Which objective(s) does the Commission pursue?

The European Defence Fund (EDF) is established under the EU 2021-2027 Multiannual Financial Framework with a total allocation of close to EUR 8 billion. One third of this budget will be allocated to research actions and two third to development actions, without prejudice to a possible reallocation in the limit of 20%. Overall, between 4% and 8% of the budget will be allocated to calls for proposals or awards of funding supporting disruptive technologies for defence. 

Its general objective is to foster the competitiveness, efficiency and innovation capacity of the European defence technological and industrial base throughout the Union. The EDF contributes to the Unions’ strategic autonomy and its freedom of action, by supporting collaborative actions and cross-border cooperation between legal entities throughout the Union, in particular SMEs and mid-caps, as well as by strengthening and improving the agility of both defence supply and value chains, widening cross-border cooperation between legal entities and fostering the better exploitation of the industrial potential of innovation, research and technological development, at each stage of the industrial life cycle of defence products and technologies.

Estimated savings and benefits

The Fund is expected to generate the following benefits¹:

• Support collaborative research that could significantly boost the performance of future capabilities throughout the Union, aiming to maximise innovation and introduce new defence products and technologies, including disruptive technologies for defence, and aiming to make the most efficient use of defence research spending in the Union;

• Improved economic efficiencies in the defence industrial base and capturing size effects by reducing duplications and enabling economies of scale. This will improve the competitiveness of the EU defence industry, resulting in reduced dependence on non-EU sources for critical defence technologies;

• A more integrated European Defence Technology and Industrial Base ('EDTIB') by reducing the barriers to cross-border collaboration and by reducing fragmentation of demand and supply along national lines;

• Enhanced cross-border involvement of SMEs and mid-caps in the defence supply chains and establishment of cross-border partnerships;

• Improved defence technology by enhancing the quality and variety of technologies being developed in the EU, enabling better use of limited budgetary resources and stimulating the EDTIB to also develop technologies in fields that currently lack sufficient investment;

• Enhanced Member States collaboration in defence R&D projects by establishing a framework for more efficient collaboration and by incentivising common capability requirements and technical specifications;

• Benefit for the Member States as buyers through lower unit costs of equipment and allowing them to develop and procure the modern defence equipment needed as well as to increase standardisation of defence systems and to achieve a greater interoperability between Member States’ capabilities.

The Fund is designed to achieve efficiency in implementation: the creation of a single and coherent European Defence Fund will increases simplification compared to the previousexisting situation where two separate programmes were set up for research and development. The Fund will be implemented under direct management. By way of derogation, specific actions may, in substantiated cases, be carried out under indirect management. This will not include the selection and award procedure.The Fund will be implemented under a single direct management mode. Such structure will ensure simple, streamlined and lean processes. Additional flexibility has been put in place that could lead to simplification, such as the introduction of a wider array of support instruments, e.g. grants to consortia of buyers allowing EU support to reach industry through one single procedure (procurement) coordinated by Member States (pre-commercial procurement). The introduction of lump sums can also reduce the administrative burden for all actors involved.

¹ Source: Impact assessment SWD/2018/345 and EDF Regulation (EU) 2021/697

Outcome of legislative procedure

The European Defence Fund is a new programme of the EU. It is expected to leverage Member States’ investment in defence research and development (EDF funding rate is not systematically covering 100% of the total eligible costs) including through joint procurement at a later stage. An interim evaluation of the Fund, based on the KPI defined within the EDF Regulation, will be carried out once there is sufficient information available about its implementation, but no later than four years after the start of the implementation period of the Fund.

Estimated savings and benefits

The proposed simplification measures proposed by the Commission have been maintained during the legislative negotiations.

Following the adoption of the European Defence Fund Regulation (EU) 2021/697 in April 2021, the European Defence Fund programme entered its implementation stage.

Following the first round of EDF calls for proposals, 56 grant agreements were signed with defence research and development projects in 2022. In addition, three contribution agreements were signed with Organisation for Joint Armament Co-operation and the European Defence Agency for the implementation of further four grant agreements. In total, EUR 1.17 billion of EU contribution was granted to these 60 projects.

The efficient internal procedures and the use of the corporate IT tools for grant management (eGrant) were instrumental to the succesful preparation and conclusion of the grant agreements.

The second round of the EDF calls for proposals closed on 24 November 2022 and the project proposals will now be evaluated with the help of independent experts in the first and second quarter of 2023.