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French Minister Reveals Small-Biz Support Efforts

Dec. 2, 2012 - 03:16PM   |  
By PIERRE TRAN   |   Comments
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PARIS — Defense Minister Jean-Yves Le Drian has unveiled a package of 40 measures in a support plan for small and medium-sized enterprises (SMEs), intended as the French equivalent of the U.S. Small Business Act.

The unveiling of the SME Defense Plan came Nov. 27, the same day a parliamentary finance committee learned that the government cut 176.6 million euros ($229 million) in defense equipment spending and 21 million euros in research studies this year, adjustments needed to offset an overspend of nearly 300 million euros in military and civilian pay.

Le Drian outlined the support plan at the first Innovation Forum held by the Direction Générale de l’Armement (DGA), a showcase of the procurement office’s 700 million euro annual investment in research and technology, with a focus on small and medium-sized companies.

“The SME Defense Plan initiated by the Ministry of Defense is a responsibility, because we are the largest government purchaser, and we are also the guarantor for maintaining the development of the defense industrial technology base of our country,” Le Drian said.

Despite the budgetary difficulties, the Defense Ministry is pushing to increase research funding, as innovation is important to maintaining competitiveness and delivering good equipment to the services, he said.

The Defense Ministry acts as a significant “unifier and actor” in research and innovation, said DGA head Laurent Collet-Billon.

France is strong in innovation, but it takes too long for research results to find their way into the industrial chain and be turned into products, he said.

The support plan is intended to help speed up theresearch-to-product chain.

Among the support plan’s main points:

• Prioritize small and medium-sized companies when it comes to awarding contracts below 15,000 euros, on condition they are competitive and a tender is held.

• Aim to award 2 percent of government spending to SMEs by 2020, in line with the recent national competitiveness plan drawn up by Louis Gallois, former EADS chief executive.

• Double to 20 percent the minimum financial advance for SMEs for new armaments contracts.

• Maintain for three years an annual 750 million euro expenditure on research and technology (R&T). The figure is in the 2013 defense budget and reflects an increase from the current 700 million.

• Raise the current 40 million euro budget for SMEs working on dual military and civilian technology to 50 million euros, or 25 percent, over three years.

• Require consideration of SMEs in the Defense Ministry’s purchasing policy.

• Guarantee an annual minimum 30 contracts of less than 2 million euros on R&T to be more accessible to SMEs.

• Help SMEs with exports, particularly from the international network of defense attachés, refundable advances, and try out a “label” granting a form of official recognition as a defense supplier.

The DGA’s innovation forum, something of a technology fair, is an attempt to match pure research with business partners.

At the forum, the DGA set out nine stands to showcase research studies and technology from SMEs in the fields of nuclear bacteriological and chemical warfare, electromagnetics and navigation, optronics, electronic components, fluids and geophysics, materials, simulation systems, robotics, and information systems and communications.

Industry has regularly called for R&T spending on feasibility studies to be raised to 1 billion euros a year, a level not seen since at least a decade ago.

Defense Cuts Announced

The SME plan was unveiled as a parliamentary financial committee heard that the government has cut 176.6 million euros from equipment, 21 million euros from research studies and 36.7 million from infrastructure spending in the current year.

The cuts were needed to help fund an overspend of 278.9 million euros in military and civilian pay this year.

“This shows the Ministry of Defense is not sufficiently in control of civilian and military pay,” said Member of Parliament François Cornut-Gentille, who sits on the finance committee of the National Assembly, the lower house.

The lack of information on the equipment programs hit by the canceled funding is regrettable, he added.

An analyst said the budget cuts showed the Defense Ministry has difficulty managing the payroll.

“This confirms the problem with the staff situation,” said Jean-Pierre Maulny, deputy director of think tank Institut de Relations Internationales et Stratégiques.

The national audit office, the Cours des Comptes, reported in July the defense wage bill rose 1 billion euros from 2008 to 2011, despite the current plan to cut 54,000 jobs, or 17 percent of staff, between 2008 and 2015.

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