SECTION 1 — GENERAL PROVISIONS APPLICABLE TO THE PROGRAMME
Objectives
1. The Programme shall aim to increase the competitiveness, resilience and readiness of the EDTIB by initiating and accelerating the adjustment of the industry to structural changes imposed by the evolving security environment. In particular, the Programme shall aim to:
(a)
enhance cooperation in defence procurement by incentivising Member States to aggregate demand for defence products, harmonise defence capability requirements and strengthen solidarity among themselves, ultimately leading to greater interoperability and interchangeability, and by improving predictability of demand for the EDTIB, corresponding with Member States’ defence product needs;
(b)
improve and accelerate the capacity for adaptation of defence industrial supply chains, open up supply chains for cross-border cooperation, in particular for SMEs and mid-caps, increase manufacturing capacities, reduce production lead time for defence products and support the industrialisation and commercialisation of defence products supported by actions funded by the Union or by other Union cooperative activities conducted with the support of Member States, with a view to ensuring the availability and supply of defence products throughout the Union, and taking into account the specific needs of Member States in the case of materialisation of conventional military threats;
(c)
improve the security of supply and resilience of the EDTIB by supporting the development and presence of the EDTIB throughout the Union.
2. The Programme shall be implemented taking into account the objectives of the Strategic Compass for Security and Defence and shall be consistent with the defence capability priorities commonly agreed by Member States within the framework of the common foreign and security policy (CFSP), in particular within the context of the Capability Development Plan (CDP), and with the collaborative opportunities identified in the Coordinated Annual Review on Defence (CARD).
3. The Programme shall be consistent with Member States’ cooperation within the framework of permanent structured cooperation (PESCO), EDA initiatives and projects, and the Union’s civil and military assistance to Ukraine. The Programme shall duly take into account the relevant activities carried out by the North Atlantic Treaty Organisation (NATO) and other partners where such activities serve the security and defence interests of the Union.
Additional financial resources
1. Member States, Union institutions, bodies and agencies, third countries, international organisations, international financial institutions or other third parties may provide additional financial contributions to the Programme, including to the Fund Accelerating Defence Supply Chains Transformation (FAST) referred to in Article 14 of this Regulation, in accordance with Article 211(2) of the Financial Regulation. Such financial contributions shall constitute external assigned revenue within the meaning of Article 21(2), point (a), (d) or (e), or Article 21(5) of the Financial Regulation.
2. Provided that they contribute to the achievement of one or more of the objectives set out in Article 4 of Regulation (EU) 2021/241, Member State contributions supported by the Recovery and Resilience Facility shall be used for the benefit of the Member State concerned and may, by way of derogation from Article 20(6) of this Regulation and from Article 193(1) of the Financial Regulation, be used for the purpose of contributing to the funding of eligible actions under Article 12 of this Regulation, up to 100 % of the eligible costs.
By way of derogation from Article 5(2), Article 18(4), point (d), and Article 19(3), point (d), and Annex V, criterion 2.4, of Regulation (EU) 2021/241, the principle of ‘do no significant harm’ shall not apply to Member State contributions supported by the Recovery and Resilience Facility, provided that the Member State concerned justifies in the relevant contribution agreement with the Commission that it is not feasible or appropriate to ensure that the type of activities intended to be supported under this Regulation comply with the principle of ‘do no significant harm’.
3. Any additional amounts received under bilateral or multilateral agreements concluded pursuant to Article 17 of Council Regulation (EU) 2025/1106 ( 38 ) shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation and shall be used for the Programme in accordance with this Regulation.
4. Resources allocated to Member States under shared management may, at the request of the Member State concerned, be transferred to the Programme subject to the conditions set out in Regulation (EU) 2021/1060. The Commission shall implement those resources directly in accordance with Article 62(1), first subparagraph, point (a), of the Financial Regulation or indirectly in accordance with point (c) of that subparagraph. Those resources shall be used for the benefit of the Member State concerned.
5. As regards the amounts contributed in accordance with paragraph 1 of this Article, the Member State concerned may take decisions regarding the proportion of those amounts to be made available to all entities eligible for funding under this Regulation, to be made available only to the benefit of the Member State concerned or to be made available to the additional benefit of other Member States. Where the amounts are made available to the benefit of the Member State concerned or to the additional benefit of other Member States, such amounts may, by derogation from Article 20(6) of this Regulation and from Article 193(1) of the Financial Regulation, be used for the purpose of contributing to the funding of eligible actions under Article 12 of this Regulation, up to 100 % of the eligible costs.
