More Money for Modernization. Bejda On Orka, F-16, Heavy IFV and Changes in Financing

We asked Minister Bejda about the funding of the modernization of the Polish Armed Forces; the programmes include: Borsuk, Rosomak, CBWP [Heavy IFV], K9PL, Homar-A and Homar-K, the modernization of the F‑16, providing the FA‑50PL with American missiles, the potential purchase of Airbus aircraft, negotiations regarding K2PL tanks, ammunition programs, and many other projects. 

Jędrzej Graf: Before we move to specific programmes, I would like to ask for a more general assessment. On the one hand, additional contracts such as for the Borsuk or the support for the Wisła programme are being signed, and on the other, the Ministry of Finance has recently announced that the budget deficit has reached over 6% of GDP. How do you see the prospects for continuing the modernization process?

Paweł Bejda, State Secretary at the Ministry of Defence: In the current geopolitical situation in which Poland finds itself, we have no choice—modernization programmes must continue. Naturally, they should be rational, based on planning our needs and taking into account our financial capabilities. 

Currently, in the General Staff of the Polish Armed Forces, work is underway to prepare the Development Programme for the Polish Armed Forces for 2025–2039. The basis for its development includes, among other things, the detailed directions for the reconstruction and technological modernization of the Armed Forces for the next 15-year planning period as adopted by the Council of Ministers. The Program will specify, in particular, the numbers and combat composition of the individual elements of the Armed Forces, as well as tasks related to the modernization of their equipment. It will also include financial frameworks for defence spending in the years 2025–2039 in accordance with the current funding principles in our country and the government’s macroeconomic forecasts for Poland. 

I would add that I will discuss the planning for the development of the Armed Forces through 2039 and the ways to finance the expansion of the Polish Armed Forces« capabilities during the upcoming Defence24 Days conference. I would only like to remind you that the entire Development Programme of the Armed Forces, according to the current Act on Homeland Defence, is financed from two sources: the national budget under section 29 »National Defence« and the Armed Forces Support Fund (FWSZ).” 

Does the Ministry of Defence support the concept of limiting VAT on armaments so that prices are not artificially inflated? Is this compliant with the European law? Aren’t you concerned that American tariffs and retaliatory levies imposed by the EU could raise the cost of the armaments Poland is acquiring?

The Ministry of Defence supports all types of legislative initiatives at both the national and European levels aimed at reducing or even entirely suspending VAT on acquired armaments and military equipment, regardless of their country of origin. Such measures would result in significant savings in our defence budget. The money we currently spend on VAT could then be redirected to finance the identified needs of the Ministry, particularly those concerning the modernization of the Armed Forces« equipment. However, I must emphasize that the Ministry of Finance plays a key role in the negotiation process with the EU in this area. 

The European Commission has recently published a draft White Paper on the new instrument, dubbed SAFE, which includes loans for defence purposes. How significant is this opportunity for the Polish defence industry and for the modernization of the military? Is there a chance that EU funds might be directed toward programmes like Orka or fighting vehicles, or will they be spent on the priority areas indicated by the Commission? How are the legislative negotiations progressing?

Let me start by saying that from the Ministry’s point of view, financing defence-related areas using new European Union instruments, including SAFE, can be considered in the context of the funding sources of the Armed Forces Support Fund (FWSZ). Today, the Fund is supported by credits, loans, bonds, and other financial liabilities concerning the acquisition of refundable financial resources. Full information on the new solutions for defence funding in the European Union is held by the Ministry of Finance. 

Considering the volume of financial resources anticipated for utilization, among other things, for the expansion of the Polish defence industry, it is undoubtedly a great opportunity for both state and private entities. However, it is too early to speak about details and the possibility of directing funds to particular projects. The discussions at the EU level are still ongoing. It is during these negotiations that the procedures and the scope of potential involvement of the various parties are being defined. Only after the final regulations are approved can we definitively state which programmes the funds will be allocated to. 

