May 17, 2017 / 11:06 AM / 3 months ago

German office upholds complaint against warship order plans - media

BERLIN (Reuters) - Germany's federal cartel office has upheld a complaint filed by German Naval Yards after the defence ministry decided to skip an open procurement for five new military corvettes valued at over 1.5 billion euros, according to German media reports.

The ministry had no immediate comment on the reports in German newspapers Die Welt and Sueddeutsche Zeitung.

A spokesman for the cartel office declined to comment, saying only that a decision was likely to be announced on Thursday.

The ministry had argued that the quickest way to meet the navy's urgent military needs in the Baltic and Mediterranean seas would be to buy more of the ships already produced by a consortium including Luerssen Werft and Thyssenkrupp.

But the cartel office agreed with German Naval Yards that the need for competition trumped urgency in this case, and said the ministry should have opened the process to other potential bidders, the Sueddeutsche Zeitung newspaper reported.

Luerssen, which leads the consortium, said it could not comment on an ongoing process.

The German Naval Yards shipyard, which is owned by Privinvest, was not immediately available to comment.

The ministry will have two weeks to appeal the decision.

It told lawmakers on Tuesday that it was unclear given the complaint whether the planned corvette purchase -- spending added to the 2017 budget after delays in another multibillion-euro warship programme -- could be presented to the budget committee before a general election in September.

The ramifications of the cartel office's ruling were unclear. Sources familiar with the process said other options were possible, such as including German Naval Yards in the consortium, which could resolve the issue and keep the project on track.

The ministry had hoped to start using the first two of the five new ships as early as 2019.

The possible delay in the corvette programme threatens to compound acquisition issues dogging the German military as it tries to rebuild after years of post-Cold War spending cuts.

Defence Minister Ursula von der Leyen took office in late 2013 vowing to rebuild the military after 25 years of spending cuts, but her three biggest arms programmes -- a 5 billion euro missile defence programme, a new drone and the multi-role MKS 180 warship -- have all been delayed in recent months.

Reporting by Andrea Shalal; Editing by Catherine Evans

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