Financial Guidelines FP6 – IST Directorate C 1 st Evaluation proposals co-ordinators Briefing 17 July 2003

2Aim  To introduce some of the main financial principles  To cover some concepts that have changed in Framework Programme 6 (compared to Framework Programme 5)  To draw attention to particular issues related to Networks of Excellence, the Additional Cost reporting model and subcontracting

3 Some main financial principles  Collective Financial Responsibility  Pre-financing, audit certification and regular reporting  Reimbursement of costs

4 Collective Financial Responsibility Definition  Each contractor shall be liable for the use of the Community financial contribution in proportion to his share of the project up to a maximum of the total payments he has received  To be used as a last resort

5 The rule of financial collective responsibility is not applicable in some cases: a)The contractor is:  a public body  an international organisation  a contractor whose participation is guaranteed by a Member or Associated State Therefore that contractor shall be solely responsible for its’ budget. Other contractors are not responsible for these contractors. b)The consortium is not responsible for:  any amount owed by a defaulting contractor for any contractual breach discovered after the end of the contract  liquidated damages due by a defaulting contractor  other financial penalties and other sanctions imposed on a defaulting contractor Collective Financial Responsibility Exceptions

6 Collective Financial Responsibility Contribution in proportion to his share  “Contribution in proportion to its’ share” of the project is calculated as follows  Where pre-financing is to be recovered  as share of the provisional Community financial contribution  Where a “settled” payment is to be recovered  as share of Community financial contribution based on certified costs accepted by the Commission

7 Collective Financial Responsibility Contract Preparation Forms - Form A5 The co-ordinator completes form A6. In addition:

8 Pre-financing, audit certification and regular reporting  Periodic pre-financing  pre-financing remains the property of the Community  initial pre-financing upon signature by Commission and co-ordinator or when minimum number of contractors have acceded or when all contractors have signed  up to 85% (80% for instruments without collective financial responsibility) of the first reporting period and the first 6 months of the subsequent reporting period  Audit certificates  certifies the costs claimed, provided by an external auditor or in the case of public bodies a competent public officer  at least one audit certificate per contractor covering the whole duration of the indirect action must be provided  an audit certificate ‘settles the amounts justified and accepted during a reporting period’

9 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 Reimbursement of costs Calculation method

10 Reimbursement of costs Costs   New principles:   cost categories are replaced by contractor’s own accounting rules and legal environment   focus 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

11 Reimbursement of costs Costs   Reimbursement of eligible costs claimed by contractors   In accordance with the cost reporting models used by each contractor   Maximum reimbursement rates of eligible costs per type of activity   Approval of requested periodic reports   Subject to the submission of an audit certificate   Taking into account the receipts of the project   Limits of public funding established by international regulations and in particular by the Community framework for State aid for research and development for certain activities

12 Reimbursement of costs Cost reporting models  FC: actual direct and indirect costs  all instruments, however in case of for Co-ordination Actions and Specific Support Actions flat rate for indirect costs (20% of direct costs minus subcontracting reimbursed  FCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)  all instruments  AC: actual additional non-recurring direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)  all instruments New

13 Reimbursement of costs Type of activity  Research and technological development (including innovation related activity)  Demonstration  Training  Other specific support activities  Consortium management: costs reimbursed up to 100% within the limit of 7% of Community contribution New

14 Reimbursement of costs Maximum reimbursement rates of eligible costs per instrument, activity and cost model

15 Reimbursement of costs Third party contribution & Receipts  Third party contribution  resources made available by third parties on the basis of prior agreement are eligible as costs for the project  costs will have to be recorded in the accounts of this third party - to be covered by audit certificates  the provision is not intended to reduce the number of contractors but to take into account particularities of some entities  contractors shall ensure that third parties whose resources are made available to the project are informed on the use of their resources  Receipts  financial transfers or contributions in kind from third parties if the third party has provided these specifically for the project (I.e. the participant has no management discretion on the use of the third party resources)  income generated by the project (including e.g. the admission fee to a conference organised by the consortium - excludes income generated in using knowledge resulting from the project)

16 Specific information  Networks of Excellence  Participants using the AC cost reporting model  Subcontracting

17 Specific information Networks of Excellence  The maximum budget is calculated taken into account:  degree of integration  number of researchers (and doctoral students*)  characteristics of the field of research  joint programme of activities * bonus per doctoral student is equivalent to 4,000€/year up to a maximum of 10% of the grant in respect of the number researchers

18 Specific information Networks of Excellence  Need exhaustive list of the names of the researchers and the doctoral students to be included in Annex I  The consortium may request a lower grant for integration than that resulting from the ‘method’  The Commission shall pay the Community financial contribution in respect of a completed period provided that the following conditions are fulfilled:  …the eligible costs, calculated in accordance with Part B of Annex II, of at least the Community financial contribution for the completed period were incurred in implementing the joint programme of activities (see Annex III - NoE)

19 Specific information Changes in FP 6  Direct costs for contractors using the Additional Cost model  direct costs of personnel shall be limited to the actual costs of the personnel assigned to the project where the contractor has concluded with the personnel  a temporary contract for working on Community RTD projects  a temporary contract for completing a doctorate  a contract which depends, in full or in part, upon external funding additional to the normal recurring funding of the contractor. In that case, the costs charged to this contract must exclude any costs borne by the normal recurring funding

20 Specific information Partners using the AC cost reporting model  Partners using the AC cost reporting model will have to identify all the resources employed in the project and provide a global estimate of all their costs - not only additional eligible costs  Partners using the AC cost reporting model - exclude any direct additional costs specifically covered by contributions from third parties  Partners using the AC cost reporting model may charge permanent personnel under Management Activities under certain conditions

21 Specific information Subcontracting  Contractors must have the capacity to carry out the work described in Annex I  Subcontracts may be a form of direct eligible cost  Subcontracts relate to the production of a service  Tasks need to be identified in Annex I or include minor tasks not relating to core work of the project  Subcontracts to be awarded following competitive tender offering, best value for money, under conditions of transparency and equal treatment