The European Commission's action plan to enhance fair and EU-wide competition in defence sector
The Directive on defence and sensitive security procurement (2009/81/EC) and the Directive simplifying the terms and conditions of transfers of defence-related products within the Community (2009/43 EC) have been fully transposed in all European Union Member States. As defence remains a fragmented market, the European Commission laid down, in July 2013, an action plan1 to ensure the Directives' correct application to enhance fair and EU-wide competition in this sector. In order to further pursue these objectives, a detailed roadmap2 was established this past summer with concrete actions and timelines.
The action plan's main points are described below.
1. Monitor the openness of Member States' defence markets
The Commission will now regularly assess how the new defence procurement rules are applied using the EU's Tenders Electronic Daily (TED) and other specialised sources. These activities will also prepare the basis for the European Commission's report on the correct application of Directive 2009/81/EC, which is to be sent to the European Parliament and the Council by August 20163.
2. Clarification of certain exlusions' limits
Although article 11 of Directive 2009/81 clearly states that none of the exclusions may be used for circumventing the Directive's provisions, the Commission found it necessary to further clarify several of these exclusions' limits. To that end, it will provide specific guidance, especially on government-to-government sales (article 13-f of Directive 2009/81) and international agreements (article 12 of Directive 2009/81).
3. Rapid phasing out of offsets
Offsets, such as the involvement of the domestic industry as subcontractor in the foreign supplier's future contracts, are practices adopted by contracting authorities to promote their domestic industry. Offsets are, by their very nature, discriminatory and therefore contrary to the Directive and EU law in general.
The Commission will ensure the rapid phasing out of offsets. It will also verify whether all Member States have withdrawn or revised their national offset legislation in light of the Directive and that these corrections have led to a change in the Member States' procurement practices.
4. Facilitating access for small and medium sized enterprises (SMEs)
Directive 2009/81 aims to offer new opportunities for small and medium sized enterprises (SMEs) to participate in the establishment of a European defence market. Similar opportunities are launched with the new EU Procurement directives, replacing Directive 2004/18/EC on public works, supply and service contracts and Directive 2004/17/EC on procurement in the water, energy, transport and postal services sectors, which were adopted by the European Parliament on 15 January 2014.
Given the reduced national expenditures related to defence, however crucial for SMEs, the Commission will further promote, amongst other things, the subcontracting provisions of the Directive by exploring how a so-called European Strategic Cluster partnership can be established. The Commission will also use the Enterprise Europe Network (EEN) to guide defence-related SMEs towards networking and partnerships.
5. Conclusion
With the two defence Directives on transfers and procurement, the regulatory framework of the internal market for defence is in place. The challenge is now to ensure that the existing framework works properly and fulfils its objectives. In this context, the Commission launched the abovementioned action plan and roadmap, which illustrates a stricter approach towards the application of the Defence Directives. Contracting authorities will have to keep in mind that they will now be thoroughly monitored in their defence-related procurement practices.
