Presentation on theme: "Legal and Financial Framework FP6 Miriam Driessen Reilly Legal Unit, DG INFSO Open Day - Brussels 30 May 2005."— Presentation transcript:
1Legal and Financial Framework FP6 Miriam Driessen Reilly Legal Unit, DG INFSO Open Day - Brussels30 May 2005
2Overview – Legal Aspects Legal framework and general principlesContract structureConclusion of the contractEvolution of the consortiumReportingAmendmentsControls and sanctionsConsortium agreementIntellectual property rights
3Legal Framework EC TREATY CONTRACTS INTERNATIONAL AGREEMENTS PARTICIPATION AND DISSEMINATION RULESFRAMEWORK PROGRAMMECONTRACTSSPECIFIC PROGRAMMESGUIDELINES ONEVALUATION ANDSELECTIONPROCEDURESOther relevantEC Regulations FINANCIAL REGULATIONWORK PROGRAMMES & Calls for proposals
4Proposal submission and evaluation Contract structureProposal submission and evaluation28/03/2017Core contract (standard with specifics of project) (possibly including special clauses)Annex I (technical tasks - the “project”)Annex II General Conditions (applicable to every instrument)Annex III Instrument specific provisions (specific to instrument)Presentation IP - Heysel
5Contract structure Annex IV - Form A Annex V - Form B Consent of contractors identified in the core-contract (article 1.2) to accede to the contract. To be signed by the contractor concerned and by the coordinator.Annex V - Form BAccession of new legal entities to the contract. To be signed by the new contractor concerned and by the co-ordinatorAnnex VI - Form CFinancial statement per activity. Specific to each Instrument and/or type of action. To be filled periodically by each contractor
6Annex II – General Conditions Part A Implementation of the ProjectSection 1 Implementation and deliverablesSection 2 Termination of the contract and responsibilityPart B Financial ProvisionsSection 1 General financial provisionsSection 2 Controls, recoveries and sanctionsPart C Intellectual Property Rights
7Contract structure & instruments Core contract Annex II Annex IIIIP YesNoE YesSTRePCA Common Common NoneSSASME YesI3 Yes
8Contractors General Rule: Participant = contractor Every legal entity contributing to a project must have a contractual link with the CommunityExceptional cases: subject to very restrictive rulesThird parties identified in Annex ISubcontractors
9Co-ordinator A contractor among other contractors No additional rights BUTAdditional obligationsAdministrative tasks: single entry point for communication, payments, reporting etc.
10Conclusion of the contract 1/2 The contract will be concluded between the Commission and all participants in an indirect action (the ‘Consortium’).It will enter into force upon signature by the Commission and the contractor acting as ‘Co-ordinator’ of the project.The other participants identified in the contract will accede to it in accordance with Article 2, assuming the rights and obligations of the contract with effect from the date on which it enters into force.
11Conclusion of the contract 2/2 Within a fixed time-limit after the entry into force of the contract, the Coordinator must send to the Commission the Accession Form A to be obtained from each of the participating contractors.Should any named participant fail or refuse to accede to the contract within the deadline, the Commission is no longer bound by its offer. It may terminate the contract.The Consortium may propose appropriate solutions to the Commission to ensure the implementation of the project, including the accession of other alternative legal entities.
12Evolution of the Consortium 1/3 The Consortium may be enlarged to include other legal entities, which shall accede to the contract by means of Accession Form B.The Commission is deemed to have accepted this legal entity as a contractor to the Consortium if it does not object within six weeks of receipt of Form B (Tacit Approval).Any acceding participant shall assume the rights and obligations of the contractors as established by the contract with effect from the date of its accession to the contract.
13Evolution of the Consortium 2/3 Any contractor may request the termination of its participation in the contract.The consortium may request the termination of any contractor.Tacit approval of such termination after six weeks.Contractors leaving the Consortium shall be bound by the provisions of the contract regarding the terms and conditions applicable to the termination of their participation.
