October 2010 – Delegation KENYA - FVDE EU financial & contractual Procedures (10th EDF & budget) How to implement EU funding (with others)… October 2010 – Delegation KENYA - FVDE

Legal basis and where to find our rules EDF : Revised Cotonou Agreement Budget : DCI Regulation, EIDHR Regulation & bananas Financial Regulation and implementation Rules (Budget); 10th EDF Financial Regulation (Internal agreement 10th EDF & Regulation on 10th EDF implementation) http://www.cc.cec/dgintranet/europeaid/contracts_finances/legislation/index_en.htm

Legal basis and where to find EU rules PRAG Practical Guide to contract procedures for EC external actions (December 2008) : same document for EDF and budget Financial Guide (one for Budget and one for EDF) Practical Guide for programme estimates (version December 2009): same document for EDF and budget Several instruction notes http://www.cc.cec/dgintranet/europeaid/contracts_finances/guides/index_en.htm

Legal basis and where to find EU rules 10th EDF rules apply for projects financed on 10th EDF and on 9th EDF if a jumbo rider was signed STABEX and 8th EDF projects still ruled by 8th EDF rules Projects financed on (thematic) budget lines are ruled by BUDGET rules

By WHO can a project or a programme be implemented ? Management modes

Management modes Centralised management Delegated cooperation indirect centralised management Joint management Decentralised management (Shared management)

Centralised management DIRECT Implementation done by the services of the EU (at HQ or in delegation) EU procurement & grant procedures apply (we launch tenders, sign contracts, make payments, etc...) Examples: Somalia operations, Audit & Evaluation contracts, framework contracts, Budget support, …

Delegated cooperation : centralised indirect There is a delegation of implementation tasks by the Commission Implementation done (1) by bodies set up by the Communities or other specialsed Community bodies such as EIB or EIF, (2) national or international public sector bodies or bodies governed by private law with public service mission providing adequate financial guarantees and complying for with provisions IR Procedures of the delegated body can apply or EU procedures

Delegated cooperation : centralised indirect An ex-ante institutional assessment needs to be carried out of 6 pillars A delegation agreement is signed

Delegated cooperation : joint management There is a delegation of implementation tasks by EU Implementation done by an international organisation (includes EIB) The IO concerned can apply its accounting, audit, internal control and procurement procedures which offers guarantees equivalent to the international accepted standards A contribution agreements is signed (similar to a grant contract but more flexible)

Delegated cooperation : decentralised There is a delegation of implementation tasks by the Commission to third countries (beneficiary countries) Implementation done by beneficiary country with ex-ante control by the EU (partial or substantial decentralisation) or ex-post control (total decentralisation) Other Procedures than EU can apply (case by case, after assessment) Financing agreement to be signed Ex-ante control could be delegated to another body

Delegated cooperation : decentralised criteria partly fulfilled decentralisation of contractual procedures Practical Guide on Contract Procedures ex-ante control by COM at every step for procurement contracts > 50,000 EUR + for grants (payment remains centralised) + + decentralisation of payments Practical Guide Programme Estimates < certain thresholds (ex-post control by COM) Lire aussi (pour formateurs!) Guide financier Budget, chap 6.4.3 – annexé aux SO de cette session!! Pour critères voir aussi RF ’06 - 56 et GDP-2.2.1 !! Il y a 3 niveaux de décentralisation à distinguer (voir aussi en référence au slide 3). Seulement les procédures contractuelles sont décentralisées par la Com au pays bénéf: le pays peut donc établir le DAO/LD, lancer l’AO/AAP, réceptionner, évaluer, attribuer. Mais dans tous les cas, il y aura l’approbation de la Com avant chaque étape (contrôle ex-ante), SAUF pour les marchés publics ≤ € 50,000. L’exécution des paiements reste dans tous les cas du ressort de la Com. Tout ceci doit être fait dans le respect du Guide prat proc contractuelles. En plus de la situation 1, les paiements peuvent être décentralisés: càd le pays bénéficiaire peut exécuter les paiements au bénéf final, mais jusqu’à certains plafonds (max.!) => voir slide suivant. La Com exerce alors un contrôle ex-post, par ex lors de l’approvisionnement. On se trouve dans le contexte de DP, et donc en plus du Guide Proc Contr, ici il faudra aussi respecter le GDP Si tous les critères sont remplis, le pays bénéf recoit le pouvoir d’exécuter tous les paiements aux bénéf finaux, avec contrôle ex-post de la Com. Dans le cas de DP, on se trouve donc dans la situation de l’accumulation du niveau 1 et 2 de décentralisation. NB: in MEDA, avant 2004, gestion décentralisée; depuis 2004: gestion décentralisée partielle => CF établies après cette date suivent donc surtout 2ème cas de figure, ie décentralisation des procédures contractuelles et des paiements jusqu’à certains seuils, avec contrôle ex-post. Question to AIDCO/A5: where does the limit <50,000 has its reference other than in the Programme Estimate Manual? Because here we are not at the level of PE yet…. > Aidco: exists in the BUDGET, this comes from a procedure called ‘environnement simplifiée’ all criteria fulfilled Substantial or total decentralisation (possibly only ex-post control by COM)

Delegated cooperation : decentralised Thresholds of contracts and grants for (partial) decentralisation of payments (Practical Guide for Programme Estimates applies) Works Supplies Services Grants < € 300 000 < € 150 000 < € 200 000 ≤ € 100 000 La décentralisation des paiements se fait sur les contrats conclus jusqu’aux seuils (max!) indiqués ici. Les contrats peuvent être signés uniquement par des personnes habilités (Régisseur, voir plus loin).

