Defence Contracts 2026

Definitive global law guides offering comparative analysis from top-ranked lawyers

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editor Andrew Sanderson Kingsley Napley LLP

Practice Guides

Defence Contracts Contributing Editor Andrew Sanderson Kingsley Napley LLP

2026

Chambers Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair, Stephen Dinkeldein, Vivienne Button and Sean Marshall Content Reviewers Lawrence Garrett, Marianne Page, Heather Palomino, Alison Moore, Adrian Ciechacki and Michael Irvine Content Coordination Manager Nancy Tsang Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Joanna Chivers Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by Andrew Sanderson, Kingsley Napley LLP p.4

JAPAN Law and Practice p.111 Contributed by Anderson Mori & Tomotsune NORWAY Law and Practice p.134 Contributed by Advokatfirmaet Thommessen AS Trends and Developments p.154 Contributed by Advokatfirmaet Thommessen AS SWEDEN Law and Practice p.160 Contributed by Advokatfirman Cederquist Trends and Developments p.178 Contributed by Kahn Pedersen

AUSTRIA Law and Practice p.9 Contributed by Schiefer Rechtsanwälte GmbH Trends and Developments p.27 Contributed by Schiefer Rechtsanwälte GmbH DENMARK Law and Practice p.34 Contributed by Gorrissen Federspiel GERMANY Law and Practice p.55 Contributed by GvW Graf von Westphalen Trends and Developments p.76 Contributed by GvW Graf von Westphalen INDIA Law and Practice p.82 Contributed by Shardul Amarchand Mangaldas & Co

Trends and Developments p.102 Contributed by Ahlawat & Associates

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INTRODUCTION Contributed by: Andrew Sanderson, Kingsley Napley LLP Kingsley Napley LLP is an independent, internation - ally recognised UK law firm with a strong reputation for handling complex, high-profile and sensitive matters. The firm provides contentious, advisory and transac - tional services across corporate and commercial law, dispute resolution, criminal litigation, employment, immigration, public law, real estate, regulatory com - pliance and investigations. In the defence and secu - rity sector, Kingsley Napley advises UK and interna - tional businesses, investors, directors and individuals operating within a highly regulated and strategically

important market. Its multidisciplinary team supports clients on defence procurement and contracting, cor - porate transactions, export controls, national security legislation, sanctions, security vetting, immigration, employment, health and safety, regulatory investi - gations, disputes and crisis management. The firm combines detailed legal and regulatory expertise with commercial understanding, helping established sup - pliers and new market entrants manage risk, protect their reputations and pursue opportunities involving the UK defence sector and government.

Contributing Editor

Andrew Sanderson is a partner at Kingsley Napley and an experienced regulatory and litigation lawyer advising clients operating in the UK and international defence and security sector. He heads the firm’s defence

practice supporting defence businesses, senior executives and investors on complex legal, regula - tory and commercial risks, including national secu - rity legislation, export controls, sanctions, security vetting, corporate governance, anti-bribery, health and safety, investigations and disputes. Andrew regularly co-ordinates multidisciplinary teams and advises boards, in-house counsel and senior management in sensitive, high-pressure matters. As chair of the National Security & Resilience Consor - tium, he combines strategic judgement, sector knowledge and practical, commercially focused advice.

Kingsley Napley LLP 20 Bonhill Street London EC2A 4DN UK Tel: +44 020 7814 1200 Email: asanderson@kingsleynapley.co.uk Web: www.kingsleynapley.co.uk

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INTRODUCTION Contributed by: Andrew Sanderson, Kingsley Napley LLP

Defence Contracts 2026 Global Overview Welcome to the 2026 edition of the Chambers Glob - al Practice Guide to Defence Contracts. This guide arrives at a moment when defence procurement has moved from a specialist area of public contracting to a central instrument of national security, industrial pol - icy and international co-operation. Governments are seeking to replenish stocks, strengthen deterrence, protect critical infrastructure and adopt new technolo - gies at a pace rarely seen in recent decades. Suppli - ers, investors and advisers therefore face a market of exceptional opportunity, but also one in which politi - cal sensitivity, legal complexity and delivery risk are unusually high. The chapters that follow explain how these pres - sures are expressed through different legal systems. Although the rules vary, the same questions recur: who may compete, how security and sovereignty shape procurement, what information may cross borders, how governments allocate risk, and how contractors can deliver at speed without compromising integrity or accountability. This introduction draws those threads together and identifies the issues that businesses should consider before entering a new defence mar - ket or expanding an established presence. A market shaped by strategic urgency The defining context for defence contracting in 2026 is sustained geopolitical instability. Russia’s continu - ing war against Ukraine, conflict and volatility in the Middle East, strategic competition in the Indo-Pacific, terrorism, cyber operations and threats to space and subsea infrastructure have altered assumptions about readiness. Governments are no longer procuring only for long-term modernisation. They are also buying for immediate availability, stockpile depth, resilience and the ability to sustain operations over time. The scale of the change is significant. The Stock - holm International Peace Research Institute (SIPRI) reported that global military expenditure reached USD2.718 trillion in 2024 after a decade of consecu - tive increases, with spending rising in every region. In 2025, NATO allies committed to invest 5% of GDP annually by 2035 in core defence requirements and wider defence- and security-related expenditure. The European Union has added new financial and indus -

