Helicopter for the Bundeswehr: Kramp-Karrenbauer's five-billion-euro error

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Actually, the legal dispute with the US defense company Lockheed Martin seemed to have gone off lightly for the Department of Defense.

The procurement chamber of the Federal Cartel Office decided two weeks ago that the Bundeswehr was allowed to stop a bidding competition for the delivery of heavy-duty helicopters launched in 2019 in September 2020.

The termination was effective, so the chamber, the proceedings do not have to be continued.

The joy of the ministry lawyers, however, only lasted for a short time.

Because on closer reading of the reasons for the verdict, it became clear that the decision was actually a legal slap in the face for the Bundeswehr procurement office.

At the same time, the judges found that the repeal was unlawful because "the Bundeswehr's estimate of the procurement costs for the helicopters, the basis for applying for budget funds ..., was not clearly documented".

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The Ministry of Defense had calculated a maximum of 5.6 billion euros for 44 to 60 helicopters and applied for the sum to the Bundestag.

The bids of the two participants in the tender, Lockheed Martin and Boeing, were about twice as high in the end.

With reference to the high prices and alleged inefficiency, the ministry got out - and left the US companies with double-digit million costs for their offers in this "extremely complex and long negotiation process," according to the procurement chamber.

In principle, such a procedure is possible.

The prerequisite, however, is that the contracting authority can prove "that even the most economical offer is significantly higher than the price that has been determined after a proper estimate of the contract value", according to the public procurement tribunal.

"The cost estimate must be methodologically justifiable and the expected costs must be comprehensively and comprehensively reflected."

But that is exactly what the procurement office failed to do.

It miscalculated by a whopping five billion - and was unable to explain to the judges how that could happen.

The reasons for the decision say that the “requirements for a proper cost estimate” have not been met, and the results presented are not justifiable.

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The Bundeswehr has apparently essentially calculated the costs for the basic helicopter models, but at the same time has drawn up a 1900-page catalog of requirements with many special equipment requests.

In addition, according to a specification by the Bundestag, German industry should not only take over the maintenance of US machines, but also be allowed to develop the helicopter further.

To do this, you have to acquire the (expensive) intellectual property rights.

"Especially with regard to the service components that deviate from the US model of both providers", so the judges, the official website has provided "no more precisely substantiated and proven data basis".

According to the manufacturer, it was precisely these costs that were decisive for the high prices.

On the basis of this decision, Lockheed Martin, which had sued the public procurement tribunal, now has a good chance of seeking compensation.

The US company does not want to be satisfied with that, however, and is moving to the next level.

"After the Federal Public Procurement Chamber has declared the annulment of the procurement procedure unlawful, we would like to have the proceedings resumed with the immediate appeal to the Higher Regional Court," said Vice-Chief Europe, Dennis Göge, WELT.

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His company is concerned that “the order for the Bundeswehr's heavy transport helicopter is awarded in a fair, transparent and non-discriminatory process”.

In other words: So far, the company has found the award process unfair, opaque and discriminatory.

The Ministry of Defense has now also recognized the scope of the procurement chamber decision - and therefore, like Lockheed Martin, filed a complaint with the Düsseldorf Higher Regional Court on Friday, the last possible date.

The procurement chamber had confirmed the effectiveness of the federal revocation decision and thus rejected the continuation of the procurement process, said a ministry spokeswoman at WELT's request.

At the same time, however, the unlawfulness of the repeal was established: “The public procurement tribunal's justification for this is not shared by the authorities.

Therefore an immediate complaint was filed. "

With that, of course, Minister Annegret Kramp-Karrenbauer (CDU) has a problem.

The Bundeswehr urgently needs new heavy-duty helicopters, currently only vintage cars are available whose continued operation is as time-consuming as it is expensive.

In the absence of other providers, it is still the Minister's plan to purchase either the CH-53K from the manufacturer Sikorsky, which belongs to Lockheed Martin, or the CH-47F from Boeing - but no longer directly from the companies, but in the form of a government deal the US administration.

Only the basic models are available

Washington has already submitted the offer data.

The only question is whether the ministry can conclude a contract despite the ongoing legal dispute.

This would be theoretically possible, in practice one would ignore an outstanding decision by the judiciary.

And it will be interesting to see how high the costs will be.

Because in a government deal, only the basic models are available, special equipment and development rights would again have to be negotiated separately with the companies.

In any case, it is not surprising that a company asks itself whether this erratic procedure is now what the whole tender was supposed to be - and whether it was being led by the nose by a German ministry.