6. Where the Commission has not entered into a legal commitment under direct or indirect management for resources transferred in accordance with paragraph 4 of this Article and at the latest by 31 December 2028, the corresponding uncommitted resources may be transferred back to one or more respective source programmes, at the request of the Member State concerned, in accordance with the conditions set out in Regulation (EU) 2021/1060.
Alternative, combined and cumulative funding
1. The Programme shall be implemented in synergy with other Union programmes. An action that has received a contribution from another Union programme may also receive a contribution under the Programme provided that those contributions do not cover the same costs. The rules of the relevant Union programme shall apply to the corresponding contribution, or a single set of rules of any of the contributing Union programmes may be applied to all contributions and a single legal commitment may be concluded. The cumulative support from the Union budget shall not exceed the total eligible costs of the action and may be calculated on a pro-rata basis in accordance with the documents setting out the conditions for support.
2. In order to be awarded a Seal of Excellence under the Programme, actions shall meet all of the following conditions:
(a)
have been assessed in a call for proposals under the Programme;
(b)
comply with the minimum quality requirements of that call for proposals;
(c)
not be financed under that call for proposals due to budgetary constraints.
3. In accordance with the relevant provisions of Regulation (EU) 2021/1060, the European Regional Development Fund (ERDF) or the European Social Fund Plus (ESF+) may support proposals submitted further to a call for proposals under the Programme which were awarded a Seal of Excellence.
Implementation and forms of Union funding
1. The Programme shall be implemented under direct management in accordance with the Financial Regulation or under indirect management with entities referred to in Article 62(1), point (c), of the Financial Regulation.
2. Without prejudice to Article 20(3) of this Regulation, Union funding may be provided in any of the forms laid down in the Financial Regulation, in particular in the form of grants, prizes, procurement, and financial instruments within blending operations under the InvestEU programme in accordance with Title X of the Financial Regulation.
3. With respect to actions referred to in Article 12(1) of this Regulation for which Union funding is provided in the form of a grant and a profit is made, the Commission shall be entitled to recover the percentage of the profit corresponding to the Union contribution to the eligible costs actually incurred by the beneficiary carrying out the action, up to the final amount of the Union contribution. By way of derogation from Article 195(2) of the Financial Regulation, the profit shall be calculated by a surplus of receipts over the eligible costs of the action, where receipts are limited to Union funding, Member State funding, including procurement, other revenue generated during the action and any revenue resulting from the action. The work programmes referred to in Article 21 of this Regulation may set out further details.
4. By way of derogation from Article 196(2) of the Financial Regulation, financial contributions may, where relevant and necessary for the implementation of an action, cover actions started and costs incurred prior to the date of the submission of the proposal for those actions, provided that those actions did not start before 5 March 2024 and have not been completed before the signature of the grant agreement.
Third countries associated with the Programme
The Programme shall be open to the participation of associated countries, in accordance with the conditions laid down in the Agreement on the European Economic Area.
Eligible legal entities
1. Only legal entities established in the Union or in an associated country and having their executive management structures in the Union or in an associated country shall be eligible to be recipients of Union funding under this Regulation.
2. The eligibility criteria set out in paragraphs 3 to 9 of this Article shall apply in addition to the criteria set out in accordance with the Financial Regulation.
3. The infrastructure, facilities, assets and resources of the recipients of Union funding involved in an action which are used for the purposes of that action shall be located on the territory of a Member State or of an associated country for the entire duration of the action.
4. By way of derogation from paragraph 3 of this Article, where recipients of Union funding involved in an action have no readily available alternatives or relevant infrastructure, facilities, assets and resources in the Union or in an associated country, they may use their infrastructure, facilities, assets or resources which are located or held outside the territory of the Member States or of the associated countries, provided that such use does not contravene the security and defence interests of the Union and its Member States, including respect for the principle of good neighbourly relations, and is consistent with the objectives set out in Article 4. The costs related to activities using such infrastructure, facilities, assets or resources shall not be eligible for support from the Programme.
5. Recipients of Union funding under the Programme shall not be subject to control by a non-associated third country or by a non-associated third-country entity.
