# L_2018248EN.01038901.xml

| 3.10.2018 | EN | Official Journal of the European Union | L 248/389 |
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3.10.2018

EN

Official Journal of the European Union

L 248/389

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RESOLUTION (EU) 2018/1458 OF THE EUROPEAN PARLIAMENT

of 18 April 2018

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget for the Shift2Rail Joint Undertaking for the financial year 2016

THE EUROPEAN PARLIAMENT,

| — | having regard to its decision on discharge in respect of the implementation of the budget of the Shift2Rail Joint Undertaking for the financial year 2016, |
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having regard to its decision on discharge in respect of the implementation of the budget of the Shift2Rail Joint Undertaking for the financial year 2016,

| — | having regard to Rule 94 of and Annex IV to its Rules of Procedure, |
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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 and the opinion of the Committee on Transport and Tourism (A8-0076/2018), |
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having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Transport and Tourism (A8-0076/2018),

| A. | whereas the Shift2Rail Joint Undertaking (the ‘Joint Undertaking’) was established in June 2014 for a period of 10 years by Regulation (EU) No 642/2014 (the ‘Regulation establishing the Joint Undertaking’); |
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A.

whereas the Shift2Rail Joint Undertaking (the ‘Joint Undertaking’) was established in June 2014 for a period of 10 years by Regulation (EU) No 642/2014 (the ‘Regulation establishing the Joint Undertaking’);

| B. | whereas the founding members are the Union, represented by the Commission, and rail industry partners (key stakeholders, including rail equipment manufacturers, railway companies, infrastructure managers and research centres); with the possibility that other entities may participate in the Joint Undertaking as associated members; |
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B.

whereas the founding members are the Union, represented by the Commission, and rail industry partners (key stakeholders, including rail equipment manufacturers, railway companies, infrastructure managers and research centres); with the possibility that other entities may participate in the Joint Undertaking as associated members;

| C. | whereas the objectives of the Joint Undertaking are: (a) to achieve a Single European Railway Area; (b) to enhance the attractiveness and competitiveness of the European railway system; (c) to ensure a modal shift from road transport; and (d) to maintain the European rail industry’s leading position in the global market; |
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C.

whereas the objectives of the Joint Undertaking are: (a) to achieve a Single European Railway Area; (b) to enhance the attractiveness and competitiveness of the European railway system; (c) to ensure a modal shift from road transport; and (d) to maintain the European rail industry’s leading position in the global market;

| D. | whereas the Joint Undertaking started to work autonomously in May 2016; |
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D.

whereas the Joint Undertaking started to work autonomously in May 2016;

General

General

| 1. | Acknowledges that the Court of Auditors’ report on the annual accounts of the Joint Undertaking for the year ended 31 December 2016 (the ‘Court’s report’) presents fairly, in all material respects, the financial position of the Joint Undertaking at 31 December 2016, the results of its operations, its cash flows, and the changes in net assets for the year then ended, in accordance with its financial rules and with accounting rules adopted by the Commission’s accounting officer; |
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1.

Acknowledges that the Court of Auditors’ report on the annual accounts of the Joint Undertaking for the year ended 31 December 2016 (the ‘Court’s report’) presents fairly, in all material respects, the financial position of the Joint Undertaking at 31 December 2016, the results of its operations, its cash flows, and the changes in net assets for the year then ended, in accordance with its financial rules and with accounting rules adopted by the Commission’s accounting officer;

| 2. | Acknowledges that the Court's report states that the transactions underlying the annual accounts of the Joint Undertaking for the financial year 2016 are, in all material respects, legal and regular; |
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2.

Acknowledges that the Court's report states 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. | Notes that the maximum Union contribution to the activities of the Joint Undertaking is EUR 450 000 000, to be paid from Horizon 2020; notes that the industry members of the Joint Undertaking are to contribute resources of at least EUR 470 000 000, consisting of at least EUR 350 000 000 for in-kind and cash contributions to the operational activities and administrative costs of the Joint Undertaking and at least EUR 120 000 000 of in-kind contributions to the Joint Undertaking’s additional activities; |
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3.

