Fit for Health is funded by the European Commission

1. Financial & legal Issues Online-Training 6.9.2011 | www Carla Chibidziura | FFG www.fitforhealth.eu Fit for Health is funded by the European Commission

2. Overview • Financial Issues – Costs • IPR issues during proposal phase • Consortium Agreement and IPR • Project Cash-Flow

3. EU funding contribution is defined by: Funding schemes Categories of participants Types of activities (RTD, demonstration, management, training etc.) Basic funding principles

4. Upper funding limits (direct costs) for Collaborative Project • Research activities – general reimbursement – 50% • SME – 75% • Non-profit public bodies – 75% • Universities and other educational org. – 75% • Research organisations – 75% • Demonstration activities – 50% • Other activities – 100% • Management activities (part of other activities) – 100% • Training activities (part of other activities) – 100% • Dissemination activities (part of other activities) – 100%

5. Maximum Funding Rates For following Funding Schemes: Coordination and support actions: up to 100% Frontier research actions (IDEAS): up to 100% Training and career development of researchers actions (PEOPLE): up to 100%

7. ExampleI • Funding scheme: Collaborative Project • Participant: Research Organisation • Type of activity: Research • Funding: 75% • Type of activity: Demonstration • Funding: 50% • Type of activity: Management • Funding: 100%

8. Example II • Funding scheme: Collaborative Project • Participant: Industry • Type of activity: Research • Funding: 50% • Type of activity: Demonstration • Funding: 50% • Type of activity: Management • Funding: 100%

9. Cost categories Indirect Overhead Direct Other Equipment Travel Personnel Non-eligible Eligible Other Demonstration RTD Management

10. actual= not budgeted, not estimated incurred by the beneficiarykeep the documents long enough! during the duration of the projectfor final report until 60 days after projct end determined in accordance with the usual accounting and management principles and practices of the beneficiary recorded in his accounts Eligiblecosts I(GA Annex II, II.14) Principles must not be contracdictory to provisions of the Grant Agreement!

11. 5. for the purpose of achieving the project objectives consistent with the principles of economy, efficiency and effectivenesscosts are essential for achieving project goals 6. they must be recorded in the accounts of the beneficiary 7. they must be indicated in the estimated overall budget in Annex I EligiblecostsII(GA Annex II, II.14)

12. Non-eligiblecosts(GA Annex II, II.14) • indirect taxes (VAT), • duties, • interest owed and debt, • provisions for possible losses or charges, • exchange losses, costs related to return on capital, • costs declared in another EU project, • excessive or reckless expenditure

13. Costs project costs eligible for reimbursement direct costs indirect costs • eligible costs not directly attributed to the project but in direct relationship with the project - “Overheads“ eligible costs which can be attributed directly to the project

14. Direct costs Personnelcosts • Definition in GA Annex II Art. II.15.1 • Time recording is necessary for all project employees • Travel costs • Equipment

15. Personnelcosts • directlyhiredbythebeneficiary • workunderthesoletechnicalsupervisionofthelatter • remunerated in accordancewithnormal practices • time recordingneeded! • Planningofperson-months (~ 140 hoursp.m.) • goodestimationofcosts • average rate ofemployeeswho will beworking on theproject for budget • considervalorisation/payrise

16. Travelcosts • Travel costsarereimbursedaccordingtotherulesofyourorganisation • ifyouareallowedtotravel Business Class in yourorganisation, thenitiseligible in theproject(if not, not) • Flat rates for subsistence • listoftheCommission for hotelanddailyallowances – ratescanbereimbursedifmentioned in Annex I during GA negotiations

17. Equipment • only the depreciation costs can be reimbursed in the project • Equipment has to be depreciated according to the organisational and national rules • only the percentage of use in the project can be reimbursed • Depreciation of equipment bought before project start can be reimbursed in FP7

18. Example: Calculation of depreciation costs • research organisation buys equipment (costs: 10.000) for the project which will be used 50% in the EU-project, 50% for a national project • After national law the equipment has a depreciation range of 5 years • Project duration: 3 years • Calculation: • 10.000/5 years depreciation range = 2.000 per year • 3 project years: 2.000 * 3 = 6.000 • 6.000 * 50% use in the EU-project: 3.000 reimbursed

19. Indirectcosts • Administration costs • Rental fee • General office equipment • Office supplies • Electricity and heating costs • Phone and copy costs • Cleaning costs • Mail charges Depends on the overheads-calculation of your organisation!

