The Ministry of Defence Was Fined CZK 550 Million for Failing to Settle Leonardo’s Objections

 05. 02. 2021      category: Army of the Czech Republic

In the summer of last year, the Office for the Protection of Competition rejected a proposal by the Italian company Leonardo to impose a ban on the performance of a contract for the purchase of multi-purpose helicopters concluded between the Czech government and the US government. Based on this decision, the performance of the contract continues and 12 new helicopters will be delivered by the end of 2023 according to the approved schedule.

venom
Picture: Based on this decision, the performance of the contract continues and 12 new helicopters will be delivered by the end of 2023 according to the approved schedule. Pictured is the AH-1Z Viper combat helicopter (foreground) and its brother, the multi-purpose UH-1Y Venom | army.cz

Now, however, the Office has issued a decision imposing a fine of CZK 550 million on the Ministry of Defence for failing to deal with Leonardo’s objections before signing the intergovernmental agreement. The Ministry of Defence cannot agree with the given conclusion. 

“It is impossible to accept the fact that we should have settled the objection of someone who is unable to supply us with what we require and who has never been directly approached by us. This is unacceptable from the point of view of ensuring the defensive capacity of the Czech Republic, because it can delay the modernization of the army by months to years. We stand behind our procedure and consider it to be correct. I also consider the amount of the imposed sanction to be completely inadequate,” summarizes the Minister of Defence Lubomír Metnar.

LM pracovnaPicture: Minister of Defence Lubomír Metnar | army.cz

The Ministry of Defence considered and still considers the objection filed by Leonardo to be unfounded. This is an entity that has never been directly approached by the Ministry in the context of a market research for this project. Only the Italian government has ever been approached. However, they did not file an objection. Leonardo’s objection was merely a purposeful obstruction in order to avoid a government-to-government agreement with the United States.

The intergovernmental purchase of helicopters was resolved using the exemption for the purchase of military equipment allowed by the Public Procurement Act. It can be concluded from the decision of the Office that anyone, even if they did not participate in the proceedings, is entitled to file an objection to such a contract, which may block the entire process. In such a case, however, the use of an exception to guarantee the state the supply of strategic material for its defence is meaningless, because the purchase can be challenged by anyone at any time.

The Czech Army demanded military helicopters verified in combat deployment and with certified armament. There was only one such offer - the American H-1 system, which with its combination of Venom and Viper machines fully fulfils the given task.