Regulation (EU) 2025/2643 of the European Parliament and of the Council of 16 December 2025 establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products (‘EDIP Regulation’) (Text with EEA relevance)

(99) A priority-rated order or a priority-rated request should be taken based on objective, factual, measurable and substantiated data. It should have regard for the legitimate interests of the undertakings and the cost and effort required for any change in production sequence. When accepted or imposed, the obligation to perform the priority-rated request or the priority-rated order should take precedence over performance obligations under private or public law. Where the object of a priority-rated request concerns a defence product, the request should specify the scope of contractual obligations over which it should have precedence. Each priority-rated request or order should be placed at a fair and reasonable price. It should be possible to carry out the calculation of such price on the basis of applicable prices over recent years, subject to reasons being given for any increase or decrease, for example taking into account inflation or input costs. In light of the importance of ensuring the supply of crisis-relevant products, which are indispensable to the correct functioning of the internal market and its supply chains, compliance with the obligation to perform a priority-rated request or order should not entail liability to third parties for damages that might result from any breach of contractual obligations governed by the law of a Member State, to the extent that the breach of contractual obligations was necessary for compliance with the mandated prioritisation. Economic operators potentially within the scope of a priority-rated request should be allowed to provide, in the conditions of their commercial contracts, for the possible consequences of a priority-rated request.

(100) Where the economic operator has expressly accepted a priority-rated request and the Commission has adopted an implementing act following such an acceptance, or where a priority-rated order has been imposed on the economic operator by an implementing act adopted by the Commission, the economic operator should comply with all the conditions of that implementing act. Non-compliance by the economic operator with the conditions laid down in the implementing act should result in a loss of the benefit of a waiver of contractual liability. Where the non-compliance is intentional or attributable to gross negligence, the Commission should be able to impose on the economic operator a fine or a periodic penalty payment, subject to the proportionality principle. The Commission should take into account any duly reasoned justification presented by the economic operator for the purpose of determining whether fines or periodic penalty payments are deemed necessary and proportionate.

(101) Under the exceptional circumstance that an economic operator established in the Union is subject to a measure entailing a priority-rated order or a priority-rated request of a crisis-relevant product from a third country, it should notify the Commission, so as to inform an assessment of whether such measure will have a significant impact on the security of supply of crisis-relevant products and the proper functioning of the internal market, as well as of any appropriate step that might need to be taken in response to that measure.

(102) The request or obligation to prioritise the production or supply of certain products does not disproportionately affect the freedom to conduct a business and the freedom of contract, which are protected by Article 16 of the Charter of Fundamental Rights of the European Union (the ‘Charter’), and the right to property laid down in Article 17 thereof. In accordance with Article 52(1) of the Charter, any limitation on the exercise of those rights and freedoms must be provided for by law and respect the essence of those rights and freedoms, and be subject to the principle of proportionality.

(103) Where the security-related supply-crisis state is activated, the measures available under the supply-crisis state should also be available if deemed appropriate by the Council and specified in the implementing act activating the security-related supply-crisis state.

(104) Intra-EU transfers of defence products are regulated by Directive 2009/43/EC of the European Parliament and of the Council (30), which aims to simplify those transfers in order to ensure the proper functioning of the internal market for defence products. As documented by past evaluations of that Directive, the granting of a priori global and individual transfer licences remains largely the norm for the movement of defence products within the internal market and the average time to process applications varies, sometimes significantly, from one Member State to another. During a security-related supply crisis, and where the Council considers it necessary, it should be possible for the Council to adopt an implementing act activating the security-related supply-crisis state to determine a timeframe, which should be no longer than two weeks, within which the national authorities concerned should treat the applications once entirely received in order to further facilitate the movement of those products in the internal market. Additionally, this Regulation aims to facilitate the intra-EU transfers of crisis-relevant products in the context of a supply crisis. Therefore, it should be clarified that a Member State which imposes export limitations to components which are crisis-relevant products and which it considers sensitive in the meaning of Directive 2009/43/EC should not require further authorisations for the intra-EU transfer of the components concerned where the recipient provides a declaration of use in which it declares that the components subject to that transfer licence are integrated or are to be integrated into a defence product and cannot be transferred or exported as such. Such measure should not affect existing Union and national rules governing the transfer and export of defence products.

