SECTION 1 — COOPERATIVE DEFENCE PROCUREMENT
Modification of framework agreements in the context of a crisis under Directive 2009/81/EC
1. Where at least two Member States enter into an agreement to commonly procure defence products for themselves or for Ukraine and where justified by an urgency resulting from a crisis as defined in Article 1(10) of Directive 2009/81/EC, the rules provided for in paragraphs 2 to 6 of this Article may be applied to framework agreements that do not include rules governing the possibility to substantially amend the agreement. When applying the rules in paragraphs 2 and 3 of this Article, the contracting authority that concluded the framework agreement shall obtain the agreement of the undertaking with which it concluded the framework agreement.
2. A contracting authority of a Member State may modify an existing framework agreement for defence products, where that framework agreement was concluded with an undertaking complying with criteria equivalent to those laid down in Article 9(1), (3) and (4) of this Regulation, in order to add new contracting authorities as party to that framework agreement so that its provisions apply to contracting authorities which were not originally party to the framework agreement. Article 29(2), first subparagraph, of Directive 2009/81/EC shall not apply to the contracting authorities not originally party to the framework agreement.
3. By way of derogation from Article 29(2), third subparagraph, of Directive 2009/81/EC, when awarding contracts based on a framework agreement with an estimated value above the threshold set out in Article 8 of that Directive, a contracting authority of a Member State may make substantial amendments to the quantities laid down in that framework agreement of up to 100 % of the value of the framework agreement, where that framework agreement was concluded with an undertaking complying with criteria equivalent to those laid down in Article 9(1), (3) and (4) of this Regulation and in so far as the modification is strictly necessary for the application of paragraph 2 of this Article.
4. For the purpose of the calculation of the value mentioned in paragraph 3 where the contract includes an indexation clause, the updated value shall be the reference point.
5. In the cases referred to in paragraphs 2 and 3, the principle of equal rights and obligations shall apply to the relationships between the contracting authorities which are party to the framework agreement, in particular regarding the cost of additional quantities procured.
6. A contracting authority which has modified a framework agreement in the cases referred to in paragraph 2 or 3 of this Article shall publish a notice to that effect in the Official Journal of the European Union . Such a notice shall be published in accordance with Article 32 of Directive 2009/81/EC.
Cases justifying use of the negotiated procedure without publication of a contract notice in the context of a defence cooperation initiative
A contracting authority of a Member State, where it establishes a new or joins an existing genuine defence cooperation initiative established by an international agreement or arrangement between Member States and, where relevant, one or more associated countries or Ukraine, with the aim of the convergence of military capabilities, may award a contract to, or conclude a framework agreement on a defence product with, an undertaking, in accordance with Article 28(1), point (e), of Directive 2009/81/EC, provided that all of the following conditions are met:
(a)
the undertaking concerned complies with criteria equivalent to those laid down in Article 9(1), (3) and (4);
(b)
the defence cooperation initiative referred to in the introductory sentence of this Article was initiated prior to the commencement of the procurement procedure by the contracting authority of the Member State concerned;
(c)
one of the other Member States participating in the defence cooperation initiative referred to in the introductory sentence of this Article has already awarded a contract to, or concluded a framework agreement on a defence product with, that undertaking;
(d)
the defence product to be procured is identical to the one referred to in point (c) of this Article or is subject to minor modifications only;
(e)
the award of the contract or the conclusion of the framework agreement is necessary for the implementation of the defence cooperation initiative referred to in point (b) of this Article.
Acceleration of the permit-granting process for the timely availability and supply of crisis-relevant products
1. Member States shall ensure that administrative applications related to the planning, construction and operation of production facilities, transfer of inputs within the Union and qualification and certification of end products are processed in an efficient and timely manner. To that end, all national authorities concerned shall ensure that the most rapid treatment legally possible is given to such applications.
2. Member States shall ensure that, in the planning and permit-granting process, the construction and operation of plants and installations for the production of crisis-relevant products are given priority when balancing legal interests in the individual case concerned.
Facilitation of the cross-certification process
1. Member States shall adopt a list of national certification authorities for defence purposes and notify it to the Commission, which shall make it available to Member States.
2. The Commission, taking into account the views of the EDA, shall draw up and keep updated, by means of implementing acts, an official list of national certification authorities for defence purposes as identified by Member States. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 77(4).
3. A certification authority of one Member State may request from the certification authority of another Member State information about the scope of the certification of a certain defence product.
4. The national certification authorities referred to in paragraph 1 shall cooperate with each other in the performance of their tasks under this Regulation and shall give the authorities of other Member States all necessary support to that end. The Commission, inviting, where relevant, the EDA to provide its expertise, shall support such cooperation in order to facilitate an efficient and effective movement of defence products in the internal market.
Mapping of defence supply chains
1. The mapping of the Union’s defence supply chains shall aim to analyse the strengths and weaknesses of such supply chains, with an emphasis on bottlenecks. It shall inform, where relevant, the development of the work programmes of the Programme and of the Ukraine Support Instrument as referred to in Articles 21 and 34.
2. The mapping of the Union’s defence supply chains shall consist of the following activities, to be performed on a regular basis:
(a)
identification of the relevant manufacturing capacities and supply chains of defence products pursuant to paragraph 5;
(b)
identification of crisis-relevant products and their related manufacturing capacities, pursuant to paragraph 9;
(c)
aggregation, cross-check and assessment of data gathered pursuant to paragraphs 6, 7 and 8;
(d)
identification of early-warning indicators, pursuant to paragraph 11; and
(e)
identification of the main suppliers of crisis-relevant products and their production capacities, pursuant to paragraphs 12 and 13.
3. The Commission, in cooperation with the Defence Security of Supply Board (the ‘Board’), shall carry out the activities referred to in paragraph 2, points (b), (c) and (d). The Member States shall carry out the activities referred to in paragraph 2, points (a) and (e). Each Member State may request the Commission to carry out, on its behalf, the activities referred to in paragraph 2, points (a) and (e).
4. The Commission shall, after consulting the Board, develop a framework and methodology for identifying crisis-relevant products, with an emphasis on existing bottlenecks, as well as their related manufacturing capacities in the Union, and for the mapping of supply chains of those products. That methodology shall build upon any frameworks or methodologies that exist within Member States. For that purpose, the Board may issue recommendations on the type of information appropriate for the mapping of supply chains of crisis-relevant products, on the technical specifications and formats for communicating that information and on the periodicity of such communication.
5. On the basis of the framework and methodology developed pursuant to paragraph 4, Member States shall identify on their territory the relevant manufacturing capacities and supply chains of defence products and shall provide the outcome of that identification to the Commission.
6. The Commission shall aggregate the data provided by Member States pursuant to paragraph 5 and perform a cross-check, with a view to identifying a list of crisis-relevant products and their related manufacturing capacities and to assessing the strengths and weaknesses of the Union’s supply chains of such products.
