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German military helicopter tender faces possible delay -ministry

BERLIN, Aug 13 (Reuters) - Germany’s defence ministry said on Monday a planned 4 billion euro ($4.56 billion) tender for new heavy-lift helicopters due to kick off this autumn could be delayed unless additional funding is secured during looming budget negotiations.

A ministry spokesman said funding for the programme must be assured before the ministry can ask U.S. arms makers Lockheed Martin Corp and Boeing Co to submit formal bids to replace the current 45-year old fleet of CH-53G helicopters.

The ministry had planned to solicit bids in the second half of 2018 and award a contract in mid-2020, but industry experts say the start of that process may slip into next year after a surprise announcement by Defence Minister Ursula von der Leyen that the programme’s funding was not certain.

Von der Leyen, a conservative, is pushing for military spending hikes, but faces resistance from the Social Democrat-led finance ministry, which prefers more spending on infrastructure and digitalisation.

The defence ministry spokesman said the programme’s schedule depended on budget negotiations in coming months.

“One cannot start a new weapons project if the funding for the follow-on years is not yet assured,” said one parliamentary source. He said it was up to von der Leyen to negotiate the additional funds in coming months.

Von der Leyen jolted air force officials and industry executives last month, when she disclosed during a visit to the CH-53G air base that funding for their replacements - long believed to be assured - was still in flux.

Parliament is slated to approve the 2019 budget and a four-year mid-term budget plan in December. That could postpone the procurement process and delay a contract award until 2021 - a national election year in which big decisions are often deferred.

Germany has said it will choose between the CH-53K King Stallion built by Lockheed’s Sikorsky unit or Boeing’s CH-47 Chinook helicopters, instead of developing its own new aircraft.

Sikorsky is monitoring the situation closely, said Beth Parcella, who heads international sales for the CH-53K.

Boeing spokesman Todd Blecher said the German Chinook programme remained one of his company’s highest priorities.

Chancellor Angela Merkel’s coalition government has agreed to boost military spending to 1.5 percent of economic output by 2024, which would require steady increases of around 3 billion to 4 billion euros a year in the procurement budget, but those increases have not yet been factored into the medium-term plan. (Reporting by Andrea Shalal Editing by Gareth Jones)

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