IT companies benefit from army deal

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 18 May 2007

ICT companies involved in the SA Army R8 billion infantry combat vehicle acquisition expect to earn up to R270 million - or 3% of the contract value - for their command-and-control, as well as communications contributions.

Public Enterprises minister Alec Erwin announced the deal in his budget vote speech, in Parliament, yesterday.

Denel CE Shaun Liebenberg says South African companies "will deliver more than 70% of the total value of the contract".

The contract will see Denel deliver 264 Patria AMV troop carriers to the SANDF over the next 10 years. The vehicle will come in five variants, including a command vehicle and an anti-tank missile variant. Both will have a higher IT content than the basic platform.

However, industry sources say the ICT component of "Project Hoefyster" has been delayed for about six months. The cause of the delay is reportedly a poorly-drafted tender specification for the command-and-control system that resulted in an inappropriate tender.

The specification has since been rewritten and a new tender is in progress, the sources say. The tendered solution is expected to be compatible with another SA Army ICT upgrade, dubbed "Project Legend".

One source, who spoke on condition of anonymity, questioned the choice of Denel as the prime contractor for the project, citing its inability in delivering on another project, this time for a ground-based air defence solution (GBADS).

Tremendous opportunities

That multi-vendor ICT-intensive project is, at last count, 54 months behind schedule. Denel admits that a "contract of this magnitude entails enormous project management skill and resources over many years", the source says.

As prime contractor, Denel will be required to manage a supply chain of scores of local subcontractors, including SMME and BEE companies, all of which stand to have guaranteed business for the next 10 years, some with follow-on support work after delivery.

The Denel Hoefyster proposal is based on a Finnish EADS-Patria platform with a turret designed by Denel Land Systems. The command variant, Denel says, "will be equipped with intricate network communications and battlefield awareness systems" that will allow for blue-force tracking and for vehicles to share data and exchange video.

"The awarding of this contract is a clear example of a very high-level alignment to meet SA's defence needs," says Liebenberg. "Our Department of Public Enterprises and the Department of Defence, along with Armscor and the SANDF, all co-operated admirably to bring us to this point," he adds.

"I foresee tremendous opportunities and further spin-offs to be realised through this contract, mainly for young technicians and engineering students who wish to make a career in the defence-related industry. This contract will contribute immensely to skills development and training, which are very much part of the Deputy President's Joint Initiative for Priority Skills Acquisition programme," Liebenberg concludes.