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EU Funding and Government Procurement Sectors

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Horizon 2020

Horizon 2020 is the largest – both in terms of value as well as thematic scope - innovation and research program ever launched in the European Union with close to €80 billion allocated from 2014 to 2020. The program aims to create jobs through smart, sustainable, and inclusive growth. It incorporates all research and innovation related tenders into one program, therefore substituting for the previous Competitiveness and Innovation Framework Programme (CIP) and the European Institute of Innovation and Technology (EIT).

The reason for the shift toward merging relevant policy areas is the Europe 2020 initiative, which serves as a blueprint for the EU`s growth strategy. Part of Europe 2020 is the Innovation Union strategy – one of seven flagship initiatives - which foresees over 30 actions that would make the European Union a top-performer in research and innovation. Horizon 2020 supports projects with aims correlating to the strategic priorities of Europe 2020 and the Innovation Union. The program builds to a large extent on the results achieved during the previous research framework programmes and will have three primary thematic priorities:

  • Excellent Science;
  • Industrial Leadership; and
  • Societal Challenges.

Horizon 2020 aims to simplify the rules and procedures to follow for funding in order to achieve results faster, with the underlying principal to help EU Member States in promoting research and innovation. For standard research projects, a consortium of at least three independent legal entities needs to be created. Each of these entities has to be established in an EU member state or in an associated country. The list of associated countries can be found on the following website: http://ec.europa.eu/research/participants/data/ref/h2020/grants_manual/hi/3cpart/h2020-hi-list-ac_en.pdf

Horizon 2020 comes with a set of new and simplified rules that are consistent with other EU programs. It provides a funding rate ceiling of a maximum of 100% of the total eligible costs (except for the project category of innovation actions, where a 70% maximum will apply for profit making entities). For indirect eligible costs, it provides a flat rate of 25%. The evaluation criteria have also been simplified along three general topics of scrutiny: Excellence – Impact – Implementation (for projects under the European Research Council “ERC” subject area, the only evaluation criteria is Excellence). Another novelty is the broader acceptance of participants’ accounting practices for direct costs, a flat rate for indirect costs, no time-sheet requirements for personnel working full time on a project, and the possibility of output-based grants.

Furthermore, no complex validations of the legal status of the participants are necessary and there are also fewer financial capacity checks – speeding up the time between proposal and project start considerably. Intermediate cost claims can also be submitted without any certificate on the financial statements completed by an external auditor. Only at the end of a project would a certificate be required for each participant if its EU contributions based on actual costs are higher than €325,000.

More information on financing can be found here: http://ec.europa.eu/research/horizon2020/pdf/press/fact_sheet_on_rules_under_horizon_2020.pdf

European Union EU Tendering for Government Procurement

Government procurement in Europe is bound by certain international obligations in the WTO Government Procurement Agreement (GPA) and the EU Public Procurement Directives. U.S.-based companies are allowed to bid on public tenders covered by the GPA, while European subsidiaries of U.S. companies may bid on all public procurement contracts covered by the EU directives in the European Union.

Green Public Procurement 

The EU actively supports and promotes Green Public Procurement (GPP) in the context of its policy on sustainable consumption and production, and public purchasers at all levels in the EU are increasingly aware of the need to meet specific environment policy goals and targets for greenhouse gas emissions, energy and waste reductions. EU Public Procurement Directives allow public contracting authorities to include environmental considerations into their procurement procedures for public works, services and supplies contracts. The Directives specifically mention the possibilities for adopting environmental considerations at the level of technical specifications, award criteria and contract performance clauses. With this focus, the European Commission hopes to boost green purchasing, thereby encouraging the development of environmentally friendly technologies for the marketplace. U.S. companies are advised to be aware of the tools that public purchasers use to implement those policy goals and this report aims to help them be well prepared to successfully bid on contracts.

MR-167 EU Defense Procurement Directive (Updated 2017)

EU Directive 2009/81/EC governs the procurement procedures for defense and non-military security supply, services and works contracts. The Directive aims to harmonize acquisition procedures throughout the EU: first by increasing competition and encouraging cross-border bidding among European bidders, so as to prevent systematic sole-source procurement or non-competitive procurement from national suppliers; second, by increasing transparency through the obligation to advertise defense contracts in the EU Official Journal. Various contract performance conditions make indirect offsets in defense contracts incompatible with EU Community law.

The Directive contains no “EU preference” clause, and leaves up to Member States the decision to invite non-EU bidders in competitions. Defense contracts covered by the Directive may become subject to investigation from EC authorities in cases of suspicion of violation of EU law, and may come under the jurisdiction of the European Court of Justice.

The Directive was reviewed in 2016 and the text was left unchanged. However, implementation gaps were identified and the Commission is now focusing its efforts on better enforcement. The majority of defense expenditure is still spent through national procurement without an open tender, while the share of collaborative equipment procurement remains around 22%. These two factors combined had led to an unnecessary duplication of capabilities, organizations and expenditures in Europe.

EU Structural Funds 2014-2020 (updated 2017)

Structural Funds are one of the main instruments used in the Europe Union to mitigate economic and social differences between regions. They are financial instruments that allocate funding to develop local infrastructure, services and other relevant activities. The Structural Funds are composed of two independent financial mechanisms:

European Regional Development Fund (ERDF); and European Social Fund (ESF).

Both of these funds are operated from the payments of all member states. These payments are redistributed to the EU regions with the aim of mitigating social and economic differences. While the distribution mechanism of the fund is overseen by the European Commission`s DG REGIO, there may be differences with regards to the tendering processes in the different member states.

This report is designed to help U.S. companies better understand the process by which projects are funded and financed in the EU and, consequently, to maximize the chances of participating in these projects.

The European Investment Bank (updated 2016)

The European Investment Bank (EIB) is the financing arm of the European Union. The EIB finances major investment projects in the EU in the areas of telecommunication, energy, environment, health and socio-economic infrastructure. The bank lends to both public and private borrowers for investment projects in the European Union, in EU candidate countries and in developing countries. Companies interested in obtaining a loan for large investment projects from the EIB may contact the bank directly, while smaller loans are negotiable through commercial banks in the country of the project. This report outlines the opportunities provided by the bank and its international partners for financing in and across the EU member states.


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