Practical Aspects of Negotiations
Negotiation Kick-off meeting / 7th Call CSJU
Brussels, 24-02-2011
Andrzej Podsadowski GRA-ITD PO
1
Introduction
Negotiations step by step:
 1.1 Big Picture
 1.2 Opening Negotiations
 1.3 Financial/Legal Negotiations
 1.4 Technical Negotiations
 1.5 Hints from Project Implementation
 1.6 Special case – not validated PIC
 1.7 Examples of payments
 1.8 Miscellaneous
 Q&A / Discussion
2
1.1 Big Picture (1/5)
Negotiations = GA Preparations !!!
DoW
Technical
Negotiations
Part A
Neg.
Rep.
Part B
ESR
Opening
of
Negotiations
Legal &
Financial
Negotiations
Selection
&
approval
of winner
(Internal
CSJU)
(Coordinator’s
signature first)
Pink
File
Draft
Grant
Agreement
GPF
/
NEF
Financial
Viability
Check
(Excel)
Validation of Beneficiaries
Validation of beneficiaries:
 The Grant Agreements can only be offer to (FP7) validated legal entities.
 Each legal entity is validated only once for all participations in FP7.
(CSJU ED
signature)
Date of CSJU ED signature
=
GA coming into force
Grant
Agreement
3
Project
Implementation
1.1 Big Picture (2/5)
Project’s Start
Standard procedure
Negotia
-tions
GA coming
into force
Grant
Agreement
1st day of the month
following the month
when GA is signed
Start Date
KoM
Project
Implementation
Pre-financing – 45 days
Fixed Starting Date
Negotia
-tions
Grant
Agreement
Start Date
KoM
Pre-financing – 45 days
Project
Implementation
4
Time gain
1.1 Big Picture (3/5)
Legal dependencies
CSJU
Grant
Agreement
Grant
Agreement
1st
step:
The coordinator and Executive Director
of CSJU to sign.
2nd step:
Each and every beneficiary (all members of
the consortium performing the project to sign
Annex III – Form A –
Coordinator
(Internal)
Consortium
Agreement
(DESCA or
IMG4
template)
[3 copies]
Implementation
Agreement
or
Accession to
ITD’s Cons A.
TM
Member
of ITD
CSJU does not interfere with it.
CSJU is only to be notified in respect to
the existence of the agreement.
Accession of beneficiaries to the Grant Agreement
!!! Those forms to be sent to the coordinator and to CSJU
(CSJU to receive within 45 days from Project coming into force)
5
1.1 Big Picture (4/5)
Negotiation activities
CSJU
A2.5 ; A2.6 ; A4 !!!
!!! During the project implementation,
the coordinator is obligated to send
Periodic/Final reports to TM (except
FormC/cost).
GPF/
NEF
Grant
Agreement
Financial
Viability
Check
(Excel)
(Internal)
Consortium
Agreement
(DESCA or
IMG4
template)
PO cooperates with TM on approval
Coordinator
TM
Member
of ITD
Neg.
Rep.
DoW
Implementation
Agreement
or
Accession to
ITD’s Cons A.
6
1.1 Big Picture (5/5)
Reasons for postponing the pre-financing
GA coming
into force
Grant
Agreement
Pre-financing – 45 days
!
Excerpts from “Core GA”
Art.6 p.1 ….A pre-financing shall be paid to the coordinator
within 45 days following the date of entry into force of this
grant agreement. The coordinator shall distribute the
pre-financing only to the beneficiaries who have
acceded to the grant agreement
Delivery of Form A to CSJU
(within 45 days)
Notification whether Implementation A.
or Accession is in place
Notification whether the (internal)
Consortium agreement is in place
CSJU will wait until
All notifications are delivered
Excerpts from Art.1 of “core Grant Agreement”.
2. The coordinator shall send to the JU one duly completed and signed Form A per beneficiary at the latest 45 calendar days after
the entry into force of the grant agreement…
3. Should any legal entity identified above, fail or refuse to accede to the grant agreement within the deadline … the JU is no longer
bound by its offer to the said legal entity(ies). The consortium may propose to the JU … appropriate solutions to ensure the
implementation of the project.
7
1.2 Opening Negotiations (1/2)
1st e-mail: Letter Opening Negotiations
 addressee: the coordinator and TM in cc:
 Confirmation of commencing negotiations (already the Coordinator has
been informed regarding „above threshold” status
 (Tentative) deadlines
 ESR
2nd e-mail: Introduction to the process and document’s templates
 (from NEF) A2.5 ; A2.6 ; A4 (Bank account/Financial Identification) to be
sent back to CSJU a.s.a.p
 Financial Viability Check tool – as above, (all coordinators, exception „public body”, and other beneficiaries requesting more than EUR 500.000,
 optional templates:
 i) Negotiations report,
 ii) Implementation Agreement/Accession,
 iii) IMG4/DESCA template for consortium agreement
 Reference documents/guidelines (e.g. IPR, DoW, Special Clauses,
subcontracting, etc.)
