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EuropeAidRevision of Revision of

Financial Regulation & Financial Regulation &

Its Implementing RulesIts Implementing Rules

Brussels, 16 November 2010Brussels, 16 November 2010

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EuropeAidSUMMARY

1. INTRODUCTION

2. DELEGATED COOPERATION

3. ASSIGNED REVENUES

4. PROCUREMENT, GRANTS OTHER TYPES OF FINANCIAL CONTRIBUTION

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EuropeAid

1INTRODUCTION

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EuropeAidIntroductionContext

• Wider context: preparation for the post-2013 programmes will also be under way

• Calendar: Entry into force of the package: the latest by 1 June 2012.

• Main areas of simplification:o Delegated cooperationo Assigned revenues & establishment of Trust Fundso Grantso Procurement

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EuropeAid

2DELEGATED COOPERATION

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EuropeAid

Management modes New structure

Direct management Indirect management

EU Budget

Heads of Delegation

TWO main categories

Member States

(shared management)

Third countries International organisations National agencies EIB-EIF / Financial institutions Public & Private Partnerships CFSP Missions Regulatory agencies

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EuropeAidManagement modes (2)New structure (1)

More entities for indirect management

• Same bodies as before:o Member States (sub-category - shared management)o national public service mission bodieso beneficiary countrieso bodies under art 185 (“traditional agencies”)o persons under CFSPo EIB/EIF and o international organisations

… but also new type of entities: PPP, FI

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EuropeAidManagement modes (3)New structure (2)

New elements relating to existing entities• “EU Member States”:

o Delegations to Member States will continue to be done under “shared management” (it is not ICM!)

o In External action, it is very exceptional:• IPA: cross-border cooperation• ENPI: cross-border cooperation

• International Organisations:o Other organisations assimilated by Commission decisiono No more limited to three caseso EIB/EIF not anymore considered international organisations (ad hoc

category)

Note: Executive Agencies – it is now direct management!

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EuropeAidManagement Modes (4)New structure (3)

New entities! • Public Private Partnerships: cooperation between public

authorities and private sector for performance of public contracts or concessions:

o Established in Member States; ORo Established by a Basic Act

• Financial Institution implementing “financial instruments”:o EU MS is a shareholder ORo Established in a EU MS with a public service missiono If use of intermediaries: (i) they must satisfy same criteria;

and (ii) no located in non-cooperative jurisdictions

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EuropeAidManagement Modes (5)Ex ante assessment

Harmonization of pillars

• Limitation to 4 pillars: procurement/grants/financial instruments; accounting; internal control and audit

• Clarification of standards for pillars:o Audit: international standardso Internal control: international standardso Accounting: international standardso Procurement/Grants (general principles)/Financial instruments

(principles of FR)

• New! National agencies will be able to apply their procedures for grants

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EuropeAidManagement Modes (6)Ex ante assessment (2)

Alignment and mutual recognition• Who does the ex ante assessment? RAO, but he/she can rely on

assessment by:

o other RAO if conclusions are relevant to the specific risks of tasks to be entrusted (nature and amounts)

o New! Other donor (only for third countries) if same criteria and standards as benchmarks (cf. EU Operational Framework for Aid Effectiveness, Part II, Section B)

o Exception: EIB/EIF ex ante assessment will only be made once for all future implementation of financial instruments

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EuropeAidManagement Modes (7)Obligations in indirect management

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EuropeAidManagement Modes (8)Deadlines for signature and contracts

More clarity and flexibility (art 166 FR & 34d IR)

• All agreements for indirect management concluded between the EU and delegatees by 31 December N+1;

• Contracts concluded by the delegatees to implement the action, concluded in D+3, except for multi-donor actions;

• Conclusions:o Alignment to all cases of indirect management;o More flexibility for agreements with National Agencies:

• Under current rules if there is no FA, contracts should be signed in N+1;

• More flexibility for multi-donor actions.

