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I Information

Court of Auditors

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SPECIAL REPORT No 6/2005

on the trans-European network for transport (TEN-T) together with the Commission's replies

(pursuant to the second subparagraph of Article 248(4) of the EC Treaty)

(2006/C 94/01)

TABLE OF CONTENTS

GLOSSARY

ANNEX 1 — Description of TEN-T management system

TEN-T legal and policy framework

TEN-T application, evaluation and selection process

TEN-T organisational structure

TEN-T budgetary framework

ANNEX 2 — Map showing TEN-T priority axes and projects

The Commission's replies

GLOSSARY

SUMMARY

INTRODUCTION

The remainder of the TEN-T budget (at least 25 %) is foreseen for non-MIP projects.

AUDIT SCOPE, OBJECTIVES AND APPROACH

OBSERVATIONS

Allocation of TEN-T financial aid

Slow execution of TEN-T priority projects

Budget allocation not sufficiently focused on cross-border sections

Table 1

2001-2003 distribution of TEN-T budget by EU 15 Member States

Too-fragmented budget allocation

More than half of the current MIP budget for cross-border projects not yet committed

Legal framework and administrative procedures

Legal and regulatory requirements

Financing decision still contains weaknesses

Scope of studies and of works not sufficiently clear

Evaluation and selection

A complex application and ex ante evaluation process

Proposal submission deadline not always respected

Until 2004, full project information not available at preliminary evaluation and selection stage

Project selections not sufficiently justified

No general use of external experts in the evaluation process

Project monitoring

TEN-T project monitoring tools are insufficient

Complete and reliable TEN-T project data not readily available

Organisational structure and staff allocation

Evaluation and monitoring of TEN-T impeded by a too high workload per project officer

Table 2

Budget and staff allocation to DG TREN activities as of end 2004

Qualification of TEN-T project officers: limited expertise on transport issues

Use of SNEs limited by Commission rules

TEN-T staff allocation and qualification not suited to new challenges

Coordination of EU transport infrastructure funding

Three main EU programmes funding transport infrastructure

Incomplete legal provisions relating to multiple financing

Terminology used in the project applications and appraisal forms insufficiently clear and consistent

Limited use of expertise from other Commission services or the EIB for evaluation purposes

Insufficient information to allow coordination through inter-service consultations

Additional coordination measures not fully exploited

CONCLUSIONS AND RECOMMENDATIONS

Need to concentrate TEN-T funding on project sections with highest European added value

Legal framework needs to be completed and applied consistently

More efficient, transparent and strictly applied evaluation procedure

More rigorous project monitoring

Need to adapt organisational structure and resources

Coordination of Community transport infrastructure funding to be further strengthened

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 15 December 2005.

For the Court of Auditors

Hubert WEBER

President

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(1)  Report of the High Level Group on the trans-European transport network, 27 June 2003, paragraph 7.

(2)  Articles 154 to 156 of the EC Treaty.

(3)  Article 154(2) of the EC Treaty.

(4)  As opposed to indirect, shared or decentralised management (e.g. Structural Funds).

(5)  Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996 on Community guidelines for the development of the trans-European transport network (OJ L 228, 9.9.1996, p. 1) as amended by Decision No 1346/2001/EC of 22 May 2001 (OJ L 185, 6.7.2001, p. 1) and Decision No 884/2004/EC of 29 April 2004 (OJ L 167, 30.4.2004, p. 1).

(6)  Council Regulation (EC) No 2236/95 of 18 September 1995 laying down general rules for the granting of Community financial aid in the field of trans-European networks (OJ L 228, 23.9.1995, p. 1) as amended by Regulation (EC) No 1655/1999 of 19 July 1999 (OJ L 197, 29.7.1999, p. 1), Regulation (EC) No 788/2004 of 21 April 2004 (OJ L 138, 30.4.2004, p. 17) and Regulation (EC) No 807/2004 of 21 April 2004 (OJ L 143, 30.4.2004, p. 46).

