The Swedish defence market
Learn more about the Swedish defence market, procurement, agencies and regulations.
In Sweden there is no:
- Security of supply strategy
- Defence industry strategy
- Defence supply strategy
- Governmental ownership or control
- IPR strategy – but IPR stipulated in contracts
Instead, we have:
- Procurement principles as a strategy (read more below)
- Strategic direction for defence innovation
- A study of future warfare
- Strict export regime
- Industry days
However security of supply is increasingly important in contracts.
The Swedish agencies look at different options:
- Own stock, not with third party for imminent use
- Stock ready to use at industry / third party semi imminent use
- Stock for “current sales” at industry
- Turnover stocks and possibility for industry to manufacture (raw materials etc.)
- Commercial contracts with clauses including security of supply, sufficient IP for operational needs etc.
Procurement principles as a strategy
The main framework is the Public Procurement Act (LOU) that applies to all public organisations. Sweden also complies with the law for the procurement of defence and security (LUFS).
The basis for the defence procurement are based on principles agreed by the Swedish Parliament in 2006 and, further placed in to use, by the the Swedish Armed Forces and the Swedish Defence Materiel Administration in a 2007, and later, again in the Defence Committee’s report from 2008, acknowledged. The principles primarily advocated the continuation and upgrading of existing equipment, and if new procurements are to be considered, firstly, procurement should be done jointly with other countries, or, secondly, bought from existing products and market, i.e., products that are already in use by other Armed Forces. Thirdly, development only to be considered when the needs could not be met by the above. In the procurement commercial interests take precedence over domestic defence considerations.
The defence industry in Sweden typically serves multiple clients beyond the Swedish Armed Forces, each with their own contractual commitments that must be fulfilled. The defence industry in Sweden is not legally obligated to prioritize orders from FMV or the Swedish Armed Forces, but such priorization could be stipulated in contracts.
In the contemporary landscape, the primary objective for a company is to generate profits for its shareholders. Consequently, there exists limited room for any form of allegiance to Sweden as a nation or to Swedish defence interests, except in cases where an underlying contract ensures the firm’s emergency preparedness costs are covered.
However, based on European union Article 346 TFEU, specific to Sweden, five domains have been categorized as “essential security interests”: the underwater domain, the domain of fighter aircraft, specialised aspects of the command domain like cryptography, the supply of ammunition and sensors.
Due to this classification, FMV is granted the authority to choose suppliers for products and services within these specific areas without necessitating the complete procurement procedure.
The study of future warfare
For the Swedish Armed Forces the key document is “Perspektivstudien”. Read the final report of the Study of future warfare 2022 – a stronger defence for a challenging future below. The document is public available , but only in Swedish.
Strict export regime
The task of the Inspectorate of Strategic Products (ISP) amongst others is to control the exports of military equipment and dual-use products. The ISP is the national authority responsible for applying certain sanctions as well as the screening of foreign direct investments. For any company operating in Sweden, ISP is important.
Industry days
SOFF organises periodic “defence market days” and “international suppliers days” to communicate forthcoming needs and procurement plans. The existing public procurement regulations limit companies willingness to engage in discussions about alternative solutions to a quotation request. This is due to the requirement that information provided by FMV to a particular supplier must also be shared with other stakeholders, thereby inhibiting open dialogue. Therefore, the events, like the industry days and international supply days, are important venues for domestic and foreign companies.
How defence procurement works
Swedish procurement legislation is based on EU directives and EU primary law. Public procurement must be efficient and legally certain and make use of market competition. There are no general requirements for participation in the public procurements. Specific requirements are set for each individual procurement. Some procurements are security protected.
Mainly, the governmental agencies prefer to procure complete systems and seldom put specific sub products in their requirements. In addition, there is no defence industry strategy and no offset strategy. Instead, a competitive and diversified market is of great importance for the development of defence capabilities. A market where suppliers of different sizes can find business opportunities.
Agencies of relevance
How the Swedish defence market differs from other countries
Future needs?
Sweden do not, like other countries e.g. Norway and Denmark, publish a future acquisition plan. Beyond the current procurement, the best way to understand the medium and long-term needs of the Swedish customers are a few strategic documents. The Defence Bill sets the five year framework for the total defence of Sweden. The current covers 2021-2025. There is also a national security strategy from 2024, that covers some of the areas.
The Defense BillIn need of support, we also recommend you to contact your embassy, as many have defence attachés in Stockholm, as well as Business Sweden. Also, learn more about the procurement process at the governments webpage.