GDR 99 - European Issues

All Systems Go
in South Africa


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• Slogan or Solution? • AFV Firms in Troubled Times • High Technology: Marconi • The UK's Role on the Ocean • All Systems Go in South Africa • South Africa Backs Europe
Top: The MEKO A 200 Frigate from B+V incorporates an advanced propulsion system and improved stealth characteristics

Hubert Faltus, naval adviser to the German Submarine Consortium, outlines the background to South Africa's naval defence procurement programme.

Following South Africa's first democratic election in April 1994, that resulted in the installation of the Government of National Unity under President Nelson Mandela, the Department of Defence (DoD) embarked on a series of strategy formulation exercises that culminated in the approval by parliament of a defence white paper (1996) and a defence review (1997). The latter established the design of the South African National Defence Force (SANDF) and paved the way for the Ministry of Defence (MoD, including the state military procurement agency, Armscor) to embark on the acquisition of the equipment needed to replace an obsolete and ageing inventory.

Formal requests for offer (RFO) were issued on a government-to-government basis in February 1998 for several items, in particular four patrol corvettes and four submarines for the South African Navy (SAN). The South African Air Force's maritime helicopters are an integral part of the corvette system.

RFOs for corvettes were issued to Germany, France, the UK and Spain, and to Germany, France, Italy and Sweden for submarines. It was made clear that the selection of the winners would be based on a number of vital criteria including through-life support considerations, financial conditions and the offset or countertrade to which each country or company was prepared to commit itself (a minimum of 100 per cent of the contract value was required). The MoD used the following terminology in specifying its offset requirements: industrial participation (IP); all offset defence IP (DIP); offset involving the South African defence industry, non-defence IP (NIP); all other offset. DIP was then divided into direct DIP that saw the involvement of the South African defence industry in the actual programme under consideration, e.g. in manufacture, tests and trials, or future support; and indirect DIP that covered all other offset involving the South African defence industry.

German naval tenderers


The Class 209 / Type 1400 Mod submarine perfectly fits the tender requirement of a"a mature design that has been qualified operationally"

Germany responded to the RFOs through the following industrial groupings. For the submarines, the German Submarine Consortium (GSC) comprising: Howaldtswerke-Deutsche Werft AG (HDW), Thyssen Nordseewerke GmbH (TNSW) and Ferrostaal AG; and for the corvettes, the German Frigate Consortium (GFC) comprising: Blohm & Voss GmbH (B+V), Howaldtswerke-Deutsche Werft AG and Thyssen Rheinstahl Technik GmbH (TRT).

The completed offers, including all IP and financial proposals, were delivered to the MoD in May 1998. This was followed by a period of intensive evaluation by the South African government departments involved, in particular the MoD and the Department of Trade and Industry (DTI), the latter being responsible for the NIP programme. The SA government's decision was announced on 18 November 1998 and the preferred suppliers were both German, with GSC selected for the submarines and GFC for the patrol corvettes. For the corvettes South Africa selected a new version of the MEKO, the MEKO A 200 frigate from B+V, incorporating an advanced propulsion system and stealth characteristics. The combat system is still to be finalised but will certainly incorporate many South African-designed and manufactured systems.

For the submarine contract, an updated Class 209 design, designated Type 1400 Mod, was selected. This is the latest model in a long and successful series and incorporates improvements resulting from the operational and logistical experience of user navies as well as the continuous introduction of modern technology. It completely satisfies the RFO requirements for a 'mature design that has been qualified operationally'.

The class 209, Type 1400 Mod not only fulfils the SAN's requirements but has the growth potential for future upgrades, such as an air independent propulsion (AIP) fuel cell system that could be incorporated as a plug-in hull section. Such a system would enhance the submarine's operational capability dramatically, allowing for nearly three weeks' continuous diving operation.

Industrial participation

The selection of the two German consortia as preferred suppliers sees the beginning of the contractual negotiations. In the area of DIP (direct and indirect), the process will be greatly supported by the strength of the South African defence industry. For direct DIP, both consortia will be looking to include as much local content as possible in both the licence manufacture and the supply of equipment of South African origin. The aim will be not only to satisfy the DIP requirements but also to contribute to ensuring long-term in-country support for the corvettes and submarines.

Indirect DIP will be facilitated by the trading house members of each consortium (Ferrostaal and TRT). These companies have more than 100 offices or subsidiaries around the world. They are able to promote the sale of South African defence industry products and systems to foreign defence forces, and to facilitate commercial arrangements. The recent isolation of South Africa's defence industry makes this a valuable service.

NIP is a particular strength of the GSC and GFC offers, especially in the field of investment projects. Ferrostaal has an impressive record in the management of turnkey projects such as the establishment of steel and chemical plants and transport systems, many of which are in Africa. Various smaller NIP proposals are also likely, involving the export of South African products as well as investments. All IP is intended to create sustainable employment (thousands of jobs for the GSC and GFC proposals combined) and benefit the South African economy for decades to come.

German-South African alliance
South Africa's aim was not only to procure new military hardware, or even simply to reap the economic benefit of the stringent offset requirements, but to create strategic alliances with selected industrialised countries. In the case of Germany the selection of GSC and GFC to supply naval vessels is a further step in the process. Already a number of high level agreements in both the military and non-military sphere are in place.

Germany is South Africa's largest trading partner and a major investor through household names such as Siemens, Daimler-Chrysler, BMW, Volkswagen and AEG. Germany is the largest provider of technical and financial aid to South Africa either directly or through the European Union and is an obvious choice as a strategic alliance partner for South Africa.