Nonetheless, I expect that EU instruments will provide considerable support for the modernization of the Polish Armed Forces, especially for purchases made from the Polish industry. At the same time, there is no doubt that the influx of new EU funds represents both a challenge and a development opportunity for domestic defence industry entities. These funds are intended, among other things, to help build industrial capacity. 

One of the key programmes implemented in the Polish industry is the NPBWP Borsuk programme. Thanks to the contract signed at the end of March, the vehicle has entered serial production. However, the ordered vehicles will enable the re-equipment of only two battalions. What needs to happen to secure further batches? Is it a question of the manufacturer’s production capacity or the availability of financial resources?

The order signed in March is a step forward. Simultaneously, we are analyzing the possibility of re-equipping additional battalions. Whether and when further orders are placed depends on two main factors: the financial capabilities of the Ministry of Defence’s budget and the production readiness of the manufacturer. We also appreciate the industrial efforts aimed at expanding production capacity so that further orders can be placed in a continuous and predictable manner. 

Borsuk is a new design, and its series production is only just gaining momentum. We are all aware that the production capacities at Huta Stalowa Wola, especially in the early years, will not be as high as the Armed Forces expect. Nevertheless, we are aware that HSW is undertaking numerous investments to expand its facilities, including its affiliated companies, to manufacture Borsuk vehicles on a large scale. 

As the Ministry of National Defence, we therefore assume a gradual increase in the company’s capacity would be happening. I expect that the next contracts will allow for the successive filling of the military’s planned needs.

Borsuk is one programme, but what about the Heavy IFV? Huta Stalowa Wola recently presented its own concept for the development of this vehicle. Are international cooperation solutions also being considered? If so, which ones? How does the Ministry plan to close the equipment gap for the 18th Mechanized Division, which will receive Abrams tanks by next year, will have modern artillery, but remain without modern fighting vehicles?

The acquisition of the CBWP (Heavy IFV) is one of the tasks stemming from the needs identified by the Polish Armed Forces. The timeframes indicate that it is an extraordinary project—complementary to the overall development of the Armed Forces. Armored and mechanized units need equipment that is as technologically advanced as possible to meet the threats of today’s and tomorrow’s battlefields. This necessitates acquiring a new vehicle as quickly as possible. 

The introduction of M1A2SEPv3 Abrams tanks into service in the Polish Land Forces forces us to take measures toward acquiring a vehicle that will support them in combat operations. In March 2023, the Armaments Agency initiated a procedure to acquire the CBWP platform. In this regard, a document entitled »Feasibility Study for the CBWP Task« was prepared and approved. Then, on August 14 of the same year, a framework agreement was signed with a consortium for the delivery of several hundred CBWP vehicles along with a training and logistics package. 

At present, discussions are ongoing with the PGZ Group, which is analyzing how to meet the expectations of the Polish Armed Forces and develop optimal solutions to satisfy the military’s needs for this type of vehicle as quickly as possible. We are not ruling out the possibility of choosing a foreign strategic partner with whom proper agreements and contracts can be concluded to implement the CBWP project.

How are the negotiations for the K2PL tank agreement proceeding? Has the division of work between the Polish and Korean industries been established? When can we expect the agreement to be signed?

The scope of Executive Contract No. 2, including the configuration of the K2PL tank, has already been negotiated. What remains to be settled are the formal and legal issues between the PGZ companies and Hyundai Rotem Company. The biggest challenge is dividing the work and implementing the transfer of technology (ToT) between the Korean company Hyundai Rotem and the Polish entity designated for the ToT. The prolonged negotiations are primarily due to the extensive scope of EC2. 

Let me remind you that the agreement is supposed to cover not only the delivery of the tank in two versions, namely K2GF and K2PL. The second execution agreement also covers the development and delivery of accompanying vehicles (technical support vehicles, engineering vehicles, and bridging vehicles), the supply of ammunition, the logistics package, the training package, and the transfer of technology to the Polish defence industry. 

I would like to emphasize that this last issue requires the most effort from both the Polish and the Korean partners. The Ministry remains ready to sign Execution Agreement No. 2 as soon as possible.

