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CONTENT. Background to Armscor 2. Armscor’s Acqu i sition and Procurement process 3. The New Armscor Act 4 . Service Level Agreement 5 . Government Export Support 6. Defence Industrial Participation 7 . Technology Exploitation Centre. ARMSCOR BACKGROUND.

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  1. CONTENT • Background to Armscor • 2. Armscor’s Acquisition and Procurement process • 3. The New Armscor Act • 4. Service Level Agreement • 5. Government Export Support • 6. Defence Industrial Participation • 7. Technology Exploitation Centre

  2. ARMSCOR BACKGROUND • Before 1992 Armscor had wide ranging powers to manufacture, sell, buy, import, export and to exercise control on the Defence Industry. • After imposition of weapons embargo by UN (1977), Armscor focused on establishing a local defence industry. • In 1992 – Armscor’s manufacturing capabilities were grouped under a new industrial group (Denel) and NCACC was formed.

  3. ARMSCOR BACKGROUND • Acquisition organization of the Department of Defence (DoD) • Test and Evaluation facilities for defence products and systems. • Defence Quality Organization. • Defence Industrial Participation for SA. • Manage the disposal of excess, forfeited, redundant and surplus defence material. • Commercial exploitation of Defence technologies.

  4. NORMAL ACQUISITION • In addition to SDP acquisition, Armscor places contracts every year on the local defence related industry for: • - development, • - manufacturing, • - upgrading, • - maintenance and • - modernization of military equipment. • This provides opportunities for SMME’s and other BEE companies.

  5. THE NEW ARMSCOR ACT • REASONS FOR REDRAFTIN THE CURRENT ACT • Current Act is 32 years old and inconsistent with new SA • Manufacturing capability of Armscor now move to Denel • Export control now done by NCACC • PROGRESS TO DATE • Workgroup formed represented by all stake holders • All relevant document consulted (e.g constitution, other acts and government policies and practices, etc). • Guidelines to the act completed and approved by both the Defence Staff Council and Armscor Board of Directors. • Bill complete waiting to be approved

  6. SERVICE LEVEL AGREEMENT • NEED FOR A SERVICE LEVEL AGREEMENT • PFMA requirement. • To be used by DOD to measure Armscor’s performance. • To be used by DOD to compare transfer payment to Armscor’s output. • To regulate relationship between Armscor and DOD. • CURRENT STATUS OF SLA: • Complete and waiting to be sign in the next few days by Armscor CEO and Secretary for Defence.

  7. GOVERNMENT EXPORT SUPPORT • WHY IS IT REQUIRED • Sale of arms and arms control are closely linked to government foreign policy. • Currently no government support to Defence Related Industry for exports. • South Africa as an arms manufacturing country in Africa. • The size of South Africa compared to other countries which supply armaments. • Capabilities of the Defence Related Industry.

  8. GOVERNMENT EXPORT SUPPORT • WHAT IN BEING DONE • The Defence Export Support Board (DESB) has been formed and will be modeled along the lines of DESO of the UK. • Members are: • Def. Sec. (Chairman), • Armscor CEO (Co-Chairman), • Chairman of AMD, • CEO’s of the big six namely; Denel, ADS, Grintek, Reunert, Vickers OMC and ATE/Aerosud, • Representatives from other government department; DFA, DPE, DTI and others.

  9. INDUSTRIAL PARTICIPATION • Industrial Participation / Counter-trade is a reciprocal trade phenomena and consists of various elements • In the RSA Industrial Participation (IP) consists of two components: • - Defence Industrial Participation (DIP): which is Industrial Participation applied solely to the benefit of the Defence Industry. • - National Industrial Participation (NIP): which is Industrial Participation for the benefit of the non-defence industry (i.e. the rest of SA industry)

  10. DEFENCE INDUSTRIAL PARTICIPATION • Direct DIP • Activities in which the defence industry participates in aspects of the equipment being acquired. For example: • - Design and development • - Manufacturing and/or Production • - Test and/or Evaluation • - Product/Systems integration • - Certification • - Commissioning

  11. DEFENCE INDUSTRIAL PARTICIPATION • Indirect DIP • Business activities in which the defence industry benefits as a result of the acquisition. For example: • - Exports of components of the equipment being acquired. • - Exports of other defence equipment. • - Partnership and Joint Ventures. • - Business acquisitions. • - Collaboration in projects.

