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

This article is brought to you in association with the European Commission.

The Commission adopted today a package of decisions supporting the competitiveness and innovation capacity of the EU defence industry. The adoption of the first European Defence Fund (EDF) annual work programme paves the way to the immediate launch of 23 calls for proposals for a total of €1.2 billion of EU funding in support of collaborative defence research and development projects. Furthermore, under the EDF’s precursor programme, the European Defence Industry Development Programme (EDIDP), 26 new projects with a budget of more than €158 million were selected for funding. In addition, two major capability development projects received today a directly awarded grant of €137 million under the EDIDP.

Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age, said: “The European Defence Fund now plays a key role in making defence industrial cooperation in Europe a permanent reality. This will foster the EU’s competitiveness and contribute to achieving our technological ambitions. With significant participation of companies of all sizes and from across the EU, the Fund provides great opportunities to foster innovation and cutting edge capabilities. 30% of funding going to small and medium sized enterprises is a very promising start.”

Thierry Breton, Commissioner for Internal Market, said: “In 2021, the European Defence Fund is coming to life. With the EU’s first-ever dedicated defence programme, European cooperation in defence will become the norm. Public authorities will spend better together, and companies – big or small – from all Member States will benefit, resulting in more integrated European defence industrial value chains. In 2021 alone, the EDF will finance up to EUR 1.2bn in high-end defence capability projects such as the next generation of aircraft fighters, tanks or ships, as well as critical defence technologies such as military cloud, AI, semiconductors, space, cyber or medical counter measures.”

2021 EDF work programme: a step change in ambition

During the first year, the EDF will co-finance large-scale and complex projects for a total amount of €1.2 billion. To finance this ambitious roll-out, the 2021 EDF budget of €930 million has been complemented with a ‘top-up’ of €290 million from the 2022 EDF budget. This will allow to kick-start large-scale and ambitious capability development projects while ensuring broad thematic coverage of other promising topics.

With the objective of reducing fragmentation of the EU defence capabilities, enhancing competitiveness of the EU defence industry and the interoperability of products and technologies, the 2021 EDF work programme will incentivise and support a number of capability development and standardisation projects.

In the first year, the EDF will allocate around €700 million to the preparation of large-scale and complex defence platforms and systems such as next generation fighter systems or ground vehicles fleet, digital and modular ships, and ballistic missile defence.

Around €100 million will be dedicated to critical technologies, which will enhance the performance and resilience of defence equipment such as artificial intelligence and cloud for military operations, semiconductors in the field of infrared and radiofrequency components.

The EDF will also increase synergies with other civilian EU policies and programmes, notably in the field of space (around €50 million), medical response (around €70 million), and digital and cyber (around €100 million). This aims to foster cross-fertilisation, enable the entry of new players and reduce technological dependencies.

The Fund will spearhead innovation through more than €120 million allocated to disruptive technologies and specific open calls for SMEs. It will foster game-changing innovations, notably in quantum technologies, additive manufacturing and over the horizon radar, and tap into promising SMEs and start-ups.

Outcome of the 2020 EDIDP: 26 new projects and 2 direct awards

The final EDIDP financing cycle resulted in the award of support to the development of a number of new defence capabilities in areas as diverse and complementary as maritime security, cyber situational awareness or ground and air combat.

In particular, 26 new projects with a budget of more than €158 million were selected for funding, with a major focus on surveillance capacities (both space-based and maritime capacities), resilience (Chemical Biological Radiological Nuclear detection, Counter-Unmanned Air System) and high-end capabilities (precision-strike, ground combat, air combat).

The 2020 EDIDP cycle confirms also this year the fit-for-purpose model of the European Defence Fund, namely:

• Highly attractive programme: 63 proposals competing in the calls involving more than 700 entities;
• Reinforced defence cooperation: on average, 16 entities from 7 Member States participating in each project;
• Wide geographical coverage: 420 entities from 25 Member States participating in the projects;
• Strong involvement of SMEs: 35% of the entities and benefit from 30% of the total funding;
• Consistency with other EU defence initiatives: notably the Permanent Structured Cooperation, with 15 out of 26 projects having PESCO status.

In EDIDP 2020, 10 entities controlled by third countries are involved in selected proposals following valid security-based guarantees.

In addition, two major capability development projects received a total grant of €137 million in view of their high strategic importance:

• MALE RPAS, also known as Eurodrone, supporting the development of a medium-altitude and long-endurance drone (€100 million). Together with other selected projects in support of payload for tactical drones, swarm of drones, sensors, low observable tactical systems, more than €135 million will be invested to build technological sovereignty in drones, a critical asset for EU armed forces;
• The European Secure Software-defined Radio (€37 million), ESSOR, boosting the EU’s armed forces interoperability by creating a European standardisation for communication technologies (software radios). Together with other projects selected in support of secure and resilient communication (with the use of quantum key distribution), optical point to point communication between military platforms and solutions for tactical networks, more than €48 million will be invested in secure communication systems.

Background

The European Defence Fund constitutes the Union’s flagship instrument to support defence cooperation in Europe and is a stepping stone for EU strategic autonomy. While complementing Member States’ efforts, the Fund promotes cooperation between companies of all sizes and research actors throughout the EU. The Fund has a budget of €7.953 billion in current prices, of which roughly one third will finance competitive and collaborative research projects, in particular through grants and two-thirds will complement Member States’ investment by co-financing the costs for defence capabilities development following the research stage.

The EDF precursor programmes were the European Defence Industrial Development Programme (EDIDP), with €500 million for 2019-2020, and the Preparatory Action on Defence Research (PADR), which had a budget of €90 million for 2017-2019. Their aim, similarly to that of the European Defence Fund, was to foster an innovative and competitive defence technological and industrial base and contribute to the EU’s strategic autonomy. The PADR covered the research phase of defence products, including disruptive technologies, while EDIDP has supported collaborative projects related to development, including design and prototyping.