Cooperation with Korea is a key element in the modernization of the Armed Forces. The framework agreements provide for subsequent stages of cooperation, including the production in Poland of K9PL self-propelled howitzers and ammunition for Homar-K in cooperation with the domestic industry. How do you see the prospects for their implementation? Is this an opportunity to strengthen the defence sector?

Yes, the agreements signed with Hanwha Aerospace foresee the possibility of a transfer of technology to the Polish defence industry, both in terms of the K9 howitzers and the Homar-K launchers. The opportunity for cooperation between Korean and Polish industrial representatives could trigger a rapid increase in the potential of the Polish industry—especially in technologies that, at this moment, our defence industry does not have access to. This includes the production of modules for the Homar-K launcher and the production of guided missile systems with a range of up to 80 km. 

I would add that the technology transfer concerning the production of modules for the Homar-K system is included in the second executive contract signed in April 2024 and is currently in the implementation phase. The next step should be the production of guided missiles. The investment planned under EC No. 3 by the WB Group and Hanwha Aerospace will be a major developmental boost for the Polish industry. For us at the Ministry, ensuring that modern ammunition for the Homar-K system—purchased in significant quantities—is produced in Poland is one of our top priorities. 

Of course, cooperation in the production of K9 self-propelled howitzers is also being considered. At present, the Polish defence industry either supplies or has commitments to supply certain components for the 155 mm K9 self-propelled howitzers used by the Armed Forces. We plan to further develop this cooperation up to the point of commencing production of the K9PL howitzers in Poland, which would be a significant reinforcement for the domestic industry. We expect our partners to invest in the industrial base in Poland. One of the Ministry’s most important goals is the development of the Polish defence industry.” 

At what stage are the preparations for purchasing active protection systems against missiles and drones for vehicles such as the Borsuk, Abrams, and K2? Experiences from Ukraine show that this is an indispensable solution.

In the Polish Armed Forces, acquired counter-UAS systems and the Active Vehicle Protection Systems (ASOP) are being introduced into service. These sets are mounted directly on combat vehicles and tanks. Therefore, there is no need to equip them additionally with mechanical systems such as nets on tank platforms. In the Armored Forces, various forms of ensuring anti-drone protection are being considered for tank subunits, including the introduction of an additional specialized unit. 

Speaking of combat platforms, we are purchasing them by the thousands. How does the Ministry plan to secure their transportation capabilities, including road transfers? The needs are growing very rapidly.

We can transport military equipment by various means. Domestically, rail and road transportation are primarily used. I emphasize that rail transport is mainly employed for moving military equipment of substantial size and weight

Going further, the Polish Armed Forces strive for balanced development of transportation capabilities by utilizing both types of transport. This aligns with the current and future requirements. Naturally, the scope of these needs is continuously increasing. Accordingly, we are executing and planning further purchases. Recently, for rail transport, platforms with a load capacity of 70/90 tons and mobile rail ramps have been acquired. Additional rail vehicle purchases are also planned. 

On the road transport side, new sets for moving tanks and heavy tracked equipment are being acquired. Each set consists of a tractor unit and a low-floor trailer. We expect that the contracts signed so far secure the necessary number of vehicles for our current tasks. If we have the opportunity to exercise options, the capacity for transporting heavy tracked equipment will further increase. However, this depends on securing additional funding. I would like to stress that in exceptional situations we have the possibility of contracting the relevant services on the commercial market.

I would also like to ask about the Wheeled Armored Personnel Carriers (KTO). Last year, two contracts for the fighting version of the Rosomak were signed, yet they do not exhaust the framework agreement. What elements are needed to fulfill the framework agreement: more funds, greater production capacity? Or perhaps both?

Yes, in 2024 two executive contracts were signed: one for the delivery of several dozen KTO Rosomak-L equipped with the Remotely Controlled Turret System ZSSW-30 integrated with the ppk Spike launcher, and another for the Rosomak with the ZSSW-30. 

The Ministry of National Defence plans to continue procuring KTO vehicles to meet the needs of the Polish Armed Forces. However, regarding the scale of orders, it will depend on the financial capabilities of the Ministry. 