trial instruments, including the EUR150 billion SAFE (Security Action for Europe) loan mechanism for joint procurement. Comparable efforts to increase capabil - ity, domestic production and supply-chain security are visible across North America, the Indo-Pacific and the Middle East. Larger budgets do not, however, guarantee rapid or effective delivery. Public finances remain constrained, inflation has increased programme costs, and compe - tition for skilled labour, production capacity and criti - cal inputs is intense. Buyers are under political pres - sure to demonstrate value, speed and national benefit at the same time. Contractors should expect closer scrutiny of price, performance, delivery schedules and economic contribution, even where urgency permits accelerated or non-competitive procedures. Procurement at speed and the continuing importance of process Many jurisdictions are reforming procurement rules, shortening competitions and using framework agree - ments, direct awards, government-to-government arrangements and urgent operational requirements. Agile acquisition models, spiral development and experimentation are increasingly used where tech - nology changes too quickly for a conventional multi- year specification. These approaches can give new entrants and smaller businesses routes into pro - grammes that were once dominated by established prime contractors. Urgency does not remove public-law risk. Decisions may still be challenged for unequal treatment, lack of transparency, improper evaluation or misuse of a national-security exemption. The boundary between legitimate security protection and unjustified restric - tion of competition remains important. A supplier must understand not only the written tender rules, but also the authority of the purchasing body, applicable review mechanisms, standstill or protest procedures, and the practical consequences of challenging a strategically important award. Early engagement is especially valuable. Pre-market consultations, capability demonstrations and industry days can influence how a requirement is framed, but communications must be controlled to avoid unequal

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INTRODUCTION Contributed by: Andrew Sanderson, Kingsley Napley LLP

access, conflicts of interest or allegations that a speci - fication favours one supplier. Bid teams should main - tain disciplined records of engagement and ensure that technical ambition is matched by evidence of manufacturability, certification and realistic delivery. Sovereignty localisation and market access Defence markets are increasingly open to international collaboration yet more demanding about domestic benefit. Governments seek assured access to pro - duction, maintenance, intellectual property, data and skilled personnel in a crisis. Requirements for local incorporation, domestic content, technology transfer, industrial participation, security-cleared facilities or local partners are therefore becoming central com - mercial terms rather than peripheral policy objectives. The result is a more regionalised market. European ini - tiatives encourage joint procurement and greater use of European industrial capacity; the United States and other major buyers continue to apply domestic prefer - ence and supply-chain rules; and many emerging mar - kets use offset or localisation obligations to develop sovereign capability. Multinational programmes can create scale and interoperability, but they also com - bine different budget cycles, export policies, security classifications and rules on workshare. Businesses should assess market access before committing bid expenditure. The relevant questions include foreign-ownership restrictions, investment screening, licensing, eligibility for classified work, local-content calculations, offset enforcement, tax and permanent-establishment exposure, and whether a proposed joint venture will receive the technology and decision-making authority needed to perform. Localisation promises should be costed and governed as enforceable obligations, with clear responsibility for suppliers, training, facilities and knowledge transfer. Supply chains: capacity and resilience Recent conflicts have exposed the limitations of lean production and globally dispersed defence supply chains. Long lead times for materials, microelec - tronics, specialist metals, propulsion systems and machine tools can determine whether or not a pro - gramme succeeds. A contractor may be legally able to supply an item but unable to secure enough com -

ponents, qualified personnel or test capacity to meet the promised schedule. Customers are responding with demands for supply- chain visibility, second sourcing, stockpiles, surge plans and notification of vulnerabilities. Contract terms increasingly address continuity of supply, pri - ority allocation, obsolescence, cyber incidents and changes in control of critical subcontractors. Prime contractors remain accountable for extensive supplier networks and may be required to flow security, audit, export-control, human-rights and quality obligations through several tiers. Due diligence should therefore extend beyond finan - cial solvency. It should identify geographic concen - tration, single-source dependencies, sanctions expo - sure, beneficial ownership, counterfeit risk, access to raw materials and the ability to operate during disrup - tion. Resilience measures must be reflected in price and programme governance; otherwise, an apparently competitive bid may transfer unmanageable cost to the contractor. Export controls, sanctions and responsible transfers Defence contracts are inseparable from export con - trols. Hardware, software, technical data, brokering, training and maintenance may each require authorisa - tion, and an exchange between colleagues or access to a shared digital environment can amount to a con - trolled transfer. Multinational teams must map the origin and classification of technology, the countries and nationals who may access it, end-use and end- user restrictions, re-export conditions and reporting requirements. Sanctions add a rapidly changing layer of risk. Restric - tions may apply to customers, banks, freight routes, insurers, shareholders and indirect counterparties. A licence under one regime does not resolve obliga - tions under another, and contractual performance may become unlawful after award. Effective clauses should address licence responsibility, co-operation, suspen - sion, alternative sourcing, disclosure and termination, while recognising that a broadly drafted force majeure provision may not answer every sanctions problem.

