Competition for security and defence contracts – The new Bundeswehr Procurement Acceleration Act 2026 (BwBBG)

A shift in security policy is taking place in Europe, entailing significant rearmament efforts both at Member State level and at European Union level. Whilst the EU aims to develop into an effective defence union in the long term, Germany is seeking to assume a leading role in European security policy. To achieve these objectives, public procurement law has been and continues to be amended in various ways at both European and national levels – on the one hand, to accelerate rearmament processes, and on the other, to strengthen the European security and defence industry. 

The competitive tensions resulting from this intervention in the security and defence procurement market are currently the subject of much debate (see, amongst others, Reichling/Stamm/Brey, ‘The Tension between Security and Defence Procurement – the Federal Government as a Contracting Authority in an Evolving Defence Union’, WiVerw 2026, p. 1 ff.). 

This debate has now been fuelled by the decision of the Higher Regional Court of Düsseldorf, which has referred the Bundeswehr Procurement Acceleration Act (“BwBBG 2026”) – which came into force on 14 February 2026 – directly to the Federal Constitutional Court (BVerfG) for review. It criticises the fact that these reductions in legal protection, resulting from the extensive abolition of suspensive effect in public procurement appeal proceedings, are no longer proportionate to the acceleration of the procurement process thereby achieved. This article aims to examine the extent to which the BwBBG 2026 actually realises its potential for acceleration and what this means for the guarantee of effective legal protection:

Significantly expanded scope of application

Arguably the most striking change concerns the material scope of the BwBBG 2026, which now brings a noticeably greater number of public contracts under the special legislation, which is limited in time until 31 December 2035. Under Section 2 of the BwBBG 2022, the Act applied exclusively to public contracts in the above-threshold category where the subject matter of the contract concerned the supply of military equipment serving to directly enhance the Bundeswehr’s operational capability – including directly related construction and maintenance services. The BwBBG 2026 goes considerably further in this respect: from now on, pursuant to Section 1 of the BwBBG 2026, all ‘Bundeswehr requirements’ in the above-threshold sector are subject to the special provisions governing accelerated procurement. This extension is of considerable significance, as it means that even contracts not specifically related to defence or security – such as the procurement of medical supplies, clothing or infrastructure services – fall within the scope of the Act, provided they serve to meet a Bundeswehr requirement. Furthermore, the definition of bodies authorised to procure is broadened: In addition to the Federal Ministry of Defence (BMVg), the authorities within its remit and federally-owned companies, the scope will in future also include companies in which the Federal Government holds a majority stake, state institutions under Section 5b of the Financial Administration Act (FVG), the Federal Office for Building and Regional Planning and the Federal Agency for Real Estate Tasks. 

Extended exemption from competition law in public procurement

One of the key special provisions for Bundeswehr procurement lies in the clarification of how the term ‘essential security interests’ within the meaning of Section 107(2) of the German Act against Restraints of Competition (GWB) in conjunction with Article 346(1)(b) of the Treaty on the Functioning of the European Union (TFEU) is to be interpreted. If a public contract relates to the safeguarding of such essential security interests within the meaning of Article 346(1)(b) TFEU, it does not have to be put out to tender in accordance with the rules of competition and public procurement law. Section 4(2), first sentence, No. 3 of the BwBBG 2022 already provided that essential security interests could also be affected in the context of cooperative procurement with other Member States. Section 2(1)(1) and (2) of the BwBBG 2026 now further clarifies that projects are generally exempt from competition law (“Exceptions to public procurement law”) which are of essential importance for security of supply and the strengthening of defence readiness – in particular the manufacture of weapons, ammunition and military equipment, including the necessary infrastructure and production in Germany. 

Another new feature is the mandatory invocation of the emergency clause in Article 347 TFEU within the scope of the BwBBG. This entitles Member States to derogate from competition and public procurement law insofar as compelling political or military circumstances so require. Section 2(3) of the BwBBG 2026 now mandatorily prescribes the derogation from antitrust procurement law in the event of such a situation, leaving no scope for discretion in this regard.   

Suspension of the ‘lot’ principle protecting bidders

One of the key levers for accelerating the process is the reform of the principle of lot allocation. The principle laid down in Section 97(4) of the German Act against Restraints of Competition (GWB) serves primarily to safeguard the interests of small and medium-sized enterprises by providing for a general obligation to award public contracts in the form of partial and specialised lots. Section 3(1) of the BwBBG 2022 provided for a broader exception, under which a single overall contract was permissible on economic, technical or time-related grounds – though its practical impact remained limited. For this reason, the BwBBG 2026 now goes considerably further: Section 8(1) of the BwBBG 2026 mandates the general non-application of Section 97(4), sentences 2 to 4, of the GWB and Section 10(1) of the VSVgV. Consequently, the interests of small and medium-sized enterprises need not be taken into account any further in the procurement of all the Bundeswehr’s requirements over the next five years. This is justified on the grounds that, until now, small and medium-sized enterprises have had the opportunity to have breaches of the principle of separate lots reviewed by the public procurement tribunals – which could, in any case, potentially lead to significant delays in the procurement of requirements. 

