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Bulgaria - Navy Modernization

By 2020 the Bulgarian Navy had six naval vessels, three dating from the Soviet era and the rest second-hand former Belgian vessels. The three 205U missile boats were to be removed from operational readiness by 31/12/2012, along with the acquisition of an anti-ship missile complex for the first E-71 frigate. The infrastructure facilities of the Navy are stationed in 40 military areas: 20 barracks, 6 storages, 2 ports and 12 other service buildings. The total number of buildings (of different types and for different purposes) is 839.

On 14 November 2019 the Bulgarian government approved the acquisition of two Tripartite-class mine countermeasure vessels (MCM) from the Royal Netherlands Navy for around EUR2.4 million. The governmental approval authorized the Bulgarian Defense Minister, Krassimir Karakatchanov, to conclude an intergovernmental agreement with the Netherlands. The purchase of two former Dutch Navy minesweepers was first announced in September 2019, when the Deputy Defense Minister, Anatoly Velichkov. According him, the total budget was then worth EUR3.5 million, with an extra EUR1.5 million to be spent for the vessels’ upgrade. The Bulgarian Navy already operated one Tripartite-class minesweeper it acquired in 2004 from the Belgian fleet. After an overhaul phase in 2009, the former M922 Myosotis became operational within the Bulgarian fleet and renamed « Tsibar ».

The government negotiated with partner countries to acquire two second-hand submarines for the Navy, Minister of Defense Krasimir Karakachanov said , learned BulgarianMilitary.com. “The question is whether or not the project can be implemented between 2024 and 2027,” Karakachanov told reporters in Varna 28 February 2020. The Navy has not had a submarine for years, having dismantled the latter because of its advanced age. Experts say the lack of a submarine makes it difficult to train sailors. In addition, the specific reconnaissance capabilities provided by the submarine have sharply reduced. At the end of 2019, Prime Minister Boyko Borisov mentioned that he could buy a second-hand submarine from Norway, but it was not clear how far the process had gone.

Multirole Patrol Vessels

In 2004 when the original tender for multirole naval patrol vessels was approved, Bulgarian officials had planned a procurement of six corvette multipurpose patrol boats. The figure was later dropped to four and then to two, and finally - under continuing financial stresses - the entire project was placed in abeyance altogether.

Corvettes are medium-sized combat vessels designed for an Anti Surface Warfare focus. Based on those required capabilities they inherit a wide range of missions for Maritime Security. The project was submitted to Parliament and the lawmakers were expected to approve it by the end of May 2015. Preliminary talks had already been held with EU and NATO member states about potential acquisition of patrol ships, according to the statement. Bulgaria has a maritime border of about 400 km in the Black Sea which is also part of the European Union’s external border.

The OPV / Corvette was revived in March 2016 when the former Borisov government outlined a plan to add two NATO-compatible multirole patrol ships. However, Parliament refused to approve the naval acquisition program - then costed at BGN820 million. Instead, the project was tabled until fresh elections were held in March 2017, resulting in a new government formation once again led by Boyko Borisov's GERB Party. Defense Minister Krassimir Karakachanov submitted the request once again to the government on June 22, 2017. The sole bidder and winner of the tender, local shipyard MTG Dolphin, a private firm based in Varna, withdrew from negotiations with the government in December 2017.

Bulgaria planned to acquire two multi-purpose patrol ships with modular design for its Navy. The project will be implemented over five years, the Defence Ministry said without giving a timeframe. The project will cost BGN 820 M (EUR 419 M). The procurement cost, which comprises armaments, equipment and communication systems for the ships, could be one-third lower if the vessels were built in Bulgaria, Nenchev said during a visit to the Black Sea city of Varna on 31 March 2016, according to a statement of the Defence Ministry. The project is part of a EUR 1.24 B defence procurement package for the Bulgarian Air Force and Navy approved by the government on 30 March 2016.

The two corvettes (called "patrol ships" will have to carry anti-ship and anti-aircraft missile weapons, and must be built in Bulgaria. For their purchase, it was planned to allocate 820 million levs (about 410 million euros), including 114 million leva in 2016, 171 million leva in 2017 and 2018, 97 million leva in 2019, 147 million leva in 2020 year, 90 million leva - in 2021 and 30 million leva - in 2022.

Defense Minister Krassimir Karakachanov submitted the request once again to the government on June 22, 2017. The sole bidder and winner of the tender, local shipyard MTG Dolphin, a private firm based in Varna, withdrew from negotiations with the government in December 2017 due to a cut in the project valuation as a result of Bulgaria's Value Added Tax (VAT) Act of January 1, 2017.

The program for building corvettes in Bulgaria had already acquired a touch of scandal, as Krasimir Karakachanov, chairman of the ruling coalition of the parliamentary group Patriotic Front, accused government circles of lobbying for the interests of a certain Bulgarian shipbuilding company, which ostensibly should be given an order for construction under this program. The local MTG Dolphin proposed the latest version of its K-90 vessel, Italian Fincantieri, entered the race with a modified Abu Dhabi-class corvette design as well as the German Lürssen with a platform based on its OPV 80/85/90 series.

Bulgaria's National Assembly voted overwhelmingly on 19 July 2018 in favor of moving forward on a defense acquisition project involving the procurement of two multirole naval patrol vessels. The purchase of these naval patrol ships is estimated at BGN984 million ($585 million). The 135-9 vote in favor of the acquisition means that the project may finally move forward after a previous vote in parliament on June 2, 2016, blocked the procurement.

