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Thursday, December 14, 2006

German committee approves big defence project

BERLIN/MUNICH (Reuters): Germany's parliamentary budget committee has approved spending of 7.2 billion euros ($9.56 billion) on defence projects to be led by IBM and Siemens, the Defence Ministry said on Wednesday.

Another project was also approved, bringing total spending approved by the committee to roughly 8 billion euros, a source close to the committee said on condition of anonymity.

Siemens's information technology unit SBS and IBM will oversee some 7.2 billion euros of contracts, the ministry said on Wednesday in a statement.

A source close to the process said SBS would be awarded 60 percent of the IT contract, with IBM taking the rest. Contracts could be signed by the end of the year, the source said.

SBS declined to comment.

Siemens shares, hurt by a corruption scandal at the industrial conglomerate, were down 0.3 percent to 73.50 euros by 1537 GMT, in a 0.5 percent-stronger wider market.

The two companies are expected to install around 140,000 personal computers, 700 mainframe computers and thousands of telephones for the German armed forces, it added.

"For the next 10 years the operation and upgrade of the civilian IT infrastructure of the German army will be carried out by a company formed by the army in cooperation with SBS and IBM Deutschland," the ministry said.

SBS and IBM will own 50.1 percent of the firm carrying out the contracts and the German government will be a junior partner with a 49.9 percent stake, the ministry said.

The chief executive of Fujitsu-Siemens, a joint venture of Siemens and Japanese electronics conglomerate Fujitsu, told Reuters earlier that he saw a good chance for his firm to win the PC part of the contract.

The government also plans to buy 272 armoured "Boxer" transport vehicles for 891 million euros, the source said. Rheinmetall, Krauss-Maffei Wegmann and Dutch firm Stork are involved in the vehicle's development.

"This was also approved," the source told Reuters.

The committee's green light makes the plans a virtual certainty, though they must still be approved by parliament.

Die Welt newspaper cited committee sources as saying that Germany was set to delay planned helicopter purchases in which European defence group EADS is a partner.

These include MH-90 naval helicopters and the second batch of NH-90 helicopters. All told they would have cost about 2.4 billion euros, the paper said.
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