7. To complement the data provided by Member States, the Commission shall use publicly and commercially available data and relevant non-confidential information from economic operators, as well as the results of similar analyses performed, including in the context of Union law on raw materials, semiconductors and renewable energy, the results of the relevant activities of the EDA, the results of the stress tests conducted pursuant to Article 58 and the results of the evaluation carried out pursuant to Article 85(2).
8. Where the data referred to in paragraphs 6 and 7 are not sufficient for the performance of its tasks pursuant to paragraph 6, the Commission may request the relevant actors involved in the supply chains concerned and based in the Union to provide, on a voluntary basis, information to the Member State on the territory of which the production site of the addressed economic operator is located. The Commission’s request shall explicitly indicate that the economic operator is free to refuse such a request. The request for information shall include the contact information of the national competent authorities of the Member State on the territory of which the production site of the addressed economic operator is located to which the reply is to be sent. Where the economic operator decides to provide the requested information to the Member State concerned, the Member State concerned shall make that information available to the Commission.
9. The Commission, by means of an implementing act, shall draw up and regularly update the list of crisis-relevant products. That implementing act shall be adopted in accordance with the examination procedure referred to in Article 77(4).
10. The Commission shall inform the Board of the aggregate results of the mapping on an annual basis or at the request of one of the members of the Board as referred to in Article 76(5). Those results shall constitute classified information.
11. The Commission shall, on the basis of the outcome of the activities carried out pursuant to paragraphs 4, 6 and 7 and after consulting the Board, develop a list of early-warning indicators aimed at identifying factors that could disrupt, compromise or negatively affect the supply of crisis-relevant products. The Commission, after consulting the Board, shall review the list of early-warning indicators on a regular basis, and at least every two years.
12. Member States shall, in cooperation with the Commission and the EDA, where relevant, identify the main suppliers of crisis-relevant products established on their territory, without unnecessary delay, after the adoption of the implementing act referred to in paragraph 9 of this Article. Each Member State shall notify the main suppliers of crisis-relevant products established on its territory that they have been identified pursuant to this paragraph and inform them about the obligation to report on disruptions in the supply of crisis-relevant products as set out in Article 57(1), point (c). That notification shall also include the relevant contact information of the national competent authorities to which that report is to be sent.
13. The identification of main suppliers as referred to in paragraph 12 may take into account the following elements:
(a)
the market share of the supplier in the market for that crisis-relevant product;
(b)
the importance of the supplier in maintaining a sufficient level of supply of a crisis-relevant product in the Union, taking into account the availability in the Union of alternative means for the provision of that product; or
(c)
the impact that a disruption of supply of the crisis-relevant product provided by the supplier could have on the functioning of the internal market.
14. Without prejudice to paragraph 10 of this Article, any information obtained pursuant to this Article shall be treated in compliance with the confidentiality obligations set out in Article 80.
15. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (a), TFEU.
Monitoring
1. Member States and the Commission, in cooperation with the Board, shall carry out regular monitoring of the Union’s manufacturing capacities necessary for the supply of crisis-relevant products, identified in accordance with Article 56(9), with a view to identifying possible risks to the supply of those products. In carrying out that monitoring:
(a)
the Commission, in cooperation with the Board, shall monitor early-warning indicators identified pursuant to Article 56(11), including by aggregating any input received from Member States on the basis of information collected at national level;
(b)
Member States shall monitor, in light of the early-warning indicators, the ability of the main suppliers of crisis-relevant products referred to in Article 56(12) to carry out their activities and report to the Board on any events that could have negative and lasting consequences on the timely availability and supply of those products;
(c)
where main suppliers of crisis-relevant products detect disruptions of supply which could significantly affect their activities related to the production of those products, they shall report on such disruptions to the Member State on the territory of which they are established, and the Member State concerned shall communicate that information to the Commission without undue delay;
(d)
the Commission, after consulting the Board, shall identify best practices for preventive risk mitigation and increased transparency of the Union’s manufacturing capacities necessary for the supply of crisis-relevant products.
The Commission, after consulting the Board, shall establish the frequency of the monitoring referred to in the first subparagraph.
2. The Commission and the Member States shall pay particular attention to SMEs in order to minimise the administrative burden resulting from the monitoring referred to in paragraph 1 and may, where necessary, provide dedicated assistance.
3. The Commission may invite, after consulting the Board, the main suppliers of crisis-relevant products referred to in Article 56(12), Member States, national defence industry associations and other relevant stakeholders to provide information, on a voluntary basis, for the purpose of carrying out monitoring activities in accordance with paragraph 1, first subparagraph, point (a), of this Article.
4. For the purposes of paragraph 1, first subparagraph, point (b), of this Article, Member States may request information, on a voluntary basis, from the main suppliers of crisis-relevant products referred to in Article 56(12) where necessary and proportionate.
5. For the purposes of paragraph 3, competent authorities of Member States shall establish and maintain a list of contacts of the main suppliers of crisis-relevant products which are established on their territory. That list shall be transmitted to the Commission. Within the Board, the Commission shall provide for a standardised format for that list of contacts.
6. Without prejudice to the protection of commercially confidential information, Member States shall provide the Board with additional relevant information, in particular information on the identification of issues related to the supply of crisis-relevant products throughout the Union and on relevant future national level measures for the procurement, purchase or manufacturing of crisis-relevant products.
7. On the basis of the information collected through the monitoring activities conducted pursuant to this Article, the Commission shall regularly provide a report of the aggregated findings to the Board. That report shall constitute classified information. The Board shall meet to assess the results of that report and to identify, where appropriate, potential solutions to issues of common interest. Where relevant, the Commission, after consulting the Board, may invite national defence industry associations, main suppliers of crisis-relevant products referred to in Article 56(12), and experts from academia and civil society to such meetings.
8. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (a), TFEU.
Stress tests
1. The Commission, upon consultation of the Board, shall identify relevant topics for the conduct of stress tests.
2. The Commission, taking into consideration the relevant topics identified pursuant to paragraph 1 of this Article, shall conduct and coordinate stress tests, including simulations that aim to anticipate and prepare for a supply crisis as referred to in Article 60, and in particular may:
(a)
develop scenarios and parameters that capture the particular risks associated with a supply crisis, in order to assess the potential impact on the provision of crisis-relevant products and the proper functioning of the internal market;
(b)
facilitate and encourage the development of strategies for emergency preparedness;
(c)
identify, in cooperation with the Board, risk mitigation measures following the completion of the stress tests.
3. The Commission may conduct stress tests as referred to in paragraph 2 on a regular basis. The Board shall provide recommendations regarding the frequency for the conduct of such stress tests.
4. The Commission shall invite representatives of all Member States to participate in stress tests as referred to in paragraph 2. Upon consultation of the Board, the Commission may also invite representatives of the High Representative, the EDA or other relevant actors to participate in those stress tests.
