1. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 1 Not legally binding Legal Framework EC TREATY FRAMEWORK PROGRAMME SPECIFIC PROGRAMMES PARTICIPATION AND DISSEMINATION RULES CONTRACTS Other relevant EC Regulations FINANCIAL REGULATION INTERNATIONAL AGREEMENTS WORK PROGRAMMES GUIDELINES ON EVALUATION AND SELECTION PROCEDURES & Calls for proposals

2. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 2 Not legally binding Guidelines Will provide supplementary information and guidance notes:  Financial guidelines  Negotiation guidelines  Consortium agreement guidelines  Project management guidelines

3. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 3 Not legally binding General Principles  Reflect requirements of the Legal Framework  Simplification No different categories of contractors Reduction of the number of contracts  Collective approach  Greater flexibility the Work Programme may adjust Rules flexibility in the composition and changes to consortium  Greater autonomy for participants

4. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 4 Not legally binding The instruments RULES APPLIES TO ALL  Integrated Projects: new  Networks of excellence new  Specific targeted research or innovation projects  Specific research projects for SMEs –Co-operative research projects –Collective research projects new  Integrated infrastructure initiatives new  Actions to promote human resources and mobility (Some are new)  Co-ordination actions  Specific support actions  Article 169 new (specific rules to this instruments)

5. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 5 Not legally binding Contract Structure  Core contract(standard with specifics of project)  Annex I (technical tasks - the “project”)  Annex II General Conditions (applicable to every instrument)  Annex IIIInstrument specific provisions (specific to instrument)

6. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 6 Not legally binding Contract Structure  Annex IV - Form A Consent of contractors identified in the core-contract (article 1.2) to accede to the contract. To be signed by the contractor concerned and by the coordinator.  Annex V - Form B Accession of new legal entities to the contract. To be signed by the new contractor concerned and by the coordinator  Annex VI - Form C Financial statement per activity. Specific to each Instrument and/or type of action. To be filled periodically by each contractor

7. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 7 Not legally binding Participation l New Every legal entity that contributes to the project (incl. Project Managers) l General Rule: Participant = contractor Every legal entity contributing to a project must have a contractual link with the Community l Exceptional cases: subject to very restrictive rules –Third parties identified in Annex I –Subcontractors

8. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 8 Not legally binding Participation Third parties identified in Annex I  In most of the cases they do not participate, they simply make their resources available to a contractor, this is not a case of participation but only a question of eligibility of the cost of these resources  In exceptional cases: “participation” of members of entities such as EEIG,UMR, SMEs Associations: these entities are contractors (EEIG, UMR) their members can do some of the work on the project even though they are third parties contractor and third parties must have a previous agreement, normally the constitution the third parties, the agreement and the tasks must be identified in Annex I

9. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 9 Not legally binding Participation Subcontracting  Contractors shall ensure that the work to be performed can be carried out by them.  Exception: where it is necessary to subcontract certain elements of the work, this should be clearly identified in Annex I.  Minor services may be subcontracted: which do not represent core elements of the project which cannot be directly assumed by contractors where necessary for the performance of the project

10. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 10 Not legally binding Signature and entry into force 4Contractual link of all contractors with the Commission 4 New Contract enters into force upon signature of coordinator and Commission 4All the contractors are identified in the core contract [Art. 1.2] 4Coordinator must ensure other contractors sign within delays 4Distribution of advance - Several options available: minimum number of participants/all participants 4Evolution of consortium possible: é where one or more does not sign the Form A [article 2] é in case of enlargement (new contractors) [article 3] 4Project begins in the date established in the contract (this can be before the contract enters into force but usually later)

11. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 11 Not legally binding Amendments  Art.10 of Core Contract & Art.8 of Annex II  Request in writing  New at the request of the coordinator, deemed to act on behalf of the consortium  New Tacit amendments with implicit agreement of the Commission within 6 weeks only for modification and evolution of the consortium and for technical reports  New in IP/NoE, enlargement of the consortium to new contractors and new activities may be foreseen. This enlargement follows a competitive call launched by the consortium with evaluation of proposals by external experts

12. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 12 Not legally binding Financing : what ? Community Financial Contribution (Arts 5 and II.24) 3 Based on activities: Articles II.2 and II.25 Based on costs: Articles II.19, II.20 and II.21 Based on costs reporting models: Art II.22 Confirmed by an audit certificate: Art II.26

13. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 13 Not legally binding Financing 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

14. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 14 Not legally binding Financing Type of activity (a) Research and technological development (including innovation related activity) Demonstration Training Other specific support activities New Consortium Management : costs reimbursed up to 100% within the limit of 7% of Community contribution (AC contractors “apply FCF”)

15. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 15 Not legally binding Financing Type of activity (b)

16. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 16 Not legally binding Financing Costs New principles:  1 - cost categories are replaced by conformity to contractors’ own accounting rules and legal environment  2 - simplify the eligibility criteria  3 - focus resources 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

17. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 17 Not legally binding Financing Cost Reporting Models FC: actual direct and indirect costs (not available for Coordination Actions and Specific Support Actions) New FCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of total actual direct costs, except costs of subcontracts - all instruments) AC: actual additional direct costs + flat rate for indirect costs (20% of total actual additional direct costs, except costs of subcontracts - all instruments)

18. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 18 Not legally binding Financing  SMEs, non- commercial or non-profit organisations established either under public or private law, international organisations: FC/FCF  Physical persons: AC mandatory  Private companies (other than above): FC  AC: only for those non- commercial or non-profit organisations established either under public or private law or international organisations that do not have an accounting system that allows the share of their direct and indirect costs relating to the project to be distinguished. General Rule: a legal entity applies the same cost model in ALL contracts established under FP6 except may move from AC to FCF/FC or from FCF to FC (“one way ticket”)

19. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 19 Not legally binding Financing Costs under FC/FCF Direct costs must be eligible costs that can be related directly to the project Indirect costs must be :  for FC eligible costs determined by the contractor, in accordance with its usual accounting practices and the definition of indirect costs [article II.21]  for FCF a flat rate is applied to the direct costs to cover indirect costs.

20. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 20 Not legally binding Financing Costs under AC Direct additional costs must be direct costs additional to the normal recurring costs of the contractor and not covered by any other sources of funding.Three possibilities of charging costs related to personnel:  personnel with a temporary contract to complete a doctorate ;  personnel with a temporary contract for working under the Community contract concerned ;  personnel whose employment contract depends full or in part on additional external financing. Indirect costs consist of a flat rate applied to the direct costs.

21. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 21 Not legally binding Financing Receipts Three kinds of receipts must be taken into consideration in order to avoid any possibility of profit: Financial transfers or their equivalent to the contractor from third parties ; Contributions in kind from third parties; Income generated by the project. In the first two cases (financial transfers or contributions in kind), these endowments are considered as receipts of the project if the third party has provided them specifically to be used in the project. If, on the other hand, these endowments are at the discretion of the contractor they are not to be considered as receipts.

22. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 22 Not legally binding Financing Receipts In the first two cases, where contributions from third parties are used for the project by the contractor, the latter is required to inform the third party of this use and in accordance with the national legislation or practice in force. In the case of income generated by the project itself: General rule: any income generated by the project itself, including the sale of assets bought for the project, are considered as income to the project (receipts) Derogation: income generated by the use of the knowledge resulting from the project is not considered as a receipt

23. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 23 Not legally binding Financing Reports and deliverables l All reports and deliverables shall be submitted within 45 days of the end of the period in question. l The project is divided into reporting periods of 12 months for IP and NOE l For other instruments, reporting periods are established on an ad hoc basis in the contract 4 P1: from month 1 to month X 4 P2: from month X+1 to month Y 4 P3: from month Y+1 to month Z 4 final: from month N+1 to the last month of the project

24. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 24 Not legally binding Financing Reports and deliverables l The consortium will submit the following reports to the Commission: For each reporting period: 3 a periodic activity report 3 a periodic management report 3 a report on the distribution between contractors 3 supplementary reports required by Annex to this contract 3 an audit certificate when required

25. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 25 Not legally binding Financing Reports and Deliverables In addition to the periodic reports of the last period, for the last period: 3 a final activity report 3 a final management report 3 supplementary reports required by Annex to this contract 3 a report on the distribution between contractors made after the end of the project of the Community financial contribution - shall be 60 days after receipt of the final tranche

26. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 26 Not legally binding Financing Audit certificates Article II.26 3 each contractor shall provide an audit certificate prepared and certified by an external auditor (for public bodies - competent public officer) 3for each period for which an audit certificate is required (article 7 - option 2) 3every 12 months for IP/NoE (article 7 - option 1) 3where requesting a Community financial contribution exceeding 750.000€ for a specific reporting period, even though an audit certificate is not required for this specific period

27. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 27 Not legally binding Financing : how ? Payment Modalities Periodic pre-financing (based on the applicable periodicity) The Community financial contribution is paid to the coordinator on behalf of the contractors: the consortium decides on the allocation of each tranche of its between the contractors (consortium agreement)

28. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 28 Not legally binding Financing Payment modalities l The Community financial contribution shall be paid in accordance with the provisions of Article 8 and II.28. Differences between: 3 1] one single reporting period 3 2] several reporting periods - with an audit certificate for each period - without an audit certificate for each period 3 3] one single reporting period - lump sum

29. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 29 Not legally binding Payments and reporting schedule for an IP (example of a 4 year contract) Activity report Reported costs Activity reportDetailed work plan Reported costsAdjusted advance Activity reportDetailed work plan Reported costsAdjusted advance Activity report Reported costs Detailed work plan Adjusted advance Detailed work plan Initial advance 0 6 12 18 24 30 36 42 48 Months

30. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 30 Not legally binding Payments and reporting schedule for a STREP, CA or SSA (example of a 3 year contract) Final activity report Reported costs + audit certificate (mandatory) Final payment Periodic activity report (mid-term review : optional) Reported costs + (audit certificate if required) Intermediate pre-financing or payment NB: impact on the total pre-financing Detailed work plan Initial advance 0 6 12 14 18 20 24 26 30 36 38 Months

31. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 31 Not legally binding LIABILITY (1) New: Collective responsibility of the contractors l Mechanism by which a contractor may be held liable, technically and/or financially, fully or partially, for the action of another contractor l Why? Reinforce the protection of the financial interests of the Community, both quantitative (only pay what is due to be paid) and qualitative (ensure that the project continues) Consequence of FP6 principle of “autonomy of the consortium”: if the money is granted to the consortium, which decides on its allocation, then the consortium as a whole is to be held liable

32. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 32 Not legally binding LIABILITY (2) Implementation: applied as a last resort Breach of contract Depending on the nature of the breach, the consortium will be invited to find the appropriate solution (technical responsibility) If no solution is found, the defaulting contractor is excluded and the consortium is requested to continue the project (technical responsibility with financial consequences) If the consortium refuses to perform:  1 - the contract is terminated  2 - the consortium is requested to reimburse money owed by the defaulting contractor (collective financial responsibility)

33. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 33 Not legally binding LIABILITY (3) Implementation: limitations Limited in proportion to the participant’s share of costs in the project, up to the total payment they are entitled to receive IOs, public bodies or entities guaranteed by MS/AS solely responsible for their own debts Exceptions for specific actions for SME’s, fellowships, duly justified cases of specific support actions Without prejudice to civil and criminal actions to be launched against the defaulting contractor

34. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 34 Not legally binding LIABILITY (4) Additional impacts Raises awareness among contractors:  1 - constitution of the consortium  2 - projects with real and lasting common interests (avoid artificial transnational projects)  3 - establishment of internal auto-controls and checks and balances within the consortium Limits systematic requests for bank guarantees and performance of ex-ante financial controls:  1 - as foreseen in the new financial regulations  2 - depending on the impact of the limitations (risk assessment - to be detailed in “Guidelines on negotiations”)

35. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 35 Not legally binding Controls (1) reinforce scientific monitoring and ex-post financial controls Simplified and streamlined ex-ante controls due to the collective responsibility Simplified and streamlined day-to-day financial management due to the audit certificates and the new approach on eligible costs (no more formal conformity with cost categories) Reorient resources in qualitative monitoring and control: 1 - assessment of the scientific outputs 2 - appraisal of the necessity of the costs with regards to these outputs

36. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 36 Not legally binding Controls (2) How? New: continuous monitoring by Commission with external experts (mandatory for IP and NoE), based on simplified procedures (no public procurement) New:periodical reviews of results achieved and expenditure made - go/no-go procedure (12 months basis for IP & NoE - ad hoc for other instruments) Technical (incl. ethical), technological, and financial audits

37. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 37 Not legally binding Sanctions Autonomy implies accountability New: in case of irregularity in a contract... 1 - exclusion from the contract 2 - exclusion from OTHER FP6 contracts, and from other Community policies 3 - ineligible to participate in FP6 activities, and from other Community policies New: liquidated damages in case of financial overstatement Without prejudice to civil and criminal sanctions

38. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 38 Not legally binding Intellectual Property Rights (IPR) Developed on the basis of Feedback from FP5 Features of the “new instruments”  contractors may leave/join during the project  “larger” projects

39. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 39 Not legally binding Consistency with FP5 (similar concepts) Simplification  New Same IPR rules for  all instruments (fewer exceptions)  New Same IPR rules for all contractors Increased certainty, in particular regarding access rights (restricted to what is necessary) Increased emphasis on the management of knowledge and IP (especially new instruments) Principles

40. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 40 Not legally binding General Concepts Definitions: no major change compared to FP5  “knowledge”, “pre-existing know-how”, “use”, “dissemination”,... Ownership: no major changes compared to FP5  resides with the contractor (incl. JRC) generating knowledge  exception for SME actions : cooperative research - SMEs own results not the “RTD Performers”  collective research - SME associations own results  transfer of ownership: prior notice to other participants + Commission (possible objection within 30 days)  public procurement (Commission owns results)

41. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 41 Not legally binding General Concepts - Protection  Where there is commercial application and subject to legitimate interests, it is a requirement to protect  Where there is no protection, Commission may protect Publication  allowed if not detrimental to protection  prior notice to Commission + other contractors (possible objection within 30 days) Use / dissemination  Obligation to use and disseminate  Commission may disseminate itself if needed

42. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 42 Not legally binding Access Rights General principles New Granted on written request, access rights for use of another’s results only where necessary (not by right) No sub-licensing (unless explicitly agreed + possible optional clause for software) Obligatory Access Rights between contractors limited to what they really need (either for carrying out the project or for using their own knowledge) but broader Access Rights may be freely negotiated Access Rights granted to third parties : Commission may object

43. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 43 Not legally binding Access Rights New features Feedback from FP5: need for pre-existing know- how (Pre-Existing Know How ) to be better safeguarded New Possibility for a contractor to exclude specific Pre-Existing Know How from the obligation to grant Access Rights to the others  with the agreement of all participants  before the contractor concerned signs the contract (or before entry of a new contractor)

44. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 44 Not legally binding FP6 System of Access Rights Access rights to pre-existing know-how Access rights to knowledge If a contractor needs them for carrying out its own work under the project For carrying out the project Royalty-free unless otherwise agreed before signing the contract Royalty-free If a contractor needs them for using its own knowledge For use (exploitation + further research) Non-discriminatory conditions to be agreed Royalty-free unless otherwise agreed before signing the contract Possibility for participants to agree on exclusion of specific pre-existing know-how before signature of the contract (or before entry of a new participant)

45. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 45 Not legally binding Consortium Agreement  WHY ? (1) 1 - Mandatory unless excluded by the call for proposals 2 - Management of the consortium: distribution of funds paid to the consortium (via the coordinator) no automatic pre-allocation of the funds among contractors: to be decided by the consortium evolution of the work programme organisation of work to be carried out (sub-projects) reports presented and submitted by the consortium (via the coordinator) evolution of the consortium’s composition (modification)

46. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 46 Not legally binding Consortium Agreement WHY ? (2)  3 - IPR issues: should be agreed before signature of the contract (mandatory for specific Pre-Existing Know How exclusion)  4 - Global Risk Management: collective responsibility  technical implementation of the action = collective responsibility of the contractors  consortium to deal with breach of contract / non-performance and imposition of financial collective responsibility and any financial security necessary for same

47. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 14/07/2015 47 Not legally binding Consortium Agreement  Issues  Decision-making process governance may range from “1 participant, 1 vote” to “elective dictatorship”, via the shareholder approach  IPR - ensure that agreements necessary for the implementation of the project have been reached - exclusion of background/sideground - initiate common strategy on dissemination/use/protection + search for industrial partners  Global Risk Management - establish internal auto-control and a checks and balances mechanism (periodic distribution of the funds, progress reporting, etc). - specific issues regarding competitive calls, costs less than EC funding etc for specific instruments