Public procurement: new Commission initiatives on more open and efficient defence procurement - Main contents

The European Commission has outlined its proposals for future initiatives to improve cross-border competition in defence procurement.

In 2006, the Commission will adopt an 'Interpretative Communication' clarifying when Member States can derogate from EU law requiring competitive procurement with regard to supplies, works and services intended for specifically military purposes and crucial to essential security interests.

In parallel, preliminary work will begin towards a possible Directive that would coordinate procedures for defence procurement in cases where the derogation under Article 296 EC i is not applicable or a Member State chooses not to take advantage of it. These initiatives are based on the results of the consultation launched in September 2004 by the Green Paper on how to open defence public procurement to greater transparency and efficiency, compatible with the specific features of this sector (see IP/04/1133). They follow the recent supportive opinion issued by the European Parliament (see Wuermeling report).

Internal Market and Services Commissioner Charlie McCreevy i said: "The response to the consultation is clear . Action to clarify and improve EU law on defence procurement is imperative. We must now put our foot on the gas . The future of Europe's defence industry is at stake. To deliver real benefits we are almost certainly going to have to go beyond a code of conduct and an interpretative communication"

Proposed initiatives

Pending the outcome of an extended impact assessment on a Directive, in 2006 the Commission will adopt an 'Interpretative Communication' on the application of Article 296. This will be a non-legislative measure that reduces the risk of legal misinterpretation and thus ensures better application of existing law by Member States. It will recall the principles governing the use of the derogation in the light of European Court of Justice case law, and will clarify the criteria on the basis of which Member States have to prove when the conditions for the application of the derogation are met.

However, this Communication is unlikely to be sufficient to resolve the inadequacy of the existing public procurement Directive with regard to the specific features of defence procurement. Therefore the option of a specific Directive will now be vigorously pursued. . In line with the principle of Better Regulation, any proposed Directive will be accompanied by an impact assessment which will assess its possible costs and benefits.

Results of the consultation

The Commission received 40 responses to the Green Paper consultation: from institutions (the European Parliament), industry and 16 Member States. All respondents welcomed the Green Paper and supported the Commission's objective of overcoming market fragmentation and increasing intra-European competition through an appropriate set of rules for defence procurement.

European Defence Equipment Market (EDEM)

The development of the EDEM is even more important given the advances in European Security and Defence Policy and the creation of the European Defence Agency (EDA). The work of the EDA and the Commission initiative concern two different segments of the defence market. The two initiatives are complementary and the Commission and the EDA cooperate closely.
The contributions to the consultation are available at:

http://europa.eu.int/comm/internal_market/publicprocurement/dpp_en.htm

(See also MEMO/05/467)