EUROPEAN
COMMISSION

Brussels, 30.11.2016
SWD(2016) 407 final

COMMISSION STAFF WORKING DOCUMENT
Evaluation of Directive 2009/81/EC on public procurement in the fields of defence and
security
Accompanying the document
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
{COM(2016) 762 final}

EN

EN

CONTENTS
1.

INTRODUCTION ....................................................................................................... 6

2.

BACKGROUND ......................................................................................................... 6
2.1. Government expenditure on defence and security ............................................ 6
2.1.1.

Estimate of defence procurement expenditure .................................... 9

2.1.2.

Procurement of defence equipment ................................................... 11

2.1.3.

Outlook in defence and security expenditure .................................... 13

2.2. The rationale for Directive 2009/81/EC .......................................................... 14
2.2.1.

The specific problem to be addressed by Directive
2009/81/EC ........................................................................................ 14

2.2.2.

General and specific objectives ......................................................... 15

2.2.3.

The operational objective and the main features of the
Directive ............................................................................................ 16

2.3. Baseline: the situation before Directive 2009/81/EC ...................................... 19
2.3.1.

Regulatory patchwork ....................................................................... 19

2.3.2.

EU-wide publication of business opportunities ................................. 19

2.3.3.

Cross-border awards .......................................................................... 20

3.

EVALUATION QUESTIONS .................................................................................. 20

4.

METHOD .................................................................................................................. 21
4.1. OJ/TED data .................................................................................................... 22
4.2. Other data sources ........................................................................................... 23
4.3. Stakeholders consultations .............................................................................. 23
4.4. Methodological issues and data availability .................................................... 23

5.

IMPLEMENTATION STATE OF PLAY ................................................................ 24
5.1. Transposition ................................................................................................... 25
5.1.1.

The transposition process (August 2011-May 2013) ........................ 25

5.1.2.

Technical analysis of transposition measures.................................... 25

5.1.3.

Offsets / industrial return regulations in the context of
transposition ...................................................................................... 29

5.2. Compliance activities concerning individual procurement cases .................... 30
5.3. Uptake of the Directive ................................................................................... 31
5.3.1.

Defence and security procurement under the Directive .................... 31

5.3.2.

Defence and security procurement under the civil
procurement Directives ..................................................................... 46
2

6.

ANSWERS TO THE EVALUATION QUESTIONS............................................... 49
6.1. Effectiveness.................................................................................................... 49
6.1.1.

Competition, transparency and non-discrimination .......................... 49

6.1.2.

Use of exemptions ............................................................................. 70

6.1.3.

Member States security concerns ...................................................... 77

6.1.4.

Changes in the industrial base (EDTIB) ............................................ 80

6.1.5.

Conclusions on effectiveness ............................................................ 96

6.2. Efficiency ........................................................................................................ 97
6.2.1.

Costs of procedures ........................................................................... 98

6.2.2.

Costs compared to benefits .............................................................. 102

6.2.3.

Administrative burden ..................................................................... 104

6.2.4.

Conclusions on efficiency ............................................................... 104

6.3. Relevance ...................................................................................................... 105
6.3.1.

The objectives of the Directive........................................................ 105

6.3.2.

New developments after the adoption of the Directive ................... 106

6.3.3.

Conclusions on relevance ................................................................ 108

6.4. Coherence ...................................................................................................... 108
6.4.1.

Internal coherence ........................................................................... 108

6.4.1.

Coherence with the framework of EU public procurement law ...... 108

6.4.2.

Directive 2009/43/EC ...................................................................... 113

6.4.3.

CSDP and a European capabilities and armaments policy .............. 114

6.4.4.

Cooperation in defence procurement............................................... 114

6.4.5.

Conclusions on coherence ............................................................... 117

6.5. EU added value.............................................................................................. 117
7.

CONCLUSIONS ..................................................................................................... 118

8.

ANNEXES .............................................................................................................. 121
Annex I – Procedural information ........................................................................... 121
Annex II – Stakeholder consultations ..................................................................... 121
Annex III – Methods and analytical models ........................................................... 125
Annex IV – Complementary data ............................................................................ 125

9.

BIBLIOGRAPHY ................................................................................................... 125

3

Glossary
ASD

AeroSpace and Defence Industries Association of Europe (http://www.asdeurope.org/home/ )

Baseline
Study

“Openness of Member States’ defence markets” by Europe Economics for the
Commission services in November 2012

BIS

Bureau of Industry and Security of the U.S. Department of Commerce,
(https://www.bis.doc.gov/)

civil
procurement
Directives

Directive 2004/18/EC on the coordination of procedures for the award of
public works contracts, public supply contracts and public service contracts
and Directive 2004/17/EC coordinating the procurement procedures of
entities operating in the water, energy, transport and postal services sectors

CPV

Common Procurement Vocabulary; Commission Regulation (EC) No
213/2008 of 28 November 2007 amending Regulation (EC) No 2195/2002 of
the European Parliament and of the Council on the Common Procurement
Vocabulary (CPV) and Directives 2004/17/EC and 2004/18/EC of the
European Parliament and of the Council on public procurement procedures,
as regards the revision of the CPV

CSDP

Common Security and Defence Policy

Directive

Directive 2009/81/EC on the coordination of procedures for the award of
certain works contracts, supply contracts and service contracts by contracting
authorities or entities in the fields of defence and security, and amending
Directives 2004/17/EC and 2004/18/EC

DG GROW

Directorate-General for Internal Market, Industry, Entrepreneurship and
SMEs (http://ec.europa.eu/growth/index_en)

EDA

European Defence Agency (https://www.eda.europa.eu/ )

EDEM

European Defence Equipment Market

EDTIB

European Defence Technological and Industrial Base

Evaluation
Roadmap

Roadmap
on
the
Evaluation
of
Directive
2009/81/EC
(http://ec.europa.eu/smartregulation/roadmaps/docs/2016_grow_031_evaluation_defence_procurement
_en.pdf)

FMS

Foreign Military Sales (http://www.dsca.mil/programs/foreign-military-salesfms)

Impact
Assessment

Commission Staff Working Document Annex to the Proposal for a Directive
of the European Parliament and of the Council on the coordination of
procedures for the award of certain public works contracts, public supply
4

contracts and public service contracts in the fields of defence and security
(http://ec.europa.eu/internal_market/publicprocurement/docs/defence/impact_
assessment_en.pdf )
M&A

Mergers and acquisitions

NATO

North Atlantic Treaty Organization (http://www.nato.int/ )

OCCAR

Organisation Conjointe de
(http://www.occar.int/185)

OJ/TED

Tenders Electronic Daily is the online version of the 'Supplement to the
Official Journal of the EU, dedicated to European public procurement
(http://ted.europa.eu/ ).

PwC Study

“Public procurement in Europe, Cost and effectiveness” done by PwC,
Ecorys and London Economics, for the Commission services in March 2011
http://bookshop.europa.eu/en/public-procurement-in-europe-pbKM3113708/

SCAP Study

“Support to the implementation of the Supply Chain Action Plan” by IHS
Global Limited for EDA

SBS

Structural Business Statistics

Technopolis
Study

“Evaluation of Directive 2009/43/EC on the Transfers of Defence-Related
Products within the Community” by Technopolis group for the European
Commission

VEAT

Voluntary ex-ante transparency notice

5

Coopération

en

matière

d'Armement

1.

INTRODUCTION

The legal basis for this evaluation is Article 73(2) of Directive 2009/81/EC (the
Directive), which states that “the Commission shall review the implementation of this
Directive and report thereon to the European Parliament and the Council by 21 August
2016. It shall evaluate in particular whether, and to what extent, the objectives of this
Directive have been achieved with regard to the functioning of the internal market and
the development of a European defence equipment market and a European Defence
Technological and Industrial Base, having regard, inter alia, to the situation of small
and medium-sized enterprises. Where appropriate, the report shall be accompanied by a
legislative proposal”.
The purpose of the evaluation is, therefore, to assess the functioning of the Directive and,
to the extent possible, its impact on the market and on the industrial base. As to the
scope, the whole of the Directive is subject to evaluation. Time-wise, the evaluation
covers the period from the transposition of the Directive (2011) until the end of 2015.
The situation before the transposition of the Directive is taken into account as baseline.
Given the short time that has elapsed since the transposition deadline, and even more
since its actual transposition by Member States, it can be expected that the conclusions
about the Directive’s impact on the European Defence Equipment Market (EDEM) and,
especially, on the European Defence Technological and Industrial Base (EDTIB) would
be very difficult to reach1. In that context, the evaluation assesses whether we are on
track to meet the objectives set by the Directive. From a geographical point of view, the
evaluation focuses on the 28 Member States of the EU and 2 EEA2 countries (Norway
and Iceland).
2.

BACKGROUND

This section seeks to provide background information that is essential for the evaluation
of the Directive. This includes, first and foremost, data on Member States’ expenditure
on defence and security and, in particular, on procurement. It also provides a brief
description of the Directive and its different components, its objectives and the problems
it was intended to solve; the key source in this respect is the Impact Assessment that
accompanied the Commission’s proposal (the Impact Assessment)3. The background
section also includes a description of the baseline, i.e. what the situation was like before
the adoption of the Directive.
2.1.

Government expenditure on defence and security

Government expenditure on defence and security in Europe accounts for a significant
share of the nations’ GDP and the total public spending. For example, the guideline
1

2

3

As required by Article 73(2) of the Directive, the evaluation mainly focuses on the defence market and
industrial base, although the Directive also applies to sensitive security procurement.
The Decision of the EEA Joint Committee 129/2013 of 14 June 2013 provided for the incorporation of
the Directive into the EEA Agreement, by amending its Annex XVI. Point 5c of Annex XVI provides
that the Directive does not apply to Liechtenstein.
Impact Assessment, Commission Staff Working Document accompanying document to the Proposal
for a Directive of the European Parliament and of the Council on the coordination of procedures for
the award of certain public works contracts, public supply contracts and public service contracts in the
fields of defence and security, SEC(2007) 1598, 5.12.2007.

6

agreed by NATO Allies state that at least 2% of GDP should be allocated to defence
spending. Meanwhile, according to the recent data for the European NATO countries4,
defence expenditure in 2015 accounted for 1.45% of their GDP5. Similar range of
estimates is provided by the European Defence Agency (EDA), which reports that
defence expenditure of the 27 EDA Member States6 in 2014 was around 1.42% of their
GDP7 and equalled roughly 195 billion EUR8.
According to Eurostat COFOG classification, defence expenditure (GF02)9 equalled
1.3% of GDP for the EU-28 and amounted to roughly 187.4 billion EUR in 2014 (or
192.8 billion EUR, if the EEA countries were included). The highest levels of total
expenditure on defence were found in Greece (2.7% of GDP), followed by the United
Kingdom (2.2 % of GDP) and Estonia (1.8% of GDP), whereas Luxembourg (0.3 % of
GDP), Ireland (0.4 % of GDP) as well as Austria and Hungary (both 0.6 % of GDP)
reported comparatively low expenditure on defence10.

4

5

6
7

8

9
10

Albania, Belgium, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, France, Germany,
Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal,
Romania, Slovak Republic, Slovenia, Spain, Turkey and the United Kingdom; the detailed data on
defence expenditure by NATO countries as a percentage of GDP is provided in Table 45 of Annex IV.
Defence Expenditures of NATO Countries (2009-2016), COMMUNIQUE PR/CP(2016)116, 4 July
2016,
http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2016_07/20160704_160704-pr2016116.pdf.
EDA 27 Member States include all EU Member States except for Denmark.
Defence Data 2014, EDA, http://www.eda.europa.eu/docs/default-source/documents/eda-defencedata2014-final, Figure 3.5, p. 14.
Idem Figure 3.1, p. 10; the total reported by EDA differs from Eurostat COFOG data probably due to
different assignments of retirement pensions in some countries; a similar discrepancy occurred in the
past and was mentioned in the Impact Assessment, p. 10.
http://ec.europa.eu/eurostat/statistics-explained/index.php/Government_expenditure_on_defence
More data is provided in Table 46, Annex IV.

7

Figure 1: General government expenditure on defence in 2014 [% of GDP]

Source: Eurostat, http://ec.europa.eu/eurostat/statisticsexplained/index.php/Government_expenditure_on_defence

As presented on the graph above, in all countries except for Romania, the major part of
the total general government expenditure on defence (GF02) in 2014 was spent under
military defence (GF0201)11. Eurostat estimates that military defence expenditure in the
EU accounted for around 1.2 % of GDP of EU-28 in 2014, which in monetary terms
equalled roughly 165.7 billion EUR (Table 1). If the EEA counties were added, the total
would increase to roughly 170.6 billion EUR.
Table 1: Government expenditure on military defence [value in million EUR]
Belgium
Bulgaria
Czech Republic
Denmark
Germany
Estonia
Ireland
Greece
Spain
France
11

2010
3 402.8
630.9
1 332.0
3 006.7
24 720.0
240.3
476.6
6 069.0
10 133.0
31 349.0

2011
3 425.4
447.0
1 272.5
3 184.0
25 771.0
234.3
475.4
4 955.0
9 622.0
30 874.0

2012
3 444.8
420.6
1 139.1
3 422.8
27 145.0
306.6
463.1
4 610.0
8 546.0
32 020.0

2013
3 550.3
491.1
1 031.1
3 248.5
27 064.0
327.5
459.1
3 878.0
8 721.0
32 309.0

2014
3 445.9
525.2
950.9
2 752.3
26 639.0
337.9
468.0
4 758.0
7 889.0
31 341.0

The 'military defence' is one of five groups under the 'defence' division in COFOG; the remaining
groups are: 'civil defence', 'foreign military aid', 'R&D defence' and 'defence n.e.c.'.

8

Croatia
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portugal
Romania
Slovenia
Slovakia
Finland
Sweden
United Kingdom
Total EU-28
Iceland
Norway
Total EEA

618.5
20 668.0
401.1
168.1
233.6
185.8
1 113.0
50.4
6 047.0
1 727.8
5 381.9
3 521.9
952.7
452.7
573.3
2 459.0
4 398.3
38 265.9
168 579.3

663.2
21 299.0
356.8
186.1
242.3
149.8
1 008.9
56.0
6 368.0
1 749.2
5 628.1
2 237.7
52.8
357.6
601.7
2 470.0
4 879.4
38 035.2
166 602.4

620.8
19 816.0
338.1
174.9
254.5
135.1
677.1
50.6
5 715.0
1 708.5
5 421.7
1 606.5
48.5
315.6
601.6
2 745.0
4 987.2
41 427.1
168 161.8

566.3
18 486.0
282.7
185.8
261.2
124.7
628.6
49.1
5 875.0
1 828.8
6 258.2
1 648.6
53.6
261.7
626.6
2 768.0
5 482.6
39 341.3
165 808.4

573.5
19 009.0
246.2
189.4
296.9
121.7
570.9
62.9
5 613.0
1 727.8
5 872.1
1 532.4
66.7
242.8
650.0
2 640.0
4 874.0
42 295.2
165 691.7

0.0
4 249.5
4 249.5

0.0
4 900.3
4 900.3

0.0
4 879.0
4 879.0

0.0
4 842.6
4 842.6

0.0
4 867.6
4 867.6

EU-28 and EEA
172 828.8 171 502.7 173 040.8 170 651.0 170 559.3
Source: Eurostat, general government expenditure by function (COFOG) [gov_10a_exp]

The total general government expenditure on military defence can be further
disaggregated into specific national accounts components (ESA 2010), such as personnel
costs (e.g. wages, salaries as well as employers' social contributions) and, among other,
the cost items that can serve as a proxy for the estimate of the value of public
procurement linked to the military defence function of the general government, as
presented in the following section.
2.1.1. Estimate of defence procurement expenditure
The estimates of the military defence procurement expenditure by general government of
EU-28 and EEA countries are presented in Table 2 below. This is the closest possible
proxy of the maximum potential value of defence procurement expenditure, irrespective
of whether the Directive is legally applicable to specific purchases. It is, therefore, the
main expenditure estimate used in this evaluation, to assess the extent of application of
the Directive, including the volume of exempted procurement (see in particular Sections
5.3.1.1., 6.1.1.1., and 6.1.2.1.).
In line with the methodology applied to calculate the total expenditure on works, goods
and services for the general government in civil procurement12, the estimate was based
12

“2014
Public
Procurement
Indicators”,
procurement/studies-networks/index_en.htm

9

http://ec.europa.eu/growth/single-market/public-

on the following aggregates extracted from COFOG classification for military defence
(GF0201) by the general government: ‘gross fixed capital formation’13 and ‘intermediate
consumption’14. ‘Social transfers in kind – purchased market production’15, which are
added to the estimate of government procurement expenditure in the civil sector were
equal to zero in all countries in the military defence sector16.
Table 2: Government procurement expenditure on military defence [value in
million EUR]
Belgium
Bulgaria
Czech Republic
Denmark
Germany
Estonia
Ireland
Greece
Spain
France
Croatia
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portugal
Romania
Slovenia
Slovakia
Finland
Sweden
United Kingdom
Total EU-28
13

14
15
16

2010
768.0
294.2
762.3
1 601.2
12 114.0
158.7
91.8
2 591.0
3 698.0
14 376.0
181.9
6 388.0
177.3
97.4
71.4
0.0
417.4
12.0
2 363.0
528.4
2 064.0
1 809.0
8.0
197.2
198.7
1 490.0
2 876.0
23 554.5
78 889.4

2011
771.6
119.6
693.4
1 709.5
13 229.0
146.1
85.8
1 564.0
3 425.0
13 696.0
233.0
6 597.0
122.1
95.6
82.0
79.4
305.5
18.0
2 715.0
564.4
2 420.0
673.7
6.3
107.4
218.6
1 467.0
3 222.2
23 193.3
77 560.5

2012
745.9
108.1
563.0
1 960.5
15 044.0
208.7
79.0
1 302.0
2 421.0
14 504.0
215.6
5 239.0
102.9
68.0
87.4
60.9
336.5
14.1
1 961.0
538.7
2 130.4
401.6
5.4
78.4
207.8
1 719.0
3 261.5
26 003.0
79 367.4

2013
812.1
123.9
483.9
1 835.1
14 919.0
217.0
78.3
1 012.0
2 618.0
15 040.0
197.8
4 061.0
43.8
77.9
89.4
47.3
307.9
11.4
2 078.0
671.2
2 738.7
378.5
5.3
58.3
208.9
1 759.0
3 576.0
25 322.0
78 771.7

2014
828.7
164.6
408.2
1 478.8
14 582.0
217.0
86.1
1 571.0
1 892.0
13 910.0
234.0
4 889.0
36.0
94.3
115.7
44.0
258.9
24.3
1 783.0
582.3
2 249.5
364.3
4.7
51.8
223.2
1 622.0
3 058.0
28 200.6
78 974.0

P.51g, 'gross fixed capital formation': consists of acquisitions, less disposals, of fixed assets during a
given period plus certain additions to the value of non-produced assets realised by the productive
activity of producer or institutional units; fixed assets are tangible or intangible assets produced as
outputs from processes of production that are themselves used repeatedly, or continuously, in
processes of production for more than one year.
P.2, 'intermediate consumption': the purchase of goods and services by government.
D.632, 'social transfers in kind - purchased market production'.
This is to be expected as ‘social transfers in kind purchased via market producers’ are for example the
provision, paid by government, of medical services by health care providers classified outside the
general government sector and which is typically an activity occurring outside of the defence sector.

10

Iceland
Norway
Total EEA

0.0
2 493.6
2 493.6

0.0
3 012.4
3 012.4

0.0
2 830.6
2 830.6

0.0
2 819.0
2 819.0

0.0
2 761.2
2 761.2

EU-28 and EEA
81 383.0 80 572.9 82 198.0 81 590.7 81 735.2
Source: Eurostat, general government expenditure by function (COFOG) [gov_10a_exp]

As presented in Table 2, in 2014 the largest budgets were at the disposal of the UK
military sector (around 28 billion EUR), followed by Germany and then France (14.5
billion EUR and 13.9 billion EUR per year respectively). The disproportionately low
value of military defence expenditure for Romania can be most probably explained by
the fact that, in contrast to other countries, significant amounts relating to civil defence
were reported by Romania (e.g. 0.8% of GDP in 2014).
The overall value of defence procurement expenditure by general government by the
28 EU Member States and EEA countries remained stable over the investigated period of
time, ranging between 81 to 82 billion EUR per year. Neither has it changed significantly
since the same analysis was carried out in the Impact Assessment - the average annual
defence procurement expenditure in 2000-2004 calculated for EU-25 Member States was
estimated at roughly 79 billion EUR17 (not adjusted for inflation).
2.1.2. Procurement of defence equipment
The overall value of military defence procurement expenditure, as presented in Section
2.1.1 above, was estimated based on the data provided by Eurostat (COFOG).
Unfortunately, this source of data does not allow obtaining more detailed breakdowns
within the selected functions of government. In particular, components which could serve
as comparators of the three procurement contract types (i.e. works, goods and service
contracts) are not available in COFOG.
However, the expenditure on military equipment, which constitutes a fraction of the total
defence procurement expenditure, is estimated by EDA and NATO. NATO divides
defence expenditure into four main categories: equipment18, personnel19, infrastructure20
and other21, while the EDA recognises the following breakdowns under the total defence
expenditure: personnel, investment (equipment procurement and R&D), other
expenditure (including infrastructure/construction), operation and maintenance. The EDA
estimate of the value of defence equipment procurement, as presented in below, covers:
the national defence equipment procurement, European collaborative defence equipment
procurement and other collaborative defence equipment procurement.

17
18
19
20
21

The Impact Assessment, p. 10 and p. 62.
Equipment expenditures include major equipment expenditures and R&D devoted to major equipment.
Personnel expenditures include military and civilian expenditures and pensions.
Infrastructure expenditures include NATO common infrastructure and national military construction.
Other expenditures include operations and maintenance expenditures, other R&D expenditures and
expenditures not allocated among above-mentioned categories.

11

Figure 2: Defence equipment procurement [value in billion EUR]

Source: EDA, Defence Data 2014, http://www.eda.europa.eu/docs/default-source/documents/edadefencedata-2014-final

The total defence equipment procurement expenditure reported by 27 EDA countries,
accounted for nearly 30 billion EUR in 2013 and roughly 25.9 billion EUR in 2014.
National defence equipment procurement was equal to around 20.2 billion EUR in the
last year for which data was available (2014). As previously explained, the value of
military equipment acquired in a given year constitutes a fraction of the total defence
procurement expenditure, but it also constitutes the part of public spending that would be
the most appropriate to serve as a denominator when evaluating the publication rate for
the procurement of goods under the Directive.
2.1.3. Outlook in defence and security expenditure
Although defence spending has generally been decreasing since the end of the Cold War,
there are multiple indications that due to recent changes in the geopolitical climate
mainly driven by the terrorist threat, and deteriorating relations with Russia following the
annexation of Crimea, the downward trend may reverse in the nearest future. In the
NATO Annual Report 2015, it was noted that ‘in 2015, there was real progress toward
fulfilling the commitment made in Wales. The first aim of the Wales pledge is to stop the
cuts to defence spending: 19 countries are expected to have met this aspect of their
commitment in 2015’ and ‘In 2015, 16 NATO members not only stopped the cuts to their
defence budgets but increased their defence spending in real terms. Twelve of these
countries are forecast to have increased their defence spending as a percentage of GDP
in 2015’. As far as year 2016 is concerned, the signs of the new trend have recently also
appeared via media coverage: according to Jens Stoltenberg NATO Secretary General
‘The forecast for 2016, based on figures from allied nations, indicates that 2016 will be

12

the first year with increased defence spending among European allies for the first time in
many, many years’. The latter was confirmed in a NATO Press Release of 4 July 201622.
This trend may have an impact on the amount of defence procurement expenditure and,
therefore, on the application of the Directive in the future.
2.2.

The rationale for Directive 2009/81/EC

This section seeks to set out, on the basis of the Impact Assessment, the rationale for the
EU intervention, i.e. the adoption of the Directive 2009/81/EC. The Directive regulates
public procurement procedures for the award of certain works, supply and service
contracts in the fields of defence and security. In essence, it provides that defence and
sensitive security contracts, which fall within its scope of application, are not excluded,
and whose value is above certain thresholds23, have to be awarded following competitive
tendering procedures based on the principles of transparency and equal treatment.
Prior to the Directive, the award of such public contracts fell within the scope of
Directives 2004/18/EC or 2004/17/EC (the civil procurement Directives), subject to the
relevant Treaty-based derogations, in particular Article 346 TFEU (Article 296 TEC
before 2009)24, and to the “secrecy” exclusions25.
2.2.1. The specific problem to be addressed by Directive 2009/81/EC
The specific problem identified in the Impact Assessment26 – was that many Member
States used Article 296(1)(b) TEC (now Article 346 (1)(b) TFEU27) extensively,
exempting almost automatically the procurement of military equipment from EU public
procurement rules. Similarly, Member States exempted sensitive security contracts
systematically on the basis of Article 296(1)(a) and/or Article 14 of Directive
2004/18/EC28. Derogations which should have been the exception according to the
Treaty and the case law of the Court of Justice were, in practice, the rule29.

22

23

24
25

26
27

28

29

http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2016_07/20160704_160704-pr2016-116.pdf
and Table 47 in Annex IV.
The thresholds are established by Article 8 of the Directive; an overview of the threshold amounts over
the years since the adoption of the Directive is provided in Table 59 in Annex IV.
Article 10 of Directive 2004/18/EC.
Article 14 of Directive 2004/18/EC and Article 21 of Directive 2004/17/EC, with almost identical
wording, provided for the exclusion of contracts “when they are declared to be secret, when their
performance must be accompanied by special security measures in accordance with the laws,
regulations or administrative provisions in force in the Member State concerned, or when the
protection of the essential interests of that Member State so requires”.
The Impact Assessment, p. 13.
Article 346 (1)(b) allows EU Member States to take measures that are necessary for the protection of
their essential security interests in connection with the production of/ trade in arms, munitions and war
material (specified in the 1958 list). Measures taken under Article 346 (1)(b) may not adversely affect
competition on the common market for products not specifically intended for military purposes.
According to Article 346(1)(a), “no Member State shall be obliged to supply information the
disclosure of which it considers contrary to the essential interests of its security”. Article 14 of
Directive 2004/18/EC excluded contracts “when they are declared to be secret, when their
performance must be accompanied by special security measures in accordance with the laws,
regulations or administrative provisions in force in the Member State concerned, or when the
protection of the essential interests of that Member State so requires”.
The Impact Assessment, p. 14.

13

In the fields of defence and security, EU public procurement rules (Directives
2004/18/EC and 2004/17/EC) were rarely applied in practice. As result, most defence
and security contracts were awarded on the basis of diverse national rules and
administrative practices. This often led to a regulatory patchwork which was hindering
the establishment of a common European defence equipment market and to noncompliance with the principles of the Treaty, in particular the fundamental freedoms of
the internal market and the principles of non-discrimination and transparency, including
the development of “buy-national practices”.
The main cause of the problem was deemed to lie in the general structure of EU civil
public procurement rules (Directives 2004/18/EC and 2004/17/EC), which failed to
address the specificities of defence and sensitive security procurement. These
specificities were: the high degree of complexity, which calls for flexibility, and the
special needs to ensure security of supply and the protection of classified information
(security of information)30.
2.2.2. General and specific objectives
Together with the other elements of the so-called “defence package” that was proposed in
200731, the Directive seeks to support the establishment of an open and competitive
EDEM. This is expected to benefit both the supply and the demand side: European
companies should obtain a larger “home” market, and competition should help public
purchasers to get best value for money, thus saving scarce financial resources32.
A more open, competitive and efficient market should help suppliers to achieve
economies of scale, optimise production capacity and lower unit production costs, thus
making European products more competitive on the global market. This should, in turn,
strengthen the competitiveness of European defence industry, by fostering consolidation
across national boundaries, helping to reduce duplication, and enhancing industrial
specialisation. Indeed, the gradual establishment of the EDEM is essential for a strong
EDTIB that can provide the military capabilities that Member States need33. The Impact
Assessment made it clear that the Commission can play a role in this area via the
establishment of a more coherent regulatory framework, but emphasised that, “as sole
customers of defence equipment, it is for Member States to reform the demand side of the
market”34 (i.e. via harmonisation of requirements and consolidation of demand).
Finally, the specific objective of the Directive, as defined in the Impact Assessment,
implied “a properly functioning regulatory framework at the EU level for the award of
contracts in the field of defence and security. This means that EU procurement law must

30

31

32
33
34

The Impact Assessment, pp. 16-20; Commission’s proposal for a Directive of the European Parliament
and of the Council on the coordination of procedures for the award of certain public works contracts,
public supply contracts, and public service contracts in the fields of defence and security (the
Commission’s proposal), 5.12.2007, COM(2007) 766 final, p. 3.
The 2007 “Defence Package” included a Communication entitled “Strategy for a stronger and more
competitive European defence industry” (COM(2007)764, and the legislative proposals for two
Directives: Directive 2009/43/EC on transfers of defence-related products within the EU; and
Directive 2009/81/EC on defence and security procurement (the Directive).
The Impact Assessment, p. 32.
Recital 2 of the Directive.
The Impact Assessment, p. 32.

14

effectively implement the principles of the Treaty for the Internal Market in the field of
defence and security and, at the same time, ensure Member States security interests.”35.
2.2.3. The operational objective and the main features of the Directive
The operational objective of the Directive is to limit the use of the exemptions, in
particular under Article 346 TFEU, to exceptional cases, in accordance with the case law
of the EU Court of Justice. The majority of contracts in the field of defence and security,
including those for the procurement of arms, munitions and war material, should thus be
awarded on the basis of the rules of the Directive in order to foster the application of the
principles of the Treaty. At the same time, Member States' security interests must be
respected36.
The Directive seeks to achieve this operational objective by coordinating the different
national rules and laying down provisions tailor-made to the specificities of the defence
and security sectors. Key elements of the Directive addressing such specificities include:
– Defence-specific exclusions: the Directive contains exclusions that have been adapted
or newly created in order to accommodate the specific situation of the defence and
security sectors. These are the exclusions on international rules, disclosure of
information, intelligence activities, cooperative programmes, contract awards in third
countries, and government to government sales. Some of the exclusions laid down in
the Directive can relate to defence cooperation in procurement.
– Flexible procedures: use of the negotiated procedure with publication of a contract
notice is authorised without the need for specific justification in order to allow the
flexibility required to award sensitive defence and security contracts;
– Security of Supply: the particular importance of this issue for defence and security
procurement and the specific needs of the Member States justify specific provisions.
The Directive allows contracting authorities to address Security of Supply needs
through criteria for the selection of suitable candidates and tenderers, contract
performance conditions, and award criteria;
– Security of Information: protection of classified information is crucial for the award
and execution of many defence and sensitive security contracts. The Directive
addresses Security of Information in several provisions: as requirement for the
tendering and contracting phase (Article 7), as cause for exclusion (Article 13), as
contract performance condition (Articles 20 and 22), and as selection criterion
(Articles 39 and 42).
– Review: in order to ensure compliance with transparency and competition obligations,
the Directive establishes a specific review system. This system is largely based on the
rules applicable to civil procurement37, but contains some provisions adapted to the
domains of defence and sensitive security.

35
36
37

The Impact Assessment, p. 31.
The Impact Assessment, p. 32.
Council Directives 89/665/EEC and 92/13/EEC, as amended by Directive 2007/66/EC of the European
Parliament and of the Council.

15

– Subcontracting: in contrast with the civil procurement Directives that provide only
very limited obligations with regard to subcontracting, the (defence procurement)
Directive contains a detailed set of provisions laid down in Articles 21 and Title III
(Articles 50-54). These provisions, in particular, allow contracting authorities to
require that successful tenderers subcontract a certain share of the main contract
and/or put proposed subcontracts out to competition. At the same time, these
provisions, set basic rules for the fair and transparent awarding of such subcontracts.
This approach is built on the assumption that competitive subcontracting would give
to sub-suppliers, and especially SMEs, a fair chance of gaining access to the supply
chains of big system integrators located in other Member States.
To summarise, the Directive aims at addressing the problems identified (extensive
application of exemptions and non-application of competitive procurement procedures)
through a set of rules specifically adapted for the defence and security sectors. The
increased application of competitive procurement procedures based on transparency and
equal treatment is expected to lead to more openness and transparency in defence
procurement, as well as more clarity and legal certainty. This should bring about costsavings for public authorities and a more open and efficient market and, in turn, be a
contributing factor towards a stronger and more competitive industrial base in Europe.
The intervention logic is presented in Figure 3 overleaf.

16

Figure 3: Intervention logic

17

2.3.

Baseline: the situation before Directive 2009/81/EC

This description of the situation before the Directive is based on the analysis contained in
the Impact Assessment and a study “Openness of Member State’s defence markets” by
Europe Economics of November 2012 (the Baseline Study). The baseline situation was
also reported in the Staff Working Document accompanying the 2013 Communication
“Towards a more competitive and efficient defence and security sector”38.
2.3.1. Regulatory patchwork
As explained above in Section 2.2., before transposition of the Directive, exemptions
were used extensively and EU public procurement rules (Directives 2004/18/EC and
2004/17/EC) were rarely applied in practice in the defence and security sector. Most
procurement contracts were awarded on the basis of different national rules39. Each
Member State followed different rules as regards publication, technical specifications,
and procedures.
With particular regard to publication, the extent to which contract notices were published
(either at the EU or national level) differed widely. The frequency of publication and
accessibility of contract notices also varied greatly across Member States40.
2.3.2. EU-wide publication of business opportunities
The Impact Assessment found that, in the reference period 2000-2004, the publication in
the field of defence was relatively rare, even with regards to non-military and nonsensitive procurement such as uniforms or certain services. The publication levels
appeared to be even lower, if not marginal, for military procurement; in these cases,
publication seemed to concern mainly procurement of “simple”, low value equipment, as
well as non-sensitive works and services41.
According to the Baseline Study, more than 1 500 notices for defence contracts42 of a
value of roughly 4 billion EUR were published on Tenders Electronic Daily (OJ/TED)43
from 2008 to 2010 included. On top of that, nearly 300 notices for contracts of roughly
4.76 billion EUR were published on the Electronic Bulletin Board (EBB) of the EDA44.

38

39

40

41
42
43

44

Commission Staff Working Document on Defence, accompanying the Communication “Towards a
more competitive and efficient defence and security sector” {COM(2013) 542 final}SWD of 2013,
Brussels, 24.7.2013 SWD(2013) 279 final.
The Impact Assessment, p. 21: some Member States had specific legislative rules, while others relied
on non-legislative/administrative guidance for project managers.
The Impact Assessment, p. 21. For a description of diverging rules on technical specifications,
procedures, selection of suppliers, security of supply, etc., see: the Impact Assessment, Section 3.4, pp.
21-25.
The Impact Assessment, p. 14.
Contracts for the purchase of arms, munitions and war material, plus related services and works.
Tenders Electronic Daily is the online version of the 'Supplement to the Official Journal of the EU,
dedicated to European public procurement (http://ted.europa.eu/ ).
The EBB was an online portal operated by the EDA to publish defence contract opportunities
submitted by subscribing Member States. The EBB supported the voluntary Code of Conduct on
Defence Procurement which covered procurement procedures that Member States considered covered
by Article 346 TFEU. The Code of Conduct and the EBB were launched on 1 July 2006 and have been
abolished in May 2014.

18

Table 3: Contracts advertised on OJ/TED and EBB in 2008-2010 [number of
contracts, value in million EUR]
Publication
Number
source
2008
2009
2010
415
447
686
TED
126
90
80
EBB
Total
541
537
766
Source: The Baseline Study, p. 30

Total
1 548
296
1 844

2008
513
2 518
3 031

Value
2009
2010
2 626
885
1 348
900
3 974
1 785

Total
4 024
4 766
8 790

Hence, in the period 2008-2010, 1 844 defence contract notices were published EU-wide.
The total value of these contracts was estimated to be nearly 8.8 billion EUR45, which
was equivalent to 3.3%46 of the EU’s total defence procurement expenditure in the
same period (263.23 billion47 EUR, 2008-2010). In the context of comparisons with the
baseline which will be made later in this evaluation, it shall be noted that the Baseline
Study referred to defence procurement expenditure as reported by the EDA, while in this
report, the main source of data used to determine defence procurement expenditure is
Eurostat COFOG database48 (see: Section 2.1.1.). If the baseline OJ/TED and EBB data
were compared with the 2008-2010 COFOG defence procurement expenditure, the share
would increase to 3.6%. Nonetheless, if the filtering OJ/TED of notices would be more
conservative (as the one applied in this report, see: Section 5.3) the percentage would
probably decrease, potentially to a figure close to the baseline estimate of 3.3%. For the
above explained reasons, the share of 3.3%, despite its caveats, has been maintained as
the reference figure for the baseline period.
2.3.3. Cross-border awards
According to the Baseline Study, cross-border contracts published in OJ/TED and EBB
in 2008-2010 amounted to 2.26 billion EUR49. Consequently, the share of cross-border
awards published through the above channels in the reference years equalled 0.86%50 of
the total defence procurement expenditure.
3.

EVALUATION QUESTIONS

The following table contains a list of questions that will be addressed in the course of this
evaluation, to guide the analysis of the performance of the Directive. The questions are
grouped under the five evaluation criteria that will look into the effectiveness, efficiency,
relevance, coherence and EU added value of the Directive.

45

46
47
48
49
50

From a legal standpoint, publication in OJ/TED and on the EBB were mutually exclusive, as OJ/TED
was to be used for contracts award procedures under the civil procurement Directive (Directive
2004/18/EC) and the EBB was to be used for procurement under Article 346 TFEU. The issue of
duplication of data has, however, been thoroughly checked in the Baseline Study, and no duplication
has been found, paragraphs 3.13 and 3.14, pp. 29-30.
8.8 billion EUR/263.2 billion EUR, in 2008-2010.
The Baseline Study, Table 3.1. p. 27.
The latter has been judged to be more complete, as it also covers Denmark and the EEA countries.
The Baseline Study, Table 4.4. p. 57.
2.26 billion EUR/263.2 billion EUR, in 2008-2010.

19

Table 4: Evaluation questions
Main evaluation
questions

Effectiveness To

Evaluation questions detailed

what extent
have the objectives
of the Directive
been achieved?

1. To what extent have competition, transparency and
non-discrimination in the defence procurement
market in Europe changed as a result of the
Directive?

To what extent the
observed changes
can be attributed to
the Directive?

2. To what extent has the use of exemptions, in
particular Article 346 TFEU, changed as a result of
the Directive?

What
are
the
factors, if any,
affecting
the
implementation of
the Directive?

3. To what extent are the provisions of the Directive
appropriate to guarantee competition, transparency
and equal treatment, while safeguarding Member
States security concerns?
4. Have there been any major structural changes in the
European Defence Technological and Industrial
Base (EDTIB), including with regards to SMEs, and
to what extent are they linked to the Directive?

Efficiency

To what extent has
the
intervention
been
cost
effective?

5. To what extent are the costs proportionate to the
benefits achieved?

Relevance

To what extent is
the intervention still
relevant?

6. To what extent are the objectives of the Directive still
relevant?
7. In what way has the initial problem evolved? Have
any new issues that need to be taken into account
emerged since the adoption of the Directive and
what are they?

To what extent is
this
intervention
coherent with other
interventions which
have
similar
objectives?

8. To what extent is the Directive coherent with the
framework of EU Public Procurement law and of
internal market legislation and policies related to
defence (e.g. Directive 2009/43/EC)?

EU
added To what extent do
the
issues
value

10. What has been the EU added value of the Directive
compared to what could have been achieved by
Member States at national (or regional) level (is the
principle of subsidiarity respected)?

Coherence

addressed
continue to require
action at EU level?

4.

9. How does the Directive fit into the framework of
other EU instruments and policies in particular in the
area of CSDP?

METHOD

The analysis presented in this document was based on several data sources, in particular:
notices published in OJ/TED, data published by EDA and NATO, IHS Jane’s Defence &
Security Intelligence database and Eurostat, as well as consultations with Member States
and stakeholders (including a public on-line survey). The findings of this evaluation are
20

compared with the situation before the entry into the force of the Directive, as analysed
in the Baseline Study.
As mentioned in the introduction, the evaluation covers years 2011-2015. Given the short
time that has elapsed since the entry into force of the provisions, it can be expected that
the conclusions about the Directive’s impact on the EDEM and, especially, the EDTIB
would be very difficult to reach. Therefore the present evaluation assesses whether we
are on track to meeting the objectives it sets and the expectations made at the time of its
adoption. The problem of insufficient time lag of this evaluation has been already pointed
out in the Baseline Study: “A comparison in 2016 of, say, 2013-2015 with 2008-2010
might not capture much of the Directive’s impacts: 2013 is only one year later than the
end of the transposition phase. Comparisons in 2017 of 2014-2016 (or possibly 20152016) with 2008-2010 would offer a better chance of capturing impacts.”51 Similarly, it
has been also pointed out in the Impact Assessment that ”Given the life cycle of defence
equipment (and their related services, especially maintenance), an evaluation of the
economic impact should be contemplated in the long term (no sooner than 10 years).”52.
4.1.

OJ/TED data

The main source of data used in this evaluation was extracted from OJ/TED, which is the
online version of the Supplement to the Official Journal of the EU dedicated to European
public procurement. The OJ/TED dataset contains information provided by national
contracting authorities about procurement procedures they implement(ed) and includes
for instance the Common Procurement Vocabulary (CPV)53 chosen to describe the
subject-matter of the contract, the price of awarded contracts, the name of the winning
firm and the legal regime applied (the Directive or the civil procurement Directives).
Procurement transactions which were of particular pertinence in the context of this
evaluation were those published on notices dedicated to defence and security
procurement54. Additionally, the analysis also covered a subset of publications on
voluntary ex-ante transparency notices (VEATs) when the contracting authority indicated
that the publication falls under the Directive and notices published under the civil
procurement Directives, if their subject matter was linked to defence or/and security. The
latter was established by retaining notices which referred to CPV codes listed in Table 42
and Table 43 in Annex III.
From the analytical point of view, the most valuable information about procurement
comes from the contract award notices, as they refer to procedures that have been
concluded (i.e. contracts which were attributed to a particular company for an agreed
price). For this reason, the following analysis is mainly based on the contract award
notices.

51
52
53

54

The Baseline Study, p.154.
The Impact Assessment, p.58.
The common procurement vocabulary (CPV) establishes a single classification system for public
procurement aimed at standardising the references used by contracting authorities and entities to
describe procurement contracts.
Annexes XV to XVIII of Commission Implementing Regulation (EU) No 842/2011 of 19 August 2011
establishing standard form for the publication of notices in the field of public procurement and
repealing Regulation (EC) No 1564/2005.

21

Before launching any descriptive analysis of OJ/TED publications, the raw dataset was
subject to manual scrutiny in order to verify its quality. The analysis of OJ/TED data
included in this evaluation is based on the manually corrected datasets, unless specified
otherwise. The scope of manual corrections is explained in detail in Annex III.
4.2.

