How to do business with the Norwegian Armed Forces

1. Introduction
2. Procurement agencies
3. Defence procurement arrangements
4. Where can defence procurement information be obtained?
5. Legislation and regulations

1. Introduction

Norwegian defence procurement includes the purchasing of equipment, goods, services, buildings and construction projects to the annual value of some NOK 14 billion. About NOK 6 billion of this represents investment in new equipment, a further NOK 6 billion is allocated to the purchase of goods and services related to the running of the Armed Services while about NOK 2 billion is expended on building maintenance and new construction projects. Procurement covers everything from small local purchases of office supplies to multi-million dollar contracts for ships, aircraft and weapon systems as well as a range of major building and construction projects.

Even though most defence contracts are placed with Norwegian suppliers, a substantial amount of defence procurement is sourced from foreign defence contractors. Norway naturally does not have the industrial capacity to produce as much of its own defence materiel as the major industrial countries. Norway, in contrast to countries like Germany, France, the United Kingdom and the United States, is thus a so-called net importer of defence materiel. The Norwegian defence industry is relatively small but it produces world-class high technology products in a range of specialist fields. The Ministry of Defence welcomes feedback by e-mail to postmottak@fd.dep.no in response to this publication.

2. Procurement agencies

The Royal Norwegian Ministry of Defence (FD) http://www.mod.no
Enquiries to: postmottak@fd.dep.no.

The Norwegian Defence Logistics Organisation (NDLO) http://www.mil.no/flo
From the Norwegian homepage, click on flag icon for information in English on defence procurement projects. Enquiries to postmottak.flomateriell@mil.no

The Norwegian Defence Estates Agency (FB) http://www.forsvarsbygg.no
Norwegian only. Enquiries to post@forsvarsbygg.no

The Norwegian Defence Research Establishment (FFI) http://www.ffi.no
Many pages in English. Enquiries to ffi@ffi.no

The Norwegian National Security Authority http://www.nsm.stat.no
Norwegian only. Enquiries to postmottak.nsm@mil.no

3. Defence procurement arrangements

3.1 Procurement for operating and maintenance purposes (all branches)
Procurement matters, large and small, relating to day-to-day running and maintenance at all levels and in all branches of Norwegian Defence, are handled centrally. For further details see www.mil.no.

3.2 NDLO manages materiel procurement for all the armed forces
Major defence equipment contracts were, in the past, placed by the individual Materiel Commands (Army, Navy or Air Force), or by the Norwegian Defence Communications and Data Services Administration. These procurement agencies were brought together in 2002 to form the Norwegian Defence Logistics Organisation (NDLO) serving the whole of the defence organisation. For more details of the organisation of NDLO, see website www.mil.no/flo.

3.2.1 Large-scale equipment projects
The largest and most comprehensive projects for the purchase of new materiel for the Armed Forces - projects costing in excess of NOK 500 million - are called Category 1 projects. Such projects require parliamentary approval both for their initiation and for any change in overall cost. Projects for which the overall cost is below NOK 500 million can be approved by the Ministry of Defence. If the contract sum for a project is expected to exceed NOK 75 million, tender enquiries and the authority to place contracts are subject to MOD approval.

3.3 FB manages all property and construction projects
The defence organisation is the country’s largest «landowner» and its building stock is managed by the Defence Estates Agency (FB). FB was established in 2002 as an agency responsible to the Ministry of Defence but with its own management board. It was formed by bringing together the former Defence Construction Service (FBT) and the local administrative elements of the Armed Forces military organisation. The agency has Norwegian defence as its largest and most important customer but it is not actually a part of the Armed Forces military organisation. The agency’s portfolio includes all types of property, buildings and installations ranging from small and simple garages to large and complex installations - and it covers the whole of the country. Its responsibilities also cover fortifications and the associated permanent installations as well as payments in connection with investment and running costs. As a consequence of the ongoing defence restructuring, the defence property portfolio is being reduced substantially. By 2006 the total floor area of the building stock will have been reduced from 6 million sq. metres to 3.8 million sq. metres.

A distinction is drawn between nationally financed and NATO financed building and construction projects. Norway had a considerable number of building and construction projects which were financed wholly or in part through NATO’s infrastructure program, mainly during the ’80s and ’90s. Projects in the building and construction sector are carried out essentially by Norwegian contractors. Information on these projects can be obtained through the Defence Estates Agency, see www.forsvarsbygg.no

3.3.1 Major works projects
Nationally financed property, buildings and installations projects («works» projects) costing more than NOK 100 million overall must be submitted for parliamentary approval. The same applies to jointly financed projects for which the national contribution is in excess of NOK 100 million.