(7)  Commission Decision C(2001) 2654 final of 19 September 2001 as amended by Decision C(2004) 3242 of 26 August 2004 and Decision C(2005) 213 of 3 February 2005.

(8)  The priority projects identified in Annex 1 to Commission Decision C(2001) 2654 final of 19 September 2001 are the following:

The following three priority projects are not included in Annex 1 as they are already complete:

(9)  There are four coherent groups of projects (see Annex 1 to Commission Decision C(2001) 2654 final of 19 September 2001):

(10)  When a beneficiary is an international organisation or an EEIG, the Commission financing decisions are complemented by grant agreements signed by the Commission and the beneficiary. In addition to the information provided in the Commission financing decision, grant agreements include a more detailed description of the project activities.

(11)  Article 5a of Regulation (EC) No 2236/95 as amended by Regulation (EC) No 1655/1999.

(12)  Annex I to Commission Decision C(2001) 2654 of 19 September 2001 as amended by Commission Decision C(2005) 213 final of 3 February 2005.

(13)  The implementation by the Member States of their obligations relating to project evaluation, monitoring and financial control as defined by the TEN financial regulation are not addressed by this audit (in particular Articles 12 and 15 of Regulation (EC) No 2236/95 as amended by Regulation (EC) No 1655/1999, Regulation (EC) No 788/2004 and Regulation (EC) No 807/2004).

(14)  Court of Auditors, Annual reports for the financial years 2001 (OJ C 295, 28.11.2002, paragraphs 4.11 to 4.36 and 4.74), 2002 (OJ C 286, 28.11.2003, paragraphs 6.22 to 6.42 and 6.57) and 2003 (OJ C 293, 30.11.2004, paragraph 6.24).

(15)  Account was thereby taken of the Commission's 24 Standards for Internal Control, adopted in December 2001, which must be followed by all Commission services in the management of their resources (see European Commission, ‘Standards for Internal Control within the Commission's services’ (SEC(2001) 2037, 31 December 2001 and SEC(2003) 1287 final of 26 November 2003)).

(16)  Railway, road, inland waterway, ports, airports, satellite navigation, intelligent transport systems for road and railway transport.

(17)  Article 2(1) of Decision No 1692/96/EC.

(18)  Communication from the Commission on ‘Developing the trans-European transport network. Innovative funding solutions and Interoperability of electronic toll collection systems’, COM(2003) 132 final of 23 April 2003.

(19)  The 16 additional priority projects are (see Annex III to Decision No 884/2004/EC):

(20)  The Netherlands and Sweden.

(21)  Finland.

(22)  EU means projects managed by international organisations (such as ESA, Eurocontrol).

(23)  Excluding coherent groups of projects Nos 4 and 5 consisting of intelligent transport systems projects.

(24)  The remaining 3 % is envisaged for cross-border projects with third countries and the new EU-10 Member States.

(25)  A new proposal to amend the TEN financial regulation which provides for a further increase up to 50 % is now being discussed by the budgetary authorities.

(26)  Although no limit is envisaged by the TEN financial regulation, the Commission applies a threshold of 10 % for infrastructure works.

(27)  Between 1995 and 2004, only 13 interest subsidies on loans and one risk capital facility have been granted on a total of 1 143 actions supported.

(28)  Between 1995 and 2004, 84 % of the budget allocated to CF countries was used for studies.

(29)  The average funding allocated to a work action amounts to 5,0 million euro, while the average funding to a study action amounts to 3,4 million euro.

(30)  From 10 to 15 % and in some cases to 30 or even 50 % (see Article 7 of the Proposal for a Regulation of the European Parliament and the Council, COM(2004) 475 final of 14 July 2004).

(31)  Article 19a(4) and (5) of Decision No 1692/96/EC as amended by Decision No 884/2004/EC.

(32)  Article 10 of Regulation (EC) No 2236/95.

(33)  Following these revisions, the version used in 2004 now specifies the responsibilities of each actor involved in the execution of a TEN-T action in a clearer manner. It includes fixed start and end dates, requires a detailed budget breakdown by activities from the beneficiaries, specifies deadlines for reporting, defines more clearly the eligibility of costs and clarifies the publicity obligation.