6. By way of derogation from paragraph 5 of this Article, a legal entity established in the Union or in an associated country and controlled by a non-associated third country or by a non-associated third-country entity shall be eligible to be a recipient of Union funding if guarantees approved in accordance with the national procedures of a Member State or associated country in which it is established, such as adequate measures pursuant to screening, as defined in Article 2, point (3), of Regulation (EU) 2019/452 of the European Parliament and of the Council ( 39 ) , are made available to the Commission.
The guarantees referred to in the first subparagraph of this paragraph shall provide assurances that the involvement in an action of a legal entity as referred to in that subparagraph would not contravene the security and defence interests of the Union and its Member States as established in the framework of the CFSP pursuant to Title V of the TEU, including respect for the principle of good neighbourly relations, or the objectives set out in Article 4 of this Regulation. Those guarantees shall in particular substantiate that, for the purposes of an action, measures are in place to ensure that:
(a)
control over the legal entity is not exercised in a manner that restrains or restricts its ability to carry out the action and to deliver results, that imposes restrictions concerning its infrastructure, facilities, assets, resources, intellectual property or know-how needed for the purposes of the action, or that undermines its capabilities and standards necessary to carry out the action;
(b)
access by a non-associated third country or by a non-associated third-country entity to classified or sensitive information relating to the action is prevented and the employees or other persons involved in the action have national security clearance issued by a Member State or an associated country, where appropriate, in accordance with national laws and regulations;
(c)
the ownership of intellectual property arising from actions referred to in Article 12(1), point (d), is not subject to restriction by a non-associated third country or a non-associated third-country entity nor transferred to entities established outside the territory of the Member States or of associated countries, without the approval of the Member State or the associated country in which the legal entity is established. Such approval shall not contravene the objectives set out in Article 4.
If considered to be appropriate by the Member State or the associated country in which the legal entity is established, additional guarantees may be provided.
The Commission shall inform the committee referred to in Article 77 of any legal entity considered to be eligible to be a recipient of Union funding in accordance with this paragraph.
7. The guarantees referred to in paragraph 6 of this Article may be based on a standardised template provided by the Commission, assisted by the committee referred to in Article 77, in order to ensure a harmonised approach throughout the Union.
8. When carrying out an eligible action, recipients may also cooperate with legal entities established outside the territory of the Member States or of associated countries, or controlled by a non-associated third country or by a non-associated third-country entity, including by using the assets, infrastructure, facilities and resources of such legal entities, provided that such use does not contravene the security and defence interests of the Union and its Member States, including respect for the principle of good neighbourly relations, or the objectives set out in Article 4.
There shall be no unauthorised access by a non-associated third country or by a non-associated third-country entity to classified information relating to the carrying-out of the action, and potential negative effects on the security of supply of inputs critical to the action shall be avoided.
The costs related to cooperation with legal entities established outside the territory of the Member States or of associated countries, or controlled by a non-associated third country or by a non-associated third-country entity, shall not be eligible for support from the Programme.
9. Paragraphs 5 and 6 shall not apply to:
(a)
contracting authorities of Member States and associated countries;
(b)
international organisations;
(c)
SEAPs;
(d)
the EDA.
SECTION 2 — ELIGIBLE ACTIONS
Eligible actions
1. Actions eligible for funding under the Programme shall implement the objectives set out in Article 4 and may take one of the following forms, or a combination thereof:
(a)
common procurement actions as referred to in Article 11, including for the purpose of establishing, managing or maintaining defence industrial readiness pools;
(b)
industrial reinforcement actions as referred to in Article 12;
(c)
supporting actions as referred to in Article 13;
(d)
deployment of EDPCIs as referred to in Article 35.
2. The following actions shall not be eligible for funding under the Programme:
(a)
actions related to defence products that are prohibited by applicable international law;
(b)
actions related to lethal autonomous systems that operate outside a responsible chain of human command and control or that cannot be used in compliance with international humanitarian law;
(c)
actions related to cluster munitions;
(d)
actions, or parts thereof, that are already fully financed from other public or private sources.
3. For procurement carried out pursuant to Articles 11, 13 and 35 which is supported by Union funding, the cost of components originating outside the Union and associated countries shall not be higher than 35 % of the estimated cost of the components of the end product. No component shall be sourced from third countries that contravene the security and defence interests of the Union and its Member States.
4. For actions carried out pursuant to Article 12 and activities carried out pursuant to Article 35 other than procurement activities, the cost of components originating outside the Union and associated countries shall not be higher than 35 % of the estimated cost of the components of the product the increase in production capacity of which is supported by Union funding. No component of the product the increase in production capacity of which is supported by Union funding shall be sourced from third countries that contravene the security and defence interests of the Union and its Member States.