(105) As the certification of defence products is key to ensuring the proper functioning of the internal market for defence products, in particular during a security-related supply crisis, this Regulation should enable, in addition to the acceleration of existing national processes, the mandatory mutual recognition of a crisis-relevant defence product lawfully certified in a Member State.

(106) In addition to other measures provided for by this Regulation for the purpose of addressing a security-related supply-crisis state, Member States should, where the Council activates those measures, consider, on a case-by-case basis, using defence-related exemptions or derogations under national and applicable Union law for the purpose of the granting of permits relating to the planning, construction and operation of production facilities of crisis-relevant defence products or with a view to ensuring the continuity of production of such products, if they deem that the use of such exemptions or derogations would facilitate the security of supply of crisis-relevant defence products. That could in particular apply to Union law concerning environmental, health and safety issues, which is indispensable to improving the protection of human health and the environment, as well as to achieving sustainable and safe development. Since a security-related supply crisis is characterised by obstacles to the movement of crisis-relevant defence products on the internal market, it is appropriate to allow, in such circumstances, for the financial support under the Programme of innovation actions, thus enabling a particularly rapid availability of defence products on the market. Support to such actions would indeed contribute to addressing the obstacles concerned, in particular by enabling a significant shortening of the delivery lead time of defence products or a mass production of such products. It should therefore be possible for the Council, when it activates the security-related supply crisis state, to make such innovation actions eligible under the Programme.

(107) Compliance with the obligations imposed under this Regulation should be enforceable by means of fines and periodic penalty payments. To that end, appropriate levels of fines for non-compliance with information requests, the obligations stemming from a priority-rated request and the notification obligation applying where an economic operator established in the Union is subject to a prioritisation measure of a third country should be laid down, taking into account the different levels of gravity of the non-compliance between both obligations, and with different ceilings for SMEs. Furthermore, periodic penalty payments should be laid down for non-compliance with the obligation to accept and perform priority-rated orders, and should be proportionate, with different ceilings for SMEs. Limitation periods should apply for the impositions of fines and periodic penalty payments, in addition to limitation periods for the enforcement of penalties. In addition, the Commission should give the economic operators concerned the right to be heard.

(108) One of the challenges identified during the COVID-19 crisis was the lack of a network for ensuring preparedness, as well as insufficient information sharing and coordination for response measures between the Member States, on the one hand, and between the Member States and the Commission, on the other hand. Therefore, the achievement of the objective pursued by this Regulation to prepare for and respond to the impact of future supply crises on the internal market for defence products should be supported by a governance mechanism. This Regulation should establish a Board, to facilitate cooperation, exchange of information and the smooth, effective and harmonised implementation of the measures provided for in this Regulation aimed at ensuring the security of supply of defence products. The Board should be composed of representatives of the Member States and the Commission. As ensuring the proper functioning of the internal market for defence products in times of supply crisis, or preparing for such supply crises, requires taking account of the ability of Member States to develop, acquire and manage their defence capabilities and to enhance their defence readiness, it is appropriate that the Commission and the Member State holding the rotating presidency of the Council co-chair the Board. In addition, given the contribution of the security of supply regime to the Union’s ability to defend its security and defence interests, the High Representative and the EDA should also be members of the Board. In particular, the EDA’s ongoing work strands on security of supply of defence products could be useful for the implementation of this Regulation. The EDA facilitates the sharing of best practices and reinforces cooperation between Member States on defence-related security of supply. It also generates insights on bottlenecks affecting the supply chains of defence products. Hence, the EDA should be able to share its views and expertise inter alia in the Board, which will contribute to preparing for and responding to the impact of supply crises on the internal market for defence products. Associated countries should have the right to become members, without voting rights, of the Board in accordance with the conditions set out under the Agreement on the European Economic Area. Representatives of the European Parliament should be invited as observers to the meetings of the Board. The Board should facilitate coordination among Member States and provide recommendations to and assist the Commission in the implementation of the mechanisms established by this Regulation aimed at ensuring security of supply, in particular by anticipating, preparing, preventing and addressing crises in the supply of crisis-relevant products.

