Chapter 3 — Getting results from the EU budget

Replies of the Commission to the European Court of Auditors’ 2018 Annual Report

Introduction

3.1. The Commission is committed to improving the performance framework for the EU budget. That improvement will happen continuously but gradually and in particular in the context of the next Multiannual Financial Framework. It requires full commitment also from all other entities implementing the EU budget, in particular Member States. The performance framework around the EU budget consists of three elements: (a) the legally obligatory reporting on indicators that are part of the legal bases of the programmes, (b) the monitoring of programme implementation, using a much wider range of both quantitative and qualitative information and (c) the regular evaluations that are assessing programme performance. While the indicators can give indications of where attention should be focussed when considering which programmes could potentially raise performance concerns, additional quantitative and qualitative information is needed in order to understand whether there are actual concerns, what those are precisely and how they can be alleviated.

Part 1 — What do the EU budget performance indicators tell us?

3.3. The ‘Methodological Note’ accompanying the Programme Performance Overview (PPO) addresses the indicator selection: ‘A selection of indicators was made based on certain criteria such as relevance, availability of data etc.’

3.4. The Commission recognises that the reader-friendliness of the Programme Statements (PS) can be improved, and is in the process of doing so, but underlines that the sheer amount of information contained therein – i.e. the progress in achieving programme objectives pursuant to Article 41(3)(h) of the Financial Regulation – is by its nature reference reading for specialists. It is precisely for this reason that the Commission has started to publish the PPO to have a more reader-friendly compilation of information on programme performance.

3.6. The Commission is fully committed to collecting, analysing, publishing and acting upon high quality performance information. To get a better understanding of the current state of performance reporting on the basis of indicators, the Commission has undertaken an internal analysis of the performance data of all spending programmes available as of March 2019 and which was published in the Programme Statements accompanying the Draft Budget 2020. Moreover, the performance framework for the EU budget is based on multiple elements. Monitoring progress on the basis of performance indicators is one important part. However, progress on select indicators provides only part of the story and cannot be used to draw firm conclusions about programme performance. As the ECA itself points out in paragraph 3.8, qualitative information, such as examples of achievement, complement indicator information and provide a more complete picture of performance, also and in particular in cases where indicator data is missing or when the baseline is updated.

Section A – The indicators show significant variation in achievements and suggest moderate progress overall

3.7. The current performance framework for the EU budget has been distinguished by the OECD ( 1 ) as best in class among its peers. The Commission recognises that all performance frameworks require continuous improvement and further work is being done to improve the system, for example through the Commission’s proposals for the next generation of financial programmes. There are many challenges associated with data collection and transmission, particularly for programmes under shared management. These and other factors, including the multiannuality of programmes, make European budget performance reporting a challenging task. The Commission recognises that all performance frameworks require continuous improvement and further work is being done to improve the system, for example through the Commission’s proposals for the next generation of financial programmes. There are many challenges associated with data collection and transmission, particularly for programmes under shared management. These and other factors, including the multiannuality of programmes, make European budget performance reporting a challenging task.

3.8. The Commission is committed to producing high-quality and reliable reports on the performance of the EU budget. For this, the Commission relies on the data provided by Member States and other sources. Through the instructions provided by central services, Commission services are requested to provide comprehensive performance information for each programme and to ensure the quality and reliability of information submitted. Sources of the performance indicators are disclosed systematically in the annual activity reports (AARs). In addition, under the 2018 annual activity reports instructions, directors responsible for risk management and internal control were requested to declare that the information presented in both Parts, 1 and 2 of the AARs, was reliable, complete and accurate.

3.9 Second indent. The Commission notes the ECA’s assessment that, generally, calculating performance progress is more indicative when taking a baseline as a starting point. However, not all programmes have defined numeric baselines in the 2014-2020 multiannual financial framework, which is why the decision was taken, for the sake of comparability, to calculate overall progress.

The Commission is of the view that using forecasts – based on decided projects – in addition to actual implementation figures, in the case of investment programmes such as the European Regional Development Fund (ERDF) and the Cohesion Fund (CF) is legitimate. It is informative and allows experts and decision-makers alike to draw conclusions on implementation progress and thereby for the system as a whole to fulfil its intended objective.

3.10. The Commission is of the view that the process of aggregating performance on indicators into programmes and headings has its limitations. The Commission has intentionally not calculated an average of distance to target per programme. A single figure cannot fully capture the complexity inherent in spending tens of billions of euros.

