Alleged Irregularities Mean Requirement will be Recompeted
Having announced on 15 September that the System Sturmgewehr Bundeswehr competition to replace the Heckler & Koch (HK) G36 rifle for the German armed forces (see MON “Germany Selects New Assault Rifle” on 18 September), had resulted in the selection of the MK556 rifle from C G Haenel, the MoD has now cancelled the contract.
According to extensive media reporting in recent weeks, the price of the Haenel offer was €152 million, compared with €179 million for the HK offer, based on the HK433 or an improved HK416 rifle. It should be noted that total programme cost had been estimated at €240 million. Reports indicate that the competing proposals were technically comparable, so the decision came down to price, which swung selection in favour of Haenel. To be delivered over a nine-year period at a rate not exceeding 20,000/year, the initial delivery order had been placed for 18,700 weapons.
More recent media reports started to allege that the Haenel rifle had an unrealistically low price, suggesting that Haenel’s ultimate owners, EDGE Group of the UAE, was prepared to offer an artificially low price to win so prestigious a contract. This could be considered ‘price dumping’ and is unacceptable under German procurement regulations. It was obvious that litigation would inevitably result from questions over both bid costs and technical aspects of the evaluation process.
Unexpectedly, the MoD issued a statement on 9 October, noting that, on 30 September, HK had requested (as it was entitled to do) an official review of the award decision. At this point, the authorities identified a possible patent (intellectual property) infringement by Haenel at the expense of HK. In consequence, the contract award to Haenel was cancelled.
The authorities now intend to re-evaluate the offers made by both parties, “taking all aspects into account.” Clearly, this is a very complex situation and any fresh evaluation of the offers will have to be extremely rigorous, no doubt involving extensive legal wrangling. Inevitably, this will add further delay to what was once expected to be a straightforward assault rifle selection.
David Saw reporting from Paris for MON