What changed between the plenary report and the adopted text

Removed:(59) Where the supply-crisis state or the security▌ crisis state is activated, the Commission working in liaison with European Defence Agency, should be able to request Member States to provide necessary information to ensure the timely availability of crisis relevant products from undertakings operating on their territory, dealing with these products, raw materials or components thereof▌. Such information should inform the Commission’s decision on appropriate measures under this Regulation to address possible disruptions or bottlenecks affecting the security of supply of relevant defence products as well as relevant raw materials and components.

Removed:(60) Such an identification, mapping and continuous monitoring mechanism should allow a near real time analysis of the production capacity in the Union, critical factors impacting security of supply of relevant defence products, and stockpiles’ status. It should also enable Commission to design emergency response measures to actual or anticipated shortages.

Removed:(61) Avoiding shortages of relevant defence products is essential to preserve the objective of general interest of security of the Union and its Member States and justifies, where necessary, proportionate interferences with fundamental rights of the undertakings providing crisis relevant products, such as the freedom to conduct a business in accordance with Article 16 of the Charter and the right to property in accordance with Article 17 of the Charter, in the respect of Article 52 of the Charter. Such interferences may be justified in particular where several Member States have undertaken specific efforts to consolidate demand through joint procurement, hence contributing to the further integration and smooth functioning of the Internal Market for relevant defence products.

Removed:(62) As an instrument of last resort to ensure that critical sectors can continue to operate in a time of crisis and only when necessary and proportionate for that purpose, relevant undertakings could be required by the Commission to accept and prioritise orders of crisis-relevant products, which are not defence products. The decision on a priority-rated order should be taken in accordance with all applicable Union legal obligations, having regard to the circumstances of the case. The priority rating obligation should take precedence over any performance obligation under private or public law except those directly related to military orders while it should have regard for the legitimate aims of the undertakings and the cost and effort required for any change in production sequence. Each priority-rated order should be placed at a fair and reasonable price which should take into account the undertaking’s opportunity costs vis-à-vis existing contracts.

Removed:(63) The obligation to prioritise the production of certain products should not disproportionately affect the freedom to conduct a business and the freedom of contract laid down in Article 16 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and the right to property laid down in Article 17 of the Charter. Any limitation of those rights should, in accordance with Article 52(1) of the Charter, be provided for by law, respect the essence of those rights and freedoms, and comply with the principle of proportionality.

Removed:(64) Where the security▌ crisis state is activated, based on the fact that a Member State has triggered Article 42(7) TEU, the measures available under the supply crisis state should also be available. ▌

Removed:(65) Where the security▌ crisis state is activated and in order to address cases where a Member State faces or may face severe difficulties either in the placing of an order or in the execution of a contract for the supply of defence products▌, the Council should ▌activate measures at Union level aimed to ensure the availability of crisis-relevant goods, such as priority rated orders to ensure the proper functioning of the internal market and its defence supply chains and the adequate supply of all Member States.

Removed:(66) As an instrument of last resort, priority-rated orders should aim at addressing situations where the production or supply of crisis relevant products which are defence products could not be achieved by other measures. The priority-rated order should be taken based on objective, factual, measurable, and substantiated data. It should have regard for the legitimate interests of the undertakings and the cost and effort required for any change in production sequence. ▌The obligation to perform the priority-rated order should take precedence over any performance obligation under private or public law. Each priority rated order should be placed at a fair and reasonable price.

Removed:(67) With a view to support the Commission in implementing this Regulation, a European Defence Industrial Readiness Board should be established, composed of the Commission, the High Representative/Head of the Agency, the Chair of the European Union Military Committee, Member States, as well as representatives from the European Parliament as observers. In addition, outside the framework of the current Regulation, the High Representative/Head of Agency and the Commission will at their initiative convene and co-chair meetings of the members in the context of the Board to exercise the joint programming and procurement function and provide strategic guidance and advice with a view to increase defence industrial readiness of the EDTIB, in line with the European Defence Industrial Strategy.

Removed:(67a) The increasing importance of the European Union in defence matters should be mirrored by an adequate level of democratic scrutiny and oversight to ensure the responsible allocation of funds and support from Union citizens. As a consequence, this Regulation should enable a proper level of parliamentary oversight from the European Parliament, in particular to provide the European Parliament with the possibility to participate in strategic decisions of the Union, to protect adherence to European ethical standards and due respect of fundamental rights.

Removed:(67b) In order to send a long-term signal to the EDTIB and to the market as well as to monitor the achievement of the objectives of this Regulation, a framework for the monitoring and evaluation of key features for the resilience, readiness, productivity, integration and competitiveness of European defence industry should be put in place, on the basis of objectives to be achieved by 2030 or 2035 outlined in the European Defence Industrial Strategy issued in March 2024. Those key features are in particular the share of defence products procured in a collaborative manner, and the share of EU content in defence products acquired by Member States and in defence investments within the Union.