Other data sources

In addition to OJ/TED data, data from other sources were also used, in particular:
 Eurostat: COFOG data (http://ec.europa.eu/eurostat/web/governmentfinance-statistics/data/database) and Structural business statistics (SBS)
data
(http://ec.europa.eu/eurostat/web/structural-businessstatistics/data/database),
 IHS Jane’s (http://www.janes.com/), especially the following modules:
Jane's Defence Procurement, Jane’s Defence Industry & Markets,
 The European Defence Agency (EDA) (https://www.eda.europa.eu/ ),
 Stockholm
International
(https://www.sipri.org/),

Peace

Research

Institute

(SIPRI)

 North Atlantic Treaty Organization (NATO) (http://www.nato.int/),
 AeroSpace and Defence Industries Association of Europe (ASD)
(http://www.asd-europe.org/home/ ).
The extent to which each of the above data was used and the limitations linked to its
scope or availability, if any, are described in Annex III (Method). This Annex contains
also references to other ancillary data sources used to underpin this evaluation.
4.3.

Stakeholders consultations

The stakeholders consultation methods for this evaluation have been designed to reach all
potential stakeholders as well as the general public, and to gather detailed technical
feedback from more directly involved stakeholders and experts. In the light of this, the
consultations included an internet-based public consultation (online survey) and several
complementary consultation meetings with key stakeholders. More information is
provided in Annex II.
4.4.

Methodological issues and data availability

The current evaluation has been carried out without encountering major unexpected
problems linked to methodological and/or data analysis issues. The economic research
underpinning this evaluation relied heavily on descriptive statistics of the OJ/TED dataset
which was available in a structured format and fit for automated processing. The raw
OJ/TED was subject to manual scrutiny to ensure its adequacy and corrected for basic
errors or missing information. Additionally, examination of the data, especially with
regards to the contract award values, has also been performed by the representatives of
two Member States who volunteered to complete the missing information for their
countries. As such, the manual corrections affected less than 5% of the observations,
which suggest that the original dataset was of a relatively good quality.
22

Some data availability issues where encountered in areas where such problems could
have been expected (e.g. procurement exempt from the application of the Directive). This
part of the market was analysed using data from a private provider (IHS Jane’s), which as
such was not technically demanding, but rather raised questions about its
coverage/completeness and potential overlaps with OJ/TED. The estimation of
compliance costs under the Directive also included “business as usual” costs and costs
deriving from national legislation. It was impossible to disentangle the above
components of the cost estimate due to technical limitations in the raw dataset used.
More information about the methodology used is provided in Annex III.
As far as the EDTIB impact is concerned, it was noted that definite conclusions are
difficult to draw at this stage, as insufficient time has elapsed since the adoption of the
Directive and potential impact on the industry would need more time to materialise. In
parallel, there were also issues with the unavailability of recent data about the industry
(e.g. beyond 2014) in Eurostat and/or ASD. Additionally, the main Eurostat database
which is typically used to describe patterns across chosen industries – the Structural
business statistics (SBS) - is not well adapted to the defence sector, as it partially covers
non-defence activities (e.g. civil aerospace and shipbuilding). This problem is known and
has been mentioned in several previous publications about the defence sector, including
the Baseline Study: “The ‘defence industry’ is not an industry in a statistical sense. There
is no classification ‘defence equipment’ in the EU’s Nomenclature générale des Activités
économiques dans les Communautés Européennes (NACE).”55.
Notwithstanding those limitations, the evaluation is based on a review of best available
quantitative and qualitative evidence of causality between actions and effected changes.
It made extensive use of stakeholders' and experts' view on the functioning of the
different provisions of the Directive.
5.

IMPLEMENTATION STATE OF PLAY

This section includes an overview of the process that led Member States to convert the
Directive into their national legal orders with some significant delays for some Member
States, a summary of the results of the technical analysis of the transposition measures
adopted by Member States process, a brief description of developments concerning the
related issue of offsets regulations, some background information on the Commission
departments’ activities to ensure compliance with the Directive, and, finally, a
quantitative analysis of the uptake of the Directive.

55

Cont. “The bulk of the equipment supplied for defence purposes resides within three NACE industries
that supply both and civil and military markets – weapons and ammunition, shipbuilding, and
aerospace. The weapons and ammunition industry, for example, is not exclusively a supplier of
military equipment: it also produces recreational guns and their ammunition. A fourth, and smaller,
defence industry category emerged from a recent revision of NACE (“NACE Rev.2”), which then
defined, for the first time, a manufacturing industry that is wholly related to defence - NACE Rev.2
C304, Military fighting vehicles.”, the Baseline Study, p. 89.

23

5.1.

Transposition
5.1.1. The transposition process (August 2011-May 2013)

Under Article 72 of the Directive, Member States had to “adopt and publish the laws,
regulations and administrative provisions necessary to comply with the Directive” (i.e.
transpose it in their national legal orders) by 21 August 2011. Only 3 Member States had
notified complete transposition of the Directive to the Commission by 21 August 2011,
and a fourth Member State notified complete transposition in September 2011.
The Commission therefore opened infringement procedures against 23 Member States
(Article 258 TFEU) by sending letters of formal notice. As a result, by March 2012, 15
additional Member States had notified complete transposition. For the remaining 8
Member States (Austria, Bulgaria, Germany, Luxembourg, the Netherlands, Poland, the
United Kingdom, and Slovenia) the Commission continued the infringement procedures
for non-communication of transposition measures and issued reasoned opinions56. By
September 2012, Austria, Bulgaria, Germany and the United Kingdom notified complete
transposition and the Commission closed the infringement procedures relating to them.
In September 2012, the Commission decided to refer Poland, the Netherlands,
Luxembourg and Slovenia to the Court of Justice since these Member States had not
notified the complete transposition of the Directive57. By April 2013, these four Member
States did so and the Commission closed the infringements procedures. The Commission
did not consider the transposition measures notified by Portugal to be complete and
issued a reasoned opinion in March 201358. Following the reply of the Portuguese
authorities and notification of further transposition measures in April 2013, this
infringement procedure was also closed.
It is, therefore, only from May 2013 that the provisions of the Directive have been fully
transposed in the national legal orders of all Member States.
5.1.2. Technical analysis of transposition measures
The Commission departments have analysed Member States’ transposition measures to
verify their conformity with the provisions of the Directive. The Commission
departments have not identified fundamental problems in terms of conformity of national
transposition measures, i.e. problems that would jeopardise the overall functioning of the
Directive. However, this analysis has shown that, in several Member States, there are
certain issues to be clarified on the transposition in national legislation of some specific
provisions of the Directive.
This Section of the SWD is based on a preliminary analysis conducted in the context of
the evaluation of the Directive. It is without prejudice to the Commission’ position
concerning possible breaches of Union law.

56

57
58

See
press
releases:
http://europa.eu/rapid/press-release_IP-12-76_en.htm?locale=en;
http://europa.eu/rapid/press-release_IP-12-290_en.htm?locale=en;
http://europa.eu/rapid/pressrelease_IP-12-416_en.htm?locale=en;
http://europa.eu/rapid/press-release_IP-12533_en.htm?locale=en; http://europa.eu/rapid/press-release_IP-12-664_en.htm?locale=en;
See press release: http://europa.eu/rapid/press-release_IP-12-1020_en.htm?locale=en.
See press release: http://europa.eu/rapid/press-release_MEMO-13-261_en.htm.

24

5.1.2.1.Scope, thresholds and exclusions
The correct transposition of the provisions defining the scope of the Directive (Articles 1
and 2), and the exclusions (Article 12 and 13) is an essential pre-requisite for the uptake
of the Directive, and compliance with the principles of competition, transparency and
equal treatment. These provisions have been broadly transposed in a correct manner. One
Member State seems to have transposed Article 2(c) broadening the scope with regard to
the award of contracts for non-military security. Similarly, another Member State seems
to have broadened the scope of Article 2(a) by referring to military “and law enforcement
purposes”.
Article 9(5) third subparagraph provides that the application of the Directive to each lot
may be waived if the lots are below a certain value. In one Member State, a small change
in the wording of the corresponding national provision could allow contracting
authorities/entities to waive such application in cases different than those provided for in
the Directive.
Two Member States have transposed Article 12(c) without including the words
“purchasing for its purposes”. One Member State seems to have broadened the scope of
Article 13(b) by referring to the purposes of the bodies pertaining to the intelligence
system rather than to intelligence activities.
5.1.2.2.Negotiated procedure without publication
Since it allows contracting authorities to derogate from the fundamental requirements on
transparency and EU-wide competition, the correct transposition of Article 28 on the use
of the negotiated procedure without publication of a contract notice is also essential.
Only very few and particular issues have been identified with the transposition of this
provision. In one Member State, the time limit of five years in Article 28(3)(a) does not
refer to “recurrent contract”. Another Member State did not transpose the provision in
Article 28(4)(b) obliging contracting authorities/entities to disclose the possible use of
the procedure as soon as the first project is put up for tender. Four Member States seem
not to have transposed the second part of the same provision laying down an obligation
to take into account the cost of subsequent works or services to calculate the estimated
value of the contract for the purposes of the thresholds under Article 8.
5.1.2.3.Exclusion grounds (Article 39)
Four Member States did not transpose Article 39(1) fourth subparagraph or at least the
reference that clarifies that contracting authorities/entities’ requests of evidence about the
personal situation of a candidate or tenderer have to relate, where needed, to natural
persons such as company directors. One Member State seems to have extended the scope
of mandatory exclusion grounds of Article 39(1) to economic operators submitting
multiple offers and to those involved in the preparation of procurement documents. Two
Member States broadened the possibility for contracting authorities/entities to waive
mandatory exclusion grounds provided for in Article 39(1) third subparagraph.
Two Member States have not transposed Article 39(2)(d) providing for the exclusion for
grave professional misconduct, and another Member State has not transposed Article
39(2)(e) on the exclusion of economic operators which lack the reliability to exclude
security risks. Two Member States have not transposed Article 39(2)(h) on the exclusion
of economic operators who are guilty of serious misrepresentation in supplying the
25

information on their personal situation or who have not supplied such information; in one
Member State, the corresponding national provision narrows the scope of this exclusion
ground.
5.1.2.4.Time limits (Articles 33 and 34)
Two Member States transposed Article 33(3) by referring directly to the time limit of 22
days, instead of making it clear that the normal time limit is 36 days and 22 days is the
absolute minimum that cannot be in any way shortened further.
Article 34(4) provides time limits for the contracting authorities/entities to send to
economic operators additional information on the contracts documents. Five Member
States have either not transposed this provision, or slightly reduced through different
mechanisms the time available to economic operators.
5.1.2.5.Other issues related to the rules on contracts
According to Article 5(2), groups of economic operators may submit tenders or put
themselves forward as candidates. In one Member State, the corresponding national
provision allows contracting authorities/entities to exclude groups of undertakings if
based on objective reasons.
Article 18(3)(a) second subparagraph provides that contracting authorities/entities, when
drafting the technical specifications, have to accompany every reference to standards
with the expression “or equivalent”. One Member State seems to have converted this
provision into national law without including this wording.
Article 22, third subparagraph provides that Member States have to recognise the security
clearances which they consider equivalent to those issued in accordance with their
national law. This means that, where there are bilateral security agreements or
arrangements concerning the equivalence of security classifications and security
requirements, contracting authorities/entities have to recognise security clearances
granted by the national security authority of the other Member State party to this
agreement or arrangement59. In two Member States national legislation do not explicitly
provide for this obligation to recognise security clearances in the above-mentioned
circumstances.
In two Member States, the national provisions corresponding to Article 29(3) allow
contracting authorities/entities to conclude framework agreements with a single
economic operator without defining all the terms for the award of specific contracts
based on the agreement.
Article 32(1) provides for the minimum content to be included in the notices for
publication at EU level; one Member State has not transposed this provision in its
national legislation. In addition, Article 32(5) prohibits contracting authorities/entities to
publish notices at national level before the date on which they are sent to the Commission
for publication at EU level. It also provides that notices published at national level cannot
include information other than that contained in the notices sent for publication at EU
59

Guidance note on Security of Information, paragraph 12,
http://ec.europa.eu/DocsRoom/documents/15411/attachments/1/translations/.

26

level. In two Member States, the relevant national provisions do not contain the explicit
prohibitions lay down in Article 32(5).
Article 37(1) lays down an obligation on contracting authorities/entities to draw up a
written report on the selection procedure, and provides for mandatory elements to be
included in the report. In two Member States, the national provisions do not mention all
these elements.
Article 38 regulates various aspects of the conduct of procedures. Two Member States
appear not to have expressly transposed Article 38(1), which sets out the sequencing of
procedures from the application of exclusion grounds to the qualitative selection and the
award of the contract. In two Member States, the provisions transposing Article 38(3)
third subparagraph do not lay down the obligation, in case of re-publication of contract
notice, to invite the candidates selected upon the first publication.
Article 38(5) regulates the situation where the contracting authorities/entities exercise the
option of reducing the number of solutions or of tenders. In three Member States, this
provision has not been transposed.
One Member State appears not to have transposed in national legislation Article 49(1)
and Article 49(2) on abnormally low tenders. According to these provisions, where
tenders appear to be abnormally low, contracting authorities/entities have to request in
writing details of the constituent elements of the tender and to verify these elements by
consulting the tenderer.
5.1.2.6. Subcontracting
Article 21(1) lays down i.a. a prohibition to require successful tenderers to discriminate
against potential subcontractors on grounds of nationality. Two Member States seem not
to have explicitly transposed this provision. One Member State appears not to have
transposed any of the provisions on subcontracting (Articles 21 and 50 to 53).
5.1.2.7. Rules to be applied to reviews
According to Article 56(3), Member States are obliged to ensure that contracting
authorities/entities cannot conclude the contract before the review body’s decision. One
Member State seems not to have transposed this provision, and another has introduced
changes that make the prohibition less stringent.
Article 57(2), fourth subparagraph, imposes an obligation on contracting
authorities/entities to include in the communication of the award decision a summary of
the relevant reasons and a precise statement of the exact standstill period applicable. Two
Member States have not transposed this provision in national legislation, and one has not
included the reference to the statement of the applicable standstill period.
Article 58 allows Member States to provide for specific derogations from the standstill
period. One of these derogations concerns contracts based on a framework agreement.
However, according to Article 58(c), Member State which decide to use this option have
to ensure, in two specific cases, that such contracts based on a framework agreement are
ineffective. Four Member States seem to have used the option, but not explicitly
transposed these provisions on ineffectiveness. In one Member State, the national
provision provides for ineffectiveness only in one of the two cases.
27

Article 60(1) imposes on Member States the obligation to provide for ineffectiveness of
contracts in specific cases. It seems that two Member States have not transposed this
provision, while three Member States appear not to have included in the relevant national
provisions all the cases for ineffectiveness. Article 60(3) provides that Member States
may enable review bodies not to declare contracts ineffective when this is required by
overriding reasons relating to a general interest; the same provision clarifies that
economic interests directly related to the contract do not constitute such overriding
reasons. In one Member State, the national provision transposing Article 60(3) admits
such economic reasons to be overriding reasons. In addition, six Member States have not
transposed either Article 60(4) or Article 60(5), which provide for mandatory nonapplication of ineffectiveness in given cases.
5.1.3. Offsets / industrial return regulations in the context of transposition
This section addresses the issue of offsets regulations, which is highly relevant in the
context of the process of transposition of the Directive. The practice of concrete offsets
or industrial return requirements in specific public procurement procedures is covered
below in Section 6.1.1.4.
Offsets are compensations that many governments in the world require when they
procure defence equipment from non-national suppliers. This is often to ensure an
economic/industrial return on defence investment. Offsets can take various forms: they
can be directly related to the subject-matter of the contract, indirect but limited to the
military sphere, or indirect non-military.
Whatever their form, offsets requirements are, from an EU law standpoint, restrictive
measures which go against the basic principles of the Treaty, because they discriminate
against economic operators, goods and services from other Member States and impede
the free movement of goods and services. They can only be justified on the basis of one
of the Treaty-based derogations, in particular Article 346 TFEU. However, these
derogations must be limited to exceptional and clearly defined cases, and the measures
taken must not go beyond the limits of such cases. They have to be interpreted strictly,
and the burden of proof that the derogation is justified lies with the Member State which
invokes it60.
The Impact Assessment highlighted the negative and discriminatory effects of offsets
upon procurement procedures. It noted that offsets “give a considerable advantage to big
prime contractors, which normally have better means than smaller competitors to
arrange offsets deals”; “if military offsets are required, prime contractors have to subcontract to companies located in the buying country. Consequently, they cannot use the
most competitive sub-contractors to organise their supply chain, but must give
preference to sub-suppliers of a certain nationality”; “if non-military offsets are
required, the same effect spills over into civil markets: non-military contracts are
awarded on the basis of nationality than competitiveness”61.
The Impact Assessment assessed a number of options with regard to offsets, and
concluded that not mentioning them in the proposal for the Directive was the best-suited
60

61

Guidance note on Offsets,
http://ec.europa.eu/DocsRoom/documents/15413/attachments/1/translations/ .
The Impact Assessment, p. 28.

28

one62. In fact, since offsets requirements violate basis rules and principles of primary EU
law, a secondary law instrument like the Directive cannot allow, tolerate, or regulate
them. The Impact Assessment added that the issue of compatibility of offsets with EC
law had to be addressed in the light of the Treaty and the Commission’s Interpretative
Communication63.
Before the adoption of the Directive, 18 Member States maintained offsets regulations
requiring compensation from non-national suppliers when they procured defence
equipment abroad64. These regulations obliged contracting authorities to systematically
(i.e. for all contracts or for all contracts above a certain value) require offsets when
purchasing defence equipment from foreign suppliers abroad. They were clearly
incompatible with EU primary law as well as the correct transposition and application of
the Directive.
Consistently with the option selected with the Impact Assessment, the Commission
departments therefore engaged, since 2010, with Member States to make sure that these
offsets regulations were abolished or revised in the context of the process of transposition
of the Directive. Member States have indeed either abolished or revised their offsets
regulations. The content of revised offsets regulations varies significantly across Member
States, but they have one key feature in common. Under the revised regulations, offsets
are no longer required systematically (i.e. for all contracts or for all contracts above a
certain value) in connection with defence purchases from abroad based on grounds of
clear economic nature. The revised rules provide that offsets can only be required,
following a case-by-case analysis, where the conditions of Article 346 TFEU are met.
The revised offsets regulations of those Member States that have chosen to maintain
them in place do not seem per se incompatible with EU law. The question remains,
however, of whether - and to what extent - the concrete application of these revised rules
in procurement practice in individual cases is compliant with EU law, and in particular
with the strict conditions for the use of Article 346 TFEU.
5.2.

Compliance activities concerning individual procurement cases

Section 5.1. above describes the Commission activities concerning the transposition of
the Directive, and the related issue of offsets/industrial return regulations. This paragraph
seeks to explain the Commission departments’ work so far about compliance of Member
States’ concrete individual procurements with the rules of the Directive.
It should be pointed out that, in the period 2011-2015 (and also until September 2016),
the Commission departments have received only 1 complaint from an economic operator
involved in a specific defence procurement procedure, and no complaint from economic
operators involved in procedures for the procurement of high-value, complex military
equipment. As it emerged in the stakeholders' consultations with regard to access to
review procedures, defence companies only usually have one customer in each country,
and therefore try not to antagonise them. This may also help explain the absence of
62
63

64

The Impact Assessment, p. 49.
The Impact Assessment, p. 49; Interpretative Communication on the application of Article 296 of the
Treaty in the field of defence procurement, 7.12.2006, COM(2006) 779 final.
Report from the Commission to the European Parliament and the Council on transposition of Directive
2009/81/EC on Defence and Security Procurement, COM/2012/0565 final.

29

complaints to the Commission. It should be pointed out, however, that the absence of
complaints from competitors, which have the potential of providing comprehensive and
well-substantiated information, severely affects the compliance activities of Commission
departments, due to the difficulties of gathering ex officio such information about
concrete defence procurement procedures. Other relevant factors in this context are the
relative novelty of the rules, and the sensitivity of the sector.
In the period 2011-2015, the Commission departments contacted Member States
authorities to seek clarifications on 11 individual procurements. In 2016, further contacts
concerning other 17 individual procurements have been undertaken. The main focus of
these exchanges has been clarifications about the legal grounds for the non-application of
the Directive and, in some cases, for the use of offsets/industrial return requirements.
5.3.

Uptake of the Directive

As explained in Section 2.3., before the entry into force of the Directive, the publication
of defence and security procurement was relatively limited and took place mainly
through OJ/TED publications under the civil procurement Directives and on the EBB run
by the EDA. According to the Baseline Study, in the period 2008-2010, 1 844 defence
contract notices were published EU-wide for the estimated total value of around 8.8
billion EUR. The following sections discuss how the situation has changed in the EU
since the adoption of a legal instrument dedicated to defence and security procurement.
5.3.1. Defence and security procurement under the Directive
Since the entry into force of the Directive, more than 8 700 notices have been published
in OJ/TED under the standard forms dedicated to defence and security procurement65. As
explained in Section 4 and Annex III, following a manual scrutiny of the raw OJ/TED
data, around 250 notices have been removed from the original dataset, mainly because
their subject matter was judged as not being related to defence and security procurement.
Additionally, contract award notices from Belgium and the Netherlands have also been
manually corrected by the representatives of the respective Member States. All analysis
of OJ/TED data included in this document is based on the manually corrected dataset.
The retained dataset related to publications under the Directive contained 8 526 notices
(Table 5).
Table 5: Notices published under the Directive, by year and type [number of
notices]

Year
2011
2012
2013
2014
2015
Total
65

Prior
information
notice
2
85
100
160
166
513

Contract
notice
95
739
896
1 226
1 343
4 299

Contract
award notice
16
348
820
1 165
1 333
3 682

Subcontract
notice
0
2
16
5
9
32

Total
113
1 174
1 832
2 556
2 851
8 526

Standard form types 16 to 19, as defined in Annexes XV to XVIII of Commission Implementing
Regulation (EU) No 842/2011 of 19 August 2011 establishing standard form for the publication of
notices in the field of public procurement and repealing Regulation (EC) No 1564/2005.

30

Source: OJ/TED, manual corrections by DG GROW

Upon entry into force, the uptake of the Directive was almost immediate and has shown a
clear upward trend. As presented in Figure 4, the use of procurement notices available
under the Directive has been increasing each year, with the exception of the subcontract
notices66 which clearly stagnated at barely a few publications per year.
Figure 4: Notices published under the Directive, by year and type [number of
notices]

1,000 1,500

Prior information notice

Contract notice
1343
1226
896

500

739

85

100

2012

2013

160

166

2014

2015

95

0

2

2011

2011

1,000 1,500

Contract award notice

2012

2013

2014

2015

Subcontract notice
1333

1165

500

820

348
2

16

5

9

2012

2013

2014

2015

0

16

2011

2012

2013

2014

2015

2011

Graphs by notice types

Source: OJ/TED, manual corrections by DG GROW

A total of 3 682 contract award notices has been published in OJ/TED over the analysed
period of time, containing 7 145 distinct contract awards67. The difference stems from the
fact that a single contract award notice may refer to the award of one or many contracts
(contract awards). Out of the total number of contract awards notices published in 20112015, 3 121 contained just one contract. The remaining 15% of notices featured many
awards – the largest number in the sample was a notice containing 365 separate awards.

66

67

The subcontracting notices refer to the cases, where the contracting authority asked the successful
tenderer to subcontract a share of the contract to third parties.
The concept of a single award is more closely related to a contract signed with a bidder (or bidders) at
the end of the procurement process.

31

Figure 5: Contract award notices and awards published under the Directive, by
year [number of notices and awards]
2931

2057

1625
1333
1165
820
514
348
16

18

2011

2012

2013

number of notices

2014

2015

number of awards

Source: OJ/TED, manual corrections by DG GROW

The number of awards (awarded contracts) published under the Directive was in a steady
increase over the last five years, rising from only 18 in 2011 to 2 931 awards in 2015
(Figure 5). The total number of awarded contracts equalled, after manual corrections,
7 145 in 2011-2015.
5.3.1.1. Use of the Directive by countries
The total value of 3 682 contract award notices published under the Directive accounted
for nearly 30.85 billion EUR over the five years which are covered by the current
analysis (2011-2015). However, the extent to which Members States implemented the
Directive remained uneven. In terms of the number of notices published, more than 70%
of the publications concerning awarded contracts were made by authorities from five
Member States: Germany, France, Italy, Poland and the United Kingdom (Table 6).
Table 6: Contract award notices published under the Directive, by country and year
[number of notices]
2011
Austria
Belgium
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland

2

2012
1
3
2

2013
4
28
17

9
17

16
23
7
36

26

32

2014
1
25
19
16
37
32
14
45

2015
5
14
35
31
75
40
19
39

Total
11
70
75
47
137
112
40
146

France
39
Germany
3
87
Hungary
1
11
Italy
10
106
Latvia
Lithuania
3
Netherlands
4
Norway
Poland
3
Portugal
Romania
Slovakia
5
Slovenia
Sweden
2
United Kingdom
30
Total
16
348
Source: OJ/TED, manual corrections by DG GROW

230
202
18
97
5
8
5
32

225
251
7
105
4
18
23
3
171

21
1
8
9
53
820

58
5
7
13
86
1 165

246
271
10
88
12
25
31
26
185
8
48
15
10
10
90
1 333

740
814
47
406
21
54
63
29
391
8
127
26
25
34
259
3 682

Between 2011 and 2015 there were no publications of contract award notices by
contracting authorities from six countries: Cyprus, Greece, Ireland, Malta, Luxembourg
and Spain68. It shall be noted however that these countries have published a number of
contract award notices with a defence-related subject-matter under the civil procurement
Directives. Spain for example, kept on publishing under the civil regime even after
transposition of the Directive.
In terms of the contract value, an overview of publications by Member States also shows
significant differences across the EU, as presented in Table 7. More than a half of the
value of published contracts has been awarded by authorities from the United Kingdom
(nearly 17 billion EUR over the analysed five years, albeit this result was heavily
influenced by one contract award notice valued at around 6 billion GBP69). France,
Poland, Germany and Italy followed in the ranking (with publications estimated at
approximately 5 to 1 billion EUR).
Table 7: Contract award notices published under the Directive, by country and year
[value in million EUR]
2011
Austria
Belgium
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
68

69

2012

0.58

2.15
0.57

2013
0.62
4.34
0.70

3.79
145.58
90.14

20.03
34.02

23.25
42.74
16.15
84.82
817.71
344.99
23.23

25.48
45.64
280.92
52.40

2014
2.03
106.20
15.60
43.71
55.15
15.95
23.79
143.35
2 000.91
409.46
57.96

2015
17.23
19.83
46.51
75.82
94.33
844.69
104.34
91.45
2 105.16
664.58
49.06

Total
23.68
275.95
153.54
119.53
192.75
937.39
144.28
345.10
4 969.42
1 702.11
183.23

The removal of notices from the working dataset due to manual quality checks did not concerned
contract award notices published by contracting authorities from these Member States.
http://ted.europa.eu/udl?uri=TED:NOTICE:162335-2015:TEXT:EN:HTML&src=0.

33

Italy
18.73
144.68
389.79
Latvia
4.38
Lithuania
1.41
37.26
Netherlands
2.27
6.73
Norway
Poland
4.37
123.30
Portugal
Romania
11.50
Slovakia
6.39
1.75
Slovenia
17.00
Sweden
1.15
0.18
United Kingdom
820.29
592.59
Total
22.03
1 444.72
2 776.88
Source: OJ/TED, manual corrections by DG GROW

395.11
8.84
22.85
26.58
3.69
700.20
216.64
286.26
4.95
0.18
2 811.81
7 351.24

116.55
25.72
75.52
81.25
191.47
1 181.23
34.04
136.56
13.67
9.17
17.68
13 259.46
19 255.31

1 064.86
38.94
137.04
116.84
195.16
2 009.11
34.04
364.70
308.07
31.13
19.19
17 484.14
30 850.19

The contracting authorities from the United Kingdom not only published the largest
contract under the Directive, but also as much as 20 out of 44 contract award notices
featuring the total value exceeding 100 million EUR (Table 8).
Table 8: Contract award notices with values above 100 million EUR published
under the Directive in 2011-2015, by country [number of notices]
Country
Freq.
United Kingdom
20
France
14
Germany
3
Denmark
2
Italy
2
Poland
2
Slovakia
1
Total
44
Source: OJ/TED, manual corrections by DG GROW

Percent
45.45
31.82
6.82
4.55
4.55
4.55
2.27
100.00

Cum.
45.45
77.27
84.09
88.64
93.18
97.73
100

The differences between countries were also significant for contracts below 100 million
EUR. The box and whisker plots for each country presented in Figure 6 illustrate the
median, quartiles, the range of data and its outliers.

34

Figure 6: Distribution of contract award notices with values below 100 million EUR
published under the Directive in 2011-2015, by country [value in million EUR]
Austria
Belgium
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Italy
Latvia
Lithuania
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Sweden
United Kingdom
0

20

40
60
value of notices [million EUR]

80

100

Source: OJ/TED, manual corrections by DG GROW

As seen on the graph, most observations are concentrated around the low value contracts
with the right tail of the distribution being considerably longer. The majority of high
value observations / outliers (marked by dots) were noted for the United Kingdom and
France.
When analysing the awarded contracts in more detail, it appears that high value
contracts carried out under the Directive were rather few. The reported contracts
frequently concerned various auxiliary defence activities e.g. repair and maintenance
services, building management services, logistic services, etc.
The examples of selected high value published under the Directive are provided in Table
9 overleaf.

35

Table 9: Examples of high value contracts published under the Directive [value in million EUR]
Country

Subject matter of procurement

United
Kingdom

Complex of logistic services (warehousing services and warehouse management system; procurement
consultancy; air, railway, road, water services; parcel transport; relocation services; medical equipment;
pharmaceuticals and personal care products; clothing, footwear, luggage articles and accessories; food,
beverages, tobacco and related products; lubricants).
Repair and maintenance services of weapons and weapon systems, firearms and ammunition, military
vehicles; fleet management.
Technical support services

8 266

Negotiated
publication

1 934

Negotiated
publication
Restricted
procedure

United
Kingdom
United
Kingdom
United
Kingdom
France

Delivery initial in-service support of Specialist (Reconnaissance) Vehicles (common base platform).

537

Defence Infrastructure management support in the fields of real estate, construction project management,
building and facilities management, organisational issue.
Building and facilities management services.

496

Maintaining in the operational conditions of CASA airplanes.

380

Denmark

Acquisition and sustainment of 309 Armoured Personnel Carriers. The total number of units adjustable
between 206 and 450.
Pipeline transport services: transportation of military fuel, maintenance of the related assets.

350

Construction works: military buildings and installations, construction and civil engineering, dismantling works
for military installations, engineering works, construction work for pipelines, communication and power lines,
architectural and engineering design for mechanical and electrical installations for buildings, demolitions,
site preparation and clearance work.

344

United
Kingdom
United
Kingdom

United
Kingdom
United
Kingdom

Value

France

678

396

344

Contractor

Contract
award

with

Leidos Supply Europe Limited (UK)

16.4.2015

with

Babcock International Group Plc (UK)

5.12.2014

Not published

6.4.2012

General Dynamics United Kingdom

22.7.2015

Capita Business Services Ltd (UK)

22.5.2014

Landmarc Security Services Limited
(UK)
Airbus Mitary (France) [2 lots]

9.5.2014

Procedure

Negotiated
with
publication
Negotiated
with
publication
Competitive
dialogue
Negotiated
with
publication
Negotiated
with
publication
Negotiated without
publication
Restricted

General Dynamics European Land
Systems (Switzerland)
Compañía
Logística
de
Hidrocarburos CLH, S.A. (Spain)
Henry Brothers (Magherafelt) Ltd,
Interserve Construction Ltd, Lend
Lease Construction (EMEA) Ltd, Kier
Graham Defence Ltd, Miller
Construction (UK) Ltd (UK) [5 lots]
NSE Les Seignes (France)

24.6.2014
27.8.2014
30.4.2015
19.3.2015
9.12.2014

Delivery and logistics of electronic equipment, optical, optronic, accessories and infantryman integrated
300 Negotiated
with
4.9.2015
equipment.
publication
Source: Source: OJ/TED
Note: Negotiated with publication – negotiated procedure following the publication of a contract notice; Negotiated without publication – negotiated procedure without the publication
of a contract notice; Restricted - restricted procedure.

36

In line with the methodology of this evaluation, Table 9 only includes contracts that have
been awarded until 31 December 2015.
However, by looking at contracts that have been advertised under the Directive (via the
publication of a contract notice) but have not yet been awarded, it is possible to identify
signs of an increasing use of the Directive for major military equipment contracts. The
most prominent example is the contract notice published under the Directive by the
German authorities for the design, construction and delivery of 4 multi-purpose combat
ships (with option for 2 additional vessels), including the integration of all systems,
equipment and materials provided, and the training of relevant staff70. The Danish
authorities published under the Directive contract notices for the procurement of new
armoured patrol vehicles and of new artillery systems71. Although it does not concern
highly complex systems, another example of a significant procurement of military
equipment launched under the Directive is the acquisition of around 90 000 assault rifles
by the French authorities72.
5.3.1.2. Reported and estimated value of contract award notices
As explained in Section 4.1 and in Annex III, the original dataset contained around 17%
of contract award notices which were published without the final price of awarded
contracts. Following a round of manual corrections carried out by the Member States
representatives73, this ratio has dropped to 15%. The overview of missing values by
country, after the implementing corrections by Member States, is provided in Table 48 in
Annex IV. The table shows that in some Member States the share of missing values was
still significant, notably in Sweden where it reaches as much as 85% of all observations,
followed by Denmark (48% of the contract award notices did not contained information
on the contract value) and Germany (41%). In order to compensate the above information
gaps, the missing information on values was imputed using average contract values74.
The result of such estimation is presented in Figure 10 below. The total value of contract
award notices published under the Directive in 2011-2015 increased from 30.85 billion
EUR to an estimated value of roughly 34.55 billion EUR.

70
71

72
73

74

Contract notice 2015/S 137-252505 of 18 July 2015.
Contract notice 2015/S 234-425025 of 3 December 2015; contract notice 2015/S 242-439446 of 15
December 2015.
Contract notice 2014/S 094-164662 of 16 May 2014.
As explained in Section 4.1.1 and in Annex III, the Government representatives of Belgium and the
Netherlands have provided the Commission with a revised dataset, where majority of the missing
values were completed.
The estimation of missing values was based on the average values by Member State for: (i) works
contracts and (ii) service and supplies contracts. The obtained average values were then used to replace
the missing observations in the corresponding Member State and sector.

37

20,000

Figure 7: Reported and estimated value of contract award notices published under
the Directive, by year [value in million EUR]
20,217

10,000

15,000

19,255

8,527

5,000

7,351

3,764
2,777
1,445
26

0

22

2,016

2011

2012

2013

Value of notices - reported

2014

2015

Value of notices - estimated

Source: OJ/TED, manual corrections by DG GROW

An overview of the raw and estimated values at country level is presented in Table 10
below. For countries where the occurrence of missing values was relatively high, the
difference between the raw and estimated data is substantial, notably in Sweden (an
increase from 19.2 to 130.5 million EUR over the analysed period of time).
Table 10: Reported and estimated value of contract award notices published under
the Directive in 2011-2015, by country [value in million EUR]

Austria
Belgium
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Italy
Latvia
Lithuania
Netherlands
Norway

Reported
23.68
275.95
153.54
119.53
192.75
937.39
144.28
345.10
4 969.42
1 702.11
183.23
1 064.86
38.94
137.04
116.84
195.16

38

Estimated
23.68
275.95
167.62
119.53
211.26
1 818.53
144.28
349.89
5 879.50
2 977.26
196.29
1 067.49
38.94
137.04
116.84
195.16

Poland
2 009.11
Portugal
34.04
Romania
364.70
Slovakia
308.07
Slovenia
31.13
Sweden
19.19
United Kingdom
17 484.14
Total
30 850.19
Source: OJ/TED, manual corrections by DG GROW

2 061.43
34.04
364.70
308.07
31.13
130.50
17 900.83
34 549.96

To summarize, the total value of defence and security procurement published under
the Directives accounted for around 30.85 billion EUR in 2011-2015 (based on the
raw dataset), or around 34.55 billion EUR if the missing values were imputed. The
imputed figure gives a rough projection of the additional value of procurement that has
probably been carried out under the Directives, but which cannot be effectively analysed
due to the incomplete fulfilment of reporting obligations. To avoid estimation
uncertainties75, this report is mainly based on the raw dataset, unless clearly specified.
5.3.1.3. Use of procedures
The Directive foresees six types of procedures that can be used in order to award defence
and security contracts: restricted procedure, negotiated with publication of a contract
notice, negotiated without publication of a contract notice, competitive dialogue and two
types of accelerated procedures (restricted and negotiated).
The procedures with prior advertising and call for competition accounted together for
60% of the number of contract award notices and 76% in terms of value of notices (see:
Section 6.1.1.3). The negotiated procedure without publication of a contract notice is the
most used one in terms of the number of contract award notices published (nearly 38%),
while the highest value of contract was awarded following the negotiated procedure with
publication of a contract notice (55%). The restricted procedure was the second most
frequently used (nearly 29% of contract award notices), but it accounted for just 18% of
their value. The use of the competitive dialogues as well as of the two types of
accelerated procedures was relatively marginal.
The significant use of the negotiated procedure without publication of a contract notice
may also be due to the award of follow-on contracts related to original contracts awarded
in previous years (as part of on-going defence equipment programmes).

75

The missing observations are clearly biased towards selected countries, hence are not missing at
random.

39

Figure 8: Contract award notices published under the Directive in 2011-2015, by
type of procedure [%]
Number of notices
1.6%
2.0%
3.2%

37.6%

26.9%

28.5%

Negotiated without publication
Negotiated with publication
Missing
Competitive dialogue

Restricted
Accelerated restricted
Accelerated negotiated

Value of notices
1.3%
1.5%
17.9%

55.2%
23.4%

Negotiated with publication
Restricted
Competitive dialogue
Missing

Negotiated without publication
Accelerated restricted
Accelerated negotiated

Source: OJ/TED, manual corrections by DG GROW

The average and median values of contracts by procedure type are provided in Table 11.
The procedure with the highest average value was the competitive dialogue, which is not
unexpected since this procedure was conceived for large and complex projects.

40

Table 11: Contract award notices published under the Directive in 2011-2015, by
type of procedure [value in million EUR]
Procedure
Accelerated negotiated
Accelerated restricted
Competitive dialogue
Negotiated with publication
Negotiated without publication
Restricted
Missing
All types of procedures
Source: OJ/TED, manual corrections by DG GROW

Average
3.42
4.01
40.81
24.04
5.76
5.65
2.08
9.89

Median
0.64
1.15
0.48
1.24
1.05
0.81
1.15
1.01

The table above also shows what could have been derived from the pie charts in Figure 8,
namely that the negotiated procedure with publication has been used for procurement of a
much higher average value than the negotiated procedure not open to competition (24
million EUR to 5.7 million EUR respectively). This significant difference was mainly
driven by the previously mentioned high value contract awarded by the UK through the
negotiated procedure with competition. The table also confirms that the average
contract value was relatively small (around 10 million EUR) and the median was
around 1 million EUR.
5.3.1.4. Contract types
As far as contract types are concerned, more than a half of published contract award
notices related to service contracts (56%), followed by supply and works contracts
(roughly 40% and 4% respectively). In value terms, the dominance of services is even
more apparent – three quarters of all contracts concerned services (Figure 9). This again
was due to the fact that the largest awarded contract, worth nearly 6 billion GBP, was
related to services. The remaining two categories followed with the shares of roughly
20% (supplies) and 4% (works contracts).
Figure 9: Contract award notices published under the Directive in 2011-2015, by
type of contract [%]
Number of notices

3.9%

39.7%
56.4%

Services
Works

Supplies

41

Value of notices

4.1%
20.3%

75.6%

Services
Works

Supplies

Source: OJ/TED, manual corrections by DG GROW

The above patterns are confirmed when looking at average and median contract values by
contract type presented below (Table 12).
Table 12: Contract award notices published under the Directive in 2011-2015, by
type of contract [value in million EUR]
Contract type
Average
Service
13.67
Supplies
4.89
Works
9.62
All contract types
9.89
Source: OJ/TED, manual corrections by DG GROW

Median
1.07
0.97
0.82
1.01

As previously explained, the average value of service contracts has been heavily
influenced by a single high value contract, therefore the value of median is probably
more telling in this context. Finally, the presented data reiterate what has been already
mentioned i.e. that average and median contract values have been rather small, especially
in the framework of the defence sector.
The following two tables (Table 13 and Table 14) present the most frequently purchased
items according to the CPV divisions under which the contracts were advertised. CPV-50
(repair and maintenance services) top the list in terms of the number of observations,
followed by CPV-35 (equipment for security, fire-fighting, police and defence), CPV-34
(transport equipment) and CPV-45 (construction works)76.

76

After a more detailed scrutiny of the dataset it was also noted that the number of notices published
under CPV division 45 (construction work) is different from the number of contract award notices
identified as works contracts (144). It appears that some authorities published their work contracts
under the CPV divisions other than 45, such as CPV-44 (construction structures and materials;
auxiliary products to construction) or CPV-71 (architectural, construction, engineering and inspection
services), etc. Yet, some CPV-45 (construction work) contracts were published as services, or
surprisingly a few of them as goods contracts.

42

Table 13: Top 10 CPV divisions by number of contract award notices published
under the Directive in 2011-2015 [number of notices]
CPV Division
50 Repair and maintenance services
35 Security, fire-fighting, police and defence equipment
34 Transport equipment and auxiliary products to transportation
45 Construction work
72 IT services: consulting, software development, Internet and support
79 Business services: law, marketing, consulting, recruitment, printing and
security
32 Radio, television, communication, telecommunication and related
equipment
38 Laboratory, optical and precision equipment (excl. glasses)
71 Architectural, construction, engineering and inspection services
73 Research and development services and related consultancy services
Source: OJ/TED, manual corrections by DG GROW

Freq.
1 053
914
254
161
149
149
133
103
99
88

As far as the value of contracts is concerned (Table 14), CPV-75 (administration, defence
and social security services) was the division which featured the highest value of
contracts, followed by divisions CPV-50 and CPV-35 (i.e. the two divisions, which open
the list sorted by the number of observations).
Table 14: Top 10 CPV divisions by value of contract award notices published under
the Directive in 2011-2015 [value in million EUR]
CPV Division
75 Administration, defence and social security services
50 Repair and maintenance services
35 Security, fire-fighting, police and defence equipment
79 Business services: law, marketing, consulting, recruitment, printing and
security
71 Architectural, construction, engineering and inspection services
60 Transport services (excl. waste transport)
34 Transport equipment and auxiliary products to transportation
45 Construction work
70 Real estate services
80 Education and training services
Source: OJ/TED, manual corrections by DG GROW

Value
8 392.25
7 569.80
4 675.39
1 544.51
1 359.13
1 305.23
1 225.01
841.94
496.20
414.42

5.3.1.5. Division into defence and security contracts
As explained in the earlier sections, the Directive covers not only the defence, but also
the sensitive security procurement. For this reason, the extent to which it is actually used
for purchases in one of the two domains has been subject to scrutiny within the
framework of this evaluation. As the OJ/TED database contains no field that would
enable filtering contracts against this criterion in an automated way, the affiliation of the
awarded contracts to either of the domains was carried out manually - contracts awarded
under the Directive have been classified as belonging to either defence or security
domain, based on common knowledge and/or desk research aimed at determining the
profile of the contracting authority/entity (the details of the work undertaken are
presented in Annex III).

