1. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20021 Not legally binding FP6 Contractual issues

2. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20022 Not legally binding PRESENTATION OUTLINE lParticipation lContract structure lCollective Approach –signature and entry into force –collective Responsibility –consortium Agreement lProvisions of general conditions, special reference to: –financial provisions –controls and sanctions

3. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20023 Not legally binding General Principles ● Reflect requirement of the Legal Framerwork ● 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 ROME 01-12-20024 Not legally binding Participation l New Every legal entity that contributes to the project 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

5. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20025 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, SMEs Associations) : - 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

6. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20026 Not legally binding Participation Subcontracting (1) ● 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. ● Management activities should not be subcontracted ● 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

7. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20027 Not legally binding Participation Subcontracting (2) ● Consequences : ● Costs must be awarded to the bid offering best value for money (best price-quality ratio) (no more competitive tender) ● Responsibility of the contractor who enters in subcontract ● The IPR belong to the contractor

8. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20028 Not legally binding Contract Structure ● Core contract(standard with specifics of project and special clauses) new version 23 Octobre 2003 ● Annex I (technical tasks - the “project”) ● Annex II General Conditions (applicable to every instrument) ● Annex IIIInstrument specific provisions (specific to instrument - 5)

9. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-20029 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

10. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200210 Not legally binding Signature and entry into force (1) ● Contractual link of all contractors with the Commission (Form A signed by authorised legal representative of the contractor identified in contract, if change form A accompanied by new CPF identifying the new legal representative or letter indicating that other person is also legal representative) ● New Contract enters into force upon signature of coordinator and the Commission. Coordinator must ensure other contractors sign within delays (30/45/60 days)

11. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200211 Not legally binding Signature and entry into force (2) ● Distribution of pre-financing to coordinator : within 45 days of : date of entry into force of contract/date of signature of minimum number of participants/date of signature of last contractor ● Distribution of pre-financing to contractors : not before minimum number of contractors have acceded to the contract ● Project begins in the date established in the contract (this can be before the contract enters into force but usually later)

12. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200212 Not legally binding LIABILITY (1) ● New : Collective responsibility of contractors ● Mechanism by which a contractor may be held liable, technically and/or financially, fully or partially, for the action of another contractor ● Consequence of FP6 principle of « autonomy of the consortium » : if the money is granted to the consortium, which decides on its allocation, then consortium as a whole is held liable.

13. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200213 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)

14. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200214 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

15. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200215 Not legally binding Consortium agreement General principles ● Regulates internal organisation and management of consortium (Mandatory for IP and NoE) ● New Compulsory unless otherwise mentioned in the call for proposal ● Between contractors - NOT signed nor approved by the Commission ● Non binding guidelines provided by the Commission

16. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200216 Not legally binding Consortium agreement Management of the consortium ● Distribution of funds paid to the consortium (via the coordinator) ● No automatic pre-allocation of the funds among contractors : allocation of funds among contractors to be decided by the consortium (via the consortium agreement ) ● Evolution of the project ● Organisation of work to be carried out (sub-projects) ● Reports presented and submitted by the consortium (via the coordinator) ● Decision-making process ● Evolution of the consortium’ composition (modification)

17. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200217 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

18. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200218 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

19. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200219 Not legally binding Financial Provisions Grant for integration (NoE) ● New mechanism ● Calculation basis: number of researchers to be integrated not as a %age of the budget for the JPA ● Payment basis: completion of the JPA + costs certificates mentioning that the costs incurred are greater than the grant itself

20. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200220 Not legally binding Financial Provisions Grant to the budget ● Calculation basis: %age of the preliminary budget of the execution plan ● Payment basis: covers a share of the expenditure incurred, necessary for the execution of the indirect action ● %age depends on:  type of activity  participant involved (cost models)

21. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200221 Not legally binding Financing: cost reporting models ● FC: actual direct and indirect costs ● 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)

22. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200222 Not legally binding Financing: cost reporting models 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”)

23. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200223 Not legally binding Financing Type of activity 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)

24. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200224 Not legally binding Financial Provisions Identification of costs ● New No cost categories but list of ineligible costs ● To be eligible costs must be : actual, economic and necessary for the project incurred during the duration of the project (exception : costs of final reports) recorded in the accounts of the contractor (or third parties) and must exclude indirect taxes, duties, interests, costs reimbursed in respect of another Community project follow contractors own accounting rules Not give rise to profit ● Audit certificates by external auditor (For public bodies - competent public auditor)

25. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200225 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.

26. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200226 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

27. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200227 Not legally binding Financing Reporting periods (12 months for IP and NoE) l The consortium will submit the following reports to the Commission( within 45 days after the end of each reporting period) : a periodic activity report ● a periodic management report (justification of resources/Form C/summary financial report) ● a report on the distribution between contractors ● supplementary reports required by Annex to this contract ● an audit certificate when (certification of costs incurred in corresponding period)

28. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200228 Not legally binding Financing Audit certificates Article II.26 3 each contractor shall provide an audit certificate prepared and certified by an external auditor 3for public bodies - competent public officer 3for each period for which an audit certificate is required: Article 7 3an audit certificate must be provided by each contractor requesting a Community financial contribution exceeding 750.000€. 3every 12 months for IP/NoE: Annex III (based on the reporting period)

29. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200229 Not legally binding Financing Payment Modalities ● Initial pre-financing (Pre-financing for each period and 6 month of next period) ● Periodic payment (base on consumption of pre- financing) ● 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)

30. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200230 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 and/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 ROME 01-12-200231 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

32. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200232 Not legally binding Controls and Audits Objective to reinforce ex-post controls ● To simplify and streamline ex-ante controls ● As a counterbalance to increased autonomy for participants

33. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200233 Not legally binding Controls and Audits ● Reports - Periodic activity and financial reports - Supplementary reports if foreseen (in Annex I or III) ● Audit certificates ● Monitoring by Commission with external experts ● Scientific, technological, and financial audits ● Ethical audits

34. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200234 Not legally binding Sanctions ● Financial irregularity: exclusion criterion ● Recovery decisions (art. 256 EC Treaty) ● Other sanctions in contracts (overclaims)

35. RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 ROME 01-12-200235 Not legally binding For more information l Legal framework within FP6 –Model contract : http://europa.eu.int/comm/research/fp6/working-groups/model- contract/index_en.html http://europa.eu.int/comm/research/fp6/working-groups/model- contract/index_en.html  Approved core contract and annex II  Approved annex III  Consortium checklist, financial guidelines, Form A- accession to the contract l Helpdesk –http://www.ipr-helpdesk.org –RTD-A03-Question-juridiques@cec.eu.int l General information on FP6 –http://europa.eu.int/comm/research/fp6/index_en.html