EU Launches New Directive on Defense, Security Procurement
August 26, 2009 // Published as a news service by IHS
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The new Directive 2009/81/EC on defense and security procurement entered into force on Aug. 21 throughout the European Union (EU).
The directive will be the cornerstone of a revitalized European defense market, supporting the development of the European defense-related supplier base.
Up until now, the vast majority of the EU's defense and sensitive security procurement contracts have been exempted from the Internal Market rules, one of the reasons being that existing EU procurement rules are considered to be ill-suited for most defense- and security-related purchases.
The new directive will greatly improve this situation by providing tailor-made procurement rules for defense and security contracts. EU member states will now have at their disposal European Community rules they can apply to complex and sensitive transactions without putting at risk their legitimate security interests.
"This directive introduces at the European level fair and transparent procurement rules for defence and security. The Internal Market principles will finally apply in sectors which have been traditionally excluded from Community law," said Internal Market and Services Commissioner Charlie McCreevy.
"This will make defence and security markets more open and more transparent to the benefit of all: taxpayers' money will be spent more efficiently, armed forces will get better value for money, and industry will get better access to new markets."
More Transparency and Competition for Europe's Defense and Security Markets
Until now, most European defense and sensitive security equipment has been procured on the basis of uncoordinated national rules, which differ greatly in terms of publication, tendering procedures, selection and award criteria, and so on. This regulatory patchwork was a major obstacle on the way towards a common European defense equipment market and fostered non-compliance with the Internal Market principles.
The new directive will open up the Internal Market for defense and security products by introducing transparent and competitive procurement rules specifically adapted to the needs of these highly sensitive sectors.
A Tailor-Made Procurement Regime for Sensitive Contracts
The new rules apply to the procurement of arms, munitions and war material and also to sensitive non-military contracts in such areas as protection against terrorism, which often have similar features to defense contracts.
The directive contains a number of innovations tailored to the specific needs of procurement in defense and security markets:
- 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 to medium-sized enterprises in the defense and security sector.
- A set of national review procedures will provide effective remedies protecting the rights of businesses taking part in the award procedure.
Limiting Exemptions from the Internal Market Rules to the Strict Minimum
EU member states still have the possibility to use Article 296 of the EU Treaty to exempt defense and security procurement contracts that are so sensitive that even the new rules cannot satisfy their security needs.
In most cases, however, member states should be able to use the new directive without any risk for their security.
Member states have two years to transpose the directive into their national legislation.
For more information, see the EU web page for defense procurement.
Source: European Commission (EC).