Foreign companies approaching the Italian defence market need to map three dimensions before they commit to a bidding strategy: the procurement regime that governs access, the security and export-control constraints that shape execution, and the industrial structure through which technology, intellectual property and security of supply will be controlled over time. Since these dimensions are closely connected, and each of them can alter the commercial viability of an opportunity well before the tender itself becomes the central issue, entering the Italian defence market requires more than identifying an opportunity and submitting a competitive offer, as it presupposes an early understanding of the legal framework within which the capability will be acquired, integrated, protected and supported.

The Italian defence ecosystem sits at the intersection of public procurement, national security, classified information, export controls, industrial policy, foreign investment screening and long-term security of supply; the Italian State may accordingly act at the same time as buyer, security authority, export-control authority and guardian of strategic assets, so that a single transaction may need to be assessed as a procurement opportunity, a transfer of sensitive technology, a potential dependency within a strategic supply chain and, in some cases, an operation affecting Italy’s essential security interests.

This is what distinguishes defence from an ordinary commercial market in which the public sector merely happens to be the customer, and why the viability of a market-entry strategy depends as much on the interaction between procurement, security, technology control and industrial policy as on the company’s technical capability.

The distinction has become increasingly important as the boundary between civilian and military technologies has grown more permeable. Artificial intelligence, cybersecurity, autonomous systems, advanced sensing, satellite technologies, quantum applications, semiconductors and other technologies may move between civilian and defence applications without changing their underlying technological nature, while their intended use, end user or contribution to a strategic capability can radically alter their regulatory significance. For foreign technology companies, this means that a product originally developed outside the traditional defence industrial base can acquire a very different legal profile once it enters a military programme or a security-sensitive supply chain.

The size of the opportunity is considerable, since the Italian Ministry of Defence publishes multiannual procurement programmes for the 2026-2028 period across specialised administrations such as TELEDIFE and NAVARM, while at European level the SAFE instrument provides up to EUR 150 billion in loans for defence investment through common procurement. In August 2026 the Council of Ministers also approved a Government bill on the strengthening of national defence capabilities, now before the Senate, which the Minister of Defence illustrated on 1 October 2026 as a means of accelerating acquisition and technological-development processes, including through fast prototyping, supporting military scientific research and simplifying procurement and certification procedures. These developments expand the opportunity set, but they also make it more important for foreign suppliers to understand the legal framework through which access to that opportunity is organised.

For a foreign supplier, however, a growing market does not automatically translate into an accessible market, and the first strategic question is accordingly through which legal and industrial structure the company can realistically enter it.

Identifying the procurement regime comes before deciding how to bid

A foreign supplier analysing Italian defence procurement should resist the temptation to treat every opportunity as an ordinary public tender governed by Italy’s general Public Contracts Code, Legislative Decree No. 36/2023, which expressly preserves a distinct regime for defence and security procurement. Article 136 of Legislative Decree No. 36/2023 provides that the Code applies to contracts awarded in the defence and security sectors, with the exception of contracts governed by Legislative Decree No. 208/2011 and of those excluded from that specialised decree by its Article 6, so that the relationship between the two instruments is one of carefully delimited speciality, and identifying the correct regime becomes, for a foreign bidder, the first step in determining how the procurement can actually be accessed and performed.

Legislative Decree No. 208/2011 implements Directive 2009/81/EC and establishes a specific framework for contracts concerning military equipment, sensitive equipment and related works and services, as well as works and services intended for specifically military purposes or involving sensitive security requirements, in keeping with a European framework designed to reconcile greater cross-border competition with the protection of classified information and security of supply. Legislative Decree No. 208/2011 also contains, in its Article 6, a detailed set of exclusions for specific categories of contracts.

The resulting legal landscape is far from binary, since a contract may fall within the specific defence procurement regime, remain governed by the ordinary procurement framework, or be subject to an exclusion connected with international arrangements, cooperative programmes, intelligence activities or essential security interests. Article 346 TFEU adds a further layer by allowing Member States to take the measures they consider necessary for the protection of essential security interests connected with arms, munitions and war material, although European law does not treat that provision as a general exemption for everything labelled “defence” and requires the derogation to remain connected with the security interest actually at stake, a balance that is equally reflected in Directive 2009/81/EC.

