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. The sale of Pandur II to Portugal includes an associated offset agreement for a value of 516 million euro. 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.

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.
 * 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.
 * 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. 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.
 * 15/02/2005 The contract is signed; 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.
 * 25/01/2007 Fabrequipa begins co-production of Pandur II.
 * 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.
 * 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.
 * 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 campo of Portuguese mechanized forces, the Campo Militar de Santa Margarida, in the years of 2007, 2008.
 * 8/05/2010 Portuguese Minister of Defense implements procedures to charge General Dynamics with breach of contract.
 * 20/08/2010 Portuguese Public Prosecutor investigates corruption charges in the award of the contract Pandur II.

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

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.

Offset issues
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, Poland, Croatia, Sweden, United Arab Emirates, South Africa, Slovenia. 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. 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. 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. 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. The case of Tecnia Lda of Torres Vedras is connected to an indirect offset, that General Dynamics based in a LGT branch in Luxembourg. 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. The problem of the weight of offset in the procurement decisions is not exclusively Portuguese. It is a European plague. 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. 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.