EU Defense Procurement & Export Control Policies
Latest News
New thresholds in the EU Defense procurement Directive: the thresholds above which the EU Directive applies have been revised: €400 000 for supplies and services, € 5 million for works contracts. Please see our updated Report April 2012.
New Report on FRONTEX, the EU Agency for External Border Management: In November 2011, the EU Frontex Regulation was revised, with changes brought to its expanding power, autonomy, budget and operational capabilities. In the future, Frontex’s new purchasing power may provide U.S. companies with European subsidiaries with new export possibilities. See our section on Market Research on the EU.
New! – Below you will find a link to a compilation of country-by-country profiles explaining how the Member States have transposed and are implementing Directive 2008/81 on the “Coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC.” This list and its information will continue to be updated to reflect the publication – within the EU’s Official Journal – of Member States’ national transposing measures of this Directive.
Briefing for U.S. Companies – London DSEI September 16, 2011:
Commercial Specialist, Isabelle Maelcamp, gave a presentation to U.S. companies on the new EU Defense Procurement Directive, its implications for industry, its significance for contract negotiations and possible risks of non-compliance.
New Market Report on EU Defense Acquisition Reform: The new EU Directive 2009/81 for defense and security procurement is set to challenge the way Member States currently purchase sensitive military and security equipment. Offsets are a purchasing practice whereby a foreign government demands industrial compensation in return for awarding a contract to a non-national supplier. However, the European Commission (EC) considers that such industrial compensation schemes violate the principles of the EU Treaty. EU Directive 2009/81 brings defense purchases under the rules of the Single Market and many offsets are set to become illegal, in particular indirect and non-military offsets. This report analyses the legal justifications of the European Commission for its position on offsets.
EU Defense Procurement Conference, Brussels, 23rd May 2011: The European Commission will hold a high-level conference on Defense and Security Industries and Markets. This event is organized in the context of the transposition of the two Defense related Directives (2009/81/EC on Defense Procurement and 2009/43/EC on Intra-EU Transfers of defense articles) and will provide the opportunity to discuss the current state and future perspectives of the sector. The EC has become a key player in the setting of defense market regulations. Registration is free at link.
New EU Common Military List, published February 21, 2011: click here
EU-certification of Defense Companies: EU Directive 2009/43/EC, which alleviates control on transfers of military equipment between EU Member States, lays down the general principles for the certification of defense companies in the EU. Certification is granted at national level and is meant to recognize the capacity of defense companies to receive military equipment and to respect all the conditions attached to those products such as end-use conditions. As certificates will have to be recognized by all EU Member States, the EU published guidelines on how certification should be undertaken by competent
NEW Portal on REACH and the Defense Exemptions: the European Defense Agency (EDA) has just launched a web-portal gathering information on national policies and the exemptions to the EU Regulation on chemicals that apply to the defense sector. The REACH (Registration, Evaluation, Authorizations and Restrictions of Chemicals) Regulation imposes certain obligations on all producers or importers but also the so-called down-stream users of chemicals. However, taking into account the specificities of the defense sector, the REACH Regulation leaves it to the Member States to grant national security-related defense exemptions.U.S. exporters of military equipment are advised to check out the status of exemptions granted by national authorities, as they will be loaded on the portal over time. For additional information on REACH, go to our webpage.
New EC Study on Industrial Implications in Europe of the Blurring of Dividing Lines Between Security & Defense: While recognizing the clear overlap between the security and defense sectors, this EC study analyses its specific nature and scope, and its industrial implications in the face of new threats of a dual nature. The study makes recommendations for future EC decision-making.
New EC Study on the Emerging Defense Markets: This study looks at how the European defense market is positioned in view of emerging defense markets (BRYCKs countries) and the U.S. market, and analyzes BRYCKs’ current and potential impact on the competitiveness of the European defense sector.
