SECTION 1 — GENERAL PROVISIONS APPLICABLE TO THE UKRAINE SUPPORT INSTRUMENT
Objectives
1. The Ukraine Support Instrument shall contribute to the recovery, reconstruction and modernisation of the Ukrainian DTIB with a view to increasing its defence industrial readiness, taking into account its possible future integration into the EDTIB, through cooperation between the Union and Ukraine, thereby enhancing mutual stability, security, peace, prosperity, resilience and sustainability.
2. The objective set out in paragraph 1 shall be pursued with an emphasis on enhancing cross-border cooperation between the EDTIB and the Ukrainian DTIB, taking into account the defence industrial reinforcement and defence procurement needs of Ukraine, through the creation of manufacturing capacities or their ramp-up in line with NATO standards and other relevant standards, the protection of assets, technical assistance and exchange of personnel, increased cooperation on common procurement of defence products involving Ukraine and the Ukrainian DTIB, including their maintenance, and licensing production cooperation through public-private partnerships or other forms of cooperation, such as joint ventures. Special attention shall be given to the objective of supporting Ukraine to progressively align with Union rules, standards, policies and practices with a view to future Union membership.
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 Ukraine Support Instrument in accordance with Article 208(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. Any additional amounts received under bilateral or multilateral agreements concluded pursuant to Article 17 of Regulation (EU) 2025/1106 shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation and shall be used for the Ukraine Support Instrument in accordance with this Regulation.
3. Any additional amounts received under relevant Union restrictive measures shall be external assigned revenue within the meaning of Article 21(5) of the Financial Regulation and shall be used for actions reinforcing the Ukrainian DTIB.
4. Resources allocated to Member States under shared management may, at the request of the Member State concerned, be transferred to the Ukraine Support Instrument 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 States 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 States concerned or to be made available to the additional benefit of other Member States or Ukraine.
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 Ukraine Support Instrument 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 Ukraine Support Instrument, 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 Ukraine Support Instrument, actions shall meet all of the following conditions:
(a)
have been assessed in a call for proposals under the Ukraine Support Instrument;
(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 ERDF or ESF+ may support proposals submitted further to a call for proposals under the Ukraine Support Instrument which were awarded a Seal of Excellence.
Implementation and forms of Union funding
1. The Ukraine Support Instrument 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 33(3) of this Regulation, Union funding may be provided in any of the forms laid down in the Financial Regulation in accordance with its Title X, with the exception of blending operations under the InvestEU programme.
3. With respect to activities referred to in Article 12(1), point (d), of this Regulation for which Union funding is provided in the form of a grant under the Ukraine Support Instrument 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 34 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.
Eligible legal entities
1. Only legal entities established in the Union or in Ukraine and having their executive management structures in the Union or in Ukraine shall be eligible to be recipients of Union funding under this Regulation.
Legal entities established in the non-government controlled areas of Ukraine shall not be eligible for 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 Ukraine 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 Ukraine, they may use their infrastructure, facilities, assets or resources which are located or held outside the territory of the Member States or in a third country other than Ukraine, 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 22. The costs related to activities using such infrastructure, facilities, assets or resources shall not be eligible for support from the Ukraine Support Instrument.
5. For the purposes of an action supported by the Ukraine Support Instrument, the recipients of Union funding shall not be subject to control by a non-associated third country other than Ukraine or by another third-country entity.
6. By way of derogation from paragraph 5 of this Article, a legal entity established in the Union and controlled by a non-associated third country other than Ukraine or by another 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 in which it is established, such as adequate measures pursuant to screening, as defined in Article 2, point (3), of Regulation (EU) 2019/452, 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 22 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 other than Ukraine or by another 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, an associated country or Ukraine, where appropriate, in accordance with national laws and regulations;
(c)
the ownership of intellectual property arising from actions referred to in Article 27(1), point (b), relating to industrial reinforcement actions fostering industrialisation and commercialisation of defence products that have been developed in the framework of actions funded by the Union or other cooperative activities conducted with support of Member States, is not subject to restriction by a non-associated third country other than Ukraine or by another third-country entity nor transferred to entities established outside the territory of the Member States, of associated countries or of Ukraine, without the approval of the Member State or the associated country in which the legal entity is established or, where the legal entity is established in Ukraine, the approval of Ukraine. Such approval shall not contravene the objectives set out in Article 22.
If considered to be appropriate by the Member State 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 Ukraine, or controlled by a non-associated third country other than Ukraine or by another 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 22.
There shall be no unauthorised access by a non-associated third country other than Ukraine or by another 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 Ukraine, or controlled by a non-associated third country other than Ukraine or by another third-country entity, shall not be eligible for support from the Ukraine Support Instrument.
9. Paragraphs 5 and 6 shall not apply to:
(a)
contracting authorities of Member States and Ukraine;
(b)
international organisations;
(c)
SEAPs;
(d)
the EDA.
SECTION 2 — ELIGIBLE ACTIONS
Eligible actions
1. Actions eligible for funding under the Ukraine Support Instrument shall implement the objectives set out in Article 22 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.
2. The following actions shall not be eligible for funding under the Ukraine Support Instrument:
(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 paragraph 1, points (a) and (c), which is supported by Union funding, the cost of components originating outside the Union and Ukraine 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 paragraph 1, point (b), the cost of components originating outside the Union and Ukraine 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 other than Ukraine or by another 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 other than Ukraine or by another 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 Ukraine Support Instrument.
7. Actions eligible for funding under the Ukraine Support Instrument shall be carried out by, or with the involvement of, at a minimum, Ukraine or one legal entity established and having its executive management structure in Ukraine.
