Magal: Sinai border fence won't work

The Defense Ministry rejected the company's bid to supply perimeter security solutions for the Israel-Egypt border fence.

"The defense establishment has decided to go for innovation, and I fear that it will pay a price," warns perimeter security solutions developer Magal Security Systems Ltd. (Nasdaq: MAGS; TASE: MAGS) president CEO Eitan Livneh, after the Ministry of Defense rejected the company's plan for the Sinai border fence.

Magal submitted its bid to install warning systems to detect infiltrators, similar to the systems installed on the borders with Syria, Lebanon, and the Gaza Strip. However, the Ministry of Defense decided to install innovated warning systems made by Magna BSP Ltd., which makes stereoscopic vision sensors, and other companies, along the Sinai border.

The government decided to build the Sinai border fence before the fall of the Mubarak government in Egypt in February and the attack at Ein Netafim in August. In the wake of the terrorist attack, Prime Minister Benjamin Netanyahu ordered work on the border fences to be expedited. At the same time, African refugees are pouring into Israel via Sinai.

Livneh told "Globes" that the lack of prior planning by the Ministry of Defense would force it to invest larger amounts in the future to adapt the border fence to the relevant threats in the area, as reflected by the terrorist attack. "Although we're talking about a physical barrier, it is a 'stupid' barrier that does not provide a response to various security scenarios," said Livneh.

"The decision means that they are going with technological solutions that are not ready, and we don’t want this long border to be a test site for new and unproven systems. If they want to install radars in the area, they should take into account that these systems have built-in limitations due to rain and poor weather conditions. If they want to install cameras, they should take into account problems of humidity and sand and dust storms."

Livneh added, "The bids talked about 10% higher set-up costs of the border fence and barrier, i.e. an additional NIS 140-150 million of the NIS 1.5 billion budget. Our offer involved a marginal cost for a project of this size."

The Ministry of Defense said in response, "For obvious reasons, the ministry does not disclose contracts of this kind or the kinds of equipment that will be included in the construction of the Israel-Egypt border fence. The company CEO lacks the relevant information about the means that have already been integrated in the fence, and which will be integrated in it. The Ministry of Defense has no intention of discussing in the media professional matters with a party that has a clear financial interest."

Magal's share price fell 0.6% in morning trading today to NIS 8.60, after closing at $2.37 on Nasdaq on Friday, giving a market cap of $25 million.

Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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