3.4 Form of contract and choice of subcontractors
With regard to the form of contract, the most usual arrangement is to place a contract with a main contractor who then engages the necessary subcontractors. In some cases, use is made of subcontracts in which the principal (the Defence Estates Agency) administers a number of subcontractors with whom the Agency has separate independent contracts.

Where procurement of major materiel systems is concerned, the contract will normally be placed with a prime contractor who both acts as main contractor and has responsibility for ensuring that the contract conditions are met. This calls for the highest levels of professional competence, administrative experience and financial standing on the part of the contractor. The procurement of large, complex systems extends over substantial periods of time and is very demanding in terms of competence and capital resources. To alleviate the load on the already stretched defence procurement organisation, the system contractor must be capable of managing subcontractors independently. In addition to the above, the choice of subcontractors for major tasks will often require the approval of the contracting authority.

3.5 Classified procurement and security clearance
The rules governing classified procurement can be found (in Norwegian only) on the Norwegian National Security Authority’s website www.nsm.stat.no.  See also the regulations (in Norwegian only) for classified procurement on the Norwegian Legislation website, The Norwegian Legislation website, www.lovdata.no, contains English translations of about 150 Norwegian statutes but none of these are of direct relevance here.

3.6 Purchasing and contract administration
For purchasing and contract administration, see the Norwegian Defence official website (Forsvarsnett, www.mil.no). (Norwegian only).

There is a brief article in English on «Provisions Concerning Procurements for the Armed Forces». This article mentions that these regulations, known as BAF, contain detailed provisions for the conduct of procurement for the Armed Forces. It adds, however, that BAF is only available in Norwegian. Although not published, a working version of these regulations in English is held by he Norwegian Defence Logistics Organisation (NDLO), see Section 2 above, from where information can be obtained as required.

4. Where can defence procurement information be obtained?

4.1 The Ministry of Defence
The Ministry of Defence has two departments dealing with defence materiel. These are FD IV, the Department of Defence Policy and Long Term Planning, and FD V, the Department of Finance and Management. FD IV has special responsibility for studying what materiel needs to be procured and FD V has special responsibility for the implementation of defence procurement projects and for negotiation of the associated offset arrangements. Further information can be found on the MOD website www.regjeringen.no/fd.

4.2 Long term reports and plans
The Storting lays down the overall framework for the development of the Armed Forces through its processing of long term reports and plans which set out the guidelines for development and the areas on which the defence organisation and the Armed Forces themselves should focus in the coming years. Most major projects and purchases will, however, be addressed in the annual budget proposals put forward by the Ministry of Defence and possibly through other proposals put before the Storting. Where purchases relate to the day-today running of the armed services, there is no overall planning structure. Purchasing activities are conducted all levels and at locations throughout the country. A substantial part of the overall spend relates to purchases from local resources in the area in which the particular unit or establishment is located.

An important document where the development of Norwegian defence in general is concerned is the Budget Proposition for the year in question, known as Proposition to the Storting No. 1, which the Ministry of Defence puts before the Storting in the autumn. It is also usual for the Ministry to submit a so-called “Investment Proposition” to the Storting in the spring. These are documents which contain much relevant and up-to-date information regarding defence procurement and covering both materiel and works projects. Every four years the Ministry of Defence submits a so-called “Long Term Plan” (the Long Term Proposition for the Armed Forces) which contains important information concerning defence procurement plans in a longer perspective.

Other documents submitted to the Storting may also be relevant and many of these are available (mostly in Norwegian) on the Internet. English versions of press releases and of many of the key documents relating, for example, to the defence budget, the Long Term Plan and the restructuring of the Armed forces, are also available on the Ministry of Defence website www.regjeringen.no/fd. The website for the Storting, www.stortinget.no, is another useful source of information.

4.3 The Defence Staff
The Chief of Defence is both the professional head of the Armed Forces’ military organisation and the Defence Minister’s most senior military adviser. The Chief of Defence and his strategic functions are now integrated within the Ministry of Defence. The Defence Staff are responsible, on behalf of the Chief of Defence, for the execution of tasks and for ensuring that policy decisions are followed up. The Defence Staff is directly subordinate to the Ministry of Defence. In addition, the Defence Staff sets priorities across individual Service boundaries, exercises resource management overall and strikes a balance between operational activities, force production and logistics.

Together with their staffs, the four Inspector Generals (Army, Navy, Air Force and Home Guard), as the Chiefs of Staff of their respective Services, form part of the Defence Staff. A fifth section of the Defence Staff deals with personnel matters, operations and the running of the defence organisation. The Defence Staff also includes a secretariat, an internal audit office and a press and information section. The latter are directly responsible to the Chief of the Defence Staff. For further information, see www.mil.no/fst.

