Ready for Defence: The EU’s Defence Readiness Omnibus

The European Union is taking decisive steps to strengthen its defence sector and ensure long-term security and resilience. This briefing summarises key takeaways from the recently published Defence Readiness Omnibus package.

The Defence Readiness Omnibus

The "Defence Readiness Omnibus" is a proposal published by the European Commission ("Commission") on 17 June 2025. It aims to address legal and administrative obstacles which the defence industry currently faces and which slow down a speedy ramp-up of defence capabilities in the EU. The proposal is in line with the European Union's wider White Paper for European Defence-Readiness 2030, builds on the European Defence Industrial Strategy and specifically responds to the European Council’s request from earlier this year to simplify the legal and administrative framework in the EU.

As an omnibus bill, the Defence Readiness Omnibus is not one single legislative act. It actually consists of different measures, all published together:

• A Communication by the Commission setting out the rationale behind the Defence Readiness Omnibus;
• A Commission Notice specifically on the sustainable finance framework; and
• Seven proposals for new regulations, directives or delegated regulations to address specific legal and administrative hurdles.

We set out the key takeaways from this package below.

The Defence Readiness Omnibus is currently still just a draft and the legislative proposals need to undergo the EU's rulemaking process before they become binding laws. Even then, further implementation may be required in EU Member States. The Commission has already begun this process by submitting the proposals to the European Parliament and the European Council ("Council"). Timing is difficult to predict, but depending on the amount of changes both the European Parliament and the Council would like to introduce, the legislative process could take more than one year. However, the Commission has encouraged its co-legislators to move quickly and to exert necessary restraint in the review process. This does not apply to the communication and notice issued by the Commission, because those are interpretative guidelines (only). We therefore expect that EU Member States and national authorities may begin to align their administrative practices with these new guidelines shortly.

As the Defence Readiness Omnibus is still evolving, it will be important to track developments in the near future.

Intra-EU Transfer of Defence Products & Non-Defence Horizontal Legislation

Intra-EU Transfer of Defence Products

The Defence Readiness Omnibus aims to tackle fragmentation and bureaucracy under the current framework (Directive 2009/43/EC), primarily caused by inconsistent national implementation, leading to fragmented requirements, slow procedures, and unnecessary administrative burdens across EU Member States. Furthermore, existing simplifications, especially exemptions and General Transfer Licences ("GTLs"), which could accelerate transfers, are not fully leveraged, resulting in continued inefficiencies. Also, the existing licensing framework does not adequately accommodate collaborative EU defence initiatives, such as those funded by the European Defence Fund or PESCO.

• The Defence Readiness Omnibus aims to broaden and standardise exemptions from prior authorisation for specific categories of defence products, reducing red tape and ensuring more predictable, uniform rules across the EU. The package proposes to make GTLs more robust and harmonised, with clearer conditions and broader applicability, enabling the industry to rely on them for routine and repeated transfers. New, tailored GTLs are proposed specifically for projects under the European Defence Fund and PESCO, facilitating the seamless movement of components and systems within multinational industrial consortia.
• The Commission will clarify certain non-essential elements of the current framework through delegated acts, providing greater legal certainty and consistency for industry and EU Member States. The Defence Readiness Omnibus also foresees an adjustment of supplier information rules for greater flexibility while maintaining transparency and control.

Horizontal Regulatory Issues

• Defence activities are often delayed or complicated by overlapping civilian regulations, particularly in environmental, product safety, and chemicals law.
• The Commission is encouraging EU Member States to implement fast-track and priority-rated permitting processes for defence industrial investments and readiness activities, including a single point of contact and streamlined procedures.
• The Defence Readiness Omnibus clarifies and promotes the use of existing derogations in EU law (such as “overriding public interest,” “public safety,” or “crisis”) to enable more flexible and timely authorisations for defence projects.
• Efforts are being made to ensure that military-specific exemptions under regulations like REACH (dealing with chemicals) are applied more consistently and broadly, reducing unnecessary compliance burdens for defence activities.
• EU Member States are also encouraged to fully utilise the possibility to suspend import duties on certain weapons, equipment, and raw materials imported for defence purposes, supporting the EU’s defence industrial base.

Streamlining Public Procurement

With EU Member States being the largest (and often only) customers for defence products, an efficient public procurement regime is key to ramping up defence production in the EU. The Defence Readiness Omnibus includes a proposal to amend the existing Defence Procurement Directive 2009/81/EC. If the proposal passes the ongoing legislative process on the EU level (see above 1), it would then need to be implemented into the national laws of EU Member States, who will need to amend their respective national procurement laws accordingly.

The proposal of the Defence Readiness Omnibus includes the following:

• Higher thresholds: Thresholds for EU procurement rules will be increased to EUR 900,000 for supply and service contracts, as well as EUR 7,000,000 for works contracts. This will allow EU Member States to apply more flexible national procurement rules below these thresholds – but the impact will depend on national procurement laws already in place.
• More flexibility: Contracting authorities will have more procedural flexibility and will be able to use innovation partnerships, open procedures and dynamic purchasing systems.
• Longer framework agreements: Framework agreements with suppliers may be extended from a maximum of seven to now ten years, providing contractors with more certainty and reducing the need to conduct tenders.
• Easier direct procurement: Direct procurement (i.e., without a tender) of the results of R&D projects will be easier. This will help close a financing gap for companies transitioning from R&D funded projects to commercial production of products.
• More joint purchases: Joint purchases between at least three EU Member States will become easier (with a sunset date of 1 January 2031).
• Broader exemptions: Already existing “national security” exemptions, which allow deviations from applicable EU procurement rules, are clarified to also apply to all tenders aimed at improving the EU's / NATO's defence readiness.

