European Defense Fund Call Results for 2022: Implications from the Baltic States

Last month’s call results for EDF 2022 were announced – a total of 41 projects to be financed that were selected from 134 received proposals. Overall 834 million euros will be allocated to finance selected projects, Donatas Palavenis, junior researcher of the Baltic Institute of Advanced Technologies (BPTI), writes.

EDF aims to promote cooperation between EU companies, scientific institutions, and other participants in the research and development activities in the field of defence. It is expected that during the 2021–2027 period, the EDF will allocate 8 billion euros to projects. 2.7 billion euros will be given to finance research and 5.3 billion euros to cover joint development projects.

EDF is implemented through annual call programs that invite participants to participate in 17 thematic categories. One topic is dedicated to small and medium-sized companies that can offer innovative solutions in the field of defence technology. Typically, invitations are published in June, and participants must submit their applications by the end of November.

Funding intensity for EDF projects varies depending on the project; in most cases, scientific research costs are covered up to 100 per cent, whereas up to 55 per cent of prototyping costs and up to 80 per cent of testing and certification costs could be covered.

It is foreseen that at least three participants from three different EU or Norway must participate in the project. In addition, there are conditions that the project financing can be higher if small and medium-sized companies participate in the project and if the project complies with the EU Permanent Structured Cooperation in the Field of Defense programs.

Lithuanian participation

Eleven selected projects feature Lithuanian participants, and five entities represent Lithuania. In implementing the 2022 calls selected by the European Commission, the “Baltic Institute of Advanced Technologies” (BPTI) will be the most active participant in the projects – having won as many as five invitations with consortium partners. “Elsis Pro” and “NanoAvionics” (currently “Kongsberg NanoAvionics”) have each won two projects. Meanwhile, the State research institute Center for Physical Sciences and Technology (FTMC) and the Ministry of National Defense won one invitation each. Lithuanians will coordinate none of the projects.

BPTI and its partners will participate in five projects on the following topics: integration of military simulators, radar technologies, integrated management of ground forces systems, cyber defence and electronic warfare. The consortia in which BPTI participates are extensive and consist of nineteen to thirty-two foreign partners. Total project values range from 14.9 to 69.6 million euros and will be coordinated by defence industry companies “Indra Sistemas,” “Kongsberg Defense & Aerospace,” “Thales,” “Leonardo” and “Rheinmetall.”

Donatas Palavenis

The first “Elsis Pro” project is an ongoing initiative to develop an early warning system placed in space to detect launched missiles. The project’s total value is 96.5 million euros, and 38 participants plan to participate. This project will be coordinated by the German company “OHB System.” The second, 19 million EUR worth of project, in which “Elsis Pro” will participate with 20 partners, is intended to increase the integrity of the shared European airspace. This project will be coordinated by the French company “Airbus Defense and Space.”

NanoAvionics,” together with its partners, won two invitations in the field of space. In the first 19.2 million euros project with 35 partners, “NanoAvionics” will study European space architecture. Meanwhile, in the second 41.8 million euros project, “NanoAvionics” and 34 partners will develop clusters of reconnaissance satellites. The mentioned projects will be coordinated by the German research centre “DLR” and the French company “Airbus Defense and Space.”

FTMC and 18 consortium partners will develop an adaptive camouflage system for soldiers and vehicles. The project’s total value, which will be coordinated by the Portuguese Institute of Technology “Citeve,” is 14.9 million euros.

Meanwhile, the Ministry of National Defense of the Republic of Lithuania, together with many EU defence ministries and defence industry associations, will participate in a 1.5 million euro worth project, which aims to improve coordination between national EDF representatives, exchange good practices and create an element of B2B interaction. The Danish Defense and Security Industry Association will coordinate this initiative. The allocation of finances for this project indicates that the European Commission is directly interested in the success of the EDF and seeks more active participation from the member states.

How did Latvians and Estonians do?

Six Latvian companies and scientific institutions will participate in five 2022 EDF projects, and the Ministry of Defense of Latvia will participate in the already mentioned 1.5 million euro worth project, aiming to improve coordination between national EDF representatives. A Latvian scientific or business entity will coordinate none of the projects. The following Latvian companies, “DATI Group,” “Exonicus,” “Latvijas Mobilais Telefons,” and “Tilde” will participate in the projects individually. In contrast, the Latvian and Riga Stradiņš Universities will jointly participate in the EU military medical countermeasures alliance.

Meanwhile, as many as fourteen Estonian entities are mentioned in 16 selected projects. It should be noted that the Estonian company “Baltic Workboats” will coordinate the 95 million euros project to develop a medium-sized semi-autonomous ship. Twenty-three companies and research centres from ten countries will participate in the mentioned project. While evaluating the involvement of individual Estonian companies in the projects, it is visible that “Cafa Tech” and “Marduk Technologies” are mentioned in four projects, “Milrem” in three, and “Falconers,” “Cybernetica” and “CR14” in two. All remaining eight companies and research institutions are involved only in individual projects. Furthermore, seven projects involve two or more companies of Estonian origin, which indicates the desire to attract reliable national companies to the ongoing projects.

Comparison of the results of the EDF call for 2022 with 2021

As an outcome of the 2022 EDF call results in comparison with 2021, we can state that the participants’ interest was lower in 2022 (134 vs 142), as well as the number of announced (33 vs. 37) and financed projects (41 vs. 61) and the number of funds allocated for implementation (834 million vs. 1.2 billion euros).

The companies and research institutions from the Baltic States will participate in more than half projects selected by the European Commission in 2022 calls. When assessing individual states’ involvement, Lithuanian entities’ participation in 2022 is more intensive, only by one figure compared to 2021. There are new participants from Lithuania, “Elsis Pro” and “NanoAvionics,” in addition to BPTI and FTMC, which successfully participated in 2021. Latvia’s situation in 2022 remains similar to 2021, and the increase is visible in the context of two additional participants. Estonia, in 2022 calls, was the best among the Baltic States in terms of the higher number of participants (8 vs. 14) and the projects won (12 vs. 16). It should be mentioned that Estonian companies both in 2022 (“Baltic Workboats” – a project worth 95 million euros) and in 2021 (“Cybernetica” – 10.8 million euros) coordinate (leading the implementation) projects.

How can small EU states make better use of the EDF?

The participation of small EU states entities in the EDF is beneficial due to the growth of competencies and involvement in future defence technology supply chains and to attracting funding from the EU budget. Therefore, the aim of each EU small state must be to maximize the interest of their commercial and scientific entities in actively participating in EDF invitations.

The case of Estonia indicates that national companies seek to include more of their “own” companies in consortia. Estonia’s determination to win EDF projects coordinated by national participants is also evident. Undoubtedly, this requires a significant involvement of government institutions, both in coordinating European Commission programs and working with ministries of other countries to secure support and the participation of foreign companies in the project.

Some of the projects that have won EDF invitations are continuous, so it must be aimed for competent national participants to participate as widely as possible and as early as possible in the topics of EDF invitations.

Some small EU states put additional prioritization exercises on already defined EDF call topics by the European Commission. This could be counterproductive, as it restricts national participants from operating in the free EU research market, developing competencies independently, and participating in the call competition with other consortium participants. After all, the responsible EU institutions coordinate the annual EDF call texts with the member states, so there is a proper time when the member states can influence the sub-topics of the upcoming calls. To remind you, the EDF was created to fuse the development of common competencies in defence R&D within the EU, not within individual countries. Such “national” prioritization of EDF call topics could make sense if additional co-financing from the national budgets is used to support national champions.

Considering the results of the EDF calls for 2021 and 2022 and the involvement of national participants from the Baltic States, it is clear that the EDF program benefits small EU states. Therefore, the decision-makers should seek to shape the position of the European Commission for an increase in EDF funding from the common EU budget. Just to note that the amount provided for the EDF in the 2021-2027 period was reduced by 5.1 billion euros due to COVID, so the first step could be to restore the original level of funding for this critical program.

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