Defence industrial cooperation commitments top 100 million euros

Defence-related industrial cooperation commitments under signed agreements have exceeded 100 million euros, Lithuania’s Defence Ministry said Tuesday, LRT reported.

The announcement came as amendments to the Defence and Security Industry Law entered into force. The changes reduce administrative procedures and give the ministry primary responsibility for implementing industrial cooperation.

Industrial cooperation in arms procurement involves agreements under which defence equipment suppliers include local industry in a purchase, for example by transferring part of the manufacturing, technology or maintenance work.

Under the new rules, industrial cooperation will be considered for procurements worth more than 20 million euros, up from the previous threshold of 5 million euros. The ministry said this would focus the mechanism on strategically important defence purchases that could create significant and lasting value for Lithuania’s industry and national security.

The Defence and Security Industry Law entered into force in July 2024. Since then, defence institutions have signed five industrial cooperation agreements, according to the ministry.

The agreements provide for specific investments and new capabilities in Lithuania, including the development of howitzer repair capacity, investment in manufacturing equipment, technology transfers for assessing the quality of ammunition and explosives, research and experimental development, and the installation of specialised equipment.

Defence Minister Robertas Kaunas said the 100 million euro threshold showed that industrial cooperation had become a practical instrument delivering benefits to Lithuania’s defence industry through new capabilities, investment, technology transfers and innovation.

The amendments remove procedures that the ministry said created no additional value while complicating negotiations and contract signing. The Ministry of the Economy and Innovation will continue to issue an assessment on whether industrial cooperation is justified, but will no longer take part in signing the agreements. The Foreign Ministry will no longer be required to participate in assessing whether industrial cooperation is justified.

The rules also change how industrial cooperation commitments are calculated. The 30 percent obligation will be based on the quantities actually purchased rather than the maximum possible contract value. The ministry said this would reduce uncertainty for suppliers and the risk that potential obligations would raise their prices.

The ministry said applying industrial cooperation to lower-value purchases could prolong military equipment procurement and disproportionately increase the final price of commercial offers.

In late August, the ministry said it planned to submit draft legislation to the government in the autumn to speed up the procurement of weapons and military equipment. The announcement followed a State Control audit of arms and military equipment purchases by the national defence system from 2021 to 2025.