Selling to the Government

Government procurement in Europe is governed by international obligations under the WTO Government Procurement Agreement (GPA) and EU-wide legislation under the EU Public Procurement Directives. U.S.-based companies can bid on public tenders covered by the GPA, while European subsidiaries of United States companies may bid on all public procurement contracts covered by EU directives, as implemented through national legislation.  

All public procurement procedures in the European Union are carried out on the basis of national rules.  For higher value contracts, these rules are based on general EU public procurement rules. The value limits, or thresholds, for EU rules depend on the subject of the purchase and who is making the purchase. These thresholds are revised regularly, and the amounts adjusted slightly. The limits are €143,000 for most types of services and supplies purchased by central government authorities, and €5,582,000 for construction contracts. For lower value tenders, only national public procurement rules apply, but the general European Union principles of transparency and equal treatment should be respected.  

The EU directives governing public procurement are:
•    Directive 2009/81/EC on defense and sensitive security procurement.  This directive sets EU rules for the procurement of arms, muni¬tions, and war material (plus related works and ser¬vices) for defense purposes, and for the pro¬curement of sensi¬tive supp¬lies, works, and ser¬vices for non-mili¬tary security pur¬poses.
•    Directive 2014/24/EU on the coordination of procedures for the award of public works contracts, public supply contracts, and public service contracts applies to the general sector.
•    Directive 2014/25/EU coordinates the procurement procedures of entities operating in the water, energy, transport, and postal services sectors.
•    Directive 2014/23/EU on the award of concession contracts. A concession contract (either for the delivery of works or services) is conducted between a public authority and a private enterprise to build infrastructure and operate businesses that would normally fall within the jurisdiction of the public authority (e.g., highways).
In addition, the European Union has “remedies” directives imposing common standards for all Member States to abide by in case bidders identify discriminatory public procurement practices.

Electronic invoicing (i.e., e-invoicing) was introduced in 2018, based on the requirement set forth in Directive 2014/55/EU. The Directive makes the receipt and processing of electronic invoices in public procurement obligatory. The European Committee for Standardization developed standards for e-invoicing (EN 16931).

There are restrictions for U.S. suppliers in the utilities sector across the European Union, both in the EU Utilities Directive and in coverage of the GPA. Article 85 of Directive 2014/25 allows European Union contracting authorities to either reject non-EU bids where the proportion of goods originating in non-European Union countries exceeds fifty percent or give preference to the EU bid if prices are equivalent (within a three percent margin). Moreover, the Directive allows EU contracting authorities to retain the right to suspend or restrict the award of service contracts to undertakings in third countries where no reciprocal access is granted.

There are also restrictions in the coverage of the GPA that apply specifically to U.S.-based companies. United States companies are not allowed to bid on works and services contracts procured by sub-central public contracting authorities in the water, airport services, urban transport and railways, or dredging services and procurement related to shipbuilding sector and sub-sectors.

The European Union has shifted the region’s economic policy vis-à-vis China to give the Commission greater authority to address negative impacts resulting from that government’s practice of subsidizing investments made by state-owned enterprises. That activity could take the form of an acquisition or other investment that displaces an established European business or industry. To ensure established enterprises and industries retain a fair opportunity to compete, the European Union enacted the Foreign Subsidies Regulation in 2022, which gives the Commission the power to investigate investments and other activity when there is evidence that they have had a distortive effect on free-market competition. This regulation allows the Commission to take remedial action against an offending entity. These actions include prohibiting the entity from participating in tendering for public procurement contracts or blocking the investment. So far, this regulation has only been used with respect to proceedings involving mergers and acquisitions, but the Commission could also investigate companies involved in public procurement proceedings with this regulation.

The European Union also adopted the International Procurement Instrument regulation in 2022, which allows the Commission to restrict access to the EU procurement market for foreign companies if the country from which they originate is found to apply restrictions to EU companies under their own procurement rules. The only example of this regulation being enacted so far is against medical devices from China worth more than €5 million.  