(109) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission with respect to the adoption of work programmes to set out the funding priorities and the applicable funding conditions, the award of funding for specific actions, the establishment of SEAPs, the identification and update of crisis-relevant products, the establishment and maintenance of a list of national certification authorities, prioritisation measures, and the imposition of penalties. The specificities of the defence sector, in particular the responsibility of Member States, associated countries or Ukraine for the planning and acquisition process, should be taken into account. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (31).

(110) It should be possible to invite representatives of Ukraine to meetings of the committee where their input is necessary in connection with implementing measures which concern Ukraine, such as the implementing acts relating to the Ukraine Support Instrument. That would allow such representatives to share their views and respond to questions from Member States. However, they should not be allowed to be present during deliberations, nor to participate in votes of the committee.

(111) This Regulation should apply without prejudice to Union competition rules, in particular Articles 101 to 109 TFEU and the legal acts that give effect to those Articles.

(112) Union funding under this Regulation should only cover the costs necessary for pursuing the objectives of the Programme and the Ukraine Support Instrument and it cannot cover the costs arising from the CFSP. As a consequence, Union funding under the Programme and the Ukraine Support Instrument should not cover the costs of the purchase and of the maintenance of defence products for military or defence purposes, including in the context of establishing, managing and maintaining defence industrial readiness pools. It should be possible however for Union funding under the Programme and the Ukraine Support Instrument to cover the costs incurred in the context of the purchase or of the maintenance of such products where those costs are necessary for strengthening the competitiveness of the EDTIB or the recovery, reconstruction and modernisation of the Ukrainian DTIB, in particular non-recurrent costs.

(113) In accordance with Article 241 TFEU, the Council is able to request the Commission to undertake any studies the Council considers desirable for the attainment of the common objectives, and to submit to it any appropriate proposals. The Commission will give prompt and detailed consideration to any such requests for proposals.

(114) This Regulation should apply without prejudice to the specific character of the security and defence policy of certain Member States.

(115) This Regulation is without prejudice to existing Union and national rules on the export of defence products and to the obligations provided for by Directive 2009/43/EC.

(116) Since the objectives of this Regulation, namely to enhance the technological leadership, innovation, readiness, long-term competitiveness, resilience, integration and preparedness of the EDTIB, ensuring the timely availability and supply of defence products and contributing to the recovery, reconstruction and modernisation of the Ukrainian DTIB, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(117) In order to allow for the implementation of this Regulation to start as soon as possible, with a view to reaching its objectives, it should enter into force as a matter of urgency,

HAVE ADOPTED THIS REGULATION:

CHAPTER I

GENERAL PROVISIONS

Article 1

General objectives and subject matter

(1) the European Defence Industry Programme (the ‘Programme’), comprising measures for strengthening the competitiveness, responsiveness and ability of the EDTIB, as set out in Chapter II;

(2) the Ukraine Support Instrument, a cooperation programme with Ukraine with a view to the recovery, reconstruction and modernisation of the Ukrainian DTIB, taking into account the possible future integration of the Ukrainian DTIB into the EDTIB, as set out in Chapter III;

(3) a legal framework for European Defence Projects of Common Interest (EDPCIs), as set out in Chapter IV;

(4) a European Military Sales Mechanism, as set out in Chapter V;

(5) a legal framework for Structures for European Armament Programmes (SEAPs), as set out in Chapter VI;

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘advance purchasing agreement’ means a public contract with one or more economic operators which aims at supporting the swift development or production of a product, and by virtue of which the right to purchase a specified number of products in a given timeframe and at a given price is subject to the prefinancing of part of the upfront costs faced by the economic operators concerned; while an advance purchasing agreement is legally binding upon the participating contracting authorities and upon the contractor, it needs to be further implemented by means of the conclusion of contracts with the contractors concerned;

(2) ‘another third-country entity’ means a legal entity that is established in a non-associated third country other than Ukraine, or a legal entity that is established in the Union, in Ukraine or in an associated country but which has its executive management structures in a non-associated third country other than Ukraine;

