The SAAF Forum

SAAF Gripens - Kicking The Can Down The Road

By Darren Olivier

By the time this issue is published the South African Air Force (SAAF) will have been without an air combat capability for more than a year.

Its fleet of Gripens, the sole fighter aircraft in operation with the service, have been grounded since mid-August 2021 when budget cuts and disagreements over contract terms resulted in the support contracts with Saab and GKN being allowed to lapse. Without support contracts in place, or adequately certified workarounds, the SAAF’s Military Airworthiness Board cannot issue or renew approvals for flight.

There’s no way to put a positive spin or brave face on this situation. It’s disastrous. For a year the country has been without any air defence capability whatsoever. And yet its leadership have complacently stood by with no apparent sense of urgency while a critical strategic capability acquired at great cost has fallen apart. One would have thought that those in positions of power would have been moving heaven and earth to resolve the situation.

Of course, the SAAF and Armscor (as the procurement agency) haven’t been entirely idle, and have been engaged in back and forth negotiations with both Saab and GKN to try find a workable solution that fits within the SAAF’s pitiful budget allocation, yet still provides the necessary level of support to keep these highly complex aircraft flying. But progress has been slow, suffocated by red tape and indecision at the highest levels, and characterised by stop-start spurts of activity and waiting that have wasted crucial time.

Worse, those negotiations have been taking place since early 2021, long before the contract was due to lapse and providing plenty of time to avoid the situation.

At the most basic level, the cause is simple: The SAAF’s Combat Systems directorate has an annual budget of just over R300 million, which is ludicrously inadequate to maintain even a single modern fighter squadron, let alone a squadron of Hawk Mk120 fighter-trainers alongside it. Benchmarking that against similar fighter squadrons around the world shows that an annual budget of R1 billion is needed just to maintain a basic capability level, with R3 billion or so a year needed for full operational capability and utilisation.

Expecting things to work with just R300-400 million a year falls in the realm of fantasy and magical thinking, not sound governance. Add to that the chronic indecision plaguing the SANDF and indeed South Africa as a whole of late, increasing red tape around procurement, and the misapplication of preferential procurement regulations to strategic defence contracts that clearly can’t support them, and it’s no surprise things have reached this point.

Absurdly, according to people familiar with the negotiations, much of the time was wasted by Armscor’s insistence on applying the 30% local content requirement from the preferential procurement regulations, even though there aren’t any local companies that could perform any of the work required. At best, it would mean some local company acting entirely as a rent seeker, placing orders with Saab and GKN for spare parts and adding its own mark up on top while adding no value and harming what’s already a low margin contract.

This type of requirement is a problem that has increasingly crept into service and support contracts for key SANDF systems, even when the OEM is the only possible supplier, making maintenance costs much higher than they need to be and contributing to low availability of these critical systems.

There are now questions being raised inside SANDF HQ about whether Armscor continues to be an enabler of the SANDF, or has become a harmful hindrance. That distrust played its part in delaying these negotiations too.

Despite these constraints earlier this month, all sides finally reached a breakthrough and agreed, in principle and after a number of proposals and revisions, to a new three year support contract that almost fits within the pre-defined budget and provides a limited return to service. It’s not perfect, for either side, but it’s at least a way forward and buys a bit more time. At the time of going to press, however, it seems that neither the airframe contract with Saab nor the engine contract with GKN have yet been finalised, signed, and paid for. This was despite an assurance provided by military leadership to the news programme Carte Blanche in June that the situation had been resolved.

Worse, even if all outstanding contracts are signed today, it will take many months for the first aircraft to return to the air after all the necessary maintenance and checks have been completed. It will take just as long for air and ground crews to regain their currencies and qualifications, as none have been able to preserve them over a grounding this extensive. It hasn’t even been possible for pilots to continue training on the two simulators in the Squadron Level Mission Trainer (SqLMT) at AFB Makhado, because those fall under the same contract and have not been operational either. They need relatively substantial upgrades in any case.

While an attempt was made to keep 2 Squadron’s aircrews actively flying by re-allocating most of them to fly Hawks Mk120s at 85 Combat Flying School, that’s been only partially successful owing to inadequate funding and the resulting low availability of the Hawk fleet too, with only four aircraft available on most days. It’s also not possible to use Hawks to preserve Gripen proficiency, only to preserve some fast jet and combat tactics skills.

Realistically, the SAAF won’t have any real fighter capability before 2023 at the earliest, and only for a handful of aircraft at first. There is also now no hope of returning to the capability levels and numbers that 2 Squadron had before the grounding, and at best only a token force can be restored by 2024/2025 under current funding levels.

