This post was also written by Peter Teare and Alexandra A. Nelson.
In an effort to open up the European market for defense and sensitive security products to greater international competition and transparency in its contracting processes, the EU member states have recently adopted a series of measures including the EU Directive on Defense and Sensitive Security Procurement (Directive 2009/81).
The European market for defense and security products is currently worth more than $220 billion. But historically less than 25% of that value is awarded through a public tender process, and 75% of the defense spending of national governments within the EU goes to domestic suppliers. This new law aims to mandate the greater use of public tendering procedures in defense and security programs and reduce the ‘national preference’ that often prevails in Europe. The aim is also to introduce, for the first time, an effective system for bid protests in defense and security procurement. The legality of imposing off-sets and other discriminatory requirements as a condition of contract awards has also been placed into question.
The Defense and Sensitive Security Procurement Directive forms a part of a package of new legislative measures known as the “European Defense Package” which aims both to promote competition, eliminate discriminatory obligations such as off-sets, and to simplify the current national licensing systems for cross-border transfers of military equipment and technology. Each EU member state was required to transpose its terms into the national law by 21 August 2011.
Reed Smith is holding a roundtable seminar at its Washington DC office on Tuesday, February 7, 2012 from 3:00 pm to 5:30 pm to discuss these legislative developments.
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