43

Figure 10: Share of defence and security procurement under the Directive in 20112015, by number and value [%]
Number of notices

Value of notices

3%

7%

93%

Defence

97%

Security

Defence

Security

Source: OJ/TED, manual corrections by DG GROW, without corrections received from Belgium and the
Netherlands

As it can be seen from the graph above, the defence purchases dominated by far the
procurement carried out under the Directive with more than 9 out of 10 contracts
referring to this category. The security contracts accounted for just 7% of the number
of notices and 3% of their value.
5.3.1.6.Use of Voluntary ex ante transparency notices
Voluntary ex-ante transparency notices (VEAT) may be published if a contracting
authority/entity considers that the award of a contract does not require prior publication
of a contract notice in OJ/TED. This may be the case, for example, if the conditions
justifying use of the negotiated procedure without publication of a contract notice, set out
in Article 28 of the Directive, are met.
In completing the VEAT notice, the contracting authorities/entities express their intention
to conclude a contract and provide, among others, the justification for the award of a
contract without prior publication of a contract notice in OJ/TED. They will then observe
a standstill period before the contract is concluded. This gives economic operators the
opportunity to challenge the decision of the contracting authority and obtain precontractual remedies should a challenge be upheld. The advantage to the contracting
authority is that the penalty of mandatory ineffectiveness does not apply in the event of a
challenge to a contract awarded after the standstill period has elapsed.
Since the entry into force of the Directive, 1 272 VEATs related to defence or security
procurement have been published in OJ/TED. The uptake of this tool for ex-ante
transparency was fairly imminent – it rose from 19 notices in 2011 (published only by
France and Denmark) to nearly 250 in the following year and then remained fairly static
at ca. 320-340 notices per year.
Table 15: Voluntary ex-ante transparency notices published under the Directive, by
country and year [number of notices]
Country
Belgium
Bulgaria
Croatia

2011
0
0
0

2012
0
0
0

2013
0
1
0

44

2014
1
0
2

2015
0
0
4

Total
1
1
6

Denmark
6
43
Finland
0
17
France
11
20
Germany
0
0
Greece
0
0
Italy
2
9
Latvia
0
0
Lithuania
0
1
Netherlands
0
0
Norway
0
0
Poland
0
1
Slovakia
0
3
Slovenia
0
0
Spain
0
0
Sweden
0
0
United Kingdom
0
150
Total
19
244
Source: OJ/TED, manual corrections by DG GROW

31
46
43
0
0
5
0
2
0
0
18
1
4
1
1
168
321

65
35
18
3
0
9
0
3
1
3
63
2
7
0
0
134
346

44
41
34
2
1
1
1
0
0
9
46
0
7
0
2
150
342

189
139
126
5
1
26
1
6
1
12
128
6
18
1
3
602
1 272

The implementation of this legal instrument was uneven across countries, with
authorities from the UK, Denmark, Finland, Poland and France being the most frequent
users. At the same time, the following 11 countries did not publish any VEATs related to
the Directive in 2011-2015: Austria, Cyprus, the Czech Republic, Estonia, Hungary,
Ireland, Iceland, Luxembourg, Malta, Portugal and Romania.
5.3.2. Defence and security procurement under the civil procurement
Directives
As mentioned in Section 2.3, before the adoption of the Directive, defence and security
procurement open to competition was carried under the civil procurement Directive and
published on OJ/TED or, as foreseen in the Code of Conduct, advertised through the
EBB. Despite the adoption of a sector–specific legal act in 2009, the publications of
contracts covered by defence and security-related CPVs under the civil regime still occur,
albeit to a lesser extent than in the past.
A total of 4 084 contract award notices, related to defence procurement was published
under the civil procurement Directives between 2004 and 2015. As presented in Figure
11, such publications have been increasing since 2006 (with just 94 contract award
notices) to reach a peak in 2012 (610 notices) and then decrease slightly.

45

Figure 11: Contract award notices covered by defence-related CPVs and published
under the civil procurement Directives, by year [number of notices]
600

610

522
491

491

400

455

370
346
301

200

205

113
94

0

86

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: OJ/TED, manual corrections by DG GROW

This overall rising trend could be interpreted as if the mere discussion about the proposal
of the Directive had translated into higher levels of publications of defence related
purchases under the legal instruments available at that time. After 2012 the publication
numbers started to fall, probably due to the fact that authorities had at their disposal a
sector-specific Directive that was better fit for the procurement of defence related goods
and services.
With regards to data corresponding to years 2008-2010, the totals provided in Figure 11
above differ from those presented in the Baseline Study for the same years (415, 447 and
686 in 2008-2010)77. The observed discrepancies can be explained by the fact that the
selection of notices identified as defence contracts was based on different assumptions.
The list of CPV codes (provided in Annex III) which have been used to filter notices was
the same as the one used in the Baseline Study, but the data manipulations that followed
diverged significantly78. At the same time, the current methodology aims at being more
77
78

The Baseline Study, p.30.
Firstly, the unit of measure in the Baseline Study was a contract while above the number of contract
award notices are used. Secondly, the Baseline Study considered as defence contracts those for which
any CPV (main or secondary) codes matched codes used to define the defence contracts, while in this
evaluation only notices with the defence CPV codes mentioned as the main description of procurement
were used. In cases where the CPV code was missing from the contract award notice, the Baseline
Study identified as defence contracts those which contained in their definition the most commonly
used defence terms. No matching of text fields was carried out under the current evaluation. Finally,
for OJ/TED contracts which did not contain the value of the contract the Baseline Study used a variety
of imputation methods to estimate an expected contract value, based on similar but more complete
records. No imputation of missing values was performed at this stage of the evaluation.

46

rigorous and leaves less room for interpretations that non-defence contracts could have
been erroneously captured.
An overview of publications across countries is provided below (Figure 12). As can be
seen from the graph, out of the total of 4 084 notices, the highest number of defencerelated contracts published under the civil procurement Directives originated from the
French contracting authorities and entities (780 notices in total), followed by Germany
(651), Italy (462), Poland (431) and the UK (345).

800

Figure 12: Contract award notices covered by defence-related CPVs and published
under the civil procurement Directives in 2004-2015, by country [number of notices]
780

600

651

462

400

431
345

200

277

166

159
109
43 28

9

20 19

39

60
23 20

78 71

72
26

1

1 5

69
24

40 34

Au
Be str
l ia
Bu giu
lg m
C aria
C
ro
ze
ch C atia
R ypr
e u
D pub s
en li
m c
Es ar
t k
Fi onia
nl
F an
G ran d
er c
m e
G an
re y
H e
un ce
g
Ic ar
el y
Ire and
la
n
Ita d
ly
L
Lu Lith atv
xe ua ia
m ni
bo a
u
N
et M rg
he a
rla lta
N nd
or s
Po way
Po lan
R rtug d
om a
Sl an l
o i
Sl vak a
ov ia
en
U
Sp ia
ni
te Sw a
d e in
Ki d
ng en
do
m

0

22

Source: OJ/TED, manual corrections by DG GROW

Interestingly, all countries which have not awarded contracts under the Directive since
2011 (see: Section 5.3.1.1), did so under the civil regime i.e.: Cyprus, Greece, Ireland,
Malta, Luxembourg and Spain, also in the years following its adoption (Table 49 in
Annex IV). In fact, many of the remaining countries have also continued to publish some
of their defence and security procurement under the civil rules after the Directive has
been effectively transposed to their legal systems.
Finally, the value of the above publications of contracts in OJ/TED under the civil
procurement Directives with CPVs related to defence or security accounted for nearly 13
billion EUR over the last decade (Table 16 below).
Table 16: Contract award notices covered by defence-related CPVs and published
under the civil procurement Directives, by year [value in million EUR]
Year
2004
2005

Sum
92.20
299.27

47

2006
325.88
2007
233.07
2008
874.37
2009
2 444.41
2010
709.05
2011
685.03
2012
1 394.88
2013
2 906.21
2014
1 161.69
2015
1 830.74
Total
12 956.79
Source: OJ/TED, manual corrections by DG GROW

During the last five years when the civil procurement Directives co-existed with the
newly enacted (defence procurement) Directive, the value of publications concerning
these contracts was roughly 8 billion EUR (hence nearly 1.6 billion EUR annually).
The scope of application of the (defence procurement) Directive and that of the civil
procurement Directives are mutually exclusive. Contracts that fall within the scope of the
Directive according to Article 2 have to be awarded under it, and cannot be awarded
under the civil procurement Directives. This means that contracting authorities/entities
have, in each individual procurement case, to make a decision on whether a given
contract fall within the scope of the Directive or within that one of the civil procurement
Directives. As pointed out by certain Member States’ authorities in the consultations,
there may be at times borderline cases where the identification of the applicable regime is
not straightforward (see: Section 6.4.1.1).
The significant number of procurement still published under the civil procurement
Directives may be explained by a combination of two factors: first, procurement with
defence or security related CPV may still, from a legal point of view, fall within the
scope of the civil procurement Directives; second, contracting authorities / entities may
have erroneously decided (especially in “borderline cases”) to publish under the civil
procurement Directives contracts that would have actually fallen within the scope of the
(defence procurement) Directive. Recognising that both legal regimes (civil and defence)
are based on the same Treaty principles of transparency and equal treatment, the
available data on publications in OJ/TED shall be interpreted, for the purposes of this
evaluation, as complementary information - altogether they account for procurement
governed by open and competitive EU rules.
6.

ANSWERS TO THE EVALUATION QUESTIONS
6.1.

Effectiveness

The evaluation questions related to the effectiveness of the Directive, as defined in
Section 3, will be analysed based on the data on its use and on the results of the online
survey and of the meetings with stakeholders.
6.1.1. Competition, transparency and non-discrimination
Evaluation question (1):

To what extent have competition, transparency and non-discrimination in the
defence procurement market in Europe changed as a result of the Directive?

48

In order to address the first evaluation question the report will start with referring to the
baseline situation and data referring to the period before the adoption of the Directive.
6.1.1.1.

EU-wide publication of business opportunities

As discussed in Section 5.3, the total value of contract award notices published in
OJ/TED since the entry into force of the Directive was around 30.85 billion EUR (20112015). The value of these notices equalled just 22 million EUR in 2011 and increased
more than ten times between 2012 and 2015, from 1.4 billion EUR to 19 billion EUR per
year (Section 5.3.1.1 and Figure 13 below). As noted in the previous sections, the
increase in 2015 as compared to 2014 was mainly driven by one large contract awarded
by the UK. However, significant year-to-year changes in the total value of defence
contracts are somehow inherent in the sector, as purchases of major items usually occur
irregularly and over longer time-spans.

20,000

Figure 13: Contract award notices published under the Directive, by year [number
of notices, value in million EUR]

10,000

15,000

19,255

5,000

7,351

2,777
1,445
22

1,165

820

1,333

0

16

348

2011

2012

2013

2014

number of notices

2015

value of notices [million EUR]

Source: OJ/TED, manual corrections by DG GROW

The increasing number of publications in OJ/TED confirms that the Directive has been
gradually adopted by the public buyers as a tool for addressing their needs in defence and
security procurement. Additionally, as described in Section 5.3.2, an important number
of publications related to defence and security purchases has been also observed under
the civil procurement Directives.
Recognising that both legal regimes (civil and defence) are based on the same Treaty
principles of transparency and equal treatment, the total value of defence related contract
award notices published under the civil procurement Directives is presented alongside the
contract award notices published under the Directive (Figure 14 below), as the total
procurement governed by EU rules.
49

20,000

Figure 14: Comparison between the contract award notices published under the
civil procurement Directives and the Directive [value in million EUR]

10,000

15,000

19,255

5,000

7,351

2,906 2,777
1,395 1,445

1,162

1,831

22

l
de
fe
nc
e

ci
v
de il
fe
nc
e

2013

2014

2015

ci
vi

2012

l
de
fe
nc
e

ci
v
de il
fe
nc
e

2011

ci
vi

ci
v
de il
fe
nc
e

0

685

Source: OJ/TED, manual corrections by DG GROW

As illustrated by the graph above, in 2011-2015, the value of procurement carried out
under the two EU legal instruments accounted for roughly 38.85 billion EUR in
total. The decrease in the value publication contracts awarded under the civil
procurement Directives after 2013 could mean a simple substitution of some publications
under the civil procurement Directive by the (defence procurement) Directive without a
net gain in transparency. It is however is impossible to verify the above conjunction only
by analysing the available dataset. Nevertheless, these hypothetical “transfers” between
the civil and defence legal instruments, if any, have happened in the general context of
increasing publication rates and improved transparency in the defence and security
procuring using all available EU legal instruments.
To conclude, a significant increase in the value of publications in OJ/TED (using civil
and defence legal instruments) has been observed over the last years. A rise from 700
million EUR in 2011 to 21 billion EUR in 2015 confirms that more and more defence
procurement has been awarded following open and transparent EU rules.
However, as far as the Directive is concerned (and as discussed in Section 5.3.1), the
majority of contract award notices published under the defence legislation were of
relatively small values. Overall, nearly 90% of observations related to procurement of
less than 10 million EUR, 95% to less than 21 million EUR. The average contract value
was around 10 million EUR while the median was around 1 million EUR. An overview
of contracts below 10 million EUR is presented in Figure 15 below.

50

0

10

20

Frequency

30

40

Figure 15: Contract award notices with values below 10 million EUR published
under the Directive in 2011-2015 [frequency by value of notices]

0

2

4
6
value of notices [million EUR]

8

10

Source: OJ/TED, manual corrections by DG GROW

As shown on the graph, the distribution of the contract award notices is positively
skewed, showing high concentration around low-value contracts and a long tail as the
value increases. The red lines on the figure mark the threshold values79 above which the
Directive shall apply – 414 thousand EUR and 5.186 million EUR. It is clear that many
of the published contract award notices have reported total contract values even falling
under the lower threshold for supplies and services of 414 thousand EUR.
Along with the relatively small average contract values being advertised under the
Directive, an overview of publications by Member States (as detailed in Section 5.3.1)
shows also significant differences across the EU, which cannot be easily explained by
such factors as the available defence budgets or the size of economy. Several countries
have not published any contract award notices under the Directive in the analysed period
of time80 (notably Cyprus, Greece, Ireland, Malta, Luxembourg and Spain). For the
countries which have used the Directive, the difference in the value of contracts
published, especially when compared with the available budgets, as presented in Table
17 below, were also significant.

79

80

As mentioned in the introduction, the threshold above which the Directive shall apply is set in Art.8
at 412 000 EUR for supply and service contracts and 5.15 million EUR for works contracts. The
thresholds are updated every two years. The threshold values valid at the end of the evaluated period
were those for 2014-2015, hence 414 000 EUR and 5.186 million EUR (for service/ supply contracts
and works contracts respectively).
However, all these countries have published a number of contract award notices with a defence-related
subject-matter under the civil Directives in 2011-2015.

51

Table 17: Comparison between the average annual81 values of contract award
notices published under the Directive (OJ/TED) and general government
procurement expenditure on military defence (COFOG), by country [value in
million EUR, %]
OJ/TED
Reported Estimated
5.92
5.92
68.99
68.99
30.71
33.52
59.77
59.77

Percentage
Reported Estimated
Austria
1.0%
1.0%
Belgium
8.8%
8.8%
Bulgaria
18.9%
20.7%
Croatia
28.1%
28.1%
Cyprus
0.0%
0.0%
Czech Republic
48.19
52.81
8.3%
9.1%
Denmark
234.35
454.63
13.6%
26.5%
Estonia
48.09
48.09
25.4%
25.4%
Finland
86.27
87.47
5.4%
5.4%
France
1 242.35
1 469.88
8.7%
10.3%
Germany
340.42
595.45
2.4%
4.3%
Greece
0.0%
0.0%
Hungary
36.65
39.26
11.3%
12.1%
Iceland
n.a
n.a
Ireland
84.20
0.0%
0.0%
Italy
212.97
213.50
5 434.80
3.9%
3.9%
Latvia
12.98
12.98
86.64
15.0%
15.0%
Lithuania
34.26
34.26
89.18
38.4%
38.4%
Luxembourg
49.88
0.0%
0.0%
Malta
15.96
0.0%
0.0%
Netherlands
29.21
29.21
2 180.00
1.3%
1.3%
Norway
97.58
97.58
2 783.36
3.5%
3.5%
Poland
502.28
515.36
2 320.52
21.6%
22.2%
Portugal
34.04
34.04
725.42
4.7%
4.7%
Romania
121.57
121.57
5.94 n.a.
n.a.
Slovakia
77.02
77.02
211.44
36.4%
36.4%
Slovenia
10.38
10.38
98.62
10.5%
10.5%
Spain
2 810.80
0.0%
0.0%
Sweden
4.80
32.62
3 198.74
0.1%
1.0%
United Kingdom
4 371.03
4 475.21
25 254.68
17.3%
17.7%
EU-28 and EEA-2
6 170.03
6 909.99
81 499.52
7.6%
8.5%
Source: OJ/TED, manual corrections by DG GROW; Eurostat, general government expenditure by
function (COFOG) [gov_10a_exp]
Note: the annual averages are based on the number of years since the first publication in OJ/TED e.g. the
total value of contract award notices published by Austrian authorities was 23.68 million EUR, but the first
publication occurred in 2012, therefore the average is calculated based on four year time span (23.68
million EUR /4=5.92 million EUR); to compare, the first publication from Bulgaria occurred in 2011 hence
153.54 million EUR/5=30.71 million EUR while Norway started publishing in 2014 and the average is
calculated as follows: 195.16 million EUR/2=97.58 million EUR; the percentage for Romania was not
provided due to the ambiguity of data available in COFOG.

81

COFOG
577.00
785.26
162.08
212.46
96.42
582.16
1 717.02
189.50
1 611.40
14 305.20
13 977.60
1 608.00
325.24

OJ/TED data refer to average annual values in 2011-2015 unless the publication period was shorter
(see: explanation in the note); Eurostat COFOG data refer to 2010-2014.

52

As presented in the Table above, the average yearly value of contracts awarded under
the Directive would therefore be between 6.2 and 6.9 billion EUR82, which equalled
roughly between 7.6% to 8.5% of the total value of general government procurement
expenditure on military defence of EU-28 and EEA-2 countries (81.5 billion EUR on
average). If the value of defence and security procurement carried out under the civil
procurement Directives (around 8 billion EUR in total in 2011-2015, hence circa 1.6
billion EUR annually) was to be added to the procurement under the Directive, the
reported percentage of procurement covered by transparent EU rules would
increase to 9.5%83. To compare, the publication rate in terms of percentage of total
expenditure in the civil sector ranged between and 16.5% and 17.8% from 2012 to
201484.
Looking at the data from a different perspective, the procurement of goods under the
Directive can be also compared with the budgets spent on defence equipment discussed
in Section 2.1.2 (

82

83
84

As explained in Section 4.1 and 5.3.1.1, the original dataset contained many contract award notices
published without the final price of awarded contracts. Following a round of manual corrections and
estimation based on average contract values the missing values were imputed. As a result of the above,
the total value of contract award notices published under the Directive in 2011-2015 increased from
30.85 billion EUR to an estimated value of roughly 34.55 billion EUR.
7.8 billion EUR/81.5 billion EUR annually.
Estimated value of tenders published in OJ/TED (excluding utilities and defence) compared with the
estimate of total public procurement expenditure by general government on works, goods and services
(excluding utilities and defence): 17.5% in 2012 (326.69 billion EUR/1866.8 billion EUR), 17.8% in
2013 (334.56 billion EUR/1880 billion EUR), 16.5% in 2014 (319.64 billion EUR/1931.5 billion
EUR) - Public Procurement Indicators 2014
(http://ec.europa.eu/DocsRoom/documents/15421/attachments/1/translations )

53

Figure 2). According to EDA, the national and collaborative defence equipment
procurement in 2014 for the Agency participating countries85 was estimated at 25.9
billion EUR. The total value of supply contracts awarded under the Directive in 20112015 was 6.2 billion EUR, hence roughly 1.3 billion EUR per year. This would indicate
that not more than 4.8 % of the value of equipment procurement reported by EDA was
carried out through the Directive.
To conclude, although the general trend in the publication of defence and security
contracts is unquestionably positive, the value of procurement awarded under the
Directives (in both cases - raw and imputed totals) still seems to be relatively small
when compared to overall defence procurement expenditure which was at the
discretion of Member States in the analysed period of time.
The relatively small overall volume of procurement carried out under the Directive
(when compared with the available defence budgets) as well as the dominance of small
value contracts, may suggest that the Directive was used to a very limited extent for
the procurement of strategic equipment (i.e. complex systems) which would be
manifested by much higher average or median contract values and by a larger share in
procurement expenditure.
A recent study had come to a similar conclusion: “The Directive 2009/81/EC is today
favoured for contracts dealing with services, the acquisition of equipment deemed to be
of a low strategic value, and sub-systems. Over the past three years, all of the major
military equipment contracts, thus those that have had a structural effect on the DTIB,
were notified without going via the Directive.”86 However, the conclusions of this
evaluation are more nuanced on this point since some significant military equipment
contracts have been awarded under the Directive.
This situation contrasts with the operational objective of the Directive, as set out in the
Impact Assessment, that the majority of contracts in the fields of defence and security
should be awarded on the basis of EU procurement rules.
In the perception of industry, the Directive improved market access and business
opportunities only to a limited extent. 36% of companies or business associations that
replied to the online survey considered there is “no difference” compared to the situation
before, 21% deemed that the situation “improved”, and 12% responded that it
“deteriorated” or “significantly deteriorated”.
In its reply to the online survey, ASD87 noted the “increase in publications of contract
notices in recent years, but also huge differences in publication rates between Member
States” and emphasised that “such uneven application of the Directive throughout the EU
clearly has a negative impact on the level playing field”. Similar comments were made
by several other companies and businesses associations responding to the online survey.
Overall, these stakeholders emphasised the importance of focusing on consistent
application of the Directive and achieving more effective enforcement of its provisions.

85
86

87

EU Member States except for Denmark.
“The impact of the 'defence package' Directives on European defence” Dr Hélène Masson, Kévin
Martin, requested by the European Parliament's Subcommittee on security and defence, 20 April 2015.
The AeroSpace and Defence Industries Association of Europe (ASD).

54

Industry representatives made the same points during stakeholder consultation
meetings88.
Transparency International emphasised that the publication of longer-term purchasing
plans by Member States, beyond the obligations under the Directive, would be an
important contribution to a more transparent market.
To summarise, the value of defence and security contracts published EU-wide and
awarded, in competition, under rules based on transparency and equal treatment has
significantly increased. However, a very significant share of defence procurement
expenditure is still done outside the Directive, especially for the procurement of highvalue, strategic, complex equipment. This is in line with the feedback received from
stakeholders.
This is probably due to a number of factors such as the relatively short time (2-3 years)
between actual transposition by Member States and the last year covered in the
evaluation (2015) and a still too broad interpretation of possible exemptions, including
under Article 346 TFEU, which are probably relied on especially for the procurement of
strategic equipment.
6.1.1.2.

Cross-border awards

In the analysed period of time (2011-2015), direct cross-border procurement (i.e.
contract won by companies located in a country different from the one of the contracting
authority and bidding directly from abroad) accounted for approximately 10% of
awarded contracts in terms of their number, as well as value. The total value of
contracts awarded directly to foreign economic operators accounted for 3.1 billion EUR
(hence around 620 million EUR annually) out of the total of 30.36 billion EUR89 which
was extracted from contract award notices that included total final values of procurement
at the level of separate awards.
Figure 16: Contracts awarded directly to foreign companies under the Directive in
2011-2015 [%]

88
89

Minutes of 22 February and 3 May 2016 meetings with industry organised by ASD.
The total value of procurement calculated on the basis of separate awards (30.36 billion EUR) is
different from the same indicator calculated on the basis of contract award notices (30.85 million
EUR); this is due to the fact that many contracting authorities, despite providing the total value of all
awarded contracts at the level of a notice, have not disaggregated this value by each unique contract
award (if there was more than one); in order to calculate the share of cross-border procurement the
values of separate contract awards must be used, therefore the above calculation is based on a larger
number of missing observations and the sum of all observations is lower.

55

Number of contracts

2% 6%
4%

88%

Intra-EU cross border
Domestic

Non-EU cross border
Missing

Value of contracts

3%

6%
4%

87%

Intra-EU cross border
Domestic

Non-EU cross border
Missing

Source: OJ/TED, manual corrections by DG GROW

As shown in Figure 16, 6% of direct cross-border contract awarded under the Directive
were won by companies from other EU Member States and 4% by companies located
outside the EU. The levels of cross-border procurement were roughly the same in terms
of the value of all awards. In civil procurement in 2007-2009, the level of direct crossborder equalled 3.5% of the contract value and 1.6% in terms of the number of
contracts90.
The differences in the percentage of contracts awarded directly to foreign companies
(intra-EU and non-EU combined) across Member States are shown in Figure 17.

90

„Cross-border procurement above EU thresholds” Ramboll Management, HTW Chur, for the
European
Commission,
DG
Internal
Market
and
Services
in
March
2011,
http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/cross-borderprocurement_en.pdf.

56

Figure 17: Contracts awarded directly to foreign companies under the Directive in
2011-2015, by country in number and value [fraction]

Austria
Belgium
Bulgaria
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Italy
Latvia
Lithuania
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Sweden
United Kingdom
0

.2

.4

.6

number of contracts

.8

1

value of contracts

Source: OJ/TED, manual corrections by DG GROW

The graph above marks significant differences between countries that can, from an
economic viewpoint, be partially explained by the size of the industrial base in respective
countries and their need (or not) to source procurement from abroad. A detailed overview
of cross-border penetration by country in terms of value, number and their respective
shares is provided in Table 50 in Annex IV.
Table 18: Contracts awarded directly to foreign companies under the Directive in
2011-2015, by contract type [%]
Number

Value

Intra-EU Non-EU
cross
cross
border
border
Domestic Missing
Supplies
8%
6%
84%
2%
Services
5%
2%
91%
2%
Works
1%
99%
1%
Total
6%
4%
88%
2%
Source: OJ/TED, manual corrections by DG GROW

Intra-EU
cross
border
18%
3%
1%
6%

Non-EU
cross
border
16%
1%
4%

Domestic
65%
93%
99%
87%

Missing
1%
3%
0%
3%

An overview of cross-border procurement by contract types (Table 18) shows that supply
contracts have been more frequently won by foreign bidders than service or works
contracts. The percentage of supply cross-border awards was 14% in terms of number
and 34% in value. This is to be expected, given the fact that goods are typically more
tradable than services (or works). The shares of cross-border procurement by selected
categories of CPV nomenclature are provided in
57

Table 51 in Annex IV. Finally, a detailed overview of contracts awarded under the
Directive in 2011-2015 and broken down by the country of contracting authorities and
economic operators is provided in Table 52 (the number of contracts) and Table 53 (in
value terms) in Annex IV.
The Impact Assessment noted that, in general terms, EU-wide publication of contract
opportunities should enhance companies’ chances to win cross-border contracts91. When
comparing the above findings with the baseline (despite some methodological
discrepancies), it appears that the level of direct cross-border procurement in EU has
remained at similar levels since the entry into force of the Directive. According to the
Baseline Study, the value of cross-border procurement advertised in OJ/TED and EBB
was estimated at around 2.26 billion EUR in 2008-201092, hence roughly 753 million
EUR per year. Since the entry into force of the Directive, contracts worth roughly 3.1
billion EUR were awarded directly to firms located in a country other than the one of the
contracting authority (circa 620 million EUR per year). Additionally, defence and
security contracts worth around 692 million EUR93 were awarded to foreign bidders
under the civil procurement Directives in 2011-2015 (hence roughly 138 million EUR
annually on average). The two figures combined would equal around 758 million EUR
annually, representing the mean average value of defence and security procurement
covered by transparent EU rules and awarded directly cross-border in 2011-2015.
When comparing the above totals with the value of defence procurement expenditure
which was at the disposal of EU governments in the respective periods of time, it seems
that, since the Directive became applicable, direct cross-border procurement in EU
has remained at similar levels - according to the Baseline Study, the cross-border
procurement announced via OJ/TED and EBB equalled roughly 0.85%94 while the same
percentage in the evaluated time span would account for 0.93%95 of the defence
procurement expenditure. Although both figures are very close (on average around 750
million EUR annually and both accounting for less than 1% of defence procurement
expenditure), it should be underlined that the two estimates are difficult to compare, as
they are based on different methodologies (e.g. the Baseline Study used a broader
definition of defence procurement than the current evaluation, hence the current estimate
would have been probably higher if it was calculated using the baseline methodology).
The above estimates all referred to the so-called direct cross-border procurement which
occurs when firms operating from their home market bid and win contracts for invitations
to tender launched in another Member State. However, cross-border procurement can
also occur indirectly through subsidiaries (e.g. a foreign affiliate bids for tenders
launched by authorities of a country different from the home country of the firm’s
headquarters or where the parent company is located).
In order to provide an estimate of the second form of cross-border procurement, the firms
that have won contracts under the Directive were compared with the names of companies

91
92
93
94
95

The Impact Assessment, p. 54.
The Baseline Study, p. 57.
Without taking into account manual corrections received for Belgium.
753 million EUR/87.73 billion EUR, annual average in 2008-2010.
758 million EUR/81.49 billion EUR, annual average in 2011-2015.

58

listed in the SIPRI Top100-arms producing and military services96 ranking. As the SIPRI
list includes the country of the parent company, the approximate share of indirect crossborder procurement could be estimated.
As shown in Table 19, which provides an overview of indirect cross-border procurement
calculated for a sample of large firms, amongst all contracts awarded under the Directive,
474 were won by the foreign subsidiaries of firms listed in SIPRI Top 100 ranking.
Around 66% of these contracts were awarded to the European companies, while the
following 26% have been won by companies from the US. Companies captured by the
above method could have acted as stand-alone businesses or in consortia.
Table 19: Contracts published under the Directive in 2011-2015 and awarded to
foreign subsidiaries of companies listed on the SIPRI Top 100 ranking, by country
[number of contracts, value in million EUR]

Country of the
headquarters
Freq.
Sum
Australia
7
0.76
EU
312
2 279.61
India
1
0.00
Israel
5
17.12
Norway
2
1.24
South Korea
1
5.00
Switzerland
24
37.27
USA
122
10 099.52
Total
474
12 440.52
Source: OJ/TED, manual corrections by DG GROW; The SIPRI Top 100 arms-producing and military
services companies in the world excluding China, December 2015.

The total value of indirect cross-border awards in 2011-2015 equalled 12.44 billion
EUR, hence roughly 40% of the total value of contracts awarded under the
Directive.
The contracts won by companies originating from the US accounted for the highest share
of the total value of awarded contracts (81%). However it is important to underline that
this result was to a large extent influenced by the previously mentioned service contract
worth 6 billion GBP awarded by the UK Government to a subsidiary of a US company.
If this outlier was removed from the dataset, the order on the list would have changed
with the winning firms from the EU moving at the top (the share of intra-EU awards in
the value of contract would increase to 55% of the remaining observations and the US
would follow with 44%).
Finally, the main drawback of the above estimation is the fact that it is solely based on
the list of 100 largest companies worldwide (i.e. refers only to a subset of contracts won
by these largest companies) while the subsidiaries of companies with lower value of arms
sales are not included in the ranking. As a result, the number and value of indirect cross-

96

The SIPRI Top 100 arms-producing and military services companies in the world excluding China,
December 2015, http://books.sipri.org/files/FS/SIPRIFS1512.pdf

59

border contracts in practice could be larger as the indirect cross-border wins of smaller
international companies were not captured by the above estimation method.
Based on the replies to the online survey, stakeholders’ perception of the impact of the
Directive on cross-border access to defence and security procurement in EU countries is
rather positive (39% of respondents among both contracting authorities and businesses),
but with a significant share of respondents seeing no impact (30% among contracting
authorities, and 24% among businesses). The respondents seeing a negative impact are a
sizeable minority among businesses (21%) and a rather marginal share among
contracting authorities (6%).
An additional factor, which is relevant in connection with the issue of cross-border
awards, is whether the Directive increases the number of cross-border bids, including
from new entrants in the market. To assess this aspect, contracting authorities were asked
in the online survey how often the Directive resulted in offers/expression of interests
coming from a more diverse, wider range of suppliers from other EU Member States.
The replies were rather mixed: 33% consider this has been the case “occasionally” or
“frequently”, whilst 30% think it happened “rarely” or “never”.
In a stakeholder’s consultation meeting97, a defence company explained that before
making a decision to bid they make a case-by-case assessment. They need to be confident
that they are well-placed to win and that it is worth preparing an offer.
To conclude, the increased use of EU public procurement rules based on transparency,
competition and equal treatment naturally leads to enhanced cross-border opportunities
for companies. However, it has not resulted in an increase in direct cross-border awards.
As stakeholders pointed out, an important contributing factor is that cross-border bidding
is by nature more difficult due to language and other non-regulatory barriers, higher costs
and insufficient knowledge of the foreign market.
6.1.1.3.

Competition

The average number of offers received when launching procurement under the Directive
was 3.4, which is somehow lower than what is observed in the civil sector (5.498 bids per
procedure), but can be explained by the structure of the defence sector with fewer but
more specialised suppliers. However, nearly 33% of contract awards published in
OJ/TED and containing information about the number of bids99 received just one offer
(Figure 18). This means that for 1/3 of the calls for tender there was actually no
competition100.
Figure 18: Number of offers per contracts awarded under the Directive in 20112015 [fraction]

97
98

99

100

Minutes of 22 February 2016 meeting with industry organised by ASD.
“Public procurement in Europe, Cost and effectiveness” http://bookshop.europa.eu/en/publicprocurement-in-europe-pbKM3113708/, p. 93.
5 700 contract award out of 7 145 contained information about the number of bids received. 1 922 bids
received one offer.
Out of the observations that contained information about the number of bids submitted.

60

.4
.3
Fraction

.2
.1
0

0

5
10
15
Number of offers per contract award

20

Source: OJ/TED, manual corrections by DG GROW

The same analysis can be carried out at a country level, showing that there are significant
differences in the levels of competition across Member States.

61

Figure 19: Number of offers per contracts awarded under the Directive in 20112015, by country101 [fraction]

Belgium

Bulgaria

Croatia

Czech Republic

Denmark

Estonia

Finland

France

Germany

Hungary

Italy

Latvia

Lithuania

Netherlands

Norway

Poland

Romania

Slovakia

Slovenia

Sweden

United Kingdom

0

.2 .4 .6 .8

0

Fraction

.2 .4 .6 .8

0

.2 .4 .6 .8

0

.2 .4 .6 .8

Austria

5

10

15

20

0

5

10

15

20

0

5

10

15

20

0

.2 .4 .6 .8

0

0

5

10

15

20

0

5

10

15

20

Number of offers per contract award
Graphs by country

Source: OJ/TED, manual corrections by DG GROW

In particular in countries such as Bulgaria, Finland, Hungary, Italy, the Netherlands,
Romania and Slovenia (with spikes after “0”) nearly 60% of contracts or more were
awarded following the reception of a single offer.
Finally, the competition levels can also be broken down by the type of contract that was
used for procurement (Figure 20). The histogram below clearly shows that 40% of
service contracts received just one offer, while single-bidder awards accounted for nearly
30% of supply contracts. In contrast, works procurement shows a much more balanced
picture with less than 1/10 of such awards, it should be however kept in mind that the
latter was based on a much smaller dataset102.

101

102

Portugal is not included on the graph as none of the contract awards from Portugal contained
information about the number of bidders.
Only 123 awards for works contained information on the number of bidders, compared to roughly
3 000 awards concerning supplies and 2 500 for services.

62

Figure 20: Number of offers per contracts awarded under the Directive in 20112015, by contract type [fraction]
Supplies

Fraction

0

.1

.2

.3

.4

Services

0

5

10

15

20

0

.1

.2

.3

.4

Works

0

5

10

15

20

Number of offers per contract award
Graphs by contract type

Source: OJ/TED, manual corrections by DG GROW

The number of offers received is closely linked with the type of procedure chosen by the
contracting authority. Non-transparent procedures, such as the negotiated procedure
without publication of a contract notice will typically involve just one bidder.
Table 20: Contract award notices published under the Directive in 2011-2015, by
transparency103 of procedures [number of notices, %]
Non-transparent
Transparent
Missing
Total
Source: OJ/TED, manual corrections by DG GROW

Freq.
1 384
2 226
72
3 682

Percent
38%
60%
2%
100%

As presented in Table 20, the fraction of contract award notices where the procedures
used in procurement were not transparent was almost 2/5. However, contracts awarded
without publishing a call for tender accounted for lower share in terms of the total value
of awards (23%), meaning that high value contracts were more frequently awarded
following transparent procedures (Table 21).

103

Non-transparent procedures understood as: the negotiated procedure without publication of a contract
notice.

63

Table 21: Contract award notices published under the Directive in 2011-2015, by
transparency104 of procedures [value in million EUR, %]
Sum
Non-transparent
7 234.25
Transparent
23 565.96
Missing
49.98
Total
30 850.19
Source: OJ/TED, manual corrections by DG GROW

Percent
23%
76%
0.2%
100%

As it can be seen from the graph below, the differences across countries in the use of
non-transparent procedures were significant, also exposing different proportions
depending on whether the share in terms of number or value is analysed. These
differences may be due to some extent to different practices of contracting authorities in
the application of the conditions for the use of the negotiated procedure without
publication of a contract notice.

0
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1

Figure 21: Contract award notices published under the Directive where nontransparent procedures were used, by country105 [fraction]

Number of notices

Value of notices

Source: OJ/TED, manual corrections by DG GROW

Austria and Latvia are not shown on the graph, as in these countries all awards were
based on transparent procedures. In Portugal the opposite was true (although in the latter
case, the calculation was based on only eight contract award notices reported by Portugal
in 2011-2015). Obtaining a corresponding result for Sweden in terms of the value of
contracts was impossible due to lack of price data.

104
105

Ibidem.
There were no contract award notices where non-transparent procedures were used in: Austria and
Latvia.

64

The results of the online survey show that the perception of contracting authorities about
the impact of the Directive on competition (in terms of number of offers received) is
positive. 45% of contracting authorities’ respondents considered that the situation
“improved” with the Directive. 15% see no difference, and only 6% replied that the
situation “deteriorated” or “significantly deteriorated” compared to before the Directive.
Similarly positive are the contracting authorities’ responses on a related aspect, i.e. the
impact of the Directive on their capacity to achieve best value for money. 33% of
contracting authorities that replied to the survey consider that this aspect improved
compared to the situation before the Directive, while 18% see no difference. Only 6%
think that the situation deteriorated.
At a meeting on the evaluation106, some Member States’ experts confirmed the
perception that the Directive helped achieving best value for money, while many
affirmed that it is still too early to draw definite conclusions. They pointed out that
getting best value for money does not only depend on the rules of the Directive, but also
on the degree of competition and the structure of the market. Some Member States
experts clarified that even before the Directive some form of competitive procurement
aimed at best value for money was normally used.
In conclusion, the fact that the average number of offers is somehow lower than in civil
procurement can probably be explained by the structure of the defence sector with fewer
but more specialised suppliers. Overall, as it is confirmed by stakeholders’ feedback, the
Directive had a generally positive impact on competition.
6.1.1.4. The practice of industrial return requirements
The Impact Assessment addressed the issue of offsets/industrial return requirements. It
concluded that this issue should/could not be explicitly regulated by the Directive, but
needed to be addressed in the light of Treaty principles. As explained in Section 5, the
Commission departments therefore engaged, since 2010, with Member States to make
sure that offsets regulations were abolished or revised in the context of the process of
transposition of the Directive. In addition to the revision of offsets regulations, it is
appropriate to assess whether changes concerning offsets/industrial return requirements
have taken place in the concrete public procurement practice of Member States.
No official data on Member States’ practices concerning offsets/industrial return
requirements exist at EU level. If some individual Member States collect such data in
relation to their own national defence procurement or defence exports, they have no
reporting obligation towards the Commission. No such data were obtained via
consultation activities either.
The Bureau of Industry and Security (BIS) of the US Department of Commerce publishes
an annual report on “Offsets in Defense Trade”107. The BIS collects data annually from
the US firms involved in defence exports with associated offset agreements. These
annual report provide data on offsets agreements and transactions reported by US firms
106

107

Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.
https://www.bis.doc.gov/index.php/other-areas/strategic-industries-and-economic-security-sies/offsetsin-defense-trade.

65

exporting defence equipment abroad; only the globally aggregated data are provided,
with no breakdown by (offset recipient) country or geographical area. The twentieth
report, published in March 2016, provides, for the first time, data concerning the EU. In
2014, the US firms reported entering into nine new offsets agreements with EU Member
States. The value of these agreements is 1.68 billion USD. As proportion of all the new
offsets agreements entered into by the US firms in the same year, those with EU Member
States represent 18% by number and 12.9% by value108.
This data confirms that Member States in 2014 still used offsets requirements when
purchasing defence equipment from abroad, presumably based on Article 346
TFEU. However, since similar BIS data from previous or later years is not available, it is
impossible to make a comparison in order to assess whether – and to what extent –
changes in the practice of offsets/industrial return requirements have taken place.
An element to assess this issue is the perception of stakeholders, and in particular of
defence companies which are confronted with such requirements.
Businesses’ replies to the online survey show that the perception is that of a reduction,
albeit to a very limited degree, in the frequency of industrial return requirements after the
Directive. While the amount of businesses replying that they have been confronted “very
often” or “often” with these requirements before or after the Directive is the same (48%),
the proportion of those replying “very often” goes from 33% (before the Directive) to
24% (after the Directive). In the same direction, the percentage of companies that replied
“never” goes from 9% (before the Directive) to 12% (after the Directive).
In its reply to the online survey, ASD pointed out that “the uncertainties concerning the
use of offset requirements that came along with the Directive is a particular concern for
defence industries in smaller Member States” and that these uncertainties also create
legal and financial risks “for bidders for contracts where such offsets are required”. In
this context, they argued that “legal certainty would benefit from further clarification of
the conditions for requests for industrial participation”. One defence company that
responded to the online survey also confirmed that there are still uncertainties in terms of
offsets practices, and argued that the situation is more unclear and less transparent than
before the Directive. This point was also made by another industry representative in a
stakeholder consultation meeting109.
At the same meeting, another industry representative mentioned that formal offsets
requirements have definitely changed or are now removed. However, there are still cases
of offsets requirements based on essential security interests under Article 346 TFEU. He
added that there remains a significant informal desire and expectation in customer
countries to build industrial links with supplier companies and for them to establish local
collaboration.
Several participants at the above-mentioned meeting stated that there is a clear trend to
move away from indirect non-military offsets. It was pointed out, however, that direct
military offsets can also have detrimental effects as they can lead to defence industrial
duplications in Europe.

