Publication: The Star Issued: Date: 2007-08-11 Reporter: Michael Schmidt

Battle Lines Drawn As ...

 

Publication 

The Star
Date

2007-08-11

Reporter

 Michael Schmidt

Web Link

www.thestar.co.za

  

SA forks out twice what Europeans paid for the Badger

South Africa's replacement for its world-renowned *1 Ratel armoured infantry combat vehicle is twice as expensive as the same vehicle bought by the Europeans, costing taxpayers R30-million apiece - or a grand total of R8,4-billion. This is more than it cost the country over 23 years for the ill-fated Rooivalk attack helicopter.

That's according to defence analyst Leon Engelbrecht in a paper entitled Taking a Look at Hoefyster - the name of the project in which the Ratel (Afrikaans for honey badger) is now replaced by the Finnish Patria Badger.

Engelbrecht questioned why the contract was awarded to a foreign company when South Africa's leading expertise in the mine-protected-vehicle field is unchallenged worldwide, saying it was "like shipping coal to Newcastle".

Why was the Ratel fleet not simply upgraded at a fraction of the cost - estimated at R1-million apiece instead of R30-million apiece for the Badger?

But a retired high-ranking officer in the industry said there would be only a limited role for upgraded Ratels, such as transports for signallers or army engineers. The six-wheelers were not true mechanised infantry, normally "tracked vehicles that can keep up with tanks *2 ".

The Rooivalk helicopter, which has consistently failed to sell abroad - most recently to Turkey earlier this year- cost an estimated R8-billion since 1984, whereas the 264 Badgers on order will cost R8,4-billion.

Perhaps, Engelbrecht suggested, the deal was more about salvaging financially troubled state arms manufacturer Denel - a fortnight ago its financial results hailed Hoefyster as the biggest contract ever for Denel - than with re-equipping the SANDF's mechanised infantry, armour and artillery formations.

Engelbrecht said the government could have better shown its trust in local industry by buying a local product. "The tail is wagging the dog; the government is over-eager to show how it can attract foreign direct investment at the expense of the actual needs of the army."

Brigadier-General Chris Gildenhuys, chief of the SANDF's armour formation, which will acquire a version of the new vehicles fitted with Denel Dynamics' Ingwe anti- armour missile, disagreed, saying: "There is politics around this but I have driven the vehicle and we will be getting a good product."

Project Hoefyster was registered in 1997, and in May this year Public Enterprises Minister Alec Erwin announced the awarding of the contract to a consortium led by the European Aeronautic Defence and Space Company (EADS), which co-owns Patria with the Finnish government, to deliver 264 Badgers between about 2010 and 2020.

The first 30 to 40 armoured hulls will be built in Finland by Patria and the remainder by Benoni-based BAE Land Systems OMC. EADS will provide the Badgers' electronic warfare suites, Denel is the lead contractor, and local Land Mobility Technologies is the custom designer.

In February 2005, when all bids were due, only the EADS-led consortium tendered. Six South African companies who had been approached failed to bid because, said an industry insider, they were not prepared to carry the risk and expense of building prototypes.

So the EADS-led consortium was a shoo-in. But Engelbrecht said it appeared possible that the decision to buy a Finnish product was tied to the Finnish Navy's 2002 purchase of Denel's Umkhonto surface-to-air missile system: "The … acquisition may, of itself, be part of an offset."

The awarding on Thursday to OMC of a R1-billion contract to build 600 armoured vehicles for the United States Marine Corps underlined, Engelbrecht stressed, the continuing ability of South African armour manufacturers to produce sought-after world-class vehicles.

"Then there are the ongoing financial woes of Denel to consider and attempts by the Department of Public Enterprises to tie up Denel with foreign partners to stem the financial bloodletting and secure export markets for Denel."

Announcing the group's financial results, Denel CEO Shaun Liebenberg on July 25 posted a net loss of R549,1-million despite a R495-million rise in turnover - the latter attributed to "contracts like the Umkhonto".

Engelbrecht said the purchase of too few Badgers - there were 1 200 Ratels at the height of the fleet - meant "the mechanised infantry will be stuck with two totally incompatible infantry combat vehicles".

But his main gripe is the price: the Finns bought the Badger for $2,03-million apiece, the Poles for $2,26-million, and the Slovenes for $2,67-million, but SA bought them for $4,32-million each - double what the Europeans paid.

With acknowledgements to Michael Schmidt and The Star.


*1       The logic is simple :
*2      Nonsense, in the Southern Africa operational area, much of the terrain is very sandy sometimes or muddy, suitable for multi-wheeled fighting vehicles and non-ideal for main battle tanks (MTBs).

That's why the primary armoured fighting vehicle (AFV) of the SA Army is an 8x8 Rooikat. This can keep up with the tanks and has the same fire power (i.e. 90 mm to 120 mm main gun) as a tank. It just does not have the same protection as a tank. But this is not a real problem in the operational area of Southern Africa where high mobility, hit-and-run, fire-on-the move tactics are quite different from the steppes of Russia and Eastern Europe where the tactics are inclined to be massed formations of dug-in and slow manaveovring MBTs supported by swarms of attack helicopters.

In Europe, MTBs would usually be rushed right to the battlefront using massive wheeled transporters on tar roads or trains whereas in Southern Africa these transporters would only make it Grootfontein and then the armoured vehicles need to do the next 500 km to 1 000 km on their own through the bush, sand and mud.


See also :
"New ICVs Could Cost between R14 and R15 Million Each"
Sapa
ARMS-HOEFYSTER
Leon Engelbrecht
2005-07-28
http://www.armsdeal-vpo.co.za/articles08/icvs.html

 
The SA Army's new infantry combat vehicle could cost between R14 and R15 million each, defence industry sources say.

The high cost is the result of the advanced technology, including four computers, fitted to every vehicle, said Richard Young, one of the sources.

The Army needs 264 of the vehicles, meaning the minimum price for the fleet, if the sources are correct, would be about R3,9 billion.

Young, managing director of CCII Systems, said that price "excluded logistics, project management, risk management, financing, statutory charges, etc. These items could easily add another 30 to 40 percent to the contract price."

Platform
   -- Chassis: R500 000
   -- Engine: R1 000 000
   -- Gearbox: R500 000
   -- Axles, Wheels, etc: R500 000
   -- Drivetrain: R500 000
   -- Armour: R500 000
   -- Vetronics: R500 000
   -- Other: R500 000

   Sub-Total: 4 500 000

   Turret
   -- Gun: R1 000 000
   -- Gundrive: R1 000 000
   -- Mechanics: R500 000
   -- Armour: R500 000
   -- Computer hardware: R1 000 000
   -- Computer software: R2 000 000
   -- Displays: R500 000
   -- Communications: R500 000
   -- Vetronics: R500 000
   -- Other: R1 000 000

   Sub-Total 8 500 000

   -- Integration: R500 000
   -- Test, etc: R500 000

   -- Grand total: R14 000 000


"At present defence acquisition is based more on balderdash, enrichment and expediency." [Young said]


With logistics, project management, risk management, financing, statutory charges, plus exchange rate variation plus price escalation from 2005 to 2007, I think I was just about right on the nose.

Just as a comparison, the new US Marine Corps Expeditionary Fighting Vehicle (EFV) will cost about about US$17 million per vehicle (R120 million).

But this probably like comparing chalk with cheese.