COLOGNE, Germany – The German federal procurement dispute court has ruled that the German Defense Ministry cannot be forced to resume a tender to purchase heavy haul helicopters that officials suddenly rejected last fall over cost concerns.
The decision of a court of the Federal Cartel Office follows Lockheed Martin-Sikorsky’s protest against the repeal. Executives had said the legal pressure was meant to test the water in an unusual federal procurement situation valued at billions of dollars.
Lockheed Martin and Boeing were the only bidders trying to replace the German CH-53G helicopters when the government abandoned the procurement process here and offered the CH-53K King Stallion and the CH-47 Chinook, respectively.
While the court upheld the government’s decision to abandon the tender, the March 5 ruling still ruled the move illegal, according to a statement posted on the Bundeskartellamt’s website on Tuesday. This is because the Department of Defense failed to properly document its argument that the cost of the two deals was unacceptably high, the statement said.
The last point is a crucial dispute with the procurement authorities of the Bundeswehr, which calls into question a basic awareness of pricing in large acquisition programs.
“Cost estimates for public contracts should always be verifiably documented,” said Andreas Mundt, President of the Federal Cartel Office.
The court essentially decided on the case without interfering in the process, said Christian Scherer, an expert on public procurement at the law firm CMS Germany in Cologne. Still, it will be important for companies to make such a decision in the future as they decide on possible claims for damages against the government arising from the now defunct tender, he added.
Lockheed’s willingness to pursue further litigation is questionable, however, as the company continues to want to sell its king stallion to Germany over the next defense leaders’ decisions. Managers have two weeks to decide whether to appeal the decision to another court.
Late last year, Defense Department officials requested information from the Defense Security Cooperation Agency for information on the types of aircraft used by Boeing and Lockheed. Buying standard aircraft with no Germanic extras through the U.S. military’s sales process would cost less and do battlefield cargo transportation just as well, so the reasoning.
The no-frills approach to the new acquisition approach encourages competitor Boeing, executives there said recently. The company’s previous marketing strategy was based on the promise of a proven workhorse that the bank would not break.
“By buying off the shelf, most of our customers get what they want,” said Michael Hostetter, who heads the Boeing campaign for the heavy lift truck (STH) helicopter program in Germany.
Lockheed, on the other hand, hopes that a recent order of King Stallions from Israel will serve as an advertisement for Berlin.
Meanwhile, the US Government Accountability Office last week recommended that the Marine Corps limit the speed of procuring its King Stallions to allow the test plan for the new aircraft to catch up. According to auditors, the move would later help to avert further cost increases.