1. Administrative, legal and financial aspects of the negotiations
“Environment (including climate change)” Theme
Negotiations Calls
Information Day for project coordinators
18 January 2012
Administrative, legal and financial aspects of the negotiations
Vincent Favrel
Acting Head of Unit
Unit I.5 – Administration and Finance
Directorate I – Environment
European Commission - Research DG
18 January 2012

2. Administrative, legal and financial aspects of the negotiations
Outline:
Administrative requirements
Contribution from third parties
Calculating the budget
Other GA specifications
Conclusions
18 January 2012

3. Administrative, legal and financial aspects of the negotiations
Administrative requirements:
Validation of legal entities Verification of the Financial Viability
Grant Preparation Forms signed
Interest-bearing bank account
Contribution from third parties
Calculating the budget
Other GA specifications
Conclusions
18 January 2012

4. Administrative requirements:
Validation of Legal Entities
Validation of all legal entities participating as beneficiary or third party carrying out part of the work (SC10) is required before signing the Grant Agreement.
Validation of SME status is essential:
Higher funding rate;
Minimum EU contribution to SMEs is an eligibility criteria for some topics and will be checked at the end of the negotiations
Participants not-yet-validated have to register in the Unique Registration Facility or URF in order to get a Participant Identification Code (PIC)
DEADLINE to register and submit the documents required for the validation: 31 January 2012!
18 January 2012

5. Which participants are concerned?
Administrative requirements: Verification of the Financial Viability (1/3)
Which participants are concerned?
coordinators;
beneficiaries requesting an EU contribution > €500,000
and which are not:
natural persons in receipt of scholarships;
public bodies;
international organisations referred to in Article 43(2) of the IR;
legal entities whose participation in the indirect action is guaranteed by a Member State or an Associated country;
higher and secondary education establishments.
 SMEs, Non-profit Research Organisations and Non-Governmental Organisations are concerned!
Organisations subject to substantial financial findings following a financial audit within the last 2 years.
18 January 2012

6. DEADLINE for submitting the documents through the URF:
Administrative requirements: Verification of the Financial Viability (2/3)
Procedure
Participants subject to a mandatory verification of their financial viability are identified in NEF
Request for documents will be sent to the participants in order to upload the supporting documents to the URF
Analysis carried out centrally by the Research Executive Agency
Based on the results of the analysis, a decision is made concerning the participation of the legal entity in the project
Financial Viability Check Tool available on Cordis for pre-check:
DEADLINE for submitting the documents through the URF:
31 January 2012!
18 January 2012

7. Possible impacts for the project?
Administrative requirements: Verification of the Financial Viability (3/3)
Possible impacts for the project?
Participants financially weak will not be allowed to be coordinator!
New administrative coordinator to be proposed
Tasks to be reallocated within the consortium
Other measures may be adopted to protect EU financial interests:
Reduced pre-financing
Reinforced monitoring through more regular reporting (i.e shortest reporting periods), systematic project reviews, technical and/or financial audits of financially weak beneficiaries
18 January 2012

8. Administrative requirements: Grant Preparation Forms - GPFs (1/2)
Information to be provided in the Grant Preparation Forms
Legal and administrative information on the project participants and their indicative budget, including:
Legal information validated centrally based on the documents provided through the URF (e.g. legal name, address, legal representatives, Indirect Cost Method)
 Any change can only be requested by the LEAR via the URF
Project-specific information (e.g department-level information, contact persons, participant acronym, eligible costs and EU contribution, third-parties, etc.)
 Change can be made directly by the coordinator and other beneficiaries
18 January 2012

9. Administrative requirements: Grant Preparation Forms - GPFs (2/2)
After the closure of the negotiations, the complete set of final GPFs approved by the Commission has to be sent with the following forms in a signed paper version:
For all beneficiaries:
Forms A.2.1 to A Form A2.5 ‘Our Commitment' signed by the authorised representative(s) who will sign the GA (if different, a written confirmation will be requested later);
In addition, for the coordinator:
Form A2.6 'Data Protection and Coordination Role' signed by the coordinator's authorised representative;
If not validated yet: Form A4 'Bank Account' duly completed + bearing the bank stamp and the signature of the bank representative of the coordinating organisation's bank as well as the account holder's signature, with date.  Draft form to be sent as soon as possible to the EC Project Officer to check if a signed version is needed.
18 January 2012