108
109

Twentieth Offset Report to Congress 3/16, p. 20.
Minutes of 22 February 2016 meeting with industry organised by ASD.

66

To conclude, it seems that Member States still use to some extent (presumably relying on
Article 346 TFEU) offsets/industrial return requirements. However, the frequency of
these requirements appears to have marginally decreased. Finally, there seems to be a
trend to move away from indirect non-military offsets.
6.1.1.5. Other aspects of procurement procedures
By introducing coordinated procurement rules based on competition, transparency and
equal treatment, the Directive sought to improve a number of aspects such as: fairness or
procedures, legal certainty, and bidders’ access to review procedures.
The Directive lays down a detailed set of provisions designed to ensure that the principle
of equal treatment is respected throughout the contract award procedure. In addition, it
establishes a specific review system that constitutes an additional guarantee to ensure
compliance with the rules. Finally, it coordinates national rules thereby reducing
regulatory fragmentation across Member States and improving legal certainty.
As to the effects of the Directive on fairness of procedures, businesses’ replies to the
online survey indicate a mixed perception, with moderately positive signs. 30% of
companies’ respondents do not see any difference compared to the situation before the
Directive, 21% consider that it “improved”, and 15% think that the situation
“deteriorated” or “significantly deteriorated”. 42% have “some doubts” that a contracting
authority in another Member State would give fair consideration to their bid under the
Directive, while 21% are “reasonably confident”, “confident” or “very confident” that
this would be the case.
One defence and security company, in its written contribution to the open public
consultation, mentioned that discriminatory technical specifications, tailor-made
requirements, as well as national standards, are used in some Member States. This
company argued that this constitutes a major problem in the application of the Directive
and a barrier to the functioning of the internal market.
Another aspect related to the fair and non-discriminatory conduct of procedures, is the
proper application of exclusion grounds. In this respect, Transparency International
considers that the mandatory exclusion of tenderers takes place extremely rarely.
Furthermore, the derogation from the mandatory exclusion is too broad and vague. A
self-cleaning mechanism (currently not foreseen in the Directive) could encourage
companies to implement effective anti-corruption policies. The application of
discretionary exclusions is also too rare. They suggest a coordination of the exclusion
systems of the Member States so as to follow a uniform approach and avoid the granting
of special advantages to companies with political influence. Implementation guidance on
the topic would also be welcome. In that context, Transparency International points at the
electronic databases of the US government and of the World Bank which contain a list of
excluded entities. These databases must be checked by the procurement authorities and
are also to a certain extent publicly available. They recommend a similar mechanism for
the EU.
With regard to legal certainty, contracting authorities consider that the Directive had
a positive impact, while businesses’ perception is rather mixed. Among the contracting
authorities that replied to the online survey, 48% think that the Directive “improved” or
“significantly improved” legal certainty, 12% see no difference, and 12% think that the
situation “deteriorated” or “significantly deteriorated”. The relative majority (30%) of
67

businesses see no difference with regard to legal certainty, while 21% considers that the
situation “deteriorated” and 15% that it “improved” or “significantly improved”. With
one exception, all Member States experts who intervened on this issue pointed out that
the Directive improved legal certainty110.
In terms of access to review procedures, 36% of businesses’ respondents think that the
Directive made no difference, 15% consider that it “improved” or “significantly
improved” the situation, and 9% see a negative impact (“deteriorated” or “significantly
deteriorated”).
The significant rate of businesses’ replies indicating that the Directive has made no
difference on these aspects is consistent with their feedback about the still limited uptake
of the Directive and the need for more widespread and consistent application.
In a stakeholders’ consultation meeting111, a number of defence companies pointed out
there should not be high expectations that they would use access to review procedures in
the defence sector. Since they only have one customer in each country, they prefer not to
antagonise them if it can be avoided. Other factors that discourage the use of legal
challenges in front of national courts are costs and time-limits. In this context, they
emphasised that enforcement to ensure the correct application of the Directive cannot
rely only on complaints from economic operators.
Transparency International, in its reply to the online survey, notes that in some situations
the oversight institutions, such as the parliaments or the courts of audit, might be lacking
the necessary information about specific defence and security procurement procedures,
due to e.g. strict data secrecy laws. Transparency International also pointed out that the
appeal or complaints mechanisms might be ineffective or insufficiently proactive in some
Member States which makes it more difficult to report irregularities or corruption. Very
often national legislations also fall short of offering adequate sanctions for corruption. In
addition, the levels of prosecutions for corruption are very low and the proceedings often
last very long and result in court settlements.
Transparency International also called for the application of an anti-corruption policy for
subcontractors and third parties as well as the use of appropriate contract clauses. In this
context, they specifically mention integrity pacts.
To conclude, when contracts are awarded under the Directive, aspects such as the
fairness of procedures and access to reviews are improved. However, the extent to which
these improvements take place depends on the degree of application of the Directive. The
mixed stakeholders’ perception on some of these aspects appears to be due to the still
limited uptake of the Directive.
6.1.2. Use of exemptions
Evaluation question (2):

110

111

To what extent has the use of exemptions, in particular Article 346 TFEU,
changed as a result of the Directive?

Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.
Minutes of 22 February 2016 meeting with industry organised by ASD.

68

As recalled in Section 2.2.3 above, according to the Impact Assessment, the operational
objective of the Directive was to limit the use of exemptions, in particular Article 346
TFEU, to exceptional cases. This implied that “the majority of contracts in the fields of
defence and security, including those for the procurement of arms, munitions and war
material, should thus be awarded on the basis of EU rules”112.
Member States have no notification or reporting obligations concerning their decisions to
rely on Article 346 TFEU, on other Treaty-based exemptions, or on one of the exclusions
from the Directive (Articles 12 and 13) in order to conduct procurement outside the
Directive. There are, therefore, no official statistical data or information on the extent to
which these exemptions have been applied.
Under these circumstances, four elements have been relied upon in order to address this
issue:
(a)

changes in the extent to which EU procurement rules (defence and civil)
are used for the award of defence and security contracts, as compared to
the defence procurement expenditure;

(b)

the volume of defence equipment procurement (upper/lower range) carried
out outside the Directive;

(c)

examples of major excluded contracts;

(d)

Member States and stakeholders’ perceptions about the use of exemptions.

The results of analysis carried out under the four above mentioned approaches, along
with methodological constraints (e.g. caused by limited access to comparable data), are
presented in the following sections.
6.1.2.1. Comparison with defence procurement budgets
The first and most important element to look at in order to understand whether changes in
the use of exemptions have occurred, are the changes in the use of the Directive. An
increase in the application of EU procurement rules would be in itself clear, albeit
indirect, evidence of a decrease in the use of exemptions.
As presented in Section 6.1.1.1 above, after the deadline for transposition, the uptake of
the Directive was almost immediate and has shown a clear upward trend.
The comparison with the baseline situation shows an increase in the use of EU
procurement rules for the award of defence and security contracts. As explained in
Section 2.3.2 above, the total value of contracts published EU-wide (OJ/TED and EBB)
in the period 2008-2010 amounted to an average yearly value of 2.9 billion EUR. The
total value of these contracts was equivalent to 3.3% of the EU’s total defence
procurement expenditure in the same period.
The reported value of contract award notices published under the Directive in 2011-2015
was around 6.2 billion EUR annually, hence circa 7.6% of the total value of general
112

Impact Assessment, p. 32.

69

government procurement expenditure on military defence of EU-28 and EEA-2 countries
(or 6.9 billion EUR and 8.5% respectively, if the estimated value was used, see: Table
17). Additionally, defence and security contracts were awarded under the civil
procurement Directives in 2011-2015 (on average 1.6 billion EUR annually).
Consequently, on average circa 7.8 billion EUR was published annually under
transparent EU rules in 2011-2015, equalling 9.5% of the defence procurement
expenditure available to EU governments in the reference period.
This shows that, compared with the baseline situation, there has been a more than
twofold increase in the award of defence and security contracts under transparent
and competitive procurement rules (from 3.3% to at least 7.6%) in terms of the
average yearly value of awarded contracts and as the proportion of defence and security
procurement compared to defence procurement expenditure.
Despite this improvement, it is also clear that a very significant share of defence
procurement expenditure is still done outside the Directive and, more in general, outside
EU public procurement rules. This share is likely to include procurement in which
exemptions (Article 346 TFEU or exclusions provided for in the Directive) are used whether or not in a legally correct manner – as well as procurement whose value is below
the thresholds for the application of the Directive.
6.1.2.2. Major defence equipment procurement outside of the Directives –
quantitative description
As already noted in Section 6.1.1.1 above, the total value of contract award notices
published under the Directive in 2011-2015 ranged between 30.85 billion EUR and 34.55
billion EUR (reported and estimated value, respectively). However, when compared with
the defence procurement budgets the share of procurement carried out under the
Directive seems to be relatively small. Similarly, the dominance of relatively small value
contracts (Figure 15), may suggest that the Directive was not used to a significant degree
for the procurement of strategic equipment (i.e. complex systems).
In this context, an attempt has been made to provide an indication of the value of major
defence equipment programmes procured outside the Directive. For this specific
exercise, IHS Jane’s defence procurement database has been used. In order to arrive at a
rough estimate, procurement programmes conducted by EU and EEA countries have
been shortlisted, where it could be inferred that award decisions have taken place
between 2011 and 2015. Only programmes committed and/or completed have been
considered. Finally, 128 defence procurement programmes, operated by 26 countries, has
been included in the sample. More details about the methodology used are provided in
Annex III.

70

Table 22: Estimate of the total value of defence equipment procurement
programmes included in IHS Jane’s database, by year [value in million EUR]
Year
Lower bound
Mid-point
Upper bound
2011
2 271.26
3 283.60
4 295.95
2012
3 157.07
3 317.76
3 478.46
2013
14 587.51
18 440.08
22 292.64
2014
3 972.65
4 346.40
4 720.14
2015
11 574.57
15 048.34
18 522.11
Total
35 563.05
44 436.18
53 309.30
Source: IHS Jane’s procurement database.
Note: IHS Jane’s database offers estimates of minimum and maximum values of the programme. The
middle estimate corresponds to the average value between the upper and the low ranges. The sample
includes 128 programmes. Only "committed" and/or "completed" programmes have been considered.

As explained in the methodological section (Annex III), comparisons between the two
sets of data (OJ/TED and IHS Jane’s) are difficult, due to potential differences in the
scope, unit of observation and in the time dimension. Nevertheless in order to make an
attempt at providing an indication of the value of major defence equipment programmes
procured outside the Directive, the following two methods have been used: (i) estimating
the value of programmes which have been awarded without starting competitive
tendering process and (ii) capturing programmes which were awarded with a competitive
tendering process, but which were presumably not published in OJ/TED.
The first approach (i) consisted of estimating the value of programmes which have been
awarded without starting competitive tendering process113. IHS Jane’s database offers
information about the request of proposal date of a programme (i.e. the date when the
procuring country requests the submission of offers from potential suppliers for a
procurement programme). It can be assumed that this date corresponds to the start of a
competitive tendering procedure. Table 23 below summarises the value of programmes
included in IHS Jane’s database which have been awarded between 2011 and 2015, but
which did not have a request of proposal date.
Table 23: Estimate of the total value of defence equipment procurement
programmes without a request of proposal date – by year [value in million EUR]
Year
Lower bound
Mid-point
Upper bound
2011
160.04
558.79
957.55
2012
518.36
605.18
692.01
2013
1 106.57
1 351.80
1 597.03
2014
1 268.28
1 402.10
1 535.92
2015
1 413.99
2 199.98
2 985.98
Total
4 467.23
6 117.86
7 768.49
Source: IHS Jane’s procurement database.
Note: See note in Table 22. The sample includes 47 programmes. Only committed or completed
programmes have been considered.

According to IHS Jane’s data, approximately 37% (47 out of 128) programmes awarded
between 2011 and 2015 did not report the start of a competitive tendering process. Table
23 shows that between 2011 and 2015, the 47 programmes without a request of proposal
113

Competitive tendering is understood here as any form of bidding process, whether under EU
procurement rules or not, whereby different offers are solicited and compared before awarding
a contract.

71

date accounted for between 4.4 billion EUR and 7.7 billion EUR (which equalled
approximately 13%114 - 15%115 of the total value of programmes recorded in the IHS
Jane’s database as committed or completed during the same period). Based on the
assumption that the absence of a request of proposal date indicates that no competitive
tendering procedure was launched, this estimate offers an overview of major defence
equipment procurement programmes awarded outside the Directive and without any
form of competitive tendering. Additionally, the data in Table 23 also presents an
increasing trend in the year-to-year values, which is difficult to explain, but can also be
linked with IHS Jane's data collection methods.
As briefly explained above, the second approach (ii) consisted of trying to capture the
programmes which were awarded with a competitive tendering process (i.e. where a
request of proposal date was included in the database), but which were not published in
OJ/TED. In order to do so, the lists of companies winning between 2011 and 2015 have
been extracted from OJ/TED and IHS Jane’s and compared. The idea behind this
exercise was to capture a low estimate of projects listed in the IHS Jane’s database,
which have been awarded to companies whose business name has not appeared in the
OJ/TED during the same period.
As a result of the matching process, it has been found that the majority of firms which,
according to IHS Jane’s database, won a defence procurement bid in 2011-2015 have not
been listed in OJ/TED during the same period of time. Only 12.5% of the procurement
projects reported in IHS Jane’s and awarded with a competitive tendering process during
2011 and 2015 have been won by companies which appeared in OJ/TED. The remaining
subset of programmes could provide an estimate of major defence equipment
procurement programmes most likely conducted outside the Directive, even if awarded
through some form of competitive tendering.
Table 24: Estimate of the value of defence equipment procurement programmes
with a competitive tendering process and likely conducted outside the Directive
[value in million EUR]
Year

Lower bound
Mid-point
Upper bound
2011
2 111.22
2 724.81
3 338.40
2012
2 513.35
2 587.22
2 661.09
2013
12 653.61
16 215.77
19 777.93
2014
2 676.97
2 914.57
3 152.16
2015
6 323.29
8 571.21
10 819.13
Total
26 278.44
33 013.58
39 748.71
Source: IHS Jane’s procurement database.
Note: please see the note in Table 23. The sample includes 70 programmes. Only committed or completed
programmes have been considered. Companies from Bulgaria have not been included in the analysis due to
matching impossibilities.

Consequently, the value of programmes awarded to companies which have not been
listed in OJ/TED is presented in (Table 24) The total estimate of this subset corresponds
to approximately between 84%116 and 87%117 of the total value of defence
114
115
116
117

4.47 billion EUR/35.56 billion EUR in 2011-2015.
7.77 billion EUR/53.31 billion EUR in 2011-2015.
26.28 billion EUR/(35.56 billion EUR – 4.47 billion EUR) in 2011-2015.
39.75 billion EUR/(53.31 billion EUR – 7.77 billion EUR) in 2011-2015.

72

equipment programmes reported in IHS Jane’s and awarded with a competitive
tendering process during the same period.
6.1.2.3. Major defence equipment procurement outside of the Directives –
qualitative description
In order to complement the quantitative indications presented above with qualitative
description, it seems appropriate to provide a list of examples of major defence
equipment programmes or contracts that have most likely been awarded outside the
Directive. This exercise can be useful to illustrate the notions of major defence
equipment programmes, strategic military procurement, or procurement of complex
weapon systems that have been referred to in this evaluation.
It should be emphasised that the compilation of this list is not based on a legal
assessment of compliance with the rules of the Directive, and in no way implies a
position of the Commission departments on the existence of breaches of EU law. In fact,
there may have been different legal reasons for awarding the defence
programmes/contracts mentioned below outside the Directive. These include the possible
application of Article 346 TFEU or of the exclusions provided for in Articles 12 and 13
of the Directive. Although great care has been taken to try and identify procurement
cases awarded after the transposition deadline of the Directive, some of these
programmes or contracts may have fallen outside the scope of application of the
Directive ratione temporis118. Finally, in some cases the application of non-competitive
procurement procedures – albeit not necessarily outside the Directive – may have been
justified (e.g. sole supplier or supplementary supplies).
Table 25: Examples of major defence equipment programmes/contracts outside the
Directive - purchases over 200 million EUR in alphabetic order of Member States
[value in million EUR]
Member
State

Description of the procurement
(probable contractor in brackets)

Maximum
estimated
contract
value

Estimated
year of
contract
award

Czech
Republic

At least 14 multirole aircraft fighters Saab Gripen
(Saab Gripen), (extension of lease agreement)

750

2014

Denmark

27 F-35 air jet-fighters (Lockheed Martin), (The
stage of government recommendation approved by
the Parliament - no contract yet)

3 000

2016

France

12 Aircraft Tankers based on Airbus A330 (Airbus)

3 000

2015

France

The SCORPION programme for the preparation of
future land combat systems. It includes i.a.
procurement of 110 Jaguar 6x6 reconnaissance
vehicles, 780 Griffon 6x6 armoured personnel
carriers, and renovation of 200 Leclerc tanks.

550

2013

118

Especially since the Court of Justice established that the rules applicable ratione temporis are those
applicable at the point in time when the contracting authority chose the type of procedure to be
followed, C-337/98 Commission v France, para. 40; C-576/10 Commission v Netherlands, para. 53.

73

France

4 C-130J Hercules transport aircrafts (Lockheed
Martin) - two with helicopter in-flight refuelling
capability, two gunships with precision-guided
munitions

330

2016

France

14 tactical patrol drones (Sagem - Safran subsidiary)

300

2016

Germany

Additional delivery of 131 Boxer armoured vehicles
(Krauss-Maffei Wegmann and Rheinmetall)

470

2015

Italy

Additional delivery of 9 M-346 advanced jet trainers
including logistics support (Aermacchi)

300

2016

Italy

6+4 multipurpose offshore patrol ships and 1 logistic
support
ships
(consortium
Fincantieri
and
Finmeccanica)

4 300

2015

Italy

6 Medium-altitude long-endurance unmanned aerial
vehicles - MALE UAVs (Piaggio Aero) P.1HH
HammerHead

490

2015

Italy

136 new 8x8 military light to medium territorial
defence and tactical reconnaissance vehicle, with a
120 mm gun (Centauro 2 programme)

200

2014

Netherlands

14 Boeing CH-47F Chinook heavy lift helicopters
(Boeing)

838

2016

Romania

24 used multirole aircraft F-16 (Lockheed Martin)
from Portugal including in-service support and
training

630

2013

Poland

64 self-propelled 120 mm mortars RAK and 32
command vehicles

230

2016

Slovakia

16 medium
(Sikorsky)

Hawk

290

2015

Sweden

Design and construction of 4 new (A26) submarines
(Saab Kockums)

2 295

2015

United
Kingdom

50 Apache attack helicopters (Boeing)

2 105

2016

United
Kingdom

Continuation of design work, demonstration and
construction of 8 global combat Ships (BAE Systems)

6 916

2016

United
Kingdom

5 helicopter-capable offshore patrol vessels (BAE
Systems)

732

2013

transport

helicopters

Black

Source: DG GROW, based on IHS Jane’s procurement database and publicly available information (i.e.
announcements in companies’ and government authorities’ websites, as well as press articles).
Note: the examples have been selected to maximise the illustrative potential of the list. Other criteria were:
high value, estimated year of contract award after the transposition deadline of the Directive, balance
across sectors (air, naval and land) and Member States.

The examples in Table 25 confirm that several major defence equipment programmes
have been awarded in recent years outside the Directive. These are all complex
weapons systems and some of them represent the highest end of military capabilities such
74

as fighter jets, attack helicopters, combat ships and submarines. Despite an effort to keep
a balance across sectors (air, naval and land) the programmes in the air sector represent
the majority (11 out of 19 examples), simply due to the much higher value of these
programmes.
6.1.2.4. Member States and stakeholders views on the use of exemptions
According to the replies to the online survey, public authorities and businesses have
rather divergent views about the impact of the Directive on the use of the essential
security interest exemption (Article 346 TFEU). While a majority of public authorities’
respondents (52%) “strongly agree” or “agree” that the Directive has reduced the need to
use this exemption, only 27% businesses hold the same view. 39% of businesses actually
“disagree” or “strongly disagree” with this statement.
In a meeting on the evaluation, the vast majority of Member States’ experts stated that
the Directive significantly decreased the need for using Article 346 TFEU.
The Federation of German Industries (BDI), in its reply to the online survey, pointed out
that “Article 346 TFEU is often referred to in order to justify a non-application of the
Directive”. BAE Systems noted that the frequency of use of this provision has reduced,
but their perception is that it represents a significant proportion of the overall
procurement value. Similar remarks have been made by one defence company and one
business association that responded to the online survey.
One respondent to the online survey among contracting authorities mentioned that it is
sometimes difficult to understand whether Article 346 TFEU can be applied to an
individual procurement case.
It has been possible to test the stakeholders’ perceptions (on both ends of the
procurement procedure, i.e. contracting authorities and businesses) through the onlinesurvey. Respondents that declared to be involved in public procurement in the fields of
defence and security were asked to rate how often different legal grounds (Article 346
TFEU, exclusions, under thresholds) were used “as a justification NOT to carry out
defence or security procurement procedures under Directive 2009/81/EC”. Among
exemptions/exclusions119, Article 346 TFEU is seen as the most frequently used legal
basis not to apply the Directive; 33% of businesses and 12% of public authorities that
replied to these questions consider that this Treaty provision has been used “very
frequently” or “frequently”.
6.1.3. Member States security concerns

Evaluation question (3):

To what extent are the provisions of the Directive appropriate to guarantee
competition, transparency and equal treatment, while safeguarding Member
States security concerns?

As explained in Section 2, the Directive seeks to lay down provisions that are tailor-made
to the specificities of the defence and security sectors. This means, in particular, that the
119

“Below thresholds procurement” is seen as the most frequently used justification by contracting
authorities. This indication is less relevant in this context.

75

Directive’s rules aim at ensuring competition, transparency and equal treatment, while at
the same time safeguarding Member States security concerns. The main features of the
Directive that are relevant in this context are the defence-specific exclusions, and the
provisions on security of information and security of supply.
The online survey and the meetings with stakeholders have been used to gather
stakeholders’ views on these provisions of the Directive (on exclusions, security of
information, and security of supply), and assess whether they are still fit for purpose.
6.1.3.1. Defence-specific exclusions
Roughly 45% of contracting authorities respondents and 36% of businesses respondents
“strongly agree” or “agree” that the exclusions (Article 12 and 13) are appropriate.
However, a non-negligible proportion of businesses respondents (27%) “disagree” or
“strongly disagree”. This is consistent with inputs received from some defence
companies and business associations, which raised a few issues with certain exclusions
from the Directive.
Some business associations and defence companies, who participated in the online
survey, expressed concerns about the application of the exclusions on government-togovernment sales (Article 13(f)) and International Organisations (Article 12(c)). They
specifically referred in this context to the Global-FMS120 concept, because this
mechanism might amplify the potentially negative effects on the internal market. These
stakeholders called for further guidance to clarify in particular these provisions of the
Directive. Similar points were made, especially with regard to the exclusion on
government-to-government sales (Article 13(f)) by a number of industry representatives
during two stakeholder consultation meetings121.
On the other hand, one business association that responded to the online survey pointed
out that the US FMS programme does not cause market distortions in Europe. In the
above-mentioned stakeholders' consultation meetings, certain industry representatives
said they are rather supportive of the use of government-to-government and FMS.
The Federation of German Industries (BDI), in its reply to the online survey, argued
more generally that the interpretation of the exclusions (Articles 12 and 13) is partly
diverging in practice, and that a clarification – through non-legislative instruments would be necessary to establish a fair and competitive market.
One Member State, in its written contribution to the open public consultation, supported
the idea of guidance on the application of the exclusions on government-to-government
sales (Article 13(f)) and International Organisations (Article 12(c)). Several other
Member States’ experts also argued that some clarifications – through non-legislative
guidance - on Article 12(c) of the Directive would be useful122.

120

121
122

FMS (Foreign Military Sales) is a US program under US Arm Export Control Act (AECA) within
which US defence articles and services are sold to foreign countries and international organisations
through government-to-government agreements.
Minutes of 22 February and 3 May 2016 meetings with industry organised by ASD.
Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

76

Most of the Directive’s provisions on exclusions (Articles 12 and 13) were not included
in the original Commission’s proposal and were, therefore, not subject to the Impact
Assessment. These provisions have been inserted by the co-legislators as they were
deemed necessary to address the specificities of defence procurement and to safeguard
Member States security interests. On the other hand, as established in the case law of the
Court of Justice, exclusions must be interpreted restrictively123. They cannot be used to
circumvent the provisions of the Directive and to undermine its effet utile. For
contracting authorities to correctly take these limitations into account when applying
exclusions in individual procurement cases may not always be straightforward.
6.1.3.2. Security of information
61% of contracting authorities' respondents strongly agreed or agreed that the Directive’s
provisions on security of information are sufficient to ensure the protection of classified
information. Among businesses respondents, the relative majority (33%) also agreed and
only 9% disagreed.
One Member State and two defence companies stated, in their replies to the online
survey, that the lack of a harmonisation of national security clearance systems can create
problems and market access barriers. However, the issue of diverse national security
clearance systems goes well beyond the regulation of public procurement and the
security of information provisions of the Directive.
The broad consensus of stakeholders on the fact that the security of information
provisions of the Directive are appropriate confirms the Commission departments’
analysis that has not identified particular problems in this area.
6.1.3.3. Security of supply
On the security of supply provisions, contracting authorities and businesses hold
somewhat different views. 30% of business respondents “agree” or “strongly agree” that
the Directive’s provisions on security of supply are sufficient to limit the risks of supply
disruptions and ensure operational autonomy. Among contracting authorities respondents
only 15% agree with that statement, while 33% are neutral and 18% disagree or strongly
disagree.
One national defence industry association pointed out that security of supply cannot be
fully guaranteed by political declarations or contractual commitments, but it is ensured
primarily through national control of domestic industrial infrastructures.
One Member State’s expert stressed, during the meeting on the evaluation124, that the
provisions of the Directive cannot be sufficient to guarantee security of supply;
contractual obligations are not sufficient in this context. In some cases, key technologies
and industrial facilities are needed, for security of supply reasons, in the national
territory.

123
124

See, inter alia, Case C-337/06 Bayerischer Rundfunk, paragraph 64.
Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

77

This feedback from Member States and stakeholders reflect the complexity of security of
supply issues. These issues include, but are not limited to, transfer licenses and export
control authorisations, contractual arrangements with suppliers and their industrial
capacity to meet additional or urgent requests, availability in the medium-long term of
industrial and technological capabilities, ownership and capital participation in key
defence and security companies. Under these circumstances, the provisions of the
Directive, which concern contractual arrangements with suppliers, address only part of
the problem. The link with Directive 2009/43/EC on Intra-EU transfers of defence
products is particularly important in this context (see below Section 6.4.3.).
6.1.4. Changes in the industrial base (EDTIB)

Evaluation question (4):

Have there been any major structural changes in the European Defence
Technological and Industrial Base (EDTIB), including with regard to SMEs
and to what extent can they be attributed to the Directive?

This section seeks to provide a broad picture of the main characteristics of the EDTIB
and of major changes that have occurred in recent years. However, as mentioned in
Section 4.4., it should be stressed at the outset that the limited availability of statistics for
this sector, as well as a relatively short time that elapsed since the adoption of the
Directive, restrict the extent to which changes affecting Europe’s defence industry in the
reference period (2011-2015) and the impacts of the Directive can be assessed.
As recalled in Section 2.2.2 above, and as argued in the Impact Assessment, the general
objective of the Directive is to support the establishment of an open and competitive
EDEM. This is expected to be, in turn, a contributing factor to strengthen the
competitiveness of the EDTIB.
The Impact Assessment included a fairly short description of the main characteristics of
Europe’s defence industrial base. It indicated that, in 2005, the turnover of companies
operating in the areas of land and naval defence and military aerospace was just over 52
billion EUR and that these companies employed around 614 000 people125. It also
presented the list of the top 20 defence companies world-wide and highlighted that 7 out
of these were based in Europe126.
Since the Impact Assessment and Article 73(2) of the Directive focus on the EDTIB, this
Section looks at the situation of the defence industrial base. This is also justified by the
fact that the overwhelming majority of contracts awarded under the Directive have been
found to concern the defence, rather than the security, sector (see above Section 5.3.1.5.).
For this reasons, this evaluation did not need to address the specific challenges related to
data availability on the European security technological and industrial base127.

125
126
127

The Impact Assessment, p. 10 and pp. 70-71.
The Impact Assessment, p. 20.
Since developing a clear picture of the security sector was hampered by the absence of reliable data, a
recent study done by Ecorys for the Commission, DG Migration and Home Affairs, aimed at
establishing the aggregate size (turnover and employment) of the security industry. The study excluded
firms that supply security products to the defence sector only, but covers firms active in both the civil
security and defence markets. The study contains a mapping of the European security sector with

78

6.1.4.1. The industry’s size
According to ASD data, the total turnover of aerospace and defence industries in 2014
was estimated to be 199 billion EUR, out of which 97 billion EUR from military
activities (in aeronautics, naval, land and space). The turnover levels have grown
between 2009 and 2014, with the exception of 2013 when a slight downturn could have
been noticed. Also with regards to employment, ASD data show a gradual but steady
increase in the aerospace and defence industries.
Table 26: Turnover and employment of European aerospace and defence industries,
by year [turnover in billion EUR, employment in thousands of employees]
Year
Turnover
Employment
2009
155
681
2010
163
705
2011
171
733
2012
187
753
2013
172
778
2014
199
795
Source: ASD - Aerospace and defence industries, Facts & Figures, 2014

In comparison, according to Eurostat SBS data, the turnover of defence-related industries
(including civil aeronautics and shipbuilding) passed from nearly 130 billion EUR in
2010 to 162.5 billion EUR in 2014 (Table 57 in Annex IV). In terms of employment, the
available Eurostat data show an increase from nearly 453 000 employees in 2010 to 550
000 in 2014128 (Table 58 in Annex IV). It is, however, impossible to assess the extent to
which the increase occurred in the defence or in the civil (aeronautics and shipbuilding)
industries.
The changes in turnover and employment levels across Member States, calculated as a
difference between 2014 and 2010 levels with 2010 being the base year129, are presented
in Figure 22. Changes in Slovenia and Sweden were calculated between 2010 and 2013,
because of the lack or incompleteness of data for 2014. Similarly, as there was no data
available for 2010 on turnover in the manufacture of air and spacecraft in Belgium, the
base year used for this country was 2009. Countries with no data reported for 2010 or
with significant incompleteness of data in at least one of the variables (employment or
turnover) were omitted (i.e. Estonia, Iceland, Ireland, Latvia, Luxembourg, Malta,
Netherlands, Slovakia and the UK).

128

129

estimates indicating that the security industry in the EU generates a total turnover of as much as € 191
bn and employs as many as 2.3. mio people, http://ec.europa.eu/dgs/home-affairs/elibrary/documents/policies/security/reference-documents/docs/security_statistics__final_report_en.pdf.
Some annual fluctuations (e.g. a slight decrease in 2011), were rather due to the absence of data for
some countries.
Difference for a country j would be then: Diffj = (value2014j- value2010j)/value2010j

79

.4

Figure 22: Changes in turnover and employment levels between 2010 and 2014130,
by country [fraction]
AT

LT

CZ
.2

NO

FR

DE

RO

SI

0

ES
SE
IT
PT PL

-.2

CY
BGFI
HU

BE

-.4

EL
DK
HR
-.5

0
Change in turnover

.5

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2)

As seen on the graph, changes in employment and turnover levels between 2010 and
2014 seem to be fairly balanced across the EU and EEA - seven countries reported a
decrease in employment and turnover levels and the same number of countries observed
changes in the opposite direction. In five Member States the turnover has increased,
despite a reduction in the headcount (Belgium, Italy, Portugal, Poland and Sweden – the
latter with almost negligible negative change in employment levels) which might signal
some efficiency gains in the industry. The employment has increased in Romania and
Lithuania although it has not translated into higher turnover levels between 2014 and
2010131. To conclude, changes occurred in all directions and there is no clear pattern
concerning the evolution of the industry that could be identified based on the available
data.
Similar picture emerges when the list of top producing counties by sector are compiled
and compared over time in EU and EEA (see: Tables 27 to 30132).
Table 27: Countries with the highest share of turnover in the manufacture of
weapons and ammunition, NACE C25.4 (sorted by 2010) [%]
United Kingdom
Germany
130
131

132

2010
26.1
21.9

2011
29.8
22.0

2012
33.1
22.7

2013
25.6
19.7

2014
31.0
23.1

2013-2010 for Slovenia and Sweden; 2014-2009 for Belgium.
It is however unclear to what extent such change could have been caused by incomplete reporting to
Eurostat.
The "highest share" in Tables 27 to 30 was defined as more than 5% in any of the analysed years.

80

Italy
France
Norway
Sweden

16.6
14.6
12.7
6.9

17.0

18.0

11.7
6.9

9.9
7.4

13.7
17.5
7.5
4.9

18.2
7.9
4.4

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2);
Note: the data for France in 2010 were missing and are replaced by its share in 2009.

Table 28: Countries with the highest share of turnover in the building of ships and
floating structures, NACE C30.11 (sorted by 2010) [%]
Norway
Italy
Germany
Spain
United Kingdom
France

2010
22.7
15.4
15.1
11.2
11.0
10.6

2011
27.8
12.7
11.9
9.2
13.0
12.7

2012
32.0
9.9
11.1
7.3
14.5
13.5

2013
35.9
8.6
10.1
6.1
13.9
14.0

2014
31.4
10.7
16.7
4.5
14.9
12.6

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2)

Table 29: Countries with the highest share of turnover in the manufacture of air
and spacecraft and related machinery, NACE C30.3 (sorted by 2010) [%]
France
United Kingdom
Germany
Italy
Spain

2010
32.7
28.8
22.1
9.2
5.3

2011
33.8
27.6
22.3
8.6
5.5

2012
33.9
27.3
22.1
8.2
5.1

2013
34.6
26.6
22.4
6.7
6.0

2014
34.8
25.6
21.3
8.1
6.2

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2)

Table 30: Countries with the highest share of turnover in the manufacture of
military fighting vehicles, NACE C30.4 (sorted by 2010) [%]
France
United Kingdom
Poland

2010
79.9
40.5
20.1

2011

2012

64.9
30.4

64.3
35.7

2013
50.4
35.2
12.5

2014
66.9
33.1

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2);
Note: the data for the UK in 2010 were missing and are replaced by its share in 2009.

Overall no important changes over time can be noted in the tables. Although certain
annual volatility over time can be observed for some countries, it is mainly caused by the
lack of data or incompleteness in time-series (e.g. the United Kingdom share in the
manufacture of military fighting vehicles has dropped from 64.3% in 2012 to 35.2% in
2013 because of the lack of data from France in 2012). In general, as it can be seen from
the tables above, the main producing countries with market shares of more than 5%
in each sector remained relatively stable between 2010 and 2014.
81

6.1.4.2. Global competitiveness
Europe’s defence industry includes some of the world’s leading system designers and
integrators. SIPRI’s list of top-100 arms producing and military services companies in
the world (excluding China), based on the annual value of arms sales, can be referred to
in order to position these leading European defence companies vis-à-vis the global
market. As presented in Table 31, the latest SIPRI list includes 25 European companies,
which are based in the UK (8), France (6) Germany (3), Italy (2), Finland, Norway,
Poland and Sweden (1 each), as well as two transnational European companies.
Table 31: Top European arms-producing and military services companies in 2014
[value in million EUR, %, number of employees]
Arms sales value

% of total
sales

Employment

UK

23 672

94

83 400

Airbus Group

Trans-EU

13 331

18

138 620

Finmeccanica

Italy

9 697

54

54 380

12

Thales

France

7 912

50

61 710

16

Rolls-Royce

UK

4 996

23

2 025

17

SAFRAN

France

4 720

25

68 950

20

DCNS

France

3 606

96

13 130

25

Babcock International Group

UK

3 275

48

10 840

31

Rheinmetall

Germany

2 732

48

20 170

37

Saab

Sweden

2 493

79

14 720

42

ThyssenKrupp

Germany

2 125

4

160 740

44

CEA

France

2 107

40

15 770

49

Serco

UK

2 006

33

118 620

53

Cobham

UK

1 711

61

12 710

62

Fincantieri

Italy

1 297

24

21 690

64

Nexter

France

1 214

95

3 320

65

Dassault Aviation Groupe

France

1 214

27

11 750

67

Polish Armaments Group

Poland

1 168

100

17 500

72

QinetiQ

UK

1 049

91

6 250

79

GKN

UK

911

8

21 400

83

Krauss-Maffei Wegmann

Germany

865

95

2 770

85

Kongsberg Gruppen

Norway

846

35

7 730

87

Meggitt

UK

819

35

10 820

93

CNH Industrial

Trans-EU

754

2

69 210

96

Patria Industries

Finland

736

88

2 450

95 257

30

950 675

Rank

Company

Country

3

BAE Systems

7
9

Top 25 European

Source: SIPRI Arms production database

The picture of the leading European defence companies has been rather stable over the
years. As noted by the Technopolis study on the evaluation of Directive 2009/43/EC (the
Technopolis Study), most changes, additions or removals to the list are a result of
mergers or group reorganisations133. It is particularly remarkable that the number of

133

“Evaluation of Directive 2009/43/EC on the Transfers of Defence-Related Products within the
Community” by Technopolis group for the European Commission in June 2016, p. 20.

82

European companies in the global top 20 list in 2014 is the same (7) as it was in 2005 at
the time of the Impact Assessment.
The international dimension is a key aspect of the competitiveness of Europe’s defence
industry. As noted in the Report of the Group of Personalities on Defence Research,
“beyond the domestic European market(s), international market access and defence
export activity are essential components of the business models used by Europe’s defence
industry. From an industrial viewpoint, access to international markets is a necessity, but
not only as a means to compensate for a declining domestic market: export growth
significantly contributed to sustaining the critical mass of European defence companies
and highlights the competitiveness, capability, performance and reliability of European
export products”134.
Table 32: Share of total global defence exports [%]
2005
2006
2007
2008
2009
2010
2011
2012
2013
EU
33.51
36.35
37.74
32.65
34.59
26.38
26.49
21.18
25.09
US
34.85
30.48
29.54
28.15
28.06
31.87
30.26
31.20
26.45
China
2.98
2.61
1.81
2.44
4.68
5.69
4.44
5.76
7.41
Russia
23.68
20.72
20.97
25.88
20.99
23.38
28.42
29.07
30.31
Rest of the world
7.95
12.46
11.75
13.32
16.36
18.37
14.83
18.55
18.15
Source: Report of the Group of Personalities on European Defence Research, based on SIPRI Arms
Transfer Database

2014
27.89
36.01
3.83
21.09
15.01

Table 32 shows that the share of global defence exports from EU Member States
declined from 33.5% in 2005 to 27.9% in 2014. The share significantly decreased in
2010, and started to pick up again in 2013. Besides this, no clear pattern in the evolutions
of the export shares over the years seems to be discernible.
6.1.4.3. The industry’s structure
The biggest defence companies in Europe (system integrators and prime contractors),
which include the top 25 mentioned above, work with smaller companies in broad and
complex supply chains to deliver their products and provide services.
A recent study commissioned by the EDA (the SCAP Study) identified about 9 000
companies supplying various capabilities across the European defence industry supply
chain. Tier 1 companies (prime contractors, system integrators) constitute only 2% of the
overall industry supply chain, but represent the dominant share of the defence
expenditure revenues. Tier 2 companies account for around 15% of the supply chain. Tier
3 to Tier 5 companies are mostly suppliers catering to end-user and industry primes
needs for components and associated support services135. According to ASD data on
Europe’s aerospace and defence industries, the supply chain is estimated to represent one
third of total revenues (i.e. 66.5 billion EUR).

134

135

Report of the Group of Personalities on the Preparatory Action for CSDP-related research, 23 February
2016, p. 44, http://www.iss.europa.eu/publications/detail/article/report-of-the-group-of-personalitieson-the-preparatory-action-for-csdp-related-research.
“Support to the implementation of the Supply Chain Action Plan” by IHS Global Limited for EDA; the
executive summary has been published online: https://www.eda.europa.eu/docs/defaultsource/procurement-library/15-esi-op-029_eda-support-for-implementation-of-scap-executivesummarye39d983fa4d264cfa776ff000087ef0f.pdf.

83

To complete the picture, Eurostat statistics on the number of enterprises can also be a
relevant source to assess possible changes in the structure of the industrial base.
However, these statistics are incomplete for a number of years and countries (no data are
reported), and appear to underestimate the number of enterprises specifically active in the
defence sector136.
Table 33: Enterprises in Europe’s aerospace, defence and shipbuilding industries,
by country and year [number of enterprises]
2010
2011
2012
2013
2014
Austria
68
67
70
70
69
Belgium
29
0
46
51
54
Bulgaria
51
41
42
43
40
Croatia
215
217
208
192
192
Cyprus
4
4
4
3
3
Czech Republic
167
167
165
157
155
Denmark
54
50
51
60
61
Estonia
38
30
35
33
35
Finland
158
142
131
132
130
France
486
496
485
535
416
Germany
391
436
450
517
516
Greece
333
358
184
137
40
Hungary
76
78
44
38
42
Iceland
0
0
0
0
0
Ireland
0
0
0
0
0
Italy
1 320
1 305
1 236
1 181
1 114
Latvia
15
15
23
21
21
Liechtenstein
0
0
0
0
0
Lithuania
22
22
25
25
27
Luxembourg
1
1
0
1
1
Malta
0
0
0
0
0
Netherlands
268
294
305
351
360
Norway
318
320
325
304
317
Poland
631
670
630
528
714
Portugal
136
118
107
101
101
Romania
293
278
275
308
343
Slovakia
0
32
10
22
10
Slovenia
51
46
50
49
49
Spain
586
566
442
464
382
Sweden
243
246
251
255
69
United Kingdom
1 056
1 045
1 084
1 158
1 261
Total
7 010
7 044
6 678
6 736
6 522
Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2)

Although a general decrease in the number of enterprises can be noted – a change from
around 7 000 in 2010 to 6 500 in 2014 – due to inconsistencies in data for specific years

136

This is particularly evident when looking at the very few enterprises reported in NACE C30.4
(manufacture of military fighting vehicles). For Germany, where two of the leading defence companies
in the land segment are located, no enterprise in this NACE is reported.

