Procurement policy on fair access for SMEs - the C1-C4 Clauses

C1 & C3 Clauses: Actions Reserved for Non-Primes and SMEs

The aim of these two clauses is to foster competitiveness of equipment suppliers and SMEs (for C1 Clause), and of SMEs and Research Institutes (for C3 Clause), in areas where the concerned organisations have recognised expertise and capabilities.

Note that 'Non-Primes' are here defined as all companies and organisations, with the exception of the 'Large System Integrators' (LSIs) such as Airbus Defence and Space, and Thales Alenia Space.

Procurements where the C1 and C3 clauses are used include those for technology research activities and for the development of equipment, components, or instruments - where SMEs and their partners have the necessary expertise, and where favouring these entities would result in a more efficient use of funds.

C1: Activities in open competition, limited to the non-primes

In these activities, major system integrators are not allowed to submit proposals to ESA.

This measure is applied to technology activities and studies aiming at developing equipment, components or instruments in areas where, both, non-prime companies (including SMEs), have recognised expertise and capabilities, and where favouring the supplier sector would result in a more efficient allocation of R&D funds, due to the inherent economies of scale that would be generated. This policy applies in particular to the development of standard satellite equipment.

The objective of the measure is to favour an increased specialisation and competitiveness of suppliers.

Major system integrators can only participate as subcontractors. In this case, the proposal must provide due demonstration that:

· The tasks assigned to the above major system integrators do not constitute the core activities of the proposed development;

· the technical expertise brought by the major system integrators is essential for the activity;

· the non-LSI economic operator(s) in the team retain the key capacities to develop and exploit the results of the technology activity;

· the presence of major system integrators in the proposal does not undermine or limit the leading role of the non-prime companies in the team.

Failure of such demonstration will result in the proposal not being considered for further evaluation.

C3: Activities limited to SMEs & R&D organisations, preferably in co-operation

This measure is applied to technology activities where ESA strives for innovation and new ideas and concepts to be brought into space.

The main objective is to increase the efficiency and flexibility of the system by facilitating the access of interesting and innovative industrial & R&D partners, many of them from collateral industrial domains to space.

C2 & C4 Clauses : Open Competition with encouragement of subcontracting to Non-Primes and SMEs

These types of actions are open to all, but the main Contractors are requested (under C2 clause) to include an adequate participation (in terms of quantity & quality) of Non-Primes and SMEs - or under C4 clause, uniquely SMEs - in their teams.

Offers must provide an analysis of the proposed participations. If no SMEs are included in the offer, the bidder must provide evidence of efforts made, and the reasons for lack of success in including SMEs.

Procurements where the C2 and C4 clauses are used include those for innovative technology activities issued as open competitive tenders, where capabilities are available at Non-Primes and/or SMEs, and generally, which have a budget greater than or equal to €250 000 (some procurements of lesser value may also be subject to these clauses).

C2: Activities in open competition, where a significant participation of non-primes (including SMEs) is requested

These activities are open to all potential bidders, major system integrators and non-primes. However, in case major system integrators bid, they are requested to include in their offers a relevant participation, in quality and quantity, of non-primes (including SMEs). Failure of such inclusion will result in the proposal not being considered for further evaluation.

This policy is applied to technology activities and studies aiming at developing equipment, components or instruments in areas where favouring the equipment supplier sector is appropriate, but the major system integrators are in a competitive position in the commercial market.

The objective is to encourage an enhanced industrial co-operation between primes and non-primes starting from the technology inception phase

C4: Activities in open competition, subject to the SME subcontracting clause

One of the structural measures of the SME initiative is the SME subcontracting clause. The measure consists basically in encouraging the well-experienced European space companies bidding as Main Contractors for ESA technology procurements, to include SMEs in their teams in order to build-up working relationships and give them the opportunity to bring new technological ideas. Indeed, as many SMEs are working in collateral domains to space, they can be efficient in providing specialised items and services and enhancing the permeability in technology between space and other domains. The SME subcontracting clause is applied to technology activities where innovation is welcome and capabilities may, in view of their nature, exist in space (& non-space) SMEs. The objective is to favour innovation, permeability between space and other sectors and introduction of new ideas & concepts through SMEs.

For that purpose, bidders are required to do their utmost to include in their offer an adequate participation (in terms of quantity and quality) of SMEs as subcontractor(s). Offers shall provide an analysis of the potential advantages (e.g. long-term prospects for future work) of the proposed participation.

If such participation is not offered, the bid shall contain evidence of the efforts made to meet these requirements and the reasons for the lack of success. Otherwise, the bid will not be considered for further evaluation.

Results achieved

Thanks to the C1-C4 clauses, SMEs and Non-Primes have gained better access to ESA activities, especially in the following Programmes:

• Technology Development Element (TDE)
• General Support & Technology Programme (GSTP)
• Advanced Research in Telecommunications (ARTES)
• Core Technology Programme (CTP)
• Preparatory technology actions for ESA's Earth Observation Programme

Activities are carried out on a project-by-project basis and cover a significant number of ESA Programmes.

Definition of an SME

The SME Policy Office applies the definition of an SME as recommended by the European Commission, and which has been in force since January 2005.

Details of the definition are available from the Internal Market, Industry, Entrepreneurship and SMEs website.