State arms manufacturer Denel is involved in a bitter spat with its acquisitions counterpart, Armscor, over whether the latter can also sell arms.

The fight has prompted Deputy Defence Minister Mluleki George to intervene - he will host a meeting between the feuding sides in the next week or two.

Denel chief executive officer Victor Moche on Tuesday accused Armscor of undermining his company, charging that Armscor was selling ammunition, small arms and aircraft and thereby providing unfair local competition.

Moche told parliament's portfolio committee on defence that Armscor's actions meant that "government is competing against its own industries".

Moche said that as far as he understood government policy, Denel was the state-owned enterprise responsible for manufacturing and selling arms, while Armscor was meant to purchase arms on behalf of the South African National Defence Force.

"Armscor should be the acquisitions arm of the SANDF, whilst Denel is the marketing sales and marketing arm of the state in the defence industry. That clarity needs to be anchored firmly," Moche told the committee.

But Armscor Chief Executive Sipho Thomo bluntly dismissed Moche's claims.

"Denel is missing the point completely," said Thomo.

Denel manufactured new arms, while Armscor was disposing of old military hardware which the SANDF was not using anymore "as a result of the equipment being too old, or of them having acquired new ones, or as a result of the technology changing".

"We are getting rid of it on behalf of the SANDF," he insisted.

"We don't see much good coming out of that kind of unfair competition. It confuses the market because you hit the market with two prices," Moche said.

In an interview with Independent Newspapers later, Moche said the roles of Armscor and Denel had been confused and it was up to the government to rectify the situation promptly.

With acknowledgements to Jeremy Michaels and the Cape Argus.