Amendment to EU Directive on Intra-EU Transfers Directive (22 November 2010): EU Directive 2009/43 is now applying to items listed under the new EU Military List published in February 2011. When the EU Directive was approved in 2009, the Annex referred to the previous EU Military List; with this update, the simplification of transfers of military items will apply to the new EU Military List. The Amendment also reminds EU Member States that the EU Directive should be transposed into national legislation by 30 June 2011, and that the provisions shall apply as of 30 June 2012.
HOT TOPIC: The European Commission published on September 29, 2010 the guidelines on the most important aspects of the EU Defense Procurement Directive. The following aspects are debated in seven distinct documents: the Directive’s field of application; the exclusions; research and development; Security of Supply; Security of Information; rules on subcontracting and offsets.
New Report on EU Airport Security: Body Scanners: In June 2010, the European Commission published a Communication on the use of body scanners, as one of the screening methods allowed by the EU Civil Aviation Security Directive. The Communication assesses the potential risk of body scanner technologies to human rights, data privacy and to the health of the individuals exposed, but it will remain up to the EU Member States to choose whether or not to make use of these technologies.
New Report: The EU Export Control Regulation on Dual-Use Items : this report outlines how the export of dual use items is organized in the EU. The EU Regulation defines the framework for export authorizations and licenses. Most Dual-USe itmes circulate without a license within the EU, but require a license if exported outside the EU.
Implementation of the EC Defense Package: The two new EU Directives that concern the European defense market (the EU Defense Procurement Directive and the Intra-EU Transfers Directive) are being transposed into the Member States' national legislation. The European Commission is helping Member States with this exercise through workshops and will post additional implementation guidelines. The Procurement Directive should be transposed by August 2011, the Intra-EU Transfers Directive by June 2011, with a one-year peer review period so that measures will be applicable as of July 2012. This website will display the national implementation laws regarding both EU Directives.
EU Study on Competitiveness of Small European Defense Firms: The European Commission published a new study on the Competitiveness of European Small and Medium Sized Enterprises (SMEs) in the defense sector.
To view the Executive Summary (November 2009- 11 pages), please click here.
To view the Full Study (256 pages), please click here.
EC Study on the "Development of a European Defense Technological Industrial Base."
Characteristics, drivers for change, scenarios, policy analysis and recommendations (2009), please click here.
Upcoming EC Study on the 'State Control of Strategic Defense Assets."
Launched in the summer of 2009, this study should be finalized by end of 2010. Publication for early 2011.
EC Study on "The Nature and Impacts of Barriers to Trade with the U.S. for European Defense Industries" was published in March 2010. This study analyzes the transatlantic defense trade flow and the market models in terms of incentives and barriers. The study concludes that the major impediment to increased transatlantic defense industrial cooperation is the lack of coordination on export controls policies at U.S. and EU levels and how such coordination could improve the trade flow and market conditions for both U.S. and European companies.
EU Defense Procurement
EU Defense Procurement Policy
The European defense procurement marketplace faces a variety of new initiatives. First, the European Commission, whose responsibilities include public procurement, has extended the rules of the EU Single Market to the defense area: a new EU law in the area of defense procurement was officially approved in July 2009 (the EU Defense Procurement Directive). Also, another EU Directive on Intra-EU Transfers of Defense products complements the Defense Procurement Directive as the second element of the so-called “EC Defense Package” proposed by the European Commission in 2007: it reforms the procedures for transferring military equipment between EU Member States by proposing new multi-country licensing authorizations and requires recipients of defense transfers to be certified according to EU criteria (see chapter on export controls). Second, the European Defense Agency is also active in the promotion of a competitive defense industrial base and has developed various voluntary codes of conduct and tenders databases.
For more information visit the EC Defense Procurement Policy website.
The EU Defense Procurement Directive
For decades, EU Member States have been procuring military equipment according to their own national law. This practice now comes to an end with the adopted reform of European acquisition procedures, which includes an EU Directive on Defense Procurement and indicative guidance on the conditions that need to be applied in order to exempt procurement from EU law. Country-by-country link
EU Defense Procurement Directive/ Guidance Notes: The EC published its long-awaited Guidance Notes to help understand 7 important aspects of the EU Directive: its field of application, offsets, exclusions, research & development, security of supply, security of information and rules on subcontracting.
