General objectives and subject matter
1. This Regulation aims to enhance the technological leadership, innovation, readiness, long-term competitiveness, resilience, integration and preparedness of the European Defence Technological and Industrial Base (EDTIB), ensuring the timely availability and supply of defence products and contributing to the recovery, reconstruction and modernisation of the Ukrainian Defence Technological and Industrial Base (the ‘Ukrainian DTIB’).
2. This Regulation establishes a budget for the period from 2025 to 2027 and the following:
(1)
the European Defence Industry Programme (the ‘Programme’), comprising measures for strengthening the competitiveness, responsiveness and ability of the EDTIB, as set out in Chapter II;
(2)
the Ukraine Support Instrument, a cooperation programme with Ukraine with a view to the recovery, reconstruction and modernisation of the Ukrainian DTIB, taking into account the possible future integration of the Ukrainian DTIB into the EDTIB, as set out in Chapter III;
(3)
a legal framework for European Defence Projects of Common Interest (EDPCIs), as set out in Chapter IV;
(4)
a European Military Sales Mechanism, as set out in Chapter V;
(5)
a legal framework for Structures for European Armament Programmes (SEAPs), as set out in Chapter VI;
(6)
a legal framework to prepare for and respond to the impact of supply crises on the internal market, as set out in Chapter VII, aimed at ensuring:
(a)
the security of supply of crisis-relevant products; and
(b)
the proper functioning of the internal market for defence products, including by preventing the emergence of obstacles to it.
3. This Regulation is without prejudice to each Member State having the sole responsibility for its national security, as provided for in Article 4(2) of the Treaty on European Union (TEU), and to the right of each Member State to protect the essential interests of its security, in accordance with Article 346 of the Treaty on the Functioning of the European Union (TFEU).
Definitions
For the purposes of this Regulation, the following definitions apply:
(1)
‘advance purchasing agreement’ means a public contract with one or more economic operators which aims at supporting the swift development or production of a product, and by virtue of which the right to purchase a specified number of products in a given timeframe and at a given price is subject to the prefinancing of part of the upfront costs faced by the economic operators concerned; while an advance purchasing agreement is legally binding upon the participating contracting authorities and upon the contractor, it needs to be further implemented by means of the conclusion of contracts with the contractors concerned;
(2)
‘another third-country entity’ means a legal entity that is established in a non-associated third country other than Ukraine, or a legal entity that is established in the Union, in Ukraine or in an associated country but which has its executive management structures in a non-associated third country other than Ukraine;
(3)
‘associated countries’ means members of the European Free Trade Association which are members of the European Economic Area that apply this Regulation in accordance with the Agreement on the European Economic Area;
(4)
‘bottleneck’ means a point of congestion in a production system that stops or severely slows production;
(5)
‘blending operation’ means an action supported by the Union budget, including within a blending facility or platform as defined in Article 2, point (6), of the Financial Regulation, that combines non-repayable forms of support or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors;
(6)
‘classified information’ means information or material, in any form, the unauthorised disclosure of which could cause varying degrees of prejudice to the interests of the Union, or of one or more Member States, and which bears an EU classification marking or a corresponding classification marking, as established in the Agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the European Union ( 32 ) ;
(7)
‘contracting authorities’ means contracting authorities as defined in Article 2(1), point (1), of Directive 2014/24/EU of the European Parliament and of the Council ( 33 ) and in Article 3(1) of Directive 2014/25/EU of the European Parliament and of the Council ( 34 ) ;
(8)
‘control’ means the ability to exercise decisive influence over a legal entity directly, or indirectly through one or more intermediate legal entities;
(9)
‘crisis-relevant products’ means defence products or components or raw materials thereof, or any products or services critical to their production, whose availability is indispensable to ensure the proper functioning of the internal market and its supply chains and must be guaranteed in order to respond to a supply crisis;
(10)
