CLU000026EN01-06PP-FP7-Opinion-OR.ppt European Parliament, ITRE, 3.04.2006 1 Exchange of views –...

1CLU000026EN01-06PP-FP7-Opinion-OR.ppt European Parliament, ITRE, 3.04.2006

Exchange of views – Industry, Transport, Research & Energy Committee (ITRE)

of the European Parliament

Commission Proposal for aREGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

laying down the rules for the participation of undertakings, research centres and universities

in actions under the Seventh Framework Programme and for the dissemination of research results (2007-2013)

Presentation by Mr François COLLING (Member of the Court)

European Parliament, Strasbourg, 3 April 2006


Background information concerning the forthcoming Opinion

Legal acts:

– REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down the rules for the participation of undertakings, research centres and universities in actions under the Seventh Framework Programme and for the dissemination of research results (2007-2013)“, hereinafter "Rules for Participation“ *

Requested by:

– Commission in the citations of the "Rules for Participation"

– Parliament - submitted to the Court of Auditors on 2 March 2006

Prepared by:

– an ad-hoc “Working Group” set up by the Court which has carried out preliminary discussions with Commission representatives and with stakeholders (such as national research ministries and agencies, international research organisations and European associations of entities participating in the RTD framework programmes).

Adopted by Court in its meeting on 5 & 6 April 2006 (planned)

* By analogy, the Opinion also applies to the Commisson proposal for the “Rules for participation” of the European Atomic Energy Community (Euratom) Seventh Framework Programme (2007-2011)”, COM(2006)42 final, 7.2.2006

General observations


Legal base of the Seventh Framework Programme (FP7) consists of three layers

• The FP7 legal base consists of three layers ...

– a Decision of the European Parliament and of the Council concerning the European Community FP7 for research, technological development and demonstration activities (2007 to 2013) and of the Council concerning the European Atomic Energy Community (Euratom) FP7 for nuclear research and training activities (2007 to 2011) - BUILDING THE EUROPE OF KNOWLEDGE

– a number of Council Decisions concerning the Specific Programmes*

– a Regulation of the European Parliament and of the Council laying down the “Rules for participation” for the EC FP7 and a Regulation of the Council for the Euratom FP7

• ... which will be complemented by additional rules and guidelines established and adopted by the Commission

* i.e. "Cooperation" (collaborative research , joint technology initiatives and technology platforms as well as coordination between national programmes), "Ideas", "People" and "Capacities", for the actions of the Joint Research Centre, and for nuclear research and training activities under the European Atomic Energy Community (Euratom) Treaty



Commission’s proposal for “Rules for participation” misses opportunity for a radical change (1)

• The European Union's RTD framework programmes are the world's largest multinational research programmes in terms of funding and participation

• Several thousand legal entities participate in each RTD framework programme, using a considerable variety of distinct types of indirect actions. Most of these are multi-partner actions carried out by a consortium of several participants

• Participants have indicated to the Court that they consider Community grants to be excessively cumbersome to administer, in particular in the absence of appropriate guidance by the Commission

• The Commission's procedures for awarding grants take too long and that the use of Community funds is insufficiently flexible to take account of the rapid changes in science

• As a result, the most innovative research projects are often not submitted to the European RTD framework programmes



Commission’s proposal for “Rules for participation” misses opportunity for a radical change (2)

• The following general principles should guide the legislator when adopting FP7:

– Research is driven by the scientific knowledge and expertise of individual researchers. Only flexible grants allow them to carry out the most promising research, and, in such cases, researchers are more likely to develop the sense of ownership which is required to succeed

• The consortia must be given the means to react speedily to external and internal changes during the lifecycle of a project

• This implies that the decision-taking powers of the co-ordinator will have to be strengthened (e.g. scientific programme, but also allocation of financial resources in accordance with a set of rules previously agreed)

– The counterpart of increased flexibility must be enhanced scientific and financial accountability towards the Commission. This should however not imply excessive paper-based reporting, but instead should be based on a peer review mechanism, possibly through hearings. Based on the results of such reviews, the Commission should have the possibility to discontinue non-performing indirect actions so that public money is not wasted

• Researchers participating in the European RTD framework programmes can be trusted to put public money to its best use, provided this remains within the limits established by the legal base to ensure effective and adequate control by the Commission

• When determining these controls, it should be acknowledged that the risk of failure is an inherent feature of all research activities



Key proposals to achieve further flexibility and simplification for participants in FP7

• Areas where the Commission proposal may not be sufficient to achieve the required flexibility and simplification for participants in FP7:

– organising a centralised and ex-ante verification of legal entities

– requiring the Commission services to use common databases and to exchange data electronically

– applying a more flexible governance structure for indirect actions, with the Commission concluding a grant agreement with the coordinator acting on behalf of the other participants

– using reviews (or hearings), ideally by peers, as a monitoring tool for indirect actions

– providing for a single cost reimbursement system which allows participants to determine the Community financial contribution in a transparent, robust and simple-to-administer way

– encouraging the use and the dissemination of results of indirect actions and the transfer of ownership



Applicability of the "Rules for Participation" to activities funded within the framework of the

European Research Council (ERC)

• According to the Commission proposal, the European Research Council (ERC) will act as an advisory body, supplemented by an executive agency to provide an administrative structure

• The proposed structure will provide sufficient assurance that the ERC’s scientific autonomy will be guaranteed, and that its management structure can be agreed and implemented sufficiently quickly

• The "Rules for Participation" should also apply to activities funded within the framework of the ERC to ensure that the same principles apply to all types of Community funding for the different schemes established in Annex III a) of the "Decision"

• However, the following specific issues require a further clarification:

– “portability of grants”: ensuring that a grant for investigator-driven “frontier” research can be transferred if a specific researcher moves to another research organisation