(34)  Annual report concerning the financial year 2002, paragraph 6.37.

(35)  In 6 out of 10 applicable cases, request for final payments were submitted without the required information on the results of the study being available.

(36)  A study is any preparatory analysis, survey, plan or design made before the start of implementation aiming at defining the characteristics of a project and the measures necessary to develop and implement the different phases of a given project and necessary precondition for the building permit and the final decision by relevant authorities to start implementation. Studies may include services of material nature (such as test structures, geological surveys, exploring of the construction site and drilling of trial bore tunnels) provided that: 1. they are necessary for the building permit or the final decision to start implementation, and 2. they do not result in a product intended for general use. A study results in a descriptive or analytical document entailing technical, economic, financial, legal and environmental domains.

(37)  Works include any service and procurement after the start of implementation (including preparatory measures to make the start of implementation possible) that involves the actual implementation, construction or mise-en-service of a given physical structure or project serving a general usage purpose (and as to be defined in more detail in the Commission decision or contract for any particular project). All supervision and/or oversight activities, necessary detailed design, or design of alternative solutions should be considered as integral parts of the works, regardless if the beneficiary or an external party performs them. Works also include the implementation and/or construction of any physical environmental mitigation measures described in the relevant environmental impact assessment.

(38)  See paragraphs 52 and 64 on TEN-T staffing.

(39)  The forms to be used depend on whether the project is a MIP or non-MIP project, financed for the first year or subsequent years and whether the project concerns a study or works.

(40)  Despite the rules being clarified in DG TREN's Manual of Procedures and the TEN-T Handbook, the Court's audit found that for 28 out of 72 projects, proposals were submitted up to 56 days after the deadline.

(41)  Such as a cost-benefit analysis, a statement on the examination of alternative possibilities of public and private financing, a description of the control measures to be operated by the Member State, direct or indirect socio-economic effects, in particular on employment and the provisional timetable of work, which is limited to an indication of the start and completion date of the project.

(42)  PP14 — West Coast Main Line Modernisation.

(43)  The TEN financial regulation specifies the following four basic conditions (see Article 5 of Regulation (EC) No 2236/95):

Compliance with the conditions which have been added following the 2004 revision of the TEN-T guidelines and the TEN financial regulation has not been analysed as it is too early to assess their application.

(44)  The criteria specified in the TEN financial regulation can be summarised as follows (see Article 6 of Regulation (EC) No 2236/95):

(45)  In 12 out of 72 applicable cases audited.

(46)  EGNOS AOC Pre-operational implementation critical design studies. Since 1995, the Commission co-financed 11 studies, whereby the total amount of funding awarded until 2004 (130,4 million euro) exceeds the maximum threshold with an amount of 29,7 million euro.

(47)  In 15 out of 31 applicable actions audited not all objectives were assessed by the Commission.

(48)  This was the case for the evaluation of studies where the questions on the economic and financial appraisal were not answered even though required in the application form.

(49)  For 15 actions where a proposal had been submitted beyond the deadline a positive reply was given to the question inquiring about the respect of the deadline for submission of proposals.

(50)  Annual Report concerning the financial year 2001, paragraph 4.35 and reply from the Commission.

(51)  Note however that Title III of the Financial Regulation (Article 160(3)) provides for specific rules applicable to the contracting of experts for the RTD framework programmes.

(52)  Article 9(3) of Regulation (EC) No 2236/95.

(53)  Article 15 of Regulation (EC) No 2236/95.

(54)  The individual project financing decisions defining the monitoring obligations in more detail specify that PSRs have to be submitted on an annual basis by the Member States to the Commission by 31 January (as from 2004 onwards, by 31 March). In the model PSR established by the Commission, Member States are required to describe on about one page the activities achieved, the reasons for any delay in project execution, to state whether the objectives remain unchanged, to indicate whether the project benefits from other Community funds, the payments made, to annex relevant information to prove compliance with EU legislation and to provide a cost breakdown. Two tables are to be annexed to the PSR's for MIP projects providing an overview of the expenditure committed and incurred.