Weakening the invalidity of de facto awards

If a public contract is awarded without carrying out the prescribed formal tendering procedure, this constitutes a breach of public procurement law and may, pursuant to Section 135 of the German Act against Restraints of Competition (GWB), result in the contract being void ab initio. The BwBBG 2022 had already breached the principle of the mandatory invalidity of de facto awards in Section 3(4) and (5). A contract could then be deemed not to be invalid provided that, following an examination of all relevant factors, compelling reasons of public interest – taking into account defence and security interests – justified this. Instead, an alternative sanction was to be imposed, namely a financial penalty of up to 15 per cent of the contract value or a reduction in the contract term. This provision is, in principle, retained in Section 10 of the BwBBG 2026; however, the financial penalty is reduced to a maximum of 10 per cent of the contract value. 

Abolition of suspensive effect – and the referral by the Higher Regional Court of Düsseldorf to the Federal Constitutional Court

Arguably the most controversial change concerns the suspensive effect of the immediate appeal. Section 6(1) of the BwBBG 2022 provided for an expedited immediate appeal, in which defence and security interests generally took precedence following a balancing of interests. The BwBBG 2026 now goes a step further: under Section 16(1) of the BwBBG 2026, an immediate appeal simply no longer has suspensive effect if the Public Procurement Tribunal has rejected the application for review. As a result, if the contracting authority prevails at first instance, the unsuccessful tenderer is largely cut off from primary legal protection and referred to secondary legal protection – that is, compensation for damages. Put simply, this means that, following a decision by the Public Procurement Tribunal, the contract may be awarded provided that the Tribunal concludes that there has been no breach of public procurement law. The unsuccessful tenderer then has no further opportunity to set the award process back on the right track by means of primary legal protection. 

This provision was referred to the Federal Constitutional Court by the Public Procurement Division of the Higher Regional Court of Düsseldorf (decision of 18 May 2026, Verg 6/26) just three months after the Act came into force. The Federal Constitutional Court must now determine whether Section 16(1) of the Federal Budget Act 2026 (BwBBG 2026) is compatible with the guarantee of effective legal protection (Article 19(4), first sentence, of the Basic Law) and the general right to access to justice (Article 20(3) of the Basic Law). The Senate is convinced that the provision is unconstitutional. In its detailed reasoning, it states, amongst other things, that the provision largely abolishes primary judicial protection as soon as an application for review is rejected by the Public Procurement Chamber – for without suspensive effect, the contracting authority could award the contract immediately, thereby bringing the review proceedings to an end. The Senate emphasises that the public procurement tribunals are not courts and are not staffed by judges to whom Article 92 of the Basic Law – the tenderer seeking legal protection would, within the framework of primary legal protection, be restricted solely to internal administrative self-regulation.

However, this is particularly significant because, over the past three years, there have been an annual average of only four appeal proceedings relating to the Bundeswehr before the competent Higher Regional Court of Düsseldorf. The time saving achieved by the provision amounted to approximately six months – a benefit which the Senate does not consider sufficient to justify the far-reaching abolition of primary legal protection. Furthermore, the legislature had not considered any alternatives, such as increasing the staffing levels of the procurement review bodies, which, given the Bundeswehr’s very high expenditure, would be of negligible fiscal significance.

Outlook

The key question is undoubtedly whether the legislature will stand by its commitment to abolishing suspensive effect even if the Constitutional Court in Karlsruhe were to rule that this provision is unconstitutional. 

This can certainly be assumed given that the provision abolishing suspensive effect in the Public Procurement Acceleration Act (VergRBeschlG) has become the new standard for the entire field of public procurement law, despite the judicial review proceedings already underway concerning the identical provision in the Bundeswehr Budget Act (BwBBG) (see our article on the Public Procurement Acceleration Act; the provision in section 16(1) of the BwBBG has since been deleted in that context on grounds of redundancy). The political will to retain this provision appears to be strong in this respect, particularly as constitutional concerns were raised throughout the entire legislative process (see, inter alia, Burgi, Statement on the draft BwPBBG, 6 November 2025, Committee Paper 21(9)115). Discussions are therefore likely to focus on the pragmatic solution of simply assigning the public procurement tribunals to the courts in the event of a constitutional challenge. Those seeking legal redress would then no longer be restricted to purely internal administrative self-regulation. In substance, however, this would change little, because the GWB (Act against Restraints of Competition) already provides in Sections 155 et seq. that the public procurement tribunals are to be staffed by members qualified to hold judicial office and also grants them independence akin to that of the courts. In this respect, such a reorganisation would be a predominantly formal act – which certainly puts the criticism levelled by the Higher Regional Court of Düsseldorf into perspective to some extent. After all, in functional terms, the decisions of the public procurement tribunals correspond to those of the courts (Federal Court of Justice, decision of 25 October 2011 – X ZB 5/10).

Alternatively, consideration could be given to retaining the waiver of suspensive effect only on the merits. This would at least afford the appeal courts the possibility, in exceptional cases, of ordering suspensive effect, as is provided for in administrative judicial protection under Section 80(5) of the Administrative Court Rules (VwGO) or in the case of an interim order pursuant to Section 570(2), 3 of the Code of Civil Procedure (ZPO). 

Likewise, the merits of this comprehensive ‘acceleration’ doctrine in the procurement of security and defence capabilities are likely to become the subject of primarily political debate. By 2025, Germany’s defence spending had risen by a considerable 24 per cent compared with the previous year. Whether this is reflected in a corresponding increase in military capabilities is a matter of debate. However, in view of the ‘gold-rush atmosphere’ prevailing in the defence industry, doubts are increasingly being voiced in this regard. These concerns, in turn, can only be allayed by ensuring, at least in principle, competition in the market for security and defence equipment. However, the BwBBG runs diametrically counter to this by undermining the principle of competition.