5. Recipients of Union funding or, where relevant, contractors, shall have the ability to decide, without restrictions imposed by non-associated third countries or by non-associated third-country entities, on the definition, adaptation and evolution of the design of the defence products concerned, including the legal authority to substitute or remove components that are subject to restrictions imposed by non-associated third countries or by non-associated third-country entities.
6. Without prejudice to Article 5 of Directive 2009/43/EC, Member States may publish general transfer licences for transfer to other Member States of products related to actions supported by the Programme.
Common procurement actions
1. Common procurement actions shall consist of activities related to the cooperation of legal entities in the procurement of defence products, at any point in the life cycle of such defence products, including for the purpose of establishing, managing and maintaining defence industrial readiness pools.
2. Only the following legal entities shall be eligible for common procurement actions:
(a)
contracting authorities of Member States or associated countries;
(b)
international organisations;
(c)
SEAPs;
(d)
the EDA.
3. Common procurement actions shall be carried out by:
(a)
a consortium of legal entities as referred to in paragraph 2, including at least three entities referred to in paragraph 2, point (a), from at least three Member States or associated countries of which at least two shall be contracting authorities of two Member States; or
(b)
a SEAP.
4. Member States and associated countries carrying out a common procurement action shall appoint, by unanimity, a procurement agent to act on their behalf for the purposes of that common procurement. The procurement agent shall carry out the procurement procedures and conclude the resulting contracts with contractors on behalf of the participating countries. The procurement agent may participate in the action as a beneficiary and act as the coordinator of the consortium of legal entities, therefore being able to manage and combine funds from the Programme and funds from the participating Member States and associated countries.
5. The procurement procedures referred to in paragraph 4 shall be based on an agreement to be signed by the participating Member States and associated countries with the procurement agent under the conditions set out in the work programme. The agreement shall, in particular, determine the practical arrangements governing the common procurement and the decision-making process as regards the choice of the procedure, the assessment of the tenders and the award of the contract.
6. The procurement agent shall apply criteria equivalent to those set out in Article 9 to its procurement procedures and contracts with contractors and require that those criteria are applied to subcontractors.
7. By way of derogation from paragraph 6, in order to take into account industrial cooperation with non-associated third countries, common procurement that involves a subcontractor that is allocated between 15 % and 35 % of the value of the contract, and that is not established or does not have its executive management structures in the Union or in an associated country, shall be eligible for support under the Programme provided that a direct contractual relationship related to the defence product has been established between the contractor and that subcontractor prior to the date of entry into force of this Regulation.
8. Procurement agents shall notify the Commission of the guarantees referred to in Article 9(6). Further information on those guarantees shall be made available to the Commission upon request. The Commission shall inform the committee referred to in Article 77 of any notification provided in accordance with this paragraph.
9. Before launching a procurement procedure for a common procurement action under this Regulation, the procurement agent shall inform Member States not participating in the planned procedure and give them the opportunity to submit, within a reasonable timeframe, a substantiated request to the procurement agent to purchase additional quantities of defence products for them. If such a request is submitted, the common procurement contract shall reserve the right of participating contracting authorities to purchase additional quantities of defence products for such Member States, without prejudice to applicable Union and national rules relating to the export of defence products.
10. Before launching a procurement procedure for a common procurement action under this Regulation, the procurement agent shall, where possible, also inform associated countries and Ukraine of the planned procedure and give them the opportunity to submit a substantiated request to the procurement agent to purchase additional quantities of defence products for them. If such a request is submitted, the common procurement contract shall reserve the right of participating contracting authorities to purchase additional quantities of defence products for associated countries and Ukraine.
