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Questions and Answers on the precursor programmes of the European Defence Fund

Met dank overgenomen van Europese Commissie (EC), gepubliceerd op maandag 15 juni 2020.

European Defence Industrial Development Programme

  • What is the EDIDP about?

The European Defence Industrial Development Programme (EDIDP) is a €500 million two-year (2019-2020) programme of the Union aiming at co-financing, through grants, the joint development of Defence products and technologies.

The legal basis (the EDIDP Regulation) of this new programme was adopted in July 2018. Its objectives are:

  • to foster the competitiveness, efficiency and innovation capacity of the defence industry throughout the Union, thus contributing to the Union's strategic autonomy;
  • to support and leverage industrial cooperation throughout the Union, with special incentives for SMEs and mid-caps, and collaboration between Member States, in the development of defence products or technologies, while strengthening and improving the agility of defence supply and value chains, and fostering the standardisation of defence systems and their interoperability;
  • to foster better exploitation of the results of defence research and contribute to development after the research phase, thereby supporting the competitiveness of the European defence industry on the internal market and the global marketplace, including by consolidation, where appropriate.

The fields of interests targeted by the EDIDP are defined in its multiannual work programme and further reflected in the annual calls for proposals published in 2019 (now closed) and 2020 (open until 1 December 2020).

The EDIDP is managed and implemented directly by the European Commission (DG Defence Industry and Space).

  • What are the results announced today?

The results announced today are those of the 2019 EDIDP competitive calls. Nine competitive calls for proposals, covering 16 topics, were published in April 2019 and more than 40 proposals were received in September 2019. Following the evaluation of the received proposals, 16 projects have been selected for grant award for a total amount of €200.5 million. Grants agreements are expected to be signed by end of September 2020.

  • How have the winning proposals been selected?

Received proposals have been selected on the basis of eligibility and award criteria specified in the EDIDP Regulation. The evaluation takes into account the contribution to excellence, innovation, competitiveness and industrial autonomy. The budget allocated to SMEs, notably to cross-border SMEs, as well as the commitment of Member States are also taken into consideration.

  • What is the added value of EDIDP in the field of defence research and development?

While Europe is facing unprecedented security challenges, defence research and development (R&D) has been suffering for the last decade from a lack and fragmentation of investments throughout the Union, with limited cooperation between Member States and between defence industrial players, leading to inefficiencies.

In addition, the coronavirus crisis will severely impact the European defence industry with a high risk of losing critical industrial competencies and skills.

In this context, the EDIDP allows for the first time ever to invest EU money in a coordinated manner in support to collaborative defence R&D. EDIDP will also be an important instrument to support European defence industry in the context of the coronavirus crisis and contribute to enhance Europe's resilience.

The EDIDP Regulation defines the eligibility conditions in order to benefit from this financial support, which can cover from 20% to 100% of the eligible costs for capacity development. Such conditions include high standards in terms of cooperation between undertakings[1] and between Member States[2], in terms of absence of non-EU control over the participants[3] as well as in terms of absence of non-EU restrictions or control over the results[4] of the funded action.

With such instrument, and in coherence with other EU defence initiatives such as the the Permanent Structured Cooperation (PESCO) or the Coordinated Annual Review on Defence (CARD), as well as consistent with the defence capability priorities commonly agreed by Member States in the framework of the Common Foreign and Security Policy and particularly in the context of the Capability Development Plan (CDP), the Union intends to scale up co-financing in the field of Defence R&D while encouraging a coordinated and more efficient approach in the development of the Defence capabilities that Member States and the Union need, thus contributing to its strategic autonomy.

  • Can non-EU controlled companies or companies established outside the EU participate?

Companies established in the Union but controlled by a third country or by a third-country entity can participate in the EDIDP calls and be eligible for funding if guarantees approved by the Member State in which it is established and substantiating that a certain number of measures have been put in place[5], are provided to the Commission.

Companies established outside the Union can participate to EDIDP under certain conditions but without receiving funds.

The results of 2019 calls prove that the participations of such companies to EDIDP is not only possible but a reality.

  • Is the EDIDP only for large Defence companies or companies established in large Member States?

