Portuguese Pandur

In 2005 the Portuguese government signed a deal worth 364 million euros to acquire 260 Pandur II armoured vehicle, with an option for further 33 worth 140 million euros, to equip the Portuguese Intervention Brigade of the Portuguese Army and the marines of the Portuguese Navy. Portugal was the first country to buy Pandur II.[1] The sale of Pandur II to Portugal includes an associated offset agreement for a value of 516 million euro.[2] The methodology of the selection process was officially based on four main characteristics of the bidder's offers: 1) cost; 2) technical requirements; 3) offset proposal; 4) delivery schedule.

Pandur II is produced by Steyr-Daimler-Puch Spezialfahrzeuge, part of General Dynamics European Land Combat Systems, which is also the parent company of MOWAG of Switzerland and Santa Bárbara Sistemas of Spain.

The first 41 Pandur II were manufactured in Austria, the further 219 are being manufactured by Fabrequipa in Portugal.

Timeline
  • 2002 Ministry of Defense prepares a competitive bidding for the procurement of 8x8 Armored Wheeled Vehicles
  • early 2003 Ministry of Defense authorizes pre-offset activities in Portugal.
  • 14/8/2003 Public announcement of the tender.
Pandur II
  • 2003 General Dynamics acquires Steyr Daimler Puch Spezialfahrzeug, SSF becomes part of General Dynamics European Land Combat Systems which includes also the Spanish Santa Bárbara Sistemas and the Swiss MOWAG. Headquarters in Vienna, Austria.
  • End 2003 Evaluation of the contenders for procurement program.
  • 27/01/2004 Three companies are selected: Patria Oy, Steyr-Daimler-Puch Spezialfahrzeug (General Dynamics), Mowag (General Dynamics)
  • 15/11/2004 Finnish Patria is excluded for technical reasons. General Dynamics´s Steyr Pandur II and MOWAG Piranha are first and second choice.[3]
  • 12/2004 Steyr-Daimler-Puch is awarded a 344.3 million euro contract for Pandur II, plus spare parts for 20.7 million euro.
  • 01/2005 Finnish Patria alleges misconduct to the Public Attorney's Office of the Administrative Court in Lisbon.[4] One of the main claim of Patria on the award of the contract to General Dynamics is that their proposed offset (contrapartidas) package is unrealistic and intentionally misleading. Patria calls for the legal suspension of the award of the contract to General Dynamics.
  • 02/2005 Lisbon Court rejects the appeal of Patria.[5]
Patria AMV - Croatia
  • 15/02/2005 The contract is signed;[6] production is supposed to run from the year 2006 to 2009 at facilities in Portugal and at plants of General Dynamics European Land Combat Systems.
  • 05/05/2006 Fabrequipa, the plant at Portugal, is certified to manufacture the Pandur II.[7]
  • 25/01/2007 Fabrequipa begins co-production of Pandur II.[8]
  • 12/2007 Operational tests of a Pandur equipped with the CT-CV turret, with a 105mm gun, from Belgian CMI Defence.
  • 2008 Operational tests of a Pandur equipped with the Hitfact turret, with a 105mm gun, from Italian Oto Melara.
  • 24/06/2008 Jornal de Negócios accuses one of General Dynamics's main offset fulfillers of industrial espionage.[9]
  • 4/04/2010 Czech Republic Prosecutor investigates corruption charges in connection with purchase of GD Pandur. Czech purchase is the second success of Pandur II, in competition with Patria AMV.[10]
  • 12/04/2010 Portuguese MoD requires Steyr to adapt 10 Pandur with a turret armed with a 105mm gun. No further information is disclosed but this may imply that the option for further 33 Pandur will not be used. The possible turrets are the Italian Oto Melara Hitfact and the Belgian CMI Defence CT-CV, both of which already made operational tests at the training field of Portuguese mechanized forces, the Campo Militar de Santa Margarida, in the years of 2007, 2008.[11]
  • 8/05/2010 Portuguese Minister of Defense implements procedures to charge General Dynamics with breach of contract.[12]
  • 20/08/2010 Portuguese Public Prosecutor investigates corruption charges in the award of the contract Pandur II.[13]

