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Grant Analysis

Purpose & Target

Core Objective: This grant encourages innovative SMEs to rapidly and cost-efficiently develop defence products and solutions, including by adapting technologies from civil applications or addressing hybrid warfare.
Target Recipient Type and Size: Innovative Small and Medium-sized Enterprises (SMEs).
Sector Designation: SECTOR-SPECIFIC (Defence sector, with specific allowance for spin-in from civil applications).
Geographic Scope: Organisations established in EU Member States and EDF Associated Countries. Project activities must take place within these eligible countries.
Key Filtering Criteria: Applicants must be SMEs, form a cross-border consortium of at least three entities, and propose development actions focused on defence or adapted civil technologies. A clear work breakdown structure is required, linking proposed tasks to eligible activities.
Grant Frequency and Program Context: This is a call under the European Defence Fund (EDF), implied to be recurring (annual) based on the 'EDF-2025' naming convention. It is part of the EDF's objective to foster the competitiveness, efficiency, and innovation capacity of the European defence technological and industrial base (EDTIB).

Financial Structure

Total Available Budget for Topic: EUR 33,000,000 for 2025.
Grant Type: Lump Sum Grants for Development Actions (LS-DA).
Maximum Grant Amount per Project: Requested grant amount must not exceed EUR 6,000,000.
Funding Rate: Variable, based on activity type and bonuses (up to 100% maximum funding rate with bonuses):
Baseline Funding Rates for Eligible Activities:
- Studies: 90%
- System prototyping: 20%
- Testing: 45%
- Qualification: 70%
- Certification: 70%
- Integrating knowledge: 65%
- Design: 65%
- Development of technologies or assets increasing efficiency: 65%
Bonuses (cumulative):
- PESCO bonus: +10%
- SME bonus: +X% (up to 5% for non-cross-border SMEs), or +twice X% (for cross-border SMEs), applicable if >=10% of eligible costs allocated to SMEs.
- Mid-cap bonus: +10%, applicable if >=15% of eligible costs allocated to mid-caps.
Eligible Costs: Lump sum contributions based on estimated project budget and basic eligibility conditions for EU actual cost grants (e.g., personnel costs, subcontracting, equipment).
Personnel costs: Average personnel costs and SME owner/natural person unit costs are eligible.
Equipment costs: Depreciation and full cost for listed equipment (full cost only for system prototyping activities).
Indirect costs: Flat-rate of 25% of eligible direct costs (excluding subcontracting, financial support to third parties, internally invoiced goods and services, PCP procurement costs) or actual costs.
Costs for kick-off meeting (travel for maximum 2 persons, return ticket to Brussels and accommodation for one night) if meeting occurs after project start date.
Communication costs for presenting the project on participants' websites or social media accounts are eligible.
Ineligible Costs:
Activities aiming to create, underpin, and improve knowledge, products, and technologies (generating knowledge, Art 10(3)(a) EDF Regulation).
Financial support to third parties is NOT allowed under this call.
Costs related to the use of assets, infrastructure, facilities, or resources located or held outside eligible countries (unless exceptional agreement).
VAT paid by beneficiaries that are public bodies acting as public authority.
Costs for separate project websites.
Travel and subsistence unit costs (only actual costs are eligible).
Matching Fund/Co-financing: Required for development actions. Applicants must demonstrate that project costs not covered by EDF funding are financed by other means (e.g., Member States' contributions or co-financing from legal entities) via co-financing declarations.
Subcontracting Limit: Limited to 30% of the total eligible costs for each beneficiary and affiliated entity. Subcontracted work must be performed in eligible countries.
Payment Schedule: Normally a prefinancing payment (typically 55% of the maximum grant amount) at the start, potentially followed by additional prefinancing/interim payments, and a final balance payment. Payments may be lowered if outstanding debts to the EU exist.
Financial Reporting: Based on the lump sum model, beneficiaries do not need to report actual costs; they claim the lump sum once the work is done. However, records on all work must be kept.
No-Profit Rule: Grants generally may not result in a profit (surplus of revenues + EU grant over costs). This will be checked at the end of the project.

