Annexes to SEC(2007)1599 - Accompanying document to the Proposal for a Directive of the European Parliament and of the Council on the coordination of procedures for the award of certain public works contracts, public supply contracts and public service contracts in the fields of defence and security - Summary of the Impact Assessment

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Agreement. Awarding authorities would still be free to invite to tender only EU companies or non-EU firms as well.

7. MONITORING AND EVALUATION ARRANGEMENTS

The Commission will continue to calculate year by year the main economic indicators allowing the assessment of transparency and competition on defence markets. It will also continue its political dialogue with Member States. A first assessment of the impacts of the directive on administrative costs should be scheduled five years after adoption. An evaluation of the economic impact should be contemplated in the longer term.

8. CONCLUSION

Introducing rules tailored to the specificities of defence and sensitive security contracts into EC procurement law seems indispensable to limit the use of the exemption provided for by Article 296 TEC and Article 14 of the PP Directive to exceptional cases, as stipulated by the ECJ. A stand-alone directive seems the best-suited legal instrument to do so.

Adoption of a procurement directive on defence and sensitive security is the logical follow-up to the Interpretative Communication of December 2006, which explains the conditions for the use of Article 296 TEC in the field of defence procurement. At the same time, it is a natural pendant to the Code of Conduct of the EDA, which is aimed at fostering transparency for defence contracts that fulfil the criteria for the application of Article 296 TEC.

Given the multitude of factors which shape defence markets, it is difficult to quantify the expected economic impact of such a directive. In general, however, it has the potential to make a difference. Bringing arms, munitions and war material as well as sensitive security equipment into the single market is by itself a strong political signal for the EU's readiness to build an EDEM. Coordinating national procedures, the directive will reduce the current regulatory patchwork. It will make it easier for Member States to use EC rules, but also more difficult for them to justify possible exemptions. This, in turn, will reduce the number of exemptions and hence improve transparency, non-discrimination and openness of defence markets in the EU.

To make the new rules as effective as possible, the Commission should envisage a series of accompanying measures. Special training courses for Commission staff and the allocation of additional resources for active monitoring of defence and security markets seem particularly important. The Commission should also pursue ongoing initiatives in related areas, namely security of supply and standardisation, and envisage new actions, particularly in the field of security of information and offsets.

The preparation of EC procurement rules for defence and sensitive equipment is only one step, but an important one, towards the establishment of a European Defence (and Security) Equipment Market.