8
1.2 Opening Negotiations (2/2)
3rd e-mail: Link to NEF (1st Negotiation Session)
 addressee: the coordinator
 all data for preparation of GA (please upload DoW!)
 (Tentative) deadlines
 in case more than 1 beneficiary – the coordinator could/should assign
rights for filling in NEF
Practical hints:
 Status of PIC (ask PO !!!) – critical …. Potential slow down
 A2.5 ; A2.6 ; A4, Financial Viability Check tool – important, please send
it a.s.a.p.
 Access to NEF by coordinator … check whether it works…
 Ask PO for any clarification and help …
 Do not hesitate to close negotiation session when you feel all relevant
information is correct and in the system … There is no limit for number of
Negotiation Sessions
 In case you spot a „mistake” in submitted session … contact PO – next
negotiation session would be open
9
1.3 Financial/Legal Negotiations (1/2)
• The total costs, total eligible costs and the maximum CSJU financial contribution.
Special attention should be given to the methodology to calculate the personnel costs and the
indirect costs.
• A table of the estimated breakdown of the budget and the Community financial contribution
per activity to be carried out by each of the beneficiaries is established.
• The amount of the pre-financing is established.
• The start date and the duration of the project are agreed upon (2 options: Fixed Starting
Date OR Standard Starting Date)
• The operational capacity of the proposed coordinator to be verified, i.e. whether that organisation
has the required management skills, capabilities and experience to carry out the coordinator’s role.
• The need for the inclusion in the Grant Agreement of any special clauses is established.
• Where applicable, a 'road map' is established for any planned competitive calls relating to the
later addition of new project partners and the budget available for the Consortium's expansion
agreed upon.
• The timing of the reporting periods is established.
• Any subcontracting or third-party issues must be clarified. (2 options for subcontracting)
• The financial capacity of the coordinator and any other applicant with an EC contribution
exceeding EUR 500,000, except for public bodies, higher and secondary education
establishments and entities whose participation is guaranteed by a Member State or an
Associated Country, is assessed
10
Here:
A 2.5
A 2.6
A4 (Financial
Identification)
Part A
Part B
Please upload NEF with DoW
(version nr and the date of
issue)
11
1.4 Technical Negotiations (1/2)
The purpose:
1. DoW (Annex I to GA) => upload NEF!
Please follow guidance for DoW contents
2. Negotiations Report
Reporting Periods
a) for TM supervision
b) for GA (indicated in NEF)
 Starting Date
 Legal obligations against ITD (Implementation A. or Accession)
• The proposal may need to be adapted to meet the recommendations
of the evaluation, as described in the Negotiation Mandate.
• The CSJU/TM verifies whether the project objectives are 'SMART'
(S-Specific, M-Measurable, A-Attainable, R-Realistic, T-Timely).
12
1.4 Technical Negotiations (2/2)
• The full work plan of the project has to be defined in sufficient detail.
• The work to be carried out by each of the beneficiaries and any potential
future expansion of the consortium has to be defined in sufficient detail.
• The list of deliverables and their content, timing and dissemination level
are agreed.
• The project milestones and their assessment criteria are agreed.
• An indicative time schedule for the project reviews, synchronized with the
reporting periods, could be established (if not pre-defined in the special
conditions of the Grant Agreement).
1. All (above mentioned) data in NEF
2. Data from NEF would be transferred to SESAME (reporting)
3. (Final) reporting not finalized yet
13
1.5 Practical hints for project implementation (1/4)
The structure of Grant Agreement
Annex VII – Form E
Annex VI – Form D
Annex V – Form C
Annex IV – Form B
Annex III – Form A
Annex II – Gen Cond
Annex I - DoW
 Annex II – General Conditions (!!! Important to
know)
Grant
Agreement
 Annex III – Form A – Accession of beneficiaries to the
Grant Agreement
Core text
 Annex IV – Form B – Request for accession of a new
beneficiary
 Annex V – Form C – Financial Statement
 Annex VI – Form D – Terms of reference for the
certificate on the financial ststements
 Annex VII – Form E – Terms of reference for the
certificate on the methodology
14
1.5 Practical hints for project implementation (2/4)
Project Implementation
Period 1
Periods 2 - 4
To be agreed:
30 d
How CSJU is to be
notified regarding
acomplished
deliverables ?
