cost? How much was the short funding they would have to steal from Peter to pay Paul?

On the equipment challenges, it was known that the second Oryx helicopter had arrived at Cabo Delgado with the objective of using that platform, but they knew that it had maintenance problems when it arrived and was now grounded until spare parts had been provided. Technicians had been going to Cabo Delgado to get the Oryx up and running again. How was that problem being addressed? There was a logistical support problem for their soldiers there. How was that being handled?

On the challenge of the relatively long-term deployment of special forces, there had been complaints that their objective was short-term deployment and coming back, but it seemed like special forces had been deployed longer than six months in Cabo Delgado, which could impact their morale and defence readiness. There was also a challenge regarding the availability of Air Force crew to deploy for both Vikela and Mistral.

South Africa appeared to be the only country that contributed to Operation Copper. It seemed that the threat of piracy was less than in the past. There had been limited spending on Operation Copper in the past year. Where did they stand with this and the piracy threat, especially considering South Africa was the only country contributing? How would they bring other SADC countries on board? What was the position going forward? Did they foresee this being limited, given that the initial patrol vessel had not been sorted out?

Mr T Mmutle (ANC) asked about the readily available funding for Operation Mistral. Within the allocated budget, how much had been allocated for that mission? This question was based on the Committee's interaction with the Air Force during their oversight visit, where the issue of spare parts would always surface. These issues could be easily addressed when there was a budget available, unlike deployments where there was unsureness about the availability of resources. He requested clarity on this so that the relevant stakeholders, who had to ensure that the platforms were serviceable and ready for deployment, did not hide behind the unavailability of resources when the Committee engaged with them at a later stage.

Department Response

Lt Gen Lucky Sangweni, Chief of Joint Operations, South African National Defence Force (SANDF), replied that he believed the Presidential Authority had approved R1 billion plus for Operation Mistral. This was the amount that had been submitted as part of the DoD’s request. Procedurally, the Department was required to indicate how much the deployment would cost, where the deployment would be, and how many personnel were required for the deployment. The DoD's estimated calculations had produced the R1 billion plus. This amount included goods and services, as well as allowances. He was unable to give a breakdown of the R1 billion currently.

On the issue of employment versus deployment, he replied that the figures presented about Operation Mistral were correct, and were the numbers that were always deployed. 1 195 people were to be deployed for Operation Vikela. This number was the Department’s ceiling. Capabilities were deployed as the situation developed. The Department had on average 1 100 to 1 200 deployees.

On the utilisation and availability of helicopters in Operation Vikela, he replied that the Department had three Oryx helicopters, and an unserviceable fixed-wing aircraft that would return to the mission area once it was ready. The host countries of the deployments often provided aircraft for the deployees to use.

The previous two years of Operation Copper had indicated zero deployments due to a lack of vessels. The SANDF believed that it was relevant to continue with Operation Copper, and wished that the entire South Africa saw it as relevant. This authority acted as a contingency when there were no vessels. The SANDF was hopeful about receiving new vessels. It needed to patrol South African waters up to the Mozambican channel. The SANDF had submitted to the President that it was necessary that Operation Copper be funded so that deployments could be made when the SANDF had vessels.

He confirmed that the funding allocation for Operation Mistral included aircraft. What was in the presentation was not the allocation, but the estimated costs for Mistral. Whether the unserviceability would lead to the SANDF receiving adequate reimbursement or not depended on serviceability. He was not able to say for sure whether the Department would get a reimbursement due to them according to the capabilities deployed.

The Chairperson said that the Committee could end its discussion of this item, because the Committee would be dealing with the budget in the next two weeks. The purpose of the day’s meeting was not necessarily to deal with the budget. The discussion of the budget could be deferred until when it was time to look at the entire budget of the Department.

