COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Defence Readiness Omnibus
Date: 2025-11-03
Institutions: Directorate-General for Defence Industry and Space, European Commission
Subjects: EU financing arrangements, European arms policy, European defence policy, European security, arms industry, defence expenditure, intra-EU trade, military equipment, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.11.2025  SWD(2025) 820 final  Addendum to the Communication from the Commission to the European Parliament and the Council  Defence Readiness Omnibus COM(2025) 820 and to COM(2025) 821, COM(2025) 822, COM(2025) 823 COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL  Defence Readiness Omnibus                      {COM(2025) 820 final} - {COM(2025) 821 final} - {COM(2025) 822 final} - {COM(2025) 823 final}  
 
 
Table of Contents 

Executive Summary............................................................................................................. 3 

1. 

Introduction: Political and legal context of Defence Readiness 2030 ......................... 5 

2.  Problem definition ....................................................................................................... 6 

2.1 What are the problems? ......................................................................................... 6 

2.2 Problem drivers by domain ................................................................................... 6 

• 

• 

• 

• 

• 

• 

• 

Burdensome processes in the European Defence Fund (EDF) 
programme ......................................................................................... 6 

Complex,  lengthy  and  costly  procedures  for  Defence 
procurement ....................................................................................... 7 

fragmented  defence 
Member  States’ 
procurement ....................................................................................... 9 

spending 

in 

Bottlenecks 
products (Transfer Directive) ............................................................. 9 

transfers  of  defence-related 

intra-EU 

in 

Lengthy  and  complex  national  permitting  procedures  for 
defence projects................................................................................ 10 

Implementation of the EU legislation on chemicals does not 
always support the objective of defence readiness by 2030 ......... 11 

Difficulties for EU companies to access finance ............................ 12 

2.3 How likely is the problem to persist? .................................................................. 14 

3.  Why should the EU act? ............................................................................................ 15 

3.1 Legal basis ........................................................................................................... 15 

3.2 Subsidiarity test: necessity criteria ...................................................................... 16 

3.3 Subsidiarity test: added value criteria.................................................................. 17 

4.  Objectives: What is to be achieved? .......................................................................... 17 

5.  What policy options were the available? ................................................................... 17 

5.1 What is the baseline for assessing options? ......................................................... 17 

5.2 What were the options for policy change? .......................................................... 18 

6.  What are the impacts of the chosen policy option? ................................................... 20 

6.1 Changes to the European Defence Fund Regulation ........................................... 20 

6.2 Changes to Directive 2009/81/EC on defence and security procurement ........... 20 

6.3  Changes  to  Directive  2009/43/EC  on  the  intra-EU  transfers  of  defence 

products ........................................................................................................... 22 

6.4 Well-targeted changes to EU legislation on chemical ......................................... 23 

6.5 Changes related to access to finance ................................................................... 24 

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6.6 A new regulation on Fast-Track Permitting for Defence Readiness Projects

 ......................................................................................................................... 25 

7.  How will actual impacts be monitored and evaluated? ............................................. 27 

8.  Conclusion ................................................................................................................. 28 

Annex  A          Information  on  the  drafting  process  for  the  staff  working 

document 

 ........................................................................................................... 32 

Annex B 

Annex C 

Annex D 

Stakeholder consultation ................................................................... 33 

Who is affected and how? ................................................................. 44 

Method used in the assessment of impacts ........................................ 46 

1.1  EDF Regulation ............................................................................................... 49 

2.1  Defence Procurement ...................................................................................... 51 

3.1 

Intra-EU transfer of defence-related products ................................................. 54 

4.1  Fast-track Permitting ....................................................................................... 57 

5.1  EU legislation on chemicals ............................................................................ 59 

6.1  Access to Finance ............................................................................................ 61 

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EXECUTIVE SUMMARY 

Further to the European Council call on the European Commission to accelerate the work 
on  all  strands  to  decisively  ramp  up  Europe’s  defence  readiness  within  the  next  five 
years (1),  on  17  June  2025,  the  Commission  adopted  the  Defence  Readiness  Omnibus (2) 
proposal (‘Omnibus’).  

In it the Commission has proposed new measures to cut red tape and facilitate EU countries’ 
major ramp-up changes in defence investments. These measures include EUR 800 billions 
of investments(3) that EU countries can use under ReArm Europe to ensure that their defence 
industries can deliver defence capabilities at speed and scale. The Omnibus also proposes 
simplifying  and  harmonising  rules  as  an  essential  part  of  boosting  Europe's  defence 
preparedness.  

This  Staff  Working  Document  attempts  to  quantify  the  expected  impacts  of  the 
Commission’s  proposals  in  the  Omnibus,  describes  the  problem  drivers  identified,  and 
explains why the European Union should act on them.  

The Commission proposals involve both defence and non-defence legislation, the European 
Defence Fund, defence procurements, intra-EU transfers of defence products, EU chemical 
rules, access to finance for defence industry and permitting for defence readiness projects. 
They could significantly reduce administrative burden for private and public entities, 
therefore  ensuring  better  time-to-delivery  for  EU  defence  industry.  They  could  also 
unlock  substantial  private  capital  flows  to  fund  defence  readiness  investments  and 
facilitate joint procurement of defence equipment by Member States, which could trigger 
additional potential savings. 

The  assessment  of  the  impacts  of  the  chosen  option  was  computed  using  a  granular 
quantitative  model,  however  taking  account  that  there  are  still  important  data  and 
information gaps in the Defence economic sector which make a precise and fully externally 
justified assessment of the impact of the Defence Readiness Omnibus a challenge in itself. 
The quantification of the Omnibus effects is therefore a modelling work that relies heavily 
on  reasonable  internal  assessment  where  outside  sources  where  not  found  or  difficult  to 
calculate with high level of precision.   

Given those limitations, existing shortcomings linked to the sensitivity and data-gaps, the 
European  Commission  welcomes  any  feedback  to  the  methodology  and  to  the 
quantification of this Omnibus. This will be instrumental to build on further quantification 

(1): European Council, Conclusions, 20 March 2025. 

(2): https://commission.europa.eu/news-and-media/news/new-simplification-proposal-will-speed-defence-

investments-eu-2025-06-17_en 

(3): The European Commission's ReArm Europe Plan/Readiness 2030, presented in March 2025, proposes to 
unlock  close  to  EUR800  billions  in  defence  spending  through  flexibility  within  the  EU  fiscal  rules  (by 
activating the national escape clause) allowing for higher level of defence spending, a new EUR150 billions 
loan instrument (SAFE) for joint procurement, potential redirection of cohesion funds, and expanded European 
Investment Bank support. It also aims to mobilise private capital through the savings and investments union. 

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work  in  the  field  of  the  Single  Market  of  Defence.  Please  address  all  methodological 
comments, inputs, feedback and ideas to: defis-simplification@ec.europa.eu. (4) 

Based on the method used and described in Annex D, the estimated cumulated impacts are 
summarised below: 

-  Simplification  measures:  direct  annual  costs  savings  of  EUR  1.2  billion  for 
private and public entities,  by reducing  the time that employees and  companies 
spend on procedures. 

-  Easier access to finance estimated to free up to EUR 4.7 billions of annual extra 
investments for defence companies and could therefore bring along between 26 000 
to  33  000  extra  jobs  annually  over  the  next  eleven  years,  calculated  under  the 
assumption that the Omnibus will remove some barriers and uncertainties to invest 
in defence for EIB, financial institutions and private investors. 

-  Potential  savings  for  Member  States  on  joint  procurement  from  reaping 
economies of scale(5) and easier procedures, which could reach up to EUR 1.8 billion 
annually, assuming that joint procurement increases from the current 18% share of 
defence equipment spending to 40% in 2036 and that efficiency will save 10% of 
joint procurement value.  

The potential additional costs on business and administrations that these proposals would 
make are considered, on the other side, not  significant due to the intended simplification 
goal  and  integration  in  the  normal  administrative  adaptation  and  formation  costs  of 
companies and public administrations.  

Although the three categories of savings are difficult to sum together given their different 
assumptions and nature (see Annex D for details), such a sum would bring the estimated 
total  financial  value  of  benefits  arising  from  the  Omnibus  to  range  (depending  on  more 
pessimistic / optimistic scenarios) from EUR 42.5 billions to EUR 51.3 billions(6), as net 
present value over the next 11 years (2026-2036)(7).  

(4): Whenever possible, please use and base your inputs on the Better Regulation Toolbox, notably Chapter 8, 

p. 499 to 608. 

(5): Sizeable procurement orders for each defence system result in cheaper unit costs. 

(6): Net present value over the next 11 years (2026-36), under different scenarios, adding all type of benefits. 
Methodology is described in details in Annex D. 

(7): Some measures will have effect from 2026, others only from 2027. 

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1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT OF DEFENCE READINESS 2030 

Europe faces acute and growing threats. The only way we can ensure European peace is to 
have the readiness to deter those who would do us harm. High intensity armed conflict has 
returned to Europe and EU Member States need to be ready for the worst-case scenario.  

To  fight  and  more  importantly  to  deter  armed  conflicts,  Member  States  need  prompt, 
effective  and  efficient  access  to  the  most  sophisticated  military  equipment  supplied  by  a 
strong and independent European Defence Technological and Industrial Base (EDTIB). The 
EU defence sector although still quite competitive globally, is in a concerning situation, as 
highlighted by the Draghi and Letta reports, plagued by under-investment, under-capacity, 
fragmentation, inefficient scale (on both the supply and demand side), and by a burdensome 
web of regulations.  

The European Council on 6 March 2025 tasked the Commission to swiftly simplify the legal 
and administrative framework, for public procurement, industry cooperation, permitting and 
reporting  requirements,  to  address  all  the  obstacles  and  bottlenecks  hindering  a  rapid 
ramping up of the defence industry, including for SMEs and mid-caps. In this context, the 
European  Council  invited  the  Commission  to  prioritise  a  defence-specific  simplification 
omnibus.  

The stakeholder consultation prior to the Commission proposal for the Omnibus confirmed 
that the overarching problem is a structural lack of scale and speed of investments in defence 
readiness across the EU. This is  due to a number of factors: lack of EU-wide collaboration 
for defence R&D, limited common procurements, complex European Defence Fund rules 
on innovation and procurement, diverging or conflicting regulations on national permits that 
impact the defence industry and intra-EU transfers of defence products,  EU legislation on 
chemicals and access to finance.  

In the context of this Omnibus proposal, ‘defence readiness’ should be understood as the 
ability  of  the  Member  States  and  the  EU  defence  industry,  institutions  and  supporting 
systems to anticipate, prevent and respond to defence-related crises.  

Defence readiness relies on the availability of the necessary defence industrial capacity to 
acquire and maintain the resources, capabilities and infrastructure required to  (i) respond 
effectively and in an agile way to crises and (ii) to deter potential threats through credible 
strength.  

This Staff Working Document (SWD) forms an integral part of the Commission proposal 
on the Defence Readiness Omnibus of 17 June 2025, submitted to the European Parliament 
and the Council for examination under the ordinary legislative procedure. It highlights the 
specific problems and underlying issues, explains the choice of proposed simplifications to 
reach  the  objective  of  Defence  Readiness  by  2030,  also  building  on  the  stakeholder 
consultation carried out in the second quarter of 2025, and attempts to quantify the impact 
of  the  proposed  solutions,  using  the  assumptions  and  methodologies  explained  in  the 
annexes.   

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2.  PROBLEM DEFINITION 

2.1 What are the problems? 

Meeting the EU’s defence-readiness objectives will require substantial defence investments. 
Current  estimates  forecast  at  least  an  additional  EUR  800  billions  investment  is  needed, 
including EUR 150 billions under the Security and Action for Europe (SAFE) instrument, 
and involving significant public procurement. The magnitude of the required effort to reach 
defence readiness by 2030 is due to the substantial and chronic under-investments in defence 
in  the  EU  over  the  last  decades  and  the  cumulated  defence  investment  gaps  of  Member 
States, which have been losing opportunities in pooling demand (provoking therefore 
inefficient scale in production, higher procurement costs, fragmentation). 

Heavy  artillery  ammunition  is  a  good  example  of  the  issues  resulting  from  decades  of 
underinvestment.  Low  demand  means  EDTIB  production  capacities  have  shrunk 
significantly over time. This limits Member States' capacities to replenish stocks quickly 
and  re-establish  a  credible  and  reliable  defence  position.  Furthermore,  stocks  that  were 
already limited have been further depleted with the military support provided to Ukraine. 
Member States would face critical shortages in the event of a high-intensity conflict.   

The EU’s current regulatory environment, adopted in peacetime, needs to be adapted to the 
EU’s current objective of developing and maintaining the necessary capabilities and military 
readiness to credibly deter armed aggression and quickly and effectively deploy the major 
defence instruments needed. Deterring armed aggression is also an effective way to protect 
the environment, that would be significantly damaged in the event of war. Currently, rules 
generate  excessive  admin  costs  and  delays  for  companies.  EU  legislation  often  also 
hampers  the  efficacy  of  armed  forces'  operations.  When  the  Commission  consulted 
stakeholders  about  whether  current  EU  legislation  could  facilitate  the  2030  Defence 
Readiness objective, many corporate stakeholders, experts, and EU countries indicated that 
several pieces of EU defence-related and non-defence-related legislation were not conducive 
to facilitating the EDTIB’s long-term investments necessary to deter threats and ensure the 
security of the EU and its citizens. For example, some Member States' air forces reported 
years-long delays in expanding training runways for pilots caused by complex and lengthy 
permitting rules.  

Across  sectors,  processes  must  be  considerably  simplified  and  regulatory  and 
administrative  burdens  removed  to  accelerate  the  ramp-up  of  European  defence 
industrial production, to rapidly reach the levels of production capacity required to prepare 
for and thereby deter a high-intensity conflict. Regulatory burden creates also problems in 
the access to finance, leading to higher cost of capital for defence sector, limited access 
to debt/equity, and foregone investment opportunities.  

2.2 Problem drivers by domain  

•  Burdensome processes in the European Defence Fund (EDF) programme  

The  interim  evaluation  of  the  European  Defence  Fund  (EDF),  established  by  Regulation 
(EU) 2021/697(8), confirmed its overall effectiveness and relevance. This is illustrated by the 

(8): Regulation (EU) 2021/697 of the European Parliament and of the Council of 29 April 2021 establishing 
the  European Defence Fund and repealing Regulation (EU) 2018/1092 (OJ L 170, 12.5.2021, p. 149, ELI: 
http://data.europa.eu/eli/reg/2021/697/oj) 

6 

 
 
increasing number of proposals submitted and companies participating since the creation of 
the Fund.  

However, this evaluation also highlighted the need to further streamline procedures, reduce 
the administrative burden, introduce clarifications, simplification, and flexibility to facilitate 
the  programme’s  implementation.  The  experience  gained  since  2021,  and  the  feedback 
received showed for example that the current criteria for evaluating proposals are complex 
and assessing them is time-consuming. 

Despite significant improvements to the EDF application process compared to its precursor 
programmes,  stakeholders  consulted  as  part  of  the  interim  evaluation  and  Omnibus 
stakeholder  consultation,  both  highlighted  the  potential  for  further  simplifications.  Some 
52%  of  corporate  stakeholders  responding  to  the  stakeholder  consultation  called  for 
simplification of the EDF programme to unlock its full potential to  also contribute to the 
defence readiness objective. 

For example, the national association of employers of a large Member State indicated that: 
‘...simplified EDF procedures should go a long way toward making businesses and member 
states more likely to be able to effectively utilise the funds in their projects, while eligibility 
for frontline testing will be of great help in ensuring that European-produced equipment is 
working effectively. We are particularly hopeful for the effect that clarifying award criteria 
could have, as this is currently an area which gives rise to a lack of transparency and equal 
treatment due to the uncertainties in application processes…’(9) 

The  current  legal  framework  for  the  EDF  implementation  also  limits  the  use  of  indirect 
management  to  exceptional  cases.  For  example,  the  requirement  that  all  infrastructure, 
facilities,  assets  and  resources  used  for  the  implementation  of  EDF  funded  projects  are 
located within the Union and associated countries territory limits the potential for the EDTIB 
to  benefit  from  testing  opportunities  that  offer  unique  features.  For  example,  testing  in 
Ukraine provides possibilities that are not readily available within the EU, such as 24-hour 
testing on the battlefield, which can significantly enhance development and validation of 
defence technologies. 

• 

Complex, lengthy and costly procedures for Defence procurement  

Stakeholders  in  the  public  and  private  sector  perceive  procedures  under  the  Directive 
2009/81/EC on Defence and Security Procurement(10) as overly complex and burdensome 
impacting,  according  to  stakeholders,  the  most  critical  contracts,  hampering  effective 
allocation of resources and creating an undue administrative burden for the industry. 

One of the key objectives of the Directive 2009/81/EC is to allow defence procurements to 
take  place  within  EU  public  procurement  rules,  adapted  to  specific  defence  needs,  and 
support the establishment of an open and competitive European defence equipment market 

(9):  Position  paper  on  the  Defence  Readiness  Omnibus,  June  2025  (author  details  not  disclosed  for 
confidentiality)  

(10): Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 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, (OJ L 216, 20.8.2009, pp. 76–136, ELI: http://data.europa.eu/eli/dir/2009/81/oj) 

7 

 
 
that would strengthen the resiliency and combat-readiness of the Union. However, a few 
issues remain. 

Firstly,  the  perceived  complexity  of  the  Directive  undermines  its  application  and  further 
worsen Member States’ tendency to rely excessively on exclusions allowed in the Directive 
or under the Treaties to not apply the Directive on grounds of security or government-to-
government relations. A study on the implementation of the directive in 2016 concluded that 
the directive had helped open the single market but that a ‘…significant share of defence 
procurement  expenditure  is  still  done  outside  the  Directive  and,  generally,  outside  EU 
public procurement rules…’(11) . 

Secondly, stakeholders report significant administrative costs disproportionately  affecting 
start-ups and SMEs(12). These costs on key players hinder the defence industry's capacity for 
innovation.  

Thirdly, procedures are reportedly too slow(13) to accommodate the urgent needs linked to 
the Defence Readiness 2030 objectives. According to a European company’s submission to 
the public consultation, ‘...procurement is too slow: it can take more or less two years before 
the tender even starts...’.  

One  Member  State  administration  noted  that  ‘…Defence  procurement  rules  lack  the 
alignment with the framework set in the classic and utilities directives, also they do not fully 
respond  to  the  regulatory  needs,  determined  by  the  international  security  challenges. 
Current defence and security procurement rules have been established in 2009 and have not 
been reviewed ever since, despite the changes in other public procurement directives and 
existing practices…’  

The  administrative  burden  resulting  from  the  application  of  strict  procurement  rules  and 
procedures can be particularly heavy in relative terms for procurements with small values. 
This is particularly important now when Member States need to quickly step up their defence 
procurements,  while  human/administrative  resources  in  both  public  administration  and 
industry are significantly limited. Making a lot of low-value contracts simpler could help 
Member States and industry to focus scarce resources on the most important procurements. 

Member  States  and  industry  recognise  that  the  specificities  of  R&D  and  innovation 
procurement  procedures  (such  as  the  lack  of  a  precise  outcome  before  funding  research) 
means  these  procedures  could  be  improved  and  accelerated  (through  simplification  and 
removing some restrictions). Member States' recent expenditure figures show them spending 
as  little  as  1-2%  of  their  total  defence  budget  on  R&D,  which  is  not  on  a  par  with 
international allies and challengers(14). According to the 2025 EDA report on defence data 

(11):  Report  from  the  Commission  to  the  European  parliament  and  the  Council  on  the  implementation  of 
Directive 2009/81/EC on public procurement in the fields of defence and security, to comply with Article 73(2) 
of that Directive, SWD(2016) 407 final, p.4. 

