Draft versions of the joint report on the arms deal come down hard on two international companies, British arms manufacturer Bae Systems and Swedish company Saab.

The "overall conclusion" of the draft report states: "There were fundamental flaws in the selection of BAe/Saab as the preferred bidder in the LIFT (lead-in fighter trainer) and ALFA (advanced light fighter aircraft) programme".

The section on the LIFT and ALFA was in draft form the most intensive of the chapters of the arms-deal report, amounting to about 150 pages. In the final version of the report this was cut down to about 50 pages.

Most worrying for government and the companies concerned is the allegation that "during the investigation it became apparent that preference was given to BAe/Saab by making changes to the value system midway through the process".

The final version of the report comes to the opposite conclusion, justifying the inclusion of a "non-costed option", and resulting in the purchase of the most expensive aircraft of those selected, saying it was the cabinet's prerogative to take the final decision. "Although unusual in terms of normal procurement practice, this decision was neither unlawful nor irregular ", the final report states.

The draft version includes several potentially embarrassing comments on the companies involved, including the comment that the BAe/Saab industrial offset programme was "of very poor quality and was aimed at the absolute minimum that they could get away with".

BAe Systems spokesman Linden Birns denied his company was given any undue advantage in the process.

He said it was untrue that BAe was not co-operating with the offset process. The company had a whole office in SA devoted to the effort. "We are committed to delivering $8,6bn in economic to SA. We are ahead of our milestones," he said

With acknowledgements to Tim Cohen and the Business Day.