Last week, the Ministry of Defense had the Government approve two very much discussed contracts, which have an indirect but very strong link to a third contract. It concerns the VERA NG passive surveillance systems, for which the price suddenly jumped in such a way that Deputy Říha had to leave the head of the Armaments and Acquisitions Section of the Ministry of Defense. Impressed by the scandal, the Ministry examined other ongoing orders and in two other significant cases a similar problem was found: the modernization of Mi-171Sh/ShM helicopters, and the so-called technical evaluation of the T-72M4 CZ tanks. The last one meets the conditions for the worst MoD contract this year.
The case of VERA NG passive surveillance systems will haunt ministerial officials, as well as Minister Metnar himself, for a long time to come. The Pardubice ERA company from the Omnipol Group asked for twice the price (1.5 billion) than the one originally approved by the Government for this acquisition project. And it was also reminded of the fact that in 2014 NATO received the same systems for a one-third price compared to the one decided by the Czech Ministry. The explanations were and remain unconvincing (emphasizing the radar mobility for the Czech Army), but the contract was signed, Deputy Říha left, extraordinarily high advances under the contract were paid.
See also: Czech Military Acquisitions – excessive advance payments and overpriced contracts investigated
The helicopters Mi-171Sh will be modernized for the Air Force by the LOM Praha state enterprise. Last autumn, the Government accepted the price of almost one billion crowns. Fifteen helicopters were to receive modern on-board transponders, and half also new radio stations and a radio navigation system. After the outbreak of the VERA NG affair, it became clear that even this contract would cost half a billion more, regardless of what the Government talked about in November. The ministry explains the increase by including the production of a prototype (350 million) and cryptographic and satellite equipment and medical kits (150 million). The Government has now approved the newly set contract. In principle, in this case, the arguments of the Ministry can be accepted, although such preparation of acquisition and modernization projects is certainly not a sign of a good management.
However, it is worse with the order for the modernization of tanks. For those, the VOP CZ state enterprise got from the original 907 million crowns to 1,515 (excluding VAT). Following criticism from, among others, members of the Defense Committee, Minister Metnar promised to inspect the contract with an expert team. He did without it, and instead a price reduction was negotiated with the state-owned company to its original level. The price of the reduction is that the power units won’t be modernized as previewed.
See also: Further modernization the ex-Soviet Czech T-72M4 CZ makes little sense
The VOP CZ state enterprise, which has been at a long-term loss (over 200 million crowns in the last two years), prepared a public supply contract for the technical improvement of the T-72M4 CZ tanks, and chose subcontractors without competition. When the Ministry of Defense was asked about the share of Czech domestic industry in the entire modernization of tanks, the answer was that it should be 35%. However, if we look at the value of these subcontracts, which in total amounts to more than 630 million, Czech companies will participate in it with only 12% (Mesit with 12.7 million and Delinfo with 62.7 million). The majority (492 million) will go to Italy for the fire control system, which has been the major issue of these tanks for many years, to Germany and to Slovakia.
The rest of the participation of domestic industry in this contract, ie almost 280 crowns, will go directly to VOP CZ, which at first glance confirms the impression that the main purpose of the contract is to keep the indebted state enterprise alive. Even from a medium-term point of view, maintaining old technology is not a rational step - the ministry should have embarked on a path of complete replacement of the armament of the tank battalion. Private Czech companies selected by the state-owned enterprise will get a share of 8.3% of the "technical evaluation" of the T-72M4 CZ tanks.
See also: The share of the Czech defense industry on the modernization of the T-72M4 CZ tanks will only reach 35%
The trio of debatable orders after less than a year looks like the following: the Ministry of Defense will buy overpriced passive surveillance systems and the problem was "solved" by the deputy's resignation. The Government has now approved a change to the helicopter project. And the modernization of the tanks will take place without the engine part and with minimal participation of the Czech defense industry.