5. Upon a request by two or more Member States, the Commission may conduct stress tests in specific geographical areas or border regions in those Member States.
6. Upon completion of the stress tests conducted pursuant to this Article, the Commission shall communicate the results to the participating Member States. The Commission shall share with the Board a report with recommendations based on the results of those stress tests without undue delay. Those results and that report shall constitute classified information.
Alerts and preventive action
1. Where a competent authority of a Member State becomes aware of a risk of serious disruption in the supply of a crisis-relevant product or has concrete and reliable information of any other relevant risk factor or event materially affecting the supply of a crisis-relevant product, it shall alert the Board without undue delay.
2. In order to determine whether a risk of serious disruption in the supply of a crisis-relevant product should trigger an alert as referred to in paragraph 1, Member States shall take into account the following:
(a)
the market position of economic operators that could be affected by the disruption;
(b)
the anticipated duration of the potential disruption;
(c)
the geographical area and the proportion of the internal market affected by the potential disruption and its possible cross-border effects, as well as its possible impact on particularly vulnerable or exposed geographical areas; and
(d)
the impact of the potential disruption on the supply of crisis-relevant products.
3. Where the Board or the Commission become aware of a risk of serious disruption in the supply of a crisis-relevant product or has concrete and reliable information of any other relevant risk factor or event materially affecting the supply of a crisis-relevant product, including on the basis of early-warning indicators, upon an alert pursuant to paragraph 1 or from international partners, the Commission shall, without undue delay, carry out the following preventive actions:
(a)
convene an extraordinary meeting of the Board to coordinate the following actions:
(i)
discuss the severity of the potential disruptions to the availability and supply of the crisis-relevant products concerned;
(ii)
recommend to the Commission to initiate action in accordance with Chapters II and III;
(iii)
discuss approaches and exchange best practices of the competent authorities of Member States, including to assess the state of preparedness of the main suppliers of crisis-relevant products;
(iv)
invite Member States to enter into dialogue with stakeholders of the Union’s manufacturing capacities necessary for the supply of crisis-relevant products with a view to identifying, preparing and possibly coordinating preventive measures;
(v)
discuss whether the activation of the supply-crisis state referred to in Article 60 would be necessary and proportionate;
(b)
on behalf of the Union, after consulting the Board, enter into consultations or cooperation with relevant third countries and international organisations with a view to seeking cooperative solutions to avoid or address supply chain disruptions, in compliance with international obligations, which may involve, where appropriate, carrying out coordination in relevant international fora;
(c)
ensure synergies with relevant Union programmes and legal acts.
4. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (a), TFEU.
SECTION 3 — MITIGATION OF A SUPPLY CRISIS
Activation of the supply-crisis state
1. A supply crisis shall be considered to occur where:
(a)
there are serious disruptions or an imminent risk of such disruptions in the provision of crisis-relevant products; and
(b)
such serious disruptions or the imminent risk thereof are resulting or are likely to result in the adoption of divergent national measures related to crisis-relevant products which are not defence products, leading to a severe negative impact on the proper functioning of the internal market, in particular obstacles to cross-border trade in such crisis-relevant products, and on the functioning of the Union’s defence supply chains.
2. Where, pursuant to Article 59, the Commission or the Board becomes aware of a risk of serious disruption in the supply of crisis-relevant products or has concrete and reliable information on any other relevant risk factor or event materially affecting the supply of such products, the Commission, after consulting the Board, shall assess whether the conditions set out in paragraph 1 of this Article are met. That assessment shall take into account the potential impact and consequences of the supply-crisis state on the supply chains of the crisis-relevant products concerned within the Union, the results of stress tests conducted pursuant to Article 58, and assessments performed in other relevant Union crisis management frameworks. Where that assessment provides concrete and reliable evidence, the Commission may, after consulting the Board, propose to the Council to activate the supply-crisis state. Where it proposes to the Council to activate the supply crisis-state, the Commission shall inform the Parliament thereof.
3. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may activate the supply-crisis state. The duration of the supply-crisis state shall be specified in the implementing act and initially shall not exceed 12 months. That implementing act shall also specify which of the measures set out in Articles 62 and 63 are activated. In addition, the implementing act may identify for which crisis-relevant products which are not defence products those measures are activated.
4. The Council, acting by qualified majority, may amend the proposal referred to in paragraph 3.
5. The Commission shall report on a regular basis and at least every three months to the Council and to the European Parliament on the state of the supply crisis.
6. Before the expiry of the duration of the supply-crisis state, the Commission, taking into consideration the recommendation of the Board, shall assess whether it is justified to prolong it. Where such assessment provides concrete and reliable evidence that the conditions for the activation of the supply-crisis state are still met, the Commission may, after consulting the Board, propose to the Council to prolong the supply-crisis state.
7. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may prolong the supply-crisis state. The duration of the prolongation shall be limited to a maximum of 12 months and specified in the implementing act.
8. During the supply-crisis state, the Commission shall, after consulting the Board, assess the appropriateness of an early termination of the supply-crisis state. If the assessment so indicates, the Commission may propose to the Council to terminate the supply-crisis state.
9. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may terminate the supply-crisis state before the expiry date specified in the implementing act referred to in paragraph 3 or 7.
10. During the supply-crisis state, the Commission shall, upon request from a Member State or on its own initiative, convene extraordinary meetings of the Board where necessary. In line with Article 76(10), the Board shall invite, where relevant, high-level industrial representatives to meet in special configuration in order to discuss issues related to crisis-relevant products. Member States shall work closely with the Commission within the Board in order to ensure the coordination of any Union and national measures taken with regard to the supply chains of the concerned crisis-relevant products which are not defence products.
11. Upon expiry of the period for which the supply-crisis state is activated or prolonged, or upon its early termination, the measures taken in accordance with Articles 62 and 63 shall immediately cease to apply. Implementing acts that have been adopted in accordance with Article 63(7) and (9) shall nevertheless continue to apply until the priority-rated requests or priority-rated orders concerned have been completed.
12. The Commission and Member States shall update the mapping and the monitoring of the Union’s defence supply chains pursuant to Articles 56 and 57, taking into account the experience from the supply crisis, no later than six months after the expiry or early termination of the supply-crisis state.
Supply-crisis toolbox
1. Where the supply-crisis state is activated pursuant to Article 60 and where necessary in order to address the supply crisis in the Union, the Commission may take the measures provided for in Articles 62 and 63, as specified in the implementing act adopted by the Council in accordance with Article 60(3).
2. The Commission shall, after consulting the Board, restrict the application of the measures referred to in paragraph 1 to the crisis-relevant products which are not defence products that are subject to serious disruption or at imminent risk of such disruptions on account of the supply crisis. The application of the measures referred to in paragraph 1 shall be proportionate and restricted to what is necessary for addressing serious disruptions or mitigating an imminent risk of such disruptions affecting the supply chains of the crisis-relevant products concerned in the Union and shall be in the best interest of the Union. The application of those measures shall avoid placing a disproportionate administrative burden, in particular on SMEs.