Notes that the maximum Union contribution to the activities of the Joint Undertaking is EUR 450 000 000, to be paid from Horizon 2020; notes that the industry members of the Joint Undertaking are to contribute resources of at least EUR 470 000 000, consisting of at least EUR 350 000 000 for in-kind and cash contributions to the operational activities and administrative costs of the Joint Undertaking and at least EUR 120 000 000 of in-kind contributions to the Joint Undertaking’s additional activities;

Budget and financial management

Budget and financial management

| 4. | Notes that the final 2016 budget available for implementation included commitment appropriations of EUR 50 200 000 and payment appropriations of EUR 52 300 000; stresses that the utilisation rates for commitment and payment appropriations were 94 % and 82 % respectively which represent a low level especially for payment appropriations; notes moreover that most of the payments made by the Joint Undertaking in 2016 were pre-financing payments for Horizon 2020 projects selected under the 2015 and 2016 calls for proposals; |
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4.

Notes that the final 2016 budget available for implementation included commitment appropriations of EUR 50 200 000 and payment appropriations of EUR 52 300 000; stresses that the utilisation rates for commitment and payment appropriations were 94 % and 82 % respectively which represent a low level especially for payment appropriations; notes moreover that most of the payments made by the Joint Undertaking in 2016 were pre-financing payments for Horizon 2020 projects selected under the 2015 and 2016 calls for proposals;

| 5. | Notes that out of the EUR 450 000 000 of Horizon 2020 funds assigned to the Shift2Rail initiative, EUR 52 000 000 were earmarked for the Horizon 2020 Transport Work Programme 2014-2015 managed by the Commission, resulting in EUR 398 000 000 allocated to the Joint Undertaking; observes that by the end of 2016, the Joint Undertaking had made commitments of EUR 92 400 000 and payments of EUR 42 700 000 (10,7 % of the allocated funds) for the implementation of its first wave of projects; |
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5.

Notes that out of the EUR 450 000 000 of Horizon 2020 funds assigned to the Shift2Rail initiative, EUR 52 000 000 were earmarked for the Horizon 2020 Transport Work Programme 2014-2015 managed by the Commission, resulting in EUR 398 000 000 allocated to the Joint Undertaking; observes that by the end of 2016, the Joint Undertaking had made commitments of EUR 92 400 000 and payments of EUR 42 700 000 (10,7 % of the allocated funds) for the implementation of its first wave of projects;

| 6. | Acknowledges the fact that out of the EUR 350 000 000 of contributions to be made by the industry members to the operational activities and administrative costs of the Joint Undertaking, by the end of 2016, i.e. four months after the Joint Undertaking had launched its first Horizon 2020 projects, the members had reported in-kind contributions of EUR 4 500 000 for operational activities, of which EUR 3 000 000 had been certified; notes that the governing board had validated cash contributions to the Joint Undertaking’s administrative costs of EUR 3 200 000; |
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6.

Acknowledges the fact that out of the EUR 350 000 000 of contributions to be made by the industry members to the operational activities and administrative costs of the Joint Undertaking, by the end of 2016, i.e. four months after the Joint Undertaking had launched its first Horizon 2020 projects, the members had reported in-kind contributions of EUR 4 500 000 for operational activities, of which EUR 3 000 000 had been certified; notes that the governing board had validated cash contributions to the Joint Undertaking’s administrative costs of EUR 3 200 000;

| 7. | Takes note that out of the EUR 120 000 000 of industry members’ contributions to be made to additional activities, by the end of 2016 the members had already reported EUR 55 000 000 (45,8 %), of which EUR 35 200 000 had been certified; |
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7.

Takes note that out of the EUR 120 000 000 of industry members’ contributions to be made to additional activities, by the end of 2016 the members had already reported EUR 55 000 000 (45,8 %), of which EUR 35 200 000 had been certified;

| 8. | Observes that by the end of 2016, the total contributions from industry members amounted to EUR 62 700 000, compared to the Union’s cash contribution of EUR 48 500 000; |
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8.

