Key facts
- EU draft regulation to exclude foreign companies posing security risks from public procurement.
- Concerns focus on data transfers, critical infrastructure, and strategic dependencies on third countries.
- Public buyers can exclude firms with ownership structures vulnerable to foreign influence.
- A European preference in procurement is proposed but not mandated.
- France has recently ended contracts with Microsoft and replaced Palantir with a French firm.
The European Commission is preparing a draft regulation that would allow public authorities to exclude foreign companies posing security risks from the EU's public procurement market. This move comes amid rising geopolitical tensions and concerns over data transfers to countries like China and the United States, as well as the potential weaponization of the EU's reliance on critical technologies and minerals.
The draft document, expected to be presented in September, outlines measures for public buyers to protect the security and public safety interests of the Union at all stages of procurement. Risks can arise from companies whose ownership, control, or financing structures are susceptible to undue foreign interference, or whose exposure to third-country legislation could lead to the disclosure of sensitive information or contract performance interference.
Public buyers would also be permitted to introduce a 'Made in Europe' preference, aligning with the EU's broader strategy to bolster domestic industries in sectors like clean technology, automotive, and energy-intensive manufacturing. This initiative reflects a growing protectionist trend within the EU.
Recent actions by some European governments highlight these concerns. In April, France terminated its contract with Microsoft concerning French health data. In June, France replaced US tech firm Palantir with the French company ChapsVision for processing sensitive information for its domestic intelligence service. Furthermore, several EU nations have previously cancelled or denied contracts to Chinese telecommunications giant Huawei due to security apprehensions.