Denel aviation has won a multimillion-rand contract to produce rear fuselage aircraft sections for the Gripen fighter jets destined for the Swedish Air Force as part of the BAE Systems' and Saab defence offset programme.

BAE Systems and Saab committed themselves to generate additional economic activity worth $8,7bn in offset projects over 11 years, coinciding with the delivery of the Hawks and Gripen aircraft for the SA National Defence Force. The $2,2bn contract for the supply of the aircraft is part of government's controversial arms procurement package.

All companies that were awarded contracts in the defence procurement programme undertook to bring in investment, in foreign currency, that would either be focussed on job creation or retention, and that such projects should target exports.

Head of business development at Denel, Grant Sampson, said at a media briefing yesterday that the initial contract from the Swedish Air Force was to supply 10 fuselage aircraft sections, but this could be extended as Sweden had placed an order for 204 Gripen fighter jets.

"It is a multi-year contract and the (ordered) units could well run over 100. It is an open-ended contract," he said.

It was primarily for this reason that the exact figure for the contract could not be divulged, he said, and also because of competitive advantage as Denel still had to bid for the manufacturing of these parts like other global companies in the aerospace industry.

The first completed airframe sections would be shipped to Sweden later this month where they would be mated with other airframe sections and incorporated into a new fighter jet for the Swedish Air Force. Sampson said the deal had enabled Denel to send 30 multi-disciplinary engineers, mainly from a previously disadvantaged background, for training by Saab in Sweden.

BAE Systems' executive director in SA, Stuart McIntyre, said the company was committed to meeting its offset targets in SA.

"We are determined to make our full contribution to SA's economic growth and industrial development. By pursuing our strategy of forging close and lasting ties with the SA industry, we are able to create opportunities for additional work, and which deliver significant economic benefits to the country," he said.

Asked to respond to criticism that BAE Systems and Saab were exaggerating the impact of their offset programme, McIntyre said the company was involved in a "very sophisticated project" with rules being set by the defence and trade and industry departments.

"It is not for us to comment on views other parties might have, but we are delivering according to strict guidelines and oversight of those departments and cabinet," he said.

With acknowledgements to Xolani Xundu and Business Day.