EU Simplifies Rules on Defense Procurement and Transfers of Defense-Related Products

The European Union has enacted its first major reform of the 2009 directives on defense procurement and intra-EU transfers of defense-related products. The amending directive, which has been adopted as part of the Defense Readiness Omnibus legislative package (also known as “Omnibus V”), aims to simplify and accelerate procedures both for buying defense- and security-related goods, and for transferring such goods between EU Member States.  

The European Commission is expected to propose a more comprehensive reform of the EU defense and security procurement rules in the coming months. 

Background 

The European Commission proposed the Defense Readiness Omnibus simplification package in June 2025. As we discussed in a previous alert, the Omnibus aims to facilitate at least €800 billion in defense-related investment over the next four years by removing legal and administrative hurdles in areas such as public procurement, permitting, and cross-border cooperation. 

In addition to the amendments discussed in this alert (i.e., to the Defense Procurement Directive and the Directive on Intra-EU Transfers of Defense-Related Products), the Omnibus also includes two regulations: 

• a regulation introducing a fast-track permitting system for defense-related infrastructure projects; 

• a regulation amending (i) EU environmental and chemicals legislation to enable Member States to exempt certain substances where this is justified by overriding defense interests, and (ii) the European Defense Fund (EDF) regulation to simplify the management and implementation of the fund and establish clearer protections of industry intellectual property. 

The European Parliament and the Council reached political agreement on the package in June 2026. The amending directive on defense procurement and transfers of defense-related products was published in the Official Journal of the EU on November 3, 2026, alongside the two aforementioned regulations (not discussed in this alert). 

What changes for defense procurement? 

The most notable change is a substantial increase in the thresholds determining which contracts are covered by the Defense Procurement Directive: 

• From €432,000 to €2,000,000 for supply and services contracts. 
• From €5,404,000 to €10,000,000 for construction and civil engineering works contracts. 

The new thresholds are substantially higher than those originally proposed by the European Commission (€900,000 for supply and services contracts and €7,000,000 for works contracts). According to the directive’s recitals, this should enable Member States to focus their resources on the most critical contracts and ease the industry’s administrative burden. Reducing the regulatory complexity and costs associated with defense contracts is expected to encourage greater participation by small and medium-sized enterprises (SMEs) and startups. There is a fly in the ointment, however, as procurements below these thresholds are governed by national law. Narrowing the directive’s scope by raising the thresholds could therefore lead to greater market fragmentation, although national rules should still respect the general principles of EU public procurement law, including transparency, equal treatment, and proportionality. 

The amended directive expands the range of contract award procedures available to contracting authorities. Previously, the  Defense Procurement Directive provided only for the restricted procedure, the negotiated procedure with publication of a contract notice, and competitive dialogue. In exceptional circumstances, contracting authorities could also use a negotiated procedure without publication of a contract notice. 

The amendments to the directive add the open procedure and the innovation partnership, both based on the Public Contracts Directive (Directive 2014/24/EU). They also introduce a defense-sector-specific dynamic purchasing system (DPS): 

• For the first time, an open procedure will be available in defense procurement: a procedure with unrestricted participation and no prequalification or shortlisting phase. 
• The innovation partnership is a procedure for the development and procurement of innovative products, services, or works to meet needs that cannot be met by solutions already available on the market. 
• A DPS is a fully electronic procurement tool that public buyers can use to procure goods, services, or both that are generally available on the market. 

The inclusion of the open procedure and the DPS should facilitate access to defense and security procurement opportunities by smaller companies. 

The amended directive also contains several provisions to encourage cooperative procurement involving contracting authorities from more than one Member State. For example, Member States should generally not prohibit their contracting authorities from relying on the services of central purchasing bodies located in other Member States. Contracting authorities from different Member States may also jointly award contracts, conclude framework agreements, or operate a DPS under an agreement governing the parties’ responsibilities, the applicable law, and the organization of the procedure. Contracting authorities from several Member States can also establish a joint procurement body and agree on the rules applicable to it. Alternatively, two or more contracting authorities may agree to conduct specific procurements jointly. In such a case, they would be jointly responsible for fulfilling their obligations under the Defense Procurement Directive for the procurement procedure, or for the part of it that they conduct jointly. 

As initially proposed by the Commission, the amended directive also extends the maximum duration of framework contracts from 7 to 10 years, to enable public buyers to establish longer-term relationships with suppliers. 

However, other elements contained in the Commission’s initial proposal did not make it into the final text. Notably, the final text does not include the proposed temporary derogation that would have allowed at least three Member States to jointly replenish stocks through immediate purchases, using a negotiated procedure without prior publication of a contract notice. 

In addition, rather than eliminating the statistical reporting requirements, as proposed by the Commission, the amended directive suspends them until the end of 2030, a date that corresponds to the EU’s defense readiness planning horizon. 

Finally, the amending directive does not expand the existing exclusions under Article 13 of the Defense Procurement Directive. The new text merely clarifies the exclusion under Article 13(c) for contracts awarded under a cooperative program based on research and development conducted jointly by at least two Member States to develop a new product. This exclusion also applies to upgrades that substantially improve an existing product. 