(3) ‘associated countries’ means members of the European Free Trade Association which are members of the European Economic Area that apply this Regulation in accordance with the Agreement on the European Economic Area;

(4) ‘bottleneck’ means a point of congestion in a production system that stops or severely slows production;

(5) ‘blending operation’ means an action supported by the Union budget, including within a blending facility or platform as defined in Article 2, point (6), of the Financial Regulation, that combines non-repayable forms of support or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors;

(6) ‘classified information’ means information or material, in any form, the unauthorised disclosure of which could cause varying degrees of prejudice to the interests of the Union, or of one or more Member States, and which bears an EU classification marking or a corresponding classification marking, as established in the Agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the European Union (32);

(7) ‘contracting authorities’ means contracting authorities as defined in Article 2(1), point (1), of Directive 2014/24/EU of the European Parliament and of the Council (33) and in Article 3(1) of Directive 2014/25/EU of the European Parliament and of the Council (34);

(8) ‘control’ means the ability to exercise decisive influence over a legal entity directly, or indirectly through one or more intermediate legal entities;

(9) ‘crisis-relevant products’ means defence products or components or raw materials thereof, or any products or services critical to their production, whose availability is indispensable to ensure the proper functioning of the internal market and its supply chains and must be guaranteed in order to respond to a supply crisis;

(10) ‘defence innovation action’ means an action primarily consisting of activities directly aiming to produce plans and arrangements or designs for new, altered or improved defence products, processes or services, possibly including prototyping, testing, demonstrating, piloting, large-scale product validation and market replication;

(11) ‘defence products’ means any defence-related products as referred to in the Annex to Directive 2009/43/EC, as well as works, supplies and services directly related to those products for any and all elements of their life cycle within the meaning of Article 2, point (c), of Directive 2009/81/EC;

(12) ‘dynamic availability management’ means the provision of defence products in time, at the agreed location and to the agreed levels of availability, as well as managing availability risks that could materialise in the form of shortages of the defence product concerned; in this context, ‘availability’ means the ability of the defence product to function faultlessly under defined conditions and to be ready to use when required;

(13) ‘executive management structure’ means a body of a legal entity, appointed in accordance with national law, and, where applicable, reporting to the chief executive officer, which is empowered to establish the legal entity’s strategy, objectives and overall direction, and which oversees and monitors the legal entity’s management decision-making;

(14) ‘foreground information’ means data, knowhow or information generated within a given action under this Regulation, whatever its form or nature;

(15) ‘lead time’ means the period of time between a purchase order being placed and the manufacturer completing the order;

(16) ‘legal entity’ means a legal person created and recognised as such under Union, national or international law, which has legal personality and the capacity to act in its own name, exercise rights and be subject to obligations, or an entity which does not have legal personality as referred to in Article 200(2), point (c), of the Financial Regulation;

(17) ‘life cycle’ means all the possible successive stages of a product, from research and development to de-commissioning and disposal;

(18) ‘maintenance’ means all actions taken to ensure the readiness and operational capability of a defence product, in particular to retain equipment in, or restore it to, specified conditions until the end of its use, including mission readiness, longevity and upgrades, customisation and specialisation, inspection, overhaul, testing, servicing, modifications, classification as to serviceability, repair, recovery, rebuilding, reclamation, salvage and cannibalisation;

(19) ‘middle-capitalisation company’ or ‘mid-cap’ means an enterprise that is not an SME and that employs a maximum of 3 000 persons, where the headcount of staff is calculated in accordance with Articles 3 to 6 of the Annex to Commission Recommendation 2003/361/EC (35);

(20) ‘non-associated third-country entity’ means a legal entity that is established in a non-associated third country, or a legal entity that is established in the Union or in an associated country but which has its executive management structures in a non-associated third country;

(21) ‘non-recurrent costs’ means costs that occur on a one-time basis or at irregular intervals, in particular design, development and investment costs necessary for the production or maintenance of defence products or for the reservation of manufacturing capacities;

