Parliament’s Portfolio Committee on Defence and Military Veterans has warned that cost savings forced on the country’s defence acquisition and research and development agency Armscor could endanger key projects. The agency’s budget has been cut by R120-million.

The committee praised Armscor for the way in which it has reorganised its budget to absorb the budget cut. “However, the impact on acquisition activities is of particular concern since Armscor runs the risk of having to terminate key projects such as Project Biro and Project Hotel, on which Armscor had already spent massive amounts,” highlighted the committee in a media release. “The committee also heard that the risk associated with the termination of these contracts could also attract penalty payments.”

Project Biro is concerned with the acquisition of three inshore patrol vessels (IPVs) for the South African Navy (SAN). The IPVs are currently being built at Damen Shipyards Cape Town. The contract is reportedly worth nearly R2.5-billion, of which more than R1.4-billion had been spent by May this year. Each IPV will be 62 m in length, have a range of 4 000 nautical miles and a maximum speed of 26.5 knots.

Project Hotel is also for the SAN. It concerns the construction of a new 95-m-long hydrographic survey ship, plus associated survey motor boats and an infrastructure upgrade at the SAN Hydrographic Office. It is being built by Sandock Austral Shipyard in Durban and the contract has been valued by Armscor at some R2.74-billion, of which R1.4-billion had been paid by May.  

On another matter, Cape Town’s Castle of Good Hope, the committee welcomed the relief funding of R3-million provided by the Department of Defence to the historical (17th century) fortification’s governing body, the Castle Control Board. This was to assist the board in dealing with the financial stress it has suffered because of the collapse of the tourist industry, owing to the Covid-19 pandemic. 

The committee was also briefed on the the R137-million cut in the Department of Military Veterans (DMV) budget. This included a R60-million reduction in the education support budget for military veterans and their beneficiaries. The DMV told the committee that it hoped to reduce the effect of this latter cut by approaching the National Student Financial Aid Scheme about funding for students, and provincial education departments regarding financial assistance to military veterans.