# Official Journal C 124/23 M

| | ISSN 1725-2423 |
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| Official Journal
  of the European Union | C 124 |
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| English edition | Information and Notices | Volume 4823 May 2005 |

ISSN 1725-2423

Official Journal

of the European Union

C 124

English edition

Information and Notices

Volume 4823 May 2005

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| Notice No | Contents | page |
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| | I   Information |
| | Court of Auditors |
| 2005/C 124/2 | Opinion No 3/2005 on the draft Regulation (EC) of the Commission amending Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities | 1 |

Notice No

Contents

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I   Information

Court of Auditors

2005/C 124/2

Opinion No 3/2005 on the draft Regulation (EC) of the Commission amending Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities

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I Information

Court of Auditors

| 23.5.2005 | EN | Official Journal of the European Union | C 124/1 |
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23.5.2005

EN

Official Journal of the European Union

C 124/1

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OPINION No 3/2005

on the draft Regulation (EC) of the Commission amending Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities

(presented in accordance with Article 279 of the EC Treaty)

(2005/C 124/01)

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular Articles 248(4) and 279, thereof,

Having regard to the Treaty establishing the European Community for atomic energy, notably Article 160 C, paragraph 4 and Article 183, thereof,

Having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (1),

Having regard to Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 (2),

Having regard to the draft Commission Regulation amending Commission Regulation (EC, Euratom) No 2342/2002 (3),

Having regard to the Commission's request for an opinion on the latter addressed to the Court dated 6 January 2005,

Whereas Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts introduced amendments to and consolidated the provisions of the Directives hitherto in force (4),

Whereas the Commission's proposed aim is to transpose the provisions of the new Directive and to simplify management of contracts and grants, in particular where the value or amounts involved is low,

HAS ADOPTED THE FOLLOWING OPINION:

INTRODUCTION

| 1. | Following the adoption in March 2004 of the new consolidated Directive 2004/18/EC of the European Parliament and the Council of 31 March 2004 on the coordination of the award of public works contracts, public supply contracts and public service contracts, and taking into account preamble 24 of the Financial Regulation, the draft modification presented seeks to adapt the implementing rules of the Financial Regulation to the new provisions. |
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1.

Following the adoption in March 2004 of the new consolidated Directive 2004/18/EC of the European Parliament and the Council of 31 March 2004 on the coordination of the award of public works contracts, public supply contracts and public service contracts, and taking into account preamble 24 of the Financial Regulation, the draft modification presented seeks to adapt the implementing rules of the Financial Regulation to the new provisions.

| 2. | Furthermore, preamble 25 of the implementing rules states ‘With regard to procurement, the option taken is to insert in the present Regulation the provisions of Council Directives ... relating to the procedures for the award of public service, supply and works contracts respectively ...’. Consequently it is necessary to modify the current implementing rules to take account of the amendments introduced by the abovementioned Directive. |
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2.

Furthermore, preamble 25 of the implementing rules states ‘With regard to procurement, the option taken is to insert in the present Regulation the provisions of Council Directives ... relating to the procedures for the award of public service, supply and works contracts respectively ...’. Consequently it is necessary to modify the current implementing rules to take account of the amendments introduced by the abovementioned Directive.

| 3. | The proposed revision of the implementing rules also has as an objective to simplify the management of contracts and grants, especially when these contracts and grants are of low value. |
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3.

The proposed revision of the implementing rules also has as an objective to simplify the management of contracts and grants, especially when these contracts and grants are of low value.

| 4. | The Court examined the Commission's draft proposal in the light of the Financial Regulation and of the new Directive, taking into account the simplification objectives pursued. The Court based its analysis on the following principles: |
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4.

The Court examined the Commission's draft proposal in the light of the Financial Regulation and of the new Directive, taking into account the simplification objectives pursued. The Court based its analysis on the following principles:

| (a) | that the proposed revision complies with the principles of sound financial management; |
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(a)

that the proposed revision complies with the principles of sound financial management;

| (b) | that the desired simplification does not vary from basic principles, is justified, effective and that the proposed modifications could be easily implemented; |
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(b)

that the desired simplification does not vary from basic principles, is justified, effective and that the proposed modifications could be easily implemented;

| (c) | that the proposed revision should ensure an adequate transposition of the norms of the new Directive concerning public procurement, taking into account the specifics of the community context; in this regard the proposed revision should not provide for any exception to the principles established in that Directive; |
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(c)

that the proposed revision should ensure an adequate transposition of the norms of the new Directive concerning public procurement, taking into account the specifics of the community context; in this regard the proposed revision should not provide for any exception to the principles established in that Directive;

| (d) | that the proposed revision of the implementing rules should not provide for any exception to the principles, and norms contained in the Financial Regulation, except to the extent that the Financial Regulation itself provides for such exceptions. |
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(d)

that the proposed revision of the implementing rules should not provide for any exception to the principles, and norms contained in the Financial Regulation, except to the extent that the Financial Regulation itself provides for such exceptions.

