German Defence Minister Ursula von der Leyen vowed on Friday to press a consortium led by Luerssen Werft of Bremen for a "fair contract" for five new warships, saying the group's initial bid was too high.
"My goal is to get the contract started in this legislative period, but we want a good contact, we want a fair contract and above all a realistic one," von der Leyen told reporters on Friday. "We are working hard on that now."
Asked if there was any chance the consortium's reported initial bid of 2.9 billion would be accepted, von der Leyen said, "I can state clearly that that number will not stand."
Defence industry sources said last week the German government had rejected the initial bid from the consortium before it exceeded the budget target of 1.5 billion euros ($1.59 billion).
The Handelsblatt newspaper reported this week that the bid came in at 2.9 billion euros, nearly twice the expected amount.
German lawmakers first announced plans in October buy five more of the warships to bolster security in the Baltic Sea and the Mediterranean
Critics have warned that the ministry's decision to skip an open competition could lead to higher costs. They also question the government's plan to secure parliamentary approval for the planned purchase as soon as June.
Germany is boosting military spending by nearly 2 billion euros in 2017 to 37 billion euros, or around 1.2 percent of gross domestic product, but says it will take time to reach the NATO target of spending 2 percent of GDP on defence.
(Reporting by Reuters TV and Sabine Siebold; Writing by Andrea Shalal; editing by Ralph Boulton)