The EU is actively revising its public procurement framework, including the above-mentioned directives.  It is expected that new legislation will simplify public procurement, include more non-pricing criteria in line with sustainability and resilience goals, and give preference to European products especially in strategic sectors.  

Project Financing

EU financial assistance programs provide a wide array of grants, loans, loan guarantees, and co-financing for feasibility studies and projects in a number of key sectors (e.g., environmental, transportation, energy, telecommunications, tourism, and public health). A number of centralized financing programs also generate procurement and other opportunities directly with EU institutions.

The European Union supports economic development projects within the Member States, as well as EU-wide “economic integration” projects that cross both internal and external EU borders. In addition, the European Union helps candidate and neighboring countries. For example, the European Union provides project financing through grants from the EU budget and loans from the European Investment Bank.  Grants from the EU Structural and Investment Funds program are distributed through the Member States’ national and regional authorities.  Projects in non-European Union countries are managed through the Directorate-Generals of International Cooperation and Development and European Civil Protection and Humanitarian Aid Operation.

EU Structural and Investment Funds 

EU Structural Funds and Investment Funds (ESIF), including the European Regional Development Fund and the European Social Fund, were created in 1975 to mitigate economic and social differences between the regions within the European Union. New budgets are approved every seven years for all Member States.  Budgets and the allocation of funding between the EU priorities (e.g., social, economic, or environmental) are based on the conclusions of Partnership Agreements, which are negotiated between the European Commission and Member State national authorities. From 2014 to 2020, the European Union earmarked €352 billion for regional development and cohesion policy projects. For example, in response to the COVID-19 pandemic, a crisis repair initiative was launched under the name Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU). The REACT-EU fund included €55 billion available through ESIF funds.

For 2021 to 2027, five main policy objectives were identified for funding: a more competitive and smarter Europe; a greener, low carbon transitioning towards a net zero carbon economy; a more connected Europe by enhancing mobility; a more social and inclusive Europe; and the fostering of the sustainable and integrated development of all types of territories. Funding mechanisms are drawn from the European Regional Development Fund, the European Social Fund+, the Cohesion Fund (see below), the Just Transition Fund, and the Interreg programs.

For projects financed through ESIF, Member State regional managing authorities are the key decision-makers. They assess the needs of their country, investigate projects, evaluate bids, and award contracts. To become familiar with available financial support programs in the Member States, would-be contractors should develop a sound understanding of the country’s cohesion policy indicators.

Tenders issued by Member States’ public contracting authorities for projects supported by EU grants are subject to EU public procurement legislation. All ESIF projects are co-financed by national authorities, and many may also qualify for a loan from the European Investment Bank in addition to private sector contributions. 

The Cohesion Fund 

The Cohesion Fund is another instrument of the European Union’s regional policy, which supports investments in the field of environment and trans-European transport infrastructure networks. For the 2021-2027 programmatic period, the Cohesion Fund applies to Bulgaria, Czechia, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovakia, and Slovenia. In addition, 37% of the overall financial allocation of the Cohesion Fund is expected to contribute to climate objectives.

In addition, the European Regional Development Fund finances programs under shared responsibility between the European Commission and national and regional authorities in Member States.  The Member States’ administrations choose which projects to finance, and they take responsibility for day-to-day management.

Other EU Grants for Member States 

Other sets of sector-specific grants, such as Horizon Europe, aid Member States in the fields of science, technology, communications, energy, security, environmental protection, education, training, and research.  Tenders related to these grants are posted on the websites of the European Commission and the relevant Member State authorities. Participation is usually restricted to EU-based firms or tied to EU content.  

Horizon Europe spans from 2021 to 2027 with a total budget of €75.9 billion. It implements mission-driven research focusing on adaptation to climate change, including social transformation; cancer; climate-neutral and smart cities; healthy oceans, seas, coasts, and inland waters; and soil health. It is expected that these missions will be addressed within the Global Challenges and European Industrial Competitiveness pillar.

