European Parliament
2014-2019

Plenary sitting

A8-0095/2018
26.3.2018

REPORTon discharge in respect of the implementation of the budget of the European
Joint Undertaking for ITER and the Development of Fusion Energy for thefinancial year 2016(2017/2180(DEC))
Committee on Budgetary Control
Rapporteur: Brian Hayes

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United in diversity

ENPR_DEC_JointUndertakings
CONTENTS
Page
1. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION .......................................... 3
2. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION .......................................... 5
3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION ........................................ 7
INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE ................................ 12
FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE .................................... 13

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1. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION
on discharge in respect of the implementation of the budget of the European Joint
Undertaking for ITER and the Development of Fusion Energy for the financial year
2016
(2017/2180(DEC))The European Parliament,–

having regard to the final annual accounts of the European Joint Undertaking for ITER
and the Development of Fusion Energy for the financial year 2016,–

having regard to the Court of Auditors’ report on the annual accounts of the European
Joint Undertaking for ITER and the Development of Fusion Energy for the financial
year 2016, together with the joint undertaking’s reply1,–

having regard to the statement of assurance2 as to the reliability of the accounts and thelegality and regularity of the underlying transactions provided by the Court of Auditors
for the financial year 2016, pursuant to Article 287 of the Treaty on the Functioning of
the European Union,–

having regard to the Council’s recommendation of 20 February 2018 on discharge to begiven to the joint undertaking in respect of the implementation of the budget for thefinancial year 2016 (05943/2018 – C8-0089/2018),–

having regard to Article 319 of the Treaty on the Functioning of the European Union,–

having regard to Article 106a of the Treaty establishing the European Atomic Energy
Community,–

having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliamentand of the Council of 25 October 2012 on the financial rules applicable to the generalbudget of the Union and repealing Council Regulation (EC, Euratom) No 1605/20023,
and in particular Article 208 thereof,–

having regard to Council Decision No 2007/198/Euratom of 27 March 2007
establishing the European Joint Undertaking for ITER and the Development of Fusion
Energy and conferring advantages upon it4, and in particular Article 5(3) thereof,–

having regard to Commission Delegated Regulation (EU) No 1271/2013 of 30
September 2013 on the framework financial regulation for the bodies referred to in
Article 208 of Regulation (EU, Euratom) No 966/2012 of the European Parliament andof the Council5,

1

OJ C 426, 12.12.2017, p. 31.
OJ C 426, 12.12.2017, p. 31.
3
OJ L 298, 26.10.2012, p. 1.
4
OJ L 90, 30.3.2007, p. 58.
5
OJ L 328, 7.12.2013, p. 42.
2

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having regard to Rule 94 of and Annex IV to its Rules of Procedure,–

having regard to the report of the Committee on Budgetary Control (A8-0095/2018),

1.

Grants the Director of the European Joint Undertaking for ITER and the Developmentof Fusion Energy discharge in respect of the implementation of the joint undertaking’s
budget for the financial year 2016;2.

Sets out its observations in the resolution below;

3.

Instructs its President to forward this decision and the resolution forming an integral
part of it to the Director of the European Joint Undertaking for ITER and theDevelopment of Fusion Energy, the Council, the Commission and the Court of
Auditors, and to arrange for their publication in the Official Journal of the European
Union (L series).

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2. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION
on the closure of the accounts of the European Joint Undertaking for ITER and theDevelopment of Fusion Energy for the financial year 2016(2017/2180(DEC))The European Parliament,–

having regard to the final annual accounts of the European Joint Undertaking for ITER
and the Development of Fusion Energy for the financial year 2016,–

having regard to the Court of Auditors’ report on the annual accounts of the Joint
Undertaking for ITER and the Development of Fusion Energy for the financial year
2016, together with the joint undertaking’s reply1,–

having regard to the statement of assurance2 as to the reliability of the accounts and thelegality and regularity of the underlying transactions provided by the Court of Auditors
for the financial year 2016, pursuant to Article 287 of the Treaty on the Functioning of
the European Union,–

having regard to the Council’s recommendation of 20 February 2018 on discharge to begiven to the joint undertaking in respect of the implementation of the budget for thefinancial year 2016 (05943/2018 – C8-0089/2018),–

having regard to Article 319 of the Treaty on the Functioning of the European Union,–

having regard to Article 106a of the Treaty establishing the European Atomic Energy
Community,–

having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliamentand of the Council of 25 October 2012 on the financial rules applicable to the generalbudget of the Union and repealing Council Regulation (EC, Euratom) No 1605/20023,
and in particular Article 208 thereof,–

having regard to Council Decision No 2007/198/Euratom of 27 March 2007
establishing the European Joint Undertaking for ITER and the Development of Fusion
Energy and conferring advantages upon it4, and in particular Article 5(3) thereof,–

having regard to Commission Delegated Regulation (EU) No 1271/2013 of 30
September 2013 on the framework financial regulation for the bodies referred to in
Article 208 of Regulation (EU, Euratom) No 966/2012 of the European Parliament andof the Council5,–

having regard to Rule 94 of and Annex IV to its Rules of Procedure,1

OJ C 426, 12.12.2017, p. 31.
OJ C 426, .12.12.2017, p. 31.
3
OJ L 298, 26.10.2012, p. 1.
4
OJ L 90, 30.3.2007, p. 58.
5
OJ L 328, 7.12.2013, p. 42.
2

