Defense industry issues: The law on public procurement needs to be amended

 02. 09. 2021      category: Events
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The regular Round Table, this time on the issue of the defense industry, was prepared by the Czech Chamber of Commerce for the last day of August. The online broadcast was attended not only by the Chamber’s representatives, its chairman Vladimír Dlouhý and the chairman of the Defense Industry Section of the Czech Chamber of Commerce and Chairman of the Supervisory Board CZG - Česká zbrojovka Group SE Lubomír Kovařík, but also deputies, representatives of the Defense Committee and the Security Committee, headed by the chairwoman of the Defense Committee Jana Černochová. There were also experts on the issue, in addition to the already mentioned Lubomír Kovařík, there was also Tomáš Pojar, Vice-Rector of the CEVRO Institute and consultant and expert Daniel Koštoval.

The debate in the pre-election atmosphere sought answers to the state of financing of the Ministry of Defense, the concept of development, acquisition processes and related problems. In essence, it could be divided into four parts: Defense industry and economy, securing 2% of GDP for the budget of the Ministry of Defense, greater involvement of the domestic security industry in the security and defense framework and Czech security interests and promotion of the Czech defense industry and acquisition processes.

modernizaceACR_TITPicture: The debate conducted in the pre-election atmosphere sought answers to the state of financing of the Ministry of Defense, the concept of development, acquisition processes and related problems. (illustration photo) | Ministry of Defense of the Czech Republic

What MEPs across the political spectrum have agreed can be worded as follows: A clearer and firmer spending framework for the military, ideally with a greater perspective (following the example of France and Germany, a 5-year outlook, or Sweden a 10-year plan). It was further agreed that the Army should be prepared for both conventional and cyber conflicts, including the resolution of pandemic situations. An important part is also the support of the G2G system, ie not only the purchase but also the sale of military equipment at the intergovernmental level. And finally, probably the most important thing. It was agreed that the Public Procurement Act should be amended, which in its current form complicates most of the announced acquisitions. Its amendment has been ready for discussion since 2017, and it is therefore clear that the real change in the law will probably take place only after the elections held in October this year.

In this context, the Chairman of the Defense Industry Section of the Czech Chamber of Commerce, Lubomír Kovařík, answered the following questions:

In your opinion, is the proposed budget of the Ministry of Defense (MoD) for 2022 sufficient and will the modernization process of the Czech Army’s equipment not be slowed down?

For the Czech defense industry, I appreciate that the Czech defense budget is constantly growing. However, as is already known, the budget of the Ministry of Defense will not reach the Allied commitment of 2% by 2024. Towards this goal it is important that the Czech Republic is a full member of NATO and that the Czech Army is prepared for all threats and able to adequately fulfill its Allied commitments. This insufficient increase in the budget of the Ministry of Defense is a consequence of the lack of a multiannual and therefore more stable budgetary framework.

How, in your opinion, can Czech companies become more significantly involved in MoD tenders?

The defense industry is a very important economic segment, which employs about 20,000 people, generates sales of about 50 billion crowns a year, pays taxes, invests in research and development, primarily through private companies. Each job in the defense industry generates almost four jobs in related sectors. Private companies also possess important competencies, technologies and know-how, which can make a significant contribution to ensuring the security of supply of key products and technologies to the military and security forces, even during a crisis. The coronavirus pandemic has shown the risks associated with dependence on foreign supplies during the crisis. It is therefore logical to strengthen the strategic self-sufficiency of our state, even in the form of greater involvement of Czech companies in acquisitions on the part of the Czech armed forces.

It is, of course, important that the Czech defense industry be able to offer the Czech Army competitive products, which is undoubtedly happening.

The Defense Industry welcomes the approval of the "Strategy for Armaments and Support for the Development of the Czech Defense Industry until 2030" by the Government of the Czech Republic. This strategy emphasizes the use of the Czech defense industry in ensuring security of supply, especially in strategic contracts of the Ministry of Defense. I firmly believe that this strategy will be put into practice and will be reflected in specific contracts for the Czech defense industry. 

In your opinion, are the acquisition processes of the Ministry of Defense capable of action?

I see room for increasing the efficiency of the acquisition process, namely by amending the Public Procurement Act, or by creating a new separate law for the purchase of military equipment, which is, by the way, an effort of the Ministry of Defense. This should help speed up acquisitions in the defense sector and thus make better use of the defense budget.

We also asked the Minister of Defense, Lubomír Metnar, and all the Members involved, the same questions mentioned above. We are currently finding out their answers and we will publish them on CZ Defense soon.

 Author: Jan Zilvar

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