20. Funding of indirect costs I (“Overheads“) Real indirect costs 1.a) Real indirect costs of the project (indicated that the organisation has an analytical accounting system) • can be taken by all types of organisations 1.b)Simplified method can be used if: • calculation ofoverheadsat the level of the legal entity possible; cost allocation with key driver (e.g. personnel), in accordance with usual accounting and management principles • no previous registration/certification by the Commission required, for all organisations possible, except for if they had employed 1.a) before

21. Funding of indirect costs II(“Overheads“) • Flat rates 2.a)Standard flat rate (20%) • 20% of all direct costs (without subcontracting costs) as indirect costs • possible for all organisations, except for if they had employed 1.a) or 1.b) before 2.b)60% Flat rate (60%) • only applicable if the organisation is a SME, university or other research organisation • unable to identify its real indirect costs • only for R&D projects

22. Funding of indirect costs III (“Overheads“) Coordination Actions and Support Actions (CSA) • max. (no flat rate!) 7% of direct costs (without subcontracting) as indirect costs • for all organisations!

23. Example: Calculation of funding • research organisation: 75% for RTD, indirect costs: 60% • Personnel costs RTD: 100.000,-- • Equipment costs RTD: 50.000,-- • Personnel costs Dissemination: 50.000,-- • Travel & Equipment costs Dissemination: 50.000,-- • Calculation:

24. Certificate on the Financial Statements (CFS) • GA Annex II Art. II.4.4: mandatory for all beneficiaries, for all interim or final payments, each time the cumulated EC contribution is not yet certified and ≥ € 375.000 • BUDGET: under Management – Subcontracting • EXCEPTIONS: • Projects ≤ 2 years • if total contribution ≥ € 375.000 only one CFS at the final payment • when Certificate of the Methodology (CoM) of the organisation is accepted by the Commission • no CFS for interim only at the final payment

25. Subcontracting • …it is possible to have third parties carrying out parts of the work, but: • tasks have to be indicated in Annex I • covers the execution of a limited part of the project • awarded according to best price-quality ratio (3 offers) • carry out work the partners cannot carry out (e.g. homepage, etc.) • Framework contracts (between beneficiary and service provider) are also accepted • Contract before project start, then no offers are needed

26. Costs in the proposal Part B Guide for Applicants: 2.4 Resources tobecommitted In additiontothecostsindicated in part A3 oftheproposal, andthestaffeffortshown in section 1.3 above, pleaseindicateanyothermajorcosts (eg. equipment). Describehowthetotalityofthenecessaryresources will bemobilised, includinganyresourcesthat will complementthe EU contribution. Show howtheresources will beintegrated in a coherentway, andshowhowtheoverallfinancial plan for theprojectisadequate. (Maximum length for Section 2.4 – twopages)

27. Tips for cost description • Recommendation: • Text hand in handwith a graphillustratingit • Common errors: • Nobalancedcostallocationaccordingtothetasks in theproject • Nodetaileddescriptionwhy a partnergets a certainamount • Inconsistencyof Part A andStaffEffort Table – often due tochanges in the last minutebeforehanding in • Budget limitofthe Call not followed!!! – non eligible • Noexplanationandjustificationofcostslike Other Costs, Subcontracting

28. Overview • Financial Issues – Costs • IPR issues during proposal phase • Consortium Agreement and IPR • Project Cash-Flow

29. IPR issuesduringtheproposalphase • IPR-management in FP7 projects is crucial • impact of the project as evaluation criterion is close to IPR-management • you have to know what IPR are generated • described in detail • ways to protect • preliminary agreements?

30. ConfidentialityAgreementNon-disclosure Agreement • itisoftenneededtoexchange/sharecertaininformationbeforesubmitting a proposal • establishes the obligation of the recipient (i.e. the legal person to whom the information is disclosed) to not disclose the information/ideas to third parties • information/knowledgewhichshouldbeprotectedshallbedescribed in detail • sanctions/feesshallbeforeseenifthereis a breachoftheConfidentiality Agreement/NDA

31. LetterofIntent (LoI) / MoU • bothdeclarationsoftheintentiontoconclude an agreement, basicdataofthelatteragreement • e.g. sanctionsiftheproposalis not submitted • couldinclude a roadmap for proposalsubmission • regulationofconfidentiality, informationexchange etc. • LoImodel: http://www.kowi.de/desktopdefault.aspx/tabid-77/ • MoU (Memorandum of Understanding) model: http://www.ncpwallonie.be/ncp/ressources/propriete-intellectuelle-1/ModeleMOU.pdf

32. Overview • Financial Issues – Costs • IPR issues during proposal phase • Consortium Agreement and IPR • Project Cash-Flow

33. Introduction • CA is compulsory – unless otherwise stated in Call • CA is a treaty between the project partners (rights and obligations) inside the consortium • European Commission is not a party of the CA • CA should in principle be negotiated and signed before starting the project • Clauses in CA cannot derogate from mandatory provisions of the Grant Agreement/RfP – GA always prevails

