South African Air Force To Receive First Gripen Soon

By Douglas Barrie

Ten years after a contentious selection process, the South African Air Force will formally receive the first of its 26 Saab Gripens next month. These aircraft will form the core of the service's defensive and offensive capability for the coming decades.

The fighter purchase constitutes the single largest procurement item within the 1998 Strategic Defense Package, and its significance extends beyond the purely military sphere. That's because the choices made in the package were driven not only by a desire to revamp the South African military's weapons inventory, but also by aspirations to reshape the country's defense-industrial base and to support the broader national economy.

The end of the apartheid regime allowed the country's armed forces to reenter the international arms market to revamp their inventory. The acquisition decisions made in late 1998 - born out of the government's 1996 defense white paper and the following defense review - were intended to modernize the armed services, replacing quantity with quality.

The Strategic Defense Package also contained a clear industrial imperative to draw in both direct technology transfer and indirect business. Besides revamping the military, it aimed to help recast the country's defense industry. At its peak, the sector accounted for 9% of those employed in manufacturing, according to the government's 1999 white paper on South Africa's defense-related industries. The change in government and in the country's military posture saw the defense budget decline by over 50% during the 1990s, with acquisition funding falling even further, according to the report. The defense industry - and Denel, in particular - continues to
wrestle with these developments.

The defense package procurements covered combat aircraft, advanced jet trainers, light utility helicopters, submarines and maritime helicopters. The combat aircraft and the jet trainers alone would total $2.2 billion.

Fiercely contested, the process and the decisions remain controversial. Today's leader of the African National Congress, Jacob Zuma, is under scrutiny over corruption allegations related to some of the acquisitions. For a country struggling with serious poverty and the need to provide basic amenities to many, defense acquisition expenditures appeared to be a luxury it could ill afford.

However, South Africa's geostrategic significance coupled with the region's volatility militates toward the retention of capable armed forces. The acquisitions were to be the catalyst for transforming not only the South African National Defense Force (SANDF) but also the defense industrial sector. Until this point, the development of both had been closely intertwined with the apartheid regime. The military was structured to deal with the border conflicts and the insurgency that sprang out of the regime's racist ideology, with actors on both sides of the conflict also proxies in the Cold War.

For the last two decades of apartheid, the country was unable to openly buy Western military equipment - the result of the 1977 United Nations embargo. It had forged close links with Israel as a defense-industrial partner. This relationship was to wither following the end of apartheid and the emergence of a multiracial government in 1994.

The 1996 white paper set out the country's need for "a balanced, modern, affordable and technologically advanced military force." It also said: "The primary role of the SANDF shall be to defend South Africa against external military aggression. Deployment in an internal policing capacity shall be limited to exceptional circumstances and subject to parliamentary approval and safeguards."

The Gripen was selected - in preference to the Dassault Mirage 2000-5 and the then-Deutsche Aerospace Mako - to meet the South African Air Force's requirement for a combat aircraft to eventually fill the roles of its Mirage F1 and Cheetah C aircraft. The BAE Systems Hawk was chosen as the successor to the Aermacchi MB326, known in the SAAF as the Impala Mk. 1. In numerical terms, the programs were far from a one-for-one replacement.

Hawk deliveries started in 2006, with all 24 to be delivered to the air force by the end of 2008. As of January, 20 had already been delivered to AFB Makhado. Delivery of the Gripen will also begin this year, with all of the aircraft handed over by 2012. The nine D two-seat aircraft will be delivered first, to be followed by the 17 single-seat C models. The SAAF's No. 2 squadron, which currently operates the Cheetah C from Makhado, in the country's north, will reequip with the Gripen. The first six Cheetah C pilots will start type conversion at the air base in September, supported by two Swedish instructors.

Alongside manufacturing structures work on the Gripen as a part of the offset-related defense industrial package (DIP), there was also a commitment to flight testing in South Africa, says Johan Rydin, Saab's Gripen in-country director.