What solutions are under consideration for the New KTO? Is continuing the Rosomak programme also being considered?

In the New KTO programme, the situation is quite similar to that of the CBWP programme. We have a framework agreement signed with the Polish Armaments Group \[PGZ\] At present, we are in discussions with the Polish Armaments Group, which is analyzing how to meet the expectations of the Polish Armed Forces and develop optimal solutions that will enable satisfying the military’s needs for the New KTO as quickly as possible.

The Ministry is engaged in dialogues with domestic companies regarding »Eastern Shield.« Among the planned procurements are counter-drone systems and coordination systems. What are the priorities in terms of procurement? How do you assess the capabilities of the Polish industry? To what extent will it be possible to utilize experiences and technologies already overseen by the Border Guard?

Let me remind you that »Eastern Shield« is a project planned for 2024–2028 to strengthen Poland’s resilience against hybrid attacks and warfare. It was developed in reaction to the Russian aggression against Ukraine and draws on the experiences of that conflict. However, it is a peacetime project: its aim is to deter potential aggressors, protect soldiers and civilians, and also, together with our allies, to demonstrate our readiness to defend our borders. 

As the Ministry of National Defence, under this programme, we are looking for modern technical solutions that can be tested and applied in related operations. We have invited—and continue to encourage—domestic as well as European Economic Area and NATO contractors who possess modern technologies that could contribute to strengthening Poland’s defensive capabilities. 

More information can be found on the project’s webpages prepared by the Department of Innovation and the General Staff. The Department of Innovation has already received over 250 contact forms containing one or more technological solutions. These proposals have come from the industry, small and medium-sized enterprises, as well as technical universities, institutes, spin-offs, or startups. The response to the program is impressive, including the cooperation offered by local entrepreneurs providing services in the areas of interest to the programme implementers.

What are the next steps?

The selected offers—both services and technologies—will be tested in operational conditions. I emphasize that we plan to conduct these tests in agreement with and with the participation of representatives from the Ministry of the Interior and Administration, including the Border Guard, as that Ministry and its subordinate services are also participants in the National Deterrence and Defence Programme – »Eastern Shield.«” 

You recently participated in discussions with representatives of Airbus. How important is the procurement of transport and tanker aircraft for Poland? When can we expect a decision in this area?

During the last meeting with Airbus representatives, we discussed acquiring our own air-to-air refueling capabilities, heavy transport aircraft, and the modernization of our C‑295M aircraft (Mid-Life Upgrade, MLU – a modernization mid-life upgrade due to outdated avionics, communications, and self-defence systems). In the latter matter, we have already signed an agreement to modernize all our aircraft. This modernization will be carried out from 2025 until 2033.

For the other two issues, we are still analyzing and surveying the market. Procuring the aforementioned aircraft will enable us to gain capabilities that we do not yet possess. We want to secure the ability to rapidly transport personnel, oversized equipment, and supplies over long distances, and to ensure continuous air protection of Polish territory through air-to-air refueling aircraft. Soon, we will have a significant number of combat aircraft with the capability to refuel in flight. With such a large fleet, the refueling service provided by allied forces might prove insufficient. 

The proposals under consideration are being analyzed in terms of the needs and modernization priorities of the Polish Army, as well as the strengthening of Poland’s defence potential. In addition to acquiring modern military equipment, we expect the establishment of the appropriate industrial capacities in Poland. This is not an easy process, and especially it cannot be carried out under time pressure.

The Air Force is also associated with combat aviation programmes: the modernization of the F-16C/D and the FA-50PL. When is the contract for the modernization of the Jastrząb \[the F-16\] planned?

The modernization process of the F-16 aircraft is already actively underway. It will include avionics, electronic warfare systems, and capabilities for employing the latest munitions. I would like to emphasize that the documents submitted to the U.S. side indicate the intention to carry out the work at Polish industrial facilities. 

The U.S. government plans to deliver the contract in July 2025. After reviewing the contract and securing funding, it will be possible for the Polish party to sign it. At the same time, we are continuing the implementation of changes to the FA-50PL, which, once the modifications are completed, will be an important complement to our combat capabilities. 

Can you confirm that Poland already has U.S. approval to integrate American weaponry with the FA-50PL aircraft? When are the FA-50PL deliveries expected?

Yes, the U.S. has approved the integration of AIM-9X missiles with FA-50PL aircraft under the DCS (Direct Commercial Sale) format—meaning on commercial terms, in a mode that directly connects the American side with the aircraft manufacturer, the Korean company KAI. 

As for the AIM-120 missiles, a permit is currently being processed for conducting a feasibility study on the possibility of integrating AIM-120 missiles with the FA-50PL aircraft. There is preliminary U.S. approval for conducting such a study. However, this is a procedure that will only determine whether such weapons integration is physically possible. 

I would add that the integration process is complex and has also been prolonged due to procedural factors, including the extended timeline of the U.S. power transition, which in turn caused delays in administrative activities. For this reason, it should be expected that the FA-50PL aircraft may not arrive in Poland in 2025. Final delivery timelines will depend purely on engineering factors—that is, the technical progress of the integration itself. 

Let’s move on to the modernization of the Navy. When can we expect a »short list« for the Orka submarine? Can you confirm that the order will be carried out within an intergovernmental formula?

We are conducting extensive government-level discussions with potential contractors. We are analyzing all the proposals submitted. We are considering the possibilities and limitations resulting from them. 

I would like to stress that in the Orka programme, there is no »short list,« and the publication of such a document is not planned. We are in talks with all participants in the program; all submitted offers are being seriously analyzed, and we will choose the best solution among them. We are committed to the development of the Polish defence industry, and in our discussions with all partners we emphasize the need to invest in the development of Poland’s industrial potential. 

In the near future, I will be traveling to France and Spain to discuss the Orka programme. I emphasize that there is a complete list of the submitted offers, which will allow us to determine the proper method and mode of implementing this programme. This is too significant a programme, and any attempts to rush the process at this stage are not advisable.

Another important area of modernization is the programme for the Rocket and Artillery Forces. I’ll start with ammunition, because the recent statement from the Head of the Armaments Agency indicated dramatic shortages—a supply for only a few days of fighting. The PGZ has submitted an application for funding from the Capital Investments Fund. One private company is also applying for funds. How is this programme progressing? Do you see a place for private entities in ammunition production?

The Rocket and Artillery Forces have a very broad modernization programme, encompassing a range of significant initiatives aimed at increasing operational capabilities and ensuring readiness to respond to modern battlefield challenges. At the current stage of programming the development of the Armed Forces, proposals have been adopted regarding the formation of new combat units, the optimization of structures, and the management of military equipment being phased out due to the introduction of new armaments. The main factor for maintaining and developing the capabilities of the Rocket and Artillery Forces is ensuring adequate financial resources. 

In the context of building the capabilities of the Rocket and Artillery Forces, the production capacity for ammunition is one of the priorities. Applications for support from the Capital Investments Fund are being analyzed, coming both from companies within the PGZ Group and from the private sector. Our objective is to build a distributed, disruption-resistant supply chain with the real participation of various domestic entities. The efficiency and pace of implementation will be crucial, and the Ministry will be one of the opinion-forming bodies assessing the proposals. 

Operational activities conducted during the defensive war on Ukrainian territory demonstrate that the volume of combat assets — including ammunition — consumed on a daily cycle is so large that a single country, operating within the standard production cycle to date, is unable to meet the needs necessary to independently defend its territory. To ensure the security of the Polish state, to preserve its territorial integrity, and also to potentially support allied countries under threat, it is necessary to expand both the diversified base for producing and supplying heavy-caliber ammunition and to supplement the current reserves. Procuring 155 mm ammunition from Polish manufacturers and developing our production capacities is a priority matter that is directly linked to protecting the nation’s fundamental security interests.

What about the Homar-A system procurement from the United States? Is there a chance for domestic production of guided ammunition, and will it be possible for Korean and American launchers to exchange ammunition—i.e., to be interoperable?

The signing of the agreement is dependent on the conclusion of negotiations and obtaining all the required approvals, both at the national and international levels. The Armament Agency is currently carrying out activities related to the acquisition of system components available under the Foreign Military Sales programme. The quantity of military equipment to be acquired, as well as the term and cost of implementation, will be determined during the negotiations for the execution agreement, which can only be concluded once all contractual conditions have been negotiated. The current concept for implementing the Homar-A system includes locating the production of its ammunition in Poland. 

What significance, from your point of view, does the recently passed law facilitating defence investments have? Do you believe it will expedite, for example, the construction of factories for Homar-K missiles as well as for 155 mm ammunition?

The need to introduce a new law comes from the geopolitical situation and the necessity of accelerating investment processes related to national defence. The introduced measures also result from the increasing number of personnel in the Polish Armed Forces, the acquisition of new military equipment, and the need for greater involvement of the domestic industrial potential in building the country’s defence capabilities. 

The law concerns strategic and key investments for Poland’s security. It will facilitate the execution of investments that are particularly important for national security. So far, the investment process has taken too long. A large part of this process consists of the decision-making phase and obtaining environmental, water law permits, various opinions, decisions—which all slow down the process. We have no time to lose. Military investments and those dedicated to public security must be carried out in an expedited manner. 

What will the new law change? What is its significance from a security standpoint?

National security is of paramount importance to us. We are simplifying the entire decision-making procedure. Investments are divided into key and strategic ones. The key investments include »Eastern Shield« and the domestic production of ammunition. The new measures concern not only the Ministry of National Defence but also the Ministry of State Assets and defence companies, both private and public. 

Speaking of 155 mm ammunition production, we want to establish new production lines. We desire greater capacity and want to secure funds from the European Union, which are very much needed. However, to ensure that these funds are not lost, we must prepare the Polish industry to immediately absorb these funds, acquire production lines, and establish production. 

I would like to say unequivocally that good legal preparation is at least as important as securing financing or taking a directional decision about how a task is to be executed. By adopting the new law, we will take a very large step in this direction. 

I would like to ask about the cooperation with the Ministry of State Assets and the Polish Armaments Group (PGZ). Is the Ministry of National Defence working on structural changes regarding oversight of the state-owned defence industry?

The Polish defence sector faces enormous challenges, yet it also has tremendous opportunities ahead. The armed conflict underway on our eastern border reminds us of the strategic significance of national defence capabilities and the role of the Polish economy in that regard. Therefore, the Ministry of National Defence constantly undertakes actions to support the development of the domestic defence industry. 

I would like to remind you that within the Polish legal system, oversight over state-owned companies in the defence sector—and specifically issues related to management and commercial activities of state enterprises—does not fall within the Ministry of National Defence’s competencies. As the ministry responsible for strictly military and operational matters, we act within our defined competencies, leaving oversight and support for the activities of enterprises to other ministries and the relevant institutions. In this regard, the Ministry cooperates closely with the Ministry of State Assets and the Ministry of Development and Technology to work out optimal solutions from the perspective of the country’s security and that of its citizens. 

Given this, the Ministry cannot interfere in the business decisions made by independent economic entities. It should also be noted that decisions regarding the activities of individual companies lie with their management bodies, which must take into account both economic and strategic interests. I assure you that the Ministry of National Defence is in close cooperation with the Ministry of State Assets and the Ministry of Development and Technology in order to develop optimal solutions in the interest of the country’s security and its citizens.

How important is the domestic industrial potential and its support for the Ministry of National Defence?

In the Ministry’s assessment, having domestic, independent defence industry entities is an essential pillar for ensuring the security of the Republic of Poland during peacetime, crisis, and direct national security threats. In the process of modernizing the Polish Armed Forces, we are striving both to build military capabilities and to enhance the country’s industrial potential. In this context, I would like to emphasize that the Ministry’s management aims to allocate at least 50% of the funds designated for the development and modernization of the Armed Forces to companies within the Polish defence industry.” 

Thank you for the conversation.