(12): In the public consultation, some actors reported a multiplier of 10 in the proportion of costs related to 
this directive between SMEs and prime contractors. 

(13):  Habitats  directive  and  other  environmental  protection  rules  require  defence  companies  to  run  impact 
assessment which can be very time-consuming, as requesting to engage with several different public entities. 

(14): Some (unverifiable) sources quote Russia’s share of defence budget allocated to R&D at around 6-7% 
and China’s between 5-10%. 

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the spending on defence research and development has reached EUR 13 billions in Member 
States. However, other  international  powers, notably the US,  outpaced Member States in 
terms of total R&D expenditure as well as the share of total defence allocated to R&D. 

Member  States’  and  industry  also  report  that  the  current  rules  governing  framework 
agreements do not give Member States as much predictability and stability in their defence 
procurement  planning  as  they  could.  According  to  stakeholders,  Directive  2009/81/EC 
limits the current maximum duration of a framework agreement to seven years. This does 
not reflect the particularities of the defence sector, whose procurement cycles are longer than 
in the civil sector. 

• 

 Member States’ fragmented defence spending in procurement  

The  European  Defence  Agency  (EDA)  noted  in  2025  that  ‘the  benefits  of  defence 
cooperation  are  widely  acknowledged  among  Member  States  and  include  economies  of 
scale, reduced unit costs, enhanced interoperability and a decrease of fragmentation and 
duplication.  Prioritising  EU  collaborative  procurement  solutions  can  foster  a  more 
coordinated  approach 
interoperability  and 
to  defence  procurement,  promoting 
standardisation across European defence systems.’ (15) 

Joint  procurement  by  Member  States  is  key  to  improve  efficiency,  effectiveness,  and 
interoperability  of  defence  capabilities.  The  latest  available  data  show  that  only  18%  of 
defence  equipment  spending  is  through  joint  procurement,  against  an  EDA 
benchmark of at least 35%(16). Stakeholders estimate that clearer and simpler rules on joint 
procurement would help increase the total of joint defence equipment spending (with all the 
associated benefits) from its current low level, which is hampered by the complex associated 
procedures and legal uncertainty. 

•  Bottlenecks  in  intra-EU  transfers  of  defence-related  products  (Transfer 

Directive)  

Swift transfers of defence-related products within the EU are essential to mobilise the full 
industrial and technological capacities across the EU and to achieve synergies, economies 
of scale, innovation and to ensure security of supply.  

Member States  must grant  general,  global, or individual  transfer licences  for transfers of 
defence-related  products  from  their  territories.  Member  States  may  exempt  transfers  of 
defence-related products from the obligation for prior authorisation in specific cases listed 
in Directive 2009/43/EC (the ‘Transfers Directive’). 

Stakeholders in the consultation pointed to the lack of harmonisation of control systems of 
Member States, insufficient use of General Transfer Licences (GTLs) which are the key 
simplification tool(17) provided for in the Transfers Directive, and called on the Commission 

(15): European Defence Agency, Defence Data 2024-2025 [2025-eda_defencedata_web.pdf]. 

(16):  European  Defence  Industry  Strategy,  5  March  2024  [https://defence-industry-space.ec.europa.eu/eu-
defence-industry/edis-our-common-defence-industrial-strategy_en]. Reaffirmed in the Joint White Paper on 
Defence  Readiness  of  19  March  2025 
[https://defence-industry-space.ec.europa.eu/eu-defence-
industry/introducing-white-paper-european-defence-and-rearm-europe-plan-readiness-2030_en]. 

(17): Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms 
and conditions of transfers of defence-related products within the Community (OJ L 146, 10.6.2009, p. 1, ELI: 
http://data.europa.eu/eli/dir/2009/43/oj). 

9 

 
 
to reduce complexities and delays linked to checks on intra-EU transfers. Fourteen Member 
States used GTLs for armed forces for EEA countries, while six only for EU(18). Stakeholders 
also pointed to bottlenecks leading to significant delays in the implementation of EDF 
projects due to lack of timely authorisations of transfers and to heavy burden of managing 
multiple national End User Certificates or other forms of limitations in intra-EU transfers.  

Several  stakeholders  indicated  that  defence  industry  often  sees  the  application  of  the 
Transfers  Directive  as  problematic.  The  Directive  makes  more  flexible  types  of  transfer 
licences available, but it is not mandatory for Member States to use them, and several do 
not. Even though transfer licenses are rarely refused, the process of requesting a licence is 
burdensome, and GTLs are not used efficiently.  

GTLs allow ex ante controls (control prior to the transfer within the EU) to be replaced by 
ex post controls (controls after the transfer within the EU). This typically enables a transfer 
to be performed within one to three days. In contrast, the average time for authorities to 
process  a  simple  individual  transfer  licence  ex  ante  can  be  roughly  estimated  to  be  6-7 
weeks, with authorisation processes often taking significantly longer times.  

GTLs  are  thus  the  main  instrument  the  Transfers  Directive  2009/43/EC  introduced  to 
facilitate intra-EU transfers of defence-related products. However, the uptake of GTLs has 
been limited. Preliminary results of a survey of industrial actors’ experience in the context 
of the ongoing evaluation of the Directive 2009/43/EC indicate, for instance, that only one 
third  of  the  responding  companies  has  ever  used  a  General  Transfer  Licence  in  their 
experience.  

Lengthy procedures and heavy administrative burden make intra-EU transfers insufficiently 
agile  and  insufficiently  responsive  to  urgent  European  defence  needs.  They  are  not 
supportive enough for the development of a competitive and innovative European defence 
technological and industrial base.  

•  Lengthy and complex national permitting procedures for defence projects 

National  permitting  procedures  for  defence-related  projects  -  such  as  construction  or 
expansion of ammunition production lines, manufacturing sites for explosives, or equipment 
assembly facilities - are governed by a multitude of sectoral rules, on environment, health 
and safety, land use, energy, water use, etc.  

These procedures can involve long mandatory impact assessments or specific consultations. 
Their outcome and the expected duration can be difficult for investors to assess a priori. 
Most  EU  environmental  and  other  permit-related  legislations  provide  for  derogations  for 
defence-related projects, to allow exceptions to be made for public interest and public order 
objectives. However, diverging interpretations and implementations across Member States 
undermine  the  efficiency  of  those  derogation  measures  when  it  comes  to  defence 
investments.  

These factors result in long and unpredictable permitting timelines, often exceeding two to 
four years for defence projects of strategic relevance. In some cases, projects are postponed 
or  cancelled  due  to  legal  uncertainty,  excessive  administrative  costs,  or  challenges  in 
securing  the  required  authorisations  within  operational  timelines.  The  absence  of  clear 

(18): Ad hoc survey on Member States, 2021. 

10 

 
 
prioritisation for defence-related investments leads to delays that are incompatible with the 
EU’s goal of achieving defence readiness by 2030.  

Corporate stakeholders also report that permitting requirements and practices differ greatly 
between  Member  States,  creating  uncertainty  for  cross-border  defence  investments  and 
delaying  industrial  partnerships  supported  by  EDF  or  European  Defence  Industry 
Programme (EDIP). Small and medium enterprises and specialised suppliers are particularly 
affected due to their limited legal and administrative resources.  

One Member State gave the example of an application for a permit to extend an existing 
explosive manufacturing facility, which was blocked for more than one and a half years by 
extensive permitting requirements.  

Another Member State reported delays of up to 24 months to strategic and time-sensitive 
defence projects due only to permitting issues, as a high number and different authorisations, 
consultations  involving  approval  by  different  administrations  were  required.  Delays 
immobilise  resources  and  are  costly  for  industry.  They  increase  the  standby  fees  of 
contractors,  total  cost  of  capital,  legal  costs  and  more.  A  private  stakeholder  reported  a 
standard timeline of at least 24 months for setting up a defence business in Europe, including 
securing  the  necessary  permits  and  licensing  authorisations.  Others  reported  a  variety  of 
cases where authorisations required three, five and even up to seven years. 

Timely and predictable investment in defence industrial capacity is a critical enabler of the 
EU’s  ability  to  respond  to  deteriorating  security  conditions  and  meet  its  operational 
commitments under the 2030 Defence Readiness objective.  

• 

Implementation of the EU legislation on chemicals does not always support the 
objective of defence readiness by 2030 

EU legislation on chemicals consists mainly of the Regulation on Registration, Evaluation, 
Authorisation  and  Restriction  of  Chemicals  (REACH)(19),  the  Regulation  on  Persistent 
Organic Pollutants(20), the Regulations on Classification, Labelling and Packaging (CLP)(21) 
and Biocidal Products(22). Their bans or restrictions on uses of certain substances are essential 
for the health and safety of EU citizens, including workers in the defence industry.  

Chemical substances are also a vital and necessary component in most defence systems, and 
a  large  part  of  the  substances  used  to  develop,  produce,  and  maintain  these  systems  are 
subject to authorisation and restriction requirements under REACH and other legislations.  

(19): Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 
concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a 
European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 
793/93  and  Commission  Regulation  (EC)  No  1488/94  as  well  as  Council  Directive  76/769/EEC  and 
Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC: OJ L 396, 30.12.2006. 

(20): Regulation (EU) 2019/1021 of the European Parliament and of the Council of 20 June 2019 on persistent 
organic pollutants (recast): PE/61/2019/REV/1 :OJ L 169, 25.6.2019, p. 45–77. 

(21): Regulation (EC) 1272/2008 of the European Parliament and of the Council of 16 December 2008 on 
classification,  labelling  and  packaging  of  substances  and  mixtures,  amending  and  repealing  Directives 
67/548/EEC and 1999/45/EC, and amending Regulation (EC) No 1907/2006: OJ L 353, 31.12.2008, p. 1–
1355. 

(22): Regulation (EU) 528/2012 of the European Parliament and of the Council of 22 May 2012 concerning 
the making available on the market and use of biocidal products: OJ L 167, 27.6.2012, p. 1–123. 

11 

 
 
 
Several  specificities  of  the  defence  sector  merit  nevertheless  special  consideration  when 
deciding on authorisations and restrictions and often result in defence-specific exemptions. 
These specificities include factors, such as (i) remarkably high operational requirements (no 
risk for failure in extreme environments), (ii) long-life cycles of defence products (often up 
to  50  to  60  years),  (iii)  demanding  and  time-consuming  requirements  for  certification, 
qualification and maintenance and (iv) aspects related to security of information.  

Article  2.3  of  REACH  states  that  ‘Member  States  may  allow  for  exemptions  from  this 
Regulation  in  specific  cases  for  certain  substances,  on  their  own,  in  a  mixture  or  in  an 
article,  where  necessary  in  the  interests  of  defence.’  The  other  chemical  legislation  also 
contains similar provisions (excluding Persistent Organic Pollutants, POPs).  

However,  stakeholders  in  the  consultation  process,  generally  agreed  that  the  present 
legislation,  and  its  implementation,  were  not  compatible  with  the  ambition  of  Defence 
Readiness by 2030. Stakeholders, industry and the Armed Forces highlighted three major 
problems: 

1.  Member States’ use of the exemption is often restricted; 

2.  The fact  that defence readiness  needs are not  adequately  taken into account  at  an 
early  stage  of  decision-making  processes,  for  example  regarding  socio-economic 
assessment of restrictions and authorisations within REACH, creates uncertainty and 
increased  risks,  which  hampers  investment  in  the  development  and  production  of 
defence systems; 

3.  Some processes and information requirements are time-consuming, administratively 

burdensome and may risk information leakage of sensitive information.  

These problems pose a direct threat to the availability, interoperability, and maintainability 
of European defence capabilities and undermine the EU’s strategic autonomy. 

•  Difficulties for EU companies to access finance  

As highlighted in a European Commission study on Access to equity financing for European 
defence SMEs (2024), the European defence industry, particularly SMEs and mid-caps, face 
difficulties in accessing finance. The report identifies an annual funding gap for both debt 
and equity of EUR 2 billions for European SMEs. Today, one in four companies cannot 
access debt or equity when they need to. 

The  environmental  sustainability  of  the  defence  sector  is  an  important  yet  complex 
dimension in accessing finance. The defence sector covers a broad spectrum of activities. 
While certain defence-related activities (such as radars or shelters) raise little concern from 
an  environmental  point  of  view.  There  are  other  defence-related  activities  such  as  the 
production  of  ammunition  which  may  indirectly  result  in  damage  to  both  the  natural 
environment (e.g. soil contamination). The wide-ranging potential environmental impacts 
of  defense  activities  are  recognised  in  various  environmental  legislations,  which  allow 
exemptions for activities conducted solely for military purposes, when appropriate(23).  

(23):  Examples  of  such  legislation  are  article  1(3)  of  the  Environmental  Impact  Assessment  Directive 
(Directive  2011/92/EU  as  amended  by  2014/52/EU)  and  article  7  of  the  Nature  Restoration  Law 
(Regulation(EU) 2024/1991). 

12 

 
 
 
Consequently, due to the diverse environmental concerns linked to the defense sector, 
many  private  and  public  financial  institutions  exclude  investments  in  the  defence 
sector. This contributes to restricting access to finance for companies developing defence 
technologies  or  that  are  part  of  the  defence  supply  chain.  Investors’  perception  and 
reputational risk aversion - influenced by eenvironmental, social and corporate governance 
ratings and benchmarks - mean that ESG-themed funds (and other funds) are not available 
for defence-related equity and debt.  

For example, the European Investment Bank (EIB) Group, which provides key financial 
support to EU’s economy and is the main implementing partner of EU financial instruments 
through the InvestEU Programme, providing EU budget guarantees of EUR 26.2 billions 
to investments(24), changed in 2025 its exclusion policy(25) to allow investments in equipment 
or infrastructure dedicated to military/police use. However, the EIB still excludes financing 
of the ‘production of and trade in weapons and ammunition’(26). These exclusions create a 
significant barrier to capital access for the defence industry. 

The EU sustainable finance framework also plays a key role in influencing investment and 
exclusion  policies  of  European  financial  actors  for  investments  in  defence  projects.  This 
framework was developed as part of the European Green Deal and codified through various 
policies  and  instruments,  such  as  Regulation  (EU)  2019/2088  (Sustainable  Finance 
Disclosure  Regulation,  SFDR)  which  aims  to  channel  private  investment  toward 
environmentally  and  socially  sustainable  activities.  It  introduces  detailed  disclosure 
obligations for financial market participants and sets out criteria for sustainable economic 
activities including minimum safeguards.  

However, during the consultation stakeholders reported that, financial actors face excessive 
uncertainties  regarding  the  treatment  of  defence-related 
investments  under 
sustainability-linked instruments, for two reasons:  

1.  EU financial actors are biased against the defence sector, because its activities are 
not seen or perceived as sustainable or as having environmental, social or governance 
benefits.  The  EU  Taxonomy  for  sustainable  activities  does  not  include  defence 
activities. As a result, investors who want to invest in alignment with this taxonomy 
usually exclude or limit the share of defence and dual-use sectors from sustainable 
investment portfolios. The EU sustainable finance framework does not provide clear 
guidance  and  definitions  on  the  type  of  activities  considered  as  positively 
contributing  to  social  sustainability.  This  means  that  the  concept  of  ‘sustainable 
finance’  is  often  interpreted  in  a  narrow  way  which  excludes  defence-related 
activities. 

2.  The framework itself does not exclude investments in the defence sector. However, 
the different financial instruments have different minimum safeguards, particularly 
for  the  defence-specific  category  of  ‘controversial  weapons’.  This  creates  legal 

(24): The InvestEU Fund aim is to mobilise  more than EUR372 billions of public and private  investment 
[https://investeu.europa.eu/investeu-

through  EU  budget  guarantees  of  EUR26.2  billions. 
programme/investeu-fund_en]. 

(25):  https://www.eib.org/en/press/all/2025-156-eib-steps-up-financing-for-european-security-and-defence-
and-critical-raw-materials. 

(26): EIB eligibility, excluded activities and excluded sectors list. 

13 

 
  
 
uncertainty and has led to an excessively careful approach, resulting in the exclusion 
of investments in the defence sector.  

This framework results in a negative bias against investments in the defence sector that 
keeps  the  average  cost  of  capital  quite  high  (a  weighted  average  of  9,19%  for  the 
defence sector in Europe)(27).  

The main actors view the absence of more specific guidance on the relation between  the 
sustainable  finance  framework  and  investments  in  defence,  as  a  major  bottleneck.  Such 
detailed guidance is needed to clarify how defence investments comply with sustainability 
and meet the minimum safeguards set out in the EU sustainable finance framework. 

Despite  the  growing  political  urgency  to  boost  the  European  Defence  Technological  and 
Industrial Base, defence-related investments are also suffering from underinvestment 
under the InvestEU support mechanisms. This is because of both the exclusions policies 
of implementing partners, such as the EIB Group or EBRD, and of inadequate eligibility 
rules of the InvestEU funds for investments in defence. 

Defence is labelled as a strategic sector and eligible for financing under InvestEU. However, 
key stakeholders and implementing partners report that the programme lacks incentives for 
implementing  partners  to  support  it.  Stakeholders  particularly  regretted  the  absence  of  a 
clear  legal  or  strategic  orientation  toward  defence-readiness  in  the  InvestEU  Investment 
Guidelines.  

The InvestEU Investment Guidelines have additional eligibility conditions for investments 
in strategic sectors, particularly defence aimed at safeguarding the essential security interest 
of  the  EU  and  its  Member  States.  However,  implementing  partners  report  that  these 
eligibility  rules,  inspired  by  the  rules  for  grant  fundings  (under  funds  like  the  EDF),  are 
excessively restrictive and unsuited to debt and equity investments, where security interests 
are not so directly at risk.  

2.3 How likely is the problem to persist? 

The stakeholder consultations stressed that the defence ecosystems and Member States have 
long been plagued by these problems, with no solution emerging at national level, because 
of the European approach required. Without EU intervention, these issues will continue to 
plague the EU’s defence sector and severely damaging its capacity to deliver its Defence 
Readiness 2030 objective.  

(27): Cybersecurity, a comparable sector, in Europe has a weighted average cost of capital of 7-9%. Defence 
sector in the USA has a weighted average cost of capital of 7,68% (industry average, Jan. 2025). 

14 

 
 
 
 
 
3.  WHY SHOULD THE EU ACT? 

3.1 Legal basis 

Defence readiness is a wide concept, so simplifying the regulatory framework to enable a 
speedy defence production ramp-up will affect many legal texts. Not all falling under the 
framework of the common security and defence policy, which is subject to specific rules of 
procedure and adoption (cf. Articles 21 to 46 TFEU).  

Defence-related legislative acts not under the common security and defence policy and that 
can  be  identified  for  simplification  are:  the  Regulation  establishing  a  European  Defence 
Fund  and  the  Directives  related  to  Defence  and  Security  Procurements  and  to  Intra-EU 
Transfers of defence-related products.  

Non-defence  related  legislative  acts  identified  as  key  for  Defence  Readiness  and  its 
financing  are:  the  REACH  Regulation,  the  Classification,  Labelling  and  Packaging 
Regulation (CLP), the Persistent Organic Pollutants Regulation (POPs), and InvestEU and 
Environmental and Social Governance (ESG) Benchmarks Delegated Regulations.  

These  pieces  of  legislation  could  therefore  be  amended  through  ordinary  legislative 
procedure. For all existing texts, the amendments should be done based on the same legal 
basis as the original procedure:  

Legislation  amended  by 
the proposal 

Legal basis 

on 

(EC) 
Regulation 
1907/2006 
the 
registration  of  chemicals 
(REACH), 
Regulation 
(EC)  1272/2008  (the  CLP 
Regulation),  Regulation 

Article 114 TFEU 

This  enables  the  EU  to  strengthen  and  protect  the  proper 
functioning  of  the  internal  market.  It  allows  co-legislatures  to 
take action through an ordinary legislative procedure to eliminate 

15 

 
 
 
528/2012 

(EU) 
Biocidal 
Regulation - BPR) 

(the 
Products 

regulatory barriers within the EU, facilitate trade, and ensure a 
competitive level playing field. 

