April 23rd, 2014

Mr. Jean-Louis Bonafe, a key personality in supporting aeronautics innovative research for SMEs in Europe, expresses his views on how SMEs can respond in their indispensable role in retaining global leadership for Europe in Aeronautics.

Q: You have been from FP4 to FP7 the Coordinator of an European Commission Aeronautical support action, dedicated at SMEs, named SCRATCH. Could you tell us the origin of such a focused action and its main goals?

A: I have been from 1989, the head of "European aeronautical affairs" in the Aerospatiale Company, now merged within Airbus. At that time has been launched the first aeronautical call of the European Commission (EC), through the Brite-Euram part five Programme. All the aeronautical community was discovering then the precompetitive research and development of the EC.
Although Aerospatiale was an Airbus Partner, the partnership was operating on the industrial stage only and research and development (R&D) activities were not performed collaboratively. Thanks to the EC, the Airbus partners have entered in a new era.
Aircraft manufacturers have set up an organisation named EUROMART Industry Management Group (IMG) to address the Aeronautical R&D matters between Aeronautical stake holders and the EC. I was acting in the EUROMART Board, as Aerospatiale representative, and owing to the fact that we were all "starting from scratch", we have learnt together how to manage with the EC labyrinth and its pitfalls.
The first of our problems has been to search Universities and small enterprises in order to offer them to be associated to EUROMART R&D proposals in preparation. The main goal was to benefit from Universities grey matter and to bring our contribution to the EC European Cohesion policy. Things were simple for Aerospatiale because our Common Research Centre was already involved in Material Technologies R&D with the EC. They suggested us to get in touch with some reliable "Institutes". Doing so, we have met several entities, in particular, the ISTRAM institute and the University of Patras. They have demonstrated since their capabilities and reliability in collaborative research for advanced materials in Aeronautics.
Since the beginning of our R&D endeavour with the EC, we have been systematically facing with the poor involvement of Small to Medium Enterprises (SMEs) in the Industrialists R&D funded by the EC.
When I retired from Aerospatiale at the end of 1996 after more than 30 years of activity in the Engineering Division, I've proposed to my EUROMART colleagues and to the EC to help SMEs to have access to Aeronautical EC R&D. Everybody supported the idea and in particular the EC.
I've created Euro Inter Toulouse Company to give visibility to my activity and confirmed the goal to convert my experience to the benefit of SMEs. The EC published a call for a support action dealing with SMEs in Aeronautics, we have bid internationally, as usual, and ISTRAM was our Greek Partner. That gave life to the SCRATCH Projects in 1999.


Q: How could SCRATCH accompany SMEs to the EC Aeronautical Programme or sub-programmes?

A: The SCRATCH partnership gathered up to 14 Partners having expertise in Aeronautics and European R&D. All of them offered to identified local SMEs support they needed to have access to Europe. Our aim was to service SMEs.
The most tricky problem when addressing a research idea suggested by an SME is to validate the idea and of course its innovativeness. By chance, generally an SME suggesting an idea was already in touch with a local laboratory and a contact with the said laboratory could confirm the interest of the research and the fact that, in most of the cases, it was not part of the state of the art. If unfortunately the SME was not yet in touch with a laboratory, we consulted our University Partners on the proposed issue (we were all linked by a confidentiality agreement).
If the innovativeness was confirmed, it was also necessary to have an idea of the usefulness of the research for a large industrialist. Owing to my origin, I had the chance to be directly in touch with former colleagues working in the Industry and close to the proposed R&D issue.
Generally, when examining the SME idea, three types of answers were occurring:
1- we lost a lot of time on such an issue without any success,
2- the issue is interesting but confidential for us,
3- the issue and its approach show good promises, we are interested by the results but we are overwhelmed and cannot invest on this issue at that time.
Those information were of paramount importance: in the first case it was better not to support the SME, in the second case we suggested the SME to get in touch with the industrialist and abandoned our idea of support towards the EC R&D.
In the third case it was worth for SCRATCH to support and service the SME because generally the Industrialist accepted a light Partnership as end user in the proposal. Its role was to validate and adjust the project specifications and finally to validate its achievement.
The offered services (free of charge for the SME) spanned from the idea validation up to the EC contract signature if any.
 In terms of services, we meant the help in the proposal preparation, the setting up of a credible consortium and the support in the proposal submission. SCRATCH invested one month and a half and requested the same investment from the SME, the whole included in a teaming agreement that committed the SME and the SCRATCH Partner. At the level of the proposal setting up, we avoided organising the proposal workplan and its workshare but we maintained a critical eye on the tasks and gave advice on the proposal technical breakdown.
The here above validation and servicing steps were very positive for SCRATCH and our Partnership was, in Aeronautics, the only one able to accomplish them all successfully.

