Europe’s defense investment boom: Germany's regulatory framework

Germany’s defense regulatory framework is evolving rapidly as the government seeks to accelerate procurement, infrastructure development and investment while strengthening security and resilience requirements. Recent reforms are creating significant opportunities across the defense ecosystem, but also a more complex landscape spanning procurement, export controls, cybersecurity, infrastructure, and public funding.

Acceleration of Bundeswehr procurement

The German Bundeswehr Procurement Acceleration Act (Bundeswehrbeschaffungsbeschleunigungsgesetz), which entered into force on 14 February 2026, now applies to all contracts above the relevant EU thresholds intended to meet the needs of the Bundeswehr. In addition to military requirements, this therefore includes all civilian requirements, such as medical supplies and construction services for the Bundeswehr.

In particular, the act suspends the requirement to divide contracts into lots until the end of 2035, expands the use of negotiated procedures without a prior call for competition, raises the applicable value thresholds, strengthens joint European procurement, and facilitates government-to-government sales. Contracting authorities may also restrict participation by entities from third countries and impose requirements regarding the proportion of European-origin content. It remains unresolved whether the restriction of legal remedies, under which a contract may be awarded despite a pending appeal, is constitutional. The Düsseldorf Higher Regional Court has referred the relevant provision to the Federal Constitutional Court for review.

In parallel, the Public Procurement Acceleration Act (Vergabebeschleunigungsgesetz), which entered into force on 1 July 2026, reforms general public procurement law while also introducing specific amendments for defense- or security-related contracts. In particular, the reform expands the options available to federal contracting authorities for making direct awards, simplifies procedures, strengthens digitalization, and accelerates procurement processes. Supplementary administrative provisions provide additional facilitations for start-ups and security authorities. Together with the Bundeswehr Procurement Acceleration Act, this creates a faster, but also more complex, regulatory framework comprising general public procurement law, specialized statutory rules for defense procurement, security-related exemptions, and legal remedies.

Further simplification and acceleration of export controls

As of 1 February 2026, the Federal Ministry for Economic Affairs and the Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA) have implemented another package of measures to simplify and expedite export controls. New and expanded general licenses facilitate certain exports and transfers of defense and dual-use goods, particularly in the context of European defense cooperation and the cloud-based exchange of controlled technology. Individual licenses are therefore no longer required for the transactions covered. At the same time, BAFA’s decision-making authority has been strengthened to simplify and expedite licensing procedures.

Further, as of 20 March 2026, a General Authorization valid through 15 September 2026 allows for the simplified delivery of certain air and maritime defense goods to Ukraine and selected Gulf states.

Bundeswehr infrastructure acceleration act

On 1 July 2026, the Federal Cabinet adopted the draft Bundeswehr Infrastructure Acceleration Act. The proposed legislation includes a new Bundeswehr Construction Act and amendments to 10 existing statutes. It is intended to accelerate the construction, expansion, and modernization of military infrastructure, including barracks, depots, training facilities, and transport connections. It provides for streamlined planning and approval procedures, targeted procedural simplifications, priority rules, and limited exemptions from environmental and nature conservation requirements, as well as faster land acquisition procedures and greater scope for the federal defense administration to implement construction projects directly. The draft remains subject to parliamentary approval and may create significant opportunities for construction, planning, engineering, and infrastructure companies.

Critical infrastructure and cybersecurity

Germany’s NIS-2 Implementation Act, in force since 6 December 2025, significantly expands statutory cybersecurity requirements. Covered entities are subject to risk-management, registration, and incident-reporting duties, while management bodies bear express responsibility for approving and overseeing the required measures.

The KRITIS-Dachgesetz, in force since 17 March 2026, complements the cybersecurity regime by introducing nationwide physical-resilience requirements for operators of critical facilities. Whether a defense or dual-use company falls within either regime depends on its sector, activities, size, and the applicable thresholds. Defense-related status alone does not automatically establish applicability.

Military Service Modernisation Act

The German Military Service Modernisation Act (Wehrdienst-Modernisierungsgesetz), in force since 1 January 2026, substantially reforms the framework for military service in Germany. From 2026, young men and women receive a digital questionnaire concerning their willingness and suitability to serve. Answering the questionnaire is mandatory for male German citizens and voluntary for women. Mandatory medical examinations for men born in 2008 or later are scheduled to begin on 1 July 2027. Military service remains voluntary unless the Bundestag subsequently activates a needs-based form of compulsory service by separate legislation. Voluntary military service generally lasts between six and eleven months. Commitments of 12 months or more are normally undertaken as a temporary-career soldier.

German defense budget

On 6 July 2026, the Federal Cabinet adopted the draft 2027 federal budget, proposing €109.7 billion for the Federal Ministry of Defense, in addition to remaining resources of €29.9 billion from the Bundeswehr Special Fund. The increase is facilitated by the March 2025 constitutional reform of Germany’s debt brake, under which qualifying defense and security expenditure exceeding 1% of the previous year’s nominal GDP may be financed through additional borrowing. The draft remains subject to parliamentary approval. The first reading was held on 9 September 2026.

While the figures provide a strong demand signal, they do not constitute a committed procurement pipeline: Individual projects remain subject to budgetary appropriations and commitment authorizations, and Bundeswehr procurement and development contracts exceeding €25 million generally require prior approval by the Bundestag Budget Committee.

Bundeswehr Infrastructure Acceleration Act / Reserve Service

On 15 October 2026, the German Parliament Federal held the first reading of the Federal Government’s draft Bundeswehr Infrastructure Acceleration Act. The bill would create new legal tools to speed up military construction, expand and secure Bundeswehr real estate, establish a strategic land reserve, introduce defense-related exceptions in environmental and nature conservation law, and assign selected proceedings to the Federal Administrative Court at first instance. The initiative is materially relevant for defense infrastructure, military logistics, construction companies and operators involved in NATO enablement and Germany’s role as a military transit hub.

On the same day the government’s draft Reserve Strengthening Act was also on the agenda and moved to committee stage. The proposal would reorganize reservist service rules, move service categories into a dedicated Reservists Act, and allow limited compulsory call-up of reservists for services beyond exercises outside a state of tension or defense. It is relevant for defense clients because Germany’s force-generation model would become more legally binding, with direct implications for employers, reservists, Bundeswehr readiness planning and the target structure of 460,000 deployable soldiers, including at least 200,000 reservists.

Bundesrat approves reform of the Federal Police Act, including counter-drone powers

On 25 September 2026 the German Bundesrat (Germany’ upper chamber) approved the Act modernizing the Federal Police Act after the Bundestag had adopted the reform in third reading. The reform is relevant to security and defense procurement because it updates federal police powers for current threat scenarios, including drone threats, and is linked to the build-up of counter-drone capabilities at federal level. For suppliers of detection, jamming, interception and related command-and-control systems, the reform strengthens the legal basis for operational deployment and future procurement.

Due to the federal structure and police powers sitting with the Länder (States) as well as strict constitutional limits of deploying military force against domestic threats, the establishment of counter-drone capabilities ran into legal difficulties of unclear responsibilities.

The EU framework sets the direction, but the regulatory landscape is shaped by how rules are implemented and enforced at national level. The following country views highlight the key legal considerations, differences and developments across major European jurisdictions.