3.11. The Commission is committed to improving data collection and availability, in particular for shared management, where the delays are currently longest. To this end, the Commission proposed in May 2018 a bimonthly reporting cycle pursuant to Article 37(1) of the proposed Common Provisions Regulation COM(2018) 375.

3.12. Performance is in most cases not linear over time but only starts slowly during implementation. It is therefore expected that progress from baseline will in most cases be lower than the linear percentages stated by the ECA. Progress made should also take into account delays in implementation. With that in mind, the Commission considers progress from baseline is on track overall. The Commission agrees however, it is necessary to monitor very carefully implementation progress and take necessary measures in case there are shortcomings.

Heading 1A: Indicators show good progress for Erasmus+ and EFSI and moderate progress for Horizon 2020 and the Connecting Europe Facility

3.13 First indent. The Commission stresses that the indicator selection for the Programme Performance Overview was based in particular on the relevance and availability of data and not on the resulting value of the indicator. In fact, there are instances in the report for every heading where the progress calculation based on the Programme Statements yields better results than based on the Programme Performance Overview. The Commission agrees that going forward the analysis needs to be more detailed and underlying assumptions better specified.

3.13 Second indent. Significant efforts have been made in the 2019 Programme Performance Overview to improve the reporting of data on the Connecting Europe Facility. The Connecting Europe Facility funds large, long-term infrastructure projects, or projects that need to be coordinated in a network. These projects often need to be developed under successive financial frameworks and there might be a significant delay between the time at which the project is launched and the availability of the data necessary to measure performance. The Commission’s proposal on the continuation of the facility has put an increased focus on the performance framework, providing for ‘transparent, accountable and adequate monitoring and reporting measures in order to assess the progress of the Programme (…) and promote its achievements’.

3.13 Third indent. In its PPO, the Commission made clear that the performance of the Erasmus+ programme is being compared to 2017. The programme is well on track to deliver on its objectives by 2020.

3.13 Fourth indent. The Commission notes that the initial target of the European Fund for Strategic Investments (EFSI) was to mobilise 315 billion euros in investments by July 2018. On 30 December 2017, the Regulation to extend and enhance the EFSI (EFSI 2.0 Regulation) entered into force. It extended the duration of EFSI to end-2020 and increased its investment target to 500 billion euros. This Regulation foresaw that the EU guarantee necessary to enable the EFSI to support investments, would increase from 16 billion euros to 26 billion euros only as of July 2018 (i.e. after the initial period). Therefore, as at end-2017 the EFSI results were compared to the initial investment target of 315 billion euros.

Heading 1B: Indicators show relatively low progress for Cohesion due to late start

3.14. Forecasts – based on decided ongoing projects – are crucial information in the context of monitoring implementation. In addition to data on actual implementation, they provide insight to the project pipeline which, in the case of investment-heavy policies with long lead times such as cohesion, is perhaps the most valuable information during implementation.

Heading 2: On the basis of the indicators, it was not possible to determine progress for most expenditure in the area of ‘Natural resources’

3.15. The Commission notes that the annual nature of the European Agricultural Guarantee Fund renders it less conducive to multiannual target setting. Work is however underway to develop the tools and metrics to ensure that mid-term performance reporting can also be conducted for the data of this fund.

3.15 First indent. The Commission notes that using the method applied by the ECA (as explained in paragraph 3.9 and Box 3.1) it is not possible to calculate progress from baseline for more than one of the 27 indicators.

However, the Commission considers that progress from the baseline can be assessed for all 27 indicators. Thus, the indicators selected do allow for monitoring progress.

A comprehensive analysis of the 27 indicators included in the Programme Statement should take into account the specific reality of the agriculture sector and the EAGF expenditure.

Heading 3: Indicators for ‘Security and citizenship’ show two programmes with good progress, one with moderate progress and one as lagging behind

3.17. The Commission notes that, in assessing the performance of the Food and Feed programme , one needs to take into account the unpredictability of outbreaks of animal and plant diseases. All work programmes have been adopted and implemented as foreseen.

Heading 4: Indicators show overall reasonable progress for ‘Global Europe’ programmes

3.19. The methodology to define indicators and targets for the Development Cooperation Instrument is explained in the Revised EU International Cooperation and Development Results Framework (SWD(2018) 444).

