On 17 June 2025, the European Commission published its proposal for a Directive to “promote the development of a competitive and innovative European defence industry”. The proposed Directive amends Directive 2009/43/EC on intra-EU transfers of defence-related products and Directive 2009/81/EC on security and defence procurement. In this blog, we discuss the key aspects of the proposal and their possible consequences for businesses and procuring entities.
Cross-border transfers and procurements
The main goal of the proposal is to enable the creation of a strong European defence industry and readiness for conflict with a prominent role for the Union. A higher degree of flexibility in defence transfers allowing for more exemptions enables more cooperation between Member States. The creation of General Transfer Licences for EU defence industrial projects as well as the power of the Commission to define (non-essential) elements of the transfer framework through delegated acts opens up possibilities for greater cooperation in the defence sector. The power to adopt delegated acts is restricted, however, by the power of the European Parliament and the Council to block a delegated act within three months of adoption.
With the greater degree of flexibility in defence transfers, there should be more room for cooperation in defence procurement. This may be the case for businesses across the EU collaborating on large scale defence projects, as well as for procuring entities. The latter have been given the explicit possibility to meet their obligations under the Directive through joint procurement procedures. In the proposed Article 10a, the Commission opens the door to joint procurement by contracting entities from different Member States. This may lower administrative costs for these entities as well as offering scaling benefits. It also incentivises interoperability between Member States.
More procurement procedures
The proposal seeks to implement a higher degree of flexibility in defence procurement. In addition to the possibility for joint procurement, the proposal introduces into the Defence Procurement Directive a number of procedures from Directive 2014/24/EU. These include the open procedure and the dynamic purchasing system. Experiences from public procurements under Directive 2014/24/EU can be built upon within the framework of defence procurement.
The proposal also introduces an innovation partnership procedure in order to foster new developments. The innovation partnership is a special type of procurement procedure – already existing under Directive 2014/24/EU – aimed at meeting a demand that cannot be met on the current market for products, services or works. Generally, the rules stipulate a fair and non-discriminatory tender for the development of a new product, service or work. The possibility of the procuring entity to end or limit the partnership after each phase may give rise to uncertainty for contracting partners. However, this is mitigated to some extent by the requirement that such a possibility and its conditions for use are stipulated in the original tender.
Sacrificing competition for the sake of certainty?
The thresholds for procurements covered by the Directive are raised significantly:
- Works: From EUR 5,538,000 to EUR 7,000,000.
- Supply and service contracts: From EUR 443,000 to EUR 900,000.
This may reduce the administrative burden significantly, especially for small and medium enterprises, as contracts that might interest them are less likely to exceed the higher threshold. The level of competition for contracts under the threshold is very dependent on the national procurement rules.
Another significant change is the maximum length of framework agreements: from seven (7) to ten (10) years. The possibility of longer framework agreements generates a higher degree of certainty for businesses, especially for large-scale projects. However, this will limit competition to a degree as well as raise the stakes when a contract expires. With longer contracts, the value of a contract is also likely to be higher. In addition, the dependency on a particular supplier may also be greater, making it more difficult for a fair procurement procedure after a contract has expired.
In the interest of legal certainty, Article 49a of the proposal codifies the rules on modification of contracts during their term into the Defence Procurement Directive. There appears to be no material difference between the proposed Article and Article 72 of Directive 2014/24/EU. Finally, the proposal deletes Articles 65 and 66 of the Defence Procurement Directive on statistical obligations and Article 68 linking the thresholds to those in the (no longer in force) Directive 2004/17/EC on procurement in special sectors such as water and energy.
Next steps
The envisioned “Massive long-term investments in defence capabilities” warrant a strong transfer and procurement framework in the defence sector. The legislative proposals are now subject to negotiations in the European Parliament and in the Council, under the ordinary legislative procedure. We will be keeping a close eye on the developments as they come and are ready to assist you in any of these matters.