3. Where the supply-crisis state is activated pursuant to Article 60 and where appropriate in order to address the supply crisis in the Union, the Board shall assess and advise on appropriate and effective measures.
4. The Commission shall regularly inform the European Parliament and the Council of any measures taken in accordance with paragraph 1 and explain the reasons for its action.
5. The Commission shall, taking into consideration the recommendation of the Board, issue guidance on the implementation and the use of the measures provided for in Articles 62 and 63.
Information requests
1. Where the Council activates the measure under this Article in accordance with Article 60(3), the Commission may, where the available information is not sufficient, request an economic operator contributing to the production of crisis-relevant products which are not defence products, with the prior agreement of the Member State on whose territory the production site of that economic operator is located, to provide information to that Member State within a set time limit about its production capabilities, production capacities and current primary disruptions. The Member State concerned shall make the requested information available to the Commission. The requested information shall be limited to what is necessary to assess the nature of the supply crisis or to identify and assess potential mitigation measures.
2. Before launching a request for information pursuant to paragraph 1, and with the prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located, the Commission may carry out a voluntary consultation of a representative number of relevant economic operators with a view to identifying the appropriate and proportionate content of such a request. The Commission shall prepare the request for information in cooperation with the Board.
3. The Commission shall without undue delay forward a copy of the request for information to the national competent authority of the Member State on the territory of which the production site of the economic operator concerned is located.
4. The request for information shall:
(a)
state its legal basis;
(b)
be limited to the minimum necessary and be proportionate in terms of the granularity and volume of the data requested and of the frequency of access to the data requested;
(c)
have regard for the legitimate interests of the economic operator and to the cost and effort required to make the data available;
(d)
include the contact information of the national competent authorities of the Member State on the territory of which the production site of the economic operator concerned is located to which the reply is to be sent;
(e)
and set out the time limit within which the information is to be provided to the Member State concerned; and
(f)
state the penalties provided for in Article 72.
5. Where the Member State concerned agrees to the launch of a request for information pursuant to paragraph 1, it may decide to address that request, as prepared by the Commission pursuant to paragraphs 2 and 4, directly to the economic operator concerned.
6. Each economic operator concerned, or a person duly authorised to represent that economic operator, shall supply the information requested on an individual basis to the Member State concerned.
7. The Member State concerned shall ensure that the requested information is made available without undue delay to the Commission.
8. If an economic operator established in the Union is subject to a request for information from a third country, related to its activities for the supply of crisis-relevant products which are not defence products, it shall inform the Member State on the territory of which its production site is located, in a timely manner. That Member State shall, in turn, inform the Commission, in such a manner as to enable the Member State concerned and the Commission to request similar information from the economic operator. The Commission shall inform the Board of the existence of such a request from a third country.
9. If an economic operator supplies incorrect, incomplete or misleading information in response to a request made pursuant to this Article, or does not supply the information within the prescribed time limit, it shall be subject to fines set in accordance with Article 72, except where the economic operator has sufficient reasons for not supplying the requested information or not supplying it within the prescribed time limit, in particular where the processing of the information request by an economic operator has the potential to significantly disrupt its operations, where the information is classified and marked as for national use only or where the disclosure of that information could significantly harm the economic operator’s business activity.
10. The Commission and the Member State concerned shall use secure means to launch the request for information and to handle any information acquired in accordance with Article 80.
11. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (a), TFEU.
Prioritisation of products which are not defence products
1. Where the Council activates the measure under this Article in accordance with Article 60(3), a Member State which faces severe difficulties either in the placing of an order or in the execution of a contract related to the supply of crisis-relevant products may submit a request to the Commission to request an economic operator to accept, or to prioritise, a certain order of crisis-relevant products which are not defence products.
2. Upon a request as referred to in paragraph 1, the Commission may, where the production or supply of crisis-relevant products which are not defence products cannot be achieved by any other measures provided for in this Chapter, address a request to the economic operator concerned after:
(a)
consulting, and receiving prior agreement, of the Member State on the territory of which the production site of the economic operator concerned is located; and
(b)
consulting the Member State on the territory of which the executive management structure of the economic operator concerned is located.
3. The request referred to in paragraph 2 shall include information about the legal basis for the request, specify the products, their specifications and quantities, specify the schedule and time-limit for performing and completing the order, and state the reasons justifying the use of the priority-rated request.
4. The Commission shall demonstrate that the choice of the recipients and beneficiaries of the request referred to in paragraph 2 is non-discriminatory and complies with Union competition rules.
5. The Commission shall base the request referred to in paragraph 2 on objective, factual, measurable and substantiated data, showing that such prioritisation is indispensable in order to ensure the proper functioning of the internal market, and having regard to the legitimate interests of the economic operator concerned and to the cost and effort required for any change in the production sequence of the supply chain.
6. The economic operator concerned shall reply to the Commission within five working days upon receipt of the request referred to in paragraph 2 and state whether it accepts or refuses the request. Where the urgency of the situation so requires, the Commission may, based on a justification of such urgency, request the economic operator to reply within a shorter deadline.
7. Where the economic operator to which the request referred to in paragraph 2 is addressed has expressly accepted that request, the Commission, by means of an implementing act, shall adopt a priority-rated request setting out:
(a)
the legal basis of the priority-rated request to be complied with by the economic operator;
(b)
the list of crisis-relevant products subject to the priority-rated request, their specifications, price and the quantities in which they are to be supplied;
(c)
the time limits within which the priority-rated request is to be completed;
(d)
the beneficiaries of the priority-rated request;
(e)
the waiver of contractual liability under the conditions laid down in paragraph 12 of this Article; and
(f)
the penalties provided for in Article 72 for non-compliance with the obligations stemming from that implementing act.
8. Where the economic operator declines the request referred to in paragraph 2, it shall provide the Commission with a detailed justification for that refusal.
9. Having due regard to the justifications provided by the economic operator under paragraph 8 of this Article, and after consulting and receiving prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of the economic operator is located, the Commission, by means of an implementing act, may adopt a priority-rated order imposing on the economic operator concerned an obligation to perform that order. The Commission shall state the reasons why, in line with the proportionality principle and the fundamental rights of the economic operator under the Charter of Fundamental Rights of the European Union and in light of the circumstances described in paragraph 1, it was necessary for it to adopt that implementing act. Any such implementing act shall provide the information referred to in paragraph 7.
10. The Commission shall not issue the priority-rated order in any of the following cases:
(a)
the economic operator is unable to perform the priority-rated order on account of insufficient production capability or production capacity, or on technical grounds, even under preferential treatment of the order; or
(b)
performance of the order would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity.