Removed:(68) This Regulation should apply without prejudice to Union competition rules, in particular Articles 101 to 109 TFEU and the legal acts that give effect to those Articles.

Removed:(69) In accordance with Article 41(2) TEU, operating expenditure arising from Chapter 2 of Title V TEU is to be charged to the Union budget, except for such expenditure arising from operations having military or defence implications.

Removed:(70) This Regulation should apply without prejudice to the specific character of the security and defence policy of certain Member States.

Removed:(70a) This Regulation has implications for the Union budget. Accordingly, the European Parliament’s Committee on Budgets adopted a budgetary assessment, which forms an integral part of Parliament’s mandate for negotiations,

Removed:HAVE ADOPTED THIS REGULATION:

Removed:General Provisions

Removed:1. This Regulation aims to enhance the technological leadership, innovation, readiness, long-term competitiveness, resilience, integration and preparedness of the European Defence Technological and Industrial Base (EDTIB), leading to a more sovereign Union, ensuring the timely availability and supply of defence products and contributing to the recovery, reconstruction and modernisation of the Ukrainian Defence Technological and Industrial Base (Ukrainian DTIB).

Removed:2. This Regulation establishes a budget for the period from 2025 to 2027 and ▌the following :

Removed:(1) the European Defence Industry Programme (the ‘Programme’), comprising measures for the strengthening of the competitiveness, responsiveness and ability of the EDTIB and for its modernisation, including the establishment of a fund for the acceleration of defence supply chain transformation (‘FAST’) as set out in Chapter II;

Removed:(2) a cooperation programme with Ukraine with a view to the recovery, reconstruction and modernisation of the Ukraine Defence Technological and Industrial Base (the ‘Ukraine Support Instrument’) and the facilitation of its industrial integration into the EDTIB, as set out in Chapter IIa;

Removed:(2a) a legal framework for the establishment of European Defence Projects of Common Interest, as set out in Chapter IIb;

Removed:(2b) a European Military Sales Mechanism as set out in Chapter IIc;

Removed:(3) a legal framework laying down the requirements and procedures for and the effects of setting-up the Structure for European Armament Programme (‘SEAP’) as set out in Chapter III;

Removed:(4) a legal framework aiming at ensuring security of supply, resilience, and strengthening the response to crisis by removing obstacles and bottlenecks and supporting the production of defence products as set out in Chapter IV;

Removed:(5) a Defence Industrial Readiness Board as set out in Chapter V.

Removed:For the purposes of this Regulation, the following definitions apply:

Removed:(1) 'advance purchasing agreement’ means a public contract with one or several undertakings which aims at supporting the swift development and/or production of a product and by virtue of which the right to buy a specified number of products in a given timeframe and at a given price is subject to the prefinancing of part of the upfront costs faced by the concerned undertakings. While an advance purchasing agreement is legally binding upon the participating contracting authorities and upon the contractor, it needs to be further implemented by means of the conclusion of contracts with the concerned contractors;

Removed:(2) ‘bottleneck’ means a point of congestion in a production system that stops or severely slows the production;

Removed:(3) 'blending operation' means an action supported by the Union budget, including within a blending facility or platform as defined in Article 2(6) of the Financial Regulation, that combines non-repayable forms of support and/or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors;

Removed:(4) ‘common procurement’ means a procurement jointly conducted by at least three Member States;

Removed:(5) ‘control’ means the ability to exercise a decisive influence on a legal entity directly, or indirectly through one or more intermediate legal entities;

Removed:(6) ‘classified information’ means information or material, in any form, the unauthorised disclosure of which could cause varying degrees of prejudice to the interests of the Union, or of one or more of the Member States, and which bears an EU classification marking or a corresponding classification marking, as established in the Agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the European Union;

Removed:(7) ‘defence products’ means any defence-related products as referred to in Article 2 of Directive 2009/43/EC;

Removed:(7a) ‘design authority’ means the entity that has the legal authority and the ability to decide, without restrictions by non-associated countries or by non-associated country entities, on the definition, adaptation and evolution of the product’s design, based on the necessary ownership of IP rights and mastery of technologies, including the legal authority to substitute or disintegrate the components subject to restriction by non-associated countries or by non-associated country entities with alternative and restriction-free components originating in the Union;

Removed:(7b) ‘defence industrial readiness pool’ means a strategic reserve of defence products, accumulated through the purchase of additional quantities of defence products when common procurement is undertaken;

Removed:(8) ‘executive management structure’ means a body of a legal entity, appointed in accordance with national law, and, where applicable, reporting to the chief executive officer, which is empowered to establish the legal entity’s strategy, objectives and overall direction, and which oversees and monitors management decision-making;