On 17 June 2025, the European Commission published its proposal for a Directive to “promote the development of a competitive and innovative European defence industry”. The proposed Directive amends Directive 2009/43/EC on intra-EU transfers of defence-related products and Directive 2009/81/EC on security and defence procurement. In this blog, we discuss the key aspects of the proposal and their possible consequences for businesses and procuring entities.
Cross-border transfers and procurements
The main goal of the proposal is to enable the creation of a strong European defence industry and readiness for conflict with a prominent role for the Union. A higher degree of flexibility in defence transfers allowing for more exemptions enables more cooperation between Member States. The creation of General Transfer Licences for EU defence industrial projects as well as the power of the Commission to define (non-essential) elements of the transfer framework through delegated acts opens up possibilities for greater cooperation in the defence sector. The power to adopt delegated acts is restricted, however, by the power of the European Parliament and the Council to block a delegated act within three months of adoption.
With the greater degree of flexibility in defence transfers, there should be more room for cooperation in defence procurement. This may be the case for businesses across the EU collaborating on large scale defence projects, as well as for procuring entities. The latter have been given the explicit possibility to meet their obligations under the Directive through joint procurement procedures. In the proposed Article 10a, the Commission opens the door to joint procurement by contracting entities from different Member States. This may lower administrative costs for these entities as well as offering scaling benefits. It also incentivises interoperability between Member States.
More procurement procedures
The proposal seeks to implement a higher degree of flexibility in defence procurement. In addition to the possibility for joint procurement, the proposal introduces into the Defence Procurement Directive a number of procedures from Directive 2014/24/EU. These include the open procedure and the dynamic purchasing system. Experiences from public procurements under Directive 2014/24/EU can be built upon within the framework of defence procurement.
The proposal also introduces an innovation partnership procedure in order to foster new developments. The innovation partnership is a special type of procurement procedure – already existing under Directive 2014/24/EU – aimed at meeting a demand that cannot be met on the current market for products, services or works. Generally, the rules stipulate a fair and non-discriminatory tender for the development of a new product, service or work. The possibility of the procuring entity to end or limit the partnership after each phase may give rise to uncertainty for contracting partners. However, this is mitigated to some extent by the requirement that such a possibility and its conditions for use are stipulated in the original tender.
Sacrificing competition for the sake of certainty?
The thresholds for procurements covered by the Directive are raised significantly:
- Works: From EUR 5,538,000 to EUR 7,000,000.
- Supply and service contracts: From EUR 443,000 to EUR 900,000.
This may reduce the administrative burden significantly, especially for small and medium enterprises, as contracts that might interest them are less likely to exceed the higher threshold. The level of competition for contracts under the threshold is very dependent on the national procurement rules.
Another significant change is the maximum length of framework agreements: from seven (7) to ten (10) years. The possibility of longer framework agreements generates a higher degree of certainty for businesses, especially for large-scale projects. However, this will limit competition to a degree as well as raise the stakes when a contract expires. With longer contracts, the value of a contract is also likely to be higher. In addition, the dependency on a particular supplier may also be greater, making it more difficult for a fair procurement procedure after a contract has expired.
In the interest of legal certainty, Article 49a of the proposal codifies the rules on modification of contracts during their term into the Defence Procurement Directive. There appears to be no material difference between the proposed Article and Article 72 of Directive 2014/24/EU. Finally, the proposal deletes Articles 65 and 66 of the Defence Procurement Directive on statistical obligations and Article 68 linking the thresholds to those in the (no longer in force) Directive 2004/17/EC on procurement in special sectors such as water and energy.
Next steps
The envisioned “Massive long-term investments in defence capabilities” warrant a strong transfer and procurement framework in the defence sector. The legislative proposals are now subject to negotiations in the European Parliament and in the Council, under the ordinary legislative procedure. We will be keeping a close eye on the developments as they come and are ready to assist you in any of these matters.