22 janvier 2020 | International, Naval

Industry protest ensnares Germany’s multibillion-dollar combat ship

By: Sebastian Sprenger

COLOGNE, Germany — The losing bidder for Germany's MKS 180 large-frigate program has filed a protest against the government's pick of Dutch shipyard Damen for the $6.7 billion job.

German Naval Yards, based in Kiel, Germany, on Monday said it had “serious doubts about the legality of the decision” and would “exhaust all legal possibilities at our disposal” to have the decision overturned.

The Defence Ministry announced Jan. 13 it selected Damen to build an initial four copies of the new multipurpose combat ships. The pick capped a source-selection process that had become controversial because the government decided to compete the project throughout the European Union. The strategy followed the bloc's principle of a unified market, but it left the domestic shipbuilding lobby miffed.

The protest by German Naval Yards and its bid partner ThyssenKrupp Marine Systems kicks off a dispute process that begins with the Defence Ministry reviewing the complaint and then, if it remains unresolved, could wind its way through the German court system.

There is no telling how long the process will take — some protests get resolved within weeks, but the process can take a year or longer. The Defence Ministry is expected to offer an indication later this month on whether its attorneys believe the Damen pick can withstand legal scrutiny.

Damen has said it wants to build the ships at the shipyards of its German bid partner Lürssen, vowing to invest 80 percent of the contract's value in Germany.

The protest comes at a time when Berlin is adopting a new policy that grants an exception to the EU competition mandate when national security is at stake. Specifically, the construction of surface warships would be designated as a “key technology area” so worthy of protection that future programs would be automatically awarded to German manufacturers.

For that to be the case, however, two political initiatives have yet to play out: The German parliament must approve a revision of national source-selection rules from October 2019, which formally enable EU acquisition exceptions on national security grounds. In addition, the Cabinet has to greenlight a draft strategy document on nurturing domestic security- and defense-related industries, currently in interagency review, that confers the rank of “key technology area” to naval surface combatants.

The strategy document, overseen by the Federal Ministry for Economic Affairs and Energy, is expected to be ready for Cabinet consideration within weeks, as Defense News reported last week.

Legal experts said the “key technology” debate has no immediate bearing on the German Naval Yards protest. At the same time, it is possible that the complaint's resolution, whichever way it goes, will come at a time when a domestic award preference for similar contracts is already in effect.

https://www.defensenews.com/global/europe/2020/01/21/industry-protest-ensnares-germanys-multibillion-dollar-combat-ship/

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The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (“C4ISR”), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios, cyber-based systems and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems. For additional information, visit: https://elbitsystems.com/, follow us on Twitter or visit our official Facebook, Youtube and LinkedIn Channels. Contacts: Company Contact: Joseph Gaspar, Executive VP & CFO Tel: +972-4-8316663 j.gaspar@elbitsystems.com Rami Myerson, Director, Investor Relations Tel: +972-77-2946403 rami.myerson@elbitsystems.com David Vaaknin, VP, Brand & Communications Tel: +972-77-2946691 david.vaaknin@elbitsystems.com IR Contact: Ehud Helft Gavriel Frohwein GK Investor Relations Tel: 1-646-688-3559 elbitsystems@gkir.com This press release may contain forward‑looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Israeli Securities Law, 1968) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current facts. Forward-looking statements are based on management's current expectations, estimates, projections and assumptions about future events. Forward‑looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions about the Company, which are difficult to predict, including projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business. Therefore, actual future results, performance and trends may differ materially from these forward‑looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; changes in global health and macro-economic conditions; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; changes in the competitive environment; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward‑looking statements speak only as of the date of this release. Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company does not undertake to update its forward-looking statements. Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this Press Release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies. All other brand, product, service and process names appearing are the trademarks of their respective holders. Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein. View source version on Elbit Systems: https://elbitsystems.com/pr-new/elbit-systems-awarded-96-million-contract-to-supply-a-rotary-wing-mission-training-center-to-a-european-country/?pageid=PR%20-20%20News

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