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European Defence Fund – cooperation opportunities

Having the development of the European cooperation and improved effectiveness of the defence industry in mind, the European Commission decided to boost competitiveness and innovation of the European industry by in-depth industrial policy in the defence sector. The year 2016 proved to be a significant stage of works on the challenges faced by the European policy, when the European Commission published the European Defence Action Plan (EDAP). This document established the main policy pillars applying to various, yet complementary needs within the defence capabilities development cycle i.e.: establishment of the European Defence Fund (EDF); supporting the investments in supply chains and strengthening the operation of the single defence equipment market.

At present, the most important challenges of the Polish defence sector in the field of European initiative include active participation of the entities in all stages of the EDF implementation, which was finally commenced by the 2017 Communication.

At the first stage of EDF until 2020, the decision on launching the Preparatory Action on Defence Research (PADR) and the European Defence Industrial Development Programme (EDIDP) was made. Both EDF pilot programmes provide the experiences for a single comprehensive EDF programme for 2021–2027.

European Defence Fund – EDF 2023

On 30 March 2023, the Commission adopted the third annual Work Programme under the European Defence Fund (EDF).

€1.2 billion is planned to support collaborative research and development projects and innovation in Europe’s defence sector.

The 2023 EDF work programme addresses 34 topics structured along four thematic calls for proposals, as well as three bottom-up calls focused on disruptive technologies and SMEs. It targets defence technologies and capabilities in line with the EU capability priorities commonly agreed upon by Member States and further elaborated in the Strategic Compass.

Additionally, the 2023 work programme introduces new measures to promote defence innovation under the umbrella of the EU Defence Innovation Scheme (EUDIS), such as the organisation of defence hackathons, financial support to organisations for developing innovation test hubs and supporting the continuation of EU civil-funded research to test its applicability for military end users. The Commission will support innovative entrepreneurs, start-ups and SMEs to help them break down traditional barriers to entry, bring ideas to market quickly and contribute to the security and defence of the EU. EUDIS will gradually strengthen the EU defence innovation ecosystem.

The EDF 2023 work program includes business coaching for SMEs and an invitation to organize a series of defence events in Europe.

The 2023 calls are expected to be opened for submission on 15 June with a deadline for submission of 22 November 2023 and are now published on the EU Funding & Tenders Portal page dedicated to the EDF Programme.

https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/programmes/edf

More information on the Commission’s website:

https://defence-industry-space.ec.europa.eu/eu-defence-industry/european-defence-fund-edf_en

European Defence Fund – EDF 2022

On 25 May 2022, the European Commission published a financial decision including  EDF work programme for 2022. The 2022 budget allocates EUR 924 million for 16 thematic categories covering the calls for proposals in 33 thematic areas determining the directions for research and development in widely understood technologies and defence capabilities.
The consortia may apply to the calls for proposals by 24 November 2022.

The description of the application process and all required documents are provided on the official website of the European Commission Funding&TenderOpportunities.

In 2021, the calls for proposals were sorted by topic, while in the 2022 tranche by the financing instrument.

The work programme provides for the following financing instruments:
•    research actions;
•    research actions targeting disruptive technologies for defence;
•    research actions targeting technological challenges;
•    development actions;
•    framework partnership agreements.

EDF financing

Maximum funding rate for research projects from the EU is up to 100% of so called eligible costs, primarily in the form of grants, while the development actions are funded by the Commission in part.

Financing of the research part and participation of entities are not complicated and require no additional activities at the state level.

Financing of the development part requires, as a matter of principle, complementing at the governmental level (e.g. by the ministries of national defence or other institutions), which notify their potential intention to purchase the outcomes of the projects/final product. There are various sources of financing for the project activities performed by a given consortium entity available. The funding rate available to a given consortium entity is established under the consortium arrangements and depends on the scope of works/allocation of tasks. Participation of entities in the consortia and related benefits often lead to the situations, in which the consortia enable participation of the entities with own funding.

In the development part, the Fund complements the investments of the Member States by funding up to 20% of costs of designing the prototype and up to 80% of further certification or testing activities. The EDF Regulation provides for dedicated incentives for the development part, so called bonuses. EDF mostly promotes involvement of the SMEs and encourages them to cross-border participation in the project cooperation. In this area, EDF provides for higher funding rates and fosters the projects implemented by the consortia involving the SMEs. The Fund promotes also complementarity with the PESCO projects, which guarantees the funding rate up to 35%. Upon consideration, the applications from certain categories of actions (among others studies and designing) may obtain even up to 100% of funding. 

The entities participating in the project consortia

EDF is available to all EU entities and targeted in particular to SMEs and innovative enterprises. All assets used in the project must be located in the EU, while the entities cannot be controlled by any third country (non-associated) or a third-country entity (non-associated).

“Non-associated third country” is a country being neither a part of the EU, nor the member of the European Free Trade Association and the European Economic Area. In other words, these are all countries from outside the EU, excluding Liechtenstein, Norway and Island.

Financing is available to the projects implemented under the cooperation covering at least three eligible entities from at least three Member States or associated countries, which cannot be mutually controlled. The terms and conditions for the composition of the consortium for the projects in the area of “disruptive technologies” provide for two entities from at least two countries.

The third-country entities (controlled) with its seat at the territory of the EU may apply for participation in the consortium as the beneficiaries under the derogation laid down in the EDF Regulation. These entities must hold the guarantees of security approved by the country, in which the entity has its seat.

The entities having their seats outside the EU may also cooperate in the implementation of the EDF projects, provided that they meet the similar security conditions. Such entities shall not be however entitled to the EDF funding.

