Project Hoefyster: R10 billion+ for 238 infantry combat vehicles?

The Minister of Defence and Military Veterans, Nosiviwe Mapisa-Nqakula, must not be allowed to cover up the cost of the 238 "Badger" infantry combat vehicles, being acquired for the South African National Defence Force (SANDF), under "Project Hoefyster".

The Defence Review, which is supposed to determine the long-term acquisition priorities of the Defence Force, has not been completed and has not been tabled in Parliament.

Yet, earlier this year the Minster approved the production phase of "Project Hoefyster" for 238 "Badger" infantry combat vehicles, over a period of ten years, for the Defence Force.

The production phase of the project was approved following the development phase of the "Badger" infantry combat vehicle, which was completed in 2010 and cost R1.3 billion.

The "Badger" infantry combat vehicles will be produced by Denel, working in conjunction with a Finnish company, Patria, and will replace the 30-year old Ratel infantry combat vehicles, currently used by the Defence Force.

More than 2 000 jobs are expected to be created as a result of "Project Hoefyster".

Riaz Saloojee, Denel's group chief executive officer, described the project as "the most significant defence contract signed with a South African company in the last 10 years".

It is, therefore, a huge concern that: 

• A major defence acquisition project was approved before the completion of the Defence Review; and 
• That the total cost of the defence acquisition project has never been disclosed to Parliament.

In fact, at a Portfolio Committee on Defence and Military Veterans meeting, on 06 November 2013, the Defence Department refused point-blank to reply to any questions about the cost of "Project Hoefyster".

We do not know the total cost of the 238 "Badger" infantry combat vehicles being acquired under "Project Hoefyster".

However, the estimated cost of the development and production of the 238 "Badger" infantry combat vehicles could be more than R10 billion.*

This means that each "Badger" infantry combat vehicle could cost approximately R42.5 million.

In the end, the R10 billion estimated cost of the 238 "Badger" infantry combat vehicles is probably a conservative estimate. 

Whatever the case, we have to ask how it is that a major defence acquisition contract, such as "Project Hoefyster", was approved without the knowledge of Parliament. 

I have already submitted parliamentary questions probing the cost of "Project Hoefyster". However, I will submit further parliamentary questions probing: 

Why the production phase of "Project Hoefyster" was approved before the Defence Review was completed; 

Why the acquisition of "Badger" infantry combat vehicles was prioritized when there are other competing requirements, which would appear to be more urgent, such as the acquisition of transport aircraft; 

How the figure of 2 000 jobs, which are expected to be generated as a result of "Project Hoefyster", was derived; and 

Most importantly the total life cycle cost, and a breakdown of the life cycle cost, of "Project Hoefyster".

* The figures used above were derived as follows:

Assuming the production cost of 264 "Badger" infantry combat vehicles was R8 400 000 000 in 2011 as set out in Denel's 2012 annual report;

Adjusting the production cost of the 264 "Badger" infantry combat vehicles for inflation, using official inflation rates, to R9 767 197 440;

Calculating the unit cost of a "Badger" infantry fighting vehicle, by dividing R 9 767 197 440 by 264, to arrive at a unit cost of R 36 996 960;

Calculating the cost of 238 "Badger" infantry combat vehicles, by multiplying the unit cost of R36 996 960 by 238, to arrive at total estimated production cost of R 8 805 276 480;

Adding the development cost of R1 300 000 000 to the estimated production cost of R 8 805 276 480 to arrive at a total estimated contract cost of R10 105 276 480; and finally

Calculating the unit cost of a "Badger" infantry combat vehicle by dividing R10 105 276 480 by 238, to arrive at an estimated unit cost of R 42 459 144.

Statement issued by David Maynier MP, DA Shadow Minister of Defence & Military Veterans, November 28 2013

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