EDIDP is a programme for all Member States and for companies of all size. In addition, the EDIDP has specific provisions to incentivise the participation of Small and Medium-sized Enterprises (SMEs) and mid-caps throughout the Union:

  • increased funding rate for proposals allocating more than 10% of their eligible costs to SMEs;
  • increased funding rate proposals allocating more than 15% of their eligible costs to mid-caps;
  • award depending on the proportion of the overall budget of the action to be allocated to the participation of SMEs established in the Union bringing industrial or technological added value, as members of the consortium, as subcontractors or as other undertakings in the supply chain, and in particular the proportion of the overall budget of the action to be allocated to SMEs which are established in Member States other than those where the undertakings in the consortium which are not SMEs are established;
  • for 2019, SMEs represent 37% of the total number of entities participating in the projects.

In addition, the 2019 and 2020 calls for proposals have each a call dedicated to SMEs for a total budget of €17.5 million.

Results of 2019 calls clearly show that EDIDP is for any size of companies from any Member State.

  • What is coming next?

EDIDP 2020 calls are open until 1 December 2020. Received proposals will undergo the same evaluation process as 2019 proposals and results should be announced during summer 2021.

After the EDIDP, the European Defence Fund (EDF) will take over from 2021 to 2027 with a proposed adjusted budget of €9 billion (current price). The EDF will cover both research and development and be implemented following the adoption of annual work programmes. The EDF will be legally based on a Regulation largely inherited from the EDIDP, which should be adopted soon.

With the current EDIDP and the upcoming EDF, the Union is preparing the next generation EU to the security and defence challenges of today and tomorrow.

  • How is coherence of EDIDP, PADR and EDF with the other EU defence initiatives and national activities ensured? Is there a risk of duplication?

Member States, as end-users of defence equipment, have a central role in the implementation of the PADR, the EDIDP and the future EDF. EDIDP and EDF development projects are linked to Member States equipment/armament programmes. Furthermore, important co-funding from Member States is required as well as the intention of Member States to commonly acquire the developed product or technology.

Member States also have an important role in the definition of the funding priorities of EDIDP and EDF. The annual EDF work programmes shall be in line with the defence capability priorities commonly agreed by Member States within the framework of the Common Foreign and Security Policy and particularly in the context of the Capability Development Plan. PESCO projects or new opportunities for cooperation amongst Member States identified through the CARD process can also be taken into account. For EDIDP 2019, nine proposals financed under EDIDP are PESCO projects. EDF work programmes can also reflect regional or international (e.g. NATO) priorities.

Preparatory Action on Defence Research

  • What is the Preparatory Action for Defence Research about?

The Preparatory Action on Defence Research (PADR) is one of the two precursor programmes of the European Defence Fund (EDF). It prepares the research window of the EDF. With a total budget of €90 million over 3 years (2017-2019), PADR provides funding for collaborative research projects demonstrating the value-added and testing the mechanisms for a variety of defence research categories and topics. EU funding is at 100% of the total eligible costs of the project (there is no co-funding from Member States such as in EDIDP). The PADR will fund, by the summer of 2020, a total of 18 research projects selected through 10 competitive calls for proposals. The implementation of the research projects runs until mid-2023.

  • Why is research for disruptive technologies important for defence?

Disruptive technologies for defence are technologies where the application can radically change the concepts and conduct of defence affairs. While it is important to foresee funding to sustain more mature technologies for defence in order to improve the performance of established defence capabilities, it is also important to look further into the future and make sure that European armed forces have novel technologies that tip the military balance in their favour. R&D for disruptive technologies intends to lead to a radical paradigm shift, create asymmetry between military powers, and to maintain a technological dominance.

  • How were the PADR project proposals selected for funding?

PADR has been implemented through annual work programmes that defined the research topics, and competitive calls for proposals. Project proposals submitted by consortia (at least 3 entities from 3 different Member States) in response to these calls were evaluated and selected based on scientific merit with the help of a group of contracted, independent technical experts.

