The Russian invasion of Ukraine triggered a near-worldwide defense earthquake. In Germany there should now be a debt-financed special fund of 100 billion euros to modernize the Bundeswehr. In addition, the federal government is planning to increase the annual defense budget from the last 47 billion to up to 80 billion euros – in the world ranking of military expenditure, Germany has thus moved up to third place behind the USA and China and clearly overtakes Russia.
With the windfall, the armed forces are to be powerfully upgraded for national and alliance defense and the long-known material shortage is finally to be remedied. But how can the unexpectedly large financial leeway be used in a meaningful way? The spectrum of the public debate ranges from the reintroduction of conscription to better armaments coordination in the European Union to the radical reform of the German procurement system.
The Federal Ministry of Defense and German armaments manufacturers are already in intensive talks. So far, department head Christine Lambrecht has primarily promised a streamlining and simplification of procurement law. This is already being discussed with the Ministry of Justice, she explained. However: the announced public procurement law reform is old hat and will not lead to the desired result. A look into the past shows that.
The procurement system of the Bundeswehr was planned in a security policy context that is largely obsolete today. A gradual change in the German procurement system and thus also in the 12,000-strong Koblenz “Federal Office for Equipment, Information Technology and Use of the Federal Armed Forces” will by no means be sufficient. What we need now is a turning point.
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The Neverending Story of 120,000 Assault Rifles
The procurement office has to be turned upside down because it has too many staff compared to similar public or private institutions. The procurement processes and organization in the Bundeswehr must also be radically restructured, simplified and professionalised. This requirement is not new. It was already raised in the report of the Bundeswehr Structure Commission of October 2010, without this having had any noticeable consequences.
For a long time, the main accusation has always been directed against public procurement and contract law. It is intended to create a regulatory framework through regulated procedures and ensure transparency, competition and cost-effectiveness in selection decisions. If bidders see their rights violated in a procurement procedure, they can lodge a complaint with the contracting authority or the judiciary and stop the award of the contract.
A prominent case that has not been resolved for several years is the dispute between the arms manufacturer Heckler & Koch and its competitor CG Haenel. It is about 120,000 new assault rifles for the Bundeswehr. Heckler & Koch sees its patent rights violated by CG Haenel. The buyers had simply overlooked the patent law dimension in the award procedure and thus triggered endless disputes. To date, the order has not been awarded.
All reform steps fizzled out without effect
Legal protection for bidders is considered to be a central disruptive factor for accident-free and speedy awarding of contracts. Politicians have tried several times to adapt the legal framework in order to get material to the troops more quickly. The “Armament Agenda” from 2014 and the “White Paper 2016” are just two examples of this. The coalition agreement between the CDU, CSU and SPD from 2018 and the current agreement between the traffic light coalition partners also took or are planning to reorganize the framework conditions of the German armaments system, some of which have not changed for decades.
In fact, the requirements for the procurement of military goods are now significantly lower than they were years ago. In the case of key technologies, there is even no need for process competition at all. But paper is known to be patient. In real life, none of the changes mattered. The repair of the “Gorch Fock”, for example, got completely out of hand. Since 2015, the costs for the German Navy’s training sail ship have exploded from ten to around 135 million euros.
The “Gorch Fock” was only able to set sail again last year. In the case of the “Fregatte 126”, the largest shipbuilding project in the history of the German Navy at a planned cost of 5.3 billion euros, the procurement organization needed several years and repeated attempts to conclude contracts with suppliers for the four multi-purpose combat ships. Things are no better for helicopters and IT equipment.
The equipment misery has organizational reasons
All reform steps have fizzled out without effect, because politicians, despite big announcements, left it at selective interventions in the procurement system. Real, visible progress or successes in improving armaments procurement were not achieved – instead, the Bundeswehr got deeper and deeper into an equipment crisis. Army Inspector Alfons Mais recently summed it up refreshingly openly: “The Bundeswehr is more or less blank.”
And the simplification of the procurement processes that has now been brought back into play by politicians will not change that. Because the underlying causes of the Bundeswehr’s equipment misery are of an organizational nature – they were previously ignored due to political consideration and fear of the strong staff representation.
Despite all the regulatory simplifications and additional specialist staff hired, the procurement office in Koblenz still too often fails to process orders reliably and with high quality. The authority lacks professional legal knowledge, its ability to manage complex military projects is inadequate, and communication in the market environment for armaments is underdeveloped. Even 14 years after the defense procurement law came into force, the office is still insecure, prone to errors and resistant to advice.
The authority seems uninformed and clumsy when it comes to the implementation of procurement procedures and the execution of armaments contracts. This bureaucratic mammoth organization does not master the basics of professional procurement and contract control. It is therefore urgently necessary to take away responsibilities and transfer them to the troops. In the medium term, a change in the organizational model is also necessary, the procurement office must be converted into an agency or corporation.
That would be the right starting point to clear out the inefficient procurement system and modernize it. Only if the federal government no longer spares the encrusted Koblenz bureaucracy can the new windfall of the Bundeswehr help at all.
The author: Jan Byok is a lawyer and colonel in the reserve.
More: The difficulties of the 100 billion euro package