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EuropeAidManagement Modes (9)Procedures

More consistency and simplification (Art 43b IR)

• Procurement: “international standards” specified (principles of transparency, non discrimination, competition) – reference to the EU Directives

• Grants: new for EU budget! procedures can also be used by national agencies if compliant with the principles mentioned (non-retroactivity, co-financing, etc).

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EuropeAidManagement Modes (10)Control issues

Reinforcement of assurance/control (art 53b(5) FR)

• Obligation to provide the Commission with*:o financial and narrative report and summary of results of

all available audits and controls carried out concerning the action by 1 February

o a management declaration of assurance by 1 February*o an audit opinion on the DAS by 15 March*

• Clearance of accounts procedures applicable to all indirect management entities (art 34cb IR)

* Flexibility to be negotiated with IO and third countries

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EuropeAidManagement Modes (11)Conclusions

What is new for national agencies?

• Only four pillars.

• New obligations: data protection, reinforced assurance.

• Possibility to recognise “assessments” made by national agencies of procedures of beneficiary countries.

• More flexibility for contractualisation period (D+3 or more in cases of multi-donor actions).

• Possibility to use its own grant procedures.

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EuropeAid

3ASSIGNED REVENUES

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EuropeAidAssigned revenues: Transfer Agreements

• More potential donors: legal entities (i.e. private foundations) and natural persons;

• No requirement of authorization by Basic Act: new possibility for actions without Basic Act (i.e. joint evaluations);

• Flexibility for the priority rule: if an action is not completed the funds from donors can be reimbursed;

• Carry over provision (for both operational and administrative expenditure) for the whole duration of the action;

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EuropeAidAssigned revenues: Transfer Agreements (2)

• Making available commitment appropriations:

o With Member States in EURO: upon signature of Transfer Agreement for the whole amount indicated in the Agreement

o With Member States in another currency: upon actual receipt of funds

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EuropeAid

4PROCUREMENT, GRANTS & OTHER TYPES OF FINANCIAL CONTRIBUTION

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EuropeAidProcurementNew thresholds – Service contracts

CURRENT THRESHOLDS PROPOSED THRESHOLDS

> 200,000 International restricted > 300,000 International restricted

10,000 –

200, 000

FWC (where possible) /

Competitive Negotiated

20,000-300,000 FWC / Competitive

negotiated / AMI

0 – 10,000 Single tender 2,500-20,000 Single tender

0-2,500 Invoice

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EuropeAidProcurementNew thresholds – Supply contracts

CURRENT THRESHOLDS PROPOSED THRESHOLDS

> 150,000 International open > 300,000 International open

60,000-150,000 Local open 100,000-300,000 FWC / Local open

10,000-60,000 Competitive negotiated 100,000 -20,000 FWC / Competitive

negotiated

0-10,000 Single tender 2,500 -20,000 Single tender

0-2,500 Invoice

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EuropeAidProcurementNew thresholds – Work contracts

CURRENT THRESHOLDS PROPOSED THRESHOLDS

> 5,000,000 International open /

International restricted

(exceptional)

> 5,000,000 International open /

International restricted

300,000-5,000,000 Local open 300,000-5,000,000 Local open

10,000-300,000 Competitive negotiated 20,000-300,000 Competitive negotiated

0-10,000 Single tender 0-20,000 Single tender

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EuropeAidProcurementNew cases for negotiated procedure

• All: Replacement of contractor - where an new contract has to be concluded after early termination of an existing contract

• Services: o Extension of services already started: The

extension of the contract not limited to a single one (value and duration shall not exceed the value and the duration of the initial contract)

o Legal services: competitive negotiated procedure (regardless of value of contract)

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EuropeAidProcurement Other

• Eligibility rules for participation in procurement procedures without Basic Act: possibility of third country nationals

• Quality standards: no limitation to European standards

• Avoid overregulation: rules mandated by IR would be transferred to PRAG/Instruction Notes

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EuropeAidProcurement & GrantsGuarantees on pre-financing

