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Document 52012DC0565
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on transposition of directive 2009/81/EC on Defence and Security Procurement
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on transposition of directive 2009/81/EC on Defence and Security Procurement
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on transposition of directive 2009/81/EC on Defence and Security Procurement
/* COM/2012/0565 final */
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on transposition of directive 2009/81/EC on Defence and Security Procurement /* COM/2012/0565 final */
REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT AND THE COUNCIL on transposition of directive 2009/81/EC
on Defence and Security Procurement I. Executive Summary Directive 2009/81/EC of the
European Parliament and of the Council of 13 July 2009 on the coordination of
procedures for the award of certain works contracts, supply contracts and
service contracts by contracting authorities or entities in the fields of
defence and security, and amending Directives 2004/17/EC and 2004/18/EC[1] is an important element of the
Commission's policy to create a truly European Defence Equipment Market and a
European level playing field for defence procurement. For the first time it
subjects defence and sensitive procurement to the specific rules of the
Internal Market, fostering transparency and competition and ensuring the
satisfaction of procurement needs in an ever tightening financial framework. Most of the 23 Member States
who have transposed the Directive as of July 2012 have prima facie done
so correctly. The vast majority of Member States have also transposed the
non-mandatory provisions on sub-contracting which aim in particular at
enhancing competition in the supply chains of successful tenderers. The
Commission will continue to monitor the state of transposition and the content
of the national implementing measures to ensure full compliance with European
law. In particular it will take action to accomplish the phasing out of offsets
which diverge from the basic principles of the Treaty. Following the transposition
of the Directive, the Commission will focus as a matter of high priority on its
correct application in the Member States. The challenge will be different in
each Member State, depending in particular on its national defence industrial
capabilities. However, ensuring fair and open competition throughout the Union is a prerequisite for establishing a level playing field for European industry and an
efficient European defence market. At the same time, the
Commission is continuing to explore how to reinforce the internal market in
this sector, which is of strategic importance for the Union, with the Member States and the European Defence Agency. II. Introduction Together with Directive
2009/43/EC of the European Parliament and of the Council of 6 May 2009
simplifying terms and conditions of transfers of defence-related products
within the Community on intra-EU transfers of defence products[2], the Directive is an
important contribution toward the creation of a truly European Defence
Equipment Market and at strengthening the European Defence Technological and
Industry Base. Defence and (to a lesser
degree) security markets are very specific markets. The customer side is
primarily (for defence exclusively) public, and both defence and security are
national prerogatives. Moreover, defence spending and defence industrial
capabilities are highly concentrated in a few Member States. Due to the nature
of the products, markets are highly regulated, certain companies of strategic
importance, and procurement decisions often also determined by political and
strategic considerations. The Directive provides
procurement rules tailor-made for the uniqueness of defence and security
equipment, namely sensitivity and complexity. It includes specific provisions
on security of supply and security of information, and it allows for
unrestricted use of the most flexible award procedure. Member States now have
at their disposal EU-wide rules they can apply to complex and sensitive
transactions without putting their legitimate security interests at risk.
