Presentation to the SA UN Procurement Summit Rakhee Ramgolam

Turnaround Executive

Market Linkage SessionArmscor

INTRODUCTION TO ARMSCOR

OVERVIEW OF ARMSCOR ARMSCOR SERVICE OFFERINGSOPPORTUNITY FOR INDUSTRY PARTICIPATION IN

ARMSCOR ACQUISITION/COLLABORATIONPROCURMENT INFORMATION

PURPOSE

INTRODUCTION TO ARMSCOR

• Statutory Corporation established by an act of Parliament to be the designated Acquisition Organization for the SA DOD

• Minister of Defence is the sole shareholder of the Corporation

• Governed and Controlled by a Board of Directors – reporting to the Minister of Defence – with dual responsibility: Accounting Authority of Armscor Defence Matériel Tender Board

INTRODUCTION TO ARMSCOR

STRUCTURE OF THE MINISTRY OF DEFENCE AND MILITARY VETERANS

Minister of Defence and Military Veterans

Armscor

Chairman of Armscor

Armscor Board of Directors

Armaments Corporation of South Africa

Secretary for Defence

Chief of the SANDF

Services and Divisions

Director-General

Divisions

DOD DMV

STRUCTURE OF THE MINISTRY OF DEFENCE & MILITARY VETERANS

ARMSCOR CORE BUSINESS FUNCTIONS

5

Acq

uisi

tion • Capital

acquisition• Development • Technology

development• Product

Support of existing systems

• Procurement of spares

• Disposal of Defence material

• Defence Industrial Participation

Res

earc

h &

Dev

elop

men

t • Armour Development• Defence Decision Support

Institute (Operational research, Decision support, Capability analysis, Product systems management)

• Ergotech (military ergonomics research and support)

• Protechnik (Chemical and biological defence research)

• Hazmat Protective Systems (Respiratory protection products)

• Flamengro (Computational mechanics modelling)

• Institute for Maritime Technology (Operational and decision support to SA Navy)

Doc

kyar

d • Strategic facility of the Navy

SUSTAINABILITY/COMMERCIALISATION

ACQUISITION DEFENCE MATERIAL EXPENDITURE

6

Defence Materiel Expenditure

AcquisitionR4.5bn

“100” projects

A few in production

phase

Ranges from high tech to low

tech

Ranges from a few items to thousands

MaintenanceR6.6bn

Normal maintenance

Expensive maintenance

(old equipment)

From aircraft to trucks

RESEARCH & DEVELOPMENT

Test & Evaluation Facilities

• Gerotek Vehicle Testing

• Paardefontein Antennae Testing

• Alkantpan Artillery Testing Range

Technology Management Analysis

& Innovation

• Electronic • Aerospace• Maritime• Landwards• Support• IP Management

Operational & Scientific Research

• Armour Development• Defence Decision

Support• Ergonomics• Hazmat Protective

Systems• Protechnik• Institute for Maritime

Technology (IMT)• Computational Fluid &

Dynamics

Capabilities

7

The total business portfolio for the R&D Department for 2015/2016 was R 457 m and the estimate for 2016/2017 is R 480m.

Armscor is mandated as the Acquisition agent of the SANDF. It may and does provide services to other government departments such as the SAPS. Armscor sources nearly all of the required goods from the SADI and Global suppliers

Traditionally Armscor contracted at a Systems level. This limited the participation of smaller business

Projects targeted for lower level contracting to allow for participation of SMMEs

INDUSTRY PARTICIPATION IN ARMSCOR ACQUISITION

Government Quality Assurance and Third-Party Quality Assurance Government QA and Third-party QA is where the procuring party

either a foreign government or a third-party (such as a company) where Armscor independents provides assurance of the goods or services procured

Armscor provides Government Quality assurance to the Netherlands, Germany, Holland, Spain;

And Third-party QA to SAPS and companies such as RDM and Thales. QA services lends further creditability to SADI products as it gives

clients assurance. Helps promote SADI product sales

INDUSTRY COLLABORATION WITH ARMSCOR

• Armscor and CSIR, on behalf of the DoD, is in process of developing an Africa Truck initiative which is a locally produced family of military vehicles which comply with SANDF and UN requirements specifically designed for African conditions. To be done in partnerships with industry and local and continental

• Armscor is in the process of leveraging its assets and is inviting business partnering proposals from private industry

• Armscor will support the sweating of SANDF/DOD assets by partnering with private industry

INDUSTRY COLLABORATION WITH ARMSCOR

Armscor as a conduit for SADI products to the UN

Armscor as a conduit for SADI products to the UN Armscor responded to a UN RFI for Uniforms. > 80% of the RFI could be serviced bySADI SMMEs. SMME would not be able to respond to the RFI on their own due to scope.Armscor as a strategic supplier to the UN:Consolidation of SADI products, especially SMME with addition value add such as QA,

Example: Armscor as a conduit for SADI products to the UN Armscor responded to a UN RFI for Uniforms. If Individual companies would respond to the RFI on their own, it

would result in a piece-meal response. Armscor as an intermediary combined supply base which resulted in

> 80% of the RFI capability provided by SADI SMMEs.

Armscor as intermediary: enable small suppliers to participate, otherwise excluded or limited chances of success due to the scale of supply required – Note NOT mandatory

Based on Armscor’s capabilities and mandate, UN could be approached to consider government level participation in UN work i.e. Armscor act as a strategic supplier for certain goods and services especially those used by own forces.

MAIN CONTRACTOR

Consulting

Spares

Specializing on subsystems Joint Ventures

SUBCONTRACTING PARTNERING

Consortiums

FORMS OF INDUSTRY INVOLVEMENT

Work sharing

TENDERING AND CONTRACTING FOR ACQUISITION Generally open tender – competitive bidding subject to PPPFA

Functionality Price BBBE

Exceptions Strategic Capabilities Continuation work OEM’s

Value Systems with mandatory and critical criteria Contracting at highest appropriate level – single point of

integrative responsibility as main contractor Industry may also participate as a vendor or subcontractor

Maximum competition at subsystem level Participation is by response to an Armscor issued RFI/RFO Compliance to Arms Control during contract execution

TENDERING AND CONTRACTING FOR BUSINESS COLLABORATION

Generally open tender – competitive bidding Terms of reference will likely accompany the RFO inviting

innovative business solutions from Industry Adjudication criteria to be confirmed but for income

generation tenders will typically be:ROIProximity to mandate and support mandateSupport of Strategic intentRisk

All Armscor suppliers must be registered as an Armscor supplierSuppliers subjected to Armscor security policy

requirementsSuppliers BEE claim verified

Tenders and Supplier registration links are onwww.armscor.co.za

PROCUREMENT INFORMATION

QUESTIONS AND ENGAGEMENT