(22) ‘off-take agreement’ means any contractual agreement between, on the one hand, at least three Member States and, where relevant, associated countries or Ukraine and, on the other hand, at least one manufacturer of defence products, containing either a commitment by the Member States and, where relevant, associated countries or Ukraine to procure a certain quantity of defence products over a certain period of time, or a commitment by the manufacturer of defence products to provide the Member States and, where relevant, associated countries or Ukraine with the option to make such a procurement;

(23) ‘originator’ means the Union institution, agency or body, Member State or an entity set up under this Regulation under whose authority classified information has been created;

(24) ‘procurement agent’ means a contracting authority established in a Member State or an associated country, a Structure for European Armament Programme (SEAP), the European Defence Agency (EDA) or an international organisation that is designated by Member States, associated countries, Ukraine or a SEAP to conduct a common procurement on their behalf;

(25) ‘raw material’ means raw material as defined in Article 2, point (1), of Regulation (EU) 2024/1252 of the European Parliament and of the Council (36);

(26) ‘results’ means any tangible or intangible effect of a given action, such as data, knowhow or information, whatever its form or nature and whether or not it can be protected, as well as any rights attached to it, including intellectual property rights;

(27) ‘Seal of Excellence’ means a quality label which shows that a proposal submitted to a call for proposals under the Programme or the Ukraine Support Instrument has passed all of the evaluation thresholds set out in the work programme, but could not be funded due to a lack of budget available for that call for proposals in the work programme, and might receive support from other Union or national sources of funding;

(28) ‘sensitive information’ means unclassified information and data that are to be protected from unauthorised access or disclosure because of obligations laid down in Union or national law, where applicable, or in order to safeguard the privacy or security of a natural or legal person;

(29) ‘small and medium-sized enterprises’ (SMEs) means small and medium-sized enterprises as defined in Article 2 of the Annex to Recommendation 2003/361/EC;

(30) ‘small middle-capitalisation company’ or ‘small mid-cap’ has the meaning as assigned to it in the Annex to Commission Recommendation (EU) 2025/1099 (37);

(31) ‘subcontractor’ means an economic operator that is proposed by a candidate, tenderer or contractor to perform specific tasks or services under the supervision of the main contractor, contributing to the design or manufacturing of a defence product, other than what is provided by suppliers to implement the contract, for which it is allocated at least 15 % of the value of the contract, and that needs access to classified information for the performance of that contract; for the purposes of this definition, ‘supplier’ shall be understood as an economic operator that delivers components of its own design or production to the contractor.

Article 3

Budget

(a) EUR 1 200 000 000 in current prices; and

(b) additional contributions in accordance with Article 5.

(a) EUR 300 000 000 in current prices; and

(b) additional contributions in accordance with Article 23, to the extent earmarked.

CHAPTER II

THE PROGRAMME

SECTION 1

GENERAL PROVISIONS APPLICABLE TO THE PROGRAMME

Article 4

Objectives

(a) enhance cooperation in defence procurement by incentivising Member States to aggregate demand for defence products, harmonise defence capability requirements and strengthen solidarity among themselves, ultimately leading to greater interoperability and interchangeability, and by improving predictability of demand for the EDTIB, corresponding with Member States’ defence product needs;

(b) improve and accelerate the capacity for adaptation of defence industrial supply chains, open up supply chains for cross-border cooperation, in particular for SMEs and mid-caps, increase manufacturing capacities, reduce production lead time for defence products and support the industrialisation and commercialisation of defence products supported by actions funded by the Union or by other Union cooperative activities conducted with the support of Member States, with a view to ensuring the availability and supply of defence products throughout the Union, and taking into account the specific needs of Member States in the case of materialisation of conventional military threats;

(c) improve the security of supply and resilience of the EDTIB by supporting the development and presence of the EDTIB throughout the Union.

Article 5

Additional financial resources

By way of derogation from Article 5(2), Article 18(4), point (d), and Article 19(3), point (d), and Annex V, criterion 2.4, of Regulation (EU) 2021/241, the principle of ‘do no significant harm’ shall not apply to Member State contributions supported by the Recovery and Resilience Facility, provided that the Member State concerned justifies in the relevant contribution agreement with the Commission that it is not feasible or appropriate to ensure that the type of activities intended to be supported under this Regulation comply with the principle of ‘do no significant harm’.