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INTRODUCTION Contributed by: Andrew Sanderson, Kingsley Napley LLP

Responsible-transfer considerations are also receiv - ing greater attention. International humanitarian law, the Arms Trade Treaty where applicable, human-rights risk, diversion and end-use monitoring can influence licensing and reputation even when a sale is politi - cally supported. Contractors need defensible due diligence, escalation routes and records showing how warning signs were assessed. Technology: data and intellectual property The modern defence market increasingly depends on software, artificial intelligence, autonomous systems, uncrewed platforms, space capabilities, quantum technologies and commercially developed dual-use products. This creates opportunities for businesses unfamiliar with traditional defence procurement. It also creates friction between fast commercial development and contracting models designed for bespoke plat - forms with long service lives. Data rights and intellectual property should be addressed at the start of a programme. Customers require sufficient rights to operate, maintain, integrate and upgrade capability, while suppliers need to pro - tect reusable technology and commercial markets. Poorly defined background and foreground rights can impede competition, through-life support and export. Contracts should distinguish ownership from access rights, define interfaces and deliverables, and deal expressly with source code, software dependencies, model training data, technical publications and rights arising from jointly funded development. Artificial intelligence introduces additional questions about assurance, bias, explainability, human control, testing and liability. Regulatory approaches differ and will continue to evolve. For defence use, compliance with general technology rules may sit alongside mili - tary exemptions, ethical policies and operational legal review. Suppliers should build governance and evi - dence into the engineering life cycle rather than treat - ing them as final-stage approvals. Cybersecurity and classified information Security is both a condition of market entry and a con - tinuing performance obligation. Personnel clearances, facility accreditation, classified-contract procedures and restrictions on foreign ownership or influence

can affect corporate structure and mobilisation time. Clearances are not automatically transferable between countries, and a contractor should not assume that an allied relationship permits unrestricted information sharing. Cybersecurity requirements are becoming more pre - scriptive and are extending down the supply chain. Customers increasingly expect demonstrable con - trols, incident reporting, vulnerability management and secure software development. The contract must align regulatory notification duties with nation - al-security restrictions and specify how parties will investigate, remediate and communicate an incident. In acquisitions and joint ventures, cyber and security due diligence can be as important as conventional financial review. Contract risk in an uncertain economy Defence contracts frequently combine demanding specifications, sovereign rights and long periods of performance. Inflation, currency movements, tariffs, shortages and changing requirements can make a fixed-price commitment unsustainable. Contractors should test indexation, price-adjustment, change- control and relief provisions against realistic scenari - os, including delays caused by government-furnished equipment, licences, security approvals or range access. Liability regimes also deserve careful attention. Cus - tomers may seek extensive warranties, liquidated damages, indemnities, step-in rights, audit access and termination for convenience. Caps and exclu - sions may be restricted by public law or policy. The commercial position should be considered together with insurance availability, parent-company support, intellectual-property exposure and the consequences of suspension or debarment. Programme governance, accurate reporting and early escalation remain the most effective protection against disputes. Integrity, sustainability and public confidence The increase in defence spending brings greater expectations of integrity. Secrecy and urgency can heighten corruption risk, particularly where interme - diaries, offsets or single-source awards are involved.

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INTRODUCTION Contributed by: Andrew Sanderson, Kingsley Napley LLP

Looking ahead The opportunity in 2026 is clear: governments need capability, production capacity, innovation and trust - ed partners. Yet success will depend on more than a strong product. Businesses must understand the public-law framework, political objectives and secu - rity culture of each market; choose partners carefully; protect technology; and build export, cyber, integrity and supply-chain compliance into delivery. The jurisdictional sections in this guide explain how those common pressures translate into local rules and practice. Read together, they show a defence market becoming larger and faster, but also more strategic, regulated and interconnected. The author hopes the guide helps readers identify both the opportunities and the points at which early legal and commercial planning can prevent delay, dispute or loss of market access.

Anti-bribery controls must be tailored to actual routes to market and supported by due diligence on agents, partners and beneficial owners. Books and records, approval controls and protected reporting channels matter as much as contractual representations. Environmental and social considerations have not disappeared, although their application to defence varies. Energy security, climate resilience, hazardous materials, modern slavery, workforce welfare and the environmental impact of production and disposal can affect eligibility, financing and delivery. Contractors should distinguish mandatory requirements from pol - icy aspirations and avoid unsupported claims, while preparing for more detailed supply-chain information requests.

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AUSTRIA

Czech Republic

Germany

Slovak

Vienna

Austria

Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller Schiefer Rechtsanwälte GmbH

Hungary

Italy

Slovenia

Croatia

Contents 1. Overview of the Defence Regulatory Framework P.12 1.1 Principal Legislation and Regulatory Framework p.12 1.2 Competent Authorities p.12 1.3 Definition of “Defence” and “Dual-Use” p.13 1.4 International Frameworks and Treaty Obligations p.13 2. Procurement and Government Contracts in the Defence Sector P.13 2.1 Defence Procurement Legislation p.13 2.2 Contracting Authorities and Entities Subject to Defence Procurement Rules p.14 2.3 Types of Contracts and Value Thresholds p.14 2.4 Restricted and Classified Procurement p.14 2.5 Tender Procedures for Defence Contracts p.14 2.6 Direct Contract Awards and Single-Source Procurement p.14 2.7 Offsets, Industrial Participation and Sovereign Capability Requirements p.15

