Dáil Éireann debate -
Tuesday, 24 Oct 2000

Vol. 524 No. 5

Priority Questions. - Defence Forces Contracts.

Michael Finucane

Question:

105 Mr. Finucane asked the Minister for Defence when the 40 armoured personnel carriers were ordered; the phased delivery programme for these armoured vehicles; the overall value of this contract; the successful tenders in this regard; if consideration was given to a joint venture contract for the provision of these vehicles; the views of his Department to the Irish company being involved in such a joint venture; and if he will make a statement on the matter. [23219/00]

Mr. M. Smith:

On becoming Minister for Defence, it became apparent to me at an early stage that the changing nature of peace support operations required that we significantly upgrade the protection available to our troops when on UN missions abroad. The APC programme is a major step in bridging the gap in this area.

In common with all tender competitions organised by my Department, the competition for the procurement of armoured personnel carriers was conducted in strict compliance with Government procurement procedures, the objective of which is the achievement of the highest standards of impartiality, objectivity and transparency. Tenderers were afforded equal opportunity in their submissions and in providing such further information as was necessary to ensure that their proposals were fully presented to the Department.

More than 30 prospective suppliers world-wide had expressed interest in the APC procurement programme and proposals were received from 12 companies. The proposals were evaluated and assessed by a civilian-military project team which was established to manage the procurement process through all stages to ensure that value for money was obtained for the expenditure involved. Two vehicles were selected to go forward to the final stage of the tender competition having complied fully with the initial technical specification. The successful proposals were submitted by Mowag of Switzerland which manufactures the Piranha APC and Steyr-Daimler-Puch of Austria which manufactures the Pandur APC. The vehicles proposed by the other ten firms failed to comply with one or more of a range of essential elements of the specification and the firms were notified accordingly.

Both companies were asked to prepare formal tenders on the basis of a detailed specification. These tenders were evaluated to determine technical merit and the best economic advantage to the Department of Defence. The evaluation process included trials in Ireland, over a two month period, of both vehicles. Following the completion of the technical assessment I authorised the opening of negotiations between the Department and Mowag with a view to concluding a contract between both sides.

The negotiations proved successful and a contract was signed on 30 November 1999 for the supply by Mowag of 40 APCs, initial spares, special tools and training courses. The 40 vehicles, known as Piranha 8 x 8s, are being manufactured as 34 troop carrier variants, four command variants, one recovery variant and one ambulance variant. The total cost of the contract, which is spread over five years, is in the region of £40 million, including VAT.

Additional InformationThe first two vehicles will be produced towards the end of this year and will undergo rigorous inspection and acceptance testing. The full production run will commence in June 2001 and I am delighted to say that all of the vehicles will have been delivered by January 2002 – almost two years ahead of previous expectations.

No consideration was given by my Department to any joint venture contract for the provision of the APCs. I have outlined for the Deputy the detailed tendering procedure which took place. The lengthy competitive process resulted in the selection of Mowag to provide the APC most suitable to the needs of the Defence Forces.

Although it was not a requirement of the tender competition Mowag, on signing the contract, committed themselves to an offset arrangement whereby the company would endeavour to source parts which might be purchased from Irish industry. The offset volume represents approximately 20% of the contract value. Mowag is in continuous contact with Enterprise Ireland in this matter.

Representatives of Mowag have compiled a shopping list and have visited companies in Ireland to establish contacts to find out if their products could assist in any way in the build of the Irish APCs. The process is ongoing. Any decisions taken in that regard are a matter for Mowag and not the Department. My Department would, of course, welcome any positive decisions taken by Mowag to source parts from Ireland and will be monitoring the progress of the offset programme as the contract develops. I am delighted with the progress made on the APC programme. The purchase of the APCs forms an integral part of the ongoing re-equipment programme. The imminent arrival of the vehicles is a great boost for the Defence Forces as a whole.

Mr. Finucane:

Is the Minister aware that Mowag entered into discussions with an Irish company in regard to assembling the armoured vehicles in Ireland? Mowag went back on it and stated to the Irish company that the Army had indicated it was not interested in a local off-set, only wanted Irish content and was very insistent on that. Is the Minister aware of who, within the Department of Defence, would have stated that to Mowag because this Irish company felt it had entered into a good arrangement with Mowag to assemble armoured vehicles in Ireland?

Mr. M. Smith:

I am aware that a particular Irish company which was involved at the initial stages and tendered for the APC competition subsequently withdrew its bid and now appears to have at least an understanding on its side that it had an agreement with Mowag. This is primarily a matter between the two companies. In the negotiations with Mowag, we had fairly serious discussions on offsetting investments which would be made here. I understand it has been in touch with Enterprise Ireland and a number of companies in regard to supplying parts for the APCs. However, the primary matter the Deputy has raised is not really for me. It is a matter between the two companies concerned.

Mr. Finucane:

Would the Minister be surprised if an Army source said to Mowag it was not interested in any Irish offset or local company in Ireland being involved?

Mr. M. Smith:

The last thing the Deputy and I would want to do would be to discuss a £40 million contract for 40 armoured personnel carriers, which we need, on the basis of rumour and hearsay about who said what. This programme was conducted in an exemplary, transparent and open way. We dealt, in the final analysis, only with people who met the specifications in full. They were put through a rigorous examination on every front, so that we would get the best value for money for the Irish taxpayer and have facilities for the Army which it never had before.

Mr. Finucane:

The Minister received a letter, of which I have a copy, from the specific Irish company, in which it said an Army source stated this. I presume, based on that letter which was sent on 3 October, the Minister has done research to establish whether this was said or not. This is not rumour or speculation on my part but is based on a factual statement the company made in a letter to the Minister, a copy of which it sent me.

Mr. M. Smith:

I have not conducted an investigation into that matter. I am dealing principally with the arrangements we have made and the conduct of those. Any matters the company raises is, as I said, a matter between it and Mowag and not for me.