Article 6

Alternative, combined and cumulative funding

(a) have been assessed in a call for proposals under the Programme;

(b) comply with the minimum quality requirements of that call for proposals;

(c) not be financed under that call for proposals due to budgetary constraints.

Article 7

Implementation and forms of Union funding

Article 8

Third countries associated with the Programme

The Programme shall be open to the participation of associated countries, in accordance with the conditions laid down in the Agreement on the European Economic Area.

Article 9

Eligible legal entities

The guarantees referred to in the first subparagraph of this paragraph shall provide assurances that the involvement in an action of a legal entity as referred to in that subparagraph would not contravene the security and defence interests of the Union and its Member States as established in the framework of the CFSP pursuant to Title V of the TEU, including respect for the principle of good neighbourly relations, or the objectives set out in Article 4 of this Regulation. Those guarantees shall in particular substantiate that, for the purposes of an action, measures are in place to ensure that:

(a) control over the legal entity is not exercised in a manner that restrains or restricts its ability to carry out the action and to deliver results, that imposes restrictions concerning its infrastructure, facilities, assets, resources, intellectual property or know-how needed for the purposes of the action, or that undermines its capabilities and standards necessary to carry out the action;

(b) access by a non-associated third country or by a non-associated third-country entity to classified or sensitive information relating to the action is prevented and the employees or other persons involved in the action have national security clearance issued by a Member State or an associated country, where appropriate, in accordance with national laws and regulations;

(c) the ownership of intellectual property arising from actions referred to in Article 12(1), point (d), is not subject to restriction by a non-associated third country or a non-associated third-country entity nor transferred to entities established outside the territory of the Member States or of associated countries, without the approval of the Member State or the associated country in which the legal entity is established. Such approval shall not contravene the objectives set out in Article 4.

If considered to be appropriate by the Member State or the associated country in which the legal entity is established, additional guarantees may be provided.

The Commission shall inform the committee referred to in Article 77 of any legal entity considered to be eligible to be a recipient of Union funding in accordance with this paragraph.

There shall be no unauthorised access by a non-associated third country or by a non-associated third-country entity to classified information relating to the carrying-out of the action, and potential negative effects on the security of supply of inputs critical to the action shall be avoided.

The costs related to cooperation with legal entities established outside the territory of the Member States or of associated countries, or controlled by a non-associated third country or by a non-associated third-country entity, shall not be eligible for support from the Programme.

(a) contracting authorities of Member States and associated countries;

(b) international organisations;

(c) SEAPs;

(d) the EDA.

SECTION 2

ELIGIBLE ACTIONS

Article 10

Eligible actions

(a) common procurement actions as referred to in Article 11, including for the purpose of establishing, managing or maintaining defence industrial readiness pools;

(b) industrial reinforcement actions as referred to in Article 12;

(c) supporting actions as referred to in Article 13;

(d) deployment of EDPCIs as referred to in Article 35.

(a) actions related to defence products that are prohibited by applicable international law;

(b) actions related to lethal autonomous systems that operate outside a responsible chain of human command and control or that cannot be used in compliance with international humanitarian law;

(c) actions related to cluster munitions;

(d) actions, or parts thereof, that are already fully financed from other public or private sources.

Article 11

Common procurement actions

(a) contracting authorities of Member States or associated countries;

(b) international organisations;

(c) SEAPs;

(d) the EDA.

(a) a consortium of legal entities as referred to in paragraph 2, including at least three entities referred to in paragraph 2, point (a), from at least three Member States or associated countries of which at least two shall be contracting authorities of two Member States; or

(b) a SEAP.

