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HomeLatest NewsThe Spanish Army excludes Indra and leaves a key Defense contract void

The Spanish Army excludes Indra and leaves a key Defense contract void

Date: March 26, 2023 Time: 15:33:21

Indra’s new setbacks in his complicated relationship with the Armed Forces, his great client. The Army, through the Ministry of Defense, has once again dealt a blow to the semi-public company after removing it from a key contract for the maintenance of the electronic warfare and simulation components of the NH90 multipurpose helicopters, which remain deserted. It understands that the proposed offer is not admissible, since the offered resignation is not justified.

Indra was called to get hold of this contract. In fact, the procedure chosen by the Defense last October was the one negotiated without publicity. This was the only offer made. It should not be forgotten that these digital electronic warfare systems have been developed, produced and supplied by Indra in another previous contract, signed in December 2020 and valued at 111 million. It is expected that it will also take care of subsequent maintenance. The land could not be more paid for its final award for a framework agreement with an estimated value of 10 million.

However, on January 24, the General Sub-directorate for Armament and Material Acquisitions informed the Defense division of the Spanish listed company that it was excluding it from the public procedure. The reason, as reflected in the resolution consulted by La Información, is that the reduction in the offered price has not been correctly justified (what is known in slang as low offered). That same day, the Agency’s Contracting Board declared it void, since there were no other proposals. The approval of the file is also revoked.

The measure is understood as a serious corrective for Indra. During the last months, the relationship between the Armed Forces and the Spanish group has not gone through its best moment. In fact, there is a growing discontent among the managers of the former due to a lack of dialogue and problems that arise in contracts that are key, according to known sources. It must be taken into account that the Army is the company’s main client. A significant portion of the income of the defense area depends on its awards.

This is not the first clash with the Army and the Ministry of Defense. The most relevant has to do with an important contract that has fallen out of favor. This is the supply of the digital radar antenna for the five F-110 frigates of the Spanish Navy. It is awarded by the American giant Lockheed Martin. It involved orders valued at more than 150 million euros, the creation of a hundred jobs and its own technological development that, in the end, would generate business for the future in other contracts of this type outside the Spanish borders. The American company had broken the relationship at the end of last year, as the information advanced, and I assumed these jobs internally and not subcontracting them.

The clash over the HN90 helicopters adds to others such as the one experienced with the end of the contract for the F-110 radar after the break with Lockheed Martin

The Ministry of Defense tried to intervene in this confrontation to save the contract or, at least, a significant part of the works. The Secretary of State for Defense, Esperanza Casteleiro, came to admit in the Senate commission: “R+D+i is assuming a slippage in the costs and required deadlines that the Ministry of Defense should not assume in principle, but, as I have said before, we are working on getting the best position for Indra in this process.” Many months later, the CEO himself, Ignacio Mataix, admitted to analysts last summer that what they were going to recover would be “very far from the 150 million agreed in the initial contract.”

military spending growth

Although it does not directly belong to the Armed Forces, the loss of another relevant contract several months ago has also been a hard blow for this defense area of ​​Indra. It is about the maintenance of the fixed installations of the Integrated External Surveillance System (SIVE) of the Civil Guard, made up of cameras and sensors to detect arrivals on the Spanish coasts. In the last two decades these works have been carried out by the company directed by Mataix. On this occasion, the horrible of the lots was to stop Escribano, a much smaller Spanish defense company with less technical capacity.

It must be taken into account that these missteps occur at a critical moment for Indra in the defense area. The company has decided to give all the prominence to this division, as opposed to pure technology, even considering a potential ‘spin off’ from Minsait. And it is also called to be one of the great beneficiaries of the increase in military spending. In the coming quarters, more projects will arrive to address. The Government has fulfilled its promise to NATO to increase spending by 8.4% if European funds are included, to which it will add 4,900 million euros from special modernization programs.

The departures marked by the cuts carried out by Abril-Martorell in 2020, which affected personnel with more experience in the sector, together with the rotation of the workforce are presenting problems, according to internal sources from the company a few days ago. There are delays in some projects, which can not only be blamed on the lack of chips or the war in Ukraine. That of the NH90 helicopters is the last setback.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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