Earlier this summer, the European Commission unveiled an extensive proposal aimed at making defense procurement faster and more flexible. The Defence Readiness Omnibus (DRO) directive is expected to channel up to €800 billion into European defense investments over the next four years, write attorneys-at-law Keidi Kõiv and Timo Kullerkupp from RASK law firm.
The changes cover everything from the introduction of new procurement forms to simplified tender procedures and accelerated joint purchases. The goal is to reduce bureaucracy, strenghten cooperation between member states, and provide industry with a clearer, more efficient environment that allows for a quicker response to defense capability needs.
The changes cover everything from the introduction of new procurement forms to simplified tender procedures and accelerated joint purchases. The goal is to reduce bureaucracy, strenghten cooperation between member states, and provide industry with a clearer, more efficient environment that allows for a quicker response to defense capability needs.
Dynamic Procurement System
A Dynamic Procurement System (DPS) will be added to the defense procurement framework, enabling repeated purchases – from protective gear and communication devices to maintenance services – to be made faster and with less bureaucracy. Companies no longer need to wait for a specific tender announcement, they can join the system at any time. Membership applications are reviewed within ten (maximum 15) working days, and once approved, companies can participate in all tenders within the same category without requalification.
This change also opens the door to new players for whom the defense market has previously been difficult and time-consuming to access. Through the DPS, offers can be submitted flexibly and continuously. Joining is free, and the system is divided into categories. In practice, this allows both large and small companies easier access, while enabling the state to make necessary purchases more efficiently.
This change also opens the door to new players for whom the defense market has previously been difficult and time-consuming to access. Through the DPS, offers can be submitted flexibly and continuously. Joining is free, and the system is divided into categories. In practice, this allows both large and small companies easier access, while enabling the state to make necessary purchases more efficiently.
Flexible Innovation Partnership
The European Commission also plans to transform the current innovation partnership into a flexible “develop and procure” model. Under this approach, the state does not need to wait for fully developed solutions but can collaborate with companies step by step – from concept to prototype and testing. If the development succeeds, the state can purchase the final product directly, without issuing a new tender.
This approach reduces the risk of costly developed solutions going unpurchased and provides companies with certainty that successful work may result in a real contract. Terms, including intellectual property ownership, are set upfront to avoid later disputes. Overall, this encourages the defense industry to invest more in new technologies and allows the state faster access to innovative solutions.
This approach reduces the risk of costly developed solutions going unpurchased and provides companies with certainty that successful work may result in a real contract. Terms, including intellectual property ownership, are set upfront to avoid later disputes. Overall, this encourages the defense industry to invest more in new technologies and allows the state faster access to innovative solutions.
Direct Procurement from Research and Development Results
A new option allows the state to make direct purchases based on research and development project outcomes. If a functional solution emerges from competitive development work among multiple companies, it can be purchased directly without a new tender. The contract values may be up to ten times the original development agreement.
Conditions require that development, production, and management take place within the EU, EEA countries, or Ukraine, and that the company is not under third-country control. This provides strong incentives for the defense industry to participate in development projects – a successful solution can lead to a substantial contract without additional competition, as long as provided origin and supply chain requirements are met.
Conditions require that development, production, and management take place within the EU, EEA countries, or Ukraine, and that the company is not under third-country control. This provides strong incentives for the defense industry to participate in development projects – a successful solution can lead to a substantial contract without additional competition, as long as provided origin and supply chain requirements are met.
Temporary Exception for Joint Procurements
Until early 2031, a temporary exception will simplify joint procurements among at least three member states. If countries decide to purchase identical or slightly modified products, direct negotiations can be used without a public tender. The exception also applies to joint maintenance.
This allows, for example, joint orders of drones or other equipment to be carried out faster and with less bureaucracy, offering companies larger contract opportunities. A condition is that at least 65% of components originate from the EU, EEA countries, or Ukraine, placing greater attention on supply chain origin and ownership structures.
This allows, for example, joint orders of drones or other equipment to be carried out faster and with less bureaucracy, offering companies larger contract opportunities. A condition is that at least 65% of components originate from the EU, EEA countries, or Ukraine, placing greater attention on supply chain origin and ownership structures.
Rules for Joint Procurement and Central Buyers Clarified
The new rules clarify joint procurements and the use of central buyers. The principle is simple: the legislation of the country where the central buyer is located applies to the procedure.
For Estonian companies, this means that if Germany or Poland manages a joint tender, their national laws and requirements must be observed. While this requires adaptation to different legal environments, it also provides access to larger international tenders that were previously difficult to enter.
For Estonian companies, this means that if Germany or Poland manages a joint tender, their national laws and requirements must be observed. While this requires adaptation to different legal environments, it also provides access to larger international tenders that were previously difficult to enter.
Changes to Framework Agreement Duration and Contract Amendments
The maximum duration of framework agreements will increase from seven to ten years. This allows defense industry companies to plan production and investments with greater certainty, while the state ensures longer-term supply security.
Rules for contract amendments will be aligned with standard public procurement principles, creating clearer grounds for changes – whether related to price, quantity, or delivery conditions – and reducing legal uncertainty that has often complicated tenders.
Rules for contract amendments will be aligned with standard public procurement principles, creating clearer grounds for changes – whether related to price, quantity, or delivery conditions – and reducing legal uncertainty that has often complicated tenders.
Increase in Thresholds for International Public Procurements
The threshold for international public procurements will rise: from €443,000 to €900,000 for goods and services, and from €5.54 million to €7 million for construction works. This aims to reduce administrative burden for smaller tenders but may also mean some procurements remain unannounced publicly, pushing companies to engage more actively with contracting authorities and make their offers visible.
Other Changes Affecting Tender Participation
The European Commission encourages member states to eliminate excessive national requirements that prevent companies from participating. This may mean that initial simple confirmation suffices, with supporting evidence requested only from the successful tenderer. Estonia’s position on this is still in development.
Companies will also receive clearer guidance on when cooperation, such as in joint procurements, is allowed under competition law, reducing fears of exclusion or enforcement actions.
An exception to the REACH chemical regulation is also introduced, allowing member states to apply simplified rules for certain substances used in defense supply chains. In practice, this shortens delivery times and reduces bureaucracy when products contain otherwise restricted chemicals but are intended for defense purposes.
Companies will also receive clearer guidance on when cooperation, such as in joint procurements, is allowed under competition law, reducing fears of exclusion or enforcement actions.
An exception to the REACH chemical regulation is also introduced, allowing member states to apply simplified rules for certain substances used in defense supply chains. In practice, this shortens delivery times and reduces bureaucracy when products contain otherwise restricted chemicals but are intended for defense purposes.
Conclusion
Overall, the Defence Readiness Omnibus directive reshapes European defense procurement, bringing more flexibility and clarity to the market. For companies, it creates new opportunities but also requires compliance with stricter origin and supply chain requirements. For states, it provides tools to respond more quickly to defense needs and to collaborate more efficiently than before.