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Turkey to Renew Competition for $2.5 Billion Corvette Deal

Sep. 29, 2013 - 03:45AM   |  
By BURAK EGE BEKDIL   |   Comments
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ANKARA — The Turkish government on Sept. 26 scrapped a $2.5 billion corvette deal with a local shipyard and pledged to renew competition.

Turkey’s ultimate decision-maker on procurement, the Defense Industry Executive Committee, chaired by Prime Minister Recep Tayyip Erdogan, announced the decision at a meeting Sept. 26. The committee said an earlier contract with RMK Marine, an Istanbul-based Turkish shipyard, had been canceled and a new tender would be opened.

Defense News reported on Aug. 13 that the government could revise a contract for the production of six corvettes.

The Turkish government in January signed the contract, dubbed “national ship” or Milgem in its Turkish acronym, with RMK Marine, owned by Turkey’s biggest industrial conglomerate, Koc Holding.

Defense News had earlier reported that Koc Holding’s defense business could be a casualty of a row between the country’s prime minister and one of its top executives after a month of civil unrest that has battered the Turkish government. The report quoted an analyst as saying, “It should come as no surprise if the government decided to thoroughly scrutinize all Koc-related contracts, including defense deals.”

In one incident during month-long demonstrations in June, protesters tried to escape police tear gas and pepper spray by taking refuge in a posh Istanbul hotel, Divan, owned by Koc. Hotel management admitted the protesters to its lobby, which quickly turned into a makeshift first aid room.

The police fired more tear gas and pepper spray into the hotel lobby although it is illegal to fire these chemicals into indoor spaces. It was reported that Ali Koc, a board member and third generation family member, had ordered the hotel to help the protesters.

On June 16, an angry Erdogan said in a public rally: “We know which hotel owners helped terrorists [protesters]. It is a crime to abet terrorists. And those crimes will not remain unpunished.”

The Milgem contract is worth $2.5 billion. The corvettes are the smallest warships in the Turkish Navy’s inventory. Turkey plans to use the experience gained in the Milgem project to design, develop and construct its first national frigate, the TF-2000, in the 2020s.

Earlier, RMK Marine had won a contract to build four search-and-rescue ships for the Turkish Coast Guard.

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