Julia Harrow, Senior Faculty Accountant Helen Jordan, Research Development Manager, European and Overseas Programmes Framework Programme Finance Training October/November 2007

Main EU programme for funding research Duration: 4 years ( ) Budget : 17.5 billion (£11 billion) Framework Programme 6

Policy driven: designed to achieve Lisbon and Barcelona objectives and support European Research Area (ERA) Majority of budget supports collaborative, transnational research in prioritised research areas Partially funded Complex rules and criteria FP6/FP7 features

Programmes & Activities

Project types / Instruments Integrated Project (IP) Large multi partner project to support objective driven research Network of Excellence (NoE) Large multi partner network bringing together a critical mass of resources and expertise Co-ordination Actions (CA) Co-ordination of research Specific Targeted Research Project (STREP) Small multi partner research, demonstration or innovation project Specific Support Actions (SSA) Workshops, studies, training European Collaborative Projects

Marie Curie Actions Host Actions Research Training Networks (RTN) Early Stage Training Networks (EST) Transfer of Knowledge Fellowships Conferences and Training Courses Individual Actions Intra-European Fellowships International Incoming Fellowships International Outgoing Fellowships Reintegration Grants Excellence Actions Excellence Grants Chairs Excellence Awards

FP6 Finance - Key Data Core Contract – provides details of contract finances Annex II General Conditions – provides general financial terms and conditions EU Financial Guidelines (250 pages) Website address to search for a key document:

FP6 Funding Instruments Reimbursement of Costs – incl. –Specific Targeted Research Project (STREP) –Integrated Project –Network of Excellence –Coordination Action Lump Sum Payments –Human Resources & Mobility (Marie Curie Actions) –Specific Support Action

FP6 Cost Models University of Bristol Model - Additional Cost with flat indirect 20% (AC) - 100% reimbursement by EC. Adopted by UoB. Others - Full Cost (FC) - 50% reimbursement by EC - Full Cost with flat indirect 20% (FCF) - 50% reimbursement by EC

Framework Programme 7

European Framework Programme 7 (FP7) Main European programme for funding research 7 years in duration ( ) Budget of 50.5 billion (£33.7 billion)

Policy driven: designed to achieve Lisbon and Barcelona objectives and support European Research Area (ERA) Majority of budget supports collaborative, transnational research in prioritised research areas Partially funded Complex rules and criteria FP6/FP7 features

FP7 Structure Four Pillars of activity: Co-operation – Collaborative Research Ideas – Frontier Research People – Human Potential Capacities – Research Capacity Plus JRC and EURATOM

FP7 Budget 32.4bn 7.5bn 4.7bn 4.1bn

10. Space Pillar 1: Co-operation 1. Health 2. Food, Agriculture and Biotechnology 3. ICT 4. Nano, Materials, Production 5. Energy 6. Environment 7. Transport 8. Socio-Economic Sciences and Humanities 9. Security

Project types / Funding Schemes Large Collaborative Project Large multi partner project to support objective driven research Network of Excellence (NoE) Large multi partner network bringing together a critical mass of resources and expertise Co-ordination and Support Actions Co-ordination or support of research activities and policies Small to Medium Sized Collaborative Project Small multi partner research, demonstration or innovation project European Collaborative Projects

Co-operation themes budget split 9.11bn 6.05bn 4.18bn 3.5bn 2.3bn 1.93bn 1.35bn 1.9bn 1.43bn 0.61bn

Concept: a European Research Council (ERC) Highly prestigious – competition at a European level Supporting frontier research Investigator-driven (bottom-up) 2 central schemes: Starting Independent Researcher Grant –Between 100,000 and 400,000 per year for up to 5 years for establish or consolidate a first research team Advanced Investigator Grant –Between 100,000 and 500,000 per year for established research leaders Pillar 2: Ideas – NEW!

