What changed

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

P10_TA(2026)0293

on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EC) No 1907/2006, (EC) No 1272/2008, (EU) No 528/2012, (EU) 2019/1021 and (EU) 2021/697 as regards defenceDefence readiness and facilitating defence investments and conditions for the defence industry (Omnibus V)

(COM(2025)0822 – C100121/2025 – 2025/0176(COD))

Committee on Security and Defence, Committee on the Environment, Climate and Food Safety, Committee on Industry, Research and Energy

PE781.261

European Parliament legislative resolution of 16 September 2026 on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EC) No 1907/2006, (EC) No 1272/2008, (EU) No 528/2012, (EU) 2019/1021 and (EU) 2021/697 as regards defence readiness and facilitating defence investments and conditions for defence industry (COM(2025)0822 – C10-0121/2025 – 2025/0176(COD))

(Ordinary legislative procedure: first reading)

– having regard to the opinion of the European Economic and Social Committee of 18 September 2025,

✦ Formal Adds a reference to consulting the Committee of the Regions.

– after consulting the Committee of the Regions,

– having regard to the provisional agreement approved by the responsible committees under Rule 75(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 23 June 2026 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

– having regard to Rule 60 of its Rules of Procedure,

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

✦ Formal Replaces the committee report heading with the adopted text heading, document number and date.

AMENDMENTS BY THE EUROPEAN PARLIAMENT*

P10_TC1-COD(2025)0176

to the Commission proposal

Position of the European Parliament adopted at first reading on 16 September 2026 with a view to the adoption of Regulation (EU) 2026/… of the European Parliament and of the Council amending Regulations (EC) No 1907/2006, (EC) No 1272/2008, (EU) No 528/2012, (EU) 2019/1021 and (EU) 2021/697 as regards defence readiness and facilitating defence investments and conditions for defence industry

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2025/0176 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulations (EC) No 1907/2006, (EC) No 1272/2008, (EU) No 528/2012, (EU) 2019/1021 and (EU) 2021/697 as regards defence readiness and facilitating defence investments and conditions for defence industry

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

After transmission of the draft legislative act to the national parliaments,

✦ Formal Adds citations of the European Economic and Social Committee opinion and the Committee of the Regions consultation.

Having regard to the opinion of the European Economic and Social Committee,

After consulting the Committee of the Regions,

Acting in accordance with the ordinary legislative procedure,

Whereas:

✦ Replaces recital 1 with wording that refers to facilitating investments in defence by Member States and to balancing protection of health, the environment, a competitive internal market and defence readiness.

(1) In order to facilitate investments byin Memberdefence Statesby inMember defence,States, it is necessary to remove regulatory and administrative burdensburden for defence readiness and to expedite approval and authorisation procedures. ThisThe facilitation of such investments and simplification will support the defence industry’s growth over time and contribute to supportsupporting the defence readiness of Member States. TheIt Commissionis important that the Union and the Member States should continue to address the practical challenges faced by defence industries, particularly small and medium-sized enterprises,enterprises (SMEs), and where necessary consider adjustments, to ensure that simplification objectives translate into enhanced industrial competitiveness and innovation, andwhile toalways strengthenensuring the Union’s strategic autonomy and defence preparedness byright 2030,balance whilebetween maintaining a high level of protection of health and environment.the environment, a competitive internal market and defence readiness.

✦ Replaces recital 2 with wording that refers to Member States' implementation and national legislation hampering defence readiness, and to how Member States use exemptions from Regulation (EC) No 1907/2006.

(2) While several instruments of Union legislation provide the necessary flexibility for Member States to take actionsaction to facilitate the ramp-up of the defence industry, often nationaltheir legislationimplementation andalong implementationwith hampernational defencelegislation readiness.hamper Thisdefence isreadiness, for example the case with the possibility forhow Member States to use exemptions from Regulation (EC) No 1907/2006 of the European Parliament and of the Council where necessary in the interest of defence, including for defence readiness.

✦ Replaces recital 3 with wording that broadens the scope of national defence exemptions in Regulation (EC) No 1907/2006 and refers to balancing defence needs with protection of health and the environment.

(3) The legal framework established by Regulation (EC) No 1907/2006 should be adapted to take into account the objective of defence readiness. Flexibility, agilityFlexibility and legal clarityagility are required to safeguard national and Union defence-related security interests, reflecting the worsened geopolitical situation. At the same time, it is fundamental to maintain a high level of protection forof human▌ health and the environment.environment, and legal clarity. There are indications that nationalthe implementationsimplementation of Regulation (EC) No 1907/2006 in some Member States dodoes not fully take into account the flexibility provided by that Regulation. The current defence exemption can be improved to ensure legal certainty and allow for swifter actions. It is therefore appropriate to broaden the scope of existing national defence exemptions within Regulation (EC) No 1907/2006, with the objective of maintaining a well-functioning internal market and thus provideproviding Member States with the possibility to authorise broader exemptions in the interest of defence as necessary, while maintaining the fundamental responsibility to balance defence and defence-related security needs with a high level of ▌protectionprotection of health and the environment and providing for the highest safety and traceability standards possible.environment.

✦ Wording Rephrases recital 4 on similar changes to Regulation (EC) No 1272/2008 and Regulation (EU) No 528/2012.

(4) Similar changes should be made to other legal acts related to chemicals providing for an equivalent national exemption, namely Regulation (EC) No 1272/2008 of the European Parliament and of the Council and Regulation (EU) No 528/2012 of the European Parliament and of the CouncilCouncil, to ensure a coherent regulatory environment for defence readiness.

✦ Replaces recital 4a with a recital stating that exemptions from Regulations (EC) No 1907/2006, (EC) No 1272/2008 and (EU) No 528/2012 should be allowed only where justified as necessary in the interests of defence.

(4a)(5) While the defence sector maycan require certain exemptions from REACHRegulations Regulation,(EC) CLPNo Regulation1907/2006, (EC) No 1272/2008 and Biocidal(EU) ProductsNo Regulation528/2012 to maintain operational capability and defence readiness, such exemptions should be grantedallowed only where demonstrably necessary and proportionate to thejustified specificas requirementsnecessary in the interestinterests of defence. Member States should ensure that requests for derogation demonstrate that the exemption is essential for maintaining defence capability.

✦ Drops recitals 4b to 4h and recital 5, and adds recitals 6 to 22 covering persistent organic pollutants, sensitive information, the European Defence Fund, European Defence Projects of Common Interest, award criteria, work programmes, indirect management, testing in Ukraine, access rights and subsidiarity.