14Particular cases of NoE and IP 3/3 For some changes in the composition of the consortium, requirement of prior publication of a competitive call (see Annex III)Specifications of the changes in the joint programme of activities for a NoE and in the implementation plan for IPThe competitive call shall be published by the consortium and advertised widely using specific information support (Internet sites of FP6, specialist press and brochures, national contact points)Offers shall be evaluated by the consortium according to the evaluation and selection criteria of the indirect action (Article 10.4 and 10.5 of RFP), and with the assistance of independent experts appointed by the consortium
15Entry into force and duration Contract enters into force upon signature of Co-ordinator and CommissionProject begins on date established in the contractImplementation and payment phases relating to the project must be completed by the final implementation date of the contractContract completed when the rights and obligations of all parties to the contract have been metSome provisions continue to apply after the final implementation date
16Controls and Audits Controls Audits Periodic activity reports (including plan for dissemination and use)Periodic financial reportsSupplementary reports if foreseen (in Annex I or III)Final reports covering the whole project durationAuditsScientific, technological and financial auditsAnnual monitoring by Commission with external experts (particularly for IP and NoE)Ethical or other reviewsContractors right to refuse particular expert
17Reporting 1/2Submission of periodic reports and deliverables within 45 days of the end of the reporting periodperiodic activity reportperiodic management report (including justification of resources deployed, Form C “Financial Statement”, consolidated summary financial report)report on distribution between contractorssupplementary reports required by Annex Iaudit certificate when requiredcAmendments - tacit for approval of project activity reports and for consortium changesSpecial conditions** under development
18Reporting 2/2Submission of final reports within 45 days after the end of the project. Delay may be increased by 45 days at the request of the consortiumfinal activity reportfinal management reportsupplementary reportsreport on the distribution of the Community financial contribution between contractors made after the end of the project
19Submission and approval of reports Electronic submission of reports and deliverables. In addition, submission of originals of these documents and of audit certificates by registered mail with acknowledgement of receipt.Reception date of submission by mail prevailsApproval of any report does not imply exemption from any audit or review
20AmendmentsRequests for amendments shall be submitted by registered mail with acknowledgement of receiptRequests for amendments are submitted by the Coordinator on behalf of the consortiumCommission undertakes to approve or reject any amendment request within 45 days of receiptNo tacit approval of amendment request, except for modification or evolution of the consortiumAll amendments shall be in writing
21Sanctions Recovery of unjustified financial contribution Liquidated damages for overstated expenditureAdministrative or financial sanctions foreseen in the Financial RegulationFalse declarationsExclusion from selection for 2-3 years, without prejudice to financial penalty of 2-10% of value of contractFraud, criminal activity, money laundering, bankruptcy, professional misconduct, tax offences, corruptionExclusion from selection for 1-5 years* Without prejudice to any civil remedies or criminal proceedings
22The Consortium Agreement 1/2 Characteristics:Private Contract between the contractorsProvides for internal operation and management of the consortiumCommission does not review it or approve itHowever, provisions must not conflict with provisions of EC ContractMay be modified/amended after entry into forceNon-binding guidelines published by the Commission
23Proposal submission and evaluation The Consortium Agreement 2/2Proposal submission and evaluation28/03/2017Mandatory unless excluded by the call for proposalsInternal OrganisationDesignation of co-ordinatorManagement structureTechnical implementationOrganisation of work to be carried out (sub-projects)Allocation of funds paid to consortiumChanges in consortium’s composition (modification)Intellectual Property Rightsensure that agreements necessary for the implementation of the project have been reached - Eg exclusion of background/sideground/Financial issuesinitiate common strategy on dissemination/use/ protection + search for industrial partners*See Suggested Consortium Agreement ChecklistSettlement of Internal DisputesApplicable lawArbitration procedurePenaltiesPresentation IP - Heysel
24Intellectual Property Rights (IPR) 1/2 General concepts:OwnershipGrants - contractor carrying out work owns the resultsJoint work between contractors – joint ownershipAgreement re allocation & terms of exercising itpublic procurement - Commission owns resultstransfer of ownershipprior notice to other participants + Commission (possible objection within 30 days)Obligation to pass on obligations AR/dis/use to assigneePersonnel AgreementsProtectionwhere there is commercial application and subject to legitimate interests, it is a requirement to protect (include in PUDK)where there is no protection, Commission may protect