Observes that by the end of 2016, the total contributions from industry members amounted to EUR 62 700 000, compared to the Union’s cash contribution of EUR 48 500 000;

| 9. | Notes that, in 2016, the Joint Undertaking signed 27 grant agreements resulting from the calls of 2015 and 2016, and that the value of the research and innovation activities of those calls amounted to EUR 167,3 million, to be co-funded by the Joint Undertaking up to a maximum of EUR 79,1 million; |
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9.

Notes that, in 2016, the Joint Undertaking signed 27 grant agreements resulting from the calls of 2015 and 2016, and that the value of the research and innovation activities of those calls amounted to EUR 167,3 million, to be co-funded by the Joint Undertaking up to a maximum of EUR 79,1 million;

Prevention and management of conflicts of interest and transparency

Prevention and management of conflicts of interest and transparency

| 10. | Notes that even though the Commission's research anti-fraud strategy is mandatory for the Joint Undertaking, at the end of 2016, the Joint Undertaking had not yet performed a specific anti-fraud risk assessment, nor had it established an action plan for the implementation of its own anti-fraud strategy, both important and expected systems of governance and best practice based on the methodology provided by the Commission; notes the fact that in 2017 the Joint Undertaking took the first steps towards establishing its own anti-fraud action plan, i.e. an anti-fraud awareness session for Joint Undertaking staff organised by the European Anti-Fraud Office (OLAF), and an anti-fraud risk assessment; notes that this plan will be followed by an impact assessment establishing the key objectives relating to mitigation of identifiable weaknesses (in the 4th quarter of 2017) and an evaluation of the anti-fraud strategy and the action plan by June 2018; |
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10.

Notes that even though the Commission's research anti-fraud strategy is mandatory for the Joint Undertaking, at the end of 2016, the Joint Undertaking had not yet performed a specific anti-fraud risk assessment, nor had it established an action plan for the implementation of its own anti-fraud strategy, both important and expected systems of governance and best practice based on the methodology provided by the Commission; notes the fact that in 2017 the Joint Undertaking took the first steps towards establishing its own anti-fraud action plan, i.e. an anti-fraud awareness session for Joint Undertaking staff organised by the European Anti-Fraud Office (OLAF), and an anti-fraud risk assessment; notes that this plan will be followed by an impact assessment establishing the key objectives relating to mitigation of identifiable weaknesses (in the 4th quarter of 2017) and an evaluation of the anti-fraud strategy and the action plan by June 2018;

Personal selection and recruitment

Personal selection and recruitment

| 11. | Notes that in 2016, the Joint Undertaking recruited 7 members of staff in accordance with its staff establishment plan: an executive director, a head of administration and finance, a communication officer, an IT assistant and three programme managers; |
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11.

Notes that in 2016, the Joint Undertaking recruited 7 members of staff in accordance with its staff establishment plan: an executive director, a head of administration and finance, a communication officer, an IT assistant and three programme managers;

| 12. | Notes that at the end of 2016, the Joint Undertaking’s staff consisted of 17 members as foreseen in the establishment plan; |
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12.

Notes that at the end of 2016, the Joint Undertaking’s staff consisted of 17 members as foreseen in the establishment plan;

Internal Control

Internal Control

| 13. | Notes that, according to the Court's report, the Joint Undertaking has set up an action plan for the implementation of its internal control framework, which takes into account the results of a risk assessment completed by the Commission’s Internal Audit Service (IAS) in December 2016; notes moreover that ex-post audits of project cost claims by independent external auditors are to be launched after the validation of the first cost claims in the course of 2017; |
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13.

Notes that, according to the Court's report, the Joint Undertaking has set up an action plan for the implementation of its internal control framework, which takes into account the results of a risk assessment completed by the Commission’s Internal Audit Service (IAS) in December 2016; notes moreover that ex-post audits of project cost claims by independent external auditors are to be launched after the validation of the first cost claims in the course of 2017;

| 14. | Acknowledges the fact that IAS performs the role of Internal Auditor of the Joint Undertaking and, in this respect, it reports to the governing board and the executive director indirectly; notes that the first audit mission consisted in establishing a risk profile of the Joint Undertaking with the objective of establishing a triennial internal audit work plan; |
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14.