Eligibility Requirements

Organizational Type & Structure

Legal entities (public or private bodies) are eligible.
Must be Small and Medium-sized Enterprises (SMEs) as defined by EU Recommendation 2003/361/EC. "SMEs" are enterprises employing fewer than 250 persons and having an annual turnover not exceeding EUR 50 million, or an annual balance sheet total not exceeding EUR 43 million.
Must be registered as an SME in the Participant Register and have a positive SME self-assessment result (for the current and 2 previous years).
Consortium is mandatory: Minimum 3 independent applicants (beneficiaries) from 3 different eligible countries.
Executive management structure must be established in eligible countries.
Subcontractors involved in the action and associated partners must also comply with establishment and control conditions.

Geographic Location

Established in one of the EU Member States or EDF Associated Countries.
Project activities must take place in eligible countries.
Infrastructure, facilities, assets, and resources used must be located or held in an eligible country (exceptions possible with prior agreement from the granting authority).

Project Specific Requirements

Applications must correspond wholly or in part to the topic description.
Must address innovative defence products, solutions, and technologies, including those that can improve readiness, deployability, reliability, safety, and sustainability of forces.
Proposals must address any area of interest for defence.
Proposals for add-on development actions to adapt civil solutions previously not applied in defence are welcomed.
Must address at least one activity among design, system prototyping, testing, qualification, certification, and increasing efficiency.
Design activities must be based on harmonised defence capability requirements jointly agreed by at least two Member States or EDF associated countries.
Prototyping, testing, qualification, or certification activities must include evidence that at least two Member States or EDF associated countries intend to procure the final product or use the technology in a coordinated manner, and are based on common technical specifications jointly agreed.
The project must concern new defence products or technologies or the upgrade of existing ones.

Exclusion Criteria

Natural persons are NOT eligible, except for self-employed persons (sole traders) without a separate legal personality.
International organisations are NOT eligible, unless their members are exclusively EU Member States or EDF associated countries and their executive management structure is in an EU Member State or EDF associated country.
Entities subject to EU restrictive measures (under Article 29 of the Treaty on the European Union (TEU) and Article 215 of the Treaty on the Functioning of the EU (TFEU)) are NOT eligible.
Entities subject to EU conditionality measures (e.g., Hungarian public interest trusts as per Council Implementing Decision (EU) 2022/2506) are NOT eligible.
Organisations in bankruptcy, winding up, or similar procedures.
Organisations in breach of social security or tax obligations.
Organisations guilty of grave professional misconduct, fraud, corruption, criminal organisation links, money laundering, terrorism-related crimes, child labor, or human trafficking.
Organisations that have shown significant deficiencies in complying with obligations under previous EU contracts/grants.
Organisations guilty of irregularities or that resisted an investigation/audit.
Organisations that misrepresented information or had an un-remedied conflict of interest during the award procedure.
Projects that do not implement the objectives set out in Article 3 of the EDF Regulation.
Projects that do not relate to at least one of the eligible types of activities.
Projects that concern products and technologies whose use, development, or production is prohibited by international law.
Projects that concern the development of lethal autonomous weapons without meaningful human control (exception: development of early warning systems and countermeasures for defensive purposes).
Projects where background or results would be subject to control or restriction by a non-associated third country or non-associated third-country entity, impacting technology transfer or results.

Application Process

Submission Method: Applications must be submitted electronically via the Funding & Tenders Portal Electronic Submission System. Paper submissions are NOT accepted.
Submission Format: Proposals consist of two parts:
Part A: Administrative information about participants and summarised budget, filled in directly online.
Part B: Technical description of the project (maximum 100 pages), submitted as a PDF using a template from the Submission System.
Annexes: Mandatory annexes (templates downloaded, completed, and uploaded as PDFs) must be assembled with Part B into a single password-protected ZIP archive (AES-256 encryption, max 100 MB).
Password Submission: The password for the ZIP archive must be communicated before the deadline to [email protected], along with the proposal ID and ZIP archive name.
Classified Information: Classified documents must NOT be submitted online. Applicants must contact [email protected] well in advance for special arrangements.

