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Defense

Commercial Specialist responsible for the sector:

Hana Obrusnikova, Hana.Obrusnikova@trade.gov

Summary

Due to ongoing Czech government plans to dramatically modernize the country’s military, the defense sector continues to be a lucrative one for U.S. companies. However, the challenges of selling to the Czech Government, including a lingering lack of transparency in the tendering process, means that quick wins are unlikely.  Only by proceeding with a longer-term view and building a solid network can a U.S. company expect to succeed in the Czech market.

The Czech government is required by law to hold tenders for major procurements. Tenders are publicized on the webpage: www.army.cz.  A public tender must be carried out whenever a procurement is ordered by a state/municipal organization or when the source of financing is from state or municipal budgets, grants or loans from an international organization.  A technical committee and/or a multi-ministerial committee decides on larger procurements.  No rules exist to govern the selection or conduct of this committee and the current public procurement law does not have accompanying regulations.  The result is wide variances in executing procurements.

Domestic content weighs heavily in purchasing decisions. Ideally, the Ministry of Defence (MoD) would like to see foreign suppliers transfer technology and manufacturing capability to local joint ventures.  Offsets or other compensation to Czech industry can balance the lack of domestic content. In the past, firms have agreed to purchase Czech products and services so that the total value of these would be equal to that of the Ministry’s purchase. The MoD prefers modern, NATO-compatible equipment from stable suppliers.