Acknowledges the fact that IAS performs the role of Internal Auditor of the Joint Undertaking and, in this respect, it reports to the governing board and the executive director indirectly; notes that the first audit mission consisted in establishing a risk profile of the Joint Undertaking with the objective of establishing a triennial internal audit work plan;

Operational procurement and grants

Operational procurement and grants

| 15. | Expresses its concern that in its procedures for the procurement of services, the Joint Undertaking unwisely set a maximum contract budget; observes that there was no evidence that this maximum amount has been based on a cost estimation process and a reasonable market price reference system; takes the view that this might not ensure the cost-effectiveness of its multi-annual service contracts, as experience shows that most of the bids received were close to the maximum budget; welcomes the fact that the approach followed by the Joint Undertaking is in line with the provisions of the Commission Procurement Vademecum and the principles of its financial rules; |
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15.

Expresses its concern that in its procedures for the procurement of services, the Joint Undertaking unwisely set a maximum contract budget; observes that there was no evidence that this maximum amount has been based on a cost estimation process and a reasonable market price reference system; takes the view that this might not ensure the cost-effectiveness of its multi-annual service contracts, as experience shows that most of the bids received were close to the maximum budget; welcomes the fact that the approach followed by the Joint Undertaking is in line with the provisions of the Commission Procurement Vademecum and the principles of its financial rules;

| 16. | Draws attention to the fact that in two cases out of eight, the Joint Undertaking awarded grants to project consortia, despite the fact that the checks of the financial viability of the beneficiaries performed by the Research Executive Agency indicated that the financial capacity of the coordinating industry members of the consortia was weak; notes that this implies an unnecessarily high financial risk for the completion of those projects and the financial risk was particularly high in one case, in which the coordinating partner had been assigned over 45 % of the total project funding; calls on the Joint Undertaking to provide before the end of 2018 the clear reasons why it decided to take such risk and to inform in written the discharge authority about the development of both projects as a part of the discharge follow up; draws attention to the ongoing and substantial need for a proper risk assessment system that should be followed in a comprehensive fashion; |
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16.

Draws attention to the fact that in two cases out of eight, the Joint Undertaking awarded grants to project consortia, despite the fact that the checks of the financial viability of the beneficiaries performed by the Research Executive Agency indicated that the financial capacity of the coordinating industry members of the consortia was weak; notes that this implies an unnecessarily high financial risk for the completion of those projects and the financial risk was particularly high in one case, in which the coordinating partner had been assigned over 45 % of the total project funding; calls on the Joint Undertaking to provide before the end of 2018 the clear reasons why it decided to take such risk and to inform in written the discharge authority about the development of both projects as a part of the discharge follow up; draws attention to the ongoing and substantial need for a proper risk assessment system that should be followed in a comprehensive fashion;

Other issues

Other issues

| 17. | Calls on the Commission to ensure the direct involvement of the Joint Undertaking in the process of the Horizon 2020 mid-term review in the sphere of further simplifications and harmonisation of joint undertakings; |
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17.

Calls on the Commission to ensure the direct involvement of the Joint Undertaking in the process of the Horizon 2020 mid-term review in the sphere of further simplifications and harmonisation of joint undertakings;

| 18. | Recognises the need for the Joint Undertaking to communicate with Union citizens, through the Union institutions, concerning the significant research and collaboration that it is undertaking; stresses the importance of highlighting the real improvements achieved as a consequence of its work, which are an important part of its mandate, as well as the fact that it works with other joint undertakings in promoting public awareness of the benefits of their work; notes in this respect that also many of the private partners of the Joint Undertaking are endowed with capacities to communicate directly with Union citizens and should be encouraged to participate in such an effort. |
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18.

