German military procurement changes open door for vigilant employers

In response to the increase in global tensions, the German government recently introduced substantial legal changes aimed at accelerating procurement and defence readiness. The draft for the new laws, currently under committee review in the German Bundestag, allows for fast-track procurement of technology and weapons for the German armed services and a significant simplification of the procurement process.

Andreas Haak, Pinsent Masons German public procurement law specialist, said: “From a procurement law perspective, the draft act for the new procurement law (Federal Armed Forces Procurement Acceleration Act – “BwBBG”) demonstrates the enormous importance of the defence industry for the future of a resilient Germany”.

“The new legal framework for procurement in the defence sector is intended to bring about the necessary far-reaching restructuring of the defence architecture. The paradigm shift with regard to essential security interests, higher procurement thresholds or the waiver of lot division – all of these measures have the potential to pave the way for a modern, agile and flexible defence procurement in Germany.”

But the increasing importance of the defence sector will also put more scrutiny on German employment laws and especially background checks during recruitment facing the procurement process.

Dr. Andreas Schöberle, an employment law expert with Pinsent Masons in Germany, said: “As companies increasingly pivot towards the defence and armaments sector, this has also an impact on the interpretation of German employment law. Considering the increasing recruitment of employees in this sector, especially the legal framework surrounding employee background checks becomes critically important”.

“In principle, the permissibility of such checks depends on whether the information sought is necessary for the employment relationship. The legal basis for this is European and national data protection and employment law. It requires a case-by-case assessment, balancing the employer’s legitimate interest in safeguarding operations against the employee’s right to privacy.”

He added: “For the majority of employment scenarios, comprehensive background checks are not necessary in the above-mentioned sense, but in the defence industry this balance shifts. The sector is inherently sensitive, often involving access to classified data and technologies relevant to national security”.

“In light of these circumstances, more extensive background checks are not only permissible but advisable. Employers must ensure that personnel meet the trustworthiness standards required for roles that may impact the employer itself and Germany’s defence capabilities.”

Germany’s escalation of its military readiness and resourcing includes sweeping exemption from EU-wide procurement rules, and changes to rules on payments to suppliers.

The growth marks a significant shift in policy which companies are keen to exploit, but Schöberle warned: “Organisations entering this space should proactively review their hiring and compliance procedures. Legal teams should assess whether existing practices align with the heightened security expectations and regulatory requirements. Failure to do so could expose companies to reputational and operational risks.”