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European Defence Procurement Outside the EC:

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Title: European Defence Procurement Outside the EC:


1
European Defence Procurement Outside the
EC European Defence Agency, OCCAR Dr. Aris
GEORGOPOULOS Public Procurement Research Group,
School of Law, University of Nottingham
Seminar on European Defence Procurement,
Bucharest, 13-14 November 2007
2
Aris Georgopoulos
OUTLINE
  • Background Information
  • European Defence Agency
  • OCCAR
  • Conclusions/Food for thought

3
Aris Georgopoulos
Background Information
  • Preliminary Clarifications/ Terminology
  • What is the definition of Defence Procurement?
  • Lato Sensu Defence Procurement
  • The acquisition by the authorities in the defence
    sector of the various kinds of goods and services
    they need for performing their duties
  • i.e. paperclips, furniture, cleaning services,
    tanks, submarines, Aircraft etc.

4
Aris Georgopoulos
Background Information
  • Preliminary Clarifications/ Terminology
  • What is the definition of Defence Procurement?
  • Stricto Sensu Defence Procurement
  • The acquisition of Armaments
  • i.e. materials intended only for military
    purposes (also known as war-like materials, hard
    defence materials)

5
Aris Georgopoulos
Background Information
Preliminary Clarifications / Terminology Dual-us
e goods Products used for both military and
non-military purposes i.e. military ambulances,
motorcycles, IT etc. Dual use goods do not fall
within the strict definition of Defence
Procurement
6
Aris Georgopoulos
Background Information
  • Some Figures
  • Aggregate spending on defence expenditure among
    the EU 25 193 billion per year (approx)
  • Aggregate spending on Defence Equipment among EU
    25 30-40 billion per year (approx)
  • Equivalent to 3 (approx.) of EU industrial
    output

7
Aris Georgopoulos
Background Information
  • Some Figures
  • EU aggregate Defence Expenditure less than half
    of the US
  • Due to market fragmentation EU Member States
    should increase their expenditure to a level
    higher of that of the US (at least 10) in order
    to achieve comparable results with the US

8
Aris Georgopoulos
Background Information
  • Why is there fragmentation in the European
    defence market?
  • Defence Market ? Market of the tools of
    sovereignty
  • As a result ? 27 national defence markets
  • .as opposed to one integrated European defence
    market

9
Aris Georgopoulos
Background Information
  • Arguments for more Europe in defence
    procurement
  • Economic imperatives
  • Need for increasing the competitiveness of
    European Defence firms
  • Need for rational use of the limited resources
    allocated to defence and avoidance of duplication

10
Aris Georgopoulos
Background Information
  • Political/strategic imperatives
  • Support of the credibility of the ESDP by a
    healthy European defence industrial base
  • Bridging the capabilities gap with the US (see
    Kosovo)

11
Aris Georgopoulos
Regulation of DP at the European level
  • At the moment there are three fora of
    regulation of defence procurement at European
    level
  • EU 1st Pillar (European Community)
  • EU 2nd Pillar (CFSP, ESDP)
  • At European level but outside the EU
  • (This Presentation focuses on 2 and 3)

12
Aris Georgopoulos
Regulation of DP under the 2nd Pillar of the EU
  • European Defence Agency (EDA)
  • Established by the Council (COUNCIL JOINT ACTION
    2004/551/CFSP of 12 July 2004)
  • NB The establishment of the EDA was foreseen in
    the Constitutional Treaty. The Member States
    decided (Thessaloniki EU Council meeting 2003) to
    move on quickly with the establishment of the EDA
    without waiting for the conclusion of the
    ratification process.

13
Aris Georgopoulos
European Defence Agency
  • Membership
  • 26 participating Member States (pMS)
  • Apart from Denmark (General opt out)
  • Organisation
  • EDA Legal personality
  • i.e. can conclude contracts on behalf of the pMS
  • Head of the Agency High Representative for CFSP

14
Aris Georgopoulos
European Defence Agency
  • Organisation (cont)
  • Chief Executive Head of EDAs staff
  • Steering Board EDAs decision making body
  • SB is composed of 26 representative (one for
    each pMS) (The EU Commission participates without
    voting rights)
  • Despite its legal personality EDA is not
    completely independent
  • ? EDA is subject to the political control of the
    Council of Ministers (submission of regular
    reports).

15
Aris Georgopoulos
European Defence Agency
  • Organisation (cont)
  • Voting system in the Steering Board ? Qualified
    Majority
  • (Unless a representative of a participating
    Member State declares that it intends to oppose a
    decision for important and stated reasons of
    national policy. In that case the matter may be
    referred to the Council which decides by
    unanimity).

