Industrial cooperation in a changing operating environment
Before the entry into force of the Act on Public Defence and Security Procurements (1531/2011) and the EU Defence and Security Procurements Directive (2009/81/EC) that it transposes, industrial participation was a precondition set by the Finnish Parliament for major equipment procurements made by the Finnish Defence Forces from abroad. Industrial participation was normally required when the value of the procurement exceeded EUR 10 million. The Rules on Industrial Participation in Finnish Defence Procurements from 2002 apply to contracts concluded before the entry into force of the aforementioned Directive.
From the perspective of industrial participation, the European operating environment is currently undergoing a transformation. The Defence and Security Procurements Directive is part of a larger endeavour to open the European defence equipment market for competition. After the entry into force of the directive, the Member States have a primary obligation to subject their defence and security procurements to competition in compliance with the directive.
New Rules on Industrial Participation in Defence Equipment Procurements entered into force in Finland on 1 January 2012. In procurements made under the new act on defence and security procurements, no industrial participation is required from the supplier as a rule (the so-called offset requirement). An exception to this principle may only be made if following it is contrary to the essential interests of the state's security. Under Article 346 of the Treaty on the Functioning of the European Union, Finland is entitled to make defence procurements that are essential for national security without complying with the provisions of the said directive and to follow so-called national contract award procedures. In procurements of this type, an obligation to engage in industrial participation may thus remain a precondition. However, the necessity for and the extent of this obligation shall always be assessed in each individual case by the procurement authorities, and the justifications shall meet the conditions for the application of Article 346 TFEU.
New Rules on Compensation in Industrial Participation (2012) (pdf) (113 KB)