Small, medium-sized and microenterprises (SMMEs) have been urged to provide inputs for the development of the Defence Industry Sectoral Charter, which will seek, among other things, to advance black economic empowerment in the local defence industry. The call was made by Department of Defence (DoD) industry governance director Trevor Mketi at the recent Armscor Supplier Open Day in Centurion, south of Pretoria. The Defence Sectoral Charter, which has been mandated by the Minister of Defence and Military Veterans, is currently being drawn up. “A steering committee with inclusive membership has been established to drive the devel- opment of the charter,” he highlighted.

Public submissions were welcome. “Come and make your contribution to the steering committee.” He cautioned businesspeople, if they did not make submissions, not to complain later that they had not been consulted. In terms of the charter, military veterans would be a specially designated group within the defence sector.

He also urged SMMEs to join the South African Aerospace, Maritime and Defence Industries Association (AMD). “A lot of people don’t understand why they should be AMD members. But it is important for us. (It makes it easy for the DoD and other government departments to interact with the defence industry.) So I plead with you to join the AMD.”

Mketi further warned SMMEs about errors they can make when bidding for defence contracts. “Sometimes, small companies shoot themselves in the foot.” For example, they submit bids but forget to include the tax clearance certificate. Without this, their bids won’t even be considered.

Defence acquisition, disposals and research and development agency Armscor’s acquisitions GM, Johannes Sipho Mkwanazi, highlighted that his organisation also procured less complex products and systems. These were especially suitable for SMMEs and included such things as tents, clothing and cooking equipment. Other potential areas of work included maintenance, repair and the supply of spare parts. SMMEs can become suppliers to Armscor in three main ways: as a main contractor in less complex and smaller programmes, as a subcontractor and as a partner in a joint venture.

Overall, Armscor’s acquisition/procure- ment activities embraced complex systems, subsystems, less complex areas and product support. It oversaw the whole life cycle of every acquisition, from start to disposal. The agency applied “mandatory and criti- cal criteria. . . There are certain stringent requirements, for we are a defence indus- try,” he stressed. Companies must register and undergo vetting, because defence pro- grammes are often classified. SMMEs often fail in tendering for defence programmes because they do not meet critical criteria, or because they make incomplete submis- sions, or because of the complexity of the systems sought or because they cannot meet Armscor’s special requirements (such as military standards, packaging, bank guarantees and financing).

In contracting, the agency follows what it describes as a “formal and robust risk- reduction process”. Usually, it employs an open tender/com- petitive bidding approach. There are, however, three important exceptions to this: where the programme involves strategic capabilities; where the contract is a follow-on to previous contracts (the first of which may have been awarded on a competitive basis) – because of budget constraints, the South African National Defence Force may have to acquire a system in a series of batches or tranches – and certain contracts involving major original-equipment manufacturers.

Armscor has an established contractor selection process. This starts with the appointment of an evaluation panel composed of experts in different relevant areas, such as technical and financial, among others. Offers are first examined, in what is called the Qualification Stage, to see if they meet with the prescribed qualifying criteria; those that do not are eliminated; those that do go through to a second round designated the Evaluation Stage. Here, they are evaluated in line with the requirements of the 2011 Preferential Procurement Regulations and a winner in selected. A full audit trail for the entire process is maintained.