Regulation 
(EU) 
2019/1021  on  Persistent 
Organic Polluants 

Article 192(1) TFEU 

This  refers  to  the  implementation  of  the  EU's  objectives  on 
environment  policy, 
including  preserving,  protecting,  and 
improving  the  quality  of  the  environment,  protection  human 
health, and prudent and rational utilisation of natural resources 

Regulation  (EU)  2021/697 
establishing  the  European 
Defence Fund 

Article 182(4) TFEU, Article 183 TFEU, Article 188 TFEU 

These  articles  concern  the  adoption  and  implementation  of 
framework programmes. 

Article 173(3) TFEU 

This  tasks  the  EU  and  Member  States  with  ensuring  that 
‘conditions  necessary  for  the  competitiveness  of  the  EU’s 
industry  exist.’  Within  this  remit,  the  Commission  may  take 
initiatives to promote coordination of defence industrial policies 
and adjusting the European Defence Technological and Industrial 
Base to structural changes – such as a deeply deteriorated security 
environment  and  encouraging  an  environment  favourable  to 
innovative initiatives. 

Directive  2009/81/EC  on 
the procurement  of  defence 
and security contracts 

Article 53(2) TFEU 

Article 62 TFEU 

These concern the right of establishment. 

Article 114 TFEU 

See above. 

Proposed  new  Regulation 
for Fast-Track Permitting 

Article 114 TFEU 

Allows the EU to take measures that increase harmonisation in 
order  to  create  a  level  playing  field  for  EU  defence  industry 
manufacturing to flourish. 

3.2 Subsidiarity test: necessity criteria 

Insofar  as  only  amendments  to  existing  legislative  texts  are  proposed,  the  problems  are 
inherently  linked  to  the  deficiencies  of  the  European  framework  and  can  only  be  solved 
through changes to the relevant EU instruments and legislations.  

Most of the stakeholders also welcomed the proposal for a new regulation related to fast-
track  permitting.  This  fast-tracking  mechanism  is  needed  to  overcome  insufficient 
coordination  between  Member  States  which  does  not  allow  for  smooth  cross-border 
investments.  The  proposed  regulation  aims  to  tackle  the  fragmentation  of  the  European 
defence single market, which is a clearly identified obstacle to European defence readiness 

16 

 
 
and prevents defence industries from growing in a seamless way across the EU. Stakeholders 
flagged the absence of a functioning and harmonised permitting framework as significantly 
impeding the development of a competitive, resilient, and innovative EDTIB.  

Introducing specific exemptions for the defence sector across different EU legislation will 
simplify the legal framework by introducing well-targeted changes to existing obligations, 
in order to clarify the needs for defence readiness for Member States. These changes should 
then mean the defence sector is treated the same as other areas targeted in those provisions, 
always with the appropriate safeguards.  

3.3 Subsidiarity test: added value criteria 

The specific cross-border nature of the problems identified – particularly those regarding 
procurement and transfers of defence-related products within the EU – illustrate the added 
value  of  the  potential  changes.  Smoothly  and  swiftly  strengthening  and  harmonising  the 
single market for defence would also bring large-scale benefits because of the urgent needs 
to prepare for European Defence Readiness 2030. 

The  proposals  aim  to  decrease  scaling  costs,  improve  access  to  finance  and  improve  the 
capacity of the defence supply chain to operate at European scale to meet increasing demand 
and  defence  readiness  2030  objectives.  These  will  in  turn  deliver  significant  economic, 
security and social benefits to the EU.  

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

The  objective  of  the  Defence  Readiness  Omnibus  initiative  is  to  enable  the  EU  and  its 
Member  States  to  achieve  defence  readiness  by  2030,  by  simplifying  the  EU  regulatory 
landscape and facilitating the necessary defence investments. It aims to reduce unnecessary 
administrative burdens, costs and delays for defence companies and investors. This will help 
tackle the loss of opportunities for Member States resulting from the fragmentation of their 
demand  (inefficient  scale  in  production,  higher  procurement  costs),  increase  innovation, 
speed up procurement, and reduce the high cost of capital for the EDTIB, which currently 
misses out on investment opportunities. 

5.  WHAT POLICY OPTIONS WERE THE AVAILABLE? 

5.1 What is the baseline for assessing options? 

The  baseline  option  is  to  keep  the  current  rules  of  the  existing  operational  framework 
(status quo). All the methodological calculations used and described below are based on the 
known costs of the implementation of existing legislation, taken as a baseline, and to which 
changes are applied to calculate cost-savings, with all methodological caveats to take into 
account  the  important  data-gaps  existing  in  the  Defence  sector,  including  confidentiality 
considerations. For each of the policy areas described below, the baseline option is therefore 
not to change the status quo. 

The  Commission  could  give  the  Member  States  extra  guidance,  guidelines,  technical 
support, etc. to help them to make full use of the existing provisions of European regulations 
(e.g. derogation). Nevertheless, financial support to defence industry from private capital 
and InvestEU would remain significantly impaired, seriously constraining development of 
defence capacities and innovation across the EU. The current ongoing EU initiatives in the 

17 

 
defence domain (EDF as it is, ASAP(28), EDIRPA(29) ) have not simplification among their 
objectives as such. Therefore, the EDF programme and the expansion of industrial capacity 
would still suffer from delays and administrative burden. Joint procurement would continue 
to  be  inadequately  low.  The  EU  cannot  afford  this  scenario  under  current  geopolitical 
circumstances. 

5.2 What were the options for policy change? 

A few different policy change options were considered:  

The baseline option of maintaining the status quo was dismissed at an early stage, because 
it does not address the structural legal and procedural obstacles described above nor does it 
guarantee the timely acceleration of projects critical for European Defence Readiness. 

Option 1 (an in-depth review of all EU legislation relevant for the Defence Readiness 
2030 objectives) would involve amending defence-related legislation and make further and 
extended exemptions for the defence players wherever needed. It would entail a complete 
overhaul  of the directives related to  defence and  security procurement(30) and to  intra-EU 
transfers  of  defence-related  products(31)  and  of  the  European  Defence  Fund  (EDF) 
Regulation.  

It would also involve reviewing and amending relevant non-defence legislation, such as the 
REACH  Regulation,  Regulation  on  classification,  labelling  and  packaging  of  chemical 
substances (CLP), the Regulation on Persistent Organic Pollutants (POP), and the delegated 
regulations  on  InvestEU  and  on  the  environmental  and  social  governance  (ESG) 
benchmarks.  

This  option  was  dismissed  at  an  early  stage.  The  urgency  to  ramp-up  Europe's  defence 
readiness by 2030 made this a suboptimal solution, because its preparation, adoption and 
implementation  would  be  long  and  complex.  Also,  it  would  most  probably  not  be  fully 
implemented or operational in time to meet the Defence Readiness 2030 objective.  

Option 2 (well-targeted amendments) focused on only the most crucial amendments to 
speed up adoption and implementation. It would involve making well-targeted amendments 
in all relevant EU legislation while maintaining the existing architecture and balance of the 
texts as much as possible, with a view to act swiftly and efficiently for fast adoption and 
implementation of the proposed changes.  

(28):  Act  in  Support  of  Ammunition  Production  (ASAP),  https://defence-industry-space.ec.europa.eu/eu-
defence-industry/asap-boosting-defence-production_en. 

(29):  European  Defence  Industry  Reinforcement  through  common  Procurement  Act  (EDIRPA),  EDIRPA  | 
Addressing Capability Gaps. 

(30): Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 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 (Text with EEA relevance). 

(31): Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms 
and conditions of transfers of defence-related products within the Community (Text with EEA relevance).   

18 

 
 
 
 
The stakeholder consultation identified the following defence-related legislation for targeted 
simplification:  the  Regulation  establishing  a  European  Defence  Fund  and  the  Directives 
related to defence and security procurement(32) and to intra-EU transfers of defence-related 
products(33).  

Option  2  would  also  consider  targeted  amendments  to  relevant  non-defence  legislation, 
specifically  the  REACH  Regulation,  the  Regulation  on  classification,  labelling  and 
packaging  of  chemical  substances  (CLP)  and  the  Regulation  on  Persistent  Organic 
Pollutants  (POP),  and  delegated  regulations  related  to  InvestEU  and  environmental  and 
social governance (ESG) benchmarks.  

Stakeholders  also  proposed  and  strongly  supported  a  new  EU  regulation  on  fast-track 
permitting for defence readiness projects. 

Some specific points were also in favour of option 2: 

-  An in-depth review of the Directive on Defence Procurement was already scheduled 
for  2026.  Plus,  some  of  the  points  stakeholders  raised  could  be  resolved  more 
efficiently  through  targeted  and  limited  changes  which  could  be  adopted  and 
implemented  more  easily  and  rapidly  than  waiting  for  the  full  revision  of  the 
Directive.  

-  Stakeholders and experts presented some proposals to make the European Defence 
Fund  Regulation  more  responsive  to  changing  operational  needs  and  opening 
financing through InvestEU just for the remaining years of the current Multi-annual 
Financial Framework, meaning only a couple of years ahead, therefore warranting 
targeted revisions for those cases.  

-  Extending exemptions from chemical legislation for the defence players in a large 

manner could be complex, costly, and lengthy to apply for companies.  

-  Reviewing all existing EU-level investment vehicles to make it easier for the defence 
sector to access finance would highly likely entail lengthy discussions with the co-
legislators, meaning further delays in implementation.  

-  Revising the Sustainable Finance Framework to include security objectives would 

also entail lengthy legislative procedures.  

-  The cost on business and administrations that these proposals would make would not 
be  significant  due  to  the  intended  simplification  goal,  the  targeted  approach  of 
changes and therefore their integration in the normal recurring administrative and 
formation costs of companies and public administrations.  

(32): Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 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 (Text with EEA relevance). 

(33): Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms 
and conditions of transfers of defence-related products within the Community (Text with EEA relevance).   

19 

 
 
 
 
 
 
6.  WHAT ARE THE IMPACTS OF THE CHOSEN POLICY OPTION? 

The  proposed  changes  are  summarised  and  their  sector  specific,  quantifiable  impacts 
described below. The exact methodology of the calculations is described in Annex D. Sub-
sections below present their wider, more general impacts (e.g. competitiveness, innovation).  

6.1 Changes to the European Defence Fund Regulation  

The  Commission  proposes  add  enabling  provisions  to  the  EDF  Regulation(34)  enabling 
provisions  to  improve  the  strategic  utility,  agility,  and  interoperability  of  EDF-funded 
projects. The proposed changes include measures aiming to: 

o  extend  the  validity  of  Ownership  Control  Declarations/Ownership  Control 
Assessment  from  18  to  36  months  and  to  reduce  the  administrative  burden  for 
applicants and the Commission itself; 

o  clarify and simplify award criteria, introducing the possibility of selecting the most 
relevant  award  criteria  for  each  action  to  be  supported.  This  will  reduce  the  time 
companies  spend  on  grant  applications  and  the  time  the  Commission  spends  on 
reviews (internal assessments estimate this will save approximately 1.054 working 
hours per year); 

o  clarify the rules applicable to direct awards;  
o 
o  clarify  pre-commercial  procurement  and  access  rights  of  co-financing  Member 

facilitate indirect management (where relevant); 

States to the results of development projects; 

o  make  costs  for  testing  activities  conducted  outside  of  the  EU  territory  (e.g.  in 

Ukraine) eligible for funding; 

o  allow for multiannual work programmes. 

These  working  hours  saved  and  the  reduced  time-to-contract  could  generate  EUR  101 
millions annually in direct administrative cost savings, plus the value of reduced time. 
This would translate, over eleven years of application and corrected for inflation, to a net 
present  value  (NPV)  of  EUR  740  millions  (see  Annex  D  for  more  information  on  the 
methodology  and  assumptions).  On  the  other  side,  these  changes  would  not  entail  any 
addition costs on companies or public administrations. 

Easier access to EDF will also accelerate innovation processes among smaller enterprises 
and boost their competitiveness. In the medium term  this will make the defence industrial 
sector more competitive.  

6.2 Changes to Directive 2009/81/EC on defence and security procurement 

The Commission proposes changing this Directive to: 

o 

increase the  contract award notice threshold  for application of the rules and 
procedures of this Directive from EUR 443 000 to EUR 900 000. This will greatly 
simplify many small value procurements, save money and reduce the administrative 
reporting  burden  for  defence  procurement.  According  to  data  on  contract  award 
notices  including  information  on  the  contract  value  published  in  the  Tender 
Electronic Daily supplement to the Official Journal of the EU, it can be expected that 

(34): Regulation (EU) 2021/697 of the European Parliament and of the Council of 29 April 2021 establishing 
the European Defence Fund and repealing Regulation (EU) 2018/1092 (Text with EEA relevance). 

20 

 
 
 
per year on average 228 procurements out of a total 1028 would fall outside of the 
scope of this Directive. The increased thresholds would greatly simplify and reduce 
administrative costs for almost one in four of the procedures currently falling under 
the Directive, while affecting only approximately 1% of the value of procurement 
under it. This should also reduce the average time necessary for these procurements. 
If we assume that the contract award notices including information on contract value 
are a representative sample of the total average annual contract award notices, the 
number  of  procurement  process  falling  outside  of  the  Directive  following  the 
implementation of the Omnibus proposal could reach 310 per year; 

o  give Member States the flexibility to profit from all available procedures related 
to public procurements  as provided for in Directive 2014/24/EU(35), (such as the 
possibility to use the open procedure and the dynamic purchasing system); 

o  make the innovation partnership procedure more flexible (based on the existing 
procedure in Directive 2014/24/EU) to better support the procurement of innovation; 
o  add a simplified procedure for direct procurement of innovative products and 
services resulting from competitive parallel research and development projects, to 
reduce the administrative burden and increase the speed at which Member States can 
procure innovative products; 

o  remove some statistical reporting obligations for Member States (to diminish the 

administrative burden in a time of urgency); 

o  extend the maximum possible duration of framework agreements to ten years. 
This  would  allow  Member  States  to  establish  longer-term  partnerships  with  the 
defence  industry  sector(36),  so  that  Member  States  and  industry  can  benefit  from 
greater certainty in procurement planning and orders. It would also reduce the current 
order book planning problems and bottlenecks in production; 

o 

o  create rules on procurement involving contracting authorities and entities from 
different  Member  States,  to  allow  for  greater  flexibility  and  better  legal 
predictability in our relations with our allies; 
facilitating  and  speeding  up  collaborative  procurement  of  identical  defence 
products (or products subject only to minor changes) by multiple Member States by 
enabling the use of the negotiated procedure without publication. This will also make 
it possible to achieve better economies of scale, reduce fragmentation, and improve 
interoperability.   

The  method  used  in  the  assessment  of  impacts  (described  in  Annex  D)  estimates  that 
collaborative  procurement  will  bring  annual  benefits  of  over  EUR  1.8  billions  from 
reduced delays, reduced procurement costs and higher efficiency on the industry side.  Most 
of these savings will be for Member States’ public budgets. 

This comes from the assumption that (i) joint procurement will gradually raise thanks to the 
Omnibus from 18% to 40% by 2036, and (ii) consequent economies of scale and efficiency 
will save 10% of joint procurement value (see Annex D for details and sources). 

(35): Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public 
procurement  and 
(OJ  L  94,  28.3.2014,  p.  65–242,  ELI: 
http://data.europa.eu/eli/dir/2014/24/oj). 

repealing  Directive  2004/18/EC 

(36): As proposed in the European Defence Industry Programme (EDIP) Regulation. 

21 

 
 
 
Over eleven years of application and corrected for inflation,  this will generate a net 
present value of EUR 16.7 billions. Increasing the share of joint procurement will widen 
the addressable market for EU defence companies now focused on 27 fragmented national 
ones.  This  will  boost  competition  in  the  EU  defence  market  and  make  the  sector  more 
sustainable and competitive. of the sector on the world stage. The employment, economic, 
and social effects will benefit several EU regions where the defence industry is concentrated.  
On the other side, these changes would not entail any addition costs on companies or on the 
public administration except from the very insignificant cost of formation linked for public 
administration to a better formation in joint procurement. 

6.3  Changes  to  Directive  2009/43/EC  on  the  intra-EU  transfers  of  defence 
products 

 The Commission proposes changing this Directive to: 

o  extend and better harmonise the scope of General Transfer Licences (GTLs) to 
widen  their  use.  GTLs  are  considered  the  most  effective  way  to  speed  up  the 
procedure and reduce the administrative burden. Overall, this is expected to unlock 
cost  savings  and  improve  industrial  responsiveness.  The  overall  effect  will  be 
achieved through a series of measures included in the Omnibus: 

▪ 

introducing  GTLs  for  transfers  for  the  implementation  of  projects  funded 
under the EU’s defence industrial programmes; 

▪  extending the benefit of the GTLs for ‘transfers to certified entities’ . This is 

also expected to significantly increase the uptake of certification.  

▪  empowering the Commission, in close collaboration with Member States, to 
adopt delegated acts negotiated in accordance with Article 290 of the TFEU, 
to effectively set and harmonise the minimum scope of GTLs.   

o  allow Member States to exempt further categories of transfers from requiring 
prior authorisation. This will further facilitate transfers in specific straightforward 
cases where the risks of dissemination are extremely limited or in situations of crisis 
and emergency.  

o  reduce the complexity and burden of managing end-user certificates and from 
other  complex  and  burdensome  restrictions  on  re-exporting  transferred 
defence products. This will be achieved by developing, in close collaboration with 
Member States, harmonised ways to implement Article 4(8) of the Directive which 
calls on Member States to refrain from imposing restrictions on the re-export of non-
sensitive  components  to  be  integrated  in  a  product  in  another  Member  State. 
Managing  multiple  national  end-user  certificates  is  also  a  heavy  administrative 
burden  and  a  source  of  possible  delays  in  projects  funded  under  the  European 
Defence Fund. The Omnibus proposes to limit such issues by introducing instead a 
standardised clause to be included in the grant agreements. 

o  Member  States  more  flexibility  to  adapt  reporting  requirements  for  non-
tangible technology transfers. This will reduce the overly burdensome obligations 
imposed on suppliers.  

Stakeholders  indicate  that  large  companies  spend  considerable  resources  on  managing 
transfer of license authorisations each year. Their information suggests that a large company 
would  employ  65  full-time  employees  (FTEs)  each  on  license  transfers  annually.  A 
conservative  scenario  assumes  that  SMEs  spend  roughly  60  hours  annually  on  license 

22 

 
 
administrative  activity.  In  this  scenario,  the  working  hours  saved  on  managing  licenses’ 
transfer and complying with reporting, plus the reduced time delays, would save each year 
EUR 142 millions in administrative cost (see Annex D for details on the methodology). 
Over eleven years of application and corrected for inflation, this would result in a net 
present value of EUR 914 millions. On the other side, these changes would not entail any 
addition costs on companies or on the public administration. 

Industrial supply chains will function more efficiently, even if they are spread across several 
Member States, which in turn will help integration of the sector across the EU. Making easier 
transfer of defence  assets and products  will  also  significantly increase  the  efficiency and 
effectiveness of the armed forces, in training and testing activities, and in normal operations 
and maintenance of their capacities. In the current geopolitical context, this is an intangible 
benefit of relevant value. 

