Report: SAP and German defence ministry in tug-of-war

SAP AG and the German Defence Ministry are embroiled in what could become a nasty brawl over a prestigious outsourcing project, the German business newspaper Handelsblatt reported Friday, citing several officials involved in the project.

Earlier this year, the vendor won a contract with the ministry to equip the Bundeswehr, the German armed forces, with its R/3 business software worldwide by the end of 2003. The contract is linked to Hercules, a ten-year 6.5 million euros (CDN$10.2 million) IT project to equip the Bundeswehr with modern voice and data computer networks and wireless communications and also to provide related support and services.

However, the project, according to industry and ministry officials quoted in the Handelsblatt report, has been off to a slow start and could be abandoned altogether if SAP and the ministry don’t resolve their differences soon.

SAP is blaming the ministry for the delay because of unclear lines of responsibility within the government body, Handelsblatt reported, with the result being a string of cancelled important meetings. Handelsblatt quoted SAP project manager Werner Dilzer saying that Bundeswehr IT experts “have found themselves often working in a vacuum.”

The ministry is arguing that any further delays could see the project dropped and lawsuits filed. If a large part of the contract isn’t fulfilled by summer of next year, “the project will die,” Klaus Hahnenfeld, director of the IT project in the defence ministry, said according to the Handelsblatt report.

Voices are growing louder in German parliament to allow a competing consortium consisting of Deutsche Telekom AG (DT), Siemens AG and IBM Corp. to join the project. Rainer Arnold, parliamentarian defence speaker for the Social Democratic Party (SPD), was quoted in the Handelsblatt report saying that it might “make sense to merge the competencies of all the companies that bid on the contract.”

SAP declined to comment, saying only that Dilzer wasn’t authorized to speak to the press.

An assistant to Hahnenfeld said the IT director was unavailable for comment.

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