Industrial reinforcement actions
1. Industrial reinforcement actions shall consist of activities related to accelerating the adjustment to structural changes of the production capacity of defence products, including their components and corresponding raw materials insofar as they are intended or used wholly for the production of defence products, in particular:
(a)
the optimisation, expansion, modernisation, including automation, upgrading or repurposing of existing, or the establishment of new, production capacity of defence products, components and corresponding raw materials, including on the basis of the procurement or acquisition of the requisite machine tools and any other necessary input;
(b)
the establishment of cross-border industrial partnerships, including through public-private partnerships or other forms of industrial cooperation including SMEs and small mid-caps, in a joint industrial effort, including activities that aim to coordinate the sourcing or reservation and stockpiling of defence products, components and corresponding raw materials and to coordinate production capacities and production plans;
(c)
the building-up and making available of reserved surge manufacturing capacities of defence products, their components and corresponding raw materials, in accordance with ordered or planned production volumes;
(d)
fostering the industrialisation and commercialisation of defence products developed in the framework of actions funded by the Union or of other cooperative activities conducted with support by at least two Member States, including through the establishment of cross-border industrial partnerships, public-private partnerships or other forms of industrial cooperation and through the ramping-up of initial production and of licensing production, where appropriate;
(e)
the testing, including the necessary infrastructure, and, as appropriate, reconditioning certification of defence products with a view to addressing their obsolescence and making them useable by end-users.
2. For activities referred to in paragraph 1, point (d), the action shall be carried out by legal entities cooperating within a consortium of at least three eligible legal entities, of which at least two shall be established in different Member States. At least three of those eligible legal entities established in at least two different Member States shall not, during the entire period in which the action is carried out, be controlled, directly or indirectly, by the same legal entity and shall not control each other.
3. Notwithstanding paragraph 2, the activities referred to in paragraph 1 may be carried out by a SEAP.
4. For the production of ammunition and missiles, recipients of Union funding or relevant governmental authorities of the Member States concerned shall have the ability to decide, without restrictions imposed by non-associated third countries or by non-associated third-country entities, on the definition, adaptation and evolution of the design of the defence product concerned, including the legal authority to substitute or remove components that are subject to restrictions imposed by non-associated third countries or by non-associated third-country entities, or alternatively, by way of derogation from Article 10(5), shall have obtained a legally binding commitment from the non-associated third country or the non-associated third-country entity concerned that they will obtain such ability to decide within a reasonable timeframe commensurate with the complexity of the action concerned, and in any event no later than 31 December 2033.
Supporting actions
1. Supporting actions shall consist of:
(a)
activities to increase interoperability and interchangeability, including the cross-certification of defence products and activities leading to mutual recognition of certification, or to facilitate the implementation of military standards, in particular NATO standards and other relevant standards, thus reducing any excessive differentiation of defence products across the Union;
(b)
activities to facilitate access to the defence market for SMEs, mid-caps and start-ups and support to obtain the necessary quality and production certifications;
(c)
the capacity-building, training, reskilling or upskilling of personnel in relation to the activities referred to in Article 10(1);
(d)
the procurement of physical and cyber protection systems in relation to the activities referred to in Article 12;
(e)
coordination and technical support actions, in particular addressing identified bottlenecks in production capacities and supply chains with a view to securing and accelerating the production of crisis-relevant products in order to ensure their effective supply and timely availability;
(f)
the establishment of a European Military Sales Catalogue as referred to in Chapter V;
(g)
support for the establishment and functioning of SEAPs, including for the purpose of establishing, managing and maintaining defence industrial readiness pools;
(h)
activities with the aim of the rapid adaptation and modification of civilian products for defence applications;
(i)
defence innovation actions, including emergency defence innovation actions where the measure referred to in Article 68 is activated.
2. For activities referred to in paragraph 1, point (a), the action shall be carried out by legal entities cooperating within a consortium of at least three eligible legal entities, of which at least two shall be established in at least two different Member States. At least three of those eligible legal entities shall not, during the entire period in which the action is carried out, be controlled, directly or indirectly, by the same legal entity and shall not control each other.
3. Notwithstanding paragraph 2, the activities referred to in paragraph 1 may be carried out by a SEAP.
SECTION 3 — FUND ACCELERATING DEFENCE SUPPLY CHAINS TRANSFORMATION (FAST)
Fund Accelerating Defence Supply Chains Transformation (FAST)
1. In order to leverage, de-risk and accelerate investments needed to increase the defence manufacturing capacities of SMEs and small mid-caps complying with criteria equivalent to those set out in Article 9(1) and, where relevant, Article 9(3) and (4), a blending operation offering debt support, equity support or both may be established, entitled ‘Fund Accelerating Defence Supply Chains Transformation’ (FAST). It shall be implemented in accordance with Title X of the Financial Regulation and with Regulation (EU) 2021/523.
