Regulaton & Policy
Complexities of EU Defence Procurement Relationships – The Matryoshka Doll Effect

Baudouin Heuninckx is Chief Counsel of the Belgian Armed Forces Procurement Division and a part-time academic at the University of Nottingham and the Belgian Royal Military Academy. He holds a PhD in Public Procurement Law.

Baudouin has been carrying out research and analysis of defence collaborative procurement projects in Europe. His aim was to raise awareness of the need for structure, or a legal framework, when countries jointly purchase large pieces of equipment, like aircraft or battleships.

His findings show that overall the people involved in these big purchasing programmes are not asking themselves questions about which legal frameworks and legal structures are applicable to those programmes, because of the complexity involved. He explains why this is so, and it’s rather like the onion layer analogy:

“… it’s quite complex because you have national law or domestic law that rules on the decision of the participating states to participate in the programme. Obviously that’s influenced by EU procurement law, but that relationship is not that clear. And then you have the relationship between the states that participate in the programme and that’s in public international law, and then you have the procurement rules of the organisation or the entity managing the programme itself and that can be international institutional law or that could be domestic law influenced by European law. So that’s really, let’s say, a nexus of domestic law, international law and EU law, and it’s quite complex and not many people are actually aware of that complexity.”

His point is that the joint procurers should be asking which rules apply: is it the national rules of the country they are procuring from, the national rules of the other country involved, your organisation’s rules, or international law, or, indeed, all of them? And what if there are several countries involved, we would add.

In fact he explains it all more fully in his recently published book – The Law of Collaborative Defence Procurement in the European Union. In part of the book he refers to the complexities as likened to the ‘Matryoshka doll’ of legal relationships (and this is represented on the cover).

His analogy is this: that collaborative defence procurement is seen as one big entity, one big concept, but actually, if you look at a collaborative procurement programme, it looks a little bit like a Matryoshka doll. The first doll you see is the law that applies to the decision of a participating state to participate in a specific programme. Then, you open it and the second doll is the relationship between the participating states, or public international law. Then, in the third doll, you have the procurement law of the entity managing the programme, which is currently more and more an international organisation. Then the fourth doll is the law applicable to the contract itself, to the interpretation and application of the contract.

“In domestic public procurement law,” he says, “it’s usually easy because the law defines which law is applicable to the execution of the contract. In collaborative programme, because there are many countries involved, it’s not that clear …” So it’s a rather clever way of explaining the levels of complexity.

The European Commission, he explains, is trying to close all the loopholes that allowed EU member states to do things to some degree in their own way within the defence sector. But, pretty much, they still have a fair amount of flexibility within the 2009/81 directive compared with the general procurement directive 2014/24. This is so because member states, and parts of the defence industry, found defence to be too complex an area to have strict rules and more flexibility was demanded (probably, he thinks, to allow them to award contracts to their own domestic industries).

But, along with the flexibility, they still have to comply with the principles of non-discrimination, equal treatment, transparency and so on, or face the Court of Justice for any breach of EU law – just like any other sector. Telles wonders whether the practice has changed since the directive came into force and has been transposed into national law?

Another interesting and informative discussion from the Telles series of Public Procurement Podcasts – and the whole transcript can be found here, or you can listen to the podcast of course.