10. Administrative requirements: Interest Bearing Bank Account
Coordinator’s bank account specified in the GA must be interest-bearing (Art. II.19).
NEW No written confirmation that the bank account is interest bearing to be provided before signing the GA!
Exemptions to this rule may exceptionally be granted when an interest-bearing bank account cannot be opened and/or operated (NEW) for legal reasons or if it would entail heavy administrative procedures
Exemption must be requested by the LEAR via the URF (not to the PO!);
18 January 2012

11. Administrative, legal and financial aspects of the negotiations
Administrative requirements
Contribution from third parties
General rules Third parties making resources available
Subcontracting
Third parties carrying out part of the work (SC10)
Calculating the budget
Other GA specifications
Conclusions
18 January 2012

12. Contribution from third parties General principles
Beneficiaries should have the operational capacity to carry out the work themselves.
Under certain conditions, legal entities that are not part of the consortium may also contribute to the projects and the costs incurred by these third parties not signing the GA may be eligible.
Three types of third parties can be identified depending on their contribution to the project
In all cases:
A beneficiary cannot be third party to another beneficiary
Third party’s contribution (tasks + budget) should be discussed, approved and described in the Description of Work (sections B.2.3 and B.2.4)!
The beneficiary retains sole responsibility for the work
18 January 2012

13. Contribution from third parties Key questions (1/2)
Is the third party carrying out part of the work under its own supervision OR is it simply making resources (staff, infrastructures, etc.) available to a beneficiary?
If the third party makes resources available to a beneficiary:
Are the resources under the full supervision, management and control of the beneficiary?
Does the beneficiary reimburse the third party (= eligible costs) or is it free of charge (possibly a receipt for the project)?  Costs reported by the beneficiary itself (not the third party)
Examples:
Foundations, spin-off companies, etc., created in order to manage the administrative tasks of the beneficiary
The case of resources (professors/equipment) working for, or used by a university but whose salaries/costs are paid by the Government: beneficiary is free to use these resources at will
18 January 2012

14. Contribution from third parties Key questions (2/2)
If the third party is carrying out part of the work:
Does its contribution concern a limited part of the work or the provision of (technical) support to a beneficiary?
Is it a service provided at market price, for profit with no specific interest in the research?
Third party = subcontractor  Only the tasks and indicative budget (not the name of the subcontractor) have to be identified in the proposal and fair and transparent contract awarding procedure will have to be followed! OR
Does its contribution concern research tasks with scientific added value?
Is there a formal relationship between the beneficiary and the third party prior and not limited to the project?
Are the costs of the third party charged without profit?
Third party + beneficiary = members of a Joint Research Unit (UMR), a grouping (e.g. EEIG) or affiliates  Grant Agreement must include the Special Clause 10 and the third party will claim its own costs.
18 January 2012

15. Contribution from third parties
Points to bear in mind when preparing the Description of Work (Annex I) and GPF:
Please make sure that all possible internal and external contributions are identified and properly described in the DoW (sections B.2.3 and B.2.4) and GPF (A.3.1-2)
Subcontracting to remain limited
Third parties identified under the Special Clause 10 should be validated
The GA (via Special Clause no 10 to be included in Article 7) refers to third parties linked to
a beneficiary. The term "linked" refers to an established formal relationship between a
third party and the beneficiary, defined by the following characteristics:
• This relationship by nature is broad and is not limited to the GA, or specifically
created for the work in the GA.
• Accordingly, its duration goes beyond the duration of the project and usually predates
and outlasts the GA.
• It has a formal external recognition, sometimes in the framework of a legal structure
(for example, the relationship between an association and its members), sometimes in
the absence of legal personality, through the sharing of common infrastructures and
resources (joint laboratory), separate from those of the legal entities composing them,
or common ownership (affiliates, holding companies).
"Ad hoc" collaboration agreements between legal entities to carry out work in the project are therefore not covered by this clause; in these cases both legal entities should be beneficiaries
The rules relating to eligibility of costs, identification of direct and indirect costs and upper funding limits apply. Equally those concerning controls and audits
They have to be identified in special clause No 10 and their name, tasks and resources have to be described in Annex I.
• Each third party fills in its costs in an individual Form C and, where necessary, shall provide its individual certificate on financial statements and/ or on the methodology independently from those of the beneficiary. The beneficiary will submit both forms and a summary report integrating both the costs of the beneficiary and those of the third party(ies).
18 January 2012