 6.4 Well-targeted changes to EU legislation on chemical 

The Commission proposes the following changes to the EU legislation on chemicals: 

o  clarification of the defence exemption under Article 2(3) REACH to facilitate its use 
by Member States, to ensure legal certainty and a faster process and to reduce the 
administrative burden for defence industries.  
to respect the subsidiarity principle and to ensure that national specific circumstances 
are assessed in a balanced way, Member States will continue to decide whether or 
not to grant exemptions or not based on their first-hand information (as they currently 
do).  

o 

o  clarification  of  the  existing  exemptions  is  also  proposed  in  Regulation  (EU) 
1272/2008 on classification, labelling and packaging of chemical substances (CLP) 
and in Regulation (EU) 528/2012 on Biocidal Products.  

o  amendment of the Persistent Organic Pollutants (POPs) Regulation to ensure that the 
preparatory  stages  of  the  Stockholm  Convention  processes  must  take  defence 
readiness needs into account at an early stage.  

o  no  corresponding  change  of  the  REACH  Regulation  is  proposed  at  this  stage, 
because  of  the  ongoing  preparatory  work  in  view  of  a  revision  of  REACH.  This 
revision  will  explicitly  incorporate  the  defence  readiness  objective,  ensuring 
comprehensive  assessment  of  defence  concerns,  including  indirect  impacts  on 
defence supply chains.  

o  Member States may make exemptions from the reporting requirements embedded in 
art 13(1) of Regulation (EU) 2019/1021 (37) to protect sensitive information on the 
grounds of protecting national or EU security interests.  

The proposed targeted amendments will reduce time and money spent on compliance tasks 
related to the amended provisions. These include registration costs, reviews, and processing 
costs of filing.  
Compliance-related  cost  savings  across  the  EDTIB  related  to  these  changes  are 
estimated at EUR 35.8 millions per year (see Annex D for details on the methodology). 
Over eleven years of application and corrected for inflation, this would result in a net 

(37): Regulation (EU) 2019/1021 of the European Parliament and of the Council of 20 June 2019 on persistent 
organic pollutants (OJ L 169, 25.6.2019, p. 45 ELI: http://data.europa.eu/eli/reg/2019/1021/oj). 

23 

 
 
 
 
 
present  value  of  EUR  263  millions.  Environmental  protection  standards  would  not  be 
downgraded,  so  these  amendments  are  not  expected  to  have  any  negative  impact  on  the 
wider  objectives  of  environmental  sustainability  of  the  defence  activities.  No  additional 
costs on companies or on the public administration can be expected through this change.  

6.5 Changes related to access to finance 

The Commission proposes the following changes to access to finance: 

o 

targeted clarifications in a Commission Notice, giving the defence industry guidance 
on  the  applicability  of  the  sustainable  finance  framework  and  the  Corporate 
Sustainability Due Diligence Directive; 

o  an amendment of the meaning of ‘controversial weapons’ in the Sustainable Finance 
Disclosure Regulation taxonomy, to give assurance to investors and a positive signal 
to the financial markets on EU’s legislation position on access to finance for defence 
industries.  

o  an amendment to the annex to the Delegated Regulation (EU) 2020/1818 to clarify 
that  ‘controversial  weapons’  are  weapons  that  are  prohibited  under  international 
conventions.  

These proposals are expected to give the financial sector clarity on how to navigate defence-
related  investments  and  the  EU  sustainability-related  frameworks.  This  is  expected  to 
generate additional investments into the defence sector from financial institutions previously 
withholding such investment due to legal uncertainty. This would increase the amount of 
capital available for the defence sector. Experts estimate that this could generate up to EUR 
2.5 billions in additional investment opportunities annually (see Annex D for details on 
the methodology and assumptions). 

Those changes should also generate cost savings and increase investments opportunities by 
reducing the weighted average cost of capital (WACC) for EU defence companies, reducing 
the risk premiums(38) that investors demand to provide capital, because of the defence sector's 
improved  access  to  finance  under  the  sustainable  finance  framework.  Notably,  experts 
estimate that it would be reasonable to estimate the premium reduction as a 1 percentage 
point lower WACC. This would generate financial cost savings of EUR 94 millions and 
generate EUR 141 millions in additional investment for defence  companies annually 
(investments that  would have otherwise not passed the ‘cost of capital’ hurdle).  

Targeted  amendments  to  the  eligibility  rules  for  investments  in  defence  under  the 
investment  guidelines  for  the  InvestEU  fund  are  also  suggested  in  order  to  increase 
financing  and  investment  in  the  defence  sector.  These  amendments  aim  to  simplify  the 
criteria  and further  adapt them to  debt  and equity funding, for example by removing the 
current  requirement  for  subcontractors  and  suppliers  to  be  exempt  from  non-EU  control. 
Changing  the  InvestEU  eligibility  criteria  is  expected  to  unlock  EUR  1  174  millions  in 
funding per year (see Annex D for details on the methodology and assumptions). 

(38): This reduction is consistent with current average cost of capital for defence companies in the USA, to 
which EU industry will therefore align. 

24 

 
 
 
 
All these proposals are expected to generate an overall benefit for companies of EUR 
3 909 millions annually (see Annex D for details on the methodology and assumptions). 
Over eleven years of application and corrected for inflation, this would result in a net 
present value of EUR 26.7 billions. 

Those important additional investments in defence can be expected to generate additional 
jobs, at a rate some economic literature estimates at 5,9 direct new jobs and 1,1 new indirect 
jobs  per  million  of  euro  invested  in  the  defence  sector(39).  Overall,  this  would  amount  to 
around 26 000 to 33 000 total extra jobs potentially created per year due to this extra 
investment,  and  cumulatively,  a  total  of  330  931  extra  (direct  and  indirect)  jobs 
potentially created over 11 years.  

On the other side, these changes could entail some very insignificant costs on companies for 
the formation of employees to this new and clearer environment, especially compared to the 
possible benefits. 

The economic, social, competitive and innovation impacts of the changes in the attitude of 
the  financial  community  towards  defence  sector  following  this  increase  in  the  scale  of 
investments  flowing  into  defence  ecosystem  and  its  employment  potential  must  not  be 
underestimated. Historically, high-tech developments in the defence ecosystem have often 
spilled  over  into  the  civilian  sector,  sparking  related  innovations  and  often  creating 
completely new products, services, and even entire industries(40) . The scale of such benefits 
cannot be assessed at this stage, but can be envisaged as an additional positive outlook for 
the EU economy and society.  

       6.6 A new regulation on Fast-Track Permitting for Defence Readiness Projects 

The  Commission  proposes  a  legal  framework  of  limited  scope  to  accelerate  permitting 
procedures related to the defence readiness projects, while leaving instruments to that end 
in the hands of Member State. The key components of the proposed Regulation include: 

o  a maximum 60-day period for permitting procedures from the time of submission of 
a complete file; possibilities to pause this period if information is missing; permit 
deemed  automatically  granted  if  no  official  response  was  sent  by  the  end  of  this 
period; 

o  a requirement for Member States to designate a single point of contact (‘one-stop-
shop’) to coordinate assessments and decisions and liaise with the permit-asker;  
o  a requirement for Member States to make information available on the permitting 

process, financing opportunities, and administrative support, where relevant; 

o  a  requirement  for  Member  States  to  provide  administrative  support  (including 
assistance on compliance and public information requirements) for defence readiness 
projects,  throughout  the  permit-granting  process,  particularly  for  SMEs  and  mid-
caps.  

The  scope  of  this  measure  and  the  available  resources  mean  no  public  estimation  of 
procedural lengths of permitting is currently available. However, stakeholders and Member 

(39): According to the results of Garret-Peltier (2017), Job Opportunity Cost of War.  

(40): From radar, penicillin mass production, jet engines, microwave ovens in the 1930s-40s, to nuclear power, 
satellite  communication,  semiconductors  &  integrated  circuits  in  the  1950s-60s,  Arpanet/Internet,  satellite 
positioning, trauma medicine in the 1970s, satellite/digital imaging, composite materials, medical imaging in 
1980s-90s, cybersecurity, UAVs, robotics, wearable tech, internet by satellite from 2000 to today,  

25 

 
 
 
 
 
States  from  across  Europe  reported  recurring  cases  of  permitting  cycles  spanning  over 
several years, up to 5 or 7 years even in projects clearly important for defence readiness.  

Now the urgency of the defence readiness ramp-up calls for a strong and ambitious response. 
Administrative  slowness  cannot  be  an  excuse  anymore  to  hamper  projects  necessary  for 
European defence and security.  

Member  States  and  industry  agreed  that,  though  ambitious,  a  60  days  period,  with  the 
possibilities for authorities to stop the clock, could provide enough time for permit-granters 
to  provide  correct  analysis  based  on  a  duly  complete  file.  Administrations  and  those 
requesting  permits would need support for this,  which is  why the proposals  make sure a 
strong and clear support framework is in place to enable the system to function smoothly.  

The regulation proposal creates a common set of legal and procedural guarantees across the 
EU, while preserving national  responsibility  for taking  the actual  permitting decisions.  It 
aligns with similar measures (fast-track procedures, ‘one-stop-shop’ principle) adopted in 
other  strategic  sectors  (e.g.  Chips  Act,  Net-Zero  Industry  Act)  and  addresses  a  key 
bottleneck identified by both industry and national authorities.  

The  collective  nature  of  the  security  challenge  and  the  cross-border  nature  of  highly 
integrated defence industries with interlinked supply chains, mean that the EU respects the 
principles  of  subsidiarity  and  proportionality  in  leaving  Member  States  responsible  for 
putting this administrative procedure in place. 

To assess the benefits of this measure, the average time for permitting pre-Omnibus was 
estimated at around three years. The Commission proposal for 60-day maximum permitting 
procedure would therefore lead to time savings of around 34 months on average,  that 
translates  into  direct  cost  savings  due  to  both  the  cost  associated  with  delays  and  the 
associated time-value of money that helps us capture the opportunity cost associated with 
immobilising  financial  resources  associated  to  a  project  awaiting  permit  approval.  By 
combining  the two  factors  and using  a conservative estimation  of the number of permits 
which could be asked per year for defence readiness, notably in view of the 2030 objectives 
and  the  industrial  ramp-up,  the  associated  cost  savings  is  estimated  to  amount  to 
approximately EUR 804 millions in annual administrative cost reduction benefits (41) 
plus  the  value  of  saved  time  (see  Annex  D  for  details  on  the  methodology  and 
assumptions). Over eleven years of application and corrected for inflation, this would 
result in a net present value of EUR 5.9 billions.  

This permitting simplification will also reduce the risk of Member Staes having to acquire 
defence  products  outside  of  the  EU  due  to  delays  in  the  supply  chain.  Environmental 
protection standards would not be downgraded, so these amendments are not expected to 
have  any  negative  impact  on  the  wider  objectives  of  environmental  sustainability  of  the 
defence activities.  
On the other side, these changes could entail some costs on the public administration for the 
formation of employees to this new legal framework, as well as possible (depending on the 
Member  States’  interpretation)  costs  linked  to  the  set  up  of  single  points  of  contacts. 
However, the proposed changes anticipate for this a provision to help public administrations 
adjust to the changes through external help from the European Union. It must also be noted 
that such a mechanism of single point of contact already exist for the Net-Zero Industry Act, 

(41): Savings linked to administrative costs are estimated around EUR 638 million. See annex D for  more 

details. 

26 

 
 
meaning that public administrations could leverage on this existing framework to minimise 
the potential costs. 

7.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

Overall,  the  Defence  Omnibus  solutions  proposed  are  expected  to  have  socio-economic 
impact  on  the  Single  Market  for  Defence  products  and  services  and  in  the  European 
economy in general.  

For some proposed changes, cost-savings, value creation, and facilitated access to finance 
could be calculated, along with the number of new jobs created. The values are presented in 
the  Executive  Summary  and  the  methodology  used  is  shown  in  the  Annex  D.  These 
calculations do not consider the effects of the changes that could not be calculated due to 
lack of specific data. Those are very important in the Defence sector (see Annex D for how 
to improve this issue). 

A main indicator of success would be the Defence Readiness efforts succeeding by 2030: 
i.e. all Member States and their citizens feel that Europe is defence-ready in 2030.  

A second category of indicators of success would be in the use of the proposed changes in 
the short to mid-term, and the related cost-savings and extra financial power. These could 
be observed through monitoring aspects such as the following: 

•  Time-to-grant for EDF projects, SMEs participation rate and crowd-in effect of 
EDF grants. This will allow checking on the short and mid-term the impact of the EDF 
changes, once adopted. An overall impact evaluation of the EDF, once the programme 
expires,  will  be  prepared  and  take  due  account  of  the  changes  made  through  the 
Omnibus. Success here would mean a shorter time-to-grant, more SMEs participating 
and  higher  private  sector  investment  following  increased  public  spending  (crowd-in 
effect). 

•  Reduced fragmentation of the defence single market would indicate the extent of the 

success of the Commission initiative. Key performance indicators include: 
increased share and value of joint defence procurement by Member States. 
increased  number  of  contracts  falling  below  the  thresholds  of  the  Directive 
2009/81/EC, coinciding with an increased or unchanged overall procurement spending.  
increased use of General Transfer Licenses. 

i. 
ii. 

iii. 

•  Monitoring and ex post impact evaluation are key to the quality of public policies and 
EU legislation. However, sometimes Member States withhold data on the grounds of 
security of information, which makes it difficult to monitor and evaluate the impact of 
REACH and other chemical legislation. Indicators could include: 
increased use of exemptions for Defence in chemical legislations. 
increased capability availability and smooth supply chains of defence products.  
expert and stakeholders’ feedback  on the difficulties for  the  defence sector due to 
administrative burden linked to chemical and environment legislation. 
Impact of measures to ease access to finance can be monitored with some of or all the 
following key performance indicators (subject to non-internal data availability):  
numbers  and  volume  of  InvestEU-backed  defence-readiness  projects  and 
beneficiaries (source: ECFIN/EIB). 
crowding-in effects of private investors (source: ECFIN/EIB).  

• 

i. 
ii. 
iii. 

i. 

ii. 

27 

 
 
iii. 

iv. 

v. 

changes in banks and funds’ investment policies towards defence undertakings (source: 
ECFIN/FISMA, financial markets, expert assessments) 
volume of private finance mobilised for defence projects and companies through 
ESG-aligned instruments, including green bonds, Paris-aligned or climate-transition 
benchmark  products  and  sustainability-linked  loans  (SLLs)  (source:  ECFIN/FISMA, 
financial markets) 
number of defence SMEs receiving positive ESG assessments or improved access to 
finance based on revised guidance or investor practices (source: industry stakeholders 
feedback); 

•  Monitoring of the permitting framework will be conducted at both national and EU 
levels  to  highlight  potential  issues  that  might  need  normative  adjustments.  Key 
performance indicators could include:  
changes  in  the number  of and permitting timelines  for defence readiness  projects 
(feedback from stakeholders and experts);  
the amount of compliance costs, especially for SMEs and mid-caps compared to bigger 
counterparties (source: industry stakeholders feedback, ad hoc analysis).  
The use and effectiveness of  ‘one-stop-shop’ mechanisms (source: Member States, 
industry stakeholders feedback and expert assessment). 

i. 

ii. 

iii. 

8.  CONCLUSION 

The proposals of the defence readiness Omnibus will simplify the existing defence-related 
legislation in a targeted manner, to harmonise authorisation and procedures created by the 
defence directives. It will accelerate these procedures as much as possible in specific cases, 
such as EDF and lower value procurement.  

In  non-defence  specific  legislation,  it  will  introduce  well-targeted  amendments  in  the 
existing InvestEU investment guidelines to support defence-readiness investments. It will 
also clarify the application of the existing legislation on chemicals.  

Well-targeted  simplification  proposals  will  contribute  to  the  completion  of  the  defence 
single market, improve the quality and readiness of the European Defence Industrial  and 
Technological Base, and comply with goals set in European Defence Industrial Strategy(42) 
and  the  White  Paper(43).  A  specific  new  Regulation  on  fast-track  permitting  for  defence 
readiness projects, respecting all existing regulations and national competencies, was also 
deemed a solution with high impact and low costs.  

This Omnibus package is expected to: (i) reduce bureaucracy costs and time-to-delivery 
for European defence companies, (ii) unlocking private capital flows to fund more defence 
investments and (iii) facilitate joint procurement of defence equipment by Member States, 
triggering further savings.  

(42):  Report  from  the  Commission  to  the  European  parliament  and  the  Council  on  the  implementation  of 
Directive 2009/81/EC on public procurement in the fields of defence and security, to comply with Article 73(2) 
of that Directive, SWD(2016) 407 final, p.4. 

(43): Joint White Paper for European Defence Readiness 2030, JOIN(2025) 120 final. 

28 

 
 
 
Table  1:  Aggregation  of  the  different  cost-savings  and  benefits  by  domain  and  category 
(annual and percentage of the overall net-present value over 11 years) 

Type of 
legislation  

Legislative proposals 
& clarifications to 
existing legislation 

Categories of 
benefits generated 

Share of 
total 
NPV 

Estimation of 
yearly 
benefits 
(EUR 
millions, real 
values)* 

Defence-
related 

EDF Regulation 

(A) Cost savings  

Defence Procurement 

(A) Cost savings 

101 

7** 

1,4% 

32,6% 

(C) Joint 
procurement 

1 818** 

Intra-EU transfer of 
defence products   

(A) Cost savings 

142** 

1,8% 

Non-
defence- 

related 

Fast-track permitting  

(A) Cost savings 

 Chemicals 

(A) Cost savings 

Access to finance 

(A) Cost savings 

(B) Value creation 

11,5% 

0,5% 

52,2% 

804 

36 

94(44) 

3 815 

Total Net Present Value of benefits over 2026-36: EUR 51.56 billions 

100% 

−  Direct annual cost savings for private & public entities: EUR 101+7+142+804 

+36+94 millions = EUR 1.2 billions. 

−  Easier access to finance triggering new investments: EUR 3 815 millions in year 1, up 

to EUR 4.7 billions (from 2035) 

−  Potential cost savings for MS on joint procurement:  EUR 1.8 billion 

annually 

(*) Central scenario, (**) Only from 2027, when relevant Omnibus amendments will enter 
into force 

The important data and information gaps in the Defence economic sector make a precise and 
fully  externally-justified  assessment  of  the  impact  of  the  Defence  Readiness  Omnibus  a 
challenge in itself. The quantification of the Omnibus effects is therefore a modelling work 
that relies heavily on internal assessment, including available outside sources.  
Although  the  availability  of  data  in  the  defence  sector  and  in  the  subsectors  affect  the 
estimations and lead to benefits’ assessment with a conservative approach, the cumulative 
impacts of the proposed changes are still to be significant, with the quantification models 
used (see Annex D for details on the methodology): 

-  direct annual EUR 1.2 billions in cost-savings for private and public entities, 
mostly for private companies due to simplification measures cutting time and efforts 

(44): Given the nature of those savings, related to lesser cost delays in access to finance, those are not counted 

as administrative cost-savings in the sense of the better regulation cost-benefit analysis. 

29 

 
 
 
- 

- 

spent on procedures (fast-track permitting scheme alone, should save around EUR 
804 millions per year). 
easier access to finance for defence companies  estimated to  free up to  EUR  4.7 
billions  of  annual  extra  investments  (mostly  through  easier  access  to  InvestEU 
starting  at  around  EUR  1.2  billions,  and  from  clearer  links  between  sustainable 
investments and Defence sector, starting at around EUR 2.5 billions annually). This 
extra-investment is expected to create around 26 000 to 33 000 extra jobs annually.  
cost savings by Member States through joint procurement, pooling together their 
demand in easier ways thanks to the Omnibus. The ensuing economies of scale could 
also amount from EUR 1.8 billions and growing annually up to EUR 3.6 billions 
in 2036 in the central scenario (equivalent figures for the low scenario are EUR 
909 millions from 2027, up to EUR 1.8 billions in 2036). 

