Among the 10 armament projects approved by the Budget and Defence Committee of Germany’s Bundestag on 6 July 2023 was one for three new fleet service ships, including an associated training and reference facility. This is an amendment to the procurement contract. On 10 July the contract for the vessels was signed by the President of the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw), Annette Lehnigk-Emden, and Tim Wagner, CEO of the NVL Group, which is acting as the contractor.
On 23 June 2021 the contract for the procurement of three Class 424 fleet service ships with a training and reference facility reconnaissance was signed between the BAAINBw and NVL BV & Co KG, which at the time was still Fr Lürssen Werft GmbH & Co KG. With the parliamentary approval on 6 July the project now moves from the design phase to the contractual realisation phase, according to an announcement by the German Ministry of Defence (BMVg), which goes on to say: “The total contract thus has a value of up to EUR 3.26 Bn and will be financed from funds of the defence budget. The new ships are to replace the previous three Type 423 fleet service ships. Delivery will take place in the period 2029 to 2031.”
Earlier, it was assumed that first ship would be delivered in 2027, although that is the year that the delivery of the training facility is expected to take place.
Fleet service ships of the German Navy are units specialised in reconnaissance and signals intelligence (SIGINT) for monitoring sea and coastal areas with special electronic, hydro-acoustic and electro-optical sensors. According to available information on their design, the vessels are understood to be about 140 m long with a displacement of 4,000 tonnes. The crew of the vessels is supposed to be 50 personnel, with the embarked reconnaissance crew also numbering about 50 personnel.
New approach to a naval armament programme
The armament programme for the three new reconnaissance ships has been accompanied by irritations in the recent past, when the NDR, WDR and SZ research organisation concluded the procurement would become more expensive by EUR 1.2 Bn. The reports on which the investigation is based criticise the chosen approach. According to the 2023 federal budget, EPl 14, EUR 1.994 Bn were earmarked for the fleet service boats.
The fact is that the development led to a final design in several rotations, with the contractors and subcontractors involved in these development steps. The aim was to avoid past experiences of amendments being added during construction. ESD research has revealed that the first contract did contain precise specifications on the scope of services for the ships. These functional performance specifications set out the requirements for the vessels, while it was left to the contracting company to implement them in concrete terms. According to statements made in Berlin, Bremen and Koblenz, the procedure was considered quite common and constructive. There were several design loops, at the end of which the current construction specification was drawn up.
The past procedure of submitting a mass of change requests during the construction phase had been criticised by experts and repeatedly (for example at the annual DWT marine workshops in Linstow) there were pleas for an approach in which client and contractor agree together on what is actually to be built.
In the case of the fleet service ships, this was the approach taken. The functional description, shared by all stakeholders including subcontractors, led to the gradual development of the construction specification. With the iterative definition of the requirements for the fleet service ship system, the contractor is not given a target for implementation. In the end the contractor decides how the construction will be done and any errors in the construction are rectified at the expense of the company. This contrasts with the design specifications that have been used up to now, where the contractor is given concrete instructions on how and what is to be built, with defects and faulty performance the responsibility of the client.
Within the chosen more co-operative approach, the BMVg decided to deviate from a pure design-to-budget model and to place greater emphasis on the core mission of the units, namely reconnaissance, and to include newly gained knowledge in the specifications. Elements such as signal acquisition requirements, antenna design, sustainability including medical support, the possibility of using unmanned systems, self-protection and data transmission were re-evaluated.
The approach of a functional description was accepted during the first parliamentary treatment in summer 2021. The budget committee linked its place to a so-called Maßgabebeschluss (decision on the allocation of funds), which, as far as is known, included the budget ceiling of EUR 2.029 Bn (as at 12/2020) as well as the deadline for the completion of the construction specification.
Parliamentary control guaranteed
The decision to impose conditions would have made it possible to sign the contract without prior parliamentary appraisal. In contrast, the BMVg had decided to deal with the matter again in the Bundestag. Not only because of newly introduced operational requirements, but also because of the price development, the Fleet Service Boat Class 424 armament project ran out of budget. Between June 2021 and the end of that year alone, the increases in costs (raw materials, energy, industrial products) accumulated to 25% (source: Federal Statistical Office). According to the available information, this alone amounted to an increase of EUR 835 M, which was confirmed to the BMVg by the price monitoring agency.
In this respect, the chosen approach of jointly developing the draft corresponds to long-voiced ideas for improving the procurement process. Perhaps it will be possible to keep to time and budget in defence projects. That said, its suitability will only be proven with implementation. From the point of view of the turning point of time, critics should reflect on the core of the new approach and be less inclined to engage in the usual bashing of Bundeswehr procurement.
According to an announcement by the National Armament Director, Vice Admiral Carsten Stawitzki, on social media, 31 contracts above the individual value limit of EUR 25 M have been submitted for approval so far in 2023. In contrast, there were 24 such submissions in 2022.
Hans-Uwe Mergener