For the foreign bidder, this classification matters well beyond procedural form, because the applicable procurement regime can affect market openness, eligibility, disclosure, security clearances, subcontracting, technical-data requirements, remedies and security-of-supply obligations, and a regime understood only after the commercial structure of the bid has been designed may leave the company with a technically attractive opportunity that is difficult, expensive or impossible to execute in the form initially envisaged. A credible market-entry analysis should consequently begin by mapping the procurement framework itself, instead of treating procurement law as the final compliance check on a business decision already taken.

EU and third-country suppliers do not necessarily enter the same market

The jurisdiction from which a bidder operates can materially affect access to the defence procurement market. Directive 2009/81/EC was designed to facilitate cross-border procurement within the European defence market while preserving Member States’ ability to protect legitimate security interests, so that for operators established within the EU participation is embedded in a legal framework intended to improve access across national borders, although the specific eligibility, security, technical and execution requirements of each procurement remain decisive.

For non-EU defence companies the position is more complex, since Recital 18 of Directive 2009/81/EC makes clear that Member States retain the power to decide whether their contracting authorities may allow economic operators from third countries to participate in defence and security award procedures, and the European Commission has subsequently reiterated that such operators do not enjoy secured access to this market under the ordinary international procurement framework, so that its guidance on third-country bidders treats market access as a question to be assessed against the applicable national and procurement-specific rules.

For companies established in the United States, the United Kingdom, Israel, Canada or other non-EU jurisdictions, market access should consequently be assessed against the specific procurement documents, the applicable international arrangements, including bilateral reciprocal defence procurement instruments such as the reciprocal defence procurement memorandum of understanding between Italy and the United States, the rules concerning the origin of technology and components, the security requirements and, increasingly, the broader European objective of strengthening the European Defence Technological and Industrial Base. SAFE illustrates the importance of nationality and industrial-origin rules, since its participation conditions differ between EU Member States, EEA countries, Ukraine and third countries connected to the Union through specific security and defence arrangements.

A third-country supplier does not necessarily require an Italian partner, since a direct bid, a consortium, a subcontracting relationship with an Italian or European prime contractor, a joint venture, the incorporation of an Italian subsidiary and the acquisition of an existing domestic operator create very different combinations of market access, legal control, customer relationships, security exposure, intellectual-property allocation and dependence on third parties, which is why the appropriate structure should be selected in light of the capability and programme concerned instead of being assumed in advance from a generic model of localisation.

Security of information and security of supply belong to the commercial design of the bid

Companies entering defence from adjacent technology markets often treat security requirements as a specialised compliance layer to be addressed once the commercial relationship has already been negotiated, an approach that the European defence procurement framework makes increasingly difficult to sustain.

Directive 2009/81/EC expressly allows contracting authorities to impose requirements concerning security of information, including commitments by bidders and subcontractors to protect classified information during the contract and after its termination, and, in the absence of full harmonisation of national security-clearance systems, Member States may apply national clearance requirements while recognising foreign clearances that they consider equivalent and retaining the ability to carry out additional investigations, as provided by Article 22 and the related provisions of Directive 2009/81/EC.

Italy operates its industrial-security system through the Ufficio Centrale per la Segretezza (UCSe), and, depending on the classification of the procurement and of the subsequent contractual activities, operators may need an Abilitazione Preventiva for participation or a Nulla Osta di Sicurezza Industriale for the execution of classified contracts, with requirements that, as UCSe guidance makes clear, vary according to the classification level and to whether the procurement procedure itself, the subsequent execution phase, or both involve classified information.

Security clearances have consequences that extend well beyond documentary compliance, since they may affect which entity within an international group can participate, which personnel may access information, where information can be processed, which IT systems can be used and how subcontractors can be integrated into the programme.

The same applies to security of supply, which moves even more directly into the commercial and industrial structure of the transaction. Under Article 23 of Directive 2009/81/EC, contracting authorities may request evidence concerning export, transfer and transit obligations, the organisation and location of the supply chain, the bidder’s capacity to meet additional needs arising during a crisis, long-term maintenance and adaptation obligations, changes to corporate or industrial structures capable of affecting performance and, in certain circumstances, access to technical drawings, licences, instructions or other means required to ensure the continued availability of components or spare parts, so that Article 23 of Directive 2009/81/EC makes the lifecycle dimension of the contract explicit.

