DG DEVCO, Unit B.6

Brussels, November 2013

Inception seminar

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This presentations is made without prejudice of the provisions of the General  Conditions of the contract, Prag, or any other applicable regulation which shall prevail in case of discrepancy

Outline

1. Most Common Errors

2. Clarification of issues

3. Questions/Answers

4. Conclusions

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Most Common Errors

1. Payment request

2. 70% rule

3. Article 9.2.

4. Procurement

5. Modification of budget

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Payment request

Annex V•

• USE templates

• Original document (NO photocopies)

• Same bank account as indicated in contract

• Same address as indicated in contract

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Payment request

Final report

• Don’t forget to put interest awarded

• Audit report

• USE templates

• Original document (NO photocopies)

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70% rule

Calculation method:

• Expenditure incurred has to take into account the EC contribution

• For previous payment at least 70% of expenditure is to be incurred

• For any other previous payment 100%• In case of non compliance it will be paid the difference

between the 70% and the amount actually incurred

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Article 9 of General Conditions

• Any modification above 15% of initial budget has to be formalised by an contract addendum

• Any modification below 15% has to be communicated by writing without delay to the EC

• Any transfer between items within the same budget heading (including cancellation or new item)

• Any transfer between budget headings• In case of several modifications the total amount of all modifications can

not exceed 15%. If exceeds 15% an addendum is required to ensure eligibility

• In exceptional circumstances an amendment may have retroactive effect provided that the execution period has not expired but on the own risk of the beneficiary because the CA has the right to refuse it.

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Procurement obligationsThresholds for Services

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≥ 200,000 EuroInternational restricted tender procedure, following publication of a tender notice in the international and the national press

SERVICES < 200,000 Euro and > 10,000 EuroFramework Contract Procedure or Competitive negotiated procedure following invitations sent without publication

 

≤ 10,000 Euro Single tender 

Procurement obligationsThresholds for Supplies

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≥ 150,000 EuroInternational open tender procedure, following publication of a tender notice in the international and the national press

SUPPLIES< 150,000 Euro and ≥ 60,000 Euro Open tender procedure, following publication of a 

tender notice in the national press only

 < 60,000 Euro and > 10,000 Euro Competitive negotiated procedure following 

invitations sent without publication

 ≤ 10,000 Euro Single tender 

Procurement obligationsThresholds for Works

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≥ 5,000,000 EuroInternational open tender procedure, following publication of a tender notice in the international and the national press

WORKS

< 5,000,000 Euro and ≥ 300,000 Euro

Open tender procedure, following publication of a tender notice in the national press only

 < 300,000 Euro and > 10,000 Euro Competitive negotiated procedure following 

invitations sent without publication

 ≤ 10,000 Euro Single tender 

Procurement: conditions to be fulfilled

• Contract to be awarded to the most economically advantageous tender

• Ensure compliance with Treaty principles as transparency, equal treatment and fair competition

• Avoid any conflict of interest

• Respect the rules of nationality and origin

• You can use the tender documents models published on our website

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Procurement: conditions to be fulfilled

• Ensure that the bidding process is as open as possible and is accessible to all potential suppliers.

• Dispatch invitations / publish notices early enough to give interested suppliers time to respond. Ensure that invitations cover the market as widely as possible.

• Ensure the same information is given to all participants at the same time.

• Ensure that the selection and award criteria are correctly applied.

• Ensure that the offers are evaluated only after the date set for their submission.

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Procurement: Rules of nationality and origin

• Contractor must present a proof of origin to the beneficiary before the presentation of the first invoice

• The Contracting Authority (beneficiary) is obliged to check the existence of the a certificate of origin

• Exception to the rule: Derogations Should be decide case by case by EC and may be justified:

• Unavailability of products and services• Reasons of extreme urgency• Eligibility Rules make action impossible or exceedingly difficult

In case of non compliance with the rules the EC could recover all the grants of all procurements contracts. 14

Clarification of issues

VAT

• Two cumulative conditions to consider VAT as eligible

1. Beneficiary should demonstrate that he could not recover VAT

2. If it´s not excluded by the conditions of the programme

Means to demonstrate the non recoverability of the VAT

• An official document (declaration or a refused claim for reimbursement) by the• competent tax authority and extract of the relevant law are some examples.

