1. Committee of the Regions, 19 June 2014
Administrative Capacity Building linked to the management of ESI Funds Priorities for
Committee of the Regions, 19 June 2014
Pascal Boijmans
Hugh Goldsmith
Nathalie Verschelde
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

2. Mandate We are a new unit set up to enhance the capacity of the Commission services to help Member States and regions to overcome implementation bottlenecks linked to administrative capacity problems in order to accelerate the absorption of Funds and improve the quality of spending in the current and future programming period. (E1 mission statement)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

3. Scope of our work:
Administrative capacity linked to the management of the funds
Geographical: Member States and regions with weaker administrative capacity
Horizontal: e.g. public procurement, environment, state aid, Land Registers
Sectoral: sectors which lag behind in absorption like railways, waste water treatment, solid waste, information society
Knowledge development: WB, OECD, EIB/Jaspers, Interact, IQ Net, RSA…: methodologies, indicators, training, networks
Good practice database: exchange of good examples
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

4. How to design administrative capacity?
Three interrelated factors determine the success of each step in the policy life cycle:
Structure & Governance
Human Resources
Systems and Tools
Measuring the administrative capacity starts with a distinction between structure, human resources, systems and tools. Structure relates to the clear assignment of responsibilities and tasks to institutions, or better at the level of departments or units within these institutions. This assignment refers to a range of Structural Funds tasks, including management, programming, implementation, evaluation & monitoring and financial management & control. Structure also relates to supervisory and ancillary bodies, such as Monitoring Committees, auditing tasks, partnership, etcetera.
Human resources relate to the ability to detail tasks and responsibilities at the level of job descriptions, to estimate the number and qualifications of staff, and to fulfil the recruitment needs. Securing the timely availability of experienced, skilled and motivated staff is a key success factor in the management of the Structural Funds. Clearly, the conditions within the administrative system need to be favourable towards recruiting and retaining such professionals.
Systems and tools relate to the availability of instruments, methods, guidelines, manuals, systems, procedures, forms, etcetera. In brief, these are all job-aids that can enhance the effectiveness of the functioning of the system. Systems and tools enable organisations to transform tacit and implicit knowledge (within the heads of individual people) into explicit knowledge that can be shared across organisations. Systems and tools therefore make organisations less vulnerable (e.g. when key staff is leaving), reduce the risk of malfunctioning and enhance overall effectiveness. Effective management of the Structural Funds requires that the above dimensions be taken into account: structure,
human resources, systems and tools. Together these provide complementary elements of the management capability grid.
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

5. Administrative capacity bottlenecks in Member States
Complexity of administrative organisations in some MS with unclear delegation of tasks
High staff turnover in some MS: lack of clear HR policy
Development and implementation of strategic plans: weak in several MS
Weak project development capacity of (local) beneficiaries
Underperforming sectors due to administrative capacity
Bottlenecks linked to public procurement and state aid
Insufficient monitoring systems in place
Risk of fraud and corruption: reputational risk

6. STATE OF PLAY – IMPLEMENTATION 2007-2013
Implementation rates after 7 years =
62% and 57% for ERDF and CF
Interruptions of payments amount to € 4.3 billion
€ 1 billion financial corrections
SOMETHING NEEDS TO BE DONE…
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

7. Strong correlation between Government Effectiveness and Corruption
Latest data for all 28 Member States

9. Competence Centre Work programme Already launched during 2013 :
Guidance and screening (27 PAs + 10 OPs)
Public Procurement Action Plan
Expert Exchange System (demand/supply analysis)
Anti-fraud & anti-corruption events
Study on funding of salaries from TA budgets
Knowledge development (country fiches, EIBURS, links to international organisations)
Extended matrix with strong and active participation and Inter-Service Group
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

10. Also coming in 2014-2016 : Modelling of fund management bodies
Strategic training programme
Exchange Platform for MAs and IBs
Integrity Pacts pilot project
Action Plan on State Aid
Knowledge development : indicators
Transparency, open data & promoting good governance
Better implementation rates, reduced error rates, more effective investments
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

11. 2 concrete project examples:
Public Procurement Action Plan
Hugh Goldsmith
CEES: Common Expert Exchange System
Nathalie Verschelde
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