2.8 Security of Supply and Resilience Requirements p.15 2.9 Evaluation Criteria and Award of Defence Contracts p.15 2.10 Exclusion Grounds p.15 2.11 Transparency and Confidentiality p.16 2.12 Modification and Termination of Defence Contracts p.16 2.13 Challenging Defence Procurement Decisions p.16 3. Export Controls and Dual-Use Items P.16 3.1 Export Control Legislation and Regulatory Framework p.16 3.2 Scope of Controls: Military and Dual-Use Lists p.17 3.3 Licence Requirements p.17 3.4 Licence Application Process p.17 3.5 Criteria for Granting or Refusing Licences p.17 3.6 End-User Controls and Post-Shipment Verification p.18 3.7 Brokering and Intermediary Activities p.18 3.8 Intra-Company and Intra-Group Transfers p.18 3.9 Enforcement, Penalties and Voluntary Disclosure p.18 4. Compliance, Sanctions and Embargoes P.19 4.1 Sanctions Legislation and Regulatory Framework p.19 4.2 Arms Embargoes p.19 4.3 Screening and Due Diligence Requirements p.19 4.4 Licences, Derogations and Exceptions p.19 4.5 Extraterritorial Sanctions and Secondary Sanctions Risk p.20 4.6 Sanctions Compliance Programmes p.20 4.7 Enforcement, Penalties and Voluntary Disclosure p.20 4.8 Recent Enforcement Actions and Developments p.20

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AUSTRIA CONTENTS

5. National Security Regulation P.20 5.1 National Security Legislation Applicable to the Defence Sector p.20

5.2 Security Vetting and Clearance Requirements p.21 5.3 Classified Information and Official Secrets p.21 5.4 Critical National Infrastructure and Defence Assets p.21 5.5 Cybersecurity Requirements for Defence Contractors p.21 5.6 Supply Chain Security p.22 5.7 Counter-Espionage and Insider Threat Obligations p.22 5.8 Foreign Ownership, Control and Influence (FOCI) Mitigation p.22 5.9 Interaction Between National Security Regulation and Other Regimes p.22 6. M&A, Joint Ventures and Foreign Direct Investment in the Defence Sector P.23 6.1 FDI Screening Legislation and Regulatory Framework p.23

6.2 Transactions Subject to FDI Screening p.23 6.3 Mandatory vs Voluntary Notification p.23 6.4 Review Process and Timetable p.23 6.5 Assessment Criteria p.23 6.6 Conditions, Remedies and Prohibition p.24 6.7 Golden Shares and Special Government Rights p.24 6.8 Joint Ventures in the Defence Sector p.24 6.9 Interaction with Competition/Antitrust Review p.24 7. Investigations and Litigation in the Defence Sector P.25 7.1 Principal Investigative Authorities p.25 7.2 Triggers for Investigation p.25 7.3 Investigative Powers and Procedures p.25 7.4 Dawn Raids and Unannounced Inspections p.25 7.5 Legal Professional Privilege and Confidentiality p.25 7.6 Debarment and Exclusion From Future Procurement p.26 7.7 Civil Litigation and Dispute Resolution p.26

7.8 Whistleblower Protections p.26 7.9 Corporate Criminal Liability p.26

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

Schiefer Rechtsanwälte GmbH is an Austrian law firm with offices in Vienna and other major cities in Austria, focused on public procurement, defence and dual-use, and banking and finance. The firm advises contracting authorities, bidders, privately- owned companies and credit institutions across the full project life cycle, from strategy and tender design through award to contract performance and review proceedings. In the defence sector, the firm advises on major equipment programmes, government-to-

government arrangements, industrial co-operation and security-of-supply structures, as well as on the export control, sanctions and investment screening questions arising in defence supply chains. Recent work includes acting as lead adviser on the industrial co-operation programme of Austria with Italian de - fence contractor Leonardo. The firm publishes regu - larly on procurement, defence regulation and defence financing.

Authors

Martin Schiefer has been recognised as one of Austria’s leading public procurement law experts for more than 20 years and has been named Austria’s Public Procurement Lawyer in 2026. As founding partner of

Christian Richter-Schöller is a partner at Schiefer Rechtsanwälte and heads the firm’s transformation law practice. His work sits at the intersection of defence procurement, EU regulatory law and ESG. He

Schiefer Rechtsanwälte, he leads a team of approxi - mately 50 specialists with a strategic, innovative and regionally rooted approach to public procurement. He advises federal ministries, contracting authorities and companies on complex, high-value and reputa - tionally sensitive award procedures, including in defence, security and critical infrastructure. His practice covers the full range of procurement under the BVergG 2018 and the defence-specific BVerg - GVS 2012, from procurement strategy and tender design to review proceedings, with particular strength in ICT, infrastructure, mobility and energy as the sectors underpinning national resilience.

advises ministries, contracting entities and the defence industry on major equipment programmes, government-to-government arrangements, industrial co-operation and offset structures, security of supply, export control, sanctions compliance and investment screening. He has developed life-cycle- costing and procurement-governance frameworks applied in major defence programmes. He publishes regularly on defence procurement, defence financing and EU regulatory law, including in the Manz journal NIU where he also is an editor. He is a frequent conference speaker and a member of Transparency International Austria.