4.4 The official journal, EU official journal and Tenders electronic daily
The EU public purchasing rules apply not only to member states but also to countries in the European Economic Area which includes Norway. Thus all purchases of goods covered by the Public Sector Procurement Act, and for which the cost exceeds the current threshold value, have to be published in the Official Journal of the EU and included in Tenders Electronic Daily, the EU online databank. A large proportion of Norway’s defence procurements are announced publicly, always in the Norwegian Official Journal [Norsk Lysningsblad] and, in some cases, from time to time in the daily press. For further information see http://ted.publications.eu.int and www.norsk.lysingsblad.no (in Norwegian only).

For those wishing to keep abreast of what is happening in a wider European setting, reference can be made to the website of the European Commission’s Delegation in Norway and the EU Commission’s own website, or to the website of the Council of the European Union.

4.5 Western European Armaments Group - WEAG bulletins
All member countries of the Western European Armament Group (WEAG) have undertaken to publish a monthly bulletin announcing possible future purchases, enquiries and tender invitations, the awarding of contracts valued at one million euro or more and subcontract opportunities. In addition, the Norwegian bulletin, entitled Norwegian Defence Contracts and published by the Norwegian Defence Logistics Organisation, includes an advertisement section in which both Norwegian and foreign companies can market themselves and their products free of charge. As a result of the Nordic Defence Materiel Cooperation agreement, Sweden and Finland, in line with Norway and Denmark, now issue their own bulletins with the same kind of content as the WEAG bulletins. The electronic version of the bulletin can be found here. For more information, see the links indicated in 4.4. above.

4.6 The Norwegian Defence Logistics Organisation
Up until 2001, responsibility for the procurement and administration of defence materiel was divided between a number of different agencies. In December 2000 the Storting endorsed a plan to bring these responsibilities together in a single agency, the Norwegian Defence Logistics Organisation (NDLO), which would manage all aspects of defence logistics under one roof. The purpose of the new organisation was to streamline the processes and work involved in the procurement and administration of defence material across the board. Materiel administration is an important part of the work of the Armed Forces and it involves some 6,600 personnel in the defence organisation as a whole. About 60 % of the defence budget is devoted to the procurement of goods and services. At the present time NDLO is being restructured to provide a leaner and more efficient organisation employing substantially fewer personnel. For further information, see www.mil.no/flo.

4.7 The Norwegian Defence Research Establishment
The Norwegian Defence Research Establishment (NDRE), usually referred to by the Norwegian acronym FFI, is an agency responsible to the Ministry of Defence. FFI is situated at Kjeller, The establishment also has a research unit located at Karljohansvern naval base in Horten. FFI has about 2400 employees in the Kjeller area with their work distributed between a number of research centres, technical establishments, colleges and universities. FFI is a multi-disciplinary institution embracing work in such fields as mathematics, physics, information technology, chemistry, biology, medicine, psychology, political science, history and economics. FFI is actively engaged in cooperation with leading institutions both in Norway and abroad.

In addition to its work at the leading edge of modern technology, FFI makes a substantial contribution to Norway’s long term defence planning. FFI’s work for the Armed Forces consists primarily of development projects and the analysis of future defence requirements, but it is also engaged in a wide range of non-military projects. For further information, see FFI’s website www.ffi.no.

4.8 The Norwegian Defence Estates Agency (FB)
The Defence Estates Agency was established on 1 January 2002 as an administrative agency responsible to the Ministry of Defence, bringing together the functions of the former Defence Construction Service (FBT) and the local administrative elements of the Armed Forces military organisation. The primary tasks of the Defence Estates Agency concern the planning, development, administration, leasing and sale of defence properties.

The Defence Estates Agency is responsible for the administration of buildings and installations amounting to some 6 million sq. metres. In addition the agency is responsible for about 15 million sq. metres of roads and other surfaced areas together with other land amounting to about 125,000 hectares. FB has embarked on a large scale disposal programme with the aim of getting rid of unwanted buildings and other installation, - that is to say properties that are no longer needed in the context of the new defence structure. The Defence Estates Agency has Norwegian defence as its largest and most important customer but it does not form part of the Armed Forces military organisation. For further information, see www.forsvarsbygg.no.

4.9 Norwegian defence attachés and other representatives abroad
Norwegian Defence Attachés represent an important source of information in the context of Norway’s defence materiel cooperation with other countries. In the publication «Instructions for Service Attachés serving with Diplomatic Missions Abroad», it states that «Attachés must keep themselves well briefed with regard to defence policy and military matters in the country where they are serving, and must place due importance on reporting back on relevant developments in fields including research and development and the procurement of defence materiel».

