German defence ministry and arms industry come under fire

The German defence ministry and arms industry are braced for a hard-hitting report expected to highlight “mistakes on all sides” in their repeated failure to deliver military equipment on budget and on time.

The review by KPMG, the consultancy, due to be published on Monday, is expected to recommend changes in policy and procedure in both the ministry’s procurement offices and at defence companies, according to one person familiar with the industry.

According to the Süddeutsche Zeitung daily, the report will identify “140 problems and risks”, including overworked officials, imprecise contracts and confused responsibilities. It will call for an urgent overhaul that could take “at least two years” to implement.

The analysis was commissioned in June by defence minister Ursula von der Leyen, a high-profile conservative sometimes seen as a potential successor to chancellor Angela Merkel. Her ability to reform procurement will be viewed as a key political test.

The report comes after a string of embarrassing technical failures that have highlighted problems caused by delays in introducing new equipment and providing spare parts.

Two weeks ago, Germany’s first shipment of arms to Iraq’s Kurds, to help in the fight against the Islamic State of Iraq and the Levant (Isis), was delayed when the designated transport plane broke down. The defective aircraft was Dutch but was leased because of the lack of a suitable German aircraft. Ms von der Leyen was left with a PR fiasco, flying to Erbil, the regional Kurdish capital, for a ceremonial handover of weapons that had yet to arrive.

Last week, a German transport plane en route to Senegal to assist in the battle against the Ebola outbreak in west Africa was stranded in the Canary Islands because of a defect.

And a few days later it emerged that a contingent of troops in Afghanistan could not return to Germany for want of a transport aircraft.

Meanwhile, German MPs commissioned a report two weeks ago that showed large swaths of equipment were out of action because of shortages of spare parts. Only 24 out of 43 Transall C-160 transport planes were operational, as were 41 of 190 helicopters, 42 of 109 Eurofighter fighters and 280 out of 406 Marder fighting vehicles.

Last week, Germany disclosed that there was a technical problem even with those Eurofighters that were operational – a fault in the finishing of drill holes in the fuselages, made by BAE Systems in the UK, which also affects the aircraft belonging to other countries. The jets remain in service while BAE investigates the issue. But the revelation has added to public unease in Germany about defence procurement.

Ms von der Leyen says Berlin can fulfil any short-term crisis-response Nato commitments and manage its current foreign deployments. Some 3,700 German soldiers are serving abroad of a total 180,000. But she acknowledged in German media last week that the country was falling short on a general pledge to Nato to have a certain proportion of its forces ready for combat.

Germany’s defence budget is 1.3 per cent of its gross domestic product, short of Nato’s 2 per cent target (fulfilled only by the US, the UK, Greece and Estonia). But money alone is not the issue – last year €1.3bn of the $6bn equipment budget went unspent.

KPMG is focusing on nine procurement projects, including the Eurofighter, the Eurohawk drone, the Tiger and NH90 helicopters, and the A400M transport plane, under development by Airbus.

The A400M is in the spotlight because a five-year delivery delay has forced Germany to rely on the 50-year-old Transall transporter, which often breaks down.

Germany’s Social Democrats have pointed the finger at their CDU/CSU coalition partners, saying that Ms von der Leyen and her three most recent predecessors as defence minister are all members of Ms Merkel’s CDU.

But defence analysts root the problems in an unwieldy arms-purchasing bureaucracy, lack of competition in the industry and the pressure to develop Europe-wide projects, such as the A400M, which fall under the influence of multiple rival governments.