2. The specific objectives pursued by FAST shall be the following:
(a)
to achieve a satisfactory multiplier effect that is in line with the debt and equity mix and which contributes to attracting both public and private-sector financing;
(b)
to provide support to SMEs including start-ups and scale-ups and small midcaps across the Union, which are facing difficulties in accessing finance and which are:
(i)
industrialising or manufacturing defence products or have imminent plans to do so; or
(ii)
part of the Union’s defence supply chain or have imminent plans to become part of it;
(c)
to accelerate investment in the fields of manufacturing defence products and developing defence technologies, and therefore strengthen the security of supply of the Union’s defence industry value chains.
Procurement with support by the Commission
1. In accordance with Article 168 of the Financial Regulation, Member States may request the Commission:
(a)
to engage with them in a joint procurement as referred to in Article 168(2) of the Financial Regulation whereby Member States may acquire, rent or lease fully the defence products jointly procured;
(b)
to act as a central purchasing body as referred to in Article 168(3) of the Financial Regulation to procure defence products on behalf of, or in the name of, the interested Member States.
2. When requesting the Commission to act in accordance with paragraph 1 of this Article, Member States’ contracting authorities shall be deemed to have complied with the requirements laid down in Directive 2009/81/EC.
3. By way of derogation from Article 168(2), second subparagraph, of the Financial Regulation, an associated country may request the Commission to engage in joint procurement as referred to in paragraph 1, point (a), of this Article. The other conditions set out in Article 168(2) of the Financial Regulation shall apply to such joint procurement.
4. By way of derogation from Article 168(3) of the Financial Regulation, an associated country together with at least one Member State may request the Commission to act as a central purchasing body as referred to in paragraph 1, point (b), of this Article. Conditions equivalent to those set out in Article 168(3) of the Financial Regulation shall apply where the Commission acts as a central purchasing body.
5. In addition to the conditions set out in the Financial Regulation, the procurement procedure referred to in paragraphs 1, 3 and 4 of this Article shall also comply with the following conditions:
(a)
participation in the procurement procedure is open to all Member States and, by way of derogation from Article 168(2) and (3) of the Financial Regulation, may be open to associated countries;
(b)
the Commission invites at least one expert with experience relevant to the negotiations from each participating country to form a joint negotiation team;
(c)
participating countries explicitly state whether they decide to run parallel negotiation processes for the product concerned, with that decision being subject to unanimous approval by participating countries.
6. Where the Commission acts as a central purchasing body pursuant to paragraph 1, point (b), and paragraph 4, it may procure, on behalf of or in the name of Member States or associated countries, components and raw materials necessary for the supply of defence products for the purpose of building strategic reserves by participating countries, including stockpiling.
7. Where duly justified by the extreme urgency of the situation, the Commission may, by way of derogation from Article 175(1) of the Financial Regulation, request the delivery of defence products from the date on which the draft contracts resulting from the procurement carried out for the purposes of this Regulation are sent.
8. In order to enter into purchase agreements with economic operators, representatives of the Commission, or experts nominated by the Commission, may carry out on-site visits in cooperation with relevant national authorities at the locations of production facilities of relevant defence products.
9. This Article shall be without prejudice to existing Union and national rules governing the ownership, export and transfer of defence products.
10. The Commission shall ensure that participating countries are treated equally when carrying out the procurement procedures and when implementing the resulting agreements.
11. In addition to the conditions set out in the Financial Regulation, criteria equivalent to those laid down in Article 9(1), (3) and (4) of this Regulation shall also apply to tenderers, contractors and subcontractors in contracts resulting from procurement conducted pursuant to this Article.
12. For procurement conducted pursuant to paragraph 1, point (a), and paragraph 3 of this Article, the rules set out in Article 10(3) and (5) shall apply.
Advance purchase of defence products
1. Joint procurement as referred to in Article 15(1), point (a), may take the form of advance purchasing agreements of defence products, negotiated and concluded in the name of, or on behalf of, participating countries. Such agreements may include a prepayment mechanism for the production of such products in exchange for the right to the result, which shall not exceed the parts of the contract on non-recurrent costs, including the reservation of manufacturing capacities.
2. Where the agreements referred to in paragraph 1 of this Article include a prepayment mechanism, the up-front payment to the contractor may be covered by the financial envelope referred to in Article 3(1). Contributions of participating countries as referred to in Article 5 shall be taken into account in equal terms per item ordered by the participating countries.
3. In cases where the negotiated amounts exceed demand, the Commission, at the request of the participating countries concerned, shall establish a mechanism for reallocation to national stockpiles or for establishing defence industrial readiness pools.