(4b) Member States retain the competence to decide whether to grant exemptions to the extent of its own jurisdiction for the use of substances in defence applications pursuant to Article 2(3) of Regulation (EC) No 1907/2006 and comparable provisions in sector-specific legislation. Such exemptions should not compromise the Union’s commitment to ensuring a high level of protection of health and the environment and must be applied stringently and consistently, in accordance with the precautionary principle laid down in Article 191 TFEU. Moreover, robust safeguards that guarantee effective monitoring and mitigation measures throughout the lifecycle of exempted substances must accompany these exemptions. Member States should also ensure that workers handling exempted substances, including military personnel, civilian defence workers, and contractors, benefit from adequate protective measures equivalent to those afforded in civilian applications, taking into account the specific operational requirements of defence activities. Furthermore, Member States are encouraged to establish environmental monitoring programmes to assess and mitigate any adverse impacts resulting from the use of exempted substances, particularly regarding soil and water contamination, air quality, and ecosystem integrity in the vicinity of defence installations and training areas.

(6) Regulation (EU) 2019/1021 of the European Parliament and of the Council implements the Stockholm Convention on Persistent Organic Pollutants (the ‘Convention’) and the Protocol to the 1979 Convention on Long-Range Transboundary Air Pollution on Persistent Organic Pollutants. A party cannot grant exemptions once a decision has been adopted under the Convention to list a chemical in Annex A, B or C to the Convention beyond those granted under the Convention, unless the party does not accept that listing. Defence readiness needs should, therefore, be addressed in preparatory stages in the Union before prohibitions or restrictions are established at international level in the Convention. For this reason, it is important that relevant information is collected, assessed and submitted for the purpose of the risk management evaluation stage within the process of listing a substance within the Convention, as it is at that stage where the Persistent Organic Pollutants Review Committee can consider potential exemptions from possible control measures for that substance.

(4c) Certain defence-related industries operate production lines that serve both non-defence and defence purposes, wherein the manufacturing processes cannot be technically segregated or conducted in separate batches owing to objective technical constraints. Such facilities typically comprise large-scale, continuous processes through which all materials pass via common equipment. It is therefore appropriate to afford Member States the discretion to extend the exemption laid down in Article 2(3) of Regulation (EC) No 1907/2006 to encompass the entire output of such production lines, provided that the technical inseparability of the production line or the infeasibility of batch-wise operation is substantiated through comprehensive technical documentation in accordance with Article 2(3b) of that Regulation. Given the exceptional character of this extension, it should not apply to substances that are classified, or are required to be classified, pursuant to Regulation (EC) No 1272/2008 as carcinogenic category 1A, carcinogenic category 1B, or toxic for reproduction category 1A. Moreover, the provisions of Article 2(3b) should apply without prejudice to the application of Articles 60 and 67, as well as of Annex XVII, concerning products destined to be placed on the market for supply to the general public. As this extension of the exemption is not intended to incentivise the restructuring or adaptation of production lines for the sole purpose of obtaining an exemption under this Regulation, Member States should ensure, in accordance with their national defence frameworks, that the competent national authorities duly consider this principle when evaluating applications for the extension of the exemption.

(7) It cannot be excluded that information on the use of chemical substances contains sensitive information that needs to be protected. Member States should therefore, with due regard to international law, be allowed to make exemptions from the reporting requirements provided for in Article 13 of Regulation (EU) 2019/1021 on grounds of protection of Union or national defence and defence-related security interests, for the purpose of protecting sensitive information.

(4d) Given the rapid pace of innovation and scientific developments, particularly in the field of new production technologies and alternative substances, it is essential that any extension of an exemption as laid down in Article 2(3b) of Regulation (EC) No 1907/2006 be subject to regular review. Such review should assess whether the original grounds for the exemption remain valid in light of technical progress, the availability of substitutes, and advances in scientific knowledge and production technologies. Where a Member State chooses to grant a time-limited extension of an exemption a review should take place in any case before any renewal. At the same time Member States are encouraged to work on uniform conditions for reviewing the extended exemptions at regular intervals within the framework of the European Defence Agency’s Code of Conduct on REACH defence exemptions in order to support coherent and transparent practices across the Union.

(8) The European Defence Fund (EDF), established by Regulation (EU) 2021/697 of the European Parliament and of the Council, should contribute to the implementation and achievement of the objective of defence readiness by 2030, as set out by the European Council, thereby reinforcing the Union’s strategic autonomy and resilience in the face of evolving security challenges. That includes strengthening the defence capabilities of Member States to effectively address a broad spectrum of threats, including the threat of hybrid operations and the risk of armed aggression.

(4e) The Commission’s Staff Working Document accompanying the Defence Industrial Strategy (SWD(2024) 515) notes that the European defence industrial base remains fragmented and specialised, and that shifting non-defence capacity into defence is constrained by certification, security and quality requirements, meaning that non-defence production lines cannot simply be converted to defence use overnight. Therefore, defence manufacturing generally operates on dedicated and controlled lines and supply chains, distinct from non-defence production, and even where facilities serve both markets, activities are usually contractually and operationally segregated, though temporary repurposing of non-defence lines for defence production may occur when required by defence needs. In this context, where manufacturing facilities are used for both, non-defence and defence production, the defence exemptions should apply only to operations and output serving exclusively the interests of defence, and not to non-defence manufacturing carried out on the same site, while recognising the contribution that dual-use technologies and shared industrial capacities can make to strengthening Europe’s defence readiness. Where defence needs require a production line ordinarily dedicated to non-defence use to be temporarily repurposed for defence manufacturing only, the exemption should apply for as long as the line is repurposed for defence production only, within the period and scope notified to the competent authority.

(9) The EDF should strengthen the resilience of the European Defence Technological and Industrial Base (EDTIB), including through the development of technologies and assets that increase energy efficiency and reduce dependencies on external suppliers for critical raw materials.

(4f) The Commission might develop guidelines on the practical application of Article 2(3) of Regulation (EC) No 1907/2006, of Article 1(4) of Regulation (EC) No 1272/2008 and of Article 2(8) of Regulation (EU) No 528/2013 in close cooperation with Member States and stakeholders. Such guidelines should serve solely to assist Member States and economic operators in understanding and applying the exemptions set out in this Regulation. The development or publication of such guidelines should not delay or otherwise affect the entry into application of the new provisions on exemptions established by this Regulation. Without prejudice to Council Decision 2011/411/CFSP establishing the European Defence Agency, Member States are invited, to ensure that cooperative frameworks in the defence field, including the principles reflected in the European Defence Agency’s Code of Conduct on REACH defence exemptions, are kept under review to support coherent and transparent practices across the Union.

(10) Under Regulation (EU) 2025/2643 of the European Parliament and of the Council the Union should identify European Defence Projects of Common Interest (EDPCIs) on which to focus efforts and resources. EDPCIs are to consist of collaborative industrial projects aimed at reinforcing the competitiveness of the EDTIB throughout the Union, while contributing to the development of Member States’ military capabilities critical for the Union's security and defence interests. Therefore, the EDF could support collaborative research and development activities consistent with those required in this context.

