Berlin to simplify rules in bid to speed up defence surge, draft law says

By Sabine Siebold

BERLIN (Reuters) -The German government seeks to speed up defence procurement by simplifying legal procedures, fostering European cooperation and facilitating orders to start-ups to make its military combat-ready, according to a draft law seen by Reuters late on Friday.

The speedy surge of the German military's capabilities "must not fail due to overly complex procurement procedures or lengthy authorisation processes", the document said, while warning of signs that Moscow's war objectives reach beyond Ukraine.

"The time factor is crucial."

At a NATO summit in The Hague, leaders on Wednesday agreed to hike the alliance's defence spending target to 5% of national GDP, with 3.5% dedicated to core defence and 1.5% to related security issues.

German Chancellor Friedrich Merz's government on Tuesday approved a budget framework which is expected to see Berlin's total military spending rise from 95 billion euros in 2025 to 162 billion euros in 2029, equalling 3.5% of GDP.

The new defence procurement law is part of efforts to speed up military purchases that in the past have been plagued by lengthy delays, project failures and cost overshoots.

The draft law determines that all procurement that contributes to Europe and NATO's military readiness inherently touches upon vital national security, which constitutes a basis to invoke an exemption under European public procurement law.

That would amplify a trend that Berlin has been following for some time by more often making use of a national security clause under EU law to prioritize domestic procurement, while also seeking to minimize delays caused by legal challenges.

The hurdles for cash-strapped start-ups and innovative companies to join competitions are to be lowered by enabling advance payment to these firms, according to the draft, dated June 25.

FOSTERING JOINT EUROPEAN PROCUREMENT

The paper also makes provisions for a future simplification of European defence procurement rules, something now under discussion at the EU level, by stating that the German law should not be tougher than European law but facilitate joint European defence procurement across the board.

The law will entitle contracting entities to limit tenders to bidders inside the European Union or the European Economic Area, and to determine that a certain share of the contracted goods or services must originate in the EU, according to the document.

The draft law does not, however, attempt to change the rule that all defence purchases with a volume of 25 million euros or more must be approved by parliament, a requirement seen by many experts as a major hurdle against speeding up procurement.

At the start of June, Defence Minister Boris Pistorius said Germany would need up to 60,000 additional troops under the new NATO targets for weapons and personnel, effectively expanding the military to some 260,000 troops.

The Bundeswehr has not yet met a target of 203,000 troops set in 2018, and it is currently short-staffed by some 20,000 regular troops, according to defence ministry data.

(Reporting by Sabine Siebold; Editing by Christoph Steitz and Leslie Adler)