16
Aris Georgopoulos
European Defence Agency
  • General Principles
  • Inclusion
  • - Invitation to all EU Member States to
    participate (not an exclusive club)
  • Flexibility
  • - This is illustrated by a look at the
    competences and the way they are exercised

17
Aris Georgopoulos
EDA Competences
  • Competences (in the area of armaments)
  • Promotion of European armaments co-operation
  • Strengthening of the European Defence
    Technological and Industrial Base
  • Enhancement of the effectiveness in European
    Defence Research and Technology (RT)

18
Aris Georgopoulos
EDA Competences
Collaborative Projects There are two
categories of ad hoc coll. projects 1. Category
A ? (participation of all MSs is presumed -
although they are not obliged to contribute) 2.
Category B ? (participation of all Member States
is not presumed)
19
Aris Georgopoulos
EDA- Initiatives
  • Other Initiatives
  • Code of Conduct for Armaments Procurement
  • Code of best practice in the Supply Chain

20
Aris Georgopoulos
EDA- Code of Conduct
  • Aim
  • to open up defence markets of participating
    Member States (operational since July 2006)
  • Characteristics
  • Voluntary
  • Non binding
  • 24 Member States participate (apart from Denmark
    Spain, Hungary joined in 2007)

21
Aris Georgopoulos
EDA- Code of Conduct
  • Field of application
  • Armaments contracts of 1 million or more where
    the conditions for application of Art. 296 EC are
    met
  • except for
  • procurement of research and technology
  • collaborative procurements
  • nuclear weapons and nuclear propulsion systems,
  • chemical, bacteriological and radiological goods
    and services
  • cryptographic equipment

22
Aris Georgopoulos
EDA- Code of Conduct
  • Publicity requirement
  • Contract opportunities are to be published on the
    electronic bulletin Board of the EDA
  • http//www.eda.europa.eu/ebbweb/
  • So far 282 contract opportunities have been
    advertised (of approx value 10 billion)

23
Aris Georgopoulos
EDA- Code of Conduct
  • Enforcement of the CoC(?)
  • Only Peer Pressure
  • N.B. Subscribing Member States may proceed to
    procurment without publication for extraordinary
    and compelling reasons of national security
  • Question How different is the notion of
    extraordinary and compelling reasons from the
    essential interests of security of Article 296
    EC?

24
Aris Georgopoulos
Code of Best Bractice in the Supply Chain
  • Aim
  • Influence behaviour in the supply chain
  • Promote efficient and fair competition
  • Support the involvement of SMEs
  • Characteristics
  • Non binding
  • Publicity Companies (1st tier etc.) may
    advertise contract opportunities on the
    Electronic Bulletin Board

25
Aris Georgopoulos
Regulation of Defence Procurement outside the EU
  • Organisation for Joint Armaments Co-operation
    OCCAR
  • Established in 2001
  • Legal Personality
  • Six Participating Countries
  • France, Germany, Italy and the United Kingdom,
    Belgium and Spain

26
Aris Georgopoulos
OCCAR
  • Field of competence
  • - management agency of defence collaborative
    projects between participating countries
  • Programmes
  • A400M
  • TIGER
  • ROLAND
  • BOXER
  • FREMM
  • FSAF
  • COBRA

27
Aris Georgopoulos
OCCAR
  • Key principles
  • Cost effectiveness in collaborating programmes
  • Harmonisation of requirements
  • Competitiveness
  • Elimination of the practice of juste retour
  • Principle of overall multi-programme/multi-year
    balance (global balance)

28
Aris Georgopoulos
Food for thought
  • Institutional Traffic?
  • Some streamlining of the institutional framework
    of (establishment of EDA and assimilation of
    WEAG/WEAO)
  • Enforcement of the regimes?
  • Even if juste retour abandoned, work-sharing
    still present.

29
Aris Georgopoulos
Food for thought
  • Global balance easier for MSs with strong
    defence industrial base.
  • How compatible are the initiatives of the EDA
    especially the Code of Conduct with the parallel
    initiatives of the Commission in this field?

30
Thank You
  • Dr Aris GEORGOPOULOS
  • Public Procurement Research Group
  • School of Law
  • University of Nottingham
  • NG7 2RD
  • United Kingdom
  • Tel 0044 (0) 115 8466307
  • Fax 0044 (0) 115 9515696
  • aris.georgopoulos_at_nottingham.ac.uk
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