Welcome to our second edition.
As the global landscape continues to evolve, public procurement remains a critical tool for addressing pressing challenges and fostering innovation. In this edition, we bring you insights into some of the most significant developments shaping the field, with a particular focus on defence and regulatory shifts across Europe.
We begin by examining the European Union's recent restrictions on Chinese firms in the medical device market, a move that underscores the growing emphasis on security and supply chain resilience. From Spain, we explore a landmark decision ensuring contractors face no financial disadvantage when extending their services, a development that could set a precedent for fairer procurement practices.
Our recent Simmons & Simmons webinar, Public Procurement in Defence, provided key insights into the complexities of defence procurement, including the legal and strategic considerations for stakeholders. Finally, we take a closer look at the White Paper on Defence and its implementation through the Security Action for Europe (SAFE) instrument, a pivotal initiative aimed at strengthening Europe's defence capabilities.
These articles highlight the dynamic interplay between policy, procurement, and defence, offering valuable perspectives for navigating this ever-changing landscape.
Enjoy the reading
EU insights and updates
Chinese firms restricted on EU medical devices market by Vincenzo Salvatore (Milan) and Julien Moiroux (Paris)
The EU Commission under Regulation (EU) 2022/1031, initiated its 1st investigation on 24 April 24 into China’s public procurement practices for medical devices
Based on Article 5(1) of Regulation (EU) 2022/1031 of the European Parliament and of the Council of 23 June 2022, the European Commission can, on its own initiative or based on a duly substantiated complaint from an interested party, open an investigation into an alleged measure or practice of a third country. This investigation is initiated by publishing a notice in the Official Journal of the European Union. At this stage, the notice of initiation shall include the Commission’s preliminary assessment of the third-country measure or practice and invite interested parties to provide relevant information.
This investigative mechanism was used for the first time on 24 April 2024, in response to China’s public procurement practices for medical devices. Following the investigation—conducted under the EU's International Procurement Instrument (IPI)—a report dated 14 January 2025 revealed that China had unfairly restricted access for European companies to its public procurement market in this sector.
Consequently, on 2 June 2025, the European Union decided to restrict imports of Chinese medical devices in response to China’s unfair and discriminatory treatment of European companies in its public procurement market. This decision—which has not yet been published in the Official Journal of the European Union—plans to ban Chinese companies from bidding on EU public contracts for medical devices valued over €5 million for a period of five years.
Practitioner’s Perspective:
This measure will have immediate consequences for Chinese companies, as some may lose market share. However, for certain devices without equivalents, buyers might attempt to procure contracts below the prohibition threshold. Furthermore, this decision is likely to be the first of a series, potentially affecting other sectors and countries in the near future. All economic operators from non-EU countries that regularly contract with EU public authorities should remain vigilant.
The White Paper on Defence - Readiness 2030 and its implementation: the Security Action for Europe (SAFE) instrument by Luigi Pontrelli (Milan)
The recent approval of the White Paper on Defence – Readiness 2030 has significantly changed the approach of European policies on the procurement of military equipment.
According to the White Paper, the lack of investment that has characterised European policies in recent decades, combined with significant recent shifts in the global order, necessitates urgent action. It argues that Europe must develop sufficient deterrence capabilities to prevent potential wars of aggression. Specifically, it calls for Europe to rearm by strengthening its defence industrial base, streamlining arms procurement processes, and planning a substantial investment programme to bolster its defences by 2030 at the latest.
Among the initiatives outlined in the White Paper to address these challenges, notable measures include a planned review of the European defence procurement directive in 2026 and the introduction of the Security and Action for Europe (SAFE) instrument dedicated to supporting Member States' defence investments. This financial instrument, already brought into force by Council Regulation No. 1106 of 2025, deserves a brief mention here.
With up to €150 billion in funding, the SAFE instrument will play a pivotal role in significantly increasing Member States' investments in Europe’s defence capabilities. This instrument is designed to support investments in critical defence areas such as missile defence, drones, and cybersecurity.