25Intellectual Property Rights (IPR) 2/2 General concepts:Publicationallowed if not detrimental to protectionprior notice to Commission + other contractors (possible objection within 30 days)Use/disseminationobligation to use and disseminate knowledgeSt protection/use w/in 2 yrs of end of projectCommission may disseminate itself if neededAccess Rights – PEKH & KnowledgeGranted to other contractors upon written requestOn a need to use basisMay exclude specific PEKH by written agreement prior to EC contract signatureNo automatic entitlement to grant sublicences
26FP6 System of Access Rights Access rights topre-existing know-howknowledgeIf a contractor needs them for carrying out its own work under the projectFor carrying outthe projectRoyalty-freeunless otherwise agreed before signing the contractIf a contractor needs them for using its own knowledgeFor use(exploitation + further research)Non-discriminatory conditionsto be agreedunless otherwise agreedbefore signing the contractPossibility for participants toagree on exclusion of specificpre-existing know-how beforesignature of the contract (orbefore entry of a new participant)
27Overview – Financial Aspects IntroductionNew concepts introduced in FP6Financial Reporting
28IntroductionAward principlesGrant to budget and grant for integrationEligibility of costs /ineligibility of costsPrinciple of cost reimbursementCost reporting modelsActivitiesMaximum reimbursement
29Award Principles CO-FINANCING NO PROFIT The award of grants shall be subject to the principles of transparency and equal treatment. They may not be cumulative or awarded retrospectively and they must involve co-financing.NO PROFITThe grant may not have the purpose or the effect of producing a profit for the beneficiaryFinancial Regulation Art. 109Implementing Rules Art. 165
30Introduction Grant to budget – grant for integration Grant to budget – IP and other instrumentscalculated as a percentage of the budget established by the participants to carry out the workthe expense needed to implement the work shall be certified by an external auditor or, in the case of public bodies or competent public officerGrant for integration – NoEcalculated taking into account the degree of integration, the number of researchers that all participants intend to integrate, the characteristics of the field of research concerned and the joint programme activitiespaid on the basis of results, … and on condition its expenses, which are to be certified….. are greater then the grant itself.
31Introduction Principles of cost reimbursement CONCEPT OF ELIGIBLE COSTSActual, economic and necessaryIn accordance with the usual accounting principles of the contractorDuring the duration of the project … except … drawing up the final reports … which may be incurred during the period of up to 45 days after the end of the projectRecorded in the accounts …In case of contributions made by third parties … be recorded in the accounts of the third party
32Introduction Principles of cost reimbursement CONCEPT OF NON-ELIGIBLE COSTS.Any identifiable indirect taxes, including VAT or duties;Interest owed;Provisions for possible future losses or charges;Exchange losses;Costs declared, incurred or reimbursed in respect of another Community project;Costs related to the return on capital;Debt and debt related charges;Excessive or reckless expenditure;Any cost which does not meet the conditions established in Article II.19.1
33Introduction Principles of costs reimbursement Reimbursement of eligible costs claimed by contractorsIn accordance with the cost reporting models used by each contractorMaximum reimbursement rates of eligible costs per type of activityApproval of requested periodic reportsSubject – if required in the contract - to the submission of an audit certificateTaking into account the receipts of the projectLimits of public funding established by international regulations and in particular by the Community framework for State aid for research and development for certain activities
34Introduction Cost reporting models FC: actual direct and indirect costsall instruments, however in case of Co-ordination Actions and Specific Support Actions flat rate for indirect costs (20% of direct costs minus subcontracting) reimbursedFCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)all instrumentsAC: actual additional non-recurring direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)
35Introduction Cost reporting models – Max Introduction Cost reporting models – Max. reimbursement rate per activitySMEs, non-commercial or non-profit organisations established either under public or private law, international organisations: FC/FCFPhysical persons: AC mandatoryPrivate companies (other than above): FCAC: only for those non-commercial or non-profit organisations established either under public or private law or international organisations that do not have an accounting system that allows the share of their direct and indirect costs relating to the project to be distinguished.