16. Administrative, legal and financial aspects of the negotiations
Administrative requirements
Contribution from third parties
Calculating the budget
General rules Allocation of tasks to activity type
Exceptions
Other GA specifications
Conclusions
18 January 2012

17. Calculating the budget: General principles (1/2)
Form of grant: reimbursement of direct and indirect eligible costs (see definition in GA Art. II.14)
Eligible costs must be actual and may include:
Costs of personnel working on the project (to be documented by time sheets)
Subcontracting costs
Other costs: travel and subsistence; durable equipment; consumables and supplies, etc.
Indirect costs calculated according to the Indirect Costs Method validated for each legal entity (actual costs, simplified method, standard and special transitional flat rate)
18 January 2012

18. Calculating the budget: General principles (2/2)
EU contribution
Legal entities established in Member States, Associated Countries, ICPC and international European Interests organisations are eligible for EU funding
Maximum reimbursement rate (50%, 75% or 100%) depending on:
the legal status of the organisation (e.g. public vs private)
the funding scheme (e.g. collaborative project vs coordination and support action)
the type of activity (e.g. research vs management)
Reporting:
Costs to be reported at the end of each period (Form C)
Certificates on Financial Statements (CFS) to be provided when (and only when) the EU contribution requested exceeds € CFS-related costs to be budgeted as management costs (e.g subcontracting).
18 January 2012

19. Calculating the budget: Allocation of resources and related costs to activity types (1/2)
Types of activities (funding rate):
RTD – Research and technological development activities (50%-75%)
DEM – Demonstration activities (50%)
COORD/SUP – Coordination and support activities (100%)
MGT – Management activities including (100%):
Overall legal, ethical, financial & legal coordination;
Certificates on Financial Statements (ONLY if contractually required!);
Audits & Technical Review costs;
Implementation of competitive calls for the selection of additional beneficiaries
Maintenance of the Consortium Agreement;
OTH – Other activities (100%) including:
Dissemination, networking, intellectual property rights (patent), studies, promotion of the exploitation of results
Training and career development of researchers actions
18 January 2012

20. Calculating the budget: Allocation of resources and related costs to activity types (2/2)
Points to bear in mind when preparing the Description of Work (Annex I):
Tasks and efforts to be allocated to the correct activity type
One activity type per Work Package as a general rule
In addition to research (coordination/support) Work Packages, you should generally have one Work Package for management + one Work Package for dissemination (incl. communication and training activities)
Costs and EU contribution budgeted in the Grant Preparation Forms (GPF A.3.1) must be consistent with the task allocation in the Description of Work (work plan tables WT1, WT3 and WT7 in particular)
18 January 2012

21. Calculating the budget: Exception - Third Countries and International Organisations
Legal entities established in International Cooperation Partner Countries (ICPC) are entitled to EU funding.
Participants from third countries other than ICPC (i.e. high-income countries) + International Organisations (different from International European interest organisations) may:
Participate if participation conditions already fulfilled;
Receive funding only if:
provided for in the SP or WP
the EU financial contribution in respect of this participant is essential for carrying out the project  it should be duly justified and approved by Commission services
provision for funding is provided for in a bilateral agreement between Community and the third country.
18 January 2012

22. Calculating the budget: Exceptions - Average personnel costs and flat rates
Costs claimed may not be actual in the following cases:
Average personnel costs if it is based on a methodology considered as beneficiary’s usual cost accounting practice and applied consistently to all participations in FP activities (see new eligibility criteria in the Decision on 3 measures to simplify the management of EU FP7 grants);
Natural persons (self-employed, one-man company, etc.) and SME-owners who do not receive a salary registered as such in the accounts
Use of a flat rate based on the ones published in the annual “People” Work Programme (Marie Curie Fellowships) and a standard number of productive hours equal to per year;
Flat rates may be used to claim daily subsistence costs and accommodation related to travel as part of the implementation of a project it applies to any travel of this participant in the specific project or only for external experts/advisors needed for the project;
Details on the budget calculation to be provided in the Description of Work (section B.2.4)
18 January 2012

