The military and Defense Ministry cut corners and in at least one case presented false information to the government in making its decision to provide a no-bid contract worth billions of shekels to an Israeli defense company to manufacture the country’s next artillery cannon, according to a report by the state comptroller released Monday.
The report looked into the Israel Defense Forces and Defense Ministry’s decade-long process of choosing the weapon, finding that the military and National Security Council failed to give adequately consideration to alternative options and present them to lawmakers.
The investigation found a series of oversights and unexplained moves by defense officials that resulted in the government forgoing a cannon made by the German firm Krauss-Maffei Wegmann (KMW) in favor of one manufactured by Israel’s Elbit Systems, which has deep ties to the country’s military and Defense Ministry.
These included the Defense Ministry canceling a planned demonstration of the German cannon in Israel, which the commander of the IDF Ground Forces had said was necessary for it to be seriously considered, and the ministry presenting a false, inflated price for the German model to the security cabinet — doubling the actual cost.
The exact value of the contract, which includes both manufacturing the cannons and maintaining them, is classified and was therefore not published in the report, though the comptroller said the agreement was worth billions of shekels.
The comptroller report did not accuse the military or Defense Ministry of intentionally misleading the government, but rather presented their actions as a process failure that may have led to a misguided decision.
The State Comptroller’s Office called on the IDF and Defense Ministry to review their process for choosing new equipment, especially systems the military plans to use for decades, and to present all relevant information about their decision-making to the security cabinet and to “ensure that all presented information [to the cabinet] is accurate.”
The process of choosing a new cannon and its manufacturer began in 2009 when the military decided that its existing artillery array needed replacement — a project dubbed “Artillery of the Future.” After three years of considering what the IDF needed of its new cannon, the military released its list of requirements to defense contractors. Two firms said they could meet those demands: Elbit and KMW.
However, early on IDF officials raised concerns about a “certain issue” with KMW’s Artillery Gun Module (AGM) Howitzer, according to the comptroller.
In its report, the State Comptroller’s Office refused to specify the nature of this issue. However, it appeared to refer to concerns in Israel that the German company would not allow Israel to use the cannon to fire cluster bombs, a controversial weapon that many countries — not including Israel — have outlawed due to the widespread damage caused by their use, as was reported by the Haaretz daily in 2017.
The comptroller did not comment on the merits of those concerns. According to the report, in late 2013 KMW was invited by the military to send its howitzer to Israel for a demonstration, specifically to show the IDF Ground Forces that the “certain issue” would not be a problem.
But shortly before the company was due to arrive, the Defense Ministry’s research and development division, known by the Hebrew acronym MAFAT, and the IDF Ground Forces canceled the demonstration. When KMW asked for an explanation, none was offered. MAFAT told the firm that the test was canceled because it was “not critical,” despite the IDF Ground Forces saying the demonstration was necessary to keep KMW in the running, according to the comptroller.
Further preventing KMW from winning the contract, MAFAT also added to its list of requirements for the cannon that it not be dependent on other countries, but “blue and white independent,” referring to the colors of the Israeli flag. This decision was made by the Defense Ministry despite the IDF — specifically the head of the IDF Planning Directorate — not making such a request.
The IDF responded to that aspect of the investigation, saying that it had asked that the project be domestically independent in some meetings with the Defense Ministry, but ought to have “also stressed the matter at the stage when summaries [were being prepared].”
In large part due to the new demand for “independence,” the Defense Ministry settled on Elbit as the manufacturer of its new cannon in 2015, according to the report.
Over the course of the next several years, many of the details regarding that decision were fleshed out, with the Defense Ministry officially naming Elbit as the supplier of its so-called “Artillery of the Future,” which would be largely based on the firm’s existing ATMOS howitzer.
Among those details was the decision to give Elbit the contract without an open tender in 2017, despite the Defense Ministry not proving that the firm met all the relevant criteria, according to the comptroller. The report indicated that Elbit could have received a no-bid contract anyway, but that the ministry would have needed to better explain why there was a need for it.
In 2018, the Defense Ministry and IDF turned to the security cCabinet for final approvals before the “Artillery of the Future” could officially begin.
According to the comptroller, in their presentation, the IDF and Defense Ministry told the cabinet and National Security Council that the cost of the German cannon was twice its actual price.
“Despite the fact that MAFAT had an estimated price for the AGM howitzer that had been given to it by KMW in 2011 and despite the fact that this estimate was mentioned in various discussions and documents from 2013 to 2016, the Defense Ministry presented to the NSC and Security Cabinet an estimated price that had been doubled, which was based on foreign reports about deals that had been made in the past between different groups and were for different models of the AGM,” the comptroller said.
The Defense Ministry responded to that claim, saying that the price quoted by KMW in 2011 did not include additional changes that Israel requested in the intervening years. The comptroller dismissed that claim as the original estimate included many of those requests, because changes in international exchange rates should have made the KMW cannon cheaper — not more expensive — and because, regardless, the Defense Ministry effectively came up with an inflated figure based on unfounded assessments, rather than receive an up-to-date offer from the company.
In March 2019, the Defense Ministry formally announced that Elbit had been awarded the contract and that work would begin immediately to manufacture the “Artillery of the Future.”
In addition to its criticisms of the IDF and Defense Ministry, the comptroller chastised the National Security Council for failing to fulfill its role as a presenter of alternative options to the security cCabinet and instead acting as a rubber stamp for the military and Defense Ministry.
Specifically, the State Comptroller’s Office said the NSC ought to have presented the option of forgoing new artillery cannons in favor of an array of surface-to-surface rockets, which would potentially perform a similar function on the modern battlefield.
“The NSC must ensure that a presentation of a project for approval by the Security Cabinet include an analysis of alternative options, including presenting all of their benefits and disadvantages, with emphasis on the differences between them and their meanings, even if the project is generally known to the cabinet members from other discussions. This information has great importance so that the security cabinet can have a large and full amount of information that will allow a proper decision-making process,” the comptroller said.
In response to the report, the IDF defended its decision to pick Elbit for the “Artillery of the Future” project, saying that the process was “long, thorough, detailed and high-quality.”
The Defense Ministry similarly dismissed the comptroller’s criticism, saying the decision to award the no-bid contract to Elbit was made at the recommendation of all relevant authorities.
“The recommendations… and their approval were done in accordance with the law, and the project is ongoing,” the ministry said.