Germany Market Report - NHADEC

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Germany Market Report30 January 2020

Copyright © 2020 Jane's Group UK Limited. All Rights Reserved.

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Report Introduction


• This report provides a review of the defense spending and procurement programs in Germany.

• The report draws heavily on the following Janes products and has been tailored for NH ADEC and its membership:

• Germany Market Report – Navigating the Emerging Markets • Germany - Defence Budgets • Janes Defence Weekly articles • Markets Forecasts • Sentinel Armed Forces Files

The report is meant to guide NHADEC members with data, visualization, analysis and insights to support future business development decisions.

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Germany is a founding member of what became the European Union (EU) and has the EU’s largesteconomy.

A member of NATO since 1955, Germany has the fourth-largest defense budget in NATO and the third-largest in the EU. Despite this, defense investment accounts for 1.3% of GDP; below the NATObenchmark.

The German market benefitted from renewed clarity from 2016 and 2020, with the publication of twosuccessive defense White Papers. In addition, former defense minister Ursula von der Leyen outlined aUSD 143.7 billion 15‐year materiel procurement and upgrade package in January 2016. January 2016also saw the publication of Germany’s Air Capability Strategy Paper which outlined procurementobjectives in the aerospace domain.

German defense spending is relatively low as a percentage of GDP , with it standing at 1.3% as of 2020, although efforts have been apparent to move towards the NATO benchmark of 2% of GDP during the next decade.

Defense spending had been on an upward trajectory and budgets of EUR43.2 billion and EUR45.1 billion were set for 2019 and 2020 respectively. The 2019 settlement was a 12% real terms increase over the 2018 settlement, whereas the 2020 settlement marked a year-on-year increase of 3.9%.

A budget of EUR46.83 was set for 2021 (including EUR1.2 billion from a stimulus fund in relation to the Covid-19 pandemic). The outlook at that time was for settlements of EUR46.83 billion, EUR46.13 billion and EUR46.14 billion in 2022, 2023, and 2024 respectively.

Executive Overview

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The United States and Germany have both core NATO members since the organization’sfounding.

Nonetheless, US President Donald Trump’s comments about NATO defense spending asa whole, and that of Germany in particular has highlighted differences in ideology andapproaches between these two core alliance members. With NATO defence spending,and Germany’s in particular historically below the 2% threshold set by the alliance inrecent years, Trump has demanded increased spending by European powers. As a result,Trump announced in June 2020 a major scale back of US troops in Germany, with thewithdrawal of 12,000 troops justified by the statement; ‘We’re reducing the force becausethey're not paying their bills; it's very simple’. Despite this, legislative efforts within theUnited States are underway as of December 2020 to halt this withdrawal.

Outside the political arena, defense relations remain close, with regular exercises such asthe NATO Defender Europe 2020 exercise being conducted with significant involvementof German forces.

Despite the imminent departure of President Trump from the White House, defenserelationships between the two countries are expected to remain somewhat strained. Withthe US focus transitioning towards Asia in the long term, there is an expectation thatGermany will be required to step up as one of the primary providers for security withinEurope.

US-Germany Strategic Relationship

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Co‐operation with France is particularly deep and encompasses air systems; land systems;maritime patrol capabilities; common missile and helicopter programs; space surveillancetechnologies; and cyber security.

A key element of this cooperation, was the merger of the German firm, Krauss-Maffei Wegmannwith the French Nexter Systems under KNDS with a 50/50 share between both companies.KNDS now produces the majority of armoured vehicles for both the French and Germanmilitaries, along with being the primary driver for the next generation European Main Battle Tankprogram.

Another critical area of cooperation with French Industry is the Future Combat Air System, whichalso incorporates Spain into a program to develop a family of platforms including swarmingdrones and a sixth-generation fighter aircraft. With Airbus, Indra, Dassault, Safran, MTU AeroEngines, Thales and MBDA taking part in the program, initial R&D commenced in February 2020,with initial test flights expected In the mid 2020’s and initial operational capability by 2040.

Aside from R&D, there is significant sharing of resources between France and Germany, with theagreement to jointly acquire and operate C-130J and KC-130J aircraft under a France-based jointtransport squadron. Germany is procuring six aircraft as its contribution, three of which will beC‐130J‐30s with the other three being KC‐130J tankers. Deliveries are planned to start in 2021and FOC is expected in 2024.

