Transcript Remedies directive in the UK

The Directive on Defence and Security
Contracts: Introduction
Jonathan Davey, Partner
8 June 2011
Historical Position
 EU Treaty excludes “measures… necessary for the
protection of the essential interests of its security which are
connected with the production or trade in arms, munitions
and war material.”(Art 346)
 1958 List
 Broadly interpreted by Member States but some pushback
from Commission (Italian Helicopters; Czech APC’s)
 New approach (effectively) moving away from perceived
over-reliance on Art 346
Directive on Defence and Security Contracts
(2009/81/EC)
 Context
 Article 296 EC (now Article 346 TFEU)
 Commission Package 5 December 2007:
 procurement directive
 directive on intra-EU arms transfers
 recommendations to foster competitiveness
 Directive adopted: 13 July 2009
 Deadline for implementation: 20 August 2011
 MOD charged with UK implementation
 Two full written consultations:
 (1) approach (commenced December 2009)
 (2) draft regulations
 Guidance notes expected from UK MOD
MoD’s view of likely change in approach
Before
After
Classic
Exempt
Other
Classic
Exempt
Other
Defence
Some key issues
 Security of Information
 Security of Supply
 “Offset” arrangements/subcontracting
 Are these new issues?
 No OP; use of NP without restriction; oddity re CD!
 Implications for defence clients and their in-house teams
Directive on Defence and Security Contracts
(2009/81/EC)
 Second consultation took place December 2010 with Regulations laid
before Parliament June/July 2011
 Coverage:
 Military/sensitive equipment and related works, goods or services
 Works/services for military/sensitive purposes
 “Military Equipment” means “equipment specifically designed or adapted
for military purposes and intended for use as an arm, munitions or war
material” [echoing Art 346 and 1958 List]
 “Sensitive” means involving, requiring and/or containing classified
information
Defence Directive: key features (1)
 Broadly follows “Classic” Directive; but more flexible (NB
useful comparator tables attached to MoD Consultation
Document, Dec 2009)
 Defence industry view of the Defence Directive vs reality
 Some key differences:
 Free use of RP, NP (no OP; CD circumscribed) (Art 25)
 Frameworks – 7 years rather than 4
 Security of Information, Security of Supply and Offsets
 Specific duties of confidentiality (Arts 6,27(3))
Defence Directive: key features (2)
 Key differences(continued):
 Thresholds:
 Supply and services: EUR 412,000
 Works:
EUR 5,150,000
 Additional grounds for exclusion at Selection stage:
 Terrorist offences
 Infringements of defence export rules
 Previous breach of SoS/SoI requirements, amounting to grave
professional misconduct
 Known national security risk
Defence Directive: key features (3)
 Key differences(continued):
 Reclassification of certain Part B services as Part A:
 Investigation and security services
 Training (and simulation)
 New Part A services:
 Foreign military aid-related services
 Defence, military defence and civil defence services
 New ground for NP without advertisement: crisis
 RP – minimum number of participants – reduced from 5 to 3
 Remedies adaptations relevant to defence and security
Exclusions
 Contracts awarded pursuant to international rules
 Contracts relating to intelligence activities or which would
oblige disclosure of information contrary to essential security
interests
 Local purchases for operations outside the EU
 Multi-Member State R&D and later phases of product
lifecycle
 Government-to-government contracts
Conclusion
The Defence and Security Procurement
Directive: Introduction
Jonathan Davey, Partner
8 June 2011
2,248,343