(4g) While the broadening of existing defence exemptions laid down in Article 2 (3) of Regulation (EC) No 1907/2006, Article 1 (4) of Regulation (EC) No 1272/2008 and Article 2 (8) of Regulation (EU) No 528/2012 may be needed and justified in light of the worsening geopolitical situation, the Commission should systematically evaluate, whether this justification is still applicable.

(11) The report on the interim evaluation of the EDF, has confirmed its overall effectiveness and relevance, while highlighting the need to further streamline procedures and reduce administrative burden where possible and introduce clarification, simplification and flexibility in Regulation (EU) 2021/697 in order to facilitate the implementation of the EDF. That Regulation should therefore be amended, taking into account the experience gained since 2021 and the feedback received during the consultations carried out in the context of the interim evaluation of the EDF.

(4h) The Commission should follow up the defence exemptions granted in accordance with Article 2 (3) of Regulation (EC) No 1907/2006, Article 1 (4) of Regulation (EC) No 1272/2008 and Article 2 (8) of Regulation (EU) No 528/2012 with incentives and support for development and implementation of alternatives with a lower risk profile, in defence applications.

(12) The administrative burden linked to participation in the EDF should be further reduced, and procedures should be simplified. Specific attention should be given to cross-border SMEs and small mid-cap enterprises to ensure fair and equitable access to calls for proposals throughout the Union. To better address the specific needs of SMEs, it is appropriate to significantly shorten and simplify the application and evaluation procedures for SME-related calls for proposals. The specific conditions for providing such prompt support should not undermine an excellence-based approach and should be laid down in the work programme.

(5) Regulation (EU) 2019/1021 of the European Parliament and of the Council implements the Stockholm Convention on Persistent Organic Pollutants and the Protocol to the 1979 Convention on Long-Range Transboundary Air Pollution on Persistent Organic Pollutants. A party cannot grant exemptions once a decision has been adopted under the Convention to list a chemical in Annex A, B or C to the Convention beyond those granted under the Convention, unless the Party does not accept that listing; thus, defence readiness needs should be addressed in preparatory stages in the Union before prohibitions or restrictions are established at the international level in the Convention. For this reason, it is important that relevant information is collected, assessed and submitted for the purpose of the risk management evaluation stage within the process of listing a substance within the Convention, as it is at that stage where the Persistent Organic Pollutants Review Committee may consider potential exemptions from possible control measures for that substance.

(13) The EDF should promote collaboration that is consistent with the defence capability priorities commonly agreed by Member States within the framework of the common foreign and security policy, in particular in the context of the Capability Development Priorities, and contribute to addressing the priority capability areas identified by the European Council.

(6) It cannot be excluded that information on the use of chemical substances contains sensitive information that needs to be protected. Member States should therefore, with due regard to international law, be allowed to make exemptions from the reporting requirements provided for in article 13(1) of Regulation (EU) 2019/1021 on grounds of protection of national or Union defence and ▌defence-related security interests, for the purpose of protecting sensitive information.

(14) The current legal framework for the implementation of the EDF limits the use of indirect management to exceptional cases. However, to facilitate faster and leaner innovation cycles which would enable the EDF to respond more effectively to emerging defence needs and technological advancements, and for a more cost-efficient implementation of the EDF, a more flexible use of indirect management could be necessary. Therefore, it is necessary to introduce the possibility to use indirect management in a more flexible manner, while ensuring that the principles of sound financial management, transparency and accountability are complied with, and that the use of indirect management is subject to rigorous monitoring and evaluation to guarantee the optimal use of Union funds. The evaluation and award procedures are carried out in accordance with Regulation (EU) 2021/697, as amended by this Regulation, and Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council, regardless of whether they are conducted under direct or indirect management.

(6a) The Defence Readiness Roadmap 2030, including the priority capability coalitions, the four flagship projects and the actions to support Ukraine, proposes urgent actions that are essential in order to strengthening Europe’s defence capabilities and to effectively adress a broad spectrum of threats, including hybrid operations, Russia’s shadow fleet and the risk of armed aggression. The European Defence Fund should contribute to the implementation and achievement of the objectives set out in these urgent actions, thereby reinforcing the Union’s strategic autonomy and resilience in the face of evolving security challenges.

(15) Due to the rapidly evolving strategic context, in particular as a result of Russia’s war of aggression against Ukraine, accelerating the technological transformation of European defence is crucial. Ukraine's defence ecosystem has proved to be innovative, resilient and cost-effective in many relevant aspects of defence technologies. It would be of particular value for the EDTIB to benefit from this experience and know-how and to exchange best practices to improve its innovation capacity. Strengthening the collaboration between Union recipients and Ukrainian entities through targeted actions could significantly contribute to that endeavour. Such collaboration can in particular provide possibilities that are not readily available within the Union, such as rapidly available results, 24-hour testing and testing under realistic operational conditions. It can also significantly enhance the development and validation of defence technologies and products and can facilitate the incorporation of realistic scenarios into the further development of defence technologies and products, thereby ensuring a technical and strategic advantage for the EDTIB. By allowing costs of testing activities carried out in Ukraine to be eligible for funding, the EDF would be able to support the development of more effective and innovative defence solutions, ultimately contributing to the enhancement of the Union's defence capabilities. The costs of such testing activities should only be eligible for funding as far as necessary for meeting the specific objectives of the EDF set out in Article 3(2) of Regulation (EU) 2021/697.

(6b) Defence readiness also relies on secure, affordable and resilient access to energy. Energy infrastructure, including low-carbon energy sources, is a key enabler of industrial and operational resilience. The European Defence Technological and Industrial Base (EDTIB) should therefore be reinforced by ensuring reliable access to energy, the diversification of supply sources, and the deployment of clean and efficient technologies, to enhance the self-sufficiency of defence-related facilities. Strengthening defence readiness also requires reducing dependencies on external suppliers for critical raw materials.

(16) The interim evaluation of the EDF has shown that the current award criteria for the evaluation of proposals under the EDF are overly complex, unclear and difficult to apply in practice. This has resulted in unnecessary administrative burden and uncertainties for the Commission and the applicants, ultimately hindering the efficient implementation of the EDF. It is necessary to simplify the award criteria and introduce more flexibility in their application in order to make the evaluation more efficient, transparent and effective. In line with an excellence-based approach to defence research and development, proposals should be assessed at least on the basis of excellence in the defence domain and potential with regard to innovation, with due consideration of operational relevance and added value to the Union, as well as on the basis of an evaluation of the quality and efficiency of the implementation of the actions. The possibility to select a relevant subset of award criteria according to the specific objectives of each call for proposals on a call-by-call basis, would allow for a tailored and focused evaluation thus enabling a better alignment with the priorities and objectives of the EDF. In order to facilitate the preparation of applications, the use of subsets of criteria and their respective weight should be specified clearly and transparently in each call for proposals. To ensure transparency, each call topic under a call for proposals should include the same set of award criteria that is displayed within the call for proposals of the annual work programme.