Although the three categories of savings are difficult to sum together given their different 
assumptions and nature, as well as the limited availability of data (see Table 2 and annexes), 
such a sum would bring the total financial value of the benefits arising from the Omnibus 
proposals to range (depending on different pessimistic/optimistic scenarios) from EUR 42.5 
to EUR 51.3 billion(45) as a net present value over the next 11 years (2026-36). 

Table 2: Breakdown of the different cost-savings and benefits by category in net-present 
value over 11 years  

Net Present Value of benefits over period 2026-36 (EUR billions) 

Scenarios: 

Low 

Central scenario 

Benefits categories: 
A) Cost savings 
B) Value creation 
C) Facilitated joint procurement 

Total 

8.0 
26.1 
8.4 
 42.5 

8.5 
26.1 
16.7 
51.3 

(45): Net present value over the next 10 years (2026-36), under different scenarios, adding all type of benefits. 
Methodology is described in details in Annex D. 

30 

 
 
 
 
 
Graphs 1 & 2:  Breaking down the overall cost savings and benefits by category illustrates 
the  weight  of  each  change  in  the  cost  savings  &  benefits  model.  The  scale  of  potential 
benefits is mostly impacted by two shifts over the next 11 years: private capital no longer 
hindered  from  flowing  to  the  sector  by  uncertainties  or  constraints  (52.2%  of  NPV)  and 
facilitation of joint procurement for Member States (32.6%). Fast-track permitting should 
also lead to significant cost savings (11.5%). 

31 

 
 
 
 
 
 
 
Annex A 

Information on the drafting process for the staff 
working document 

This  Staff  Working  Document  accompanies  the  Defence  Readiness  Omnibus.  It  was 
produced,  in  line  with  the  Better  Regulation  Guidelines,  within  three  months  after  the 
adoption  of  the  package,  due  to  urgency.  To  assess  the  proposals,  the  Commission  used 
publicly available data and previous studies, stakeholders’ feedback, expert analysis, and its 
internal  accumulated  expertise  in  managing  defence  policies  and  programs.  The 
Commission relied on external consultants (46) to coproduce the quantitative model used to 
assess the potential savings impact of the Defence Readiness Omnibus.  

The availability and reliability of defence sector-specific data were limiting factors for the 
current  study.  The  following  knowledge  gaps  merit  further  research,  which  will  benefit 
future quantification. Important points of attention identified in the course of this study are 
notably: 

1.  Supply chain knowledge and mapping is scarce. Member States differ in how they 

define, monitor, and disclose this. 

2.  Information  Member  States  share  with  the  Commission  is  voluntary  rather  than 
systematic, which impairs data consolidation by the Commission. Thus, information 
on  bottlenecks  is  limited,  hampering  efforts  to  address  them  to  enable  fast-track 
defence readiness. 

3.  Some EU instruments are too new to allow the impact of previous instruments to be 
assessed, so we cannot yet learn from gaps in application or diverging results.  

These three factors hamper a very granular analysis of the current situation and extremely 
precise projections in the future. Data-building and consolidation for the defence sector at 
European level have in the past been assessed as complex, given their nature and ongoing 
discussions  with  many actors.  More experimental  data-building  is  also  being  explored in 
order to circumvent all the limiting factors. Discussions could lead to progress in the future, 
when this Staff Working Document could then be subject to counterfactual analysis.In the 
meanwhile, information on issues such as bottlenecks and gaps and how to address them to 
enable and to fast-track defence readiness relied both on available disclosures and to a large 
extent  on  expert  estimations,  using  conservative  expectations  and  building  as  much  as 
possible  on  available  assessments  of  other  defence  policy  initiatives  (such  as  the  Staff 
Working Document accompanying the European Defence Fund, the Joint White Paper on 
the  Future  of  European  Defence,  and  the  Staff  Working  Document  accompanying  the 
European Defence Industry Programme and a framework of measures to ensure the timely 
availability  and  supply  of  defence  products).  Against  this  background,  the  European 
Commission welcomes  feedback to the methodology  and to the quantification  of this 
Omnibus. These will be instrumental to build on this work for further quantification in the 
field of the Single Market of Defence. Please address all methodological comments, inputs, 
feedback and ideas to: defis-simplification@ec.europa.eu. (47) 

(46): The quantitative model to assess benefits was built in cooperation with Price Waterhouse Coopers office 
in Paris, which was involved in assessing other defence policy initiatives (e.g. EDF mid-term review, EDIP, 
etc.). 

(47): Whenever possible, please use and base your inputs on the Better Regulation Toolbox, notably Chapter 

8, p. 499 to 608. 

32 

 
 
 
Stakeholder consultation  

Annex B 
The stakeholder consultation process comprised (i) a public survey that was open from 25 
March to 22 April 2025, (ii) implementation and strategic dialogues at high level, and (iii) a 
series of targeted meetings with Member States, relevant business representatives from the 
Union and other key stakeholders, industry associations, major industrial players, small and 
medium-size-enterprises, mid-caps, in-house experts and civil society.  

Committees of  national  experts (for defence  procurement,  transfers, EDF,  InvestEU, and 
sustainable finance, where these existed) were consulted on the idea of the Omnibus and on 
the more concrete proposals.  

In total, the Commission engaged over 202 stakeholders across all 27 Member States 
and received some 277 inputs, for the defence readiness consultation.  

The  interim  evaluation  of  the  EDF  -  based  on  experts'  and  users'  assessments  and 
evaluations - also pointed out needs for simplification and streamlining after three full cycles 
of  implementation  to  deliver  critical  innovations  rapidly.  This  evaluation  process  is  not 
described here, as it is already described in detail in a dedicated report (48). 

•  Scope of the defence readiness consultation(49) 

This aimed to identify main bottlenecks to defence readiness in defence and non-defence 
legislations, and to gather qualitative and quantitative input on implications of existing and 
projected regulatory frameworks.  

The consultation covered six interlinked thematic areas:  

- 
- 
- 
- 

the European Defence Fund,  
the Directive 2009/81/EC on defence procurement,  
the Directive 2009/43/EC on intra-EU transfers of defence-related products,  
the chemicals and environmental regulatory framework affecting industrial supply 
chains,  

-  permitting procedures for defence-related military and training infrastructures and 

- 

production facilities,  
access to financial instruments for defence industries and applications of sustainable 
finance frameworks to the defence sector.  

The stakeholder consultation aimed to collect qualitative and quantitative data and evidence, 
as  well  as  feedback  and  suggestions  on  key  issues  and  proposals  made  in  the  Defence 
Readiness Omnibus – a form of reality check. The idea was to gather those from all type of 
stakeholders (Member States, industry and others) with the aim of (i) removing regulatory 
barriers/discriminations which affect the European defence industry in EU-regulations and 
programmes,  (ii)  simplifying  and  accelerating  procurement  procedures  for  the  European 
defence industry (iii) simplifying and facilitating transfer of defence products in the single 

(48):  EDF  Interim  Evaluation  Report  2025:  [https://defence-industry-space.ec.europa.eu/eu-defence-
industry/european-defence-fund-edf-official-webpage-european-commission/edf-interim-evaluation-
report_en]. 

(49):  https://defence-industry-space.ec.europa.eu/newsroom/consultations/consultation-contribute-defence-

omnibus-simplification-proposal_en. 

33 

 
 
market, and (iv) simplifying EU defence programmes, particularly the European Defence 
Fund (EDF). 

•  Stakeholder consultation on the EU-Survey platform 

The  consultation  was  built  around  an  open  online  survey  on  the  EU  Survey  platform 
(‘Consultation  to  contribute  to  the  Defence  Omnibus  Simplification  Proposal’).  This  ran 
from  25  March  to  22  April  2025,  and  engaged  with  202  stakeholders.  These  included 
authorities from all Member States, defence industry leaders, small and medium enterprises 
and  mid-caps,  sectoral  associations,  trade  unions,  research  organisations  and  NGOs,  and 
private citizens.  

The respondents were able to respond to question blocks that related to issues in the areas 
of (i) expanding and maintaining existing defence industrial capacities, (ii) enabling rapid 
grant of construction and environmental permits for defence industrial projects, (iii) timely 
and lawful availability and usability of necessary essential materials / inputs in the supply 
chains of the European defence industrial base, (iv) the availability of personnel, (v) access 
to  finance,  including  Environmental,  Social  and  Governance  (‘ESG’)  investment,  (vi) 
defence procurement rules and procedures, (vii) the effectiveness and efficiency of intra-EU 
transfers  of  defence-related  products,  (viii)  the  exchange  of  confidential  and  sensitive 
information, (ix) the insufficient cross certification of defence products and lack of mutual 
recognition of certification, (x) the need to streamline EU defence industrial programmes 
and (xi) the need to simplify or change other EU-funded programmes.  

For  each  question,  where  a  respondent  reported  experiencing  problems  in  this  area,  they 
were asked to name the main obstacles they face, to provide specific examples, to provide 
concrete proposals for changes that would solve the obstacle, if possible, to provide a cost 
estimate  of  the  magnitude  of  possible  cost  savings  for  their  entity  and  for  the  sector  in 
general that would arise from the proposal and to propose solutions for obstacles that are 
caused by a lack of EU legislation. 

The respondents were also asked to mention anything else that they believe can be done to 
simplify the EU regulatory environment and harmonise rules for them/their organisation and 
the defence industry overall. They could also attach documents to their survey responses. 
They were also invited to submit any non-structured contributions or papers in support of 
their views. 

•  Stakeholder profiles 

We received: 

180 replies to the survey. These included 32 from Member States authorities representing 
23  Member  States,  104  from  companies,  25  from  business  associations,  8  from  research 
organisations  and  7  from  non-governmental  organisations  (including  labour  unions).  We 
also received 47 additional documents (see table below for complete picture). 

Out of the original 16 respondents who described themselves as ‘others’ 15 were requalified 
after observation: 

-  1 EDF public-private national contact point, 1 sustainable finance association, 1 

regional cluster and 1 labour union were requalified as ‘NGO’ 

34 

 
 
 
-  2 investors, 1 state-controlled company, and 2 public banks were requalified as 

‘companies’ 

-  2 universities were requalified as ‘research organisation’   
-  3 associations of industries or investors were requalified as ‘business association’ 
-  1 ministerial department was requalified as ‘Member State authority’. 

Type of 
stakeholder  

MS authority  
Companies 
Research 
organisation  
Business 
association 
NGO  
EU citizen  
International 
organisation  
Other  

Survey 
replies  

32  
104  

8 

25  

7 
2  

1  

1 

 Sub-total 

 180 

Additional documents 
sent through the survey 
tool 
7 
19 

Individual Member 
State or person 
concerned 
23 
104 

0 

20 

0 
0 

0 

1 

47 

8 

25 

7 
2 

1 

1 
171 (incl. 23 Member 
States) 

In  total,  counting  as  one  the  different  replies  from  the  same  persons,  171  persons  with 
different  legal  status  provided  inputs  using  the  EU-Survey  platform:  from  Member  State 
authorities, companies and businesses, research organisations, business associations, NGOs, 
EU citizens, International Organisations and other stakeholders were received online in.  

•  Main results of the public survey 

For ease of readability, results can be broken down into:  

−  33 replies of public sector stakeholders (, including replies under ‘Member States 

authorities’ and ‘international organisations’ and  

−  148 replies of private sector stakeholders 
−  Around 35% of private stakeholders were SMEs (52 out of 99 replies). 

All percentages below are rounded up, and only ‘yes’ and ‘no’ answers are used to calculate 
the percentage values. 

Responses from private sector stakeholders (148 replies): 

Obstacle 

Yes  No  

I  do  not 
know 

This  question  is 
not  relevant  for 
me 

Total  of 
replies 

Yes+no 

Are there, in your view, 
obstacles 
(legal/regulatory/admini
strative) to establish 
new or 

85 

30 

13 

15 

143 

115 

74% 

26% 

35 

 
 
expand/maintain 
existing defence 
industrial capacities in 
the EU?   

Do you/your 
organisation face 
specific obstacles 
(legal/regulatory/admini
strative or other) to 
enable rapid grant of 
construction and 
environmental permits 
for defence industrial 
projects?   

Do you/your 
organisation face 
specific obstacles 
(legal/regulatory/admini
strative or other) to 
ensure the timely and 
lawful availability and 
usability of necessary 
essential materials / 
inputs in the supply 
chains of the European 
defence industrial base 
(‘EDTIB’), for which 
adequate substitutes are 
not available (e.g., raw 
materials, components 
and substances)?   

Are there, in your view, 
obstacles 
(legal/regulatory/admini
strative or other) to the 
availability of 
personnel?   

Are there, in your view 
obstacles 
(legal/regulatory/admini
strative or other) related 
to access to finance, 
including 
Environmental, Social 
and Governance (‘ESG’) 
investment?   

52 

29 

20 

39 

140 

81 

64% 

36% 

50 

31 

20 

37 

138 

81 

62% 

38% 

46 

43 

19 

30 

138 

89 

52% 

48% 

68 

24 

28 

22 

142 

92 

74% 

26% 

36 

 
Do you/your 
organisation face 
obstacles 
(legal/regulatory/admini
strative or other) related 
to the effectiveness and 
efficiency of defence 
procurement rules and 
procedures that slow 
down defence 
procurement process, 
introduce excessive 
complexity or 
administrative costs, 
limit unduly the access 
to defence procurement 
procedures etc.? 

Do you/your 
organisation face 
obstacles 
(legal/regulatory/admini
strative or other) related 
to the effectiveness and 
efficiency of intra-EU 
transfers of defence-
related products and the 
control of those transfers 
that unduly slow down 
transfers, introduce 
excessive complexity or 
administrative costs, 
limit the possibilities for 
effective cross-border 
collaboration or the 
access to cross border 
defence procurement 
procedures.   

Do you/your 
organisation face 
obstacles 
(legal/regulatory/admini
strative or other) for the 
exchange of 
confidential and 
sensitive information 
with the European 
Commission, national 
authorities in ensuring 

62 

27 

23 

29 

141 

89 

70% 

30% 

53 

29 

22 

33 

137 

81 

65% 

35% 

49 

36 

23 

30 

138 

85 

58% 

42% 

37 

 
   
41 

25 

32 

39 

137 

66 

62% 

38% 

86 

9 

29 

15 

139 

95 

91% 

9% 

77 

12 

31 

21 

141 

89 

87% 

13% 

simple and secure 
handling of such 
information?   

Are there, in your view, 
issues stemming from 
the insufficient cross-
certification of defence 
products and lack of 
mutual recognition of 
certification and how 
could these issues be 
addressed?   

Is there, in your view, a 
need to streamline EU 
defence industrial 
programmes (such as 
European Defence Fund, 
EDIRPA, ASAP) to 
reduce delivery time, 
simplify procedures and 
the treatment of Member 
States’ co-funding?   

Is there, in your view, a 
need to simplify or 
change other EU-
funded programmes 
(such as Horizon 
Europe, Structural funds, 
InvestEU or other) in 
order to improve the 
access and or usefulness 
of funding under these 
programmes for the 
defence industry?   

The numbers refer to all respondents replying to the particular questions. 

Overall, private sector stakeholder replying to these questions were almost unanimous in 
considering there were regulatory obstacles:  

-  91%  of  them  agreed  there  was  leeway  for  simplifying  EU  defence  industrial 

programmes. 

-  87% of them saw leeway for simplifying non-defence funding programmes. 
-  74% saw obstacles in accessing finance. 
-  74% saw obstacles in setting up new businesses and in expanding or maintaining 

existing defence industrial capacities in the EU. 

Many private sector stakeholders who replied thought the existing legal and administrative 
framework was detrimental to: 

38 

 
 
intra-EU transfers of defence-related products (65%); 

−  procurement rules (70%); 
− 
−  permitting (64%); 
−  availability of critical materials (62%); 
− 
−  exchange of sensitive information (58%); 
−  availability of personnel (52%). 

recognition of certification between Member States (62%); 

Responses from public sector stakeholders (33 replies): 

Obstacle 

Yes 

No  

Total of 
replies 

Yes+no 

I do not 
know 

This 
question is 
not 
relevant 
for me 

16 

4 

2 

10 

32 

20 

80% 

20% 

12 

5 

71% 

29% 

10 

4 

71% 

29% 

17 

17 

14 

14 

Are there, in your view, 
obstacles 
(legal/regulatory/administrative) 
to establish new or 
expand/maintain existing 
defence industrial capacities in 
the EU?   

Do you/your organisation face 
specific obstacles 
(legal/regulatory/administrative 
or other) to enable rapid grant 
of construction and 
environmental permits for 
defence industrial projects?   

Do you/your organisation face 
specific obstacles 
(legal/regulatory/administrative 
or other) to ensure the timely 
and lawful availability and 
usability of necessary essential 
materials / inputs in the supply 
chains of the European defence 
industrial base (‘EDTIB’), for 
which adequate substitutes are 
not available (e.g., raw 
materials, components and 
substances)?   

Are there, in your view, 
obstacles 
(legal/regulatory/administrative 

10 

5 

67% 

33% 

15 

15 

39 

 
 
 
 
 
 
 
 
or other) to the availability of 
personnel?   

Are there, in your view obstacles 
(legal/regulatory/administrative 
or other) related to access to 
finance, including 
Environmental, Social and 
Governance (‘ESG’) 
investment?   

Do you/your organisation face 
obstacles 
(legal/regulatory/administrative 
or other) related to the 
effectiveness and efficiency of 
defence procurement rules and 
procedures that slow down 
defence procurement process, 
introduce excessive complexity 
or administrative costs, limit 
unduly the access to defence 
procurement procedures etc.?   

Do you/your organisation face 
obstacles 
(legal/regulatory/administrative 
or other) related to the 
effectiveness and efficiency of 
intra-EU transfers of defence-
related products and the control 
of those transfers that unduly 
slow down transfers, introduce 
excessive complexity or 
administrative costs, limit the 
possibilities for effective cross-
border collaboration or the 
access to cross-border defence 
procurement procedures.   

Do you/your organisation face 
obstacles 
(legal/regulatory/administrative 
or other) for the exchange of 
confidential and sensitive 
information with the European 
Commission, national authorities 
in ensuring simple and secure 
handling of such information?   

14 

4 

78% 

22% 

20 

1 

95% 

5% 

18 

18 

21 

21 

15 

4 

79% 

21% 

19 

19 

12 

10 

55% 

45% 

22 

22 

Are there, in your view, issues 
stemming from the insufficient 

11 

5 

16 

16 

40 

 
 
 
 
 
 
 
 
 
 
 
69% 

31% 

21 

0 

100% 

0% 

12 

0 

100% 

0% 

cross-certification of defence 
products and lack of mutual 
recognition of certification and 
how could these issues be 
addressed?   

Is there, in your view, a need to 
streamline EU defence 
industrial programmes (such 
as European Defence Fund, 
EDIRPA, ASAP) to reduce 
delivery time, simplify 
procedures and the treatment of 
Member States’ co-funding?   

Is there, in your view, a need to 
simplify or change other EU-
funded programmes (such as 
Horizon Europe, Structural 
funds, InvestEU or other) in 
order to improve the access and 
or usefulness of funding under 
these programmes for the 
defence industry?   

21 

21 

12 

12 

The numbers refer to all respondents replying to the particular questions. 

Replies of public sector authorities must be interpreted carefully, given that only 22 out of 
27 Member States replied to the online survey, and some Member States replied to multiple 
times  (two  Member  States  gave  three  replies,  and  six  Member  States  gave  two  replies). 
However, as the multiple replies had different opinions and came from different ministries 
or independent bodies, we included them all in the table above. 

Overall,  all  public  sector  stakeholders  (100%)  that  replied  to  these  questions  considered 
there were regulatory obstacles and leeway for simplifying EU defence industrial and non-
defence funding programmes. 

Almost all (95%) considered that defence procurements could also be improved. 