Defence contracts should therefore, as a rule, no longer be awarded outside
Internal Market rules by invoking the exception clause of
Article 346 TFEU. This should lead to more transparency and
competition, which in turn should foster the competitiveness and innovativeness
of European industries and help Member States to satisfy their procurement
needs despite ever-shrinking budgets. The Directive had to be
transposed by Member States by 21 August 2011. This report implements Article 73 of the Directive, which requests the Commission to
present a report "on the measures taken by
Member States with a view to the transposition of this Directive, and in
particular Article 21 and Articles 50 to 54 thereof”". The Report assesses the
general state of transposition of the Directive by Member States, before
addressing the crucial provisions for the creation of a European Defence
Equipment Market: the scope of application (Article 2); the exclusions
from the application of the Directive (Articles 12 and 13); the
subcontracting provisions (Articles 21 and 50-54); and the
review procedures (Articles 55-64). It also highlights the situation
concerning offsets whose continuing existence is a major risk to the correct
application of the Directive. III. State of play of the
transposition of Directive 2009/81/EC Three Member States had
notified complete transposition of the Directive to the Commission by
21 August 2011, and a fourth Member State notified complete
transposition in September 2011. The Commission therefore opened
infringement procedures against 23 Member States
(Article 258 TFUE) by sending letters of formal notice. As a result,
by March 2012, 15 additional Member States had notified complete
transposition. For the remaining eight Member States the Commission continued
the infringement procedure by issuing reasoned opinions to them. By
June 2012, two of these Member States had completely transposed while two
Member States had only partially transposed the Directive. By July 2012, four
Member States had still not notified any transposition measure to the
Commission. The Commission intends to refer the cases of missing or only
partial transposition to the European Court of Justice in due course. Since a majority of Member
States have transposed the Directive with a considerable delay, the Commission
is still verifying whether the national implementing measures comply with the
Directive. IV. National implementing
measures for key elements of the Directive A. Scope of the Directive
(Article 2) It is crucial for the
effective implementation of the Directive that the Member States' national
implementing measures apply to all procurements falling within the scope of the
Directive. The correct transposition of Article 2 is therefore a key element. According to Article 2,
the Directive applies to contracts awarded "in the fields of defence and security for (a) the
supply of military equipment, including parts,
components and/or subassemblies thereof; (b) the supply of sensitive equipment, including
parts, components and/or subassemblies thereof; (c) works, supplies and services directly
related to the equipment referred to in (a) and (b) for any and all elements of
its life cycle; (d) works and services for specifically military purposes or
sensitive works and sensitive services". It is therefore the subject of the procurement that determines the
application of the Directive. In the area of defence, the
scope of the Directive is based on that of Article 346 TFEU and
covers, in principle, all contracts for the procurement of military equipment,
works and services. In addition, the Directive also applies to all sensitive
purchases that have a security purpose and involve classified information. All
other contracts in the fields of defence and security continue to be subject to
Directives 2004/17/EC of the European Parliament and of the Council of 31
March 2004 coordinating the procurement procedures of entities operating in the
water, energy, transport and postal services sectors[3] and 2004/18/EC of the
European Parliament and of the Council of 31 March 2004 on the coordination of
procedures for the award of public works contracts, public supply contracts and
public service contracts[4],
which regulate civil public procurement. Sixteen Member States have
transposed Article 2 by using in essence a similar wording to that of the
Directive. However, six Member States have used a different wording. Of those,
only some have the potential materially to change the scope of application of
the Directive. One Member State, for example, has restricted the application of the national implementing measure to
specific contracting authorities. Contracts awarded by other contracting
authorities within the material scope of the Directive will therefore not be
covered. Such a differentiating approach constitutes a risk for a European
level playing field for the procurement of all contracts covered by the
Directive and is incompatible with the Directive. Some Member States use
specific national lists to define the field of application of the Directive in
the area of defence. In principle, these lists constitute legitimate references
for the interpretation of Article 2 provided that they reflect the list of 1958[5]. It will be subject to further
detailed assessment, whether this is the case. One Member State explicitly subjects the so-called "dual use products" to the application of the