Follow up discussion

Mr Marais followed up by stating that the feedback by the SANDF did not address the Committee’s concerns, and agreed with the Chairperson that this should be addressed in the budget process. He had asked the questions because the presenter had stated that the information had been partially provided. He just wanted to know what the Committee was dealing with, given what the Committee had been presented with the day before. The Committee would eventually have to look at priorities, but this would be handled when the Committee dealt with the budget.

Dr Thobekile Gamede, Acting Secretary of Defence, suggested that the Department should focus more on the budget when the Department presents its annual performance plan. In that way, it would be better prepared to discuss shortfalls, and so on.

Mr D Ryder (DA, Gauteng) asked that the Department put the Committee at ease when they came back by assuring it that the people who were deployed were sufficiently cared for, as this was central to the Committees’ role.

Feedback to the Joint Standing Committee on Defence on the outcomes of the DoD workshop with Armscor on spares and maintenance

Admiral Anthony Morris, Chief Director: Defence Acquisition, SANDF, briefed the Committee on the capital acquisitions' environment, the status of capital projects contracted via Armscor regarding the SA Army, and the level of the DoD’s satisfaction.

He reported that the water provision system had been delivered in 2022. It was partially funded, because the request was for the delivery of a division, but the SANDF could deliver only a brigade at this moment. The brigade had been successfully delivered, and the SANDF was currently in the project closing stage.

The Air Defence Command and Control System and the Situation Awareness Sensors were 50% funded. The SANDF had problems with this project, as it was contracted by Denel.

The SANDF was ten years behind schedule with the new generation Infantry Combat Vehicle Products System. This project was underfunded due to the imposed budget reductions.

The upgrade of the 155mm GV6 was also a project that was contracted to Denel. The contract had been concluded in 2019, but had now been delayed due to the situation at Denel.

The SANDF was not funded for its core capabilities of acquiring systems in the new generation operational supply support system (vehicles).

The hardware for the militarised operational earthmoving system had been delivered, but the contract date had already been overshot because the SANDF was supposed to have received it by 2020, and was now in the interim support phase.

There were parcel acquisition plans for Project Transportable Camping System Capability. The tanks and the mortuary had been fully delivered, but the expandable capability and the ablution facilities, the mobile stores, the waste management, as well as the laundry, were anticipated to be delivered by the end of this year. The challenge lay with the vehicle-based products that were now going to be delivered only by July 2024.

The mobile and rapid and deployable mass feeding system had been delivered, but there were challenges regarding qualifications and codification. The SANDF had recently realised that they had to change from diesel to gas generators as part of the mass feeding system. The new date for delivery had actually been 2021, but the SANDF was now overshot that target.

The weapons for the sniper rifle system had been delivered. The SANDF was waiting for the ammunition.

On the gyroscopic theodolites, the SANDF was standing by for the inertial navigation units, which would likely come in March 2024.

On the status and level of satisfaction of capital projects contracted via Armscor regarding the SA Air Force, he reported that the replacement of aircraft rescue and fire vehicles had been contracted in 2016. The SANDF was currently experiencing delays with the pilot rescue vehicles. The current expected delivery date was in 2023.

The Air Defence Management and Air Traffic Management surveillance sensor capability had been partially funded because the SANDF was meant to acquire new systems, but only four of them could be upgraded due to funding challenges. There was currently a challenge with the technical testing of the system, and the SANDF now had a new date of the end of this year.

The remainder of the projects remained fully funded.

On the status and level of satisfaction of capital projects contracted via Armscor regarding the SA Navy, he reported that the patrol capability was partially funded, and the hydrographic capability was fully funded. The remaining Navy projects were unfunded.

The organic core sea mine warfare capability was partially funded, but the core capability of the project was unfunded. The partial acquisition plan referred only to the re-breathers which had been integrated with the fleet. The submarine capability had been a major challenge.

On the common weapons, he reported that the SANDF was awaiting a decision on whether they should cancel or defer the new generation Defence Communication Network, as it was currently unfunded.

The project standard report for the deployable electronic warfare system had been completed.

