Opening up the internal market for defence products will improve the competitiveness of the sector’s technological and industrial base. The persisting fragmentation of European defence markets leads to the unnecessary duplication of capabilities, organisations and expenditures. As a result, the industry is lacking the necessary economies of scale and risks losing critical expertise and autonomy in key capability areas.
A European Commission evaluation report on the Defence Procurement Directive 2009/81/EC concluded that it helped open up the internal market for defence but that much more progress is needed.
The Report states that the Directive led to an initial increase of defence procurement in EU-wide competition, but that a significant share of expenditure, especially for high-value, strategic, complex defence systems, is still done outside the Directive. Moreover, the degree of application of the Directive remains uneven across EU countries.
To address this situation, the report underlines the strong need to focus on the effective implementation of the Directive and proposes a number of actions such as guidance on the interpretation of specific provisions, dialogue with EU countries, enforcement actions, and scoreboards on countries’ use of the Directive.
Overall, the report concludes that the Directive is largely fit for purpose and that the rules do not need to be amended. It stresses that a more open defence internal market will improve the competitiveness of the sector’s technological and industrial base, in particular by enabling economies of scale.
Full evaluation report (includes related Staff Working Paper with essential background for the evaluation of the Directive including data on national expenditure on defence/security and procurement).
The EU Directive 2009/81/EC on defence and sensitive security procurement sets out European rules for the procurement of arms, munitions and war material (plus related works and services) for defence purposes. It also sets out rules for the procurement of sensitive supplies, works and services for security purposes. These rules are adapted to the specificities of defence procurements, which tend to be particularly complex and sensitive. The Directive provides rules that enhance transparency and openness in defence markets between EU countries, while also ensuring that individual countries’ security interests are protected.
Directive 2009/81/EC contains a number of innovations tailored to the specific needs of procurement in defence and security markets. These include:
The European Commission is supporting the implementation of Directive 2009/81/EC. In particular, it is working to provide guidance on cooperative procurement.
In its Conclusions of December 2013, the European Council underlined ‘the importance of cross-border market access for SMEs’, stressed that ‘full use should be made of the possibilities that EU law offers on subcontracting’, and invited the Commission ‘to investigate the possibilities for additional measures to open up supply chains to SMEs from all Member States’.
The Commission organised a group of experts from EU countries and stakeholders that worked on the subject between April 2015 and November 2016. The group prepared a report. The main observations are:
More information in Improving access of SMEs to cross border defence procurement and in the full report.
On 30 November 2016, the Commission adopted a Notice providing guidance on government-to-government contracts in defence. This Notice is to help EU countries’ procurement authorities applying this exclusion (Article 13(f) of the Directive). It replaces section 3.6 “Contracts awarded between governments” (paragraphs 24-26) of the guidance document Exclusions.
Interpretative Communication on the application of Article 296 of the Treaty (now Article 346 TFEU) in defence procurement. This provides guidance on the extent to which EU countries can exempt defence contracts from the Directive in the interest of essential security. It enhances legal certainty and limits abuse of the exemption.
Summary of discussions and programme of the May 2011 conference with European Commissioner for Internal Market and Services Michel Barnier and European Commissioner for Industry and Entrepreneurship Antonio Tajani.