Bilateral partnership with France

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Defense SpendingDefense Budget

and % GDP 2020 2021 2022 2023 2024

Constant 2020 USD billion 49.238 50.602 49.980 48.614 47.975

% of GDP 1.3% 1.4% 1.3% 1.3% 1.2%

German defense expenditure has traditionally fallen short of the 2% benchmarked for NATO members, with funding varying between 1.0% and 1.4%over the last decade. The lack of direct military threats since the reunification of Germany in the early 1990’s have driven defense spending to remaincomparatively low as a proportion of GDP, especially compared to Cold War spending, where an average of 3% of spending was allocated to defense.

However, defense spending had been on an upward trajectory in recent years and budgets of USD 48.109 billion and USD 49.238 billion were set for2019 and 2020 respectively. The 2019 budget saw a 12% real terms increase over the 2018 budget, whereas the 2020 budget marked a year-on-yearincrease of 3.9%.

The German cabinet on 15 March 2017 approved the main points of a 2018 federal budget that foresaw a EUR1.4 billion increase in defense spendingto USD 47.16 billion. The cabinet also approved the main points of a finance plan for 2017–21 that was to increase the defense budget by USD 10.17billion to USD 51.82 billion by 2021.

The 2018 Budget and Finance Plan 2019–22 outlined significant changes to previous plans. The German defense budget in 2019 saw an increase toUSD 50.84 billion – an 8% increase over 2018 spending in nominal terms (6.7% real increase). The budget was then projected to increase by 0.5% and2.3% nominally in 2020 and 2021 respectively.

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Defense Spending Outlook – Accelerated Outlook

Type of Spend 2020 2021 2022 2023 2024Procurement 8.686 8.943 8.954 8.778 8.743

RDT&E 1.494 1.538 1.527 1.486 1.467

Military personnel 24.478 25.119 24.637 23.857 23.544

Operations and maintenance 12.584 12.945 12.826 12.502 12.256

Procurement 1.996 2.056 2.036 1.989 1.963

Total 49.238 50.602 49.980 48.614 47.975

Two announcements by the German Federal Ministry of Defense (BMVg) in January 2016 provided clarity on procurement andupgrade aspirations.

The first was the Air Capability Strategy Paper, which was released on 19 January 2016, while the second was the presentation byformer defense minister Ursula von der Leyen of a major defense equipment spending package that was put before the Germanparliament on 27 January. The package was valued at USD 143.7 billion and was to run over 15 years. An additional package ofmateriel procurement plans was also put forward to parliament by the defense ministry in April 2018.

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Defense Spending Outlook by CategoryProcurement

According to the 2016 Air Capability Strategy Paper and the presentation by Defense Minister Ursula von der Leyen to the German parliament, a range ofmajor procurement programs were put forward under a USD 143.7 billion package to be carried out until 2030. However, naval procurements were notableby their absence, but long term naval plans have been outlined on a piecemeal basis elsewhere.

Major programs for the immediate future include:

• Leopard 2 – Increasing fleet numbers from 225 to 320 and upgrading the existing inventory to the Leopard 2A7 standard.• Boxer 8x8 APC – procurement of an additional 130 vehicles• Eurofighter and F/A-18E/F/EA-18G aircraft – to replace the existing Panavia Tornado fleet.• Replacement of the Sea Lynx Helicopter fleet – the NH90 Sea Tiger has been selected as a replacement with 31 to be procured for EUR 2.7 billion


RDT&E 1.494 1.538 1.527 1.486 1.467

Military Personnel 24.478 25.119 24.637 23.857 23.544

O&M 12.584 12.945 12.826 12.502 12.256

Other 1.996 2.056 2.036 1.989 1.963

Total 49.238 50.602 49.980 48.614 47.975

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Defense Spending Outlook by Category

Research, Development, Training and Evaluation (RDT&E)

The 2019 budget allocated USD 1.376 billion to research and development comprising 2.8% of the total defense budget. Spending is

forecast to remain broadly stable, with major research programs including cooperative development of future MBT’s with France, and

development of the next generation of frigates for the Deutsche Marine.


RDT&E 1.494 1.538 1.527 1.486 1.467


O&M 12.584 12.945 12.826 12.502 12.256

Other 1.996 2.056 2.036 1.989 1.963

Total 49.238 50.602 49.980 48.614 47.975

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Personnel

Germany suspended compulsory military service in November 2011. This has resultedin a smaller professional force geared towards increased efficiency.