23. Calculating the budget: Exceptions – Lump sums (1/2)
Optional alternative funding form for International Cooperation Partner Countries’ participants
The lump sum covers all the costs of an ICPC participant, including not only the costs for personnel and travel, but also those of equipment, consumables and indirect costs.
Lump sum calculated based on:
Lump sum amount per researcher per year based on the economy of the ICPC (3 income groups)
The number of person-years requested for the project by the legal entity (efforts for research activities only!)
As for any other participants, the reimbursement rate is based on the funding scheme and the legal status
18 January 2012

24. Eligible costs and EU contribution: Exceptions – Lump sums (2/2)
Points to bear in mind when preparing the DoW and the GPF:
Make sure that the lump sum is calculated according to the rules and consistent with the contribution (in Person-Months) of the participant to the project activities:
 Consistency between GPF A.3.1 and the Description of Work (WT3, WT6 and WT7 in particular) must be ensured
Interest of ICPC participants to use the lump sum option should be checked at an early stage
18 January 2012

25. Calculating the budget: Exceptions – Indirect Costs in Coordination and Support Actions (1/2)
Specific rules for Coordination and Support Actions:
The transitional flat rate of 60% does not apply to Coordination and Support Action (CSA) but only to funding schemes with RTD and demonstration activities
 The 20% standard flat rate applies and is calculated automatically in NEF for the participants using the transitional flat rate of 60%
100% EU funding of direct eligible costs BUT indirect costs will be reimbursed up to maximum 7% of the direct eligible costs, excluding subcontracting and the costs of resources made available by third parties which are not used on the premises of the beneficiary.
18 January 2012

26. Eligible costs and EU contribution: Exceptions – Indirect Costs in Coordination and Support Actions (2/2)
In GPF A.3.1 (Participant’s budget), participants able to calculate their actual indirect costs should indicate their “indirect costs” based on the rate used in their general accounting practice and not use the 7% corresponding to the “maximum reimbursement indirect costs”
=“real” rate
= 7%
18 January 2012

27. Administrative, legal and financial aspects of the negotiations
Administrative requirements
Contribution from third parties
Calculating the budget
Other GA specifications
Consortium agreement Duration and start date
Reporting periods
Pre-financing
Special Clauses
Conclusions
18 January 2012

28. Other GA specifications: Consortium agreement
Consortium agreement (Article 1.4)
Mandatory only for:
collaborative projects (large-scale integrating projects);
«Research for the Benefit of Specific Group – Civil Society Organisation» [BSG-CSO]
But recommended in all cases and may be required by the Project Officer
It cannot contradict the terms of the EU Grant Agreement and its annexes
To be concluded by the beneficiaries before the entry into force of the Grant Agreement (i.e signature by the Commission)!
A checklist is available on Cordis at:
18 January 2012

29. Other GA specifications: Project duration and start date
Duration of the project (Article 3):
In principle, duration specified in the negotiation mandate
Deviations from the duration in the original proposal must be duly justified
Start date (Article 3):
Different options:
1st day of the month following the entry into force of the GA (default option)
Fixed starting date (to be duly justified if before entry into force of the GA)
To be notified within x months following the entry into force of the GA
 Special Clause 6 “Late payment of pre-financing” needed if start date later than 45 days after GA signature
To be discussed and agreed with the Project Officer
18 January 2012

30. Other GA specifications: Reporting periods (1/2)
Reporting periods (Article 4):
18-month period to be used as a general rule to reduce the administrative burden
18 months is a maximum duration for a reporting period
If project duration not multiple of 18 months:
Preference should be given to shorter periods at the end of the project (e.g instead of )
More balanced periods can also be envisaged for a better monitoring of the project (e.g instead of 18+6)
18 January 2012

