Revision of
EuropeAid
Financial Regulation &
Its Implementing Rules
Brussels, 11 June 2010
1
SUMMARY
EuropeAid
1. INTRODUCTION
2. DELEGATED COOPERATION
3. ASSIGNED REVENUES & EU
TRUST FUNDS
4. PROCUREMENT, GRANTS
OTHER TYPES OF FINANCIAL
CONTRIBUTION
2
EuropeAid
INTRODUCTION
3
Introduction
EuropeAid
• DG AIDCO’s objectives: Simplification of EU rules and
procedures for a more efficient implementation of EU external
aid
• Occasion: Triennial Review FR/IR (proposal 28 May 2010) –
review of Management modes/Procurement/Grants
Note that, after Lisbon Treaty - EP stronger role: ordinary
legislative procedure (ex co-decision) – expected to be
adopted in 2012
• In 2010, proposals for the amendment of the FR and IR to
adapt them to the Lisbon Treaty & EEAS has been adopted by
the Commission.
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Triennial Review of the Financial Regulation
Context
EuropeAid
• Commission proposal adopted on 28 May 2010 … but work
already initiated in 2009
o
o
o
DG AIDCO put forward more than 50 proposals in June
2009: Internal consultations; coordination with RELEX
family DGs and consultations with external stakeholders
Active participation in an inter-service group on the
Financial Regulation
DG AIDCO’S reply to the ISC (March-April 2010) was the
most extensive reply and close follow-up with DG BUDG
5
Triennial Review of the Financial Regulation
Context (2)
EuropeAid
• 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 (as requested by AIDCO):
o Delegated cooperation
o Assigned revenues & establishment of Trust Funds
o Grants
o Procurement
6
Triennial Review of the Financial Regulation
Context (3)
EuropeAid
• The rationale of AIDCO’s proposals were:
Simplified possibility for the EU to delegate tasks to
other actors (such as national agencies) = smoother
implementation of the principles of Aid Effectiveness, in
light of the EU and international commitments;
o
Facilitate role of the Commission as recipient of
funds (Trust Funds, more flexible assigned revenues) –
also for Aid Effectiveness reasons;
o
o
Simplification of grant & procurement procedures.
Overall results – Simplification achieved, but concern of
“budgetary”/audit authorities to keep control & assurance.
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EuropeAid
DELEGATED COOPERATION
8
Management modes
Current structure
EuropeAid
From 5 categories ….
EU Budget
centralised
direct
Shared
(Member
States)
Decentralised
(Third
Countries)
Joint
(international organisations)
Indirect
9
Management modes (2)
New structure
EuropeAid
…..to TWO main categories
EU Budget
Direct management
Indirect management
Member
States
Heads of Delegation
(shared
management)
Third countries
International organisations
National agencies
EIB-EIF / Financial institutions
Public & Private Partnerships
CFSP Missions
Regulatory agencies
10
Management modes (3)
New actors in indirect management
EuropeAid
More entities for indirect management (art 53 FR)
• Same bodies:
o Member States (sub-category ex-shared management
with specific rules)
o national bodies,
o beneficiary countries,
o bodies under art 185 (“traditional agencies”)
o persons under CFSP,
o EIB/EIF and
o international organisations (opening for new type of IOs
by Commission decision)
Executive agencies are now part of “direct” management
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Management Modes (4)
New actors in indirect management (2)
EuropeAid
• New! Financial Institutions implementing Financing
Instruments:
o Member State is a shareholder OR
o Established in a Member State with a public service
mission
o If use of intermediaries: (i) they must satisfy same
criteria; and (ii) no located in non-cooperative
jurisdictions
• New! Public Private Partnerships: cooperation between
public authorities and private sector for performance of
public contracts or concessions:
o Established in Member States; OR
o Established by a Basic Act
12
Management Modes (5)
Ex ante assessment
EuropeAid
Alignment and “mutual recognition”
• Harmonization of pillars– Alignment to “4 pillars”:
procurement/grants/financial instruments; accounting;
internal control and audit (art 53b FR)
• Who does the ex ante assessment (art 34b & 34c IR)?
o RAO – can also rely on assessment of other RAO within
the Commission
o
New! Assessment done by other donor (only for
third countries) – Possibility for “mutual recognition” of
assessments, if same criteria & “international standards”
as benchmarks (cf. EU Operational Framework for
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Aid Effectiveness, Part II, Section B)
Management Modes (6)
Obligations in indirect management
EuropeAid
New contractual obligations (art 53b FR & 34d IR)
• Harmonization
• New FR obligations but already specified in the existing
models (publication of beneficiaries, provisions on
irregularities and fraud, suspension, termination)
• New obligations (which need amendment of existing
models):
o Reasonable level of data protection,
o Contact point for OLAF
o Additional obligations for financial instruments managed
by EIB/EIF/financial institution
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Management Modes (7)
Deadlines for signature and contracts
EuropeAid
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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Management Modes (8)
Procedures
EuropeAid
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).