Variants of Pandur II
Variant Army Marines Total
Infantry Carrier Vehicle (ICV) 105 10 115 Armed with 12.7mm machine gun and capable of transporting 11 soldiers
Infantry Carrier Vehicle (ICV RWS) 7 3 10 Armed with remotely controlled 12.7mm machine gun and capable of transporting 11 soldiers
Infantry Fighting Vehicle (IFV) 30 2 32 Armed with 30mm cannon (MK30-2 in SP30 turret for army, MK44 in ORCWS turret for marines) and capable of transporting 5 to 7 soldiers. The ORCWS can operate ATGW Spike LR
Anti-tank Guided Missile Vehicle (ATGMV) 15 0 15 Armed with TOW
Mortar Carrier Vehicle (MCV) 31 2 33 Armed with 120mm mortar with a crew of 5 to 6
Command Post Vehicle (CPV) 16 3 19
Recovery and Maintenance vehicle (RMV) 7 0 7
Medical Evacuation Vehicle (MEV) 10 0 10
Engineer Squad Vehicle (ESV) 9 0 9
Radio Access Point Station Vehicle (RAPSV) 6 0 6
Reconnaissance and Surveillance Vehicle (RSV) 4 0 4
Mobile Gun System (MGS) 33 0 33 Optional. Armed with 105mm gun turret, either Oto Melara HITFACT or CMI Defence CT-CV

The Pandur II for the marine will be amphibious and have a cargo ramp instead of the original doors. [14]

Armour

The Pandur II for the Portuguese Army is fitted with Steyr add-on armour that provides Level 4 protection according to STANAG 4569. The vehicles for the marines are equipped with Level 3 armour. However, Portuguese army did not accept the quality of the Pandur II and keep only 120 Pandurs in Portugal a título provisório, that means that either Pandur II are not technically suitable or some other part of the contract with General Dynamics was not fulfilled, or both.[15]

Offset issues
World operators of Patria AMV

It is worthy to return to the surprising and preemptive exclusion of Patria. It could not have been on technical problems, since Patria AMV was a vehicle more tested than Pandur. Before Portugal's purchase there were only few prototypes of Pandur II. On the other hand, Patria sold AMV to many countries: Finland,[16] Poland,[17] Croatia,[18] Sweden,[19] United Arab Emirates,[20] South Africa,[21] Slovenia.[22] The exclusion of Patria AMV put Portugal in the awkward condition to have to negotiate with one supplier only. Portugal moved from a situation of monopsony (only one buyer and many sellers -typical of arms procurement) to a situation of monopoly (only one seller). It has been stated that Patria proposed the only vehicle that did not show the requested operational capabilities. The fact that the company gave its price offer after the deadline, knowing that this might have disqualified Patria from the tender, was also interpreted as a desire to avoid the final tests with the Portuguese Military, since the results could have harmed Patria's international image. However. this interpretation of Patria's intentions is not consistent with Patria's successive actions, especially with Patria's public legal appeal against the decision of the Ministry of Defense. If a company wants to go unnoticed, it does not make such a public statement against the Portuguese real motivations for the elimination of Patria.[23]

Romanian Piranha (GD)

After the elimination of Patria in 2004, Portugal was effectively left with one competitor, that is, General Dynamics Pandur vs. General Dynamics Piranha, GD vs. GD.[24] At this point, the only factor that had actual weight for the Ministry of Defense was the offset proposal. Most of the serious problems on Pandur procurement pertain to the offset package offered by General Dynamics. Patria had claimed it was unrealistic, and time has shown that Patria was right. They claimed also that General Dynamics offset package was intentionally misleading, and this was an understatement.[25] Fabrequipa, direct offset, is the most known case. General Dynamics transferred the Pandur production to Czech Republic, blaming the global economic crisis for their breach of the Pandur offset contract.[26] The case of Tecnia Lda of Torres Vedras is connected to an indirect offset,[27] that General Dynamics based in a LGT branch in Luxembourg.[28] It was supposed to support Portuguese environmental and water technologies sales in Saudi Arabia and it is the most embarrassing of all Portuguese contractual violations related to the offset program. The destruction of Tecnia to justify the issuing offset certificates exposes the ways General Dynamics conceives offset contracts and offset fulfillment in Europe.[29] The problem of the weight of offset in the procurement decisions is not exclusively Portuguese.[30] It is a European plague.[31] In the European horizon one can understand what happened in the Pandur procurement between 2003 and 2005 by looking at the Slovenian case, that is one of the many battles in the commercial war between Patria and General Dynamics European Land Systems. In 2008 Jorma Wiitakorpi (Patria CEO) was arrested in Finland and charged with bribery and industrial espionage.[32] Portuguese Pandur offset agreement demonstrates the urgency of a European reform to enforce Lisbon Treaty article 346, and the European convention against corruption involving officials.[33]