(7) The report on the interim evaluation of the European Defence Fund (EDF), established by Regulation (EU) 2021/697 of the European Parliament and of the Council, has confirmed its overall effectiveness and relevance, while highlighting the need to further streamline procedures and reduce administrative burdens where possible and introduce clarification, simplification and flexibility in that Regulation in order to facilitate the implementation of the EDF. Regulation (EU) 2021/697 should therefore be amended, taking into account the experience gained since 2021 and the feedback received during the consultations carried out in the context of the interim evaluation of the EDF. To ensure a genuinely competitive and inclusive European defence industrial base, the participation of small and medium-sized enterprises (SMEs) and small mid-caps (SMCs) across all Member States should be facilitated and promoted. The administrative burden linked to participation in the European Defence Fund should be further reduced, and procedures should be simplified in practice. Specific attention should be given to cross-border SMEs and SMCs to ensure fair and equitable access to calls for proposals throughout the Union.

(17) The implementation of the EDF has been hindered by the requirement to adopt annual work programmes, resulting in complex procedures, making it challenging to ensure predictability and continuity of the actions supported by the EDF. To address that issue and provide more flexibility in the management of the EDF, it is necessary to introduce the possibility to implement the EDF through annual or multi-annual work programmes. This would enable the Commission to better plan and coordinate support for defence research and development activities, while also allowing for more efficient use of resources and improved synergies between different projects and initiatives. By allowing multi-annual work programmes, the EDF would be able to better support long-term research and development projects, foster collaboration among stakeholders, and ultimately contribute to the enhancement of the Union's defence capabilities. Due to the changed geopolitical landscape, particular attention should be paid to actions contributing to addressing the needs of Member States and associated countries with the highest exposure to conventional military threats.

(8) The current legal framework for the EDF implementation limits the use of indirect management to exceptional cases. However, to facilitate faster and leaner innovation cycles, enabling the EDF to respond more effectively to emerging defence needs and technological advancements and for a more cost-efficient implementation of the EDF, a more flexible use of indirect management may be necessary. Therefore, it is necessary to introduce the possibility to use indirect management in a more flexible manner, while ensuring that the principles of sound financial management, transparency and accountability are maintained, and that the use of indirect management is subject to rigorous monitoring and evaluation to guarantee the optimal use of Union funds.

(18) In order to further improve the efficiency and effectiveness of the EDF, it is essential to provide the Commission with the necessary flexibility to manage the EDF in a way that optimises the use of resources and minimises administrative burden. To that end, the conditions under which the Commission may exceptionally have recourse to direct awards should be clarified, allowing for a more streamlined and expedited procedure in certain circumstances, which are clear and deemed relevant for the purpose of the call topic. Continuity of efforts and efficient implementation of defence research and development projects should be facilitated, while respecting an excellence-based approach, and the principles of transparency, fairness, and equal treatment. The Commission should be enabled to better respond to the evolving needs of the defence sector, the cooperation between stakeholders should be fostered and the development of innovative and effective defence solutions should be improved, thereby enhancing the security of the Union and defence capabilities of the Member States.

(9) The requirement that all infrastructure, facilities, assets and resources used for the implementation of EDF funded projects be located within the Union and associated countries territory to be eligible for funding limits the potential for the European Defence Technological and Industrial Base to benefit from testing opportunities that offer unique advantages. To address this limitation, it is necessary to allow for the costs of carrying out testing activities in third countries, namely Ukraine, to be eligible for EDF funding. Testing in Ukraine provides possibilities that are not readily available within the Union, such as rapidly available results, 24-hour testing and testing on the battlefield, which can significantly enhance the development and validation of defence technologies and products. In addition, testing in Ukraine can facilitate the incorporation of live experience on modern warfare into the further development of defence technologies and products, thereby ensuring a technical and strategic advantage for the European Defence Technological and Industrial Base. By allowing costs of testing activities carried outside the Union territory to be eligible for funding, the EDF would be able to support the development of more effective and innovative defence solutions, ultimately contributing to the enhancement of the Union's defence capabilities.

(19) The EDF has the potential to boost the development of innovative defence technologies and solutions through pre-commercial procurement. However, the current legal framework is overly complex and lacks clarity on the conditions for pre-commercial procurement under the EDF, thus hindering its effective use. The conditions for pre-commercial procurement need to be simplified and clarified, as the current provisions promote the award of multiple contracts within the same procedure (multiple sourcing), which is not always suitable for the defence sector. Removing that restriction is expected to provide a clearer and more effective pre-commercial procurement framework, enabling the EDF to better support the development of innovative solutions, bridge the gap between research and market deployment, and provide a strong incentive for Member States to invest in defence research and development.

(10) The interim evaluation of the EDF has shown that the current award criteria for the evaluation of proposals under that Fund are overly complex, unclear, and difficult to apply in practice. This has resulted in unnecessary administrative burdens and uncertainties for the Commission and the applicants, ultimately hindering the efficient implementation of the EDF. It is necessary to simplify the award criteria and introduce more flexibility in their application in order to make the evaluation more efficient, transparent, and effective. In line with an excellence-based approach to defence research and development, proposals should be selected primarily on the basis of scientific and technical excellence and potential with regard to innovation, with due consideration of operational relevance and added value to the Union, as well as on the basis of an evaluation of the quality and efficiency of the implementation of the actions. The possibility to select a relevant subset of award criteria according to specific objectives of the calls for proposals would allow for a tailored and focused evaluation thus for a better alignment with the priorities and objectives of the EDF. In order to facilitate the preparation of applications, the use of subsets of criteria and their respective weight should be specified clearly and transparently in each call.for proposals.

(20) The current legal framework for the EDF has not provided sufficient access rights to the results of development projects to Member States, in particular for those co-financing such projects. To ease that concern and promote a more collaborative and cooperative approach to defence research and development, it is necessary to grant to the co-financing Member States the right to access the results of development projects on fair terms. Such access rights should be strictly limited to enabling the relevant national authorities to assess the results of the action and to assess their potential use for public defence planning and capability development. Those access rights should not entail any transfer of ownership of any intellectual property rights (IPRs) or know-how and should be limited to non-commercial and non-competitive use. In addition, where Member States or EDF-associated countries have confirmed co-financing to some legal entities of a consortium, nothing in Regulation (EU) 2021/697 prevents legal entities of the selected consortium from providing such Member States or EDF-associated countries with rights to use or to have used the results generated during the action, including for certification, testing, and integration in national systems as well as for other defence purposes, to be agreed upon between the Member States or EDF-associated countries and the legal entities of the selected consortium. The conditions for the exercise of such access rights should be defined in the contractual relationship between the recipients and the national authorities co-financing the action. This aims to improve transparency and ease the negotiation process between the Member States and industry and facilitate the decision-making process. As a result, this is expected to promote a more streamlined collaboration in defence research and development.