11. Priority-rated requests referred to in paragraph 7 and priority-rated orders referred to in paragraph 9 shall:
(a)
be placed at a fair and reasonable price, adequately taking into account the economic operator’s opportunity costs when fulfilling the priority-rated request or the priority-rated order as compared to existing contractual obligations;
(b)
take precedence over any performance obligation under private or public law related to the crisis-relevant products subject to the priority-rated request or to the priority-rated order, with the exception of obligations directly related to orders with a military purpose.
12. Economic operators subject to a priority-rated request pursuant to paragraph 7 or to a priority-rated order pursuant to paragraph 9 shall not be liable for any breach of contractual obligation that is governed by the law of a Member State, provided that:
(a)
the breach of contractual obligation is necessary for compliance with the required prioritisation;
(b)
the implementing act referred to in paragraph 7 or 9 has been complied with; and
(c)
where applicable, the acceptance of the priority-rated request did not have the sole purpose of unduly avoiding a prior contractual obligation.
13. Any conflict between a priority-rated request or a priority-rated order and a measure under any other prioritisation mechanism of the Union shall be discussed within the Board and resolved by the Commission, based on the weighing of the public interest.
14. The economic operator subject to a priority-rated request pursuant to paragraph 7 or to a priority-rated order pursuant to paragraph 9 may request the Commission to modify the implementing act referred to in paragraph 7 or 9 where it considers it to be duly justified based on one of the following grounds:
(a)
the economic operator is unable to perform the priority-rated request or the priority-rated order on account of insufficient production capability or production capacity, even under preferential treatment of the request or order;
(b)
completion of the request or the order would place an unreasonable economic burden on, and entail particular hardship for, the economic operator.
15. The economic operator shall provide all relevant and substantiated information to allow the Commission to assess the merits of the request for modification referred to in paragraph 14.
16. Based on the examination of the reasons and evidence provided by the economic operator, the Commission may, after consulting the Member State on the territory of which the production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of that economic operator is located, amend its implementing act to release, partially or in totality, the economic operator concerned from its obligations under this Article.
17. Where an economic operator established in the Union is subject to a measure of a third country which entails a priority-rated order or a priority-rated request of a crisis-relevant product which is not a defence product, it shall notify the Commission thereof. The Commission shall then inform the Board of the existence of such measure.
18. Where an economic operator subject to a priority-rated request pursuant to paragraph 7 or a priority-rated order pursuant to paragraph 9 intentionally, or through gross negligence, does not comply with that request or order, it shall be subject to fines set in accordance with Article 72, except where:
(a)
the economic operator is unable to perform the priority-rated request or the priority-rated order on account of insufficient production capability or production capacity, or on technical grounds; or
(b)
performance or completion of the order would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity.
19. The Commission shall adopt an implementing act laying down the practical and operational arrangements for the functioning of priority-rated requests and priority-rated orders, including a methodology for the determination of the price of crisis-relevant products subject to priority-rated orders.
20. The implementing acts referred to in this Article shall be adopted in accordance with the examination procedure referred to in Article 77(4).
21. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (b), TFEU.
SECTION 4 — SECURITY-RELATED SUPPLY-CRISIS STATE
Activation of the security-related supply-crisis state
1. A security-related supply-crisis shall be considered to occur where:
(a)
there are serious disruptions or an imminent risk of such disruptions in the provision of defence products, such as disruptions due to the impact of events related to the security of the Union; and
(b)
such serious disruptions or the imminent risk thereof are resulting or are likely to result in the adoption of divergent national measures related to crisis-relevant defence products leading to a severe negative impact on the proper functioning of the internal market, in particular obstacles to cross-border trade in such crisis-relevant defence products within the Union causing significant shortages of defence products.
2. Where, pursuant to Article 59, the Commission or the Board becomes aware of a risk of serious disruption in the supply of crisis-relevant defence products or has concrete and reliable information of any other relevant risk factor or event materially affecting the supply of such products, the Commission, after consulting the Board, shall assess whether the conditions set out in paragraph 1 of this Article are met. That assessment shall take into account the potential impact and consequences of the security-related supply-crisis state on the defence supply-chains within the Union, the results of stress tests conducted pursuant to Article 58, and assessments performed in other relevant Union crisis management frameworks. Where that assessment provides concrete and reliable evidence, the Commission may, after consulting the Board, propose to the Council to activate the security-related supply-crisis state. Where it proposes to the Council to activate the security-related supply crisis-state, the Commission shall inform the Parliament thereof.
3. When assessing if the conditions set out in paragraph 1 of this Article are met pursuant to paragraph 2, the Commission shall, in particular, take into account whether a crisis affecting the security and defence interests of the Union and its Member States has been identified within the area of CFSP, such as whether that crisis has triggered the activation of the mutual assistance clause pursuant to Article 42(7) TEU.
4. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may activate the security-related supply-crisis state. The duration of the security-related supply-crisis state shall be specified in the implementing act and initially shall not exceed 12 months. That implementing act shall also specify which of the measures set out in Articles 65 to 71 are activated. In addition, the implementing act may identify for which crisis-relevant defence products those measures are activated.
5. The Council, acting by qualified majority, may amend the proposal referred to in paragraph 4.
6. The Commission shall report on a regular basis and at least every three months to the Council and to the European Parliament on the state of the security-related supply crisis.
7. No later than three weeks before the expiry of the duration of the security-related supply-crisis state, the Commission, taking into consideration the recommendation of the Board, shall submit to the Council a report, assessing whether that duration should be prolonged. The report shall in particular analyse the impact of the measures previously activated under this Chapter. Where such assessment provides concrete and reliable evidence that the conditions for the activation of the security-related supply-crisis state are still met, the Commission may, after consulting the Board, propose to the Council to prolong the security-related supply-crisis state.
8. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may prolong the security-related supply-crisis state. The duration of the prolongation shall be limited to a maximum of 6 months and specified in the implementing act. That implementing act shall also specify which of the measures set out in Articles 65 to 71 continue to be applied or, where relevant, are activated. The Council, acting by qualified majority, may repeatedly decide to prolong the period for which the security-related supply-crisis state is activated where so justified to address the security-related supply crisis.
9. The Commission may propose to the Council to prolong the security-related supply-crisis state as many times as considered necessary to address the security-related supply crisis, subject to the conditions set out in paragraph 7. Upon such proposal from the Commission, paragraph 8 shall apply.
10. During the security-related supply-crisis state, the Commission shall, after consulting the Board, assess the appropriateness of an early termination of the security-related supply-crisis state. If the assessment so indicates, the Commission shall propose to the Council to terminate the security-related supply-crisis state.
11. The Council, by means of an implementing act adopted by qualified majority upon a proposal from the Commission, may terminate the security-related supply-crisis state before the expiry date specified in the implementing act referred to in paragraph 4 or 8.