What changes for intra-EU transfers of defense-related products? 

The reform also simplifies the rules governing intra-EU transfers of defense-related products under Directive 2009/43/EC. The  directive already distinguished between general transfer licenses, (which authorize qualifying suppliers to make transfers subject to published conditions), global licenses (issued to an individual supplier for transfers to specified recipients or recipient categories), and individual licenses (for a specific transfer). Rather than replacing that framework, the amendments expand the use of general licenses and the circumstances in which Member States may dispense with prior authorization altogether. 

A major change is the introduction of mandatory general transfer licenses for projects funded under EU defense industrial programs, such as the European Defense Fund (EDF). The new Article 5a requires Member States to publish general licenses covering all intra-EU transfers necessary to implement specific funded projects, for the defense-related products listed in the directive’s Annex. Member States may extend this licensing system to later phases of the projects’ life cycle after the funded stages. Where the funding agreement or contract contains the prescribed commitment against unauthorized sharing beyond the specified project participants and oversight bodies, Member States must not require additional commitments, such as end-use certificates, or impose export limitations on those products.  

The new Article 5b requires Member States also to publish general transfer licenses for structured intra-EU industrial partnerships, expressly including non-tangible transfers of software and technology. The new definition of structured intra-EU partnerships covers stable and lasting collaboration between entities established in different Member States within a common corporate group, consortium, joint venture, or similarly structured entity, engaged in activities ranging from joint design and development to production, assembly, supply, marketing, or life cycle support of a defense-related product. This should facilitate recurring cross-border collaboration within integrated industrial structures, rather than treating each movement of a product or exchange of controlled technology as an isolated transaction. 

In addition, the reform introduces a general transfer license or potential licensing exemption for transfers between certified suppliers and certified recipients. Effectively, this extends the existing rules so that they cover certified suppliers as well. At the very least, the same defense-related products must be covered. Member States must moreover ensure that their national legislation allows additional categories of general transfer licenses beyond those expressly listed in the directive. 

In a separate amendment, the directive broadens the grounds on which the Member States can rely when adopting optional exemptions from prior authorization. New grounds include transfers to EU institutions or bodies or the European Defense Agency, transfers between certified undertakings, transfers necessary for EU-funded defense industrial projects, and transfers within structured intra-EU industrial partnerships. Added to the list are transfers in situations of urgency resulting from a crisis, transfers providing aid and assistance under Article 42(7) TEU, and transfers linked to military and defense assistance under specified EU treaty provisions. References to cooperative armament programs are clarified to include PESCO projects, Structures for European Armament Programmes, and European Defense Projects of Common Interest. These exemptions are optional for Member States, they are not automatic EU-wide license waivers. For structured industrial partnerships, the recitals specify case-by-case exemptions for particular partnerships rather than a blanket exclusion. The Commission’s delegated power to add exemption grounds is also expanded to cover transfers necessary for intra-EU cooperation. 

The amended directive also limits barriers to suppliers’ access to the licensing system. Member States may not impose preconditions that prevent suppliers from using general licenses or applying for global or individual licenses on grounds unrelated to their capacity to meet transfer and export control obligations. The recitals identify a supplier’s legal form or status as examples of criteria that should not exclude categories of suppliers. However, the applicable license conditions or suppliers’ information obligations are not dispensed with. 

Simplification is accompanied by more explicit certification and compliance requirements. The reliability assessment is now expressly based on compliance with EU and national transfer and export controls, and, in particular, on due diligence assessing export risks. The certification criteria emphasize experience in transfers and exports, while removing the specific reference to system or subsystem integration capacity from the industrial activity criterion. Internal compliance programs must expressly cover reporting and corrective measures, information security, and transaction screening. Certified undertakings must also notify the authorities without delay of changes to their internal organization or defense-related industrial or commercial activities, which may trigger reassessment. Companies seeking to benefit from the new certified-to-certified transfer route should therefore review their compliance arrangements alongside the potential licensing efficiencies. 

For non-tangible transfers of software and technology, Member States must apply the supplier information requirements proportionately and avoid disproportionate reporting obligations, particularly concerning quantity and value and transfer dates. This is a targeted adjustment to the existing recordkeeping framework and should make the rules more workable for technology-intensive cross-border collaboration. 

Overall, the reform of the rules on intra-EU transfers of defense-related products should reduce friction in European defense supply chains. However, national implementation and export controls remain critical. Furthermore, the amending directive does not remove Member States’ discretion regarding exports to third countries, and the new project licenses cover intra-EU transfers only, not exports to non-EU project participants.  

It is important that companies assess which new general licenses or national exemptions may affect their activities. They should also continue to verify the applicable conditions and export restrictions.  

Next steps 

The amending directive enters into force on November 23, 2026. Member States have 12 months from the date of publication (November 3, 2026) to transpose it into national law, and they must apply the new rules no later than 15 months after publication. Although some Member States may enact their national transposition measures more quickly, the reform is therefore unlikely to have much practical effect before 2028.