German cartel office OKs newly-formed K 130 corvette construction consortium

Construction of additional five corvettes for the German Navy has been cleared for take-off by the German cartel office which ruled that the newly-formed shipbuilding consortium broke no cartel laws.

This means that German Naval Yards Kiel GmbH will be able to join the ARGE K130 consortium – made up of Lürssen and Thyssen Krupp Marine Systems – which built the first five ships.

To remind, Germany’s defense ministry wanted to speed up the corvette acquisition by avoiding an open procedure, buying the five corvettes directly from the ARGE K130 consortium.

However, the cartel office upheld a complaint made by shipbuilding competitor German Naval Yards, arguing that an open tender had precedence over a quick procurement.

In response to the ruling, Lürssen and TKMS offered German Naval Yard to join the consortium with a 15 percent stake in the construction. This solution has now received a green light from the cartel office.

“This is really good news,” Inspector of the German Navy, Vice Admiral Andreas Krause, commented. “This goes to show that we can implement armament projects quickly if we act in concert and engage in open discussion.”

Price issue

The new K130 corvettes still have one issue to clear as the actual contract to build the ships is yet to be signed. The price could prove to be a stumbling block according to German media reports which say the shipbuilders are asking €2.9 billion for the five corvettes and two training facilities for corvette-operation.

The almost €3 billion price tag is in stark contrast to the €1.5 billion the ministry of defense expected to spend on the corvettes when the acquisition was announced in October 2016 by defense minister Ursula von der Leyen.

The ministry reasoned that the corvettes could be cheaper because they are an existing design and wouldn’t have to be designed from scratch.

Whether the contract is signed by August, before the German federal elections, remains to be seen.

Should everything go according to the defense ministry’s plans, the German Navy could receive the first of five corvettes by 2019 with remaining ships joining by 2023.

The ships are set to be stationed at the German naval station Warnemünde, Kiel, bringing around 1,000 more personnel to the base.