Simonsen Vogt Wiig (SVW) are reaching out to international contractors or suppliers seeking to capitalize on the significant opportunities presented by Norway’s ambitious defense investment plan, which includes the pledge to spend 600 billion kroner over the next 12 years on defense modernization and capabilities.[1]
Historic increase in defense spending
Norway’s decision to boost defense spending by 600 billion NOK over the long term
The Norwegian Government is proposing to parliament a historic increase in defense spending with 600 billion kroner (approx. 60 billion USD). It is a historic boost for the Armed Forces. All services of the Norwegian Armed Forces will be strengthened, with more personnel and new capabilities.[2]
The long-term plan will require significant resources, more employees, and large investments. Therefore, the Government is presenting a plan for the next twelve years.
Simonsen Vogt Wiig (SVW) are reaching out to international contractors or suppliers seeking to capitalize on the significant opportunities presented by Norway’s ambitious defense investment plan, which includes the pledge to spend 600 billion kroner over the next 12 years on defense modernization and capabilities.[3]
Norway’s ambitious defense investment plan has broad implications for national security, technology, economy, and international relations. There are several strategic objectives behind Norway’s decision to increase investments, such as geopolitical factors, broader European security concerns and NATO objectives. Norway will reach the NATO commitment of spending 2% of GDP on defense in 2024.
Key areas where the investment will be directed
The Government will prioritise the following main areas:
- A strong maritime package (a minimum of five new frigates with anti-submarine helicopters, at least five new submarines, and a standardised vessel class of up to ten large and eighteen smaller vessels).
- More and improved air defense (long-range air defense systems to protect against short-range ballistic missiles. In addition, the quantity of the existing NASAMS air defense will be doubled).
- Improve the current defense structure (an increase in stocks of munitions and materiel, maintain buildings and important infrastructure).
- Invest in the people of the Armed Forces.
- Stronger Army and Home Guard (Investments will follow on long-range precision firepower, additional combat vehicles, air defense, and helicopters for the Army and special forces).
- Improve situational awareness (more surveillance, presence, and control in our surrounding areas, through the use of new vessels and the expansion of satellite and drone capabilities).
Relevance
Implications for international defense contractors
With a substantial increase in defense spending, international defense contractors may also vie for lucrative opportunities in Norway.
The Norwegian Defense Materiel Agency (NDMA) is the main responsible entity for procurement for the Armed Forces, and is responsible for the vast majority of procurement contracts. In most product areas, NDMA will enter into framework agreements that can be used by other entities within the Armed Forces. Defense contracts often involve long-term commitments, providing stability and predictability for businesses in terms of revenue and growth. Defense investments often drive technological innovation.
Regulatory challenges
Defense procurement decisions in Norway can involve lengthy sales cycles and bureaucratic procedures, posing challenges for foreign contractors and suppliers unfamiliar with the system. Defense contracts often come with stringent regulatory and compliance standards. Meeting these standards while navigating export controls and licensing can be complex.
Norway has strict regulations and legal frameworks governing public procurement, especially in defense and security sectors. Foreign suppliers must navigate complex procurement procedures and meet stringent criteria to qualify for contracts.
Also, Norwegian defense procurement policies often emphasize local industry participation and technology transfer. Foreign suppliers may face pressure to partner with Norwegian companies or invest in local capabilities to be considered for contracts, which can pose logistical and financial challenges.
Security and Confidentiality Concerns
Defense contracts often involve sensitive information and technologies. Foreign suppliers may encounter challenges related to security clearances and ensuring compliance with Norwegian security regulations.
International contractors may need to comply with measures to ensure that suppliers of the Norwegian Armed Forces can receive, retain, contribute and use classified information, equipment and material according to applicable law, regulations and provisions.
The public procurement may be deemed a security classified procurement if the supplier may gain access to classified information or classified object, or where the procurement must be classified for other reasons. It might be necessary to enter into a security agreement between NDMA and the supplier/sub-contractor that regulates the security related requirements placed on the supplier/sub-contractor. This must take place before signing the contract.
Also, be aware that Norway’s strategic alliances and security partnerships, particularly within NATO, can influence procurement decisions. Foreign suppliers from non-aligned countries or countries with strained diplomatic relations may face political obstacles.
Challenging technological requirements
Meeting the technological requirements of modern defense systems can be challenging. Scaling up production and managing complex supply chains to meet defense project demands can strain existing capacities. Ensuring a robust and reliable supply chain as well as an effective quality system management will be crucial to ensure timely delivery and quality.
Industrial cooperation
International contractors may also face challenges in relation to the Norwegian government’s national defense industrial strategy[4], particularly concerning industrial cooperation agreements. The Norwegian MoD is responsible for the national defense industrial strategy and industrial cooperation agreements (offset). Industrial cooperation agreements (offset) applies to procurements subject to EEA agreement (Article 123) exemptions and FOSA when elected contractor is situated outside EEA. Offset is negotiated and managed by NDMA as a transaction to compensate for the Armed Forces’ procurement abroad.
Why Simonsen Vogt Wiig?
Unique experience and tailored legal advice
First of all, we have extensive experience and success in facilitating market access to the Norwegian defense procurement market. At SVW, we have a proven track record of guiding international suppliers and contractors through the complexities of Norway’s defense industry, enabling them to establish a strong presence.
Navigating Norway’s defense procurement market requires a nuanced understanding of local regulations, compliance standards, and market dynamics. As experienced legal advisors specializing in defense contracting and public procurement in Norway, SVW offer comprehensive legal support to international suppliers looking to enter and succeed in this strategic sector.
We help international defense contractors and suppliers understand and comply with Norway’s complex legal and regulatory framework governing public procurement, including specific requirements in the defense sector. We make sure you meet all legal obligations throughout the tender process.
We conduct thorough risk assessments, review contracts tailored to Norwegian procurement standards and assist in contract negotiations with Norwegian authorities or partners. We may also assist in developing comprehensive strategies tailored to the specific challenges of the Norwegian defense public procurement market, optimizing the contractor’s chances of success.
If you are considering expanding into Norway’s defense sector or require tailored legal advice to capitalize on the new defense investment plan, we invite you to contact our experts. Together, let’s seize the potential of Norway’s defense market.
We look forward to partnering with you on this journey.
[1] Regjeringen.no (The Norwegian Defence Pledge (regjeringen.no)
[2] Regjeringen.no (New Norwegian Long Term Plan on Defense: ”A historic plan” – regjeringen.no).
[3] Regjeringen.no (The Norwegian Defence Pledge (regjeringen.no)
[4] Cooperation for Security — Meld. St. 17 (2020–2021) Report to the Storting (White Paper).