84

or countries, no conclusive pattern in the number of enterprises over the analysed years
can be identified in a reliable manner.
Finally, mergers and acquisitions (M&A) concerning companies in the sector are another
potential source of information about changes in the industrial base, in particular with
regards to consolidation. IHS Jane’s study for the EDA tracked, between January 2011
and June 2015, 197 M&A transactions involving the purchase of a controlling stake in
defence companies in EU Member States and EEA countries137. The above mentioned
SCAP Study points out that there has been limited evidence of meaningful consolidation
efforts by individual companies, although there has been extensive bolt-on activity138 by
tier 2-3 companies.
According to the same database, the number of M&A transactions for an earlier reference
period of similar duration (2006-2010) is 126139.
The sheer number of M&A transactions tracked in the last years (2011-2015) is
significant and appears to have increased. However, the more significant M&A or
company restructuring operations involving defence companies based in Europe appear
to be much fewer. Table 34 presents some examples of these operations that have
occurred in the reference period (2011-2015).
Table 34: Examples of recent M&A or other corporate operations
Year
2016

Operation
Following a reorganisation, Leonardo-Finmeccanica has become a
single company by integrating the activities of the group’s companies
(AgustaWestland, Alenia Aermacchi, Selex ES, Oto Melara, WASS and
Finmeccanica).
2015
Nexter and Krauss Maffei Wegmann set up a joint holding company,
called KMW and Nexter Defence Systems (KNDS).
2015
GKN, a UK-based global engineering company operating in the
automotive, land systems and aerospace markets, acquired Dutch
aerospace component and systems manufacturer Fokker Technologies.
2014
Nexter agreed to acquire Mecar Belgium (energetics subsystems such
as fuzes) and Simmel Difesa of Italy (medium and large calibre
ammunition) from Chemring of the UK.
2014
The Finnish government acquired Airbus Group’s stake (26.8%) in
Patria.
2013
Following company restructuring, EADS has become Airbus Group,
which was reorganised into three divisions. At the core of the
reorganisation is the integration of three businesses (Airbus Military;
space systems business Astrium; and defence and security systems
business Cassidian) into the newly created Airbus Defense & Space.
Source: DG GROW based on IHS Jane’s industry and market database, and other publicly available
sources

137
138

139

The SCAP study, p. 46.
A bolt-on acquisition is when a private equity-backed company acquires another company as a "bolt
on" to enhance the private equity-backed company's value. It refers to an acquisition that fits naturally
within the buyer's existing business lines or strategy.
This figure refers to transactions targeting companies based in EU Member States and EEA countries.
Elaboration by DG GROW, on the basis of IHS Jane’s Defence Industry and Markets M&A database,
which reports transactions that occurred until 2013.

85

6.1.4.4. No evidence of fundamental change in the industrial base
Given the encountered limitations in data availability and the relatively short time that
elapsed since the adoption of the Directive, it seems difficult to conclude that the overall
size, structure, and shape of the EDTIB has fundamentally changed in the period 20112015. It would be even more difficult, if not impossible, to establish any causal link
between the effects of the Directive and developments in the EDTIB.
This is fully consistent with the feedback received by Member States and stakeholders in
the consultations for this evaluation. In fact, 55% of respondents among contracting
authorities and 58% of respondents among businesses see no impact of the Directive on
the competitiveness of EDTIB or have no opinion on the matter.
In its reply to the online survey, ASD stressed that “the Directive should be assessed
against realistic expectations and in a broader context. European procurement rules are
an important part of the internal market for defence but by themselves they are not
sufficient to ensure the proper functioning of the market (…) even more important from
an industrial perspective is the size and structure of the market”. In addition, several
respondents to the online survey among businesses stated that, given the long cycle of
defence markets, it is difficult to assess after only five years the impact of the Directive
on the market and, even more so, on the industrial base.
One Member State also stressed, in its written contribution to the open public
consultation, it is impossible at this stage to establish a causal link between the changes
occurring in the market and in the industrial base and the application of the Directive.
Member States’ experts expressed very similar views in a meeting on the evaluation140:
there have been some changes in the EDTIB, but it is impossible to establish a link with
the Directive; there is no evidence that would allow to do so. In addition, these changes
are often the result of industry’s reaction to long-term general market and technological
developments.
Some industry representatives, in a stakeholder consultation meeting, pointed out that the
objective of making Europe’s industrial base more competitive is very hard to
achieve in the absence of truly common security and defence policy (CSDP), no
common armaments policy and no harmonisation of requirements141. In general, at
this meeting there was broad agreement that at this stage, after only five years, there is no
evidence of impact of the Directive on the industrial base.
There are a number of factors that have the potential to affect the EDTIB, such as
changes in Member States’ budgets, degree of competition and emergence of new
competitors on third countries markets, technological developments, with a more
efficient European market (which the Directive can help achieve) being one of them.
Given the long life-cycle of defence markets, all these factors are likely to take several
years to bring about changes in the EDTIB. Under these circumstances, it would already
be very difficult to attribute to the Directive changes taking place in the EDTIB after a
longer period of time. It is, in fact, impossible to draw any conclusions on the impact of

140

141

Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.
Minutes of 22 February 2016 meeting with industry organised by ASD.

86

the Directive on the EDTIB five years after the deadline for transposition, also given the
significant delays in transposition and the still partial uptake by Member States.
Finally, the lack of significant impact on the industry is undoubtedly related with the fact
that major strategic purchases have not been carried out under the Directive, hence the
causal link between the two (the Directive and the industry) is difficult to intercept.
6.1.4.5. Winning firms and SMEs presence
As far as the winning firms are concerned, out of 7 145 contracts awarded under the
Directive in 2011-2015, 867 contracts were won by companies listed on SIPRI Top100arms producing and military services companies142 in 2014, hence accounted for circa
12% of the contracts. The list of winning companies, acting as stand-alone contractors or
winning in consortia, is provided in Table 35 below.
Table 35: Companies listed on the SIPRI list and winning contracts under the
Directive in 2011-2015 [number of contract awards]
SIPRI
ranking
1
2
3
4
5
6
7
9
10
12
16
17
18
20
22
25
26
27
29
30
31
32
33
37
40
42
43
44
142

Company
Lockheed Martin
Boeing
BAE Systems
Raytheon
Northrop Grumman
General Dynamics
Airbus Group incl. EADS, Eurocopter
Finmeccanica
L-3 Communications
Thales
Rolls-Royce
SAFRAN
Honeywell International
DCNS
Booz Allen Hamilton
Babcock International Group
Leidos
General Electric
Harris
AECOM Technology Corp.
Rheinmetall
Israel Aerospace Industries
Elbit Systems
Saab
Alliant Techsystems
ThyssenKrupp
Hewlett-Packard
CEA

Freq.
13
28
21
6
2
18
112
1
4
96
6
1
2
19
2
8
1
8
8
1
112
1
4
19
2
4
11
8

The SIPRI Top 100 arms-producing and military services companies in the world excluding China,
December 2015, http://books.sipri.org/files/FS/SIPRIFS1512.pdf.

87

46
48
49
53
58
62
64
65
67
71
72
79
80
83
84
85
87
88
92
93
96
99

Rockwell Collins
6
Exelis
1
Serco
3
Cobham
3
Indian Ordnance Factories
1
Fincantieri
6
Nexter
13
Dassault Aviation Groupe
3
Polish Armaments Group
10
Jacobs Engineering Group
1
QinetiQ
8
GKN
4
Pilatus Aircraft
11
Krauss-Maffei Wegmann
79
ASC
7
Kongsberg Gruppen
2
Meggitt
2
Moog
4
RUAG
13
CNH Industrial incl. Iveco, Fiat
13
Patria Industries
27
Hyundai Rotem
1
S
Pratt & Whitney - United Technologies C
4
S
AgustaWestland – Finmeccanica
15
S
MBDA - BAE Systems UK/EADS W. Eur./Finmeccanica Italy
28
S
Selex ES SpA – Finmeccanica
79
S
Alenia Aermacchi – Finmeccanica
5
Total
867
Source: OJ/TED, manual corrections by DG GROW; The SIPRI Top 100 arms-producing and military
services companies in the world excluding China, December 2015.

The winners included firms with headquarters in the EU, US, Switzerland, Australia,
Israel, Norway, India and South Korea. The value of the above mentioned 867 contracts
was equal to roughly 16.5 billion EUR, accounting for a much higher share of the total
value of procurement carried out under the Directive (53%) than its share in terms of the
number of contracts (12%). However it is important to underline that this relatively high
result in terms of value was to a large extent influenced by a previously mentioned
service contract worth 6 billion GBP awarded by the UK Government to a subsidiary of a
US company.
The remaining dataset of contracts won by firms not listed on the SIPRI ranking has been
further scrutinised in order to identify most frequent winners and, to the extent possible,
determine their size classes. The top 10 winners amongst companies which were not
listed on the latest SIPRI Top100 ranking won 1 473 contracts under the Directive in
2011-2015. The list of these companies is provided below (Table 36).
Table 36: Top 10 companies not listed on the SIPRI list and winning contracts
under the Directive [number of contract awards]
Company
WOJSKOWE ZAKŁADY LOTNICZE Nr 1 S.A.
ANKOL Sp. z o.o.
CENZIN Sp. z o.o.

Country
PL
PL
PL

88

Freq
292
255
210

FIN Sp. z o.o.
STV GROUP a.s.
PPHU NAVCOM SYSTEMS s.c.
MEGMAR LOGISTICS & CONSULTING
FFG FLENSBURGER FAHRZEUGBAU GESELLSCHAFT MBH
DIEHL GRUPPE
DRABPOL Sp. z o.o.
Total
Source: OJ/TED, manual corrections by DG GROW;

PL
PL
PL
PL
DE
DE
PL

201
125
112
87
67
62
62
1 473

As it can be seen from the table, the top-winners most frequently included firms from
Poland, followed by Germany. The clear dominance of firms from Poland can be
explained by the fact that Polish authorities are among those that have published the
largest number of contract awards (2 188), while the cross-border procurement in this
country remains relatively low (3% in number).
In order to assess the SMEs presence among the most frequent winners, the profiles of
firms which were not included in the SIPRI list, but have won more than 10 contracts
under the Directive (50 firms in total) were analysed. As a result, it appeared that 27.9%
of contracts included in this sample have been awarded to SMEs. In terms of market
share, the contracts identified as awarded to SMEs accounted for 6.1% of the total value
of contracts in the sample143. When compared to the overall share of contracts won by
SMEs in civil procurement (56% in number of contracts and 29% by value)144, SMEs
appear to be less successful in winning contracts under the Directive than in EU public
procurement in general. This difference may be explained by the specificities of the
defence procurement market.
Based on the replies to the online survey, stakeholders’ perception on the impact of the
Directive on the access of SMEs to defence and security procurement is rather mixed,
with a strong proportion seeing no impact or having no opinion on the matter among both
contracting authorities (33% no impact and 27% no opinion) and businesses (30% no
impact and 15% no opinion). Among those seeing an impact, the views of business
respondents are more critical (33% replied that the impact was negative, compared to
21% that think it was positive). Among contracting authorities respondents, 18% see a
negative impact and 15% a positive one.
A Member State participating in the open public consultation stressed that there are
multiple factors affecting the situation of SMEs in the defence sector, such as new
competitors, technological developments, and shrinking markets, so that it is impossible
to identify if the Directive had any specific impact on their situation.
One national defence industry association argued, in its reply to the online survey, that
the Directive did not help increasing the competitiveness of SMEs and did not facilitate
their penetration in the supply chains of major defence companies.
143

144

The figures provided above only correspond to the top 50 firms which won more than 10 contract
according to data provided in OJ/TED. This sample might be not representative for the entire
population, although it illustrates the relatively low degree of participation of SMEs in the public
procurement defence market.
"SMEs' access to public procurement markets and aggregation of demand in the EU" by PwC, ICF
GHK and Ecorys, for the European Commission DG Internal Market and Services in February 2014,
http://ec.europa.eu/DocsRoom/documents/15459/attachments/1/translations , pp. 28-29.

89

The issue was discussed, as part of the stakeholder consultation process, in the
Commission’s Advisory Expert Group on cross-border access for SMEs to defence and
security contracts145. All participants agreed that there are no hard data available on the
situation of SMEs in the defence sector and on how that may have changed after the
Directive. Their perception broadly was that there have been no major changes in the
situation of SMEs in the defence sector in recent years. They may face some additional
difficulties, but these are most likely due to other factors such as reductions in national
defence budgets than directly to the effects of the Directive.
To summarise, SMEs appear to be less successful in winning contracts under the
Directive than in EU public procurement in general. This difference may be explained by
the specific nature of the defence procurement market. More in general, it seems, as
broadly confirmed by stakeholders’ feedback, that the Directive did not have a significant
impact (positive or negative) on the situation of SMEs in the defence sector.
6.1.4.6. Subcontracting and SMEs' market access
In order to evaluate the presence of SMEs and their access to the procurement market,
one should also look at how subcontracting is being used, since this form of participation
in procurement is typically perceived as a key method to facilitate market access for
smaller companies.
Under a traditional approach to subcontracting, the successful tenderer is in principle free
to decide whether and to what extent some part of contracted work is let to other firms, as
well as to select its subcontractors146. In such case, information on potential
subcontracting is contained in the contract award notice. An overview of such
publications is provided below.
Table 37: Contract awards published under the Directive in 2011-2015, where
subcontracting was declared as likely [number of contract awards, %]
Yes
No
Missing
Total
Source: OJ/TED, manual corrections by DG GROW

Freq.
709
4 535
1 901
7 145

Percent
10%
63%
27%
100%

As presented in Table 37, in around 10% of contract awards the contracting authorities
reported that a certain share of the awarded contract is likely to be subcontracted to third
parties. In terms of value of these same contracts they accounted for a much higher
proportion of the overall procurement carried out under the Directive (42%), accounting
for nearly 13 billion EUR in 2011-2015, as shown in Table 38. However, it is important
to notice that the results are influenced by an outlier (the previously mentioned UK

145

146

Minutes of 26 April 2016 meeting of the Commission’s advisory expert group on cross-border access
for SMEs to defence and security contracts.
Pursuant to Article 21(1) of the Directive “the successful tenderer shall be free to select its
subcontractors for all subcontracts that are not covered by the requirement referred to in paragraphs 3
and 4 and shall in particular not be required to discriminate against potential subcontractors on grounds
of nationality”.

90

service contract estimated at nearly 6 billion GBP, which is also likely to be partially
subcontracted).
Table 38: Contract awards published under the Directive in 2011-2015, where
subcontracting was declared as likely [value in million EUR, %]
Sum
Yes
12 715.56
No
12 757.87
Missing
4 889.22
Total
30 362.65
Source: OJ/TED, manual corrections by DG GROW

Percent
42%
42%
16%
100%

When interpreting the total value of 12.7 billion EUR mentioned above, it is also
important to underline that the presented proportion in terms of value does not represent
the value of subcontracting as such, but only the value of contracts which are expected to
be contracted out (i.e. in some proportion of it). If a share of 30% would be used as the
proxy, the total value of subcontracting would be around 3.8 billion EUR
representing an estimated value of business opportunities for SMEs. A country-bycountry overview of contract awards where subcontracting was likely, is presented in
Figure 23 below.

C
ze

0
B
ch ulg
a
R ria
ep
u
D bli
en c
m
a
Fi rk
nl
an
Fr d
an
G
er ce
m
H any
un
ga
ry
Li Ital
N thua y
et
he nia
rla
n
N ds
or
w
Po ay
R land
om
a
Sl nia
ov
a
Sl kia
ov
e
U
ni Sw nia
te
d ed
Ki en
ng
do
m

.2

.4

.6

.8

1

Figure 23: Contract awards published under the Directive, where subcontracting
was declared as likely compared to total awards, by country147 [fraction]

Number of contract awards

Value of contract awards

Source: OJ/TED, manual corrections by DG GROW

Finally, under the specific subcontracting provisions of the Directive, the contracting
authority may require the successful tenderer to subcontract a share of the contract to
third parties via competitive tendering, following the rules specified in Articles 50 to 53.
147

There were no awards where subcontracting was reported in: Austria, Belgium, Croatia, Estonia,
Latvia and Portugal.

91

The aim of these specific subcontracting provisions is to inject competition into the
supply chains of prime contractors, thereby fostering market access opportunities for subsuppliers and SMEs. These provisions have clearly not been adopted by the market. As
mentioned in Section 5.3.1.1, the use of subcontracting notices was very limited with as
little as 32 notices of such type published over the last five years in Europe (2011-2015).
Based on manual checks of these notices, it seems that most of them were not defence
subcontracts or have likely been published by mistake under the subcontracting standard
form.
The negative assessment of the Directive’s provisions on subcontracting is confirmed by
the replies to the online survey. The relative majority of respondents “disagree” or
“strongly disagree” that these provisions “foster cross-border access to defence and
security supply chains” among both businesses (39%) and contracting authorities (27%).
The proportion of these respondents that agreed with the statement was, respectively,
15% and 21%.
The Belgian Defence Staff, in its contribution to the open public consultation, stressed
that “the current subcontracting provisions are not interesting for the Member States”
and suggested that “Member States should have the possibility to define specific parts of
the main contract for subcontracting”, and/or contracting authorities should be allowed
“to use subcontracting as an award criterion”. The Dutch Ministry of Economic Affairs
replied that the subcontracting provisions do not foster cross-border access to supply
chains, but added that legal obligations in this area would in any case not be an
appropriate solution. Another Member States argued that these provisions are not used
since “they do not guarantee subcontracting in the Member State of the contracting
authority” and are therefore “ineffective to gain additional value”. Other Member States
stressed that the subcontracting provisions “are of no use” or “difficult to apply in
practice”. Several Member States’ experts expressed, in a meeting on the evaluation148,
similar views on the ineffectiveness of the subcontracting provisions.
ASD replied that the subcontracting provisions of the Directive are not workable in
practice. BAE Systems emphasised that “within the defence industry, supply chains are
long term and for the most part are established during product development, well in
advance of sales contracts being tendered. Therefore, the (subcontracting) provisions do
not correlate with this environment”. A similar view was expressed by another
respondent from a big defence company. NDIV (the Netherlands Industries for Defence
and Security) stressed that the subcontracting provisions have “no benefit for cross
border access to the supply chains”, and argued that “the Directive has had no positive
impact on cross-border access to defence and security supply chains”. Similarly, another
defence company pointed out that since the majority of supply chains have already been
established, the Directive will not stimulate cross-border access to defence and security
supply chains.
The EDA developed, in discussions with Member States and stakeholders, a document
setting out the challenges for contracting authorities and defence industry in using the
subcontracting provisions of the Directive. EDA provided this document to the

148

Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

92

Commission’s departments, also as input for this evaluation149. The main issues
identified by this document are:
– If smaller Member States use the subcontracting provisions of Directive, it does not
necessarily mean that companies from their own countries will be awarded
subcontracts, although they will have the opportunity to compete. These Member
States therefore do not have strong incentive to use them.
– The fact that the existing Commission departments guidance note states that
contracting authorities cannot define up-front which part of the contract the main
contractor has to subcontract in competition is a disincentive for smaller Member
States to apply the subcontracting provisions.
– The ability of contracting authorities to supervise prime contractors subcontracting
activities (organising the subcontracting competition and running it fairly, including
with regard to the definition of award criteria, execution of subcontracts) is very
limited.
– Supply chains are formed well before the contract award procedure. It would be
difficult, if not impossible, to change subcontractors in an existing system after the
development phase without major costs, technical risks, delays and security of supply
risks. In fact, large contractors have long lasting relationships with most of their
subcontractors, which are normally involved early in the bidding process to assure a
reliable evaluation and assessment of both price and performance. The subcontracting
provisions are not in line with how industry manages supply chains.
– The potential use of subcontracting provisions would entail major questions in terms
of liability for the contracting authority. These include, for example, cases such as: if a
claim is made that the prime contractor has not complied with the provisions, a
subcontract fails, or execution problems (additional costs or delays) arise due to
performance issues related to subcontracts awarded in competition. Similar questions
arise in terms of liability for the main contractor, which would be held responsible for
problems in the execution of the main contract due to non-performance of new
subcontractors selected on the basis of the provisions of the Directive.
To summarise, according to the traditional approach to subcontracting, business
opportunities for SMEs and sub-suppliers to be freely selected by the successful tenderer
(main contractor) can be estimated to amount to around EUR 3.8 billion EUR.
The specific provisions of the Directive on subcontracting, instead, have not been used
for the reasons mentioned above. Since the subcontracting provisions merely lay down
options for Member States and contracting authorities, the fact that they have not been
used does not prevent the use of the Directive or undermine its functioning. It does,
however, mean that the aim of providing additional opportunities to sub-suppliers and
SMEs by injecting competition into the supply chains of prime contractors is not
achieved.

149

“Challenges for Member States contracting authorities and defence industry in using/implementing
Directive 2009/81/EC subcontracting provisions – an EDA assessment”, 8 April 2016.

93

6.1.5. Conclusions on effectiveness
In reference to Evaluation Question 1, this evaluation has demonstrated that competition,
transparency and non-discrimination in the defence procurement market in Europe have
started to improve as a result of the Directive, even if implemented recently. The value of
defence and security contracts awarded under EU rules and based on transparency
and equal treatment increased more than tenfold times within the reference period
(2011-2015) as a result of the Directive. However, the degree of application of the
Directive, and therefore of the increase in competition, transparency and nondiscrimination, remains uneven across Member States, which in turn impacts
negatively the effectiveness of the Directive.
According to the Baseline Study, the total value of contracts published EU-wide
(OJ/TED and EBB) in the period 2008-2010 was equivalent to 3.3% of the EU’s total
defence procurement expenditure in the same period. The total value of contract award
notices published under the Directive in 2011-2015 equalled 7.6% (or 9.5% if defence
and security procurement under the civil procurement Directive was also taken into
account) of the total value of general government procurement expenditure on military
defence of EU-28 and EEA-2 countries. This shows that there has been a more than
twofold increase in the share of defence and security contracts awarded under the
EU rules.
Despite this improvement, a very significant share of defence procurement
expenditure is still done outside the Directive and, generally, outside EU public
procurement rules. In addition, the overall volume of procurement carried out under the
Directive as well as the dominance of small value contracts seems to suggest that the
Directive was used to a limited extent for the procurement of strategic equipment
(i.e. complex defence systems). This finding is further reinforced by examples of major
defence equipment programmes for complex defence systems that have been presumably
awarded in recent years outside the Directive in 2010-2015.
The increased use of EU public procurement rules based on transparency, competition
and equal treatment, while bringing about more cross-border opportunities, did not result
in an increase in direct cross-border awards. This can be partly explained by the fact that
cross-border bidding is, by nature, more difficult for companies due to language and
other non-regulatory barriers, higher costs and insufficient knowledge of the foreign
market.
On Evaluation Question 2, the conclusion, based on the body of evidence presented, is
that the use of exemptions has started to decrease as a result of the Directive. However
exemptions are still used to a significant extent especially for the procurement of
high-value, strategic, complex defence systems. Nevertheless, there are some recent
signs that the Directive is being used for this kind of procurement.
It can also be confirmed, based on the broad consensus that emerged in the consultations
and on the Commission departments’ analysis, that the provisions of the Directive
designed to address the specificities of defence procurement (e.g. exclusions,
security of information, and security of supply) have in general proven to be fit for
purpose (Evaluation Question 3). It has emerged from the consultations that, given the
complexity of the issues related to security of supply, the relevant provisions of the

94

Directive cannot be, by themselves, sufficient to fully guarantee Member States’ security
of supply.
Given the encountered limitations in data availability and the relatively short time that
had elapsed since the adoption of the Directive, it seems difficult to conclude that the
overall size and structure of the EDTIB has fundamentally changed in the period
2011-2015. It would be even more difficult, if not impossible, to establish any causal link
between the effects of the Directive and developments in the EDTIB. This is fully
consistent with the feedback received by Member States and stakeholders in the
consultations for this evaluation. A definitive answer to Evaluation Question 4 cannot be
therefore provided at this stage.
As regards the situation of SMEs, they appear to have been less successful in winning
contracts under the Directive than in civil procurement, which can be explained by the
nature of the defence market. Additionally, stakeholders’ perception is that SMEs in the
defence sector have faced additional difficulties in recent years; it is also recognised
that there are multiple factors other than the directive (such as new competitors,
technological developments or shrinking markets) affecting SMEs. In any case, the
specific subcontracting provisions of the Directive have not been used by Member
States’ contracting authorities as they are seen by them as ineffective. Since the
subcontracting provisions merely lay down options for Member States and contracting
authorities, the fact that they have not been used does not prevent the use of the Directive
or undermine its functioning. However, the aim of providing additional opportunities to
sub-suppliers and SMEs by injecting competition into the supply chains of prime
contractors has not been achieved. Two Member States argued that the Commission
departments’ 2010 guidance note on subcontracting unnecessarily restricts the
subcontracting possibilities for contracting authorities, and that this is a contributing
factor to the non-use of competitive subcontracting by Member States.
There are several factors that may have affected the achievement of the Directive’s
objectives. First, only a relatively short time (2-3 years) elapsed between actual
transposition by Member States and the last year covered in the evaluation (2015). This
factor, which is especially significant due to the long cycles of the defence market, means
that if the upward trend in the use of the Directive continues, its results will become more
visible in the next few years. This may also explain the as yet limited awareness of the
rules among Member States’ contracting authorities. A second factor, somewhat related
to the first one, is that exemptions, including Article 346 TFEU, appear to be subject to
an overly broad interpretation that does not restrict their use to truly exceptional cases as
required by the case law of the Court of Justice. This factor probably is particularly
relevant to explain the very limited use of the Directive for the procurement of strategic
equipment and complex systems. Moreover, a significant share of defence procurement
expenditure may have been spent on contracts awarded in the framework of cooperative
programmes started well before the adoption of the Directive. Finally, the financial crisis
may have led to the cancellation or postponement of new major procurement projects to
be implemented under the Directive.
6.2.

Efficiency

Evaluation question (5):

To what extent are the costs proportionate to the benefits achieved?

95

In order to address the efficiency question, the cost of carrying out procurement
procedures under the Directive will be estimated, taking into account both sides of the
procurement transaction (i.e. the cost for contracting authorities or entities, as well as for
firms bidding). The cost estimate will be then compared to the potential savings
stemming from the Directive.
6.2.1. Costs of procedures
The overall costs of procedures carried out under the Directive accounted for
approximately 89.6 million EUR in 2011-2015 (compliance costs)150 (Table 39). The
above estimate is a sum of two components:
 the costs incurred by the contracting authorities of 27.6 million EUR, and
 the costs incurred by the economic operators of nearly 62 million EUR (cost for
all participating firms, including the unsuccessful ones).
The costs incurred by the economic operators have been calculated as the average cost
for a firm bidding, multiplied by the average number of bidders participating in a call for
tender. The above overall costs of procedures was estimated following a similar approach
to the one adopted in the study “Public procurement in Europe, Cost and effectiveness”
by PwC, Ecorys and London Economics for the services of the Commission and
completed in May 2011 (the PwC Study). The costs of the application of the Directive
was calculated based on the cost data collected in the above study, as more recent data of
this type was not available. The methodology of the estimate is explained in Annex III.
Table 39: Costs of procedures carried out under the Directive for the contracting
authorities and the economic operators [value in thousand EUR]
Costs of procedures
for
for
contracting
economic
authorities
operators
Sum
2011
133.7
271.3
405.0
2012
2 505.8
8 573.0
11 078.8
2013
5 988.8
12 011.0
17 999.8
2014
8 753.2
17 095.7
25 848.9
2015
10 233.7
24 054.0
34 287.7
Total
27 615.1
62 005.0
89 620.2
Source: OJ/TED, manual corrections by DG GROW, based on PwC estimates of costs.

As presented in Table 39 above, around 30% of the total cost has been borne by the
contracting authorities, while the rest by the economic operators. This proportion is due
to the fact that the costs for firms are calculated for all bidders, including the cost of
preparing offers which were not successful. It is also important to underline the above
costs of procedures are not only the costs that directly resulted from the obligations
stemming from the Directive, but it might likewise include other cost elements, such as
“business as usual cost” or costs resulting from the national legislation, etc.

150

The methodology of this estimate is presented in Annex III.

96

The average unitary cost of running the procurement procedures for the contracting
authority was around 7.5 thousand EUR, while the total average cost for all economic
operators was around 16.8 thousand EUR and the overall cost was 24.3 thousand EUR on
average. The medians were 6.4 thousand EUR and 13.8 thousand EUR for the
contracting authorities and all bidders, respectively.
Table 40: Mean and median costs of procedure for contracting authorities and
economic operators [value in thousand EUR]
Costs of procedures
for contracting
for economic
authorities
operators
Total
Mean
7.5
16.8
24.3
Median
6.4
13.8
21.6
Source: OJ/TED, manual corrections by DG GROW, based on PwC estimates of costs.

The relationship between the contract value and the costs of procedures for contracts
below 10 million EUR (i.e. approximately the average contract value) is presented in
Figure 24 below151. The red reference lines on the graph mark the threshold values for
the end of the evaluated period, hence those valid for 2014-2015 (414 thousand EUR and
5 186 million EUR).
Figure 24: Comparison between the costs of procedure and the value of awarded
contracts below 10 million EUR [share of notice value]

151

The figure is only based on observations where complete data was available e.g. notices where the
number of bidders was not available were not used in the graph although they were used in the overall
estimate of the cost presented above. The costs were also trimmed at 100% of the contract value to
remove potentially erroneous observations.

97

.6
.5
.4
.3
.2
.1
0

0

2

4
6
value of notices [million EUR]

8

the cost of procedure as a share of notice value
predicted

10
95% CI

Source: OJ/TED, manual corrections by DG GROW, based on PwC estimates of costs.

As shown on the graph, for high value contract the costs seem to be negligible, especially
once the upper threshold for works is passed (5 186 million EUR). The costs of
procedure as a share of the contract value are still below 5% for a majority of
observations where procurement value was below 2 million EUR. Although there are
notably some outliers with the reported costs accounting as much as almost 60% of the
contract value, for all contracts with values above the thresholds the costs were lower
than 20% of the total value of procured goods, works or services.
Table 41: Comparison between the costs of procedure and the value of awarded
contracts [thousand EUR]
Value of
awarded
Costs of
contracts
procedure
Percentage
Total
30 850 190
89 620.2
0.3%
Mean
9 897
24.3
0.2%
Median
1 012
21.6
2.1%
Source: OJ/TED, manual corrections by DG GROW, based on PwC estimates of costs.

When compared to total value of awarded contract (30.85 billion EUR in 2011-2015),
the costs of procedures account for around 0.3% of the contract value (Table 41).
The comparison between the average values yields a similar result (0.2%). It is only the
median contract value and the median costs of procedure that accounts for a higher share
(i.e. around 2.1% of the typical contract value is spent on the purchasing process itself).
In order to gather stakeholders’ views concerning the cost of implementing the Directive,
the online survey included a number of questions on related to the above aspects.
According to the replies received, business respondents’ perception differs from that of
contracting authorities. 52% of business respondents consider that the costs of
98

participating in procurement procedures under the Directive are more or much more
resource intensive compared to the situation before. Among contracting authorities, the
views are more balanced with 33% of respondents considering that the costs have
increased and the same proportion (33%) seeing no difference with the situation before.
However, when asked to compare the costs under the Directive to those under the civil
procurement Directives, respondents expressed more positive views. 33% of respondents
among businesses see no change or a reduction in costs, whilst 27% perceive an increase.
Respondents among contracting authorities have a more positive perception, with 45%
seeing no increase or a reduction, and only 12% considering that the costs of carrying our
procedures under the Directive are more resource intensive than those under the civil
procurement Directive.
A comparison of the replies to these two questions of the online survey (one comparing
the costs of the Directive to the situation before and the other comparing them to the
costs of the civil procurement Directive) seem to suggest that respondents think that the
Directive has led to an increase in costs if compared with the costs entailed by (the
participation in or the organisation of) non-competitive procurement procedures.
One Member State, in its written contribution to the open public consultation, pointed out
that the Directive did not have a significant impact in terms of complexity and duration
of tendering procedures or in terms of costs for contracting authorities. The main reason
is that national legislation before the Directive provided for competitive procedures
inspired by broadly similar principles.
One respondent (contracting authority) to the online survey pointed out that, for the
military aeroplane market that consists of strong original equipment manufacturers with
monopolistic positions, the procedures laid down in the Directive are too complex and
take too much time.
The issue of costs was discussed at a meeting with Member States’ experts152. No expert
could provide quantitative data on costs stemming from the organisation of procurement
procedures under the Directive. One Member State explicitly explained that they did not
do a costing exercise, and did not intend to do so in the future. Only one Member State
expert provided an estimation for costs concerning the organisation of procedures for
simple off-the-shelf procurement (2 000 EUR), but added that for complex negotiations
the cost would be much higher but also very difficult to estimate.
At the same meeting, several Member States’ experts expressed the perception that costs
slightly increased compared to the situation before the Directive. However, as pointed
out by two experts, the response essentially depends on what the specific national
situation used to be. If defence procurement was completely excluded or unregulated,
then the procedures under the Directive will inevitably be more complex and costly. If
some form of competitive procedures were used, then there is likely no significant impact
stemming from the Directive. This is especially the case because, as one Member State
clarified, the most time consuming and resource intensive activity for the contracting
authority is the preparation of the technical specifications. The Directive as such has
marginal impact on this aspect.
152

Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

99

The issue of costs was also discussed with industry in two stakeholder consultation
meetings153. The participants who intervened on this issue considered that either the
Directive did not bring about changes in costs or burden for responding to procurement
procedures or that there was a minor, marginal increase stemming from the rules of the
Directive. With regard to more detailed questions on costs154, they explained not to be in
a position to provide answers; there are too many differences across different kinds of
procurement and too many elements to take into account. In addition, some of the
information in this area could be commercially sensitive.
Finally, participants were asked whether “suppliers in the EU could be given equal, open
and competitive access to the European Defence Equipment Market with a system that
imposes less regulation”. Those who intervened on this point stated that the Directive
probably cannot be made much simpler.
6.2.2. Costs compared to benefits
As mentioned in the previous Section, the total cost of implementing the rules of the
Directive is estimated at around 89.6 million EUR over the time span of this evaluation
(2011-2015). When compared with the total volume of works, goods and services
procured under the Directive (30.85 billion EUR), the cost level was relatively low
(0.3%).
The analysis of the cost-benefit relationship of the Directive remains particularly
challenging, also due to the limited body of literature on the particular topic of
procurement savings in defence. The study on the costs of non-Europe on defence
procurement155 commissioned nearly three decades ago, aimed at estimating the likely
magnitude of the competition effect that would reflect the impact on costs, profits and
prices of opening up national markets to competition. The study concluded that a
common market in defence procurement restricted to EU firms only was likely to lead to
price reductions ranging from 5% to 30 % (depending on the scenario) with a median
figure of 20% reductions in prices. Opening the EU market to the rest of the world,
according to the study of 1992, would increase the median estimate by further 5% (i.e.
the median price reductions would reach 25%).
Further to the above quoted publication, its hard find studies that would estimate cost
savings in the defence equipment procurement, especially amongst more recent research.
This is mainly due to the fact the implementation of public procurement rules in the area
of defence and sensitive security constitutes a relatively new policy area. As a
consequence, there is little or no research completed on this subject. In order to
compensate for the limited evidence on competition effects in the defence sector, the
estimation of savings (benefits) resulting from the opening up of civil procurement
markets will be used.
153
154

155

Minutes of 22 February 2016 and 3 May 2016 meetings with industry organised by ASD.
“How would you evaluate the costs of participating in procurement procedures under the Directive as
compared to these costs under the Civil Directives for procurements of similar complexity?”; “Can
you provide an estimation of costs (e.g. in terms of man/hour of staff) of participating in a procurement
procedure for the award of a defence contract, including under the Directive?”; “Can you identify the
elements of the participation in a procedure contributing mostly to the overall costs and explain their
relative importance?”.
Hartley, K., and A. Cox, “The Costs of Non-Europe in Defense Procurement”, Brussels, European
Commission-DGIII, May 1992.

100

There is general consent in academic literature and reports that that transparency (e.g. via
the publication of a call for tender in an official journal) generates competition, which
raises the number of bids and ultimately leads to savings and/or lower prices. A study
completed in 2006156 for the Commission services estimated that an increase in supplier
competition caused by EU procurement legislation has led to a 2.5 % to 10 % price drop.
Similar conclusions can be found in the evaluation of the public procurement directives
of 2004, which founds that "even incremental increases in transparency or openness can
yield tangible savings. Publication of a contract notice results in a saving of 1.2%
compared to contracts where neither contract nor prior information notice was
published. Using an open procedure is associated with further 2.6 % savings. Based on
these findings, a contracting authority that publishes an invitation to tender and uses an
open procedure may expect total benefits equivalent to savings of 3.8 % on the final
contract value. For restricted procedures, the corresponding saving appears smaller at
around 2.5%."157.
If a conservative assumption of 2.5% savings was used for the cost-benefit analysis in
this evaluation (i.e. lower bound of the above mentioned expected savings resulting from
the increased market opening or the estimates savings for the restricted procedure), the
Directive would be likely to generate savings of roughly 770 million EUR158. This
figure would then translate into lower prices paid for the procured works, goods and
services in the defence and security sectors.
The savings generated by the Directive are therefore likely to exceed the costs of
running the procedures for public authorities and firms, nearly by a factor of nine (i.e.
89 million EUR of costs of procedures, compared to 770 million EUR of savings).
Finally, respondents to the online survey were also asked to give an overall assessment
on the efficiency of the Directive by comparing the costs and benefits of carrying out (for
contracting authorities) or participating in (for businesses) procurement procedures under
the Directive. Among contracting authorities, the perception is largely positive: 52% of
respondents consider that benefits outweigh costs or are proportionate, and only 12% see
the costs outweighing the benefits. The perception of business respondents is more
negative: 33% think that the costs outweigh the benefits; while 24% consider the costs
proportionate or the benefits outweighing the costs. This perception of business
respondents is probably not due to shortcomings of the Directive as such, but rather to its
limited uptake and inconsistent implementation that have been emphasised by several
industry stakeholders during the consultations.
To conclude, the above estimates show that the Directive has the potential to bring about
benefits significantly outweighing their costs. For contracting authorities, these benefits
consist in savings. For industry, benefits derive from an increase of business
opportunities and a reduction in bidding costs due to compliance with harmonised rules
instead of rules widely diverging across Member States. Based on stakeholders’
feedback, it is clear that for such benefits to fully materialise, the Directive needs to be
used by Member States more and more consistently.
156

157

158

“Evaluation of Public Procurement Directives” by Europe Economics, for the European Commission,
DG MARKT in September 2006.
Commission Staff Working Document, Evaluation Report Impact and Effectiveness of EU Public
Procurement Legislation , Brussels, 27.6.2011 SEC(2011) 853 final.
The total value of procurement awarded under the Directive 30.85 billion EUR * 2.5%.

101

6.2.3. Administrative burden
The concept of administrative burden refers to the costs incurred by enterprises, the
voluntary sector, public authorities and citizens in meeting legal obligations to provide
information on their action or production, either to public authorities or to private parties.
The administrative costs consist of two different cost components: the business-as-usual
costs and administrative burdens. They are different from compliance costs, assessed
above in section 6.2.1. which stem from the implementation of the Directive.
The public procurement rules impose information obligations mainly on contracting
authorities, which in most cases must provide substantial ex ante and ex post information
about the award procedures (for instance through the publication of a contract notice in
the OJ/TED). These obligations of transparency constitute the basis of the EU public
procurement rules, to the extent that those rules would be meaningless without access to
information.
Since the information obligations laid down in the Directive do not differ from those
included in the civil procurement Directives, no additional administrative burden can be
identified. A distinctive feature of the Directive that is relevant in this context is the
subcontracting provisions, according to which the contracting authority may oblige an
economic operator to organise a competitive selection of a subcontractor and therefore
publish a subcontract notice on OJ/TED. This could, in principle, be considered as
administrative burden. As noted in Section 6.1.4.6., these provisions have been
practically not used, so the resulting administrative burden is negligible.
Stakeholders indicated that the Directive did not bring about changes in burden for
responding to procurement procedures or that there was a minor, marginal increase
stemming from the rules of the Directive.
It can therefore be concluded that the administrative burden stemming from the rules of
the Directive is negligible.
6.2.4.

Conclusions on efficiency

The overall costs of procedures carried out under the Directive accounted for
approximately 89.6 million EUR in 2011-2015. The average unitary cost of running the
procurement procedures was around 7.5 thousand EUR for the contracting authority,
while the total average cost for all businesses was around 16.8 thousand EUR and the
overall average cost for all participants was 24.3 thousand EUR.
The procedure costs as a share of the contract value accounted for less than 5% for the
majority of observations where procurement value was above 2 million EUR. When
compared with the total volume of works, goods and services procured under the
Directive (30.85 billion EUR in 2011-2015), the overall cost level was relatively low
(0.3%).
The savings generated by the Directive are therefore likely to exceed the costs of running
the procedures for public authorities and firms, by almost a factor of nine (i.e. 89 million
EUR of costs of procedures, compared to 770 million EUR of savings). Finally, the
administrative burden stemming from the rules of the Directive is negligible. In response
to Evaluation Question 5, it can be concluded that overall the costs are broadly
proportionate to the benefits achieved and the Directive is generally cost effective.
102

Further work aimed at ensuring a greater and more consistent use of the Directive by
Member States would also result in increasing the benefits for contracting authorities and
businesses and, therefore, further enhancing its efficiency.
6.3.

Relevance

The assessment in this section addresses whether the objectives (and the problem
definition) underpinning the adoption of the Directive are still valid. It also considers
developments that have occurred after 2009 and their impact on the relevance of the
Directive. This is mainly based on the open public consultation, the complementary
stakeholders’ consultation, as well as desk research.
6.3.1. The objectives of the Directive
Evaluation question (6):

To what extent are the objectives of the Directive still relevant?

The overwhelming majority of respondents to the open public consultation consider the
objectives of the Directive159 and the needs it is supposed to address still relevant. 70% of
businesses or business associations replied that these objectives are “relevant”, and only
9% considers them “rather irrelevant”. Among Member States’ authorities, 67% of
respondents replied that the objectives of the Directive are “relevant” or “moderately
relevant”. Again, only 9% replied “rather irrelevant” and no respondent qualified the
objectives as “irrelevant”. 3 out of the 4 respondents from the general public replied
“relevant”.
Other stakeholders’ replies to the online survey confirm their support for the general
objectives and underlying principles of the Directive. 91% of respondents among
businesses and business associations agree or strongly agree that “defence and security
equipment and services acquired by Member States should be procured using fair and
competitive procedures (except where a valid exemption is properly applied)”. 89% of
the same respondents also agree or strongly agree that “defence and security contracts
should be awarded to the tenderer offering the best value for money solution, irrespective
of the Member State in which the company is located (except where a valid exemption is
properly applied)”.
On a different tone, one national defence industry association, which replied to the online
survey, argued that the Directive aims “primarily to market liberalisation and clearly
favours the large, technologically and industrially advanced countries”. It maintained
that Member States should rely to the greatest possible extent on existing national
industrial and technological capabilities.
The meetings with key stakeholders (Member States and industry) confirmed that there is
consensus on the fact that the objectives of the Directive are still relevant. Stakeholders
did not question the importance and relevance of establishing an open and competitive
159

These objectives (direct and indirect) were summarised in the online survey as: “to establish an open
and competitive European Defence Equipment Market, to help strengthen the European Defence
Technological and Industrial Base, to ensure that the situation of SMEs in the defence sector is not
negatively affected”.

