As part of the List of Strategic Projects of the Army of the Czech Republic, a plan for their implementation for the next three years was submitted to the Government and subsequently approved. The document contains four projects. For two of them, contracts have already been concluded - the tracked BMP (CV90) and the 5th generation fighter aircraft (F-35). The remaining two projects are the acquisition of main battle tanks (Leopard 2) and medium transport aircraft (Embraer C-390).

Strategic Project Definition and Status of CV90 and F-35 Contracts

A strategic project of the Czech Armed Forces is a multi-year project characterised by a set of material, time and financial conditions, which has a fundamental impact on the defence capability of the Czech Republic and is in accordance with strategic, conceptual and planning documents approved by the Government of the Czech Republic. The amount of expenditure for the implementation of a strategic project of the Czech Armed Forces corresponds to the amount of the budget rules for individually assessed expenditure earmarked for financing a specific action.

As regards the BVP and the F-35, the details of these projects have already been sufficiently communicated. We will recapitulate only the basic parameters. In the case of the CV90 CVP, of which the army will receive 246 units in seven variants, the material indicates implementation in 2023-2030. VAT and, in addition to the contract price of CZK 59.71 billion, also includes a provision for inflation and exchange rate risk of CZK 10.96 billion. The material also states that the Ministry of Defence intends to conclude an important contract for the after-warranty servicing of the vehicles with the service provider no later than the delivery of the first vehicles, i.e. by November 2026.

The project for the acquisition of F-35 aircraft, of which the Air Force will receive 24 units, is planned for 2024-2035. The fund to finance the project includes CZK 160.7 billion incl. VAT, which consists of CZK 105.9 billion in contract expenditures, CZK 40.9 billion in related infrastructure expenditures and VAT levy for the entire project, and a foreign exchange reserve of CZK 13.9 billion. Life cycle support is provided for five years from the delivery of the first aircraft under the contract (2029-2034). In 2033, in accordance with Foreign Military Sales rules, negotiations will commence on follow-on service contracts that will seamlessly build on the expiring service support under the current US offer.

Main battle tank of the Czech Armed Forces - Leopard 2A8 in standard versions for the Bundeswehr

The Government has authorised the Minister of Defence Jana Černochová to negotiate with the German Ministry of Defence on the delivery of Leopard 2 Main Battle Tanks on 24 May 2023. Negotiations are now underway with the German Ministry of Defence (MoD) on the specific method and timing of the delivery of Leopard 2A4 and 2A8 tanks, including its financing profile, where the intention is to secure the delivery of MBTs in the years 2024-2029, or by exercising the 2024-2030 option. The Army envisages the new equipment for the next three decades.

The material approved by the government explicitly states, "As MBTs for the needs of the Czech Armed Forces, it is planned to acquire Leopard 2A8 tanks with high protection of the tank crew, firepower, manoeuvrability, agility, penetrability and the ability to overcome water obstacles up to a depth of four metres. According to the Czech Armed Forces, six modifications of the tanks will be procured in the most up-to-date versions, introduced as standard in the German army. The national specifics concern only the communication equipment, the camouflage paint and the national markings of the tanks."

The tanks are to be procured through a Cooperative Procurement Arrangement (CPA), an agreement between several interested states. Negotiations focus on industrial cooperation on the project to ensure maximum security of supply, financing including possible advance payments, contracting for the delivery of individual tank modifications and a model for providing warranty and after-sales service. A deadline of 31 December 2024 has been set for the negotiations, and depending on the outcome, the government will then approve accession to the existing German framework agreement(s). 

The AFK plans to procure at least 61 Leopard 2A8 MBTs in six modifications (guaranteed delivery) with an option to procure an additional 16 machines (maximum delivery). In total, this means the procurement of up to 77 tanks in six modifications (combat, command, recovery, engineer, bridge and driver training). According to the material, the possible use of the option would enable the creation of an additional tank company of the 73rd Tank Battalion: "This would make it possible to provide a heavy element (two tank companies) for both brigade task groups of the Czech Armed Forces and thus meet NATO requirements for a heavy and medium brigade structure."

The estimated price is given in the range of CZK 39.8-52.1 billion incl. VAT, depending on the rate of performance, and as payments will be made in euros, as with previous strategic projects, the funds set aside for this purchase will also have to include an amount for exchange rate risk. The final amount paid will also be affected by the spread of funding over time and inflation. According to the information from the negotiations so far, the advance is expected to be around 30%.