CURRENT RULES PROPOSED RULES

Procurement - pre-financing > 150.000

- where financial capacity is not

assessed

- possible waiver: public bodies

Procurement - AO Risk assessment

- where financial

capacity is not assessed

Grants - pre-financing > 60.000 and > 80

% of the grant value

- NGO: pre-financing > 1,000,000

or > 90% of the grant value

- possible waiver: public bodies

and international organizations

Grants - AO Risk assessment

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EuropeAidProcurement & GrantsExclusion Cases

• New cases: o New illegal activity: Money laundering;o Persons with powers of representation, decision making

or control over tenderers/candidates/applicants: illegal activities and professional conduct offence

• On the basis of decisions taken by:o Professional misconduct: ALSO decisions of EIB and

international organizations o Professional conduct offence: ONLY Member State

authorities

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EuropeAidProcurement & GrantsExclusion Cases (2)

• Two additional exceptions to the obligation to exclude:

o Candidates/tenderers/applicants that have taken adequate measures against persons having powers of representation

o Captive situations (monopoly) in order to ensure continuity of service: In case of bankruptcy and analogous situations; grave professional misconduct and non compliance with social obligations

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EuropeAidGrantsPerformance based grants

• Output control vs. Input control

• Tools:

o Simplification of lump sums: ex ante methodology or on the basis of budget submitted by applicant

o “Factual audits”: was the output of the grant effectively achieved?

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EuropeAidGrantsSub-granting

CURRENT RULES PROPOSED RULES

• It cannot be the primary aim of

the action

• Conditions for giving financial

support are defined in the

contract: activities

• Amounts are small: total <

100,000 and each < 10,000

• The beneficiary offers adequate

guarantees as regards the

recovery.

• Conditions for giving financial

support are defined in the

contract: activities,

persons/categories, procedures

• Amounts are small: each <

50,000

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EuropeAidGrantsRules on pre-financing

CURRENT RULES PROPOSED RULES

< 250,000 Not due Interest is not due unless

otherwise provided in

agreements.

Interest shall be re-used for the

corresponding programme.

250,000 –

750,000

Deducted from

final payment

> 750,000 Annual

Recovery

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EuropeAidGrantsOther

• Deadline for submission of applications: By post/courier service: deadline = receipt by the contracting authority and not date of dispatch

• Co- financing: o more flexibility for 100% financingo Total costs vs. Eligible costs

• Non profit:o Broader exception (only for external actions): generation of

income was provided in the agreement and where it is reinvested to ensure the sustainability of the action

o Profit is recovered on a pro rata basis

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EuropeAidGrantsOther (2)• Direct award: updated definition of “crisis situation”

• Operating grants: clarification of bodies pursuing aims of general European interest: not only European bodies

• Low value grants > 50,000 EUR (eligibility check)

• No obligation to have selection procedure with Evaluation Committee in case of direct award of grants

• Extrapolation of errors:o Recurrent errors by one beneficiary proven by controls/audit with

impact on non-audited projecto Extension of findings to non audited projects and request

reimbursement

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EuropeAidNew category of financial contribution:Prizes and financial instruments

• Prizes are not anymore regarded as grants: new specific rules

• Financial instruments:o Loans, guarantees, equity/quasi-equity investments or

participations, other risk-bearing instruments, possibly combined with grants

o Principles shall also apply to directly related elements (i.e. technical assistance)

o Implemented: directly or indirectly (EIB, EIF, any other financial institution)

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EuropeAidFurther information• On EuropeAid:

http://ec.europa.eu/europeaid/index_en.htm

• On the speakers:

Javier RAYA AGUADOHead of Contractual matters sectionJavier.RAYA-AGUADO@ec.europa.eu

Dolores DOMINGUEZ PEREZContractual matters sectionDolores.DOMINGUEZ-PEREZ@ec.europa.eu

Unit G7: Financial and contractual matters, and legal affairs