Military Personnel accounts for 49.7% of the defense budget in 2020 with thisexpected to drop to 49.1% by 2025.


RDT&E 1.494 1.538 1.527 1.486 1.467


O&M 12.584 12.945 12.826 12.502 12.256

Other 1.996 2.056 2.036 1.989 1.963

Total 49.238 50.602 49.980 48.614 47.975

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Operations and Maintenance (O&M)

Despite the projected expansion of the German armored forces, O&M spending is expected to remain largely static over the coming

five years, with 25.5% of the defense budget in 2020 being allocated to supporting existing systems.

By 2024, the O&M budget is expected to remain at 25.5%, with only minor changes to overall requirements as older systems are

replaced with new platforms.


RDT&E 1.494 1.538 1.527 1.486 1.467


O&M 12.584 12.945 12.826 12.502 12.256

Other 1.996 2.056 2.036 1.989 1.963

Total 49.238 50.602 49.980 48.614 47.975

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Defense Spending by Service

Type of Spend 2020 2021 2022 2023 2024 SUM %Army 13.787 14.169 13.745 13.126 12.953 67.779 27%Navy 9.552 9.918 9.996 9.966 9.835 49.267 20%Air Force 16.249 16.699 16.743 16.286 16.249 82.048 33%Defense Wide 9.651 9.817 9.496 9.237 9.651 246.409 19%

Total 49.238 50.602 49.980 48.614 47.975 65.322 100%

Defense spending had been on an upward trajectory and budgets of EUR4 3.2 billion and EUR 45.1 billionwere set for 2019 and 2020 respectively. The 2019 budget was a 12% real terms increase over the 2018settlement, whereas the 2020 settlement marked a year on year increase of 3.9%.

A budget of EUR 46.83 was set for 2021 (including EUR 1.2 billion from a stimulus fund in relation to theCovid-19 pandemic). The outlook at that time was for budgets of EUR 46.83 billion, EUR 46.13 billion andEUR 46.14 billion in 2022, 2023, and 2024 respectively.

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Service Specific Spending - Army

Historically one of the largest and most professional armies in Europe, the GermanArmy is seeing significant enhancement to its armored formations in response to risingtensions in Eastern Europe.

Specifically, the army is building back up to six fully equipped armor battalions. Thearmy will ultimately have an operational fleet of 264 Leopard 2 tanks, as well asadditional tanks for training and trials. Artillery and engineer units are also going to bereinforced and overall personnel numbers are being increased. The German Army willalso restructure to have 10 brigades as part of three fully equipped and capable heavydivisions. However, this restructuring will not be completed until the mid‐2030s.

Type of Spend 2020 2021 2022 2023 2024Procurement 1.751 1.792 1.842 1.787 1.706RDT&E 0.414 0.425 0.412 0.394 0.389Military Personnel 7.996 8.218 7.972 7.613 7.513O&M 3.033 3.117 3.024 2.888 2.850Other 0.551 0.567 0.550 0.525 0.518Total 13.787 14.169 13.745 13.126 12.953

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Key Programs - Army

Leopard 2A7 Upgrade Program – 20 Leopard 2A6’s are to be upgraded during 2019 and2020, with additional units expected to undergo the upgrade process in the following years.

Boxer 8×8 APC Procurement: Procure a new 8x8 wheeled APC platform to replace the Fuchs6x6 APC. Germany announced in December 2015 that the German Army was to receive afurther 131 ARTEC Boxer vehicles under a EUR 476 million contract. The Bundeswehr alreadyhad 272 Boxer vehicles on order at that time, and the new order brought this total to 403 units.

Ungeschützte Transportfahrzeuge transport vehicles programme: Acquire a range oflogistics vehicles to replace legacy trucks. An initial order for 558 vehicles was placed fordelivery between 2018 and 2021. A second order for 252 trucks came in June 2019 and by mid-2020 a total of 1,870 trucks had been ordered. In October 2020 the Bundeswehr announced aplanned procurement of an additional 1,000 trucks valued at EUR 398 million

Future Main Ground Combat System Program: Develop in partnership with France a newgeneration of Main Battle Tanks to replace the Leopard 2 and Leclerc MBT’s. A frameworkagreement was signed in April 2020 and in May 2020 Krauss-Maffei Wegmann (KMW),Rheinmetall, and Nexter announced that they were to commence an 18-month architecturestudy relating to the solution. Funding for the program has been agreed on a 50/50 basis.