The eligible activities financed through SAFE will relate to the first list of priority areas identified by the European Council on 6 March 2025 and will be divided into two categories of defence products:
1) ammunition and missiles; artillery systems, including deep precision strike capabilities; ground combat capabilities and their support systems, including soldier equipment and infantry weapons; critical infrastructure protection; cyber; military mobility including counter-mobility;
2) air and missile defence systems; maritime surface and underwater capabilities; drones and anti-drone systems; strategic enablers, such as, but not limited to, strategic airlift, air-to-air refuelling and C4ISTAR systems as well as space assets and services; space assets protection; artificial intelligence and electronic warfare.
SAFE will support the European defense industry through common procurement involving at least two countries, one of which should be a member state receiving SAFE financial assistance and the other may be another member state, an EEA-EFTA country or Ukraine. SAFE will also allow acceding countries, candidate countries, potential candidates and countries that have signed a Security and Defence Partnerships with the EU, such as the United Kingdom, to join common procurements.
The main rules applicable to such common procurements are as follows:
- Participation in the procurement procedures is reserved for economic operators established in the European Union, in an EEA-EFTA country or in Ukraine and not subject to control by entities established in a third country;
- Participation of economic operators established in third countries is exceptionally permitted following an FDI screening procedure;
- The cost of components not originating from the European Union must not exceed 35% of the estimated cost of the final product.
- All common procurements financed by the SAFE instrument meet, under the regulation, the urgency condition that justifies the use of the negotiated procedure without prior publication of the contract notice.
EU & national Case-Law
Spain: no financial disadvantage for contractors extending their services by Daniel Vázquez (Madrid)
The Supreme Court rules that the contractor who, in good faith, continues to provide a service under a public contract at the request of the tendering authority cannot be economically in disadvantage
In a judgment dated 28 January 2025, the Spanish Supreme Court addressed issues concerning public procurement, focusing on service contract continuation and interest on delayed payments. This judgment provides insights into the interpretation of public procurement laws in Spain.
Contractual Origin of Continued Services
The Court reaffirmed that when a contractor is asked to continue rendering services in good faith after contract expiration, and the tendering authority accepts these services without protest, such services are deemed contractual. This ensures contractors are not disadvantaged due to contract expiration, provided service continuity without modifications.
Accrual of Interest on Delayed Payments
Interest accrual begins thirty days after a payment claim submission, assuming the administration has not settled the principal. This is grounded in Article 216.4 of the Public Sector Contracts Law, mandating interest commencement following invoice submission and payment failure.
Application of European Directives
The judgment underscores Directive 2011/7/EU* 's applicability, emphasizing creditor protection in payment delays due by public bodies and entities under public contracts.
*Directive 2011/7/EU, also known as the Late Payment Directive, is a piece of European Union legislation aimed at combating late payment in commercial transactions. It was adopted on 16 February 2011 and is designed to improve cash flow for businesses, particularly small and medium-sized enterprises (SMEs), by ensuring timely payments in business-to-business (B2B) and public authority-to-business transactions.
Key insights from Simmons webinar ‘Public Procurement in Defence’ of June 30th
The "Public Procurement in Defence" webinar, held on 30 June 2025, provided a comprehensive overview of the evolving landscape of defence procurement in Europe and NATO. The event featured expert speakers from Simmons & Simmons, including Julien Moiroux, Luigi Pontrelli, Andrea Pomana, and Marie Soriano, who discussed the international context, EU directives, challenges for SMEs, national implementations, and NATO-specific rules. Below is a detailed summary of the key topics covered during the webinar.
1. International Context for Defence Procurement
Julien Moiroux opened the webinar by highlighting the shifting international defence landscape, particularly in light of the NATO Summit held in The Hague (24–25 June 2025). Key developments include:
- The Hague Defence Investment Plan: NATO allies committed to increasing defence-related spending to 5% of GDP by 2035, with 3.5% allocated to core defence and 1.5% to resilience and security. This marks a significant shift from the 2% Wales pledge of 2022.
- EU White Paper "Readiness 2030": The European Commission's "ReArm Europe" initiative aims to address capability gaps through joint procurement, regulatory simplification (via the Defence Omnibus), and the mobilisation of €800 billion. The focus is on fostering a unified EU defence market, enhancing stockpiling, mobility, and innovation in areas such as drones, cyber, and missile defence.
- EU-NATO Strategic Alignment: The EU's strategy aligns with NATO's collective defence posture, urging member states to leverage EU fiscal tools like the Stability & Growth Pact escape clause and SAFE loans to fund readiness at both national and alliance levels Reference 1.
