German military helicopters get 'mandatory' funding in budget plan

BERLIN (Reuters) - A German military helicopter tender likely to be fought out between U.S. arms makers Lockheed Martin and Boeing will get “mandatory” funding of 1.61 billion euros ($1.8 billion) under German budget plans, a government document shows.

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Some lawmakers and industry officials had worried that the long-awaited tender could be postponed because Defence Minister Ursula von der Leyen secured only half the 4 billion euro increase in military spending she had sought for 2020.

However the document, which is due to be approved by Chancellor Angela Merkel’s cabinet this week, singled out the heavy-lift helicopter as the only major arms program on a list of “mandatory elements” of a new four-year budget plan.

The helicopter program is expected to cost Germany around 4 billion euros ($4.54 billion) in the longer term, a rich prize for the winning bidder.

Germany’s defense ministry has previously said it expects to choose either of two U.S. helicopter models, the twin-rotor CH-47 Chinook helicopter built by Boeing, or the new CH-53K King Stallion built by Lockheed’s Sikorsky helicopter unit.

Procurement of the 45-60 helicopters will continue beyond 2023, which is why the four-year plan budgets for a smaller sum.

The Defence Ministry issued a pre-solicitation notice for the new helicopter in February, saying it expected to issue a formal request for proposals in the second half of 2019.

A ministry spokesman declined to comment on the finance ministry document or any specific funding requests.

“We’re at the beginning of the process,” he said.

German government officials will debate and refine the budget request in coming months, and changes are possible, but the fact that the helicopter program was designated mandatory should prevent a postponement of the program, experts said.

Another big arms project that was to be launched this year, an 8 billion euro MEADS missile-defense system, to be built by Europe’s MBDA, owned by Airbus, Italy’s Leonardo and Britain’s BAE Systems, and Lockheed, was not included on the mandatory funding list.

Also absent were four new multi-role MKS 180 warships expected to cost 4.5 billion euros ($5.11 billion), along with a option for two additional ships.

Reporting by Andreas Rinke, Andrea Shalal and Sabine Siebold; Editing by Alexander Smith