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Service Specific Spending - Navy


The German Navy’s small number of ships has left the force stretched thin. Theparliamentary commissioner for the armed forces urged the navy in early 2018to stop international missions because of a lack of sufficient available ships.The problem has been exacerbated by a lack of spare parts to maintainexisting ships and delays in bringing new ships into service.

The German Navy is short on conventional high-intensity warfighting capability.This is due to the fact that the Type 125s entering service have a reduced levelof armament compared with legacy German frigates. Moreover, the impendingretirement of its ageing tanker fleet may further impact its ability to deployforces on extended missions.

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Key Programs - Navy

Type 707 Replenishment tanker procurement: Procure new replenishment vessels to replace the Type704 Rhön-class tankers. The Type 707s are expected to enter service in 2024 and will remain in the fleetout into the 2050s.

Additional Type 212A submarines: In November 2017 Germany confirmed it will procure two additionalType 212 submarines. This is being done in co‐operation with Norway and will involve an upgradedGermany‐Norway/next‐generation (NG) configuration from ThyssenKrupp Marine Systems. Delivery of thefirst boat to Germany is expected in 2027 and the second in 2030.

Baden‐Württemberg‐class procurement: Procure new Type 125 Frigates to augment the existingBremen Class Frigates. The first vessel was commissioned in June 2019, although full operationalcapability is still pending. The second of the class was delivered in March 2020 and formally commissionedin June, later than originally scheduled, with the final two frigates entering service later in 2021.

Sea Lynx replacement: The German Navy is seeking between 18 and 24 helicopters to replace itsWestland Mk 88A Sea Lynx ASW helicopters. A contract is expected in 2020/21 ahead of entry into servicefrom 2023. In November 2020, the German Bundestag cleared a EUR 2.7 billion purchase of 31 NH90 SeaLion.

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Service Specific Spending – Air Force


The German Air Force (Luftwaffe) operates a fleet of more than 200 combat aircraft, which includespure air defense fighters, dedicated ground strike aircraft, electronic attack aircraft, and an increasingnumber of multi‐role aircraft. However, the combat aircraft fleet has struggled to maintain adequateavailability, and the organization as a whole has no combat experience against conventional orasymmetric threats.

The Luftwaffe's largest procurement programs are for the Eurofighter and Airbus A400M. Germanywill also begin replacing its fleet of Tornados with 55 new Eurofighters and 30 Boeing F/A-18E/FSuper Hornets, in addition to acquiring 15 EA-18G Growlers, beginning in 2025. In the longer term,Germany has decided to replace its CH‐53 fleet with a new type between 2020 and 2025. On theground, Germany intends to procure 8–10 batteries of the Medium Extended Air Defense System(MEADS).

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Key Programs – Air ForceFuture fighter Programme: Germany is collaborating with France and Spain to develop a new fighter (NF) or next‐generation fighter. The manned combat aircraft is to be developed to operate in conjunction with a swarm of unmanned 'wingmen' as a next‐generation weapon system or remote carrier elements. The manned and unmanned teams are collectively referred to as the Future Combat Air System. The release of a common operational document is due in 2020, with a demonstrator platform to be built and flown during 2025. Between 2025 and 2030, the design will be fine‐tuned ahead of the specifications being frozen in time for an in‐service date of between 2040 and 2045.

C‐130J Super Hercules Procurement Program: France and Germany are setting up a joint air transport squadron that will operate Lockheed Martin C‐130J Super Hercules aircraft. Germany is procuring six aircraft as its contribution to the joint squadron, three of which will be C‐130J‐30s with the other three being KC‐130J tankers. Deliveries are planned to start in 2021 and FOC is expected in 2024. The aircraft will be stationed at the French air base at Évreux. Before agreeing to set up the multinational squadron, reports had already emerged that Germany was contemplating the purchase of up to 10 C‐130Js for special operations as the A400M is considered too large for some of these missions.

Heavy transport helicopter Replacement Program: he Luftwaffe has decided to replace the CH‐53 fleet with a new heavy transport helicopter, The new helicopter fleet will retain the operational-tactical capabilities provided by the CH-53, while building up and expanding the Luftwaffe's combat search and rescue, personnel recovery, and special forces support capabilities. The Luftwaffe plans to procure 44–60 of the new helicopters over an eight‐year delivery period. Lockheed Martin is offering the Sikorsky CH-53K King Stallion to Germany, while Boeing is offering its CH-47F Chinook. Type selection is expected in late 2020 and deliveries from 2024–31.