External Assistance Grants 

The Directorate-General for International Cooperation and Development is responsible for implementing EU development policies through programs and projects beyond the borders of the European Union. Its website offers extensive information on the range of grant programs, the kind of projects that are eligible, and manuals to help interested parties understand the relevant contract law. However, participation in these calls for tender is reserved for enterprises located in Member States or in the beneficiary countries and requires that the products used to respond to these projects are manufactured in the European Union or in the aid recipient country. U.S. consultants employed by a European firm as well as European subsidiaries of U.S. firms are allowed to participate.

In addition, the Instrument for Pre-accession Assistance II (IPA II) is an EU program for pre-accession countries that provides support for political and economic reforms, preparing the beneficiaries for the rights and obligations that come with EU membership and that are linked to the adoption of the acquis communautaire (i.e., the body of European Union law that must be adopted by candidate countries as a precondition to accession).  

These programs are intended to help build up the administrative and institutional capacities of these countries and to finance investments designed to aid them in complying with EU law. The successor program, IPA III, will aim to accelerate project implementation by reducing the time gap between project selection, which will be based on technical maturity besides alignment to the country-specific recommendations of the enlargement package, and effective contracting. In addition, the final selection of actions will also consider the assessment of the performance of the beneficiaries in the enlargement agenda, and their commitment to and progress in implementing reforms, with particular attention to fundamental areas like the rule of law.

The Connecting Europe Facility (CEF) is an EU financing mechanism that uses the EC budget as well as the Cohesion Funds to finance projects in transport, energy, and digital. Along with EFSI, CEF is expected to play a role in bridging the investment gap in Europe, which is one of the Commission’s top priorities. In all three main categories, the focus is on creating better conditions for growth and jobs. For the 2021-2027 period, the budget amounts to €25.8 billion for transport, €5.8 billion for energy, and €2.1 billion for digital.  Annual and multi-annual work programs specify the priorities and the total amount of financial support allocated for these priorities in a given year, and there are certain regulations limiting eligibility for support.  Only actions contributing to projects of common interest in accordance with Regulation 1315/2013, Regulation 347/2013, and a Regulation on guidelines for trans-European networks in the area of telecommunications infrastructure, as well as program support actions, are eligible for support.

Loans from the European Investment Bank 

Headquartered in Luxembourg, the European Investment Bank (EIB) is the financing arm of the European Union.  Since its creation in 1958, the EIB has been a key player in building Europe.  As a non-profit banking institution, the EIB assesses, reviews, and monitors projects, and offers cost-competitive, long-term lending. Best known for its project finance and economic analysis, the EIB makes loans to both private and public borrowers for projects supporting four key areas: innovation and skills, access to finance for smaller businesses, climate and environment, and infrastructure. The EIB opens credit lines for financial institutions that then lend funds to creditors.

While the EIB mostly funds projects within the European Union, it lends outside the European Union as well.  In 2024, the EIB signed a total of €100 billion in financing, with its arm for global partnerships (EIB Global) signing €89 billion in new financing. The EIB also plays a key role in supporting European Union enlargement with loans used to finance improvements in infrastructure, research, and industrial manufacturing to help those countries prepare for eventual European Union membership.  The EIB presents attractive financing options for projects that contribute to those objectives, as EIB lending rates are lower than most other commercial rates.

Projects financed by the EIB must contribute to the socio-economic objectives set out by the European Union, such as fostering the development of less favored regions, improving European transport and environment infrastructure, supporting the activities of SMEs, assisting urban renewal and the development of a low-carbon economy, and generally promoting growth and competitiveness in the European Union. 

Multilateral Development Banks

The U.S. Commercial Service maintains Commercial Liaison Offices at the World Bank and the European Bank for Reconstruction and Development. These institutions lend billions of dollars to developing countries on projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help U.S. businesses learn how to get involved in bank-funded projects and advocate on behalf of U.S. bidders. For more information, check the websites of the Foreign Service Commercial liaisons to the European Bank for Reconstruction and Development and the World Bank.