A 2004 memorandum of understanding between Saab and Denel set out the timescale for the program to be carried out at South Africa's Gripen Flight Test Center. The facility is at AFB Overberg on the country'ssoutheastern  coast, conveniently colocated with the Denel-run Overberg Test Range (known
as OTB).

The MOU "set a first-flight target date of Aug. 15, 2006," says Rydin. "We did it four days before on the 11th." The plan was to carry out 100-150 flights, concluding at the end of October 2007. They finished on Nov. 1, he adds.

The Gripen eventually flew 199 sorties totaling 178 hr. It averaged 17 flights per month, he says, "five more than we thought we could achieve."

The proximity to the OTB was a clear benefit, with the weapons range providing the ability to rapidly conduct multiple sorties. On one occasion, four free-fall bomb-trial flights were carried out during a 5-hr. period.

Aircraft reliability was also high. "The aircraft had only three snags in 18 months," he notes. One of these, however, was particularly dicey. During a low-altitude flight test, possible fuel contamination was a worry due to a problem with the center-line drop tank. The aircraft had to be grounded temporarily in January while the issue was resolved. The other two problems were related to the environmental control system. Magnus Lewis-Olsson, Saab's flight test operations manager, says the aircraft has been used for a variety of trials, including examining the performance of "various software loads of increasing capabilities." He adds that flight testing has covered the navigation and communications suites, as well as night flying and initial free-fall bomb clearance and utilization. The latter included areas such as weapon-aiming symbology and asymmetric weapon-release characteristics. These trials used Mk. 81 and Mk. 82 bombs.

The OTB range also provided radar emitters for tests of the aircraft's electronic warfare suite, while chaff and flare dispersion tests have also been done. The flight test program culminated in 10 sorties that included mock air-to-air engagements with a Cheetah C.

The air force has yet to publicly identify its weapons integration priorities for the Gripen, although a choice of precision-guided bomb is pending. Trials also will begin in the second quarter using the Rafael Litening II laser designator pod with the aircraft.

While the air force has selected the Denel Dynamics A-Darter imaging-infrared guided missile as the short-range weapon for its Gripens, it may procure an interim weapon pending the completion of A-Darter development. The program is funded jointly by South Africa and Brazil. The integration costs of the missile were one of several changes to the overall program that resulted in the number of C-standard aircraft being reduced to 17 from 19 in 2006.

The test center will be transferred to Denel and the SAAF around the fourth quarter of this year, while Saab will continue to provide support into 2009.

The Swedish company also is considering using the center to support its own product development. This could include further Gripen variants, as well as UAV and unmanned combat air vehicle research. Were any of these to come to fruition within the next four years, the value of the work could be included as part of the DIP.

"The industrial participation approach was intended to leverage industrial value for the country, to provide economic and social benefits," says Jonathan Walton, BAE's executive vice president for South Africa. The government's aim was to secure work worth up to "400% of the contract value," he notes. "Several bidders were offering this level of industrial participation."

Given the size of the requirement, Walton says, "there was quite a lot of cynicism about the IP package." The target is defined as the delivery of $8.7 billion worth of economic benefit through the provision of work
packages, subcontracts and financial investment.

The importance of the participation program is underscored by President Thabo Mbeki's request to then-British Prime Minister Tony Blair that his government "ensure BAE would deliver," according to Walton. The South African government set out the overall framework for offset in 1996 when it established the National Industrial Participation (NIP) program. This covers all state purchases over a certain value. In addition, military procurement is covered by the requirement for a DIP for offset directly related to the acquisition.

The defense industrial package amounts to 17% of the total obligation. Flexibility has been required in delivering part of the offset, since some of the originally projected business did not materialize. Walton points to optimistic expectations for the total of BAE Hawk exports as an example.

Direct offset includes Gripen and Hawk aerostructures work as well as Hawk final assembly. Indirect structural work includes packages on the Euroýýfighter Typhoon.

