DENMARK Law and Practice Contributed by: Thomas Maaberg Hansen and Peter Sand, Gorrissen Federspiel
Trends for Procedures for Defence Contracts Generally, contracts within the defence sectors are awarded either via regular procedures or via direct award. As such, direct award is used much more com - monly for contracts within the defence sector and is typically justified on the basis of urgency or for techni - cal reasons. Please refer to 2.6 Direct Contract Awards and Single-Source Procurement for an overview of the options for using direct award procurement. 2.6 Direct Contract Awards and Single- Source Procurement The Public Procurement Act Contracting authorities may directly award contracts in the following cases: • no suitable tenders or requests to participate have been submitted in response to an open or restrict - ed procedure; • the product is manufactured purely for the purpose of R&D, except for quantity production to establish commercial viability or recover research and devel - opment costs; • the works, supplies or services can be supplied only by a particular economic operator for techni - cal reasons or owing to exclusive rights; • extreme urgency not foreseeable by or attributable to the contracting authority; and • under certain conditions, works or services con - sisting in the repetition of similar works or services entrusted to an economic operator awarded an original contract, if not more than three years have passed since the conclusion of the original con - tract. All direct award cases are listed in Section 80‒83 of the Public Procurement Act. The Executive Order on Defence and Security The defence and security regime broadens the scope for direct award (negotiated procedure without prior publication) as compared with the general public pro - curement regime, in two respects, as follows. • A new exemption applies where the periods laid down for the restricted procedure and negoti -
ated procedure are incompatible with the urgency resulting from a crisis, effectively eliminating the “not foreseeable” requirement of the fourth point in the above-mentioned list. • The time limit for the exemption in the fifth point in the above-mentioned list, concerning the repeti - tion of similar works and services, is extended to five years – with a specific provision allowing this period to be exceeded where justified by excep - tional circumstances. Article 346 of the TFEU Please refer to 2.1 Defence Procurement Legislation . 2.7 Offsets, Industrial Participation and Sovereign Capability Requirements Denmark operates a formal industrial-participation (offset) regime for defence procurement, which is administered by the Danish Business Authority ( Erh- vervsstyrelsen ) together with the DALO. Where a prospective foreign supplier sells defence equipment or services exceeding DKK50 million to DALO, the Ministry of Defence and the Danish Busi - ness Authority assess – on a case-by-case basis – whether measures to support Danish defence indus - trial capability are required. If so, the supplier must sign a legally binding industrial co-operation contract (ICC) with the Danish Business Authority before the acquisition contract with DALO is effective. The ICC will oblige the supplier to purchase from, or run development/technology-transfer projects with, Danish companies worth between 25% and 100% of the acquisition’s value. The foreign supplier itself decides how to discharge the obligation, subject to Danish Business Author - ity approval. Neither DALO nor the Danish Business Authority can force the foreign supplier to work with a specific Danish partner. Non-compliance can trigger financial penalties and blacklisting from future Ministry of Defence contracts
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