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NH ADEC Identified Opportunities• Recent Awards

• Current Opportunities

• Forecasted Opportunities


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Opportunity Stats – Defense Wide

No. Type Projects Opportunity Timeframe Total Value (Bn)

Current Opportunities 2020-2021

10 C4ISR, Naval Tankers, Helicopter Upgrades, Light

Helicopters, Combat Aircraft, Transport Aircraft, Naval

Auxiliaries

Now $ 14.19

Forecasted Opportunities 2021-2023

8 Costal Tankers, Air Defense Systems, Landing Craft,

Armored Vehicles, Jet Trainers, Naval Auxiliaries

Imminent $ 2.17

18 $ 16.36

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Current Opportunities Summary – Defense Wide

Type Service Opportunity Est. Value (USD M)

Mil Aircraft Air Force Tornado Replacement Program $ 11000.00Mil Aircraft Air Force SIGNIT Global 6000 Aircraft $ 85.00Mil Aircraft Army Tiger Mk3 Helicopter Upgrade $ 285.00Mil Aircraft Air Force A321 Transport Aircraft $ 240.00Mil Aircraft Air Force Tornado Service Life Extension $ 1941.00

Total $ 13522.50

Highlighted programs briefly described in next slide

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Key Opportunities – Defense WideTornado replacement program: Germany plans to procure new aircraft to replace the Tornado, which will be phased outgradually by 2035. In April 2020, the German Ministry of Defense indicated that it would purchase 55 Eurofighters and 30Boeing F/A-18E/F Super Hornets (and 15 E/A-18G) to fulfil this requirement. The F/A-18E/F was selected on the basis of itsability to undertake nuclear strike missions with the US B61 freefall bomb.

Tiger Mk3 Helicopter UpgradeGermany is on the cusp of an agreement with Airbus in partnership with France and Spain to upgrade its existing fleet ofTiger helicopters. The Mk3 upgrade will include the integration of new 'digital space', weaponry, and self-protectionenhancements, as well as enhancements to the Tiger's communications suite, including a Link 16 datalink and Blue ForceTracking system. Key to the upgrade will be the fielding of a common missile across the different variants in service. TheMk3 MLU is also an attempt to bring the costs associated with differing variants down by fielding a more commonconfiguration across both current and future operators. The Mk3 MLU is due to be rolled out in 2023, with time allowed forthe participating operators to reach agreement.

A321 Transport AircraftThe Bundeswehr announced on 8 July 2020 that a contract had been signed between the BAAINBw procurement office andLufthansa Technik for two Airbus A321-200NX aircraft to be operated by the Luftwaffe in the medium- to long-haul passengerand freight transportation role, as well as for medevac duties. They will come with a variety of cabin configurationsdepending on the nature of the particular role being flown. These will comprise passenger transport of between 136 and 163people, and medevac of up to six stretchered patients or up to 12 “mildly ill” patients. The underfloor hold can be utilised forcargo in both configurations.

Tornado Service Life Extension ProgrammeAn airframe upgrade package has been developed to extend airframe life of German Tornados from 4,000 to 8,000 hours.Testing of the structural upgrade was completed in 2002. The German Air Force had intended to keep its Tornados operatinginto the 2030s, however, the service is now looking to replace the fleet in the mid-2020s, making this upgrade increasinglyunlikely.

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Forecasted Opportunities – Defense Wide 2021-2023

Type Service OpportunityExpected timeframe

Est Value (M $)

Mil Ships Navy Type 707 Tanker 2021 $ 609.0Air Defense Multi-service Tactical Air Defense System 2022 $ 5,750.0Mil Ships Navy Costal Tankers 2022 $ 37.0Mil Ships Navy Landing Craft Utility 2022 $ 50.0Mil Aircraft Multi-service Light Helicopters 2021 $ 260.0Mil Aircraft Army Training Helicopter 2021 $ 156.0Mil Ships Navy Naval Tender 2022 $ 808.2Mil Ships Navy Trails Support Ships 2022 $ 492.9Mil Ships Navy Costal Trials Support Ships 2021 $ 54.0Mil GndVehicle Army Bv-206 Replacement 2023 $ 400.0Mil Aircraft Navy CSAR Helicopters 2021 $ 570.0Mil Aircraft Air Force Jet Trainers 2022 $ 880.0Mil Ships Navy Range Safety Vessels 2021 $ 15.3

Total $ 10,082.4

Highlighted programs briefly described in next slide

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Forecasted Opportunities – Defense Wide

Tactical Air Defense System Program- Berlin committed in June 2015 to proceed with the MEADS program to meet its Tactical Air DefenseSystem requirements, that was developed to replace the German PAC-3 Patriot and the Italian MIM-14 Nike Hercules Surface to Air MissileSystems. Funding in 2020 was however, not forthcoming and the issuing of a contract to provide MEADS has been delayed until at least 2022.