Most also considered there were regulatory or administrative obstacles: 

− 

− 
− 
− 
− 
− 
− 
− 

to set up new business or expand/maintain existing defence industrial capacities in 
the EU (80%); 
intra-EU transfers of defence-related products (79%); 
to access finance (78%); 
in permitting (71%); 
in availability of critical materials (71%); 
to recognise certification between Member States (69%); 
in availability of personnel (67%); 
in exchanging sensitive information (55%). 

•  Other contributions outside of the EU-Survey platform 

41 

 
 
 
 
 
 
The  Commission  also  received  20  input  papers  from  Member  States  and  10  from 
industry stakeholders (including 5 by business associations) describing in detail existing 
issues with EU legislation for defence.  

Some of the senders provided concrete examples and suggested measures for streamlining 
the regulatory environment and to lessen the administrative burden for the defence sector.  

One of the most impactful inputs was a joint letter to European Commissioner Kubilius 
from  Ministries  of  Defence  of  11  Member  States:  namely  the  Netherlands,  Germany, 
Belgium, Sweden, Czechia, Latvia, Lithuania, Romania, Finland, Estonia, and Denmark. 

They expressed their strong desire for the Commission's legal  analysis and proposals  for 
solutions  in  the  Omnibus  Proposal  to  also  address  the  legal  obstacles  for  operational 
readiness  of  our  armed  forces  and  defence  organisations,  in  addition  to  addressing  legal 
obstacles to the defence industry.  

They indicated that while the Treaty recognises the special position of national security and 
territorial integrity as essential state functions of the Member States that the EU respects, 
they considered that some EU legislation formed a direct obstacle to the armed forces for 
fulfilling their tasks.  

This  is  mainly  (but  not  exclusively)  in  the  areas  of  procurement  legislation,  nature 
conservation, and environmental protection, and more generally the administrative burden 
on defence organisations deriving from various EU legal acts.  

•  Implementation and strategic high-level dialogues 

On 12 May 2025, President von der Leyen chaired the first-ever Strategic Dialogue with the 
European  Defence  industry  and  Social  Partners  to  collect  ideas  from  the  main  actors 
concerned.  Three  trade  unions  and  business  associations,  16  companies  as  well  as 
representatives from the Ukrainian defence industries were invited.  

The participants were: Aerospace, Security and Defence Industries of Europe (ASD EU) ; 
European Trade Union Confederation (ETUC); IndustriAll European Trade Union; Airbus 
;  Aktyvus  Photonics;  Diehl  Stiftung  &  Co.  KG;  DOK-ING;  Frankenburg  Technologies; 
Helsing;  Indra;  Kitron;  Leonardo;  MBDA;  Naval  Group;  Navantia;  Polish  Armament 
Group; SEC technologies; Thales; WB Group; Ukraine Defence Industry 

On 19 May 2025, Commissioner Kubilius chaired an Implementation Dialogue with defence 
industry and social partners, which further refined priorities based on real-world feedback.  

The  participants  were  32  companies  and  2  social  partners  and  business  associations: 
Aerospace, Security and Defence Industries of Europe (ASD - EU), IndustriAll European 
Trade  Union  (EU),  Airbus  (DE,  FR,  ES),  Aktyvus  Photonics  (LT),  Czechoslovak  Group 
(CZ),  C&V  Consulting  (BE);  Damen  (NL),   Dassault  (FR),  DOK-ING  (HR),  Fincantieri 
(IT), Frankenburg Technologies (EE), GMV (ES), Helsing (DE), Hensoldt (DE), ICEYE 
(FI),  INDRA  (ES),  John  Cockerill  (BE);  Kitron  (NO),  KNDS  (FR  DE),  Leonardo  (IT), 
MBDA (IT FR UK DE), Nammo (NO, FI), Naval Group (FR), Navantia (ES), Patria (FI), 
Polish Armament Group / PGZ (PL), SAAB (SE), Safran (FR), Sener (ES), Terma (DK), 
Thales (FR), Theon (EL), Threod (EE), and WB group (PL).  

The implementation and the strategic dialogues concluded that the defence industry is ready 
to speed-up and ramp-up defence production. They also concluded that the EU needs to act 

42 

 
now, including on investments in innovations to be used on the battlefield as crucial priority. 
This aligned broadly with the results from the stakeholder consultation. 

Stakeholders highlighted  the urgent  need for  both  further simplification  on the European 
Defence Fund and for help in increasing the private and public funding for Defence projects 
throughout the R&D process, chiefly through easier access to finance. They agreed on the 
need for exemptions in environmental and chemical legislations (such as REACH) to give 
certainty to investors.  

The industry emphasised that fast procurement is crucial to reach the goals set for a strong 
European defence. It also stressed the need for fast-track permitting, which would greatly 
speed up process of opening or expanding defence businesses and projects.  

Many  stakeholders  expressed  that  the  Commission  should  encourage  Member  States  to 
facilitate transfers, for instance through more and broader use of General Transfer Licences 
(GTLs).  

Total number of inputs in the stakeholder consultation 

In  total,  the  Commission  received  285  inputs  from  various  stakeholders,  elaborating  on 
problems  and  providing  innovative  solutions,  from  201  different  actors  from  all  the  27 
Member States. 

Type of 
stakeholder  

Survey 
replies  

MS authority  
Companies 
Research 
organisation  
Business 
association 
NGO / labour 
union 
EU citizen  
International 
organisation  
Other  

32  
104  

8 

25  

7 

2  

1  

1 

Additional 
documents 
sent 
through the 
survey tool 
7 
19 

0 

20 

0 

0 

0 

1 

Separa
te 
input 
papers  

Implement
ation and 
strategic 
dialogues 

Total 
inputs 

34 

2 

1 

20  
3  

0  

5 

0  

0  

2  

0  

58 
160 

8 

52 

8  

2  

3  

2 

 Sub-total 

 180 

47 

 30 

37 

285 

Individual 
Member 
State or 
person 
concerned 
27 
123 

8 

31 

8 

2 

1 

1 
201 (incl. 27 
Member 
States) 

43 

 
 
 
 
 
 
 
Annex C 

Who is affected and how?  

As  the  analysis  in  Annex  D  presents,  there  are  three  distinct  categories  of  defence  players 
positively impacted by the Omnibus Defence package: 

1.  The defence industry in the EU, particularly more than 3 000 SMEs(50) 
2.  Public authorities of the EU-27 Member States  
3.  The Commission services, marginally 

Companies will enjoy reductions in time delays, cost savings, and new opportunities to invest 
and expand. Defence budget will be spent more efficiently, ensuring economies of scale in 
joint procurement.  

More details on who is affected and how are provided in the following table ‘Overview of 
Beneficiaries and Benefits by Measure’, which summarises the findings of the quantification 
procedure described in detail in annex D. 

We must also  stress  that the targeted amendments proposed by Omnibus  Defence  are not 
expected to introduce new costs for private enterprises or public entities at EU and national 
level, either directly, or indirectly. They will amend or clarify existing rules and regulations, 
simplifying their application. 

The important data and information gaps in the Defence economic sector make a precise and 
fully  externally-justified  assessment  of  the  impact  of  the  Defence  Readiness  Omnibus  a 
challenge in itself. The quantification of the Omnibus effects is therefore a modelling work 
that relies heavily on internal assessment where outside sources where not found or difficult 
to calculate with a higher level of precision. Overall, we took a conservative approach to the 
assessing benefits  

(50): A conservative number, based on limited available data. 

44 

 
 
 
 
 
 
Overview of Beneficiaries and Benefits by Measure  
yearly total  
Preferred option– central scenario 

Measure 

Cost savings: reduction of FTEs 
allocated on administrative tasks, 
opportunity cost of time delays (by 
amending EDF Regulation). 

savings: 
on 

reduction  of  FTEs 
Cost 
allocated 
tasks, 
administrative 
opportunity  costs  of  time  delays  (by 
amending intra-EU transfer of defence 
products directive). 

savings: 

Cost 
reduction  of  FTEs 
allocated  on  administrative  tasks,  other 
administrative  costs  and  opportunity 
costs of time delays (by introducing new 
EU  regulation  on  permits  for  defence 
projects). 

Amount 

 EUR 101 
millions/year 

Beneficiaries 

Beneficiaries will be mainly EU companies applying 
for EDF grant and marginally the Commission 
services analysing the replies 

EUR 142 
millions/year 

Beneficiaries will be EU companies involved in 
transferring defence products across Member States, 
for commercial/industrial or R&D purposes. 

EUR 804 
millions/year 

Beneficiaries will be EU defence companies and the 
public authorities applying for permits. 

Cost savings: reduction of administrative 
compliance costs (by amending REACH 
and other EU chemicals regulation). 

EUR 36 
millions/year 

Beneficiaries will be EU defence companies using 
chemicals subject to regulation, for 
commercial/industrial or R&D purposes. 

Cost savings due to economies of scale in 
purchasing: facilitated joint procurement 
(by  amending  Defence  Procurement 
directive). 

EUR 1 818 
millions 
/year 

Value creation: Additional public and 
private debt and equity investments, 
supported by the EU budget (by 
amending the investment guidelines of 
the InvestEU fund) 

EUR 1 174 
millions 
/year 

Cost savings: reduction of cost of capital 
(above  regulatory  simplifications  and 
clarifying  the  application  of  the  EU 
sustainable 
to 
framework 
finance 
defence will reduce risk premium). 

EUR 94 
millions 
/year 

Value  creation:  Supplemental  internal 
investments  activated  (lower  internal 
barrier to pass for approval) 

EUR 141 
millions 
/year 

Beneficiaries will be Member States (national budgets 
and particularly those of Ministries of Defence) 

Beneficiaries will be more than 3000 EU SMEs and 
50 large corporations active in the ecosystem 

Beneficiaries will be the more than 3000 EU SMEs 
and 50 large corporations active in the ecosystem   

Beneficiaries will be the more than 3000 EU SMEs 
and 50 large corporations active in the ecosystem   

Value  creation:  Additional  private 
capital  available  for  investments  in  the 
defence 
the 
the  EU  sustainable 
application  of 
finance framework to defence). 

industry  (by  clarifying 

EUR 2 500 
millions 
/year 

Beneficiaries will be more than 3000 EU SMEs and 50 
large corporations active in the ecosystem 

45 

 
 
 
Method used in the assessment of impacts 

Annex D 
The Commission's assessment used an Excel-based Omnibus calculation model to compute 
the annual and net present value of the direct and indirect financial benefits over a 11 years' 
time horizon (2026-36). 

The  net  present  value  measures  today’s  cumulative  value  of  future  forecasted  amounts, 
discounting them back with an appropriate percentage rate, following the principle that one 
euro tomorrow and further in the future is worth less than one euro today. 

The model identifies three main categories of benefits: 

A.  cost savings refer to reductions of administrative costs, the cutting of red tape and 

time delays for the European defence industry in its existing configuration; 

B.  value creation computes the impact of releasing more private capital to be invested 

in the European defence industry, expanding the current ecosystem; 

C.  facilitated  joint  defence  procurement  for  Member  States,  which  would  reduce 

procurement costs for the public budgets of defence ministries. 

The granular quantitative model assessed the impacts as follows: 

A.  cost  savings:  this  would  consist  of  direct  effects  through  reduction  of  full-time 
equivalent  employees  allocated  on  administrative  tasks,  opportunity  cost  of  time 
delays, reduction of cost of capital; 

B.  value creation: this would consist of almost direct effects of the reforms proposed 
through  new  unlocked  investments  given  a  better  and  more  secure  regulatory 
environment,  as  more  private  capital  becomes  available  for  the  defence  sector, 
compared to the current situation; 

C.  facilitated joint procurement: this would consist of indirect effects of the reforms 
on savings of national budget through accelerated defence procurements, thanks to 
economies  of  scale  and  of  purchasing  power  on  a  bigger  share  of  defence 
procurements  being  joint  between  different  Member  States  -  these  effects  being 
however dependent how much use the Member State makes of the facilitated joint 
procurement. 

Each category of benefits - stemming from the above-mentioned impacts - generates specific 
potential  financial  gains  to  be  reaped  by  the  EU  defence  industry,  Member  States  and 
marginally also by the Commission. 

Categories  A  and  B  mainly  accrue  directly  to  private  companies  in  the  defence  sector, 
especially  SMEs  but  also  big  corporations  (supply  side).  Category  C  impacts  defence 
ministries  and therefore  Member States’ budgets (demand side). Minor  cost  savings also 
impacts the Commission services (e.g. shorter processing time for EDF grants (51). Given the 
simplification-oriented nature of the Omnibus proposals, at this stage no new administrative 
costs  arising  from  their  implementation  could  be  envisaged.  It  can  therefore  be  safely 
assumed they would be negligible. 

This model is built aggregating six ‘policy sub-models’ corresponding to two sets of affected 
policy areas, defence- & non-defence related, for which changes are proposed: EDF, defence 
procurement,  intra-EU  defence  transfers  in  the  first  set,  permitting,  environment  and 
chemicals, access to finance in the second one. 

(51): See Annex C for more details on who is benefitting and how, Annex D for methodology calculation. 

46 

 
 
Omnibus 
proposal 

Defence-
related  

Policy sub-model   Categories of benefits 

Beneficiaries 

generated 

1. EDF Regulation 

1.  (A) - cost savings 

1. SMEs, Large companies, 

2. Defence 

Procurement 

2.  (A) cost savings, (C) 
cost savings from 
joint procurement 

Commission 

2. SMEs, Large companies, 
Ministries of Defence 

3. Intra-EU 

Transfer of 
defence 
products  
4. Fast-track 
Permitting  

5. Chemicals  

6.Access to 
finance 

Non-
defence-
related  

3.  (A) cost savings 

3. SMEs, Large companies, 

4.  (A) cost savings 

4. SMEs, Large companies 

5.  (A) cost savings 

5. SMEs, Large companies 

6.  (A) cost savings (52), 
(B) value creation 

6. SMEs, Large companies, 

Given  the  limitations  referred  above,  existing  shortcomings  and  data-gaps,  the  European 
Commission welcomes any improvement ideas and feedback to the methodology and 
to the quantification of this Omnibus. Improvement ideas and feedback will also be used 
in order to build on this novel work for further quantification work in the field of the Single 
Market of Defence. Please address all methodological comments, inputs, feedback and ideas 
to: defis-simplification@ec.europa.eu. (53) 

Key quantitative assumptions, hypothesis and parameters used in the model are taken from 
recent defence stakeholders’ consultation findings, industry-specific financial sources and 
official reports, academic literature, EDF programme management and defence directives 
implementation  experiences,  and  previous  defence-related  work  (e.g.  Staff  Working 
Document on Directive 2009/81/EC (2016)), as described in the details of each of the six 
policy sub-models. The model takes an overall inflation hypothesis of 2% for the period 
2026-36, in line with the target of the European Central Bank and anchored expectations of 
economic agents. Every annual figure thus refers to the result for the first year of application 
of the policy, which is updated annually for inflation to compute a net present value. The 
interest rate used to discount the yearly financial benefits back to present is 9,2%, the current 
‘weighted average cost of capital’ for the defence industry sector.  

We assessed two scenarios in the analysis. The central scenario was based on averaged-
out  estimates  or the  estimates  for  which the level  of certainty  of the data is  high, due to 
Commission  internal  knowledge  (e.g.,  from  running  EDF,  enforcing  the  two  defence 
Directives), feedback from stakeholders and market intelligence. The lower scenario allows 
some extremely conservative hypothesis compared with the central scenario (notably a cost 
saving of only 5% instead of 10% on the facilitated joint procurement).  

(52):  Given their nature, those are however not counted as administrative cost-savings in the sense of the 

better regulation cost-benefit analysis. 

(53):  Whenever  possible,  please  use  and  base  your  inputs  on  the  Better  Regulation  Toolbox,  notably 

Chapter 8, p. 499 to 608. 

47 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Each of the six policy sub-models (i.e. computing the specific benefits according to the six 
different intervention areas) are discussed below, with all quantification of benefits referring 
to the central scenario (adding up to a total net present value of EUR 51.3 billions over 
11-years, all three different benefit categories included, in the central scenario). 

The overall impact of the preferred option generates a range of potential benefits, according 
to three different scenarios, as summarised below. 

Net Present Value of benefits over period 2026-36 (billions of EUR) 

Scenarios: 

Low 

Central scenario 

Benefits categories: 
A) Cost savings 
B) Value creation 
C) Facilitated joint procurement 

Total 

8.0 
26.1 
     8.4 

 42.5 

8.5 
26.1 
16.7 
51.3 

48 

 
 
 
1.1 

EDF Regulation 

Baseline:  
Companies applying for EDF grants must apply through the EU Funding and Tenders Portal 
and submit specific documentation to verify eligibility. One requirement is the Ownership 
Control Assessment (OCA), designed to check whether applicants are ultimately owned or 
controlled  by  non-eligible  entities  from  non-EU  countries.  Accordingly,  applicants  must 
complete  a  self-assessment  form  detailing  their  ownership  and  control  structure  (an 
Ownership Control Declaration - OCD) and provide supporting documents upon request. 

Evaluation of the proposed changes:  

1.  The Omnibus for Defence package is expected to extend the validity of OCAs from 18 
to 36 months, alleviating the administrative burden on companies for renewing OCAs. 

2.  The  Omnibus  is  also  expected  to  simplify  the  award  criteria  for  EDF  grants,  saving 
companies time on grant applications and money on allocation of Full-Time Employee 
(FTEs) to these tasks, who can then be assigned to more productive tasks. This will also 
impact  the  Commission's  internal  costs,  as  its  staff  can  focus  on  topics  other  than 
reviewing documents for EDF grant applications. 

Estimated savings/benefits following the envisaged amendment:  

1.  To estimate the cost of OCA procedures for EDF grants, we estimate the annual effort 
spent  by  applicants’  staff.  Overall,  the  effort  of  an  entity  applying  to  an  EDF  grant 
consists in 1 FTE working on OCDs - on average - for 3.64 working days per year, with 
an average daily cost rate for relevant category of FTEs estimated at EUR 594 per day 
(source: the EDF assessment report). Considering there are 280 entities that were eligible 
to OCD obligations (source: EDF 2024 data), this represents an overall effort of EUR 403 
603 (EUR 594 x 3.64 x 280 x 12/18) that is reduced to EUR 201 802 by extending the 
validity of OCAs over 36 months (EUR 594 x 3.64 x 280 x12/36), stretching the number 
of  months  that  amortise  the  investment  in  administrative  processes.  Overall,  the  cost 
savings for companies is thus estimated at EUR 201 802 per year.  

2.  Cost savings must also be measured for the European Commission’s staff. Using a similar 
approach of amortising costs of OCDs reviews over the validity period of the OCAs, we 
consider the amount of OCD problem and success rates, respectively reported being at 
6,16% and 93,94%, with their respective processing time that is reported being 140 hours 
per problematic OCD and 23 hours per successful OCD. Considering an internal hourly 
rate of EUR100, we estimate pre-omnibus internal review costs at EUR 569 655 (EUR 
100 x (success rate x 23h + problem rate x 140h) x 280 eligible entities x12/18) and EUR 
284 828 post-omnibus (EUR 100 x (success rate x 23 + problem rate x 140) x 280 eligible 
entities x12/36), leading to a cost saving of EUR 284 828 per year.  

3.  With  respect  to  the  simplification  of  award  criteria,  internal  assessments  conclude  in 
approximately 1 054 hours per year saved thanks to the Omnibus, mostly due to savings 
in  simplifying  eligibility  and  admissibility  review  processes  with  the  corresponding 
savings in expert evaluations, legal and ethical review. With the Commissions internal 
hourly rate of EUR 100, this leads to cost savings of EUR 105 350 for the Commission. 
However,  most  of  the  savings  are  expected  to  result  from  simplifications  for  the 
applicants. With 178 proposals deposited per year (source: EDF, 2023) at an average cost 
of EUR 496 584 per proposal (source: EDF assessment, 2024) this represents a total cost 
of EUR 88.4 millions for the industry. This cost was estimated by experts to be reduced 
by approximately 30% following the Omnibus implementation, so down to  EUR 61.9 

49 

 
  
millions. This results in total savings of EUR 26.5 millions for the industry and a total 
cost  savings  of  EUR  26.6  millions  approximately  when  we  add  the  Commission 
administrative cost savings.  