One call, however, experimented with a more refined selection procedure. The call in question, the open call for disruptive technologies, used a two-stage application and selection procedure. In order to attract proposals with out-of-the-box thinking and novel ideas on how to apply radically new technologies in a defence context, applicants were invited to submit short outline proposal in a first step. These outline proposals were evaluated by technical experts for their scientific merits, and by a pool of military experts (nominated by the national Ministries of Defence) for the relevance of the ideas in a military context. Applicants who submitted the highest ranked proposals were then invited to submit a full proposal assessed by another pool of independent technical experts. This double assessment had two advantages: first, by inviting a short outline proposal in a first stage, more applicants were attracted to submit a project proposal (53 proposals in total). Second, by including a military assessment, the likelihood of selecting projects relevant for the military was increased.

  • Will PADR continue in 2020?

PADR is a three years test programme that prepares the research window of the future European Defence Fund. Launched in 2017, it entered its third and final year in 2019. A last round of PADR calls have been launched in Spring 2019. Most of the results of these calls have been announced in April this year. The last three projects to be funded have been announced today. PADR cannot be extended and there will be no further calls for proposals in 2020. However, some of the research projects funded by PADR will run until mid-2023.

  • What is the role of the European Defence Agency (EDA) in the implementation of the PADR?

The Commission is overall responsible for the implementation of the PADR. However, it entrusted certain implementation tasks to the EDA through a delegation agreement. The Commission prepared the annual PADR work programmes and the related call for proposal texts in cooperation with an expert group of Member States. EDA participates in the meetings of this group. Once the work programmes and call texts were adopted by the Commission, EDA implemented the calls, evaluated the project proposals received and selects the projects to be funded, prepares the grant agreements with the consortia that will manage the research projects, and monitors their implementation. Only the last 2019 PADR open call on disruptive technologies (resulting in the three selected projects announced today) was implemented directly by the Commission.

  • What role do artificial intelligence and algorithm-based decisions play in European defence research? Is there any funding for this under the PADR?

Artificial intelligence (AI) will play an increasing role in defence technologies and systems. The 2019 PADR call on emerging technologies for defence focused amongst other topics on AI related technologies. The project AIDED, one of the five research projects proposed for funding as a result of this call in April this year, looks into artificial intelligence for the detection of explosive devices. AIDED will explore the use of a set of state of the art AI algorithms to identify unconventional (IEDs) and conventional (buried mines) explosive devices. For more information on the AIDED project, see fact sheet under: https://eda.europa.eu/docs/default-source/documents/padr-calls-factsheet-v2.pdf

[1] undertakings must cooperate within a consortium of at least three eligible entities established in at least three different Member States. At least three of those eligible entities established in at least two different Member States shall not be controlled, directly or indirectly, by the same entity or shall not control each other.

[2] consortium must demonstrate that several Member States are supporting the development. Depending on the proposed development this must include:

  • intention of at least two Member States to procure the final product or to use the technology in a coordinated way, including through joint procurement where applicable;
  • development based on common requirements jointly agreed by at least two Member States;
  • development based on common technical specifications jointly agreed by the Member States that are to co-finance or that intend to jointly procure the final product or to jointly use the technology;
  • co-financing.

[3] the beneficiaries and subcontractors involved in the action shall not be subject to control by a third country or by a third-country entity. Derogation exists, subject to additional conditions.

[4] The results of actions which receive funding under the Programme shall not be subject to control or restriction by a third country or by a third-country entity, directly, or indirectly through one or more intermediate undertakings, including in terms of technology transfer.

[5] In particular that:

  • a) 
    the ‘third country' or ‘third-country entity' ‘control' over the ‘undertaking' is not exercised in a manner that:
  • restrains or restricts the ‘undertaking's ability to carry out the action and to deliver ‘results',
  • imposes restrictions concerning its infrastructure, facilities, assets, resources, intellectual property or know-how needed for the purpose of the action, or
  • that undermines its capabilities and standards necessary to carry out the action;
  • b) 
    access by a ‘third country' or by a ‘third-country entity' to sensitive information relating to the action is prevented and the employees or other persons involved in the action have national security clearances, where appropriate;
  • c) 
    ownership of the intellectual property arising from, and the ‘results' of, the action:
  • remain within the ‘beneficiary' during and after completion of the action;
  • are not subject to control or restriction by a ‘third country' or by a ‘third-country entity'; and
  • are not exported outside the Union nor is access to them from outside the Union granted without the approval of the Member State in which the ‘undertaking' is established and in accordance with the objectives of EDIDP (set out in ‘Article 3 of the EDIDP Regulation').

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