(10a) Artificial intelligence (AI) is a key aspect of the competitiveness, innovation and strategic autonomy of the EDTIB. Enhancing the role of AI within the EDTIB will contribute to more efficient decision-making, improved interoperability and strengthened technological leadership. In the implementation of the European Defence Fund, the Commission should foster trustworthy, human-centred and secure AI applications for defence purposes, in line with Union law and ethical principles.

(21) The eligibility of costs related to testing activities in Ukraine can improve the efficiency and effectiveness of the projects funded under the EDF. To maximise the benefits of the amendments to Regulation (EU) 2021/697, the amendment to that Regulation related to the eligibility of those costs should apply retroactively as of 1 January 2025.

(11) The implementation of the EDF has been hindered by the requirement to adopt annual work programmes, resulting in complex procedures, making it challenging to ensure predictability and continuity of the actions supported by the EDF. To address that issue and provide more flexibility in the management of the EDF, it is necessary to introduce the possibility to implement the EDF through annual or multi-annual work programmes. This would enable the Commission to better plan and coordinate the support for defence research and development activities, while also allowing for more efficient use of resources and improved synergies between different projects and initiatives. By allowing multi-annual work programmes, the Fund would be able to better support long-term research and development projects, foster collaboration among stakeholders, and ultimately contribute to the enhancement of the Union's defence capabilities. Due to the changed geopolitical landscape, particular attention should be paid to actions contributing to addressing the needs of Member States and associated countries with the highest exposure to conventional military threats.

(22) Since the objectives of this Regulation, namely to support defence readiness, to facilitate investments in defence and to improve conditions for the defence industry, cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(12) In order to further improve the efficiency and effectiveness of the EDF, it is essential to provide the Commission with the necessary flexibility to manage the programme in a way that optimises the use of resources and minimises administrative burdens. To that end, the conditions under which the Commission may exceptionally have recourse to direct awards should be clarified, allowing for a more streamlined and expedited procedure for research and development actions that have previously received Member State or Union funding following competitive calls for proposals ▌. Continuity of efforts and efficient implementation of defence research and development projects should be facilitated, while respecting the principles of excellence, transparency, fairness, and equal treatment. The Commission should be enabled to better respond to the evolving needs of the defence sector, the cooperation between stakeholders should be fostered and the development of innovative and effective defence solutions should be improved, thereby enhancing the security of the Union and defence capabilities of the Member States.

(13) The EDF has the potential to boost the development of innovative defence technologies and solutions through pre-commercial procurement. However, the current legal framework is overly complex and lacks clarity on the conditions for pre-commercial procurement under the EDF, thus hindering its effective use. The conditions for pre-commercial procurement need to be simplified and clarified, as the current provisions promote the award of multiple contracts within the same procedure (multiple sourcing), which is not always suitable for the defence sector. Removing this restriction will provide for a clearer and more effective pre-commercial procurement framework, enabling the EDF to better support the development of innovative solutions, bridge the gap between research and market deployment, and provide a strong incentive for Member States to invest in defence research and development.

▌

(15) To maximise the benefits of the changes to Regulation (EU) 2021/697, the amendments to that Regulation should apply retroactively. While some provisions, such as those relating to the award criteria cannot be applied retroactively due to their very nature, others, such as those relating to funding rates or testing outside of the territory of the Union, can improve the efficiency and efficacy of the projects funded under the EDF. To ensure that Union funds are spent in the most effective way possible, these provisions should be applicable as of 1 January 2025.

(23) Regulations (EC) No 1907/2006, (EC) No 1272/2008, (EU) No 528/2012, (EU) 2019/1021 and (EU) 2021/697 should therefore be amended accordingly,

HAVE ADOPTED THIS REGULATION:

✦ Formal Adds the heading for the amendment to Regulation (EC) No 1907/2006.

Article 1 Amendment to Regulation (EC) No 1907/2006

In Article 2 of Regulation (EC) No 1907/2006, paragraph 3 is replaced by the following:

✦ Wording Rephrases the exemption provision in Article 2(3) of Regulation (EC) No 1907/2006 without changing its effect.

‘3. Member States may allow for exemptions from this Regulation for substances, on their own, in a mixture or in an article, where necessary in the interests of defence.defence.’.

✦ Drops paragraphs 3a to 3d of Article 2 of Regulation (EC) No 1907/2006 on dual-use production lines, temporary repurposing, review and guidelines, and adds the heading for the amendment to Regulation (EC) No 1272/2008.

3a. Where substances, on their own, in a mixture or in an article, are used for both, defence and non-defence purposes, any exemption granted under paragraph 3 of this Article shall apply only to the uses in defence applications.

Article 2 Amendment to Regulation (EC) No 1272/2008

3b. By way of derogation from paragraph 3a, where defence and non-defence production take place on a common production line which has been shown to the national competent authority, to be technically non-separable due to objective technical constraints or that it cannot be operated in batches, the exemption granted under paragraph 3 may, where necessary in the interests of defence, be extended to the entire output of that production line without prejudice to the application of Articles 60, 67 and of Annex XVII to products placed on the market for supply to the general public. Any such extension of the exemption shall be supported by a justification containing detailed technical documentation demonstrating that the physical separation of production lines or that operation in separate batches is not technically possible and that the extension is required in the interests of defence, drawn up, where relevant, in accordance with the applicable national rules.

Any extension of the exemption granted under first subparagraph of this paragraph shall not apply to substances which are or have to be classified in accordance with Regulation (EC) No 1272/2008, as carcinogenic category 1A, carcinogenic category 1B, or toxic for reproduction category 1A.

Any extension of the exemption granted under first subparagraph of this paragraph may be limited in time and shall be subject to a regular review, including a review before renewal of that exemption where applicable.

Within five years from the date of application of this Regulation, the Commission shall assess the implementation of provisions laid down in paragraphs 3 to 3c of this Article in particular their effects on the functioning of the internal market and on the level of protection of health and the environment under this Regulation and shall report to the European Parliament and the Council.

3c. Where defence needs require a production line ordinarily dedicated to non-defence applications to be temporarily repurposed for defence manufacturing only, the exemption referred to in paragraph 3 of this Article shall apply for as long as the line is repurposed for defence production only, in line with the period and scope notified to the competent authority.

3d. The Commission may, in consultation with Member States and relevant stakeholders, develop guidelines on the practical implementation of the provisions of paragraph 3.’

