Germany’s $6.7 billion frigate deal with Dutch shipbuilder Damen may be the last of its kind
By Sebastian Sprenger, Defense News, January 16, 2020
Dutch naval shipbuilder Damen has won the selection process for the German Navy's new MKS 180 frigates, shown here in an artist's rendering. (Courtesy of Damen)
COLOGNE, Germany — Following the pick of Dutch shipbuilder Damen this week to build at least four new frigates for the German Navy, officials in Germany are finalizing a new policy meant to steer similar contracts to local shipyards in the future.
As drafted, the multi-ministry policy would establish the construction of surface ships as a key technology area in Germany’s security-industry fabric. The designation means Berlin may seek an exception from certain European Union acquisition regulations. Chief among those is a requirement to compete national programs across the bloc, which was the case with the large-frigate-style MKS 180 ships.
German Naval Yards, which teamed with ThyssenKrupp Marine Systems, also had been vying for the deal, portraying their offer as the most German of the proposals, with the promise of jobs and technology kept in the country. Damen, in turn, said this week it would build the ships at the plants of its bid partner Lürssen Group, most notably Blohm+Voss in Hamburg.
New rules on Germany's key strategic industries have been in the works since the governing parties CDU and SPD agreed on a coalition agreement in 2018. That pact said surface shipbuilding would get the designation as a key technology area, but it didn't say when or how.
For the Defence Ministry, the upcoming revision of the 2015 “Strategy Paper of the Federal Government on Strengthening the Defence Industry in Germany,” as the document is titled, is the vehicle that would make it so.
The document is still stuck in the interagency review process, which is more comprehensive this time around because the new version combines defense and civilian aspects for the first time, a spokeswoman for the Federal Ministry for Economic Affairs and Energy told Defense News.
A Cabinet decision on the text is expected within weeks, the spokeswoman said.
Without Cabinet approval, however, the Defence Ministry doesn’t feel tied to the kind of protectionist bent that some lawmakers have previously urged for the MKS 180 competition.
the German Navy's new MKS 180 frigates, shown here in an artist's rendering. (Courtesy of Damen)
“As the process is not yet completed, surface shipbuilding is currently not a key technology area,” a spokeswoman for the Defence Ministry told Defense News. “Once the Cabinet has approved the document, a purely national competition can unfold.”
The German Navy wants the ships as quickly as possible, and some service officials still harbor hard feelings toward ThyssenKrupp for what they consider a botched F125 frigate program caused by years of delays.
German Naval Yards is still weighing its options to challenge the Damen selection, a possibility that Thomas Silberhorn, a parliamentary deputy defense secretary, noted in a Jan. 13 letter to lawmakers. Ministry officials plan to submit a detailed contract proposal for parliamentary debate in the spring, he wrote.
Tobias Lindner, the point man on defense issues for the Green Party in the Bundestag, said he would await details of the proposed contract before making a judgment on the Damen pick.
“It's good that the long competition process has come to an end,” he said in a statement. “I hope that the selection has legal standing.”
As for the merits of going through an EU-wide project solicitation for the new ships, “we’ll probably know only after the last ship has been delivered,” he added.
Even after losing the MKS 180 program, there should be plenty of business for German Naval Yards and the other domestic shipbuilders, according to Sebastian Bruns, who heads the Center for Maritime Strategy and Security at the University of Kiel in northern Germany.
“The military should now quickly move to explain what other naval new-build programs are in the pipeline,” he said, citing corvettes, oilers, reconnaissance ships, mine hunters and support vessels that are expected to be on the table.
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