Military procurement and the strategy for Romania’s defence industry

European context and strategic implications

As Europe recalibrates its security architecture, military procurement has become a strategic policy lever. The White Paper for European Defence – Readiness 2030 envisions mobilising up to EUR 800 billion to reinforce Europe’s defence industrial base, while placing clear responsibility on Member States to build national capabilities, including through joint procurement, as part of a broader European readiness effort.

Romania is aligned with this trajectory. The Ministry of National Defence (MApN) has signalled planned investments exceeding EUR 8 billion in 2025. These investments cover NATO-standard equipment, armoured vehicles, C4I systems and cyber infrastructure.

Crucially, the legal and strategic analysis of defence procurement in Romania extends beyond contracts directly managed by MApN. State-owned defence companies are increasingly initiating projects and entering into strategic partnerships with international prime contractors. They complement classic acquisition programmes with industrial cooperation, local production and technology transfer.

This mixed approach – direct procurement, offset-based cooperation and industrial partnerships – reflects an integrated legal and economic strategy in which the state is not only a purchaser but also a facilitator of a sustainable national defence industry. A prominent example is the expanding collaboration between Rheinmetall and Romanian entities, covering local production of infantry fighting vehicles, medium-calibre ammunition and preparations for what is set to become the largest propellant powder facility in Europe.

The legal framework for defence and security procurement in Romania

Romania’s defence and sensitive security procurements are governed by Government Emergency Ordinance No. 114/2011, which transposes Directive 2009/81/EC on defence and security procurement. This ordinance applies to:

• Military products and sensitive items.
• Classified services and related works.
• Works and services with a military or sensitive nature.

For mixed procurements, the applicable legal regime is determined by the predominant component. Contracting authorities are prohibited from structuring procurements to circumvent the relevant legal requirements.

Allowed award procedures include the restricted auction procedure, negotiated procedure, competitive dialogue and request for quotations. The open auction procedure is excluded to protect classified information and other security-sensitive aspects.

Key exceptions include:

• Government-to-Government (G2G) acquisitions.
• Intelligence services and arbitration/conciliation services.
• Contracts below EUR 100,000 (net of VAT).
• Situations justified under Article 346 of the Treaty on the Functioning of the European Union (TFEU).

Article 346 TFEU permits derogations from internal market rules only when strictly necessary to protect essential national security interests. It applies to measures relating to the production and trade of arms, munitions and war material, provided such measures do not adversely affect competition for products not intended specifically for military use. In Romania, reliance on Article 346 TFEU must be proportionate, clearly linked to an essential security interest and limited to cases involving strictly military use. This provision has been invoked in strategic programmes such as SHORAD–VSHORAD, where the protection of sensitive information required the use of restrictive procedures.

Subcontracting and security requirements

Government Emergency Ordinance No. 114/2011 establishes stringent rules on subcontracting:

• Tenderers must declare proposed subcontractors and the proportion of the contract to be performed by each.
• The contracting authority may impose restrictions as necessary to safeguard information security, security of supply and essential defence interests.
• Subcontractors must hold the appropriate facility security clearances and personnel clearances for access to classified information.
• Authorities may require supply-chain traceability and proof of surge capacity or assured delivery under crisis conditions.

Contracts typically include confidentiality and notification clauses, audit rights and sanctions for breaches of security requirements.

Parliamentary pre-approval for high-value programmes

Romanian law requires contracting authorities to obtain prior approval from the Parliament of Romania before initiating a procurement procedure if the estimated contract value (exclusive of VAT) is equal to or exceeds the RON equivalent of EUR 100 million.

A recent example is the SHORAD–VSHORAD programme conducted by MApN through Romtehnica, in partnership with Israel’s Rafael. The contract, valued at over EUR 200 million, was awarded through a restricted procedure, received parliamentary approval and was published in SEAP (the national e-procurement system) and the Official Journal of the European Union (OJEU). Its objective is to equip the armed forces with advanced air defence systems capable of countering drones and cruise missiles.

National Strategy for the Defence Industry 2024–2030

Adopted by the Government in November 2024, the National Strategy for the Defence Industry 2024–2030 aims to revitalise Romania’s defence industrial base. Priority areas include:

• Cyber and IT capabilities.
• Research, development and innovation (RDI).
• Public–private partnerships and international industrial cooperation.

The strategy supports the inclusion of mandatory industrial participation requirements in tender documentation to support the domestic industry. Tender dossiers may require, as a condition of award:

• integration of national industry in the supply chain;
• local production and in-country lifecycle support;
• technology transfer and licensed production;
• cybersecurity certification and secure-by-design standards; and
• RDI deliverables aligned with national capability priorities.

The strategy also establishes an inter-institutional coordination mechanism involving the Ministry of Economy, Entrepreneurship and Tourism (MEAT), MApN, the Supreme Council of National Defence (CSAT) and economic operators to align strategic acquisitions with industrial policy and security objectives.

Offset and industrial cooperation: legal basis and enforcement

Romania uses industrial cooperation (offset) mechanisms to leverage major defence acquisitions for national economic and technological development. The legal framework is governed by:

• Government Emergency Ordinance No. 124/2023 on technological and industrial cooperation in defence and security.
• Government Decision No. 438/2024, which provides the methodological norms for implementation.

The regime is administered by the Romanian Agency for Technological and Industrial Cooperation for Security and Defence (ARCTIS), which also extends cooperation obligations to G2G transactions where applicable.

Qualifying cooperation activities include:

• transfer of technology, licensing and know-how;
• research, development and innovation activities;
• subcontracting to Romanian economic operators;
• export promotion of Romanian defence products and services; and
• establishment or upgrading of local maintenance, repair and overhaul (MRO) and test facilities.

Enforcement and guarantees under the offset regime include the following:

• The contractor must provide a performance bond equal to 5% of the total cooperation commitment, valid for the entire duration of the cooperation agreement.
• ARCTIS verifies progress at 50% and 100% completion milestones.
• Delays relative to the approved implementation calendar attract penalties of 15% of the unfulfilled value.
• If penalties are not paid, ARCTIS may execute the guarantee.
• Failure to fulfil obligations within one year of the deadline may lead to exclusion from defence procurement procedures for five years.

Illustrative programmes include the COBRA II vehicle project with Otokar and the Elbit Systems–ROMARM partnership for ATMOS howitzers, both featuring local production, technology transfer and long-term maintenance capabilities – consistent with the strategy’s goals of capability sustainment and export potential.

Practical takeaways for the industry

• Embed industrial policy lawfully: Ensure measurable, auditable industrial participation requirements (local content, technology transfer, RDI deliverables, cyber certification) are aligned with the 2024–2030 strategy.
• Structure enforceable offset: Align cooperation obligations with Government Emergency Ordinance 124/2023 and Government Decision 438/2024, secure appropriate guarantees and plan for milestone audits and penalties.
• Leverage partnerships: Use G2G and strategic OEM partnerships to accelerate capability delivery while anchoring long-term sustainment and exports in Romania.

Conclusion

Romania’s defence procurement regime combines EU-derived legal safeguards with national strategic objectives. By integrating competitive procedures, targeted derogations, parliamentary oversight and enforceable industrial cooperation, Romania is positioned to accelerate capability acquisition and rebuild its defence industrial base. The evolving portfolio – from air defence to armoured platforms, ammunition and cyber – demonstrates a shift from ad hoc purchasing to a coherent legal and industrial strategy aligned with Europe’s broader readiness agenda.