Special instruments: Insufficient information on the progress achieved

3.20 First indent. The Commission notes that the indicator takes into account only those disasters that satisfy eligibility criteria. The 6 cases from 2017 were still under investigation, therefore they were not taken into the calculation as it was still not clear whether they meet eligibility criteria. Finally, in 2017, two of the 10 applications were not accepted (Murcia flooding and Donana fires).

Section B – Indicators did not always provide a good picture of actual progress

3.21. With respect to the subtitle ‘Many indicators were not well chosen’, the Commission notes that the performance indicators for the EU’s financial programmes are defined in the legal acts underpinning these programmes. The choice of indicators is the result of negotiation between the European Parliament and the Council on the basis of a proposal from the Commission. The Commission is obliged to report regularly on all the indicators defined in the legislation.

3.22. A high share of input/output indicators does not mean that indicators are poorly chosen. The Commission agrees that result and impact indicators are more appropriate to measure performance per se. However, especially for investment-heavy, long lead-time projects, outcome indicators are necessary in order to report on progress. Our view is therefore that a balance is necessary between types of indicators and this balance should be programme-specific.

3.23. The Commission considers that a 60 % proportion of input and output indicators does not necessarily limit the usefulness of the information provided. While the Commission agrees that there should be a balance between different types of indicators, the appropriate balance can vary between different programmes. The performance framework of the EU budget also contains a structured system of evaluations (interim and ex-post), as laid down in the Better Regulation Guidelines, precisely in order to distinguish between the various effects of a programme.

3.24. The Commission notes that it is exceedingly difficult to select impact indicators that are influenced only by the direct effects of the programme itself. Any wider result or outcome indicator will inevitably be affected by a variety of factors of which these programmes will only be one. The Commission therefore aims to use a set of indicators that explain and report on the performance of the programmes in the best way possible, but, due also to the nature of the programmes themselves, this is at times very challenging. Efforts are however being made in particular for the next set of indicators in the post-2020 multiannual financial framework, to select result and impact indicators that best explain the programmes. In addition, the Commission also notes that only in a fully-fledged evaluation with the proper control variables will the effects of the EU spending programmes become discernible.

3.25. In relation to Table 3.2, the Commission agrees that in some cases indicators covering the humanitarian aid domain only have an indirect link to EU-funded humanitarian action and also that a number of external factors influence the value of the indicator. Thus, efforts will be made in the context of the next MFF to increase the relevance of the set of indicators for EU humanitarian action, i.e. to ensure clearer links of all indicators to the spending and objectives. As regards the EAGF, effective management and control systems are also crucial for ensuring that the programmes are implemented in a manner that leads to the achievement of the objectives. Hence, the need for the indicator in the programme statement measuring to which extent expenditure is checked.

3.26. The Commission acknowledges that the Programme Statements are not structured in such a way as to clearly link specific objectives to the general objective. However, for the post-2020 spending programmes a clear hierarchical structure has been established linking specific objectives to general objectives and indicators to specific objectives. Moreover, the budget nomenclature is also being revised and will be structured along specific objectives. These measures will improve significantly both the structure and user-friendliness of the Commission’s budget performance documents.

3.27. There is always a trade-off to consider between an exhaustive list of indicators covering every aspect of the objectives and the resources implied.

3.27 Second indent. The objectives of the Development Cooperation Instrument are, by nature, very broad and cannot be encompassed by a limited number of indicators. Nevertheless, actions related to climate change and environment are monitored annually using the methodology of the Rio markers, as developed by the OECD Development Assistance Committee (DAC).

3.28. As mentioned above, the Commission – relying also on Member States and other reporting entities – is continuously improving its performance reporting. In its analysis of the dataset available in March 2019 the Commission found that 63 % of the indicators have ‘full performance information’ meaning data points, baseline and target, which the Commission considers a reasonable figure. For the performance framework of the post-2020 spending programmes the Commission has now launched a broad project aiming to ensure that such underlying performance information is set for the programmes in a consistent manner and according to an agreed schedule.

3.28 Fourth indent. The Commission notes that in specific cases the baseline also changes when the official statistical data are updated.

3.29. For EAGF it is considered that the indicators selected allow assessing the progress (see Commission reply to paragraph 3.15, 1st indent). The Commission is furthermore committed to ensuring that performance reporting for EAGF, Horizon 2020 and EUSF is continuously improved in particular for the next MFF period, for which reinforced monitoring provisions and streamlined indicators are proposed based on lessons learned from evaluations.

