P10_TA(2026)0293Defence readiness and facilitating defence investments and conditions for the defence industry (Omnibus V)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)The European Parliament,

–having regard to the Commission proposal to Parliament and the Council (COM(2025)0822),

–having regard to Article 294(2) and Article 114, Article 173(3), Article 182(4), Article 183, Article 188, second paragraph, and Article 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C10‑0121/2025),

–having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–having regard to the opinion of the European Economic and Social Committee of 18 September 2025 OJ C, C/2026/30, 16.1.2026, ELI: http://data.europa.eu/eli/C/2026/30/oj,

–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,

–having regard to the joint deliberations of the Committee on Security and Defence, the Committee on the Environment, Climate and Food Safety and the Committee on Industry, Research and Energy under rule 59 of the Rules of Procedure,

–having regard to the report of the Committee on Security and Defence, the Committee on the Environment, Climate and Food Safety and the Committee on Industry, Research and Energy (A10-0273/2025),

1.Adopts its position at first reading hereinafter set out;

2.Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

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

P10_TC1-COD(2025)0176Position 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 industryTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114, Article 173(3), Article 182(4), Article 183, Article 188, second paragraph, and Article 192(1) thereof,

Having regard to the proposal from the European Commission,

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

Having regard to the opinion of the European Economic and Social CommitteeOJ C, C/2026/30, 16.1.2026, ELI: http://data.europa.eu/eli/C/2026/30/oj.,

After consulting the Committee of the Regions,

Acting in accordance with the ordinary legislative procedurePosition of the European Parliament of 16 September 2026.,

Whereas:

(1)In order to facilitate investments in defence by Member States, it is necessary to remove regulatory and administrative burden for defence readiness and to expedite approval and authorisation procedures. The facilitation of such investments and simplification will support the defence industry’s growth over time and contribute to supporting the defence readiness of Member States. It is important that the Union and the Member States continue to address the practical challenges faced by defence industries, particularly small and medium-sized enterprises (SMEs), and where necessary consider adjustments, while always ensuring the right balance between maintaining a high level of protection of health and the environment, a competitive internal market and defence readiness.

(2)While several instruments of Union legislation provide the necessary flexibility for Member States to take action to facilitate the ramp-up of the defence industry, often their implementation along with national legislation hamper defence readiness, for example how Member States use exemptions from Regulation (EC) No 1907/2006 of the European Parliament and of the Council Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC (OJ L 396, 30.12.2006, p. 1, ELI: http://data.europa.eu/eli/reg/2006/1907/oj). where necessary in the interest of defence, including for defence readiness.

(3)The legal framework established by Regulation (EC) No 1907/2006 should be adapted to take into account the objective of defence readiness. Flexibility and agility 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 of ▌ health and the environment, and legal clarity. There are indications that the implementation of Regulation (EC) No 1907/2006 in some Member States does 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, providing 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 protection of health and the environment.

(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 Regulation (EC) No 1272/2008 of the European Parliament and of the Council of 16 December 2008 on classification, labelling and packaging of substances and mixtures, amending and repealing Directives 67/548/EEC and 1999/45/EC, and amending Regulation (EC) No 1907/2006 (OJ L 353, 31.12.2008, p. 1, ELI: http://data.europa.eu/eli/reg/2008/1272/oj). and Regulation (EU) No 528/2012 of the European Parliament and of the Council Regulation (EU) No 528/2012 of the European Parliament and of the Council of 22 May 2012 concerning the making available on the market and use of biocidal products (OJ L 167, 27.6.2012, p. 1, ELI: http://data.europa.eu/eli/reg/2012/528/oj)., to ensure a coherent regulatory environment for defence readiness.

(5) While the defence sector can require certain exemptions from Regulations (EC) No 1907/2006, (EC) No 1272/2008 and (EU) No 528/2012 to maintain operational capability and defence readiness, such exemptions should be allowed only where justified as necessary in the interests of defence.

(6)Regulation (EU) 2019/1021 of the European Parliament and of the Council Regulation (EU) 2019/1021 of the European Parliament and of the Council of 20 June 2019 on persistent organic pollutants (OJ L 169, 25.6.2019, p. 45, ELI: http://data.europa.eu/eli/reg/2019/1021/oj). 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.