Article 12

Industrial reinforcement actions

(a) the optimisation, expansion, modernisation, including automation, upgrading or repurposing of existing, or the establishment of new, production capacity of defence products, components and corresponding raw materials, including on the basis of the procurement or acquisition of the requisite machine tools and any other necessary input;

(b) the establishment of cross-border industrial partnerships, including through public-private partnerships or other forms of industrial cooperation including SMEs and small mid-caps, in a joint industrial effort, including activities that aim to coordinate the sourcing or reservation and stockpiling of defence products, components and corresponding raw materials and to coordinate production capacities and production plans;

(c) the building-up and making available of reserved surge manufacturing capacities of defence products, their components and corresponding raw materials, in accordance with ordered or planned production volumes;

(d) fostering the industrialisation and commercialisation of defence products developed in the framework of actions funded by the Union or of other cooperative activities conducted with support by at least two Member States, including through the establishment of cross-border industrial partnerships, public-private partnerships or other forms of industrial cooperation and through the ramping-up of initial production and of licensing production, where appropriate;

(e) the testing, including the necessary infrastructure, and, as appropriate, reconditioning certification of defence products with a view to addressing their obsolescence and making them useable by end-users.

Article 13

Supporting actions

(a) activities to increase interoperability and interchangeability, including the cross-certification of defence products and activities leading to mutual recognition of certification, or to facilitate the implementation of military standards, in particular NATO standards and other relevant standards, thus reducing any excessive differentiation of defence products across the Union;

(b) activities to facilitate access to the defence market for SMEs, mid-caps and start-ups and support to obtain the necessary quality and production certifications;

(c) the capacity-building, training, reskilling or upskilling of personnel in relation to the activities referred to in Article 10(1);

(d) the procurement of physical and cyber protection systems in relation to the activities referred to in Article 12;

(e) coordination and technical support actions, in particular addressing identified bottlenecks in production capacities and supply chains with a view to securing and accelerating the production of crisis-relevant products in order to ensure their effective supply and timely availability;

(f) the establishment of a European Military Sales Catalogue as referred to in Chapter V;

(g) support for the establishment and functioning of SEAPs, including for the purpose of establishing, managing and maintaining defence industrial readiness pools;

(h) activities with the aim of the rapid adaptation and modification of civilian products for defence applications;

(i) defence innovation actions, including emergency defence innovation actions where the measure referred to in Article 68 is activated.

SECTION 3

FUND ACCELERATING DEFENCE SUPPLY CHAINS TRANSFORMATION (FAST)

Article 14

Fund Accelerating Defence Supply Chains Transformation (FAST)

(a) to achieve a satisfactory multiplier effect that is in line with the debt and equity mix and which contributes to attracting both public and private-sector financing;

(c) to accelerate investment in the fields of manufacturing defence products and developing defence technologies, and therefore strengthen the security of supply of the Union’s defence industry value chains.

SECTION 4

PROCUREMENT

Article 15

Procurement with support by the Commission

(a) to engage with them in a joint procurement as referred to in Article 168(2) of the Financial Regulation whereby Member States may acquire, rent or lease fully the defence products jointly procured;

(b) to act as a central purchasing body as referred to in Article 168(3) of the Financial Regulation to procure defence products on behalf of, or in the name of, the interested Member States.

(a) participation in the procurement procedure is open to all Member States and, by way of derogation from Article 168(2) and (3) of the Financial Regulation, may be open to associated countries;

(b) the Commission invites at least one expert with experience relevant to the negotiations from each participating country to form a joint negotiation team;

(c) participating countries explicitly state whether they decide to run parallel negotiation processes for the product concerned, with that decision being subject to unanimous approval by participating countries.

Article 16

Advance purchase of defence products

Article 17

Facilitating off-take agreements

(a) the volume and quality;

(b) the intended price or price range;

(c) the intended duration of the off-take agreement.

(a) the volume and quality of defence products for which they are seeking to conclude off-take agreements;

(b) the intended price or price range at which they are willing to sell;

(c) the estimated delivery lead time of defence products within the framework of the off-take agreement;

(d) the intended duration of the off-take agreement.

SECTION 5

AWARD CRITERIA AND WORK PROGRAMMES

Article 18

Award criteria

(a) contribution to competitiveness;

(b) contribution to resilience and geographical distribution of manufacturing capacities;

(c) increase in production capacities;

(d) increase in interoperability;

(e) increase in interchangeability; and

(f) contribution to reducing strategic dependencies.

(a) the number of participating Member States or associated countries;

(b) the action’s contribution to the adaptation, modernisation and development of the EDTIB throughout the Union; and

(c) the participation of SMEs and mid-caps.