Developing Europes workforce: 2 main objectives Researcher mobility –Between Member States –From Member States to 3 rd Countries and Vice Versa Researcher training –Early stage & experienced researcher training –Wide range of skills training, including transferable skills and working with the private sector Pillar 3: People

Marie Curie Actions Initial training of researchers Initial Training Networks (ITN) Life-long training and career development Intra-European Fellowships European Reintegration Grants Co-funding of national programmes Industry-academia partnerships & pathways Industry-Academia partnerships & Pathways International dimension International Incoming Fellowships International Outgoing Fellowships International Reintegration Grants

Research infrastructures Research for the benefit of SMEs Regions of knowledge Research potential of convergence regions Science in society Support to the coherent development of research policies International co-operation Pillar 4: Capacities

EU-27 Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, UK Associated Countries (FP6) Croatia, Iceland, Israel, Liechtenstein, Norway, Switzerland, Turkey, Serbia EU Countries

International Cooperation in FP7

FP7 Finance - Key Data Core Contract – provides details of contract finances Annex II Grant Agreement (or GA) – provides general financial terms and conditions EU Financial Guidelines (only 85 pages!) Website address to search for a key document:

FP7 Funding Instruments - 1 Reimbursement of Costs – Co-operation Pillar –Collaborative Projects (cc STREPs - these projects are small to medium sized) –Large Integrating Collaborative Projects (cc Integrated Projects) –Networks of Excellence –Coordination and Support Actions (cc Specific Support Actions and Coordination Actions)

FP7 Funding Instruments - 2 Reimbursement of Costs – Other Pillars –Ideas (ERC) –Capacities Lump Sum Payments –People (Marie Curie Actions) – for payments of individuals remuneration

FP7 Cost Model - 1 One cost model for all entities Additional cost model abolished Direct Costs reimbursed as follows: Activities within Co-operation and Capacities –Research Training Development (RTD) Activities: 75% –Demonstration Activities: 50% –Project Management, Training, Other Activities: 100% Except Coordination and Support Actions - all Activities: 100% Ideas/ERC: 100%

FP7 Cost Model - 2 Indirect Costs reimbursed as follows: For most activities (except below) calculate indirect costs as either choice of either actual indirect costs or flat rate of 60% of direct costs (latter is current UoB option) –reimburse as per rules for Direct e.g. 75% for RTD ERC projects: flat rate of 20% of direct costs Co-ordination and Support Actions: flat rate of 7% of direct costs Marie Curie projects: flat rate of 10% of direct costs

Eligible Costs Actual and necessary Incurred during timescale of project Determined by accounting principles and management practices e.g depreciation, travel standard class Recorded in accounts Used only to achieve project objectives New for FP7! Time/cost of permanent researchers e.g. PIs

Management Activities EC fund 100% of management activities of consortium FP6 ceiling of 7% of total EC contribution no longer exists (but informal advice is not over 10%) Additional indirect costs of 60% Only available funding for Audit costs Coordination costs except those in RTD activities Most management activities

Ineligible Costs The following will not be funded: Indirect taxes incl. VAT Excessive or reckless expenditure Indirect costs for subcontractors Exchange losses – may be managed within C.A. Student tuition fees Provisions for future losses Costs on other EC projects

FP7 and VAT VAT is an ineligible EC FP cost Unlike earlier Framework Programmes, HM Revenue & Customs will not reimburse the VAT in FP7. Thus the cost will fall to UoB UoB decision: irrecoverable VAT costs will be accounted for as a reduction in the indirect income rather than a direct cost to a department

Cost Category Exercise

Calculating Staff Time Need Number of Productive Hours per year Determined by deducting holidays, national holidays, sick leave and other entitlements e.g. training UK Productive Hours: 1650 hours per year Hourly Rate = Annual FTE salary / 1650 hours At UoB, this is done via fEC Research Costing tool

Time Recording Q. Who needs to do this? A. Any staff costed to a project, including PIs Requirements as are follows: Record actual (not estimated) hours including time spent on all projects, except PIs who only need to record time on project Record either start and end time, or number of hours each day N.B. If total hours exceed annual amount, hourly rate will be reduced, thus best to work standard hours Web address:

