The Joint Standing Committee on Defence has highlighted the risks posed by the continued challenges faced by Denel on the operational capacity of the South African National Defence Force (SANDF) to deliver on its mandate.
 
The committee received a briefing from Denel and Armaments Corporation of South Africa (Armscor) on defence intellectual property management and Denel maintenance of defence equipment.
 
While the committee appreciated the hard work undertaken by the executive to resolve challenges faced by Denel, it also highlighted the need for Armscor to find alternative suppliers to ensure continued supply of components and spares normally procured from Denel. However, although this is done to ensure sustainable supply of the required material, its adverse effect is that it poses a financial risk as those alternative suppliers are potentially costlier especially given the reduction of the defence budget. 
 
Furthermore, the committee is averse to a situation where the SANDF loses its sovereign capability and strategic independence as a result of over-reliance on the international market.  
 
“We are of the view that the development of defence technology domestically is critical in protecting national interest. The loss of this capability and the reduction in the defence budget and resultant decline in defence equipment spending, the South African Defence Industry has seen significant reductions in capacity, which necessitate the need to heighten efforts to ensure the survival of Denel to secure our defence industry,” said Mr Cyril Xaba, the Co-Chairperson of the committee. 
 
Despite this, the committee is concerned by the continued loss of critical skills within Denel which poses a risk to the Intellectual Property (IP) held by the company and its ability to service its contracts. While the committee welcomes the assurances that the country’s IP remains largely protected with reviewed protection processes, it is cognisant that the IP is not only developed and stored in documents and data banks but also that the most effective IP memory is retained in people who Denel continues to lose in numbers.
 
The committee is disturbed that the group has lost 36% of its engineers, 39% of production technicians and 45% of design & development technicians which will have a direct negative impact in the drive to salvage the company.
 
The committee has acceded to the request from the Minister of Public Enterprises that the discussion on the viability of Denel should be deferred to give the department time and space to see if their interventions bear fruit. The committee will engage in the near future with the department to ascertain progress.    
 
Regarding the protection of IP, the committee has called for the review of the Intellectual Property Rights Act with the aim of entrenching Amscor as the custodian of the Department of Defence IP capability which is seemingly being lost as a result of the Act. The committee will await a report in this regard within a reasonable time.

 
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CO-CHAIRPERSONS OF THE JOINT STANDING COMMITTEE ON DEFENCE, MR CYRIL XABA AND MR MAMAGASE NCHABELENG