Navigating NATO Procurement: Legal and Regulatory Considerations for Companies in Finland & Sweden
6 min read
As NATO’s strategic priorities evolve, the accession of Finland and Sweden marks a significant shift in the alliance’s defense landscape. With these Nordic nations integrating into NATO’s security framework, their defense industries have a unique opportunity to expand into alliance-wide procurement channels. The continuing emphasis on European defense self-sufficiency, and NATO’s commitment to strengthening its Arctic dimension are reshaping defense collaboration. For Finnish and Swedish companies, this evolving environment presents both challenges and opportunities. As NATO accelerates military modernization, enhances cybersecurity capabilities, and fortifies European defense infrastructure, firms in Finland and Sweden have a critical window to establish themselves as key players in NATO’s supply chains. However, participating in NATO procurement requires careful attention to complex legal and regulatory requirements, including security clearances, export controls, and compliance with NATO procurement protocols. Companies seeking to compete for NATO contracts must be prepared to meet these stringent obligations, mitigate legal risks, and strategically position themselves within this evolving defense landscape.
Legal and Regulatory Framework for NATO Procurement
NATO procurement operates under a decentralized framework, with multiple agencies handling acquisitions based on their specific mandates. The NATO Support and Procurement Agency (NSPA) is responsible for logistics, sustainment, and acquisition of military goods and services. It provides a centralized procurement system that covers everything from maintenance and spare parts to large-scale acquisitions for NATO operations. The NATO Communications and Information Agency (NCIA) focuses on the procurement of command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) solutions. This includes cybersecurity initiatives, software development, and secure communications infrastructure necessary for NATO’s strategic operations. The NATO Investment Committee (NIC) oversees infrastructure projects, including military installations, technological upgrades, and construction projects necessary for strengthening NATO’s operational capabilities. NIC funding supports military base enhancements, airfields, and integrated defense systems across NATO member states.
For companies within NATO member states, participation in NATO procurement requires adherence to both NATO regulations and domestic laws governing defense trade, compliance, and corporate governance.
Steps to Qualify for NATO Procurement
Companies must first establish their eligibility and register with the appropriate NATO procurement agency, such as the NSPA Supplier Registration system. This process involves meeting NATO’s eligibility criteria, which typically include security clearances, financial stability, and technical capability assessments. Many NATO member states require additional national approvals for companies bidding on sensitive defense contracts. Registration and pre-qualification are crucial for ensuring companies are recognized as eligible bidders in NATO’s procurement processes.
Depending on the type of procurement contracts sought, compliance with security and operational requirements may be required. For opportunities squarely in the defence market, companies will likely have to adhere to NATO Security Policy, which in some cases mandates obtaining Facility Security Clearances (FSC) through national security authorities. Personnel involved in these types of NATO contracts may need security clearances aligned with NATO Confidential or higher classification levels. Similarly, if triggered by a particular procurement opportunity, cybersecurity requirements under the NATO Cyber Defence Pledge would necessitate adherence to specific security protocols, particularly for ICT-related procurements. Failure to comply with these security mandates can result in disqualification from bidding or contract termination.
In addition, export control and trade compliance obligations may be triggered based on the nature of the contract. Companies must comply with both EU and national export control regulations, including the EU Common Military List and relevant national laws governing defense exports. Certain NATO procurement contracts may require compliance with the U.S. International Traffic in Arms Regulations (ITAR) if American-origin components are involved. These types of requirements highlight why companies must conduct due diligence to ensure supply chain integrity and avoid restricted entities or sanctioned jurisdictions. Violations of export control laws can result in severe penalties, reputational harm, and potential debarment from NATO contracting opportunities.
Equally important to these compliance obligations, understanding the legal framework governing NATO contracts is vital. NATO contracts follow strict legal frameworks, incorporating standard clauses such as NATO General Terms and Conditions (NGTCs) and specific agency-level procurement rules. Companies should assess liability provisions, indemnification clauses, and dispute resolution mechanisms, often subject to arbitration under NATO Administrative Tribunal (NAT) procedures. Compliance with anti-corruption laws, including national anti-bribery statutes and NATO’s integrity policies, is critical to avoid procurement bans or reputational risks. Companies should work closely with legal counsel to ensure all contractual obligations are met.
Post-Award Compliance Obligations
Winning a NATO contract brings significant compliance and oversight obligations. Companies must meet ongoing reporting and audit requirements. NATO contractors are subject to regular audits by procurement agencies and must maintain transparent records of contract performance, financial transactions, and subcontractor engagements. Compliance with NATO’s Financial Rules and Audit Policies ensures continued eligibility for future contracts. These audits are rigorous and require firms to maintain detailed documentation to verify performance, cost structures, and adherence to contract terms.
Managing supply chain and offset requirements is another key obligation. Some NATO contracts impose offset obligations, requiring foreign contractors to reinvest a percentage of the contract value into the local economy. Companies acting as subcontractors must ensure compliance with NATO’s industrial participation policies and national defense industrial cooperation regulations. This includes establishing local partnerships, investing in domestic manufacturing, and ensuring supply chain security measures align with NATO’s strategic goals.
Intellectual property and data protection requirements must be carefully followed. NATO procurement contracts may impose strict requirements on data ownership, intellectual property rights, and confidentiality obligations. Companies handling sensitive defense technology must comply with the EU’s General Data Protection Regulation (GDPR), as well as NATO-specific data security measures. These regulations protect classified information and prevent unauthorized disclosure of sensitive military technology.
Key Focus Areas
Adapting to new NATO procurement regulations will be crucial as the alliance modernizes its acquisition policies to streamline processes and increase participation from Finnish and Swedish industries. Companies and their legal teams must stay updated on regulatory changes and ensure compliance with evolving standards. This includes tracking new procurement methodologies, digital transformation initiatives, and NATO’s focus on increasing procurement transparency and efficiency.
Managing cross-border legal risks is an increasing challenge for Finnish and Swedish companies engaging in multinational defense contracts. Businesses must navigate diverse legal frameworks, including conflicts of laws between national, EU, and NATO regulations. Establishing robust compliance programs to address trade controls, sanctions risks, and extraterritorial regulatory requirements is essential. Companies should proactively assess how emerging geopolitical developments impact their contractual obligations and business operations.
Leveraging NATO membership for market expansion presents significant opportunities for Finnish and Swedish firms. NATO affiliation enhances credibility and market access for companies seeking to expand into allied defense markets. Legal advisors should assess the applicability of mutual recognition agreements and defense cooperation frameworks to facilitate cross-border operations. Expanding market reach through NATO contracting can lead to long-term strategic partnerships, increased revenue opportunities, and positioning Finnish and Swedish companies as key players in the international security landscape.
Conclusion
Finnish and Swedish companies are uniquely positioned as their countries integrate into NATO as its two newest members. Companies operating within their borders can access significant prospects in the broader NATO supply chain, but success requires careful navigation of complex legal and regulatory frameworks. By proactively addressing eligibility requirements, compliance obligations, and post-award contractual commitments, Finnish and Swedish companies can position themselves as reliable partners in NATO’s defense ecosystem. Legal teams must ensure rigorous adherence to procurement rules, trade compliance laws, security policies, and dispute resolution mechanisms to mitigate risks and capitalize on the expanding opportunities within NATO's supply chain in 2025 and beyond.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2025 White & Case LLP