Schiefer Rechtsanwälte GmbH Rooseveltplatz 4-5/5 1090 Vienna Austria Tel: +43 1 402 68 28 Email: office@schiefer.at Web: www.schiefer.at

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

1. Overview of the Defence Regulatory Framework 1.1 Principal Legislation and Regulatory Framework The constitutional frame is set by Article 9a of the Fed - eral Constitutional Act ( Bundes - Verfassungsgesetz , B-VG), which establishes the principle of compre - hensive national defence, and by the Federal Consti - tutional Act on the Neutrality of Austria of 1955 ( Neu- tralitätsgesetz ), which enshrines permanent neutrality and shapes the entire defence regulatory landscape. The key statutes are: • the Defence Act 2001 ( Wehrgesetz 2001 ) and the Military Powers Act ( Militärbefugnisgesetz , MBG) on the organisation and powers of the Austrian Armed Forces ( Bundesheer ); • the Federal Procurement Act 2018 ( Bundesver- gabegesetz 2018 , BVergG 2018) as the general procurement framework and the Federal Procure - ment Act for Defence and Security 2012 ( Bundes- vergabegesetz Verteidigung und Sicherheit 2012 , BVergGVS 2012), implementing Directive 2009/81/ EC (the “Defence Procurement Directive”); • the War Material Act ( Kriegsmaterialgesetz , KMG) and the Foreign Trade Act 2011 ( Außen- wirtschaftsgesetz 2011 , AußWG 2011), together with Regulation (EU) 2021/821 (the “EU Dual-Use Regulation”), for export controls; • the Sanctions Act 2024 ( Sanktionengesetz 2024 , SanktG 2024) for the implementation of UN and EU sanctions; • the Investment Control Act ( Investitionskontrollge- setz , InvKG) for foreign direct investment (FDI) screening; • the Information Security Act ( Informationssicher- heitsgesetz , InfoSiG) and the Information Security Regulation for classified information; and • the Network and Information System Security Act 2026 ( Netz - und Informationssystemsicherheitsge- setz 2026 , NISG 2026), applicable from 1 October 2026, for cybersecurity. 1.2 Competent Authorities The key government ministries responsible for over - seeing defence in Austria are the following:

• Federal Ministry of Defence ( Bundesministerium für Landesverteidigung , BMLV): Responsible for the armed forces, defence procurement through its armaments and procurement directorates, facility security clearances for classified defence contracts, and the military intelligence services ( Heeresnachrichtenamt and Abwehramt ). • Federal Ministry for Economy ( Bundesministerium für Wirtschaft , Energie und Tourismus , BMWET): Grants export licences for military and dual-use goods under the Foreign Trade Act 2011, conducts FDI screening under the Investment Control Act and is responsible for defence industry policy. • Federal Ministry of the Interior ( Bundesministerium für Inneres , BMI): Grants war material licences under the War Material Act in agreement with the foreign affairs and defence ministries, and hosts the Directorate for State Protection and Intelligence ( Direktion Staatsschutz und Nachrichtendienst , DSN) and, from October 2026, the new Federal Office for Cybersecurity. • Federal Ministry of Finance ( Bundesministerium für Finanzen , BMF): Controls the defence budget via the annual Federal Finance Act and the medium- term expenditure framework, oversees the cus - toms administration including the tariffs authority, and owns the central purchasing body in Austria ( Bundesbeschaffung GmbH , BBG), through which non-military-specific procurement is channelled. Other Authorities The Federal Ministry for European and International Affairs ( Bundesministerium für europäische und inter- nationale Angelegenheiten , BMEIA) provides the for - eign and security policy assessment for licensing and embargo matters. The Austrian Customs Office ( Zol- lamt Österreich ) enforces export controls at the border. The Financial Market Authority ( Finanzmarktaufsicht , FMA) has supervised financial sanctions compliance since 1 January 2026, having taken over from the Oesterreichische Nationalbank. The Federal Admin - istrative Court ( Bundesverwaltungsgericht , BVwG) reviews procurement decisions. Public prosecutors, including the Economic Crime and Corruption Pros - ecutor’s Office ( Wirtschafts - und Korruptionsstaatsan- waltschaft , WKStA), handle criminal enforcement. The ministries interact through statutory agreement ( Ein-

