The international law firm Garrigues enters the defence sector through AESMIDE
- An ambitious EDIP, but modestly funded
- Government-to-government contracts with regulatory hypertrophy
The first European Defence Industrial Strategy - EDIS - recently approved by the European Commission, as well as the proposed regulation of the European Defence Industry Programme (EDIP), have been the subject of a detailed analysis at a forum organised by the international law firm Garrigues and AESMIDE, the Association of Public Administration Contracting Companies.
With the aim of identifying the legal keys to the new avenues opened up by Brussels for contracting armaments, material, munitions, infrastructures and military equipment, legal experts from Garrigues -a prestigious international legal and tax advisory firm-, together with a senior official from the European Commission's Directorate General for Defence Industry and Space, gave a detailed explanation of the new legal framework that is being put in place for the Spanish and European defence industrial fabric.
Gerardo Sánchez Revenga, President of AESMIDE, the Association of Companies Contracting with Public Administrations, highlighted two aspects to be taken into account before fifty or so executives from the national industrial fabric: that Brussels "is going down the path of joint procurement", and that, consequently, it is necessary to equip ourselves with the appropriate practices "so that the new European market that is taking shape does not become an entry barrier for Spanish companies, but rather the opposite".
In order to provide an overview of the current scenario, David Arias, a partner at Garrigues, heading a team of legal experts specialising in national and international public law, stressed the importance of having a "solid, cutting-edge, well-established" defence industry in Spain, and stated that the forum aims to be "the first stone of a permanent collaboration with the security and defence sector".
It is worth remembering that the EDIS, approved by Brussels last March, as well as the EDIP regulation, essentially seek to support and reinforce the efforts of EU states to encourage greater and better investment in defence. They also aim to achieve the availability and security of products and weapons systems, as well as to equip the entire supply chain of the European military industry with the appropriate capabilities to respond to crisis or threat situations.
An ambitious EDIP, but modestly funded
Garrigues' Administrative and Constitutional lawyers, Marta Guerrero and María José Morales, have detailed the main measures included in the proposed EDIP regulation, which they describe as "ambitious, but with modest funding of 1,500 million euros".
In their analysis of the EDIP, both specialists point out that the aim of the document is to "know the manufacturing capabilities of defence products and supply networks" and that to this end they want to have a "catalogue" of products. They also pointed out that the new structures for European defence programmes (SEAP) make the Commission a "facilitator" of procurement agreements, while allowing for advance purchases and framework agreements.
Speaking by videoconference from Brussels, Colonel Francisco Casalduero, head of R&D programmes at the Commission's Directorate-General for Defence Industry and Space, recalled that EU countries "face very serious geopolitical risks related to security and defence (...) so the availability and competitiveness of the defence industry and its entire supply chain is essential".
In his view, "industrial and technological capabilities are inseparable from military capabilities", and he pointed out that "the European defence industry is globally competitive, but its real potential suffers from years of under-investment". And he did not want to overlook the "fragmentation" of the market, which he described as "absolutely dominant".
The aforementioned scenarios are what have advised Brussels, in coordination with governments, to implement "industrial policy measures focused on creating the conditions to promote investment, growth and employment in the sector". He recalled that the European Defence Fund is endowed with 8 billion, "of which we already have more than 4 billion committed or budgeted, for some 200 projects underway".
Government-to-government contracts with regulatory hypertrophy
The senior official brought to light the measures focused on innovation, aimed at SMEs and the so-called "non-traditional actors". He cited the so-called Defence Innovation Scheme and the instrument for the Strengthening of the European Defence Industry through Common Procurement (EDIRPA), "which seeks to support and accelerate munitions production capabilities".
Colonel Casalduero stressed that the EDIS message of "investing more, better, jointly and in a European way" includes "structuring the present, but also the future multiannual financial framework", which will run from 2028 to 2034. And he left no doubt about the Commission's "unequivocal will" to continue applying EU resources and the EU budget "at the necessary level, to promote the efficiency, competitiveness and resilience of the European defence industry".
Brussels aims to implement this 'in parallel with the promotion of defragmentation and consolidation of demand', while 'deepening cooperation between nations across the whole life cycle of weapon systems'. This includes R&D, acquisition, ownership, operation and servicing, "all jointly". But he qualifies: "I am not saying that the EU should own or operate the systems, I am saying that this should or could be undertaken jointly by member states according to their priorities".
The defence procurement regime in Spain was examined by Professor of Administrative Law Javier García Luengo. He pointed out that the so-called "government-to-government contracts" suffer from "regulatory hypertrophy, which has prevented their due development and makes it advisable to reactivate them". He went into more detail on innovative public procurement in defence in its innovative technology and pre-commercial aspects. He also looked at the legislator's solutions to possible abuses due to orders to own resources, and dedicated a chapter to the regulation of military Artificial Intelligence applicable in Spain.
Antonio Ávila, from the Administrative and Constitutional Department of Garrigues, reviewed the regulation of price reviews in the Public Sector Contracts Act. He discussed the problems in the current geo-economic context and provided his knowledge in relation to the existence or not of sufficient review mechanisms, the doctrine of unforeseeable risk, as well as the regulation of forced extensions and possible actions on the part of the extended bidder.
The president of AESMIDE confirmed that the new measures adopted by Brussels have been drafted "after consultations with the main actors in the EU Member States, both with governments and with industry, the financial sector, think tanks and academia". The aim is to strengthen the capabilities of the defence industrial fabric within the EU, once "Spanish and European civil society is aware that there is a before and after in its perception of the defence industry.