Light Helicopters - The German Army’s rapid forces division is looking to acquire 24 Airbus Helicopters H145Ms to replace the older EC135sand Bell 206Ds currently deployed at the army’s multinational training school at Buckeburg, operating contracts for which expire in 2021.

Training Helicopters- The German International Helicopter Training Centre at Bückeburg operates 14 Airbus EC135T1 helicopters as well asleasing a number of Bell 206Bs for autorotation training. As part of a wider Bundeswehr acquisition of around 80 light helicopters in the H145Mclass, the organization would like 18 of these to ensure maintenance and usage synergies through operating the same platform as frontline units.According to the reports, although the decision for a specific type has yet to be made, the aircraft should start entering service from 2021 onwards.

Jet TrainersThe German Air Force is expected to seek an indigenous advanced trainer capability following the cancelation of the Advanced European Jet PilotTraining program. No plans are currently known to exist, however it expected that the BAE Hawk, Leonardo M346 and KAI TA-50 are to competefor this requirement.

Type 707 TankerA requirement for new double-hulled tankers to provide increased support capability for its navy. The Type 707design was announced as the preferred concept in 2019, although the program has returned back to the designphase as industry proposals were considered too expensive. Redesign is to focus on a more modest requirementto reduce procurement costs.

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Market Engagement • Market Entry Strategies

• Procurement Procedures

• Final Considerations


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Market Entry StrategiesGermany offers a well‐structured and transparent defense procurementenvironment with a reasonable level of clarity concerning requirements.

The German defense industrial base is extensive and therefore is well-positioned to meet the majority of domestic requirements. It comprisesaround 200 companies, with eight major players, and the sector’s capabilitiesextend from subsystems production to final platform production anddevelopment in land, sea, and air domains.

Germany has taken a very positive approach to European defenseco‐operation while maintaining its own national interests. Bilateralco‐operation with France is particularly notable in recent years.

Defense sector – Inward investmentGermany introduced stringent laws since the start of the 2000s to defendnational strategic assets from foreign suitors and past sales of defenseventures have also fallen foul of government intervention. Germany’sBundesrat first passed legislation in 2004 to give the federal government aveto over foreign acquisitions of stakes greater than 25% in its domesticdefense operations on national security grounds.

The threshold was reduced to 10% in December 2018 through amendmentsto the Foreign Trade and Payments Ordinance and Germany no longer seeksto bar EU/EEA buyers on national security grounds.

Procurement co-operationGermany takes a positive approach to co‐operative procurements with otherEU countries in both multinational and bilateral initiatives, although. Germanyhas historically insisted on strong elements of cost‐share/work‐share ininternational programs.

Protected capabilities and global market solutionsGermany has published a defense industrial strategy in February 2020through which it identified two broad categories of technologies and platformsand solutions.

One list outlined competencies that should be maintained in Germany, whichincluded sensors, armored vehicles, cryptology, artificial intelligence; navalshipbuilding, cyber and electronic warfare; IT and communications hardware.

A second list outlined platforms and technologies that may be acquired on theglobal market or acquired in co-operation with European partners. These arefixed and rotary wing aircraft; NBC protection; unprotected vehicles; guidedmissiles and air defense; and small arms.

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Procurement proceduresAuthority

The main central purchasing and contracting organization responsible for defense procurement is the Federal Office of Bundeswehr Equipment,Information Technology and In‐Service Support (Das Bundesamt für Ausrüstung, Informationstechnik und Nutzung der Bundeswehr: BAAINBw).

The BAAINBw is one of nine major departments of the Federal Ministry of Defense.

Established in October 2012 from the merger of the former Federal Office of Defense Technology and Procurement (BWB) and the FederalOffice for Information Management and Information Technology of the Bundeswehr (IT Office), the BAAINBw and its agencies are the centralpoint for all defense equipment procurement activities from preparation of technical solutions, the implementation and in‐service control up todisposal and recycling of the materiel. The BAAINBw is subordinate to the Directorate of Equipment (Department A) within the Federal Ministryof Defense.

