fp7 rules for participation and grant agreement · fp7 rules for participation and grant agreement...

Legal & Financial issues 24th June 2008 Not legally binding

European CommissionDG Enterprise and Industry

FP7 Rules for Participation and Grant agreement

NCP meeting 24th June 2008

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FP7 legal documents for implementation and guidelinesadopted by Commission

Source: CORDIS websitehttp://cordis.europa.eu/fp7/find-doc_en.html

New documents available: – Amendment Guide for FP7 Grant Agreements– Guide for beneficiaries - New version 11-03-2008!– Rules for submission and evaluation of proposals –

New version 13-02-2008!– Negotiation guidance notes - New version 08-05-2008!– Guidance notes on project reporting (07-03-2008):

- Template for periodic report- Template for final report- Templates for security research

– Guidance notes on project technical review (18-12-2007)

– Grant Agreement and annexes now available in all official languages

– New additional special clauses available soon

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1.Upper funding limits Reimbursement according to the type of organisation, of

action and/or activity

• Research and technological development activities: up to 50% of eligible costs. However, it can be up to 75% for:• Non profit public bodies, secondary and higher education

establishments and research organisations, SMEs, and • Security related research (in certain cases)

Status verified by DG Research Validation Team

• Demonstration activities: up to 50%

• Other activities including management: up to 100%

• Coordination and support actions: up to 100%

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2. Indirect Costs (1)• For all:

– either actual overhead or simplified method– flat rate of 20% of direct costs

• Non-profit Public Bodies, Secondary and Higher Education establishments, Research Organisations and SMEs unable to identify real indirect costs, may apply for a flat rate of 60% for funding schemes with RTD.

• For CSA limit of 7% of direct costs

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2. Indirect Costs (2)Simplified method

• A participant may use a simplified method to calculate its indirect costs at the level of the legal entity, and not at a detailed level (centre, department) • if this is in accordance with its usual management and

accounting principles

• If no analytical accounting system

• Based on actual costs of the last closed accounting year

• Does not require previous certification by EC

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3. Payment modalities

–One pre-financing (upon entry into force) for the whole duration

– Interim payments based on financial statements (EC contribution= amounts justified & accepted * funding rate)

–Retention (10%)–Final payment

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4. Certification (1)

2 types of certificates:• certificate on financial statements (CFS)

(Form D)- expenditure verification• certificate on the methodology (Form E) -

system verification– Personnel & Overheads

N.B.: The submission of a certificate does not waive the right of the Commission to carry out its own audits (Article II.22 of the FP7 model grant agreement).

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Certificate on financial statements (CFS)Mandatory for a beneficiary when its requested funding for the project is equal or more than 375,000€

–exception for project of 2 years or less: no intermediate CFS submitted, only at the end

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4. Certificate on the methodology (CoM) (3):scope

– Aims at certifying the methodology of calculating (average) personnel costs and overheads

– On a voluntary basis– Particularly aimed at legal entities with multiple

participation – criteria: at least 8 participations in FP6 > 375K €

– EC makes final decision on acceptability– Once accepted, it is valid for all subsequent

financial statements submitted by the beneficiary (valid throughout FP7)

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4.CoM (4): Advantages–Use of average costs for direct personnel costs allowed–No recalculation of individual actual costs for personnel in

the Certificate on the Financial Statements for the final payment or during ex-post audit (auditors only have to focus on checking compliance with CoM and systems, omitting individual calculations)

–Waiving of interim CFS (if certificate on methodology on both personnel and indirect costs) – CFS only for final payment

–Early assessment of compliance to contractual provisions to calculate personnel and indirect costs. Early detection and corrections of possible errors

–Reduced costs for the whole certification system–EC & Beneficiaries gain significantly in terms of

assurance on legality and regularity–Simplification of administrative burden both for

beneficiaries and EC operational services (less number of certificates to provide/process)

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4. Average Personnel Costs (5) (no waiver)

• Mandatory for everyone who wishes to use average personnel costs in their claims (even if requested amount < € 375.000)

• EC makes final decision on acceptability of the part related to personnel of the CoM (Form E) certificate on the methodology (Form E) - system verification for

– Personnel & Overheads (‘Waiver’)– Average Personnel Costs (‘No Waiver”)

• Average personnel costs charged by the beneficiary according to the certified and accepted methodology are deemed not to significantly differ from actual personnel costs

• Not necessary if a Certification of Methodology for Personnel & Overheads on the same system exists

• Does not allow intermediate CFS to be waived, but auditors only have to focus on checking compliance with the certified methodology and systems, omitting individual calculations

• Enables EC to assess ‘significant deviation’ of the system

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– Auditors will provide information according to a specific format specified via agreed terms of reference (ToR)

– ToR are in Annex VII of the Grant AgreementForms D: Certificate on Financial Statement Forms E: Certificate on Methodology

– ToR result from common practice in audits and corresponds to international audit standards

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These certificates can be provided by auditors:

– Qualified (according to Directive 2006/43/CE repealing 8th Council Directive)

– Independent

Exception:

1. Public bodies

2. secondary and higher education establishments

3. research organisations

may opt for a competent public officer

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5. Subcontracts

• Subcontractors charge a price, which usually includes a profit (different from third parties, which charge only the costs of the activity)

• Tasks have to be indicated in Annex I• awarded according to best value for money principle• shall not be a “core” part of the work (based on

qualitative criteria more than quantitative – in fact there is no upper limit)