EU Directive 2009/81/EC now regulates how contracting authorities purchase defense and security equipment throughout the European Union. The Directive addresses procurement procedures for armaments acquisition, as well as sensitive non-military security supplies, services and works contracts. The new law does not tell governments what to purchase, but how to purchase. US suppliers bidding on contracts covered under the Directive will have to follow the new procedures. The EU Directive contains no EU “preference clause”, and leaves to Member States the decision to invite non-EU bidders in procurement procedures. EU Member States have until August 2011 to transpose the Directive into national legislation.
Frequently Asked Questions.
Article from Single Market News (No.55; EC publication) on the EU Defense Procurement Directive that includes information on the proposed alternatives to current offset requirements.
For more information, please ask for our Market Reports.
The Interpretative Communication
The Interpretative Communication on the application of Article 296 of the Treaty in the field of defense procurement clarifies the conditions for the use of Article 296, now Article 346 under the Treaty of Lisbon, which allows Member States to derogate from Community rules if this is necessary for the protection of their essential security interests. Frequently Asked Questions.
The European Defense Agency
The European Defense Agency (EDA) was created in 2004 as an agency of the Council, and is pursuing four goals: develop European capabilities, promote armaments co-operation between Member States, promote defense research and technology, and develop the necessary tools for a competitive defense industrial base and market in the EU. Under the latter objective, the EDA produced codes of conduct that subscribing member states decide to adhere to on a voluntary basis (those codes are legally non-binding):
The EDA Code of Conduct on Defense Procurement (2005)
The Code of Best Practices in the Supply Chain (2006)
The EDA Code of Conduct on Offsets (2008)
The EDA Offset Portal
The EDA is not an EU procuring agency, but it promotes measures aimed at improving transparency and competitiveness in the European defense industrial market, in particular in areas where EU governments exempt defense contracts from EU procurement rules under the Article 296 of the EU Treaty (now Article 346 under the new Treaty of Lisbon).
Where to Find EU Tenders for Defense Contracts
The CSEU Tenders Database
The CSEU Tenders Database addresses US suppliers established in the U.S. without subsidiary in the EU. This database displays tenders covered by the WTO/Government Procurement Agreement. Although large or sensitive defense contracts are usually excluded from the scope of application of the Agreement, a fair number of tenders for small non-sensitive equipment are advertised. Examples: soldiers equipment, nuclear, biological, chemical protective equipment, safety clothing, police materiel, military testing and measuring equipment, small ammunitions, shooting targets, fire detection systems, rescue and safety equipment, emergency, surveillance and security equipment, etc.
TED
Future defense contracts covered under the new Defense Procurement Directive will be advertised in the EU Tenders Electronic Daily (the “TED” database) in the on-line EU Official Journal, and should indicate whether non-European bidders are invited to participate in the competition.
Important Search Tips
For USEU Tenders Database searches: use the selection tools “defense/police” or “safety/security” and “invitation to tender” for targeted searches. Keyword searches also give good results. TED Database and our CSEU Tenders Database use a specific nomenclature to precisely identify the object of the contract that is procured with a “CPV” code. Once you have identified the CPV number that matches the supply you want to sell, you can search by typing this code number into the “keyword” selection tool, and it will show all ongoing calls for tender from European governments which are currently purchasing that particular item. CPV Code Identification Link.
The European Defense Agency (EDA)
The EDA website displays two databases on its “Electronic Bulletin Board”: the first one features calls for tender from EDA subscribing member states for government contracts covered under Article 296 of the EU Treaty. This article, now numbered 346 in the new EU Lisbon Treaty, allows EU governments to exempt very sensitive equipment from Community procurement rules when a Member State considers it necessary for the protection of its essential national security interests. The second database features calls for tender for subcontracting contracts (industry to industry) and offers an opportunity to sell components to large European prime contractors.
