The Ministry of Defense announced the cancellation of the corvette tender won by Naval Group in 2019.

According to the army, the French company did not sign a framework agreement and no funds were set aside to declare runner-up Damen the winner.

MApN Ads:

• “The customer from the Ministry of National Defense approved on Monday, August 7, the cancellation of the special procedure related to the main endowment program “Multifunctional Corvette”, proposed by the report of the evaluation commission established on the basis of GD no. 48 of February 15, 2018. The decision to cancel a specific procedure was made on the basis of the provisions of Section BI, Clause 4, Letters f) and g), in conjunction with the provisions of Section B.II, Letter c), Clause 10 of GD No. 48/2018 , because the participant declared the winner did not sign the framework agreement within the terms set by the customer, and the funds necessary to recognize the next business entity as the winner have not been determined.”

According to the law, in a situation where the first participant, who for one reason or another is declared the winner, does not sign the contract, it goes to the next participant, which is Damen. But, as the MApN claims, there was no money to “move” the contract.

In recent years, HotNews.ro has written about the contract for corvettes, which has not yet been signed, and about backroom negotiations.

• Why is the contract for the corvette not signed? Naval Group: ‘Cost’ and ‘Risk’ Negotiations Underway / Second, Damen says he’d do them for the same money and before the deadline

• X-ray moment with strategic consequences. France’s military rapprochement with Romania and the bidding of a large contract for corvettes. A few things to keep in mind

History of the Corvette contract

In 2018, Romania announced a tender for the purchase of four new Romanian-built corvettes and the modernization of two Navy Type 22 frigates. Essential terms? All ships will be built in Romania, the first ship within 3 years of contract signing, and all ships will be ready within seven years.

In 2019, MApN signed a contract with the association Naval Group – Şantierul Naval Constanța, which came in with an offer of 1.2 billion euros, only 50 million euros ahead of Damen Group, which has two shipyards in Romania in Galați and Mangalia, a shipyard where it builds ships for export, including military.

• Marine group offered the ship Gowind 2500 with a hybrid diesel-electric power plant CODLAD. In the basic proposal, the ship was equipped with European armament solutions with MBDA missiles: VL Mica anti-aircraft missiles and Exocet anti-ship missiles. Offered price: 1.2 billion euros.

• Damen Corvette suggested Sigma 10514 CODOE hybrid diesel-electric installation with American weapons solutions: Harpoon anti-ship missiles from Boeing, anti-aircraft missiles from Raytheon, sonar from General Dynamics and Thales tactical system. Offered price: 1.25 billion euros.

At the time, Naval Group’s win was a surprise, especially considering the price, which is considered quite low in the industry, given that the Gowind model is considered not only very modern, but also quite expensive. This is especially true given that Naval Group does not own shipyards in Romania like its competitors (the third competitor in the race – Fincantieri – owns shipyards in Brail and Tulcea).

After several Damen appeals were upheld and rejected by the courts, in 2021 MApN found itself in a situation where it could practically sign a contract with Naval Group, but the French company would no longer be so willing to initial the deal.

Last year, according to some market sources consulted by HotNews.ro, the proposed price was very rigid and had no room for maneuver, the increase in the price of construction materials in recent years, a very tight schedule for the delivery of the ships, the commitment to build them all in country, and the very strict provisions of the contract would prevent the signing of the contract.

In addition, according to the same sources, disagreements arose in the association of the Naval Group with the Constanța Naval Shipyard regarding the implementation of investments in the Constanța shipyard so that the construction of modern warships could begin. According to other sources, they also had disagreements over who should bear the rather stiff penalties stipulated in the contract if the deadlines are not met.

What are the scenarios – G2G contracts, but with whom?

In the current conditions, the army could turn to a new formula for contracting works, contracts would be the most convenient Government to Government (G2G).

As HotNews.ro wrote last year, we can discuss one here G2G agreement with Francewith the same builder with whom the original contract failed to be signed, but on different grounds: a larger budget and possibly with ships built wholly or partly in France.

In this case, although in theory the Romanian Navy will eventually receive the ships it needs (even on an accelerated schedule), economically Romania will lose the ability to build ships domestically. Of course, some stages of construction or, more likely, maintenance during the life of the ships at the shipyard in Romania could be put on the table as a consolation…

Another possible scenario would be to do a G2G agreement with the United States of America, especially given that in recent years such contracts with the US have been the most successful and have always favored the Bucharest authorities. In addition, Romania recently received the status of “Trusted Business” from the US, which means that from now on, contracts for the purchase of military equipment can be concluded without the need for advance payments.

In recent years, Romania has grown closer to the United States, with which it has signed intergovernmental contracts worth several billion euros, and French defense companies have blamed the lack of open procurement procedures for military equipment.

HotNews.ro already wrote that in such conditions, “Australian writing” the application in Romania is not what you seem to need to imagine. Especially since Romania has already decided to buy NSM shore-launched anti-ship missiles directly from the US, the G2G contract is a type of anti-ship missile that was not included in Naval Group’s proposal for Gowind corvettes.

In such a scenario e maybe for the US to subcontract work on the vessel (as a platform) to Damen, which has two shipyards in the country and could build and deliver the vessels in due time. Above them, the US will bring all the necessary equipment and weapons, including other American companies such as Raytheon (already participating in Romania in the Patriot and NSM contracts), Boeing, General Dynamics (participating in the Piranha 5 contract) or Lockheed Martin (participating in HIMARS contracts).

as maybe The US G2G would aim to buy already built ships that the US would be willing to sell to Romania. For example, the United States has decommissioned and is about to decommission the first Freedom-class ships after only a few years of use – Littoral Combat Ship-type ships, which in terms of displacement can be compared to the corvettes desired by Romania.

The Freedom LCS class ships operated from 2008 to 2012 and are now decommissioned because they no longer meet US requirements and because they will need additional and expensive work to address a number of engine and transmission reliability issues. In this case, in addition to these costs, which cannot be neglected, the ships must also be technically adapted for Romania, including through the prism of weapons.

The advantage of such a purchase would be the speed with which the new ships would practically enter the equipment of the Romanian Navy, as well as increased interoperability with American forces, but the disadvantages could be significant: the ships would no longer be built in the country and could require huge sums to eliminate reliability problems , including during the service life of the ships.

Another third scenariomaybebut it is less likely that this would be the initiation of a direct mandate purchase, as was done in 2015. At that time, the government led by Ciolos came to the conclusion, after a study that analyzed the market, that Damen was the only shipyard in the country that constantly builds warships and it was the only one that could build in a short time the corvettes needed by Romania.

Then came the government, de facto led by Liviu Dragnia, and canceled the procedure, instead launching the current auction, which has so far come to nothing. If the direct purchase of 2015 had been allowed, in 2020 Romania could have already received the first Corvette, and now it would already have to close all ships are equipped…

Currently, Romania is completely open in the Black Sea, and the navy is the least equipped branch of the army. There are currently no modern means of anti-aircraft, anti-missile and anti-ship defense, the only armed platforms are ships of Soviet origin with outdated installations and equipment.