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

vernehmen ) requirements, most visibly in war material licensing. 1.3 Definition of “Defence” and “Dual-Use” “War material” ( Kriegsmaterial ) is defined by the War Material Regulation issued under the War Material Act and covers weapons, munitions and equipment specifically designed or adapted for combat use. It triggers the strictest licensing regime. Military or defence goods in the broader sense are defined under the Foreign Trade Act 2011 by refer - ence to the EU Common Military List and include defence-related products within the meaning of Direc - tive 2009/43/EC (the “Transfers Directive”). For pro - curement purposes, the Federal Procurement Act for Defence and Security 2012 refers to military equip - ment on the basis of the Council list of 1958 read together with the Common Military List. Dual-use items are defined by Article 2 of the EU Dual- Use Regulation as items, including software and tech - nology, that can be used for both civil and military purposes; the control list is Annex I of that Regulation. The practical consequence of the layered definitions is that war material falls under the War Material Act, other military goods under the Foreign Trade Act 2011, and dual-use items under the directly applicable EU Regulation as supplemented by national provisions. 1.4 International Frameworks and Treaty Obligations EU law is the dominant layer, more specifically: • the Defence Procurement Directive; • the Transfers Directive on intra-EU transfers; • the EU Dual-Use Regulation; and • Common Foreign and Security Policy (CFSP) sanc - tions regulations, which apply directly or through implementing statutes. Austria is not a NATO member due to its permanent neutrality, but it has participated in the Partnership for Peace since 1995 and takes part in the EU’s Common Security and Defence Policy, in PESCO projects and in the European Defence Agency. Since 2023, Austria has participated in the European Sky Shield Initiative

for joint air defence procurement, framed by the gov - ernment as compatible with neutrality. UN Security Council resolutions, including arms embargoes, are implemented through EU law and the Sanctions Act 2024. Austria ratified the Arms Trade Treaty in 2014, is a founding participant of the Was - senaar Arrangement, whose secretariat is seated in Vienna, and participates in the Missile Technology Control Regime, the Australia Group, the Nuclear Suppliers Group and the Zangger Committee. Austria also has a strong humanitarian arms control profile, including the Anti-Personnel Mine Ban Convention, the Convention on Cluster Munitions and the Treaty on the Prohibition of Nuclear Weapons, of which Austria was a driving force. 2. Procurement and Government Contracts in the Defence Sector 2.1 Defence Procurement Legislation Austria has a bespoke defence procurement regime: the Federal Procurement Act for Defence and Security 2012 implements the Defence Procurement Directive and governs contracts for military equipment, sensi - tive equipment and related works and services, as well as works and services for specifically military pur - poses or involving classified information. The Federal Procurement Act 2018 remains the general framework and applies to non-sensitive purchases by defence authorities. The exemptions mirror those of the Directive: the “essential security interests” carve-out of Article 346 of the Treaty on the Functioning of the European Union (TFEU); contracts governed by international rules; government-to-government contracts; contracts for intelligence activities; contracts awarded in third coun - tries during deployments; and certain research and development services. In line with the case law of the CJEU, exemptions are interpreted narrowly and the burden of justification lies with the contracting author - ity. Below the EU thresholds, a lighter national regime within the Federal Procurement Act for Defence and Security 2012 applies.

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

2.2 Contracting Authorities and Entities Subject to Defence Procurement Rules The regime applies to contracting authorities in the functional sense, namely, the Federation, the regions, municipalities and bodies governed by public law, as well as sector contracting entities for defence-rele - vant purchases. In practice, the dominant buyer is the Federal Ministry of Defence; the Federal Ministry of the Interior and other federal bodies award security- sensitive contracts – for example, in policing and civil protection. State-owned enterprises are covered where they qualify as bodies governed by public law or as sector contracting entities. Private entities are caught where they act as central purchasing bodies or where a sub - sidised contract falls within the statute; purely private purchases are not covered. Since defence procure - ment is federal, review competence lies with the Fed - eral Administrative Court regardless of which ministry is the procurer. 2.3 Types of Contracts and Value Thresholds The contract types covered are those concerning the supply of military and sensitive equipment, including parts and components; works and services directly related to such equipment across its entire life cycle; works and services for specifically military purpos - es; and sensitive works and services. Research and development is covered only in limited constellations; R&D services where the contracting authority does not exclusively retain the benefits are exempt. The EU thresholds applicable from 1 January 2026 under Commission Delegated Regulation (EU) 2025/2487 are EUR432,000 for supply and service contracts and EUR5,404,000 for works contracts. Below these values, national procedures with reduced formal requirements apply, including direct awards below the national de minimis limits. 2.4 Restricted and Classified Procurement The Federal Procurement Act for Defence and Securi - ty 2012 allows contracting authorities to impose secu - rity-of-information requirements: bidders must dem - onstrate their ability to protect classified information, typically through a facility security clearance under the Information Security Act framework and individ -

ual clearances for the personnel involved (reliability checks in the military domain, security screenings by the Directorate for State Protection and Intelligence in the civilian domain). The commitments flow down to subcontractors through security annexes. Where the contract itself is classified or a formal pro - cedure would compromise essential security interests, the procurement can be exempted altogether under Article 346, TFEU and is then conducted outside the statute under internal rules. International classified contracts follow the applicable bilateral security-of- information agreements. 2.5 Tender Procedures for Defence Contracts Under the Federal Procurement Act for Defence and Security 2012, the restricted procedure and the nego - tiated procedure with prior publication are available without special justification; an open procedure does not exist under the defence regime. The competitive dialogue process is available for particularly complex projects, and the negotiated procedure without prior publication only on enumerated grounds. In practice, negotiated procedures dominate, because requirements, security arrangements and long-term support need to be negotiated. In recent years, major platform programmes have frequently been imple - mented through government-to-government arrange - ments or joint procurement with partner states, which are exempt from the Defence Procurement Directive. Direct awards are therefore considerably more com - mon in the defence context than in general public procurement. 2.6 Direct Contract Awards and Single- Source Procurement The negotiated procedure without prior publication is available in particular for: extreme urgency resulting from a crisis; technical reasons or exclusive rights that make one supplier the only possible source; additional deliveries by the original supplier where a change of supplier would cause disproportionate technical dif - ficulties, which covers interoperability concerns; and certain R&D and commodity situations. In addition, Article 346 TFEU permits a full derogation where essential security interests genuinely so require, and government-to-government contracts are exempt.

