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Denel DOD Presentation

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Denel DOD Presentation PRESENTATION TO THE JOINT STANDING COMMITTEE ON DEFENCE 28 May 2020 INDEX 1. DENEL’S DOD FUNDED MULTI-YEAR PROGRAMMES 2. PROJECT HOEFYSTER i. PROGRAMME BACKGROUND ii. PROGRAMME STATUS iii. CAPABILITY TO DELIVER iv. PROGRAMME CHALLENGES v. PROGRAMME SPEND vi. PROGRAMME SCHEDULE vii. LESSONS LEARNT 3. CONCLUSION 2 OVERVIEW OF DENEL’S DOD FUNDED MULTI-YEAR PROGRAMMES 3 REMAINING ACTIVITY PER PROGRAMME Remaining Contract Values Item Denel Division Programme Product / System Contract Planned Date Funding Balance 1 DENEL Land Systems MUHALI (KT545838) MUHALI Phase 1B: Obsolescence Upgrade of the GV6 System Ongoing to Jun-21 R145m Yes 2 DENEL Land Systems TOPSTAR PRODUCTION AND TRANSITION PHASE OG THE GLNS- Ongoing to Jul-21 R223m Yes 3 DENEL Land Systems BIRO Supply GI2 Cannons (x3) MS in Aug-20 R5m Yes 4 DENEL Land Systems HOEFYSTER Phase 1 Infantry Combat Vehicles Development (R1.2bn in 2007 ZAR) Ongoing to Dec-22 R150m Yes 5 DENEL Land Systems HOEFYSTER Phase 2 Infantry Combat Vehicles Production (R8.392bn in 2013 ZAR) Ongoing to Mar-29 R6.692bn Partial 6 DENEL Aeronautics Oryx Product Supply Support Oryx Medium Transport Helicopter (R1.2bn for 3 years) Ongoing to Apr-21 R433m Annually 7 DENEL Aeronautics Rooivalk Product Supply Support Rooivalk Combat Support Helicopter (R1bn for 3 years) Ongoing to Apr-21 R361m Annually 8 DENEL Aeronautics C130 Product Supply Support C130BZ Transport Aircraft (R350m for 3 years) Ongoing to Nov-21 R194m Annually 9 DENEL Aeronautics Hawk Ground Support & Test Equipment Hawk Lead In Fighter Trainer (R18.6m for 3 years) Ongoing to Mar-21 R7m Annually 10 DENEL Dynamics SA Navy Support Contract Umkhonto Surface-to-Air missile system Quartely to Mar-21 R4.8m Yes 11 DENEL Dynamics LOKI Development of Low Cost Target Drone Demonstrator MS in Aug-21 R32.7m Yes 12 DENEL Dynamics Seeker 400 IPSS Seeker 400 support Ongoing to Mar-21 R75.7 Yes 13 DENEL Dynamics KAMAS A-Darter Industrialization & production Ongoing to Nov-21 R428m Yes 14 DENEL Dynamics Glow II All Weather Air Defence Missile Demonstrator MS in Sep-20 R154.8m Yes DENEL Overberg Test Provision and Maintenance of the RSA Multi-Purpose Test and 15 DUCE-STORM Ongoing to Mar-21 R61m Yes Range Evaluation Technological Capabilities Total R8 974.8m 4 REMAINING FUNDING REQUIRED PER PROGRAMME Estimated MZAR per fin year Item Denel Division Programme 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 1 DENEL Land Systems MUHALI (KT545838) 73 73 145 2 DENEL Land Systems TOPSTAR 156 74 230 3 DENEL Land Systems BIRO 5 5 4 DENEL Land Systems HOEFYSTER Phase 1 75 75 150 5 DENEL Land Systems HOEFYSTER Phase 2 260 804 804 804 804 804 804 804 804 6692 6 DENEL Aeronautics Oryx Product Supply Support 400 33 433 7 DENEL Aeronautics Rooivalk Product Supply Support 333 28 361 8 DENEL Aeronautics C130 Product Supply Support 117 78 194 9 DENEL Aeronautics Hawk Ground Support & Test Equipment 7 7 10 DENEL Dynamics SA Navy Support Contract 5 5 11 DENEL Dynamics LOKI 33 33 12 DENEL Dynamics Seeker 400 IPSS 76 76 13 DENEL Dynamics KAMAS 214 214 428 14 DENEL Dynamics Glow II 155 155 15 DENEL Overberg Test Range DUCE-STORM 61 61 1936 1411 804 804 804 804 804 804 804 8975 Funded : 1936 468 2404 Unfunded : 943 804 804 804 804 804 804 804 6571 5 REMAINING FUNDING REQUIRED PER DIVISION Estimated MZAR per fin year Item Denel Division 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 1 DENEL Land Systems 569 1025 804 804 804 804 804 804 804 7222 2 DENEL Aeronautics 857 139 996 3 DENEL Dynamics 449 247 696 4 DENEL Overberg Test Range 61 61 1936 1411 804 804 804 804 804 804 804 8975 Funded : 1936 468 2404 Unfunded : 943 804 804 804 804 804 804 804 6571 Note: PMP has no multi-year DOD Orders 6 PROGRAMME HOEFYSTER 7 HOEFYSTER BACKGROUND • Programme was contracted to fulfil a number of requirements in various stakeholder environments including: – Develop and Deliver new generation equipment to satisfy SANDF requirements – Business injection for Denel to support Denel’s sustainability – Job creation circa 2000 jobs across the Defence industry – Establish and grow young engineering capability and capacity within the government’s transformation directives HOEFYSTER COMPLEXITY • The scope and complexity of the programme: – New Weapon Systems and ammunition – New Sighting Systems – New Fire Control Software to Avionics level certification – New Electrical Systems and Safety Interlocks – New Communications Systems • Technical integration with above sub elements was extremely time consuming within the resource constraints of the organisation HOEFYSTER CONTRACT SUMMARY Orders Contract Major Deliverables Value (P0) DEVELOPMENT 5x Engineering Development Models (EDMs) (Product Baselines (PBLs)) (Phase 1) IN i.e. (Section Variant, Command Variant, Mortar Variant, Missile Variant, R1.196bn JUNE 2007 Fire Support Variant, including logistics development). 