(Updated Dec. 12, 2007) The Czech Defense Ministry has cancelled a 23 billion Kč order ($1.3 billion) for 199 armored transport vehicles from Austrian arms manufacturer Steyr, according to Hospodářské Noviny newspaper.

Steyr was six months late in delivering the first 17 vehicles in the order, after defects came to light in October, according to Vlasta Parkánová, the Czech defense minister.

The tender for the vehicles was suspicious from the start, the newspaper said. Finnish arms manufacturer Patria, which came in second in the tender, claimed it had presented a more advantageous bid than Steyr. The contract itself was signed by former Defense Minister Karel Kühnl in 2006, immediately before he left his post.

Defense officials said they signed the actual contract with Czech arms dealer Defendia. The ministry has said it does not expect the cancellation to result in arbitration proceedings, in spite of the fact that both Defendia and Steyr are owned by the multinational corporation General Dynamics.