2. EU Public Procurement Directive on Defence
Luigi Pontrelli provided an overview of the EU's legal framework for defence procurement, focusing on Directive 2009/81/EC. Key points include:
- Article 346 TFEU: This article allows exemptions for military equipment procurement, leading to fragmented national legislation.
- Directive 2009/81/EC: Introduced to increase competition in the defence sector, the directive includes:
- Rules safeguarding the security of supply and information.
- Flexible award procedures tailored to military procurement needs.
- Recent Developments: The EU's White Paper and the Security Action for Europe (SAFE) instrument aim to support common procurement and defence industry investments 1.
3. Challenges for SMEs in Defence Procurement
Andrea Pomana addressed the unique challenges faced by small and medium-sized enterprises (SMEs) in the defence sector. SMEs play a critical role in the supply chain but face barriers such as complex tender processes and limited access to funding. Recommendations to support SMEs include:
- Simplification and Acceleration: Shortening tender documents, minimising requirements, and accelerating timelines.
- Fostering Innovation: Encouraging dual sourcing, competitive consortia, and collaborative R&D partnerships.
- Dedicated Funding: Allocating targeted investments to SMEs and start-ups.
- Subcontracting Opportunities: Encouraging leading defence companies to subcontract to SMEs to foster competition at the European level.
4. National Implementation in France, Germany, and Italy
The speakers explored how France, Germany, and Italy have implemented defence procurement regulations, highlighting the unique approaches in each jurisdiction.
- France:
- Defence or Security Procurements (DSP) are governed by a framework prioritising sovereignty and national security.
- Flexibilities include procedures without publicity or competition, specific confidentiality measures, and no obligation to divide procurements into lots.
- Tender procedures are adapted to defence needs, such as competitive dialogue and direct negotiation in exceptional cases.
- Sensitive clauses, such as export control and intellectual property, require careful negotiation .
- Germany:
- Defence procurements are governed by the Procurement Regulation for Defence and Security (VSVgV), which ensures competitive procurement while safeguarding security interests.
- The Competition Act has been amended to simplify and expedite procedures, allowing for waivers in urgent cases and enabling contract awards despite ongoing review procedures .
- Italy:
- Legislative Decree 36/2023 applies to general defence contracts, while Legislative Decree 208/2011 (implementing Directive 2009/81/EC) governs contracts with specific defence and security purposes.
- Special provisions include requirements to safeguard information and supply chain security, as well as specific subcontracting regulations .
5. NATO-Specific Procurement Rules
Julien Moiroux and Marie Soriano discussed the importance of NATO procurement and its unique framework. Key takeaways include:
- Why NATO Procurement Matters:
- NATO contracts offer high-value, recurring business opportunities and cover both military and dual-use needs (e.g., equipment, IT, logistics).
- Being a NATO supplier enhances a company's international credentials.
- NATO Procurement Landscape:
- NATO does not have a single contracting authority; procurement is managed by various entities, including:
~ NATO Support and Procurement Agency (NSPA).
~ NATO Communications and Information Agency (NCIA).
~ Allied Command Operations (ACO) and Allied Command Transformation (ACT).
- NATO does not have a single contracting authority; procurement is managed by various entities, including:
- NSPA Procurement Principles:
- Core principles include consolidation, competition, and integrity.
- International competitive bidding is the primary method, with a focus on obtaining the most economical proposals that meet technical and contractual requirements.
- Vendor Registration:
- Companies must register in the NSPA Source File to access solicitations and participate in tenders. Registration evaluates legal eligibility, capabilities, and past performance.
- The NSPA eProcurement Portal provides access to restricted solicitations, electronic bidding, and alerts for relevant RFPs
Conclusion
The "Public Procurement in Defence" webinar underscored the dynamic and complex nature of defence procurement in Europe and NATO. With increasing defence spending commitments, evolving EU directives, and NATO's unique procurement framework, businesses must navigate a multifaceted landscape. SMEs, in particular, stand to benefit from targeted support and simplified processes, while national implementations highlight the importance of tailoring procurement rules to specific defence needs. By understanding these frameworks, companies can better position themselves to seize opportunities in this critical sector.
For further information, attendees were encouraged to contact the speakers directly:
