1. EuropeAid 1 Revision of Financial Regulation & Its Implementing Rules Brussels, 16 November 2010

2. EuropeAid 2 SUMMARY 1.INTRODUCTION 2.DELEGATED COOPERATION 3.ASSIGNED REVENUES 4.PROCUREMENT, GRANTS OTHER TYPES OF FINANCIAL CONTRIBUTION

3. EuropeAid 3 1 INTRODUCTION

4. EuropeAid 4 Introduction Context Wider context: preparation for the post-2013 programmes will also be under way Calendar: Entry into force of the package: the latest by 1 June 2012. Main areas of simplification: o Delegated cooperation o Assigned revenues & establishment of Trust Funds o Grants o Procurement

5. EuropeAid 5 2 DELEGATED COOPERATION

6. EuropeAid 6 Management modes New structure Direct managementIndirect management EU Budget Heads of Delegation TWO main categories Member States (shared management) Third countries International organisations National agencies EIB-EIF / Financial institutions Public & Private Partnerships CFSP Missions Regulatory agencies

7. EuropeAid 7 Management modes (2) New structure (1) More entities for indirect management Same bodies as before: o Member States (sub-category - shared management) o national public service mission bodies o beneficiary countries o bodies under art 185 (“traditional agencies”) o persons under CFSP o EIB/EIF and o international organisations … but also new type of entities: PPP, FI

8. EuropeAid 8 Management modes (3) New structure (2) New elements relating to existing entities “EU Member States”: o Delegations to Member States will continue to be done under “shared management”(it is not ICM!) o In External action, it is very exceptional: IPA: cross-border cooperation ENPI: cross-border cooperation International Organisations: o Other organisations assimilated by Commission decision o No more limited to three cases o EIB/EIF not anymore considered international organisations (ad hoc category) Note: Executive Agencies – it is now direct management!

9. EuropeAid 9 Management Modes (4) New structure (3) New entities! Public Private Partnerships: cooperation between public authorities and private sector for performance of public contracts or concessions: o Established in Member States; OR o Established by a Basic Act Financial Institution implementing “financial instruments”: o EU MS is a shareholder OR o Established in a EU MS with a public service mission o If use of intermediaries: (i) they must satisfy same criteria; and (ii) no located in non-cooperative jurisdictions

10. EuropeAid 10 Management Modes (5) Ex ante assessment Harmonization of pillars Limitation to 4 pillars: procurement/grants/financial instruments; accounting; internal control and audit Clarification of standards for pillars: o Audit: international standards o Internal control: international standards o Accounting: international standards o Procurement/Grants (general principles)/Financial instruments (principles of FR) New! National agencies will be able to apply their procedures for grants

11. EuropeAid 11 Management Modes (6) Ex ante assessment (2) Alignment and mutual recognition Who does the ex ante assessment? RAO, but he/she can rely on assessment by: o other RAO if conclusions are relevant to the specific risks of tasks to be entrusted (nature and amounts) o New! Other donor (only for third countries) if same criteria and standards as benchmarks (cf. EU Operational Framework for Aid Effectiveness, Part II, Section B) o Exception: EIB/EIF ex ante assessment will only be made once for all future implementation of financial instruments

12. EuropeAid 12 Management Modes (7) Obligations in indirect management New contractual obligations (art 53b FR & 34d IR) Harmonization New FR obligations but already specified in the existing models (publication of beneficiaries, provisions on irregularities and fraud, suspension, termination) New obligations (which need amendment of existing models): o Reasonable level of data protection, o Contact point for OLAF o Additional obligations for financial instruments managed by EIB/EIF/financial institution

13. EuropeAid 13 Management Modes (8) Deadlines for signature and contracts More clarity and flexibility (art 166 FR & 34d IR) All agreements for indirect management concluded between the EU and delegatees by 31 December N+1; Contracts concluded by the delegatees to implement the action, concluded in D+3, except for multi-donor actions; Conclusions: o Alignment to all cases of indirect management; o More flexibility for agreements with National Agencies: Under current rules if there is no FA, contracts should be signed in N+1; More flexibility for multi-donor actions.

