Reuters International

BERLIN (Reuters) - A consortium including Luerrsen Werft and Thyssenkrupp has lowered its bid to build five warships for Germany's Defence Ministry, but will still exceed the programme's budget of 1.5 billion euros (1.27 billion pounds), a German magazine reported.

"Our new offer will be around 2 billion euros," Wirtschaftwoche magazine reported on Thursday, citing a manager familiar with the programme. "The first reaction of the military administration was positive."

The group's initial bid came in at 2.9 billion euros, an amount rejected by Defence Minister Ursula von der Leyen last month.

The magazine said the shipbuilders secured lower prices from suppliers to drive down costs, but some technical improvements and construction of training facilities had also been dropped.

A ThyssenKrupp spokesman declined to comment. Other companies in the consortium could not immediately be reached.

German lawmakers announced plans in October to buy five new warships to bolster security in the Baltic Sea and the Mediterranean. The Defence Ministry requested a bid from the group without issuing a public tender.

Critics have said the ministry's decision to skip an open competition could lead to higher costs. They have also questioned 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, equivalent to about 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 Andrea Shalal, Sabine Siebold and Georgina Prodhan; Editing by Edmund Blair)

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