1.Key elements of the ‘Defence Readiness Omnibus‘:
Accelerated permitting procedures for defence projects
The European Commission is proposing a new initiative aimed at accelerated permitting procedures in defence projects. The Commission recognises that the implementation of defence readiness facilities, infrastructure and activities is often a lengthy and cumbersome process.
To address this issue, the Commission is proposing a draft regulation which provides that:
- The Member States appoint a Single Point of Contact, responsible for, inter alia, facilitating and coordinating the permitting process for defence projects;
- All communication about the permit application must go through this SPOC;
- Permit procedures should be significantly accelerated and should not take more than 60 days. The proposal foresees that, if no decision is communicated within this period, the permit should be deemed to have been granted.
Reduced administrative burden under the European Defence Fund (EDF)
The Commission envisages a smoother grant process for EDF projects. In doing so, the Commission wishes to support innovation and development in a more efficient way.
Accelerating the cross-border transfer of defence products
The European Commission proposes changes that should make it easier and faster to transfer products in the defence sector within the EU to other Member States.
Guidelines for defence investments and ESG
Currently, environmental, social and governance (ESG) considerations must be taken into account when making investment decisions in the financial sector. The approach to this is, among other things, to invest more in sustainable economic activities and projects. The question then arises to what extent investments in the defence sector are compatible with these sustainability considerations.
The Commission now clarifies that the EU’s sustainable finance framework is compatible with investments in the defence sector. The Commission considers that the current framework does not limit the financing of any sector, including the defence sector, and encourages investment in this sector. The suitability with sustainability considerations can then, as always, be assessed on a case-by-case basis.
Substantial changes for defence procurement
In addition to the initiatives discussed above, the European Commission is planning an amendment to the Defence Procurement Directive. These changes are discussed separately in Section 2 below.
2.New Directive revising the current Defence Procurement Directive
As part of the proposed measures, the European Commission has proposed a draft new Directive amending the existing Directive 2009/81/EC on defence and security procurement.
The draft of the new Directive aims to better reflect the reality of defence markets and technological developments. The Commission has set a stronger, more integrated European defence market as its objective.
The following changes are some of the main eye-catchers:
- Raising the threshold amounts for direct awards
The maximum value of public contracts that do not require a tendering procedure will be increased. For supplies and services, the threshold will rise from €443,000 to €900,000. For works contracts, the threshold rises from €5,538,000 to €7,000,000. This would mean that significantly more contracts could be awarded without a prior public procurement procedure.
- Promoting joint procurement
The draft Directive contains a specific provision regulating and encouraging the practice of joint procurement by Member States.
- Introduction of the open procedure, the dynamic procurement system and innovative partnerships for defence and security procurement.
- Extension of conditions to apply the negotiated procedure without prior publication
The proposal provides that the low-threshold and flexible negotiated procedure without prior publication will be possible when the contract is the result of a research and development project.
In addition, it would temporarily be possible to use the negotiated procedure without publication for “off-the-shelf” products. This exception is provided for the purchase of identical defence products or of products undergoing only minor modifications, exported by at least three Member States. The contracts must then be concluded before 1 January 2031.
- Extension of duration of framework agreements
The rules on framework agreements will be clarified and the maximum duration of a framework agreement will be extended from 7 years to 10 years.
*
All the Commission proposals discussed above have to be negotiated in the European Parliament and the Council, in other words, they are not yet final.
An overview of the current procurement rules in public procurement for Defence can be found here.
This contribution is not intended to provide completeness or legal advice. Do you have comments or questions about a specific file? Please contact Thomas Christiaens or Manon De Weser. They will be happy to help you!
