Article 2 — Definitions

For the purposes of this Regulation, the following definitions apply: (1) advance purchasing agreement means a public contract with one or more economic operators which aims at supporting the swift development or production of a product, and by virtue of which the right to purchase a specified number of products in a given timeframe and at a given price is subject to the prefinancing of part of the upfront costs faced by the economic operators concerned; while an advance purchasing agreement is legally binding upon the participating contracting authorities and upon the contractor, it needs to be further implemented by means of the conclusion of contracts with the contractors concerned; (2) another third-country entity means a legal entity that is established in a non-associated third country other than Ukraine, or a legal entity that is established in the Union, in Ukraine or in an associated country but which has its executive management structures in a non-associated third country other than Ukraine; (3) associated countries means members of the European Free Trade Association which are members of the European Economic Area that apply this Regulation in accordance with the Agreement on the European Economic Area; (4) bottleneck means a point of congestion in a production system that stops or severely slows production; (5) blending operation means an action supported by the Union budget, including within a blending facility or platform as defined in Article 2, point (6), of the Financial Regulation, that combines non-repayable forms of support or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors; (6) classified information means information or material, in any form, the unauthorised disclosure of which could cause varying degrees of prejudice to the interests of the Union, or of one or more Member States, and which bears an EU classification marking or a corresponding classification marking, as established in the Agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the European Union; (7) contracting authorities means contracting authorities as defined in Article 2(1), point (1), of Directive 2014/24/EU of the European Parliament and of the Council and in Article 3(1) of Directive 2014/25/EU of the European Parliament and of the Council; (8) control means the ability to exercise decisive influence over a legal entity directly, or indirectly through one or more intermediate legal entities; (9) crisis-relevant products means defence products or components or raw materials thereof, or any products or services critical to their production, whose availability is indispensable to ensure the proper functioning of the internal market and its supply chains and must be guaranteed in order to respond to a supply crisis; (10) defence innovation action means an action primarily consisting of activities directly aiming to produce plans and arrangements or designs for new, altered or improved defence products, processes or services, possibly including prototyping, testing, demonstrating, piloting, large-scale product validation and market replication; (11) defence products means any defence-related products as referred to in the Annex to Directive 2009/43/EC, as well as works, supplies and services directly related to those products for any and all elements of their life cycle within the meaning of Article 2, point (c), of Directive 2009/81/EC; (12) dynamic availability management means the provision of defence products in time, at the agreed location and to the agreed levels of availability, as well as managing availability risks that could materialise in the form of shortages of the defence product concerned; in this context, availability means the ability of the defence product to function faultlessly under defined conditions and to be ready to use when required; (13) executive management structure means a body of a legal entity, appointed in accordance with national law, and, where applicable, reporting to the chief executive officer, which is empowered to establish the legal entity’s strategy, objectives and overall direction, and which oversees and monitors the legal entity’s management decision-making; (14) foreground information means data, knowhow or information generated within a given action under this Regulation, whatever its form or nature; (15) lead time means the period of time between a purchase order being placed and the manufacturer completing the order; (16) legal entity means a legal person created and recognised as such under Union, national or international law, which has legal personality and the capacity to act in its own name, exercise rights and be subject to obligations, or an entity which does not have legal personality as referred to in Article 200(2), point (c), of the Financial Regulation; (17) life cycle means all the possible successive stages of a product, from research and development to de-commissioning and disposal; (18) maintenance means all actions taken to ensure the readiness and operational capability of a defence product, in particular to retain equipment in, or restore it to, specified conditions until the end of its use, including mission readiness, longevity and upgrades, customisation and specialisation, inspection, overhaul, testing, servicing, modifications, classification as to serviceability, repair, recovery, rebuilding, reclamation, salvage and cannibalisation; (19) middle-capitalisation company or mid-cap means an enterprise that is not an SME and that employs a maximum of 3000 persons, where the headcount of staff is calculated in accordance with Articles 3 to 6 of the Annex to Commission Recommendation 2003/361/EC; (20) non-associated third-country entity means a legal entity that is established in a non-associated third country, or a legal entity that is established in the Union or in an associated country but which has its executive management structures in a non-associated third country; (21) non-recurrent costs means costs that occur on a one-time basis or at irregular intervals, in particular design, development and investment costs necessary for the production or maintenance of defence products or for the reservation of manufacturing capacities; (22) off-take agreement means any contractual agreement between, on the one hand, at least three Member States and, where relevant, associated countries or Ukraine and, on the other hand, at least one manufacturer of defence products, containing either a commitment by the Member States and, where relevant, associated countries or Ukraine to procure a certain quantity of defence products over a certain period of time, or a commitment by the manufacturer of defence products to provide the Member States and, where relevant, associated countries or Ukraine with the option to make such a procurement; (23) originator means the Union institution, agency or body, Member State or an entity set up under this Regulation under whose authority classified information has been created; (24) procurement agent means a contracting authority established in a Member State or an associated country, a Structure for European Armament Programme (SEAP), the European Defence Agency (EDA) or an international organisation that is designated by Member States, associated countries, Ukraine or a SEAP to conduct a common procurement on their behalf; (25) raw material means raw material as defined in Article 2, point (1), of Regulation (EU) 2024/1252 of the European Parliament and of the Council; (26) results means any tangible or intangible effect of a given action, such as data, knowhow or information, whatever its form or nature and whether or not it can be protected, as well as any rights attached to it, including intellectual property rights; (27) Seal of Excellence means a quality label which shows that a proposal submitted to a call for proposals under the Programme or the Ukraine Support Instrument has passed all of the evaluation thresholds set out in the work programme, but could not be funded due to a lack of budget available for that call for proposals in the work programme, and might receive support from other Union or national sources of funding; (28) sensitive information means unclassified information and data that are to be protected from unauthorised access or disclosure because of obligations laid down in Union or national law, where applicable, or in order to safeguard the privacy or security of a natural or legal person; (29) small and medium-sized enterprises (SMEs) means small and medium-sized enterprises as defined in Article 2 of the Annex to Recommendation 2003/361/EC; (30) small middle-capitalisation company or small mid-cap has the meaning as assigned to it in the Annex to Commission Recommendation (EU) 2025/1099; (31) subcontractor means an economic operator that is proposed by a candidate, tenderer or contractor to perform specific tasks or services under the supervision of the main contractor, contributing to the design or manufacturing of a defence product, other than what is provided by suppliers to implement the contract, for which it is allocated at least 15 % of the value of the contract, and that needs access to classified information for the performance of that contract; for the purposes of this definition, supplier shall be understood as an economic operator that delivers components of its own design or production to the contractor.