ENTR F

Bulgarian Defence and Aerospace Industry & Research Conference Sofia – 10 July 2017

Sylvia Kainz-Huber Gueorgui Ianakiev European Commission, Directorate General for Internal Market, Industry, Entrepreneurship & SMEs Defence, Aeronautics and Maritime Industries

The European Defence Action Plan: towards a European Defence Fund

GLOBAL CONTEXT / CHALLENGES

• Mounting security concerns in relation to developments outside of the EU, as well as to internal threats

• Growing complexity of emerging challenges (e.g. hybrids threats) requiring a wide range of versatile capabilities

• Increasing cost of the defence equipment and high development costs

• High fragmentation and substantial duplications in the EU defence market

• Insufficient financing of research leading to weakening of the competitiveness of the EU defence sector

• Insufficient collaboration in research and in the development of defence technologies or products

• Increasing global competition

• Growing dependence from non-EU sources of critical technologies / capabilities

POLICY CONTEXT

July 2014

President Juncker makes a stronger Europe in security and defence one of his Commission's 10 priorities Global Strategy for the European Union's Foreign and Security Policy EU and NATO sign Joint Declaration on cooperation in Warsaw Bratislava summit: Leaders agree to give new impetus to security and defence • Member States agree on an Implementation plan on security and defence • Commission proposes European Defence Action Plan to increase research and capabilities

• EU and NATO endorse common set of proposals for implementation of Warsaw Declaration • European Council endorses implementation of Defence Action Plan, Global Strategy and

Warsaw Declaration

Rome Declaration: Leaders agree to create a more competitive and integrated defence industry • Commission presents proposals for a European Defence Fund • Commission presents a Reflection paper on the future of European Defence by 2025

June 2016

July 2016

September 2016

November 2016

December 2016

March 2017

June 2017

EUROPEAN DEFENCE ACTION PLAN

• Adopted on 30 November 2016

• Focus on defence capability needs and support to the European Defence Industry

• Three key objectives:

Support EU defence collaboration

Ensure EU retains industrial capacity in key areas

Support competitive industry & innovative technological and industrial base

EUROPEAN DEFENCE ACTION PLAN

• European Defence Fund

• Two separate 'Windows' – Research and Capability

• Fostering Investments in Defence Supply Chains

• Access to finance

• Support from EU funds

• Regional Clusters of Excellence

• Skills

• Strengthening the Single Market for defence

• Procurement and Transfer Directives

• Security of Supply

• Cross-border market access for SMEs

• Standardisation

• Maximising civil/military synergies across EU policies

THE EUROPEAN DEFENCE FUND

COMPLETE CAPABILITY DEVELOPMENT CYCLE

• Preparatory Action on Defence Research

• European Defence Research Programme

Research Window Capability Window

European Defence Industrial Development

Programme

Financial Toolbox

PROPOSED BUDGET

THE RESEARCH WINDOW

PREPARATORY ACTION ON DEFENCE RESEARCH (PADR)

• The Preparatory Action on Defence Research and the Pilot Project – first EU budget support for collaborative defence R&T

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

• Aims at promoting further cooperation between Member States and between EU defence industries

• The Preparatory Action will pave the way towards an ambitious dedicated EU Defence Research Programme under the next MFF

PADR – SCALE AND SCOPE

• Duration: 3 years 2017-2019

• Requested total budget: EUR 90 million, subject to yearly budget decisions

• 2017 Budget: EUR 25 million approved

• SMEs involvement: WP includes research topics where SMEs could benefit (e.g. Force protection and soldier systems)

PADR – MODALITIES

• Funding: 100% direct eligible costs + indirect costs (flat rate of 25% of direct eligible costs)

• Support instrument: grants

• Implemented through annual work programmes and calls for proposals

• IPR: results owned by participants; measures to inform national authorities on the outcome of the projects

• Implementation tasks delegated to the EDA

PADR – FIRST CALLS FOR PROPOSALS

• Launch of the first calls for proposals – 7 June 2017:

• Technological demonstrator for enhanced situational awareness in a naval environment:

Budget: EUR 15.5 million

Deadline: 05 October 2017

• Force protection and advanced soldier systems beyond current programmes:

Budget: EUR 6.8 million

Deadline: 21 September 2017

• The European Defence Research Runway:

Budget: EUR 950,000

Deadline: 21 September 2017

FUTURE EUROPEAN DEFENCE RESEARCH PROGRAMME

• Multiannual Financial Framework 2021-2027

• Estimated budget: EUR 500 million per year

• Topics:

• Capability driven research

• Critical defence technologies

• Future disruptive technologies

• Proposal accompanied by an impact assessment should be ready in 2018

THE CAPABILITY WINDOW

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

• Proposal for Regulation adopted on 7 June 2017 – procedure in front of the European Parliament and of the Council of the EU forthcoming

• First proposal for EU budget support for collaborative defence capability development projects

• Objectives:

Foster the competitiveness and innovation capacity of the EU defence Industry

Leverage cross-border cooperation between undertakings, including SMEs, in the development of defence technologies or products

Foster better exploitation of the results of defence R&T

• It will pave the way towards an ambitious European Defence Industrial Development Programme under the next MFF (envisaged budget of EUR 1 billion annually after 2020)

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

• Legal base: Article 173 TFEU

• Duration: 2 years 2019-2020

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

• Areas of intervention: design, prototyping, testing qualification or certification of a product or technology, or studies

• Beneficiaries: at least 3 undertakings from at least 2 different Member States must establish a cooperation (consortium)

• Involvement of SMEs: a credible proportion of the budget will benefit actions enabling cross-border participation of SMEs

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

• Amount of support: up to 20 % of total cost for prototyping (for other actions it may cover up to 100%). Higher percentage of an additional 10 percentage points is provided for projects under PESCO

• Support instruments: grants, financial instruments or public procurement

• Implementation through a multiannual work programme

• Actions should be based on common technical specifications

• Ownership and Intellectual Property rights: the Commission will not own the products or technologies resulting from supported actions

EUROPEAN DEFENCE INDUSTRIAL DEVELOPMENT PROGRAMME

Award criteria:

• Excellence

• Contribution to innovation and technological development of defence industries and fostering the industrial autonomy of the Union

• Contribution to the security and defence interests of the Union through the implementation of defence capability priorities commonly agreed by MS within the Union

• Viability via demonstration that the remaining costs of the action are covered by other means of financing such as MS contributions

• Demonstration that the MS committed to jointly finance the production and procure the final product/technology

• Flexible set of financial tools to address challenges in the financing of cooperative defence projects:

• Creating synergies and synchronising budget spending

• Fair risk and cost sharing e.g. ex-post cost recovery

• Avoiding financing constraints in the supply chain

e.g. targeted support instruments

• Exploring alternative ownership structures for capacities

e.g. joint ownership or leasing structures

• Can be deployed in parallel to contributions from EU budget but EU budget involvement not requirement, can be deployed with national budget resources

• Instruments intended to facilitate development, but also procurement covering the full life-cycle

FINANCIAL TOOLBOX

THANK YOU FOR YOUR ATTENTION

USEFUL LINKS

Commission‘s Communication on European Defence Fund: http://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A52017DC0295

Communication from the Commission on European Defence Action Plan: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2016:950:FIN

Proposal for a Regulation establishing the European Defence Industrial Development Programme: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017PC0294

Reflection paper on the future of European Defence: https://ec.europa.eu/commission/sites/beta-political/files/reflection-paper-defence_en.pdf