1. INTERNATIONAL AGREEMENTS PARTICIPATION AND DISSEMINATION RULES
Legal Framework EC
TREATY
INTERNATIONAL AGREEMENTS
PARTICIPATION AND DISSEMINATION RULES
FRAMEWORK PROGRAMME
CONTRACTS
SPECIFIC PROGRAMMES
GUIDELINES ON
EVALUATION AND
SELECTION
PROCEDURES
Other relevant
EC Regulations FINANCIAL REGULATION
WORK PROGRAMMES
&
Calls for proposals

2. Guidelines Will provide supplementary information and guidance notes:
Financial guidelines
Negotiation guidelines
Consortium agreement guidelines
Project management guidelines

3. 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. The instruments Integrated Projects: new Networks of excellence new
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. Contract Structure Core contract (standard with specifics of project)
Annex I (technical tasks - the “project”)
Annex II General Conditions
(applicable to every instrument)
Annex III Instrument specific provisions (specific to instrument)

6. 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. Core-Contract Structure
Art Scope
Art Constitution of the Consortium
Art Evolution of the consortium
Art Entry into Force of the Contract and Duration of Project
Art Community financial contribution
Art Reporting periods
Art Reports
Art Payment modalities
Art Special clauses
Art Amendments
Art Communication
Art Applicable law
Art Jurisdiction
Art Annexes forming an integral part of this contract

8. Annex II - General conditions Structure
Article II.1 - Definitions
Part A: Implementation of the Project
Section 1 - Implementation and deliverables
Section 2 - Termination of the contract and responsibility
Part B: Financial Provisions
Section 1 - General financial provisions
Section 2 - Controls, recoveries and sanctions
Part C: Intellectual Property Rights

9. Annex II - General Conditions Structure
Part A: Implementation of the Project
SECTION 1 - IMPLEMENTATION AND DELIVERABLES
Art.II Activities
Art.II Performance obligations
Art.II Force majeure
Art.II Suspension and prolongation of the project
Art.II Subcontracting
Art.II Reports and deliverables
Art.II Evaluation and approval of reports and deliverables
Art.II Confidentiality
Art.II.10 - Communication of data
Art.II.11 - Information to Member States and Associated States
Art.II.12 - Publicity
Art.II.13 - Liability
Art.II.14 - Assignment

10. Annex II - General Conditions Structure
Part A: Implementation of the Project
SECTION 2 - TERMINATION OF THE CONTRACT AND RESPONSIBILITY
Art.II Termination of the contract and participation of contractors
Art.II Termination for breach of contract and irregularity
Art.II Technical collective responsibility
Art.II Financial collective responsibility

11. Annex II - General Conditions Structure
Part B: Financial provisions
SECTION 1 - GENERAL FINANCIAL PROVISIONS
Art.II.19 - Eligible costs of the project
Art.II.20 - Direct costs
Art.II.21 - Indirect costs
Art.II.22 - Cost reporting models
Art.II.23 - Receipts of the project
Art.II.24 - Community financial contribution
Art.II.25 - Reimbursement rates
Art.II.26 - Audit certificates
Art.II.27 - Interest yielded by pre-financing
Art.II.28 - Payment modalities

12. Annex II - General Conditions Structure
Part B: Financial provisions
SECTION 2 - CONTROLS, RECOVERIES AND SANCTIONS
Art.II.29 - Controls and audits
Art.II.30 - Liquidated damages
Art.II.31 - Reimbursement to the commission and recovery orders

13. Annex II - General Conditions Structure
Part C: Intellectual Property Rights
Art. II.32 - Ownership of knowledge
Art. II.33 - Protection of knowledge
Art. II.34 - Use and dissemination
Art. II.35 - Access rights
Art. II.36 - Incompatible or restrictive commitments

14. Participation
New Every legal entity that contributes to the project (incl. Project Managers)
General Rule: Participant = contractor
Every legal entity contributing to a project must have a contractual link with the Community
Exceptional cases: subject to very restrictive rules
Third parties identified in Annex I
Subcontractors

15. Third parties identified in Annex I
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

16. 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

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

18. 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

19. New: Collective responsibility of the contractors
LIABILITY (1)
New: Collective responsibility of the contractors
Mechanism by which a contractor may be held liable, technically and/or financially, fully or partially, for the action of another contractor
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

20. 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)

21. 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

22. 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”)

23. Financing : what ? Community Financial Contribution (Arts 5 and II.24)
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

24. 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  

25. Other specific support activities
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”)

26. Financing
Type of activity (b)

27. 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

28. 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)

29. 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”)

30. 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.

31. Indirect costs consist of a flat rate applied to the direct costs.
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.

32. 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.

33. 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

34. Reports and deliverables
Financing
Reports and deliverables
All reports and deliverables shall be submitted within 45 days of the end of the period in question.
The project is divided into reporting periods of 12 months for IP and NOE
For other instruments, reporting periods are established on an ad hoc basis in the contract
P1: from month 1 to month X
P2: from month X+1 to month Y
P3: from month Y+1 to month Z
final: from month N+1 to the last month of the project

35. Reports and deliverables
Financing
Reports and deliverables
The consortium will submit the following reports to the Commission:
For each reporting period:
a periodic activity report
a periodic management report
a report on the distribution between contractors
supplementary reports required by Annex to this contract
an audit certificate when required

36. Reports and Deliverables
Financing
Reports and Deliverables
In addition to the periodic reports of the last period, for the last period:
a final activity report
a final management report
supplementary reports required by Annex to this contract
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

37. Financing Audit certificates Article II.26
each contractor shall provide an audit certificate prepared and certified by an external auditor (for public bodies - competent public officer)
for each period for which an audit certificate is required (article 7 - option 2)
every 12 months for IP/NoE (article 7 - option 1)
where requesting a Community financial contribution exceeding € for a specific reporting period, even though an audit certificate is not required for this specific period

38. 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)

39. Financing Payment modalities
The Community financial contribution shall be paid in accordance with the provisions of Article 8 and II.28. Differences between:
1] one single reporting period
2] several reporting periods
- with an audit certificate for each period
- without an audit certificate for each period
3] one single reporting period - lump sum

40. Payments and reporting schedule for an IP (example of a 4 year contract)
Activity report
Reported costs
Activity report
Detailed work plan
Reported costs
Adjusted advance
Activity report
Detailed work plan
Reported costs
Adjusted advance
Activity report
Detailed work plan
Reported costs
Adjusted advance
Detailed work plan
Initial advance
Months

41. Payments and reporting schedule for a STREP, CA or SSA (example of a 3 year contract)
Final activity report
Final payment
Reported costs + audit certificate (mandatory)
Intermediate
pre-financing or
payment
NB: impact on the total pre-financing
Periodic activity report
(mid-term review : optional)
Reported costs
+ (audit certificate if required)
Detailed work plan
Initial advance
Months

42. 1 - assessment of the scientific outputs
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

43. 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

44. 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

45. 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

46. Principles 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)

47. 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)

48. 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

49. 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

50. 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)

51. FP6 System of Access Rights
Access rights to
Access rights to
pre-existing know-how
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)

52. 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)

53. 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

54. 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