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

2.8 Security of Supply and Resilience Requirements Security of supply is an express feature of the defence regime. Contracting authorities may require bidders to certify and commit to, among other things: disclosure of the supply chain and the location of production; the ability to meet surge and crisis demands; assurances regarding export and transit authorisations from the bidder’s home state; and continuity of maintenance, modernisation and spare parts over the life cycle. These commitments become contract terms and are enforced through ordinary contractual remedies, retention mechanisms and termination rights. Complementary instruments exist outside individual contracts: the Defence Funding Act ( Landesver- teidigungs - Finanzierungsgesetz ) provides multi-year budget certainty, the Federal Crisis Security Act ( Bundes - Krisensicherheitsgesetz ) establishes crisis co-ordination structures, and NIS-2 (Directive (EU) 2022/2555) duties will add supply chain security obli - gations from October 2026. 2.9 Evaluation Criteria and Award of Defence Contracts Contracts are awarded to the most economically advantageous tender or, exceptionally, on lowest price; in defence, best-value awards with substan - tial non-price weighting are standard. Typical criteria include technical performance, quality, the logistics and support concept, delivery schedule, life cycle costs, interoperability with existing systems and part - ner forces, and security of supply. National industrial base preferences cannot lawfully be used as award criteria under EU law; security- of-supply criteria may, however, legitimately reflect supply chain resilience and support arrangements. Whole-life costing is expressly recognised in Austrian procurement law and is increasingly used for plat -

Austria has no dedicated single-source pricing or profit regulation comparable to the US or UK regimes. Price reasonableness is addressed through negotia - tion and contract design, budgetary law and ex-post audits by the Court of Audit ( Rechnungshof ). 2.7 Offsets, Industrial Participation and Sovereign Capability Requirements Austria imposes no statutory offset obligations. The earlier administrative practice of requiring offsets ( Gegengeschäfte ) for major defence purchases, most prominently in the Eurofighter programme, was dis - continued in the mid-2010s following EU-law con - cerns and audit criticism. In 2025, Austria concluded its first industrial co-opera - tion arrangement since then, with the Italian Leonardo group. Schiefer Rechtsanwälte advised on the struc - turing of the co-operation, which is designed to com - ply with EU law and national law. Implementation is currently under way, and the arrangement may serve as a template for industrial co-operation in future pro - curement programmes. The structuring question in arrangements of this kind is which contributions may be credited. In the case of the Eurofighter offsets, the audit criticism concerned transactions that would have taken place in any event and multipliers that produced credited amounts with - out a counterpart in Austrian value creation. Current practice therefore should rest on additionality, ie, on transactions that would not have taken place without the arrangement. Beyond such negotiated arrange - ments, industrial participation may only be pursued within the narrow limits of EU law: through security-of- supply and information-security requirements under the Federal Procurement Act for Defence and Secu - rity 2012, or where a genuine Article 346, TFEU jus - tification exists. Sovereign capability considerations increasingly appear in programme design – for exam - ple, in-country maintenance, ammunition supply and long-term support. The policy debate on strengthen - ing domestic and European value creation in defence procurement has intensified with the EU’s defence- industrial agenda under the European Defence Indus - try Programme (EDIP).

forms with long service lives. 2.10 Exclusion Grounds

The exclusion grounds broadly track general procure - ment law: mandatory exclusion for final convictions for participation in a criminal organisation, corruption, fraud, terrorist offences or money laundering, and dis -

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

cretionary grounds such as insolvency, grave profes - sional misconduct or misrepresentation. The defence regime adds specific grounds: a bidder may be excluded where it does not possess the reli - ability necessary to exclude risks to national security, which may be established by any means of evidence, including protected data sources; the failure to obtain required security clearances is in practice decisive. Sanctions law adds a further layer: awards to listed persons are prohibited, and Article 5k of Council Regulation (EU) No 833/2014 bans awards to Russian entities and to bidders relying on Russian subcontrac - tors for more than 10% of the contract value. 2.11 Transparency and Confidentiality Above-threshold procedures require EU-wide con - tract notices and contract award notices via Tenders Electronic Daily (the official online database of the EU for publishing such notices), and the core contract data of federal awards are published. The defence regime, however, permits withholding information whose release would impede law enforcement, harm legitimate commercial interests or prejudice security interests; classified elements are not published at all. The Freedom of Information Act ( Informationsfrei- heitsgesetz ), in force since 1 September 2025, replaced official secrecy with a general right of access to infor - mation, subject to exceptions that include national security and defence, so defence contracts remain largely shielded from individual access requests and can only be published heavily redacted (if they must be published at all). Oversight is exercised primarily by the Court of Audit and parliamentary committees rather than through public disclosure. 2.12 Modification and Termination of Defence Contracts The modification of defence contracts follows the general regime: modifications are permissible without a new procedure where they are provided for in clear review clauses, concern additional necessary supplies or services within value limits, respond to unforesee - able circumstances, or are non-substantial. Substan - tial modifications require a new award procedure and expose the parties to ineffectiveness claims.

