Due to the sensitive nature of the defense industry sector, there are no official statistics available on local production, imports, and exports. The only data available through public sources is the annual amount of defense expenditures, which is illustrated in the table below.
Spending on Defense in Poland
| Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Approximate Defense Spending$ billion | 8.38 | 8.79 | 9.05 | 10.36 | 10.67 | 10.30 | 9.8* | 9.5* | 10.1* | 12.5* | 12.5* |
Poland leads the former East-bloc countries in parting from Soviet-era equipment and has long term plans to replace any remaining Soviet era equipment with modern NATO-compatible platforms. However, the Polish Government’s plans to strengthen and reorganize the armed forces and the Polish defense industry must compete with other reforms that are financed through the state budget.
The Polish Government annually negotiates its defense budget and the budget parameters are set during these negotiations. In the 2020 budget, the Polish government allocated 2.1% of 2019 GDP (the government announced its intent to increase spending up to 2.5% of GDP by the year 2030), an amount equal to about $12.5 billion** (PLN 49.997 billion) for total defense expenditures, of which about $12.25 billion** (PLN 49.015 billion) is dedicated to national defense. This is a y-o-y increase of 11.3% and includes $3.35 billion** (PLN 13.413 billion) allocated for arms and technical modernization. One of the main expenditures is salaries and pensions.
Poland’s military is undergoing changes designed to transform it into a more capable, mobile, and NATO-compatible force. Change is occurring in every area of operation, to include force structure, staff organizations, training programs, doctrine, and security procedures. Modernization plans include improvement of troop capacity/mobility, air defense systems and further development of a professional army. The total value of the 2020-2035 modernization plan is estimated at approximately $133 billion (PLN 524 billion).
The Polish Armed Forces modernization plan is based on three principles: 1) assessment of Polish military needs; 2) timeframe for delivery of equipment; and 3) Polish industry participation. The implementation of the program has placed an emphasis on using Polish defense industry capabilities, especially Polish Armament Group (PGZ) companies. U.S. companies are encouraged to team with Polish defense companies seeking cooperation agreements or joint venture opportunities that, combined with the relatively lower cost of production in Poland, will be attractive to potential customers.
Although Poland is no longer a recipient of new Foreign Military Financing (FMF), it has used previously allocated FMF funding for Night Vision Devices, Unmanned Aerial Vehicle (UAV) procurement and sustainment, signal intelligence, airfield navigational aids and tactical airlift support. As of July 2020, Poland has over 120 active FMS cases. Major recent FMS sales include F-35 fighter aircraft, the PATRIOT air and missile defense system, High Mobility Artillery Rocket System (HIMARS), Joint Air-to-Surface Standoff Missiles (JASSM), and Javelin Anti-Tank Missiles.
New FMS Expenditures in $M for CY 2017, 2018 and 2019.
| CY 2017 | CY 2018 | CY 2019 | CY 2020 * | |
| FMS Expenditures (in $M) | 447 | 4870 | 507 | 4670 |
Leading Sub-Sectors
Opportunities for American firms exist mainly in investment, technology transfer, and co-production work. Polish defense companies seek cooperative agreements or joint venture opportunities with foreign defense companies that, combined with the relatively lower cost of production in Poland (particularly tanks, armored vehicles, artillery, ships, aircraft, and helicopters), will be attractive to potential customers.
Receptivity to American products is high due to an excellent reputation for high quality products, reliability, and technical assistance. However, technological advantage is not the only factor determining success in the market. American companies should focus on educating end-users and other players in the defense sector. A successful U.S. exporter is expected to support its agent/representative at trade shows, seminars, and conferences.
Polish officials maintain that the most important factor in awarding a contract is price (which is particularly critical for big-ticket purchases), after which other variables, such as quality, availability of service and training, and technical assistance for the installation, as well as the start-up operation of the equipment, becomes important. Therefore, superior performance offered from U.S. companies will not always win the deal.
The Polish government is required by law to hold tenders for major procurements, though there is a national security exception. Financial value, project complexity, international cooperation, and political sensitivity determine the project category.
American companies that are well informed about upcoming projects are free to submit tenders to the contracting authority directly. However, direct purchases from foreign suppliers are very rare and we encourage U.S. firms to identify local agents/representatives that can provide necessary assistance. Selecting an appropriate representative is very important. The agent should have very close contacts in the military/defense market. A reputable agent with good contacts can provide important and timely information, which is often not readily available through public sources. Additional considerations should be given in view of complicated tender procedures and import regulations. American companies exporting to Poland should be familiar with the country’s Public Procurement Law, Polonization, and Offset Act. Polonization is part of Poland’s long-term plan to become more self-sufficient, and to increase and promote local industrial production. The bottom line is that it is nearly impossible to effectively sell defense products without a competent agent.
