SA pays twice as much as Europeans

South Africa's replacement for its 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 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 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.

Why was the Ratel fleet not simply upgraded at a fraction of the cost, estimated at R1m apiece instead of R30m apiece for the Finnish Patria Badger?

A retired high-ranking officer in the industry said there would only be a limited role in future for upgraded Ratels. The six-wheelers were not true mechanised infantry which are normally "tracked vehicles that can keep up with tanks".

Perhaps, Engelbrecht suggested, the deal was more about salvaging financially troubled state arms manufacturer 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 an entirely local product. "The tail is wagging the dog; government is overly eager to show how it can attract foreign direct investment at the expense of the actual needs of the army."

In May, Public Enterprises Minister Alec Erwin announced the awarding of the contract to a consortium lead 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 30-40 armoured hulls will be built in Finland by Patria, and the remainder by Benoni-based BAE Land Systems OMC (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 the decision to purchase 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 R1bn contract to build 600 armoured vehicles for the United States Marine Corps underlined, Engelbrecht stress-ed, 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, something they were hopeless at when left to their own devices."

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 completely incompatible in-fantry combat vehicles".

But his main gripe is the price: the Finns bought the Badgers for, $2.03m a piece but South Africa bought them for $4.32m each, double what the Europeans paid.

With acknowledgement to Michael Schmidt and Cape Argus.