Bulgaria’s caretaker Defence Minister: Cost of 2 naval patrol vessels could rise by a billion leva

Written by on June 3, 2021 in Bulgaria - Comments Off on Bulgaria’s caretaker Defence Minister: Cost of 2 naval patrol vessels could rise by a billion leva

The cost of the two naval patrol vessels being acquired by the Bulgarian Navy could rise between 400 million and a billion leva because the contract signed last year did not include ammunition for them, caretaker Defence Minister Georgi Panayatov told a news conference on June 3.

As The Sofia Globe reported at the time, Bulgaria’s Defence Ministry signed on November 12 a contract worth 984 million leva (about 503 million euro) including value-added tax with German firm Fr. Lürssen Werft for the building and delivery of two naval patrol vessels.

The ships are expected to be delivered in 2025 and 2026, respectively.

Panayotov, who took office as part of the interim administration on May 12, told the news conference that he had not known that the purchase did not include ammunition.

“It was explained to me that this was a normal process. However, it is important to know that work is underway on a project to purchase ammunition for both ships. The price of this ammunition varies between 400 million and one billion leva,” Panayotov said.

Asked about the purchase of ammunition for the new patrol ships, Defence Chief Admiral Emil Eftimov said that during the procedure for the implementation of the investment project, the ministry had complied with the amount determined by the National Assembly.

“In essence, the cost of acquiring the two modular patrol ships, which according to classification are between a large corvette and a small frigate, is unprecedented in this type of transaction – for less than 500 million euro with VAT we will acquire two very high quality naval vessels.

“We cannot plan to purchase ammunition before the ship’s configuration is clear,” Eftimov said.

Several companies had been approached, he said. The winning company had a certain configuration of artillery, anti-ship, anti-submarine and anti-aircraft weapons.

“Once the contract is in progress, technical specifications will be prepared so that orders for ammunition can be announced. Ammunition delivery is not a one-time process, it is a continuous process. Until the receipt of the first new ship in 2025, the process of acquiring ammunition will go in parallel,” Eftimov said.

Panayatov said that work on the project for a new multi-role F-16 fighter was going smoothly. The main activities for receiving the new fighter jets are concentrated at the Graf Ignatievo air base, where 300 million leva has been earmarked for infrastructure activities.

Panayotov said that the project for the armoured vehicles of the Land Forces had not been implemented, as the companies admitted to the final round had submitted bids that significantly exceed the approved envisaged budget.

He said that it was worrying that more than 90 per cent of the Defence Ministry’s public procurements were awarded directly, without conducting market research and consulting with potential contractors.

“The other problem identified is with 100 per cent advance payment, which means that the Ministry of Defence has credited private companies with budget funds,” Panayotov said, adding that this was in violation of the recommendations of the Ministry of Finance to refrain from advance payment.

He said that in 2018 the General Directorate of Defence Infrastructure concluded contracts worth 35 784 752 leva, of which 32 890 394 leva were direct award. In 2019, the value of the awarded public procurements was 39 148 840, of which 36 375 684 leva had been implemented in the same way.

“This means that for 2018, 92 per cent of the contracts were awarded directly, and for 2019, 93 per cent.

“For 2020, the orders are worth almost 160 million leva, of which 99 per cent were given as direct award,” Panayotov said

He described as disturbing the lack of set deadlines for start-up and implementation in public procurement related to construction and repair activities.

“I can quote you a case in which with a planned 90 days for design and 360 days for implementation, preparation and approval of the project alone took 545 calendar days, and construction began a year and a half after the contractor was paid in advance the entire amount. The contract was for 5 975 835 leva.”

The results of the completed inspection of the General Directorate of Defence Infrastructure for 2018 and 2019 had been sent to the Agency for State Financial Inspection due to suspicions of violation of financial discipline and violations in the implementation of the Public Procurement Act, and to the Prosecutor’s Office due to suspicions about the application of practices contrary to the applicable laws and contractual clauses, and the lack of control over the implementation of the contracts.

In connection with contracts with the media, which the Ministry of Defence had concluded, Panayotov said that in the period January-March 2021, a total of 240 000 leva, VAT included, had been spent on two national television stations for the “Be a Soldier” recruiting campaign.

He said that a contract had been signed with a private television station for the production of military programmes worth 36 000 with VAT, while the Ministry of Defence had its own Military TV channel. The contract had included access to the video archive of the Military TV channel.

“Maintenance of a Facebook platform worth 36 000 leva has been assigned, while this activity was carried out by full-time employees of the press centre of the ministry, for which there was no additional payment,” Panayotov said.

(Photo: Ministry of Defence)

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