Germany Scraps Largest Naval Project Since WWII Amid Delays and Cost Overruns

Germany has pulled the plug on its largest naval shipbuilding project since the end of WWII, scrapping plans for a fleet of six F126 frigates first ordered under then-Defense Minister Ursula von der Leyen.

The plans to axe the project were first reported by Der Spiegel on Tuesday, which said the program had long been plagued by numerous issues. The ministry confirmed the move the next day, saying it was “due to significant delays, enormous cost increases, and incalculable risks.”

It also noted that completing six F126s would have driven total costs above €18 billion ($20.3 billion) – compared to the initial estimate of €5.27 billion for four vessels.

Launched in 2020 under von der Leyen, the F126 program was billed as the largest warship project in modern German Navy history, displacing 10,500 tons and stretching 166 meters – big enough to stay at sea for two years with rotating crews. The vessel was designed to be highly versatile, capable of roles ranging from submarine hunting to supporting special forces and drone operations.

The contract was initially awarded to the Dutch Damen Schelde Naval Shipbuilding (DSNS), but the project quickly stalled as the company struggled to transfer ship design data into the production systems used by German shipyards and suppliers due to incompatible software.

Costs already started ballooning as early as 2019 – even before the contract went to DSNS – with then-Left Party MP Matthias Hohn calling the project a “money pit.”

Around the same time, the ministry’s tendering process drew its own controversy. Von der Leyen’s office came under accusations of tolerating nepotism and cronyism after handing lucrative, largely uncompetitive contracts to McKinsey consultancy.

Critics pointed to the fact that Katrin Suder, then-state secretary in the Defense Ministry, was herself a veteran McKinsey employee. A later federal audit found that in most cases, the ministry failed to justify why external consultants were necessary.

According to Der Spiegel, as DSNS continued to struggle with the order, German defense officials weighed handing the contract to German shipbuilder Naval Vessels Lurssen, now owned by Rheinmetall, the country’s largest arms manufacturer. But the ministry ultimately ruled this out, saying it would have meant waiving its right to sue DSNS for damages.

The termination of the project was a severe blow to Rheinmetall, with shares plunging as much as 17% in the stock’s worst single-day fall in years.

In place of the F126, the ministry plans to buy eight MEKO A-200-DEU frigates – ships originally pitched as a stopgap “bridge solution.” Built by the TKMS shipbuilding conglomerate, the MEKO A-200 is far smaller than the F126, at around 120 meters and 4,200 tons.

The first four frigates would cost around €6.3 billion, with an option on four more for around €5.3 billion if exercised by the end of 2026, pending approval from the Bundestag’s Budget Committee.

The termination of the controversial project comes as Germany carries out its largest militarization campaign in decades, with the 2026 defense budget reaching €108 billion. Germany and other European nations have cited the supposed ‘Russian threat’ to justify the build-up. Moscow has dismissed speculation that it plans to attack NATO as “nonsense.”