1. Use of SCOs in the ESI funds: Survey of OPs 2017
Draft Interim report on the ESF Colin Byrne EMPL F1

2. Introduction Part of wider survey of ERDF, CF and EAFRD
Full report to be published in January
For ESF, covers mono and multi-fund OPs
Replies from 27 Member States, 145/187 OPs
Covers 84% of total ESF budget
Replies were not used where the amounts declared were not consistent, eg used SCOs but declared '0' as the amount

5. The uptake of SCO in
Some 33% of ESF OP costs are expected to be covered by SCO, just below the 2015 estimate (35%).
The large majority of ESF projects (65%) are fully or partially implemented through an SCO. This implies that most ESF beneficiaries are benefiting from SCO.
More developed regions are expected to declare more costs under SCO than other regions.

6. Reasons for taking up, or not taking up SCO
Reducing administrative burden and simplification of the compliance check are considered important by approximately 80% of respondents
The 5% of respondents not using SCO consider legal uncertainty and investments needed to design SCO as the key reasons
Fully publicly procured operations (Art. 67(4) CPR) do not seem to limit the use of SCO, apart from a small number of Member States (FR and UK in particular).

7. Type of SCO used
Flat rate financing the most widely used type of SCO – 80% (especially indirect costs up to 15% and 40% flat rates).
However, flat rates only make up 36% of all payments made via an SCO
Although used less often than flat rates (70%), SSUCs make up 53% of the payments declared under SCO.
Most SSUCs based on fair, equitable and verifiable calculation method
Lump Sums used by 30% of OPs using SCOs, and account for 10% of all payments through SCO

8. Type of operations and costs covered by SCO
Training (72% of ESF OPs already use SCO), education (57%) and social inclusion (59%).
About 50% of operation costs are covered by SCO on average.
SCO are mainly used for direct staff costs and indirect costs.
16% of ESF operations are below EUR Flat rates are used by 87% of ESF OPs with operations below EUR of public support) followed by SSUC (67%) and lump sums (47%).

9. Involvement of Audit Authorities
Audit Authorities were involved ex-ante in the design of SCO (or carried out an ex-ante validation of the SCO) for about 36% of ESF OPs.
The percentage of audits on SCO is similar (35%).
In 10% of cases, auditors made observations on implemented SCO, while only 3% led to ineligible expenditure.

10. Opinions on Omnibus proposal
If the Omnibus proposal is approved, more than one third of respondents would use additional off-the-shelf flat rates;
26% of respondents would adopt lump sums with public support above EUR (which were not allowed previously).
Increasing the threshold currently established under Art. 14(4) would impact about 28% of ESF operations.

11. Support needed and recommendations
Approximately half of ESF MAs already using SCO need further support. MAs underline the importance of more opportunities to share “real and practical examples”.
Key recommendations for improving/facilitating the use of SCO are to:
increase the number SCO defined at EU level and at national level;
simplify the process of elaboration and approval of Article 14(1).

12. Conclusions Survey is broadly in line with 2015 version.
What more can the Commission do to help national authorities implement SCOs?
Guidance note to be updated
Survey produces uncertain results and is burdensome process for MAs
Alternatively, possibility to use SFC to collect data on annual basis on payments to beneficiary on basis of real costs and simplified costs.

13. Thank you !