Defence Public Procurement: a Renewed European Framework
During 2025, the European Commission has presented a set of cornerstone instruments for the European defence industry, including the European Defence Industrial Programme (EDIP), adopted in December 2025, and the SAFE Regulation (Security Action for Europe), adopted in March 2025. Following their adoption, it is useful to outline the key developments they introduce with regard to defence public procurement.
These instruments go well beyond a mere adjustment of the legal framework. They redefine the conditions for access to European markets for industrial operators by placing, at the heart of procurement strategies, the security of the European industrial base, the reduction of extra-European dependencies and the acceleration of joint procurement.
I. The EDIP Programme
The European Defence Industrial Programme (EDIP), adopted by the European Parliament on 25 November and pending examination by the Council of the European Union, marks a significant step in consolidating the framework applicable to defence public procurement at EU level. With a budget of EUR 1.5 billion for the 2025–2027 period, it extends the temporary EDIRPA and ASAP schemes, which were established on an exceptional basis in response to Russia’s aggression against Ukraine.
While pursuing industrial objectives, EDIP also reshapes procurement, contract performance and coordination rules to foster deeper integration of the European value chain.
1 - Pooling of Procurement and Security of Supply
EDIP establishes the Structure for European Armament Programmes (SEAP), which provides a common framework for public contracts jointly awarded by several Member States. This centralisation of procurement makes it possible to pool national requirements and encourages the formation of transnational industrial consortia. For industrial operators, this development means that the ability to offer solutions involving several Member States and to participate in collaborative programmes will become decisive for access to future defence markets.
EDIP also simplifies contract performance through the harmonisation of rules relating to subcontracting, intellectual property and export controls, while providing for VAT exemptions aimed at enhancing the competitiveness of European bids.
In parallel, the introduction of a European security-of-supply regime requires companies to strengthen control over their production and subcontracting sources. Contractors must be able to ensure continuity of performance in crisis situations, in particular through priority supply clauses and increased visibility over their industrial capacities. Contract holders must secure their supply sources and are subject to a coordination mechanism led by the Commission and the Member States, designed, in times of crisis, to guarantee the continuation of essential deliveries.
However, several recent analyses emphasise that persistent dependencies on certain critical components and extra-European technologies may, in the short term, limit the effectiveness of this regime, as the European industrial capacities required for full substitution are not yet fully consolidated within the Union.
2 - Towards a Reconfiguration of European Value Chains
EDIP enshrines a clear logic of European preference. Beneficiaries must be established within the Union, the European Economic Area or Ukraine, with their centres of decision located in those territories. The cost of non-European-origin components is capped at 35% of the total cost of the final product, and companies are required to replace non-EU subcontractors within two years, unless an objectively justified impossibility can be demonstrated.
These requirements represent a step change in the way defence value chains are structured, as access to EDIP-related funding and markets is now conditional upon European control over strategic production activities. The Commission thereby seeks to encourage industrial operators to reorganise in favour of European suppliers for sensitive components and, where appropriate, to relocate strategic sites previously established outside Europe. It also strengthens incentives for the development of sustainable industrial partnerships within the Union, ensuring that key technologies, decision-making centres and innovation capacities remain under European control.
II. The SAFE Regulation
The SAFE Regulation, adopted on 27 May 2025, establishes an exceptional financial instrument designed to support, through long-term loans on favourable financial terms, joint defence procurement projects between Member States. Its objective is to enable rapid and coordinated investment in critical capabilities, particularly in areas where needs have been significantly reassessed since 2022.
For industrial operators, this instrument represents a major source of financing to accelerate the ramp-up of existing capacities or to secure strategic production investments in Europe. Financial support is subject to specific eligibility criteria, including the joint nature of the acquisitions, the industrial location of the infrastructures concerned and the maximum permitted level of foreign third-country components.
Acquisitions benefiting from SAFE are, in particular, covered by a harmonised VAT exemption procedure based on a standardised certificate, intended to reduce delays associated with cross-border tax formalities. In practice, this harmonisation streamlines cross-border orders and improves the predictability of billing cycles for companies, thereby contributing to shorter contracting phases.
Beyond financing, SAFE primarily introduces substantial procedural derogations that significantly reduce procurement timelines. These derogations are built around two core mechanisms: the presumption of urgency for acquisitions carried out under the Regulation, and the possibility of opening existing contracts to additional contracting authorities.
1 - Presumption of Urgency Allowing the Use of Negotiated Procedures Without Prior Publication or Competition
Article 19 of the Regulation provides that acquisitions involving at least one Member State benefiting from SAFE financial support “shall be deemed to satisfy the condition of urgency resulting from crisis situations”. Consequently, for any acquisition financed under the SAFE Regulation, the urgency condition required under Article 28(1)(c) of Directive 2009/81/EC on defence procurement procedures is presumed to be fulfilled.
This measure does not dispense with all the conditions laid down by the Directive for the use of such procedures, but it removes the most onerous evidentiary requirement, thereby reducing procedural constraints on contracting authorities and facilitating recourse to procedures without prior publication or competition. Companies able to demonstrate immediate industrial responsiveness and shortened delivery schedules will benefit from significantly simplified access to these markets.
2 - Opening Framework Agreements and Existing Contracts to Other Member States
The second major mechanism introduced by SAFE relates to the possibility, on grounds of urgency and in order to enable the rapid consolidation of larger procurement volumes, to add new contracting authorities to an existing framework agreement or contract. Recital 32 expressly states that it should be possible “to open a framework agreement or an existing contract” to contracting authorities from Member States that were not parties to the original contract, “even if it did not provide for such a possibility”, subject to the consent of the contractor.
Several reports nonetheless point out that the high fragmentation of the European defence market and the continued predominance of national procurement may limit the scale of the expected economies of scale and hinder the aggregation of joint orders.
This direction is reflected in Article 18 of the Regulation, which allows Member States to join an ongoing contract. Such extension is possible for acquisitions falling within the scope of the Regulation, provided that it is accompanied by a transparency measure through the publication of a contract modification notice.
Article 18 also authorises, within this specific framework, the necessary adjustments to ordered quantities to take account of the addition of new parties to the contract. This mechanism offers existing contractors the opportunity to increase their volume of activity without reopening competition, representing a direct opportunity to expand their contractual portfolio and optimise their production tools. As such, it constitutes a significant lever for increasing orders at European level, in line with the instrument’s objectives.
The adoption of these two regulations reshapes access to European defence public procurement markets, with the aim of accelerating joint acquisitions and taking an initial step towards a clearly affirmed European preference. Their implementation will durably alter the practices of both public buyers and industrial operators, who will now need to factor these new flexibilities into the structuring of their value chains, the location of their production capacities and their strategies for accessing European defence markets.