Delegated cooperation NOTE The other way around is also an option : EU to receive funds from other donors through tranfer agreement (assigned revenues) 14

EU Implementation modalities Delegated cooperation with MS bodies, international organisations or benef. country (if partial decentralisation through programme estimates) Budget support Procurement contracts (services, supplies & works) Award of grant contracts Other 15

Working with EIB ? HOW ? If several donors First question is who will be responsbile for managing the “common pot” (donor, beneficiary state, ...) Type of funds (EU : non reimbursable aid (grants), other donors: very often loans), blending the two makes loan conditions cheaper Contractual arrangements to be made, depending on who is managing common pot Determine level of control (ex-ante or ex-post) donors want to exercise

Working with EIB, if EIB manages common pot, HOW ? Preferred option at this stage would be joint management with a contribution agreement if type of project/intervention allows or ad-hoc agreement (see Infrastructure Trust Fund) Under Neighbourhood Instrument as framework agreement is under negotiation to cover specialised interventions such as risk capital, loan guarantees (interest rate subsidies), ... Under revised Financial Regulation (2012) a new more flexible implementation mechanism will be introduced for financial intermediairies

QUESTIONS ? 18

IMPLEMENTATION MODALITIES HOW can a project or a programme be implemented ? IMPLEMENTATION MODALITIES

EU Implementation modalities Budget support Procurement contracts (services, supplies & works) Grants Delegated cooperation with MS bodies or international organisations If partial decentralisation : programme estimates Other 20

EU Implementation modalities Delegated cooperation with MS bodies, international organisations or benef. country (if partial decentralisation through programme estimates) Budget support Procurement contracts (services, supplies & works) Award of grant contracts Other 21

Implementation procurement procedures 10th EDF/Budget Services Supplies Works International open tender - >=150.000 EUR >= 5.000.000 EUR International restricted tender >= 200.000 EUR - (derogation) Local open tender <150.000 EUR and >= 60.000 EUR <5.000.000 and >=300.000 EUR Competitive negotiated procedure >10.000 EUR and <200.000 EUR >10.000 EUR and <60.000 EUR >10.000 EUR and <300.000 EUR Framework contract Single tender <=10.000 EUR

Implementation : procurement Alternative procedure applicable to works, supplies & services contracts = negotiated procedure but only in well defined cases, a prior approval is needed from authorising officer concerned (HQ or HoD) See note on derogations and prior approvals: http://www.cc.cec/dgintranet/europeaid/contracts_finances/fin_and_cont_rules/other_issues/index_en.htm

Implementation : procurement One important possibility to do a negotiated procedure for service contracts is : “where the services are entrusted to a public sector bodies or to non-profit organisations or associations ans relate to activities of an institutional nature or designed to provide assistance to people in the social field” A prior call for interest could be considered...

Implementation : grants What is a grant ? Co-financing and non profit are requirements ! How to award a grant ? Open or restricted call for proposal In well defined cases a direct award is possible, prior appoval is needed by authorising officer concerned (HQ or HoD) See note on derogations and prior approvals: http://www.cc.cec/dgintranet/europeaid/contracts_finances/fin_and_cont_rules/other_issues/index_en.htm

Implementation : grants One important possibility to do a direct award for grants is: “Actions with specifi characteristics that require a particular typ of body on account of its technical competence, its high degree of specialisation or its administrative powers ... “ A prior informal call for expression could be considered...

Implementation : grants Special cases of grants : Interest rate subsidies Twinning / exchange activities

Implementation : decentralised operations & programme estimates Tasks (including payment and contracting up to certain ceilings) are delegated to an imprest administrator and an imprest accounting officer through a programme estimate Direct decentralised operations (department of ACP State concerned is in charge) Public indirect decentralised operations (public body legally distinct from ACP State is in charge) Private decentralised operations (private operator is in charge & responsible) – not for budget lines !

QUESTIONS ?

Financing decision – (Annual) Action Plan Country Strategy Paper & NIP (Joint Strategy Paper for Somalia) Identification fiches Quality Support Group (1) 30

Financing decision – (Annual) Action Plan Annual Action Plan(s) with indicative budget Quality Support Group (2) Financing Decision (after Inter-service Consultation & opinion Member States Committee & Parliament) 31

Financing decision – (Annual) Action Plan Financing Agreement signed between EU and beneficiary country (not always applicable !!) = Special Conditions, General Conditions (Annex 1) and Technical & Administrative Provisions (TAPs – Annex 2) 32

Important dates to keep in mind Deadline to sign financing agreement (31.12.n+1) Contracting deadlines (date of signature + 3 years or 31.12.n+1 if no financing agreement) Period of execution of a financing agreement = operational implementation phase + closure phase

Important dates to remember What happens once the contracting deadline is expired in a financing agreement ?

What “implementation issues” to be Management modes What “implementation issues” to be put in an Annual Action Plan (chapter 4)? Method of implementation - Management modes Applicable rules & procedures Budget (always put in contingencies !) and calendar More details will be given in TAPs (templates !) 35

Implementation : eligibility rules For Budget : see applicable Regulation (DCI, EIDHR, ...) 10th EDF : Individuals, legal persons, supplies and materials orginating from ACP States and 27 EU Member States International organisations Country participating in a regional initiative Third Country in case of cofinancing Derogations still possible with prior approval For more details per instrument : see annex A2 of PRAG http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm