RPT-Czech govt scraps $1.3 bln army contract-minister

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The Czech Republic has scrapped a contract to buy armored personnel carriers from a unit of General Dynamics Corp for the equivalent of $1.3 billion, the government said on Tuesday.

The Pandur carriers should have been supplied by the Steyr-Daimler-Puch Spezialfahrzeug consortium, a unit of U.S.-based General Dynamics.

Steyr offered up to 234 Pandur carriers for 23.6 billion crowns ($1.3 billion).

Defense Minister Vlasta Parkanova said the supplier failed to meet the contract terms. Ministry officials said the consortium faced sanctions that they declined to specify.

"From the supplier's side, the contract terms were not being fulfilled orderly and timely," Parkanova told a news conference. "In our view ... the contract was violated in a significant manner."

Parkanova added the ruling center-right coalition government agreed unanimously to pull out of the deal at a secret meeting last week, whose results were announced on Tuesday.

A General Dynamics spokesman in the United States declined to comment on whether terms of the contract had been breached or whether the contract had been canceled. He said the company was still in discussions over the contract with the Czech government.

The Steyr consortium beat Finland's Patria in the tender to supply the vehicles, which was called by a previous center-left government and which was signed only after that government lost a general election last year.

Prime Minister Mirek Topolanek's right-wing Civic Democrats, who won the election and lead the current government, at the time criticized the center-left administration for making such a big decision after the election.

General Dynamics shares fell 43 cents to $93.57 on the New York Stock Exchange, in a broadly lower market. ($1=17.74 Czech Crown) (Reporting by Petra Vodstrcilova, writing by Marek Petrus; Editing by David Holmes and Maureen Bavdek)

Keywords: GENERALDYNAMICS CZECH/

[PRAGUE/Reuters/Finance.cz]