COLOGNE, Germany – Germany’s go-to court for federal procurement disputes has ruled that the German ministry of defense cannot be forced to resume a tender for the acquisition of heavy transport helicopters that officials suddenly nixed last fall over cost worries.
The decision by a court of the Federal Cartel Office follows Lockheed Martin-Sikorsky’s protest against the cancellation. Executives had said the legal pressure was meant to test the waters in an unusual federal procurement situation involving billions of dollars.
Lockheed Martin and Boeing were the only bidders in an effort to replace Germany’s CH-53G helicopters when the government here walked away from the procurement process, offering the CH-53K King Stallion and the CH-47 Chinook, respectively.
While court upheld the government’s decision to abandon the tender, its March 5 ruling still found the move to be unlawful, according to a statement published Tuesday on the Federal Cartel Office website. That’s because the defense ministry failed to properly document its argument that the cost of the two offers was unacceptably high, the statement read.
The last point amounts to a crucial dig at the Bundeswehr’s procurement authorities, calling into question a fundamental awareness of pricing in major acquisition programs.
“Cost estimates for public procurements should always be demonstrably documented,” Andreas Mundt, president of the Federal Cartel Office said.
The court essentially made a judgment about the case without interfering in the process, explained Christian Scherer, a public procurement expert with the law firm CMS Germany in Cologne. Still, getting such a ruling will be important for companies in the future, as they decide on any potential compensation claims against the government incurred in the course of the now-defunct tender, he added.
Lockheed’s willingness to litigate further is questionable, however, because the company still wants to sell its King Stallion to Germany through whatever avenue defense leaders here may decide next. Executives have two weeks to decide if they want to appeal the decision with a different court.
Late last year, defense ministry officials requested information for Boeing’s and Lockheed’s aircraft types from the Defense Security Cooperation Agency. Buying off-the-shelf aircraft, without Teutonic extras, through the U.S. foreign military sales process would cost less and do the job of hauling battlefield cargo just as well, the thinking goes.
The no-frills tack of the new acquisition approach emboldens competitor Boeing, executives there said recently. The company’s previous marketing strategy had rested on the promise of a proven workhorse that wouldn’t break the bank.
“Buying off the shelf gets most our customers what they want,” said Michael Hostetter, who spearheads Boeing’s campaign for the Schwerer Transporthubschrauber (STH) helo program in Germany.
Lockheed, on the other hand, hopes that a recent King Stallion order from Israel will serve as an advertisement for Berlin.
Meanwhile, the U.S. Government Accountability Office recommended last week that the Marine Corps limit the procurement speed of its King Stallions so that the testing schedule for the new aircraft can catch up. The move would help avert further cost increases later on, according to auditors.
Sebastian Sprenger is associate editor for Europe at Defense News, reporting on the state of the defense market in the region, and on U.S.-Europe cooperation and multi-national investments in defense and global security. Previously he served as managing editor for Defense News.