Administrative Capacity Building linked to the management of ESI Funds Priorities for 2014-2016

1. Administrative Capacity Buildinglinked to the management of ESI FundsPriorities for 2014-2016 Committee of the Regions, 19 June 2014 Pascal Boijmans Hugh Goldsmith Nathalie Verschelde DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

2. MandateWe are a new unit set up to enhance the capacity of the Commission services to help Member States and regions to overcome implementation bottlenecks linked to administrative capacity problems in order to accelerate the absorption of Funds and improve the quality of spending in the current and future programming period. (E1 mission statement) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

3. Scope of our work: • Administrative capacity linked to the management of the funds • Geographical: Member States and regions with weaker administrative capacity • Horizontal: e.g. public procurement, environment, state aid, Land Registers • Sectoral: sectors which lag behind in absorption like railways, waste water treatment, solid waste, information society • Knowledge development: WB, OECD, EIB/Jaspers, Interact, IQ Net, RSA…: methodologies, indicators, training, networks • Good practice database: exchange of good examples DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

4. How to design administrative capacity? • Three interrelated factors determine the success of each step in the policy life cycle: • Structure & Governance • Human Resources • Systems and Tools DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

5. Administrative capacity bottlenecks in Member States • Complexity of administrative organisations in some MS with unclear delegation of tasks • High staff turnover in some MS: lack of clear HR policy • Development and implementation of strategic plans: weak in several MS • Weak project development capacity of (local) beneficiaries • Underperforming sectors due to administrative capacity • Bottlenecks linked to public procurement and state aid • Insufficient monitoring systems in place • Risk of fraud and corruption: reputational risk

6. STATE OF PLAY – IMPLEMENTATION 2007-2013 Implementation rates after 7 years = 62% and 57% for ERDF and CF Interruptions of payments amount to € 4.3 billion € 1 billion financial corrections SOMETHING NEEDS TO BE DONE… DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

7. Strong correlation between Government Effectiveness and Corruption Latest data for all 28 Member States

9. Competence Centre Work programme • Already launched during 2013 : • Guidance and screening (27 PAs + 10 OPs) • Public Procurement Action Plan • Expert Exchange System (demand/supply analysis) • Anti-fraud & anti-corruption events • Study on funding of salaries from TA budgets • Knowledge development (country fiches, EIBURS, links to international organisations) • Extended matrix with strong and active participation and Inter-Service Group DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

10. Also coming in 2014-2016 : • Modelling of fund management bodies • Strategic training programme • Exchange Platform for MAs and IBs • Integrity Pacts pilot project • Action Plan on State Aid • Knowledge development : indicators • Transparency, open data & promoting good governance Better implementation rates, reduced error rates, more effective investments DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

11. 2 concrete project examples: • Public Procurement Action Plan • Hugh Goldsmith • CEES: Common Expert Exchange System • Nathalie Verschelde DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

12. EP Public Hearing 01.10.2013 Public ProcurementAction Plan Wasting public money Irregularities Corruption What is EC doing?

13. OLAF Study 2013 - Headlines • Direct public loss was 18% of the overall project budgets concerned, of which 13% attributed to corruption • Overall direct cost of corruption for 5 sectors & 8 Member States studied estimated at: €1.4 - 2.2 billion • Main forms of corruption: Bid-rigging; kick-backs; conflicts-of-interest; deliberate mismanagement

14. Public Procurement (PP) Basics Key principles Legal enactment Directive 2004/18/EC(Classic Directive) Directive 2004/17/EC (Special sectors) Directive 2007/66/EC (Remedies Directive) MARKT Interpretative Communications & Explanatory Notes ECJ Case Law A complex area with … New Directives 2014 • Transparency • Equal treatment & non-discrimination • Proportionality … in purchase of works,supplies and services by public entities or entities with a public service mission in “special” sectors (water, energy, transport and postal services)

15. Public Procurement using ESI Funds OPPORTUNITIES Use of public funds: • Value-for-money • Support to policy RISKS Compliance: • Fraud/Corruption • Errors => Financial Corrections

16. Improving public procurement (PP) involving EU Funds is a priority • It matters - 19% of EU GDP passes through public procurement! • Increasing EU-level competition for PP contracts is a core policy strengthening the single market • PP errors are single most common cause of administrative errors and financial corrections across all EU Funds • Slow PP procedures delay funds implementation • Better PP procedures and management systems can help limit risks related to Fraud & Corruption through more transparency, "red flag" checks etc • Major scope to pursue broader policy objectives via PP (green PP, PP of innovation, social inclusion, SME access to markets) … need to build capacity

17. DG REGIO audit workPublic Procurement irregularities • 40% of irregularities detected by DG REGIO since 2005 are due to non-compliance with Public Procurement rules • European Court of Auditors: DAS 2011: 44% of all quantifiable errors were due to Public Procurement. From 2007-2012 32% of all transactions audited were affected by PP errors • National audits: report more and more irregularities on Public Procurement • Affects all Member States

18. Lots of fragmented initiatives … • DG ENV 2008 "Green Public Procurement" toolkit • DG MARKT 2011 Study "Public procurement in Europe: Cost and effectiveness" • DG MARKT 2012 Implementation Report & "Golden book of e-procurement good practices" • DG ENTR 2013 Launch of "Procurement of Innovation Platform" • OLAF 2013 Study "Identifying and reducing the costs of corruption in Public Procurement" • DG HOME 2014 First "EU Anti-corruption Report" identifies PP as "most vulnerable area"

