Legal framework for research funding Ingrid Mariën-Dusak DG INFSO S4 – Legal Aspects

1. Legal framework for research funding Ingrid Mariën-Dusak DG INFSO S4 – Legal Aspects ______________________________________ 18/2/2011 Presentation for the Ombudsman Service

2. Legal Framework for research programmes TEU/TFEU INTERNATIONAL AGREEMENTS PARTICIPATIONAND IPR RULES FRAMEWORK PROGRAMME Grant agreement SPECIFIC PROGRAMMES Rules on Submission, evaluation and selection procedures Rules on financial capacity Other relevant EU Regulations FINANCIAL REGULATION/Implementing Rules WORK PROGRAMMES & Calls for proposals

3. 7th Framework Programme for research, technological development and demonstration activities (2007-2013) supports the following activities: • Cooperation: research in trans-national cooperation • Ideas: investigator-driven research • People: training and mobility for researchers • Capacities: support for research infrastructures, research for the benefit of SMEs • Maximum budget and share for each programme (Annex II): 50 521 billion EUR • Funding schemes (Annex III): collaborative projects, networks of excellence, coordination and support actions etc. • Implementation through specific programmes

4. Research Grants Research funding based on grants: Grants are direct financial contributions from the European Union budget awarded by way of a donation to beneficiaries engaged in activities that serve Union policies. • Grants are based on the costs actually incurred by the beneficiaries • Results of the action remain the property of the beneficiaries • All grants are the subject of a grant agreement • Co-financing principle • No profit rule

5. Grants versus procurement

6. Lifecycle of projects • Calls for proposals • Evaluation • Negotiation • Award of grant • Signature of grant agreement • Project monitoring • Technical reporting and reviews • Financial reporting: eligible costs • Certification • EU contribution • Payment modalities • Recoveries • IPR provisions

7. Calls for proposals • Content and timing set out in the work programmes adopted by the Commission • Notifications of calls published in the Official Journal and on CORDIS • Guides for applicants • Fixed deadline/Open calls  • Electronic submissions

8. Who may participate? • Legal entities (public or private) from Member States or Associated countries including natural persons • Joint Research Centre • Entities established under EU law • International organisations • Legal entities from third countries • Minimum 3 independent legal entities from 3 different Member States or Associated countries (general principle)

9. Evaluation of proposals Criteria: - Scientific/technological excellence • Relevance to objectives • Potential impact • Implementation Independent experts: • Impartiality • Confidentiality

10. Negotiation Legal and financial verification Commission decision on rules to ensure consistent verification of the legal status and financial capacity of participants: • Legal validation for every beneficiary • Verification of financial capacity only for coordinators and beneficiaries requesting > 500.000 EUR • Protective measures

11. Guarantee fund • Participant guarantee fund established and operated by the Commission • Contribution to guarantee fund of 5% of the EU contribution by each participant • Financial interest generated by the Fund to cover financial risk of any project • At the end of the project, if interests generated not sufficient to cover sums due to EU, retention of max. 1% of EU contribution • Exemption of retention for public bodies, higher and secondary education establishments, legal entities guaranteed by a MS/AC • Fund replaces financial guarantees and collective financial responsibility

12. Signature of Grant Agreement Model grant agreement adopted by the Commission, after consultation of Member States Content of General Conditions: Part A: Implementation of the Project Part B: Financial Provisions Part C: Intellectual Property Rights Grant agreement complemented by Guidance Notes drawn up by the Commission.

13. Obligations of coordinator and beneficiaries • Coordinator represents beneficiaries towards the Commission/intermediary for any communication • Receives the contribution of the EU on behalf of the beneficiaries • Tasks of coordinator may not be subcontracted • Joint and several liability of beneficiaries to carry out the project • Consortium agreement • Each beneficiary shall carry out the work identified in Annex I →only limited resort to subcontracts and third party contribution

14. Third parties • Third parties carrying part of the work • Subcontracts: agreement on business conditions without direct supervision • Third parties linked to beneficiary • Third parties making available resources • Free of charge – beneficiary does not reimburse it for the costs of the resources • The third party is reimbursed by the beneficiary

15. Reporting • Periodic reports to be submitted by coordinator 60 days after end of period: - progress of the work - use of the resources - Financial Statement (Form C) • Final reportsto be submitted by coordinator 60 days after end of project: - publishable summary report, conclusions and socio-economic impact • covering wider societal implications and a plan on use and dissemination of results • Deliverables to be submitted as foreseen in Annex I • Certificates on financial statements/on methodology

16. Project technical reviews General principles • Aim is to assess the work carried out under the project over a certain period • The Commission may initiate a technical review at any time during and up to 5 years after the end of the project • It may be assisted by external experts (reviewers) who give recommendations to the Commission. • The final decision is taken by the Commission. The consolidated experts’ review report is communicated to the project coordinator.