36Introduction Cost reporting models- Max Introduction Cost reporting models- Max. reimbursement rate per activityAccess to a cost reporting model depends on the type of legal entity and its accounting systemGeneral rule: a legal entity applies the same cost reporting model in ALL contracts established under FP6 except may move from AC to FCF/FC or from FCF to FC (“one way ticket”) – a contractor however cannot change midway in a projectNote: special clause 22 “Different cost reporting models within the same legal entity” – in case legal entity uses AC and one of its departments uses FC
37Introduction Cost reporting models - reminder Direct costs for contractors using the Additional Cost modeldirect costs of personnel shall be limited to the actual costs of the personnel assigned to the project where the contractor has concluded with the personnela temporary contract for working on Community RTD projectsa temporary contract for completing a doctoratea contract which depends, in full or in part, upon external funding additional to the normal recurring funding of the contractor. In that case, the costs charged to this contract must exclude any costs borne by the normal recurring funding
38Introduction Activities The project includes, ... one or more of the following activitiesResearch and technological development or innovation activitiesDemonstration activitiesTraining activitiesManagement of the consortium activitiesAudit certificatesImplementing of competitive callsMaintenance of consortium agreementFinancial security … when requested by the CommissionAny other management activities …Other specific support activities
39Introduction Maximum reimbursement rates of eligible costs per instrument, activity and cost model
40New concepts introduced in FP6 Collective Financial ResponsibilityThird party costsReceiptsInterestsSubcontractingPrefinancing, renewal of prefinancing and settled payment
41New Concepts Collective Financial Responsibility DefinitionArt. II.18.1/2 – Termination of one contractor = rest of consortium responsible for reimbursement on pro-rata basis.“Should the contract be terminated or the participation of a contractor be terminated in accordance with Art. II.16, and any contractor does not honour the reimbursement of the amount due by that contractor, the consortium will reimburse the amount due to the Commission. The amount due to the Commission may not exceed the value of the contribution due to the consortium in accordance with Art. 5.”
42Exceptions Collective Financial Responsibility In some cases the rule of financial collective responsibility is not applicable – see Art. II.18.3 & 4:a) The contractor is:a public bodyan international organisationa contractor whose participation is guaranteed by a Member or Associated StateThese type of contractors shall be solely responsible for their budget.Other contractors are not responsible for these contractors.b) The consortium is not responsible for:any amount owed by a defaulting contractor for any contractual breach discovered after the end of the contractliquidated damages due by a defaulting contractorother financial penalties and other sanctions imposed on a defaulting contractor
43New concepts Third party costs Resources made available by third parties on the basis of prior agreement are eligible as costs for the projectThe tasks and their execution by such third parties are clearly identified in the Annex ICosts will have to be recorded in the accounts of this third party - to be covered by audit certificatesContractors shall ensure that third parties whose resources are made available to the project are informed on the use of their resources
44New concepts Receipts Three kinds of receipts financial transfers or their equivalent to the contractor from third parties, contributions in kind from third parties, income generated by the projectFinancial transfers or contributions in kindconsidered as receipts of the project if the third party has provided them specifically to be used in the projectIf at the discretion of the contractor they are not to be considered as receipts.Income generated by the projectGeneral rule: any income generated by the project itself, including the sale of assets bought for the project, are considered as income to the projectDerogation: income generated by the use of the knowledge resulting from the project is not considered as a receipt
45New concepts Interests Article II.24.5The Community contribution shall be offset by any interest or equivalent benefits yielded by the pre-financing of the project, as referred to in Article II.27Article II.27In accordance with the provisions of the Financial Regulation, pre-financing granted to the coordinator on behalf of the consortium remains the property of the CommunityThe coordinator shall inform the Commission of the amount of any interest or equivalent benefits yielded by the pre-financing it has received from the Commission. …