34. ImportantprovisionsofCA Responsibilities Liability Ownership, Access Rights Confidentiality Dissemination and Exploitation Consortium bodies technical, financial and general provisions Source: Desca

35. ImportantprovisionsofCA • Payments from the coordinator to the partners • payment modalities (when, how much etc.) • Management Structure(bodies, proxy) • Decision-makinge.g. 2/3 majority if it suits the project consortium – always carefully calculate who are the ones deciding! • Responsibilities and contributions(also in kind) of the partners – when is a partner in breach of contract? • Beginning/End of the CA, Confidentiality, Dispute settlement

36. IPR issues in FP7 (I) Definitions (1): Start of project „Background“ „Foreground“

37. IPR issues in FP7 (II) Definitions (2): „Use“: means the direct or indirect utilisation of Foreground in further research activities or for developing, creating and marketing a product or process/service „Dissemination“: disclosure of foreground by any appropriate means (e.g. publication of Foreground) „Access rights“: means licences and user rights to Foreground or Background.

38. IPR issues in FP7 (III) • Joint Ownership (generated jointly): no joint ownership agreement default regime (Annex II.26) • Transfer of ownership: • No notification to the European Commission needed, only to the other beneficiaries • Transfer to a third party = European Commission may object to such transfer of ownership of Foreground • Protection of Foreground: adequate and effective

39. IPR issues in FP7 (IV) • Dissemination (including publications): • Participants shall use/disseminate the foreground as swiftly as possible • Consider protection of foreground (IPR) and confidentiality • Notification of the other participants of all dissemination activities • There must be a plan for use and dissemination of foreground

40. IPR issues in FP7 (V) • Access Rights: • Access rights requests shall be made in writing • Compulsoryaccessrights on Background andForegroundaregranted when needed by a beneficiary (for implementationorusepurposes) • negotiateifroyalty-freeorcompensation! • exclude Background ifnecessary

41. IPR issues in FP7 (VI) Access rightsto background Access rightsto foreground Yes, if a beneficiary needs them for carring out his own work under the project Forimplementingthe project Royalty-freeunlessotherwise agreed before acceding to the GA Royalty-free For use purposes(exploitation+ furtherresearch) Yes, if a beneficiary needs them for usingits own foreground Either royalty-free, or on fair and reasonableconditions to be agreed

42. CA-Models There are 4 Models of Consortium Agreements in FP7: DESCA Consortium Agreement Model http://www.desca-fp7.eu/download-desca IP Model Consortium Agreement EICTA for FP7http://www.digitaleurope.org/index.php?id=32&id_article=163 EUCAR Model Consortium Agreement FP7 http://www.eucar.be/publications/EUCAR%20Model%20of%20Projects%20Consortium%20Agreement Model CA for the Aeronautics projects in FP7 http://www.aerosme.com/news/article.asp?article=250

43. CANegotiation • Coordinator: • Has to choose early enough the model Consortium Agreement which fits to the project and adapt it to the project and the Consortium (Annex I!) • Send it to all partners for comments, wishes etc. • If the comments cannot be taken into account – explanation why it is not possible! • Partners: • take a careful look at the provisions including decision making, financials, dispute settlement and IPR • critically questioning if everything is ok!

44. Overview • Financial Issues – Costs • IPR issues during proposal phase • Consortium Agreement and IPR • Project Cash-Flow

45. MaximumEUcontribution • Article 5 of the Grant Agreement • maximum that will be reimbursed in a project • maximum EU contribution includes: • Prefinancing (Art. 6 GA) • interim payments • final payment

46. Prefinancing • FP7 – just one Prefinancing at the beginning • paid to the Coordinator within 45 days after the entry into force of the GA • about 160% of the average funding per period (> 2 p.) • <= 2 periods: 60-80% of the maximum EU contribution • ownership of Pref.: Commission until final payment • 5% of the maximum EU contribution goes into the Guarantee Fund, part of Prefinancing

47. Interest • interest of Prefinancing on the account of the Coordinator have to be written into the Form C of every period • will be deducted from the max. EU contribution • only if the Prefinancing is > 50.000 EUR • not valid for interest of interim payments!

48. InterimPayment(s) • paid within 105 days after receipt of the reports by the Commission • based on the accepted eligible costs and the upper funding limits for the activities (50%, 75%, 100%) • Retention: only 90% of the max. EU contr. is paid during the project lifetime – 10% is held back for the final payment

49. FinalPayment • within 105 days after receipt of the Final Report • difference between max. EU contribution and amount already paid (~ 10%) • Commission orders the Guarantee Fund to transfer the money (5%)

50. Information • slidesandtraining will beavailable for downloadon theFit for Healthwebsite