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having regard to the report of the Committee on Budgetary Control (A8-0095/2018),

1.

Approves the closure of the accounts of the Joint Undertaking for ITER and theDevelopment of Fusion Energy for the financial year 2016;2.

Instructs its President to forward this decision to the Director of the European Joint
Undertaking for ITER and the Development of Fusion Energy, the Council, theCommission and the Court of Auditors, and to arrange for its publication in the Official
Journal of the European Union (L series).

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3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
with observations forming an integral part of the decision on discharge in respect of theimplementation of the budget for the European Joint Undertaking for ITER and theDevelopment of Fusion Energy for the financial year 2016(2017/2180(DEC))The European Parliament,–

having regard to its decision on discharge in respect of the implementation of the budgetof the European Joint Undertaking for ITER and the Development of Fusion Energy forthe financial year 2016,–

having regard to Rule 94 of and Annex IV to its Rules of Procedure,–

having regard to the report of the Committee on Budgetary Control (A8-0095/2018),

A.

whereas the European Joint Undertaking for ITER and the Development of Fusion
Energy (Fusion for Energy) (the “Joint Undertaking”) was established in March 2007
for a period of 35 years by Council Decision 2007/198/Euratom1,;

B.

whereas the members of the Joint Undertaking are Euratom, represented by theCommission, the member states of Euratom, and third countries which have concluded
a cooperation agreement with Euratom in the field of controlled nuclear fusion;

C.

whereas the objectives of the Joint Undertaking are: (a) providing the Union’scontribution to the ITER international fusion energy project; (b) implementing thebroader approach agreement between Euratom and Japan; and (c) preparing for theconstruction of a demonstration fusion reactor (DEMO);

D.

whereas the Joint Undertaking started to work autonomously in March 2008;

General1.

Notes that the report of the Court of Auditors (the “Court”) on the Joint Undertaking’s
annual accounts for the financial year 2016 (the “Court’s report”) finds the annual
accounts to be presented fairly, in all material respects, its financial position as at 31
December 2016 and the results of its operations, its cash flows and the changes in its net
assets for the year then ended, to be in compliance with its financial regulation and theaccounting rules adopted by the Commission’s accounting officer;

2.

Acknowledges that the transactions underlying the annual accounts of the Joint
Undertaking for the financial year 2016 are, in all material respects, legal and regular;

3.

Highlights that the Joint Undertaking is responsible for the management of the Union’scontribution to the ITER project and that the budget cap of EUR 6 600 000 000 until
2020 must be maintained; notes that this figure does not include the EUR 663 000 000

1Council Decision No 2007/198/Euratom of 27 March 2007 establishing a Joint Undertaking for ITER
and the Development of Fusion Energy and conferring advantages upon it (OJ L 90, 30.3.2007, p. 58).

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ENproposed by the Commission in 2010 to cover potential contingencies;
4.

Notes that in November 2016, the Council of ITER Organisation (the “ITER Council”)
approved a new ITER project baseline for the scope, schedule and the costs of the
project; notes, moreover, that the overall project schedule for operations ´First Plasma ´and ´Deuterium-Tritium´ was approved , notes the fact that following the approval of
the new ITER project baseline, the Joint Undertaking set the new timetable andrecalculated the related cost at completion of the Joint Undertaking’s contribution to theproject construction phase;5.

Expresses ongoing concern that the estimated completion date for the wholeconstruction phase is currently planned with a delay of about 15 years compared to theoriginal baseline; takes note of the fact that the new schedule endorsed by the ITER
Council set out a four-stage approach, making December 2025 the deadline forachieving the first strategic milestone of the project construction phase (‘First Plasma’)and December 2035 the estimated completion date for the whole construction phase;acknowledges the fact that the aim of the new staged approach is to better align the
project implementation with the priorities and constraints of all members of ITER
Organization;

6.

Notes the Court’s report finding that the results, which were presented to the Joint
Undertaking’s Governing Board in December 2016, indicated an expected additional
funding requirement to that already committed of EUR 5 400 000 000 for theconstruction phase after 2020, which represents an increase of 82 % in relation to theapproved EUR 6 600 000 000 budget; reiterates the fact that the amount of EUR 6 600
000 000 adopted by the Council in 2010 serves as a ceiling for the Joint Undertaking’s
spending up to 2020;recognises that the additional funding required to complete the
ITER project must involve future Multiannual Financial Framework commitments;

7.