This is where defence procurement begins to merge with industrial strategy, because a foreign supplier may regard proprietary software, technical documentation, manufacturing processes or know-how as essential components of its competitive advantage, whereas the customer may regard access to some of those capabilities as necessary to prevent an unacceptable long-term dependency.

Beyond price, specifications and liability, the negotiation thus determines how technological dependence and operational control will be distributed over the lifecycle of the capability.

Industrial partnerships and intellectual property should be designed around access and control

For many foreign suppliers, cooperation with an established Italian or European defence operator may represent the most effective route into a particular programme, whether in the form of a subcontract, consortium, joint bid, licensing arrangement, technology partnership, joint venture or other structured collaboration.

Cooperation with an established operator may bring procurement experience, security credentials, integration capabilities, customer relationships, infrastructure and knowledge of the industrial ecosystem, but those advantages can obscure the longer-term implications of the structure being created, because a partnership that solves an immediate market-access problem may also create dependency in relation to customers, interfaces, certifications, know-how, maintenance, export licences or future opportunities. The distinction between access to the Italian defence market and control over the business generated in that market should therefore remain visible throughout the transaction design.

Defence procurement also changes the traditional relationship between intellectual property and the customer, since a technology company approaches IP through ownership, licensing and protection against infringement, whereas the defence customer operates across a much longer horizon, in which interoperability, maintenance, modification, cybersecurity, obsolescence management, access to spare parts and operational continuity remain relevant long after the original procurement, which is precisely why the security-of-supply rules mentioned above allow contracting authorities to seek commitments on technical drawings, licences and instructions.

For technology-intensive companies, the relevant analysis consequently extends well beyond formal ownership of patents or source code, as it concerns the distinction between background IP, programme-specific developments and integration know-how, the allocation of rights over improvements created during integration, access to technical data, the protection of trade secrets, the use of know-how outside the programme, customer ownership, post-termination rights, lifecycle-support obligations and the extent to which confidential or classified information can flow through the subcontracting chain.

These issues are particularly acute where the value of the technology lies partly in unpatented know-how, since integration into a defence programme may require the disclosure of information that the technology company would never share in an ordinary distribution relationship, and the contract must accordingly reconcile two legitimate interests that may pull in opposite directions, namely the customer’s interest in reducing strategic dependency and the supplier’s interest in preserving technological autonomy and competitive differentiation.

Transferring rights more broadly than necessary erodes the supplier’s technological advantage, while preserving absolute control over every element of the technology may create an unacceptable dependency for the customer and weaken the attractiveness of the solution. The appropriate objective lies in identifying the minimum rights, information flows and control mechanisms that keep the programme operationally sustainable without unnecessarily transferring the supplier’s strategic advantage, and the question to be answered is accordingly which rights each party must control for the industrial relationship to remain sustainable throughout the operational life of the capability.

That question becomes even more important for software-intensive, AI-enabled and continuously evolving systems, where the capability operated several years after delivery may differ materially from the system initially procured because of updates, retraining, cybersecurity patches, integration with new platforms and changes to the surrounding technological environment.

Export control begins before a product is exported

Timing materially affects deal design in export control as well, because foreign suppliers sometimes approach export restrictions as a licensing issue that becomes relevant only when equipment is physically shipped across a border, a view that proves too narrow in defence and dual-use transactions, where the classification and origin of technology can affect the proposed industrial structure well before a finished product exists.

Italy’s control regime for armament materials is based on Law No. 185/1990 and administered by UAMA, which is also the competent Italian authority for the application of Regulation (EU) 2021/821 to dual-use goods, software and technologies and issues authorisations for exports, transfers, brokering, technical assistance and transit, as UAMA’s institutional guidance confirms. Operators active in armament materials should also consider the National Register of Companies kept by the Ministry of Defence, now governed by Article 44 of Legislative Decree No. 66/2010, since registration is a precondition for several operations regulated by Law No. 185/1990, including intra-Community transfers and brokering, and entails the obligation to notify the start of contractual negotiations.

A defence partnership can therefore create controlled transfers without any completed system crossing a border, since software, design documentation, technical assistance, encryption technologies, engineering data, manufacturing know-how and access granted to foreign personnel may themselves be subject to control, and a company considering an Italian integration partner should understand at the design stage whether the intended division of work creates licensing requirements or limitations on re-export, end use, personnel access or future transfers, bearing in mind that technology developed or integrated in Italy may in turn become subject to restrictions affecting the foreign partner’s ability to exploit it elsewhere.