Defense

Background

The EU is undergoing significant changes in its defense and security procurement policies. Recent initiatives, such as the Security Action for Europe (SAFE) loan program, the European Defense Industry Program (EDIP), and the anticipated reopening of the Directive on Defense and Security Procurements reflect the EU’s intent to strengthen its defense industrial base and reduce reliance on non-European suppliers. These policies are part of a broader trend toward fostering European strategic autonomy, which has significant implications for U.S. companies competing for contracts and funding in the region.

The Security Action for Europe Loan Program 

The SAFE loan program is designed to strengthen the European defense industrial base by improving access to financing for European defense companies, particularly small- and medium-sized enterprises. The program provides €150 billion in loan guarantees, enabling European firms to secure financing for research, development, and production. By reducing risk for lenders, the program encourages private investment in the European defense sector and enhances the competitiveness of European firms. While U.S. companies are not explicitly excluded, the program’s minimum content requirements (i.e., the 65% European content rule), design authority requirements, and focus on European industry development limits opportunities for non-European firms, may make U.S. company participation difficult. In a U.S. context, with some specific exceptions laid out in the SAFE regulation, the design authority rule prevents any defense item that touches a U.S. export control – such as the International Traffic in Arms Regulations (ITAR) – from being eligible for funding under SAFE. 

European Defense Industry Program

EDIP is a €1.5 billion fund designed to address urgent defense capability gaps and strengthen the European defense industrial base that is expected to be formally adopted by the EU in December 2025. EDIP focuses on facilitating joint procurement among Member States, ensuring that European companies—particularly SMEs—benefit from collaborative defense projects. The program complements the broader European Defense Fund by addressing short-term priorities and bridging gaps between now and the end of the current Multiannual Financial Framework in 2027. EDIP-funded projects must meet the 65% European content rule such that the majority of components, labor, and intellectual property originate from the Member States.  EDIP is also expected to introduce design authority requirements, which ensure that critical design decisions and intellectual property rights remain under European control. In this context, design authority refers to the entity responsible for making key technical and engineering decisions during the development, production, and lifecycle management of a defense system. This includes control over intellectual property associated with the defense system, such as patents, technical specifications, and proprietary designs. In a U.S. context, the design authority rule prevents any defense item that touches a U.S. export control – such as ITAR – from being eligible for funding under EDIP.  

Directive on Defense and Security Procurements

Currently, EU countries are permitted to purchase U.S. defense equipment through open tenders, bilateral agreements, or via NATO/foreign military sales channels. The existing Directive on Defense and Security Procurements (2009/81/EC) sets basic rules for cross-border competition inside the EU, but it does not force countries to buy European products. However, Member States often bypass the Directive’s competitive procedures and proceed directly to U.S. foreign military sales programs. The Directive is set to be reviewed in 2026, which could impact U.S. defense companies. As part of this review, the Commission is likely to enable more procurement money to circulate within Europe and to support EU industry. Additionally, revisions are likely to reinforce European preferences prioritizing European suppliers in procurement decisions. 

EU Space Act

The European Commission released its proposal for the EU Space Act on June 25, 2025, which seeks to harmonize safety, cybersecurity, and environmental standards for space operators between member states.  As drafted, the EU Space Act may increase regulatory barriers for U.S. companies seeking EU space contracts as part of the EU’s broader push for “strategic autonomy. The Act seeks to reduce dependence on non-EU countries for critical space services. The proposal establishes plans to harmonize authorizations, safety, cybersecurity, and environmental standards for space operators; reduce space debris; and create a risk assessment framework for cybersecurity. The plan also empowers EU institutions (especially the European Union Agency for the Space Program) with new oversight, registration, and certification powers, and it establishes a Union Space Resilience Network for coordinated responses to cyber incidents.  Regarding third-country involvement, the proposal introduces additional technical requirements that all space services providers outside of the EU must comply with to operate in the EU market and mandates that third-country operators appoint a legal representative within the EU.  The Space Act is expected to take effect in 2030.