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Clarification of issues

• VAT

• Exemption of proving the non recoverability of VAT: Article 14.7 of GC • In these cases the beneficiary has to submit a declaration that the VAT will not be

recovered from the tax authorities

1. When the amount of taxes per invoice is less than EUR 200 within a maximum of EUR 2500 limiting to 5% of the contracting contribution

2. Costs of recovery exceed the amount of the taxes

3. Countries in crisis situation or need for emergency. Limited to the period of the declaration

4. Action related to protection of fundamental rights of people16

Clarification of issues

Report presentation ( Article 2.3 of General Conditions):

• The final report should be sent no later than three months after the implementation

• The deadline is extended to six months when the Beneficiary does not have its headquarters in the country where the Action is implemented.

• In case of interim report you have to present:

• Request for payment• e3h5 interim report• e3h7 financial report• If applicable expenditure verification report

For the final report the same as above plus AUDIT REPORT

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Clarification of issues

Budget modifications

• Any transfer between items within the same budget heading (including cancellation or new item)

• Any transfer between budget headings

• In case of several modifications the total amount of all modifications can not exceed 15%. If exceeds 15% an addendum is required to ensure eligibility

• Previous invoices can be reimbursed provided that they had not been presented before and the related action was foreseen in budget and description

• Mistakes of previous years can be corrected in following reports

• Complementary actions can be presented to absorb an overestimated budget provided that there is prior approval by EC and comply with Article 9 of GC

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Clarification of issues

• Staff

• Art.14.2. of GC“… actual gross salaries and costs must not exceed those normally borne by the Beneficiary or its partners,”

• Art. 16.3 Staff and payroll records such as contracts, salary statements, time sheets. For local staff recruited on fixed-term contracts, details of remuneration paid, duly substantiated by the person in charge locally, broken down into gross salary, social security charges, insurance and net salary.

• As per Article 10 of the General Conditions, if your organization or a partner has to conclude implementation contracts with contractors in order to carry out the Action, shall respect the contract-award procedures and rules of nationality and origin set out in Annex IV of this Contract. These are not considered Staff members and they are disclosed in point 5 of Budget

• All this will be checked by the auditor

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Clarification of issues

• Travel• Follows principle of sound financial management, no business tickets,

travels within Europe are international trips

• Per diems

• Cover accommodation, meals, local travel within the place of mission and sundry expenses paid only in case of overnight stay.

• Contingency• Art. 14.3 of GC : A contingency reserve not exceeding 5 % of the direct

eligible costs may be included in the Budget of the Action.

• The contingency reserve cannot be used to solve financial mismanagement.

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Clarification of issues

• Exchange rate (Articles 14.6. and 15.8 of the General Conditions)

• Any conversion into euro of the real costs borne in other currencies shall be done at the rate made up by the average of the rates published in InforEuro for the months covered by the relevant report, unless otherwise provided in the Special Conditions.

• The currency exchange losses costs shall not be considered eligible Exchange gains will be treated as a profit and deducted from EU contribution.

• In the event of an exceptional exchange-rate fluctuation, the Parties shall consult each other with a view to restructuring the Action in order to lessen the impact of such a fluctuation. Where necessary, the Contracting Authority may take additional measures such as terminating the Contract.

• It´s recommended to be informed of the benefits of subscribing an exchange rate insurance to avoid any risk of fluctuation

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Clarification of issues

• Audit costs (Art 14 of GC)

• Eligible costs are actual costs incurred by the Beneficiary which meet all the following criteria:

• a) They are incurred during the implementation of the Action as specified in Article• 2 of the Special Conditions.

• b) They are indicated in the estimated overall budget for the Action• c) Necessary for the implementation of the Action• d) Identifiable and verifiable, reasonable and justified

• So, the costs related above should be considered as eligible, please note that only staff costs or other costs related to the closing will be considered eligible.

• It’s highly recommended to discuss these expenses with your task manager

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Questions & Answers (submitted to EC)

• Explanation on the nationality rule: Can we for our DEAR project within the EU engage a trainer from e.g. the USA? What about an US expert living in the EU?

• Are we allowed to contract an African Organisation/actor for designing, for layouting or for proof-reading (in regards to eventual discriminative contents) the teaching materials we are elaborating and producing (together with European NGOs in the course of the project), as long as these are actors from countries on the DAC-list?