The SANDF was currently in the process of closing the information system security solution, and establishing a new one.

The family of tactical combat net radio systems was currently very delayed due to operational testing issues. The supplier had had to go back to resolve technical methods. Operation tests and equipment for both the mobile and static portions of this capability were completed in February.

Brigadier General Andre Barends, Director: Technology Development, DoD, stepped in to brief the Committee on the technology development projects, and to reflect on the Armscor dockyard.

He reported that the DoD was satisfied with 52% of the total capital projects and technology projects allocated to ARMSCOR, but the Navy was not 100% satisfied with Armscor's dockyard output. The Navy had resourced the dockyard as far as possible. The Armscor dockyard had been advised and authorised to source partnerships with the local defence industry to capacitate itself.

See attached

Discussion

The Chairperson asked whether he was incorrect in assuming that the presentation did not include the status of the maintenance contracts across all the services.

Dr Gamede replied that what had been presented was the status, and why certain projects were delayed. However, maintenance projects and how delays were dealt with would be covered in the feedback from the workshop.

Mr Marais agreed with the Chairperson that he had also expected the presentation to deal with all the contracts. Maintenance was linked directly to special defence accounts (SDAs), and was very important. On SDAs versus general defence accounts (GDAs), he did not understand why maintenance contracts had been left out, as they were some of the more critical ones. He requested clarity on whether the SDA funded the spares for strategic prime mission equipment, and whether a case could be made to National Treasury that funding for spares should come from the SDA, and not from the GDA. It had been said that the SDA was being phased out, but there was nothing in the SDA report stating whether it was proceeding or whether something else had been put in place to make up for the vacuum left by the absence of the SDA.

Regarding slide six on the status and level of satisfaction of capital projects contracted via Armscor for the Air Force, he observed that too many delays should be a red flag for any defence force. There were too many delays. The content of the conclusion table in the presentation was also worrying. The Committee would follow up on what the Department was doing to mitigate these challenges. What project and contract was being spoken about in reference to the Rooivalk? What contract on the Rooivalk had been fully funded and concluded? There were only two of the 11 Rooivalk helicopters that were serviceable. What contract for the Augusta and Maritime helicopters had been fully funded and concluded? There was one maritime helicopter that had done a test run in the Western Cape, and three that were not serviceable -- what reference was being made to the maritime helicopter?

On the patrol capabilities and the presentation stating that it was partially funded and the schedule had been reviewed, it was known that the offshore patrol vessels (OPVs) had been put on hold for a long time. There had been a difference of opinion in the past between Armscor, who said that Project Biro was fully funded, and the previous Chief Financial Officer, who had said on multiple occasions that there were no funds for Biro. Where did they stand with Biro and the three intel patrol vessels? That was quite important, because that was the best capabilities that they had.

It had been said that the frigates and the rebuilding of the frigates were behind schedule and were unfunded. He was under the impression that the Minister of Finance had allocated money specifically for the upgrade of the vessels, and R1.8 billion for the next two years had been received. He could not understand why the vessels' upgraded equipment was unfunded. There were too many unsatisfactory markers in the presentation regarding technology. What were the dates for these contracts and projects? All of them were basically a year or two old. Did the Department want to tell the Committee that no older projects had been a problem? All the projects that had problems originated from 2021 and 2022 -- was that really the case? What had happened before that?

On the level of satisfaction with the Armscor dockyard, he asked what the South African Navy meant when they said they were not 100% satisfied. Where was the information that could give the Committee something to work with to alert Armscor what the Navy’s issues were? What was the Navy not happy with?

Mr Mmutle said that the Committee expected them to bridge a gap that had been identified in one of their engagements, where they had requested the DoD to give them the status. They had delegated that responsibility to Armscor, while the Committee had expected the Department to give them its perspective. What must happen now, considering that the Department was only presenting the status and had different expectations from the Committee? The Committee wanted to deal with the gist of the challenges, and not with a surface level interaction.

