The BwBBG Under Review – A New Turbo for Defence Procurement?

The “turning point” (Zeitenwende) initiated in February 2022 is now leading to a welcome acceleration, at least in defence procurement. The aim is to restore Germany’s defence readiness as quickly as possible. On 14 February 2026, the “Act on Accelerated Planning and Procurement for the Bundeswehr” (BwPBBG) entered into force. This legislative package includes amendments to the German Aviation Act and the Act against Restraints of Competition (GWB), as well as a revised version of the “Bundeswehr Procurement Acceleration Act” (BwBBG).

This revised version of the BwBBG, originally enacted in 2022, introduces simplifications and acceleration measures for procurement in the defence sector and for construction contracts related to defence. These measures are currently set to expire after nearly ten years, on 31 December 2035. The new BwBBG was adopted by the parliamentary groups of the CDU/CSU, SPD, and AfD against the votes of Bündnis 90/Die Grünen and Die Linke, the latter criticising the law as a “huge gift to the defence industry.”

Deviation from the Lotting Principle: Risks to SME Interests?

The scope of the BwBBG is not limited to military equipment. Rather, the simplifications apply to all contracts covering the Bundeswehr’s needs—including civilian contracts such as medical supplies and even construction works.

Accordingly, Section 2(1) BwBBG expands the scope of Section 107(2) GWB: procurements aimed at achieving European defence readiness or fulfilling NATO obligations generally affect Germany’s essential security interests (No. 1). The same applies to ensuring supply security for weapons, ammunition, and war materials (No. 2), as well as for “key defence industrial technologies” (No. 4).

A key provision of the new BwBBG is set out in Section 8(1), according to which Section 97(4) sentences 2–4 GWB do not apply within the scope of the Act. As a result, the principle of dividing contracts into lots is waived for procurements covering the needs of the Bundeswehr or the armed forces of other EU Member States. Section 8(2) establishes the same rule for public construction contracts in the defence sector.

The lotting principle is an important tool for promoting SMEs. It ensures that not only global players but also small and medium-sized enterprises (SMEs) can participate in public tenders without being overwhelmed by excessively large contract volumes. Originally, the deviation from this principle was to be limited until the end of 2030. It has now been extended until 31 December 2035, in line with the duration of the Act as a whole.

The waiver of the lotting principle was introduced in close coordination with SME associations. The Act thus subordinates SME protection to the overarching objective of fully accelerating defence procurement. Nevertheless, care should still be taken to ensure SME participation. This is achieved by maintaining the applicability of Section 97(4) sentence 1 GWB, which requires that SME interests be given primary consideration.

Indeed, the legislator has sought to strike a fair balance by allowing contracting authorities, under Section 5, to make advance payments. The possibility of agreeing on prepayments is intended to open procurements to a broader range of bidders. SMEs and innovative start-ups in particular benefit from this provision, as it enables financially weaker bidders to access contracts, they might otherwise be unable to perform without costly interim financing. However, contracting authorities should keep insolvency risks in mind when making advance payments and take appropriate safeguards.

Accelerated Review Procedures

Another core aspect of the BwBBG is the acceleration of review procedures. The direction of these measures is clear: procurement review proceedings are to be made less attractive for unsuccessful bidders. Pure formalism should no longer be able to block defence procurements. In this respect, the legislator has made a strong policy choice in favour of accelerated procurement, at the expense of bidder interests.

Section 15 provides that the Federal Public Procurement Tribunal (Vergabekammer des Bundes) shall have jurisdiction over all review procedures in defence matters. While this body is already typically competent, the legislator aims to close potential gaps and ensure uniform interpretation of the law.

The Act also extends the obligation to raise objections (Rügeobliegenheit) under Section 160(3) sentence 1 no. 1 GWB to applications seeking a declaration of contract ineffectiveness. Previously, in cases of allegedly unlawful de facto awards, applicants could directly initiate review proceedings without prior objection, although objections were often raised in parallel in practice. This exception, set out in Section 160(3) sentence 2 GWB, has now been removed.

Furthermore, at the request of the contracting authority, decisions may be made based on the file alone. The prohibition on awarding the contract during review proceedings ends if the contracting authority prevails at first instance upon notification of the decision.

Interim awards are also facilitated: the previously rarely used interim procedure under Section 169(2) GWB is now structured so that defence and security interests generally outweigh the interests of unsuccessful bidders. This provision effectively establishes a presumption in favour of interim awards. The aim is to minimise procurement delays caused by review procedures, meaning that interim awards are likely to become significantly more common even while review proceedings are ongoing.

Finally, immediate appeals are weakened (Section 16). In cases where a review application has been rejected, an immediate appeal to the Higher Regional Court no longer has suspensive effect. This means that, unlike under normal circumstances, the contract may be awarded despite the pending appeal, rendering the appeal procedure largely ineffective.

In combination with Section 10, these legislative decisions are likely to have a substantial impact. The Act allows the Federal Procurement Tribunal, in cases of procurement law violations, to refrain from declaring a concluded contract ineffective. Instead, alternative sanctions may be imposed (Section 10(2)), such as financial penalties of up to ten percent of the contract value or a reduction in contract duration.

Financial penalties against contracting authorities are of limited practical effect and are unlikely to create strong incentives for compliance. Reducing contract duration can also be problematic, particularly for longer-term contracts where risks and initial investments are amortised over time. Such reductions may disrupt this amortisation and potentially give rise to compensation claims by the contractor—ultimately to the detriment of the contracting authority. The contract itself remains in force. Notably, the maximum financial penalty has been reduced from 15 percent under the original BwBBG to 10 percent, with the aim of preserving defence-critical contracts—even at the expense of unsuccessful bidders.

Direct Awards and Innovation Partnerships

The BwBBG now permits negotiated procedures without prior publication (so-called direct awards) where interoperability requirements of defence equipment make this necessary (Section 4). In doing so, the legislator prioritises seamless system integration over the competition principle. Direct awards are also permissible where interoperability is required in military cooperation with other EU Member States.

In addition, Section 14(1) allows the use of innovation partnerships for procurements under the Act wherever a negotiated procedure would otherwise be permissible. This instrument, originally introduced for civilian procurement, is now explicitly extended to the defence sector.

Although negotiated procedures with prior publication were already permitted under the VSVgV and offered similar advantages in practice, the explicit reference in Section 14(1) formally incorporates innovation partnerships into defence procurement. These allow, for example, remuneration of innovation partners for achieving intermediate milestones. At the same time, the contracting authority may terminate the partnership after each development phase if the project does not progress as desired, thereby enhancing flexibility in procuring innovative solutions.

Conclusion

Overall, the revised BwBBG provides a well-balanced set of measures that are likely to significantly accelerate defence procurement. Long-standing issues in procurement law—such as excessive formalism and the duration of review procedures—are effectively addressed. Innovation is strengthened and procurement processes become more flexible.

Despite the deviation from the lotting principle, SME interests are still considered, and the growing start-up ecosystem in the defence sector is supported. Whether the not uncontroversial restrictions on legal protection will prove viable in practice remains to be seen.