Dr Erno VANDEWEERTEuropean Commission, Directorate General for Internal

Market, Industry, Entrepreneurship & SMEsUnit Defence 2

The European Defence Fund

and SPACE

Does not represent an official legal opinion of the European Commission

Space International Information Day & Brokerage Event13-14 November 2019, Warsaw, Poland

POLICY CONTEXT:EUROPEAN DEFENCE FUND

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Challenges

• Security Threats

• To our borders

• Increasing complexity – hybrid

• Markets & Industry

• Fragmented

• Rapidly evolving – new sources of innovation

• Increasing global competition

Policy Context

Fragmentation …

Policy Context

… the case for greater cooperation on defence

Rationale for the European Defence Fund

ECONOMICReduction of inefficiencies of the current market,

synergies and economies of scale Reduction of inefficiencies of the current market,

synergies and economies of scale

STRATEGIC Strategic autonomy of the Union Strategic autonomy of the Union

POLITICALProtection of the basic interest of the Union

and its Member StatesProtection of the basic interest of the Union

and its Member States

COM(2018)476

Policy Context

Proposal for a fully fledged European Defence Fund

Contribute to the strategic autonomy

of the EU

Build partnerships between defence actors

across Europe + stimulate joint

acquisition(not financed)

Strengthening other security and defence initiatives in Europe

Foster competitiveness of

European defence industry

Closing the technological gap

in the European defence sector

Support R&D projects on defence products and technologies;

including disruptive technologies

Policy Context

The European Defence Fund

Policy Context

European Defence Fund

Policy Context

• 2021-2027 budgets are proposals!

• Investment decisions should be based on defence capability priorities agreed by the Member States

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X22!!

Main pillar of an ambitiousEuropean Defence Union

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Policy Context

European Defence Fund

• Budget: EUR 13 billion for 2021 to 2027 (EUR 4.1bn for

research actions and EUR 8.9bn for development actions)

• Integrated approach covering the research and development

activities – to strengthen the uptake of research results

• Use of result-based tools such as single lump sum support

• Disruptive technologies for defence: dedicated support to

ensure long term strategic autonomy for Europe

• Commission proposal adopted on June, 13th 2018; partial

agreement reached between the co-legislators on April,

18th 2019; final adoption depends on discussions on the long-

term budget

Policy Context

• Actions covering both new and upgrade of existing products and

technologies in at least one of the following areas:

• At least 4% and up to 8% of the overall budget to benefit

disruptive technologies for defence

What can be funded?

• Activities aiming at new

knowledge and defence

technologies

• Activities aiming at

interoperability and

autonomy

• Feasibility studies • Definitions / design studies

• Prototypes • Product tests

• Qualification / Proof of suitability

• Certification

• Technologies to reduce

life cycle costs

Policy Context

• Cooperation projects between at least three legal entities

established in at least

three different Member States/Associated Countries

• Only entities established in the Union or in an Associated

Country which are not controlled by third countries/companies

• Exception if conditions relating to the security interests of the

Union and its Member States are met

• No risk in the ability to perform the action (security of supply)

• Classified information are not accessible to 3rd country entity (sensitive

information protected)

• No Transfer of IP (IPR remains in the EU)

• Cooperation with companies based outside the Union possible,

but costs are not eligible

Eligibility

Policy Context

• Excellence

• Contribution to innovation and technological development in

the European defence industry

• Contribution to the competitiveness and growth of the

defence industry

• Contribution to the Union's security and defence interests

• Contribution to the cross-border participation of SMEs

• Quality and efficiency of the implementation of the action

Award criteria

Policy Context

Funding rates

• (Co-)financing approach up to 100% of eligible costs, prototypes

up to 20%, post-prototype actions up to 80%

• 25% of the total direct eligible costs as flat rate for indirect costs

or determined on the basis of actual indirect costs

• 10% bonus for projects identified in the context of the

Permanent Structured Cooperation (PESCO)

• SME / mid-cap bonus

increase in the funding rate according to the proportion of cross-

border participation of SMEs/midcaps in projects

Policy Context

European Defence Fund:State of Play

13 June 2018 Publication of the Commission proposal COM (2018)476

19 February 2019 Partial general agreement reached between MS (Council) and European Parliament (ITRE Committee)

18 April 2019 Plenary vote in favour of the partial general agreement in the European Parliament

Fall 2019 Resume discussions on the long-term EU budget (2021 – 2027)

January 2021 First calls for proposals under the fully-fledged EDF

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Policy Context

POLICY CONTEXT:TWO TEST PROGRAMMES

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How to try something new at EU level?