Directive. However, according to the case-law of the European Court of Justice
(Case C-615/10, Judgment of 7 June 2012), such products are subject
to the more stringent rules of Directives 2004/17/EC and 2004/18/EC
and not to those of the Directive. On the whole, the Commission
is nonetheless satisfied that most Member States have correctly transposed
Article 2. It will have to review carefully what action will be required
in order to ensure the complete application of this particular provision in all
Member States. B. Exclusions from the
application of the Directive (Articles 12 and 13). The Directive provides for
specific exclusions from its scope in Articles 12 and 13, In
accordance with Article 11 and the ECJ case law, these exclusions from the
application of EU law have to be interpreted restrictively. It is therefore of
major importance for the effectiveness of the Directive that the Member States
transpose those provisions correctly. According to Article 12
certain contracts awarded pursuant to international rules are excluded from the
Directive. While these exclusions are based on the respective exclusions of
Directives 2004/17/EC and 2004/18/EC, they have been adapted to the
specific situation of defence. Article 12 (c) in particular specifies that
a procurement pursuant to the specific procedural rules of an international
organisation is excluded from the Directive if this organisation purchases for
its purposes, or if a Member State is obliged to award the contracts in
accordance with such rules. The national implementing
measures of ten Member States use the same wording as Article 12 of the
Directive. Thirteen Member States, however, have adopted a different wording
which does not seem to change the material scope of the exclusions. At least
one Member State, however, has broadened the scope of the exclusion of
Article 12 (c). Its national implementing measure does not restrict
the exclusion to purchases for an international organisation's purposes. Article 13 contains all
other specific exclusions, some of which are identical to the exclusions of
Directives 2004/17/EC and 2004/18/EC. Defence specific exclusions
concern principally contracts involving the disclosure of information
(Article 13(a)); for the purposes of intelligence activities
(Article 13(b)); in the framework of cooperative programmes
(Article 13(c)); and awarded in third countries (Article 13(d)). A
final exclusion concerns government to government sales (Article 13(f)). The national implementing
measures of nine Member States use the same wording as Article 13 of the
Directive. Fourteen Member States adopted a different wording. As for
Article 12, most of these differences do not seem to change the material
scope of this Article. The few material changes
mainly concern the exclusion in cases of disclosure of information,
Article 13 (a), and the exclusion in the framework of cooperative
programmes, Article 13 (c). According to Article 13 (a),
the Directive does not apply to contracts for which the application of the
rules of this Directive would oblige a Member State to supply information the
disclosure of which it considers contrary to the essential interests of its
security. This exclusion is based on Article 346 (1)(a) TFEU
according to which "no Member State shall be obliged to supply
information the disclosure of which it considers contrary to the essential
interests of its security". The Directive clarifies that where a Member State is not obliged to supply information within the meaning of
Article 346 (1)(a) TFEU, it is not obliged to apply the
Directive. All but two Member States
have transposed this exclusion correctly. One Member State has not transposed
it; the other Member State excludes all contracts where publication would lead
to disclosure of classified information, which goes beyond the wording of
Article 13 (a). Contracts involving classified information are
covered by the Directive and can be subject to specific provisions guaranteeing
the security of information. Other material changes in
the scope of a specific exclusion concern Article 13 (c). It excludes
certain contracts in the framework of cooperative programmes from the
Directive. The exclusion as such appears to have been correctly transposed by
all Member States. This is not the case, however, for the obligation to inform
the Commission upon the conclusion of the respective agreement foreseen under
Article 13 (c). In one Member State there is no obligation to inform
the Commission and in another the Commission has to be informed only when the
cooperative programme ends. All other exclusions foreseen under Article 13 seem
to have been transposed correctly. Since exclusions have to be
interpreted strictly, the Commission will monitor closely the use of exclusions
by Member States and verify that none of them, especially the exclusions under
Article 12 and the exclusion of government to government sales,
Article 13 (f), is used to circumvent the rules of the Directive. C. Provisions relating to
subcontracting (Articles 21 and 50 to 54 – title III). The Directive lays down
extensive rules on subcontracting. Their aim is to enhance competition within
the supply chains of successful tenderers. The more systematically they are
used by contracting authorities the more they will improve market access in
particular for SMEs and economic operators established in smaller countries and
