The regulation, already agreed with the Council on 27 June 2023, establishes a short-term instrument for the reinforcement of the European defence industry through common procurement until 31 December 2025. It will help member states to fill their most urgent and critical defence needs, which have been exacerbated by transfers of defence products to Ukraine, in a voluntary and collaborative way.
At least three EU countries per consortium and EU-based contractors
A 300 million euros budget will finance the instrument. Joint purchases will have to involve at least three member states, and should be open to the participation of members of the European Free trade Association which are members of the European Economic Area (associated countries).
Contractors and subcontractors must be established in the EU or in an associated country, and not be subject to control by a non-associated third country or entity. The cost of components originating in the EU or associated countries shall not be lower than 65% of the estimated value of the end product.
Bonuses for projects supporting Ukraine, Moldova and SMEs
The EU financial contribution to each action will be capped at 15% of the estimated value of the common procurement contract per consortium. This ceiling may be raised to 20% if Ukraine or Moldova are recipients of additional quantities of defence products, or if at least 15% of the estimated value of the common procurement contract is allocated to SMEs or mid-capitalisation companies (those with a medium market capitalisation, known as midcaps), as contractors or subcontractors.
Background
Russia’s war of aggression against Ukraine has dramatically underlined the need to adapt the European defence industrial and technological base (EDTIB) to structural changes: ramp up EU military R&D, modernise military equipment, and strengthen cooperation between Member States in the framework of procurement in the field of defence, in order to make the Union a relevant global player.