One development to note is that the Defence Readiness Omnibus does not heavily rely on "buy European" requirements. EU government tenders in the defence sector continue to be open to third country bidders, though recent decisions of the European Court of Justice have generally made it easier for third-country bidders to be excluded from government tenders (see our blog on this topic here). Nevertheless, some of the privileges described above will only be available to contractors (and subcontractors) established in the EU, the EEA or the Ukraine. In addition, the contractors (and subcontractors) may not be subject to control by a third country or by a third-country entity. The details, especially what "control" means in this context, will need to be further clarified in the legislative process.

Sustainable Finance and the Defence Sector

The Defence Readiness Omnibus includes a dedicated "Notice" on how the EU sustainable finance framework and the Corporate Sustainability Due Diligence Directive (CSDDD) apply to the defence sector. It aims to prevent undue discrimination against the defence sector in investment decisions and to clarify the sector’s potential contribution to social sustainability and EU resilience. This development follows the previously released Sustainability Omnibus, which aims at generally reducing ESG related burdens for EU companies (see our coverage here and here). The defence industry is recognised as contributing to EU and UN policy goals, particularly in relation to peace, security, and social sustainability. The sector is essential for EU defence readiness, resilience, and the protection of citizens, especially in light of current geopolitical threats.

• No sectoral exclusion for defence industry: The EU sustainable finance framework does not exclude the defence sector from access to finance or investment. Defence companies are treated like in any other sector with sustainability disclosure requirements. Only activities involving “controversial weapons” (anti-personnel mines, cluster munitions, chemical and biological weapons) are subject to additional disclosure and exclusion requirements. There is a lack of clarity regarding nuclear weapons.
• Case-by-case assessment and no revenue thresholds: There are no prescribed revenue thresholds or blanket exclusions for defence-related activities. Investment decisions and sustainability assessments should be made on a case-by-case basis, considering compliance with relevant laws, treaties, and risk mitigation processes.
• Defence industry’s contribution to social sustainability: The EU recognises the defence industry as an important contributor to the EU’s resilience, security, and peace, and therefore to social sustainability. Financial market participants may consider defence activities that safeguard peace and security as contributing to social objectives, provided they do not significantly harm other sustainability goals and follow good governance practices. There is no automatic assumption that defence activities are socially harmful.
• Risk mitigation and regulatory controls: The defence sector is highly regulated, especially regarding the use and export of military and dual-use items. There are strict EU and international controls, including export licensing and compliance measures. Those controls are relevant for meeting due diligence and sustainability requirements under EU law.
• Alignment with international standards: Defence companies are expected to align with international standards such as the UN Global Compact and OECD Guidelines for Multinational Enterprises. Due diligence and compliance with export controls are supporting those standards and are the minimum safeguards required under the EU Taxonomy Regulation.
• Transparency and benchmarking: Only companies involved in prohibited weapons are explicitly excluded from sustainability benchmarks. The framework promotes transparency and reliability of sustainability-related benchmarks without excluding the defence sector.
• Reporting and disclosure provisions: The Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive apply to the defence sector like any other, but allow for the omission of sensitive or classified information. The Corporate Sustainability Due Diligence Directive excludes due diligence obligations for downstream activities related to military and dual-use products once export is authorised.

Adaptation of Competition Rules to the Defence Readiness Strategy

In its Defence Readiness Omnibus Communication, the Commission clarifies the application of competition and State aid rules to the defence sector.

• Application to the defence sector: Without prejudice to Article 346 TFEU, competition law applies to the defence industry. However, the Commission commits to give due consideration to the “specificities” of the industry when enforcing competition rules. The document does not provide detailed practical guidance but gives the direction of travel in terms of enforcement for each area of competition law, i.e. merger control, antitrust and State aid. In doing so, the Commission has sent clear signals of a favourable policy landscape for investments, consolidations and cooperation that contribute to the defence readiness objective.
• Merger control: The Commission is expected to reflect the new security and defence environment in its updated guidelines on merger control. In practice, we see a favourable policy environment for clearing complex M&A deals that contribute to the defence readiness objective. In particular, the Commission may be more open to policy considerations and give more weight to defence related efficiencies arguments when reviewing these deals. Member States may also be inclined to invoke the defence exception under Article 346 TFEU and instruct companies to carve out from EU notifications the exclusively military aspects of M&A deals. The Commission and any Member State can refer the case before EU courts if it considers that a Member State is making an improper use of the defence exception.
• Antitrust: The Commission shows openness to defence related cooperation between competitors, including in the form of joint production of defence products or joint procurement of raw materials. As it did during the Covid-19 crisis and at the start of the war in Ukraine, the Commission stands ready to provide guidance to businesses on specific joint initiatives in order to increase legal certainty. In that context, it commits to consider efficiencies in terms of defence readiness and supply chain resilience.
• State aid: The Commission highlighted several facilitations for public funding to the defence industry:

• funding for activities within the public remit (such as aid to general infrastructure or to the armed forces) does not constitute State aid and therefore does not need to go through the notification and clearance process;
• Member States can rely on the defence exception under Article 346 TFEU to disapply State aid rules when granting aid for developing military goods to protect their essential security interests. The Commission confirmed the availability of this exception in the current context. However, in practice, navigating this exception is not easy. In particular, (i) only listed military products are in scope, (ii) the situation of dual use products is not straightforward, and (iii) strict necessity and proportionality requirements apply. Therefore, a case-by-case assessment is required.
• State aid measures outside the scope of Article 346 TFEU will generally need to be notified to the Commission, unless exempted. The Commission confirmed its readiness to greenlight such State aid and committed to prioritise the review of defence related State aid notifications. Positive factors for the assessment include alignment with EU programmes, contribution to resilience, reduction of third-country dependencies and some cross border cooperation.