Highlights that in addition to the construction phase, the Joint Undertaking will have tocontribute to the ITER operational phase after 2035 and to the subsequent ITER
deactivation and decommissioning phases; considers it worrisome that thosecontributions are not yet estimated; calls on the Joint Undertaking to estimate the cost ofsuch phases as soon as possible;

8.

Stresses that on 14 June 2017, the Commission issued a communication entitled ‘EUcontribution to a reformed ITER project’1, seeking Parliament’s support and a mandate
from the Council for the Commission to approve the new baseline on behalf ofEuratom;9.

Acknowledges that while the Joint Undertaking’s forecasts for First Plasma arecompatible with the ITER Organization timetable for the project, the schedule isconsidered to be the earliest possible technically achievable date;10.

Stresses that even though the new baseline does not include a contingency, in its above
mentioned communication from 14 June 2017 the Commission suggested that acontingency of up to 24 months in terms of schedule and 10 to 20 % in terms of budget
would be appropriate; notes in addition that the measures taken to respect the1

COM(2017)0319.

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EUR 6 600 000 000 capped budget included postponing the procurement andinstallation of all components not essential to First Plasma; draws attention to the factthat while positive steps have been taken to improve the management and control of the
ITER project construction phase, there remains an ongoing risk of further cost increases
and delays in project implementation compared to the new proposed baseline; notes thatthe recognition of such risks must be appreciated by the Joint Undertaking and indeed
all parties of the project;
11.

Stresses that on 29 March 2017, the United Kingdom notified the European Council of
its decision to withdraw from the EU and Euratom; notes that an agreement setting out
the arrangements for its withdrawal is being negotiated; notes that, on several occasions,the United Kingdom has expressed its interest in further participating in EU fusionenergy activities; notes furthermore that the Union and United Kingdom fusion
communities expressed their hope in the JET experiment at Culham in the United
Kingdom to continue, beyond 2018, to undertake vital preparation work for the ITER
project.

Budget and financial management
12.

Notes that the final 2016 budget available for implementation included commitment
appropriations of EUR 488 000 000 and payment appropriations of EUR 724 510 000;
notes that the utilisation rates for commitment and payment appropriations were 99,8 %and 98 % respectively;

13.

Notes that out of EUR 488 000 000 available for commitment appropriations, almost
100 % was implemented through direct individual commitments;

14.

Acknowledges the fact that almost full implementation of the 2016 budget and theautomatic carry-over make the level of cancelled appropriations very low for 2016,
representing less than 1 % of the budget; observes that the cancelled appropriations forthe amount of EUR 1 202 662 correspond to the amounts not paid in 2016 on open
administrative commitments carried over from 2015;15.

Notes that, in 2015, the balance of the budget outturn amounted to EUR 5 880 000;

16.

Expresses concern that the Joint Undertaking missed the opportunity to introduce
detailed information about its budgetary and financial management in 2016 compared to2015 (payment transactions, global and individual commitments, important notes andcomments on the implementation of the budget); invites the Joint Undertaking toprovide these data to the discharge authority as a follow up to this report;

Prevention and management of conflicts of interest and transparency
17.

Notes that in June 2015, the Joint Undertaking’s governing board adopted an anti-fraud
strategy and corresponding action plan, of which most of the actions were implemented
in 2016; notes, however, that the Joint Undertaking has not set up a specific tool tofacilitate the monitoring of its actions in relation to procurement procedures, inparticular those related to risk assessment and the evaluation, negotiation and award
phases of the procedures; welcomes the fact that the Joint Undertaking is currently
defining the requirements to parameterise the tool that will allow the Joint Undertaking

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ENto collect systematically information relating to anti-fraud indicators on procurement
procedures and will also offer the possibility to the Joint Undertaking’s staff to insert
additional information related to red flags on any procurement procedure;18.

Welcomes that during 2016, the anti-fraud and ethics officer together with therespective units further implemented Joint Undertaking’s anti-fraud strategy, which waschecked by the Court as part of its regular visits;

19.

Notes that further to the adoption of the Joint Undertaking’s whistleblowing rules” in2015, an implementation process was drafted, establishing a concise and detailed
process map on how serious irregularities and wrongdoings can be reported and arebeing followed-up within the Joint Undertaking;

Personal selection and recruitment
20.

Notes that the Joint Undertaking missed the standard opportunity to introduce detailed
information about their personal selection and recruitment procedures in 2016 (numberof Union officials, temporary agents, contract agents and interim staff, number ofpublished vacancies, etc.), invites the Joint Undertaking to provide these data to thedischarge authority as a follow up to this report;

Internal Control
21.