31. Other GA specifications: Reporting periods (2/2)
Periodic reports to be submitted by coordinator 60 days after end of period:
overview of progress of the work, including a publishable summary report,
use of the resources and
Financial Statement (Form C)
When relevant: Certificate on Financial Statements (CFS)
Final reports to be submitted by coordinator 60 days after end of project:
publishable summary report, conclusions and socioeconomic impact,
covering wider societal implications and a plan on use and dissemination of foreground.
Commission has 105 days to evaluate and execute the corresponding payment:
No tacit approval of reports
Automatic payment of interests
18 January 2012

32. Other GA specifications: Pre-financing
Pre-financing (Article 6):
One pre-financing to be paid within 45 days after entry into force of the GA
Pre-financing rates:
For projects with 1-2 periods (≤36 months): 60-80% of the total EU contribution.
For projects with more than two periods (>36 months): 160% of estimated average EU funding per reporting period:
3 periods  53.33%
4 periods  40.00%
5% of maximum EU contribution (Art. 5.1 GA) is transferred from the pre-financing to Guarantee Fund
Signed Form A needed by the Coordinator before transfer of pre-financing can be made to a beneficiary
18 January 2012

33. Other GA specifications: Special Clauses (1/3)
Special Clauses of general use (Article 7)
1. PARTICIPATION BY THE JRC
2. INTERNATIONAL ORGANISATIONS - General rule
3. INTERNATIONAL ORGANISATIONS - UNITED NATIONS
4. COORDINATION AND SUPPORT ACTIONS (CSA) with one single beneficiary
5. PROJECT REVIEW (mid-term and/or end of the project)
9. BENEFICIARIES WITH COSTS INCURRED IN RELATION TO THE PROJECT BUT NO EU CONTRIBUTION (e.g from third countries not entitled to EU funding)
10. THIRD PARTIES LINKED TO A BENEFICIARY [JOINT RESEARCH UNITS (UNITÉS MIXTES DE RECHERCHE, UNITÉS PROPRES DE RECHERCHE ETC.) EEIGS/ GROUPINGS/AFFILIATES
18 January 2012

34. Other GA specifications: Special Clauses (2/3)
Special Clauses of general use (ctd.)
13. ETHICAL RULES
15. ETHICAL REVIEW
16. CLINICAL RESEARCH (SPECIFIC TO BIOMEDICAL RESEARCH INVOLVING HUMAN BEINGS)
29. ACCESS RIGHTS TO FOREGROUND FOR POLICY PURPOSES AND TRANSFER OF OWNERSHIP OF FOREGROUND (SPECIFIC TO ENVIRONMENT RESEARCH)
30. DEPARTMENTS/INSTITUTES ETC. WITHIN A LEGAL ENTITY THAT CAN IDENTIFY THEIR REAL INDIRECT COSTS WHERE THE (WHOLE) LEGAL ENTITY CANNOT
39. OPEN ACCESS (SPECIFIC TO “ENVIRONMENT (INCLUDING CLIMATE CHANGE”)
18 January 2012

35. Conclusions
(1/2)
Administrative, financial and legal aspects are an essential part of the negotiations (potential impact on consortium composition, tasks and budget allocation)
 They should be addressed at an early stage!
In particular, specific attention should be paid to:
Validation and verification of financial viability of legal entities when required
Completeness and validity of documents submitted to the Commission services (incl. GPF, DoW, legal and financial documents)
Consistency of information provided in GPF and Description of Work
18 January 2012

36. Conclusions (2/2) To help you: Today: Bilateral meetings with PO
Assistance by the Administration and Finance Unit’s staff during the afternoon: Please make your appointment during the coffee break!
Later:
Checklist for coordinators
Reference documents
18 January 2012

37. Documents to read carefully (all beneficiaries!)
More information?
Documents to read carefully (all beneficiaries!)
Model Grand Agreement (incl. the General Conditions and Special Clauses)
Reference documents
Rules for participation and dissemination of results
Guide to Financial Issues
Rules to ensure consistent verification of participants
Guide to Intellectual Property Rules
Guidance notes on project reporting
Guidance notes on audit certification
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18 January 2012