Europe first? How Germany’s procurement overhaul boosts National Champions and tests market access for foreign bidders

What companies need to know

In light of the changed security situation, including uncertainties within NATO and the Western alliance, and the increased need for efficient defense procurement, the German Parliament passed the Act on Accelerated Planning and Procurement for the Bundeswehr on January 15, 2026, and the new law has come into effect immediately. This act marks a decisive step toward strengthening the defense-readiness of the armed forces and significantly simplifying the procurement process. The aim is to equip the Bundeswehr quickly and efficiently, in most cases with solutions available on the market, while taking greater account of national and European interests.

According to Chancellor Merz, this forms part of the government’s initiative to equip Germany with the “strongest conventional army in Europe.” For companies and bidders, this opens up new opportunities for lucrative contracts.

Key provisions

• Extended scope: In the future, the law will apply to all contracts covering the needs of the German Armed Forces, not just the procurement of military equipment but also civilian contracts, such as for medical supplies or construction contracts.
• Focus on commercially Off-the-Shelf solutions: A key objective is to use existing products and solutions available on the market in order to minimize development times and costs. The Bundeswehr will essentially no longer procure the “gold standard” solutions.
• Interoperability justifies direct award decisions: If necessary for interoperability within the German armed forces or for cooperation with allied partners, the procurement authority can directly award a contract without a tender to speed up the process.
• Exclusion of bidders from third countries: Companies from non-EU countries may be excluded from procurement procedures without any need for a justification. While this does not mean that such a limitation of competition will occur in every tender, the contracting authority can decide about this at its own discretion, and there is no legal remedy against this decision. The stricter rules also apply to the supply chain, and the contracting authority may exclude subcontractors from outside the EU.
• More difficult legal protection for unsuccessful bidders: Unsuccessful companies will have limited legal protection, as the suspensive effect of immediate appeals to the Higher Regional Court will no longer apply, meaning that award decisions of the contracting authorities can be executed by the armed forces, regardless of a legal complaint against them.

Outlook: What companies should consider now

The new law has the potential to reshape defense procurement in Germany. On the one hand, the budget increase benefits contractors as the higher spending will be required for several years to meet the requirements in view of the heightened security challenges. At the same time, the acceleration of procurement procedures will result in limitations of legal redress options for bidders.

As the focus will be on national and European solutions, German and European suppliers will benefit the most from the new rules. Third-country providers need to examine their participation and legal protection options at an early stage and develop alternative strategies, such as partnerships with German companies if necessary. Generally, we expect that mid-term, only those third-party suppliers that offer capabilities that cannot be matched by other companies in Europe or that otherwise convince the German MoD in pre-contract studies that the procurement process should not be closed for third countries will have meaningful chances of success under the new German procurement procedures.

Regardless of the nationality of the bidder, flexibility, market knowledge, and the ability to offer solutions that are available on the market at short notice will become decisive factors for success. The increased use of exceptions to public procurement law also requires careful monitoring of current tenders.

Authored by Marc Schweda, Falk Schöning, Jonathan Möller, Stefan Kirwitzke, Nikita Ivlev, Julius Gertz.