Defence SMEs

Defence-related small and medium-sized enterprises (SMEs) are key enablers of innovation and growth. Europe’s defence industry should be fully able to draw upon the innovations coming from SMEs; including those SMEs that are mainly active in civil industries. More than 2,500 SMEs are playing a central role in the complex defence supply chains in Europe. However, an over-riding characteristic of these supply chains is that they function largely on a national basis, with limited cross-border cooperation.

The European Commission can play a supportive role to help SMEs grow and enhance their cross-border collaboration by means of various policy tools in various domains (trade, internal market etc). This is done hand-in-hand with the Member States and synergistically with the national policies in support of SMEs.

Cross-sectoral Initiatives

The Commission has developed an integrated Commission strategy to support SMEs through strengthening their capacities to adapt to climate neutrality challenges, help them to reap the benefits of digitalisation, reduce the regulatory burden that SMEs face, and improve their opportunities to access finance. As regards Defence industries in particular, the Commission has launched several initiatives to stimulate cross-border cooperation in the defence sector with a focus on SMEs and enhance their competitiveness, as outlined below.

The European Defence Fund (link to the page of EDF) funds cross-border cooperation on research and development actions with defence application. It is designed to stimulate the participation of SMEs and help opening up the defence supply chains, linking the large system integrators with the entire defence SMEs ecosystem across the EU.

First, dedicated calls have been introduced targeted at SMEs in the work programmes that set annual funding priorities; both for Research and for Development actions. Only consortia consisting of SMEs can apply to these specially designed calls.

Apart from these dedicated calls, the participation of SMEs is also encouraged in all other projects. When assessing project proposals, the inclusion of cross-border SMEs is one of the award criteria. Furthermore, for development actions financial bonuses apply based on the level of involvement of (cross-border) SMEs.

The Commission will continue to provide guidance to defence-related SMEs on the opportunities offered by the European Defence Fund. Awareness-raising events and info-days are often organised at EU and national levels following the launch of EDF calls. A network of EDF National Focal Points has bee put in place. SMEs and other stakeholders will be able to turn to these focal points for practical information and guidance on many aspects of participation in the EDF.

Dedicated Commission Actions

The Commission is also launching a number of dedicated actions to facilitate the creation of opportunities for the market entry of non-traditional defence SMEs to the defence market

Defence-related SMEs can also turn to the Enterprise Europe Network. The network can guide SMEs engaged in defence-related activities towards networking and partnerships, internationalisation, technology transfers and finding business opportunities. 

The European Network of Defence-related Regions is also offering defence-related regional organisations and clusters a platform to exchange good practices on integrating dual use/defence into regional development strategies (in particular smart specialisation strategies) to benefit of SMEs, disseminate info on defence funding to SMEs and facilitate consortia-building and matchmaking.

When it comes to the procurement of defence contracts, the Commission also works to allow SMEs from across the EU to bid for national defence procurement. Despite being an important part of the defence supply chain, SMEs face considerable challenges in cross-border access to defence and security contracts. These range from legal, administrative, and language obstacles to barriers presented by limited/no access to classified information, security of supply requirements, standardisation, certification, and national export control regulations. In response to such challenges, the Commission published a 'Recommendation on cross-border market access for sub-suppliers and SMEs in the defence sector' in 2018.

It outlines specific proposals in the area of public procurement by national authorities, such as providing early information about long-term plans and priorities in defence procurement or a voluntary publication of contract opportunities.