October 6, 2014 / 2:30 PM / 5 years ago

Report urges Germany to get a grip on its defence buying

* Much German military hardware unfit for service, forces say

* Report urges better management, contract drafting

* Projects hit by rising costs, shifting goals

By Sabine Siebold

BERLIN, Oct 6 (Reuters) - Germany must urgently overhaul its approach to arms procurement if it wants to contain rising costs and address the poor state of its military hardware, an independent report said on Monday.

Half a year after vowing Germany would take a more active role in international crises, Defence Minister Ursula von der Leyen has been forced to acknowledge that some equipment is in such disrepair that Germany is unable to meet NATO commitments.

The shortcomings came to light after two planes taking arms and trainers to help Iraqi Kurds fighting Islamic State broke down, as did a plane taking aid to African states hit by Ebola.

The military says a large proportion of equipment such as helicopters and fighter jets is unfit for service, casting doubt on Germany’s ability to help provide air defence for its NATO allies in the Baltics if the Ukraine crisis escalates.

The report, drawn up by KPMG consultancy at the request of the defence procurement office, identified 140 problems and risks facing nine key arms projects worth 57 billion euros.

They include the A400M transporter made by Airbus, the Eurofighter Typhoon jet made by BAE Systems, Airbus and Alenia Aermacchi, and the Puma tank made by Rheinmetall and Krauss-Maffei Wegmann.

“The analysis of selected defence projects and plans shows that improvement in the management of national and international projects is urgent and needed without delay,” said the report.

It makes 180 recommendations to address problems of rising costs and changing project parameters, which would take at least two years to implement. Von der Leyen, who said the report would help focus efforts, blames the problems on delays in deliveries of spare parts and inadequate inspections and maintenance.

The report said defence buying required a culture of leadership and responsibility, close cooperation with industry and precise contracts with clear incentives and penalties.

The military says only 70 of 180 Boxer armoured fighting vehicles, seven of 43 navy helicopters, 42 of 109 Eurofighters and 38 of 89 Tornados are operational. Transall transport planes are also in poor condition, with only 24 out of 56 deployable.

Regarding a Puma tank project which will be six years behind schedule if the first of the tanks is in use by November, KPMG said original projections were too optimistic in allocating 2.5 years to come up with a demonstration model for the new tank.

“The intention of the procuring party to keep both the time frames short and costs low, while trying to achieve a maximum amount of technical innovation, can be viewed as the main reason for the huge delay,” said the report.

Former military chief Harald Kujat has blamed the problems on cost-cutting. At 1.29 percent of output, Germany’s defence spending is “shamefully” under NATO’s 2 percent target, he says.

Writing by Alexandra Hudson and Victoria Bryan; Editing by Stephen Brown and Noah Barkin

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