Q: Now, that SCRATCH is over, could you summarise its achievements?

A: SCRATCH has been active from 1999 to 2011 with a success depending on the lack of SMEs in EC Aeronautics R&D.
To summarise, SCRATCH has established around 11000 contacts with SMEs, industrialists and laboratories, owns a database of 1000 visited companies, has serviced and submitted to the EC 129 proposals led by SMEs (112 level 1, 10 CSA, 7 Awards). 40 contracts have been signed with the EC for a total budget of 60 MEuros.
The success has started high (one out of two) and we have seen the EC interest tapering of, with the running time, down to only one proposal accepted out of 25 in 2011. This has been the end of the SCRATCH EC funded Projects.

We have been the victim of our success.


Q: What has been the importance of Universities in the SCRATCH endeavour?

A: Universities have participated in every serviced proposal; they have fuelled the selected projects with the grey matter, mandatory for the success. In fact, generally a serviced SME was already in touch with a local university. This duo was the origin of most of the successful proposals. The duo was completed with other industrialists and other Universities in order to gather the critical mass in the Project consortium.
Universities have offered larger view on connected or similar research and their networks were very efficient to find complementary partners like laboratories or industrialists as well.
Universities were the partners not only able but also voluntary to perform large dissemination efforts about the projects achievements.


Q: What support did you get from the large stakeholders during SCRATCH and now on?

A: Contacts with large stake holders have not been early formalised, they have been positive through personal networks from SCRATCH Partners.
Owing to the fact that the EC fixed in the various FPs a target of budget allocation to SMEs like 10%, then 15% and now 20% of the full FP budget, SMEs seemed privileged.
One could have imagined that the only captive budget for SMEs was the one dedicated at CRAFT actions. In fact it was a virtual budget for SMEs with few R&D capabilities that delegated budget research to organisations performing research on behalf of them. Large stake holders have not participated in CRAFT and high tech SMEs as the ones working in Aeronautics have very scarcely addressed CRAFT. The 10 to 15% EU targeted budget came from all SMEs participations in Projects selected in all other specific programmes.
Even if a certain % was allocated to SMEs, this was not managed from the EC. Only some specific programmes dedicated an identified part of their calls to SMEs, it was in particular the case of NMT Programme in FP7. Nothing special was done in Aeronautics and there was a feeling of competition around the same budget which spoiled relationship with stake holders associations like in particular ASD.
Nevertheless, by the end of SCRATCH, Euromart IMG has been reorganized. The number of Aeronautical large industrialists has been growing thanks to the EU enlargement and EUROMART set up an executive board with the 10 European large Aircraft manufacturers and a general assembly grouping 30 companies. I've been personally invited to join Euromart IMG as observer representing SMEs. Doing so, fifteen years later, I was back in Euromart IMG and met again some representatives I've well known earlier like the Airbus representatives.
This shows simply that relationship between SCRATCH and Aeronautical Industrialists have never been broken, they just needed for fifteen years to be officially formalized.


Q: What are the Aeronautical SME opportunities in H2020?

A: The approach of SMEs in H2020 has totally changed and most of the former handicaps have been overcome. There is a specific programme named "Innovation in SMEs" and a very innovative instrument dedicated only to SME R&D, the so called "SME instrument".
8650MEuros are expected to be allocated to SMEs through all specific programmes.
SMEs have still the possibility to bid directly to all specific programmes calls as done up to FP7, either as coordinators or partners with other Industrialists and Universities. They will be funded now from 70% to 100% (depending on the type of actions they bid for), with overheads limited 25% which is very attractive.
They still have the right to answer to JTI calls for tenders, in particular to Clean Sky JTI and to SESAR JU in Aeronautics. They will be funded according to the rules of the JTI or the JU. In Clean Sky they will be funded 70% with overheads limited 20% (if unchanged). We have nevertheless to mention that most of the SMEs selected in those tenders were SMEs already in the loop with JTI members; this has not favoured in Aeronautics the emergence of SMEs ready to join the supply chain.