– selection and award criteria: provision should be made for specific criteria for investigator-driven “frontier” research funded within the framework of the ERC

– nomination of experts and monitoring: Given the specificity of ERC funding, this should be the responsibility of the ERC's “Scientific Council”, or its competent subcommittees



Specific observations

• The Commission should establish more specific rules and procedures for the verification of participants, but

– The request for documents and checks to be made must be in proportion to the financial risk involved

– allowance must be made for the capacity of certain legal entities (such as public bodies or SMEs) to produce the requested information

• Almost all legal entities participate in several indirect actions, often administered by different Commission services. As evidenced by the Court's audits, this often implies that the same information is requested over and over again

Centralised and ex-ante verification

Common databases and electronic

exchange of data

More flexible governance structure

for indirect actions

Peer reviews (or hearings)

as monitoring tool

Simplified financing systems for

indirect actions

A centralised ex-ante verification system should be set up and the verification to be carried out independently of the evaluation of proposals:

• to be based on supporting documents provided by the legal entity• its existence and legal status as well as its financial and operational capacity to be verified• documents must be up-dated periodically, or whenever requested by the Commission• Commission certifies a successful verification to avoid double verification (applicable to all Commission services and executive agencies)

Use/dissemination of results and

transfer of ownership



• The Commission's IT systems should permit computerised transaction processing at every stage of the procedure

• Despite its longstanding commitment to implementing such a system, the Commission has consistently failed to do so

• The Commission intends to provide for electronic submission and a unique registration facility, as stated in the Explanatory Memorandum, but no provision is made in the “Rules for participation”



exchange of data




as monitoring tool


indirect actions

Specify in the "Rules for Participation“ the obligation to set up integrated databases and a common computerised system including:

• electronic proposal submission, • identification and selection of experts, • proposal evaluation and selection, • negotiation of proposals, • the award and management of grants, • the receipt of project deliverables (such as reports and financial statements) and • communication with participants





• Traditionally, the Commission has used private law contracts to establish a legal relationship between and with participants

• The intention behind this approach was to strengthen the coordination between legal entities from different countries and to further multi-national cooperation

• As a result, participants often consider themselves to be contractors for the Commission or see Commission as an active partner in the consortium. This has also created a "de facto" veto right for each participant, resulting in the loss of the flexibility required for sucessful research



exchange of data




as monitoring tool


indirect actions

A simplified governance structure for consortia carrying out indirect actions is to be defined in the “Rules for participation”:

• the specific rights and obligations of each participant should be defined in the consortium agreement

• the Commission should conclude a grant agreement with the coordinator, acting on behalf of the other participants

• only elements essential for the indirect action as a whole are covered by the grant agreement (e.g. duration; scientific and technical obligations; the budget of total estimated costs; the maximum Community contribution)







exchange of data




as monitoring tool


indirect actions

The “Rules for participation” should explicitly provide for reviews (or hearings), possibly by peers, as an alternative monitoring approach



• The Commission proposes that the monitoring of indirect actions is mainly based on progress reports

• No distinction is made between main FP7 and funding under the European Research Council

The the monitoring of investigator-driven “frontier” research funded within the framework of the ERC should be the responsibility of its “Scientific Council”, or its competent subcommittees





exchange of data




as monitoring tool


indirect actions



• The Court welcomes proposals to simplify financing systems (see Special report 1/2004, Annual Reports) ... but, the Commission does not say for which types of actions, forms of grants, specific activities and types of costs (i.e. direct or indirect), flat rate financing, including scale of unit costs, or lump sum financing will be applied.

• Unless the legal base is explicit in this respect, participants lack the needed legal certainty with regard to the FP7 financial rules

With regard to lump sums for whole actions, including those proposed for "Networks of Excellence", the Court recommends a more cautious approach (only "coordination and support actions" and "actions for training and career development of researchers“)

Court proposes alternative system to determine the Community financial contribution in a transparent, robust and simple-to-administer way:

• based on single cost system, • three cost categories for direct costs (personnel, travel, other specific costs), and • other simplification measures (use of budgeted costs, average or category-specific rates, negotiated flat rates for indirect costs based on internal rates, negotiated lump sums for specific items, etc.)





exchange of data




as monitoring tool


indirect actions



• In the case of industry participants, the relevant background is often not owned by the legal entities participating but by another entity within an industrial group

• Jointly-owned knowledge may not be exploited at all due to the reluctance of certain consortia members to give authorisation for protection of the knowledge

• No general necessity for the Commission to be given prior notification of a transfer of ownership

Adding the obligation to conclude a joint ownership agreement

Establishing in “Rules for participation” reciprocal access rights for affiliated entities to remove this specific disincentive for industry

Transfer of ownership notification towards the Commission should be required only in specific circumstances (inconsistency with European economic competitiveness or with ethical principles). In all other cases, arrangements concerning the transfer of ownership should be dealt with by the participants


Overall conclusion

• The Court considers that in many areas the Commission proposal constitutes an important step towards the simplification and flexibility necessary for an economic, effective and efficient implementation of FP7

• However, the principles and criteria that should have guided these changes have not always been followed and, as a consequence, the Commission has missed the opportunity to achieve the required simplification

• Some of the Commission proposals are not justified and risk complicating the management of FP7 unnecessarily

The Commission's proposal for a simplified financing mechanism falls short of creating a transparent, robust and simple-to-administer system to calculate and report costs and determine the Community financial contribution

Unless significant changes are adopted by the legislator, the dissatisfaction of participants will persist and the rate and frequency of over-declaration of costs by participants will continue to be material under FP7

CLU000026EN01-06PP-FP7-Opinion-OR.ppt European Parliament, ITRE, 3.04.2006 1 Exchange of views –...

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