Introduction to the C1-C4 industrial policy measures
The IPC approved in January 2001 a series of industrial policy measures for non-primes, SMEs
and R/D entities in ESA technology programmes, here-after called C1-C4 measures. Such
measures are in accordance with ESA Contract regulations (Article 5.2 (b)): “Restricted
competitive tender may be applied […] if the Industrial Policy Committee has given a directive or
a guideline to that effect to the Director General”.
The C1-C4 measures were revised by the IPC in May 2005.
These measures were implemented to fulfil the requirements imposed by Ministerial Council
Resolutions of March 1997 and November 2001, emphasizing the need for ESA to ensure a fair
allocation of activities among all industrial firms and to provide support to non-primes and SMEs.
The C1-C4 measures have as objectives:
- maintaining a level playing field for subcontractors, including SMEs and R&D entities, with a
view to contributing to a strengthening in all Member States of industrial competencies in a
sustainable manner,
- giving priority to non-Large System Integrators in order to favour the supply of services or
goods from them, in cases where such policy would be more efficient,
- allowing early involvement/industrial teaming of equipment suppliers.
The C1-C4 measures aim to benefit enterprises operating in the space market which are not
“Large System Integrators” (LSIs):
LSIs are enterprises having at the same time:
- at least one ongoing prime contract for over €200M and concerning space-related
infrastructures, launchers or satellites; and
- in this area either an annual turnover of over €200M or an annual balance sheet total of more
than €200M, and being linked to another enterprise having in this area either a consolidated
annual turnover greater than €1B or a consolidated annual balance sheet total greater than €1B.
SMEs (micro, small and medium-sized enterprises) are defined according to the criteria provided
by the European Commission in Recommendation 2003/361/EC of 6 May 2003 (OJ L 124,
20.5.2003, p.36).
R&D organisations are defined as:
- Public or Governmental Research Entities (national or regional),
- Universities and associated laboratories,
- Legal entities in which Public Governmental Research Centres or Universities have a majority
control,
- Other forms of R&D organisations not satisfying the above definitions might be considered by
ESA, provided that they are recognised in writing as an R&D organisation by their respective
national ESA delegation.
ESA makes use of the following criteria to propose C1-C4 procurement policies in future
technology contracts and plans:
C1: Activities in open competition limited to the non-Large-System Integrators
In these activities, LSIs are not allowed to submit prime proposals to ESA, but can participate as
subcontractors provide they comply with certain conditions limiting their role in the team.
- The C1 measure is proposed when the technology development is not of crucial importance for
prime system integrator activities in future programmes, the C1 measure is proposed for the
programme-specific technology development, provided potential beneficiaries of the measures
have recognised expertise and/or capabilities. With the same conditions, the C1 measure is also
proposed when the results of the technology activity should be made available to a large number
of players.
- The C1 measure is proposed when the technology development does not relate to improving
lines of products for which LSIs have a strong competitive position in commercial markets and
capabilities and it relates to the development of a product with new technology solutions, the C1
measure is proposed, provided non-LSIs have recognised expertise and/or capabilities.
C2: Activities in open competition, where a significant participation of non-LSIs is
requested
These activities are open to all potential bidders. However, LSIs that submit bids are requested to
include in those bids a relevant participation of non-LSIs, in quality and quantity.
- the C2 measure is proposed when the technology activity is such that Large System Integrators
can bring key competences (system view) and when the above-mentioned C1 criteria are verified.
- the C2 measure shall not be proposed for activities with a budget not appropriate for further
subcontracting
C3: Activities restricted to SMEs & R&D organisations, preferably in cooperation
- the C3 measure is proposed when the technology activity relates to early phases of the
technology development (TRL lower than 3) with strong expectations on innovation contents, or
to technology spin-in, and when SMEs & R&D organisations have recognised expertise and
capabilities in the technology domain.
C4: Activities in open competition, subject to the SME subcontracting clause
In this case, bidders are required to do their utmost to include in their bid an adequate
participation of SMEs as subcontractor(s)
- the C4 measure is proposed when non-SMEs can bring key competences (system view,
industrial capacities) and when one of the above-mentioned C3 criteria is verified. In particular,
the C4 measure is proposed to maintain opportunities for SMEs when they do not have the
capacity to bid alone for the full technology contract. C4 is therefore meaningful when
technological specialisation is credible for SMEs (for example: development of hardware
requiring use of industrial processes common to different industrial domains) and when there is
evidence of industrial supply by SMEs.
- the C4 measure shall not be proposed for low budget activities, where imposing subcontractors
would be inefficient.