  12. DEFENCE INDUSTRIAL PARTICIPATION • Technology Transfer • The defence industry acquire new technology and/or skills base. Examples are: • - Direct training and skills transfer • - Acquisition of product datapacks • - Technical assistance • - Publications and manuals • - Acquisition of licence agreements

  13. SA INDUSTRIAL PARTICIPATION POLICY • Defence acquisitions • All foreign acquisitions or procurement of defence meteriel to the value of USD 10 million and above are subject to IP. • Requirement is 100% IP or more. • Normally split 50/50 or 70/30 between DIP and NIP. • Other government procurement • Form 1 Sept 1996 all other Government foreign procurements of USD 10 million or more require an IP commitment of at least 30%(e.g SAA/Boeing)

  14. ARMSCOR’S DIP TO DATE • Defence Industrial Participation • Armscor’s DIP programme is in existence since 1988 and boast with an exemplary discharge record. • To date the result are as follows: • Contract No. Passed Credits • Active DIP: 13 R4 700 million • Pro-Active DIP: 9 R265 million • TOTALS 22 R4 965 million • The DTI-IP policy is only in existence since 1997.

  15. NATIONAL INDUSTRIAL PARTICIPATION • National Industrial Participation (NIP) • Projects to the benefit of the non-defence industry. Examples in the SDP are investment project totalling +/- R24 billion in the following areas: • - Motor components. • - Gold chain products. • - Stainless steel plan (mainly downstream products) • - Power equipment.

  16. OBJECTIVES OF IP IN SA • Stimulate economic growth. • Secure foreign investments. • Generate additional exports. • Secure technology transfer. • Foster strategic international partnerships. • Open global markets for SA companies. • Retain technological skills base for the defence industry. • Contribute to job creation. • Foster Black Economic Empowerment development.

  17. SDP BENEFITS TO INDUSTRY • 1. Corvettes (4x Meko A200) • - Steering gear equipment • - Gearboxes • - Surface-to-air missile systems • - 35mm gun system • - Radar and optronic equipment • - Communication subsystems • - Electronic warfare equipment

  18. SDP BENEFITS TO INDUSTRY • 2. Light Utility Helicopters (30x Agusta A109) • - Manufacturing licences for the A109 and A119 • - Skills transfer and training • - Avionics and tooling • 3. Lead in Fighter Trainer (24x Hawk) • - Health usage and monitoring system (HUMS) • - Electrical connectors • - Aircraft components

  19. SDP BENEFITS TO INDUSTRY • 4. Advanced Light Fighter Aircraft ( 9x 19 Bae/SAAB Gripen) • - Communication and electronic warfare equipment • - NATO Standard Pylons • - Power supply units • - Rocket artillery and ammunition

  20. SDP BENEFITS TO INDUSTRY • 5. General • - Initial total DIP commitment: R14,6 billion (December 1999 @ R6,5/USD). • - Estimated total DIP commitment: R18,5 billion (April 2001 @ R8,20/USD) • - Total IP commitment: R104 billion (USD16 billion) now estimated at R131,2 billion.

  21. STRATEGIC DEFENCE PACKAGE DIP DISCHARGE:1 APRIL 2000 TO 30 JUNE 2001(EXCHANGE RATE AS ON 25 JUNE 2001)

  22. TECHNOLOGY EXPLOITATION CENTRE • General • Armscor and the SANDF have a bank of defence technologies developed over the years. • Two years ago Armscor, in consultation with the SANDF, started commercialising some of these technologies. • Armscor signed an MOU with DERA/DDA to tap into their technology bank for technology exploitation. • AIM • To create wealth for South Africans through companies or commercial product. • To create employment. • To render technical assistance to SA companies.

  23. PROTABLE X-RAY MACHINE • IDEAL FOR: • Disaster aid • Rural areas • Battlefield hospitals • Emergency situations • Sports injuries

  24. TORNADO LENS SPECIFICATION: Observes and capture video images over long distances (80m - 20km) Has night observation capability Total weight of 12kg excluding batteries and tri-pot. Powered by 24V DC batteries with operational time of 10 hrs.

  25. CONTAINERISED MEDICAL UNIT • Insulated containers, ISO design. • Air-conditioned surgical theatre. • Integrated power & communication system • Automatic stand-by power facility • Sterilization facility & steam generator • 1000 liter water tank reservoir • Separate shower and double sink • X-ray facility

  26. RUN-FLAT TYRE INSERT SPECIFICATION: Easy to replace with a split rim arrangement without need for specialized tooling. Withstands a maximum loading of 4,5 tons. Temperature resistance.

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