8. For the purposes of this Chapter, references to Member States in Articles 11, 12, 13 and 38 shall be understood to include Ukraine. References to associated countries in Articles 11, 12, 13 and 38 shall not apply to this Chapter. For the purposes of this Chapter, references to Article 9 contained in Article 11 shall be understood to refer to Article 26 and references to Article 10(5) contained in Article 12 shall be understood to refer to paragraph 5 of this Article.
Procurement with support by the Commission
1. By way of derogation from Article 168(2), second subparagraph, of the Financial Regulation, Ukraine may request, together with at least one Member State, the Commission to engage in joint procurement as referred to in Article 168(2) of the Financial Regulation, whereby Member States and Ukraine may acquire, rent or lease fully the defence products jointly procured. The other conditions set out in Article 168(2) of the Financial Regulation shall apply to such joint procurement.
2. By way of derogation from Article 168(3) of the Financial Regulation, Ukraine may request, together with at least one Member State, the Commission to act as a central purchasing body as referred to in Article 168(3) of the Financial Regulation to procure defence products on their behalf or in their name. Conditions equivalent to those set out in Article 168(3) of the Financial Regulation shall apply wherever the Commission acts as a central purchasing body.
3. 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.
4. In addition to the conditions set out in the Financial Regulation, the procurement procedure referred to in paragraphs 1 and 2 of this Article shall also comply with the following conditions:
(a)
participation in the procurement procedure is open to all Member States;
(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.
5. Where the Commission acts as a central purchasing body pursuant to paragraph 2, it may, as part of the procurement, procure components and raw materials necessary for the supply of defence products for the purpose of building strategic reserves by participating countries, including stockpiling.
6. 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 products from the date on which the draft contracts resulting from the procurement carried out for the purposes of this Regulation are sent.
7. 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.
8. This Article shall be without prejudice to existing Union and national rules governing the ownership, export and transfer of defence products.
9. The Commission shall ensure that participating countries are treated equally when carrying out the procurement procedures and when implementing the resulting agreements.
10. In addition to the conditions set out in the Financial Regulation, criteria equivalent to those laid down in Article 26(1), (3) and (4) of this Regulation shall also apply to tenderers, contractors and subcontractors in contracts resulting from the procurement conducted pursuant to this Article.
11. For procurement conducted pursuant to paragraph 1 of this Article, the rules set out in Article 27(3) and (5) shall apply.
Advance purchase of defence products
1. Joint procurement as referred to in Article 28 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(2). Contributions of participating countries as referred to in Article 23 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 Ukrainian DTIB’s manufacturing capacities, between Member States and Ukraine on the one hand and economic operators of the Ukrainian DTIB 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 other than Ukraine or by another 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, an associated country or Ukraine.
2. The system referred to in paragraph 1 shall allow interested Member States and Ukraine 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 26(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 Ukraine.
5. Further to the contact referred to in paragraph 4 of this Article, Ukraine and interested Member States 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 28.
6. The financial envelope referred to in Article 3(2) may cover the parts of the contract on non-recurrent costs, including the reservation of manufacturing capacities.
SECTION 4 — 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, as referred to in Article 22, the expected results of the relevant action, and the quality and efficiency of its implementation.
2. In addition to the criteria set out in paragraph 1 of this Article, proposals for common procurement actions as referred to in Article 11 may be evaluated based on one or more of the following criteria:
(a)
the estimated value of the common procurement;
(b)
the action’s contribution to the recovery, reconstruction and modernisation of the Ukrainian DTIB;
(c)
the action’s contribution to the acceleration of the procurement of, and the reduction of the production and delivery lead times for, defence products.
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 may be evaluated based on one or more of the following criteria:
(a)
the reduction of production lead time and the increase in production capacity in Ukraine;
(b)
the contribution to ensuring timely availability and supply of defence products throughout Ukraine;
(c)
the contribution to cross-border defence industrial cooperation between Ukraine and the Union.
4. The work programmes referred to in Article 34 shall lay down further details concerning the application of the award criteria, 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 and Article 13(1), point (g), 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. Where the Union contribution takes the form of grants pursuant to Article 193(3) of the Financial Regulation, the Ukraine Support Instrument may finance up to 100 % of the eligible costs for actions referred to in Article 27(1), points (b) and (c), of this Regulation.
2. Where the Union grant takes the form of financing not linked to costs, the level of the Union contribution 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 action 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;
(d)
the contribution of the action to the ramp-up of necessary manufacturing capacities in Ukraine;
(e)
the degree of complexity for Ukraine to progress with the process towards accession to the Union, including structural reforms and measures to promote convergence with Union rules, standards, policies and practices;
(f)
the degree of complexity for Ukraine to adapt its defence procurement processes and the environment of the Ukrainian defence industry, including to meet NATO standards and other relevant standards;
(g)
the hardship and risks associated with Russia’s war of aggression against Ukraine, taking into account the need to rebuild and modernise infrastructure damaged by that war in a resilient way and the need to avoid, prevent, reduce and, if possible, offset such damages.
3. Actions referred to in Article 27(1), point (a), 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. For actions referred to in Article 27(1), point (a), the support from the Ukraine Support Instrument shall not exceed 25 % of the estimated value of the common procurement contract concerned.
5. The work programmes referred to in Article 34 shall lay down further details.
Work programmes
1. The Ukraine Support Instrument 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 Ukraine Support Instrument.
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 27(1) and a detailed description of each type of action;
(b)
with respect to actions referred to in Article 27(1), points (a) and (b), the minimum financial size of the actions;
(c)
with respect to actions referred to in Article 27(1), point (b), 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 28(1), Article 29 and Article 30; 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.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
