Buying Under Fire: How the 2022 Rearmament Shock Reshaped Competition in European Defense Procurement

When a large, unexpected demand shock hits a discretionary procurement system, do public buyers compete more or less? I provide causal evidence for defense procurement, using the 2022 Russian invasion of Ukraine as a single, common shock to European rearmament. On the near-universe of EU tender records (EU-27, the UK, and Norway, 2014–2026), I estimate a defense-versus-civilian difference-in-differences with country-by-year fixed effects. Competition fell, and defense procurement shifted about ten percentage points toward the negotiated procedure without prior publication—legal sole-source awards that bypass open tendering—routed to the incumbent prime contractors that European defense-industrial policy has cultivated. Decomposing the legal justifications buyers must state, the shift is driven by “technical-monopoly” rather than urgency grounds. Replicating and extending a published coverage benchmark, I rule out that procurement migrated off-record into Article 346 exemptions; the effect survives Honest-DiD and leave-one-out checks. When rearmament meets buyer discretion, spending is absorbed by incumbents through legal exemptions rather than competition.