Defence Procurement in Europe: NATO, EDF, and Opportunities for Contractors

For contractors, from large defence primes to mid-sized technology providers and specialist SMEs, this represents a rapidly expanding market. But defence procurement in Europe operates differently from civilian public procurement. National security exemptions, classified requirements, offset obligations, and a complex institutional landscape make this a market that rewards preparation and patience.

This article maps the European defence procurement landscape, explains the key institutions and funding mechanisms, and provides practical guidance for contractors looking to participate.

The Market: EUR 240 Billion and Growing

European defence spending has accelerated sharply since 2022. Let us put the numbers in context.

The most striking figure for procurement professionals is that only approximately 10% of European defence procurement is published on TED. The remaining 90% flows through national defence procurement agencies, classified channels, and direct awards under national security exemptions.

Why Defence Procurement Is Different

Before examining the institutional landscape, it is worth understanding why defence procurement follows different rules.

Article 346 TFEU

Article 346 of the Treaty on the Functioning of the European Union allows member states to take measures necessary for the protection of essential security interests connected with the production of or trade in arms, munitions, and war material. In practice, this means member states can exempt defence contracts from the standard EU procurement directives.

This exemption is widely used. While the Defence and Security Procurement Directive (2009/81/EC) was introduced to bring more defence procurement under EU rules, member states retain significant discretion to procure outside the directive framework when they invoke Article 346.

Directive 2009/81/EC, Defence and Security Procurement

The Defence and Security Procurement Directive applies to contracts for military equipment, sensitive security equipment, and related works and services. Its thresholds are:

Contracts above these thresholds should, in principle, be advertised on TED using the defence-specific procurement procedures. The directive allows for restricted procedures, negotiated procedures with publication, and competitive dialogue, all of which are more common in defence than the open procedures typical of civilian procurement.

However, the European Commission has noted that compliance with the directive is uneven. Many contracts that could be advertised under 2009/81/EC are instead procured nationally under Article 346 exemptions.

Security Clearances and Classified Requirements

Many defence contracts require bidders to hold national or NATO security clearances. Obtaining clearance can take months or even years, and the process varies by country. If you are considering entering the defence market, beginning the clearance process early is essential, you cannot bid on classified contracts without it.

Key Institutions and Procurement Channels

European defence procurement flows through multiple institutions, each with its own mandate, procurement processes, and contractor access routes.

NATO Support and Procurement Agency (NSPA)

The NATO Support and Procurement Agency is NATO's primary procurement and logistics organisation, responsible for EUR 4 to 5 billion in annual procurement. NSPA handles procurement for NATO common-funded infrastructure, logistics support, and capability programmes.

What NSPA procures:

• Munitions and weapon systems maintenance
• Fuel and petroleum products
• Strategic airlift and sealift
• Communication and information systems
• Infrastructure construction and maintenance
• Logistics services and supply chain management

How to engage:

• Register as a supplier on the NSPA Supplier Portal
• NSPA tenders are published on its own procurement portal and, for some categories, on TED
• Contracts are awarded to companies from NATO member nations
• Competitive bidding is the norm, but NSPA also uses framework agreements for recurring needs

European Defence Agency (EDA)

The European Defence Agency supports EU member states in developing defence capabilities and promoting armaments cooperation. While EDA's direct procurement budget is modest, it plays a crucial coordination role.

EDA's key functions for contractors:

• Managing collaborative armaments programmes between member states
• Running the EDA procurement portal for its own operational needs
• Administering pilot projects and preparatory actions that preceded the European Defence Fund
• Publishing research and technology calls

EDA procurement opportunities are published on the EDA website and, where applicable, on TED.

European Defence Fund (EDF)

The European Defence Fund is the EU's flagship defence capability programme. With EUR 8 billion for 2021-2027, it co-funds collaborative defence research and capability development projects.

EDF structure:

• Research window (EUR 2.7 billion): fully EU-funded research into innovative defence technologies
• Development window (EUR 5.3 billion): co-funding (typically 20-80% depending on the activity phase) for the development of defence capabilities

Key requirements:

• Projects must involve at least three eligible entities from at least three member states or associated countries
• At least 10% of the budget is earmarked for projects involving SMEs
• Cross-border cooperation is mandatory, no single country can dominate a consortium
• Results must benefit EU defence capabilities

Sectors covered by recent EDF calls:

• Cyber defence
• Space surveillance and tracking
• Unmanned systems (ground, maritime, aerial)
• Electronic warfare
• Military mobility
• Chemical, biological, radiological, and nuclear defence
• Naval mine countermeasures
• Directed energy weapons

All EDF calls are published on the EU Funding & Tenders Portal.