| 5. | The Court considers that some aspects of the draft Regulation need to be modified to meet the criteria stated in paragraph 4. Further explanations are provided below. Specific observations can be found in the table annexed to this opinion including, where relevant, proposed modifications to the text. |
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5.

The Court considers that some aspects of the draft Regulation need to be modified to meet the criteria stated in paragraph 4. Further explanations are provided below. Specific observations can be found in the table annexed to this opinion including, where relevant, proposed modifications to the text.

COMPLIANCE WITH THE PRINCIPLES OF SOUND FINANCIAL MANAGEMENT

| 6. | The Court welcomes the modernisation and simplification of procedures in the draft Regulation proposed by the Commission and considers that, in the main, the new rules proposed are consistent with the Directive and with the sound financial management principles established by the Financial Regulation. |
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6.

The Court welcomes the modernisation and simplification of procedures in the draft Regulation proposed by the Commission and considers that, in the main, the new rules proposed are consistent with the Directive and with the sound financial management principles established by the Financial Regulation.

SIMPLIFICATION OF PROCEDURES AND EASE OF IMPLEMENTATION

| 7. | An objective of the draft proposals as presented by the Commission, is to simplify the procedures and obligations contained in the current implementing rules, notably for contracts of low value and those relative to the provision of legal services, as well as the obligation to undertake an external audit in the cases of grants (Article 180) and for financing systems which provide for the reimbursement of eligible costs (or expenditure) based on lump sums, scales of unit costs and flat rates (Article 181). |
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7.

An objective of the draft proposals as presented by the Commission, is to simplify the procedures and obligations contained in the current implementing rules, notably for contracts of low value and those relative to the provision of legal services, as well as the obligation to undertake an external audit in the cases of grants (Article 180) and for financing systems which provide for the reimbursement of eligible costs (or expenditure) based on lump sums, scales of unit costs and flat rates (Article 181).

| 8. | However, the desired simplification should always be undertaken while ensuring the full respect of the principles established by the Financial Regulation and taking due account of the Directive. Furthermore, such simplification should not introduce the possibility of unjustified discretionary powers and the principle of clarity and legal certainty should be ensured. |
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8.

However, the desired simplification should always be undertaken while ensuring the full respect of the principles established by the Financial Regulation and taking due account of the Directive. Furthermore, such simplification should not introduce the possibility of unjustified discretionary powers and the principle of clarity and legal certainty should be ensured.

| 9. | A simplification of the implementing rules should also allow for ease of implementation notably as far as the new procedures proposed and the new possibilities introduced by the Directive are concerned. |
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9.

A simplification of the implementing rules should also allow for ease of implementation notably as far as the new procedures proposed and the new possibilities introduced by the Directive are concerned.

| 10. | The terms used in certain modifications proposed are inconsistent with the Directive or are different than those of the Directive, and thus go against the requirements of legal clarity. |
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10.

The terms used in certain modifications proposed are inconsistent with the Directive or are different than those of the Directive, and thus go against the requirements of legal clarity.

| 11. | In contrast, the Commission's proposals do not take account of the need to facilitate the implementation of procedures concerning the submission of elements of proof (Article 134, exclusion cases). In particular, there is a need to establish a complete list of documents and certificates to be delivered by national authorities which could be accepted in the context of public procurement procedures. Such lists could be established in liaison with the national authorities in each Member State (see Article 45(4) of the Directive). Moreover, to facilitate the implementation of the procedures, certain aspects concerning the opening of tender offers sent electronically, should also be specified. |
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11.