12. Upon expiry of the period for which the security-related supply-crisis state is activated or prolonged or upon its early termination, the measures taken in accordance with Articles 65 to 71 shall immediately cease to apply. Implementing acts that have been adopted in accordance with Article 66(6) shall nevertheless continue to apply until the priority-rated requests concerned have been completed.
In the course of the preparation and implementation of the measures set out in Articles 65 to 71, the Commission shall, whenever possible, act in close coordination with the Board, which shall provide advice in a timely manner. The Commission shall inform the Board on the action taken. During the security-related supply-crisis state, the Commission shall, upon request from a Member State or on its own initiative, convene extraordinary meetings of the Board where necessary. In line with Article 76(10), the Board shall invite, where relevant, high-level industrial representatives to meet in special configuration in order to discuss issues related to the defence products concerned. Member States shall work closely with the Commission within the Board in order to ensure the coordination of any Union and national measures taken with regard to the defence supply chains related to the crisis-relevant defence products concerned.
13. Where the security-related supply-crisis state is activated, the Commission may propose to the Council to activate the measures provided for in Articles 62 and 63, under the conditions laid down therein and in Articles 60 and 61.
Information requests
Where the Council activates the measure under this Article in accordance with Article 64(4), the Commission may take the measures provided for in Article 62 in relation to crisis-relevant defence products, in accordance with the conditions defined therein.
Prioritisation of defence products
1. Where the Council activates the measure under this Article in accordance with Article 64(4), a Member State may submit a request to the Commission to request an economic operator whose production site is located on its territory to accept, or to prioritise, a certain order of crisis-relevant defence products in order to address the severe difficulties that Member State or another Member State faces either in the placing of an order or in the execution of a contract for the supply of such products.
2. Upon a request as referred to in paragraph 1, the Commission may, where the production or the supply of crisis-relevant defence products cannot be achieved by any other measure provided for in this Chapter, address a request to the economic operator concerned after:
(a)
consulting, and receiving prior agreement of, the Member State on the territory of which the production site of the economic operator concerned is located; and
(b)
consulting, and receiving prior agreement of, the Member State on the territory of which the executive management structure of the economic operator concerned is located.
The Commission’s request shall explicitly indicate that the economic operator is free to refuse the request.
3. The request referred to in paragraph 2 shall include information about the legal basis for the request, specify the products, their specifications and quantities, specify the schedule and time-limit for performing and completing the order, and state the reasons justifying the use of the priority-rated request.
4. The Commission shall demonstrate that the choice of the recipients and beneficiaries of the request referred to in paragraph 2 is non-discriminatory and complies with Union competition rules.
5. The Commission shall base the request referred to in paragraph 2 on objective, factual, measurable and substantiated data, showing that such prioritisation is indispensable in order to ensure the proper functioning of the internal market, and having regard to the legitimate interests of the economic operator concerned and to the cost and effort required for any change in the production sequence of the supply chain.
6. Where the economic operator to which the request referred to in paragraph 2 is addressed has expressly accepted that request, the Commission, by means of an implementing act and after the consultation and prior agreement of the Member State on the territory of which the production site of the economic operator concerned is located and of the Member State on the territory of which the executive management structure of the economic operator concerned is located, shall adopt a priority-rated request setting out:
(a)
the legal basis of the priority-rated request to be complied with by the economic operator;
(b)
the list of crisis-relevant products subject to the priority-rated request, their specifications and the quantities in which they are to be supplied;
(c)
the time limits within which the priority-rated request is to be completed;
(d)
the beneficiaries of the priority-rated request;
(e)
the scope of contractual obligations over which the priority-rated request shall have precedence;
(f)
the waiver of contractual liability under the conditions laid down in paragraph 8 of this Article; and
(g)
the penalties provided for in Article 72 for non-compliance with the obligations stemming from that implementing act.
The implementing act referred to in the first subparagraph of this paragraph shall be adopted in accordance with the examination procedure referred to in Article 77(4).
7. The priority-rated requests referred to in paragraph 6 shall:
(a)
be placed at a fair and reasonable price, adequately taking into account the economic operator’s opportunity costs when fulfilling the priority-rated request as compared to existing contractual obligations; and
(b)
take precedence over any contractual obligations related to the crisis-relevant products subject to the priority-rated request under private or public law, under the conditions laid down in the implementing act referred to in paragraph 6.
8. The economic operator subject to a priority-rated request pursuant to paragraph 6 shall not be liable for any breach of contractual obligation that is governed by the law of a Member State, provided that:
(a)
the breach of contractual obligation is strictly necessary for compliance with the required prioritisation;
(b)
the implementing act referred to in paragraph 6 has been complied with; and
(c)
the acceptance of the priority-rated request did not have the sole purpose of unduly avoiding a prior performance obligation.
9. The economic operator subject to a priority-rated request may request the Commission to modify the implementing act referred to in paragraph 6 where it considers it to be duly justified based on one of the following grounds:
(a)
the economic operator is unable to perform the priority-rated request on account of insufficient production capability or production capacity, even under preferential treatment of the request;
(b)
completion of the request would place an unreasonable economic burden on, and entail particular hardship for, the economic operator.
10. The economic operator shall provide all relevant and substantiated information to allow the Commission to assess the merits of the request for modification referred to in paragraph 9.
11. Based on the examination of the reasons and evidence provided by the economic operator, the Commission may, after consultation and prior agreement of the Member State on the territory of which the relevant production site of the economic operator concerned is located and the Member State on the territory of which the executive management structure of that economic operator concerned is located, amend its implementing act to release, partially or in totality, the economic operator concerned from its obligations under this Article.
12. Where an economic operator, after having expressly accepted to prioritise the orders requested by the Commission, intentionally or through gross negligence does not comply with the obligation to prioritise those orders, it shall be subject to fines set in accordance with Article 72, except where:
(a)
the economic operator is unable to perform the priority-rated request on account of insufficient production capability or production capacity, or on technical grounds; or
(b)
performance or completion of the request would place an unreasonable economic burden on, and entail particular hardship for, the economic operator, including substantial risks relating to business continuity.
13. When an economic operator established in the Union is subject to a measure of a third country which entails a priority-rated request of a crisis-relevant defence product, it shall notify the Commission thereof. The Commission shall inform the Board of the existence of such measures. Where relevant, the Commission may consult with the Board on any appropriate step to be taken in response to that measure.
14. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1)(b) TFEU.
Intra-EU transfers of crisis-relevant defence products
1. Where the Council activates the measure under this Article in accordance with Article 64(4) of this Regulation, and without prejudice to Directive 2009/43/EC and Member States’ prerogatives under that Directive, Member States shall ensure that applications related to intra-EU transfers are processed in an efficient and timely manner. To that end, all national authorities concerned shall ensure that the most rapid treatment legally possible is given to such applications. The Council implementing act referred to in Article 64(4) of this Regulation shall specify the timeframe within which national authorities concerned shall treat the applications once they have received all necessary information from the applicant. That timeframe shall not be longer than two weeks.