4.  Finally, and in addition to the direct cost reduction, we also computed the corresponding 
monetary value of time saved by an accelerated EDF evaluation process. This value is 
computed by considering the weighted average cost of capital that academic literature 
estimates on average at 9,19% yearly in the defence industry, that we bring down to a 
monthly value of cost of capital that is then multiplied by the 7 months EDF time savings 
that can be expect overall that is itself multiplied by the average yearly EDF program 
value of EUR 1.464.275.685. This leads to a total opportunity cost savings of EUR 73.8  
million yearly.   

5.  A division of the savings between SMEs and non-SMEs was not possible at this stage, 

given the complex organisation of the projects.  

6.  By combining all the entries, we estimate the associated cost savings from simplification 
of the EDF programme made possible by Omnibus to amount to nearly EUR 101 millions 
of annual benefits.  

Item  Benefit item & its category 

Calculation process (summarised)   Value ((year 1, then 

(A-B-C) 

Applicant’s cost savings on 
OCDs  - (A) 

Administration’s cost 
savings on OCAs  - (A) 

a 

b 

c = 
a+b 

Cost savings related to 
OCA and OCD process  

d 

Administration’s cost 
savings on award criteria 
simplification  - (A) 

e 

f = 
d+e 

Applicant’s cost savings on 
award criteria 
simplification  - (A) 
Cost savings due to a 
simplification of award 
criteria  

g  Opportunity cost time 

savings  - (A) 

h = 
c+f+g 

Total yearly savings on 
EDF - (A) 

Pre-Omnibus – Post-Omnibus values 
for: # eligible entities * FTE working 
on OCD * effort spent by an FTE * 
daily rate of an FTE  
Pre-Omnibus – Post-Omnibus values 
for: % of problematic/successful 
OCDs * processing time of 
problematic/successful OCDs * 
hourly internal EC rate  
Applicant cost savings on OCDs + 
Administration’s cost savings on 
OCAs  
hourly internal EC rate * [total 
annual hours spent on award process 
pre-Omnibus - total annual hours 
spent on award process post-
Omnibus]  
# proposals per year * average EDF 
proposal cost * cost reduction 
estimate post-omnibus  
Administration’s cost savings on 
award criteria simplification + 
Applicant’s cost savings on award 
criteria simplification  
Average yearly EDF program value * 
WACC (monthly) * EDF evaluation 
savings in months  

inflated over time) 

EUR 201 802 

EUR 284 828 

EUR 486 629  

EUR 105 350  

EUR 26,517,586  

EUR 26,622,936 

EUR 73.836.597  

EUR 100.946.162 

50 

 
 
 
 
 
  
 
  
 
 
 
2.1 

Defence Procurement 

Baseline:  
Directive 2009/81/EC defines procedures which Member States’ contracting authorities or 
entities  in  the  fields  of  defence  and  security  must  follow  when  awarding  certain  works 
contracts, supply contracts, and service contracts.  

Reporting obligations have a relevant cost when it comes to defence procurement in the EU. 
These procedures involve mandatory administrative steps which the contracting authorities 
must  complete.  For  instance,  directive  requires  that  contracting  authorities  that  have 
awarded a contract or concluded a framework agreement have to publish a contract award 
notice (CAN).  

The administrative costs related to conducting a procurement under Directive 2009/81/EC 
represent  a  cost  that  the  Staff  Working  Document  on  Directive  2009/81/EC  (2016)  has 
estimated at roughly EUR 7 500 for contracting authorities and EUR 16 800 for all economic 
operators involved in a procurement process, per procurement. 

Delays in contracting also translate into indirect costs resulting from the opportunity cost of 
funds  that  have  been  immobilised  due  to  procurement  procedures.  Delays  in  investment 
activation represent a missed opportunity for the EU to fully mobilise its defence industry 
faster in order to reap benefits early on in a context where every single month of increased 
production matters for our industrial base.  

Finally,  a  wider,  scattered  offering  of  weapon  systems  in  the  EU,  spread  over  several 
Member States, also bears the risk of duplication of systems compared to a country like the 
United States, potentially leading to programme cost duplications and inefficiencies that end 
up costly, therefore with potential savings to be made.  

Evaluation of the proposed changes:  

1.  The Omnibus for Defence package will increase the threshold for contracts subject to the 
procedures set out by Directive 2009/81/EC moving threshold from EUR 443 000 to EUR 
900 000 for supply and service contracts and from EUR 5 538 000 to EUR 7 000 000 for 
works contracts. This will result in a set of contracts being excluded from the associated 
administrative requirements, generating cost savings.  

2.  The increased thresholds for the application of the Directive will also translate into time 
savings.  This  is  because  the  time  delays  previously  attributable  to  the  procurement 
process  can  now  be  saved  because  of  the  streamlined  administrative  procedures.  This 
time saving can then be translated into monetary proxies.  

3.  The Omnibus for Defence package will also stimulate joint procurement by facilitating 
the engagement in larger and joint purchases by multiple Member States, leading not only 
to  cost  savings  generated  by  volumes  of  orders,  but  also  facilitating  cross-border 
purchases. This is expected to focus purchases on a fewer number of weapon systems, 
paving the way for program efficiencies that translate into cost savings.  

Estimated savings/benefits following the envisaged amendment:  

1.  To start, we took as a based the European Commission Evaluation on the Directive 
on  Defence  Procurement  of  2016  for  the  estimation  of  the  unitary  cost  of 

51 

 
 
 
 
 
 
procurement procedure, which would stand at EUR 7 500 per public authority and 
EUR 16 800 per company (i.e. around 2% of the total value of eligible contract award 
notices). Prior to the Omnibus package, according to the TED platform, there were 
between  979  and  1329  contracts  per  year  awarded  by  Member  States  contracting 
authorities  in  the  area  of  security  and  defence  which  fell  in  the  scope  of  the 
application  of  the  Directive  2009/81/EC.  As  a  result  of  the  changes  proposed  by 
Omnibus this number is expected to drop mathematically to between 751 and 1019 
contracts per year, de facto excluding between 229 and 310 contracts per year from 
the scope of the Directive. Considering that the procurements concluded outside of 
the scope of the Directive 2009/81/EC require fewer procedural steps and less staff 
compared with those procurements conducted under the Directive, the unitary cost 
per procurement contract for procurements outside of the Directive was estimated 
by experts to be 30% lower than under the Directive. Under this assumption, this 
measure is expected to generate potential savings, related to the administrative cost 
for contracting authorities and the economic operators of between EUR 1.8 millions 
per year to EUR 2.4 millions per year (total cost of procedure EUR 24 300  x 269 
median number of excluded procedures) - (total cost of procedure EUR 24 300 x 269 
median number of excluded procedures x (1-30%)). 

2.  An additional cost saving benefit related to the exclusion of these 269 procedures is 
the  usual  two  months'  time  delay  of  notification,  estimated  at  EUR  10  000  per 
procedure  (expert  assumption  confirmed  by  the  stakeholders’  consultation),  i.e.  a 
total of more than EUR 5.3 million per year, to the benefit of public administrations. 
3.  Finally, with respect to joint procurement cost saving opportunities, a consolidated 
approach  modelled  for  both  the  Munich  Security  Conference  in  2013  and  the 
European  Union  Institute  for  Security  Studies  (EUISS)  in  2023  looked  into  the 
potential  savings  linked  to  joint  procurement  that  would  reduce  the  variety  of 
weapon  systems  sold  in  the  EU,  and  lead  to  program  efficiencies.  It  estimated 
potential  savings  of  approximately  10%  per  year  of  the  value  procured.  These 
savings  are  based  on  the  hypothesis  that  we  can  reduce  the  number  of  different 
models of each weapon system down to the same number of systems for all Member 
States than in the fully integrated U.S. industrial defence basis. This differs from the 
current EU defence landscape in which several models for each weapon system are 
still in production, demonstrating the fragmentation of the EU’s defence industrial 
basis. The simplification amendments will boost Member States’ joint procurement. 
We assume this will increase from the current 18% level to 40% at the end of the 
period given the current policy objectives (54), with a 2.2% increase year over year. 
4.  Applying  the  Munich  Security  Conference  and  EUISS  consolidated  approach  for 
joint  procurement  savings  calculation  to  the  EUR  90  billions  annual  spending  on 
defence procurement in the EU (source: European Council data for 2024) thus leads 
to the estimated potential savings from pooling weapon systems of more than EUR 
1.8 billions yearly. 

5.  Overall, by combining all the entries, we estimate the associated cost savings plus 
potential  value  creation  from  simplification  of  the  rules  on  defence  procurement 
made possible by Omnibus to amount to more than EUR 1 825 millions of annual 

(54): 

PESCO commitments since 2017 and European Defence Agency goal of 35% of defence equipment 

to be done collaboratively, see Joint White Paper on Defence Readiness 2030. 

52 

 
 
benefits,  kicking  in  from  year  2027,  when  the  amendments  could  enter  into 
force.  

Item  Benefit item & its category (A-

Calculation process (summarised)  

B-C)  

a  Reduced yearly 

administrative burden  - (A) 

b  Yearly costs savings due to 

reduced delays - (A) 

c = 
a+b 

Total yearly savings on 
Defense procurement  - (A) 

d  Total Joint Procurement 

value creation, i.e. pooling 
activation/acceleration - (C) 
Total cost savings plus 
potential value creation - (A), 
(C) 

e = 
c+d 

Difference in value of unitary costs for 
both contracting authorities and economic 
operations in and outside of the scope of 
the Directive 2009/81/EC * number of 
CANs exempted thanks to Omnibus  
Number of CANs no longer eligible (post-
Omnibus) * average delay in months *  
monthly cost 

 Yearly procurement volume to EU Defense 
ecosystem * % pooling potential * 10% 
cost  reduction 

Value (year 1, 
then inflated 
over time) 

EUR 1.961.010 
(median value) 

EUR 5.380.000 

EUR 7.341.010 

EUR 
1.818.000.000  

EUR 
1.825.341.010 

53 

 
 
 
 
  
 
 
 
 
 
 
 
 
 
3.1 

Intra-EU transfer of defence-related products   

Baseline:  
In the European Union, the Directive 2009/43/EC governs the transfer of  defence-related 
products between Member States. It was intended to simplify and harmonise the terms and 
conditions for intra-EU transfers of defence-related products.  

Directive 2009/43/EC notably introduced General Transfer Licenses (GTL) to significantly 
simplify  and  speed-up  transfers  by  replacing  ex  ante  controls  with  ex  post  controls  for 
transfers to specific types of recipients (e.g. armed forces of the Member States, certified 
recipients)  or  for  transfers  undertaken  for  some  specific  types  of  purposes  (evaluation, 
demonstration and exhibition, maintenance and repairs).  

This  streamlined  approach  aims  to  reduce  administrative  burdens,  shortening  delivery 
timelines, and lowering compliance costs. For companies—especially SMEs—this means 
fewer delays and reduced overhead associated with navigating complex transfer procedures. 
By  ensuring better  fluidity  and predictability, general  transfer licenses also foster greater 
industrial cooperation, enabling economies of scale and enhancing the competitiveness of 
the European defence sector.  

However, the uptake of General Transfer Licences and the harmonisation of their scope and 
conditions remains limited so their benefits are also limited. 

Evaluation of the quantified proposed changes:  

1. The Omnibus for Defence package is expected to increase the use of General Transfer 
Licenses  through  the  different  measures  described  in  Part  6(C).  This  is  expected  to 
unlock cost savings and improve industrial responsiveness  

2. Reduced administrative delays related to GTLs will save time, as the time delays were 
previously  caused  by  the  licensing  process  can  now  be  saved  by  the  streamlined 
procedures. The time saved that can then be priced by monetary proxies. 

Estimated savings/benefits following the envisaged amendment:  

1.  There  are  several  thousand  defence  companies  in  the  EU.  The  ‘Access  to  equity 
financing  for  European  defence  SMEs’  report  (2024)  estimates  this  number  at 
minimum 3 150 SMEs, to which we can add another 50 mid and large cap companies 
in the defence sector (source: SIPRI). Stakeholder consultations report that 65 FTEs 
in large cap companies spend about 1000 hours each on transfer licences annually, a 
substantial share of the estimated 2000 worked hours a year that corresponds to 250 
8-hour days. Considering a baseline salary cost of EUR 70 000 to an employer of a 
compliance  officer  in  a  country  like  France  (source:  open  source  pay  scale  gross 
salaries for a compliance officer), this amounts to a dedicated staff cost of EUR 2 
275  500  per  company.  For  SMEs,  given  the  variety  of  profiles  we  consider  a 
conservative scenario of 1.5 FTEs spending roughly 30 hours annually on licensing 
(confirmed  by  stakeholder  consultation)  which  translates  into  yearly  costs  for  an 
SME  of  EUR  1  575  based  on  similar  salary  considerations  as  for  large  cap 
companies. Overall, when considering our assumption of 4725 SMEs and mid-caps 
(+50%  compared  to  the  minimum  amount  estimated  above,  to  adjust  for  non-
accounted  for  companies)  and  50  large  cap  companies,  this  amounts  to  a total  of 

54 

 
 
 
more  than  EUR  120  millions  spent  on  licensing  and  transfer  costs  for  defence 
companies  in  the  EU  (more  than  EUR  113  millions  for  large  caps  and  EUR  7.4 
million for SMEs). 

2.  With the Omnibus for Defence package, the number of licences falling  under the 
GTL  that  will  reduce  costs  will  be  increased  substantially.  Currently,  EUR  120 
millions can be estimated to be spent on the 15 000 transfer licences (source: EPRS 
study on Transfers, 2020), averaging to a cost of EUR 8 004 per non-GTL licence. 
Considering that experts and stakeholders estimate that a GTL licence reduces costs 
by  approximately  80%,  a  GTL  licence  is  expected  to  cost  EUR  1  601.  Factoring 
those numbers into an expected increased GTL coverage thanks to the Omnibus from 
around 10% to 30% (or 15% in a low policy effect scenario), this amounts to a total 
cost post-Omnibus for licensing and transfers of EUR 91.2 million. This means that 
the implementation of the Omnibus is expected to result in an overall cost saving 
from a broader application of GTLs of approximately EUR 28.8 million (or EUR 14 
millions in the low scenario). 

3.  Considering that SMEs would benefit in the same share of gain as their share in the 
cost of transfers (the overall EUR 120 million spent on licensing and transfer costs 
for defence companies in the EU divided between EUR 113 million for non-SMEs  
and EUR 7.4 millions for SMEs), the gain for SMEs would be EUR 1 786 050 and 
for non-SMEs EUR 27 million. 

4.  Stakeholders also reported an average monthly cost in lost contracts or production 
stops linked to current transfer licensing delays of EUR 15 000 on average. This loss 
must be multiplied by the cumulative 26250 months of annual delays we get from 
multiplying the share of the 15000 annual licences that fall under GTL and non-GTL 
categories by delays of 6-8 weeks for non-GTL licences on average and the 1-3 days 
delays for GTL licences estimated by the Commission. This thus represents a total 
EUR 394 millions lost on delays (cumulative months of delay x average monthly 
cost). By increasing the share of GTL licences from 10% to 30% (or 15% in a low 
scenario  post-Omnibus,  we  expect  a  decrease  in  delays  that  will  shrink  the 
cumulative 26250 months of annual delays down to 18675 cumulative months and 
reduce  costs  to  EUR  280  millions  (lower  cumulative  months  of  delay  x  average 
monthly cost). This thus means a delta of EUR 114 million in delay costs saved by 
implementing the Omnibus (or EUR 57 millions in the low scenario).   

5.  Considering that SMEs would benefit in the same share of gain in this delay costs as 
their share in the cost of transfers, this would amount to a gain of around EUR 7 
million for SMEs and of around EUR 106 million for non-SMEs.  

6.  Overall, by combining all the entries, we estimate the associated cost savings from 
simplification of the rules on Intra-EU Transfer of defence products made possible 
by Omnibus to amount to more than EUR 142 million of annual benefits, kicking in 
from  year  2027,  when  amendments  could  enter  into  force. This  only  taking  into 
account a limited set of measures (i.e. a conservative approach). 

Item 

a 

Benefit item & its category 
(A-B-C) 
Savings from General 
Transfer License (GTL) 
widening  - (A) 

Calculation process (summarised)  

Value  (year 1, then 
inflated over time) 

Yearly licensing & transfer costs pre-
Omnibus for SMEs and mid/large caps 
(EUR120M) - Yearly licensing & 
transfer costs post-Omnibus for SMEs 
and mid/large caps (EUR91,2M)  

55 

EUR 28.813.050 

 
 
 
b  Costs of delays  - (A) 

  c =a+b Total yearly savings on 

Intra-EU Defence 
Transfers  - (A) 

EUR 113.625.000  

Pre-Omnibus delay costs (average 
delay cost per month * pre-omnibus 
cumulative months of delays for both 
non-GTL and GTL licenses) – post-
Omnibus delay costs (average delay 
cost per month * post-omnibus 
cumulative months of delays for both 
non-GTL and GTL licenses)  

EUR 142.438.050 

56 

 
  
 
 
 
4.1 

Fast-track Permitting  

Baseline: 
Specific permits are required in the EU prior to obtaining construction, environmental, or 
zoning approvals needed to build or expand even strategic industrial sites like ammunition 
factories, assembly lines, and test facilities. This is referred to as permitting.  

Permitting  is  associated  with  administrative  delays  required  to  process  the  complex 
documentation  associated  with  the  requests  that  must  be  filed,  often  across  different 
branches of the national and local public administration. These delays, often stretching over 
several months, significantly slow down the deployment of critical production capacity.  

Evaluation of the proposed changes:  

1.  The Omnibus for Defence package aims to cut these delays by introducing fast-track 
permitting  procedures  for  infrastructure  projects  deemed  essential  to  the  EU’s 
defence industrial base.  

2.  No  available  source  can  calculate  average  permitting  time  for  defence  projects. 
External  and  internal  expertise  and  stakeholder  feedback  were  therefore  used  to 
estimate  a  36-month  average  for  complex  permitting  procedures  (stakeholders 
mentioned  some  examples  of  permitting  taking  up  to  five  or  seven  years).  The 
Omnibus  proposes  that  permitting  takes  no  longer  than  two  months,  saving  an 
average of 34 months.  

Estimated savings following the envisaged amendment:  

1.  The 34 months faster permitting time following the Omnibus is expected to lead to 
direct  cost  savings due to  both  the cost  associated with  each  month of permitting 
delay and the associated time-value of money that helps us capture the opportunity 
cost  associated  with  immobilising  financial  resources  associated  to  a  project 
awaiting permit approval.  

2.  Faster permitting times are expected to lead to an overall cost saving of around EUR 
638 million per year by freeing up staff and resources from tasks that were subject 
to permitting. 

3.  This cost saving amount is calculated on the hypothesis that the defence investment 
ramp-up  and  current  growth  in  the  sector  mean  that  each  year  12%  of  the  4  775 
defence  undertakings(55)  in  the  EU  will  launch  projects  necessitating  permitting 
(which we then multiply by the monthly costs associated with permitting delays). 
These costs are an estimated daily worker wage rate (EUR 325) multiplied by the 
number of working days in a month (21) and the number of two full-time equivalents 
expected  to  be  immobilised  during  the  34  months  permitting  delay  (per  project). 
Added  to  this  value  (EUR  464  100)  are  the  (+30%)  estimated  average  costs  of 
overhead including legal and rental costs (around EUR 15 000 a month according to 
estimations  provided  in  discussions  with  stakeholders)  to  capture  the  rest  of 
administrative costs and obtain a more accurate picture of cost reductions (EUR 464 
100 x (1+30%) +EUR 15 000 x 34) x number of estimated yearly projects (4 775 x 
12%) = EUR 638 million. 

