Eurada News nº392 – September 2019

EU and National Funding Opportunities for Defence Technologies

The European Defence Fund will provide a key contribution to Europe’s strategic autonomy, protecting and defending its citizens. It will promote defence cooperation among companies and between EU countries to foster innovation and develop state-of-the-art defence technology and products.

As part of AGORADA+2019: Innovative Defence Technologies for the Virtual Battlefield, Paul Anciaux (Policy Officer at the European Commission responsible for the Defence Industries) gave a presentation called EU and National Funding Opportunities for Defence Technologies, about the European Defence Fund (EDF) and its two programmes aimed at testing defence cooperation among EU states: the Preparatory Action on Defence Research (PADR) for 2017-2019 and the European Defence Industrial Development Programme (EDIDP) for 2019-2020.

The EDF is a €13 billion long-term initiative (2021-2027) with the goal of increasing the EU’s strategic autonomy, reinforce its ability to protect the European citizens and make the EU a stronger global actor. The EDF will provide €4.1 billion to directly finance competitive and collaborative research projects, in particular through grants. Beyond the research phase, €8.9 billion will be available to complement Member States’ investment by co-financing the costs for prototype development and the ensuing certification and testing requirements. The Fund will place the EU among the top 4 defence research and technology investors in Europe, and act as a catalyst for an innovative and competitive industrial and scientific base. First calls for proposals under the fully fledged EDF will not be published until January 2021.

Two requirements must be met in order to participate in the funding: a) to be a cooperation project between at least 3 legal entities established in at least 3 different Member States and b) to be an entity established in the Union or one established in an associate country which is not controlled by third countries or companies. If conditions relating to the security interests of the EU are met (that is, no risk in the ability to perform the action, classified information is not accessible to third countries and the intellectual property rights [IPR] remain in the EU), there can be exceptions. Cooperation with companies based outside the Union is possible, but costs are not eligible.

The EDF will finance 100% of eligible costs, prototypes up to 20%, post-prototype actions up to 80%, and 25% of the total direct eligible costs as flat rate for indirect costs or determined on the basis of actual indirect costs. It will also give a bonus of 10% for projects identified in the context of Permanent Structured Cooperation (PESCO) and increase the funding rate according to the proportion of cross-border participation of SMEs/midcamps in projects.

The PADR is a concrete step aimed at assessing and demonstrating the added-value of EU supported defence research and technology (R&T). Its main goals are: to demonstrate and assess added-value of EU-supported defence R&T, foster further cooperation between Ministries of Defence and between EU defence industries, and prepare for a basic act to launch a substantial defence research programme from 2021 on-wards. It has a budget of €90 million, funds 100% of direct eligible costs plus indirect costs (flat rate of 25% of direct eligible costs) and is implemented by means of annual work programmes and calls for proposals (one on electromagnetic spectrum dominance, another on future disruptive defence technologies, and the third on unmanned systems). Up to 10 projects are expected to be awarded following the 2019 calls.

The EDIDP is an industrial programme of the EU with a budget of €500 million aiming to support the competitiveness and innovation capacity of the Union’s defence industry in all domains (land, sea, air, cyber and space) by co-financing with Member States the development of defence capabilities. This programme will be implemented by the Commission through annual calls for proposals, to be published in 2019 and in 2020. The calls for proposals are based on a 2-year work programme defined in close cooperation with EU countries and adopted by the European Commission on 19 March 2019. There will be 9 calls for proposals in 2019, and 12 in 2020. The financial support of this programme will take the form of grants. It will finance up to 100% of studies with bonuses and up to 90% without them, up to 55% of prototypes with bonuses and up to 20% without them, and up to 100% of other activities with bonuses and up to 65% without them.

Non-EU controlled undertakings are eligible as beneficiary or subcontractor involved in the action, if they can provide guarantees approved by their Member State assuring that their participation does not contravene the security and defence interests of the EU or the objectives of the EDIDP. They shall in particular confirm that there will be no risk in the ability to perform the action, that sensitive information is protected and that IPR remain in the EU (export will need the approval of the Member State). Under strictly defined conditions and if there is no competitive substitute available in the Union, beneficiaries and subcontractors may use their assets, infrastructures and resources located outside the Union, but the related costs won’t be funded.

Written by Alex Arcos Pujades, Communication and Project Officer at EURADA