19. Technical Working Group on PP established Sept 2013 Purpose: To develop common understanding of issues, and to prepare & deliver an Action Plan to support MS improve Public Procurement performance for ESI Funded investments during 2014-2020 REGIO (Chair), MARKT, EMPL, AGRI, MARE, EIB • ESI Fund DG's have most "in the field" knowledge from audits • MARKT primary focus is on policy (transposition and application of legislation), particularly preparation for new PP Directives, but also increasingly looking at implementation issues

20. ESI Funds PP Joint Action Plan Approved by REGIO Board February 2014

21. Other Actions Identified • Preparation for new PP Directives (2016) – support to transposition, training, dissemination programmes (MARKT lead) • Assessment of current practices and scope to improve PP professionalization and accreditation linked to funds (will be started under Stocktaking Study) • Training/networks on PP as a strategic tool for Cohesion Policy (e.g. e-procurement, Green PP, Innovation: coordination with DGs ENTR and ENV) • Peer-to-Peer exchange mechanism (CEES) to include PP as pilot topic

22. Practical Guidance on "How to avoid common PP errors" • Target Audience is “Procurement Officer” managing day-to-day procurement activities • Guidance structured around the main stages of a public procurement process, highlighting issue to look out for and potential mistakes to avoid, with links through to a more detailed … • Toolkit of resources addressing specific topics in greater depth and giving concrete examples on what to do and what not to do during the procurement and contract management stages of the project cycle.

23. Guidance for Practitioners Structure: • Preparation and planning • Invitation to bid • Bid submission and opening • Evaluation • Award • Contract implementation Step by step description of the PP process • highlights areas of typical mistakes • why and how to avoid them • explanations of how to handle each situation • list of most common/ most serious errors • Link to Toolkits on specific topics with examples Translation into EU languages

24. Achievements to date: • Good collaboration & coordination mechanism established with mandate to deliver useful tools to support MS • Focus on both compliance (reduce errors) and value-added (policy support) • Concrete actions and deliverables DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

25. PURPOSE: • Is there interest for a peer-to-peer exchange system among the ESIF management bodies (MA,CA,AA, IB) ? • METHODOLOGY: • - On-line questionnaire all MA, CA and AA • - Interviews in 8 Member States (33 institutions) • CONTRACTOR • European Institute of Public Administration (Maastricht, NL) Common Expert Exchange System (CEES)Supply/demand analysis DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

26. KEY QUESTIONS: • Do you have capacity building needs ? Which ones ? • How do you go about building capacity ? • Your experience with private consultants and peer-to-peer support ? • Your interest in peer-to-peer exchanges ? To do what ? • Role of the Commission ? • Use of Technical Assistance to cover costs ? Common Expert Exchange System (CEES)Supply/demand analysis DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

27. Web-survey : response rate Number of addressees (persons): 408 Number of replies submitted: 131 Percentage submitted replies: 32% Responses from 27 MS DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

28. Key findings - survey (1) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

29. Key findings – survey (2) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

30. Key findings - survey (3) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

31. Key findings - survey (4) Assistance required mostly for : Programme Management : financial instruments, simplified cost options, financial management and verifications, anti-fraud measures Ex-ante conditionalities : Public Procurement and State Aid Thematic Objectives : TO1 (Research & Innovation) and TO11 (institutional capacity) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

32. Key findings – survey (5) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

33. Key findings - survey (6) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

34. Key findings – survey (7) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

35. Key findings – interviews (1) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

36. Key findings – interviews (2) • Strong message that more systematic peer-to-peer exchanges would be most welcome – interviewees in their majority expressed a need to have more contacts with peers • But also strong need to have a place where they can talk to each other, and to the Commission = platform ? Social media ? • Ad-hoc networks exist – build on them or embed them in a wider system • Peer-to-peer assistance is complementary to private sector consultant assistance. Neither can cover all the needs – both should be used depending on the needs and tasks • If a system is set up, it should be : light (non-bureaucratic), flexible (short, medium and long-term assignments), rapid (quick missions for burning issues) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

37. Main conclusions : • MS strongly in favour of a peer-to-peer exchange system • System must be light, flexible and rapid • Commission should coordinate and control quality • Also a strong need for a platform to exchange views, questions, practices • And a need for more training (new CPR) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

38. Follow-up Peer-to-peer • Unit E1 to make proposals to REGIO Board of Directors (July) • Pilot projects during Autumn 2014 • Exploring system options (IT, coordination in MS, database of experts, etc.) • Launch system early 2015 • Evaluate in 2018 DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

39. Follow-up Other measures • Explore options to set up an IT-platform for MA, CA, AA. Technical dimension, content and management • Organise strategic training on new elements of ESIF implementation for 2014-2020 (pilot project on-going, first training session on 23-24/06) DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"

40. Staffing and contacts in Competence Centre REGIO.E1 • Pascal Boijmans, HoU • Ann-Kerstin Myleus, Deputy HoU • Daniela Negreanu, Secretariat • AC Team: Inguna Kramina, Agnieszka Krasicka, Denisa Perrin, Nathalie Verschelde, Hugh Goldsmith (EIB), Laura Indriliunaite, Anna-Lena Zademach

41. Thank you ! Please do contact us  Regio-E1-administrative-capacity@ec.europa.eu DG Regional and Urban Policy - Unit E1 "Competence Centre for Administrative Capacity-Building and the Solidarity Fund"