• General principle: no legal framework – no money!

• Three exceptions for testing new actions:

• Pilot Project: experiment to test the feasibility and usefulness of an action (max 2 year duration) - FINISHED

• Preparatory Action: prepare for a proposal for a new legal framework (max 3 year duration – max EUR 100 million per action)

• Propose new legislation: used for the development programme – EDIDP: launch April 2019 17

PREPARATORY ACTION ON DEFENCE RESEARCH

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The European Defence Fund

Preparatory Action on Defence ResearchEuropean Defence

Industrial DevelopmentProgramme

PADR

PADR Objectives

• Demonstrate and assess added-value of EU supported defence R&T

• Results should foster further cooperationbetween Member States and between EU defenceindustries

• Prepare for a basic act to launch a substantial defence research programme from 2021 onwards

PADR

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Preparatory Action on Defence Research

• Budget: EUR 90 million for 2017-2019 in grants

• Funding: 100% direct eligible costs + indirect costs (flat rate

of 25% of direct eligible costs)

• Implemented through annual work programmes and calls for

proposals

• 7 actions running – 1 proposal close to end of the grant

agreement preparation phase

• 2019 proposals under evaluation - up to 10 actions expected to

be awarded in the second half of 2020

PADR

PADR WORKPROGRAMMES

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Calls of PADR Work Programme

PADR

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201720182019

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R

Eff

ects

Fo

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Pro

tecti

on

an

dso

ldie

rsyste

ms

Un

man

ned

Pla

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Defence Research Demonstrator Project

OCEAN 2020

Critical Defence Technologies1 project

1 pr. TALOS

Future and Emerging Disruptivetechnologies

2 topics – up to 8 projects

VESTLIFEACAMS IIGOSSRAStandardisation and Interoperability 1 project

PYTHIA

SOLOMON

All calls available on the Funding and Tender opportunities Portal

WorkProgrammes

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EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

25Regulation (EU) 2018/1092

The European Defence Fund

European DefenceIndustrial Development

Programme

EDIDP

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

• Duration: 2 years 2019-2020

• Budget: EUR 500 million for the period 2019-2020

• Objectives:

• foster the competitiveness, efficiency and innovation capacity of the defence industry throughout the Union, thus contributing to the Union's strategic autonomy;

• support and leverage the cooperation including across borders between undertakings including SMEs and mid-caps;

• foster better exploitation of the results of defence research and contribute to development after the research phase.

EDIDP

Cross-border SMEs participation

• EDIDP not only for large Member States and large companies – it provides opportunities for all EU's defence industry regardless of size and location within the EU.

• Award criteria and bonus system for actions with substantial cross-border SME participation

• 10% of the overall budget shall benefit the cross-border participation of SMEs

• Specific project category solely focused on consortia of SMEs

EDIDP

EDIDP WORKPROGRAMMES

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EDIDP

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

• Work programme published on 19th March 2019

• Prepared by the Commission in close cooperation with Member States

• Describes categories of defence capabilities for competitive calls for proposals in 2019 and/or 2020 (21 calls in total)

• Work programme covers:

o all domains: land, sea, air, cyber and space

o 17 categories of capabilities

o >50 capabilities (topics)

• Provides indicative budget and targeted activities for each category of

projects

EDIDP

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

Work programme in numbers

• EUR 80 million for enabling operations, protection and mobility of military forces

• EUR 180 million on intelligence, secure communication & Cyber

• EUR 71 million to strengthen the ability to conduct high-end operations

• EUR 27 million for actions covering the development of innovative defence technologies. Also designed for Small and Medium-sized Enterprises.