See also

References
  1. ¨Portugal was the first country to select the Pandur II 8x8, awarding Steyr-Daimler-Puch a EUR344.3 million (USD455.1 million) contract (plus a spares contract worth another EUR20.7 million) for the supply of 260 vehicles in February 2005 ... Second in line was the Czech Army, which it was announced in June 2006 had placed an EUR821 million order for 199 vehicles (plus 35 options) in 18 versions, all of which will be amphibious, including 63 infantry combat vehicles (ICVs)¨ Pandur II in profile: Steyr's 8x8 digitized warfare platform is gathering speed by Rupert Pengelley, in Jane´s Defence Industry, 17 January 2007.
  2. Procurement Decision Support for the Portuguese MoD: The MACBETH Approach and the Acquisition of 8x8 AWV, by Carlos A. Bana e Costa Mário Simões Marquest, Paper presented at the SAS-080 Specialists Meeting on Decision Support Methodologies for Acquisition of Military Equipment, Brussels, Belgium, October 22–23, 2009, Archived 2013-02-25 at the Wayback Machine
  3. Finlandeses evitam teste operacional Diário de Notícias. However, some other articles challenge this interpretation of the exclusion of Patria: ¨O PUBLICO.PT apurou ainda que a empresa finlandesa Patria Vehicles, derrotada no processo de escolha, desistiu anteontem da providência cautelar interposta em tribunal, depois de uma primeira acção intentada em Janeiro, que foi considerada improcedente pelo Tribunal Administrativo e Fiscal de Lisboa.¨ Archived 2011-10-01 at the Wayback Machine
  4. Patria Alleges Misconduct in Portuguese Pandur II Deal Defence Industry Daily
  5. ¨A suspensão da assinatura do contrato acabaria por ser levantada pelo Tribunal Administrativo e Fiscal de Lisboa, que considerou que a assinatura do contrato não constituía "lesão iminente e irreversível" dos interesses da empresa numa providência cautelar, apresentada em simultâneo, e cujo processo ainda decorre.¨ "Archived copy". Archived from the original on 2010-08-21. Retrieved 2010-08-26.CS1 maint: archived copy as title (link)
  6. The contract is sealed by Santana Lopes administration 5 days before the general election:¨O TC terá depois um mês para transmitir a sua decisão final, que é determinante para a homologação do contrato assinado no passado dia 15 de Fevereiro pelo ex-ministro da Defesa Paulo Portas, cinco dias antes das eleições legislativas antecipadas¨ Archived 2011-10-01 at the Wayback Machine
  7. Steyr reactiva fábrica no Barreiro para produzir carros blindados Diário de Notícias
  9. Jornal de Negócios, Espionagem Industrial, Existe im Portugal e está de boa saudé, pag. 8, 24/06/2008
  10. "Archived copy". Archived from the original on 2010-08-04. Retrieved 2010-08-26.CS1 maint: archived copy as title (link)
  11. Ministério deixa cair as 33 'Pandur' com canhão 105 Archived 2010-04-12 at the Portuguese Web Archive Diário de Notícias
  12. O Ministério da Defesa informou há dias o fabricante das viaturas blindadas Pandur que os atrasos no cumprimento do programa "obrigam à adopção de medidas urgentes e eficazes" para "debelar todos os prejuízos sofridos.""Archived copy". Archived from the original on 2010-08-04. Retrieved 2010-08-26.CS1 maint: archived copy as title (link)
  13. . ¨O Governo afirmou-se hoje "totalmente disponível para cooperar" com a Justiça relativamente a uma eventual investigação ao processo de compra de 260 viaturas blindadas de rodas Pandur II para as Forças Armadas nacionais.¨"Archived copy". Archived from the original on 2010-08-21. Retrieved 2010-08-26.CS1 maint: archived copy as title (link). ¨Um responsável político admitiu também ao DN que o Governo pode seguir uma via semelhante à do Executivo checo - denunciou o contrato com a Steyr e depois aceitou comprar apenas metade das viaturas inicialmente contratualizadas - libertando-se assimdos custos das Pandur por entregar.¨ "Archived copy". Archived from the original on 2010-08-28. Retrieved 2010-08-26.CS1 maint: archived copy as title (link).
  14. Pandur II is supposed to replace the Chaimite
  15. ¨ O Exército informou também que 59 das 120 Pandur recebidas desde finais de 2007 "encontram-se no Depósito-Geral de Material do Exército" (Alcochete), para serem reparadas.¨