3.30. In cases referred to by the ECA, the Commission accepts the usefulness of defining annual milestones to monitor performance. The Commission notes however that some programmes in the 2014-2020 cycle do not have them or – in the case of shared management – there is insufficient information from Member State authorities as to the reported values. Here too the Commission is committed, where relevant, to improving this situation for the post-2020 financial programmes, for which the support of the Parliament, Council and the Member States will be vital.

3.31. With respect to the subtitle ‘For some programmes, data available was of insufficient quality’, the Commission notes that data availability and quality largely depend on reporting obligations that result from the legislative process. When data are reported by Member States and public authorities the Commission has limited capacity to influence their quality. The Commission notes that three-quarters of indicators had the most recent data available. For some programmes, data will only become available later in the implementation period.

3.32. The Commission takes the recommendations of the European Parliament and the Council very seriously and always presents the latest available data in its performance reports. As already set out, in a performance system as complex as that of the EU budget, and with the current legal framework, it is challenging to have fully up-to-date data. The Commission is aiming to improve on presenting as up-to-date information as possible in its reporting, while again noting that this depends in large part on timely and reliable data provision by Member States and other third parties. The Commission also points out that any reporting will always be a snapshot of a situation at a certain point in time, as underlying data are rarely static.

3.33. The Commission accepts that there are certain, limited data quality issues with indicators but maintains that overall the performance framework is robust. The Commission also emphasises its commitment to improving the performance and reporting system for the next budgetary cycle .

3.33 Second indent. The Commission is committed to ensuring that data quality behind the core performance indicators is improved, including the reported information on patents applications and publications. This is reflected in the regularly updated project results section of the Horizon Dashboard, published on the Funding & Opportunities online portal.

3.34. The Commission accepts that certain indicator targets might not be sufficiently ambitious but maintains that overall the performance framework is robust. The Commission also emphasises its commitment to improving the system in the next multiannual financial framework.

3.34 Second point. Policy priority, particularly for the Cohesion Fund (given the railway sector of the Member States eligible for these investments), was railway reconstruction and upgrade, with a target of 2 829 km. Targets for new railway lines financed by the ERDF were somewhat higher at 580 km but still only at 14 % of the target for reconstructed and upgraded line length.

3.35. The Commission accepts that targets on some indicators in some programmes might not be sufficiently ambitious. In order to identify those indicators and targets, it is necessary to assess in detail the meaning and context of the indicators.

Part 2 — Results of the Court’s performance audits: main conclusions and recommendations

Headings 1a ‘Competitiveness for growth and jobs’ and 1b ‘Economic, social and territorial cohesion’

(a) Special report 8/2018 – Durability of EU support for productive investments in businesses

3.38. The Commission notes that projects audited by the ECA had in general delivered outputs as planned and that in most cases those outputs still existed and were being used. Compared to the programming period 2000-2006, the EU management approach to the issue of durability of investments has evolved significantly in 2007-2013. This is reflected not only by the specific and reinforced regulatory provisions, but also by the emphasis put on strategic planning for major projects as well as in the Commission’s ex-post evaluations at programme level for Cohesion Policy. As regards achieved results, at the time of the audit the Commission underlined the lack of data for many of the projects audited, rather than a dominance of weak or no durable results.

3.39 First indent. The Commission notes that this recommendation is related to the approval process of operational programmes in the post 2020 period.

(b) Special report 9/2018 – Public Private Partnerships (PPPs) in the EU

3.40 and 3.41. The Public Private Partnerships (PPPs) are one of the tools put at the disposal of Member States and project promoters as a potential instrument of policy implementation. The Commission contributes to the sharing of best practice, offers targeted technical assistance, analyses the national PPP frameworks regularly and provides policy recommendations on how to improve them (‘European Semester’), where relevant. However, as regards the European Semester and Europe 2020 strategy, there is no specific encouragement for a more intensive use of PPPs. As regards sectoral instruments, the Commission does not have a legal basis to request Member States to use more or less PPPs compared to other procurement methods. Under shared management of the European Structural and Investment Funds, the discretion to use PPP is left exclusively to Member States.