In contrast, the Commission's proposals do not take account of the need to facilitate the implementation of procedures concerning the submission of elements of proof (Article 134, exclusion cases). In particular, there is a need to establish a complete list of documents and certificates to be delivered by national authorities which could be accepted in the context of public procurement procedures. Such lists could be established in liaison with the national authorities in each Member State (see Article 45(4) of the Directive). Moreover, to facilitate the implementation of the procedures, certain aspects concerning the opening of tender offers sent electronically, should also be specified.

| 12. | In addition, the implementing rules should take due account of case-law of the Court of Justice in the judgement ‘ALCATEL’ (5) to provide for sufficient time between the notification of awarding a contract and its signature to allow rejected tenderers to challenge the awarding decision. |
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12.

In addition, the implementing rules should take due account of case-law of the Court of Justice in the judgement ‘ALCATEL’ (5) to provide for sufficient time between the notification of awarding a contract and its signature to allow rejected tenderers to challenge the awarding decision.

| 13. | Finally, concerning grants and the use of simplified financing systems for the reimbursement of eligible costs (or expenditure), the Commission's proposals open up the possibility for the exercise of undue discretionary powers. Without the requirement of a preliminary analysis of the elements which could justify such financing, and without prior approval through a basic act, multiple lump-sum payments as well as unit costs and forfeitary amounts could be granted to beneficiaries on the basis of a simple Commission decision. Whereas the Court is not opposed to increasing thresholds for ‘lump-sum’ payments ‘per se’, as implicitly proposed in the draft revision presented by the Commission, an overall maximum ceiling should be clearly specified in the implementing rules. |
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13.

Finally, concerning grants and the use of simplified financing systems for the reimbursement of eligible costs (or expenditure), the Commission's proposals open up the possibility for the exercise of undue discretionary powers. Without the requirement of a preliminary analysis of the elements which could justify such financing, and without prior approval through a basic act, multiple lump-sum payments as well as unit costs and forfeitary amounts could be granted to beneficiaries on the basis of a simple Commission decision. Whereas the Court is not opposed to increasing thresholds for ‘lump-sum’ payments ‘per se’, as implicitly proposed in the draft revision presented by the Commission, an overall maximum ceiling should be clearly specified in the implementing rules.

| 14. | In contrast, the proposed modification concerning the obligation to conduct an independent audit for grants exceeding certain values, would require a separate audit for all such grant payments, with the exception of prefinancing payments, independent of the value and timing of such payments, resulting in an excessive burden on beneficiaries. |
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14.

In contrast, the proposed modification concerning the obligation to conduct an independent audit for grants exceeding certain values, would require a separate audit for all such grant payments, with the exception of prefinancing payments, independent of the value and timing of such payments, resulting in an excessive burden on beneficiaries.

CORRECT TRANSPOSITION OF THE PUBLIC PROCUREMENT DIRECTIVE

| 15. | One of the objectives of the Commission's proposed modifications is to adapt the implementing rules of the Financial Regulation to take account of the amendments made by Directive 2004/18/EC, where they are relevant (6). |
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15.

One of the objectives of the Commission's proposed modifications is to adapt the implementing rules of the Financial Regulation to take account of the amendments made by Directive 2004/18/EC, where they are relevant (6).

| 16. | In order to ensure clarity and legal certainty, this adaptation should be based on a correct transposition of the norms of the Directive, whilst taking into account the community context to which these norms should be applied. |
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16.

In order to ensure clarity and legal certainty, this adaptation should be based on a correct transposition of the norms of the Directive, whilst taking into account the community context to which these norms should be applied.

| 17. | Even though for most of the proposed modifications the objective is successfully achieved, the Court notes that the transposition of the Directive lacks coherence in several places. This lack of coherence is due, among others, to:






  — | the use of terms or definitions which are not the same as those of the Directive, without justification of these differences (Articles 116, 125a, 126, 130, 139 and 156), |
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17.

Even though for most of the proposed modifications the objective is successfully achieved, the Court notes that the transposition of the Directive lacks coherence in several places. This lack of coherence is due, among others, to:

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the use of terms or definitions which are not the same as those of the Directive, without justification of these differences (Articles 116, 125a, 126, 130, 139 and 156),

| — | an incomplete transposition of certain provisions (Articles 136, 137 and 143), |
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an incomplete transposition of certain provisions (Articles 136, 137 and 143),

| — | an erroneous transposition of the Directive, |
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an erroneous transposition of the Directive,

| — | the introduction of terms or elements which are not provided for in the Directive (Articles 118(2) and 131(2)), |
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the introduction of terms or elements which are not provided for in the Directive (Articles 118(2) and 131(2)),

| — | a transposition not taking into account the community context (Article 117), |
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a transposition not taking into account the community context (Article 117),

| — | contradictions within the Directive itself (Article 125(3)). |
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contradictions within the Directive itself (Article 125(3)).

| 18. | The precise text of the Directive, should, where possible, be incorporated into the implementing rules directly. Exceptions to this rule should always be justified in order to ensure a correct application of the norms in the community context. Such exceptions could be justified, for example, in the case of the terms relating to framework contracts (Article 117) and to the definition of administrative provisions in the community context (Article 126). |
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18.

