Industrial participation (IP) and military goods
The Netherlands has an innovative defence and security industry. But the defence materiel market is not a level playing field. Many countries prefer to purchase military systems from their own national defence industry. Foreign suppliers are therefore less likely to be awarded contracts.
Industrial participation helps Dutch manufacturers
Industrial participation (IP) strengthens the position of Dutch manufacturers on the defence market. If the Ministry of Defence orders military goods from abroad, in certain cases the Dutch government may require the foreign supplier to place offset orders with Dutch manufacturers (industrial participation).
IP is permitted under the exemption provided for by article 346 of the Treaty on the Functioning of the European Union (TFEU) for the protection of the essential interests of a country’s security. The leading policy document on IP is the Defence Industry Strategy (DIS).
When is industrial participation required?
The Dutch government can require industrial participation if the Ministry of Defence buys military materiel from a foreign supplier. This generally concerns orders worth more than € 5 million. The Commissariat for Military Production (CMP) is responsible for industrial participation. It concludes IP agreements with foreign suppliers to fulfil this obligation. It also helps foreign suppliers get in touch with Dutch companies.
Would you like more information about the possibilities of IP? Then send an email to one of the advisors Industrial Participation, see organizational chart Commissariat Military Production for contact information.
Industrial participation obligations for Dutch companies
Exporters may also be required to place offset orders, subject to the requirements of the importing country.