Government endorses procurement of 246 infantry fighting vehicles
Ministry of Defence & Armed Forces of the Czech Republic
31.5.2023
Author: by editorial staff
The Government of the Czech Republic authorised the procurement of 246 CV90 infantry fighting vehicles for CZK 59.7 billion and on the very same day, the Director General of the MoD Armaments and Acquisition Division Lubor Koudelka signed an agreement with the Swedish party. Under the leadership of Minister Černochová, the MoD contracted for the acquisition of fighting vehicles less than a year after the previous tender was discontinued. We are embarking on the realization phase nine years after the decision to procure these vehicles which are necessary to deliver the key commitments to the Alliance, that is, to build a heavy infantry brigade by 2026. We are procuring vehicles that meet the requirements of the Czech Armed Forces. The contract also ensures that the participation of the Czech defence industry will amount to at least 40% of this contract.
"The procurement of infantry vehicles is an important milestone for building a heavy brigade, modernizing armed forces, and for strengthening our defence posture," Minister Černochová said. Despite all proclamations, governments in the preceding two electoral terms did not fulfil this commitment. The previous competitive bidding ended in failure in 2021. None of the tenderers whose offers had been rejected by the previous MoD leadership accepted the adjustments of the tender conditions which had been recommended by the legal study commissioned by Minister Černochová, meaning the tender had to be cancelled. Therefore, the Government authorised the Minister of Defence to negotiate the procurement of CV90 infantry fighting vehicles directly with the Government of the Kingdom of Sweden. This vehicle was chosen because it is the only combat proven vehicle, it is used in various European countries and it fulfils the requirements of the Czech Armed Forces.
The Czech Republic is going to acquire 246 units of CV90, including 29 maintenance vehicles, training, spare parts, and other accessories for approximately CZK 59.7 billion including VAT, which is approximately CZK 49.3 billion excluding VAT. The Czech Armed Forces previously demanded 210 pieces and the possibility of an option for another 36 pieces in the future. In the end, decided decision was made to acquire all 246 pieces. "Past experience with different vehicles proved that sufficient stock reserves are necessary. Furthermore, due to a worsened security situation, prices of equipment are constantly increasing. That is why we decided to accept the favourable Swedish offer which observes the original unit price," the Director General of the MoD Armaments and Acquisition Division explained. It was possible to keep the original price also thanks to the cooperation with Slovakia which is purchasing these vehicles for Slovak Armed Forces as well.
"With today's signature of the contract, we are welcoming the Czech Republic to the expanding family of CV90 infantry fighting vehicle users. It is a vehicle designed for harsh conditions and difficult terrain which was also tested in combat during international missions. Introduction of this first class Swedish-developed vehicle will strengthen not only the Czech Armed Forces, but NATO as well," Swedish Minister of Defence Pal Jonson stated.
As part of the contract, Sweden undertakes that the participation of the Czech defence industry will amount to at least 40% of the contract value. In case of non-compliance, sanctions will be imposed. This means that Czech industries will have the opportunity to cooperate on the production of vehicles for the Czech Armed Forces and also, after agreement with the producer, to potentially participate in future contracts with other European countries. The Swedish producer BAE Systems-Hägglunds is responsible for the involvement of Czech companies. Prior to signing the contract with the Czech Government, BAE signed contracts with major Czech subcontractors - state-owned enterprise VOP CZ, VR Group a.s. (owned by LOM PRAHA state enterprise) and the companies Excalibur Army, Meopta, and Ray Service. Approximately 30 Czech companies will cooperate on the contract and the estimated participation on the overall value during the realization of the contract will exceed the "mandatory" mark of 40%.
In the past, the involvement of the state-owned enterprise VOP CZ and its participation in the project, namely the contract-based calculation of its share in the overall participation of Czech industry, was questioned. Transactions for VOP or other state-owned enterprises are, in some aspects, considered to be accounting more, as under the 2030 Armaments and Defence Industry Development Support in the Czech Republic Strategy, VOP as a state-owned enterprise holds a key position for ensuring the security of supplies in the vital cycle of military materiel. The conflict in Ukraine has shown that having enterprises with such capabilities in our territory and under the control of the state is an essential strategic advantage that determines the power to defend our territory.
The contractual provision of the whole agreement is specific. Two contracts were signed - firstly, a bilateral agreement between the Czech Republic and the Kingdom of Sweden, represented by the Swedish Defence Materiel Administration (FMV), which regulates civil and military cooperation with regard to the procurement of infantry fighting vehicles. Furthermore, the agreement ensures close cooperation between the Czech Republic and the Kingdom of Sweden for decades.
Secondly, a tripartite agreement was signed between the Czech Ministry of Defence, the Swedish agency FMV and BAE Systems Hägglunds, the manufacturer of the vehicles. The subject matter of the agreement is the procurement of the CV90 vehicles itself.
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