12. Public Procurement Action Plan
EP Public Hearing
Wasting public money
Irregularities
Corruption
What is EC doing?

13. OLAF Study Headlines
Direct public loss was 18% of the overall project budgets concerned, of which 13% attributed to corruption
Overall direct cost of corruption for 5 sectors & 8 Member States studied estimated at:
€ billion
Main forms of corruption: Bid-rigging; kick-backs; conflicts-of-interest; deliberate mismanagement

14. Public Procurement (PP) Basics
Key principles
Legal enactment
Transparency
Equal treatment & non-discrimination
Proportionality
… in purchase of works, supplies and services by public entities or entities with a public service mission in “special” sectors (water, energy, transport and postal services)
Directive 2004/18/EC (Classic Directive)
Directive 2004/17/EC (Special sectors)
Directive 2007/66/EC (Remedies Directive)
MARKT Interpretative Communications & Explanatory Notes
ECJ Case Law
A complex area with …
New Directives 2014

15. Public Procurement using ESI Funds
RISKS
Compliance:
Fraud/Corruption
Errors => Financial Corrections
OPPORTUNITIES
Use of public funds:
Value-for-money
Support to policy

16. Improving public procurement (PP) involving EU Funds is a priority
It matters - 19% of EU GDP passes through public procurement!
Increasing EU-level competition for PP contracts is a core policy strengthening the single market
PP errors are single most common cause of administrative errors and financial corrections across all EU Funds
Slow PP procedures delay funds implementation
Better PP procedures and management systems can help limit risks related to Fraud & Corruption through more transparency, "red flag" checks etc
Major scope to pursue broader policy objectives via PP (green PP, PP of innovation, social inclusion, SME access to markets)
… need to build capacity

17. DG REGIO audit work Public Procurement irregularities
40% of irregularities detected by DG REGIO since 2005 are due to non-compliance with Public Procurement rules
European Court of Auditors: DAS 2011: 44% of all quantifiable errors were due to Public Procurement. From % of all transactions audited were affected by PP errors
National audits: report more and more irregularities on Public Procurement
Affects all Member States

18. Lots of fragmented initiatives …
DG ENV 2008 "Green Public Procurement" toolkit
DG MARKT 2011 Study "Public procurement in Europe: Cost and effectiveness"
DG MARKT 2012 Implementation Report & "Golden book of e-procurement good practices"
DG ENTR 2013 Launch of "Procurement of Innovation Platform"
OLAF 2013 Study "Identifying and reducing the costs of corruption in Public Procurement"
DG HOME 2014 First "EU Anti-corruption Report" identifies PP as "most vulnerable area"

19. Technical Working Group on PP
established Sept 2013
Purpose: To develop common understanding of issues, and to prepare & deliver an Action Plan to support MS improve Public Procurement performance for ESI Funded investments during
REGIO (Chair), MARKT, EMPL, AGRI, MARE, EIB
ESI Fund DG's have most "in the field" knowledge from audits
MARKT primary focus is on policy (transposition and application of legislation), particularly preparation for new PP Directives, but also increasingly looking at implementation issues

20. ESI Funds PP Joint Action Plan
Status
Comments
Prepare and appropriately disseminate Practical Guidance on "How to avoid common PP errors"
On-going
Draft ready
Prelim draft Guidance and Toolkit for discussion
Compilation and analysis of PP evidence/indicators on performance related to EAC negotiations
Most data rec'd
Data request to ECA pending
MS v EC opinion
Transparency initiative against corruption/fraud in PP
Anti-Fraud Conferences: SK, CZ, BG, RO, HR, IT (last 25/6)
MS specific Action Plans (RO, GR, BG & IT)
GU lead
On-going in RO, BG pending (GR under Programme), IT proposal
Stock-taking/analysis of MS lessons learned, dissemination tools, good practices, etc. to improve PP capacity
Scoping
Initial scoping mission to Scottish Procurement. ToR under preparation
Guidance on how to prepare and follow-up on EAC Action Plans
Started
Learning by doing in BG. Will be prepared by E1 with Expert
Pilot integrity pacts
Under study by REGIO/E1
Approved by REGIO Board February 2014

21. Other Actions Identified
Preparation for new PP Directives (2016) – support to transposition, training, dissemination programmes (MARKT lead)
Assessment of current practices and scope to improve PP professionalization and accreditation linked to funds (will be started under Stocktaking Study)
Training/networks on PP as a strategic tool for Cohesion Policy (e.g. e-procurement, Green PP, Innovation: coordination with DGs ENTR and ENV)
Peer-to-Peer exchange mechanism (CEES) to include PP as pilot topic

22. Practical Guidance on "How to avoid common PP errors"
Target Audience is “Procurement Officer” managing day-to-day procurement activities
Guidance structured around the main stages of a public procurement process, highlighting issue to look out for and potential mistakes to avoid, with links through to a more detailed …
Toolkit of resources addressing specific topics in greater depth and giving concrete examples on what to do and what not to do during the procurement and contract management stages of the project cycle.