Nor have key obsolescence issues been addressed, so the SAAF is going to be faced with another budget crisis on the Gripens when it next needs to renew the contract. That time it may be impossible to resolve.

To understand why these contracts are so crucial, it’s necessary to know what they cover and how they work. Formally speaking, Saab, Armscor, and the SAAF refer to these as steady state support contracts, meaning that they’re intended to maintain an existing capability rather than establish new capabilities or perform substantial upgrades. There are two main contracts, the steady state support contract with Saab, which is commonly referred to as the ‘airframe’ contract, and a similar one with GKN (the OEM of the RM12 engine in the Gripen) to maintain engines.

As with most similar traditional support contracts, these contain two types of support: Activities, products, and services covered in part or in full as part of the annual contract cost and those that need to be purchased and paid for on an on demand basis through separate Work Authorisation requests, with the contract defining the terms and process under which those orders will be made. As an example, air forces will usually include most baseline items, like configuration management, technical maintenance publications, and map updates, as part of the annual contract cost so as to ensure predictability and security of supply. Items that might be needed on an unscheduled basis or not needed as often, such as certain types of spare parts or repairs, might then be excluded from the main contract to save on annual costs.

It’s always a complex exercise to get the balance right, as leaving too many items out of the main contract and into the on-demand portion can end up costing you far more over the life of the contract. It’s also risky from an availability point of view as those on-demand repairs and spare part orders have long lead times and little guarantee on delivery dates, meaning you could have aircraft grounded for months if you can’t carry enough spare parts inventory to cover for those delays.

For this reason many countries have been moving toward integrated support contracts that guarantee a certain minimum level of availability and cover all aircraft management, spares, spiral upgrades, etc in a single annual payment. That’s the model nearly all of its other Gripen C/D customers use, which is why it was so much easier for them to upgrade from the MS19 baseline to MS20, and it’s a model the SAAF initially requested as part of its RFP for Project Ukhozi but subsequently abandoned in favour of a traditional support model with upgrades bought separately. Yet it has never had sufficient funding to implement most of those upgrades, including MS20, which has increased maintenance costs over time.

To be clear, integrated support contracts are expensive, trading cost for predictable availability and consistent upgrades. The Swedish Air Force’s support contract with Saab for its two remaining Gripen C/D squadrons comes to over R1 billion a year. In contrast, the annual portion of the airframe support contract for the SAAF is expected to be around R200-250 million a year. Even that may yet turn out to be unaffordable.

But in order to fit the annual cost within that limited budget, the revised SAAF Gripen contract apparently covers only the most crucial items, leaving almost everything else including training, upgrades, most spares, and certain types of maintenance as services to be procured and paid for separately as needed. It’s a high-risk gamble by the SAAF, betting that enough things will go right and it might be able to shift budgets around as needed for the most critical items, but it’s a short-term strategy that will prevent 2 Squadron from reaching proper operating capacity and will cause severe maintenance delays.

Worse, the SAAF’s Gripen C/D fleet is on a unique baseline from all other Gripens around the world. Not only are its aircraft still on MS19, but the SAAF has fitted unique electronic warfare, refuelling, and other components to its aircraft. It also has a custom logistics system, including integration with other systems like OSIS and its own technical publications format.

Even the ejection seats are no longer at the same baseline as other Gripens, having been modified under Project Mothusi. There was a significant extra cost in the support contract that was dedicated to just maintaining the separate SAAF baseline, and included things like keeping people staffed at Saab just because they were skilled at maintaining some or other component or subsystem that other Gripen operators no longer used.

In 2018 I spoke to Mats Lundberg, then Saab’s programme manager for South Africa, to discuss this issue and Saab’s ongoing campaign to get the SAAF to purchase the MS20 upgrade in order to reduce the baseline difference and save on maintenance and support costs. He predicted that it would not be too long before the cost of the support contract became too costly for the SAAF to afford, even if Saab took virtually no margin on it. That turned out to be prophetic; that upgrade never happened, and according to those same people familiar with the negotiations, the SAAF has even had to exclude a number of those custom systems from the new contract while hoping it could somehow fix that later. It’s just more kicking the can down the road.

Hope is not a strategy, and the budget crisis facing the SANDF is no longer something that we can pretend is a temporary state that will soon end. It’s time to wake up to that fact and start making serious proposals and plans on how to still preserve the most crucial capabilities while disbanding and dismantling anything and everything else. It will leave us weaker as a country, but at this point that’s inevitable anyway.