‘defence innovation action’ means an action primarily consisting of activities directly aiming to produce plans and arrangements or designs for new, altered or improved defence products, processes or services, possibly including prototyping, testing, demonstrating, piloting, large-scale product validation and market replication;
(11)
‘defence products’ means any defence-related products as referred to in the Annex to Directive 2009/43/EC, as well as works, supplies and services directly related to those products for any and all elements of their life cycle within the meaning of Article 2, point (c), of Directive 2009/81/EC;
(12)
‘dynamic availability management’ means the provision of defence products in time, at the agreed location and to the agreed levels of availability, as well as managing availability risks that could materialise in the form of shortages of the defence product concerned; in this context, ‘availability’ means the ability of the defence product to function faultlessly under defined conditions and to be ready to use when required;
(13)
‘executive management structure’ means a body of a legal entity, appointed in accordance with national law, and, where applicable, reporting to the chief executive officer, which is empowered to establish the legal entity’s strategy, objectives and overall direction, and which oversees and monitors the legal entity’s management decision-making;
(14)
‘foreground information’ means data, knowhow or information generated within a given action under this Regulation, whatever its form or nature;
(15)
‘lead time’ means the period of time between a purchase order being placed and the manufacturer completing the order;
(16)
‘legal entity’ means a legal person created and recognised as such under Union, national or international law, which has legal personality and the capacity to act in its own name, exercise rights and be subject to obligations, or an entity which does not have legal personality as referred to in Article 200(2), point (c), of the Financial Regulation;
(17)
‘life cycle’ means all the possible successive stages of a product, from research and development to de-commissioning and disposal;
(18)
‘maintenance’ means all actions taken to ensure the readiness and operational capability of a defence product, in particular to retain equipment in, or restore it to, specified conditions until the end of its use, including mission readiness, longevity and upgrades, customisation and specialisation, inspection, overhaul, testing, servicing, modifications, classification as to serviceability, repair, recovery, rebuilding, reclamation, salvage and cannibalisation;
(19)
‘middle-capitalisation company’ or ‘mid-cap’ means an enterprise that is not an SME and that employs a maximum of 3 000 persons, where the headcount of staff is calculated in accordance with Articles 3 to 6 of the Annex to Commission Recommendation 2003/361/EC ( 35 ) ;
(20)
‘non-associated third-country entity’ means a legal entity that is established in a non-associated third country, or a legal entity that is established in the Union or in an associated country but which has its executive management structures in a non-associated third country;
(21)
‘non-recurrent costs’ means costs that occur on a one-time basis or at irregular intervals, in particular design, development and investment costs necessary for the production or maintenance of defence products or for the reservation of manufacturing capacities;
(22)
‘off-take agreement’ means any contractual agreement between, on the one hand, at least three Member States and, where relevant, associated countries or Ukraine and, on the other hand, at least one manufacturer of defence products, containing either a commitment by the Member States and, where relevant, associated countries or Ukraine to procure a certain quantity of defence products over a certain period of time, or a commitment by the manufacturer of defence products to provide the Member States and, where relevant, associated countries or Ukraine with the option to make such a procurement;
(23)
‘originator’ means the Union institution, agency or body, Member State or an entity set up under this Regulation under whose authority classified information has been created;
(24)
‘procurement agent’ means a contracting authority established in a Member State or an associated country, a Structure for European Armament Programme (SEAP), the European Defence Agency (EDA) or an international organisation that is designated by Member States, associated countries, Ukraine or a SEAP to conduct a common procurement on their behalf;
(25)
‘raw material’ means raw material as defined in Article 2, point (1), of Regulation (EU) 2024/1252 of the European Parliament and of the Council ( 36 ) ;
(26)
‘results’ means any tangible or intangible effect of a given action, such as data, knowhow or information, whatever its form or nature and whether or not it can be protected, as well as any rights attached to it, including intellectual property rights;