23. Guidance for Practitioners
Structure:
Preparation and planning
Invitation to bid
Bid submission and opening
Evaluation
Award
Contract implementation
Step by step description of the PP process
highlights areas of typical mistakes
why and how to avoid them
explanations of how to handle each situation
list of most common/ most serious errors
Link to Toolkits on specific topics with examples
Translation into EU languages

24. Achievements to date:
Good collaboration & coordination mechanism established with mandate to deliver useful tools to support MS
Focus on both compliance (reduce errors) and value-added (policy support)
Concrete actions and deliverables
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

25. Common Expert Exchange System (CEES) Supply/demand analysis
PURPOSE:
Is there interest for a peer-to-peer exchange system among the ESIF management bodies (MA,CA,AA, IB) ?
METHODOLOGY:
- On-line questionnaire all MA, CA and AA
- Interviews in 8 Member States (33 institutions)
CONTRACTOR
European Institute of Public Administration (Maastricht, NL)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

26. Common Expert Exchange System (CEES) Supply/demand analysis
KEY QUESTIONS:
Do you have capacity building needs ? Which ones ?
How do you go about building capacity ?
Your experience with private consultants and peer-to-peer support ?
Your interest in peer-to-peer exchanges ? To do what ?
Role of the Commission ?
Use of Technical Assistance to cover costs ?
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

27. Web-survey : response rate
Number of addressees (persons): 408
Number of replies submitted: 131
Percentage submitted replies: 32% Responses from 27 MS
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

28. Key findings - survey (1)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

29. Key findings – survey (2)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

30. Key findings - survey (3)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

31. Key findings - survey (4)
Assistance required mostly for :
Programme Management : financial instruments, simplified cost options, financial management and verifications, anti-fraud measures
Ex-ante conditionalities : Public Procurement and State Aid
Thematic Objectives : TO1 (Research & Innovation) and TO11 (institutional capacity)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

32. Key findings – survey (5)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

33. Key findings - survey (6)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

34. Key findings – survey (7)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

35. Key findings – interviews (1)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

36. Key findings – interviews (2)
Strong message that more systematic peer-to-peer exchanges would be most welcome – interviewees in their majority expressed a need to have more contacts with peers
But also strong need to have a place where they can talk to each other, and to the Commission = platform ? Social media ?
Ad-hoc networks exist – build on them or embed them in a wider system
Peer-to-peer assistance is complementary to private sector consultant assistance. Neither can cover all the needs – both should be used depending on the needs and tasks
If a system is set up, it should be : light (non-bureaucratic), flexible (short, medium and long-term assignments), rapid (quick missions for burning issues)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

37. Main conclusions :
MS strongly in favour of a peer-to-peer exchange system
System must be light, flexible and rapid
Commission should coordinate and control quality
Also a strong need for a platform to exchange views, questions, practices
And a need for more training (new CPR)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

38. Follow-up Peer-to-peer
Unit E1 to make proposals to REGIO Board of Directors (July)
Pilot projects during Autumn 2014
Exploring system options (IT, coordination in MS, database of experts, etc.)
Launch system early 2015
Evaluate in 2018
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

39. Follow-up Other measures
Explore options to set up an IT-platform for MA, CA, AA. Technical dimension, content and management
Organise strategic training on new elements of ESIF implementation for (pilot project on-going, first training session on 23-24/06)
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

40. Staffing and contacts in Competence Centre REGIO.E1
Pascal Boijmans, HoU
Ann-Kerstin Myleus, Deputy HoU
Daniela Negreanu, Secretariat
AC Team: Inguna Kramina, Agnieszka Krasicka, Denisa Perrin, Nathalie Verschelde, Hugh Goldsmith (EIB), Laura Indriliunaite, Anna-Lena Zademach

41. Thank you ! Please do contact us 
DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"