As regards termination, the legislation requires that contracts can be terminated where the contractor should have been excluded at the time of award or where the contract was awarded in serious breach of EU law. Beyond that, termination is governed by the contract and general civil law; there is no statu - tory government right of termination for convenience. Such rights are, however, frequently stipulated in defence contracts, combined with negotiated com - pensation mechanisms. 2.13 Challenging Defence Procurement Decisions Undertakings with an interest in a specific contract that face or have suffered damage may challenge decisions of federal contracting authorities before the Federal Administrative Court; its decisions are subject to review by the Supreme Administrative Court and the Constitutional Court. Before award, separately challengeable decisions can be set aside within short deadlines, generally ten days, and interim relief is available; after award, declaratory proceedings can lead to ineffectiveness of the contract or alternative sanctions. Damages are pursued before the civil courts and require a prior declaratory finding. There is no general national-security carve-out from review. Where a contract was awarded outside the statute – for example, under Article 346, TFEU or as a government-to-government contract – the review bodies examine whether the exemption was lawfully invoked, applying the strict standards developed by the CJEU. 3. Export Controls and Dual-Use Items 3.1 Export Control Legislation and Regulatory Framework The export control framework rests on three pillars. • First, the War Material Act governs war material – import, export and transit require a licence from the Federal Minister of the Interior in agreement with the foreign affairs and defence ministers. • Second, the Foreign Trade Act 2011, together with the Foreign Trade Regulation ( Außenwirtschaftsver- ordnung ), governs other military goods, defence-

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AUSTRIA Law and Practice Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH

related products under the Transfers Directive, technical assistance, brokering and transit, and is administered by the Federal Ministry for Economy. • Third, the EU Dual-Use Regulation applies directly to dual-use items and is supplemented by the For - eign Trade Act 2011. Customs enforcement lies with the Austrian Customs Office, while criminal enforcement lies with the public prosecutors and courts. Nuclear material is addition - ally covered by the Safeguards Act ( Sicherheitskon- trollgesetz ). 3.2 Scope of Controls: Military and Dual-Use Lists Three control lists apply: • the war material list under the War Material Regula - tion; • the military list annexed to the Foreign Trade Regu - lation, which mirrors the EU Common Military List and thereby the Wassenaar Munitions List; and • the dual-use list in Annex I of the EU Dual-Use Regulation, which is updated annually by a Com - mission Delegated Regulation to reflect decisions of the Wassenaar Arrangement, the Missile Tech - nology Control Regime, the Australia Group and the Nuclear Suppliers Group. Austria participates in all major multilateral regimes and hosts the Wassenaar Arrangement secretariat in Vienna. The Foreign Trade Regulation additionally contains a limited number of national control items. Classification follows EU practice; binding classifica - tion guidance can be sought from the Federal Ministry for Economy. 3.3 Licence Requirements For war material under the War Material Act, only indi - vidual licences exist, for each import, export or transit. For military and dual-use goods under the Foreign Trade Act 2011 and the EU Dual-Use Regulation, the main categories are: individual licences for a sin - gle end-user or transaction; global licences cover - ing multiple end-users or destinations for a defined product range, typically conditional on an internal compliance programme; and general licences, includ -

ing the EU General Export Authorisations EU001 to EU008 for low-risk destinations and scenarios, plus national general licences. Certification as a recipient of defence-related products enables simplified intra- EU transfers under the Transfers Directive. Brokering, technical assistance and transit are subject to their own authorisation types. The appropriate instrument depends on destination risk, product sensitivity and transaction frequency. 3.4 Licence Application Process Applications are filed electronically with the Federal Ministry for Economy for military and dual-use goods and with the Federal Ministry of the Interior for war material. Required documentation includes a precise technical description and classification of the items, the underlying contracts or orders, end-use and end- user certificates, the shipping route and, for global licences, a description of the internal compliance pro - gramme. Inter-ministerial consultation is standard: the Federal Ministry for European and International Affairs assess - es the foreign policy criteria, and the Federal Ministry of Defence is involved where relevant; for war mate - rial, the statutory agreement requirement between the ministries applies. Straightforward dual-use individual licences are typically processed within a few weeks; applications concerning sensitive destinations or war material can take several months. Early pre-applica - tion engagement with the relevant authority is advis - able for complex programmes. 3.5 Criteria for Granting or Refusing Licences For war material, the War Material Act prohibits licenc - es in particular where the goods would be delivered into areas of armed conflict or in imminent danger of such conflict, where there is reason to believe that they would be used to suppress human rights, or where Austria’s international obligations, including embargoes, or its foreign policy interests, shaped by permanent neutrality, would be infringed. These lim - its attach to deliveries from Austrian territory. Groups producing in several countries therefore decide at an early stage from which site a given contract can be served, which makes this a question of structuring rather than a general bar on the business.

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