4.  Considering the share of SMEs and non-SMEs in the defence sector as described 
above, a crude approximation of the savings divided between SMEs and non-SMEs, 

(55): Using the estimations used in the other models, a very minimum of 3150 SMEs to which we can add 33 

mid and large cap companies in the defence sector. 

57 

 
 
 
 
estimating that each category would be applied the factor of estimated yearly projects 
irrespective of its size, would be a benefit of around EUR 631 million for SMEs and 
around EUR 6.6 million for non-SMEs.  

5.  In  addition  to  the  direct  cost  reduction  linked  to  shortened  delays  with  the  fast-
tracked permitting procedure, we also calculated the corresponding monetary value 
saved by being able to use the funds that would otherwise have been immobilised. 
This  value  is  calculated  by  considering  the  weighted  average  cost  of  capital  that 
academic  finance  literature  estimates  on  average  at  9.19%  yearly  in  the  defence 
industry that we divide by 12 to get a monthly value. This is then multiplied by the 
estimated cost reduction associated with shortened delays (EUR 638 million x 9.19% 
/ 12 x 34 = EUR 166 million). 

6.  As for the division of savings between SMEs and non-SMEs, the same calculation 
as described above indicates savings in this category of around EUR 164 million for 
SMEs and around EUR 1.7 million for non-SMEs. 

7.  Overall, by combining the savings of shortened delays, we estimate the associated 
cost savings from reduced permitting delays made possible by the Defence Omnibus 
fast-track  permitting  to  amount  to  approximately  EUR  804  million  of  annual 
benefits. 

Item  Benefit item & its category (A-B-

Calculation process (summarised)   Value  (year 

C) 

Cost savings from reduction in 
permitting delays  - (A) 

Indirect savings from time 
value of money  - (A) 

a 

b 

Total yearly savings on 
Permitting  - (A) 

c=a+
b 

# EU defence companies * % 
companies subjected to permitting 
* monthly costs including 
overheads, equipment and 
salaries * # months of permitting 
saved  
Total savings from reduction in 
permitting delays * monthly 
WACC * # months saved per 
permitting procedure  

1, then 
inflated over 
time) 
EUR 
637.871.290 

EUR 
166.091.053 

EUR 
803.962.343  

On the other side, the changes proposed could entail some costs on the public administration 
for the formation of employees to this new legal framework, as well as possible (depending 
on the Member States’ interpretation) costs linked to the set up of single points of contacts. 
However, the proposed changes anticipate for this a provision to help public administrations 
adjust to the changes through external help from the European Union. It must also be noted 
that such a mechanism of single point of contact already exist for the Net-Zero Industry Act, 
meaning that public administrations could leverage on this existing framework to minimise 
the  potential  costs.  Overall,  those  potential  additional  administrative  costs  for  the  public 
administrations are considered negligeable in light of the normal administrative adaption to 
change and the normal formation efforts, especially compared to the potential benefits. 

58 

 
 
 
  
  
 
 
 
5.1 

EU legislation on chemicals  

Baseline:  

The Regulation 1907/2006 (REACH) governs the safe use of chemical substances. Under 
REACH, businesses that manufacture, import, or use chemicals must identify and manage 
the  risks  associated  with  these  substances  and  provide  safety  information  to  users.  For 
defence businesses, this means, first, ensuring compliance alongside the supply chains, and 
for some economic agents, second, to register new substances with the European Chemicals 
Agency, ensuring compliance throughout their supply chains, and potentially substituting 
hazardous chemicals with safer alternatives.  

Evaluation of the proposed changes:  

1.  The Defence Readiness Omnibus Package should ease REACH regulatory obligations 
for defence-related activities by expanding the pre-existing set of exemptions for critical 
substances with military applications. The aim is to preserve, at the initiative of Member 
States, the defence industrial basis from possible costly and unnecessary requirements. 
These  measures  aim  to  strengthen  Europe's  defence  resilience  while  maintaining 
essential environmental and safety protections.  

2.  In  addition  to  REACH-specific  amendments,  the  Omnibus  for  Defence  package  will 
introduce  exemptions  on  environmental  reporting  requirements  which  should  reduce 
administrative  workload  on  European  companies  and  alleviate  the  need  to  dedicate 
employees’  time,  allowing  re-orientation  towards  more  productive  and  value-adding 
tasks.  

3.  Finally,  the  Omnibus  might  alleviate  REACH  Art.  33  obligations  that  provide  that 
businesses monitor and pass along the supply chain information on certain substances 
and chemicals in their products, generating cost savings and its own set of reallocations 
towards more productive and value-adding tasks.  

Estimated savings/benefits following the envisaged amendment:  

1.  Compliance  with  REACH  generates  costs  across  EU  defence  companies  that  are 
estimated at  EUR 35.8 million per year. These  are  divided  into two types  of savings 
achieved through exemptions and savings due to alleviated Art. 33 obligations.  

2.  The first type of savings is estimated to be modest (around EUR 2 million) as highly 
dependent  on  companies  that  are  low  in  the  supply  chain  and  on  the  willingness  of 
Member States to use this clause. They entail registration costs, reviews, and processing 
costs of filing (a total of around EUR 42 million), which are applied to an expert estimate 
of the proportion of defence companies that would benefit from this exemption, in this 
conservative case, only 5%.  

3.  The second type of savings are estimated as more consequential (EUR 33.7 million), 
based  on  stakeholders’  input  that  stressed  the  business  impact  of  such  obligations. 
Lighter Article 33 reporting obligations are assumed to alleviate the dedicated effort of 
the associated workforce (the equivalent cost of 602 FTEs, costing EUR 70 000/year, a 
total  of  EUR  42.1  million,  allocated  80%  on  Article  33  compliance  (source:  experts 
estimation), i.e. EUR 33.7 millions). 

4.  Both  results  were  achieved  based  on  FTE  costs,  average  time,  and  cost  devoted  to 
compliance tasks related to amended provisions. A division of savings between SMEs 
and  non-SMEs  was  not  possible  at  this  time,  given  the  limited  data  available  on  this 
specific supply chain. 

59 

 
Item 

Benefit item & its category (A-
B-C) 

a  REACH cost savings - (A) 

b  Reporting requirements cost 

saving  - (A) 

c= a+b Total yearly savings on 

Environmental & Chemicals 
reporting  - (A) 

Calculation process (summarised)   Value (year 1, 

Cost of FTEs allocated to REACH 
compliance * average percentage of 
projects expected to be exempted 
Cost of FTEs allocated to REACH 
compliance * % of time allocated to 
reporting 

then inflated 
over time)   
EUR 2.106.602  

EUR 
33.705.626  

EUR 
35.812.228  

60 

 
 
  
 
 
 
 
6.1 

Access to Finance   

Baseline:  
The  EU  sustainable  finance  framework  aims  to  channel  private  investment  toward 
environmentally  and  socially  sustainable  activities  by  introducing  detailed  disclosure 
obligations for financial market participants, by defining setting out criteria for sustainable 
economic activities including minimum safeguards. It is codified through various policies 
and instruments such as the Sustainable Finance Disclosure Regulation (SFDR)(56) and the 
Benchmark Regulation (BMR)(57).  

To  support  access  to  finance  the  EU  uses  budgetary  guarantees  under  the  InvestEU 
programme, covering financial instruments deployed by implementing partners. As part of 
InvestEU, the InvestEU fund established by the Regulation (EU) 2021/523, is an EU budget 
guarantee, aiming to support investments in the form of debt, counter-guarantees, or equity 
funding. InvestEU is endowed with a EUR 26.2 billions EU budget guarantee backing the 
investments of the ‘implementing partners’, increasing their risk-bearing capacity and thus 
helping to mobilise at least EUR 372 billions in additional investment. Notwithstanding, the 
current framework results in a negative bias against the defence sector that keeps the average 
cost of capital high. 

Evaluation of the proposed changes:  

1.  The Commission has published two texts which provide clarity to the financial sector 
on  how  to  link  defence  sector  investments  with  their  sustainable  investment 
preferences: the Notice on the application of the sustainable finance framework and 
the Corporate Sustainability Due Diligence to the defence sector and the amended 
Delegated Regulation on the definition of prohibited weapons. These two proposals 
are expected to provide clarity to the financial sector on how to navigate defence-
related investments and the EU sustainability-related frameworks. This is expected 
to generate additional investments into the defence sector from financial institutions 
previously withholding such investment due to legal uncertainty, i.e. an increase in 
the amount of capital available for the defence sector. More available funding will 
also  have  an  indirect  effect  by  reducing  the  premiums  required  by  investors  and 
lenders  to  invest  in  defence,  therefore  reducing  the  WACC(58)  for  EU  defence 
companies.  

2.  The  change  of  investment  guidelines  for  the  InvestEU  fund  will  facilitate  the 
financing of defence-related projects and beneficiaries under the programme. It will 
increase the availability of EU guarantee deployed in support of the defence sector 
and  crowd-in  additional  public  and  private  investments  in  support  of  the  defence 
sector.  

Estimated savings/benefits following the envisaged amendment:  

(56): Regulation (EU) 2019/2088. 

(57): Commission Delegated Regulation (EU) 2020/1818. 
(58): Access to capital is costly and is measured in corporate finance by the Weighted Average Cost of Capital 
(WACC) metric that measures a company's average cost of financing from all sources, debt and equity. The 
higher the WACC, the more profitable investment projects have to be to pay for capital. Therefore, several 
projects that could have existed are not financed because from an internal company finance standpoint, their 
internal  rate  of  return  (IRR)  falls  below  the  weighted  average  cost  of  capital  and  are  thus  not  financially 
sustainable for a private entity. As such, they represent foregone investment opportunities and defence projects.  

61 

 
 
 
 
 
•  Value creation following guidance on the application of the EU sustainable finance 

to defence: 

The amended Delegated Regulation on the definition of prohibited weapons clarifies that 
only ‘prohibited weapons’ should be considered for exclusion under the EU’s sustainable 
funds, instead of the legally contested ‘controversial weapons’, in order to clarify the scope 
of weapons subject to disclosure obligation or exclusion. This will offer clarity on several 
types of weapons which are screened for by financial institutions and ESG data providers. 
We expect a convergence from ‘heterogeneous lists’ towards lists that include only those 
under the harmonised definition proposed.  

The most tangible and measurable adjustment expected concerns the treatment of companies 
involved in nuclear deterrence programmes recognised under the Non-Proliferation Treaty, 
but currently often bundled under the ‘controversial’ category. 

In  the  second  quarter  of  2025,  combined  assets  in  Article  8  (funds  with  sustainability 
characteristics  under  the  SFDR)  and  Article  9  funds  (funds  with  sustainability  as  an 
objective) amounts to EUR6.4 trillion, representing over 59% of the total EU fund market 
(Article  9  funds  only  represent  5%)(59).  .  According  to  data  issued  by  Morningstar 
Sustainalytics in August 2025(60), 92% of Article 8 funds exclude controversial weapons. 

Since Russia’s full-scale invasion of Ukraine in 2022, exposure to aerospace and defence 
stocks within European equity Article 8 funds has increased significantly  — rising  to  an 
average  of  2.5%  for  active  funds  and  1.2%  for  passive  funds,  up  from  0.6%  and  0.2% 
respectively, at the start of 2022(61).  

We estimate that the Omnibus could increase the exposure of Article 8 funds to defence, in 
a proportion equivalent to the average of the increase observed since 2022 for both active 
and passive funds, 0,4%. This could generate EUR 25 billions of additional investment 
opportunities over ten years.  

In  addition,  the  increase  in  investment  opportunities  is  expected  to  generate  indirectly 
additional savings and investments:  

-  With an estimated EUR 9.4 billion capital expenditure for investments (CAPEX) 
by European defence companies in 2025 (source: Fitch Ratings, 2025) and an 
average WACC that academic literature estimated at 9.19 % for the aerospace & 
defence  sector (62),  a  decrease  in  the  WACC  made  possible  by  Omnibus  for 
Defence package that experts estimate could be up to 1 percentage point would 
generate  savings  on  financing  costs  of  EUR  94  millions  for  the  European 
industry (63).  

-  We also believe that additional investments will be generated by reducing the 
gap between projects with an internal rate of return too low to be financed prior 

(59): SFDR Article 8 and 9 Funds: Requirements, Inflows, ESG Risks | Morningstar 

(60): EU ESG Funds’ Exposure to Defense Continues to Increase 
(61): EU ESG Funds’ Exposure to Defense Continues to Increase 

(62):Source,  among  others:  NYU,  Aswath  Damodaran,  Cost  of  Equity  and  Capital 

(US) 
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.html, April 2025. It is important 
to  note  that  since  April  2025,  in  September  2025  the  cost  of  capital  already  importantly  decreased, 
underlining the credibility of the hypothesis made here. 

(63):Given their nature, those are however not counted as administrative cost-savings in the sense of the better 

regulation cost-benefit analysis. 

62 

 
 
to Omnibus and the applicable WACC. After implementation of the Omnibus for 
Defence package, we estimate EUR 141 millions worth of investments will be 
activated,  based  on  a  hypothesis  that  15%  of  investments  are  not  made  today 
because the internal rate of return (IRR) is too low (source: expert discussions). 
A medium-conservative expert estimation place around 10% of this to become 
financeable post-Omnibus. 

•  Direct effect: amendment of the eligibility rules of the InvestEU fund for operations 

in the area of defence:  

The  InvestEU  fund  is  a  EUR  26.2  billions  EU  budget  guarantee  which  is  expected  to 
mobilise at least EUR 372 billions in additional investment (a 14.2 multiplier leverage effect 
in average). According to the data from 28 February 2025(64), EUR 23 978 millions of EU 
guarantee have been approved to support operations (by implementing partners) amounting 
to EUR 64 billions which mobilised EUR 300 billions. Based on the data available in May 
2025,  defence-related  investments  by  the  EIB  Group,  which  is  the  main  implementing 
partner  for  SME  support  under  InvestEU,  account  for  less  than  0,1%  of  InvestEU 
operations(65).  

The  change  of  eligibility  criteria  proposed  in  the  Omnibus  will  facilitate  investment  in 
defence by InvestEU implementing partners. By comparing with the investments realised in 
the space sector under  InvestEU, since both  space and defence are strategic sector under 
InvestEU  and  receive  similar  type  of  EU  funding  support  (in  the  current  Multiannual 
Financial  Framework  defence-related  budgets  represents  0,57  of  the  budget  dedicated  to 
space(66), a reasonable estimate would be that at least 1% of the InvestEU fund could be 
invested in defence.  

The InvestEU fund is expected to invest an additional EUR 7.23 billions by the end of the 
current  MFF  (EUR  2.23  billions  remaining  from  the  initial  budget  and  EUR  5  billions 
additional investments from the InvestEU Omnibus(67), mobilising at least EUR 103 billions, 
so the InvestEU fund could mobilise EUR 1.3 billions in support of defence by end 2027.  

The  change  of  eligibility  rules  will  also  facilitate  the  deployment  of  the  Defence  Equity 
Facility(68), an instrument  under which the EIF  will invest  EUR  175  millions into private 
funds investing in defence and mobilise approximately EUR 500 millions in support of the 

(64): InvestEU Indicators - European Union. 
(65): However, the data are likely to be under-estimated since some defence-related investments are reported 
in other transversal categories (ex. manufacturing). 

(66):  In  the  current  MFF,  the  budgets  allocated  to  defence  amounts  to  EUR10.2  billions  (EUR7.9  billions 
European Defence Fund, EUR500 millions ASAP, EUR300 millions EDIRPA and EUR1.5 millions EDIP), 
while the budget allocated to space accounts for EUR17,9 billions (EUR16 billions Space programme, EUR1,9 
billions  as  part  of  Horizon  Europe).  Based  on  data  from February  2025,  in  total  the  space  sector  received 
EUR228 millions funding received, generating an estimated EUR3,24 billions additional investments, which 
amounts to 0,95 % of the total investment under InvestEU. If InvestEU operations would reflect EU budget 
spending on defence, it would represent 0,54% of the investment generated under InvestEU. However, in light 
of the increased need to invest in defence identified by the EU (SAFE fund, as well as InvestEU implementing 
partners (defence & security identified as public Policy goal by the EIB Group in March 2025), it is reasonable 
to expect that defence investment will be higher, at least equivalent to space-related investments realised with 
the support of InvestEU. 

(67): EUR-Lex - 52025PC0084 - EN - EUR-Lex. 

(68): Defence Equity Facility. 

63 

 
  
 
defence sector in the next two years. In total EUR 18 billions of investments in defence 
could be generated with the support of the InvestEU fund until end 2027. 

For  the  next  MFF,  the  Commission  proposed  to  quintuple  the  budget  available  for 
defence and space to reach EUR 131 billions for the European Competitiveness Fund (the 
successor to the current InvestEU fund), and to allocate up to EUR 70 billions in budgetary 
guarantee  under  the  EU  Compartment  of  the  ECF  InvestEU  Instrument  (the  amount 
allocated to  defence is  unknown at  this stage)(69). Based on these data, it is  reasonable to 
estimate that at least EUR 700 millions (1% of the budgetary guarantee) could be allocated 
to defence, which would generate EUR 9.94 billions of investments in support of defence 
(with Invest EU’s average leverage effect of x 14.2). Therefore, in total, over the next 10 
years, a total of EUR 11.74 billions investments could be generated with the support of 
InvestEU and its successor programme (ECF). 

Consolidating  such  impacts  of  changes  brought  to  access  to  finance  leads  to  a  total 
financing cost savings of EUR 94 millions per year while more than EUR 3.8 billions 
in supplemental investments are made possible by facilitated access to finance for the 
EU defence sector.  

The supplemental investments expected will also  generate additional jobs, at a rate some 
economic  literature  estimates  at  5,9  direct  jobs  and  1,1  indirect  jobs  per  millions  euro 
invested in the defence sector(70). Overall, this would amount to around 26 705 to 33 204 
total extra jobs potentially created per year thanks to this extra investment means nearly 331 
000  extra  (direct  and  indirect)  jobs  potentially  created  over  10  years  following  the 
implementation of the Omnibus for Defence package. No additional financial value benefit 
is included in the model for these extra jobs created. 

Item 

Benefit item & its 
category (A-B-C) 

Calculation process (summarised)  

a 

b 

c 

d 

Financing costs 
reduction – (A) 
Supplemental 
investments activated 
- (B) 
Increased access to 
finance - (B) 

Additional investment 
in defence projects 
and companies 
supported by the 
InvestEU fund - (B) 

1% WACC reduction * total CAPEX 

Project value unrealized due to too low 
IRR * % of project passing approval 
threshold due to lower WACC 
 Total assets under management for 
Article 8 Funds* 0,4% 

Until 2027: 1% total annual InvestEU 
budget guarantee + Defence Equity 
Facility   

After 2027: 1% maximum budgetary 
guarantee under next MFF * average 
InvestEU leverage effect  

Total divided by 10 (to provide an 
average across the two MFFs) 

Value (year 1, then 
inflated over 
time)   
EUR 94.000.000  

EUR 141.000.000 

EUR 
2.500.000.000 

EUR 1.174. 000. 
000 

(69) : EU budget 2028-2034. 

(70): According to the results of Garret-Peltier (2017), Job Opportunity Cost of War.  

64 

 
 
 
e = 
a+b+c 
+d 

Total yearly benefits 
on Access to finance - 
(A), (B) 

EUR 
3.909.000.000 

65