• Participation in tender procedures administered by the Beneficiary is open on equal terms to all natural and legal persons of the Member States and the States and territories of regions expressly covered and/or allowed by the Financial Regulation, the basic legislation or other instruments governing the aid programme under which the grant is being financed. Tenderers must state, in the tender, the country of which they are nationals by presenting the usual proof of nationality under their national legislation. This rule does not apply to the experts proposed by service providers taking part in tender procedures or service contracts financed by the grant

• As per article 31 of the DCI Regulation, countries specified in the DAC-list can participate in award procedure

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Questions & Answers (submitted to EC)

• Es posible que los fondos europeos se utilicen para pagar personal que esta siendo pagado por el gobierno local socio del proyecto pero que dedica un porcentaje de tiempo importante al mismo?

• Yes, provided that the time dedicated to the Project is not already paid by another public body or private entity (avoiding double salary payment).

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Conclusions

• Be in permanent contact with your task manager

• Complete reports before submission

• Plan procurement well in advance so as to limit the risk of irregularities.

• Rules are easier than people thought

• A simple email could have important value for an smooth treatment of your file

• Golden rule: Ask and then Act

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Useful links

• Tool kit• http://ec.europa.eu/europeaid/work/procedures/fina

ncial-management-toolkit_en.htm• Exchange rates• http://

ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/inforeuro_en.cfm

• Per diem• http://

ec.europa.eu/europeaid/work/procedures/implementation/per_diems/documents/perdiems_july_2013.pdf

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Useful links

• PRAG 2012• http://

ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/previous_versions/january_2012/documents/prag_2012_en.pdf

• Grant Annexes

• http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/previous_versions/january_2012/

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Budget

Final financial report: period (dd/mm/yyyy-dd/mm/yyyy)

Reallocation

Fx-rate1

Expenditures Unit # UnitsUnit cost (in

EUR)Costs

(in EUR)

allowed reallocation (article 9.2 of the

General Conditions)# Units

Unit cost (in

currency n°1)

Total cost (in currency n°1)Total cost(in EUR)

Units total # for all currencies

(a) (b) (a)*(b) (d1) (e1) (f1)=(d1)*(e1)(g1)=

(f1)*(Fx-rate1)Sum (d1dn)

1. Human Resources 1.1 Salaries (gross amounts, local staff) 1.1.1 Technical Per month 1.1.2 Administrative/ support staff Per month1.2 Salaries (gross amounts, expat/int. staff) Per month1.3 Per diems for missions/travel 1.3.1 Abroad (staff assigned to the Action) Per diem 1.3.2 Local (staff assigned to the Action) Per diem 1.3.3 Seminar/conference participants Per diem

Subtotal Human Resources2. Travel2.1. International travel Per flight2.2 Local transportation Per monthSubtotal Travel

3. Equipment and supplies3.1 Purchase or rent of vehicles Per vehicle3.2 Furniture, computer equipment3.3 Machines, tools…3.4 Spare parts/equipment for machines, tools3.5 Other (please specify)Subtotal Equipment and supplies

4. Local office4.1 Vehicle costs Per month4.2 Office rent Per month4.3 Consumables - office supplies Per month4.4 Other services (tel/fax, electricity/heating, maintenance) Per monthSubtotal Local office5. Other costs, services5.1 Publications5.2 Studies, research5.3 Auditing costs5.4 Evaluation costs5.5 Translation, interpreters

5.6 Financial services (bank guarantee costs etc.)5.7 Costs of conferences/seminars

5.8 Visibility actionsSubtotal Other costs, services

6. Other

Subtotal Other

7. Subtotal direct eligible costs of the Action (1-6) 8. Provision for contingency reserve (maximum 5% of 7, subtotal of direct eligible costs of the Action) 9. Total direct eligible costs of the Action (7+ 8)

10. Administrative costs (maximum 7% of 9, total direct eligible costs of the Action)11. Total eligible costs (9+10) 12. Taxes13. Total accepted costs of the action (11+12)

Bank interests on EU/EDF contribution yielded during the period: ( see article 15.9 of the General Conditions)

Per currency

Budget as per contract/addendum Expenditures incurred

Contract n°Implementation period of the contract (dd/mm/yyyy-dd/mm/yyyy)

Name of currency n°1

Exchange rate of the period (dd/mm/yyyy-dd/mm/yyyy):

Per currency Total for the period in EUR

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Thank for your attention

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