AUSTRIA Trends and Developments Contributed by: Martin Schiefer and Christian Richter-Schöller, Schiefer Rechtsanwälte GmbH
The notable development of the past two years is that this expectation is being channelled into instruments that are compatible with EU law rather than into offset quotas. First evidence of this is the industrial co-oper - ation agreement concluded in 2025 with the Italian Leonardo group. Three instruments dominate practice. • Security-of-supply requirements – where in-country maintenance, repair capacity, ammunition supply or stockholding are genuinely required for opera - tional reasons, they may be demanded in the ten- der and weighted in the award, and they naturally favour bidders that build an Austrian and European footprint. • Co-operation at government level – government- to-government programmes are regularly accom - panied by industrial co-operation arrangements between the partner states’ industries, negotiated alongside rather than inside the procurement. • The European layer – EDIP preferences and SAFE- financed joint procurement reward European content as such, which benefits Austrian suppliers without any national preference being applied. The legal craft lies in keeping these instruments on the right side of the line. Requirements must be jus - tified by the subject matter of the contract, propor - tionate and transparent; co-operation arrangements must not become disguised award criteria; and Article 346, TFEU must be reserved for cases that genuinely concern essential security interests. Done properly, industrial participation is today a matter of programme design and contract structure at government level, not of procurement-law shortcuts. For suppliers, the value of such arrangements lies less in the headline volume than in qualification. A company that once meets a prime contractor’s quality and security requirements gains access to its wider programmes, from defence electronics and space to aircraft and helicopters, well beyond the procurement that triggered the co-oper - ation. The European Layer: SAFE, EDIP and the Coming Reform of Defence Procurement Law 2025 was the year in which the EU became a defence- industrial actor in its own right. The SAFE Regula -
tion (Regulation (EU) 2025/1106), in force since May 2025, provides up to EUR150 billion in loans to EU member states for joint defence procurement. Austria decided not to draw SAFE loans, since it can currently finance itself more cheaply on the capital markets, but participation in joint procurements alongside SAFE- funded partners is possible and politically intended. In December 2025, the EDIP Regulation (Regulation (EU) 2025/2643) established the European Defence Industry Programme (EDIP), which channels EU budg - et funds into the defence industrial base and attaches European-preference requirements to supported pro - curements, including minimum European content and design-authority conditions. In parallel, the Commission’s Defence Readiness Omnibus of June 2025 proposed simplifications across permitting, procurement and industrial regulation and announced an evaluation of Directive 2009/81/EC, the first serious reform debate since the Directive entered into force. Practitioners should expect the EU defence procurement framework to change within the current legislative cycle, most likely in the direction of faster procedures, explicit facilitation of joint procurement and a stronger European preference. For Austria, the European layer resolves an old ten - sion. Neutrality bars membership of military alliances and the stationing of foreign troops; it does not bar industrial co-operation, joint procurement of defen - sive capabilities or participation in EU defence-indus - trial instruments. The Austrian defence and dual-use industry, with around 11,000 employees and approxi - mately EUR3 billion in annual revenue, is predomi - nantly a component, subsystem and niche-technolo - gy supplier. European-preference rules and the surge in European production are therefore an opportunity rather than a threat: Austrian suppliers are natural can - didates for the supply chains that EDIP-supported and SAFE-financed programmes must now build within Europe. Positioning requires early engagement with primes, certification and security clearances, and the ability to demonstrate supply chain resilience. Compliance: The Net Tightens The compliance environment surrounding defence business has tightened on several fronts at once.
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