The head of Europe's new defence agency says a voluntary code is likely to be in place by the middle of next year laying down transparent rules for how states procure defence equipment.

But Nick Witney, who became the first chief executive of the European Defence Agency (EDA) earlier this year, says a true single market in supplying military products and services to European Union governments is still some way off because countries still have concerns about guaranteeing long-term supplies, backdoor subsidies to foreign competitors and security of information on sensitive military projects. Governments and manufacturers in the EU are exempt from the free market regulations that govern the supply of other goods and services, under Article 296.

This allows states to limit certain defence contracts to their own manufacturers for reasons of national security. When the EDA was set up, however, many hoped that it would help overturn the practice of favouring national industries over opening procurement contracts to foreign-owned suppliers.

Speaking at a New Defence Agenda seminar in Brussels last week, Witney said the "intellectual battle" to persuade member countries that open competition was in their interests was won. "We are now in the stage of making it work". Bill Giles, director general Europe at BAE Systems, said that Article 296 was a major challenge to European suppliers keen to expand their market.

"Preservation of inefficient structures prolongs industrial inefficiency," he said. He pointed to the UK's policy of "smart procurement", where defence equipment is bought from the most competitive supplier on the world market. "The UK experience shows that operating an open procurement system works," he said.


Source: Flight International