In Article 1 of Regulation (EC) No 1272/2008, paragraph 4 is replaced by the following:

✦ Wording Rephrases the exemption provision in Article 1(4) of Regulation (EC) No 1272/2008 without changing its effect.

‘4. Member States may allow for exemptions from this Regulation for substances,substances and mixtures, andas well as articles referred to in section 2.1 of Annex I, where necessary in the interests of defence.defence.’.

✦ Drops paragraphs 4a to 4c of Regulation (EC) No 1272/2008 on dual-use uses, temporary repurposing and guidelines, and adds the heading for the amendment to Regulation (EU) No 528/2012.

4a. Where substances, mixtures, and articles referred to in section 2.1 of Annex I, are used for both, defence and non-defence purposes, any exemption granted under paragraph 4 of this Article shall apply only to the uses in defence applications, without prejudice to the application of this Regulation to other uses.

Article 3 Amendment to Regulation (EU) No 528/2012

4b. Where defence needs require a production line ordinarily dedicated to non-defence applications to be temporarily repurposed for defence manufacturing only, the exemption referred to in paragraph 4 of this Article shall apply for as long as the line is repurposed for defence production only, in line with the period and scope notified to the competent authority.

4c. The Commission may, in consultation with Member States and relevant stakeholders, develop guidelines on the practical implementation of the provisions of paragraph 4, in a manner consistent with any Commission guidelines referred to in Article 2(3c) of Regulation (EC) No 1907/2006.’

In Article 2 of Regulation (EU) No 528/2012, paragraph 8 is replaced by the following:

✦ Wording Rephrases the exemption provision in Article 2(8) of Regulation (EU) No 528/2012 without changing its effect.

‘8. Member States may allow for exemptions from this Regulation for biocidal products, on their own or in a treated article, where necessary in the interests of defence.defence.’.

✦ Drops paragraphs 8a to 8c of Regulation (EU) No 528/2012 on dual-use uses, temporary repurposing and guidelines, and adds the heading for the amendments to Regulation (EU) 2019/1021.

8a. Where biocidal products, on their own or in a treated article, are used for both, defence and non-defence purposes, any exemption granted under paragraph 8 of this Article shall apply only to the uses in defence applications, without prejudice to the application of this Regulation to other uses.

Article 4 Amendments to Regulation (EU) 2019/1021

8b. Where defence needs require a production line ordinarily dedicated to non-defence applications to be temporarily repurposed for defence manufacturing only, the exemption referred to in paragraph 8 of this Article shall apply for as long as the line is repurposed for defence production only, in line with the period and scope notified to the competent authority.

8c. The Commission may, in consultation with Member States and relevant stakeholders, develop guidelines on the practical implementation of the provisions of paragraph 8, in a manner consistent with any Commission guidelines referred to in Article 2(3c) of Regulation (EC) No 1907/2006.’

Regulation (EU) 2019/1021 is amended as follows:

✦ Formal Updates the cross-reference in the amendment to Article 2 of Regulation (EU) 2019/1021.

(1) in Article 2, the following point (14) is added:

✦ Wording Rephrases the definition of defence readiness in Article 2(14) of Regulation (EU) 2019/1021.

‘(14) ‘defence readiness’ means the state of preparedness of a Member State or several Member States to respond to a crisis as defined in Article 1, point (10), of Directive 2009/81/EC of the European Parliament and of the Council*, which relates to defence’;defence;

_________

* Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC (OJ L 216, 20.8.2009, p. 76, ELI: http://data.europa.eu/eli/dir/2009/81/oj).’;

✦ Formal Updates the cross-reference in the amendment to Article 3 of Regulation (EU) 2019/1021.

(2) in Article 3, the following paragraph (4a) is inserted:

✦ Wording Rephrases the provision on socio-economic information and defence readiness in Article 3(4a) of Regulation (EU) 2019/1021.

‘4a. When collecting, assessing and submitting information related to socio-economic considerations pursuant to Annex F ofto the Convention for the purpose of the risk management evaluation referred to in Article 8(7) and▌ Articleand 8(8)(8) of the Convention, the Commission and Member States shall duly take into account defence readiness and specificities of the defence sector, including impactsimpact on defence production supply chains;chains.’;

✦ Formal Updates the cross-reference in the amendment to Article 13(1) of Regulation (EU) 2019/1021.

(3) in Article 13(1)13(1), the following second subparagraph is added:

✦ Wording Rephrases the exemption from reporting requirements in Article 13(1) of Regulation (EU) 2019/1021.

‘Where necessary, Member States may make exemptions from this article on grounds of protection of nationalUnion or Unionnational defence interests,interests for the purpose of protecting sensitive information provided that such exemptions do not undermine the UnionUnion’s or Member StatesStates’ compliance, where relevant, with their reporting obligations under the Convention’.Convention.’.

✦ Formal Adds the heading for the amendments to Regulation (EU) 2021/697.

Article 5 Amendments to Regulation (EU) 2021/697

Regulation (EU) 2021/697 is amended as follows:

(1) Article 2 is amended as follows:

✦ Formal Updates the cross-reference for the inserted point in Article 2 of Regulation (EU) 2021/697.

(a) the following point (6a) is inserted:

✦ Replaces the definition of cross-border SMEs in Article 2(6a) of Regulation (EU) 2021/697 with wording covering SMEs established in other Member States or associated countries that participate as recipients, subcontractors or other legal entities in the supply chain.

‘(6a) ‘cross-border“cross-border SMEs’SMEs” means SMEs which are established in Member States or associated countries other than those wherein thewhich legalrecipients entitiesthat cooperatingare withinnot aSMEs consortium▌ are established and which areparticipate notin SMEsthe activity as recipients, subcontractors or mid-capsother arelegal established;’;entities in the supply chain;’;

(b) point (17) is replaced by the following:

✦ Wording Rephrases the definition of pre-commercial procurement in Article 2(17) of Regulation (EU) 2021/697.

‘(17) ‘pre-commercial“pre-commercial procurement’procurement” means the procurement of research and development services involving risk-benefit sharing under market conditions where there is a clear separation of the research and development services procured from the deployment of commercial volumes of end-products;’;

✦ Formal Updates the lettering of the inserted point in Article 2 of Regulation (EU) 2021/697.

(ba)(c) the following point (18a) is inserted:

✦ Wording Rephrases the definition of ex aequo proposals in Article 2(18a) of Regulation (EU) 2021/697.

‘(18 a)‘(18a) ‘ex“ex aequo proposals’proposals” means two or more proposals that have obtained the same evaluation score following a call for proposals;’;

✦ Drops amendments on collaboration priorities, third-country participation, indirect management, testing in Ukraine, European Defence Projects of Common Interest and direct awards, and adds provisions on multiannual budgetary commitments, support for disruptive technologies and SME actions, and indirect management.