Defence Attachés are also to assist the Norwegian authorities and the Norwegian defence industry in connection with defence materiel cooperation with other countries. Norway has twelve Defence Attachés in post and at four locations there is also an Assistant Defence Attaché. Norwegian Defence Attachés are in post at Norwegian Embassies in the capital cities of the following countries (where they are also accredited to other countries, these are shown in brackets):

Swedwn, Finland, Latvia (Estonia and Lithuania), Poland (Czech Republic and Slovakia), Russia (Byelorus, Ukraine, Kyrgyzstan, Tadjikistan, Uzbekistan and Kazakhstan), the United Kingdom (Republic of Ireland), Germany (Switzerland and Austria), France (Spain), the Netherlands (Belgium, Denmark and Luxembourg), Italy (Slovenia, Hungary, Bulgaria and Romania), Turkey (Azerbaijan) and the United States of America (Canada).

The Norwegian permanent representation to NATO in Brussels (NORDEL) consists of representatives from the Ministry of Foreign Affairs and the Ministry of Defence. The Norwegian Mission to the EU in Brussels (EUDEL) currently consists of a representative from the Ministry of Defence. Both delegations are led by a senior official (Ambassador) from the Ministry of Foreign Affairs. More information about Norwegian embassies can be found on the Ministry of Foreign Affairs website at www.norway.info.

5. Legislation and regulations

5.1 Norwegian regulations and the European Economiv Area (EEA) agreement
Norwegian defence procurement is governed by the provisions of the Act concerning Public Sector Procurement and the Regulations concerning Public Sector Procurement. Pursuant to the clause on exceptions in Section 3 of the Act, cf. article 123 of the EEA Agreement and Sections 1-3 of the Regulations, the procurement of arms, munitions and war materiel which a country considers to be «essential to the interests of its security» may, under certain conditions, fall outside the scope of the Act. The same applies to corresponding categories of research, development and production. The reason for this exemption lies in the sensitivity of the materiel concerned and its importance in the context of national security.

Since the EEA Agreement came into force in January 1994, Norway has harmonised its regulations concerning public sector procurement with those of the EU. The situation is now that all procurement projects for the Armed Forces, for which the cost exceeds the specified thresholds, shall in principle be covered by these harmonised regulations. The EEA Agreement (Article 123), in common with the Treaty on European Union (Article 223), contains exemptions for certain categories of defence products.

These are products which are exempted by virtue of their importance in the context of national preparedness and security. See also the Ministry of Foreign Affairs website www.dep.no/ud/. Select English (under Language) to access a wide range of reports, handbooks etc. The Act concerning Public Sector Procurement is reproduced (in Norwegian) on the Norwegian Legislation website. The site also offers an English translation of the Act. Select «In English» to access an alphabetical list of Acts.

5.2 Defence aquisition regulations
The new regulations governing procurement for the defence sector, entitled Defence Acquisition Regulations [Anskaffelsesregelverk for Forsvaret - ARF], have recently been implemented by the Ministry of Defence. These regulations contain more detailed information regarding the way in which defence procurement is to be conducted.

The regulations are primarily focused on the phases which follow a decision by the Ministry of Defence to proceed with the acquisition of particular goods or services. The Ministry believes that some knowledge of this process will be useful to contractors and potential bidders. The regulations are particularly important in the case of those acquisitions which are not bound by the provisions of the Act concerning Public Sector Procurement (LOA) or the Regulations for Public Sector Procurement (FOA), but they are also relevant as supplementary regulations applicable to acquisitions which are governed by LOA/FOA.

One of the main principles enshrined in the Defence Acquisition Regulations, as well as in the Act and the Regulations for public sector procurement, is the equitable treatment of contractors, which means that procurement must be based on fair competition and the public announcement of forthcoming acquisitions.

The Ministry of Defence may, in certain cases, depart from these principles and place emphasis on, for example, industrial policy considerations where the acquisition in question is exempt from the provisions of LOA and FOA.

5.3 The government procurement (GPA)
Norway belongs to the World Trade Organisation ( WTO) within which public sector procurement is governed by rules contained in the so-called Government Procurement Agreement. Purchases made by the major Armed Forces procurement agencies are covered by the provisions of this Agreement. The GPA rules mean that the procurement of goods and services falling within the scope of the Agreement shall be governed by these provisions. Detailed rules for the announcement of intended purchases, criteria for the choice of contractor and the announcement of contracts awarded are to be followed for all such procurement. For further details, see the World Trade Organisation website www.wto.org.