Norwegian Industrial Research and Development (IFU) Contracts
There is a growing international awareness of the great business potentials, which lie in a close co-operation between two parties with a common interest - to develop a unique new product or service. A Norwegian IFU contract is a model for co-operation and a strategic tool to create a win-win situation for the parties involved. After all, innovation is not just a question of money.
The close bonds between a company and its suppliers are often crucial to the success of the business. As companies limit their number of suppliers to a minimum, the commitment between the two parties is intensified, and co-operation is often replaced by a more binding partnership.
When larger corporations require innovation, they must consider their options. They can either use in-house resources, or they can «buy» development services externally. To stimulate the latter alternative, we offers our incentive scheme, Industrial Research and Development (IFU) Contracts, which is a platform for organising such co-operation.
Under the IFU contract the supplier commits himself to develop the new product or service required by the customer. Realising that foreign contribution to Norwegian business and industry is invaluable, we particularly welcome foreign companies that wish to co-operate with Norwegian small and medium sized companies.
Where two or more meet....
The IFU scheme is a flexible one, and allows for more than two partners. The condition is that at least one of the partners needs the product or service developed, and that it does not already exist on the market in the form required. This party, called the customer, must be a market leader, professionally acknowledged and with a broad market access.
What does an IFU project entail?
An IFU contract is an agreement between two or more companies to co-operate in the development of a new "state-of-the-art" product, a process or service which one or more of the participants need.
Potential projects can roughly be divided into four categories:
- Developing new products or solutions needed for internal improvements or innovation of its own equipment or systems, for instance improvements of buildings, water purification or computer technology. The supplier may use the customer's name as reference in their marketing.
- Developing the customer's own line of products. The supplier strengthens his own market potential through enhanced and unique competence.
- Developing a new product, which by mutual agreement is licensed to a third party, for instance a re-launching or development for the international market. The purpose can also be to establish new business.
- Supplier and customer develop products or processes for their own markets, for instance based on a joint supply of raw materials.
The IFU scheme is an outline agreement. The parties themselves will define the contents in such a way that they get the maximum benefit from the IFU contract.
In every development project there is risk and potential gain. IFU aims to balance the two, and always encourages the parties to discuss and clarify the consequences of success or failure.
Who can participate?
Public procurement is strictly regulated by national and international agreements, chiefly the EEA agreement. The EEA regulations also clearly stipulate what kind of support the various companies can receive. These are our guidelines when we approve the partners for a particular project.
In IFU projects one party, called the supplier, must ordinarily be classified as a smaller development company. It must fill the criteria for a small or medium sized company (SME); i.e. less than 250 employees and a turnover of less than 40 million ECU. Total balance must not exceed 27 million. Not more than 25% of the supplier may be owned by a single non-SME.
If a company meets these requirements, an IFU-contract may grant up to 35% of the overall development project costs.
IFU contracts can only be granted to projects of exceptional level of innovation and value creation, given that the supplier is a non-SME. In this case only up to 25% of the project costs may be granted.
The IFU Support Team at your service
INNOVATION NORWAY has a special team for information and advice on Development Contracts. Don't hesitate to contact the centre on telephone +47 22 00 27 14 if you have questions regarding any of the above.