105 d
(Copies in Periodic
Reports)
60 d
 Pre-financing ≤ 80% of
CSJU contribution to first 18
month
 Σ(Pre-financing + Interim
payments) ≤ 80% CSJU
contribution
Interim
Payment
Periodic
Report
Recomme
ndation:
Plan for
Using &
Dissemin.
(FP6)
105 d
60 d
Final CSJU
contribut.
FINAL
Payment
Periodic
Report
Final
Report
Societal
implication
Plan for
Using &
Dissemin.
15
1.5 Practical hints for project implementation (3/4)
Conclusions p.1
 TM is focused on „technical part DoW” … do not forget:
 Dissemination and Exploitation
 Gender issue
 Flexibility (tailoring to the case) is more than important:
 Starting date (eligibility of cost) is a challenge … (for coordinator:) in
case of Fixed Starting date before GA is signed do „cash flow” in order
to be sure the project is affordable
 Check „cash flow” against expected payments … to minimize risk
of project failure; Reporting periods could be of different duration
 In case of „no financial records” or weak Financial Viability either
amount of pre-financing or a collateral would be agreed/negotiated
 Ideally if Reporting periods corresponds to important milestones
16
1.5 Practical hints for project implementation (4/4)
Conclusions p.2
 Subcontracting (also described in DoW) … do not forget:
 Only minor topics
 No IPR (Intellectual Property Rights)
 Impossible between members of the consortium (Wind Tunnel Test is
the exception)
 Misunderstandings and challenging items:
 Reporting periods in Negotiations Report … it is intended as an
input to Grant Agreement (independently from reporting to TM)
 Legal relationships between the project consortium and ITD …
quite often TM doesn’t knows who within ITD deals with that issue (Legal
Department of TM’s employer)
 Documents/Guidelines (and templates) are available in published
CSJU Calls or CORDIS … in case of difficulties please contact PO
 for more than 1 beneficiary the project consortium agreement is to be
concluded
17
1.6 Special case – not validated PIC (1/3)
Categories of legal entities
General purpose:
 the existence;
 the legal status;
 the operational capacity; and
 the financial capacity
PIC status:
 Validated
 Temporary
 No PIC
Opening Letter
(requested documents)
Should depend on PIC status
NOT the case
18
1.6 Special case – not validated PIC (2/3)
Verification of existence and legal status (affects CSJU contribution rate !)
For natural persons:
i) A legible photocopy of the valid identity card or passport;
ii) If applicable, an official VAT document.
For public bodies:
iii) A copy of the resolution, law, decree or decision establishing the entity in
question; or, failing that, any other official document attesting to the
establishment of the entity as a public body;
iv) If applicable, an official VAT document.
For other legal entities:
v) A copy of any official document (e.g. official gazette, register of
companies, etc) showing the participant's legal name and address and the
registration number given to it by the national authorities;
vi) A copy of the VAT registration document, if any, and only if the VAT
number does not appear on the official document referred to above.
The request for validation and supporting documents must
be provided to Central Validation Team via Participants
Portal (task for LEAR).
19
1.6 Special case – not validated PIC (3/3)
Financial viability check (affects garantee/collateral to GA)
Purpose
In order to be financially viable, a legal entity must be:
• liquid: capable of covering its short-term commitments;
• solvent: capable of covering its medium and long-term commitments;
• profitable: generating profits, or at least with self-financing capacity.
all coordinators, exception - „public body”, and other
beneficiaries requesting more than EUR 500.000,
In case of „Not validated beneficiary” CSJU assists
fast validation by CVT
20
1.7 Examples of payments (1/4)
A general case
A project:
Period 1 (18m)
Max. CSJU
contribution
400 k€
80% - 320 k€
Period 2 (12m)
Period 3 (12m)
Max CSJU contribution:
Max CSJU contribution:
Max CSJU contribution:
100 k€
200 k€
100 k€
Actual/eligible cost * “rate”:
Actual/eligible cost*rate:
Actual/eligible cost*rate:
140 k€
190 k€
110 k€
20% - 80 k€
Money owned by CSJU
Pre-financing:
80 k€
Money owned by the consortium
Transfer of ownership of
80 k€ (pre-financing)
Interim payment after P1:
Interim payment after P2: Final payment:
140 k€
100 k€
80 k€
Because
Total: 400 k€
∑ of payments = 320 k€
(80 + 140 + 100)
 Pre-financing ≤ 80% of CSJU contribution to first 18 month
 Σ(Pre-financing + Interim payments) ≤ 80% CSJU contribution
21
1.7 Examples of payments (2/4)
Single Reporting Period
Max. CSJU contribution: 100 k€
Pre-financing:
≤ 80 k€
Actual/eligible cost*rate: 98.5 k€
Final payment:
18.5 k€
Should be FormC certified/audited?
