EuropeAid 1 DELEGATED COOPERATION AND CO-FINANCING : Application of Aid Effectiveness to EC procedures October 2009 AIDCO/G7

EuropeAid 2 SUMMARY 1.Introduction 2.Common characteristics 3.Delegating to national agencies: indirect centralised management 4.Delegating to beneficiary countries: decentralised management 5.Delegating to international organisations: joint management 6.Transfer of funds from donors to the EC

EuropeAid 3 1 INTRODUCTION

EuropeAid 4 Context Aid effectiveness: o Paris Declaration (2005) and Accra follow-up (2008); o European Consensus (2005); o Code of Conduct on Division of Labour (2007) Principles: o Ownership o Harmonisation o Alignment Drivers: Use of country systems and Division of Labour

EuropeAid 5 2 DELEGATED COOPERATION AND CO-FINANCING UNDER PRAG : Common characteristics

EuropeAid 6 New specific legal basis for joint co-financing with and delegating to other donors POOL FUND (Joint-co financed funds): Managed by whom? Donor 1Donor 2Donor 3 BEFORE 2007 ONLY by IOs AFTER 2007 ALSO EC & national agencies & Benef countries

EuropeAid 7 Management mode/Methods of implementation executive agencies bodies set up by Communities "(tradit. agencies) " bodies with a public service mission "(nat. agencies)" centralised joint (International Organisations) shared (Member States ) directindirect decentralised (Third Countries) The Commission may also manage funds received from other donors (International organisations) joint

EuropeAid 8 Overview EntityManagement mode Legal instruments Procedures for management mode 1. Delegation to international organisation joint managementcontribution agreement procedures of the international organisation 2. Delegation to public or private body with a public service mission indirect centralised management delegation agreement choice between the EC rules or that of the delegated body 3. Delegation to beneficiary country decentralised management financing agreement choice between the EC rules, that of the beneficiary country or that of other donor 4. Reception of funds by European Commission Defined in the AAP, usually direct centralised: this modality refers only to the source of financing transfer agreement Depending on management mode defined in AAP (usually EC’s procedures)

EuropeAid 9 DELEGATED COOPERATION: Common characteristics- What does it mean? Role of the delegatee entity (Beneficiary country, national agency, an IO): it becomes Contracting Authority instead of Commission  Launch procedures & sign contracts,  Depending on the degree: manage payments to contractors/grant beneficiaries  Control Delegated cooperation works both ways: The Commission can also be delegated by other donors : assigned revenues. The use of Delegated Cooperation (management mode) has to be included in Financing Decision/AAP

EuropeAid 10 DELEGATED COOPERATION Common characteristics- Pillar Review The delegation of budgetary tasks requires an ex ante assessment of the entity (pillars): 1) transparent procurement and grant-award procedures; 2) internal control system 3) accounting system 4) audit; 5) adequate annual ex post publication of beneficiaries 6) (for ICM only : access to documents) Assessment carried out by G2/ responsible AO

EuropeAid 11 3 DELEGATION TO NATIONAL AGENCIES Under Indirect Centralised Management

EuropeAid 12 Indirect Centralised management (I) DA MoU

EuropeAid 13 Delegation to a national body: Indirect centralised management (II) CONDITIONS -Who is concerned? Article 54(2)(c) FR/25(3)(b) FR 10 th EDF: national bodies or bodies governed by private law with a public- service mission providing adequate financial guarantees. - Choice of the entity: if complies with the principles of economy, effectiveness, sound financial management and efficiency and its is chosen in an objective, transparent and non discriminatory manner + pillars (Art 56 FR / 26 FR 10th EDF) Justification to the European Parliament.

EuropeAid 14 Indirect centralised management (III) APPLICABLE PROCEDURES -The assessment would determine the possibility for the national body to use its own procedures or those of the Commission (grants: difference between EDF and Budget). -Steps: The use of the management mode and, in general, the name of the chosen body is contained in the financing decision (Annual Action Programme). This is approved by the relevant Committee and the Commission (College) -The agreement to be used is the Delegation Agreement (There may be other documents: MoU amongst donors)

EuropeAid 15 Indirect centralised management (IV) DELEGATION AGREEMENT -Applicable fee: maximum 7% -Contracting with third parties: procedures and rules of nationality and origin. -Are in-house activities eligible? -Rules on eligibility of costs -Financial aspects: Bank accounts and interests

EuropeAid 16 INDIRECT CENTRALISED MANAGEMENT (V) : Sub-delegation & use of country system? DA MoU FA?

EuropeAid 17 4 DELEGATION TO BENEFICIARY COUNTRIES Under Decentralised Management

EuropeAid 18 Decentralised management (I) (EC & EDF funds) BC acts as CA: - Always delegated: award and signature of contracts. -May be further decentralised: - Payments (financial management - Procedures to be used (finance & proc) FA Commission: -Control (ex ante or ex post) always “centralised” = residual tasks Procedure : -Pillar assessment for non EC procedures -Decision college (decentralised management) - Signature of a Financing Agreement

EuropeAid 19 Decentralised Management (II): Co-financing amongst donors FA MoU HOW TO ENSURE REDUCTION OF TRANSACTIONAL COSTS?

EuropeAid 20 Decentralised Management (III): Cofinancing + Residual tasks FA DA MoU

EuropeAid 21 5 DELEGATION TO INTERNATIONAL ORGANISATIONS Under Joint Management

EuropeAid 22 JOINT MANAGEMENT (I) CA Procedure : - Pillar assessment - Decision college (joint management) - Signature of a Contribution Agreement

EuropeAid 23 6 RECEIVING FUNDS FROM OTHER DONORS: Assigned revenue/Transfer Agreements

EuropeAid 24 TRANSFER AGREEMENTS (I) How to receive funds from other donors MoU TA

EuropeAid 25 TRANSFER AGREEMENTS (II) PRINCIPLES Commission can receive funds from other donors: o Member States o Other third donor country o International Organisations Authorization by the College to receive funds: Financing decision/Annual Action Programme Priority of consumption of assigned revenues (funds received by donors)

EuropeAid 26 TRANSFER AGREEMENTS (III) MAIN ELEMENTS OF THE AGREEMENT Contributions would be incorporated in budget after signature of a Transfer Agreement. Main elements: o The normal EC procedures will be followed to implement these funds – so the Commission comply with the Financial Regulations and Implementing Rules (audits, internal control, procurement, accounting, etc) o Assigned revenues: “prioritary consumption” (art 10 RF) o Fee: average of 4% o Reports, visibility, etc Possible Memorandum of Understanding amongst donors

EuropeAid 27 7 MORE INFORMATION

EuropeAid 28 Where can I find the information ? − Internet on procedural aspects relating to Delegated Cooperation and Cofinancing: on/international_organisations/index_en.htm