Tuesday, 27 October 2026
Poland’s position as the largest beneficiary of the European Union’s Security Action for Europe (SAFE) programme is bringing renewed attention to how the country distributes military contracts between state-owned manufacturers and independent defence companies. With access to approximately €43.7 billion in European financing, the government is undertaking one of the largest defence investment programmes in the country’s history. However, the scale of the expenditure raises questions about procurement transparency, industrial competition and the long-term value delivered to the armed forces.
Unlike European grant programmes, SAFE provides loans that participating countries must repay. Poland’s approved allocation amounts to €43.734 billion, of which approximately €6.6 billion was transferred as an initial payment in May 2026. Further financing is expected as the programme progresses. The arrangement provides access to long-term borrowing on favourable terms, but the financial obligations will ultimately remain with Poland. Consequently, decisions concerning equipment selection, production costs and delivery schedules will have implications extending well beyond the immediate military modernisation programme.
According to information presented to the Polish parliament on 23 October by Deputy Defence Minister Magdalena Sobkowiak-Czarnecka, the Armament Agency had concluded 39 contracts and 12 amendments representing approximately PLN 120 billion (€27.3 billion). A further 16 agreements covering cybersecurity requirements were valued at PLN 3.4 billion (€774 million). The ministry reported that Polish defence companies accounted for 99.5% of the value of the Armament Agency orders, demonstrating the government’s intention to direct a substantial proportion of military expenditure towards domestic production.
One of the principal beneficiaries is the Polish Armaments Group (PGZ), the state-controlled industrial organisation bringing together more than 50 companies and employing approximately 22,000 people. The group plays an established role in supplying and maintaining equipment for Poland’s armed forces, including armoured vehicles, artillery systems and ammunition. Major procurement agreements announced in May, with a combined value approaching PLN 60 billion, involved PGZ subsidiaries and industrial partnerships producing equipment such as Borsuk infantry fighting vehicles, Krab self-propelled howitzers and Rak mortar systems.
Several major agreements were negotiated directly with selected manufacturers rather than awarded through open competitive procedures. Such arrangements are permitted in certain defence procurement circumstances, particularly where national security considerations, technical requirements or existing production capabilities influence supplier selection. Nevertheless, the concentration of substantial contracts among established state-controlled manufacturers has prompted questions about how effectively the procurement system accommodates independent suppliers and encourages competition.
The government’s approach also reflects a wider industrial strategy aimed at increasing Poland’s ability to manufacture and maintain military equipment domestically. Expanding national production capacity has become increasingly important as European countries seek to strengthen supply chains and reduce dependence on manufacturers outside the region. SAFE itself was established to support European defence capabilities, including cooperation between participating countries and investment in the continent’s military manufacturing base.
Private companies are also participating in Poland’s modernisation programme. WB Group, a Polish privately owned defence technology manufacturer, supplies systems including FlyEye reconnaissance drones and Warmate loitering munitions, both of which feature in procurement arrangements associated with SAFE. Their inclusion illustrates the contribution that independent manufacturers can make in areas where technological development and changing operational requirements demand rapid innovation.
However, the publicly available information does not provide a complete assessment of how the total value of procurement is divided between state-owned enterprises, private manufacturers and industrial consortia. While the government has disclosed substantial contract values and identified major equipment programmes, the absence of a comprehensive ownership-based breakdown makes it difficult to determine the precise distribution of spending. It also limits independent evaluation of whether procurement arrangements are providing comparable opportunities to manufacturers with different ownership structures.
Military requirements remain the primary consideration in assessing these decisions. The war in Ukraine has demonstrated the importance of artillery production, unmanned systems, electronic warfare, ammunition availability and the ability to replenish equipment rapidly. Established manufacturers may offer production capacity and experience that smaller companies cannot immediately match, while specialist private businesses can contribute technologies and manufacturing flexibility. An effective procurement system must accommodate both where they can meet operational requirements.
Another consideration is the relationship between newly announced contracts and existing military procurement commitments. Some SAFE-related agreements involve amendments to contracts concluded in previous years, allowing eligible expenditure to be financed through the European mechanism. This distinction matters because the total value of agreements associated with SAFE does not necessarily represent entirely new military orders or additional spending beyond previously approved programmes.
The financial consequences also require attention. Although European borrowing can provide more favourable repayment conditions than some alternative financing arrangements, the loans will remain public liabilities. Poland must therefore ensure that expenditure delivers measurable improvements in military readiness while maintaining sufficient oversight of costs, contractual performance and production schedules. The government’s procurement decisions will also influence employment, industrial investment and the development of manufacturing facilities across the country.
Greater disclosure of contract allocation, supplier participation and delivery performance would provide a clearer understanding of how Poland’s defence investment is being distributed. This would not require the publication of classified operational information but could improve public accountability for one of the country’s largest long-term spending commitments. The central question is not whether state-owned or private manufacturers should receive preference, but whether procurement decisions provide the armed forces with the necessary equipment, at an appropriate cost and within the required timeframe.
Poland’s SAFE programme represents an opportunity to modernise its military while expanding domestic industrial capabilities. Its longer-term success will depend on more than the value of contracts signed or the proportion awarded to Polish companies. The decisive measures will be the reliability of delivered equipment, the ability of manufacturers to meet military requirements and whether the investment creates a competitive, technologically capable defence industry without placing unnecessary financial burdens on future public budgets.
Source: WEI