Mr K Motsamai (EFF, Gauteng) said he was confused, as there were only three Rooivalk Helicopters. Parts were being taken from one helicopter and placed into other helicopters so that the three helicopters could work. There was a serious problem with the Navy and its submarines. He had asked himself whether this looked like someone wanting to promote a certain company and not coming openly to say, "let’s take this one and pay him for the tenders so that they could help us." The Department was being given a lot of money and had received more than R1 billion in previous years -- what had it done with that money? Why were they failing to service the Rooivalks and the submarine? Even though there was no a war currently, the equipment had to be serviced and ready should it be needed.

The Chairperson pointed out that the presentation had not met the Committee’s expectations of what was going to be presented. The question had always been why the DoD's aircraft were not in the sky and its vessels in the sea, but that was largely due to maintenance. However, today’s presentation focused mainly on capital projects.

Lieutenant General Michael Ramantswana, Chief of Staff, SANDF, gave feedback on the outcomes of the DoD workshop with Armscor on spares and maintenance.

He started by apologising for the previous presentation not meeting the Committee’s expectations. He explained that this third briefing talked to the Department’s assessment of contracts and the areas of maintenance where there was engagement between the Department and Armscor.

The Chairperson shared with the Department the Committee’s findings on this presentation. Its concern had always been about the fact that capability was collapsing. There was money, but value for money was not being seen. He used the Rooivalk combat support helicopter as an example of this. There were 11 Rooivalk helicopters, but only two of them were serviceable. The absence of on-demand services led to the absence of spares. Essentially, many of the Department's aircrafts were being reduced to shells because there were no on-demand services allocations. No new spares could be bought -- the only thing that could be done was to cannibalise, but this had a limit.

The contract value for the Oryx in the 30 April 2020 to 31 March 2022 period was R769 million, and this amount was received from the Central African Federation (CAF). There was also an additional R300 million from Joint Operations funding. This also told one why most of the Oryx helicopters were standing "ugly" and needed to be repaired but could not be brought back into service because no spares were available. This showed where the problem was. A significant amount of the budget was sent to the CAF, instead of using funds directly to purchase spares. Why was the DoD the only department responsible for the maintenance of Denel, when there were departments like the Department of Public Enterprises that was capable of assisting with Denel? Denel was a capability that was needed, and the Committee did not want to lose it.

Mr Mmutle said the Chairperson had expressed the Committee’s concerns quite well. The Department’s plans to deal with the original equipment manufacturers (OEMs) must be looked into as well. The monopolies of the OEMS needed to be tackled, as this was one of the things that was creating a problem in terms of the spares contracts. They were compelled to go to the OEMs, and because the Department’s equipment was old, the equipment was no longer available because space and time needed to be made available to manufacture orders. This presentation had been expected to address those things.

DoD's response

Dr Gamede said it looked like the Department had taken a narrow view of what had been required of them. Some of the questions that Members raised about spares would be answered in the feedback from the work session. The Department was prepared to return to the Committee should the next presentation not suffice. She apologised that the previous presentation had not met the Committee’s expectations.

Lt General Wiseman Mbambo, Chief of the Airforce, said that he was in full agreement with the Chairperson’s statement on how money had been flowing from the Defence Force to Denel, with the result that it was basically maintaining Denel’s personnel costs. This situation would lead to there being a lack of aircraft if it was not turned around. It would be prudent for Denel and Armscor to both be in the room when the Department made another presentation so that they could answer accordingly when questions were asked about them.

