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At the end of the government’s term, Defense Minister Krassimir Karakachanov signed a second major military agreement: the acquisition of two new patrol boats worth almost 1 billion lev.
The project has been in the works for at least five years and has gone through several phases, failing three years ago.
The Defense Ministry chose to have the order fulfilled by the German company LURSSEN WERFT GmbH & Co.KG, whose subcontractor will be the Varna shipyard “Dolphin”. The two ships will be built in Bulgaria.
“Dolphin” has a key role in the project, and was considered a favorite from the beginning. In 2017, the company surprisingly withdrew the order. The company did not officially comment on its decision, but the Defense Ministry explained that it was due to the reduction in the cost of the project. Initially, it was for BGN 820 million, but without VAT. The tax is now included in the general budget.
In the new edition of the project, Dolphin refused to submit an offer. Thus, only the German company and the Italian shipyard “Fincantieri” remained in the competition.
Until the last moment, “Fincantieri” was trying to stop the deal. According to the company, the project has been compromised and there are many violations in it. He even insisted on a parliamentary investigation, but the government did not respond to his calls.
This is the cabinet’s second major military deal after the purchase of the F-16 Block 70 fighters for more than BGN 2 billion from the US and Lockheed Martin. The third major project, for the purchase of armored vehicles for about BGN 1.5 billion, is progressing more slowly and is very likely not to be signed within the government’s mandate.
Lursen has requested to build more ships in Bulgaria
“This agreement shows that the relations between Bulgaria and Germany are also developing well. We have taken the second step for the modernization of the army after the signing of the agreement for new fighters.” Karakachanov said.
“I hope that our cooperation with Lursen does not end with him, on the contrary, it is only beginning now, because there is much work to be done in industrial cooperation.” added.
On behalf of Lursen, the contract was signed by the managing director of the company, Dirk Malgovski. He pointed out that the agreement is important for Bulgaria and because the ships will be built entirely in Varna.
“MTG” Dolphin “will be our partner and this partnership will be long-term,” Malgovski said.
He expects more ships to be built in Bulgaria, even for export orders.
Ships are expected in 2026
The ships are expected to be delivered in 2025 and 2026, respectively. The contract provides for the training of both crews and engineers.
The financial framework of the project has a value of BGN 984,000,000 with VAT.
The ships will be paid in installments over six years.
Last week, information came out that the initial payment may be higher so that the company does not have to apply for a bank loan to start the project and possibly becomes more expensive.
The Fincantieri accusations
The losing Italian company claims that its offer was evaluated with the highest number of points according to all criteria: technical, indicator, industrial cooperation, price. Fincantieri also raises the question of whether a participant in the procedure is allowed to become a subcontractor to another successful participant.
The Defense Minister points out that even after the update of the Italian offer they did not fall within the budgetary framework of the project.
The Italians tried unsuccessfully to challenge the procedure before the Supreme Administrative Court (SAC). The court refused to hear the case because it was related to a decision of the Council of Ministers, which is directly related to national security and is not subject to judicial review.
How did you get here?
The project has been in the works for many years, going through several stages.
Initially, the Bulgarian company MTG-Dolphin was considered the favorite in the project for the new boats, but surprisingly it refused to participate in the project on its own and did not submit a bid.
Therefore, only “P. Lurssen Werft GmbH & Co. KG” and the Italian “Fincantieri” submitted official offers.
Dolphin was one step away from the contract in the previous edition of the competition three years ago, but gave up at the last minute.
The company did not officially comment on its decision, but the Defense Ministry explained that it was due to the low cost of the project.
Initially, it was for BGN 820 million, but without VAT. The tax is now included in the general budget.
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