244 Badger systems of which: 16x Pre Production Model (PPM) systems, PRODUCTION 223x Production Systems, Upgrade of 5 x Engineering (Phase 2) IN Development Models, R 8.038bn AUGUST 2013 Incl. Ammunition, Training Simulator Systems and all logistical documentation and support elements. PRODUCTION Development of 4x Joint Task force group Variants i.e. (Phase 2 New Ambulance Variant, Signal Variant, Tactical Command Post Variant Variants) IN R0.354bn and Basic Artillery Observation System Variant. AUGUST 2013 CONTRACT DELIVERABLES 1. COMBAT VARIANTS. SECTION VARIANT . COMMAND VARIANT . MORTAR VARIANT . FIRE SUPPORT VARIANT . MISSILE VARIANT 2. AMMUNITION. 3. TACTICAL COMMAND & CONTROL SYSTEM. 4. RECOVERY VEHICLES. 5. MAINTENANCE & REPAIR. 6. TRAINING SYSTEM. 7. LOGISTIC SUPPORT SYSTEM. 8. INTERFACES FOR: . Recovery Vehicles . Maintenance and Repair Vehicles . Special B-Type Vehicles 1111 PROGRAMME STATUS 12 PROGRAMME SUCCESSES - Ammunition: • 30mm Ammunition Industrialised and 126 000 rounds delivered. • 60mm Long Range Mortar Ammunition Industrialised and delivered. - Main Weapon: • 30mm CamGun Industrialised, 6 Pre-Production and 27 Production Models for Battalion 1 Section Variant delivered. - Platform: • 3 Section Variant and 1 Ambulance Variant Pre-Production Models, and 12 Production Common Platforms built and delivered by Patria. • Finnish Common Platform Pre-Production and Manufacturing Baseline achieved. - Turret: • 4 Section Variant Pre-Production Model turrets built and integrated onto above Patria Platforms for (P)OT&E. • Assembly of 1 FSV Pre-Production Model Turret complete (barring 2 Hatches and Secondary Weapon Bracket) with Production documentation verified during build. • Section Variant, Fire Support Variant and Command Variant Pre-Production Model Turret Add-on Armour industrialised and delivered. - Training Simulators: • Mechanical assembly of 27 Driver, 15 Section Variant Turret, and 5 Command Variant Turret Simulators, and 5 Master Instructor and 5 Instructor Stations, loaded with Pre-Production software. • Simulator facility used for training for (P)OT&E. - System level • SECTION VARIANT User Evaluation including Integrated Communications System successfully completed. PROGRAMME SUCCESSES – HOEFYSTER DISPLAY PROGRAMME SUCCESSES – AV8 TURRET PROGRAM PHASE 1 & 2 COMMERCIAL STATUS/PROGRESS Order Description Phase Contract Value Invoiced to date % Complete by Value Development and production of 5 "Current Phase 1 R0.978bn (P0) R0.875bn (P0) 89% Variants" Industrialization and production of 5 "Current Variants" and common sub- Phase 2 R8.038bn (P0) R1.554bn (P0) 19% systems for "New Variants" Design, develop, industrialize and produce Phase 2 New R0.354bn (P0) R0.049bn (P0) 14% the unique portions of the New Variants Variants Industrialization and production of 60mm Phase 2 R0.135bn (P0) R0.135bn (P0) 100% Long Range Mortar Ammunition Total (P0) R8.527bn R1.738bn 20% P0: Value at contract date, excludes pre-payment and inflation based escalation P1: Value at time of payment, excludes Pre-payment, but includes escalation CAPABILITY TO DELIVER 17 CAPABILITY TO DELIVER INTERNAL TO DENEL • Denel is fortunate that the technical skills for this programme is largely in place given the security the contract has provided, there are resources available within the company to deliver on the programme • Given the delay in Production Phase, there will be a level of re-industrialisation required in the production environment. EXTERNAL TO DENEL • Majority of technical skills are vested internally with limited skills in the supplier base. • These external skills are largely in place but have been negatively impacted by the programme delay and financial position of Denel • Some suppliers no longer exist and components will need to be sourced and industrialised again to ensure integrity in supply. 18 YOUNG TALENT ON HOEFYSTER • Renata Westmacott who hails from Eldorado Park and joined Denel five years ago after obtaining a B Eng degree from the University of Johannesburg. Her responsibility is to provide system engineering and development support to all Badger variants as well as technical support during the industrialisation and production phases. • Nkabe Motjale, a mechanical engineer, has been with Denel Landward for five years. The 31-year old from Ficksburg in the Free State is responsible for the design and integration of platform-related components. • Lyzander Prinsloo, a structures and mechanism designer from Port Elizabeth, looks after the integration of all subsystem mechanical hardware on the Badger. The former student at the Nelson Mandela Metropolitan University has been with Denel for six years. • Shale Modiba, a software
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