OCCAR, Organisation for Joint Armament Cooperation

OCCAR (Organisation Conjointe de Cooperation en matiere d'ARmement) manages large-scale multinational defence programmes on behalf of its member states (Belgium, France, Germany, Italy, Spain, and the UK). OCCAR-managed programmes include the A400M transport aircraft, the Tiger helicopter, and the ESSOR military radio programme.

OCCAR procurement is programme-specific and typically involves major defence contractors. However, substantial supply chain opportunities exist for mid-sized and specialist companies through subcontracting tiers.

EDIRPA, European Defence Industry Reinforcement Through Common Procurement Act

EDIRPA is a newer EU instrument specifically designed to incentivise joint defence procurement by member states. With a budget of EUR 300 million, it provides financial support to encourage collaborative purchases of defence products, particularly in areas where the war in Ukraine exposed urgent shortfalls, ammunition, missiles, air defence systems, and armoured vehicles.

EDIRPA requires at least three member states to jointly procure from a European-established manufacturer. The instrument co-funds the procurement itself, reducing the per-unit cost for participating countries and creating a guaranteed market for European defence producers.

ASAP, Act in Support of Ammunition Production

The Act in Support of Ammunition Production (ASAP) allocates EUR 500 million to ramp up production capacity for ammunition and missiles. It provides grants and guarantees to manufacturers investing in production line expansion, workforce training, and supply chain diversification.

Country-Specific Defence Procurement Portals

Beyond the multinational organisations, each European country runs its own defence procurement through national agencies. The major ones include:

United Kingdom, Ministry of Defence (MOD)

Despite Brexit, the UK remains Europe's largest defence spender. The MOD's Defence and Security Industrial Strategy governs procurement, with opportunities published on:

• Contracts Finder: for below-threshold MOD contracts
• Find a Tender: for above-threshold contracts (post-Brexit replacement for TED)
• Defence Contracts Online (DCO): specialist portal for MOD tenders
• Defence and Security Accelerator (DASA): innovation funding for novel technologies

France, Direction Generale de l'Armement (DGA)

The DGA is France's defence procurement agency, managing one of the largest defence budgets in Europe. Procurement flows through:

• PLACE: the national procurement platform
• BOAMP: for published notices
• DGA-specific portals for classified or restricted competitions

Germany, Bundesamt fur Ausrustung, Informationstechnik und Nutzung der Bundeswehr (BAAINBw)

Germany's federal procurement office for the armed forces manages defence acquisition from research through to disposal. German defence tenders appear on:

• bund.de: the federal procurement portal
• evergabe-online.de: electronic tendering platform
• TED: for above-threshold non-exempt contracts

Germany's growing defence budget, with a commitment to a EUR 100 billion special fund for Bundeswehr modernisation, is generating significant procurement activity.

Italy, Segretariato Generale della Difesa / Direzione Nazionale degli Armamenti (SGD/DNA)

Italy's defence procurement flows through the General Secretariat of Defence, with tenders published on national platforms and TED.

Other Notable Portals

• Spain: Ministerio de Defensa procurement through PLACSP
• Netherlands: Defensie Materieel Organisatie (DMO) tenders on TenderNed
• Poland: Inspektorat Uzbrojenia (Armament Inspectorate), with rapidly growing procurement linked to Poland's commitment to spend 4% of GDP on defence
• Sweden: Forsvarets Materielverk (FMV) manages defence procurement

How Small and Mid-Sized Companies Can Participate

Defence procurement can appear impenetrable to companies outside the traditional defence industrial base. But there are practical routes in.

Subcontracting

The most common entry point for smaller companies is subcontracting to prime contractors. Large defence programmes involve extensive supply chains, and prime contractors actively seek specialist suppliers for electronics, software, materials, engineering services, and logistics. Building relationships with primes and registering on their supplier portals is essential.

Offset and Industrial Participation Obligations

Many defence contracts include offset or industrial participation requirements, obliging the prime contractor to invest a percentage of the contract value in the buyer country's economy. This creates opportunities for local companies to become part of the supply chain, receive technology transfers, or participate in joint ventures.