14. EuropeAid 14 Management Modes (9) Procedures More consistency and simplification (Art 43b IR) Procurement: “international standards” specified (principles of transparency, non discrimination, competition) – reference to the EU Directives Grants: new for EU budget! procedures can also be used by national agencies if compliant with the principles mentioned (non-retroactivity, co-financing, etc).

15. EuropeAid 15 Management Modes (10) Control issues Reinforcement of assurance/control (art 53b(5) FR) Obligation to provide the Commission with*: o financial and narrative report and summary of results of all available audits and controls carried out concerning the action by 1 February o a management declaration of assurance by 1 February* o an audit opinion on the DAS by 15 March* Clearance of accounts procedures applicable to all indirect management entities (art 34cb IR) * Flexibility to be negotiated with IO and third countries

16. EuropeAid 16 Management Modes (11) C onclusions What is new for national agencies? Only four pillars. New obligations: data protection, reinforced assurance. Possibility to recognise “assessments” made by national agencies of procedures of beneficiary countries. More flexibility for contractualisation period (D+3 or more in cases of multi-donor actions). Possibility to use its own grant procedures.

17. EuropeAid 17 3 ASSIGNED REVENUES

18. EuropeAid 18 Assigned revenues: Transfer Agreements More potential donors: legal entities (i.e. private foundations) and natural persons; No requirement of authorization by Basic Act: new possibility for actions without Basic Act (i.e. joint evaluations); Flexibility for the priority rule: if an action is not completed the funds from donors can be reimbursed; Carry over provision (for both operational and administrative expenditure) for the whole duration of the action;

19. EuropeAid 19 Assigned revenues: Transfer Agreements (2) Making available commitment appropriations: o With Member States in EURO: upon signature of Transfer Agreement for the whole amount indicated in the Agreement o With Member States in another currency: upon actual receipt of funds

20. EuropeAid 20 4 PROCUREMENT, GRANTS & OTHER TYPES OF FINANCIAL CONTRIBUTION

21. EuropeAid 21 Procurement New thresholds – Service contracts CURRENT THRESHOLDSPROPOSED THRESHOLDS > 200,000International restricted> 300,000International restricted 10,000 – 200, 000 FWC (where possible) / Competitive Negotiated 20,000-300,000 FWC / Competitive negotiated / AMI 0 – 10,000Single tender 2,500-20,000Single tender 0-2,500Invoice

22. EuropeAid 22 Procurement New thresholds – Supply contracts CURRENT THRESHOLDSPROPOSED THRESHOLDS > 150,000International open> 300,000International open 60,000-150,000Local open100,000-300,000FWC / Local open 10,000-60,000Competitive negotiated100,000 -20,000 FWC / Competitive negotiated 0-10,000 Single tender 2,500 -20,000 Single tender 0-2,500Invoice

23. EuropeAid 23 Procurement New thresholds – Work contracts CURRENT THRESHOLDSPROPOSED THRESHOLDS > 5,000,000International open / International restricted (exceptional) > 5,000,000International open / International restricted 300,000-5,000,000 Local open 300,000-5,000,000 Local open 10,000-300,000Competitive negotiated20,000-300,000Competitive negotiated 0-10,000Single tender0-20,000Single tender

24. EuropeAid 24 Procurement New cases for negotiated procedure All: Replacement of contractor - where an new contract has to be concluded after early termination of an existing contract Services: o Extension of services already started: The extension of the contract not limited to a single one (value and duration shall not exceed the value and the duration of the initial contract) o Legal services: competitive negotiated procedure (regardless of value of contract)

25. EuropeAid 25 Procurement Other Eligibility rules for participation in procurement procedures without Basic Act: possibility of third country nationals Quality standards: no limitation to European standards Avoid overregulation: rules mandated by IR would be transferred to PRAG/Instruction Notes