(27)
‘Seal of Excellence’ means a quality label which shows that a proposal submitted to a call for proposals under the Programme or the Ukraine Support Instrument has passed all of the evaluation thresholds set out in the work programme, but could not be funded due to a lack of budget available for that call for proposals in the work programme, and might receive support from other Union or national sources of funding;
(28)
‘sensitive information’ means unclassified information and data that are to be protected from unauthorised access or disclosure because of obligations laid down in Union or national law, where applicable, or in order to safeguard the privacy or security of a natural or legal person;
(29)
‘small and medium-sized enterprises’ (SMEs) means small and medium-sized enterprises as defined in Article 2 of the Annex to Recommendation 2003/361/EC;
(30)
‘small middle-capitalisation company’ or ‘small mid-cap’ has the meaning as assigned to it in the Annex to Commission Recommendation (EU) 2025/1099 ( 37 ) ;
(31)
‘subcontractor’ means an economic operator that is proposed by a candidate, tenderer or contractor to perform specific tasks or services under the supervision of the main contractor, contributing to the design or manufacturing of a defence product, other than what is provided by suppliers to implement the contract, for which it is allocated at least 15 % of the value of the contract, and that needs access to classified information for the performance of that contract; for the purposes of this definition, ‘supplier’ shall be understood as an economic operator that delivers components of its own design or production to the contractor.
Budget
1. The financial envelopes for the implementation of the Programme for the period from 30 December 2025 to 31 December 2027 shall be composed of:
(a)
EUR 1 200 000 000 in current prices; and
(b)
additional contributions in accordance with Article 5.
2. The financial envelopes for the implementation of the Ukraine Support Instrument for the period from 30 December 2025 to 31 December 2027 shall be composed of:
(a)
EUR 300 000 000 in current prices; and
(b)
additional contributions in accordance with Article 23, to the extent earmarked.
3. Union funding under this Regulation shall only cover the costs necessary for pursuing the objectives of the Programme and the Ukraine Support Instrument. Therefore, Union funding under the Programme and the Ukraine Support Instrument shall not cover the costs of the purchase and the maintenance of defence products for military or defence purposes, including in the context of establishing, managing and maintaining defence industrial readiness pools as referred to in Article 38 (‘defence industrial readiness pools’). Union funding under this Regulation may cover costs incurred in the context of the purchase or maintenance of such products where those costs are necessary for strengthening the competitiveness of the EDTIB or for the recovery, reconstruction and modernisation of the Ukrainian DTIB, in particular non-recurrent costs.
4. At least 15 % of the financial envelope referred to in paragraph 1, point (a), of this Article shall be allocated to actions referred to in Article 11, and at least 30 % of that financial envelope shall be allocated to actions referred to in Article 12. Up to 25 % of that financial envelope may be allocated to actions referred to in Article 35.
5. In order to respond to unforeseen situations or to new developments and needs, the Commission may transfer the amounts referred to in paragraphs 1 and 2 of this Article between the Programme and the Ukraine Support Instrument in accordance with the Financial Regulation.
6. Up to 3,5 % of the amount referred to in paragraphs 1 and 2 of this Article may be used for technical and administrative assistance for the implementation of the Programme and the Ukraine Support Instrument, such as preparatory, monitoring, control, audit and evaluation activities, including price investigations and corporate information technology systems and platforms, and all other technical and administrative assistance or staff-related expenses incurred by the Commission for the management of the Programme and the Ukraine Support Instrument.
7. Budgetary commitments for activities extending over more than one financial year may be broken down over several years into annual instalments.
8. If necessary to enable the management of actions not completed by 31 December 2027, appropriations may be entered in the Union budget until 2033 to cover the expenses necessary to fulfil the objectives set out in Article 4 for the Programme or, where relevant, Article 22 for the Ukraine Support Instrument, to enable the management of actions not completed by the end of the Programme or the Ukraine Support Instrument, and to cover the expenses related to critical operational activities and services.
