RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding General Principles  Reflect requirements of the Legal Framework  Simplification No different categories of contractors Reduction of the number of contracts  Greater flexibility Evolution of the project Composition and changes to consortium  Greater autonomy for participants = Collective approach

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Guidelines Will provide supplementary information and guidance notes:  Financial guidelines  Negotiation guidelines  Consortium agreement guidelines  Project management guidelines

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Contract Structure  Core contract(standard with specifics of project)  Annex I (technical tasks - the “project”)  Annex II General Conditions (applicable to every instrument)  Annex IIIInstrument specific provisions (specific to instrument)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Contract Structure  Annex IV - Form A Consent of contractors identified in the core-contract (article 1.2) to accede to the contract. To be signed by the contractor concerned and by the coordinator.  Annex V - Form B Accession of new legal entities to the contract. To be signed by the new contractor concerned and by the coordinator  Annex VI - Form C Financial statement per activity. Specific to each Instrument and/or type of action. To be filled periodically by each contractor

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Contractors l New Every legal entity that contributes to the project (incl. Project Managers) l General Rule: Participant = contractor Every legal entity contributing to a project must have a contractual link with the Community l Exceptional cases: subject to very restrictive rules –Third parties identified in Annex I –Subcontractors

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Coordinator l A contractor among other contractors l No leadership l No additional rights BUT l Additional obligations l Administrative tasks: single entry point for communication, payments, reporting etc.

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Third parties identified in Annex I  In most of the cases they do not participate, they simply make their resources available to a contractor, this is not a case of participation but only a question of eligibility of the cost of these resources  In exceptional cases: “participation” of members of entities such as EEIG,UMR, SMEs Associations: these entities are contractors (EEIG, UMR) their members can do some of the work on the project even though they are third parties contractor and third parties must have a previous agreement, normally the constitution the third parties, the agreement and the tasks must be identified in Annex I

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Subcontracting  Contractors shall ensure that the work to be performed can be carried out by them.  Exception: where it is necessary to subcontract certain elements of the work, this should be clearly identified in Annex I.  Minor services may be subcontracted: which do not represent core elements of the project which cannot be directly assumed by contractors where necessary for the performance of the project

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Signature and entry into force 4Contractual link of all contractors with the Commission 4 New Contract enters into force upon signature of coordinator and Commission 4All the contractors are identified in the core contract [Art. 1.2] 4Coordinator must ensure other contractors sign within delays 4Distribution of advance - Several options available: minimum number of participants/all participants 4Evolution of consortium possible: é where one or more does not sign the Form A [article 2] é in case of enlargement (new contractors) [article 3] 4Project begins in the date established in the contract (this can be before the contract enters into force but usually later)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Amendments  Art.10 of Core Contract & Art.8 of Annex II  Request in writing  New at the request of the coordinator, deemed to act on behalf of the consortium  New Tacit amendments with implicit agreement of the Commission within 6 weeks only for modification and evolution of the consortium and for technical reports  New in IP/NoE, enlargement of the consortium to new contractors and new activities may be foreseen. This enlargement follows a competitive call launched by the consortium with evaluation of proposals by external experts

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing : what ? Community Financial Contribution (Arts 5 and II.24) 3 Based on a calculation method 3 Based on activities: Articles II.2 and II.25 Based on costs: Articles II.19, II.20 and II.21 Based on costs reporting models: Art II.22 Confirmed by an audit certificate: Art II.26

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: calculation method Grant for integration Grant to the budget Flat-rate Networks of excellence Integrated Projects Specific targeted research projects Specific research projects for SMEs Integrated initiatives relating to infrastructure Actions to promote human resources & mobility Coordination actions Specific support actions

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: type of activity Research and technological development (including innovation related activity) Demonstration Training Other specific support activities New Consortium Management : costs reimbursed up to 100% within the limit of 7% of Community contribution

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: type of activity (b)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: costs New principles:  1 - cost categories are replaced by conformity to contractors’ own accounting rules and legal environment  2 - simplify the eligibility criteria  3 - focus resources on the reality and the necessity of the cost, rather than on formality (cost categories) Therefore, costs must be :  actual, economic and necessary for the project  incurred during the duration of the project (exception: costs of the final reports)  recorded in the accounts (or third parties) and must exclude indirect taxes, duties, interests, costs reimbursed in respect of another Community project, and not give rise to profit

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: receipts (a) Three kinds of receipts must be taken into consideration in order to avoid any possibility of profit: Financial transfers or their equivalent to the contractor from third parties ; Contributions in kind from third parties; Income generated by the project. In the first two cases (financial transfers or contributions in kind), these endowments are considered as receipts of the project if the third party has provided them specifically to be used in the project. If, on the other hand, these endowments are at the discretion of the contractor they are not to be considered as receipts.