Required Documentation & Materials

Application Form Part A.
Application Form Part B (Technical Description).
Mandatory Annexes:
Detailed budget table/calculator (EDF LS DA).
Participant information (including previous projects).
List of infrastructure, facilities, assets, and resources.
Co-financing declarations (if the EU grant doesn't cover total eligible costs).
Actual indirect cost methodology declarations (if actual indirect costs are used).
Harmonised capability declarations (for design activities).
Declarations on procurement intent and common specifications (for prototyping, testing, qualification, certification activities).
Ownership control declarations (for beneficiaries, affiliated entities, subcontractors, and associated partners).
PRS declaration (if access to Galileo PRS information is required).

Application Timeline & Deadlines

Call Opening: 2025-02-18.
Submission Deadline: 2025-10-16 17:00:00 CET (Brussels time). No extensions possible.
Evaluation Period: October 2025 - April 2026.
Information on Evaluation Results: April 2026.
Grant Agreement Signature: By 2026-12-31.

Evaluation & Selection Process

Procedure: Standard one-stage submission and one-step evaluation.
Review: Proposals are first checked for admissibility and eligibility, then evaluated against operational capacity and award criteria by an evaluation committee assisted by independent experts.
Selection: Successful proposals will be invited for grant preparation, which involves dialogue to fine-tune technical/financial aspects and potentially adjust the proposal.

Project Implementation Timeline

Project Duration: Between 12 and 48 months. Longer durations may be accepted if duly justified.
Starting Date: Normally after grant signature. A retroactive starting date is exceptional and never earlier than the proposal submission date.
Reporting Schedule: Progress reports are mandatory every 6 to 12 months (to be agreed during grant preparation).

Support Available

Business Coaching: Successful SME beneficiaries will be offered business coaching to accelerate growth and guide them in accessing the defence market.
Assistance: IT Helpdesk for technical issues. Email support ([email protected]) for non-IT questions. Online Manual, Topic Q&A, and Portal FAQ are available resources.

Evaluation Criteria

Award Criteria and Scoring System Proposals are scored from 0 to 5 for each criterion, with half-points allowed. An overall threshold of 37 points (out of 55 maximum) must be met for a proposal to be considered for funding. Excellence and potential of disruption (Weight: 2)

Quality of the overall concept and soundness of the proposed approach, including ideas, technologies, and methodology.
Compliance of the proposal with the topic's objectives, scope, types of activities, functional requirements, and expected impact.
Degree to which the project's objective and outcome offer an advantage over existing defence products/technologies, or its potential for disruption in the defence domain.

Innovation and technological development (Weight: 1)

Demonstration of innovation potential; presence of groundbreaking/novel concepts/approaches (e.g., new products, services, business models), promising technological improvements, or application of technologies/concepts new to the defence sector.
Integration of existing knowledge and previous R&D (defence/civil) to avoid unnecessary duplication.
Potential for innovations/technologies to spin-off to other defence applications and products.

Competitiveness (Weight: 1)

Foreseen competitive advantage of the solution compared to existing/planned products/technologies, considering the balance between performance and cost-efficiency.
Potential to accelerate company growth across the EU, based on market analysis (EU and global, including expected sales volumes).
Strength of the Intellectual Property (IP) strategy (e.g., patents) to support competitiveness and growth.

EDTIB autonomy (Weight: 2)

Contribution to the autonomy of the European Defence Technological and Industrial Base (EDTIB) by reducing non-dependency on third countries.
Beneficial impact on European security of supply, including creating new supply chains.
Contribution to defence capability priorities agreed by Member States (CFSP, Capability Development Plan) and relevant regional/international priorities that align with EU security/defence interests and are inclusive.

Creation of new cross-border cooperation (Weight: 2)

Extent of new cross-border cooperation established between legal entities in Member States or EDF associated countries, particularly SMEs and mid-caps, considering market specificity.
Planned future cross-border cooperation and opportunities created by the project.
Extent of substantial participation by cross-border SMEs and mid-caps and their industrial/technological added value.

Lifecycle efficiency (Weight: 1)

Improvement in efficiency across the product/technology lifecycle compared to existing solutions (e.g., lower production, operational, maintenance, repair, overhaul, or disposal costs; simplification of processes).