Terms and conditions for participation of entities in the consortia

The entities that receive the EDF funding include the direct beneficiary or subcontractor with its seat in the EU. The subcontractor is an entity having a direct contractual relationship with one of the consortium partners.

The infrastructure, facilities, assets and resources used for action purposes must be located at the territory of the EU throughout the implementation period. The consortium participants and subcontractors cannot be controlled by any third-country entity or a third country alone.

If the entity is controlled, the Member State, in which the European entity has its seat, approves the security guarantees in order to enable this entity applying for EDF funding. The guarantees are approved by the European Commission, which makes a final decision on the participation of a controlled entity in the project activity.

The guarantees must demonstrate that the involvement of a controlled company does not contravene with the security interests of the EU and Member States, EDF objectives and the intellectual property rights regulations. In addition, the guarantees must demonstrate that there are measures in place ensuring that the dominant third-country company does not impede the implementation of the project activity, ensures the protection of confidential information and prevents export of property rights and project outcomes outside the EU territory. The Member State may implement additional measures that increase the security (confirmation of autonomy of the controlled entity).

One should emphasize that each consortium entity is verified by the European Commission. The first stage is so called self-assessment form (Appendix 6 to the application). The form requires providing sufficient information on: the ownership structure and scope of rights, internal management, corporate governance as well as commercial and financial information. 

Eligible project activities

The projects funded by the EDF must deliver the Fund objectives and target the new defence products and/or technologies or upgrade the existing products and technologies. These products and technologies cannot be subject to any restrictions or limitations imposed by any third country.

There are nine types of activities eligible for funding:

  • Activities that aim to create, underpin and improve knowledge, products and technologies, including disruptive technologies for defence, which can achieve significant effects in the area of defence;
  • Activities that aim to increase interoperability and resilience, including secured production and exchange of data, to master critical defence technologies, to strengthen the security of supply or to enable the effective exploitation of results for defence products and technologies;
  • Studies, such as feasibility studies to explore the feasibility of new or upgraded products, technologies, processes, services and solution;
  • design of a defence product, tangible or intangible component or technology as well as the definition of the technical specifications on which such a design has been developed, including any partial tests for risk reduction in an industrial or representative environment;
  • The system prototyping of a defence product, tangible or intangible component or technology;
  • The testing of a defence product, tangible or intangible component or technology;
  • The qualification of a defence product, tangible or intangible component or technology;
  • The certification of a defence product, tangible or intangible component or technology;
  • The development of technologies or assets increasing efficiency across the life cycle of defence products and technologies.

Essential requirements

In the case of a development project (in contrary to the research project) it is required that at least two Member States agree the capability requirements. In addition, at least two Member States must intend to acquire the final product.

The Member States co-funding the project must agree the technical specifications. Confirmation of the use of technology in a coordinated manner as a contribution to the development of the technological and industrial base is a must.

Assessment criteria for the project proposals

The European Commission grants funding under the individual competitions for the proposals which gained the best scores on the basis of the following assessment criteria:

  • the contribution to excellence or potential of disruption in the defence domain, in particular by showing that the expected results of the proposed action present significant advantages over existing defence products or technologies
  • the contribution to the innovation and technological development of the European defence industry, in particular by showing that the proposed action includes ground-breaking or novel concepts and approaches, new promising future technological improvements or the application of technologies or concepts previously not applied in defence sector, while avoiding unnecessary duplication;
  • the contribution to the competitiveness of the European defence industry by showing that the proposed action is a demonstrably positive balance of cost-efficiency and effectiveness thus creating new market opportunities across the Union and beyond and accelerating the growth of companies throughout the Union;
  • the contribution to the autonomy of the EDTIB, including by increasing the non-dependency on non-Union sources and strengthening security of supply, and to the security and defence interests of the Union in line with the priorities referred to in Article 3;
  • the contribution to the creation of new cross-border cooperation between legal entities established in Member States or associated countries, in particular SMEs and mid-caps with a substantial participation in the action, as recipients, subcontractors or as other legal entities in the supply chain, and which are established in Member States or associated countries other than those where the legal entities cooperating within a consortium which are not SMEs or mid-caps are established;
  • the quality and efficiency of the carrying out the action.
  • the contribution to increasing efficiency across the life cycle of defence products and technologies, including cost-effectiveness and the potential for synergies in the procurement, maintenance and disposal processes;
  • the contribution to the further integration of the European defence industry throughout the Union through the demonstration by the recipients that Member States have undertaken to jointly use, own or maintain the final product or technology in a coordinated manner.

Support documents

The consortium entities acquire so called governmental support documents required for their participation in the project consortium – both research and capability. In Poland, apart from the support documents issued by the Ministry of National Defence, the documents are also issued by the Ministry of Economic Development and Technology.

The support documents issued by the Ministry of Economic Development and Technology are usually limited to confirmation of the economic efficiency and value of a given action i.e. the technological and market aspects, contribution to the EU technological and industrial base capacity and joint exploitation of the project results.

BASE OF ENTERPRISES OPERATING IN THE DEFENCE AND SECURITY SECTOR

The Ministry of Economic Development and Technology invites the entrepreneurs to enter into the list of the Polish entities contributing to the development of the technological and industrial base in the defence and security sector.

Collecting these data will foster effective support of participation of the Polish enterprises in the international EU industrial programmes. This will also streamline notifying of the initiatives, competitions and events in the field of cooperation of the industries of the EU Member States.

Information collected in this way will also support associating the industrial consortia and working-out the process of advising and supporting the Polish entities in their promotion on the foreign markets.