Can SMEs afford to be FP7 project partners?

SMEs don’t like to expose themselves as partners in the high risk, high cost, long-term R&D that is FP7.

In our recent survey on the European Commission’s proposed Common Strategic Framework for Research and Innovation (CSFRI) we really hit a nerve in our questions about sub-contracting in FP7 projects. Indeed, we started a discussion about it on LinkedIn and the debate is still going strong.

Today I would like to talk about a related topic which we also covered our CSFRI Green Paper response – the inclusion of SMEs in framework programme projects as partners.

Greater involvement by SMEs in framework programme research is consistently stated as a key aim of the EC. But for SMEs there are some pretty big barriers that prevent this close, cooperative involvement.

The sheer volume of bureaucracy and paperwork involved just to submit a proposal is certainly one of them. Costly and time-consuming form filling and pre-qualification is simply seen as too much of a hassle by some companies; they simply don’t bother. Even when we get involved in proposals as subcontractors there are a good number of forms to fill and fax.

We certainly welcome the EC’s plans to simplify processes across the board. There is a risk that less bureaucracy means more fraud, but surely there must be clever technology to spot the artful dodgers (and if there isn’t, can I propose a Call)?

Secondly there is the issue of financing. Let me illustrate with our own experience.

Our specialism is scientific research communication and dissemination. We design and implement ways in which project consortia can reach their target audience effectively. We possess skills, experience and professional working practices that are outside the competencies of many researchers and project coordinators and we can provide a working resource that is flexible and scalable depending on the needs and progress of projects.

For these reasons we have previously had offers to join projects as partners but have had to politely turn them down. As an SME we are only eligible for 75% of a project’s funding were we to become a partner, depending on the funding details and our involvement level. We might get 100% for some actions, but probably not all.

The problem is that as a service provider we cannot commercially exploit the results of research projects to give us a future return on the time we invest. As project partners we will effectively work for 75% of our usual income. We know that FP7 funding is not supposed to generate commercial profit, but does this arrangement sound attractive to you?

And even when a business can commercialise the research in the future there are still problems. For example, IP issues are inherently complex and make negotiations difficult. Large companies can afford to ‘give away’ IP, but SMEs want to hang on to it through patents or secrets. But keeping mum is not in the spirit of FP7 is it? Again, the SMEs vote with their feet and keep away.

It is also possible that many smaller companies cannot afford to make the high risk, long-term and expensive investments in R&D that FP7 requires. For example, the recent Innovation Union report on EU competitiveness included figures (as explained by Research Europe) stated that in Europe SMEs pay around €168,000 legal fees to patent compared to €4,000 in US!

In the next post we will consider a number of ways that project consortia could overcome the specific issues mentioned above and include more SMEs in framework programme projects. However, we’re sure that plenty of our readers have good ideas and/or experiences of their own to share – if this is you then please feel free to add your thoughts to the comments below.

Filed under: CSFRI,FP7,innovation | Tags: , , , , , | By Hywel on June 14, 2011 at 1:04 pm

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