(a) the reduction of production lead time, and the increase in production capacity in the Union, in reserved capacity and in workforce skilled;

(b) the contribution to ensuring availability and security of supply throughout the Union in response to identified risks, including in particular high exposure to the risk of materialisation of conventional military threats; and

(c) the contribution to cross-border defence industrial cooperation throughout the Union, improving the inclusion of SMEs and mid-caps, or the link with orders stemming from the common procurement of defence products by at least three Member States or associated countries.

Article 19

Selection and award procedure

Except for actions referred to in Article 11, Article 13(1), point (g), and Article 10(1), point (d), the Commission shall award the funding under this Chapter by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 77(4).

Article 20

Union financial contribution

(a) the degree of complexity of the common procurement, for which a proportion of the estimated value of the common procurement contract and the experience gained in similar actions may serve as an initial proxy;

(b) the contribution of the action to improving interoperability outcomes;

(c) the characteristics of the action which are likely to give rise to greater long-term investment signals to industry, in particular where the common procurement covers activities that would be eligible for funding from the Union budget, such as research and development, testing and certification, initial production or in-service support activities;

(d) the number of participating Member States and associated countries, or the inclusion of additional Member States or associated countries in existing cooperations;

(e) the contribution of the action to the ramp-up of necessary manufacturing capacities;

(f) the contribution of the action to the reduction of dependencies on non-associated countries;

(g) the contribution of the action to enhancing cooperation between Member States or associated countries for the purpose of establishing, managing or maintaining defence industrial readiness pools;

(h) the contribution of the action to enhancing cooperation between Member States or associated countries resulting in the common procurement of additional quantities of defence products for Ukraine or Moldova;

(i) the complexity of the technological solutions necessary for the integration of the defence product procured within the armed forces of a participating Member State.

(a) the action is carried out by a SEAP;

(b) the action supports the common procurement of restriction-free end products;

(c) the action results in the common procurement of additional quantities of defence products for Ukraine or Moldova;

(d) the action ensures a wide distribution of suppliers across Member States whereby more than 20 % of the total value of the end product is made by suppliers established in at least one Member State other than the Member State in which the prime contractor is established;

(e) the defence investment expenditure of the majority of Member States participating in the action concerned exceeded 30 % of their respective defence spending in the financial year preceding the application.

(a) the beneficiary demonstrates a contribution to the creation of new cross-border cooperation between entities established in Member States or associated countries;

(b) the action involves building new infrastructure, facilities or production lines from the ground up or on sites not previously used for such activities, contributing to the development of supply chains and technology transfer throughout the Union;

(c) the action contributes to the establishment of new, or the ramping-up of existing, manufacturing capacities of crisis-relevant products.

Article 21

Work programmes

(a) the overall amount of the Union contribution to each type of action referred to in Article 10(1) and a detailed description of each type of action;

(b) with respect to actions referred to in Articles 11 and 12, the minimum financial size of the actions;

(c) with respect to actions referred to in Article 12, the maximum number of legal entities forming part of the consortium, which shall not exceed 15 legal entities;

(d) the procedure for the evaluation and selection of proposals, including, where relevant, a description of the milestones, designed in such a way as to mark substantial progress in the implementation of actions, the results to be achieved and the associated amounts to be disbursed, as well as the arrangements for the verification of the milestones, the fulfilment of conditions and the achievement of results;

(e) the overall amount of the Union contribution to joint procurement with the support of the Commission as referred to in Article 15(1), point (a), Article 15(3), Article 16 and Article 17; and

(f) the methods for determining and, where applicable, adjusting the funding.

CHAPTER III

THE UKRAINE SUPPORT INSTRUMENT

SECTION 1

GENERAL PROVISIONS APPLICABLE TO THE UKRAINE SUPPORT INSTRUMENT

Article 22

Objectives

Article 23

Additional financial resources

Article 24

Alternative, combined and cumulative funding

(a) have been assessed in a call for proposals under the Ukraine Support Instrument;

(b) comply with the minimum quality requirements of that call for proposals;

(c) not be financed under that call for proposals due to budgetary constraints.

Article 25