46New concepts Subcontracting Subcontracting is a derogation from the general rule and limited to situations where the work cannot be carried out by the contractor itself.Subcontracts should normally not concern “core” parts of the project work.Subcontracting may only cover the execution of a limited part of the project where this is necessary for its implementation.Tasks to be subcontracted must be identified in Annex I. Minor services not representing core elements of the projects may be subcontracted during the implementation of the project.Project management must always be considered to be a core element of the project and may not be the subject of a subcontract.As a general rule, subcontracting between contractors should not be accepted.Any subcontract must be awarded to the bid offering best value for money under conditions of transparency and equal treatment
47Introduction Renewal of pre-financing – settled payments Pre-financing is calculated as % of the estimated Community financial contribution corresponding to the first/subsequent reporting period and the 6 months of the subsequent reporting period as indicated in the table of estimated breakdown of costsPre-financing is normally renewed at each reporting periodIn case audit certificates are submitted a payment is made which settles the amounts justified and accepted during the reporting periodIn case no audit certificates are submitted the amount justified and accepted is taking into account in calculating the pre-financing
48Financial ReportingSubmission of financial statement reportsForm CAudit certificationsJustification of major resources and costs
49Financial Reporting Submission of financial statement reports Article II.7.2(b)A periodic management includingA justification of the resources deployed by each contractor, linking them to activities implemented and justifying their necessity;The Form C Financial statement set out in Annex VI, provided by each contractor for that periodA summary financial report consolidating the claimed costs of all the contractors in an aggregate form, based on the information provided in Form C.Article II.7.2(c)A report on the distribution between contractors made during that period of the Community financial contribution.
50Financial Reporting Submission of financial statement reports Article II.7.3 The consortium shall submit the audit certificates provided by each contractor … for each period for which the audit certificate is required. Even though an audit certificate is not required for a specific period, an audit certificate must be provided by each contractor where the Community financial contribution requested by the contractor exceeds € 750,000 for that period.
51Financial Reporting Form C OverviewResources (Third party(ies))Declaration of eligible costs (in €)Declaration of receipts (in €)Declaration of interest generated by the pre-financing (in €) – to be completed only by the coordinatorRequest of FP6 Financial contribution (in €)Audit certificatesConversion ratesContractor’s Certificate
54Financial Reporting Audit Certificates Provided by an external auditor – or in the case of a public body it may be provided by a competent public officerExternal auditor must be independentBe qualified to carry out statutory auditsAt least one audit certificate per contractor covering the whole duration must be providedPeriodicity defined in the core of the contractEach contractor continues to be responsible to the Commission for the costs claimed
55Financial Reporting Audit certificates An audit certificate certifies thatThe amount of the total eligible costsare actual and answers to the economic environment….use of correct reporting modelThe total amounts of receipts, interest, ….An audit certificate must refer to theaudit carried out in accordance with generally accepted auditing standardstest carried out in order to obtain reasonable assuranceAn audit certificate must be signed and dated. The organisation providing the certificate must clearly identified.It is strongly recommended that the external audit or public competent officer use the model prepared by the Commission – see financial guidelines.
57Financial Reporting Justification of costs/Financial Statements a brief description of the work performed by each contractorexplanatory note or any major cost itemsa tabular overview of budgeted costs and actual costs, by contractor and by major cost item including personnelfor AC contractors, a tabular overview of all resources employed on the project and a global estimate of all costsa tabular overview of budgeted person-months and actual person-months, by contractor and by work packagefor AC contractors in addition estimate the number of person-months of permanent staff working on the projecta summary explanation of the impact of major deviation from cost budget and from person-month budget
58End of Presentation Thank you for your attention The previous slides constitute an overview of the legal and financial provisions of the FP6 EC contracts. However, this should not be taken to constitute legal advice.