BAE's expansion into the land systems sector has proved a distinct benefit in the South African offset context. Its 2004 purchase of Alvis also brought with it South African subsidiary OMC. Walton says the company had to make
the case for this to be considered as IP-investment by the government since, "in South Africa, aerospace is seen as strategic and not land. It was very challenging." Land Systems South Africa, as the company is known, is owned by BAE Systems and the government's Black Economic Empowerment Group. BAE is the majority shareholder, with 75%. The land systems business also provided offset credits once the order intake exceeded an agreed "pre-investment baseline."

The broader "national industrial" package covers the remaining 83% of the total offset requirement, says Walton. To fulfill this, BAE and Saab set up the South Africa National Industrial Participation organization. "The government encouraged us to invest in green-field companies," says Walton. So far, 42 projects - including automotive, agro-processing, information technology, ship repair, biotech and medicine - have been established.

With regard to the DIP, Walton says industry faces several challenges. "We are extremely dependent upon the ability of the projects to deliver," he notes. A comparatively strong rand has also "hindered the export performance" of some of the projects.

While there have been challenges associated with direct offset, Walton says fulfilling the NIP is proving to be more difficult. Most of the problems and some poor performances have been in the national participation projects - but "this is probably what the NIP program is all about," he adds. The national participation program is geared to investing in businesses and projects that likely would not have otherwise received financial support.

BAE and Saab report every six months in a formal meeting with the government on the state of the NIP.
Walton says there's still a need for more DIP on Gripen. A "major project" is being discussed, though he declines to provide further detail. This may well be related to the future variant of the Gripen, for which a demonstrator is now being built. "We're not in panic mode."

By 2011 - when the offset packages are due to be fulfilled - Walton sees BAE's presence beyond this as "predominantly in the land systems."

At one point BAE Systems had been selected by the government as the strategic partner in Denel. The company was expected to take an initial 20% stake in Denel. Shaun Liebenberg, Denel's CEO, says there were "attempts to sell Denel on the international market to BAE or EADS, but there were too many issues."

Liebenberg was appointed as Denel CEO in 2005 with a mandate to restructure the ailing group and return it to profitability. One of his aims was to conclude a series of equity partnerships covering the eight main areas of
the group's business.

The latest - and likely his last, since he will leave his post in May - was the sale of a majority stake in Denel Munitions to Germany's Rheinmetall Group at the beginning of February. (Liebenberg is joining Rheinmetall.) The move resulted in considerable comment in the South African press.

Liebenberg also has been pushing Saab to increase its stake in Denel Saab Aerostructures. Saab currently has 20%, with options to increase first to 51% and potentially to 70%.

The initial deal with Saab was driven by the need to gain "competency," suggests Liebenberg. The company's aerostructures business has run into difficulties on some contracts - including its work on the A400M, where it
is responsible for the wing-fuselage fairing. BAE's Walton notes that Aerostructures was "faced with the loss of the A400M work." This outcome, he suggests, would have been a major setback for the company.

The Denel CEO says the issues on the A400M arose partly because the company had "never done anything like this before." As for Airbus, there was a "lack of clarity" regarding the design, he asserts. As of January, there were
still design changes related to the weight-reduction effort.

Irrespective of the A400M teething troubles, Liebenberg sees the aerostructures business as offering considerable promise. "The marketplace is competitive but there's a huge undersupply," he notes. Denel has held discussions with Embraer on becoming a risk-sharing partner in the latter's proposed C-390 airlifter, building on its experience on the A400M.

Denel is also looking to forge closer ties with AgustaWestland based on its final assembly of the A109 light utility helicopter, which is part of the Strategic Defense Package.

Liebenberg wants the Defense Ministry "to focus on long-term contracts." He advocates increasing the amount of maintenance and support carried out by industry instead of by the military. This constitutes a controversial approach in the South African context, so it's unclear how his departure will affect the proposal and, indeed, the broader outlook for Denel.