(55)  80 % of the decisions closed in 2004 where preceded by an on-the-spot mission.

(56)  For instance, whether the initial cost-benefit analysis made at the project evaluation stage is still valid and what has been the actual impact of the Community intervention on public/private financing, on employment or on the environment.

(57)  Programme management system (PMS).

(58)  The CVs of 13 statutory project staff and of 11 SNEs (who are or have been working on TEN-T projects since 2001) have been analysed.

(59)  Such as a DESS in transport, an MSc in transportation and traffic planning, engineer in field transport infrastructures.

(60)  The analysis of the training activities was carried out on the basis of the information contained in the training cards and passports of each individual staff member.

(61)  Commission decision C(2002) 1559 of 30 April 2002 as amended by Commission Decision C(2003) 406 of 31 January 2003 and Commission Decision C(2004) 577 of 27 February 2004. Article 6 stipulates that SNEs ‘shall under no circumstances (...) represent the Commission on his or her own with a view to entering into commitments (financial or otherwise) or negotiating on its behalf’. In addition, the rules state that ‘every effort must be made to avoid any conflict of interests or appearance of such conflict in relation to the SNEs duties while seconded to the Commission’. In addition, Article 52 of the Financial Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 states that ‘there is a conflict of interests where the impartial and objective exercise of the functions of player in the implementation of the budget or an internal auditor is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other shared interest with the beneficiary’.

(62)  The practical implications of these rules are that a SNE:

(63)  Cost-benefit assessment of the externalisation of the management of Community financial support to the TEN-T Networks, final report of June 2004.

(64)  The CF and ERDF provide the major share of funding for transport projects in the eligible Member States or regions, both in terms of total funds available and the co-financing rate for individual projects. The Community contributions from CF and ERDF in the period 2000 to 2003 can be estimated at roughly 3,3 to 3,5 billion euro per year, whereas the TEN-T annual average budget amounts to 580 million euro. Apart from the subsidies provided by these three Community instruments, the European Investment Bank grant loans for the financing of transport infrastructure.

(65)  The ceilings for contributions from the Structural Funds are set in Article 29(3) of Regulation (EC) No 1260/1999 (OJ L 161, 26.6.1999, p. 1) at 75 % of total eligible cost in regions covered by Objective 1, 80 % in regions located in a Member State covered by the Cohesion Fund, and 85 % for the outermost regions and outlying Greek islands. In the case of investment in infrastructure generating substantial net revenue, the contribution may not exceed 40 % in Objective 1 regions.

(66)  Regulation (EC) No 1783/1999 of the European Parliment and of the Council of 12 July 1999 on the European Regional Development Fund (OJ L 213, 13.8.1999, p. 1) and Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds.

(67)  Council Regulation (EC) No 1164/94 of 16 May 1994 establishing a Cohesion Fund (OJ L 130, 25.5.1994, p. 1).

(68)  Means for evaluating actions of a structural nature.

(69)  Either a favourable opinion (with or without comments), a suspended opinion (e.g. pending submission of further information) or an unfavourable opinion. No opinion within a deadline of 10 working days implies a tacit favourable opinion. The time limit is increased to 15 working days if the main body of the text (minus annexes) is longer than 20 pages.

(70)  The same is done for CF projects and ERDF measures, but with difference that the IDC is carried out in two steps: upon receipt of the project application or draft operational programme and when the draft financing decision is established. Additional IDC's take place in case a Member State applies for financing of a so-called major project (with financial aid exceeding 50 million euro) within the operational programme.

(71)  Such as participation in committee or panel meetings (e.g. monitoring Committees for CF and ERDF measures), TEN-T financial assistance committee and TEN-T evaluation panel meetings; joint inspections or ex post impact assessments; exchange of relevant documentation (such as project progress reports); or informal contacts between Commission staff of different services.