(1a) in Article 3(2) sub-paragraph 2 is replaced by the following:

▌

‘Such collaboration shall be consistent with defence capability priorities commonly agreed by Member States within the framework of the Common Foreign and Security Policy (CFSP) and in particular in the context of the CDP, and shall address the critical capability gaps referred to in the White Paper for European Defence – Readiness 2030, and the Preserving Peace – Defence Readiness Roadmap 2030.’;

(2) in Article 4, the following paragraph is added:

(2) in Article 4 the following paragraph 6 is added:

‘6. The budgetary commitments relating to the Fund which cover activities extending over more than one financial year may be broken down over several years into annual instalments.’;

‘6. The budgetary commitments relating to the Programme and which cover activities extending over more than one financial year may be broken down over several years into annual instalments. When applying such multiannual budgetary commitments, the Commission shall ensure that equal access for new applicants is maintained and that the participation of projects at earlier stages of development is not prejudiced’;

(3) Article 6 is replaced by the following:

(2a) Article 5 is replaced by the following:

‘Article 6 Support for disruptive technologies for defence and research and development actions carried out by SMEs

‘The Fund shall be open to the participation of the following third countries (associated countries):

1. The Fund shall support actions that are conducive to developing disruptive technologies for defence and research and development actions carried out by SMEs in the areas of intervention defined in the work programmes referred to in Article 24.

(a) Members of the European Free Trade Association, which are members of the EEA, in accordance with the conditions laid down in the Agreement on the European Economic Area;

2. The work programmes shall lay down the most appropriate forms of funding, selection and award criteria and procedures and of implementation for disruptive technologies for defence and research and development actions carried out by SMEs.’;

(b) Ukraine, in accordance with the general principles and general terms and conditions for the participation of Ukraine in Union programmes established in the EU-Ukraine Association Agreement.’

(4) in Article 8, paragraph 2 is replaced by the following:

(3) in Article 8(2) the second sentence is deleted;

‘2. By way of derogation from paragraph 1 of this Article, specific actions may, in substantiated cases, be carried out under indirect management by bodies as referred to in Article 62(1), point (c), of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council*, under the conditions set out in the work programme.

(4) in Article 9(2) the following second sub-paragraph is inserted:

‘By way of derogation from the first subparagraph, infrastructures, facilities, assets and resources used by recipients and subcontractors involved in the action for testing of a defence product, tangible or intangible component or technology, as referred to in Article 10(3), point (f) may be located or held ▌in Ukraine. This shall not contravene the security and defence interests of the Union and its Member States and, shall be consistent with the objectives set out in Article 3 and shall comply with Articles 20 and 23.’;

(4a) in Article 10(3) the following sub-paragraphs are inserted:

‘(j) research and development activities related to an European Defence Project of Common Interest as identified in accordance with Article 21i(4) of Regulation XXX [EDIP];

(k) activities that aim at significantly accelerating the research and development of defence products or components, where the Council activates the measures in Article 52 of Regulation XXX [EDIP].’;

(5) in Article 11(1) the second sub-paragraph is replaced by the following:

‘In certain duly substantiated and exceptional circumstances, Union funding may also be granted without a call for proposals to a research and development action that has previously received Member State or Union funding following competitive calls for proposals, in accordance with Article 198 of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council*▌first subparagraph, point (e) ▌.

________

* Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (OJ L, 2024/2509, 26.9.2024, ELI: http://data.europa.eu/eli/reg/2024/2509/oj).’;

✦ Adds provisions making costs of testing activities in Ukraine eligible for support from the Fund and replacing the conditions for funding without a call for proposals.

(5) in Article 9(6), the third subparagraph is replaced by the following:

‘The costs related to those activities shall not be eligible for support from the Fund. However, if the recipients and subcontractors involved in the action cooperate with legal entities established in Ukraine, controlled by Ukraine, or controlled by a Ukrainian entity, for the sole purpose of using their infrastructure, facilities, assets and resources for testing activities referred to in Article 10(3), point (f), the related costs shall be eligible for support from the Fund provided that those costs benefit the funded action and are necessary for strengthening the competitiveness, efficiency and innovation capacity of the EDTIB throughout the Union, as laid down in Article 3.’;

(6) in Article 11(1), the second subparagraph is replaced by the following:

‘In certain duly substantiated and exceptional circumstances, Union funding may also be granted without a call for proposals in accordance with Article 198 of Regulation (EU, Euratom) 2024/2509, including in cases provided for in the first paragraph, point (e), of that Article.’

(7) Article 12 is replaced by the following:

✦ Formal Adds the heading 'Award criteria' to Article 12 of Regulation (EU) 2021/697.

‘Article 12 Award criteria

✦ Formal Updates the paragraph numbering in Article 12 of Regulation (EU) 2021/697.

Award criteria

1. In accordance with Article 203 of Regulation (EU, Euratom) 2024/2509, each proposal shall be assessed on the basis of the following criteria:

-1. In accordance with Article 203 of Regulation (EU, Euratom) 2024/2509, each proposal shall be assessed on the basis of the following criteria:

(a) its contribution to excellence in the defence domain, in particular by showing that the expected results of the proposed action present significant advantages over existing defence products or technologies;

✦ Wording Rephrases the award criterion on quality and efficiency of implementation.

(b) its quality and efficiency of the implementation of the action;action.

✦ Replaces the provision on additional award criteria so that they are set out in the work programme on a call-by-call basis.

1.2. In addition to the criteria mentionedreferred to in paragraph -1,1, each proposal shall be assessed on the basis of one or more of the following criteria, as set out in the work programme:programme, on a call-by-call basis:

▌

✦ Wording Rephrases the award criterion on innovation or potential of disruption.

(a) its contribution to the innovation or potential of disruption of the European defence industry, in particular by showing that the proposed action includes ground-breaking or novel concepts and approaches previously not previously applied in the defence sector;

✦ Wording Replaces the reference to the European Defence Technological and Industrial Base with the abbreviation EDTIB.

(b) its contribution to the competitiveness of the European Defence Technological and Industrial BaseEDTIB by creating new market opportunities across the Union and beyond and accelerating the growth of companies throughout the Union;

✦ Wording Rephrases the award criterion on reducing dependency on non-Union sources and security of supply.

(c) its contribution to reducing dependency on non-Union sources and strengthening security of supply of defence products throughout the Union in response to identified risks;Union;

✦ Wording Rephrases the award criterion on cross-border cooperation.

(d) its contribution to cross-border cooperation between legal entities established in Member States or associated countries, in particular with SMEs and mid-caps that bring substantial added-value to the action, as recipients, as subcontractors involved in the action or as other legal entities in the supply chain;

▌

(f) its contribution to the further integration of the European defence industry throughout the Union, in particular regarding joint use, ownership or maintenance of the final product or technology;

✦ Wording Rephrases the award criterion on addressing the needs of Member States and associated countries with the highest exposure to conventional military threats.

