German defence procurement: radical U-turn

The Federal Cabinet has examined a bill submitted by the minister of Economic affairs & energy, Mr. Peter Altmaier (CDU) ; this bill which has been cleared by the college of ministers and has yet to be voted by the Bundestag, should drastically modify the procurement policy in Germany in Defence & Security domains.

Procurement policy: the revolution of Mrs von der Leyen and Mr. Gabriel

in 2015, Mrs. von der Leyen, then minister fo defence and Mr. Sigmar Gabriel, the precedessor of Mr. Altmaier, decided to open up all German tenders in Defence & Security. In the naval domain, a European-wide tender has been floated for the procurement of the future heavy frigates (the famous ‘MKS-180‘).

This decision that put at risk key-domains of the German industry was quite unique in Europe with nearly all MoDs (at the exception, maybe, of UK) favoring their domestic industry. Trade unions (such as IG-Metall Küste) or Defence organizations (such as the BDLI) harshly critized the new policy.

Therefore, in the MKS-180 case, Lürssen Werft partnered with Damen for German naval ships: a true revolution in that sector!

Procurement policy: radical U-turn in sight?

The bill intends to introduce some exemptions to the EU-tendering rules.

Significant security interests could be particularly affected « when a public tender or a concession concerns a technology that is considered a key defense technology technology, » states the bill : (Text in German: « wenn ein öffentlicher Auftrag oder eine Konzession eine Technologie betrifft, die als verteidigungsindustrielle Schlüsseltechnologie eingestuft wird. », page 57).

« The classification of a technology as a key-defense technology technology is made by a decision of the Federal Cabinet, for example in the context of the White Paper of the Bundeswehr or in respect of the strategy paper of the Federal Government to strengthen the defense industry in Germany, » so the bill (Text in German: « Die Einstufung einer Technologie als verteidigungsindustrielle Schlüsseltechnologie erfolgt durch einen Beschluss des Bundeskabinetts, beispielsweise im Rahmen des durch das Bundeskabinett verabschiedeten Weißbuchs der Bundeswehr oder im Strategiepapier der Bundesregierung zur Stärkung der Verteidigungsindustrie in Deutschland« ).

The list given by a report released in 2015 included submarines and armored vehicles as domains of key-technologies but, curiously, not the surface Fleet and the Air Defence ones. This omission was not quite surprising, given the plans of the MoD to open the MKS-180 project to European competitors of TKMS and GNY-K.

Procurement policy: faster and smarter?

 

According to the bill, German security interests may be affected when a high level of confidentiality is required while purchasing. « It can cover both certain procurements that serve to ensure border police protection of the federal territory, as well as those intended for the preventive defense or repressive prosecution of terrorist offenses or in the area of ​​organized crime, » it says (Text in German, page 57: « Damit können sowohl bestimmte Beschaffungen erfasst sein, die der Sicherstellung des grenzpolizeilichen Schutzes des Bundesgebietes dienen, als auch solche, die zur präventiven Abwehr oder repressiven Verfolgung von Straftaten mit terroristischem Hintergrund oder im Bereich der organisierten Kriminalität bestimmt sind« ).

Also, covert investigations or capabilities (i.e encryption technologies) can be affected by the publicity made around open tenders.

In such cases, the requirement for Europe-wide public procurement tenders to be dropped beyond a certain threshold.

The EU Procurement Directive explicitly provides for such exceptions, but so far and curiously, Germany has not made use of these provisions. In their coalition agreement, the Union and the SPD had agreed however to protect key-industrial domains.

Obviously, this should accelerate procurement projects, especially in the Defence sector : « We need to get faster in defense procurement. This is about our security interests. Our Bundeswehr needs the best materials – when needed, not years later, « said the Maritime Coordinator of the Federal Government, Norbert Brackmann (CDU). « Our shipyards also need security in planning« .

However, the instrument can also be used in other domains, for example, to keep European competitors out of the race, when dealing with major government contracts.

Procurement policy: national at last!

Germany was a good student of EU-rules: for Berlin, it was important to stick to European public procurement law and to the compulsory Europe-wide tender process. This will not change.

But, in the field of defense, however, there are exceptions, which would be specified in the bill, so Brackmann. « With the change that has now been initiated by the bill in the current law, we are laying a good foundation for keeping expertise relevant to defense and security policy in Germany in  in the long term« . « Strong German technologies are the guarantee for the reliability of Germany within its alliances and thus a cornerstone for strong European partnerships. »

At last!

P.S: the bill can be found here: https://www.bmwi.de/Redaktion/DE/Downloads/G/gesetzentwurf-beschaffung-verteidigung-und-sicherheit-optimierung-vergabestatistik.pdf?__blob=publicationFile&v=6.

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