(72)  Invitations to committee and evaluation meetings are issued, but meetings are not systematically attended; on-the-spot inspections are generally carried out by each DG independently and project-related reports are not systematically shared with other Commission services (and if so, usually not analysed); and ex post impact assessments are carried out by external experts for most structural actions but findings are not communicated to DG TREN.

(73)  See Article 17a of Decision No 1692/96/EC as amended by Decision No 884/2004/EC.

(74)  See draft opinion of the European Parliament Committee on Transport and Tourism for the Committee on Budgets on the proposal for a European Parliament and Council Regulation determining the general rules for the granting of Community financial aid in the field of the trans-European transport networks and energy and amending Council Regulation (EC) No 2236/95.

(75)  As already envisaged by the TEN financial regulation for some type of projects (see Article 5(5) of of Regulation (EC) No 2236/95 as amended by Regulation (EC) No 807/2004).

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ANNEX 1

DESCRIPTION OF TEN-T MANAGEMENT SYSTEM

TEN-T legal and policy framework

TEN-T policy guidelines

TEN financial regulation

The multiannual indicative programme (MIP)

Commission financing decision

TEN-T application, evaluation and selection process

TEN-T organisational structure

TEN-T budgetary framework

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(1)  Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996 on Community guidelines for the development of the trans-European network, (OJ L 228, 9.9.1996, p. 1).

(2)  Decision No 1346/2001/EC of the European Parliament and of the Council of 22 May 2001 (OJ L 185, 6.7.2001, p. 1).

(3)  Decision No 884/2004/EC of the European Parliament and of the Council of 29 April 2004 (OJ L 167, 30.4.2004, p. 1).

(4)  The 30 priority projects include the three already completed priority projects; i.e Öresund fixed link completed in 2000, Malpensa Airport completed in 2001 and Conventional rail link Cork-Dublin-Belfast-Larne-Stranraer completed in 2001.

(5)  Council Regulation (EC) No 2236/95 of 18 September 1995 (OJ L 228, 23.9.1995, p. 1).

(6)  Regulation (EC) No 1655/1999 of the European Parliament and of the Council of 19 July 1999 (OJ L 197, 29.7.1999, p. 1).

(7)  Regulation (EC) No 788/2004 of the European Parliament and of the Council of 21 April 2004 (OJ L 138, 30.4.2004, p. 17).

(8)  Regulation (EC) No 807/2004 of the European Parliament and of the Council of 21 April 2004 (OJ L 143, 30.4.2004, p. 46).

(9)  Commission Decision C(2001) 2654 of 19 September 2001 final as amended by Decision C(2004) 3242 of 26 August 2004 and Decision C(2005) 213 of 3 February 2005.

(10)  See recitals of the Commission Decision of 19 September 2001.

(11)  Some projects, such as the Dutch High Speed Rail Link and the French-Spanish Perpignan-Figueras line, have a PPP part, but this part is not co-financed by the EU.

(12)  A separate model exists for the initial MIP and for the MIP revision.

(13)  Preliminary and detailed application forms for non-MIP projects have been merged to one form in 2004.

(14)  A third evaluator in case of conflicting evaluation results.

(15)  Article 4(1)(a) of TEN financial regulation.

(16)  Annex II to the Commission financing decision, paragraph 1.1. ‘Definitions’.

(17)  Article 4(1)(e) of TEN financial regulation.

(18)  Article 5(3) of TEN financial regulation.

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ANNEX 2

MAP SHOWING TEN-T PRIORITY AXES AND PROJECTS

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THE COMMISSION'S REPLIES

SUMMARY

OBSERVATIONS

CONCLUSIONS AND RECOMMENDATIONS

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(1)  Definition of studies: studies needed for the definition of a project, including the preparatory studies, the feasibility and evaluation and any other technical support activities including activities prior to infrastructure works needed to complete the definition of a project and to make decisions about its financing, including exploratory work on the sites concerned and the preparation of the financial structure.

Definition of works: purchase and supply of components systems and services, undertaking construction and installation works related to the project, including the reception of installations and the entry into service of the project.

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