Industrial cooperation will be ensured directly between the MoD and KNDS Deutschland

In the material submitted to the government, the Ministry of Defence emphasises the importance of industrial cooperation and the interest in maintaining the capabilities, capacity development and competitiveness of the domestic defence industry: 'It is planned to involve domestic industry in subcontracting and life cycle assurance on the territory of the Czech Republic for the MBT project in order to ensure the security of supply in support of the activities of the Czech Armed Forces in accordance with the essential security interests of the state.' At the same time, it states that, according to information from the MoD, it is not possible to include the area of industrial cooperation in an addendum to the framework agreement or framework agreements for the acquisition of tanks, and it intends to address this area in a separate arrangement with the tank manufacturer, which is KNDS Deutschland (formerly Kraus-Maffei Wegmann, KMW).

The service contract for the after-sales service of the Leopard 2A8 tanks is to be concluded, as in the case of the CV90 CVP, until the delivery of the first vehicles (2027). "The procurement of ammunition to ensure training and stockpiling will be handled through separate contracts, following on from the upcoming contracts for the supply of ammunition for the already established Leopard 2A4 tanks" - both tanks are armed with a 120 mm calibre gun, differing in barrel length - the modern Leopard 2A8 has an Rh-120 L/55 gun of 55 calibre, the older Leopard 2A4 an Rh-120 L/44 gun of 44 calibre.

Leopard 2A4 will accelerate Capability Targets

The material also recalls the German government's donation as part of the so-called circular exchange. The Army already operates 14 Leopard 2A4 tanks, and another 14 will be delivered between 2024 and 2025, as well as two recovery tanks on the same platform, the Büffel 3. In addition, Germany has offered the Czech Republic the option to acquire the same number of these tanks on the same terms.

Following the introduction of the Leopard 2A8, the Army continues to count on the Leopard 2A4 tanks for Active Reserve unit training, training new soldiers and as an operational reserve, highlighting the aforementioned standardized caliber main gun.

Accession agreement approved, material on terms of purchase will be in place by the end of the year

On Thursday, 6 June, Defence Minister Jana Černochová told ČTK that the government should approve the Cooperative Procurement Agreement (CPA) for the acquisition of Leopard 2A8 tanks within a few weeks. "We have managed to move forward the project for the acquisition of Leopard 2A8 main battle tanks and we should approve the CPA sometime in the coming weeks. It is not yet about the actual conclusion of the contract, we would like to conclude that sometime before the end of 2024." The government then approved the accession to the agreement yesterday, 12 June. 

In a press release, the defence ministry said the following: "The CPA sets out the terms of cooperation between participating states and the MoD will conclude it in the coming weeks. By agreeing to accede to this arrangement, the Government has approved the commencement of negotiations and the implementation of steps towards accession to the framework agreement for the acquisition of the main battle tank. The CPA facilitates, expedites and cheapens the acquisition of tanks through a quantity discount. Savings will also be made by minimising differences between national versions. Another advantage for the Czech Republic will be that the administrative burden will be significantly reduced by joining the framework agreement already negotiated by Germany."

The Minister of Defence commented on the expected price only in an outline and said that it would be similar to the purchase of CV90 BIPs, i.e. rather at the upper limit of the above-mentioned range depending on the chosen performance. Yesterday's press release said, "The estimated expenditure for 61 tanks is CZK 39.8 billion including VAT, and for 77 tanks CZK 52.1 billion. The pace of financing is still to be negotiated."

Medium transport aircraft C-390 Millennium

KVAČR 2035 also identifies a long-term need for the acquisition of two medium transport aircraft, i.e., aircraft that are capable of transporting cargo over fifteen tons over a strategic distance and landing on-site using tactical procedures. Based on the results of the feasibility study prepared by the Ministry of Defence, negotiations were initiated for the possible acquisition of two C-390 Millennium aircraft with the necessary equipment and support from the Brazilian company Empresa Brasileirade Aeronáutica S.A. - Aero Vodochody AEROSPACE is involved in its production.

The Ministry of Defence is planning a total cost of CZK 13.99 billion for the acquisition of the two units, incl. VAT, including exchange rate risk. The supplier's offer is to be submitted by the end of the third quarter of this year and the delivery of the first aircraft is planned for 2025.