Today's Special: Turkey Subs

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May 19, 2013, 10:13:44 AM5/19/13

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Today’s Special: Turkey Subs

© 2004-2013 Defense Industry Daily, LLC

Preveze Class

In 2006 the Turkish SSM procurement agency issued a request for information (RFI) for 4 more diesel-electric submarines. That RFI became an RFP for 6 diesel-electric submarines with air-independent propulsion systems, to replace older boats like Turkey’s U209-based Preveze and Atilay classes.

DID covers the competition, and adds some quick background re: the Turkish Navy’s existing fleet, where its rival Greece stands, and contract developments regarding their new “Cerbe Class”. Turkey has a signed multi-billion Euro contract for HDW’s U214 subs… and are about to add a revolutionary new weapon.

Contracts and Key Events

The Cerbe class has an 80% industrial offset provision, with Golcuk Naval Shipyard retaining its position as the build location. STM will assist. Havelsan will be involved in customizing the combat system, while Milsoft delivers Link-11/22 datalinks, and state agency TUBITAK will offer an underwater telephony system and help by verifying submarine signatures. Koc Savuma Sistemleri provides a torpedo countermeasure system.

2010 – 2013

Contract goes into effect; Agreement for sub-launched anti-aircraft missile.

U214 cutaway

May 13/13: Weapons. ThyssenKrupp Marine Systems and Diehl Defence sign a cooperation agreement with Turkey’s Roketsan to develop and supply the submarine-launched IDAS (Interactive Defence and Attack System for Submarines) anti-aircraft missile. Roketsan will be responsible for the IDAS warhead, support testing of the Control Actuation System with some follow-on work share, and participation in system-level design activities. The Norwegian company Nammo is developing and producing the rocket motor.

IDAS builds on Diehl’s experience with the IRIS-T short-range air-to-air missile, and is launched without a protective capsule using a torpedo canister. An autopilot and image-processing infrared seeker offer autonomous guidance and navigation, with a fiber-optic data link as an operator-controlled backup. Its presence on submarines like the U212A/ U214 makes life far more dangerous for sub-hunting helicopters and maritime patrol aircraft, who have never had to worry about counterattacks before. Diehl .

July 1/11: The July 2/09 submarine deal takes effect, and its value is published as EUR 2 billion (currently about $2.9 billion) in public statements by TKMS.

“The two-billion-euro order for six U-214 submarine material packages placed with ThyssenKrupp Marine Systems by the Republic of Turkey has been activated with the receipt of the advance payment… ThyssenKrupp Marine Systems can now begin executing the order. The order will contribute to securing employment at [ThyssenKrupp's] Howaldswerke Deutsche Werft, or HDW, in Kiel, as well as at many subcontractors in Germany and Turkey, for the next 10 years.”

Of course, that’s just the TKMS deal. Without a more detailed report, it’s not clear whether, and how much, of the Turkish work at the Golcuk Shipyard might be considered extra. Hurriyet reports that the 2 sides had been discussing loan conditions for the last 6 months, with an agreement finally coming in late June 2011. Defense News adds that the go-ahead means the end of modernization plans for Turkey’s older submarines.

June 30/11: Spin-off opportunity. A Turkish Ministry of Defense official tells Today’s Zaman that a deal with Indonesia for 2 U209 submarines is “very close.” If the expected deal between the two states is signed, Turkey’s Savunma Teknolojileri Muhendislik ve Ticaret A.S. (STM) would partner with HDW to build them in the Golcuk shipyard. As it happens, Turkey loses to HDW partners in South Korea, but there may be another competition before Turkish shipyards are done building the U214s. Read “Submarines for Indonesia” for full coverage.

March 26/11: Transparency. Turkish media shine a spotlight on the fact that the government has not revealed key facts of the U214 deal, such as the deal’s price, or the submarines’ technical features. The Bugun daily adds that Turkey’s Undersecretariat of the Treasury had initially objected to the high interest rate on financing deal payments, and concerns were also raised over hidden costs such as inflation predictions, and labor costs for construction in Turkey. Overall, these factors are estimated to add up to EUR 1 billion, pushing outside estimates of the deal to around EUR 3.5 billion.

Even at lower figures such as the EUR 2.19 billion allocated for financing, there is also criticism that Turkey ends up paying more than Greece did for U214 submarines. Given that Greece’s submarines reportedly had their cost inflated by bribes and extra add-ons, that should be a matter of some concern in Turkey. The German magazine Manager says that bribery is not unknown to the naval firm, and alleges that TKMS Marine’s HDW subsidiary has paid bribes related to submarine buys in Argentina (U209), Colombia (U209), and Portugal (U214), as well as Greece (U214). Today’s Zaman .

Jan 12/11: Financing. After long negotiations threatened to destroy the submarine deal, a major financing deal between German banks and the Turkish Treasury reportedly rescued the project on Dec 31/10. The Turkish Treasury announced that:

“For the financing of the production of [6] submarines in Turkey, an export credit agreement in the amount of 1.878 billion euros was signed between the Undersecretariat of the Treasury and bank consortium led by Bayerische Landesbank, and a commercial loan agreement in the amount of 309 million euros was signed between the Undersecretariat of the Treasury and a bank consortium led by WestLB London Branch on Dec. 31. The total amount of financing provided equals 2.187 billion euros.”

