New NATO Headquarters in Financial Trouble

NATO's planned headquartersNATO is building a new headquarters for one billion euros. But the construction consortium is in financial difficulties and the project is at risk of being halted. It’s an embarrassment for outgoing NATO chief Anders Fogh Rasmussen. . . .

The construction project has run into serious financial difficulties, according to documents seen by SPIEGEL. The consortium of firms building it is at risk of insolvency. Rasmussen is aware of the problem but hasn’t seen fit yet to inform the public about it, meaning the taxpayers of the 28 NATO member states. At a meeting of NATO’s Deputies Committee on December 19, Rasmussen’s staff asked that the issue be dealt with “confidentially.”

The Committee consists of representatives of all 28 NATO member states. Rasmussen’s staff told it that the consortium leader, BAM Alliance, was in serious financial difficulty “resulting from miscalculation and high claims from subcontractors,” according to a Dec. 20, 2013 report by Germany’s NATO representative office in Brussels. The conclusion was that the project would not be able to stick to the budgeted upper limit of €1.05 billion. Without a fresh injection of capital, construction would come to a halt.

The mood was frosty. Member states had already been skeptical when the consortium won the contract for €460 million in 2010 — the offer was €210 million below the costs estimated by NATO. . . .

“We pointed to the disastrous effect on the image of the alliance if construction were to stop and if NATO appeared to be incapable of punctually completing a construction project that was decided at the NATO summit of government leaders in April 1999 in Washington,” the German ambassador, Martin Erdmann, told Berlin in a confidential cable. . . .

The committee met again on Jan. 10. NATO project manager Tony Carruth told delegates that the consortium wanted €245 million in additional funding and that completion would probably be delayed by nine-and-a-half months.

“These figures must be approached with caution,” NATO staff said in a 13-page report prepared for the meeting.

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Image: NATO's planned headquarters (graphic: NATO)