Facilitating off-take agreements
1. The Commission shall set up a system to facilitate the conclusion of off-take agreements related to the industrial ramp-up of the EDTIB’s manufacturing capacities, between Member States and, where relevant, associated countries on the one hand and economic operators of the EDTIB on the other, in compliance with the Union’s competition and procurement rules. The Commission shall ensure that access by a non-associated third country or by a non-associated third-country entity to classified or sensitive information relating to the action is prevented and that the employees or other persons involved in the action have national security clearance issued by a Member State or an associated country.
2. The system referred to in paragraph 1 shall allow interested Member States and associated countries to make bids for defence products indicating:
(a)
the volume and quality;
(b)
the intended price or price range;
(c)
the intended duration of the off-take agreement.
3. The system referred to in paragraph 1 of this Article shall allow manufacturers of defence products that comply with criteria equivalent to those laid out in Article 9(1), (3) and (4) to make offers indicating:
(a)
the volume and quality of defence products for which they are seeking to conclude off-take agreements;
(b)
the intended price or price range at which they are willing to sell;
(c)
the estimated delivery lead time of defence products within the framework of the off-take agreement;
(d)
the intended duration of the off-take agreement.
4. Based on the bids and offers received pursuant to paragraphs 2 and 3, the Commission shall put relevant manufacturers of defence products in contact with interested Member States and associated countries.
5. Further to the contact referred to in paragraph 4 of this Article, interested countries may request the Commission to engage in a joint procurement procedure or in a procurement procedure in their name, or on their behalf, pursuant to Article 15.
6. The financial envelope referred to in Article 3(1) may cover the parts of the contract on non-recurrent costs, including the reservation of manufacturing capacities.
SECTION 5 — AWARD CRITERIA AND WORK PROGRAMMES
Award criteria
1. Proposals for actions shall be evaluated in the light of the objectives set for the relevant action, the expected results of the relevant action, and the quality and efficiency of its implementation. In particular, that evaluation shall include one or more of the following criteria:
(a)
contribution to competitiveness;
(b)
contribution to resilience and geographical distribution of manufacturing capacities;
(c)
increase in production capacities;
(d)
increase in interoperability;
(e)
increase in interchangeability; and
(f)
contribution to reducing strategic dependencies.
2. In addition to the criteria set out in paragraph 1 of this Article, proposals for common procurement actions referred to in Article 11 shall be evaluated based on the following criteria:
(a)
the number of participating Member States or associated countries;
(b)
the action’s contribution to the adaptation, modernisation and development of the EDTIB throughout the Union; and
(c)
the participation of SMEs and mid-caps.
3. In addition to the criteria set out in paragraph 1 of this Article, proposals for industrial reinforcement actions as referred to in Article 12 shall be evaluated based on the following criteria:
(a)
the reduction of production lead time, and the increase in production capacity in the Union, in reserved capacity and in workforce skilled;
(b)
the contribution to ensuring availability and security of supply throughout the Union in response to identified risks, including in particular high exposure to the risk of materialisation of conventional military threats; and
(c)
the contribution to cross-border defence industrial cooperation throughout the Union, improving the inclusion of SMEs and mid-caps, or the link with orders stemming from the common procurement of defence products by at least three Member States or associated countries.
4. The work programmes referred to in Article 21 shall lay down further details concerning the application of the criteria set out in paragraph 1 of this Article, including any weighting to be applied. The work programmes shall not set individual thresholds.
5. The evaluation committee may be assisted by independent external experts in accordance with Article 153(3) of the Financial Regulation. The work programmes may specify that those experts are required to hold a valid personal security clearance.
Selection and award procedure
Except for actions referred to in Article 11, Article 13(1), point (g), and Article 10(1), point (d), the Commission shall award the funding under this Chapter by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 77(4).
Union financial contribution
1. For actions referred to in Articles 13 and 35 of this Regulation, and by way of derogation from Article 193(1) of the Financial Regulation, where the Union financial contribution takes the form of grants the Programme may finance up to 100 % of the eligible costs.
