UPDATE 1-General Atomics lawsuit to delay Heron drone programme - Germany

(Adds response from General Atomics)

BERLIN, Aug 31 (Reuters) - Germany’s Defence Ministry on Tuesday informed lawmakers that its plan to lease armed Heron TP drones from Israel Aerospace Industries will be delayed by months given a fresh legal challenge filed by U.S. weapons maker General Atomics.

Defence Minister Ursula von der Leyen in January announced the army would lease the Heron drones for about 580 million euros instead of buying Predator B drones from the privately held U.S. firm or Switzerland’s RUAG, prompting protests by both firms which were denied in May.

“This move by General Atomics is very unfortunate and frustrating, especially since our legal position was upheld by the (cartel office) with very clear words,” a senior ministry acquisition official told lawmakers in a letter seen by Reuters.

General Atomics spokeswoman Melissa Haynes said the company filed the legal challenge “to ensure that this procurement is conducted as a fair and open competition; thereby ensuring that the German Ministry of Defense procures the most technologically superior and cost efficient solution.”

She gave no details about the substance of the lawsuit.

It was the latest setback for the minister’s efforts to rebuild the German military after years of declining military budgets and reports of ill-equipped troops.

Germany’s air force is facing growing problems due to delays in deliveries of the Airbus A400M military transport, and a $4 billion air defence system to be built by Lockheed Martin Corp and MBDA is also facing possible delays. MBDA is jointly owned by Airbus, Britain’s BAE Systems Plc and Italy’s Leonardo Finmeccanica SpA.

General Atomics had in June asked the German cartel office to review a decision rejecting its protest of the contract decision, but the agency rejected that bid on Aug. 17, according to the ministry letter, which was first reported by Spiegel Online.

In response, the company on Monday filed a lawsuit with the German higher court in Duesseldorf, the final arbiter in the case, the ministry official said.

RUAG did not pursue its case with the cartel office.

The ministry official said the latest legal process could take three to nine months to resolve, which meant the Heron project could be delayed by months.

Tobis Lindner, a Green party member of the parliamentary budget committee, said critics had long questioned whether von der Leyen’s decision to lease the Israeli drones was the economically and technologically least risky option.

“It now appears that the Defence Ministry’s plans are now falling apart. Ursula von der Leyen’s ambitious drone plans are over for this legislative period,” he said in a statement.

The leasing plan was intended as an interim measure until the EU has developed its own drone. Germany, France, Italy and Spain plan to jointly develop a drone by 2025. (Reporting by Andrea Shalal; Editing by Alison Williams and Toby Chopra)