2. Where a Member State imposes, in accordance with Article 4(8) of Directive 2009/43/EC, export limitations on components which are crisis-relevant products, that Member State shall not require further authorisations for the intra-EU transfer of the components concerned where the recipient provides a declaration of use in which it declares that the components subject to that transfer licence are integrated or are to be integrated into a defence product and cannot be transferred or exported as such. This shall be without prejudice to the obligations of recipients laid down in Article 10 of Directive 2009/43/EC.
Support to emergency defence innovation actions
Where the Council activates the measure under this Article in accordance with Article 64(4), innovation actions related to one of the following activities shall be deemed eligible under the Programme:
(a)
activities aimed at very significantly shortening the delivery lead time of defence products;
(b)
activities aimed at significantly simplifying the technical specifications of defence products in order to enable their mass production;
(c)
activities aimed at significantly simplifying the production process of defence products to enable their mass production; or
(d)
activities aimed at replacing components with alternatives that are available in the Union or that are easily adaptable or can be developed in a timely manner by economic operators established in the Union.
Certification
1. Where the Council activates the measure under this Article in accordance with Article 64(4), Member States shall ensure that administrative procedures related to the certification of crisis-relevant defence products and, where necessary, technical adaptations of such products are processed in the most rapid way possible, in accordance with their applicable national laws and regulations.
2. Where such a status exists in national law, certification of crisis-relevant defence products shall be allocated the status of the highest possible significance.
3. Where this measure is activated, crisis-relevant defence products certified in a Member State shall be deemed certified in another Member State without being subject to additional control.
4. The implementing act referred to in Article 64(4) may lay down more precise provisions on the scope of this measure.
5. This Article is without prejudice to the right of each Member State to protect the essential interests of its security in accordance with Article 346(1), point (b), TFEU.
National fast-tracking of permit-granting procedures
Where the Council activates the measure under this Article in accordance with Article 64(4) of this Regulation, the security of supply of crisis-relevant defence products may be considered an imperative reason of overriding public interest within the meaning of Article 6(4) and Article 16(1), point (c), of Directive 92/43/EEC and of Article 4(7) of Directive 2000/60/EC. Therefore, the planning, construction and operation of related production facilities may be considered of overriding public interest, provided that the other conditions set out in those provisions are fulfilled.
Continuity of production of crisis-relevant defence products
1. Where the Council activates the measure under this Article in accordance with Article 64(4) of this Regulation and where Directive 2003/88/EC of the European Parliament and of the Council ( 46 ) applies to the relevant production activities, Member States may decide to use, or to encourage economic operators whose production sites are located on their territory and which produce the crisis-relevant defence products concerned to make use of, derogations provided for in Article 17(3) of Directive 2003/88/EC in order to allow for the expansion of working shifts thereby facilitating continuity of production of the crisis-relevant defence products concerned, if they deem it necessary to achieve the objectives of this Regulation.
2. Where prior authorisation is required, all national authorities concerned shall ensure that the most rapid treatment legally possible is given to applications from economic operators producing crisis-relevant defence product to use the derogations referred to in paragraph 1.
Penalties
1. Where it deems it to be necessary and proportionate, the Commission may, by way of implementing acts, impose on the economic operators that are addressees of information requests pursuant to Article 62 or that are subject to any of the obligations to inform the Commission of a third-country obligation pursuant to Article 63(17) and Article 66(13) or to prioritise the production of crisis-relevant products pursuant to Articles 63 and 66, the following fines or penalties:
(a)
fines not exceeding EUR 300 000 where the economic operator, intentionally or through gross negligence, supplies incorrect, incomplete or misleading information in response to a request made pursuant to Article 62(1), or does not supply the information within the prescribed time limit in accordance with Article 62(9);
(b)
fines not exceeding EUR 150 000 where the economic operator, intentionally or through gross negligence, does not comply with the obligation to inform the Commission of a third-country obligation pursuant to Article 63(17) and Article 66(13);
(c)
periodic penalty payments not exceeding 1,5 % of the average daily turnover in the preceding business year for each working day of non-compliance from the date established in the decision in which the priority-rated order was issued, where the economic operator, intentionally or through gross negligence, does not comply with an obligation to prioritise the production of crisis-relevant products pursuant to Article 63(9), in accordance with Article 63(18), and, where the economic operator on whom a periodic penalty payment is imposed under this point is an SME, not exceeding 0,5 % of its average daily turnover in the preceding business year;
(d)
fines not exceeding EUR 300 000 where the economic operator, intentionally or through gross negligence, does not comply with the obligation to prioritise the production of crisis-relevant products pursuant to Article 63(8) and Article 66(6), in accordance with Article 63(18) and Article 66(12), respectively.
The implementing acts referred to in the first subparagraph of this paragraph shall be adopted in accordance with the examination procedure referred to in Article 77(4).
2. Before taking a decision pursuant to paragraph 1 of this Article, the Commission shall provide an opportunity for the economic operator concerned to be heard in accordance with Article 75. The Commission shall take into account any duly reasoned justification presented by the economic operator for the purpose of determining whether fines or periodic penalty payments are deemed necessary and proportionate.
3. In fixing the amount of the fine or periodic penalty payment, the Commission shall take into consideration the nature, gravity and duration of the infringement, including, in relation to cases of non-compliance with the obligation to accept or prioritise a priority-rated order set out in Article 63(9) or a priority-rated request set out in Article 63(7) or Article 66(6), whether the economic operator has partially complied with the priority-rated order or the priority-rated request.
4. The fines shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation and shall be directed to the Ukraine Support Instrument.
Limitation period for the imposition of penalties
1. The powers conferred on the Commission by Article 72 shall be subject to the following limitation periods:
(a)
two years in the case of infringements of provisions concerning requests for information pursuant to Article 62(1);
(b)
two years in the case of infringements of provisions concerning information obligations pursuant to Article 63(17) and Article 66(13);
(c)
three years in the case of infringements of provisions concerning the obligation related to the prioritisation of the production of crisis-relevant products pursuant to Articles 63 and 66.
2. The limitation periods referred to in paragraph 1 shall begin to run on the day on which the infringement is committed. Where there are continuous or repeated infringements, the limitation periods shall begin to run on the day on which the last infringement was committed.
3. Any action taken by the Commission or the competent authorities of the Member States for the purpose of ensuring compliance with this Regulation shall interrupt the limitation period.
4. The interruption of the limitation period shall apply for all the parties which are held responsible for participation in the infringement.
5. Each interruption of the limitation period shall start that limitation period running afresh. However, the limitation period shall expire at the latest on the day on which a period equal to twice the limitation period has elapsed without the Commission having imposed a fine or a periodic penalty payment. That period shall be extended by the time during which the limitation period is suspended because the decision of the Commission is the subject of proceedings pending before the Court of Justice of the European Union.
