Parliament’s Joint Standing Committee on Defence has revealed that the South African Army’s R9-billion Hoefyster (‘Horseshoe’) project, to acquire 264 Badger infantry fighting vehicles (IFVs) from Denel Land Systems (DLS), is now running three years and nine months late. The Badger is intended to replace the increasingly obsolete Ratel (‘Honey Badger’) IFV and deliveries of the new vehicle were meant to start last year and be concluded in 2023.
The committee reported that DLS was unable to meet its contractual obligations to Armscor (the Department of Defence’s acquisition agency). In a virtual briefing to the committee on May 28, the State-owned Denel group reported that DLS could not deliver Project Hoefyster at the agreed price and with the contracted technical specifications. The committee has called on the Defence and Military Veterans Minister to intervene in the matter.
“The unfortunate thing is that there seems to be a misalignment on progress status between Denel and Armscor,” said Standing Committee co-chairperson Cyril Xaba. “The committee has called on all the parties involved to converge and agree on where the project is, and what is the best way forward.”
The delays in the project had been accompanied by an escalation in its costs. This, too, was a cause for concern because the defence acquisition budget was shrinking.
A further problem was Denel’s lack of liquidity, which had contributed to the delays in the Badger programme. It also posed a significant risk to the entire defence industry. Denel had told the committee that, because of legacy debts, it had not paid invoices from its suppliers. As a result, these companies were not supporting the project.
“The committee raised concerns over the reputational damage that Denel has suffered as a result of the delay of Denel Land Systems to deliver on its contractual obligations, especially at a time when the State Owned Entities should reposition and rebrand themselves, and improve their technical capability to contribute towards job creation in South Africa,” it affirmed in its statement. It recognised that the group’s problems were historical and that it was implementing a turnaround plan. Nevertheless, the committee “called for a greater reflection on the plausibility of completion of the project, especially in the context of the huge investment that the Department of Defence, through Armscor, has made on the project”.