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Procurement proceduresThe BAAINBW agencies are as follows:

• Bundeswehr Technical Centre for Land‐based Vehicle Systems and General Field Equipment (WTD 41) in Trier: Responsible for testing and evaluation ofland vehicles and field equipment.

• Bundeswehr Technical Centre for Protective and Special Technologies (WTD 52) in Oberjettenberg: Responsible for the test and evaluation of indirect anddirect protection systems for air, land, and sea forces.

• Bundeswehr Technical and Airworthiness Centre for Aircraft (WTD 61) in Manching: Responsible for the test and evaluation of air systems; management ofresearch programs; and German participation in international programs.

• Bundeswehr Technical Centre for Ships and Naval Weapons, Maritime Technology and Research (WTD 71) in Eckernförde: Responsible for the test andevaluation of naval weapon systems.

• Bundeswehr Technical Centre for Information Technology and Electronics (WTD 81) in Greding: Responsible for research and technology efforts and test andevaluation in the areas of robotics; fire control technologies; navigation; communications technologies; IT security; electronic warfare; C2 systems; and the provisionof measurement systems for weapon systems.

• Bundeswehr Technical Centre for Weapons and Ammunition (WTD 91) in Meppen: Responsible for the technical support of armament projects; researchefforts; and the evaluation of ammunition, rockets and missiles plus protective shelters and related installations.

• Naval Arsenal in Wilhelmshaven: Responsible for maintenance activities and repairs and technical repairs relating to naval vessels.• Bundeswehr Research Institute for Materials Science and Technologies (WIWeB) in Erding: Responsible for the provision of technical services and studies

relating to technical textiles and chemicals.• Bundeswehr Research Institute for Protective Technologies and CBRN Protection (WIS) in Munster: Responsible for management activities relating to CBRN

and fire protection plus the provision of technical and scientific advisory services.• German Liaison Office for Defense Materiel USA/Canada (DtVStRü USA/Ka), Reston, VA/USA: Responsible for the support and promotion of armaments

cooperation between Germany and the United States of America and Canada.

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Procurement proceduresThe BAAINBw is headed by a president and two vice‐presidents who are supported by the Office of the President, the Press and Information Centre, and the Central Controllingdivision.

The BAAINBw has the following divisions:

• Complex Purchases/Purchasing (E): Responsible for the development of purchasing concepts and strategies, the management of purchases and project management functions,price negotiations, and the disposal of surplus materiel.

• IT Support directorate (G): Responsible for IT service management, systems support, and data management functions.• Information Technology directorate (I): Responsible for price negotiations concerning IT and related procurements, standardization efforts, contracting, land, sea, and air

communications systems, wireless communication systems, and cyber security procurements.• Combat directorate (K): Responsible for procurements relating to ground‐based air defense systems, air and shipborne armaments, armored combat and transport systems, and

artillery and infantry procurements.• Air directorate (L): Responsible for activities relating to rotary‐wing aircraft, air‐ and space‐based reconnaissance systems, and in-service support activities. There are specific

divisions responsible for the procurement (and budgeting and export) of A400m and Eurofighter fixed‐wing aircraft.• Common Technical, Logistic and Economic Activities (T): Responsible for project co‐ordination, price auditing, international co‐operation and risk management.• Program Organization directorate (PMO): The unit has responsibility for the MKS 180 frigate program, the Tactical Air Defense System (TLVS – Taktische

Luftverteidigungssystem) project, and the European MALE UAV project.• Quality directorate (ZtQ): Responsible for quality assurance.• Sea directorate (S): Responsible for activities relating to naval surface systems, sub‐sea systems, support and auxiliary systems, and C2 systems.• Land support directorate (U): Responsible for activities relating to field equipment, personnel equipment and clothing, protected wheeled vehicles, electronic warfare and air

traffic control, and training, simulation and robotic systems.• Central Affairs directorate (ZA): Responsible for budget policy and allocations, fund management, contract accounting, contract consulting and review, licensing and rights

issues, and price audit activities.

In addition, another Federal authority responsible for procurement for the armed forces is the Bundesamt für Infrastruktur, Umweltschutz und Dienstleistungen der Bundeswehr (TheFederal Office of Bundeswehr Infrastructure, Environmental Protection and Services) with offices in Bonn is responsible for construction projects in Germany and abroad, forcompliance with environmental regulations and for co-ordinating as well as centrally fulfilling general service tasks for the armed forces.

