Depth & diversity: SMEs

The uniqueness of the defence market relates to a number of issues: technological level, programme cycle, security of supply, market regulation and industry's relationship with governments. The governments dominate the sector through a variety of roles such as regulators, owners, controlling shareholders, funders of research and as principal customers. Therefore, the governments' attention should be directed to all stakeholders, not only to the major prime contractors but also to Small and Medium-sized Enterprises (SMEs), which possess the technology but lack the resources necessary to penetrate the market.

Credit: European Union

The Strategy for the European Defence Technological and Industrial Base (EDTIB), launched by a ministerial meeting of the EDA Steering Board on 14 May 2007, underlines that the future success of the DTIB in Europe will depend upon effective utilisation of human capital and innovation also including that of Small and Medium-sized companies (SMEs). EDA Member States noted that "a healthy, competitive and integrated future EDTIB will not be realised if the market-opening efforts are perceived to be simply a bonanza for the large prime contractors". To ensure the implementation of the Strategy a set of roadmaps was endorsed by the Steering Board on 25 September 2007. The Depth and diversity roadmap of the Strategy tasked the Agency to support the involvement of SMEs and non-traditional suppliers in the EDTIB by, amongst other things, developing support measures aimed at making SMEs prosper further in a European scale market, in close dialogue with the Member States and industry.

Aim

Initiatives undertaken by EDA together with the Member States aim at encouraging increased competition and fair opportunities for SMEs, through the development of measures supporting their operation in the defence market. Within this workstrand, the emphasis is put on:

SMEs in government procedures;
facilitating industry access to information;
facilitating clustering/ partnering of companies.

Current Status

The Guidelines for facilitating SMEs’ access to the defence market, approved by the EDA Steering Board on 9 October 2009, provide non-binding recommendations for possible measures to be implemented by national authorities to support SMEs operating in the defence market. They have been developed to direct the governments' attention to SMEs and to create better conditions for participation of these companies in the defence market. The main problem for SMEs in “to know and to be known” and therefore a strong emphasis is put in the Guidelines on a proper flow of information from government institutions. Also, it has been recognised that tendering and contracting procedures in national languages are a crucial obstacle for SMEs’ cross-border activity and steps should be taken to allow companies to easily identify interesting opportunities abroad. The Guidelines address a number of other issues crucial for SMEs: equal conditions for main- and subcontractors, minimum reaction time for smaller contracts, protection of SME-owned Intellectual Property Rights (IPRs) and fostering industrial cooperation with SMEs in Research and Technology/ Development (R&T/ R&D) projects.

Way Ahead

The use and implementation of the Guidelines will be promoted and monitored;
EDA will address the issue of stimulating the support for companies through National Defence Industrial Associations (NDIAs), by developing a document on NDIAs Best Practices;
Measures for facilitating access to information relevant for defence industry will be further developed (business-to-business events around EDA projects and programmes, IT tools);
EDA will, together with the Member States, analyse the administrative requirements related to company’s eligibility to participate in defence procurements in the Member States.