A certificate on the financial statements shall be submitted for claims of interim payments and final payments when
the amount of the JU financial contribution claimed by a beneficiary under the form of reimbursement of costs is equal
to or superior to EUR 200 000, when cumulated with all previous payments for which a certificate on the financial
statements has not been submitted. A certificate on the financial statements will be submitted in all cases at
the end of the project for all costs for which a certificate on the financial statements has not been
submitted previously. (Form D – Annex VI).
Periodic and Final Reports to be delivered
22
1.7 Examples of payments (3/4)
Periodic report
The consortium shall submit a periodic report to the JU for each reporting
period and a copy of it (excluding the financial statements) to the
responsible ITD member as defined in Annex I, within 60 days after the end
of each respective period.
Reporting Tools
SESAM &
FORCEC
The reporting shall comprise:
a) an overview, including a publishable summary, of the progress of work towards the
objectives of the project, including achievements and attainment of any milestones and
deliverables identified in Annex I. This report should include the differences between work
expected to be carried out in accordance with Annex I and that actually carried out,
b) an explanation of the use of the resources, and
c) a financial statement, from each beneficiary together with a summary financial report
consolidating the claimed JU contribution of all the beneficiaries in an aggregate form, based on
the information provided in Form C (Annex V) by each beneficiary
23
1.7 Examples of payments (4/4)
Final report
The consortium shall submit a final report to the JU and a copy of it to
the responsible ITD member as defined in Annex I, within 60 days after
the end of the project.
The report shall comprise:
a) a final publishable summary report covering results, conclusions and socioeconomic impact of the
project.
b) a report covering the wider societal implications of the project, including gender equality actions,
ethical issues, efforts to involve other actors and spread awareness
c) the plan for the use and dissemination of foreground.
When providing a copy of their periodic and final reports to the responsible ITD member, the
beneficiary(ies) may make the content of such reports subject to confidentiality provisions !!!.
The coordinator shall submit a report on the distribution of the JU financial contribution between
beneficiaries. This report must be submitted within 30 days after receipt of the final
payment
24
1.8 Miscellaneous (1/3)
Timing
 “opportunity window for negotiations” … although, the
deadlines
in Negotiations Letter are indicative ones, please try to follow them (due to PO/CSJU
workload missing deadlines could amplify “shift to the right”)
 Project’s Kick-off (do not wait for Kick-off Meeting) … please
start project’s activities as it is indicated in the Grant Agreement (and Negotiations
Report/NEF)
 Start with PIC and Implementation Agreement/Accession A.
first…. as those issues are the most time consuming…
25
1.8 Miscellaneous (2/3)
 “Clean Sky vs. FP7 Collaborative Research projects” …
 No “Guarantee Funds” (5% of total max CS contribution is not deducted)
 200 k€ threshold for audit on cost statements (instead of 375 k€)
 Pre-financing calculated by PO
 “technical side” supervised by TM (deliverables/milestones and Reports)
 Payments after approval of Reports by PO
 Communication via e-mail … please be precise with “subject”
 Receipts … (deducted from payment)… be careful with indicating!
II.17. Receipts of the project
Receipts of the project may arise from:
a) Resources made available by third parties to the beneficiary by means of financial transfers or contributions in kind
which are free of charge:
i. shall be considered a receipt of the project if they have been contributed by the third party
specifically to be used on the project;
ii. shall not be considered a receipt of the project if their use is at the discretion of the beneficiary's
management.
b) Income generated by the project:
i. shall be considered a receipt for the beneficiary when generated by actions undertaken in carrying
out the project and from the sale of assets purchased under the grant agreement up to the value of
the cost initially charged to the project by the beneficiary;
ii. shall not be considered a receipt for the beneficiary when generated from the use of foreground
resulting from the project.
26
1.8 Miscellaneous (3/3)
End of
project
2 years
… years after
5 years
A. II.10
Contribution
to standards
(beneficiary
initiative)
10 years
A. II.10
Impact
assesment
A. II.9
Confidentiality
A. II.22
Financial audits
and controls
A. II.23
Technical audits and
reviews
Keep original
docs !
A. II.23
Ethics audits
A. II.25
Excluding from grants in
case of an offence ≤ 2 years
A. II.25
Doubling of financial penaltis if
repeated offence
A. II.43
End of entitlements between
JU and beneficiary
27
Q&A / Discussion
28
Thank You all
29