European Defence Fund

Presse release June 30th 2021: Defence Industry: the Commission kick-starts the European Defence Fund with €1.2 billion and awards 26 new industrial cooperation projects for more than €158 million 

EDF Factsheet

The European Defence Fund (EDF)

The European Defence Fund (EDF) is the Commission's initiative to support collaborative defence research and development, and to foster an innovative and competitive defence industrial base.

Without substituting Member States’ efforts, the Fund will promote cooperation among companies of all sizes and research actors throughout the EU, in research and development of state-of-the-art and interoperable defence technology and equipment. The Fund will support competitive and collaborative defence projects throughout the entire cycle of research and development for a bigger impact.

It strongly encourages participation of small and medium-sized enterprises (SMEs) in collaborative projects and foster breakthrough innovative solutions.

The EDF was preceded by two pilot programmes with limited duration and budget – the European Industrial Development Programme (EDIDP) Search for available translations of the preceding linkEN•••and the Preparatory Action on Defence Research.Search for available translations of the preceding linkEN•••

EDF Factsheet

EDF Regulation

EDF Regulation has been politically agreed by the co-legislators in the fifth and final trilogue on 14/12/2020. Following the formal adoption of EDF Regulation by the Council in March 2021 and the adoption by the European Parliament in April, the EDF enters into force in May 2021. 

EDF budget

A budget of close to €8 billion for 2021-2027 is dedicated to the European Defence Fund. €2.7 billion is for funding of collaborative defence research to address emerging and future security threats and €5.3 billion euros to co-finance collaborative capability development projects complementing national contributions.

Funding and implementation:

Funding:

Under the EDF, the EU is providing support all along the lifecycle, from research to prototype development up to certification. Only collaborative projects are eligible. Research actions can receive up to 100% of EU funding of the eligible costs, mainly in grants, while development actions are co-funded. The Fund will complement Member States’ investment by co-financing up to 20% of the costs for prototype development and up to 80% of ensuing certification and testing activities.

In the acquisition phase, the Commission cannot offer financial support but can practically support Member States if they decide to acquire jointly capabilities.

Bonus-system:

With an aim to achieve the EDF goals and promote cooperation in defence domain, special incentives’ have been introduced in its Regulation. In particular, the EDF contains specific provisions in favour of involving SMEs and middle-capitalisation companies and it will incentivise the cross-border participation of SMEs by providing higher financing rates and favouring projects by consortia, which include SMEs.

Higher priority has been put for the projects established under the Permanent Structured Cooperation (PESCO) framework. PESCO projects eligible under the Fund may receive higher EU co-funding rate (10%).

Implementation and governance:

The Programme is implemented directly by the Commission. In specific cases and when in line with the EDF Regulation, projects can be indirectly managed.

The EDF strategic priorities and work programme are defined in close cooperation with Member States, and the involvement of the European Defence Agency (EDA) and the EU Military Staff (EUMS). Projects will be defined along priorities aiming at contributing to the security and defence interests of the Union, in line with defence capability priorities agreed by Member States within the framework of the Common Security and Defence Policy (CSDP) and particularly in the context of the Capability Development Plan (CDP), and taking into account, where appropriate, regional priorities and priorities from and international organisations (NATO).

Calls for proposals are expected to cover all the military domains and key domain enablers.  Various areas should enable the European Commission to respond to the needs of Member States while targeting critical capabilities that are essential for the future.

Calls of proposals are launched on annual basis following the adoption of the work programme. Search for available translations of the preceding linkEN•••

Eligibility:

With an exception for funding projects on disruptive technologies, only collaborative projects, involving at least three eligible entities from at least three Member States or associated countries may receive funding.

Norway is associated country and Norwegian entities will be treated as EU Member State entities.

Participation of entities from other countries is subject to conditions defined to ensure the security and defence interests of the EU and its Member States. They also guarantee the freedom of action of Member States in the use and export of resulting defence equipment. More particularly:

• Entities established in the EU but controlled by entities from can participate as member of the consortium and receive funding provided security-based conditions are met.
• Entities established outside the EU can also cooperate and need to adhere to similar security-based conditions, but they cannot receive funding from the EDF.

Calls on disruptive technologies

While many technological developments target incremental improvements of defence products and systems, some have the potential to lead to radical changes in the conduct of defence affairs. Classical examples include cryptography, radar and space-based positioning systems. Big data and artificial intelligence have started to do so recently. In the future, quantum and other emerging technologies may also induce such paradigm shifts. It is important to identify such disruptive technologies early on and to support their development in a smart manner in order to exploit their operational advantages and be prepared for the changes. These developments can also bring significant industrial and economic benefits.

Particular attention is given to the support of defence disruptive technologies as up to 8% of the total budget is dedicated to support disruptive, high-risk defence innovation projects.

Calls for SMEs

To improve the inclusion of SMEs, opening up the internal market and to promote innovation capacity, dedicated calls in the EDF are foreseen.

Calls for proposals submitted by consortia composed of only SMEs without pre-defined topics, will be organised for both the research and the development window of the EDF.

The European defence fund supports the cross-border cooperation between EU countries and between enterprises, research centres, national administrations, international organisations and universities. This applies to the research phase and in the development phase of defence products and technologies. It has 2 strands. Under the research strand, the EU budget will provide funding for collaborative defence research projects. Under the capability strand, the EU will create incentives for companies and EU countries to collaborate on the joint development of defence products and technologies through co-financing from the EU budget. The European Commission will also offer practical support and advice on

• cost-saving financial arrangements
• providing terms and framework agreements
• ownership structures for joint acquisition of defence capabilities by EU countries

Previous program

The European defence fund in the 2014-2020 multiannual financial framework

As a first step, the European defence fund supports collaborative defence research and development through 2 pilot programmes with limited duration and budget.

The preparatory action on defence research (PADR)

The preparatory action on defence research provides grants for collaborative defence research with a budget of €90 million for 2017-2019. The first PADR grant agreement was signed in December 2017. By the beginning of 2019, 8 grant agreements were signed and projects have started.

• Calls for proposals
• Project descriptions
• PADR: Commission decision on financing and unit costs 2017
• PADR: Work programme on financing and unit costs

The European defence industrial development programme (EDIDP)

2020

The Commission has published the 2020 EDIDP calls for proposals. The deadline for submission is 1 December. Information concerning the organisation of an info day will follow.

• Calls for proposals
• Factsheet outlining the 12 categories

2019

The European defence industrial development programme offers co-financing for collaborative defence development projects with a budget of €500 million for 2019-2020.

• 2019 work programme
• Calls for proposals
• Regulation (EU) 2018/1092 on competitiveness and innovation in defence
• Proposal for regulation establishing the European defence industrial development programme aiming at supporting the competitiveness and innovative capacity of the EU of 7 June 2017
  • COM(2017) 294 – Proposal
  • SWD(2017) 228 – Ex-ante evaluation accompanying the proposal

The financial toolbox

The EDF financial toolbox aims to address financing challenges for collaborative development and procurement. It does so by providing a set of voluntary reference acquisition models and identifying ways in which financial instruments can support the EDTIB. The first deliverables of the expert group on the financial toolbox are the basis for further policy considerations as part of relevant processes. These include PESCO and creating future financial products under the investEU programme.

• Deliverable 1: Mapping key policy processes for multi-state defence capability acquisition
• Deliverable 2: Financing models for defence capabilities
• Deliverable 3: Financial instruments for autonomous European defence