This was a deviation from defence procurement agency Armscor's procedure of calling for tenders with a budget already in place.
Taking the stand as the first Armscor witness‚ acting acquisition general manager Dawie Griesel said the special defence package programme (SDPP) was different because Armscor had to negotiate the tender and assess the offset programme offered by the contenders before a budget had been allocated.
This meant that there was a separate process looking for ways and means of funding the arms deal which was undertaken by the Treasury in consultation with cabinet committee. Normally‚ Armscor acquisitions are approved by the Department of Finance with a budget already allocated to ensure the agency works within allocated funds.
Griesel said by the time Armscor concluded the deal‚ the agency had been given a budget estimate as Treasury was still considering how to fund the deal.
"A ministerial directive had initiated the SDPP which involved government-to-government negotiations for purchasing of large equipment (frigates‚ submarines and fighter jets). The nature of the project (arms deal) lumped together several strategic procurement projects that would have otherwise been addressed separately and systematically by Armscor‚" he said.
Pressed by commissioners as to why there was a deviation on Armscor's procedures‚ Griesel said most of the targeted products for SDPP were hybrids. He said the design and development of the equipment had not progressed sufficiently to the development stage. These were concepts at a design stage and had not yet reached manufacturing stage.
Griesel said Armscor had extended invitations for information from at least nine countries of which seven responded.
"There were a total of 37 offers on various aspects of the equipment that were to be procured. In the end 23 products offered by eight countries were shortlisted and tested‚ which led to a further round of best-and-final offers from bidding companies based on the functionality score by the military‚ best value for money and possibly offset programmes to reduce the costs of repairs and service at the later stage," Griesel said.
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