Federal Audit Office criticizes price jump in tank deal

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GTK Boxer of the Bundeswehr: Planned new development more expensive than planned

Photo: Sven Eckelkamp / IMAGO

The Federal Audit Office is warning the Bundestag's budget holders not to give the green light to a defense ministry's billion-dollar armaments project. In a confidential report, the financial controllers criticize the planned order for 123 armored transport vehicles of the “Boxer” type as being too expensive and too complicated. The report is available to SPIEGEL.

The ministry would like to replace the lightly armored tracked vehicle “Wiesel” previously used by the hunter troops with a new so-called “heavy weapon carrier infantry” based on the “Boxer”. Originally, two billion euros were earmarked for the major project, which was to be paid from the Bundeswehr's special funds.

But the two billion is not enough. The new price is 2.69 billion euros – at least. “Price escalation, contract options, expenses for initial ammunition requirements and driving school vehicles that still need to be procured are not taken into account,” the financial controllers wrote in their report dated February 15th.

They not only criticize the increase in costs, but also the complexity of the planned purchase order. The purchase of the new weapon system is to be handled by the Australian government. In addition, the tanks are to be largely manufactured in Australia, although their manufacturers Rheinmetall and Krauss-Maffei Wegmann are based in Germany.

»No targeted project management«

Background: In order for the weapon system to be in the Bundeswehr as early as 2025, the defense department considered organizing the procurement together with Australia in 2017 - at that time still under the leadership of Ursula von der Leyen (CDU). Shortly afterwards, the Australian government commissioned 211 new “Boxers”; their configuration largely corresponds to the requirements of the German army. The Bundeswehr should not have its own model developed first, but rather receive the vehicles designed for Australia's army.

According to the Federal Audit Office, what sounds efficient has the opposite effect: "The intended time saving in the procurement of the "heavy weapon carrier infantry" is expensive, leads to logistical dependencies on the arms industry and to challenges for use," write the auditors. They criticize a lack of care: "Driven by a tight schedule and declarations to Australia, the Bundeswehr did not investigate alternatives in more detail."

The auditors are taking the ministry seriously. You write: "The Federal Audit Office was unable to determine any targeted project management." Your report paints a picture of a ridiculous procurement process.

“It took 4.5 years of the project before financing was secured in 2022,” write the auditors. In addition, the planned procurement volume of up to 123 vehicles was “not comprehensibly derived and justified”. The motives for the cooperation with Australia are also not transparent and the economic viability has not been proven. On the contrary: "The chosen approach leads to logistical disadvantages."

The need for coordination is great: "The complex contract structure leads to a very high project management effort (223.6 million euros), even in comparison to other projects," says the report. German-Australian meetings alone would cost 14.8 million euros.

From Germany to Australia and back

The increase in costs is also due to a special intercontinental production. The first 20 armored personnel carriers are to be manufactured in Germany. Production will then be relocated to Australia. “There will be transport costs of 15.6 million euros,” write the financial controllers and explain: “Ten vehicles are to be delivered by air transport (6 million euros) from Australia to Germany. The remaining vehicles are to be transported by sea (38,000 euros per vehicle)." In addition, components for production would be sent to Australia.

The extra costs for management, logistics and customs duties mean that Germany pays a significantly higher unit price than Australia. “The individual price per weapon system for production and delivery is 11.5 million euros,” write the auditors. “The other expenses result in a unit price of 15.8 million euros.”

All in all, the desired time gain and the additional costs are not in good proportion to each other, writes the Court of Auditors. His appeal to the Bundestag's budget committee: It should call on the Ministry of Defense to "identify and use savings potential and scope for renegotiation."

Block traffic light housekeepers

The warning has arrived. The Ministry of Defense actually wanted to submit the project to the Budget Committee for approval next Wednesday. But according to SPIEGEL information, the stewards of the traffic light factions did not put the “Heavy Weapon Carrier Infantry” project on the agenda. So far, their doubts about the economic viability of the project predominate. They also fear that the additional expenditure for this project will come at the expense of other purchases that are to be paid for from the already over-planned Bundeswehr special funds.

The Defense Ministry is now trying to address parliamentarians' concerns. Soon after the Federal Audit Office sent its report to the budget, the House of Defense Minister Boris Pistorius circulated a response to it on Thursday.

In the paper, the defense department rejects the accusation that it did not sufficiently look for cheaper alternatives on the market. "The result of the market survey carried out showed that there were no product alternatives available besides the Australian Boxer Recon II reconnaissance vehicle," says the letter, which SPIEGEL has received. In addition, according to the manufacturer Rheinmetall, “no national production capacities were available.”

However, the ministry admits that the time factor is essential: procurement without Australia would result in a delay of several years. This would also delay the full operational readiness of the so-called intermediate forces of the army.

In addition, the defense department is in the word at NATO. Germany has promised the alliance the first operational army division by 2025. Without the armored transport cooperation with Australia, this promise would obviously be difficult to keep. The ministry writes that the equipment of the 2025 division would be “significantly set back” in the event of a new procurement process for the “Boxer”.

The Federal Audit Office had recently repeatedly accused the Defense Ministry of wasting money. He recently appealed to householders to adjust a planned order for up to 203,000 hearing protection headphones with a speaking function with a volume of around 2.8 billion.

Defense Minister Pistorius is pushing for faster procurement. But apparently the financial controllers are prioritizing care over speed.