European defence equipment market reaches significant milestone

5^thanniversary of the launch of the Intergovernmental Regime on Defence Procurement

1 July 2011 marked the fifth anniversary of the launch of the Intergovernmental Regime on Defence Procurement, a landmark agreement of EU governments to open up to cross border competition the most sensitive share of the defence market covered by Article 346 TFEU.
Since then, the Regime has been pioneering a gradual transition from closed and fragmented national defence markets to a more open, transparent and competitive marketplace where better value for money is the key procurement priority and a critical determinant.

Rob de Jong, Chairman of the EDA National Armaments Directors Steering Board

The launch of the Regime has been a remarkable achievement and brought fundamental changes in defence procurement/defence business.

In its 5 years of operation it has been creating new opportunities for companies across Europe, strengthening our defence technological and industrial base, beneficial both for our Armed Forces and taxpayers.

Results: Over 650 contract opportunities published on the Electronic Bulletin Board operated by the Agency Over 400 contracts awarded under competition with a total value of 5,4 bn euros 1/3 cross–border awards Over 500 000 views

Results:

Over 650 contract opportunities published on the Electronic Bulletin Board operated by the Agency
Over 400 contracts awarded under competition with a total value of 5,4 bn euros
1/3 cross–border awards
Over 500 000 views

In this process, both Member States, as shareholders, and Defence Industries, as stakeholders, are critical.

Domingo Ureña Raso, President of The AeroSpace and Defence Industries Association of Europe and CEO Airbus Military

I would like to congratulate the Agency on its essential role in the process of opening up the defence market in Europe through the Regime. ASD has been actively supporting it from the beginning and we are pleased with the results. But this has to be accompanied by efforts to consolidate demand through the harmonisation of requirements across the continent. We need more consolidated defence procurement across Europe, with the EDA being used as a prime vehicle to co-ordinate this process, increased effort on research and technology and more collaborative programmes between EU Member States.

Together with the European Commission’s new directive on defence procurement, it provides a solid foundation in our joint endeavours towards enhancing and strengthening the development of a genuine European Defence Market.

Michel Barnier, EU Commissioner in charge of the Internal Market and Services

The Intergovernmental Regime has been an important step towards the creation of a European Defence Equipment Market. It has fostered trans-border competition in a market segment which was traditionally closed for non-national suppliers. Moreover, it has helped - by its very existence - to build consensus on the necessity of market openness between Member States. This consensus made it possible to adopt Directive 2009/81/EC which will apply from August 21 on to the bulk of defence procurement in the EU. I am convinced that the EDA will continue to play an important role for European defence markets and industries, in particular in areas related to the demand side such as security of supply and pooling and sharing. The Commission will cooperate as closely as possible with the EDA to develop a fully integrated EDEM and to strengthen the EDTIB.

This twin - track approach combines community measures and intergovernmental initiatives and ensures that Member State's Armed Forces get the best possible, robust, flexible and interoperable equipment in the most cost – effective and efficient way.

Dr. Csaba Hende, Minister of Defence of Hungary

A strong Europe needs a globally competitive European defence industry. At the same time the current financial crisis and the budgetary problems faced by most nations only make the development of a European defence market an even more pressing necessity. We need to use the economic constraints as an incentive to eliminate duplication and rationalise our defence procurement. The final goal is to save money for our taxpayers and deliver high-technology, European made defence equipment for our armed forces. The work of EDA and the Commission is vital in this process.

Next steps:

Less fragmented markets mean more efficient use of resources – this is simply an imperative given constraints on European defence spending. To this end, we have to also increase our efforts to consolidate demand in order to achieve the economies of scale to maintain and develop defence capabilities in Europe.

Last month, the EDA Defence Ministers, building on the 5 – year success of the Regime, decided to take forward the development the European defence market and tasked the Agency to bring about 5 critical objectives in close consultation with the participating Member States and in cooperation with the European Commission:

1. Ensuring security of supply on a European level

2. New opportunities for more effective procurement and improved effectiveness of military expenditures through more cooperative action

3. Increased global competitiveness of the European defence industry and reciprocal market access

4. Addressing security aspects in view of the development of a wider European Defence and Security Market

5. Constructive dialogue with defence industry; incentives for more defence industrial efficiencies and innovation

Claude – France Arnould, the EDA Chief Executive

The success of the Regime would not have been possible without the strong commitment of Member States and Industry’s support. But we cannot stop there. The actions we are launching now will not only contribute to further development of a more open and globally competitive European defence market but will considerably support pooling efforts together to meet future military needs, ensure interoperability and standardization, and share the ever-increasing costs of developing and procuring high-technology defence equipment.