Richard Young says his company’s bid was prejudiced by underhand manoeuvrings. 

A crucial witness in the public investigation into the arms deal has alleged widespread flaws and inconsistencies in the evaluation of bids, something he says prejudiced his company. 

C²I² Systems MD Richard Young claimed during public hearings yesterday that behind-the-scenes machinations between government institutions and another bidder, African Defence Systems (ADS), led to his firm being sidelined. 

Young has reserved his right to sue government for between R100m and R200m for losing out on a contract dealing with the supply of corvettes in the R43bn arms deal. 

Young’s evidence is vital because he is the only witness before the inquiry who says he has evidence of irregularity in the awarding of contracts. 

ADS is owned by French electronics group Thomson, which also owns Detexis. Detexis won a subcontract for the combat suite’s information management system after Cape Town-based C²I² Systems was overlooked. 

Young’s testimony and the nature of some of his allegations have held up the investigation by Public Protector Selby Baqwa. The hearing was adjourned two weeks ago to allow him to seek consent from the defence ministry that his testimony would not jeopardize state security. 

Young – who testified uninterrupted for about five hours – detailed the technical aspects involved in the combat suite his firm was selling for the Corvette. 

He mapped out in detail efforts he said his firm had gone to in order to get answers to questions about what criteria resulted in the choosing of a winning bidder. 

He said it was after government’s acquisitions’ unit and Armscor had not responded to correspondence that the came across and Armscor report containing the information last April. 

The report, Young said, was prepared by a team of technical experts evaluating his company’s product. He said the document was of particular relevance because Armscor prepared it and, according to Young, “(it) was intended to provide a brief overview of the process followed”. 

The report showed that although “technically all the offers complied to the user requirement”, the C²I² Systems offer had to be adjusted – inferring this was irregular. 

He said the report gave 15 reasons why the C²I² product should be retained and only six negatives, most of which were untrue.  

Young seemed especially riled by what he said was “a misrepresentation (of the C²I² Systems offer) in an attempt to justify the selection of the higher ADS offer.” 

Not only was there a better price offered for a product which met technical requirements, “namely the C²I² Systems’ offer”, but it appeared his firm was used merely to force a lower price from ADS.  

To support his argument on the behind-the-scenes machinations, Young supplied what he said were ADS figures during the tendering process. 

The final price – Young noted disapprovingly – put at R29,65m in the report, amounted to “a saving to the state of at least R7,9m for the system management subsystem”. 

He said ADS had added a risk premium of about R40m to his firm’s R38m price, a mark-up of R4m and a risk-management fee of R9m – “making a price of R89m, in all”. 

He said: “ADS pushed our price up so high that we were not competitive anymore.” 

The hearing continues today. 

With acknowledgement to Bonile Ngqiyaza and Business Day.