Simplification of intra-EU transfers of defence-related products and the simplification of security and defence procurement

The Committee on Security and Defence and the Committee on the Internal Market and Consumer Protection jointly adopted the report presented by Pekka TOVERI (EPP, FI) and Anna-Maja HENRIKSSON (Renew, FI) on the proposal for a Directive of the European Parliament and of the Council amending Directives 2009/43/EC and 2009/81/EC, as regards the simplification of intra-EU transfers of defence-related products and the simplification of security and defence procurement.

As a reminder, the proposal is part of the omnibus package of measures on defence readiness. It contains simplification proposals aimed at removing regulatory obstacles, facilitating and accelerating public procurement in defence and intra-EU transfers of defence-related products, and facilitating European defence industrial readiness and construction.

The relevant committees recommended that the initial position adopted by the European Parliament amend the proposal as follows:

A) Amendments to Directive 2009/43/EC

European strategic cross-border partnership

European strategic cross-border partnership’ means a strategic collaboration arrangement between two or more entities established in different Member States, where such entities repeatedly engage in joint development, production, assembly, supply, marketing, or life-cycle support of a defence-related product, such as: (i) European collaborative defence projects, (ii) defence-related projects funded under a Union programme, (iii) a European Defence Project of Common Interest (EDPCI), (iv) a project under Permanent Structured Cooperation (PESCO) or a collaborative armament programme between Member States. (SEAP).

Transfer licenses

Member States should exempt transfers of defence-related products from the obligation of prior authorisation set out in therein in one or more of the following cases:

- the supplier or the recipient is a governmental body or part of the armed forces or another national security authority;

- the transfer takes place in the framework of a European strategic cross-border partnership;

- the transfer takes place in an urgency resulting from a crisis, or in a situation where the EU's mutual assistance clause provided for in Article 42(7) TEU has been activated by one or several Member States.

Member States may exempt transfers of defence related non-tangible technologies from the obligation of prior authorisation set out in therein where the supplier and the recipient belong to the same company or group of companies.

General transfer licenses

With the objective of supporting innovation and SMEs in the Union, the general transfer licence should also be extended to transfers that aim to support disruptive technologies or innovative industrial processes or address critical readiness. Member States should publish general transfer licences for transfers necessary for the implementation of European strategic cross border partnerships.

B) Amendments to Directive 2009/81/EC

Market threshold amounts

Members propose that the directive apply to contracts whose estimated value excluding value added tax (VAT) is equal to or greater than the following thresholds: a) EUR 1 800 000 (instead of EUR 900 000) for supply and service contracts; b) EUR 8 000 000 (instead of EUR 7 000 000) for works contracts.

Innovation Partnership

Only those economic operators invited by the contracting authority/entity following its assessment of the requested information may submit research and innovation projects aimed at meeting the needs identified by the contracting authority/entity that cannot be met by existing solutions. The selection process should ensure equal treatment and fair competition, including for dual-use providers, SMEs and operators from smaller Member States with developing industries.

Entities established in the EU, in an EFTA state that is a member of the EEA, or in Ukraine

In order to ramp-up the EDTIB, EEA EFTA States and Ukraine should be involved as partners for European projects for security and defence that receive Union funding.

By way of derogation, a legal entity established in the Union, in an EEA EFTA State or Ukraine and controlled by another third country or by another third-country entity may be eligible as a contractor if guarantees approved with the national procedures of a Member State in which it is established.

The guarantees should provide assurances that the involvement in an action of a legal entity would not contravene the security and defence interests of the Union and its Member States as established in the framework of the Common Foreign and Security Policy (CFSP). In particular, they must ensure that control over the legal entity is not exercised in a manner that restrains or restricts its ability to carry out the action and to deliver results and that access to sensitive or classified information is prohibited to unauthorised third countries and the employees or other persons involved in the action have national security clearance issued by a Member State.

Negotiated procedures without prior publication

In the event of common procurement of military equipment through the negotiated procedure without prior publication, Members consider that the use of components originating outside the Union and EEA EFTA states should be limited, in order to preserve and foster the EU’s strategic autonomy and the defence industry. In such cases, therefore, the cost of components originating outside the Union, the EEA EFTA States and Ukraine should not be higher than 35 % of the estimated cost of the components of the end product. However, such limitation should not apply to components originating from Albania, Canada, Japan, Moldova, North Macedonia, Norway, South Korea and the United Kingdom, because the Union has signed a Security and Defence Partnership with each of these countries.

Review and reports

By 1 January 2029, the Commission should examine the implementation of Directives 2009/43/EC and 2009/81/EC against the background of improving Europe’s defence readiness by 2030. Where appropriate, these reports will be accompanied by a legislative proposal.