Navy Partnership: Strategic Insights on the Submarine Deal Between Naval Group and PGZ
Establishing agreements with companies in a target country is a necessary but insufficient condition for securing contracts. The recent Norwegian frigate tender exemplifies this: despite partnerships with Kongsberg Group and local research institutes, Naval Group was surpassed by British BAE Systems, which had also formed alliances but with different entities. Oslo justified its decision based on its “strategic intimacy” with London.
What will be the outcome for Poland, which has recently revived its “Orka” program in 2023? This initiative aims to acquire at least three diesel-electric submarines, with an investment of approximately €2.5 billion.
Among the eleven manufacturers initially considered by Warsaw two years ago, seven remain in contention, including British Babcock, Italian Fincantieri, Swedish Saab, German TKMS, Spanish Navantia, South Korean Hanwha Ocean, and Naval Group, which is proposing a variant of the Scorpène.
At the recent MSPO defense exhibition in Kielce, Hanwha Ocean signed a memorandum of understanding with Polish company Famor to “facilitate the transfer of technology and industrial know-how” to Poland, should it choose the KSS-III submarine. This model is a strong contender, promising delivery of the first unit before 2028.
However, it is the public entity Polska Grupa Zbrojeniowa (PGZ) that is being courted by the main competitors in the Orka program. PGZ has signed agreements with Babcock International, Saab, and Fincantieri.
Additionally, Swedish industry has received a boost from its government, as Stockholm and Warsaw announced enhanced military cooperation during the MSPO event. Micael Johansson, CEO of Saab, highlighted the “great potential for expanding the partnership” between Sweden and Poland to ensure security and stability in Europe, particularly in the Baltic Sea region. However, Saab’s bid may be hampered by challenges in its A26 submarine program.
Naval Group holds a competitive advantage, having previously signed a memorandum of understanding with PGZ in 2017, when it was still known as DCNS. At that time, it also established an industrial partnership with the MARS-Nauta shipyard.
During the MSPO exhibition, Naval Group solidified its position by signing an Industrial Cooperation Agreement (ICA) with PGZ, focusing on “the construction of submarines and other highly specialized vessels.”
“This is a significant step in the strategic relationship between the two companies, elevating the level of cooperation and opening the possibility of integrating the Polish defense industry into our supply chain,” stated Naval Group in a press release. The agreement also aims to deepen the strategic partnership between France and Poland, as outlined in the Franco-Polish Friendship Treaty signed in Nancy on May 9, 2025.
We signed yesterday at #MSPO an Industrial Cooperation Agreement with Poland’s main defense shipyard: @PGZ_pl
A tangible commitment, for our Orka submarine programme offer and beyond, paving the way for a long lasting industrial cooperation.
Our press release below: pic.twitter.com/UFl9l8TJof
— Naval Group (@navalgroup) September 4, 2025
The signing of this industrial cooperation agreement follows a visit to Toulon by a delegation led by Paweł Bejda, Poland’s Deputy Minister of Defense. This visit was part of in-depth analyses and negotiations related to the Orka program.
The delegation “had the opportunity to engage in working discussions, addressing technology transfer prospects and the involvement of the Polish industry,” as stated by the Polish Ministry of Defense on July 16.
Recently excluded from the tender for the future submarines of the Royal Canadian Navy in favor of TKMS and Hanwha Ocean, Naval Group is making every effort to secure a contract in Poland. Will these efforts prove successful? Warsaw is expected to announce its decision by the end of this year.
Photo: Naval Group