(g)its(g) its contribution to addressing the needs of the Member States and the associated countries with the highest exposure to the risk of materialisation of conventional military threats.

✦ Replaces the provision on work programme details for selection procedures and award criteria, including weighting, scoring thresholds and rules for ex aequo proposals.

2.3. The work programme shall lay down details concerning the selection procedures, and the application of the award criteria listed in paragraph 1. This shall2, includeincluding any weighting of the criteria, scoring thresholds and, where relevant, rules for dealing with ex aequo proposals, taking into consideration the objectives of the call for proposals. The use of subsets of criteria and their respective weighting shall be clarified in the call for proposal, ensuring full transparency.’;proposals.’;

(8) Article 13 is amended as follows:

(b) in paragraph 3, points (a) and (b) are replaced by the following:

✦ Formal Updates the citation of Council Decision (CFSP) 2017/2315 and replaces the reference to Regulation XXX [EDIP] with Regulation (EU) 2025/2643.

‘(a) an action developed in the context of a project of PESCO, as established by Council Decision (CFSP) 2017/2315,2017/2315*, or in the context of a Structure for European Armament Programme SEAP,(SEAP), as established by Regulation XXX(EU) [EDIP],2025/2643 of the European Parliament and of the Council**, may benefit from a funding rate increased by an additional 10 percentage points;’;points;

✦ Drops the sentence on proportionate administrative requirements and simplified reporting for SMEs from the provision on increased funding rates.

‘(b)(b) an activity may benefit from an increased funding rate, as referred to in this point, where at least 10 % of the total eligible costs of the activity are allocated to SMEs established in Member States or in associated countries and which participate in the activity as recipients, subcontractors or other legal entities in the supply chain. For SMEs participating as recipients, administrative requirements shall be proportionate to their size and role. The Commission may establish simplified reporting templates and reduced documentation requirements for SMEs.

✦ Increases the maximum additional funding rate for activities allocated to SMEs from 5 to 10 percentage points.

The funding rate may be increased by percentage points equivalent to the percentage of the total eligible costs of the activity allocated to SMEs established in Member States or in associated countries in which recipients that are not SMEs or mid-caps are established and which participate in the activity as recipients, subcontractors or other legal entities in the supply chain, up to an additional 510 percentage points.

✦ Wording Rephrases the provision on increased funding rates for activities allocated to cross-border SMEs.

The funding rate may be increased by percentage points equivalent to twice the percentage of the total eligible costs of the activity allocated to cross-border SMEs as defined in Article 2, point (6a), which participate in the activity as recipients, subcontractors or other legal entities in the supply chain;’;▌.

✦ Formal Adds footnotes citing Council Decision (CFSP) 2017/2315 and Regulation (EU) 2025/2643.

__________________

* Council Decision (CFSP) 2017/2315 of 11 December 2017 establishing permanent structured cooperation (PESCO) and determining the list of participating Member States (OJ L 331, 14.12.2017, p. 57, ELI: http://data.europa.eu/eli/dec/2017/2315/oj).

** Regulation (EU) 2025/2643 of the European Parliament and of the Council of 16 December 2025 establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products (‘EDIP Regulation’) (OJ L, 2025/2643, 29.12.2025, ELI: https://eur-lex.europa.eu/eli/reg/2025/2643/oj).’;

(9) in Article 14, paragraph 1 is replaced by the following:

(10) in Article 17(2), point (b) is replaced by the following:

✦ Wording Rephrases the provision on authorising multiple contracts within the same procedure.

‘(b) may authorise, in specific cases, the award of multiple contracts within the same procedure (multiple sourcing)’;sourcing);’;

(11) Article 22 is deleted;

(a) paragraphs 3 and 4 are replaced by the following:

✦ Replaces the provision on transfers and export policy so that Member States shall endeavour to use all tools at their disposal, such as general transfer licences, and avoid disproportionate administrative requirements.

‘3. This Regulation shall not affect the Member States’ discretion as regards their policy on the transfer and export of defence-related products. As regards transfers, Member States shall ▌useendeavour to use all tools at their disposal, such as general transfer licenceslicences, as referred to in Article 5 of Directive (EC) 2009/432009/43/EC of the European Parliament and of the Council*Council*, and avoid disproportionate administrative pre-conditionsrequirements to ensure the smooth implementation of the actions.

✦ Wording Rephrases the provision on notification of transfers of ownership to non-associated third countries.

4. With regard to results generated by recipients through development actions supported by the Fund, and without prejudice to paragraph 3 of this Article, the Commission shall be notified prior to any transfer of ownership to a non-associated third country or to a non-associated third-country entity, which takes place within 3three years afterof the final payment of the action. If such a transfer of ownership contravenes the security and defence interests of the Union and its Member States or the objectives set out in Article 3, the support provided from the Fund shall be reimbursed.

_________________

________________

* Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying terms and conditions of transfers of defence-related products within the Community (OJ L 146, 10.6.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/43/oj).’;

✦ Adds a provision on negotiations between national authorities co-financing an action and recipients on access rights to results, limited to non-commercial and non-competitive use.

▌

(b) the following paragraph is added:

▌

‘6. For the purpose of assessing the results of the development actions and assessing their potential use for public defence planning and capability development, the national authorities co-financing an action and the recipients generating the results shall engage in negotiations, with a view to the recipients granting access rights to those results to the national authorities under fair and reasonable conditions to be agreed upon with the recipients generating those results. Access rights shall not entail any transfer of ownership of IPRs or know-how contained therein, and shall be limited to non-commercial and non-competitive use. Those access rights shall not include background intellectual property except where strictly necessary for the purpose of understanding the results of the action and shall require the prior consent of the owners of such background intellectual property.

▌

Terms and conditions for the exercise of such access rights shall be defined in the contractual relationship between the recipients and the national authorities co-financing the action.’;

(13) in Article 24, paragraph 1 is replaced by the following:

✦ Wording Rephrases the provision on implementation of the Fund through annual or multiannual work programmes.

‘1. The Fund shall be implemented by means of annual or multiannual work programmes as referred to in Article 110(2) of the Regulation (EU, Euratom) 2024/2509. Work programmes shall set out, where applicable, the overall amount reserved for blending operations.’.

✦ Formal Adds the heading for the entry into force and application article.

Article 6

Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

✦ Formal Updates the cross-reference for the retroactive application of provisions of Regulation (EU) 2021/697.

Article 9(2) second subparagraph9(6), andthird Articlesubparagraph, 13▌ of the Regulation (EU) 2021/697, as amended by the presentthis Regulation, shall apply from 1 January 2025.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

✦ Formal Replaces the place of signature with a placeholder.

Done at Strasbourg,…,

For the European Parliament For the Council