(c) Special report 12/2018 – Broadband in the EU Member States

3.42 and 3.43. The Commission monitors the broadband objectives of the Digital Agenda and publishes relevant data in its Digital Economy and Society Index.

The Commission has called on Member States to review progress of their National Broadband Plans and update them with a time horizon of 2025.

The Commission recalls that the ultimate responsibility on the enforcement of the legal and regulatory environment lies with national regulatory authorities (NRAs). In its proposal for revised EU telecom rules (the European Electronic Communications Code) the Commission proposed enhanced provisions on the independence and regulatory capacity of NRAs, including available resources, power to directly impose penalties and a harmonisation of a minimum list of tasks.

In economically less viable areas, the Commission has also proposed revised telecom rules to incentivise deployment.

In addition, the Commission provides guidance to Member States for the application of State Aid for broadband and will continue to do so.

The Commission has set up a Rural Broadband Action Plan which focuses on the challenge of broadband in rural areas, notably through the exchange of best practices through the Broadband Competence Offices network, targeted missions in the Member States, closer monitoring of ESIF broadband spending and updated guidelines on broadband investment.

(d) Special report 17/2018 – Absorption

3.44. The Commission recalls that the adoption date of the legislative framework strongly depends on the co-legislators. The Commission also underlines that while early adoption of the legislation framework is important in relation to starting programme implementation, there are also other factors such as the de-commitment rule, the level of pre-financing or the designation requirements for 2014-2020, which had a significant effect on implementation. The Commission notes with satisfaction that the measures it took in close cooperation with the concerned programme authorities, namely through the Task Force for better implementation it has established, led to a marked increase in absorption during the 2007-2013 period. It also underlined that on the basis of the results of the ex-post evaluation of the 2007-2013 programming period and of the 7th report on Economic, Social and Territorial Cohesion, Cohesion policy has shown overall good results.

3.45 First indent. For the 2021-2027 period, the Commission presented its proposal for the Common Provisions Regulation as early as 29 May 2018 (COM(2018) 375), i.e. 30 months prior to the planned start of the eligibility period. It has also started informal negotiations on partnership agreements with Member States ahead of the adoption of the legal framework by the co-legislator.

3.45 Second indent. The Commission services have continued to provide substantial support to Member States including technical assistance and advisory services in order to improve their capacity to implement the funds while focusing on the delivery of results.

A close monitoring allows setting up action plans tailored to the needs of each programme and following up on the specific issues identified to ensure sustained implementation, without any compromise on the delivery of results.

(e) Special report 30/2018 – Passenger rights

3.47 First indent. The Commission accepted the recommendations.

3.47 Second indent. The Commission accepted this recommendation considering it had an important role to play in increasing passenger awareness. It also accepted to further enhance the existing guidance.

3.47 Third indent. The Commission accepted the recommendation and will use its right of initiative to reflect on and propose solutions to the remaining challenges to enforcement.

(f) Special report 28/2018 – Horizon 2020

3.48. The Commission welcomed the assessment of the ECA as regards Horizon 2020. The Commission has accepted all the recommendations of the report. The Commission is consequently implementing the recommendations.

Heading 2 ‘Natural resources’

3.51 First indent. The Commission acknowledges that renewable energy projects have the potential to contribute to sustainable rural development.

It considers that by now it has addressed the design and sustainability of future renewable energy policy through the newly adopted legislation: the new Energy Union Governance Regulation (Regulation (EU) 2018/1999), the LULUCF Regulation (Regulation (EU) 2018/841), and the recast of the Renewable Energy Directive (Directive (EU) 2018/2001).

In this framework, the Member States, when drafting and finalising their integrated national energy and climate plans, could take into account the circumstances and needs of their rural areas.

It remains the choice of the Member States/Regions, when designing their rural development programmes and striking the balance between various objectives of their rural development strategies, whether the potential of EAFRD funding in this respect is realised.

3.51 Second indent. The Commission committed to take into account all available evidence on the performance of the policy so far and to use this information when analysing specific solutions for the future in the Impact Assessment underpinning the Commission proposal for the post-2020 CAP. The Commission also committed to consider the way to assess the performance of types of intervention, including where appropriate, income support.

3.51 Third indent. The use of Simplified Cost Options is to reduce administrative burden for authorities and beneficiaries. Simplified Cost Option reimbursement system should lead to the same results as conventional reimbursement systems, though in a simpler and quicker way. The Commission agreed to reflect on ways to move to systems that base Member State reimbursement on policy delivery.

