By a first-instance decision of February 2, 2021, the Office for the Protection of Competition imposed a fine of CZK 550 million on the Ministry of Defense of the Czech Republic for violating the Public Procurement Act in the criticized purchase of American Venom and Viper helicopters.
In its report, the Office states:
"By its first-instance decision, the Office for the Protection of Competition imposed a fine of CZK 550,000,000 on the Ministry of Defense of the Czech Republic on February 2, 2021 for violating the Public Procurement Act. The decision is not yet final and may be appealed.
The Ministry committed the offense by illegally concluding an agreement with the United States Government to purchase multi-purpose military helicopters before deciding on the objections of the Italian company Leonardo S.p.A., which is a manufacturer of military helicopters, among others.
See also: Leonardo turned to the Office for the Protection of Competition regarding the multi-purpose helicopters acquisition
The Office has previously decided not to impose a prohibition on the performance of the contract in view of the security interests of the State in the case. "
The protracted acquisition of multi-purpose helicopters was achieved by the Ministry of Defense in a debatable result just before the end of 2019. Instead of the long-required twelve multi-purpose helicopters, eight multi-purpose Venoms and four attack Vipers were purchased as an integrated system, which according to the Ministry and the Army met the best tactical and technical requirements, was operationally tested and was the only one offered for sale in G2G format.
The purchase of helicopters, which are to replace the obsolete Mi-35 for almost 18 billion crowns, has been criticized as too expensive and disadvantageous for the Czech Republic.
In the past, Leonardo repeatedly approached the Office of the Office, offering AW139M helicopters to the Army of the Czech Republic for approximately half the price of Americans. It accused the Ministry of Defense of not respecting European legislation and abusing the possibility of exemption from the Public Procurement Act. And also that the contract for the purchase of helicopters was signed without settling its objections. This was already acknowledged by the Office in the summer of 2020, at the same time the Office stated that “imposing a ban on performance of the contract would jeopardize the existence of a broader defense or security program, which is crucial for the security interests of the state. For this reason, the Office did not impose a ban and rejected the proposal. However, the contracting authority may be subject to a significant fine in view of the seriousness of the conduct and the value of the contract."
The agreement was concluded during the tenure of the Deputy for Acquisitions of Říha, who has recently returned to the Ministry of Defense to head the newly established legal and investment section. He resigned in connection with a number of contracts for which there was an unexpected price increase, in particular the acquisition of the VERA NG passive trackers. The Ministry does not agree with the Office's conclusions on helicopters and considers its acquisition procedure to be correct.
See also: MoD did violate the Public Procurement Act – but the purchase of the Venom and Viper helicopters stays confirmed by the OPC
The chairwoman of the Defense Committee, Jana Černochová, said: „In this context, I call on Prime Minister Babiš to immediately address the personnel situation at the Ministry of Defense and draw the appropriate consequences from this mistake. If we are to increase funding for the Army, and if this increase is to continue to have broad political support, we cannot afford to have it subsequently wasted on fines of hundreds of million and for this sector to be further dismantled.
Although the decision on the fine is not final, it is still alarming. All the more so as the complaint against the procedure in this contract also lies with the European Commission. It is unbelievable that such a failure can occur with a contract of strategic importance. We want to hear from the Minister at the Committee meeting whether the purchase is not endangered, how it will resolve the situation and what consequences it will draw from this failure.“