2. Where the Union grant takes the form of financing not linked to costs, pursuant to Article 183(3) of the Financial Regulation, the level of the Union contribution attributed to each action may be based on factors such as:
(a)
the degree of complexity of the common procurement, for which a proportion of the estimated value of the common procurement contract and the experience gained in similar actions may serve as an initial proxy;
(b)
the contribution of the action to improving interoperability outcomes;
(c)
the characteristics of the action which are likely to give rise to greater long-term investment signals to industry, in particular where the common procurement covers activities that would be eligible for funding from the Union budget, such as research and development, testing and certification, initial production or in-service support activities;
(d)
the number of participating Member States and associated countries, or the inclusion of additional Member States or associated countries in existing cooperations;
(e)
the contribution of the action to the ramp-up of necessary manufacturing capacities;
(f)
the contribution of the action to the reduction of dependencies on non-associated countries;
(g)
the contribution of the action to enhancing cooperation between Member States or associated countries for the purpose of establishing, managing or maintaining defence industrial readiness pools;
(h)
the contribution of the action to enhancing cooperation between Member States or associated countries resulting in the common procurement of additional quantities of defence products for Ukraine or Moldova;
(i)
the complexity of the technological solutions necessary for the integration of the defence product procured within the armed forces of a participating Member State.
3. Actions referred to in Article 11 of this Regulation shall be funded by way of grants in the form of financing not linked to costs, pursuant to Article 183(3) of the Financial Regulation.
4. The Union financial contribution to each action referred to in Article 11 shall not exceed 15 % of the estimated value of the common procurement contract concerned.
5. By way of derogation from paragraph 4 of this Article, the Union financial contribution to each action referred to in Article 11 may be up to 25 % of the estimated value of the common procurement contract concerned, provided that at least one of the following conditions is met:
(a)
the action is carried out by a SEAP;
(b)
the action supports the common procurement of restriction-free end products;
(c)
the action results in the common procurement of additional quantities of defence products for Ukraine or Moldova;
(d)
the action ensures a wide distribution of suppliers across Member States whereby more than 20 % of the total value of the end product is made by suppliers established in at least one Member State other than the Member State in which the prime contractor is established;
(e)
the defence investment expenditure of the majority of Member States participating in the action concerned exceeded 30 % of their respective defence spending in the financial year preceding the application.
6. For actions referred to in Article 12, the Union financial contribution shall not exceed 35 % of the eligible costs.
7. By way of derogation from paragraph 6 of this Article, the Union financial contribution to each action referred to in Article 12 may be up to 50 % of the eligible costs where the majority of beneficiaries are SMEs or mid-caps established in Member States or in associated countries or where the action is carried out by a SEAP, and where at least one of the following conditions is met:
(a)
the beneficiary demonstrates a contribution to the creation of new cross-border cooperation between entities established in Member States or associated countries;
(b)
the action involves building new infrastructure, facilities or production lines from the ground up or on sites not previously used for such activities, contributing to the development of supply chains and technology transfer throughout the Union;
(c)
the action contributes to the establishment of new, or the ramping-up of existing, manufacturing capacities of crisis-relevant products.
8. The work programmes referred to in Article 21 shall lay down further details.
Work programmes
1. The Programme shall be implemented by work programmes as referred to in Article 110 of the Financial Regulation. Work programmes may be multiannual, when appropriate. Work programmes shall set out the actions and associated budget required to meet the objectives of the Programme and, where applicable, the overall amount reserved for blending operations.
2. The Commission shall adopt work programmes by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 77(4).
3. The work programmes shall include in particular:
(a)
the overall amount of the Union contribution to each type of action referred to in Article 10(1) and a detailed description of each type of action;
(b)
with respect to actions referred to in Articles 11 and 12, the minimum financial size of the actions;
(c)
with respect to actions referred to in Article 12, the maximum number of legal entities forming part of the consortium, which shall not exceed 15 legal entities;
(d)
the procedure for the evaluation and selection of proposals, including, where relevant, a description of the milestones, designed in such a way as to mark substantial progress in the implementation of actions, the results to be achieved and the associated amounts to be disbursed, as well as the arrangements for the verification of the milestones, the fulfilment of conditions and the achievement of results;
(e)
the overall amount of the Union contribution to joint procurement with the support of the Commission as referred to in Article 15(1), point (a), Article 15(3), Article 16 and Article 17; and
(f)
the methods for determining and, where applicable, adjusting the funding.
4. When adopting work programmes, the Commission shall take into account the need for coherence with other relevant Union programmes and instruments.
5. The financial envelope referred to in Article 3(1) may cover joint procurement as referred to in Article 15(1), point (a), which shall not exceed the parts of the contract on non-recurrent costs, including the reservation of manufacturing capacities.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
