Small Project Fund in Interreg 2021-2027 programmes, an analysis of the law Territorial Cooperation Department Tomasz Kołodziejczak Nowy Targ, 30-11-2018

Assumptions Support should be continued for small projects with budgets lower than regular projects, promoting people-to-people contacts on cross-border areas. Small projects should be treated as activities pursuing the aims of the programme rather than be an aim in itself. Small projects should pursue aims meeting local needs, identified, defined and quantifies in the relevant cooperation programmes. Their contents should be adapted to match the needs of the specific area of support.   The system of implementation should be optimised in terms of facilities for small project beneficiaries. The system of implementation should be effective, as simple as possible and friendly for small project beneficiaries. Simplified methods in accounting should be aimed to be used to a maximum degree. Small projects should be accounted for primarily for the products they deliver and the results they generate.

Prerequisites Preamble to ETC (23) It is necessary to clarify the rules governing small project funds which have been implemented since Interreg has existed, but have never been covered by specific provisions. … In order to simplify the management of the financing of small projects by the final recipients, who are often not used to applying for Union funds, the use of simplified cost options and of lump sums should be made obligatory below a certain threshold.   (27) Member States should be encouraged to assign the functions of the managing authority to an EGTC or to make such a grouping, like other cross-border legal bodies, responsible for managing a sub-programme, an integrated territorial investment or one or more small project funds, or to act as sole partner.

Aims „People-to-people and small-scale projects in cross-border cooperation programmes”, such small project funds play an important role in building up trust between citizens and institutions, offer great European added value and contribute considerably to the overall objective of cross-border cooperation programmes by overcoming border obstacles and integrating border areas and their citizens. (ETC Regulation, Article 23)   This aim is attained through the engagement of numerous entities at the local level and considerable direct participation of society.

Definitions Article 2, CPR (3) „operation” means: (a) a project, contract, action or group of projects selected by the managing authorities of the programmes concerned;   (8) „beneficiary” means: (a) a public or private body, an entity with or without legal personality or a natural person, responsible for initiating or both initiating and implementing operations; (9) „small project fund” means an operation in the Interreg programme aimed at the selection and implementation of projects of limited financial volume; Article 24, ETC 2. The beneficiary of a small project fund shall be a cross-border legal body or an EGTC

EGTC Registration procedure Drafting the grouping’s convention and statutes Adoption of resolutions on EGTC membership Expression of consent by the Ministry of Foreign Affairs (consulted by: Ministry of Internal Affairs, Ministry of Finance, Ministry of Investment and Development) for the local government body to join the EGTC Entry in the register = acquisition of legal personality Regulation (EC) No 1082/2006 of the European Parliament and of the Council of 5 July 2006 on a European grouping of territorial cooperation (EGTC) Regulation (EU) No 1302/2013 of the European Parliament and of the Council of 17 December 2013 amending Regulation (EC) No 1082/2006 on a European grouping of territorial cooperation (EGTC) Act of 7 November 2008 on a European Grouping of Territorial Cooperation (Dz. U. /Journal of Laws/ No. 218, item 1390, of 2011 No. 232, item 1378 and of 2013 item 1323) Act of 11 September 2015 Amending the Act on a European Grouping of Territorial Cooperation (Dz.U. 2015 item 1884)

Cross-border legal body Art. 2. ETC 4. 'cross-border legal body' means a legal body established under the laws of one of the participating countries in an Interreg programme provided that it is set up by territorial authorities or other bodies from at least two participating countries. European Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities, done at Madrid on 21 May 1980 (Dz.U. 1993 No. 61, item 287) Government Statement of 1 April 1993 on the ratification by the Republic of Poland of the European Outline Convention on Transfrontier Co-operation between territorial Communities or Authorities done at Madrid on 21 May 1980 (Dz.U. 1993 No. 61, item 288) Act of 15 September 2000 on the Rules for Local Government Bodies Joining International Associations of Local and Regional Communities (Dz.U. 2000 No. 91, item 1009, as amended), Act of 7 April 1989 – Law on Associations (Dz.U. 1989 No. 20, item 104 Article 22.1, as amended). Agreement of Karlsruhe of 23 January 1996 (Poland is not a party thereto)

Allocation, SPF Article 24, ETC   1. The contribution from the ERDF or, where applicable, an external financing instrument of the Union, to a small project fund within an Interreg programme shall not exceed EUR 20 000 000 or 15% of the total allocation of the Interreg programme, whichever is lower. 5. Staff and indirect costs generated at the level of the beneficiary for the management of the small project fund shall not exceed 20% of the total eligible cost of the respective small project fund. The maximum amounts per one umbrella project according to Article 24, ETC, PLSK = 155 mln  FMP 15% = 23 mln  20 mln ≈ 2.8 million/year management 20% ≤ 4 million Article 106, CPR / Article 13, ETC 4. The co-financing rate for Interreg programmes shall not exceed 70%.

SPF Art. 22. ETC 4. In selecting operations, the monitoring committee or, where applicable, the steering committee shall: a) ensure that selected operations comply with the Interreg programme and provide an effective contribution to the achievement of its specific objectives c) ensure that selected operations present the best relationship between the amount of support, the activities undertaken and the achievement of objectives   6. For each Interreg operation, the managing authority shall provide a document to the lead or sole partner setting out the conditions for support of that Interreg operation, including the specific requirements concerning the products or services to be delivered, its financing plan, time-limit for its execution and, where applicable, the method to be applied for determining the costs of the operation and the conditions for payment of the grant.

