Update June 19: The German Defence Procurement Agency today announced signing a contract on acquiring the two additional frigates. The Defence Ministry also informed Parliament on having reached an agreement with Damen on the mandated cost increase distribution.
The budget committee of the German parliament (Bundestag) on June 12 approved the acquisition of two additional F126 frigates. The German Navy issued a related statement via social media service “X”, formerly Twitter. This additional purchase raises the count to six frigates for the type. Overall the approval passed now is reportedly worth 2.8 billion Euros for construction of the two frigates. An additional 300 million Euros is included for associated services and equipment for the ships, for a total of 3.1 billion Euros.
Originally the German Navy received approval for construction of four F126 under a contract signed in June 2020. These first four units are due for delivery to the Navy between 2028 and 2031. Additionally this agreement provided an option for two further hulls. The related clause will finally expire on June 19, only one week from now. The German Navy has repeatedly emphasized their intention to acquire two more F126 frigates. Six ships of the type are also part of the “Zielbild Marine 2035+” future force structure revealed in March 2023.
Terms and conditions apply
The budget committee today also added language to their approval which considering the urgency to sign a contract may yet jeopardize a speedy purchase. In a separate budget request for the F126-program the Defence Ministry (BMVg) sought an additional 320 million Euros covering increased cost for the first four units. Builder Damen justifies the adjusted price with cost hikes caused by inflation.
The approval language added now requires BMVg to negotiate a “fair balance” allocating the additional funding between Damen as lead contractor and the German yards Blohm & Voss, GNYK and NVL realising construction as subcontractors. Should the Defence Ministry fail to achieve “a satisfying outcome” in its negotiations with Damen within one week, the approval permitting purchase of the extra two hulls will be void.
Funding questions persist
The challenging timeframe for inking a contract represents only the most immediate problem for the effort. The Defence Ministry also has to clarify out how it intends to account for the purchase within its budget. The 100 billion Euro-“Sondervermoegen” (special budget) instituted after Russia’s renewed invasion of Ukraine in 2022 is already covering existing commitments. As things stand, the money required for this purchase will therefore have to come out of future annual budgets.
Defence spending remains a consistently difficult subject in German political debates. All relevant political parties acknowledge a need of increased funding. Even so the Scholz-government has consistently flatlined defence spending in midterm budgetary projections beyond the one-off “Sondervermoegen”. Assuming a scenario of moderate rises for defence spending it appears likely that short notice acquisitions such as two more F126 frigates are displacing existing procurement plans elsewhere within Bundeswehr.