thereby contribute to a truly European Defence Equipment Market. The
subcontracting rules are therefore a cornerstone of the Commission's policy. Article 73 requires the
Commission to report specifically on their transposition. Such rules are new to
European public procurement legislation. Directive 2004/17/EC
and 2004/18/EC only state that "the contracting authority may ask
or may be required by a Member State to ask the tenderer to indicate in his
tender any share of the contract he may intend to subcontract to third parties
and any proposed subcontractors". Contracting authorities
have no further rights under Directives 2004/17/EC and 2004/18/EC to
intervene in the choice of subcontractors by the main contractor. While reiterating this basic
principle in Article 21 (2), the rules of the Directive provide
important additional tools for the Member States and their contracting
authorities. Firstly, according to
Article 21 (3), contracting authorities can oblige the successful
tenderer to award all or certain of its proposed subcontracts through the
competitive procedure described in Title III of the Directive. While
Member States had to transpose this provision, they could decide whether
contracting authorities are free to impose to award subcontracts through such a
competitive procedure or whether they are obliged to do so. Twenty-two Member States
have given their contracting authorities the option to oblige the successful
tenderer to award their subcontracts using the competitive procedure. No Member State obliges its contracting authorities to so oblige the successful tenderer. One Member State seems to have omitted to transpose Article 21 (3) at all. Secondly, under
Article 21 (4), Member States may provide for compulsory
subcontracting by the successful tender. However, the transposition of these
provisions is left to the discretion of the Member States. If a Member State introduces compulsory subcontracting, it has two options: It can either give
its contracting authorities the possibility to require subcontracting from the
successful tenderer or it can oblige its contracting authorities to do so. Both
options, if exercised, create additional business opportunities for potential
subcontractors. It has to be noted that the
successful tenderer can only be obliged to subcontract up to 30% of the
main contract and that the subcontracts have to be awarded using the
competitive procedure of Title III. Only two Member States have
chosen not to provide for compulsory subcontracting. All other Member States
have given their contracting authorities the possibility to require
subcontracting without obliging them to require it. A preliminary assessment
suggests that Member States' transpositions of the subcontracting provisions
are generally compatible with the Directive. The Commission is satisfied that a
majority of Member States have seized these opportunities to enhance
competition in the supply chains and is confident that this will have a
positive impact on the internal market. Since the subcontracting provisions are
an important tool for the creation of a European level playing field in the
defence market, the Commission will closely monitor their use by Member States. D. Review mechanism, Articles 55-64 The Directive includes a
comprehensive set of provisions aimed at making effective means of redress
available to aggrieved bidders. These provisions are based on those
coordinating national review systems for civil procurementsDirective2007/66/EC
of the European Parliament and of the Council of 11 December 2007 amending
Council Directives 89/665/EEC and 92/13/EEC with regard to improving the
effectiveness of review procedures concerning the award of public contracts[6]. Approximately half the
Member States have transposed the provisions on review in the national
implementing measures of the Directive, the other half have chosen to transpose
these provisions within their general rules on remedies. The Directive foresees some
adaptations to the general review system to take the special characteristics of
defence into account. This report will highlight the two most important ones. First,
Article 56 (10) foresees that "Member States may decide that
a specific body has sole jurisdiction for the review of contracts in the fields
of defence and security" in order to guarantee an adequate level of
confidentiality of classified information. The provision also contains specific
rules on how "to reconcile the confidentiality of classified
information with respect for the rights of the defence". It seems that no Member has
used the option to endow a specific body with jurisdiction. Only a few Member
States have included specific rules on security clearance for the members of
the review body. These rules deal with the capacity of a member of the review
body to sit on a case but do not contain specific provisions for granting or
requesting security clearance. It seems, therefore, that the Member States did
not share some of the concerns voiced in the legislative process, which had
given rise to the specific rules of the Directive on that point. Second,
Article 60 (3) foresees that a review body may not consider a
contract ineffective, even though it has been awarded illegally, "if
the review body finds that overriding reasons relating to a general interest,
first and foremost in connection with defence and/or security interests,
require that the effects of the contract should be maintained (…) In any event,