Member State cooperation (Weight: 1)

Contribution to the integration of the European defence industry by demonstrating Member States' commitment to jointly use, own, or maintain the final product/technology in a coordinated way.
Contribution to increasing cooperation potential between Member States.

Implementation (Weight: 1)

Effectiveness and practicality of the work plan structure (Work Breakdown Structure, timing, inter-relation of work packages).
Usefulness and comprehensiveness of milestones and deliverables; clarity and measurability of criteria for reaching milestones.
Appropriateness of management structures and decision-making mechanisms relative to project complexity and scale.
Quality of risk management, including identification, assessment, and proposed mitigation measures for critical risks.
Appropriateness of task and resource allocation among consortium members, ensuring valid and complementary roles and high effectiveness/efficiency of work share.

Priority Order for Same Scores If multiple proposals have the same total score, priority is determined by: 1. Score for 'Excellence and potential of disruption'. 2. If still tied, score for 'Innovation and technological development'. 3. If still tied, score for 'Competitiveness'. 4. If still tied, score for 'Creation of new cross-border cooperation'. 5. If necessary, further prioritisation by the number of Member States or EDF associated countries where applicants are established.

Compliance & Special Requirements

Regulatory Compliance

Ethical Standards: Projects must adhere to the highest ethical standards and comply with applicable EU, international, and national law. An ethics review is mandatory.
EU Policy Alignment: Projects must comply with EU policy interests and priorities (e.g., environment, social, security, industrial, trade) and respect EU values.
Financial Regulations: Compliance with Regulation 2024/2509 (EU Financial Regulation) and EDF Regulation 2021/697.
Legal Entity Validation: Beneficiaries and affiliated entities must register in the Participant Register and be validated by the Central Validation Service.

Security Requirements

Classified Information: Projects involving classified information will undergo security scrutiny and be subject to specific security rules detailed in a Security Aspects Letter (SAL) annexed to the Grant Agreement.
Prohibited Classification: Projects involving 'TRES SECRET UE/EU TOP SECRET' (or equivalent) classified information cannot be funded.
Facility & Personnel Clearance: Handling classified information (CONFIDENTIEL UE/EU CONFIDENTIAL or above, and RESTREINT UE/EU RESTRICTED if required by national rules) requires Facility Security Clearance (FSC) for premises and Personnel Security Clearance (PSC) for individuals.
Ownership Control: Entities cannot be subject to control by a non-associated third country or entity unless specific guarantees are approved by the Member State/EDF associated country where they are established.
Intra-EU Transfer of Defence-related Products: Beneficiaries are responsible for ensuring compliance with national rules for transferring defence-related products within the consortium. A consortium agreement should address this, ideally by considering the consortium as a collective 'end-user'.
Third-Country Security Requirements: Projects must not be subject to third-country/international organisation security requirements that could affect implementation or the grant award.

Intellectual Property

IPR Rules: Intellectual Property Rights (IPR) rules, including ownership, protection, transfer, licensing, and rights of use on results, are defined in the Model Grant Agreement. Results must be free from restrictions.

Special Considerations

Consortium Agreement: A consortium agreement is mandatory to define internal arrangements, grant money redistribution, and dispute resolution.
Subcontracting: A fixed subcontracting limit of 30% of the total eligible costs applies per beneficiary and affiliated entity. Subcontracted work must be performed in eligible countries.
Equipment Costs: Reimbursement for equipment costs uses depreciation plus full cost for listed equipment (full cost only for system prototyping activities).
Business Coaching: Successful SME beneficiaries will receive business coaching.
Project Scope Limitations: Projects must specifically address the eligible activities and types of defence products/technologies; 'generating knowledge' activities are explicitly ineligible for funding under this call. Projects must concern new or upgraded defence products/technologies, not those already completed.
No Double Funding: It is strictly prohibited to cumulate funding from the EU budget (except under 'EU Synergies actions'). Each action receives only one EU grant, and cost items cannot be declared under two EU grants.
Retroactive Start: A retroactive project start date may be granted exceptionally for duly justified reasons, but never earlier than the proposal submission date.

Grant Details