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: receipts In the case of income generated by the project itself: General rule: any income generated by the project itself, including the sale of assets bought for the project, are considered as income to the project (receipts) Derogation: income generated by the use of the knowledge resulting from the project is not considered as a receipt

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: cost reporting models (a) FC: actual direct and indirect costs (not available for Coordination Actions and Specific Support Actions) New FCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of total actual direct costs, except costs of subcontracts - all instruments) AC: actual additional direct costs + flat rate for indirect costs (20% of total actual additional direct costs, except costs of subcontracts - all instruments)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: cost reporting models (b)  SMEs, non- commercial or non-profit organisations established either under public or private law, international organisations: FC/FCF  Physical persons: AC mandatory  Private companies (other than above): FC  AC: only for those non- commercial or non-profit organisations established either under public or private law or international organisations that do not have an accounting system that allows the share of their direct and indirect costs relating to the project to be distinguished. General Rule: a legal entity applies the same cost model in ALL contracts established under FP6 except may move from AC to FCF/FC or from FCF to FC (“one way ticket”)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Financing: audit certificates 3 each contractor shall provide an audit certificate prepared and certified by an external auditor (for public bodies - competent public officer) 3 to transform an advance into a final payment 3 Based on the reporting periodicity of the contract (see next section) 3for IP/NoE : every 12 months 3other instruments: periods to be negotiated - at least one at the end 3where requesting a Community financial contribution exceeding € for a specific reporting period, even though an audit certificate is not required for this specific period

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Reporting periodicity l The project is divided into reporting periods of 12 months for IP and NOE l For other instruments, reporting periods are established on an ad hoc basis in the contract 4 P1: from month 1 to month X 4 P2: from month X+1 to month Y 4 P3: from month Y+1 to month Z 4 final: from month N+1 to the last month of the project

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Reporting periodicity Reports and deliverables (a) l The consortium will submit the following reports to the Commission: For each reporting period, 45 days after its end: 3 a periodic activity report 3 a periodic management report 3 a report on the distribution between contractors 3 supplementary reports required by Annex to this contract 3 an audit certificate when required

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Reporting periodicity Reports and Deliverables (b) For the last perido, in addition to the periodic reports : 3 a final activity report 3 a final management report 3 supplementary reports required by Annex to this contract 3 a report on the distribution between contractors made after the end of the project of the Community financial contribution - shall be 60 days after receipt of the final tranche

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Payment modalities Periodic pre-financing (based on the applicable reporting periodicity) Periodic “final” payments if costs are certified The Community financial contribution is paid to the coordinator on behalf of the contractors: the consortium decides on its allocation between the contractors (consortium agreement)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Payment modalities l The Community financial contribution shall be paid in accordance with the provisions of Article 8 and II.28. Differences between: 3 1] one single reporting period 3 2] several reporting periods - with an audit certificate for each period - without an audit certificate for each period 3 3] one single reporting period - lump sum

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Payments and reporting schedule for an IP (example of a 4 year contract) Activity report Certified costs Activity reportDetailed work plan Certified costs Payment + new advance Activity reportDetailed work plan Certified costsPayment + new advance Activity report Certified costs Detailed work plan Payment + new advance Detailed work plan Initial advance Months Final payment

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Payments and reporting schedule for a STREP, I3, SMEs project CA or SSA (example of a 3 year contract) Final activity report Certified costs Final payment Periodic activity report (mid-term review : optional) Reported costs OR certified costs Intermediate advance or payment + advance Detailed work plan Initial advance Months

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding LIABILITY (2) Implementation: applied as a last resort Breach of contract Depending on the nature of the breach, the consortium will be invited to find the appropriate solution (technical responsibility) If no solution is found, the defaulting contractor is excluded and the consortium is requested to continue the project (technical responsibility with financial consequences) If the consortium refuses to perform:  1 - the contract is terminated  2 - the consortium is requested to reimburse money owed by the defaulting contractor (collective financial responsibility)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding LIABILITY (3) Implementation: limitations Limited in proportion to the participant’s share of costs in the project, up to the total payment they are entitled to receive IOs, public bodies or entities guaranteed by MS/AS solely responsible for their own debts Exceptions for specific actions for SME’s, fellowships, duly justified cases of specific support actions Without prejudice to civil and criminal actions to be launched against the defaulting contractor

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Controls How? New: continuous monitoring by Commission with external experts (mandatory for IP and NoE), based on simplified procedures (no public procurement) New:periodical reviews of results achieved and expenditure made - go/no-go procedure (12 months basis for IP & NoE - ad hoc for other instruments) New:for IP & NoE, the yellow flag procedure Technical (incl. ethical), technological, and financial audits

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Sanctions Autonomy implies accountability New: in case of irregularity in a contract exclusion from the contract 2 - New: exclusion from OTHER FP6 contracts, and from other Community policies 3 - New: ineligible to participate in FP6 activities, and from other Community policies New: liquidated damages in case of financial overstatement Without prejudice to civil and criminal sanctions

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Consortium Agreement  WHY ? (1) 1 - Mandatory unless excluded by the call for proposals 2 - Management of the consortium: distribution of funds paid to the consortium (via the coordinator) no automatic pre-allocation of the funds among contractors: to be decided by the consortium evolution of the work programme organisation of work to be carried out (sub-projects) reports presented and submitted by the consortium (via the coordinator) evolution of the consortium’s composition (modification)

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Consortium Agreement WHY ? (2)  3 - IPR issues: should be agreed before signature of the contract (mandatory for specific Pre-Existing Know How exclusion)  4 - Global Risk Management: collective responsibility  technical implementation of the action = collective responsibility of the contractors  consortium to deal with breach of contract / non-performance and imposition of financial collective responsibility and any financial security necessary for same

RTD-A.3 Legal Unit - Participation rules and contracts /06/ Not legally binding Consortium Agreement  Issues  Decision-making process governance may range from “1 participant, 1 vote” to “elective dictatorship”, via the shareholder approach  IPR - ensure that agreements necessary for the implementation of the project have been reached - exclusion of background/sideground - initiate common strategy on dissemination/use/protection + search for industrial partners  Global Risk Management - establish internal auto-control and a checks and balances mechanism (periodic distribution of the funds, progress reporting, etc). - specific issues regarding competitive calls, costs less than EC funding etc for specific instruments