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Procurement proceduresTender procedureThe BAAINBw contracts all defense related procurement projects for the German armed forces and also runs tendering processes.

There are three locations where tenders are announced.

• The central internet portal of the federal government, which manages announces all current tenders.• The German language site, e‐Tendering platform, which is mainly utilized for minor items that may be relevant for small to medium organizations• The EU’s Official Journal – Tenders Electronic Daily (TED).

As well as specific tender documentation found on the internet portal of the federal government, forms required in connection with the submission of bids, such asorganization self‐declarations, can be found separately on the “Bidding documents” section of the BAAINBw website.

Tender TypesContracts are placed by:• Public competitive bidding/open procedure• Restricted bidding/restricted procedure• Negotiated contracting/negotiated procedure

The notice of intended contracting by public competitive bidding and by open procedure includes the invitation to directly place binding bids.Notices of intended contracting by restricted bidding or restricted procedure, negotiated contracting or negotiated procedure include the invitation to participate in thetender and also need the organization to provide evidence of the competence to fulfil the contract.

The award procedures of the Bundeswehr, including contract negotiations are held on a case‐by‐case basis, and will usually be conducted in German only.

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Procurement proceduresProcurement approachThe 2011 Defense Policy Guidelines place priority on commercial off‐the‐shelf solutions and aim to keep a consistent alignment with prioritized capability requirements.

Policy and RegulationGerman public procurement is governed by the following two overarching regulations:• The Act Against Restraint of Competition – Section 104 (Gesetz gegenWettbewerbsbeschränkungen – GWB).• Regulation on the award of public contracts (Vergabeverordnung – VgV).

The special regulations concerning award procedures for defense and security contracts are laid down in separate legislations governing defense and securityprocurement:• Public Procurement Regulation for the areas of Defense and Security (Vergabeverordnung Verteidigung und Sicherheit – VSVgV) legislation, which entered into force

July 2012.• Conditions concerning Contracts for Supplies and Services – Part A (Bekanntmachung der Vergabe und Vertragsordnung für Leistungen – VOL/A), which f• Public Works Contracts, section 3 (Vergabe‐ und Vertragsordnung für Bauleistungen – VOB/A).

Unsolicited offersWhile all organizations may participate in these procedures, unsolicited offers from companies which are addressed to the Bundeswehr without reference to invitationsto tender as published on the above‐mentioned portals cannot be considered. Additionally, the Bundeswehr does not keep lists of bidders with the aim of automaticallykeeping companies informed of advertisements on internet portals.

Procurement in the context of European obligationsThe VSVgV incorporates Directive 2009/81/EC of the European Parliament and of the Council on the coordination of procedures for the award of certain workscontracts, supply contracts and service contracts by contracting authorities or entities in the fields of defense and security, and amending Directives 2004/17/EC and2004/18/EC. The Public Works Contracts regulation was also amended to take into account Directive 2009/81/EC.

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Final ConsiderationsCompetitionA negotiated procedure without publication of a contract notice is only admissible under exceptional circumstances. The contracting authoritymay choose such a procedure if:• There are no suitable tenders submitted in a restricted or negotiated procedure• That due to the protection of exclusive rights, the contract may only be awarded to a particular supplier• Where the time limited associated with restricted or negotiated procedure are incompatible with the urgency resulting from a crisis and this

crisis was brought about by unforeseen events and are not attributable to the contracting entry.

Acquisition processAll of Germany’s defense procurement is managed and overseen by BAAINBw, with the exception of construction projects, which is managedby the Federal Office of Bundeswehr Infrastructure, Environmental Protection and Services

Urgent operational requirementsLegislation was approved in October 2019 to modify defense procurement to accelerate and simplify the procurement of urgent operationalrequirement equipment, including for mandated overseas deployments, defense commitments, peace enforcement, counter-terrorism, andkey defense technologies. This was achieved through the Act on Accelerated Procurement in the Field of Defense and Security and theOptimization of the Procurement Statistics Ordinance (Gesetz zur beschleunigten Beschaffung im Bereich der Verteidigung und Sicherheitund zur Optimierung der Vergabestatistikverordnung), which modified the GWB and VSVgV. The law came in to force in April 2020.

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For more information, please contact:

Inigo GuevaraManaging Director of Janes Markets, Equipment, and Industry (JEMI) Consulting

[email protected]

Germany Market Report - NHADEC

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