The Office for Offset Agreements at the Ministry of National Defense (MoND) coordinates Poland’s defense offsets. The offset requirements are an important part of defense procurement contracts. On June 26, 2014, the Polish Parliament adopted a new Offset Act – the “Act on Certain Agreements Concluded in Connection with Contracts Essential for National Security. “ The new Offset Act was signed into law by the President of Poland on 7 July 2014. The new law covering the use of offsets in defense acquisition brings the country in line with European Union (EU) military procurement rules.
American companies interested in military procurements in Poland are advised to use various resources to increase the chances of getting their company’s information into vendor’s databases within the military/defense sector. We advise American suppliers of military/defense equipment and services to contact the American Embassy in Warsaw as it pertains to information on defense-related business in Poland and current political issues prior to contacting any Polish government agency. This applies particularly to the Office of Defense Cooperation (ODC) and the Foreign Commercial Service (FCS).
Defense cooperation includes both security assistance and armaments cooperation activities. The U.S. government security assistance program for the government of Poland is managed by the Office of Defense Cooperation and includes Foreign Military Sales (FMS) armaments cooperation.
Poland’s membership in NATO has brought numerous opportunities for U.S. companies in terms of upgrades and adjustments. In addition, Poland became a close U.S. ally in Europe through its support for and participation international interventions in Iraq and Afghanistan, which also called for upgrades and adjustments in terms of developing a more capable and mobile force compatible with NATO troops.
Poland’s military is traditionally land force heavy. Currently, the military consists of 111,500 professional soldiers including 50,663 troops in the land forces; 16,813 in the Air Force; 7,048 in the Navy; 4,038 in Territorial Defense Forces, and 32,938 in other segments including, Reinforcements, Military Police, and the Polish Armed Forces Command. In addition, in 2019, the Ministry of Defense decided to establish a new Mechanized Division (18 Dywizja Zmechanizowana) and create a new general-military brigade (nowa brygada ogólnowojskowa).
In October 2019, the Polish Ministry of National Defense announced its new “Technical Modernization Plan 2020-2035,” which outlined a number of major procurement programs:
- HARPIA Program: Acquisition of 32 new generation multi-task F-35 aircraft. The modernization plan also includes a requirement for additional F-16 aircraft.
- HARPI SZPON Program: Poland plans to acquire stealthy unmanned aerial vehicle aircraft to enhance the combat capabilities of F-35 aircraft.
- NAREW program: Modernization of Poland’s short range air-and-missile defense capability.Polish defense industry is expected to be heavily involved.
- KRUK Program: Acquisition of modern attack helicopters for Polish Land Forces.
- OBSERWATOR Program: Acquisition of satellites, microsatellites, and reconnaissance aircraft
- CYBER.MIL Program: Acquisition of cyber defense tools and software, with heavy involvement by Polish industry.
- WISŁA Program: Modernization of Poland’s medium air and missile defense capability
- GRYF Program: Acquisition of tactical medium-range unmanned aerial vehicles
- WAŻKA Program: Acquisition of unmanned aerial vehicles intended for use mainly in urbanized areas, equipped with an optoelectronic head that allows observation during both day and night.
- PŁOMYKÓWKA Program: Acquisition of reconnaissance aircraft.
- MIECZNIK Program: Acquisition of two coastal defense vessels
- REGINA Program: Acquisition of 155 mm fire division modules to enhance the fire support capability at the tactical level. The major contractor is Huta Stalowa Wola (HSW).
- Continuation of HOMAR Program: Possible acquisition of additional rocket launchers, capable of striking targets in the 70-300 km range.
- PUSTELNIK Program: Acquisition of light anti-tank guided missile launchers
- BORSUK Program: Introduction of a new combat vehicle based on a universal modular tracked chassis, developed and manufactured by the Polish defense industry. It will replace the Soviet era BWP-1 vehicle.
- WILK Program: Acquisition of new generation main battle tanks.
- BALSA Program: Acquisition of advanced engineering robots for bomb disposal units. Robots are indigenously developed and manufactured.
- OTTOKAR BRZOZA Program: Acquisition of tank destroyers for the anti-tank regiment.
- GROSZEK Program: Pods for combat aircraft
- GLADIUS Program: Acquisition of unmanned search-strike systems (“loitering munitions”)
- Small MUSTANG Program: Finalizing acquiring of high-mobility trucks and passenger vehicles to repalce Honkers.
Foreign investors and joint venture partners with local firms can take advantage of government incentives. Many U.S. businesses in Poland take the form of joint ventures with Polish companies and are specifically set up to handle sales in the market. Joint ventures are an excellent way to facilitate export sales to the Polish market. U.S. companies competing for Polish defense contracts are encouraged to look for joint ventures, co-production, and other cooperative opportunities with Polish companies to make their bid offers more attractive. The relatively lower cost of production in Poland has led many foreign defense companies to seek cooperation agreements or joint venture opportunities with Polish defense companies that can produce equipment, which will be attractive to potential customers. Examples of such products include tanks, armored vehicles, artillery, ships, aircraft, and helicopters.
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