(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.

(8) The European Defence Fund (EDF), established by Regulation (EU) 2021/697 of the European Parliament and of the Council Regulation (EU) 2021/697 of the European Parliament and of the Council of 29 April 2021 establishing the European Defence Fund and repealing Regulation (EU) 2018/1092 (OJ L 170, 12.5.2021, p. 149, ELI: http://data.europa.eu/eli/reg/2021/697/oj)., 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.

(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.

(10) Under Regulation (EU) 2025/2643 of the European Parliament and of the Council 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: http://data.europa.eu/eli/reg/2025/2643/oj). 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.

(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.

(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.

(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.

(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 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)., regardless of whether they are conducted under direct or indirect management.

(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.

(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.

(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.

(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.

(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.

(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.

(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.

(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.

(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:
Article 1Amendment to Regulation (EC) No 1907/2006In Article 2 of Regulation (EC) No 1907/2006, paragraph 3 is replaced by the following:

‘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.’.

Article 2Amendment to Regulation (EC) No 1272/2008In Article 1 of Regulation (EC) No 1272/2008, paragraph 4 is replaced by the following:

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

Article 3Amendment to Regulation (EU) No 528/2012In Article 2 of Regulation (EU) No 528/2012, paragraph 8 is replaced by the following:

‘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.’.

Article 4Amendments to Regulation (EU) 2019/1021Regulation (EU) 2019/1021 is amended as follows:(1)in Article 2, the following point is added:

‘(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;

_________

* 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).’;

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

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

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

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

Article 5Amendments to Regulation (EU) 2021/697Regulation (EU) 2021/697 is amended as follows:(1)Article 2 is amended as follows:(a)the following point is inserted:

‘(6a) “cross-border SMEs” means SMEs which are established in Member States or associated countries other than those in which recipients that are not SMEs ▌ are established and which participate in the activity as recipients, subcontractors or other legal entities in the supply chain;’;

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

‘(17) “pre-commercial 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;’;

(c) the following point is inserted:

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

▌(2)in Article 4, the following paragraph 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.’;

(3) Article 6 is replaced by the following:

‘Article 6

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

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.

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.’;

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

‘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.

________

* 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).’;

(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:

‘Article 12

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

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

▌(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 not previously applied in the defence sector;(b) its contribution to the competitiveness of the EDTIB by creating new market opportunities across the Union and beyond and accelerating the growth of companies throughout the Union;(c) its contribution to reducing dependency on non-Union sources and strengthening security of supply of defence products throughout the Union;(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;

▌(e) its contribution to increasing efficiency across the life cycle of defence products and technologies, including cost-effectiveness and the potential for synergies in the procurement, maintenance and disposal processes;(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;(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.

3.The work programme shall lay down details concerning the selection procedures, and the application of the award criteria listed in paragraph 2, including 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.’;

(8)Article 13 is amended as follows:(a)paragraph 2 is replaced by the following:

‘2. By way of derogation from paragraph 1 of this Article, support from the Fund shall not exceed 20 % of the eligible costs for activities referred to in Article 10(3), point (e), without prejudice to higher funding rates which may apply in accordance with paragraph 3 of this Article.’;

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

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

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 10 percentage points.

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 ▌.

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* 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:

‘1. Notwithstanding Article 201 of Regulation (EU, Euratom) 2024/2509, only the financial capacity of a coordinator shall be verified.’;

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

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

(11)Article 22 is deleted;(12)Article 23 is amended as follows:(a)paragraphs 3 and 4 are replaced by the following:

‘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 endeavour to use all tools at their disposal, such as general transfer licences, as referred to in Article 5 of Directive 2009/43/EC of the European Parliament and of the Council*, and avoid disproportionate administrative requirements to ensure the smooth implementation of the actions.

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 three years of 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).’;

(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:

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

Article 6Entry into force and applicationThis Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.Article 9(6), third subparagraph, ▌ of the Regulation (EU) 2021/697, as amended by this Regulation, shall apply from 1 January 2025.This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at …,

For the European Parliament For the Council

The President The President