This finally begin to put a firm deal figure on Turkey’s submarine program, which had been estimated at EUR 2.5 billion but had no contract. The financing package is reportedly the last obstacle to a firm deal, and at current exchange, EUR 2.187 billion is about $2.886 billion. The submarines will still be built at the military-owned Golcuk Shipyard near Izmit, and the Turkish government is still reportedly hoping for an in service date “shortly after” 2015. In practice, however, negotiation delays usually translate into fielding delays of similar magnitude. In this case, fielding in late 2016 to early 2017 seems likeliest. Hurriyet Daily.

2006 – 2009

Turkish competition; HDW picked and contract signed.

U-214 SSK

Nov 18/09: Cost concerns. Hurriyet reports that previous accounts of the Turkish deal may have overstated the cost:

“…selected HDW over its French and Spanish rivals in the summer of 2008. At the time, the program’s expected cost was announced to be nearly 2.5 billion euros. After yearlong price and work-sharing negotiations… a final contract was signed in July.

No price was specified in the public announcements for the contract at the time, but Hürriyet Daily News & Economic Review found out that the cost of the program was around 1.96 billion euros, which is nearly 500 million euros lower than the original price.”

July 2/09: Contract. The Turkish government signs a reported EUR 2.5 billion ($3.5 billion equivalent) contract to co-produce 6 of HDW’s U-214 class submarines, with HDW’s fuel cells for air independent propulsion. The submarines will be built at the military-owned Golcuk Shipyard near Izmit, and the expected delivery date for the first U-214TN submarines remains 2015.

According to Turk Net Haber, HDW will pre-assemble key structural and mechanical parts in Germany, as well as classified elements such as the fuel cells and propulsion system. All electronic and weapon systems, including sensors, communications, and data processing systems, will be designed and produced in Turkey. Defence Minister Vecdi Gonul has reportedly stated that Turkish industrial participation would be worth around 80% of the deal’s value.

The order lengthens HDW’s lead in air-independent propulsion systems. Once these submarines are fielded, there will then be 36 submarines with HDW fuel cell propulsion systems in operation world-wide. ThyssenKrupp release | Defense News | Turk Net Haber | Defense Aerospace | Reuters Germany [in German].

6 U214 submarines

Aug 26/08: Competition. The SSM begins contract negotiations with the HDW/MFI Business Partnership, for U-214 submarines with Air Independent Propulsion. Source .

Nov 12/07: Competition. The Turkish Undersecretariat for Defense Industries (SSM) has confirmed 3 bidders for the Future Submarine Project. DCNS in France, HDW/MFI in Germany, and Spain’s Navantia S.A.

HDW is the current incumbent in Turkey, and their most advanced submarines are the U-212A and U-214 classes . The U-212A has been ordered by Germany (5) and Italy (2), while the U-214 has been ordered by Turkey’s rival Greece (4) and by South Korea (3).

DCNS and Navantia both make Scorpene class submarines, which have been sold to India (6), Chile (2), and Malaysia (2). That partnership has split over future models, however, with Navantia developing the larger S-80 class for Spain in cooperation with BAE (4), and DCNS developing the Marlin class for export.

March 15-16/07: Competition. Turkey’s SSM holds a bidder conference for RFP purchasers.

Feb 2/07: Competition. The Turkish SSM lists the companies who bought the New Type Submarine (AIP) Project RFP. They are:

Armaris (France, would become DCNS)
Fincantieri Cantieri Navali Italiani S.p.A. (Italy)
HDW/MFI (Germany)
Lockheed Martin Maritime Systems & Sensors (USA)
Navantia S.A. (Spain).

Lockheed and Fincantieri are almost certainly positioning themselves as subcontractors.

Dec 28/06: Competition. The SSM’s RFP announcement raised the total from 4 to 6 submarines, and adds air-independent propulsion systems as a requirement. See release with contact information … but the fee of the RFP is EUR 10,000 (currently about $13,200). Get your Euros in by January 31, 2007, by 17:00 Ankara time.

June 23/06: Competition. DID’s “Turkey Gets Responses re: Sub Program, Delays Other RFPs” covers the firms that responded to the RFI, most of whom are subcomponent manufacturers or services providers. Within the respondent group, HDW, Armaris, and Navantia all build diesel-electric submarine classes with air-independent propulsion; Kockums and Russia’s Rosoboronexport are conspicuous by their absence.

Links add details re: both the sub RFI, and accompanying competitions for a Submarine Rescue Mother Ship (Moship) and 2 Rescue and Towing Ships.

March 2006: Competition. Defense-Aerospace relayed a Turkish SSM procurement agency RFI for 4 more diesel-electric submarines:

“In this frame, Request for Information is issued to gather administrative, financial and technical information from related Companies who may be willing to participate for the project activities. The companies who are willing to reply to the RFI may request the RFI document by sending an e-mail including their company name and detailed contact address to [colcay -at- ssm -dot- gov.tr]. Then, the RFI document will be sent to the related companies by e-mail. The deadline for requesting the RFI document from SSM is May 15th, 2006 by local time 17:00.”