  16. 62 AMV
  17. 692 AMV
  18. 84 AMV
  19. 113 AMV
  21. 264 AMV
  22. See Patria case
  23. See Patria case on the European commercial war between General Dynamics and Patria.
  24. "Patria had won some of these competitions, including a large 690-vehicle contract in Poland, plus 84 AMV orders from Finland so far that include 24 breech-loading 120mm AMOS twin-mortar variants. It has also lost competitions in Belgium (242 LAV III Piranhas for $850 million) The Czech Republic (199 Pandur IIs for $1 billion), and Portugal (260 Pandur IIs for $482 million)." Defense Industry Daily, 28/03/2011
  25. "A empresa austríaca que vendeu os blindados Pandur a Portugal ainda não cumpriu nem um cêntimo dos 516 milhões de euros de contrapartidas devidas à economia nacional. A informação consta de um relatório a que a SIC teve acesso. O Governo garante agora que perante este incumprimento vai utilizar a garantia bancária de 130 milhões de euros prestada pelo fornecedor na assinatura do contrato." SIC Noticias, 19.12.2012,"Archived copy". Archived from the original on 2012-12-31. Retrieved 2012-12-19.CS1 maint: archived copy as title (link)
  26. Empresa austríaca quer transferir fabrico de blindados Pandur de Portugal para a República Checa. Poderão estar em causa 200 empregos no Barreiro, Publico, March 14, 2009 Archived 2011-10-01 at the Wayback Machine
  27. Foreign Direct Investment and Marketing Assistance offset
  28. ¨Governo contacta Berlim para obter lista de clientes de bancos no Liechtenstein¨. See: 2008 Liechtenstein tax affair
  29. "Archived copy". Archived from the original on 2010-08-05. Retrieved 2010-08-26.CS1 maint: archived copy as title (link)
  30. ¨Defense Minister's directive on Contrapartidas (offsets) has been issued in 2002. Decree-Law 153/2006 and 154/2006 regulates Portuguese Contrapartidas. The Permanent Commission on Offsets (CPC) is a government agency, which depends on the Ministries of Defense and of Economy, and it is in charge of negotiating and supervising offsets. The threshold is 10 million Euro, and the minimum offset request is 100 %. Multipliers have been set in 2006 between 1 and 5. There is no preference with regard to direct or indirect offsets¨ Portugal offset agreement. See also Portugal - Epicos National Offset Report (E.N.O.R. 19) - November 2007. Portugal is an offset important theater: G.O.C.A Global Offset and Countertrade Association and DMA Defence Manufacturers Association are the two main offset fulfillers organizations, and in 2004 they decided to hold their first joint meeting on offset in 2004 in Sintra.
  31. The EDA has stated that offsets can distort the defence procurement market and obstruct the creation of a unified European industrial base. While the European Defence Agency (EDA) has recognised the benefits of some offset agreements, it has also said that "offset should ideally be phased out eventually and that it is "generally difficult to justify any type of offset on the basis of Article 296 (now Article 386 of the Treaty on European Union) by Kery Smith, in Jane's Defence Industry December 01, 2007
  32. Jorma Wiitacorpi is the same person who decided to appeal the Ministry of Defense decisions in 2005. See Patria case and
  33. . ¨O Governo português decidiu fazer dos veículos Pandur um caso exemplar, deixando um ultimato à fabricante austríaca Steyr: ou as prometidas contrapartidas de 384 milhões aparecem ou o contrato com o Estado português é simplesmente denunciado. O braço-de-ferro teve um alvo escolhido a dedo: os últimos relatórios da Comissão de Contrapartidas apontam-no como o mais grave (entre os muito graves) caso de aquisição de equipamento militar por Portugal. O grau de cumprimento é tão próximo do zero que permite ao Ministério da Defesa abrir um diferendo que se prevê prolongado e de vitória incerta, sobretudo porque, nestes casos, o mais habitual é partir para uma comissão arbitral que resolva ou pressione as partes a chegar a novo acordo.¨"Archived copy". Archived from the original on 2010-08-10. Retrieved 2010-08-26.CS1 maint: archived copy as title (link)
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