Denel wins R8bn Armscor order

18 May 2007

State-owned defence company Denel has won an R8-billion contract from Armscor to develop a new generation infantry combat vehicle for the South African Army.

The contract, awarded to Denel subsidiary Denel Land Systems is aimed at replacing the army’s fleet of Ratel infantry combat vehicles (ICV), which have been in service for about 30 years.

Addressing the media in Parliament, in Cape Town, this week, Denel chief executive, Shaun Liebenberg, said the contract for about 270 infantry combat vehicles was three years in the making and signified “a tremendous boos to the local industry and the South African economy in general”.

The tender was open internationally but ultimately Denel was the only one that bid for it. The contract, code-named Project Hoefyster, is arguably the largest contract Denel has landed in its 16-year history, he said.

Denel is the prime contractor in the programme with South African companies delivering more than 70% of the total value of the contract, and companies abroad delivering the remainder.

Armscor will be placing phased orders on Denel Land Systems over a 10-year period as milestones are achieved towards final delivery to the Army of five variants of the ICV system, namely Command, Mortar, Missile, Section and Fire Support vehicles.

The new infantry combat vehicle is being based on a Finnish Patria platform and will be build locally under license, with a turret designed by Denel Land Systems at its core.

According to Denel Land Systems, they are not off-the-shelf items, and the future command variant of the vehicle will be equipped with intricate network communications and battlefield awareness systems, while others will carry a variety of weapons systems.

Liebenberg explained that the first phase would be the development phase and is to run over a three-year period. This will see 18% of the contract completed.

It would be six to seven years before the first vehicle would be off the production line, Liebenberg said.

The light infantry vehicle, in its complete state, will be able to hold between five to 11 soldiers.

Denel as main contractor would involve numerous South African defence companies and subcontractors, like BAE Systems’ South African subsidiary Land Systems OMC, as well as small, medium and micro enterprises, and black economic empowerment companies.

All of these companies stand to have guaranteed business for the next 10 years, some with follow-on support work after delivery with the vehicles set to have a life span of about 25 years.

“The awarding of this contract is a clear example of very high level alignment to meet South Africa’s defence needs,” Liebenberg said.

“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.”

Source: BuaNews