• EUR 137 million for 2 actionsselected for direct award procedure (no competitive calls): Eurodrone and ESSOR

EDIDP

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

• 2020 Call – Categories:

• Chemical Biological Radiological Nuclear (CBRN) detection capabilities and medical countermeasures

• Underwater control contributing to resilience at sea

• Counter-Unmanned Air Systems (UASs) capabilities

• Cyber situational awareness and defence capabilities, defence networks and technologies for secure communication and information sharing

• Space Situational Awareness (SSA) and early warning capabilities

• Maritime surveillance capabilities

• Upgrade of current and development of next generation ground-based precision strike capabilities

• Ground combat capabilities

• Air combat capabilities

• Simulation and virtualisation tools and equipment for training, exercises, systems design, development and integration, testing and validation

• Defence technologies supported by artificial intelligence

• Category for SMEs – Innovative and future-oriented defence solutions

EDIDP

Eligible actions

a) studies, such as feasibility studies, and other accompanying measures;

b) design of a defence product;

c) system prototyping;

d) testing;

e) qualification;

f) certification;

g) development of technologies or assets increasing efficiency across the life cycle of defence products and technologies.

EDIDP

Funded activities and requirements

• EDIDP activities cover the development of new and the upgrade of existing defence products and technologies

• Costs of the action that are not covered by Union support are to be covered by other means of financing (such as Member States co-financing)

• Design must be based on common requirements jointly agreed by at least two Member States.

• System prototyping, testing, qualification, certification, development of life-cycle technologies:

o must be 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;

o at least two Member States need to show the intention to procure the final product or to use the technology in a coordinated way, including through joint procurement where applicable.

• The results of actions which receive funding shall not be subject to non-EU control or restrictions

Funding rates

a) studies, such as feasibility studies, and other accompanying measures – 90% of total eligible costs

b) the design – 65% of total eligible costs

c) the system prototyping – 20% of total eligible costs

d) the testing – 65% of total eligible costs

e) the qualification - 65% of total eligible costs

f) the certification - 65% of total eligible costs

g) the development of technologies or assets increasing efficiency across the life cycle of defence products and technologies - 65% of total eligible costs

EDIDP

Bonus system

• +10% in case the action is developed in the context ofPESCO and eligible for

• Where at least 10% of the total eligible cost of the action isallocated to SMEs established in the Union:

o % equal to the percentage of the total eligible cost of an actionallocated to SMEs established in Member States in which theundertakings in the consortium that are not SMEs areestablished (maximum 5%)

o Twice the % of the total eligible cost of an action allocated toSMEs established in Member States other than those referredto in the previous point

• +10% where at least 15% of the total eligible cost of theaction is allocated to mid-caps established in the Union

• Maximum bonus cannot exceed 35% - EU funding islimited to 100% of eligible cost of the action

EDIDP

Award criteria

• contribution to excellence;

• contribution to innovation;

• contribution to the competitiveness and growth;

• contribution to the industrial autonomy of the European defence industry and to the security and defence interests of the Union;

• participation of SMEs / cross-border SMEs;

• contribution to the further integration of the European defence industry;

EDIDP

EDIDP next steps

• Fall 2019: Evaluation of proposals by the

Commission assisted by independent experts

• End 2019: Selection of first projects

• 1st trimester 2020:

• Publishing of the 2020 call for proposals

• Negotiation and signature of Grant

Agreements with the beneficiaries

EDIDP

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All calls available on the Funding and Tender opportunities Portal

EDIDP

CALL FOR EXPERTS

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Call for Experts

Call for Experts

41https://www.eda.europa.eu/docs/default-source/procurement/2017-call-for-experts.pdfhttps://ec.europa.eu/growth/content/call-expression-interest-establish-list-experts-assist-european-commission-tasks-connection_en

Experts need to be validated by national authorities Experts need appropriate personal security clearance

EUROPEAN NETWORK OF DEFENCE-RELATED REGIONS

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• Forum for regional organisations & clusters to exchange information and share best practices

• Info on access to funding at EU level

• Access to EU funding

• EDF leaflets (Q1 '18) & brochures (Q3 '18)

• Organisation of events

• Conference on defence skills and dual use technologies (14 November 2019)

• Conference on innovative defence technologies for the virtual battlefield (18 September 2019)

COSMEENDR

www.endr.eu

Thank you for your attention

Erno Vandeweerterno.vandeweert@ec.europa.eu

More information:

• The Commission's proposal for a regulation establishing the European Defence Fund: COM(2018)476.• Staff working document, including impact assessment: SWD(2018)345.

Accessible from EU press release IP/18/4121http://europa.eu/rapid/press-release_IP-18-4121_en.htm

• Adoption of the PADR 2019 and EDIDP 2019-2020 work programmes:http://europa.eu/rapid/press-release_IP-19-1717_en.htm