The defence department on Wednesday defended its decision not to award a South African company a contract to fit a state-of-the-art electronic combat system into the navy's new corvettes.

Four corvettes form part of the government's R30-billion arms deal.

The department's head of procurement, Chippy Shaik, told Parliament's watchdog public accounts committee that additional risk associated with the South African supplier's system made it unviable.

"The navy did not want to assume the risk of new technology," he said.

It would have been forced to freeze its acquisition programme to allow the technology to be developed and tested on working ships, and was not willing to "risk a R6-billion contract for R30-million worth of technology".

The government and primary supplier had also refused to carry the risk costs, Shaik said.

The rejected supplier, CCII Systems, was originally identified by the SA Navy as the preferred supplier for the integrated management system (IMS) for the corvettes.

However, the Project Control Board -- which was jointly chaired by Shaik -- subsequently decided not to use CCII's system and replaced it with one built by Detexis, a subsidiary of French weapons manufacturer Thomson-CSF.

Thomson-CSF was a member of the German Frigate Consortium that was awarded the final contract.

The project officer for the contract, Captain Johnny Kamerman, said the prime contractor had added a risk premium of about R40-million to the local product.

The IMS was the "spinal cord" of the combat system of the ship, and therefore could put the safety of the entire ship in jeopardy should it prove faulty.

This in turn would have put the performance guarantee for the frigates at risk.

The system finally chosen was the "latest technology available", Kamerman said.

CCII Systems MD Dr Richard Young told Sapa that Shaik and Kamerman were "clutching at straws".

He was extremely surprised by the department's contention that his company's product was too risky.

The risk associated with the system offered by Thomson-CSF was greater than that of the local product.

The technology finally chosen was used by the United States during the 1960s and 1970s, Young said.

Committee members questioned why it was not preferable to award a South African company the contract, and demanded that the defence department submit a detailed report on how the R40-million premium was calculated.

This should be submitted within seven days.

With acknowledgements to Sapa.