Investing in the German Defence Sector: Turbo-charging the armed forces – Germany's new act to accelerate Bundeswehr procurement

In the wake of Zeitenwende, Germany is accelerating its defence procurement system to respond to a significantly increased demand for military goods and services. As part of this effort, the German Bundestag passed a legislative package (Gesetz zur beschleunigten Planung und Beschaffung für die Bundeswehr), the core of which was a substantial amendment to the Act to Accelerate Planning and Procurement for the German Armed Forces (Bundeswehrplanungs- und Beschaffungsbeschleunigungsgesetz – BwBBG).

The amended BwBBG modifies how procurement and budget laws apply to defence projects to bolster supply chain security and European sovereignty. Following its promulgation on 13 February 2026, the new rules entered into force on 14 February 2026. They will remain effective until 31 December 2035.  

Broadening exemptions from public procurement law

A central feature of the BwBBG amendments is the clarification of "essential security interests" under Article 346 TFEU and Section 107 of the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkung – GWB). This enables the government to not be bound by stricter, standard procurement rules where the subject matter of a public contract …

• concerns key defence industry technologies within Germany;
• contributes to strengthening Germany's technological sovereignty in the security and defence sector; or
• consists of supplies or services for the Bundeswehr or for intelligence-gathering purposes.

In such cases, the Federal Ministry of Defence (Bundesministerium der Verteidigung – BMVg) has greater flexibility to use simplified or direct award procedures and thereby accelerate procurement.

Flexibility in budgetary law and market exploration

To accelerate projects, the new law adjusts budgetary rules. Advance payments to contractors, generally restricted under Section 56 of the Federal Budget Code (Bundeshaushaltsordnung – BHO), are now permissible if they are expected to lead to higher quality performance or a faster expansion of defence industry capacities. This increases flexibility for contractors who previously often had to make extensive up‑front investments. Stabilising liquidity and financial security over the entire contract term enhances reliability for both parties and safeguards critical projects, especially in key technology areas.

Furthermore, the package strengthens the requirements for market exploration prior to commencing a procurement procedure. Under Section 7 of the amended BwBBG, contracting authorities must expressly include civilian markets in their market analyses to ascertain whether suitable supplies and services – including commercially available or dual‑use products (such as off‑the‑shelf IT equipment or commercial drones) – are already available and can be used or adapted for Bundeswehr purposes.

Supply chain resilience and European sovereignty

The package also introduces measures to strengthen supply chain resilience. Under Section 9 of the amended BwBBG, contracting authorities may now require bidders to provide evidence of security of supply for “key resources”. This term covers raw materials for which there are significant one‑sided supply dependencies on “autocratic third countries”, as the explanatory note explicitly states.

To improve project execution, the Act also obliges contracting authorities to consider including incentive-based clauses in contracts for suitable projects. This includes bonus-malus arrangements tied to the achievement of contractual milestones, aiming to accelerate project delivery and avoid delays. In parallel, the legislation places a new emphasis on the strategic dimension of procurement: when purchasing armaments, the Bundeswehr must now consider the impact on European technological sovereignty and on production capacities within Germany and the European Union.

Other notable changes are the introduction of innovation partnerships for new service concepts and the requirement to include update and upgrade clauses in IT procurement contracts. Also, the suspension of the general rule to award contracts in separate lots will now apply for the entire duration of the law until the end of 2035, a measure intended to simplify the handling of large-scale projects.

Outlook: Further reforms on the horizon

The amended BwBBG is a significant step, but further reforms are on the way: The German government has committed to reviewing existing environmental, climate, and procurement regulations by the end of 2026 to identify further exemptions that could benefit the Bundeswehr. Corresponding legislative proposals are expected by 2027. This approach aligns with a broader legislative trend in Germany to accelerate key infrastructure projects by establishing their military significance as a 'priority consideration' (vorrangiger Belang). For projects deemed significant for national and alliance defence, this means that while other protected interests such as environmental conservation are not eliminated, they may carry less weight in the overall balancing exercise required for project approval. 

Against this backdrop, for market participants, the amended BwBBG changes both access and expectations in Bundeswehr procurement. The mandatory consideration of civilian markets in pre‑procurement market exploration opens the door more widely to non‑traditional suppliers with commercially available or dual‑use solutions. At the same time, the Act’s focus on technological sovereignty and key defence‑industrial capabilities in Germany and the EU is likely to strengthen the position of domestic and European providers.

Bidders should also anticipate stricter scrutiny of supply chains, including requests for evidence of security of supply for key resources, as well as a greater use of performance‑based contract mechanisms such as bonus‑malus arrangements. 

In this blog series, we explore key regulatory opportunities and challenges shaping investments in the German and European defence sector, providing critical insights for our clients. You can find the previous posts on public funding and BMWE 's guidance on drones and loitering munitions here.