South Africa’s defence acquisition agency, Armscor, (which also undertakes research and development – R&D – and disposes of surplus military equipment) achieved, during the 2013/14 financial year, its best financial performance regarding acquisition projects in five years. This was revealed when the agency recently (October 16) presented its 2013/14 annual report to Parliament’s Portfolio Committee on Defence and Military Veterans. Armscor’s income statement revealed a R103.3-million surplus.

The auditor-general gave Armscor an unqualified audit for the 2013/14 financial year. Back in March, the auditor-general had presented the agency with an award for its clean audit. “[I]n delivering on its mandate, Armscor continues to adhere to accepted principles of corporate governance and lawfulness,” affirmed agency CEO Sipho Mkwanazi.

Further, all acquisition and R&D objectives for the last financial year were exceeded. “The ongoing engagement between Armscor and the Department of Defence with regard to delivery on acquisition projects, and as as agreed in the Service Level Agreement, had yielded positive results,” stated the agency in a press release.

Mkwanazi expressed pride that the agency had retained its Level 3 broad-based black economic- empowerment status. However, he cautioned that legislative changes meant that Armscor would have to make greater efforts to better the current situation.

On the other hand, the agency was constrained by inadequate financing, including for the Simon’s Town dockyard. This was the most serious issue facing Armscor. “We continue to tackle the challenges head-on by transforming Armscor into a world-class organisation that focuses on excellent client service through the highest standards of quality, efficiency and effectiveness,” he asserted.

Despite its problems, the agency was “applauded by the Portfolio Committee for having applied stringent measures to its finances”, it said in its release. “The Portfolio Committee welcomed the overall performance results of [Armscor] amid the challenges it was facing and pledged its support to the new board in its role of guiding and supporting Armscor.” The new board took over in May and has since been active in discussions with various stakeholders, such as its employees, the Department of Defence, the South African defence industry, the Portfolio Committee and the Department of Trade and Industry. “The input from these engagements will no doubt form the basis for the corporation’s strategy being developed by the executive,” Armscor pointed out.

Armscor – its full, original, name, the Armaments Corporation of South Africa, is now very rarely used – has four main functions: acquisition, R&D, the dockyard and support functions. Acquisition is subdivided into technology acquisition (contracting for and developing technologies), capital equipment acquisition, systems support acquisition (ensuring support for Armscor’s ‘clients’ ’ operating systems already acquired), procurement (acquisition of commercial or military off-the-shelf equipment), plus the disposal of surplus equipment (under the Armscor Defence Asset Management Centre) and Defence Industry Support (to assist the local defence industry). Armscor’s role in overseeing defence industrial participation (offsets) also falls under the aegis of acquisition.

Armscor’s R&D activities embrace nine different units. These are Armour Development, the Defence Decision Support Institute, Ergotech (ergonomics technologies), Flamengro (fluid and mechanical engineering group – focused on fluid-flow, structural integrity and signal processing engineering services), Hazmat Protective Systems (respirators and associated systems), the Institute for Maritime Technology and Protechnik Laboratories (chemical and biological defence), in addition to the Gerotek vehicle test complex and the Alkantpan weapons test range. Armscor regards these R&D activities as strategically necessary but not commercially viable.

The country’s naval dockyard, at Simon’s Town (not to be confused with the colocated Simon’s Town naval base) is managed and operated by Armscor. The dockyard is responsible for the third-line maintenance and refitting of the South African Navy’s vessels and some shore facilities.

Support functions comprise the Finance and Infrastructure Department, the Human Resources Department and the Quality Department (quality management, quality engineering, ‘shared technologies’ and safety, health and the environment). It also includes Defence Support, which covers everything from registering military vehicles to operate on public roads to arranging for South African National Defence Force personnel and equipment to participate at international exhibitions in support of the defence industry.