P&S Legal has previously examined the broader EU framework governing dual-use technology and export controls for global technology companies, including product classification, end-user controls, supply-chain management and internal compliance systems.

In defence procurement, export control acquires an additional strategic dimension, because a technically superior solution may become less attractive if its continued availability depends on licences, third-country components or onward-transfer approvals that weaken the customer’s security of supply, and exportability thus becomes part of the procurement decision itself instead of a compliance question that sits downstream from it.

Golden Power becomes relevant when market entry becomes an investment in strategic control

Direct procurement and industrial partnership are not the only paths available to foreign companies, which may decide to acquire an Italian technology company, invest in a local defence supplier, establish a joint venture or take control of assets that already form part of the national defence ecosystem.

At that point the Italian Golden Power regime may become part of the transaction structure. Decree-Law No. 21/2012 established special governmental powers over companies and activities considered strategic for national defence and security, under which the Government may, where the statutory conditions are met, impose specific conditions concerning security of supply, security of information, technology transfers and export controls, veto certain corporate decisions or oppose acquisitions capable of creating a serious threat to essential defence and national-security interests.

Foreign investors should also bear in mind that in this sector the notification obligation is not confined to non-EU acquirers, as it extends to Italian and EU investors acquiring shareholdings in companies carrying out activities of strategic importance, and that the voting rights attached to the notified shareholding remain suspended until the screening period has elapsed.

The distinction between bidding, partnering and acquiring is therefore more than a corporate structuring question, because each route changes the degree of control over technology, customers, personnel, infrastructure and future development, and that change in control may itself alter the regulatory profile of the transaction, so that an acquisition capable of overcoming the limitations of market access and local integration may create an investment-screening issue that a more limited commercial partnership would not raise in the same way. For the same reason, the strategic status of the target, the nature of its technology, its customers, licences, classified activities, export-control profile and position within critical supply chains should be examined well beyond the scope of conventional corporate due diligence, since they can affect both the structure and the executability of the deal.

Before bidding, the legal map should follow the industrial map

European defence procurement policy was expressly developed to improve cross-border access, and Italian programmes increasingly operate within an environment shaped by European cooperation, multinational programmes and interconnected supply chains; the accessibility of that market to foreign operators, however, depends on their ability to treat procurement, security, corporate structure, export control and technology protection as interdependent components of the same market-entry decision.

A bidder may satisfy the procurement requirements while encountering an industrial-security constraint, just as a partnership that accelerates access to the market may expose strategically valuable know-how or produce long-term dependency on the local partner, a technologically superior solution may depend on export authorisations or third-country components that weaken security of supply, and an acquisition may offer the strongest local platform while triggering Golden Power scrutiny; in the same way, an apparently sophisticated contractual allocation of responsibility may provide little practical protection where the actual control of technology, data or infrastructure resides elsewhere.

For that reason, foreign defence companies entering Italy should map the legal perimeter before committing to a bidding structure, reconstructing the applicable procurement route, nationality and eligibility issues, industrial-security requirements, security-of-supply exposure, export-control constraints, the allocation of intellectual property and technical data, subcontracting and partnership structures and any investment-screening implications, since these variables interact with one another and their combination determines whether the selected route into the Italian market remains commercially executable when the opportunity moves from preliminary interest to contract performance.

Seen in this light, the Italian defence market is better understood as an industrial and security architecture through which the State acquires capabilities that must remain reliable, secure, supportable and controllable over time horizons far longer than those of commercial procurement, and some of the most consequential legal choices consequently arise before the tender reaches its final form, because once the industrial partner, the supply chain, the technical interfaces, the security arrangements and the allocation of IP rights have been fixed, decisions that initially appeared purely commercial may become difficult or expensive to reverse.

In the defence sector, market access forms part of the industrial strategy through which a company decides how much access, control and dependency it is prepared to create in order to operate in Italy.

Foreign companies assessing a defence procurement, industrial partnership or strategic investment in Italy may submit the relevant documentation to P&S Legal for a preliminary written legal assessment of the applicable procurement, security and regulatory framework.