1. Public Procurement ESF ECA DAS 2011 Case studies
Public Procurement in EU Structural Funds and EAFRD
3 December 2012, Tallinn
Andris Skrastins
Auditor DG EMPL

2. The European
Court of Auditors' 2011 DAS

3. European Court of Auditors
Independent Institution, External auditor of the Union (Art. 285 TFEU)
Providing the Discharge authority (Council and EP) with the Statement of Assurance  (Art. 287 TFUE)
DAS = "Déclaration d'Assurance"
On the reliability of the EU annual accounts and on the legality and the regularity of the underlying transactions
Results of ECA 's audits as reflected in its Annual Report
Basis for EP Discharge

4. What is audited by the Court?
Audits of sample operations
Based on Commission "transactions" in 2011
160 ESF; 20 others (EGF, IPA, direct management)
Grouped as 8 transactions per OP (including LV, LT)
Management and Control Systems
2 Audit authorities in DAS 2011 (including LV AA: clasified in cat 1)
DG EMPL's Annual Activity Report 2011
Special Reports: "corrective capacities", " closure"

5. Process with MS and Commission
Audit by ECA
Commission and MS receive Preliminary findings
Partnership MS and Commission
Commission assists MS in preparing observations/argumentation
Commission also sends its own assessment/comments to the Court
Re-assessment SPF by Court
If issues remain: tripartite meeting (ECA, COM, MS)
Final Assessment ECA
Results feed into DAS – Annual Report

6. Errors (ESF) Number of Errors: 85 ESF error frequency: 27% - 2010 DAS
Chapter 6 of the 2011 ECA's Annual Report (Section 1):
error rate 2.2%
Number of Errors: 85
ESF error frequency:
27% DAS
53% DAS
Quantifiable Errors
Non Quantifiable Errors ESF
61% DAS
39% DAS
34% DAS
66% DAS

7. DAS 2011 ESF errors Number of errors Grouping of errors 25
Eligibility (1.2% of the 2.2% error) 21
Audit trail 15
Public procurement (0,36% out of 2,2%)
11 National level EU level 1 mixed 13
Management control system
(Selection procedure, state aid, reporting errors) 11
Other

8. DAS 2011/ESF Public procurement
From breaches to public procurement rules, 11 out of 15 are only linked to national law.
- Value of the contracts is below the thresholds of the Directives
- Training financed by the ESF falls within Annex II B

9. DAS 2011/ESF Public procurement
3 Cases with financial findings;
- 1 Split contracts
- 2 Non respect of procedures
Follow up: significant breaches in PP quantified as 100% error

10. DAS 2011/ESF Public procurement
12 cases of Non-financial findings
Including 3 findings in LT;
- 2 (Non)publication of tender results
- 1 Selection procedures (treatment of VAT)

11. Some significant findings based on FSFs
Public procurement
Limited impact: mostly limited compliance issues (procedural aspects)
Examples:
Direct award: absence of competition under EU threshold or for training activities under Annex I.b of Dir. 2004/18 (eligibility)
No / Late publication of award notice (compliance)
Selection criteria introduced or modified after call publication (compliance)
Call for proposal launched by political authority instead of MA (compliance)

12. Other identified weaknesses in ESF Audits
- Cut-off dates for framework contracts
- Unjustified/ limiting selection criteria
- Short deadlines for submission of offers
- Conflict of interest?

13. Eligibility
Ineligible costs (main source of errors) : eligibility criteria of participants not met, participants outside target group, unclear segregation between usual and project's capacity building activities under technical assistance, incorrect calculation of costs, incorrect allocation of overheads, inclusion of employment termination benefit in project's costs; VAT
Non-respect of national eligibility rules: non-compliance with national accreditation rules for training companies, non-respect of requirements for final implementation reports, application for funding sent after national deadline, non-compliance with national PP rules – impact of "gold plating"

14. Conclusions
National eligibility rules should be carefully evaluated and simplification envisaged
Simplified cost options: current and next programing period!
Management verifications (including Public procurement)!
Tripartite meetings have a substantial impact on DAS errors

15. Thank you for your attention !