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(1) In its Communication of 3 March 2010 entitled ‘Europe 2020 A Strategy for smart, sustainable and inclusive growth’ (the ‘Europe 2020 strategy’) the Commission emphasised the need to develop favourable conditions for investment in knowledge and innovation so as to achieve smart, sustainable and inclusive growth in the Union. Both the European Parliament and the Council have endorsed this strategy.

(2) Regulation (EU) No 1291/2013 of the European Parliament and of the Council established Horizon 2020 – The Framework Programme for Research and Innovation (2014-2020) (‘Horizon 2020’). Horizon 2020 aims at achieving a greater impact with respect to research and innovation by contributing to the strengthening of public-public partnerships, including through Union participation in programmes undertaken by several Member States in accordance with Article 185 of the Treaty on the Functioning of the European Union.

(3) Public-public partnerships should aim to develop closer synergies, increase coordination and avoid unnecessary duplication with Union, international, national and regional research programmes, and should fully respect the Horizon 2020 general principles, in particular those relating to openness and transparency. Moreover, open access to scientific publications should be ensured.

(4) By Decision No 743/2008/EC of the European Parliament and of the Council , the Community decided to make a financial contribution to Eurostars, a joint research and development programme undertaken by all Member States and five participating countries in the framework of Eureka, an intergovernmental initiative established in 1985 with the objective of promoting cooperation in industrial research (‘Eurostars’).

(5) In April 2012, the Commission communicated to the European Parliament and the Council a report on the interim evaluation of Eurostars carried out by a Group of Independent Experts two years after the beginning of the programme. The overall opinion of the experts was that Eurostars meets its objectives, adds value to European research and development performing small and medium-sized enterprises (‘SMEs’) and should be continued after 2013. Eurostars is also considered to meet a number of genuine needs of SMEs engaged in research and development; it has attracted a large number of applications, with the budget for projects eligible for funding exceeding the initial budget. A number of recommendations for improvement were made, mainly addressing the need of further integration of national programmes and improvements in the operational performance in order to reach shorter time-to-contract and more transparency in the procedures.

(6) The definition of SME provided for in Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises should apply.

(7) In accordance with Council Decision 2013/743/EU , support may be provided to an action building on Eurostars and reorienting it along the lines stated in its interim evaluation.

(8) The second Research and Development Programme jointly undertaken by several Member States aimed at supporting research and development performing small and medium-sized enterprises (‘Eurostars-2’), aligned with the Europe 2020 strategy, its flagship initiative ‘Innovation Union’ and the Commission Communication of 17 July 2012 entitled ‘A Reinforced European Research Area Partnership for Excellence and Growth’, will aim to supporting research and development performing SMEs by co-financing their market oriented research projects in any field. As such, and in combination with the activities under the ‘Leadership in Enabling and Industrial Technologies’ objective set out in Horizon 2020, it will contribute to the goals of the Industrial Leadership part of that programme to speed-up development of the technologies and innovations that will underpin tomorrow’s businesses and help innovative European SMEs to grow into world-leading companies. As part of the improvements from the previous Eurostars programme, Eurostars-2 should head towards shorter time-to-grant, stronger integration and lean, transparent and more efficient administration to the ultimate benefit of research and development performing SMEs. To keep the bottom-up nature and the business-driven agenda with its main focus on market potential from the previous Eurostars programme is key to the success of Eurostars-2.

(9) In order to take into account the duration of Horizon 2020, calls for proposals under Eurostars-2 should be launched at the latest by 31 December 2020. In duly justified cases calls for proposals may be launched by 31 December 2021.

(10) The Eureka Ministerial Conference on 22 June 2012 in Budapest endorsed a strategic vision for Eurostars-2 (‘Budapest Document’). The ministers committed to support the continuation of Eurostars after its termination in 2013 for the period covered by Horizon 2020. This will consist of a reinforced partnership addressing the recommendations of the interim evaluation of Eurostars. The Budapest Document sets out two main objectives for Eurostars-2. Firstly, a structural-oriented objective to deepen the synchronisation and alignment of the national research programmes in the field of funding, which is a central element towards the realisation of the European Research Area by the member countries. Secondly a content-related objective to support research and development performing SMEs engaging in transnational research and innovation projects. The Budapest Document invites the Union to participate in Eurostars-2.

(11) For the purpose of simplification, administrative burdens should be reduced for all parties. Double audits and disproportionate documentation and reporting should be avoided. When audits are conducted, the specificities of the national programmes should be taken into account, as appropriate.

(12) Audits of recipients of Union funds provided under Eurostars-2 should be carried out in accordance with Regulation (EU) No 1291/2013.

(13) The Participating States intend to contribute to the implementation of Eurostars-2 during the period covered by Eurostars-2 (2014-2024).

(14) Eurostars-2 activities should be in line with the objectives and bottom-up principles of Horizon 2020 and with the general principles and conditions laid down in Article 26 of Regulation (EU) No 1291/2013.

(15) A ceiling should be established for the Union’s financial contribution to Eurostars-2 for the duration of the Horizon 2020. Within the limits of that ceiling, there should be flexibility regarding the Union’s contribution, which should be at least one third but no more than half of the contribution of the Participating States in order to ensure a critical mass necessary to satisfy the demand from projects eligible for financial support, to achieve a high leverage effect and ensure stronger integration of national research programmes of the Participating States.

(16) In accordance with the objectives of Regulation (EU) No 1291/2013, any Member State and any country associated to Horizon 2020 should be entitled to participate in Eurostars-2.

(17) Any Eureka Member or country associated to Eureka that is not a Member State or a country associated to Horizon 2020 may become a Eurostars-2 partner country.

(18) The Union’s financial contribution should be subject to formal commitments from the Participating States to contribute to the implementation of Eurostars-2 and to the fulfilment of those commitments. Financial support under Eurostars-2 should mainly take the form of grants to projects selected following calls for proposals launched under Eurostars-2. In order to meet the objectives of Eurostars-2, the Participating States shall ensure sufficient financial contributions to fund a reasonable number of proposals selected through each call.

(19) The joint implementation of Eurostars-2 requires an implementation structure. The Participating States have agreed on designating the Eureka Secretariat (‘ESE’) as the implementation structure for Eurostars-2. ESE is an international non-profit association established under Belgian law in 1997 by the Eureka countries and, since 2008, is responsible for the implementation of Eurostars. ESE’s role goes beyond the implementation of Eurostars, being at the same time the secretariat of the Eureka initiative, with its own governance linked to the management of Eureka projects outside of Eurostars. The Union, represented by the Commission, is a founding member of the Eureka initiative and full member of the Eureka Secretariat association.