The special characteristics of the defence equipment market and its demands for security and confidentiality of the proceedings determine the need for specific rules governing the award of works, services and supplies related to that sector. According to these requirements, the OJEU has published on August 20th 2009, Directive 2009/81/EC 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.

One prerequisite for the creation of a European defence equipment market is the establishment of an appropriate legislative framework. In the field of procurement, this involves the coordination of procedures for the award of contracts to meet the security requirements of Member States and the obligations arising from the Treaty.

To achieve this objective, in its resolution of 17 November 2005 on the Green Paper on defence procurement, the European Parliament called on the Commission to draft a directive taking particular account of the security interests of Member States, further developing the common foreign and security policy, promoting greater European cohesion and preserving the role of the Union as a ‘civil power’.

Scope of the Directive on public procurement in the field of defense and security

• The supply of military equipment, including any parts, components and/or subassemblies thereof.
• The supply of sensitive equipment, including any parts, components and/or subassemblies thereof.
• Works, supplies and services directly related to the equipment referred to in previous points for any and all elements of its life cycle.
• Works and services for specifically military purposes or sensitive works and sensitive services.

In the case of mixed contracts, having as its object works, supplies or services covered by Directives 2004/17/EC and 2004/18/EC, these will be awarded in accordance with Directive 2009/81/CE.

Directive 2009/81/CE will be applied to contracts whose value exceed 412,000 Euros in the case of supplies and services, and those exceeding 5,150,000 Euros in the case of works contracts.

The award of contracts concluded in the Member States by contracting entities as referred to in Directive 2004/17/EC and by Directive 2004/18/EC is subject to compliance with the principles of the Treaty and in particular the free movement of goods, the freedom of establishment and the freedom to provide services, and with the principles deriving therefrom, such as the principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency.

In the case of contracts in the field of security and defense, there are certain exclusions which determine the procedures for awarding such contracts. Contracts relating to arms, munitions and war material awarded by contracting authorities/entities operating in the field of defence are excluded from the scope of the Government Procurement Agreement (GPA) concluded at the World Trade Organization.

This exclusion means also that in the specific context of defence and security markets, Member States retain the power to decide whether or not their contracting authority/entity may allow economic operators from third countries to participate in contract award procedures. They should take that decision on grounds of value for money, recognizing the need for a globally competitive European Defence Technological and Industrial Base, the importance of open and fair markets and the obtaining of mutual benefits.

In addition, the Directive takes into account those cases where it does not apply because specific rules on the awarding of contracts which derive from international agreements or arrangements between Member States and third countries apply.

Furthermore, in the fields of defence and security, some contracts are so sensitive that it would be inappropriate to apply this Directive, despite its specificity. That is the case for procurements provided by intelligence services, or procurements for all types of intelligence activities, including counter-intelligence activities, as defined by Member States. It is also the case for other particularly sensitive purchases which require an extremely high level of confidentiality, such as, for example, certain purchases intended for border protection or combating terrorism or organised crime, purchases related to encryption or purchases intended specifically for covert activities or other equally sensitive activities carried out by police and security forces.

Principle of Publicity and contracts of security and defence

To ensure the development of effective competition in the field of procurement covered by this Directive, it is necessary that contract notices drawn up by the contracting authorities/entities of Member States be advertised throughout the Community. The information contained in these notices must enable economic operators in the Community to determine whether the proposed contracts are of interest to them. For this purpose, they must be given adequate information as regards the subject-matter of the contract and the conditions attached thereto. Improved visibility should therefore be ensured for public notices by means of appropriate instruments, such as standard contract notice forms and the Common Procurement Vocabulary (CPV), which is the reference nomenclature for contracts.

Certain information on the contract award or the conclusion of the framework agreement may be withheld from publication where release of such information would impede law enforcement or otherwise be contrary to the public interest, in particular defence and/or security interests, would harm the legitimate commercial interests of economic operators, public or private, or might prejudice fair competition between them.

Contracting authorities/entities may make known, by means of a prior information notice published by the Commission or by themselves on their ‘buyer profile’:

• Where supplies are concerned, the estimated total value of the contracts or the framework agreements by product area which they intend to award over the following 12 months. The product area shall be established by the contracting authorities/entities by reference to the CPV nomenclature.
• Where services are concerned, the estimated total value of the contracts or framework agreements in each of the categories of services which they intend to award over the following 12 months.
• Where works are concerned, the essential characteristics of the contracts or framework agreements which they intend to award.