16
Management Modes (9)
Control issues
EuropeAid
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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Management Modes (10)
Conclusions
EuropeAid
What is new for national agencies?
• Only four pillars.
• New obligations: data protection, reinforced assurance.
• Possibility to recognise “assessments” made by this 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
ASSIGNED REVENUES &
TRUST FUNDS
19
Assigned revenues: Transfer Agreements
EuropeAid
• 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;
20
Assigned revenues: Transfer Agreements
(2)
EuropeAid
• Making available commitment appropriations:
o
o
With Member States in EURO: upon signature of Transfer
Agreement for the whole amount indicated in the
Agreement
With Member States in another currency: upon actual
receipt of funds
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EU Trust Funds
EuropeAid
• Possibility to set up Trust Funds in external actions:
o Crisis and post-crisis
o Thematic actions
• Request of the European Parliament in order to gain visibility
• More flexibility than assigned revenues (decision-making and
expenditure)
• Placed outside the EU Budget
• Board will take decisions on use of funds BUT with positive
vote of the Commission
22
EuropeAid
PROCUREMENT, GRANTS &
OTHER TYPES OF FINANCIAL
CONTRIBUTION
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Procurement
New thresholds – Service contracts
CURRENT THRESHOLDS
EuropeAid
PROPOSED THRESHOLDS
> 200,000
International restricted
> 300,000
International restricted
10,000 –
FWC (where possible) /
20,000-300,000
FWC / Competitive
200, 000
Competitive Negotiated
0 – 10,000
Single tender
negotiated / AMI
2,500-20,000
Single tender
0-2,500
Invoice
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Procurement
New thresholds – Supply contracts
CURRENT THRESHOLDS
EuropeAid
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
0-20,000
Single tender
0-2,500
Invoice
25
Procurement
New thresholds – Work contracts
CURRENT THRESHOLDS
> 5,000,000
International open /
EuropeAid
PROPOSED THRESHOLDS
> 5,000,000
International restricted
International open /
International restricted
(exceptional)
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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Procurement
New cases for negotiated procedure
EuropeAid
• 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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Procurement
Other
EuropeAid
• 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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Procurement & Grants
Guarantees on pre-financing
CURRENT RULES
Procurement
- pre-financing > 150.000
EuropeAid
PROPOSED RULES
Procurement
- AO Risk assessment
- where financial capacity is not
- where
financial
assessed
capacity is not assessed
- possible waiver: public bodies
Grants
- pre-financing > 60.000 and >
Grants
- AO Risk assessment
80 % of the grant value
- NGO: pre-financing >
1,000,000 or > 90% of the grant
value
- possible waiver: public bodies
and international organizations
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Procurement & Grants
Exclusion Cases
EuropeAid
• 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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Procurement & Grants
Exclusion Cases (2)
EuropeAid
• Two additional exceptions to the obligation to exclude:
o
o
Candidates/tenderers/applicants that have taken
adequate measures against persons having powers of
representation
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
31
Grants
Performance based grants
EuropeAid
• Output control vs. Input control
• Tools:
o
o
Simplification of lump sums: ex ante methodology or on
the basis of budget submitted by applicant
“Factual audits”: was the output of the grant effectively
achieved?
32
Grants
Sub-granting
CURRENT RULES
EuropeAid
PROPOSED RULES
• It cannot be the primary aim of
• The beneficiary offers adequate
the action
guarantees as regards the
• Conditions for giving financial
recovery.
support are defined in the
• Conditions for giving financial
contract: activities
support are defined in the
• Amounts are small: total <
contract: activities,
100,000 and each < 10,000
persons/categories, procedures
• Amounts are small: each <
50,000
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Grants
Rules on pre-financing
CURRENT RULES
< 250,000
Not due
EuropeAid
PROPOSED RULES
Interest is not due unless
otherwise provided in
agreements.
250,000 –
Deducted from
Interest shall be re-used for the
750,000
final payment
corresponding programme.
> 750,000
Annual
Recovery
34
Grants
Other
EuropeAid
• 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% financing
o 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
35
Grants
Other (2)
EuropeAid
• 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 project
o Extension of findings to non audited projects and
request reimbursement
36
New category of financial contribution:
Prizes and financial instruments
EuropeAid
• 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
o
Principles shall also apply to directly related elements
(i.e. technical assistance)
Implemented: directly or indirectly (EIB, EIF, any other
financial institution)
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Further information
EuropeAid
• On EuropeAid:
http://ec.europa.eu/europeaid/index_en.htm
• On the speakers:
• Laurent SARAZIN
Head of Unit
Laurent.SARAZIN@ec.europa.eu
Javier RAYA AGUADO
Head of Contractual matters section
Javier.RAYA-AGUADO@ec.europa.eu
Dolores DOMINGUEZ PEREZ
Contractual matters section
Dolores.DOMINGUEZ-PEREZ@ec.europa.eu
Unit G7: Financial and contractual matters, and legal
affairs
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