Recognises the need for the Joint Undertaking to communicate with Union citizens, through the Union institutions, concerning the significant research and collaboration that it is undertaking; stresses the importance of highlighting the real improvements achieved as a consequence of its work, which are an important part of its mandate, as well as the fact that it works with other joint undertakings in promoting public awareness of the benefits of their work; notes in this respect that also many of the private partners of the Joint Undertaking are endowed with capacities to communicate directly with Union citizens and should be encouraged to participate in such an effort.

| 19. | Underlines the fact that research and innovation in the rail sector are decisive for the development of a safe and globally competitive rail sector and play an important role in order to achieve a significant reduction of the life-cycle cost of the railway transport system and to achieve significant increases in capacity of the railway transport system, in reliability and punctuality, as well as in order to remove the remaining technical obstacles to interoperability and to reduce the negative externalities linked to transport; highlights also that the objectives of the Joint Undertaking are to achieve a Single European Railway Area and to enhance the attractiveness and competitiveness of the European railway system; |
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19.

Underlines the fact that research and innovation in the rail sector are decisive for the development of a safe and globally competitive rail sector and play an important role in order to achieve a significant reduction of the life-cycle cost of the railway transport system and to achieve significant increases in capacity of the railway transport system, in reliability and punctuality, as well as in order to remove the remaining technical obstacles to interoperability and to reduce the negative externalities linked to transport; highlights also that the objectives of the Joint Undertaking are to achieve a Single European Railway Area and to enhance the attractiveness and competitiveness of the European railway system;

| 20. | Recalls that research and innovation is not an isolated process using a simple rule for process management; stresses therefore that it is significantly important to identify among the research and innovation projects those that are capable to bring innovative solutions to the market; highlights that changes in the Regulation establishing the Joint Undertaking and in its Statutes will be very important for the future development of the Joint Undertaking in order to improve its efficiency; stresses, in particular that there is a need to foresee the use of the principle of multiannual financing and to adopt flexible timetables for publishing projects proposals; |
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20.

Recalls that research and innovation is not an isolated process using a simple rule for process management; stresses therefore that it is significantly important to identify among the research and innovation projects those that are capable to bring innovative solutions to the market; highlights that changes in the Regulation establishing the Joint Undertaking and in its Statutes will be very important for the future development of the Joint Undertaking in order to improve its efficiency; stresses, in particular that there is a need to foresee the use of the principle of multiannual financing and to adopt flexible timetables for publishing projects proposals;

| 21. | Insists on the importance of the cooperation between the Joint Undertaking and the Union Agency for Railways (ERA); welcomes the involvement of ERA in meetings of the Joint Undertaking governing board; asks the Joint Undertaking to provide more concrete information on the main achievements of this cooperation in its annual activity report; |
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21.

Insists on the importance of the cooperation between the Joint Undertaking and the Union Agency for Railways (ERA); welcomes the involvement of ERA in meetings of the Joint Undertaking governing board; asks the Joint Undertaking to provide more concrete information on the main achievements of this cooperation in its annual activity report;

| 22. | Takes note of the fact that, during the first months since it became autonomous, the Joint Undertaking started some exploratory work to consider how to make use of activities planned in other Union programmes and funds, in relation to the railway sector, in particular the European Fund for Strategic Investments, Regional and Cohesion fund, and that the Joint Undertaking intends to further develop this activity; requests the Joint Undertaking to provide details about how it intends to develop synergies between those activities and what are the expected outcomes; |
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22.

Takes note of the fact that, during the first months since it became autonomous, the Joint Undertaking started some exploratory work to consider how to make use of activities planned in other Union programmes and funds, in relation to the railway sector, in particular the European Fund for Strategic Investments, Regional and Cohesion fund, and that the Joint Undertaking intends to further develop this activity; requests the Joint Undertaking to provide details about how it intends to develop synergies between those activities and what are the expected outcomes;

| 23. | Underlines that research and innovation projects should be followed by a higher Technology Readiness Level in the demonstration and implementation phase; stresses that the necessity of complementary financing using the relevant funding instruments is key to build a competitive railway system in the future. |
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23.

Underlines that research and innovation projects should be followed by a higher Technology Readiness Level in the demonstration and implementation phase; stresses that the necessity of complementary financing using the relevant funding instruments is key to build a competitive railway system in the future.

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