The precise text of the Directive, should, where possible, be incorporated into the implementing rules directly. Exceptions to this rule should always be justified in order to ensure a correct application of the norms in the community context. Such exceptions could be justified, for example, in the case of the terms relating to framework contracts (Article 117) and to the definition of administrative provisions in the community context (Article 126).

CONFORMITY OF THE PROPOSED MODIFICATIONS WITH THE PRINCIPLES AND NORMS ESTABLISHED BY THE FINANCIAL REGULATION

| 19. | The draft revision presented by the Commission concerns a modification of the implementing rules of the Financial Regulation on the basis of Article 183 of that regulation: ‘The Commission shall adopt rules for implementing this Regulation’. As such, the proposals cannot deviate from or exceed the principles and norms contained in the Financial Regulation except in cases where the Financial Regulation provides for such a possibility, because otherwise the modifications to the implementing rules would lack an adequate legal basis. |
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19.

The draft revision presented by the Commission concerns a modification of the implementing rules of the Financial Regulation on the basis of Article 183 of that regulation: ‘The Commission shall adopt rules for implementing this Regulation’. As such, the proposals cannot deviate from or exceed the principles and norms contained in the Financial Regulation except in cases where the Financial Regulation provides for such a possibility, because otherwise the modifications to the implementing rules would lack an adequate legal basis.

Procedures for procurement

| 20. | The Court considers the ‘competitive dialogue’ a good step in the modernisation process allowed by the Directive. As the Financial Regulation does not provide for such a procedure (7), the Commission should consider its introduction during the revision of the Regulation, currently being undertaken. |
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20.

The Court considers the ‘competitive dialogue’ a good step in the modernisation process allowed by the Directive. As the Financial Regulation does not provide for such a procedure (7), the Commission should consider its introduction during the revision of the Regulation, currently being undertaken.

Criteria for selection of candidates/tenderers

| 21. | Article 89 of the Financial Regulation provides that all public contracts financed in whole or in part by the budget shall comply with the principles of transparency, proportionality, equal treatment and non-discrimination. Article 97 of that Regulation provides that selection criteria used to evaluate the candidates' or tenderers' capacities should be defined in advance and set out in the call for tender. |
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21.

Article 89 of the Financial Regulation provides that all public contracts financed in whole or in part by the budget shall comply with the principles of transparency, proportionality, equal treatment and non-discrimination. Article 97 of that Regulation provides that selection criteria used to evaluate the candidates' or tenderers' capacities should be defined in advance and set out in the call for tender.

| 22. | The Court considers that Article 135(6) proposed should be modified to allow for a mininum level of documentation to be presented in the selection process for the awards of contracts below 50 000 euros, but that the contracting authority should always be in a position to justify tender selection. |
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22.

The Court considers that Article 135(6) proposed should be modified to allow for a mininum level of documentation to be presented in the selection process for the awards of contracts below 50 000 euros, but that the contracting authority should always be in a position to justify tender selection.

The present Opinion was adopted by the Court at its meeting in Luxembourg on 17 March 2005.

For the Court of Auditors

Hubert WEBER

President

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(1)  OJ L 248, 16.9.2002as amended by OJ L 25, 30.1.2003.

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(2)  OJ L 357, 31.12.2002.

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(3)  Commission document SEC(2004) 1310.

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(4)  OJ L 134, 30.4.2004.

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(5)  Case C-81/98, Alcatel Austria AG and others v Bundesministerium für Wissenchaft und Verkehr, (1999) ECR I-7671.

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(6)  Preamble 1 of the draft Regulation.

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(7)  According to Article 91 of the Financial Regulation, procurement procedures can take one of the following forms: (a) the open procedure, (b) the restricted procedure, (c) contests and (d) the negotiated procedure.

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