Notes that, according to the Court´s report, the Joint Undertaking has a system for
performing audits at contractors’ premises with the aim of checking compliance with its
quality assurance requirements; acknowledges the fact that the audits cover numerous
aspects of implementation, including the quality plan, any situations of non-compliancewith a specific requirement, purchase control and subcontracting management,
documentation and data management, change and deviation management, the civil
works quality control plan, the detailed project schedule, contract risk management andthe technical works quality control plan; draws attention to the fact that the 29 audits
carried out in 2016 identified 47 situations of non-conformity with the quality assurance
requirements and 202 areas for improvement; and invites the Joint Undertaking toprovide a comprehensive statement on data exchange to the discharge authority;

22.

Acknowledges the fact that in September 2016, the Commission’s internal audit service(IAS) completed an audit on the implementation of procurement arrangements and the
Joint Undertaking is implementing an action plan in response to the resulting
recommendations; recognises with appreciation that the IAS also followed up its audit
on contract management and concluded that all its related recommendations had beenadequately implemented by the Joint Undertaking;23.

Notes that in 2016, the Joint Undertaking internal audit capability (IAC) followed up its
audit of procurement in the area of ITER buildings and acknowledged the importantwork performed by the Joint Undertaking in formalising and designing the process,guidelines, rules and tools related to procurement activities; takes further note on thefact that the IAC also made six further recommendations for improvements inprocedures; welcomes that as of July 2017, five out of the six new IAC
recommendations have been implemented and the ongoing recommendation relates tothe redefinition of the role of the internal review panel;

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24.

Notes that a residual error rate for grant payments has not been calculated due to their
low share of the Joint Undertaking’s budget and the small number of ex-post audits
carried out; notes with appreciation that in 2016, the European Research Agency
launched an ex-post audit of a beneficiary on behalf of the Joint Undertaking; welcomesthe fact that the Joint Undertaking has taken the necessary action to correct errors
identified in previous years’ audits;

Operational procurement and grants
25.

Notes that during 2016, 40 operational procurement procedures were launched and 52
procurement contracts were signed;

26.

Notes with concern that the average time to contract for procurements above
EUR 1 000 000 increased (from 140 to 162 days) during 2016 with respect to 2015;
notes that the average timeframe for procurement procedures below EUR 1 000 000
also increased (from 59 to 71 days) but for grants decreased significantly (from 103 to61) in line with 2015 figures; and that clear action must be taken by the Joint
Undertaking to adequately address the worrying increase in the timeframe to contract
for procurements for both amounts above and below the EUR 1 000 000 threshold;

Other issues
27.

Invites the Joint Undertaking to use the benefits of the network of the joint undertakings
network, which serves as a platform of cooperation between joint undertakings;

28.

Recognises the need for the Joint Undertaking to communicate with Union citizens
through the institutions, concerning the significant research and collaboration that is it
undertaking, stresses the importance of highlighting the real improvements achieved asa consequence of its work, which are an important part of its mandate as well as the factthat it works with other joint undertakings in promoting public awareness of the benefitsof their work.

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INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE
Date adopted

20.3.2018

Result of final vote

+:
–:
0:

Members present for the final vote

Nedzhmi Ali, Inés Ayala Sender, Zigmantas Balčytis, Dennis de Jong,
Tamás Deutsch, Martina Dlabajová, Raffaele Fitto, Ingeborg Gräßle,Cătălin Sorin Ivan, Jean-François Jalkh, Arndt Kohn, Notis Marias, José
Ignacio Salafranca Sánchez-Neyra, Petri Sarvamaa, Claudia Schmidt,
Bart Staes, Indrek Tarand, Marco Valli, Derek Vaughan, Tomáš
Zdechovský, Joachim Zeller

Substitutes present for the final vote

Karin Kadenbach, Julia Pitera, Miroslav Poche

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FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

+

20
ALDE

Nedzhmi Ali, Martina Dlabajová

GUE/NGL

Dennis de Jong

PPE

Tamás Deutsch, Ingeborg Gräßle, Julia Pitera, José Ignacio Salafranca Sánchez-Neyra,
Petri Sarvamaa, Claudia Schmidt, Tomáš Zdechovský, Joachim Zeller

S&D

Inés Ayala Sender, Zigmantas Balčytis, Cătălin Sorin Ivan, Karin Kadenbach, Arndt
Kohn, Miroslav Poche, Derek Vaughan

VERTS/ALE

Bart Staes, Indrek Tarand

-

3
ECR

Raffaele Fitto, Notis Marias

EFDD

Marco Valli

0

1
ENF

Jean-François Jalkh

Key to symbols:+ : in favour- : against
0 : abstention

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