Obligations of a SPF beneficiary Art. 24. ETC 3. The document setting out the conditions for support to a small project fund shall, in addition to the elements laid down in Article 22(6) set out the elements necessary to ensure that the beneficiary: a) establishes a non-discriminatory and transparent selection procedure; b) applies objective criteria for the selection of small projects, which avoid conflicts of interest; c) assesses applications for support; d) selects projects and fixes the amount of support for each small project; e) is accountable for the implementation of the operation and keeps at its level all supporting documents required for the audit trail in accordance with Annex [XI] of Regulation (EU) [new CPR]; f) makes available to the public the list of the final recipients which benefit from the operation.   The beneficiary shall ensure the observance by the final recipients of the requirements set out in Article 35 „Responsibilities of managing authorities and partners with regard to transparency and communication.”

Small project Art. 24. ETC 1. The final recipients within a small project fund shall receive support from the ERDF or, where applicable the external financing instruments of the Union through the beneficiary and implement the small projects within that small project fund (‘small project’).   6. Where the public contribution to a small project does not exceed EUR 100 000, the contribution from the ERDF or, where applicable, an external financing instrument of the Union shall take the form of unit costs or lump sums or include flat rates, except for projects for which the support constitutes State aid (note: public aid). Where flat-rate financing is used, the categories of costs to which the flat rate is applied may be reimbursed in accordance with [point (a) of Article 48(1)] of Regulation (EU) [new CPR].

2014-2020 implementation scheme MA SPF Beneficiary SPF Partner SP Beneficiary SP Partner (PLSK, CZPL option) SPF as a partner operation Optional joint small projects Border

2021-2027 implementation scheme MA SPF as an operation   Optional joint small projects Border SPF Beneficiary SP Beneficiary SP Beneficiary SP Partner (option) SP Partner (option)

Operation management Essentially, the amount of funds to prepare an operation should not exceed 5% of the amount allocated for its management. The preparatory costs may be defined as lump sums in accordance with Article 48(1)(c) CPR. A condition for the provision of funds should be the signing of a funding agreement. The staff costs may take the form of the mean standard flat rate, in accordance with Article 48(1)(b) CPR, setting the said costs per person employed in relation to the implementation of the operation. The rate levels should be based on market prices and historical data in accordance with Article 48(2)(a) CPR.   The other costs may be covered by the flat rate of up to 40% of the direct staff costs in accordance with Article 51(1) CPR.

Implementation of small projects option I The system of implementation may be based on lump sums comprising all small project costs.   The lump sums may be based on the provisions of Article 48(2)(b) CPR. Small project applicants should present the draft budget which, after it is verified and assessed by the SPF would be the basis for the lump sum amount.

Implementation of small projects option II An option for small projects largely based on the staff costs. The staff costs may take the form of the mean standard flat rate, in accordance with Article 48(1)(b) CPR, setting the said costs per person employed in relation to the implementation of the operation. The rate levels should be based on market prices and historical data in accordance with Article 48(2)(a) CPR.   Other costs may be covered by the flat rate of up to 40% of eligible direct staff costs in accordance with Article 51(1) CPR.

Implementation of small projects option III The costs of a small project may take the form of standard flat rates, in accordance with Article 48 (1)(b) CPR, setting the mean costs with regard to standard types of actions in small projects. The rates should be based on market prices and historical data in accordance with Article 48(2)(a) CPR.

Reimbursement Reimbursement should be conditioned by the attainment of the planned outcomes, i.e. a link to the product and result indicators. This approach should take account of a certain flexibility in tying the value of indicator attainment to the payment of the lump sum. A lump sum should be possible to pay with regard to the planned value within a pre-assumed tolerance. The lump sum would be paid to the SPF operator after the delivery of the report with a list of small projects to which the lump-sum amount would be assigned which is specified in the small project funding agreement and the value of the indicators attained.  

Control of small projects The subject of Control is: Correctness of the methodology applied to calculate the lump sum. Delivery of products and attainment of results following from the funding agreement. The above conditions may be verified individually by an EGTC or by the MA/Joint Secretariat.

Issues to be resolved It remains to explain the possibility to fund in this way small infrastructural projects and the proposed regulations do not indicate that it is prohibited.   Because of the exclusion from the lump sum system in Article 24(6) State (public) aid should not be granted within small projects. The possibility to apply the draft budget at the small project level should be confirmed with the EC (option I). Issue of developing a system of indicators in the context of 0-1 of lump-sum assumptions.

Intermediate bodies Article 65, CPR 3. The managing authority may identify one or more intermediate bodies to carry out certain tasks under its responsibility. Arrangements between the managing authority and intermediate bodies shall be recorded in writing.   Article 66, CPR 1. The managing authority shall be responsible for managing the programme with a view to delivering the objectives of the programme. In particular, it shall have the following functions: (d) supervise intermediate bodies; Article 44, ETC 6. Where the managing authority identifies an intermediate body under an Interreg programme in accordance with Article [65(3)] of Regulation (EU) [new CPR], the intermediate body shall carry out those tasks in more than one participating Member State or, where applicable, third country, partner country or OCT.

Direct programme path The implementation of small-scale actions as operations in accordance with the provisions of Article 2(3) CPR involves the need to apply, to small projects, the general rules on the cooperation between partners from two sides of the border, including in particular the leading partner rule and the fulfilment of the four cooperation criteria.   This model is characterised by high flexibility with regard to the subject of a small project. Calls for proposals may be opened in various thematic areas as required by the diagnosed needs. The amount of funds for small projects does not have to be set in advance. An optimum implementation system should be based on lump sums comprising all small project costs based on Article 48(1) CPR. These provisions set an obligation to use simplified methods in operations where the total cost does not exceed € 200 000.

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