Nevertheless, the more attractive particularity for SMEs in H2020 is through the SME Instrument. As an example the budget reserved to the SME Instrument in 2014-2015 deals with 251 MEuros in 2014 and more in 2015. The funds represent a bit more than 0,5% of each of the others specific programmes (probably per year). This seems few but it is and will reach a total of about 4% for H2020 as a part of the 8,65 BEuros dedicated at SMEs..
Smart, green and integrated transport (including Aeronautics) dedicates 35,87 MEuros in 2014 for the SME instrument. It's a simple coincidence but this budget is about the same that triggered the beginning of the Aeronautical EC R&D in FP 2. It is considerable and it is the first case that EC is so much supporting directly SMEs.
SMEs can bid alone or with other SMEs. SMEs will be the only contractors and be funded 70% with overheads limited 25%; the 2014 call is an open call and can be in two phases: award then proposal.
SMEs having few research capabilities are no more invited to join the EC R&D system, CRAFT time is over.
In the present call 500 feasibility awards are spared in the budget which could lead to one proposal selected out of two converted awards. A lightly higher amount is already called for 2015.
The Commission suggests as well a certain number of coaches to service SMEs in their Projects after contract signature. Not exactly like we did in SCRATCH where our coaching was going from the research idea expression to the contract signature and not after, like offered now.


Q: So, it's a success for the SCRATCH ideas; do you feel that the SME Instrument will stress innovation in Aeronautical SMEs?

A: It could be for Aeronautics, like everywhere else, not less and no more. According to our SCRATCH experience, I cannot claim for a full success, nevertheless I feel that some missing keys we have advocated for, several times, are now fully addressed by the EU:

- the allocation of  SME dedicated budget is effective in each specific programme,
- the feasibility award which was abandoned has been reintroduced,
- the calls are not scheduled but open,
- the support of coaches is recognised and encouraged,
- a Specific Programme is dedicated at managing specific funds allocated to the SME Instrument.

Some keys of the SCRATCH success are not yet addressed but the lack will soon appear and I feel that the Commission will take the useful corrective actions:

- the core of an SME proposal was embedded in a research that was already initiated between an SME and a University. These were the foundations of winning proposals. In the present SME instrument: Universities, Laboratories and Research Centres, cannot be partner. They just might be sub-contractors of SMEs. The sub-contracting invoices will only be reimbursed 70% without overhead. This will create a high burden for SMEs that will oblige them not to work with their natural and traditional support. That will create as well a lack of funds for graduated students preparing for PHD in European Universities. The link between Universities and Industry will be lost in a lot of European funded R&D which is counterproductive for employment in Europe.

- the necessity of an end user in every SME R&D project is not considered. This point was very positive for each SCRATCH serviced Project. It represented a win-win situation for the SME and for the large industrialist. This granted the industrialist to get products in line with its industrial goals and as well for the SME the possibility to claim full property rights. In the present situation, if an SME wants to have its Project specifications approved (and corrected) by an end user, if it wants to have the Project achievements validated by an end user it will have to sub-contract the tasks and to own fund 30% of the costs. This defeats the purposes of converting research into marketable products and funds would be wasted in defining products that do not fit perfectly with large industrialists needs. Such a case is more sensitive in sectors led by large industries which represent most of the industry sectors.

- servicing SMEs during the proposal preparation is not yet funded by the EC as it was in SCRATCH. This servicing activity has made its proofs when guiding SMEs on their way to Brussels. Might be a large part of the Innovation SME awards will be diverted to consulting companies without control of the EU.

- Another fact dealing with a single partnership is questionable as well.

Innovation in SMEs is once again stressed by the Commission, some important steps have been yet accomplished in H2020, and others remain at stake. In the SCRATCH principles everything became positive for SMEs research thanks to the participation of Laboratories and the blessing of large end users. I hope the Commission will soon consider the cases.