• Can be under framework contracts

• Public entities: must follow national procurement principles

• Private entities: should follow the rules that they usually apply for the selection of procurement contracts e.g. submission of several quotes

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5. Third parties

- Costs may be claimed by the beneficiary if tasks to be performed, an estimation of the costs and the resources allocated to the Project are indicated in Annex I

- Same rules of beneficiaries apply

I. Third parties making available resourcesa. Free of chargeb. Beneficiary reimburses the third party

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5. Third parties (2)II. Third parties carrying out part of the work a. To be identified in special clause No. 10 b. Name, tasks and resources to be described in Annex I c. Requirements of relationship beneficiary/third party:

1. It is broad and not limited to the G.A.2. its duration goes beyond the duration of the Project3. It has formal external recognition: legal structure,

common ownership or shared infrastructures/resourcese.g. European Economic Interest Grouping, Joint Research Units, affiliates and groupings (associations, federations)

d. Each third party fills in its costs in an individual Form C and,where necessary, shall provide its individual certificate on financial statements and/or on the methodology independently from those of the beneficiary. The beneficiary will submit both forms and a summary report integrating both the costs of the beneficiary and those of the third party(ies).

Need to be validated in Unique Registration Facility as the beneficiaries!!

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6. Receipts

2 kinds of receipts must be taken into consideration to avoid any profit:

• Transfers from third parties to the beneficiary (if specifically attributed to the project and not reimbursed):

–Financial transfers–Contributions in kind

• Income generated by the project

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6. Receipts (2)

At final payment the EC contribution will take into account any receipts of the project

For each beneficiary:

the eligible costs • EC contribution + the receipts for the project

Otherwise: reduction of EC contribution!

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7. Guarantee Fund (NEW) • The Fund belongs to all beneficiaries of grant agreements under

the FP7

• All beneficiaries contribute to the Fund to insure against financial losses of the project

• The contribution equals 5% of the total EC financial contribution foreseen for each participant

• Deducted from the pre-financing

• Financial interest generated by the Fund will serve to cover financial risk

• In principle the amount contributed to the Fund will be reimbursed at the end of the action

• No bank/financial guarantee requestedanymore

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7. Guarantee Fund (2)

Ongoing grant agreement:

• a beneficiary does not reimburse to the coordinator any amount requested by the Commission

• the remaining beneficiaries agree to continue with the implementation of the GA

• the Commission orders the Fund to transfer an equivalent amount directly from the Fund to the coordinator

• Amounts transferred from the Fund shall substitute the Community financial contribution not reimbursed by the beneficiary

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7. Guarantee Fund (3)

Recoveries after termination or completion of the GA:

• The Commission requests the beneficiary concerned to reimburse the amount due (recovery order)

• If payment not made by the due date, sums may be recovered by offsetting them against any sums the Community owes to the beneficiary concerned

• Where offsetting is not possible, the Commission recovers from the Fund the amounts due

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7. Guarantee Fund (4)Recoveries to the benefit of the Fund:

• Where amounts have been – transferred from the Fund to an ongoing project

or – recovered from the Fund by the Community

the beneficiary owing them shall reimburse the Fund

• The Commission shall issue a recovery order against this beneficiary to the benefit of the Fund

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8. Financial viabilitySince Guarantee Fund, financial check only for - Coordinators- beneficiaries requesting more than 500.000€Exempted:

1. public entities, 2. International Organisations, 3. higher and secondary education

establishments4. entities whose participation is

guaranteed by a Member State or Associated country,

5. natural persons in receipt of a scholarship

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8. Financial viability (2)

- Financial Viability checktool (Excel sheet) available on CORDIS!

- Audit report certifying the amounts of the checktool to be provided (if not available, business plan)

- Insufficient beneficiaries can not participate!

- Weak beneficiaries can not be coordinator(could participate under certain conditions, e.g. voluntary bank guarantee)

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9. AmendmentsPrinciples- Continuity with main lines of FP6

policy- One single amendment procedure:

Exchange of letters- Model Letters to be used- Coordinator requests amendments

on behalf of the consortium- For addition/withdrawal tacit

approval after 45 days (not 42)

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9. Amendments (2)Main Novelties: Procedure (1)• Coordinator can accept on behalf of the

Consortium an amendment proposed by the Commission

• Exchange of letters– One letter from the Consortium– One letter from the Commission

• Possibility for the Commission to make a counter-proposal to the Consortium request(no need for the Consortium to resubmit a request)

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9. Amendments (3)Main Novelties: Procedure (2)• Tacit rejection: after 45 days, the absence of

response is in principle considered a rejection

• Entry into force of the Amendment: on the date of the last signature (either that of the Commission or that of the Coordinator)

• No obligation to submit the amendmentrequest by registered mail like in FP6;

• However, it is important to use means thatcan prove the day of receipt of the request

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9. Amendments (4)Main Novelties: Information Letters• Information letters to be used in case of:

– Universal transfer of rights & obligations (Partial transfer: Individual amendments still required)

– Change of legal name or details– Change of FP7 legal status (i.e. SME which is no longer an SME) and mistake in indirect costcalculation

• Advantages:– Directly from the beneficiary to the Commission– One letter per beneficiary not per GA– Signature of Contact person enough

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Information• Find a document è

http://cordis.europa.eu/fp7/find-doc_en.html

• FP7 Helpdesk èhttp://ec.europa.eu/research/enquiries

• Seventh Framework Programme: http://ec.europa.eu/research/future/index_en.cfm

• Information requests:[email protected]

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