26. EuropeAid 26 Procurement & Grants Guarantees on pre-financing CURRENT RULESPROPOSED RULES Procurement - pre-financing > 150.000 - where financial capacity is not assessed - possible waiver: public bodies Procurement - AO Risk assessment - where financial capacity is not assessed Grants - pre-financing > 60.000 and > 80 % of the grant value - NGO: pre-financing > 1,000,000 or > 90% of the grant value - possible waiver: public bodies and international organizations Grants - AO Risk assessment

27. EuropeAid 27 Procurement & Grants Exclusion Cases New cases: o New illegal activity: Money laundering; o Persons with powers of representation, decision making or control over tenderers/candidates/applicants: illegal activities and professional conduct offence On the basis of decisions taken by: o Professional misconduct: ALSO decisions of EIB and international organizations o Professional conduct offence: ONLY Member State authorities

28. EuropeAid 28 Procurement & Grants Exclusion Cases (2) Two additional exceptions to the obligation to exclude: o Candidates/tenderers/applicants that have taken adequate measures against persons having powers of representation o Captive situations (monopoly) in order to ensure continuity of service: In case of bankruptcy and analogous situations; grave professional misconduct and non compliance with social obligations

29. EuropeAid 29 Grants Performance based grants Output control vs. Input control Tools: o Simplification of lump sums: ex ante methodology or on the basis of budget submitted by applicant o “Factual audits”: was the output of the grant effectively achieved?

30. EuropeAid 30 Grants Sub-granting CURRENT RULESPROPOSED RULES It cannot be the primary aim of the action Conditions for giving financial support are defined in the contract: activities Amounts are small: total < 100,000 and each < 10,000 The beneficiary offers adequate guarantees as regards the recovery. Conditions for giving financial support are defined in the contract: activities, persons/categories, procedures Amounts are small: each < 50,000

31. EuropeAid 31 Grants Rules on pre-financing CURRENT RULESPROPOSED RULES < 250,000Not due Interest is not due unless otherwise provided in agreements. Interest shall be re-used for the corresponding programme. 250,000 – 750,000 Deducted from final payment > 750,000Annual Recovery

32. EuropeAid 32 Grants Other Deadline for submission of applications: By post/courier service: deadline = receipt by the contracting authority and not date of dispatch Co- financing: o more flexibility for 100% financing o Total costs vs. Eligible costs Non profit: o Broader exception (only for external actions): generation of income was provided in the agreement and where it is reinvested to ensure the sustainability of the action o Profit is recovered on a pro rata basis

33. EuropeAid 33 Grants Other (2) Direct award: updated definition of “crisis situation” Operating grants: clarification of bodies pursuing aims of general European interest: not only European bodies Low value grants > 50,000 EUR (eligibility check) No obligation to have selection procedure with Evaluation Committee in case of direct award of grants Extrapolation of errors: o Recurrent errors by one beneficiary proven by controls/audit with impact on non-audited project o Extension of findings to non audited projects and request reimbursement

34. EuropeAid 34 New category of financial contribution: Prizes and financial instruments Prizes are not anymore regarded as grants: new specific rules Financial instruments: o Loans, guarantees, equity/quasi-equity investments or participations, other risk-bearing instruments, possibly combined with grants o Principles shall also apply to directly related elements (i.e. technical assistance) o Implemented: directly or indirectly (EIB, EIF, any other financial institution)

35. EuropeAid 35 Further information On EuropeAid: http://ec.europa.eu/europeaid/index_en.htm On the speakers: Javier RAYA AGUADO Head of Contractual matters section Javier.RAYA-AGUADO@ec.europa.eu Dolores DOMINGUEZ PEREZ Contractual matters section Dolores.DOMINGUEZ-PEREZ@ec.europa.eu Unit G7: Financial and contractual matters, and legal affairs