Project Budget Virements Transfer of budget between activities and members is allowed without need for EC approval Unless results from changes to workplan (as laid out in Annex I of GA) e.g. new subcontractor Watch for transfer between activities with different funding rates e.g. movements between RTD and Management. N.B. maximum EC contribution remains If in doubt, consult EC Project Officer

EC Financial Contribution Maximum contribution cannot be exceeded and includes: –Single Pre-Financing (see slides below) –Interim payments following each Reporting Period –Final Payment plus any prior period adjustments Calculation of EC payments deducts any interest earned by Coordinator from Pre-Financing (> 50k) EC withhold 10% retention until date of last payment so pre-financing and interim payments shall not exceed 90%

Pre-Financing 1 (Article 6 of Financial Guidelines + Article II.6 of GA) Only 1 pre-financing (or advance) payment received at beginning of project Received from the EC no later than 45 days of contract start date (unless special clause) Coordinator must distribute to members:- –Once minimum numbers of members have signed and returned Form A (accession form) –Only to those members who have signed and returned Form A

Pre-Financing 2 General Rule for projects with more than 2 reporting periods (RPs) - 160% of average EU funding per RP less 5% Guarantee Fund For projects with 1 or 2 RPs – between 60%-80% of the total EC contribution (specified in contract) Reasons for variations to Pre-Financing: 1.Project with heavy initial investment – increased 2.Project with low expenditure in 1 st period - decreased

Guarantee Fund (Article II.20 of GA) Aims to cover financial risks incurred by EC and participants during project 5% of the total EC contribution retained by the EC and transferred to separate EC fund at time of pre-financing payment Paid into EC bank account and interest earned should cover risks of non reimbursement of amounts due by project members Returned to project members via Coordinator at point of final payment Maximum deduction of 1% of EC contribution may be permanently retained excluding public bodies (so UoB okay!)

Pre-Financing Example 1 Project running over 3 reporting periods (RPs) with total budget 3,000,000 a)Average EC contribution = 1,000,000 (i. e. 3,000,000 / 3 years) b)160% of average contribution = 1,600,000 c)Contribution to Guarantee 5% = 150,000 d)Pre-financing to Coordinator = 1,450,000

Pre-Financing Example 2 Project running over 18 months with 1 RP with total budget 900,000 a)Pre-financing 75% as stated in EC contract = 675,000 b)Contribution to Guarantee 5% = 45,000 c)Pre-financing to Coordinator = 630,000 N.B. RP may not equal number of years of project

Interim Payments EC pay all accepted costs of previous Reporting Period as next interim payment (less pre-financing interest) Does not require Audit Certificate unless total accepted costs have reached 375,000 or multiples thereof (see Financial Audit below) Interim payments continue during life of project up to threshold of 90% of total budget or final reporting period EC assumption that participants will get Guarantee Fund so reality is receive up to threshold of 85% until final payment

Project Reporting 1 Article II.4 of GA Periodic Report – due within 60 days after end of each Reporting Period Consortium Requirements: Overview of progress towards objectives Explanation of use of resources Financial statement – FORM C for each partner plus consolidated report (Annex IV). New for FP7! Form C requires separate reporting of Personnel costs

Project Reporting 2 Article II.4 of GA Final Reports – due within 60 days after end of project Consortium Requirements: Final summary report of results, conclusions etc. Report covering wider societal implications, dissemination plans etc. Plus: Coordinator must submit report on distribution of EC contribution to partners 30 days after receipt of final payment

Financial Audit 1 Article II.4 of GA Certificate on the Financial Statement (CFS) Independent report of factual findings on costs claimed in accordance with GA Mandatory (for interim and final claims) as soon as EC contribution requested by reimbursement of costs reaches threshold of 375,000 when cumulated with all previous payments for which a CFS has not been submitted. Once a CFS is submitted then threshold applies again for subsequent EC contributions

Audit example – Project with duration of 5 years (k) Claim no. Eligible Costs 50% EC contr. Cumulative amount for CFS CFS required NO YES NO YES NO