Vice Admiral Mosiwa Hlongwane, Chief: South African Navy, DoD, explained the history of the challenge of the unavailability of spare products, stemming from the year 2000. During the strategic defence acquisition, 80% of the funding was for the acquisition funds and 20% for true life support. The 20% had been used to assess Project Citron and Project Wills. The funding was not enough to support those platforms after their delivery. Today, the Department found itself in a situation where the underfunding of true life support was not balanced. The Navy found itself unable to maintain its submarines and frigates because of the funding model, not because of a lack of will. The process of acquiring spare parts for submarines was rigorous and long, and this had to be considered. The acquisition phase proved how lengthy and rigorous this was. The maintenance and plan evolution had been planned way back, but there was a challenge because the required spare parts were unavailable. This led to a delay in all the maintenance and repair programmes because the Navy conducted maintenance and repairs through procurement, in line with the availability of spares in the market.

Regarding the R1.4 billion made available by National Treasury to the Navy, he replied that only R500 million of the R1.4 billion had been made available to the Navy for this financial year. The Navy had made sure to stick to what the National Treasury had actually directed them to do to meet its operational requirements. The Navy expected Armscor to manage a service provider by June of this year to assist with the maintenance of the Navy’s submarines. This would have its own timelines. The plan was to ensure that the funding from National Treasury was spent in the way it directed it should be spent.

Regarding Mr Motsamai’s comments that the Navy was taking spare parts from one Rooivalk to keep another Rooivalk afloat, he replied that due to the current spare parts crisis at the Navy’s depots, cannibalisation was a standard maintenance and repair practice in projects that had been done in the Navy before. He used Project Mandi as an example. Project Mandi’s components had been replaced and it was now one of the operationally available platforms for the SA Navy. Stripping under the platform to make way for another one was not a crime in engineering practices.

On the maintenance and repair of the submarines, he replied that the Armscor dockyard had a plan. Armscor had gone through the first round of sourcing a service provider to assist them in repairing the frigates and the submarines. The plan was for the Navy to have a service provider by June that would assist them with the required services. Historically, when the dockyard was given to Armscor in 2009, the agreement was that the Armscor dockyard would provide the Navy with its strategic maintenance and repair capabilities, but people in the dockyard had resigned over time. The Navy had maintained its obligation to ensure that it transferred that money to the dockyard so that the strategic maintenance capability could be executed. It was confident that the dockyard was going to overcome its maintenance and repair issues. The Navy had given the dockyard over R380 million. Some of the money was yet to be spent, but was scheduled to be used.

The Chairperson said he did not believe that the Navy was getting value for the money allocated to the Air Force for repairs and maintenance readiness.

Lt Gen Ramantswana apologised that the Committee’s expectations had not been met.

DoD workshop with Armscor on spares and maintenance

A DoD official briefed the Committee on the outcomes of the DoD workshop with Armscor on spares and maintenance.

He reported that contracting timelines were an area of concern. There was a problem regarding prolonged timelines for placing orders and contracts for spares and maintenance. There was an agreement that Armscor should reduce its internal process times so that more time could be given to the industry to respond.

There were also issues in contract management, in that there was no urgency to solve disputes with contractors affecting operational availability. Resolutions included adding punitive penalties/termination clauses, coupled to timelines in the event of non-performance by suppliers in contracts.

On the late submission of requirements by end users, he said it was felt that the services and divisions often brought their requirements too late to Armscor, making it appear as if Armscor was not up to speed with support to the services. The resolution was therefore to require end users to submit their requirements at the beginning of the financial year, or even to pre-commit their requirements. This was where Armscor resolved to perform IPTs between Armscor and the Defence Materiel Division (DMD), where forthcoming issues could be addressed before the funds became available. This responsibility had been given to services and divisions to be responsive in getting the requirements to the Armscor process as soon as possible.

Besides the late submission of requirements by end users, there had also been an issue identified regarding requirement delivery, distribution and processing records management. The resolution was to develop and implement an electronic tracking system, inclusive of an automated early warning function that was visible to all stakeholders in the DoD. The Chief of Staff should be able to know where the challenges are in contracts at all times.

On the long lead times for CJ operations and special forces operational requirements, he said that there was a process that could be used to acquire rare and special equipment that was not easily available, almost through an approved waiver from National Treasury to do this.