a contract may not be considered ineffective if the consequences of this
ineffectiveness would seriously endanger the very existence of a wider defence
or security programme which is essential for Member State's security interests." All Member States but two have included this specific possibility to abstain from declaring a contract
ineffective. A preliminary assessment
suggests that Member States' transpositions of the review provisions in general
are compatible with the Directive. The Commission, therefore, expects that
procurement in the field of defence and security will be subject to effective
national review. V. Impact of the
Directive on Member States' offset provisions In the past, 18 Member
States maintained offset policies requiring compensation (offsets) from
non-national suppliers when they procured defence equipment abroad. In these
Member States, contracting authorities were generally obliged to require such
compensation for purchases above a certain value. Such offset requirements are
restrictive measures which go against the basic principles of the Treaty. They
discriminate against economic operators, goods and services from other Member
States, and they impede the free movement of goods and services. Offsets thereby jeopardize
the proper application of the Directive and hinder the creation of a European
level playing field in defence procurement. EU law can tolerate offsets only on
the basis of a Treaty-based derogation, in particular
Article 346 (1)(b) TFEU, i.e. if an offset requirement is
necessary for the protection of the essential security interests of a Member
State. The use of the derogation, however, has to be justified by the Member State concerned on a case-by-case basis. The Commission has, therefore,
been in close contact with the 18 Member States concerned, helping them to
abolish or revise their offset rules. As a result, most of these Member States
have either abolished the respective rules or revised their legislation. In
this case, offsets are no longer required systematically but solely in
exceptional cases where the conditions of Article 346 TFEU are met.
Major legal changes have, therefore, been implemented. In addition, the
European Defence Agency and its participating Member States clarified that its
Code of Conduct on Offsets may be applied only to offsets which are justified
on the basis of Article 346 TFEU. The Commission will now
monitor whether these changes will bring about a change in practice. It is
convinced that a rapid phasing out of the discriminatory practice of offsets is
necessary to create a truly European Defence Equipment Market. The Commission
will, therefore, take appropriate action where this is not the case. It will
also do so where Member States continue to have offset rules that are clearly
incompatible with EU law. VI. Conclusion The aim of the Directive is
to create a European level playing field, applying to large and small Member States and companies alike. Defence procurement is now subject to internal market rules
and only exceptionally exempted from them. Thus, Member States now have to
publish business opportunities, apply harmonised procedures, and phase out
offsets. Timely transposition proved
challenging for the vast majority of Member States. However, most of the 23
Member States who have transposed the Directive as of July 2012 have prima
facie done so correctly. In particular, the Commission considers it an
encouraging sign that many Member States have also transposed the
non-compulsory subcontracting provisions and thereby seized additional
opportunities to foster competition. A consistent and correct
application of the Directive is necessary to strengthen the European Defence
Technological and Industrial Base. Therefore, the Commission will closely monitor
especially the use of exclusions and derogations as well as the phasing out of
offsets. In general, this report is without prejudice to the power of the
Commission to bring infringement proceedings against individual Member States
whose national implementing measures are not in compliance with the provisions
of the Directive. Moreover, the Commission
will pay particular attention to the impact of the Directive on the openness of
the Defence market and the strength of the European Defence Industrial Base. By
21 August 2016 the Commission will report on this subject to the
European Parliament and the Council as provided under Article 73(2). Further initiatives may be
necessary to promote the internal market in this area, with efforts from all
relevant actors, in particular Member States and industry. The Commission has,
for its part, set up a Task Force to examine ways of further developing
European policies in the defence sector. It will do so in association with the
European Defence Agency and in close cooperation with all other stakeholders in
order to ensure overall coherence of European efforts in an area which is of
strategic importance for the Union as a whole. [1] OJ L 216 of 20 August 2009, p. 76 (the
"Directive"). [2] OJ L 146 of 10 June 2009, p. 1. [3] OJ L 134 of 30 April 2044, p. 1. [4] OJ L 134 of 30 April 2004, P. 114. [5] Decision defining the list of products (arms,
munitions and war material) to which the provisions of Article 223 (1)(b) – now
Article 346 (1)(b) TFUE – of the Trieaty apply (doc. 255/58). Minutes of 15
April 1958: doc. 368/58. [6] OJ L 335 of 20 December 2007, p. 31.