EU Export Control
Export Control Policy Background
Traditionally, the EU has exercised little influence over the control of exports of munitions and arms of the EU Member States: they were responsible for drafting and updating their own list of controlled arms and munitions, and for acting according to their national export control policy. However, for the past few years, a number of initiatives were introduced, aimed at enhancing cooperation among EU Member States, some of which are detailed below. Some initiatives were generated at the EU Council level, with policies that EU Member States have to apply without any EU-level enforcement mechanism (such as the “Common Positions” outlined below); other initiatives were generated by the European Commission (such as the EU Dual-Use Regulation or the Intra-EU Transfers Directive) where the EC is able to exercise implementation controls. Also, a major accomplishment is the generalization of the use of an EU “Common Military List”.
Military Equipment Export Control
EU Council website on Export Control Policy for Military Equipment
1. EU Code of Conduct on Arms Export Control
In December 2008, the Council of EU Foreign Affairs Ministers approved the Common Position 2008/944 making the 1998 EU Code of Conduct on Arms Exports legally binding. Every request for an arms export license for an item referenced in the EU Common Military List will have to be assessed according to the eight criteria outlined in the new Common Rules. The new Common Position also includes a mechanism among EU Member States to consult and inform each other about denials of arms export and brokering licenses. The new Common Position only concerns exports of military items ‘outside’ the EU, and complements the recently adopted EU Directive on Intra-EU Transfers of Defense Equipment and Technology, which regulates the transfers between EU Member States (so: ‘inside’ the EU).
For more information please click here for our Market Report.
2. EU Control of Arms Brokering
On 23 June 2003 the Council adopted Common Position 2003/468/CFSP aimed at regulating arms brokering. The Common Position establishes a set of provisions to be implemented through national legislation, requiring the Member States to take all the necessary measures to control brokering activities on their territory or carried out by brokers of their nationality.
3. The New Intra-EU Transfers Directive
The EU Directive 2009/43/EC on Intra-EU Transfers of Defense Products approved in May 2009 outlines a set of new laws with a twofold aim: first, reforming European licensing procedures for the transfer of defense articles within the EU, and second, introducing common criteria for the certification of recipients of defense transfers. The term “transfer” here concerns “exports between EU Member States”. The Directive applies to equipment listed on the EU Common Military List and is one part of the so-called “EC Defense Package” that also comprises the EU Directive on Defense Procurement, outlined above. The objective of the Transfers Directive is to create an area where military goods and components can circulate more freely between EU Member States, on the basis of a harmonized European licensing system aimed at reducing the number of individual licenses to the benefit of the use of General and Global Licenses.
For more, please consult our Market Report Information.
Dual-Use Technology Export Control EU Regulation
Dual-Use goods and technologies are products and technologies which are normally used for civilian purposes but which may have military applications. Exports, transfers, brokering and transit of dual-use items referenced on the EU Dual-Use List must be controlled at EU level.
In 2009, a new Council Regulation (EC) No.428/2009 of 5 may 2009 was approved, and replaces the 2003 Regulation: it sets up a Community regime for the control of exports, transfers, brokering and transits of dual-use items. It entered into force on 27 August 2009 and is directly applicable and legally binding in all EU Member States.
The DG Trade Website offers more information on Dual-Use Technologies.
EU Council Website on Dual-Use Technology Export Control.
Contacts
For additional questions, please send an email to the following address: Office.BrusselsEC@trade.gov and please reference "Defense Inquiry" in the subject line. One of our specialists will respond to your inquiry as soon as possible.
Links to web sites outside the U.S. Government or the use of trade, firm, or corporation names within U.S. Commercial Service web sites are for the convenience of the user. Such links and use do not constitute an express or implied official endorsement or approval by the United States Department of Commerce of any private sector web site, or of the products or services of specifically identified companies or entities.
EXPERT ASSISTANCE WITH PROCUREMENT/EXPORT CONTROLS
For companies seeking in-depth technical or legal assistance with compliance issues relating to government defense contracts or export controls, the Commercial Service provides the names of the Business Service Providers who ensure track records in providing multi-country solutions and services.