There was an overreliance on OEMs.  This could lead to OEMs taking advantage of the fact that they were the only ones who could do whatever they wanted. However, it was understood that equipment from OEMs may last longer and increase the operational life of equipment, but research had to be done as to whether alternative suppliers could do the same.

Armscor’s position on the way forward included that:

• The procurement of spares should become proactive, rather than reactive.
• The requirements for spares had to be provided early in the financial year, preferably before the start of a financial year.
• The phasing of operating funds should be provided to coincide with the lead times of long lead spares, to allow for payment for the spares in future financial years if required.
• The SANDF must provide Armscor with multi-year funded requirements for spares.

He referred to the Committee’s comments on how satisfied the DoD was with Armscor. He said that the DoD's satisfaction with Armscor’s work must take into account the availability of funds to address spares for maintenance and repairs. He was happy that his division and Armscor had been able to find each other. His division would be able to assess Armscor monthly, and they were happy with the process that had been agreed upon.

See attached

Discussion

Mr Marais believed that the presentation was constructive, and that the Committee’s concerns had been heard. The words from the presentation must follow actions. The DoD should report to the Committee quarterly to see how the DoD was progressing, specifically on the concerns the Committee had expressed about the Navy, the Air Force and the strategic platforms. The DoD and the Committee would need to look at the bottom line and assess whether the projects worked.

He recalled that there had been a problem involving the GDA versus the SDA. He was yet to hear what was going to happen to the SDA, and what would be put in its place. Somehow, auto spares and certain other categories of spares should be looked at. There were certain spares that the Department could produce and some spares that would need the Department to go to the OEMs. Could a system be designed wherein certain spares for maintenance could be classified as SDA expenditure items? Rolling funds over would make planning easier for the Department when given a multi-year commitment.

The Chairperson said that he was not convinced that National Treasury’s involvement was needed at this stage, at least not until there was demonstrable evidence that the Department and Armscor were implementing these reforms. The reforms were a welcomed development, and were, in fact, showing that the Department was experiencing self-inflicted pain. It would have made significant progress if these reforms had been implemented earlier. He agreed that there should be quarterly reporting on implementing the reforms. The availability of funding had still not been addressed. The Committee wanted to know about the outputs, and not only the inputs. The Committee wants to see the DoD’s aircraft in the sky, vessels in the sea, and landward forces using protective vehicles to do their work properly. The money was available. The manner in which the money was spent needed to be worked on.

Dr Gamede said that she aligned herself with Mr Marais and the Chairperson’s comments, that now that there was a plan, it needed to be monitored. The Department was going to monitor the plan and would come back to the Committee to report as and when required.

Deputy Minister's concluding comments

Deputy Minister Makwetla said there was a legacy issue in regard to the way the value chain of support by industry functioned in relation to the Defence Force. The Committee’s engagement with the findings of the issue between Denel and Armscor showed that there were seeds informed by the practices, that the two entities belonged together. Armscor released money to Denel that ended up keeping Denel viable, but did not assist Armscor with what it wanted from Denel. Something questionable about Denel’s business model was how they dealt with money paid out to them. Their business model appeared as if Denel treated Armscor like a spoiled baby. Things being equal, no entity could treat their clients as casually as Denel treated Armscor. This should be revisited.

He was happy that it had been suggested that contract management by Armscor on contracts that were placed with Denel seemed not to be strong enough. Project contract management was not strong enough either, and could do with significant improvement. He was happy that the technical challenges involved in procuring spares had been sufficiently ventilated to the Committee. The availability of funds was a challenge, but the way the entities were managed had the potential to minimise the challenges they faced. He felt that the information that was shared had been fruitful.

Committee programme

The Committee turned to their programme for the current term.

The programme was supported by Mr Marais, and seconded by Ms M Mothapooo (ANC).

The Committee adopted the programme.

The meeting was adjourned.