Financial Audit 2 Article II.4 of GA Special Cases: Where project duration is 2 years or less, if 375,000 threshold is met then only one CFS submitted at time of final payment No CFS required if under threshold For all projects: no CFS required if costs are approved via Certificate on Methodology

Financial Audit 3 Article II.4 of GA Certificate on the Methodology Certifies the calculation of personnel costs and overhead rates e.g. Estates and Indirect No requirement for CFS on interim payments and simplified final certificate Requires in-depth UoB independent audit of figures/systems prior to EC acceptance Not likely to use until January 2010

EC Approval of Reports Article II.5 of GA EC evaluate Project Reports and ideally disburse payment within 105 days of RP After receipt of reports, EC may: Approve in whole or part, or approve s.t. special conditions Reject with justification and terminate in whole or part Suspend time-limit if deliverable(s) are missing Suspend the payment in whole or part EC shall inform Coordinator of amount of final payment; Coordinator has 2 months if disagree and EC has 2 months to reply thereafter

EC Financial Audit Article II.22 of GA May occur up to 5 years after end of project Financial and systemic audit including management and accounting principles UoB keeps documents for 7 years Could have on-the-spot checks Institution has 30 days to respond to EC provisional report, before final report is issued

EC Technical Audit Article II.23 of GA May occur up to 5 years after end of project Includes scientific and technological audit Evaluates progress, relevance, management, resources and impact of the project Institution has 30 days to respond to EC provisional report, before final report is issued May accept or reject deliverables/project

Collaboration Agreements Mandatory for large scale integrated project, optional for small and medium Financial Review: Partner budgets and budget reviews Transfer of budgets Plan for defaulting partners May prioritise types of costs for reimbursement e.g. RTD

EC Model Grant Agreement Web address: Core Text (main contract) Annex I – Description of Work (varies per project) Annex II – General Conditions Annex IV – Form A Accession to Agreement Annex VI – Form C (differs per Cooperation project) Annex VII – Certificate of Financial Statement and Certificate on the Methodology (different forms) List of Special Clauses

FP7 Applications and Contracts

Applying to FP7 Consult CORDIS calls page: Consult relevant call fiche, Work Programme & Guide for Applicants Ensure proposal idea is appropriate in terms of size and scope of activities Speak to Helen and Tom!

Part A is the administrative forms including financial forms Part B is the main proposal text Part B Section 1: Scientific and/or technical quality Section 2: Implementation Section 3: Impact Proposal preparation

EPSS - the ECs Electronic Proposal Submission System The proposal coordinator manages the EPSS account Each partner completes administrative Part A forms, A1 and A2 (info on RED www for UoB) The coordinator uploads the proposal Part B and submits proposal when all information is complete (well in advance of the deadline!) Electronic submission - EPSS

Successful applicants complete Grant Agreement Preparation forms (GPFs) (info on RED www for UoB) Grant Agreement is prepared by the Commission based on information provided in the GPFs Grant Agreement is standard – no negotiation Negotiation stage

Consortium Agreement (CA) is negotiated and signed prior to signature of grant agreement CA provides structure for decision making, conflict avoidance, conflict resolution and exit and fills in the gaps left by the model grant agreement RED contracts team handles the negotiation of the CA (contact Consortium Agreements

FP7 Intellectual Property Rights (IPR) Access rights to background Access rights to foreground For carrying out the project Yes, if a participant needs them for carrying out its own work under the project Royalty-free unless otherwise agreed before acceding to the grant agreement Royalty-free For use (exploitation + further research) Yes, if a participant needs them for using its own foreground Either fair and reasonable conditions or royalty-free to be agreed

Official FP7 website: Marie Curie: ERC: European Commission FP7 Factsheet: RED FP7 pages: UKRO: UoB EC Timesheet: timesheet.xls Useful links

FP7 Model Grant Agreements: grant-agreement_en.html#standard_ga FP7 Financial Guidelines: ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf FP7 IPR Guidelines: ftp://ftp.cordis.europa.eu/pub/fp7/docs/ipr_en.pdf FP7 essential documents