Public Procurement ESF ECA DAS 2011 Case studies Public Procurement in EU Structural Funds and EAFRD 3 December 2012, Tallinn Andris Skrastins Auditor DG EMPL

The European Court of Auditors' 2011 DAS

European Court of Auditors Independent Institution, External auditor of the Union (Art. 285 TFEU) Providing the Discharge authority (Council and EP) with the Statement of Assurance  (Art. 287 TFUE) DAS = "Déclaration d'Assurance" On the reliability of the EU annual accounts and on the legality and the regularity of the underlying transactions Results of ECA 's audits as reflected in its Annual Report Basis for EP Discharge

What is audited by the Court? Audits of sample operations Based on Commission "transactions" in 2011 160 ESF; 20 others (EGF, IPA, direct management) Grouped as 8 transactions per OP (including LV, LT) Management and Control Systems 2 Audit authorities in DAS 2011 (including LV AA: clasified in cat 1) DG EMPL's Annual Activity Report 2011 Special Reports: "corrective capacities", "2000-2006 closure"

Process with MS and Commission Audit by ECA Commission and MS receive Preliminary findings Partnership MS and Commission Commission assists MS in preparing observations/argumentation Commission also sends its own assessment/comments to the Court Re-assessment SPF by Court If issues remain: tripartite meeting (ECA, COM, MS) Final Assessment ECA Results feed into DAS – Annual Report

Errors (ESF) Number of Errors: 85 ESF error frequency: 27% - 2010 DAS Chapter 6 of the 2011 ECA's Annual Report (Section 1): error rate 2.2% Number of Errors: 85 ESF error frequency: 27% - 2010 DAS 53% - 2011 DAS Quantifiable Errors Non Quantifiable Errors ESF 61% - 2010 DAS 39% - 2010 DAS 34% - 2011 DAS 66% - 2011 DAS

DAS 2011 ESF errors Number of errors Grouping of errors 25 Eligibility (1.2% of the 2.2% error) 21 Audit trail 15 Public procurement (0,36% out of 2,2%) 11 National level 4 EU level 1 mixed 13 Management control system (Selection procedure, state aid, reporting errors) 11 Other

DAS 2011/ESF Public procurement From breaches to public procurement rules, 11 out of 15 are only linked to national law. - Value of the contracts is below the thresholds of the Directives - Training financed by the ESF falls within Annex II B

DAS 2011/ESF Public procurement 3 Cases with financial findings; - 1 Split contracts - 2 Non respect of procedures Follow up: significant breaches in PP quantified as 100% error

DAS 2011/ESF Public procurement 12 cases of Non-financial findings Including 3 findings in LT; - 2 (Non)publication of tender results - 1 Selection procedures (treatment of VAT)

Some significant findings based on FSFs Public procurement Limited impact: mostly limited compliance issues (procedural aspects) Examples: Direct award: absence of competition under EU threshold or for training activities under Annex I.b of Dir. 2004/18 (eligibility) No / Late publication of award notice (compliance) Selection criteria introduced or modified after call publication (compliance) Call for proposal launched by political authority instead of MA (compliance)

Other identified weaknesses in ESF Audits - Cut-off dates for framework contracts - Unjustified/ limiting selection criteria - Short deadlines for submission of offers - Conflict of interest?

Eligibility Ineligible costs (main source of errors) : eligibility criteria of participants not met, participants outside target group, unclear segregation between usual and project's capacity building activities under technical assistance, incorrect calculation of costs, incorrect allocation of overheads, inclusion of employment termination benefit in project's costs; VAT Non-respect of national eligibility rules: non-compliance with national accreditation rules for training companies, non-respect of requirements for final implementation reports, application for funding sent after national deadline, non-compliance with national PP rules – impact of "gold plating"

Conclusions National eligibility rules should be carefully evaluated and simplification envisaged Simplified cost options: current and next programing period! Management verifications (including Public procurement)! Tripartite meetings have a substantial impact on DAS errors

Thank you for your attention !