103

EDEM, increasing competition, transparency and equal treatment in defence
procurement, and achieving a level playing field in this area.
One defence company pointed out that the objectives of the Directive remain fully valid
since the structure of the market has not fundamentally changed in the past five years. A
Member State highlighted in particular the objectives mentioned in recital 3 of the
Directive “to foster, develop and sustain EDTIB that is capability driven, competent and
competitive”. Another Member State argued that the objective of establishing an open
and competitive EDEM not only remains fully valid, but is even more relevant today due
to security concerns and budget restrictions.
Statements made by the European Council and Council in recent years confirm Member
States’ support for the objectives of the Directive and their relevance. The European
Council stated, in its conclusions of December 2013, that “a well-functioning defence
market based on openness, equal treatment and opportunities, and transparency for all
European suppliers is crucial” and stressed the importance of ensuring the full and
correct implementation and application of the Directive (as well as of Directive
2009/43/EC)160. In May 2015, the Council underlined “the importance of improving costeffectiveness and efficiency in the European security and defence market” and reiterated
“the need for the implementation and application” of the Directive “without prejudice to
Article 346 TFEU”161. The European Parliament also expressed support for the objectives
of the Directive in recent resolutions162.
6.3.2. New developments after the adoption of the Directive

Evaluation question (7):

In what way has the initial problem evolved? Have any new issues that need
to be taken into account emerged since the adoption of the Directive and what
are they?

A number of developments that are relevant to the Directive have been identified in
answers to the open public consultation and in meetings with stakeholders. These are:
 The evolving defence and security landscape in Europe. Several Member States and
stakeholders pointed at the deterioration of the security situation “with an increasingly
unstable neighbourhood, difficult relationships with Russia, and hybrid threats
directly targeting European territory”163. This situation can have an impact on the
defence and security budgets of Member States, as it led to a (at least partial)
reversion of the trend of budget reductions. One Member State also maintained that
the worsening security situation can entail consequences on the application of the
Directive, as the need for urgent procurement of military equipment in crisis situation
can become more important. Another Member State highlighted in this regard that the
provisions of the Directive on exclusions and the negotiated procedure without prior
160
161
162

163

European Council conclusions of December 2013, paragraph 17.
Council conclusions on CSDP, 18 May 2015, paragraph 27.
See, for example, European Parliament resolution of 21 May 2015 on the impact of developments in
European defence markets on the security and defence capabilities in Europe, P8_TA(2015)0215,
paragraph 28, http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-20150215&language=EN.
ASD reply to the online survey.

104

publication of a contract notice should be sufficient to allow contracting authorities to
face urgent or crisis situations.
 The financial crisis which exacerbated the already existing trend towards significant
reductions of defence budgets, and especially of defence procurement budgets.
According to ASD’ reply to the online survey, “it is fair to assume that this hampered
European cooperation and the openness of national markets to EU-wide competition”.
A similar comment was made by a Member State in a consultation meeting. Member
States and stakeholders also pointed out that budgetary constraints had a more direct
impact on the uptake of the Directive: they led to cancellation or postponement of new
defence procurement programmes. Such a trend implied a greater focus on
maintenance, overhaul, and life-extension contracts for existing equipment, which
often need to be awarded to original contractor. In general, the significant decrease in
budgets and number of procurements limited the ability of the Directive to change the
market. One Member States emphasised that, as a result of budgetary constraints, the
market for used equipment has become more important and the implications on the
functioning of the Directive should be assessed.
 An emerging consensus in the EU on the need to maintain an appropriate level of
strategic autonomy. A number of stakeholders pointed out that it is in Europe’s
strategic interest to maintain technological and industrial means to develop and sustain
certain indispensable defence capabilities. No Member State can afford to sustain the
full spectrum of these means individually. Member States should therefore identify
together the key defence capabilities for which they want to maintain or develop the
necessary technological and industrial means. In order to avoid unnecessary
duplication, these decisions should be based on a common assessment of Europe’s
security interests164. This can also have an impact on Member States procurement
needs and strategies, and therefore on the application of the Directive.
 Although concrete progress is still very limited, Member States and stakeholders see
as a relevant development that there is increasing awareness at all levels on the need
for more defence cooperation in Europe, and in particular for more cooperative
procurement. Some Member States pointed out in particular that nowadays there is a
greater focus on common/joint procurement of off-the-shelf equipment, rather than on
the establishment of new cooperative programmes for the development of new
products. This is deemed to be a consequence of budgetary constraints. The link
between cooperation and the Directive is further addressed under “Coherence” in
paragraph 6.4.5. below.
 Several Member States and some stakeholders mentioned the adoption of the new
civil procurement Directives as a relevant development. For example, ADS Group, in
its reply to the online survey, stated that “best practice in public procurement has
further developed since the adoption of the Directive”, which “does not allow for the
full range of procurement techniques currently available”. They argued that the new
civil procurement Directives are more efficient and streamlined. This issue is assessed
in more details under “Coherence” in Section 6.4.2.

164

Replies to the online survey by ASD, MBDA, and ADS UK.

105

6.3.3. Conclusions on relevance
The objectives of the Directive - i.e. to support the establishment of an open and
competitive EDEM by increasing the application of competitive tendering procedures in
defence procurement and thus limiting the use of exemptions such as Article 346 TFEU –
are still fully relevant (Evaluation Question 6). As shown under effectiveness,
significant progress towards these objectives has been made thanks to the Directive, but
much more work on the implementation is needed. The whole rationale and needs that
led to the adoption of the Directive thus remain relevant.
All this is supported by a broad consensus among Member States and stakeholders.
Statements made by the European Council and Council in recent years also confirm
Member States’ support for the objectives of the Directive and their relevance.
In response to Evaluation Question 7, it emerged that there have been a number of
developments (deteriorating security situation, budgetary constraints, emerging
consensus on the need of strategic autonomy and more cooperation, new legal framework
for civil procurement) that needs to be taken into account. However, none of these
developments put into question the relevance of the objectives of the Directive.
6.4.

Coherence

The evaluation of coherence involves looking at how well or not different components of
an intervention (i.e. different provisions of the Directive) and different actions work
together. This part of the analysis relies on the open public consultation, the
complementary stakeholders' consultation, and desk research.
6.4.1. Internal coherence
Checking internal coherence means looking at how the various internal components of
the intervention (i.e. the different provisions of the Directive) operate together to achieve
its objectives.
The Commission departments have not identified problems related to lack of coherence
between the different provisions of the Directive. The structure of the Directive follows,
albeit with a number of specificities, the general approach of EU public procurement
legislation that has been developed and tested over several years. These findings have
been confirmed by stakeholders: no internal coherence problems have been raised in the
context of the open public consultation or the complementary stakeholders consultations.
It is widely considered that the subcontracting provisions of the Directive (Articles 21
and 50 to 53) have not achieved their objectives. This is addressed above under
effectiveness (see: Section 6.1.4.6). With this exception, a broad consensus among
Member States and stakeholders emerged on the fact that the provisions of the Directive
are generally fit for purpose. The focus needs to be on their effective
implementation and application.
6.4.1. Coherence with the framework of EU public procurement law

Evaluation question (8):

To what extent is the Directive coherent with the framework of EU Public
Procurement law and of internal market legislation and policies related to
defence (e.g. Directive 2009/43/EC)?

106

The framework of EU public procurement law, based on the principles of the Treaties,
consists of several legislative instruments. The Directive, which lays down rules on the
coordination of procedures for the award of contracts in the fields of defence and
sensitive security, is one of these instruments. To assess coherence, it is necessary to look
at the interplay between the Directive and the other components of the EU acquis in the
area of public procurement. This is particularly important since the main part of the
acquis (the civil procurement Directives) has been reformed in 2014.
6.4.1.1. Delimitation of scope
The first key issue that should be looked at with regard to the coherence of the Directive
with the other elements of EU public procurement law are the rules on the applicable
piece of legislation.
Article 2 of the Directive, jointly red with Article 1(6) to (8), defines the contracts that
fall within the scope of the Directive. These provisions are based on the notions of
military equipment (i.e. equipment specifically designed or adapted for military
purposes), works and services for specifically military purposes, and sensitive equipment,
works and services (i.e. for security purposes, and involving, requiring and/or containing
classified information). This is consistent with the overall approach underlying the
Directive: military contracts and contracts in the field of non-military security, which
have features similar to those of defence procurement and are equally sensitive, should
only be subject to the specific defence and security procurement regime. The civil
procurement Directives do not apply to such contracts165. All other contracts should fall
within the scope of the civil procurement Directives. Although there might be
“borderline” cases in particular circumstances, the delimitation of scope between the
different procurement regimes appear to be effective.
This question has been asked in the online survey. The majority (58%) of contracting
authorities respondents “agreed” or “strongly agreed” that the distinction between the
scope of application of the Directive and that of the civil procurement Directives is
“sufficiently clear”. The proportion of positive replies was lower among business
respondents: 36% agreed or strongly agreed, while 24% disagreed. Out of the four
citizens that replied to the online survey, only two replied to this question and both
agreed that the distinction is clear. However, it should be noted that the clarity of the
applicable piece of legislation is a more immediate concern for contracting authorities,
which have to make such a determination before launching a tendering procedure.
During a meeting on the evaluation166, the majority of Member States’ experts that
intervened took the view that the existing provisions on the distinction of the scope of the
Directive with that of the civil procurement Directives are satisfactory. However, one
Member State’s expert argued that identifying the applicable Directive is one of the most
complex issues they are confronted with. He argued that it would be preferable to have a
system based on scope ratione personae: a list of contracting authorities/entities that only

165
166

Article 15 of Directive 2014/24/EU, Article 24 of Directive 2014/25/EU.
Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

107

have to use the rules of the (defence procurement) Directive. This proposal was
supported by another Member State’s expert.
6.4.1.2. Choice of procedures
A relevant aspect is the choice of contract award procedures that are available under the
Directive (restricted procedure, negotiated procedure with publication of a contract
notice, competitive dialogue, and negotiated procedure without publication of a contract
notice) and the conditions for their use.
Article 25 of the Directive leaves contracting authorities free to choose whether to apply
the restricted procedure or the negotiated procedure with publication of a contract notice.
Contrary to the civil procurement Directives, the (defence procurement) Directive does
not allow for the use of the open procedure. At the time of the proposal for the Directive,
the reason for excluding the open procedure was that it involves distributing the
specifications to any economic operator that wants to see them and this was deemed to be
inappropriate in view of the confidentiality and security of information requirements
attached to the contracts in question167. This approach was then confirmed by the
legislator. No new elements calling into question the validity of this choice have emerged
in more recent years.
According to Article 27 of the Directive, the competitive dialogue may be used in the
case of particularly complex contracts where the use of the restricted procedure or the
negotiated procedure with publication of a contract notice would not allow the award of
the contract. The new civil procurement Directive defined the conditions for the use of
the competitive dialogue in greater detail168. However, this does not seem to create
inconsistencies that would have an impact on the functioning of the Directive. Article 28
of the Directive lays down the conditions for the use of the negotiated procedure without
publication of a contract notice. These conditions appear to be fully consistent with the
case law of the Court of Justice, and they are largely similar to those defined in the new
civil procurement Directives169.
Stakeholders, according to the replies to the online survey, seem to consider rather
appropriate the existing provisions of the Directive on the choice of procedures and the
conditions for their use. 48% of respondents among contracting authorities consider that
these provisions provide them with enough flexibility, and only 12% took the opposite
view. Businesses replies on whether the rules on tendering procedures under the
Directive are appropriate to ensure equal treatment and transparency are more mixed:
27% agree, and 24% disagree. Indications based on stakeholders meetings seem to show,
however, that this businesses’ perception has more to do with the limited uptake and
application of the Directive, than with specific problems with the rules of the Directive.
During a meeting on this evaluation170, Member States experts expressed their full
satisfaction with the rules of the Directive on the choice of contract award procedures.
They praised in particular the possibility of using the negotiated procedure with
167
168
169
170

Commission proposal, p. 7.
Article 26(4) of Directive 2014/24/EU.
Article 32 of Directive 2014/24/EU and Article 50 of Directive 2014/25/EU.
Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

108

publication of a contract notice, which they consider to be particularly suited for defence
and sensitive security procurement, without the need to provide justification.
A few Member States experts, however, raised the issue of the non-availability of the
open procedure. They argued that it would be useful to have the possibility to use this
procedure for certain non-sensitive military purchases under the Directive. A similar
point was made by some Member States in the written contributions to the open public
consultation. Belgian Defence Staff argued that contracting authorities should have the
possibility to choose for an open procedure; there are exceptional cases where an open
procedure would be preferred. Another Member State also explicitly argued, in its
written contribution to the open public consultation, for the introduction of the open
procedure; this would be more appropriate for the award of non-sensitive military
contracts where the use of a two-step procedure (the restricted procedure) would be “a
waste of time” for all parties involved in the procurement procedure.
In its reply to the online survey, Transparency International suggests that transparency of
defence and security purchases would be enhanced through the use of open procedures.
In a stakeholder consultation meeting, industry representatives took a different view on
the issue of the open procedure. They argued that the use of open procedures for
procurement in the fields of defence and sensitive security would not be appropriate.
They maintained that the existing rules on the choice of procedures are best suited for
these specific sectors.
6.4.1.3. The new civil procurement Directives
In February 2014, the European Parliament and Council adopted three new Directives in
the field of public procurement: Directive 2014/23/EU on the award of concession
contracts, Directive 2014/24/EU on public procurement, and Directive 2014/25/EU on
procurement by entities operating in the water, energy, transport and postal services
sectors. Directives 2014/24/EU and 2014/25/EU replace and repeal, respectively,
Directives 2004/18/EC and 2004/17/EC which constituted the “civil” public procurement
legislation at the time when the (defence procurement) Directive was proposed,
negotiated and adopted. Although with significant adaptations to take into account the
specificities of defence and sensitive security procurement, the content of the (defence
procurement) Directive is largely modelled after the provisions of Directive 2004/18/EC.
As explained in the Commission’s proposal for the new civil procurement Directives, the
reform had two main objectives: i) simplifying the existing rules (dating back to 2004)
and increasing their flexibility; ii) enabling procurers to make better use of public
procurement in support of common societal goals such as protection of the environment,
energy efficiency, combating climate change, promoting innovation, and employment
and social inclusion171.
The (defence procurement) Directive already provides for more flexible rules, in
particular the possibility to use the negotiated procedure with publication of contract
notice as default procedure. In addition, given the specificities of the defence sector, the
need for specific rules enabling national authorities to use public procurement in support
of broader non-defence related societal policies appear to be less relevant.
171

Commission proposal, COM(2011) 896 final, p. 2.

109

A technical issue should also be mentioned here. In order to comply with the new civil
procurement Directives, it was necessary to adapt the previous standard forms for the
publication of notices. Hence, the Commission adopted Implementing Regulation
2015/1986 establishing updated standard forms for the publication of notices in the field
of public procurement172. The introduced changes reflect the requirements of the new
civil procurement Directives, and also involve some improvements to the previous
standard forms. Since the (defence procurement) Directive was not amended, the
Implementing Regulation left the corresponding standard forms unchanged. It should be
added that a more substantial exercise for the revision of the standard forms, including an
overhaul of the IT system of OJ/TED, and seeking to introduce more structural changes
and improvements, is planned for later, possibly in 2018. For overall coherence, better
functioning of the system, and the ease of users, this future exercise is likely to involve
all standard forms, including those provided for by the (defence procurement) Directive.
The issue of coherence between the (defence procurement) Directive and the new civil
procurement Directives was raised and discussed in the context of the consultations.
Two Member States argued, in their reply to the online survey, that it would be
appropriate to consider amending the Directive to align it to the innovations introduced in
the civil procurement Directives. The Dutch Ministry of Economic Affairs specifically
wrote that it would be worth to investigate if the procedure of innovation partnership in
the new civil procurement Directive would have an added value for defence and security
procurement.
During a meeting on the evaluation173, one Member State argued that it would be useful
to consider the inclusion in the Directive of certain innovations of the new civil
procurement Directive such as: the codification of in-house and public-public exclusions,
the new exclusion on rescue services, the innovation partnership, the changes to
exclusion grounds and the introduction of self-cleaning mechanisms, the rules on
modification of contracts, and certain elements of electronic procurement. Some other
Member State argued, more generally, that any additional flexibility and simplification
stemming from the recent changes would be useful to consider. One Member State
specifically questioned the possibility to integrate in the context of defence the new
provisions on the mandatory use of electronic procurement.
In its written contribution to the open public consultation, a Member State strongly
argued that the focus should be on application of the Directive rather than its revision.
Reopening it would imply significant legislative work for only marginal improvements
of the text; in addition, it would shift the focus away from application and
implementation also at national level, with time and resources needed to draft and adopt
new implementation measures and additional time for contracting authorities/entities to
become familiar with the revised rules.

172

173

Commission Implementing Regulation (EU) 2015/1986 of 11 November 2015 establishing standard
forms for the publication of notices in the field of public procurement and repealing Implementing
Regulation
(EU)
No
842/2011,
http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=uriserv%3AOJ.L_.2015.296.01.0001.01.ENG.
Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

110

Industry stakeholders did not identify any change introduced by the new civil
procurement Directives that would be useful or appropriate in the context of defence
procurement. In their view, the new rules need be tested in the civil market before
considering if - and to what extent - some of them should be carried over to the defence
procurement framework. One national industry association also addressed this in its
written contribution to the open public consultation: they do not consider appropriate to
amend the Directive in order to integrate the novelties of the new civil procurement
Directives.
Some stakeholders also raised a more technical issue relating to the new civil
procurement Directives: the (defence procurement) Directive contains several references
to Directives 2004/18/EC and 2004/17/EC that have been repealed from 18 April 2016. It
should be pointed out that this issue is, in fact, addressed by the new civil procurement
Directives through Articles 91 of Directive 2014/24/EU and 107 of Directive
2014/25/EU. Pursuant to these provisions, references to the repealed civil procurement
Directives shall be construed as being made to the new civil procurement Directives and
shall be read in accordance with the correlation tables in Annexes XV (Directive
2014/24/EU) and XXI (Directive 2014/25/EU).
To summarise, the evaluation did not identify any inconsistency between the Directive
and the innovations introduced with the new civil procurement Directives. This is also
the case for the new civil procurement Directives’ provisions on electronic procurement;
Member States are free to use electronic procurement methods in the fields of defence
and security, but it does not seem appropriate at this stage to introduce obligations at EUlevel to do so. Furthermore, as the conclusions on effectiveness show, there is a need to
strengthen the effective implementation of the Directive in order to increase its uptake
and consistent application; this requires a stable legal framework. For these reasons, and
in line with the overall indications from Member States and stakeholders it seems that
amending the Directive in order to introduce the innovations of the new civil
procurement Directives is not necessary or appropriate at this stage.
6.4.2. Directive 2009/43/EC
Directive 2009/43/EC, which seeks to simplify the rules and procedures applicable to the
intra-EU transfer of defence-related products, was proposed, negotiated and adopted in
parallel with the (defence procurement) Directive as part of the so-called “defence
package”. These are two different legal instruments, each one with its own operational
objectives and specific sets of rules, and each one building on distinct areas of the acquis.
There is no specific inconsistency between the legal provisions of the two Directives.
However, problems with the application of Directive 2009/43/EC can have a direct
impact on the uptake of the (defence procurement) Directive. When procuring defence
related products from suppliers established in another Member States, contracting
authorities often have to consider the risks that the authorisation for the transfer of the
purchased equipment, as well as for the supplies needed for in-service support along its
life-cycle, will be refused or excessively delayed. In this context, Member States
sometimes use risks related to the transfer authorisations as arguments for the nonapplication of the (defence procurement) Directive on the basis of Article 346 TFEU.

111

A number of Member States’ experts, during a meeting on the evaluation174, highlighted
the importance of the link with Directive 2009/43/EC. They stressed that the effective
implementation of Directive 2009/43/EC is a key enabler for cross-border trade and for
the full uptake of the (defence procurement) Directive. The importance of the effective
implementation of Directive 2009/43/EC for cross-border procurement has been
highlighted by industry representatives as well in consultation meetings and in replies to
the online survey.
Directive 2009/43/EC has also been subject to evaluation, and a number of steps aimed at
improving its application have been taken and/or proposed.
6.4.3. CSDP and a European capabilities and armaments policy
Evaluation question (9):

How does the Directive fit into the framework of other EU instruments and
policies in particular in the area of CSDP?

According to Article 42(3) TEU, as part of the Common Security and Defence Policy
(CSDP), “Member States shall undertake progressively to improve their military
capabilities”. One of the tasks of the European Defence Agency is to “participate in
defining a European capabilities and armaments policy”.
The Impact Assessment for the Directive presented the Commission’s initiatives to
support the establishment of an EDEM as complementing Member States’ efforts to
develop military capabilities and, through EDA, to harmonise military needs, pool
research efforts and foster European armaments cooperation175.
Several stakeholders highlighted that, without progress towards such a European
capabilities and armaments policy, the Directive can contribute only to a very limited
extent to the competitiveness of the EDTIB. ASD, in its reply to the online survey,
stressed that there is “a fundamental and structural handicap of the Directive, which is
the weakness of CSDP and the absence of a common European armaments policy. The
more Member States agree on common capability needs and an industrial strategy to
address these needs, the more market openness will become a reality. This would also
pave the way for new cooperative projects, which we believe are the best means to
establish sustainable and competitive cross-border supply chains”. Similar points have
been made by other industry representatives in replies to the online survey and in a
stakeholder meeting176.
6.4.4. Cooperation in defence procurement
In recent years, Member States, EU institutions and stakeholders have repeatedly and
unanimously stressed the importance of strengthening European defence cooperation,
including in the field of procurement.

174

175
176

Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.
The Impact Assessment, p. 5.
Minutes of 18 February 2016 meeting of the Commission’s governmental expert group on defence and
security procurement.

112

The European Council, in its conclusions of December 2013, stated that “cooperation in
the area of military capability development is crucial to maintaining key capabilities,
remedying shortfalls and avoiding redundancies. Pooling demand, consolidating
requirements and realising economies of scale will allow Member States to enhance the
efficient use of resources and ensure interoperability, including with key partner
organisations such as NATO. Cooperative approaches whereby willing Member States
or groups of Member States develop capabilities based on common standards or decide
on common usage, maintenance or training arrangements, while enjoying access to such
capabilities, will allow participants to benefit from economies of scale and enhanced
military effectiveness”177. In June 2015, the European Council recalled the need for
“fostering greater and more systematic European defence cooperation to deliver key
capabilities”. The Bratislava Declaration of 16 September 2016 sets out the objective of
strengthening EU cooperation on external security and defence, and provides that the
European Council should look at how to make better use of the options in the Treaties,
especially as regards capabilities178.
In his political guidelines of July 2014, President Juncker stated: “Member States should
also create more synergies in defence procurement. In times of scarce resources, we need
to match ambitions with resources to avoid duplication of programmes. More than 80%
of investment in defence equipment is still spent nationally today in the EU. More
cooperation in defence procurement is therefore the call of the day, and if only for fiscal
reasons”179. In the State of the Union speech of 14 September 2016, President Juncker
also stressed that defence cooperation should be strengthened, in particular by moving
towards common military assets, establishing a European Defence Fund and using the
permanent structured cooperation to pool Member States’ capabilities180.
Participants at a stakeholder consultation meeting181 agreed on the importance of
cooperation and recognised that it is more necessary than ever to face increased
challenges and budgetary constraints. They recalled that there are two complementary
routes to create an integrated market: cooperation and competition, and recognised that
the approach in the Directive is consistent with this. For complex systems in particular,
cooperation is definitely the best way forward. Cooperation is also important to bring in
the industry from smaller Member States.
Some specific examples of defence cooperation in procurement are mentioned in Recital
28 of the Directive. This Recital refers to cooperative programmes managed by
international organisations such as OCCAR or NATO (via specific agencies) and by
agencies of the EU, such as the EDA. As an example of the role played by these
organisations, OCCAR currently manages 13 programmes with a total operational budget
of 3.1 billion EUR in 2016.
It follows from the above that, from the point of view of coherence, it is important that
the Directive does not hinder cooperation in defence procurement.

177
178

179
180
181

European Council conclusions of December 2013, paragraph 10.
http://www.consilium.europa.eu/en/press/press-releases/2016/09/16-bratislava-declaration-androadmap/.
http://ec.europa.eu/priorities/sites/beta-political/files/juncker-political-guidelines_en.pdf.
http://ec.europa.eu/priorities/state-union-2016_en.
Minutes of 22 February 2016 meeting with industry organised by ASD.

113

Indeed, the Directive was designed to enable Member States to pursue cooperative
procurement in different forms. The main features of the Directive that are relevant in
this context are:
– According to Article 13(c), contracts awarded in the framework of multinational
cooperative programmes for the development of new products, based on Research &
Development (R&D), are excluded from the Directive. This exclusion covers both
R&D services and the purchase of the final products developed in the cooperative
programme. Cooperative programmes under this exclusion must involve at least two
Member States and can also include third countries. Member States with smaller
defence budgets can participate in cooperative programmes covered by this exclusion,
because the size of individual contributions is not a decisive factor182.
– With regard to existing products (off-the-shelf procurement), Member Stated can
organise common or joint procurement in compliance with the contract award
procedures of the Directive, either via a lead nation or through central purchasing
bodies in the sense of Article 10 of the Directive.
– The exclusions on government-to-government sales (Article 13(f)) and on
international organisations (Article 12(c)) can also be relevant in the context of
cooperation.
The Commission departments discussed this issue with Member States’ experts183. At
this meeting, one Member State’s expert presented his experience and explained that the
Directive offers all the flexibility that is needed to pursue cooperative projects. It is
sufficient to look carefully at all the possibilities contained in the Directive and add no
extra condition at national level. Defence cooperation requires a number of important and
challenging pre-conditions (e.g. political will, alignment of budgetary cycles, and
harmonisation of requirements). The Directive is not the problem in this context. All
Member States’ experts that intervened at the meeting essentially agreed that the
Directive is not an obstacle hindering cooperation; there are much more significant
challenges in this area.
The EDA assessed the impact of the Directive on cooperation, and discussed the issue
with Member States at expert and National Armaments Directors level. The general
result of these discussions was that no direct obstacle, nor incentive on cooperation
seems to be stemming from the Directive, especially on topics analysed in depth such as
off-the-shelf procurement and barter. EDA concluded that if Member States do not
cooperate in defence procurement, this may be due to a number of other elements (e.g.
defence budget cuts, lack of harmonisation of requirements), but not in particular to the
Directive184.
In its written contribution to the open public consultation, a Member State argued that the
provisions of the Directive that are relevant for cooperation apply to situations where
182

183

184

Guidance
note
on
Exclusions,
paragraph
17,
http://ec.europa.eu/DocsRoom/documents/15408/attachments/1/translations/.
Minutes of 27 May 2015 meeting of the Commission’s governmental expert group on defence and
security procurement.
EDA document, “Impact of Defence and Security Procurement Directive 2009/81/EC on
Cooperation”.

114

Member States decided to cooperate from the beginning. They do not seem to be
applicable in cases in which a Member State would envisage to start converging towards
capabilities already owned by another Member State. On this point, the contribution
concluded that a flexible application of Article 28 of the Directive could facilitate
cooperation in such scenarios.
A defence company who responded to the online survey stated that “cooperation between
Member States should be clearly incentivised at both regulatory and financial levels.
Moreover, new genuinely European schemes of cooperation need to be considered under
the Directive beyond the classical one already covered by the Directive. More flexibility
should be introduced”.
6.4.5. Conclusions on coherence
In terms of consistency between the different provisions of the Directive, no issue has
emerged from the consultations or from the technical analysis carried out by the
Commission departments.
The Directive’s consistency with the framework of EU public procurement law has also
been analysed (Evaluation Question 8). There are no problems of consistency with the
other instruments of EU public procurement law, including the new civil procurement
Directives. In this context, the question of whether (some of) the innovations introduced
by the new civil procurement Directives should be rolled over to the (defence
procurement) Directive attracted the particular attention of Member States and
stakeholders, who have rather mixed views on the issue. The evaluation concluded that
the innovations of the new civil procurement Directives do not create coherence
problems with regard to the existing text of the (defence procurement) Directive.
Finally, the evaluation found no specific inconsistency between the legal provisions of
the Directive and those of Directive 2009/43/EC.
To answer Evaluation Question 9, the issue of cooperative procurement was assessed.
The Directive already recognises the importance of this aspect and seeks to enable
Member States to pursue cooperative procurement in different forms. Based on
discussions with Member States experts, the stakeholders consultations, and a specific
contribution from the EDA, it can be concluded that the Directive does not hinder
cooperative procurement.
6.5.

EU added value

Evaluation question (10):

What has been the EU added value of the Directive compared to what could
have been achieved by Member States at national (or regional) level (is the
principle of subsidiarity respected)?

The Impact Assessment looked into the question of whether the EU was the best suited to
act. It stated that the widespread use of the exemption from EC law in the field of
defence and sensitive security procurement is incompatible with the Treaty and the case

115

law of the Court of Justice. It concluded the EU was not only the best suited, but the only
possible actor to address this problem185.
This assertion remains, from a legal standpoint, fully relevant today. It is clear that only
EU action can tackle the issue, i.e. the non-application of EU public procurement rules,
hindering the establishment of a common European defence equipment market and
leading to non-compliance with the Treaty’s principles. However, the analysis of the EU
added value for this evaluation can go beyond these legal arguments.
As shown above in Section 6.1.5, the Directive has led to a significant increase in the
value of defence contracts published EU-wide and awarded through fair and competitive
tendering procedures. This means that competition, transparency and non-discrimination
in the defence procurement market in Europe have all improved as a result of the
Directive. As demonstrated in Section 6.2.4, the savings generated by the Directives are
likely to exceed the costs of running the procedures for public authorities and firms,
nearly by a factor of nine (i.e. 89 million EUR of costs of procedures, compared to 770
million EUR of savings). If the uptake of the Directive further increased in the future,
these results would be even more significant.
The EU-level coordination of procedures for public procurement above certain thresholds
has proven to be an essential tool to ensure effective and equal access to public contracts
for businesses across the Single Market. This could not be achieved through Member
State action which would inevitably result in diverging requirements and possibly
conflicting procedural regimes increasing regulatory complexity and causing
unwarranted obstacles for cross-border activities.
In the absence of a specific EU regime for defence and sensitive security procurement,
the increased use of transparent, fair and competitive tendering procedures, and the
corresponding decrease in the use of exemptions, would not continue and might even be
reversed.
In reference to Evaluation Question 10, it can, therefore, be concluded that the Directive
has a clear EU added value and continues to comply with the principle of subsidiarity.
7.

CONCLUSIONS

This evaluation analysed the Directive against five criteria: effectiveness, efficiency,
relevance, coherence and EU added value.
As to effectiveness, it can be concluded, taking into account the short time elapsed
between its actual transposition in Member States and the last year of the reference
period of this evaluation (2015), that the Directive has partially achieved its objectives
concerning the European defence equipment market. It has led to an initial increase of
competition, transparency, and non-discrimination, and to a corresponding decrease in
the use of exemptions. However, the uptake of the Directive, and therefore the degree of
increase in competition, transparency and non-discrimination, remains uneven across
Member States. Furthermore, a very significant share of defence procurement
expenditure is still done outside EU public procurement rules, which in turn, affects the
185

The Impact Assessment, p. 31.

116

efficiency of the Directive. Besides the short time since actual transposition by Member
States, the main reasons are thought to be: the fact that exemptions, including Article 346
TFEU, appear to be still subject to an overly broad interpretation that does not restrict
their use to truly exceptional cases as required by the case law of the Court of Justice.
This factor probably is especially relevant to explain the very limited use of the Directive
for the procurement of strategic equipment and complex systems. Moreover, a significant
share of defence procurement expenditure may have been spent on contracts awarded in
the framework of cooperative programmes started well before the adoption of the
Directive. Finally, the financial crisis may have led to the cancellation or postponement
of new major procurement projects to be implemented under the Directive.
The provisions of the Directive designed to address the specific needs of defence
procurement (e.g. exclusions, security of information, and security of supply) have
proven to be appropriate and do not need to be amended. The analysis conducted on the
position of Europe’s defence industry, based on the available data, shows that it is
difficult to conclude that the overall size, structure, and shape of the EDTIB has
fundamentally changed in the period 2011-2015. As confirmed by Member States and
stakeholders feedback in the consultations for this evaluation, it must be concluded that it
is impossible at this stage to establish any causal link between the effects of the Directive
and developments in the EDTIB.
The specific, optional, subcontracting provisions of the Directive have not been used by
Member States’ contracting authorities as they are seen by them as ineffective. Although
this does not undermine the application and functioning of the Directive, it does mean
that the aim of providing additional opportunities to sub-suppliers and SMEs by injecting
competition into the supply chains of prime contractors has not been achieved.
In light of the estimations of costs and savings, and given that the impact on
administrative burden is negligible, the evaluation has demonstrated that overall the
Directive is broadly efficient. Further work aimed at ensuring a greater and more
consistent use of the Directive by Member States would also result in increasing the
savings and, therefore, further enhancing its efficiency.
The objectives of the Directive are still fully relevant. So is the whole rationale that led
to the adoption of the Directive.
The evaluation has not identified any inconsistency or other coherence problems
between the different provisions of the Directive, with the other elements of EU public
procurement legislation, or with other EU instruments and policies (e.g. Directive
2009/43/EC).
The Directive, therefore, has a clear EU added value and continues to comply with the
principle of subsidiarity.
Results from the evaluation, including an overall consensus among Member States and
stakeholders, concur that the text of the Directive is broadly fit for purpose and that
amending the Directive is not necessary. There is a strong need to focus on its
effective implementation. This requires, among other things, a stable legal framework.
Follow-up actions should therefore aim at supporting the Directive’s effective
implementation, including through soft law instruments such as guidance on the
application of specific provisions, as well as ensuring compliance by Member States.
Planned actions to improve the functioning of Directive 2009/43/EC on transfers of
117

defence-related products should also have a positive impact on the effective
implementation of the Directive186.

186

See the Report on the evaluation of Directive 2009/43/EC simplifying terms and conditions of
transfers of defence-related products within the Community, and the accompanying SWD.

118

8.

ANNEXES
Annex I – Procedural information

The lead department for this evaluation was the Directorate-General for Internal Market,
Industry, Entrepreneurship and SMEs (DG GROW) of the European Commission. In
particular, the evaluation has been carried out by Unit G3 (Procurement Legislation and
Enforcement) and Unit 01 (Economic Analysis).
The evaluation was included in the Commission’s Agenda Planning (2016/GROW/031),
which is the programming tool for the most important policy initiatives to be adopted by
the Commission187.
As per the Better Regulation Guidelines on evaluations, an inter-service steering group
(ISG) was set up to follow and steer the whole process188. The ISG for this evaluation
involved people from the following Commission’s departments: Unit G3 (Procurement
Legislation and Enforcement), Unit 01 (Economic Analysis), Unit G4 (Innovative and eprocurement) and Unit I4 (Defence, Aeronautic and Maritime Industries) of DG GROW;
Unit C1 (Evaluation, Regulatory Fitness and Performance) and Unit D2 (Internal Market
and Competitiveness) of the Secretariat-General; Unit B4 (Innovation and Industry for
Security) of the Directorate-General Migration and Home Affairs. The ISG was
established in February 2015 and was involved – through three meetings189 and several
written exchanges – in the whole process from the drafting of the evaluation roadmap190
to the finalisation of the Staff Working Document.
With regard to the evidence used for the evaluation, the analysis presented in this
document was based on several data sources, in particular: notices published in OJ/TED,
EDA, NATO, IHS Jane’s Defence & Security Intelligence database and Eurostat, as well
as consultations with Member States and stakeholders (including a public on-line
survey). For more details on the methodology and the use of different sources, see Annex
III.
This was an internal evaluation, i.e. it was entirely carried out by the Commission
departments and did not rely on a study from an external contractor. However, the
evaluation drew on external expertise through the use of two Commission expert
groups191 and through specific consultation meetings with stakeholders. For more details,
please see Annex II.
Annex II – Stakeholder consultations
The consultations for the evaluation have been designed to reach all potential
stakeholders as well as the general public, and to deepen the engagement with more
directly involved stakeholders and experts. In the area at stake (defence and security
187
188
189
190

191

http://ec.europa.eu/atwork/planning-and-paring/index_en.htm
http://ec.europa.eu/smart-regulation/guidelines/ug_chap6_en.htm
9 February 2015, 19 June 2015, 2 September 2016.
http://ec.europa.eu/smartregulation/roadmaps/docs/2016_grow_031_evaluation_defence_procurement_en.pdf
The governmental Expert Group on Defence and Security Procurement and the Advisory Expert
Group on cross-border access for SMEs to defence and security contracts.

119

procurement), there are two key categories of stakeholders that are directly impacted by
the Directive: Member States’ contracting authorities (the buyers) operating in the
defence and security sectors, and the suppliers (defence and security companies and
business associations as their representatives). Other categories of stakeholders also
include: public authorities other than MoD and procurement authorities; other companies
and businesses associations; social partners; NGOs; consultants including lawyers;
academics; citizens.
In the light of this, the consultations included an internet-based public consultation
(online survey) and complementary consultation meetings with key stakeholders to
gather detailed inputs, expert advice, as well as data and technical information.
The below description presents summary of obtained opinions, and the detailed Factual
summary available on the web page of DG GROW192 provides more detailed technical
information on the carried out consultations.
Online survey (public consultation)
The open public consultation has been carried out between 11 April and 8 July 2016
(13 weeks). This has been based on an online survey published on the 'Your Voice in
Europe' portal: http://ec.europa.eu/yourvoice/consultations/. To better target potential
respondents, the survey has been carried out through three questionnaires, separately
directed for: 1) contracting authorities/entities and other public authorities, 2) businesses
and business associations, 3) the general public (other stakeholders and citizens).
Additionally the respondents were invited to attach free text files in which may possibly
further elaborate their views. The questions of the online survey were put in English, but
answers to the open questions and uploaded contributions in any of the official languages
of the EU have been accepted and taken into account in the evaluation.
This online survey aimed at giving to all potential stakeholders an opportunity to
respond. Hence, all citizens, public authorities, businesses, and other stakeholders were
welcome to respond to it. The news about the online survey, together with the relevant
links and background information, were published with high visibility on the webpage of
the Commission department responsible for this evaluation193. Contributions have been
particularly sought – including via direct mailings - from respondents which have an
interest and/or expertise in public procurement in the fields of defence and security194.
In quantitative terms, the response rate to the online survey has been rather limited (70
replies), which can probably be explained by the restricted number of key stakeholders
and the technical nature of the topic. There have been thirty-three respondents among
contracting authorities/entities and other public authorities, thirty-three respondents
among businesses and business associations, and four respondents from the general
public (two academics, one NGO, and one citizen). Out of the thirty-three respondents
from industry, sixteen were business associations that presumably participated in the
online survey representing the views of several individual companies.

192
193
194

http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=8675.
http://ec.europa.eu/growth/single-market/public-procurement/rules-implementation/defence_en.
Several direct mailings have been made to invite stakeholders and experts to reply to the consultation.
For more details, see: Annex II.

120

Meetings with key stakeholders
The open public consultation based on the online survey has been complemented by the
following targeted consultation activities seeking inputs by the key stakeholders
identified above:
 Meetings with Member States’ experts via the Commission’s Governmental Expert
Group on defence and security procurement. This group includes experts from all 28
Member States and EEA countries, mainly but not exclusively from Ministries of
Defence195.
 Meetings with industry organised by the AeroSpace and Defence Industries
Association of Europe (ASD) and involving several representatives of defence and
security companies and national business associations196.
 With specific regard to the situation of SMEs, consultation with Member States and
industry experts has also taken place in the Commission’s Advisory Expert Group on
cross-border access for SMEs to defence and security contracts197.
These extensive meetings have been effective tools for in-depth discussions with a
comprehensive and balanced set of key stakeholders. The discussions, based on detailed
sets of questions prepared by the Commission departments, covered all relevant aspects
of the Directive and have been centred around the evaluation questions as set out in the
Evaluation Roadmap.
Beyond the above, the Commission departments at all the above fora declared its
openness to the direct bilateral meetings with all interested stakeholders. A will to have a
meeting related to the evaluation of the Directive was expressed by German Ministry of
Defence and the French Aerospace Industries Association (Groupement des industries
françaises aéronautiques et spatiales – GIFAS).
Summary of opinions expressed within consultations
In summary the stakeholders expressed the below views, presented in order of evaluation
questions. The most comprehensive presentation of the opinions expressed by the
stakeholders is included in the text of the Commission Staff Working Document Evaluation of Directive 2009/81/EC on public procurement in the fields of defence and
security. The technical information on consultations is summarised in the document
Stakeholder consultations - Factual summary198.


Transparency

According to the public consultation outcome, in the perception of industry, the Directive
improved to a limited extent market access and business opportunities: 36% of
195
196

197
198

The meetings dedicated to the evaluation of the Directive took place on 18 February and 14 July 2016.
The membership of ASD consists of 14 European Aerospace and Defence Companies and 26 National
Associations in 19 countries: http://www.asd-europe.org/about-us/structure/asd-members/. The
meetings took place on 22 February and 3 May 2016.
The meeting on the evaluation of the Directive took place on 26 April 2016.
http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=8675.

121

companies or business associations that replied to the online survey considered there is
“no difference” compared to the situation before, 21% deemed that the situation
“improved”, and 12% responded that it “deteriorated” or “significantly deteriorated”.
Stakeholders stressed the increase in publications of contract notices connected with
significant differences in publication rates between Member States. The stakeholders
emphasised the importance of consistent application of the Directive.


Cross-border access to the public defence contracts

Based on the replies of online survey, the perception of the impact of the Directive on
cross-border access to defence and security procurement in EU countries is rather
positive (39% of respondents among both contracting authorities and businesses), but
with a significant share of respondents seeing no impact (30% among contracting
authorities, and 24% among businesses). The respondents seeing a negative impact are a
sizeable minority among businesses (21%) and a rather marginal share among
contracting authorities (6%).
In its written contribution to the public consultation, one Member State emphasised that
economic operators, big or small, can participate in tendering procedure via local
subsidiaries or partners. As a result, the percentages of “direct” cross-border awards
resulting from the OJ/TED database can underestimate the participation of companies
from other Member States.
In a stakeholder’s consultation meeting with industry199, a defence company explained
that before making a decision to bid they make a case-by-case assessment. They need to
be confident that they are well-placed to win and that it is worth preparing an offer.
Cross-border bidding is by nature more difficult due to language barriers, higher costs
and insufficient knowledge of the foreign market.


Competition

The results of the online survey show that the perception of contracting authorities about
the impact of the Directive on competition (in terms of number of offers received) is
positive. 45% of contracting authorities’ respondents considered that the situation
“improved” with the Directive. 15% see no difference, and only 6% replied that the
situation “deteriorated” or “significantly deteriorated” compared to before the Directive.
Similarly positive are the contracting authorities’ responses on a related aspect, i.e. the
impact of the Directive on their capacity to achieve best value for money. 33% of
contracting authorities that replied to the survey consider that this aspect improved
compared to the situation before the Directive, while 18% see no difference. Only 6%
think that the situation deteriorated.
At a Member States’ experts meeting on the evaluation200, some experts confirmed the
perception that the Directive helped achieving best value for money, while many
affirmed that it is still too early to draw definite conclusions. They pointed out that
getting best value for money does not only depend on the rules of the Directive, but also
199
200

Meeting of 22 February 2016.
Meeting of 18 February 2016.

122

on the degree of competition and the structure of the market. Some Member States
experts clarified that even before the Directive some form of competitive procurement
aimed at best value for money was normally used.


Industrial return (offset)

Businesses’ replies to the online survey show that the perception is that of a reduction,
albeit to a very limited degree, in the frequency of industrial return requirements after the
Directive.
In the consultation meeting201, industry stakeholders believe that the formal offsets
requirements have changed or are now being removed. However, there are still cases of
offsets requirements based on essential security interests and informal expectation in
customer countries to build industrial links. The above brings also some uncertainty to
the market game.


Other aspects of procurement procedures

As to the effects of the Directive on fairness of procedures, businesses’ replies to the
online survey indicate a mixed perception, with moderately positive signs. Transparency
International considers that the mandatory exclusion of tenderers takes place extremely
rarely and the derogation from the mandatory exclusion is too broad and vague.
Contracting authorities replying to the online consultation consider that the Directive had
a positive impact on legal certainty, while businesses’ perception is rather mixed.
In the industry stakeholders’ consultation meeting202, a number of defence companies
pointed out there should not be high expectations that they would use access to review
procedures in the defence sector since they only have one customer in each country.


Use of exemptions

In the online survey public authorities and businesses expressed rather divergent views
about the impact of the Directive on the use of the essential security interest exemption
(Article 346 TFEU). Majority of public authorities’ respondents (52%) “strongly agree”
or “agree” that the Directive has reduced the need to use this exemption and 27%
businesses hold the same view.
In a meeting on the evaluation, the vast majority of Member States’ experts stated that
the Directive significantly decreased the need for using Article 346 TFEU.


The Directive exclusions

45% of contracting authorities respondents and 36% of businesses respondents to the
on-line survey “strongly agree” or “agree” that the exclusions (Article 12 and 13) are
appropriate, but a non-negligible proportion of businesses respondents (27%) “disagree”
or “strongly disagree”.
201
202

Meeting of 22 February 2016.
Meeting of 22 February 2016.

123

In consultation meetings, some stakeholders expressed concerns about the application of
the exclusions on government-to-government sales (Article 13(f)) and International
Organisations (Article 12(c)) and called for further guidance to clarify particular
provisions of the Directive.


Security of information

61% of contracting authorities’ respondents to the online consultation strongly agreed or
agreed that the Directive’s provisions on security of information are sufficient to ensure
the protection of classified information. Among businesses respondents, the relative
majority (33%) also agreed and only 9% disagreed. The consultations meetings also
confirmed the broad consensus of stakeholders on the fact that the security of information
provisions of the Directive are appropriate.


Security of supply

On the security of supply provisions, contracting authorities and businesses replying to
the on-line consultation hold somewhat different views. One national defence industry
association pointed out that security of supply cannot be fully guaranteed by political
declarations or contractual commitments, but it is ensured primarily through national
control of domestic industrial infrastructures. One Member State’s expert stressed, during
the meeting on the evaluation203, that the provisions of the Directive cannot be sufficient
to guarantee security of supply; contractual obligations are not sufficient in this context.
In some cases, key technologies and industrial facilities are needed, for security of supply
reasons, in the national territory.


Changes in the industrial base

55% of respondents among contracting authorities and 58% of respondents to the on-line
consultation among businesses see no impact of the Directive on the competitiveness of
EDTIB or have no opinion on the matter.
Based on inputs provided in consultation meetings, stakeholders in general agree that the
Directive should be assessed against realistic expectations and in a broader context.
European procurement rules are not sufficient to solely and within the short time period
significantly influence the industrial base.


SMEs

Based on the replies to the online survey, stakeholders’ perception on the impact of the
Directive on the access of SMEs to defence and security procurement is rather mixed,
with a strong proportion seeing no impact or having no opinion on the matter among both
contracting authorities.
A Member State participating in the open public consultation stressed that there are
multiple factors affecting the situation of SMEs in the defence sector, such as new
competitors, technological developments, and shrinking markets, so that it is impossible
to identify if the Directive had any specific impact on their situation. One national
203

Meeting of 18 February 2016.

124

defence industry association argued, in its reply to the online survey, that the Directive
did not help increasing the competitiveness of SMEs and did not facilitate their
penetration in the supply chains of major defence companies.
The issue was discussed, as part of the stakeholder consultation process, in the
Commission’s Advisory Expert Group on cross-border access for SMEs to defence and
security contracts204. Their perception broadly was that there have been no major changes
in the situation of SMEs in the defence sector in recent years as a result of the Directive.


Subcontracting

The negative assessment of the Directive’s provisions on subcontracting is confirmed by
the replies to the online survey. The relative majority of respondents “disagree” or
“strongly disagree” that these provisions “foster cross-border access to defence and
security supply chains” among both businesses (39%) and contracting authorities (27%).
The proportion of these respondents that agreed with the statement was, respectively,
15% and 21%.
As it results from the online survey and consultation meetings, stakeholders believe that
the current subcontracting provisions are ineffective since they do not foster cross-border
access to supply chains. They pointed out that these provisions are not used by Member
States as ”they do not guarantee subcontracting in the Member State of the contracting
authority”.


Efficiency – costs of procedures

According to the received replies to the online survey, business respondents’ perception
differs from that of contracting authorities. 52% of business respondents consider that the
costs of participating in procurement procedures under the Directive are more or much
more resource intensive compared to the situation before. Among contracting authorities,
the views are more balanced with 33% of respondents considering that the costs have
increased and the same proportion (33%) seeing no difference with the situation before.
When asked to compare the costs under the Directive to those under the civil
procurement Directives, respondents expressed more positive views. 33% of respondents
among businesses see no change or a reduction in costs, whilst 27% perceive an increase.
Respondents among contracting authorities have a more positive perception, with 45%
seeing no increase or a reduction, and only 12% considering that the costs of carrying our
procedures under the Directive are more resource intensive than those under the civil
procurement Directive.
The issue of costs was discussed at a meeting with Member States’ experts205. No expert
could provide data on costs stemming from the organisation of procurement procedures
under the Directive. At the same meeting, several Member States’ experts expressed the
perception that costs slightly increased compared to the situation before the Directive.
However, as pointed out by two experts, the response essentially depends what the
specific national situation used to be. If defence procurement was completed excluded or
unregulated, then the procedures under the Directive will inevitably be more complex
204
205

Meeting of 26 April 2016.
Meeting of 18 February 2016.

125

and costly. If some form of competitive procedures were used, then there is likely no
significant impact stemming from the Directive. This is especially the case because, as
one Member State clarified, the most time consuming and resource intensive activity for
the contracting authority is the preparation of the technical specifications. The Directive
as such has marginal impact on this aspect.
The issue of costs was also discussed with industry in two stakeholder consultation
meetings206. The participants who intervened on this issue considered that either the
Directive did not bring about changes in costs or burden for responding to procurement
procedures or that there was a minor, marginal increase stemming from the rules of the
Directive. With regard to more detailed questions on costs207, they explained not to be in
a position to provide answers; there are too many differences across different kinds of
procurement and too many elements to take into account. In addition, some of the
information in this area could be commercially sensitive.


Efficiency – costs compared to benefits

Respondents to the online survey were also asked to give an overall assessment on the
efficiency of the Directive by comparing the costs and benefits of carrying out (for
contracting authorities) or participating in (for businesses) procurement procedure under
the Directive. Among contracting authorities, the perception is largely positive: 52% of
respondents consider that benefits outweigh costs or are proportionate, and only 12% see
the costs outweighing the benefits. The perception of business respondents is more
negative: 33% think that the costs outweigh the benefits; while 24% consider the costs
proportionate or the benefits outweighing the costs.
Stakeholders in consultation meetings in general agreed that the Directive did not have a
significant impact in terms of complexity and duration of tendering procedures or in
terms of costs for contracting authorities since that national legislations before the
Directive provided for competitive procedures inspired by broadly similar principles.


Relevance - objectives

The overwhelming majority of respondents to the open public consultation consider the
objectives of the Directive208 still relevant. 70% of businesses or business associations
replied that these objectives are “relevant”, and only 9% considers them “rather
irrelevant”. Among Member States’ authorities, 67% of respondents replied that the
objectives of the Directive are “relevant” or “moderately relevant”. Again, only 9%
replied “rather irrelevant” and no respondent qualified the objectives as “irrelevant”. 3

206
207

208

Meetings of 22 February and 3 May 2016.
“How would you evaluate the costs of participating in procurement procedures under the Directive as
compared to these costs under the Civil Directives for procurements of similar complexity?”; “Can
you provide an estimation of costs (e.g. in terms of man/hour of staff) of participating in a procurement
procedure for the award of a defence contract, including under the Directive?”; “Can you identify the
elements of the participation in a procedure contributing mostly to the overall costs and explain their
relative importance?”.
These objectives (direct and indirect) were summarised in the online survey as: “to establish an open
and competitive European Defence Equipment Market, to help strengthen the European Defence and
Technological industrial base (EDTIB), to ensure that the situation of SMEs in the defence sector is
not negatively affected”.

126

out of the four respondents from the general public replied “relevant” and no one see
them as “rather irrelevant” or “irrelevant”.
Other stakeholders’ replies to the online survey confirm their support for the general
objectives and underlying principles of the Directive. 91% of respondents among
businesses and business associations agree or strongly agree that “defence and security
equipment and services acquired by Member States should be procured using fair and
competitive procedures (except where a valid exemption is properly applied)”. 89% of
the same respondents also agree or strongly agree that “defence and security contracts
should be awarded to the tenderer offering the best value for money solution, irrespective
of the Member State in which the company is located (except where a valid exemption is
properly applied)”.
The meetings with key stakeholders (Member States and industry) confirmed that there is
consensus on the fact that the objectives of the Directive are still relevant.


Relevance - new developments after the adoption of the Directive

A number of developments that are relevant in relation to the Directive have been
identified in answers to the open public consultation and in meetings with stakeholders:
– The evolving defence and security landscape in Europe. Several Member States
and stakeholders pointed at the deterioration of the security situation “with an
increasingly unstable neighbourhood, difficult relationships with Russia, and
hybrid threats directly targeting European territory”209. This situation can have an
impact on the defence and security budgets of Member States, as it led to a (at
least partial) reversion of the trend of budget reductions.
– The financial crisis which exacerbated the already existing trend towards
significant reductions of defence budgets, and especially of defence procurement
budgets. According to ASD’ reply to the online survey, “it is fair to assume that
this hampered European cooperation and the openness of national markets to
EU-wide competition”. A similar comment was made by a Member State in a
consultation meeting. Member States and stakeholders also pointed out that
budgetary constraints had a more direct impact on the uptake of the Directive:
they led to cancellation or postponement of new defence procurement
programmes.
– An emerging consensus in the EU on the need to maintain an appropriate level of
strategic autonomy. A number of stakeholders pointed out that it is in Europe’s
strategic interest to maintain technological and industrial means to develop and
sustain certain indispensable defence capabilities. No Member State can afford to
sustain the full spectrum of these means individually. Member States should
therefore identify together the key defence capabilities for which they want to
maintain or develop the necessary technological and industrial means.
– Although concrete progress is still very limited, Member States and stakeholders
see as a relevant development that there is increasing awareness at all levels on
the need for more defence cooperation in Europe, and in particular for more
209

ASD contribution to the online survey.

127

cooperative procurement. Some Member States pointed out in particular that
nowadays there is a greater focus on common/joint procurement of off-the-shelf
equipment, rather than on the establishment of new cooperative programmes for
the development of new products.
– Several Member States and some stakeholders mentioned the adoption of the
new civil procurement Directives as a relevant development.


Coherence - in general

Based on both the online survey and consultation meetings, a broad consensus among
Member States and stakeholders emerged on the fact that the provisions of the Directive
are generally fit for purpose. The focus needs to be on their effective implementation and
application.
No problems specifically related to lack of coherence between the different provisions of
the Directive have been raised in the context of the open public consultation or the
complementary stakeholders’ consultation.


Coherence – delimitation of scope

The majority (58%) of contracting authorities’ respondents “agreed” or “strongly agreed”
that the distinction between the scope of application of the Directive and that of the civil
procurement Directives is “sufficiently clear”. The proportion of positive replies was
lower among business respondents: 36% agreed or strongly agreed, while 24% disagreed.
Out of the four citizens that replied to the online survey, only two replied to this question
and both agreed that the distinction is clear.
During a meeting of Member States’ experts210, the majority of experts that intervened
took the view that the existing provisions on the distinction of the scope of the Directive
with that of the classical procurement Directives are satisfactory.


Coherence – choice of procedure

Stakeholders, according to the replies to the online survey, seem to consider rather
appropriate the existing provisions of the Directive on the choice of procedures and the
conditions for their use. 48% of respondents among contracting authorities consider that
these provisions provide them with enough flexibility, and only 12% took the opposite
view. Businesses replies on whether the rules on tendering procedures under the
Directive are appropriate to ensure equal treatment and transparency are more mixed:
27% agree, and 24 disagree. Indications based on stakeholders meetings seem to show,
however, that this businesses’ perception has more to do with the limited uptake and
application of the Directive, than with specific problems with the rules of the Directive.
During a meeting on this evaluation211, Member States experts expressed their full
satisfaction with the rules of the Directive on the choice of contract award procedures.
They praised in particular the default possibility of using the negotiated procedure with
210
211

Meeting of 18 February 2016.
Meeting of 18 February 2016.

128

publication of a contract notice, which they consider to be particularly suited for defence
and sensitive security procurement.
A few Member States experts, however, raised the issue of the non-availability of the
open procedure. They argued that it would be useful to have the possibility to use this
procedure for certain non-sensitive military purchases under the Directive. A similar
point was made by some Member States in the written contributions to the open public
consultation.
In its reply to the online survey, Transparency International suggests that transparency of
defence and security purchases would be enhanced through the use of open procedures.
In an industry stakeholder consultation meeting, industry representatives took a different
view on the issue of the open procedure. They argued that the use of open procedures for
procurement in the fields of defence and sensitive security would not be appropriate.
They maintained that the existing rules on the choice of procedures are best suited for
these specific sectors.


Coherence – new civil procurement Directives

Two Member States argued, in their reply to the online survey, that it would be
appropriate to consider amending the Directive to align it to the innovations introduces in
the civil procurement Directives. The Dutch Ministry of Economic Affairs specifically
wrote that it would be worth to investigate if the procedure of innovation partnership in
the new civil procurement Directive would have an added value for defence and security
procurement.
During a meeting of Member States’ experts on the evaluation212, one expert argued that
it would be useful to consider the inclusion in the Directive of certain innovations of the
new civil procurement Directive such as: the codification of in-house and public-public
exclusions, the new exclusion on rescue services, the innovation partnership, the changes
to exclusion grounds and the introduction of self-cleaning mechanisms, the rules on
modification of contracts, and certain elements of electronic procurement213. Some other
Member State argued, more generally, that any additional flexibility and simplification
stemming from the recent changes would be useful to consider. One Member State
specifically questioned the possibility to integrate in the context of defence the new
provisions on the mandatory use of electronic procurement.
In its written contribution to the open public consultation, a Member State strongly
argued that the focus should be on application of the Directive rather than its revision.
Reopening it would imply significant legislative work for only marginal improvements
of the text; in addition, it would shift the focus away from application and
implementation also at national level, with time and resources needed to draft and adopt
new implementation measures and additional time for contracting authorities/entities to
become familiar with the revised rules.
212
213

Meeting of 18 February 2016.
The reference was probably made to articles 12 (in house exclusion), 31(Innovation Partnership), 57
(exclusions), 22, 34-36, 59 (electronic communisation), 72 (contract modifications), 74-77 (light
regime including rescue services).

129

In consultation meetings, industry stakeholders did not identify any change introduced by
the new civil Directives that would be useful or appropriate in the context of defence
procurement. In their view, the new rules need be tested in the civil market before
considering if - and to what extent - some of them should be carried over to the defence
procurement framework.


Coherence – Directive 2009/43/EC

A number of Member States’ experts, during a meeting on the evaluation214, highlighted
the importance of the link with Directive 2009/43/EC. They stressed that the effective
implementation of Directive 2009/43/EC is a key enabler for cross-border trade and for
the full uptake of the (defence procurement) Directive. The importance of the effective
implementation of Directive 2009/43/EC for cross-border procurement has been
highlighted by industry representatives as well in consultation meetings and in replies to
the online survey.


Coherence – CSDP and a European capabilities and armaments policy

During the consultation meetings, several stakeholders highlighted that, without progress
towards such a European capabilities and armaments policy, the Directive can contribute
only to a very limited extent to the competitiveness of the EDTIB. ASD, in its reply to
the online survey, stressed that there is “a fundamental and structural handicap of the
Directive, which is the weakness of CSDP and the absence of a common European
armaments policy. The more Member States agree on common capability needs and an
industrial strategy to address these needs, the more market openness will become a
reality. This would also pave the way for new cooperative projects, which we believe are
the best means to establish sustainable and competitive cross-border supply chains”.
Similar points have been made by other industry representatives in replies to the online
survey and in a industry stakeholder meeting215.


Coherence – cooperation in defence procurement

Participants at a stakeholder consultation meeting216 agreed on the importance of
cooperation and recognised that it is more necessary than ever to face increased
challenges and budgetary constraints. They recalled that there are two complementary
routes to create an integrated market: cooperation and competition, and recognised that
the approach in the Directive is consistent with this. For complex systems in particular,
cooperation is definitely the best way forward. Cooperation is also important to bring in
the industry from smaller Member States.
The Commission departments discussed this issue with Member States’ experts217. At
this meeting, one Member State’s expert presented his experience and explained that the
Directive offers all the flexibility that is needed to pursue cooperative projects. Defence
cooperation requires a number of important and challenging pre-conditions (e.g. political
will, alignment of budgetary cycles, and harmonisation of requirements). All Member
214
215
216
217

Meeting of 18 February 2016.
Meeting of 18 February 2016.
Meeting of 22 February 2016.
The Commission's Members States Expert Group on Defence Procurement, meeting of 27 May 2015
with a special point on cooperative procurement.

130

States’ experts that intervened at the meeting essentially agreed that the Directive is not
an obstacle hindering cooperation and there are much more significant challenges in this
area.
In its written contribution to the open public consultation, a Member State argued that the
provisions of the Directive that are relevant for cooperation apply only to situations
where Member States decided to cooperate from the beginning. Thus, in their views, a
flexible application of Article 28 of the Directive could facilitate cooperation in such
scenarios.
A defence company who responded to the online survey stated that “cooperation between
Member States should be clearly incentivised at both regulatory and financial levels.
Moreover, new genuinely European schemes of cooperation need to be considered under
the Directive beyond the classical one already covered by the Directive. More flexibility
should be introduced”.
Conclusions on stakeholders consultations
The consultation processes provided a wide range of experience and opinion regarding
the implementation of the Directive seen through the eyes of the stakeholders. This
information is widely used in the evaluation to augment the information obtained from
the TED and other sources.
The questionnaires targeted to the three groups of stakeholders brought important
qualitative input, since answers to the open questions and attached textual documents
presented important deepened and relevant opinions. From the quantitative point of view,
i.e. the possibilities of carrying out statistically analysis, the online survey was less
useful, due to the relatively low amount of answers. The limited number of replies was
caused by the specificity of the sector in which, out of the two main stakeholders group,
there is in principle the only one main buyer in every Member States and only some main
suppliers.
Most of the gathered information referred to the functioning of the Directive, in terms of
mechanism of carrying out of the procurement procedures, and to the situation and
functioning of the defence and security market. It was less successful in gathering
contextual data e.g. on relative costs of procedures, thus, in the evaluation obtained
information was used in conjunction with information from other sources.
The meetings with the stakeholders proved to be highly useful, both, in case of the
meeting with Member States and the industry. The obtained, deepened expert
information allowed better understand and explaining the key issues, including those
only generally asked in the questionnaire. It also brought the opinions about aspects of
functioning of the Directives that could not be explained on the basis of the hard
evidence and numerical data.
In overall, the mixture of the used stockholders consultation methods (questionnaire,
written inputs and meetings), despite natural shortcomings connected with the sector
specificity, proved to be an adequate and necessary element of the evaluation, completing
and explaining the analysed hard data.

131

Annex III – Methods and analytical models
As mentioned in the main sections of this evaluation report, the presented analysis was
mainly based on the following data sources: notices published in OJ/TED, data published
by EDA and Nato, IHS Jane’s procurement database and Eurostat, as well as
consultations with Member States and stakeholders (including a public on-line survey).
OJ/TED data
As briefly explained in Section 4, the main source of data used in this evaluation was the
OJ/TED data, containing all notices whose publication is required under the procurement
Directives.
The analysis of notices published in OJ/TED covered:
 notices dedicated to defence and security procurement218 published on standard
forms 16 to 19,
 a subset of publications on voluntary ex-ante transparency notices (VEATs)
published on standard form 15, when the contracting authority indicated that the
publication falls under the Directive,
 notices published under the civil procurement Directives if their subject matter
was linked to defence or/and security.
The notices published under the civil procurement Directives were judged to be affiliated
with defence and/or security procurement if they referred to any of CPV codes listed in
Table 42 and Table 43.
Table 42: Defence-related CPV codes used to filter publications under the civil
procurement Directives – high level
CPV codes used to characterise supplies defence contracts
31642200-0 Detection apparatus for mines.
35300000-7 Weapons, ammunition and associated parts.
35400000-8 Military vehicles and associated parts.
35500000-9 Warships and associated parts.
35600000-0 Military aircraft, missiles and spacecrafts.
35700000-1 Military electronic systems.
CPV codes used to characterise works defence contracts
45111300-1 Dismantling works.
45216200-6 Construction work for military buildings and installations.
45222200-1 Engineering work for military installations.
45222300-2 Engineering work for security installations.
CPV codes used to characterise services defence contracts
50600000-1 Repair and maintenance of security and defence materials.
50840000-5 Repair and maintenance of weapons systems.
51550000-2 Installation services of weapon systems.
218

CPV
x
x
x
x
x
x
x
x
x
x
x
x
x

Annexes XV to XVIII of Commission Implementing Regulation (EU) No 842/2011 of 19 August 2011
establishing standard form for the publication of notices in the field of public procurement and
repealing Regulation (EC) No 1564/2005.

132

72231000-3 Development of software for military applications.
73410000-9 Military Research & Technology.
73420000-2 Pre-feasibility study & technological demonstration.
73430000-5 Test and Study.
75211300-1 Foreign military-aid-related services.
75221000-1 Military defence services.
80600000-0 Training services in defence and security materials.
90523100-0 Weapons and ammunition disposal services.
90523200-1 Bomb-disposal services.
90523300-2 Mine sweeping services.
Source: The Baseline Study

x
x
x
x
x
x
x
x
x
x

Table 43: Defence-related CPV codes used to filter publications under the civil
procurement Directives – detailed
CPV codes used to characterise supplies defence contracts
31000000-6 Electrical machinery, apparatus, equipment and consumables; lighting
31600000-2 Electrical equipment and apparatus.
31640000-4 Machines and apparatus with individual functions.
31642000-8 Electronic detection apparatus.
31642100-9 Detection apparatus for metal pipes.
31642200-0 Detection apparatus for mines.
31642300-1 Detection apparatus for plastics.
31642400-2 Detection apparatus for non-metallic objects.
31642500-3 Detection apparatus for timber.
35000000-4 Security, fire-fighting, police and defence equipment.
35100000-5 Emergency and security equipment.
35200000-6 Police equipment.
35300000-7 Weapons, ammunition and associated parts.
35310000-0 Miscellaneous weapons.
35311000-7 Swords, cutlasses, bayonets and lances.
35311100-8 Swords.
35311200-9 Cutlasses.
35311300-0 Bayonets.
35311400-1 Lances.
35312000-4 Gas guns.
35320000-3 Firearms.
35321000-0 Light firearms.
35321100-1 Hand guns.
35321200-2 Rifles.
35321300-3 Machine guns.
35322000-7 Artillery.
35322100-8 Anti-aircraft.
35322200-9 Self-propelled artillery.
35322300-0 Towed artillery.
35322400-1 Mortars.
35322500-2 Howitzer.
35330000-6 Ammunition.
35331000-3 Ammunition for firearms and warfare.
35331100-4 Bullets.
35331200-5 Shells.
35331300-3 Grenades.
35331400-7 Land mines.

133

x

x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x

35331500-8 Cartridges.
35332000-0 Ammunition for naval warfare.
35332100-1 Torpedoes.
35332200-2 Sea mines.
35333000-7 Ammunition for aerial warfare.
35333100-8 Bombs.
35333200-9 Rockets.
35340000-9 Parts of firearms and ammunition.
35341000-6 Parts of light firearms.
35341100-7 Gunmetal pipe fittings.
35342000-3 Parts of rocket launchers.
35343000-0 Parts of mortars.
35400000-8 Military vehicles and associated parts.
35410000-1 Armoured military vehicles.
35411000-8 Battle tanks.
35411100-9 Main battle tanks.
35411200-0 Light battle tanks.
35412000-5 Armoured combat vehicles.
35412100-6 Infantry fighting vehicles.
35412200-7 Armoured personnel carriers.
35412300-8 Armoured weapon carriers.
35412400-9 Reconnaissance and patrol vehicles.
35412500-0 Command and liaison vehicles.
35420000-4 Parts of military vehicles.
35421000-1 Mechanical spare parts for military vehicles.
35421100-2 Engines and engine parts for military vehicles.
35422000-8 Electronic and electrical spare parts for military vehicles.
35500000-9 Warships and associated parts.
35510000-2 Warships.
35511000-9 Surface combatant.
35511100-0 Aircraft carriers.
35511200-1 Destroyers and frigates.
35511300-2 Corvettes and patrol boats.
35511400-3 Amphibious crafts and ships.
35512000-6 Submarines.
35512100-7 Strategic submarine nuclear fuelled.
35512200-8 Attack submarine nuclear fuelled.
35512300-9 Attack submarine diesel fuelled.
35512400-0 Unmanned Underwater Vehicles.
35513000-3 Mine warfare & auxiliary ships.
35513100-4 Mine hunter / minesweeper.
35513200-5 Auxiliary research vessel.
35513300-6 Auxiliary intelligence collection vessel.
35513400-7 Auxiliary Hospital / Cargo / Tanker / Roro vessel.
35520000-5 Parts for warships.
35521000-2 Hull and mechanical spare parts for warships.
35521100-3 Engines and engine parts for warships.
35522000-9 Electronic and electrical spare parts for warships.
35600000-0 Military aircraft, missiles and spacecrafts.
35610000-3 Military aircraft.
35611000-0 Fixed-wing aircraft.
35611100-1 Fighter aircraft.
35611200-2 Fighter-bomber / ground attack aircraft.

134

x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x

35611300-3 Bomber aircraft.
35611400-4 Military transport aircraft.
35611500-5 Training aircraft.
35611600-6 Maritime patrol aircraft.
35611700-7 Tanker aircraft.
35611800-8 Reconnaissance aircraft.
35612100-8 Combat helicopters.
35612200-9 Anti submarine warfare helicopters.
35612300-0 Support helicopters.
35612400-1 Military transport helicopters.
35612500-2 Search and rescue helicopters.
35613000-4 Unmanned Aerial Vehicles.
35613100-5 Unmanned Combat Aerial Vehicles.
35620000-6 Missiles.
35621000-3 Strategic missiles.
35621100-4 Strategic anti-ballistic missiles.
35621200-5 Inter continental ballistic missiles.
35621300-6 Submarine launched ballistic missiles.
35621400-7 Intermediate range ballistic missiles.
35622000-0 Tactical missiles.
35622100-1 Air-to-air missiles.
35622200-2 Air-to-ground missiles.
35622300-3 Anti-ship missiles.
35622400-4 Anti-submarines rockets.
35622500-5 Tactical anti-ballistic missiles.
35622600-6 Anti-tank guided missiles.
35622700-7 Surface-to-air missiles.
35623000-7 Cruise missiles.
35623100-8 Air/Ground/Sea Launched Cruise missiles.
35630000-9 Military spacecrafts.
35631000-6 Military satellites.
35631100-7 Communication satellites.
35631200-8 Observation satellites.
35631300-9 Navigation satellites.
35640000-2 Parts for military aerospace equipment.
35641000-9 Structure and mechanical spare parts for military aerospace
equipment.
35641100-0 Engines and engine parts for military aerospace equipment.
35642000-7 Electronic and electrical spare parts for military aerospace equipment.
35700000-1 Military electronic systems.
35710000-4 Command, Control, Communication and Computer systems.
35711000-1 Command, Control, Communication systems.
35712000-8 Tactical Command, Control and Communication systems.
35720000-7 Intelligence, Surveillance, Target Acquisition and Reconnaissance.
35721000-4 Electronic intelligence system.
35722000-1 Radar.
35723000-8 Air defence radar.
35730000-0 Electronic warfare systems and counter measures.
35740000-3 Battle simulators.
CPV codes used to characterise works defence contracts
45000000-7 Construction work.
45100000-8 Site preparation work.
45110000-1 Building demolition and wrecking work and earthmoving work.

135

x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x

45111300-1 Dismantling works.
x
45111310-4 Dismantling works for military installations.
x
45111320-7 Dismantling works for security installations.
x
45200000-9 Works for complete or part construction and civil engineering work.
45210000-2 Building construction work.
45216000-4 Construction work for buildings relating to law and order or emergency
services and for military building
45216200-6 Construction work for military buildings and installations.
x
45216220-2 Military bunker construction work.
x
45216230-5 Military shelter construction work.
x
45216250-1 Trench defences construction work.
x
45220000-5 Engineering works and construction works.
45222000-9 Construction work for engineering works except bridges, tunnels, shafts and
subways.
45222100-0 Waste-treatment plant construction work.
45222200-1 Engineering work for military installations.
x
45222300-2 Engineering work for security installations.
x
CPV codes used to characterise services defence contracts
50000000-5 Repair and maintenance services.
50600000-1 Repair and maintenance services of security and defence materials.
x
50610000-4 Repair and maintenance services of security equipment.
x
50620000-7 Repair and maintenance services of firearms and ammunition.
x
50630000-0 Repair and maintenance services of military vehicles.
x
50640000-3 Repair and maintenance services of warships.
x
50650000-6 Repair and maintenance services of military aircraft, missiles and
spacecrafts.
x
50660000-9 Repair and maintenance services of military electronic systems.
x
50800000-3 Miscellaneous repair and maintenance services.
50840000-5 Repair and maintenance services of weapons and weapon systems.
x
50841000-2 Repair and maintenance services of weapons.
x
50842000-9 Repair and maintenance services of weapon systems.
x
51000000-9 Installation services (except software).
51500000-7 Installation services of machinery and equipment.
51550000-2 Installation services of weapon systems.
x
72000000-5 IT services: consulting, software development, Internet and support.
72100000-6 Hardware consultancy services.
72200000-7 Software programming and consultancy services.
72230000-6 Custom software development services.
72231000-3 Development of software for military applications.
x
72232000-0 Development of transaction processing and custom software.
73000000-2(3) Research and development services and related consultancy
services.
73400000-6 Research and Development services on security and defence
materials.
73410000-9 Military Research & Technology.
x
73420000-2 Pre-feasibility study & technological demonstration.
x
73421000-9 Development of security equipment.
x
73422000-6 Development of firearms and ammunition.
x
73423000-3 Development of military vehicles.
x
73424000-0 Development of warships.
x
73425000-7 Development of military aircraft, missiles and spacecrafts.
x
73426000-4 Development of military electronic systems.
x
73430000-5 Test and Study.
x
73431000-2 Test and Study of security equipment.
x

136

73432000-9 Test and Study of firearms and ammunition.
x
73433000-6 Test and Study of military vehicles.
x
73434000-3 Test and Study of warships.
x
73435000-0 Test and Study of military aircraft, missiles and spacecrafts.
x
73436000-7 Test and Study of military electronic systems.
x
75000000-6 Administration, defence and social security services.
75200000-8 Provision of services to the community.
75210000-1 Foreign affairs and other services.
75211000-8 Foreign-affairs services.
75211300-1 Foreign military-aid-related services.
x
75220000-4 Defence services.
75221000-1 Military defence services.
x
75222000-8 Civil defence services.
80000000-4 Education and training services.
80600000-0 Training services in defence and security materials.
x
80610000-3 Training and simulation in security equipment.
x
80620000-6 Training and simulation in firearms and ammunition.
x
80630000-9 Training and simulation in military vehicles.
x
80640000-2 Training and simulation in warships.
x
80650000-5 Training and simulation in aircraft, missiles and spacecrafts.
x
80660000-8 Training and simulation in military electronic systems.
x
90000000-7 Sewage, refuse, cleaning, and environmental services.
90500000-2 Refuse and waste related services.
90520000-8 Radioactive-, toxic-, medical- and hazardous waste services.
90523000-9 Toxic waste disposal services except radioactive waste and contaminated soil.
90523100-0 Weapons and ammunition disposal services.
x
90523200-1 Bomb-disposal services.
x
90523300-2 Mine sweeping services.
x
Source: The Baseline Study

From the analytical point of view, the most valuable information about procurement
comes from the contract award notices, as they refer to procedures that have been
concluded (i.e. contracts which were attributed to a particular company for an agreed
price). For this reason, the analysis is mainly based on the contract award notices.
Before launching any descriptive analysis of OJ/TED publications, the raw dataset was
subject to manual scrutiny in order to verify its quality. The analysis of OJ/TED data
included in this evaluation is based on the manually corrected datasets, unless specified
otherwise. The scope of these manual checks is described below.
Manual corrections
The raw data uploaded from OJ/TED was first subject to manual checks concerning the
assessment of whether or not the notice was indeed related to defence and security
procurement. To this aim, the subject matter of the notices was verified, in particular with
regards to the CPV codes used in the notices and the description of procurement carried
out. The investigation was frequently supported by a general desk research. Manual
corrections of the subject matter affected more than 250 observations out of nearly 8 700
published in OJ/TED in the investigated period of time (2011-2015). The notices
published on standard forms dedicated to the Directive, but which have been removed
from the dataset concerned for example the following purchases: plumbing and sanitary
works, health and safety consultancy services, canteen and catering services, printing and
137

related services, the purchase of industrial kitchen equipment, cupboards, military
uniforms, outerwear, rucksacks, footwear or coins and medals, etc.
Additionally, the quality checks also concerned the plausibility of values reported in
notices, and the affiliation of procurement to either works, goods or services category.
For a subset of notices, the missing information about the country of the successful
bidder was manually completed using various information potentially indicating the
geographical location, such as: the company name, the town, telephone numbers, etc.
Finally, to the extent possible, observations referring to cancelled procedures were
removed from the dataset.
In addition to the above mentioned problems linked to the consistency of information
contained in the notices or the occurrence of erroneous publications (presumably due to
inappropriate legal basis), it was noted that around 17% of the contract award notices
have been published without the final price of awarded contracts. In some countries the
ratio was much higher, reaching nearly 85% in Sweden, followed by 71% in the
Netherlands, 71% in Belgium, 48% in Denmark and 41 % in Germany.
Following a meeting of the Commission’s Expert Group on Defence and Security
Procurement on 17 of July 2016, the Government representatives of two countries (where
the occurrence of contracts without values was particularly high), have agreed to
manually correct notices published by their national authorities. As a result, the
Netherlands and Belgium have provided the Commission with revised datasets, where
the majority of missing contract values has been completed. The missing contract values
received from the Netherlands included VAT calculated at various rates and VATexempt contracts. Because a case-by-case analysis of the level of tax rate was impossible,
all newly received values were discounted at 21%. Additionally, Belgium has expanded
the original dataset by providing a list of procurement notices that were erroneously
published under a standard forms devoted to the civil Directives. These notices were
added to the analysed dataset. As mentioned in the earlier sections, the analysis presented
in this evaluation report is based on a dataset which was subject to manual corrections,
including those received from Member States, unless stated otherwise.
Finally, in order to provide the results presented in Section 5.3.1.5 above, contract award
notices published under the Directive have been scrutinised in order to decide on their
affiliation of the awarded contracts to either defence or security domains. Contracts in the
field of security fall within the Directive if they are “for security purposes” and involve,
require and/or contain classified information. It was clearly impracticable to manually
check all the notices published the Directive in order to assess whether the contracts
fulfilled those conditions and were, therefore, security contracts in the sense of the
Directive. Instead, an approach based on the evaluation of profiles of the contracting
authority/entity was chosen. The full list of all contracting authorities/entities that
awarded at least one contract under the Directive was manually divided into military and
security purchasers, on the basis of their name and available description. This was
complemented, through a random check of contracts, by the nature of purchases they
made. Authorities / entities that were assessed to be “military contracting
authorities/entities” included e.g. ministries of defence, services and units of armed
forces, specialised defence procurement agencies. Based on the assumptions that
“military contracting authorities/entities” are unlikely to award security contracts in the
sense of the Directive, and that non-military contracting authorities/entities would not
award military contracts, the remaining contracting authorities/entities (which included
138

for instance ministries of interior, police forces, local authorities) have been classified as
“security contracting authorities/entities”.
Estimation of the compliance costs under the Directive
The overall costs of procedures carried out under the Directive, as presented in Section
6.2.1, was estimated following a similar approach to the one adopted in the PwC Study.
The costs of the application of the Directive was calculated based on the cost data
collected in the above study, as more recent data of this type was not available.
The basic input for the cost analysis in the PwC Study was provided by 7 300 authorities
and firms across Europe who answered an on-line survey and willingly reported the
number of person-days spent, and other monetary costs, across a defined set of activities
in the purchasing process. They provided the information with reference to a specific
purchase published in OJ/TED for which they indicated themselves as the person
responsible219. The costs of the procurement processes were collected in terms of persondays (in full time equivalent, FTE). The costs were then monetised by linking labour
costs to the person-day data mentioned above, using the average wage for each country
for 2009 from Eurostat and/or OECD220. The average costs per type of procedure from
the PwC Study were used as a starting point for the main estimate included in this
evaluation.
In line with the methodology of the PwC Study, it is important to underline that the costs
of procedures which were captured by the survey were not only the costs that directly
resulted from the obligations specified in the Directives, but might have also included
other inputs, such as “business as usual cost”, costs stemming from the national
legislation, etc. The methodology applied for the collection of raw cost data was designed
to provide the most comprehensive estimate of the compliance cost incurred across the
whole procurement delivery chain (i.e. pre-award stage or pre-proposal stage for firms,
award or proposal for firms, post-award stage and litigation, if applicable), rather than to
look into the factors behind the observed costs. For this reason, it was equally impossible
to disentangle the cost estimate into the above components for the purpose of this
evaluation.
In order to take account of the change in costs over time, the average cost per procedure
type obtained from the PwC Study has been indexed with the Labour cost index by
NACE Rev. 2 activity (lc_lci_r2_a), using the yearly data on percentage change over
previous period. The procurement costs incurred by the contracting authorities’ were
updated based on an index for NACE O code (Public administration and defence;
compulsory social security), while the costs for the economic operators were updated
using LCI annual data for NACE codes B-N (Business economy).
Once indexed, the costs of procurement for different procedures from the PwC Study
were used to estimate the cost of procurement carried out under the Directive. The cost
referring to the negotiated procedure was used to estimate the cost of contracts awarded
through the accelerated negotiated procedure or the negotiated procedure with and
without publication. The costs of the restricted procedure as estimated in the PwC Study
were used to calculate the cost of tenders carried out under the Directive following the
219
220

The PwC Study, p. 76.
The PwC Study, p. 86.

139

restricted procedure and the accelerated restricted procure. The PwC Study didn't provide
estimates for the competitive dialogue. It was therefore decided to use the average cost
across all procedure types to estimate the costs of these tenders. If the information about
the procedure used was missing in OJ/TED, then also the average cost from the PwC
Study was used. An overview of procedure types and the relevant cost estimates which
have been used for the estimate is provided in Table 44 below.
Table 44: Procedure types used to estimate the overall costs of the Directive
Procedure used to award contracts under
the Directive (according to OJ/TED)
Negotiated with publication
Negotiated without publication
Accelerated negotiated
Restricted
Accelerated restricted
Competitive dialogue
Missing

Data on the cost of procedure used in
the estimate (PwC)
Negotiated
Negotiated
Negotiated
Restricted
Restricted
Average cost for all procedures
Average cost for all procedures

Finally, as the calculation of costs of procurement for the economic operators was based
on the average number of bidders per contract award notice. For observations where
information on the number of bidders was not available in OJ/TED, the average value
was taken (i.e. 3.4 offers, see: Section 6.1.1).
IHS Jane’s procurement data
The IHS Jane’s data was mainly used to calculate the value of procurement outside of the
Directive (Section 6.1.2.2).
IHS Jane’s procurement database offers a regularly updated list of major defence
procurement programmes operated worldwide. Information about defence procurement is
provided at programme (rather than contract) level, and it reveals different characteristics
of programmes such as the purchasing country, the manufacturing and contractors
companies, the latest status of the project (i.e. committed, completed, cancelled,
postponed, announced or forecasted) as well as an estimation of the programme's value.
In order to arrive at a rough estimate, procurement programmes conducted by EU and
EEA countries have been shortlisted, where it could be inferred that award decisions
have taken place between 2011 and 2015. Only programmes committed and completed
have been considered. Programmes which have been cancelled, announced or postponed
have not been included in the sample in order to be as close as possible to the notion of
an “award” as used in OJ/TED. A total list of 128 defence procurement programmes,
operated by 26 countries, has been included in the sample: Austria, Belgium, Bulgaria,
Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Croatia,
Hungary, Ireland, Italy, Latvia, Lithuania, Malta, the Netherlands, Norway, Poland,
Portugal, Romania, Slovenia, Slovakia, Spain, Sweden.
The IHS Jane's database is based on open-source intelligence data. As a consequence,
there is no absolute certainty concerning the full scope of the programs listed, the number
of purchased units and/or the specific value of particular contracts or purchased units. It
can be therefore the case that some programs have been implemented, but have not
appeared in IHS Jane’s database.
140

As far as the estimation of the major defence equipment procurement outside of the
Directives is concerned, it must be also stressed that comparisons between OJ/TED and
IHS Jane’s are very difficult. IHS Jane’s essentially reports major equipment
programmes and it is likely not to include some of the defence and security procurement
contracts published in OJ/TED. In addition, the unit of observation of both datasets is
different - IHS Jane’s data being gathered at the programme level and OJ/TED at a
contract or a contract award notice level. The comparison is also difficult time wise,
since the award date of programmes in IHS Jane’s is often inferred on the basis of
available information, may not be absolutely certain and is not entirely comparable with
OJ/TED variables containing information about timing of the public procurement
transaction (e.g. the date of contract award as published in OJ/TED).
With regards to the OJ/TED vs. IHS Jane's matching presented in Section 6.1.2, the
second approach consisted of trying to capture the programmes which were awarded with
a competitive tendering process (i.e. where a request of proposal date has been included
in the database), but which were not published in the OJ/TED. In order to do so, the only
practicable method, given the difficulties in comparing OJ/TED and IHS Jane’s, was to
contrast the list of winning companies between 2011 and 2015 in both datasets. The idea
behind this exercise was to capture an estimate of projects which have been awarded to
companies whose business name has not appeared in OJ/TED during the same period.
This matching presented significant limitations, in particular since companies listed in
IHS Jane’s were only parent companies. Thus, if other sub-units of subordinate
companies were listed in OJ/TED, the comparison might not correspond.
Member States’ statistical reports
According to Article 65 of the Directive, Member States are obliged to provide the
Commission with the yearly statistical information on services supply and works contract
awarded under the Directive. The reports should include information on number of
contracts, broken down value by CPV and procedures, as well as a more detailed
overview of the use of negotiated procedure without publication of a contract notice.
Member States are also asked to provide information on the nationality of the successful
contractors that could be used to estimate the share of cross-border procurement.
Member States are obliged to provide the report by 31 October each year, but the reports
have been sent irregularly and not all Member States provided them in the analysed
period of time (2011-2015). Additionally, the statistical reports which have been sent to
the Commission included aggregated information that was not complementary to what
was already available in OJ/TED. As a consequence, it was judged that analysing the
OJ/TED data would more effective.
Annex IV – Complementary data
This annex contains supplementary data which has been referred to in the previous
sections of the evaluation report.
Table 45: Defence expenditures as a percentage of gross domestic product221 [%]

221

Based on 2010 prices and exchange rates.

141

Country

2009

2010

2011

2012

2013

2014

2015

2016 e

(0)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

1.52

1.56

1.53

1.49

1.41

1.34

1.16

1.21

1.16

1.08

1.05

1.05

1.01

0.97

0.91

0.85

1.75

1.67

1.33

1.35

1.46

1.32

1.29

1.35

Croatia

1.62

1.54

1.60

1.53

1.47

1.41

1.37

1.23

Czech Republic

1.52

1.29

1.07

1.06

1.03

0.96

1.06

1.04

Denmark

1.34

1.41

1.30

1.34

1.23

1.16

1.14

1.17

Estonia

1.80

1.70

1.68

1.89

1.90

1.94

2.07

2.16

France

2.02

1.96

1.87

1.87

1.86

1.84

1.80

1.78

Germany

1.39

1.35

1.28

1.31

1.23

1.19

1.19

1.19

Greece

3.08

2.64

2.38

2.29

2.22

2.22

2.38

2.38

Hungary

1.14

1.04

1.05

1.04

0.95

0.87

0.94

1.01

Italy

1.42

1.35

1.30

1.24

1.20

1.09

1.02

1.11

Latvia

1.21

1.06

1.02

0.89

0.93

0.94

1.04

1.45

Lithuania

1.07

0.88

0.79

0.76

0.76

0.88

1.14

1.49

Luxembourg

0.40

0.47

0.39

0.38

0.38

0.39

0.43

0.44

Netherlands

1.42

1.34

1.25

1.23

1.16

1.15

1.16

1.17

Norway

1.54

1.52

1.51

1.47

1.48

1.51

1.47

1.54

Poland

1.71

1.77

1.72

1.74

1.72

1.85

2.23

2.00

Portugal

1.53

1.49

1.49

1.41

1.44

1.30

1.32

1.38

Romania

1.33

1.24

1.28

1.22

1.28

1.35

1.45

1.48

Slovak Republic

1.52

1.27

1.09

1.10

0.99

0.99

1.14

1.16

Slovenia

1.59

1.61

1.30

1.18

1.06

0.98

0.94

0.94

Spain

1.13

1.03

0.94

1.04

0.92

0.91

0.92

0.91

Turkey

2.06

1.93

1.76

1.76

1.75

1.70

1.67

1.56

United Kingdom

2.51

2.51

2.42

2.20

2.30

2.20

2.09

2.21

NATO - Europe

1.70

1.64

1.56

1.53

1.51

1.46

1.45

1.46

Canada

1.39

1.16

1.23

1.10

0.99

1.02

0.98

0.99

United States

5.29

4.81

4.77

4.42

4.09

3.78

3.59

3.61

North America

4.91

4.46

4.42

4.09

3.78

3.51

3.33

3.36

NATO - Total

3.30

3.04

2.98

2.82

2.66

2.50

2.41

2.43

Albania
Belgium
Bulgaria

222

Source: Defence Expenditures of NATO Countries (2009-2016), COMMUNIQUE PR/CP(2016)116, 4
July 2016, http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2016_07/20160704_160704-pr2016116.pdf

222

Data do not include pensions.

142

Table 46: Total general government expenditure on defence as percentage of gross
domestic product (GDP) [%]
2010
Belgium
Bulgaria
Czech Republic
Denmark
Germany
Estonia
Ireland
Greece
Spain
France
Croatia
Italy
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portugal
Romania
Slovenia
Slovakia
Finland
Sweden
United Kingdom
EU-28

2011
1.0
1.7
1.0
1.4
1.1
1.7
0.4
2.7
1.0
1.9
1.5
1.3
2.1
1.0
1.2
0.5
1.2
0.8
1.3
0.6
1.6
2.0
1.4
1.5
0.9
1.5
1.5
2.6
1.5

2012
0.9
1.2
0.9
1.4
1.1
1.5
0.4
2.4
1.0
1.8
1.6
1.3
1.8
1.0
1.0
0.4
1.1
0.8
1.3
0.6
1.6
1.3
0.8
1.2
0.9
1.4
1.4
2.5
1.5

2013
0.9
1.1
0.8
1.4
1.1
1.8
0.4
2.4
0.9
1.8
1.5
1.3
1.8
0.9
1.0
0.4
0.7
0.7
1.2
0.6
1.5
1.1
0.7
1.1
0.9
1.5
1.4
2.4
1.4

2014
0.9
1.2
0.8
1.3
1.1
1.8
0.4
2.1
1.0
1.8
1.4
1.2
1.6
0.9
1.0
0.3
0.7
0.6
1.2
0.6
1.7
1.1
0.8
1.0
0.9
1.5
1.5
2.3
1.4

Iceland
:
:
:
0.0
Norway
1.5
1.5
1.4
1.4
Switzerland
0.9
1.0
1.0
1.0
Source: Eurostat, general government expenditure by function (COFOG) [gov_10a_exp]

0.9
1.4
0.7
1.2
1.0
1.8
0.4
2.7
0.9
1.7
1.5
1.2
1.4
0.9
1.1
0.3
0.6
0.8
1.1
0.6
1.5
1.0
0.8
0.9
0.9
1.4
1.3
2.2
1.3
0.0
1.4
1.0

Table 47: Defence expenditures - annual real change 223

223

Country

2009

2010

2011

2012

2013

2014

2015

2016 e

(0)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Based on 2010 prices.

143

Albania

-4.58

6.54

0.55

-1.32

-4.23

-2.83

-11.62

7.95

-5.82

-3.70

-1.68

0.10

-3.11

-3.09

-4.57

-5.30

-21.22

-4.59

-18.90

1.54

9.58

-8.27

1.02

6.21

Croatia

-11.12

-6.38

3.53

-6.44

-4.93

-4.61

-0.95

-8.80

Czech Republic

10.17

-13.58

-14.92

-2.17

-3.11

-4.82

14.43

0.29

Denmark

-6.00

6.53

-6.81

3.12

-8.32

-4.37

-1.05

4.32

Estonia

-13.79

-2.91

6.11

18.21

2.26

4.82

7.95

6.50

France

-13.70

-0.94

-2.95

0.56

0.00

-1.08

-1.21

0.64

Germany

2.30

1.44

-1.90

2.90

-6.31

-1.26

1.22

2.08

Greece

3.36

-18.94

-17.97

-10.81

-6.41

0.72

7.06

-0.07

Hungary

-12.08

-8.01

3.09

-2.84

-6.67

-4.81

10.32

9.33

Italy

-5.68

-3.73

-3.18

-6.82

-5.10

-9.81

-5.82

10.63

Latvia

-31.82

-15.80

2.31

-9.51

8.31

3.11

14.08

42.31

Lithuania

-17.54

-16.85

-4.28

-0.89

4.71

18.99

31.72

34.13

Luxembourg

-2.57

25.03

-14.63

-3.72

3.02

7.15

16.23

5.75

Netherlands

1.36

-4.22

-4.90

-2.84

-5.98

0.19

2.63

2.27

Norway

3.65

-1.08

0.47

0.40

1.57

4.32

-1.65

5.45

Poland

9.37

7.34

2.05

2.69

-0.05

11.42

24.76

-7.80

Portugal

5.03

-1.35

-1.45

-9.56

1.51

-8.74

3.01

5.68

Romania

-14.30

-7.31

4.48

-4.13

8.36

8.60

11.42

6.47

Slovak Republic

-1.74

-12.02

-12.23

2.31

-8.63

3.24

18.66

4.85

Slovenia

-1.73

2.38

-18.77

-11.90

-10.52

-4.76

-1.85

1.46

Spain

-4.63

-8.87

-9.66

7.59

-12.81

0.53

4.54

0.62

Turkey

-0.74

2.54

-1.11

2.36

3.66

-0.04

2.33

-3.23

United Kingdom

-1.40

1.38

-1.67

-8.23

6.80

-1.61

-2.52

7.44

NATO - Europe

-3.32

-1.44

-3.21

-1.89

-1.27

-1.40

0.79

2.97

Canada

5.88

-14.25

9.71

-9.50

-7.51

5.14

-2.70

3.33

United States

2.07

-6.68

0.74

-5.45

-6.04

-5.22

-2.88

2.49

North America

2.17

-6.89

0.97

-5.56

-6.08

-4.95

-2.87

2.52

NATO - Total

0.68

-5.48

-0.16

-4.60

-4.78

-3.95

-1.82

2.65

Belgium
Bulgaria

224

Source: Defence Expenditures of NATO Countries (2009-2016), COMMUNIQUE PR/CP(2016)116, 4
July 2016, http://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2016_07/20160704_160704-pr2016116.pdf

Table 48: Contract award notices with and without the value of awarded contracts
published under the Directive in 2011-2015 [number of notices, %]
Notices with final value
Austria
224

Notices without final value

11
100 %

Data do not include pensions.

144

0
0%

Total
11
100 %

70
100 %
69
Bulgaria
92 %
47
Croatia
100 %
125
Czech Republic
91.24 %
58
Denmark
51.79 %
40
Estonia
100 %
144
Finland
98.63 %
628
France
84.86 %
483
Germany
59.34 %
45
Hungary
95.74 %
405
Italy
99.75 %
21
Latvia
100 %
54
Lithuania
100 %
63
Netherlands
100 %
29
Norway
100 %
381
Poland
97.44 %
8
Portugal
100 %
127
Romania
100 %
26
Slovakia
100 %
25
Slovenia
100 %
5
Sweden
14.71 %
253
United Kingdom
97.68 %
3 117
Total
84.66 %
Source: OJ/TED, manual corrections by DG GROW

0
0%
6
8%
0
0%
12
8.76 %
54
48.21 %
0
0%
2
1.37 %
112
15.14 %
331
40.66 %
2
4.26 %
1
0.25 %
0
0%
0
0%
0
0%
0
0%
10
2.56 %
0
0%
0
0%
0
0%
0
0%
29
85.29 %
6
2.32 %
565
15.34 %

Belgium

70
100 %
75
100 %
47
100 %
137
100 %
112
100 %
40
100 %
146
100 %
740
100 %
814
100 %
47
100 %
406
100 %
21
100 %
54
100 %
63
100 %
29
100 %
391
100 %
8
100 %
127
100 %
26
100 %
25
100 %
34
100 %
259
100 %
3 682
100 %

Table 49: Contract award notices covered by defence-related CPVs and published
under the civil procurement Directives in 2011-2015 – by selected countries
[number of notices]
2011

2012

2013

145

2014

2015

Total

Cyprus
0
1
Greece
0
1
Ireland
7
7
Luxembourg
0
0
Malta
0
1
Spain
56
27
Total
63
37
Source: OJ/TED, manual corrections by DG GROW

1
0
5
0
0
40
46

1
4
2
0
0
33
40

1
6
4
1
0
39
51

4
11
25
1
1
195
237

Table 50: Contracts awarded directly to foreign companies under the Directive in
2011-2015, by country [number of awards and value in million EUR]

12
137

29%
4
17
2
42%
159
1 116
76%
11
14 129
79%
2%
2
4 185
96%
2%
9
70 1619
35% 14%
41 767 129
62%
51
15
78
30%
7%
82
51 163
98%
0% 457
8 4480
96%
15
31
73
94%
3%
44
137
1% 85% 11%
47
5 967
8% 61%
60
19
58
20% 30%
23
13
3
26% 57%
23
42
52
2% 74%
21
2 172
0% 97%
0%
10
5 1993
25% 25%
7
21
6
5% 90%
34
6 324
2% 80% 13%
0
0
19
2% 92%
5
0
26
90%
182
126
7% 84%
3% 626
77 15577
4% 88%
2% 1913 1171 26432

73%
0%
9%
2%
4%
82%
10%
15%
0%
26%

Missing

18%
58%
7%
1%
1%
4%
36%
24%
9%
12%
24%
4%
44%
59%
20%
11%
0%
21%
9%
0%
16%
59%
4%
6%

Domestic

24
276
154
1 193
4 1702
0 937
144
44 340
25 4969
120
2 183
35 1054
137
39
117
195
2 2009
34
365
0
19
31
308
733 17013
847 30363

Missing

Domestic

Non_EU cross border

Intra-EU cross border

Missing

Domestic

36%
4%
9%
4%
1%
17%
6%
44%
0%
3%

Non-EU cross border

6

36%
54%
16%
15%
1%
34%
32%
19%
2%
1%
3%
3%
31%
50%
17%
23%
3%
50%
5%
4%
6%
10%
5%
6%

Intra-EU cross border

3

14
78
94
350
1029
138
50
259
1253
269
99
429
75
40
108
43
2188
8
143
45
51
30
352
7145

Total

3
49

Non-EU cross border

18
2

Intra-EU cross border

7
18
19

Value

Total

5
4
3
33
8
71
15 276
10 989
24
48
3
31
115
77
3 1225
8 258
93
4 364
6
46
8
12
28
62
1
32
3 2113
2
2
7 129
1
36
1
47
27
24 297
279 6272

Missing

5
42
15
52
12
47
16
49
23
3
3
12
23
20
18
10
69
4
7
2
3
3
19
457

Domestic

Non-EU cross border

Austria
Belgium
Bulgaria
Czech Republic
Germany
Denmark
Estonia
Finland
France
Croatia
Hungary
Italy
Lithuania
Latvia
Netherlands
Norway
Poland
Portugal
Romania
Sweden
Slovenia
Slovakia
United Kingdom
Total

Intra-EU cross border

Number

9%
42%
84%
96% 1%
95% 0%
14% 0%
54%
48% 13%
90% 1%
61%
75% 1%
1% 92% 3%
14% 42%
34%
7%
36% 44%
1% 88%
0% 99% 0%
62% 16%
2% 89%
0% 100%
0%
1% 83%
41%
0% 92% 4%
4% 87% 3%

Source: Source: OJ/TED, manual corrections by DG GROW; “0%” in the value columns frequently stem
from the fact that notices were published without their respective contract values e.g. 0% of cross-border
procurement in value terms in Sweden despite the fact that three contracts were directly awarded to foreign
suppliers

146

Table 51: Contracts awarded directly to foreign companies under the Directive in
2011-2015, by CPV divisions with the top 10 highest value of awards - number and
value [%]

34
45
70
80

Missing

60

Domestic

75

Non-EU cross border

79

Intra-EU cross border

35

Missing

50

Administration, defence and
social security services
Repair and maintenance
services
Security, fire-fighting, police and
defence equipment
Business services: law,
marketing, consulting,
recruitment, printing and security
Architectural, construction,
engineering and inspection
services
Transport services (excl. waste
transport)
Transport equipment and
auxiliary products to
transportation
Construction work
Real estate services
Education and training services

Domestic

75

Non-EU cross border

CPV division

Value

Intra-EU cross border

Number

12%

0%

85%

3%

0%

0%

100%

0%

5%

1%

91%

3%

2%

1%

96%

1%

11%

11%

75%

3%

21%

19%

58%

2%

0%

1%

98%

0%

0%

0%

100%

0%

1%

2%

95%

3%

0%

1%

49%

50%

13%

7%

80%

0%

33%

0%

67%

0%

7%
1%
0%
10%

3%
1%
0%
14%

90%
98%
100%
66%

0%
1%
0%
10%

3%
0%
0%
3%

4%
0%
0%
12%

91%
99%
100%
82%

2%
0%
0%
3%

Source: OJ/TED, manual corrections by DG GROW; “0%” in the value columns frequently stem from the
fact that notices were published without their respective contract values e.g. Administration, defence and
social security

147

Table 52: Contracts awarded under the Directive in 2011-2015, by the country of contracting authority and economic operator [number of
contract awards]

Source: Source: OJ/TED, manual corrections by DG GROW

148

1
0
0
0
0
2
0
1
0
0
0
0
1
3
0
32
1
0
0
0
0
0
0
41

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

3
0
0
1
8
0
0
0
1
5
3 15
2
1
1 110
1
0
3
3
0
0
1
2
0
4
0
3
1 24
0
0
0
1
0
2
1
6
1
0
0
0
0
0
3
9
29 186

Total

Lichtenstein

0
0
1
7
0
0
0
0
0
0
5 13
1
4
7 18
1
2
0
0
0
0
0
5
2
2
3
2
0
6
1
3
0
0
0
0
0
2
36
1
0
1
0
0
1 297
58 363

Missing

Iceland

0
0
0
0
0
0
0
0
0
0
0
0
0
2
0
0
0
0
0
0
47
0
0
49

1
0
2
0
0
0
15
7
4 18
4 19
0
0
3 18
2
2
2
0
0
3
1 49
1
0
2
0
3
0
1
0
1
3
0
0
0
0
0
6
1
0
0
0
12 12
55 137

14
78
94
350
1029
138
50
259
1253
269
99
429
75
40
108
43
2188
8
143
45
51
30
352
7145

Other

Norway

0
0
0
14
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
27
0
41

USA

United Kingdom

0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
2
0
0 129
0
0
0
0
0
0
0
0
6 129

Switzerland

Sweden

0
0
3
0
2
0
0 12
1
0
4
0
0
0
1
2
1
1
0
0
0
0
0
0
1
2
0
0
62
0
1
0
1 2113
0
0
0
0
0
0
0
0
1
0
2
0
80 2130

Slovenia

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Slovakia

0
0
0
0
0
0
0
0
0
0
0
0
1
12
0
0
0
0
0
0
0
0
0
13

Romania

0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
1

Portugal

Malta

0
0
0
22
0
0
0
0
0
0
0
0
46
5
0
0
8
0
0
0
0
0
0
81

Poland

Latvia

0
0
0
2
0
0
0
0
0
2
0
3
0
0
0
1
0
2
0
0
0
1
0 364
0
1
0
0
0
0
0
0
0
1
0
0
0
1
0
1
0
0
0
0
1
0
1 379

Netherlands

Luxembourg

0
0
0
0
0
0
0
0
0
0
93
0
0
0
0
0
0
0
0
0
0
0
0
93

Lithuania

0
0
0
0
0
0
0
0
2
0
0
0
0
0
0
0
0
0
0 258
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2 259

Italy

0
0
0 10
0
5
0
1
0
2
0
9
2
2
77
7
0 1225
0
0
0
0
0
0
1
0
0
1
0
5
0
1
0
0
0
0
0
0
0
0
1
0
0
0
0
3
81 1271

Ireland

0
0
0
0
0
0
31
0
0
0
0
0
2
0
0
0
0
0
0
0
0
0
0
33

Hungary

Finland

0
6
0
0
0
0
0
2
1
0
0
1
2
0
0
1
1
0
0
0
0
0
3
17

Croatia

Estonia

0
1
0
0
0
48
1
7
3
0
0
1
2
0
0
1
0
0
0
0
0
0
1
65

Greece

Spain

0
2
3
0
1
9
0
1
7
0 276
0
0
0 989
0
0 12
0
1
5
0
0
3
0
0
4
1
0
2
0
1
0
0
0
4
0
1
2
0
0
1
0
0
2
0
0
1
0 55
3
0
0
0
0
0
3
0
0
0
0
0
0
0
0
1
0
0
6
1 338 1057

France

Denmark

0
0
71
3
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
74

Germany

0
33
0
0
0
1
0
1
6
0
0
1
1
6
3
0
0
4
1
0
0
0
2
59

Czech Republic

Bulgaria

4
1
0
0
5
0
0
0
1
0
0
0
3
0
0
0
0
0
0
0
1
1
0
16

Cyprus

Belgium

Country of the
contracting
authority
Austria
Belgium
Bulgaria
Czech Republic
Germany
Denmark
Estonia
Finland
France
Croatia
Hungary
Italy
Lithuania
Latvia
Netherlands
Norway
Poland
Portugal
Romania
Sweden
Slovenia
Slovakia
United Kingdom
Total

Austria

Country of the economic operator

Table 53: Contracts awarded under the Directive in 2011-2015, by the country of contracting authority and economic operator [value225 in
million EUR]

Norway

Iceland

Lichtenstein

Switzerland

USA

Other

Missing

0
0
1
0
1
0
0
0
0
0
4
0
0
0
0
0
1
1
0
0
0
0
0
0
0
1
0
0
52
0
1
0
4 1993
0
0
0
0
0
0
0
0
89
0
7
0
159 1995

0
4
0
0
0
0
0
0
71
0
0
0
0
0
0
2
0
6
0
0
0
0
0
84

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
324
0
0
0
0
324

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
126
0
126

0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
26
0
0
27

0
0
14
3
0
0
0
0
0
0
22
0
4
8
43
5
229 123
0
0
0
0
0
11
6
3
11
0
0
13
0
12
0
0
0
0
0
2
19
0
0
0
0
0
40 15577
388 15758

1
0
0
0
0
0
0
1
0
0
0
0
0
0
0
172
0
0
0
0
0
0
0
175

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

16
0
14
0
1
716
5
1
1
4
0
3
0
0
0
0
0
0
2
0
0
0
14
776

0
0
0
0
25
47
10
40
0
5
0
1
12
10
39
0
2
21
5
0
0
0
23
240

0
1
0
4
45
4
0
10
7
22
0
1
6
2
3
2
2
0
0
0
0
0
40
151

0
24
0
276
0
154
1
193
4 1702
0
937
0
144
44
340
25 4969
0
120
2
183
35 1054
0
137
0
39
0
117
0
195
2 2009
0
34
0
365
0
19
0
31
0
308
733 17013
847 30363

Total

United Kingdom

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

Sweden

0
0
0
0
0
0
0
0
0
0
0
0
2
3
0
0
0
0
0
0
0
0
0
5

Slovenia

0
0
0
0
0
0
0
0
0
0
0
0
0
0
3
0
0
0
0
0
0
0
0
3

Slovakia

0
0
0
1
0
0
0
0
0
0
0
0
58
7
0
0
1
0
0
0
0
0
0
66

Romania

0
0
0
6
0
0
0
0
0
4
0
4
0
0
0
0
0
1
0
0
0
9
0 967
0
9
0
0
0
0
0
0
0
0
0
0
0
11
0
0
0
0
0
0
0
0
0 1011

Portugal

0
0
0
0
0
0
0
0
0
0
137
0
0
0
0
0
0
0
0
0
0
0
0
137

Poland

0
0
0
0
0
0
0
0
0
73
0
0
0
0
0
0
0
0
0
0
0
0
0
73

Netherlands

0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1

Malta

Hungary

0
0
0
74
0
4
0
1
0
2
0
2
10
24
163
20
0 4480
0
0
0
0
0
0
0
0
0
1
0
4
0
1
0
0
0
0
0
0
0
0
2
0
0
0
0 205
175 4819

Latvia

Croatia

0
0
0
0
0
0
78
0
0
0
0
0
2
0
0
0
0
0
0
0
0
0
0
80

Luxembourg

Greece

0
6
0
0
0
0
0
9
0
0
0
1
10
0
0
2
0
0
0
0
0
0
345
373

Lithuania

France

0
1
0
0
0
129
1
0
0
0
0
12
10
0
0
2
0
0
0
0
0
0
0
155

Italy

Finland

3
1
4
46
4
2
185
0
0 1619
0
9
0
5
0
3
0
12
0
9
35
0
0
6
2
4
0
1
0
2
0
1
2
3
0
0
0
5
0
0
0
0
0
4
0
24
234 1756

Ireland

Estonia

0
0
0
0
0
0
0
0
0
6
0
0
0
0
0
0
0
0
0
0
0
0
0
6

Spain

0
0
129
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
129

Denmark

Cyprus

0
116
0
0
0
1
0
1
17
0
0
17
4
2
1
0
0
7
16
0
0
0
5
187

Germany

Bulgaria

2
0
0
0
1
0
0
0
0
0
0
0
6
0
0
0
0
0
0
0
3
89
0
102

Czech Republic

Belgium

Country of
the
contracting
authority
Austria
Belgium
Bulgaria
Czech Republic
Germany
Denmark
Estonia
Finland
France
Croatia
Hungary
Italy
Lithuania
Latvia
Netherlands
Norway
Poland
Portugal
Romania
Sweden
Slovenia
Slovakia
United Kingdom

Austria

Country of the economic operator

Source: Source: OJ/TED, manual corrections by DG GROW

225

The reliability of this Table is linked to the quality of information provided in OJ/TED e.g. Sweden reported the award of 36 contracts domestically, but in most cases refrained from
providing their values. As a result only 19 million EUR is reported as Swedish domestic procurement while France reported procurement worth 229 million EUR awarded to Swedenbased companies, which was actually based on one contract only won by SAAB Dynamics AB (http://ted.europa.eu/udl?uri=TED:NOTICE:4298742014:TEXT:EN:HTML&src=0&tabId=1 ).

149

Table 54: Turnover in Europe’s aerospace, defence and shipbuilding industries 2010-2014 – broken down by NACE sectors [million EUR]
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Total

2010
257
333.4
226.9
0
11.9
182.3
0
0
83.6
0
2254
0
15.1
0
0
1712
0
0
0
0
0
0
1303.5
193.2
45.1
0
0
0
278.5
710.4
2685.4
10292.3

2011
200.6
0
204.4
0
13
215.6
0
0
0
0
2244.4
76.6
14.8
0
0
1737.8
0
0
0
0
0
0
1196.4
186.6
40.5
0
0
6
310
706.5
3042
10195.2

C25.4
2012
309.2
0
190.1
0
11.4
217.7
0
0
0
0
2606.7
49.2
22.2
0
0
2068.2
0
0
0
0
0
0
1135
184.1
41.5
0
0
4.2
0
849.5
3807.2
11496.2

2013
349
0
148.4
0
8.6
248.6
0
0
0
2382.7
2693.3
80.8
19.6
0
0
1864.3
0
0
0
0
0
0
1023
220.4
48.1
0
0
1.8
396.5
663.5
3500.3
13648.9

2014
300
0
246.7
0
8.6
280.9
0
0
0
0
2471.2
39.4
21.6
0
0
1940.8
0
0
0
0
0
0
845.5
199.3
55.4
0
0
0
497.3
465.5
3311.8
10684

2010
0
0
75
797.3
0
0
617.1
0
840.6
3460.8
4906
173.9
3.7
0
0
5025.5
0
0
54
0
0
0
7406.9
775.4
72
905.4
0
1.5
3657.3
215.7
3592
32580.1

2011
0
0
41.8
528.4
0
0
474.6
0
505.9
3839.8
3598.2
87.3
4.6
0
0
3818.5
0
0
6.3
0
0
0
8393.3
956.6
57.7
824.8
24.5
0
2773.2
285.8
3916.8
30138.1

C30.11
2012
0
20.8
35.8
382
0
0
394.9
42.1
748.1
4224.9
3466.6
71.7
4.5
0
0
3095.3
0
0
59.3
0
0
0
10007.5
892
76.2
627.8
1.8
1.6
2283.8
327.1
4521.6
31285.4

2013
0
26.2
18.1
236.2
0
0
239.6
0
868.2
4248.7
3074.6
84.8
5.4
0
0
2596.8
0
0
58.9
0
0
0
10899.5
733.7
30.7
844.9
4.6
1.4
1855.3
294.2
4201.9
30323.7

2014
0
33.2
23.9
301.6
0
0
296.3
38.1
835.6
4158.1
5529.4
0
5.7
0
0
3544.7
27.8
0
52.7
0
0
0
10406.9
689
34.4
711.8
3.8
1.4
1493.1
0
4921.1
33108.6

2010
201.7
0
0
0
0
449.1
23.6
0
146.9
27940.6
18836.6
0
10
0
0
7821.7
0
0
13.7
0
0
0
0
650.1
0
117.4
0
10.3
4548.6
0
24588.9
85359.2

C30.3
2011
2012
2013
2014
180.4
182.9
174.5
212.9
0
1355
1363.6
1479.3
0
0
0
0
11.6
0
31.4
33.7
0
0
0
0
479.3
533.1
648.2
681.3
31.5
25.3
60.8
65.7
0
0
0
0
0
0
0
165.6
29584.6 34191.5 37255.4 40942.3
19577.9 22265.6
24143 25055.1
168
0
0
84.8
10.2
0
0
0
0
0
0
0
0
0
0
0
7498.6
8270
7191.7
9529.7
0
0
0
0
0
0
0
0
1.7
2.2
4.4
1.8
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
857.7
1152.3
1463.5
1532.4
12.7
11.9
28.8
53.2
126.8
162.8
185.3
204.4
14.5
0
11.6
0
11.1
14.2
15.9
17.2
4856.8
5117.9
6490.6
7315.2
0
0
0
0
24227.2 27527.5 28675.4 30120.9
87650.6 100812.2 107744.1 117495.5

2010
0
0
0
0
0
0
0
0
0
1058.2
0
0
0
0
0
0
0
0
0
0
0
0
0
266.7
0
0
0
0
0
0
0
1324.9

2011
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
237.1
0
0
36.5
0
0
0
506.6
780.2

C30.4
2012
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
277.4
0
0
0
0
0
0
500.3
777.7

2013
0
0
0
0
0
0
0
0
0
699.4
0
0
0
0
0
0
0
0
0
0
0
0
0
173.9
0
0
26.7
0
0
0
488.1
1388.1

2014
0
0
0
0
0
0
0
0
0
869.2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
429.5
1298.7

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry (NACE Rev. 2, B-E) (sbs_na_ind_r2);
Note: C25.4 - Manufacture of weapons and ammunition, C30.11 - Building of ships and floating structures, C30.3 - Manufacture of air and spacecraft and related machinery, C30.4 Manufacture of military fighting vehicles

150

Table 55: Number of employees in Europe’s aerospace, defence and shipbuilding industries 2010-2014 – broken down by NACE sectors
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Total

2010
958
1660
13450
0
26
3264
0
0
418
6503
11134
0
339
0
0
6824
24
0
0
0
0
0
2676
4651
468
0
0
0
1284
2318
0
55997

2011
899
0
13900
0
30
3278
0
0
0
0
11310
1196
345
0
0
6603
18
0
0
0
0
0
2864
4513
424
0
0
9
1666
2353
0
49408

C25.4
2012
1029
0
12634
0
27
3303
0
0
0
6408
11766
1102
331
0
0
6805
17
0
0
0
0
0
2953
4368
423
0
0
7
0
2522
14453
68148

2013
1229
0
10798
0
21
3615
0
0
0
0
11975
898
310
0
0
6941
15
0
0
0
0
0
2876
5446
414
0
0
0
1615
2293
0
48446

2014
1262
0
11825
0
22
3918
0
0
0
0
12384
825
326
0
0
6768
14
0
0
0
0
0
2874
4879
477
0
0
0
1856
0
0
47430

2010
0
0
1889
11162
0
0
2293
0
5102
12547
14345
3304
80
0
0
16414
723
0
334
0
0
6325
21677
8640
1619
17196
0
29
11279
1359
22664
158981

2011
0
0
1278
10558
0
0
1831
0
4161
13398
13419
2085
128
0
0
15253
724
0
236
0
0
6806
21160
8276
1480
16195
456
0
11119
1337
21466
151366

C30.11
2012
0
104
796
9799
0
0
1050
362
4190
14098
10713
2076
122
0
0
14153
789
0
825
0
0
6164
23753
7207
1390
16357
54
26
10093
1389
0
125510

2013
0
105
627
10352
0
0
999
0
4166
14174
12559
1373
121
0
0
13739
792
0
678
0
0
6542
26121
5450
676
17152
48
0
9386
1371
0
126431

2014
0
110
554
5701
0
0
1057
306
4108
14547
12939
0
128
0
0
14304
727
0
713
0
0
6621
27564
4966
799
18022
29
26
8795
0
0
122016

2010
676
0
0
0
0
5977
177
0
1282
83050
67595
0
167
0
0
32326
13
0
261
0
0
3898
522
13988
0
3528
0
112
17728
0
0
231300

2011
711
0
0
428
0
6461
211
0
0
87700
69429
1871
142
0
0
31786
16
0
83
0
0
3918
552
14337
309
3452
162
120
18489
0
0
240177

C30.3
2012
927
4943
15
0
0
6977
178
0
0
93639
71433
0
0
0
0
31703
31
0
101
0
0
3612
546
14546
359
3708
0
137
18480
0
0
251335

2013
945
5338
19
668
0
7372
457
0
0
99160
74806
0
0
0
0
30317
41
0
107
0
0
3798
495
15373
499
3976
233
152
19177
0
87004
349937

2014
1003
5522
0
716
0
8198
520
0
1384
110896
74958
1443
0
0
0
32555
57
0
97
0
0
3810
498
15840
557
4171
0
0
20702
0
92242
375169

2010
0
0
0
0
0
0
0
0
0
2229
0
0
0
0
0
0
0
0
0
0
0
0
1
1703
0
0
0
0
0
0
2436
6369

2011
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1483
0
0
641
0
0
0
3852
5977

C30.4
2012
0
0
0
0
0
0
0
0
0
2236
0
0
0
0
0
0
0
0
0
0
0
129
1
1459
0
0
0
0
0
0
3393
7218

2013
0
0
0
0
0
0
0
0
0
2308
0
0
0
0
0
0
0
0
0
0
0
201
0
1322
0
0
553
0
0
0
3429
7813

2014
0
0
0
0
0
0
0
0
0
2246
0
0
0
0
0
0
0
0
0
0
0
209
0
0
0
0
0
0
0
0
3400
5855

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry (NACE Rev. 2, B-E) (sbs_na_ind_r2);
Note: C25.4 - Manufacture of weapons and ammunition), C30.11 - Building of ships and floating structures, C30.3 - Manufacture of air and spacecraft and related machinery, C30.4 Manufacture of military fighting vehicles

151

Table 56: Number of enterprises in Europe’s aerospace, defence and shipbuilding industries 2010-2014 – broken down by NACE sectors
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Total

2010
48
29
23
8
4
112
13
2
25
136
154
0
13
0
0
261
2
0
2
1
0
13
29
38
8
0
0
20
56
85
126
1208

2011
47
0
21
8
4
108
15
2
26
164
168
45
16
0
0
260
2
0
2
1
0
14
32
42
8
0
0
16
59
78
123
1261

C25.4
2012
47
0
20
7
4
99
14
2
27
131
180
26
15
0
0
244
2
0
2
0
0
12
32
40
7
0
0
17
0
74
122
1124

2013
49
0
19
7
3
97
18
2
27
173
211
22
7
0
0
248
1
0
2
1
0
12
32
40
7
0
0
16
51
75
121
1241

2014
49
0
20
6
3
90
16
2
24
45
235
24
13
0
0
224
1
0
2
1
0
13
35
36
6
0
0
17
52
69
124
1107

2010
0
0
25
194
0
0
18
36
126
153
99
333
32
0
0
889
11
0
17
0
0
186
283
538
113
272
0
14
445
121
438
4343

2011
1
0
15
198
0
0
17
28
105
134
111
302
28
0
0
878
9
0
17
0
0
206
282
564
92
260
20
12
426
126
418
4249

C30.11
2012
1
10
17
190
0
0
19
33
96
161
99
158
29
0
0
828
15
0
19
0
0
216
287
525
83
258
10
12
366
136
392
3960

2013
0
11
18
173
0
0
22
31
96
132
100
115
31
0
0
760
15
0
19
0
0
262
267
415
74
289
11
14
337
137
394
3723

2014
0
18
15
173
0
0
25
33
97
163
121
0
29
0
0
706
14
0
22
0
0
273
276
593
77
325
10
12
248
0
418
3648

2010
19
0
3
13
0
55
21
0
6
193
138
0
31
0
0
170
2
0
3
0
0
69
5
51
14
21
0
17
85
35
492
1443

2011
18
0
5
11
0
59
15
0
9
194
157
11
34
0
0
167
4
0
3
0
0
74
5
60
17
18
5
18
81
40
494
1499

C30.3
2012
21
36
5
10
0
66
15
0
5
189
171
0
0
0
0
164
6
0
4
0
0
76
5
60
16
17
0
21
76
39
562
1564

2013
20
40
6
11
0
60
17
0
7
225
206
0
0
0
0
173
5
0
4
0
0
75
5
69
19
19
5
19
76
41
634
1736

2014
19
36
5
12
0
63
17
0
7
203
160
16
0
0
0
184
6
0
3
0
0
72
6
82
18
18
0
20
82
0
709
1738

2010
1
0
0
0
0
0
2
0
1
4
0
0
0
0
0
0
0
0
0
0
0
0
1
4
1
0
0
0
0
2
0
16

2011
1
0
0
0
0
0
3
0
2
4
0
0
0
0
0
0
0
0
0
0
0
0
1
4
1
0
7
0
0
2
10
35

C30.4
2012
1
0
0
1
0
0
3
0
3
4
0
0
0
0
0
0
0
0
0
0
0
1
1
5
1
0
0
0
0
2
8
30

2013
1
0
0
1
0
0
3
0
2
5
0
0
0
0
0
0
0
0
0
0
0
2
0
4
1
0
6
0
0
2
9
36

2014
1
0
0
1
0
2
3
0
2
5
0
0
0
0
0
0
0
0
0
0
0
2
0
3
0
0
0
0
0
0
10
29

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry (NACE Rev. 2, B-E) (sbs_na_ind_r2);
Note: C25.4 - Manufacture of weapons and ammunition), C30.11 - Building of ships and floating structures, C30.3 - Manufacture of air and spacecraft and related machinery, C30.4 Manufacture of military fighting vehicles

152

Table 57: Turnover in Europe’s aerospace, defence and shipbuilding industries
2010-2014 [value in million EUR]
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Lithuania
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
United Kingdom
Total

2010
458.7
333.4
301.9
797.3
11.9
631.4
640.7
0
1 071.1
32 459.6
25 996.6
173.9
28.8
0
0
14 559.2
0
0
67.7
0
0
0
8 710.4
1 885.4
117.1
1 022.8
0
11.8
8 484.4
926.1
30 866.3
129 556.5

2011
381.0
0
246.2
540.0
13.0
694.9
506.1
0
505.9
33424.4
25420.5
331.9
29.6
0
0
13 054.9
0
0
8
0
0
0
9 589.7
2 238.0
110.9
951.6
75.5
17.1
7 940.0
992.3
31 692.6
128 764.1

2012
492.1
1 375.8
225.9
382.0
11.4
750.8
420.2
42.1
748.1
38 416.4
28 338.9
120.9
26.7
0
0
13 433.5
0
0
61.5
0
0
0
11 142.5
2 505.8
129.6
790.6
1.8
20
7 401.7
1 176.6
36 356.6
144 371.5

2013
523.5
1 389.8
166.5
267.6
8.6
896.8
300.4
0
868.2
44 586.2
29 910.9
165.6
25
0
0
11 652.8
0
0
63.3
0
0
0
11 922.5
2 591.5
107.6
1 030.2
42.9
19.1
8 742.4
957.7
36 865.7
153 104.8

2014
512.9
1 512.5
270.6
335.3
8.6
962.2
362.0
38.1
1 001.2
45 969.6
33 055.7
124.2
27.3
0
0
15 015.2
27.8
0
54.5
0
0
0
11 252.4
2 420.7
143.0
916.2
3.8
18.6
9 305.6
465.5
38 783.3
162 586.8

Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2)

153

Table 58: Employment in Europe’s aerospace, defence and shipbuilding industries
2010-2014 [number of employees]
2010
2011
2012
2013
2014
Austria
1 634
1 610
1 956
2 174
2 265
Belgium
1 660
0
5 047
5 443
5 632
Bulgaria
15 339
15 178
13 445
11 444
12 379
Croatia
11 162
10 986
9 799
11 020
6 417
Cyprus
26
30
27
21
22
Czech Republic
9 241
9 739
10 280
10 987
12 116
Denmark
2 470
2 042
1 228
1 456
1 577
Estonia
0
0
362
0
306
Finland
6 802
4 161
4 190
4 166
5 492
France
104 329 101 098 116 381 115 642 127 689
Germany
93 074
94 158
93 912
99 340 100 281
Greece
3 304
5 152
3 178
2 271
2 268
Hungary
586
615
453
431
454
Iceland
0
0
0
0
0
Ireland
0
0
0
0
0
Italy
55 564
53 642
52 661
50 997
53 627
Latvia
760
758
837
848
798
Liechtenstein
0
0
0
0
0
Lithuania
595
319
926
785
810
Luxembourg
0
0
0
0
0
Malta
0
0
0
0
0
Netherlands
10 223
10 724
9 905
10 541
10 640
Norway
24 876
24 577
27 253
29 492
30 936
Poland
28 982
28 609
27 580
27 591
25 685
Portugal
2 087
2 213
2 172
1 589
1 833
Romania
20 724
19 647
20 065
21 128
22 193
Slovakia
0
1 259
54
834
29
Slovenia
141
129
170
152
26
Spain
30 291
31 274
28 573
30 178
31 353
Sweden
3 677
3 690
3 911
3 664
0
United Kingdom
25 100
25 318
17 846
90 433
95 642
Total
452 647 446 928 452 211 532 627 550 470
Source: Eurostat, Structural Business Statistics (SBS), annual detailed enterprise statistics for industry
(NACE Rev. 2, B-E) (sbs_na_ind_r2)

Table 59: Thresholds as defined in Article 8 the Directive over the period of its
applicability [value in thousand EUR]
Period
21 August – 31 December 2011
2012-2013
2014-2015
2016-2017

services and supplies
387
400
414
418

154

works
4 845
5 000
5 186
5 225

9.

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155