Tender or State Aid for R&D Projects

It can be difficult to distinguish whether if a project is classified as State Aid or subject to competition.

OJEU (Tenders) State Aid

1)    Aid is granted through resources

2)    )Favours certain companies or the production of certain goods

3)    Distorts or threatens to distort competition

4)    Affects trade between members


OJEU- mandates companies to advertise contracts over £[current OJEU value]


State Aid is deemed to distort competition, therefore, the company can either a) apply for permission to proceed, b) rely on the di minimis rule ( under 146K- over 3 years) or c) Rely on Block Exemption (RD&I)
R&D= Exempt from EU Regs but if you pay the market price = EU competition A grant for R&D purposes only= State Aid


Fundamental Research
Aid for R&D Projects-Applied Research (Industrial and experimental development)
Aid for feasibility studies ( aim at overcoming market failure)
Aid for construction and upgrade of research infrastructures
Aid for innovation activities
Aid for innovation clusters
Feasability study means the evaluation and analysis of a the potential of a project which aims at supporting the decision making proves by objectively uncovering strengths and weakness
Pre- commercial procurement means the public procurement of R&D services where the contracting body does not reserve all the results and benefits of the contract exclusively for itself for use in the conduct of its own affairs but shares them. The contract must be of limited duration and may include a prototype or limited volumes of products or services must not be an object of the same contract.
R&D project means an operation that activities span across several categories of R&D. The work is intended to be an indivisible task. It may consist of several work packages including clear objectives and expected cost.
An undertaking carries out economic activity consisting of offering products or services on a given market.
Clause 2,2,1 RD& I Framework

Where a research organisation or infrastructure is used to perform contract research or provide a research service to an undertaking which specifies the terms and conditions of the contract, owns the results of the research activities and carries the risk of failure, not state aid will be passed to the undertaking if the supplier receives payment of an adequate remuneration for its services especially if:

–       The supplier provides its research or contract research at market price

–       Where there is no market price the research organisation provides its research service or contract at a price which reflects the full costs of the service and generally includes a margin in line with industry rates

–       Negotiations where the organisation negotiates to obtain the maximum economic benefit when the contract is concluded and covers at least it marginal cost

Where the ownership of the UPR remains with the research organisation, their market value may be deducted from the price payable for the services concerned

Collaboration- 2 independent parties pursue a common objective based on the division of labour & jointly define its scope, participate design and contribute to implementation share financial technology and scientific risk, as well as results. One or more party may bear the full cost of the project which relieves the other part of its financial risk. The T’s&Cs of a collaboration project, in particular, relating to cost sharing of risk and results, dissemination and rules on allocation of IPR must be conducted prior to the start of the project.
Collaboration projects carried out jointly the Commission considers that no indirect state aid is awarded  to the grant recipients due to favourable conditions of the collaboration if one of the following conditions is fulfilled:

-The grant recipient bear the full cost of the project

-IPR may be widely disseminated and any IPR resulting from the activities

-Grant recipient receive compensation equivalent to the market price for the IPR which result from their activities that resulted in the IPR, may be deducted from that compensation.

 If none of the conditions is fulfilled, the full value of the contribution of the research organisation to the project will be considered as an advantage for the collaborative undertakings to which state aid rules apply.
Compensation will be considered to be received if its equivalent to the market price if it enables the grant recipient to enjoy the full economic benefit of those rights where one of the following conditions are fulfilled:

-the amount of the compensation has been established by means of an open transparent and non- discriminatory competitive sale procedure

-an independent expert valuation confirms that the amount of the compensation is at least equal to the market price

-Negotiation of the compensation at arm’s length conditions in order to obtain the max economic benefit at the moment when the contract is concluded while considering its statutory objectives

-Right of first refusal  as regards IPR generated by the collaborative research where those entities expect a reciprocal right to solicit more economically advantageous tenders from third parties so that the collaborating undertaking has to match its offer accordingly

Public procurement of research and development services

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We may procure R&D services from undertakings through both exclusive development and pre- commercial procurement procedures


An open tender procedure for the public procurement is carried out in accordance with applicable directives, the commission will generally consider that no state aid is present


In all other cases including pre- commercial procurement, the commission will consider that no state aid is awarded to undertakings where the price paid for the relevant services fully reflects the  market value of the benefits received by the public purchaser and the risk taken by the suppliers in particular where the following conditions are fulfilled


-the selection procedure is open, transparent and non-discriminatory and is based on selection and award criteria in advance of the bidding process

-Contract terms including IPR requirements made clear in advance

-Non-preferential treatment

– all results which are not IPR protected are allocated is required to grant the contracting body unlimited access to the results free of charge and to grant access to third parties e.g. non-exclusive licences under market conditions