EDF Calls for SMEs

The European Defence Fund explicitly reserves at least 10% of its budget for projects involving SMEs, and additional bonus funding is available for consortia that include SME participation. EDF calls for proposals typically list specific topics where SME involvement is encouraged.

Innovation Programmes

Several European innovation programmes specifically target non-traditional defence suppliers:

• UK DASA: challenges open to any UK-based innovator
• French Agence de l'Innovation de Defense (AID): innovation challenges and rapid procurement
• German Cyber Innovation Hub (CIH): connecting tech start-ups with the Bundeswehr
• NATO Innovation Fund: EUR 1 billion venture capital fund investing in dual-use technologies

Dual-Use Technologies

Companies with technologies applicable to both civilian and defence markets, cybersecurity, AI, autonomous systems, communications, advanced materials, are increasingly sought after by defence buyers. The distinction between civilian and military technology is blurring, and this creates openings for companies that have not traditionally served the defence market.

Practical Steps for Entering the Defence Market

1. Obtain security clearances: begin the process in your home country early, as it can take 6 to 18 months
2. Register on procurement portals: NSPA, EDA, national defence procurement portals, and the EU Funding & Tenders Portal (for EDF calls)
3. Identify your value proposition: understand exactly what you offer that the defence market needs
4. Attend defence industry events: Eurosatory (Paris), DSEI (London), ILA (Berlin), IDEF, and national defence exhibitions
5. Build relationships with primes: register on the supplier portals of major European defence contractors (Airbus Defence, Leonardo, Thales, Rheinmetall, BAE Systems, Saab)
6. Monitor funding decisions: track EDF awards, EDIRPA allocations, and national defence budget announcements for early signals of procurement activity
7. Consider consortia: for EDF calls, you will need partners from at least three member states

The Outlook: A Growing Market

European defence procurement is at an inflection point. The combination of rising budgets, new EU instruments like EDF and EDIRPA, NATO modernisation commitments, and the strategic imperative to reduce dependence on non-European suppliers is creating a sustained expansion in opportunities.

For contractors who invest in understanding this market, its institutions, its rules, and its relationship dynamics, the rewards can be substantial. The defence market values long-term partnerships, and suppliers who establish themselves now will be well positioned for the procurement pipeline that is building across the continent.

If you are looking to track defence tenders alongside civilian procurement opportunities across Europe, Bidovate's tender discovery platform monitors both civilian and defence portals. Book a demo to see how it can help you identify relevant opportunities.

Frequently Asked Questions

What percentage of European defence procurement is published on TED?

Approximately 10% of European defence procurement reaches TED. The remaining 90% is procured through national defence agencies, classified channels, or under the Article 346 TFEU national security exemption. The Defence and Security Procurement Directive (2009/81/EC) was intended to increase transparency, but member states retain broad discretion to procure outside its scope.

What is the European Defence Fund?

The European Defence Fund (EDF) is an EU programme with EUR 8 billion for 2021-2027 that co-funds collaborative defence research and capability development. It has a research window (EUR 2.7 billion, fully EU-funded) and a development window (EUR 5.3 billion, co-funded with member states). Projects must involve at least three entities from three member states, and at least 10% of the budget is reserved for SME-involving projects.

Can SMEs participate in defence procurement?

Yes. SMEs can participate through subcontracting to prime contractors, through EDF calls that reserve at least 10% of the budget for SME involvement, through national innovation programmes like the UK's DASA or Germany's Cyber Innovation Hub, and through direct bidding on smaller defence contracts published on national portals. The dual-use nature of many modern technologies, cybersecurity, AI, autonomous systems, means the defence market is increasingly accessible to technology SMEs.

What is EDIRPA?

EDIRPA (European Defence Industry Reinforcement through common Procurement Act) is an EU instrument with EUR 300 million that incentivises joint defence procurement by member states. It requires at least three member states to procure collaboratively from a European-established manufacturer, and provides financial support to reduce per-unit costs. It was created in response to the urgent need to replenish stocks depleted during support for Ukraine.

How do I find NATO procurement opportunities?

NATO procurement is primarily handled by the NATO Support and Procurement Agency (NSPA), which publishes opportunities on its dedicated procurement portal at nspa.nato.int. You need to register as a supplier and be based in a NATO member nation. Some NSPA tenders also appear on TED. NATO's individual agencies (such as NCIA for communications and information) also run their own procurement processes.