Limitation period for the enforcement of penalties
1. The power of the Commission to enforce decisions taken pursuant to Article 72 shall be subject to a limitation period of three years.
2. The limitation period shall begin to run on the day on which the decision becomes final.
3. The limitation period for the enforcement of fines and periodic penalty payments shall be interrupted by:
(a)
a notification of a decision varying the original amount of the fine or periodic penalty payment or refusing an application for variation;
(b)
any action of the Commission or of a Member State, acting at the request of the Commission, designed to enforce payment of the fine or periodic penalty payment.
4. Each interruption as referred to in paragraph 3 shall start the limitation period running afresh.
5. The limitation period for the enforcement of fines and periodic penalty payments shall be suspended for as long as:
(a)
time to pay is allowed;
(b)
enforcement of payment is suspended pursuant to a decision of the Court of Justice of the European Union.
Right to be heard for the imposition of fines or periodic penalty payments
1. Before adopting a decision pursuant to Article 72, the Commission shall ensure that the economic operators concerned have been given the opportunity to submit observations on:
(a)
the preliminary findings of the Commission, including any matter in relation to which the Commission has raised objections;
(b)
the measures that the Commission may intend to take in view of the preliminary findings pursuant to point (a) of this paragraph.
2. The economic operators concerned may submit to the Commission their observations on the Commission’s preliminary findings within a time limit which shall be fixed by the Commission in its preliminary findings, and which may not be less than 14 working days.
3. The Commission shall base its imposition of fines or periodic penalty payments only on objections on which the economic operators concerned have been able to comment.
4. Where the Commission has informed the economic operators concerned of its preliminary findings as referred to in paragraph 1, it shall give access, if so requested, to the Commission’s file under the terms of a negotiated disclosure, subject to the legitimate interest of economic operators in the protection of their business secrets, or in order to preserve business secrets or other confidential information of any person. The right of access to the file shall not extend to confidential information and internal documents of the Commission or the authorities of the Member States, in particular to correspondence between the Commission and the authorities of the Member States. Nothing in this paragraph shall prevent the Commission from disclosing and using information necessary to prove an infringement.
SECTION 6 — DEFENCE SECURITY OF SUPPLY BOARD
Defence Security of Supply Board
1. The Defence Security of Supply Board (the ‘Board’) is hereby established.
2. The general task of the Board is to assist and provide recommendations to the Commission pursuant to this Chapter.
3. The Commission shall maintain a regular flow of information to the Board on any planned measures and on measures that have been taken following the activation of the supply-crisis states pursuant to Article 60 or 64. The Commission shall provide the necessary information through a secured IT system.
4. For the purposes of preparing for and addressing a supply-crisis state referred to in Article 60 or 64, the Board shall assist the Commission in:
(a)
analysing crisis-relevant information gathered by Member States or the Commission;
(b)
assessing possible preparedness measures;
(c)
assessing whether the criteria for activation or deactivation of the supply-crisis states referred to in Article 60 or 64 have been fulfilled;
(d)
facilitating coordinated action with Member States;
(e)
providing guidance on the implementation of the measures chosen to respond to the supply-crises at Union level referred to in Article 60 or 64, including on the activation of the measures referred to in Articles 62 and 63 and 65 to 71;
(f)
identifying specific response measures for the Member States for ensuring the timely availability and supply of crisis-relevant products;
(g)
facilitating exchanges and sharing of information, including with other crisis-relevant bodies at Union level, as well as, as appropriate, with third countries, international organisations and representatives of industry, civil society and academia;
(h)
identifying relevant topics for the conduct of stress tests;
(i)
the development of a framework and methodology for identifying crisis-relevant products and the list of early-warning indicators;
(j)
carrying out the mapping regarding crisis-relevant products and early warning indicators;
(k)
assessing whether a prolongation of the supply-crisis state is necessary and proportionate and whether a termination is appropriate;
(l)
assessing the results of the monitoring and identifying, where appropriate, potential solutions to issues of common interest; and
(m)
identifying an appropriate frequency for the conduct of stress tests.
5. The Board shall be composed of representatives from all Member States, the Commission, the High Representative and the EDA. It shall be co-chaired by a representative of the Commission and of the Member State holding the rotating presidency of the Council. The secretariat of the Board shall be ensured by the Commission. Only Member States shall have voting rights.
6. The co-chairs shall invite representatives of the European Parliament to attend, as observers, the meetings of the Board.
7. Associated countries shall have the right to become members, without voting rights, of the Board in accordance with the conditions set out under the Agreement on the European Economic Area.
8. The Board shall meet whenever the situation requires, upon request from the Commission, a Member State or an associated country which has become a member of the Board. The Board shall adopt its rules of procedure on the basis of a proposal submitted by the Commission. Those rules of procedure shall provide mechanisms to ensure the good functioning of the Board in carrying out its tasks, including by foreseeing dispute resolution procedures related to potential disputes between the co-chairs.
9. The Board may issue recommendations, upon the request of the Commission or on its own initiative. The Board shall endeavour to find solutions which command the widest possible support.
10. The Board shall invite, at least once a year, representatives from national defence industry associations and selected industrial representatives to take part, as observers, in its work, taking into account the necessity to ensure a balanced geographical representation. Where a supply-crisis state referred to in Article 60 or 64 has been activated, the Board shall invite, where relevant, high-level industrial representatives to take part, as observers, in its work, meeting in a special configuration in order to discuss issues linked to crisis-relevant products or, where a security-related supply-crisis state under Article 64 has been activated, the defence products concerned.
11. The Board shall invite the representatives of other crisis-relevant bodies at Union level as observers to its relevant meetings.
12. The Board shall invite, where relevant, in line with its rules of procedure and with due respect to the security and defence interests of the Union and its Member States, a representative from Ukraine to attend meetings as an observer.
13. The Commission shall ensure inclusiveness and provide members of the Board with equal access to information in order to ensure that the decision-making process of the Board reflects the situation and the needs of all Member States. The Board shall take the necessary measures to ensure the safe handling and processing of classified and sensitive information in accordance with Articles 79 and 80.
14. The Commission may, on its own initiative or acting on a proposal from the Board, set up working groups on an ad hoc basis to support the Board in its work for the purpose of examining specific questions on the basis of the tasks referred to in paragraph 1. Member States shall nominate experts for those working groups. The EDA may be invited to meetings of such working groups.
15. The Commission shall set up a working group within the meaning of paragraph 14 on legal, regulatory and administrative hurdles. The objectives of that working group shall be:
(a)
to identify existing or potential legal, regulatory and administrative obstacles at international, Union and national levels to the achievement of the objectives listed in Article 1(2), point (6);
(b)
to identify potential solutions and mitigation measures to identified obstacles.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
