Negotiations for the acquisition of the CV90 IFV are continuing. The offer corresponds to the requirements of the Army of the Czech Republic

 09. 03. 2023      category: Army of the Czech Republic
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The deadline for the signing of the contract for the acquisition of 210 CV90 tracked IFVs was set by the Minister of Defence until 31 May 2023, and according to our sources, intensive negotiations are also being conducted between representatives of the Ministry of Defence of the Czech Republic and the vehicle manufacturer, the Swedish company BAE Systems Hägglunds. It is true that the deadline for the submission of the final offer by the FMV and BAE Systems has been extended, but the agreed deadline has also been met and the MoD currently has an offer. Its details cannot be commented on in view of the ongoing negotiations, which some are using to cast doubt on the whole process. A certain degree of responsibility in this respect lies with the ministry itself, which has stopped communicating systematically about the IFV contract both with the media and with members of the defence committee, which opens the door to unnecessary speculation.

cv90sved_TITPicture: The deadline for signing the contract for the acquisition of 210 CV90 tracked IFVs was set by the Minister of Defence until 31 May 2023, and according to our sources, intensive negotiations are being conducted between representatives of the Ministry of Defence and the vehicle manufacturer, the Swedish company BAE Systems Hägglunds. | Michal Pivoňka / CZ DEFENCE

In December 2022, a memorandum of understanding was signed between the Czech and Swedish sides. This contains several very clearly formulated points which foreshadow the parameters of both the offer under discussion and the future contractual relationship. In addition to FMV, the supplier of the CV90 vehicles, Systems Hägglunds, will be directly involved at the request of Sweden.

The price of the contract is guaranteed by the signed memorandum

From a general perspective, a very important – if not the most important – parameter of the bid is the total price. The Swedish side has clearly declared, and confirmed by signing the memorandum, that the bid price of CZK 51.684 billion incl. VAT is valid, will be adhered to within the terms of reference and its specifics as stated at the time of signing the memorandum, and is valid until the end of June this year. This gives ample time to reach mutual agreement before the contract is signed. This was confirmed by Defence Minister Jana Černochová herself on the occasion of the handover of the first Leopard 2 A4 tank in Přáslavice at the end of last year when she said, "The Memorandum confirms the agreement of all three parties on the basic parameters regarding the acquisition of CV90 infantry fighting vehicles." 

The contract itself is under negotiation, according to the announced schedule. The previous tender, which was cancelled in July 2022 after years of delays, had an estimated value comparable to that. That tender was suspended from the end of 2021 by the then Government of Andrej Babiš because the bids submitted did not meet all the requirements of the Ministry of Defence. Subsequently, the tender was cancelled. Instead, the Government decided to implement the project through an intergovernmental agreement. According to available information close to the Ministry of Defence, the price for what was originally requested has not increased. Some parameters have been adjusted according to the Army's requirements and these could, of course, be reflected in the price adjustment. However, it is not possible to predict the outcome of the negotiations until they are finally concluded. Thus, the price for the same piece of CV90 earlier and now is essentially the same, and the total price is guaranteed by the memorandum.

The length of the delivery period is not significantly different from the assumptions

We have contacted a BAE Systems spokesman on the delivery dates of the new IFVs, who responded as follows: 'As you can imagine, it would not be appropriate for us to comment on the details of our offer while further negotiations are ongoing. The Czech customer is currently evaluating the offer and we cannot provide any further details. However, we can state that the vehicle delivery schedule is very similar in overall length to the schedule we have offered to the Czech customer in previous offers."

This can generally and objectively be considered a minor miracle, similar to the price. The parameters of the contract were set in 2019, the framework even at a time about ten years ago, and by mid-2023, yet the manufacturer is able to guarantee both an adequate price and delivery time. The first vehicles are expected to arrive in the Czech Republic as early as 2026, but the latest delivery date is not known for the last vehicles, including variants that will be developed and produced in the Czech Republic. However, it can be assumed, given the previously known information and the overall shift in the schedule, that it will be approximately 2028, as the original information indicated that the vehicles in all variants were expected to be delivered within a maximum of 72 months from the signing of the contract.

The tactical-technical parameters remain unchanged and correspond to the requirements of the Czech Army

Some commentators also question the fulfilment of the tactical-technical parameters of the vehicles required by the Army and claim that the overall price is kept at the original level due to their reduction. This is despite the fact that both BAE Systems and the Czech Army, in concert with the Ministry of Defence, have repeatedly confirmed that the vehicle meets the Army's requirements. Unspecific speculation in this regard is very difficult to refute. Perhaps the results of comparative tests of vehicles of the same type carried out in Slovakia, where the CV90 succeeded over the competition by a wide margin, might suggest something. The requirements of the Czech Armed Forces for the new IFV have not changed in the main features since 2019. According to sources familiar with the offer, the latter also fully respects them. Incidentally, it is a pity that the results of the Czech army's 2021 testing of the vehicles in Libava have never been made public.

Cooperation with the Czech defence industry

In mid-February of this year, the so-called "Industry Day", organised by the Ministry of Defence of the Czech Republic, took place in accordance with the planned schedule and was attended by more than 40 companies from the Czech defence industry. Many of these companies are already involved in other projects that BAE Systems is implementing throughout Europe, in which Czech companies are subcontractors. The Swedish company intends to deepen and strengthen these partnerships within the IFV project. The role of VOP CZ has also been repeatedly questioned, but this state-owned enterprise has been identified by the Ministry of Defence as key for the contract as early as 2019. VOP CZ should be responsible for the production of the chassis and for the overall integration of the vehicles, and will thus contribute significantly to the delivery of the CV90 to the Czech Armed Forces – in line with the Ministry of Defence's requirement. Indeed, this commitment was reaffirmed by the Ministry of Defence representatives at the aforementioned "Industry Day" in Prague a few weeks ago.

The issue of communication

In recent months, negotiations have been going on, and they have moved on considerably – for example, they are continuing in Sweden this week – and it is understandable that it is impossible to talk about details until everything is concluded, as this could fundamentally disrupt the whole process and the final agreement. On the other hand, it is true that the communication from the Ministry of Defence has not been the happiest, particularly in relation to the members of the House Defence Committee. The latest public information dates back to January, which opens the door to speculation of all kinds. This is not about information on details, be it tactical and technical specifications of the vehicles or upcoming contracts with Czech defence industry companies, the purchase contract itself, or future contracts for servicing the vehicles. In December, the ministry announced the signing of the memorandum, in January it informed the government about the status of the contract and gave the deadline for submitting a bid, and that was also the last time the contract was discussed by MPs. This is a strategic and the largest arms contract for the Czech Army to date, and the information that the Ministry of Defence has received the offer and that it meets the requirements of the Czech Armed Forces does not have the potential to complicate further negotiations, but on the contrary would prevent various speculations.

 Author: Michal Pivoňka

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