17. Review objectives • Degree of fulfilment of the project work plan • Continued relevance of the objectives • Resources planned and used in relation to the achieved progress • Management procedures • Beneficiaries’ contributions and integration within the project • Expected potential impact and plans for the use and dissemination of results

18. Review outcome • Accept or reject the deliverables • Allow the project to continue without modification of Annex I or with minor modifications • Consider that the project can only continue with major modifications • Initiate the termination of the grant agreement or of the participation of any beneficiary • Issue a recovery order regarding all or part of the payments already made and apply any applicable sanction.

19. Eligible Costs • Eligibility criteria • actual (except: average personnel costs) • incurred during duration of project • in accordance with usual accounting and management principles • recorded in the accounts of beneficiary • used for the sole purpose of achieving the objectives of the project • Non-eligiblecosts (identifiable indirect taxes including VAT,…) • Direct/indirect costs

20. Eligible personnel • Employment status – Directly hired or – in-house consultants if: • Contract to engage physical person • Work under the instructions of the beneficiary • In the premises • Output belongs to beneficiary • Cost in line with normal employment remuneration on basis of number of worked hours

21. Average Personnel Costs • Usual cost accounting practice • Based on actual personnel costs, without estimated or budgeted elements • Exclude ineligible cost items • Number of productive hours

22. Indirect Costs • For all beneficiaries: • actual overhead • flat rate of 20% of direct costs minus subcontracting • Flat rate of 60% for non profit Public Bodies, Secondary and Higher Education establishments, Research Organisations and SMEs unable to identify real indirect costs per project

23. Certification • Certification of financial statements (CFS) • Verification of costs and receipts • Certification on the Methodology (CoM) • System verification • For Average Personnel Costs(CoMAv) • For Personnel & Indirect Costs (CoM)

24. Certification • Auditors perform a standard set of checks and provide information according to a specific format defined via agreed Terms of Reference (ToR) • ToR are part of the FP7 Model Grant Agreement (Annex VII) • ToR correspond to international audit standards (International Federation of Accountants – IFAC – ISRS 4400)

25. Approval of reports and deliverables • The Commission has 105 days to evaluate reports and deliverables and make the corresponding payment • No tacit approval of reports • EC will pay interest on late payment • Payment is made after approval of reports and deliverables • After reception of the reports the Commission may: • Approve the reports and deliverables • Reject the reports and deliverables • Suspend the time limit for approval • Suspend the payment in whole or in part

26. Contribution of the EU • Maximum contribution indicated in the grant agreement • Table of estimated breakdown of budget and contribution of the EU per activity and per beneficiary in Annex I • Budget transfers between beneficiaries and activities allowed without amendment, except if changes of Annex I • Actual contribution: application of upper funding limits per activity/beneficiary to actual eligible costs/flat rates/lump sums • No profit for any beneficiary → receipts to be taken into account for final payment

27. Upper funding limits • Research and technological development activities: up to 50% of eligible costs. • However, up to 75% for: • Non profit public bodies, secondary and higher education establishments and research organisations • SMEs • Security-related research projects • Demonstration activities: up to 50% • Other activities including management: up to 100% • Coordination and support actions: up to 100%

28. Payment modalities • One pre-financing (within 45 days after entry into force) for the whole duration minus guarantee fund • Interim payments based on financial statements (EU contribution= amounts justified & accepted * funding rate) • Retention (10%) • Final payment

29. Recoveries • Any amount unduly paid to a beneficiary shall be subject to a recovery order • Waiving of recovery in compliance with the principle of sound financial management and proportionality • Criteria: • The facts giving rise to recovery • Impact on operation of EU and their financial interests • Distortion of competition • Economic and social damage

30. Intellectual Property Provisions • Main objectives • to facilitate the implementation of the project and the exploitation of its results • to provide a minimum framework while allowing participants flexibility to determine additional rules specific for their cooperation

31. Intellectual Property Provisions • Ownership: each participant owns the foreground it generates • Transfer of ownership of foreground: prior notification to consortium • Protection, use, dissemination (publication) • Access rights

32. Thank you for your attention!