Removed:(9) ‘legal entity’ means a legal person created and recognised as such under Union, national or international law, which has legal personality and the capacity to act in its own name, exercise rights and be subject to obligations, or an entity which does not have legal personality as referred to in Article 200(2), point (c), of the Financial Regulation;

Removed:(10) ‘defence innovation action' means an action primarily consisting of activities directly aiming to produce plans and arrangements or designs for new, altered or improved defence products, processes or services, possibly including prototyping, testing, demonstrating, piloting, large-scale product validation and market replication;

Removed:(11) ‘middle capitalisation company’ or ‘mid-cap’ means an enterprise that is not a SME and that employs a maximum of 3 000 persons, where the headcount of staff is calculated in accordance with Articles 3 to 6 of the Annex to Recommendation 2003/361/EC;

Removed:(12) ‘non-associated third-country entity’ means a legal entity that is established in a non-associated third country or, a legal entity that is established in the Union or in an associated country, but has its executive management structures in a non-associated third country;

Removed:(13) ‘off-take agreement’ means any contractual agreement between at least [three] Member States and at least one manufacturer of defence products containing either a commitment on the Member States to procure a certain quantity of defence products over a certain period of time or a commitment on the manufacturer of defence products to provide the Member States with the option to do so;

Removed:(14) ‘procurement agent’ means a contracting authority as defined in Article 2(1), point (1), of Directive 2014/24/EU and Article 3(1) of Directive 2014/25/EU established in a Member State or an associated country, the European Defence Agency, a Structure for European Armament Programme or an international organisation that is designated by Member States, associated countries or Ukraine to conduct a common procurement on their behalf;

Removed:(15) ‘lead time’ means the period of time between a purchase order being placed and the manufacturer completing the order;

Removed:(15a) ‘life-cycle’ means all the stages of a product, from research and development to de-commissioning and disposal;

Removed:(15b) ‘maintenance’ means all actions taken to ensure the readiness and operational capability of the defence product, in particular to retain equipment in, or to restore it to, specified conditions until the end of its use, including mission readiness and product longevity and upgrades, customisation and specialisation, inspection, overhaul, testing, servicing, modification, classification as to serviceability, repair, recovery, rebuilding, reclamation, salvage and cannibalisation;

Removed:(16) ‘raw materials’ means the raw materials as defined by Regulation (EU) 2024/1252;

Removed:(17) ‘seal of excellence’ means a quality label which shows that a proposal submitted to a call for proposals under the Programme and the Ukraine Support Instrument has passed all of the evaluation thresholds set out in the work programme, but could not be funded due to a lack of budget available for that call for proposals in the work programme, and might receive support from other Union or national sources of funding;

Removed:▌

Removed:(19) ‘sensitive information’ means information and data, including classified information, that is to be protected from unauthorised access or disclosure because of obligations laid down in Union or national law or in order to safeguard the privacy or security of a natural or legal person;

Removed:(20) ‘small and medium-sized enterprises’ or ‘SMEs’ means small and medium-sized enterprises as defined in Article 2 of the Annex to Commission Recommendation 2003/361/EC;

Removed:(21) 'subcontractors in the common procurement’ means any legal entity which provides critical inputs that possess unique attributes essential for the functioning of a product and which is allocated at least 15 % of the value of the contract;

Removed:(22) ‘small middle capitalisation company’ or ‘small mid-cap’ means an enterprise that is not a SME and whose number of employees does not exceed 499, calculated in accordance with Articles 3 to 6 of the Annex to Recommendation 2003/361/EC, the annual turnover of which does not exceed EUR 100 million or the annual balance sheet of which does not exceed EUR 86 million;

Removed:(23) ‘crisis-relevant products’ means defence products or ▌components or raw materials thereof or any products or services critical to their production whose availability is indispensable to ensure the proper functioning of the internal market and its supply chains and must be secured to respond to a supply crisis.

Removed:The Programme

Removed:1. Grants may take the form of financing not linked to costs, pursuant to Article 183(3) of the Financial Regulation.

Removed:2. Where the Union grant takes the form of financing not linked to costs for common-procurement actions reinforcing the EDTIB, the level of the Union contribution attributed to each action may be defined on the basis of factors such as:

Removed:(a) the complexity of the common procurement, for which a proportion of the estimated value of the common procurement contract and the experience gained in similar actions may serve as an initial proxy;

Removed:(b) the characteristics of the cooperation which are likely to give rise to greater interoperability outcomes and long-term investment signals to industry, in particular where the common procurement covers activities that would be eligible for funding from the Union budget, e.g. research and development, testing and certification, initial production or in-service support activities;

Removed:(c) the number of participating Member States and associated countries or the inclusion of additional Member States or associated countries in existing cooperations;