The ministry sent requests for proposal to seven companies that have expressed interest to participate in the bid. The Bulgarian Ministry of Defense publicly opened offers for the acquisition of 2 patrol vessels by the Bulgarian Navy on 22 April 2019. This was made public in the presence of the three companies participating in the tender Fr. Lürssen Werft GmbH & Co.KG, MTG - Dolphin - Bulgaria and Fincantieri - Italy. Major ranking points now are "industrial co-operation", "overall support" and "capabilities". On May 29, the bids based on the fourth criterion – price, will also be opened. The final decision on the preferred offer will be taken by the government and parliament. The price for both ships was expected to be over 500 million euros.

In November 2017, the defence ministry said that MTG Dolphin met the technical and financial criteria for the implementation of the project. The technical proposals submitted by MTG Dolphin meet and considerably exceed the set technical specifications of the project, the defence ministry said at the time. It added that the transfer of high technology is ensured by Dolphin's framework agreements with five leading companies, whose products are established brands on the world market.

Bulgarian shipyard MTG Dolphin withdrew from the negotiations for construction of two multi-functional modular patrol ship for the country's Navy, due to a cut in the maximum allocation for the project, the defence ministry said on 20 November 2017. As the main reason for its withdrawal, MTG Dolphin has indicated the 20% decrease of the originally announced project financing of 820 million levs resulting from the introduction of value added tax (VAT) on all defence procurement deals, in force from January 1, 2017, the defence ministry said in a statement. Considering the payment of VAT, the estimated maximum value of the project actually decreases by 164 million levs ($99.3 million/83.8 million euro), which was the main reason why several foreign companies which initially interest towards the project decided to withdraw from the procurement procedure.

On 12 November 2019 Defence Minister Krassimir Karakachanov told reporters that he had signed an order to extend by 15 days the deadline for submission of offers for two multi-role patrol ships for the Bulgarian Navy. The purchase of the patrol ships was one of three key armed forces modernization projects in Bulgaria together with the purchase of F-16 jet fighters for the Air Force and armored vehicles for the Land Forces. Three companies submitted offers in June: Fr. Lurssen Werft GmbH & Co.KG (Germany), MTG Dolphin (Bulgaria), and Fincantieri (Italy), and had been asked to make improvements in the offers.

Bulgaria is prepared to spend close to 1 billion leva including VAT for the patrol ships. The new deadline for the improved offers was December 6. Karakachanov said that he decided for the extension to make sure he is not accused of rushing the project in the interest of a specific tenderer. He still expected that this coming spring the contract will be ready to be signed. The Bulgarian company MTG – Dolphin, which previously refused to participate independently in the project and did not submit an offer, although it was considered a favorite, may become its subcontractor.

Bulgaria’s government approved a report by an interdepartmental working group recommending handing the tender to supply two naval patrol vessels to German shipbuilding company Fr. Lürssen Werft GmbH & Co.KG. A government media statement 28 February 2020 stated that the offer from the German firm was within the project’s financial framework of 984 million leva million leva, including value-added tax (about 503 million euro). The first of Bulgaria’s new OPVs could be delivered by the end of 2023, with the second arriving the following year.

The Bulgarian Ministry of Defense (MoD) began negotiations with the German company Lurssen for the construction of two modular patrol ships for the needs of the Navy, with the project costing nearly BGN 1 billion [$580 million]. According to Defense Minister Krassimir Karakachanov, this will most likely happen today [ie, 16 June 2020], as the reason for the delay was the epidemic of the novel coronavirus. In practice, the procedure for acquiring the two corvettes was temporarily frozen due to a complaint by the other participant in the race – the Italian defense company Fincantieri, before the Supreme Administrative Court (SAC).

It was not clear what exactly is the fate of the case, as on 29 May 2020 the magistrates classified the proceedings. However, it seemed that the dispute was clearly not in favor of Fincantieri, as the Ministry of Defense had already decided to move to the next step and start negotiating with the Germans on the parameters of a possible deal, which, according to Karakachanov, should be concluded by the end of 2020 at the latest, but by mid-2021 this had not happened. The complaint was probably an attempt to sabotage the modernization program by postponing it by procedural means. If the project is not finalized in parliament by the end of the summer or the beginning of autumn, the agreement with the Germans will hardly be able to be signed in time.

According to unofficial information, the subcontractor of the German military company will be the Bulgarian shipyard Dolphin. The company was determined as the winner in the previous attempt to implement the same project, but withdrew at the last moment, after it turned out to be surprising that 20% VAT should be deducted from the budget. It is also claimed that Dolphin will now have to take on the “rough work” on the project and will construct the hulls of the two corvettes, while Lurrsen will take on the systematic integration of equipment and armaments.

On 12 November 2020 Bulgaria finally signed the contract for the acquisition of two multi-role patrol ships for the Bulgarian Navy with Fr. Lurssen Werft GmbH & Co. KG. It is one of three big modernization projects of the Bulgarian Armed Forces along with the purchase of F-16 fighter jets earlier this year and the upcoming purchase of armoured vehicles for the Land Forces. The financial framework of the patrol ships project is 984 million leva after VAT.

The ships are due to be delivered in 2025 and 2026. The contract also includes training of the crew and technical staff. The ships will be equipped to participate in a wide range of naval operations of NATO and the EU. They will make the Bulgarian Navy capable of combatting marine, submarine and aerial enemy. In his remarks after the signing of the contract, Defence Minister Krassimir Karakachanov said that Bulgaria has just made "the right step in the modernization of its Navy". He expressed hope that cooperation with Lurssen will not end with the signing of the contract but is only starting "because a lot of work needs to be done in the area of industrial cooperation".

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