Wzrost gospodarczy

Defence procurement

Defence procurement

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.

Need for more effective implementation of EU defence procurement rules

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). 

EU Directive on defence and sensitive security 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:

  • awarding authorities may use the negotiated procedure with prior publication as a standard procedure, which gives them flexibility to fine-tune all details of the contract;
  • candidates may be required to submit specific guarantees ensuring security of information (safeguarding of classified information) and security of supply (timely and reliable contract execution, especially in crisis situations).
  • specific rules on research and development contracts strike a balance between the need to support innovation and the necessary openness of production markets.
  • awarding authorities may oblige contractors to award subcontracts in a competitive manner, opening-up supply chains and creating business opportunities for small and medium-sized enterprises (SMEs) in the defence and security sector;
  • a set of national review procedures will provide effective remedies to protect the rights of businesses taking part in the award procedure.

The European Commission is supporting the implementation of Directive 2009/81/EC. In particular, it is working to provide guidance on cooperative procurement.

Cross-border access for SMEs in defence contracts

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:

  • cross-border market access and open supply chains are crucial for the European Defence Equipment Market and sub-suppliers should have a fair chance to gain access to the supply chains of big system integrators in other EU countries. At the same time, actions in this area need to avoid any negative impact on prime contractors' competitiveness
  • voluntary instruments (to be signed by relevant parties) should be explored with actions to promote SME participation and the openness of supply chains. These include:
    • procurement authorities should provide early information about long-term plans and more and better information on procurement, using pre-procurement advertising, and designing public procurement procedures to facilitate cross-border and SME participation.
    • prime contractors should have transparent strategic long-term plans, pre-procurement and subcontracting advertising, EU-wide market searches and scouting to identify potential suppliers across different EU countries, being transparent about the cross-border elements of their supply chains.
  • recommendations for possible actions in different additional areas such as intra-EU transfers, cooperative procurement, R&T, standardisation and certification
  • the Commission should engage in further discussions with EU countries and industry to start the implementation of recommendations

More information in Improving access of SMEs to cross border defence procurement and in the full report.

Advisory group on cross-border access for SMEs to defence and security contracts (E03274)

Guidance documents

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.

2011 High Level Conference on Defence and Security Industries and Markets

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.