3.52 Second indent. The Commission has strengthened the links between the cross-compliance system and animal welfare in particular by further sharing with Member States best practices and results of inspections on cross-compliance, as recommended by the ECA. This was done in the framework of meetings of the Experts Group on cross compliance organised in 2018.

3.52 Fifth indent. Concerning special report 25/2018, project selection (including the prioritisation of projects) is for the Member States to carry out. As regards ESI Funds, the legal provisions governing these do not provide for such a role of the Commission under shared management with regard to establishing criteria for the selection of operations, launching calls for proposals, evaluation and selecting the projects for funding. It is the role of the Member States to organise this process. This is not changed in the Commission’s proposal for the period 2021-2027. However, as funding preconditions (called enabling conditions) for the ERDF/Cohesion Fund support, the Commission has proposed for the period 2021-2027 that the investments in risk prevention and management have to be in line with a national or regional disaster risk management plan. This is a similar approach to the 2014-2020 period, but strengthened and offering to look at all risks in an integrated manner.

Headings 3 ‘Security and citizenship’ and 4 ‘Global Europe’

(a) Special report 7/2018 — Turkey

3.55 First indent. The Commission accepted this recommendation.

The Commission takes note of the target implementation date and will consider the refocussing under the 2018 programming exercise, keeping within the political guidelines.

The Commission notes that progress in such sensitive areas is not only dependent on IPA funding allocated but more importantly on the political will of the Turkish authorities

3.55 Second indent. The Commission accepted this recommendation.

3.55 Third indent. The Commission accepted this recommendation.

3.55 Fourth indent. The Commission accepted this recommendation.

3.55 Fifth indent. The Commission accepted this recommendation.

(b) Special report 20/2018 – The African Peace and Security Architecture (APSA)

3.56. EU support to the African Peace and Security Architecture (APSA) both in terms of capacities as well as of financial ownership, has been instrumental to contribute to the development of this architecture – although expected results have not systematically been reached. Contributing to salaries or other operational costs is not an issue in itself as long as it is linked to achieving results and is part of a wider support strategy with a clear exit strategy.

3.57 First indent. The Commission and the EEAS accepted the recommendation. However, ad hoc support to operational costs may still be appropriate under certain conditions.

3.57 Second indent. The Commission accepted the recommendation.

(c) Special report 27/2018 – The Facility for Refugees in Turkey

3.59 First indent. The Commission accepted this recommendation.

The Commission considers that the support of similar type of activities through parallel instruments allowed for complementarity and did not lead to any duplication or overlap, and allowed the Commission to speed up its responses, as different instruments were mobilised at different times.

3.59 Second indent. The Commission accepted this recommendation.

3.59 Third indent. The Commission accepted this recommendation.

3.59 Fourth indent. The Commission accepted this recommendation.

The Commission notes that the implementation of this recommendation does not depend exclusively on the Commission but also on the willingness of the partners to accept these conditions.

3.59 Fifth indent. The Commission accepted this recommendation.

Despite the lack of access to beneficiary names, the partners established robust control mechanisms. Partners, as well as the Commission, will continue to advocate for better access to primary data to the Turkish Government, with due consideration for the legal framework

3.59 Sixth indent. The Commission accepted this recommendation.

The Commission will continue to engage with the Turkish authorities on this issue with the aim to ensure full data access for implementing partners, with due consideration of the applicable legal framework.

The Commission notes that the Facility is not meant to coordinate all EU assistance to refugees in Turkey; its mandate on monitoring and reporting relates to Facility assistance only. The Commission is already preparing, in a separate context, a Global Report on the Implementation of funding related to the migration crisis which will complement the specific reporting of the Facility.

(d) Special report 32/2018 – EU Trust Fund (EUTF) for Africa

3.60. The EUTF was designed as an implementing tool with flexible objectives to be able to respond to needs and emerging challenges originated by the complex crises, each of different nature, affecting the three regions.

3.61 First indent. The Commission accepted this recommendation.

3.61 Second indent. The Commission partially accepted this recommendation.

3.61 Third indent. The Commission accepted this recommendation.

3.61 Fourth indent. The Commission accepted this recommendation.

Heading 5 ‘Administration’

(a) Special report 34/2018 – Office accommodation of EU institutions

3.64 First indent. Concerning the building strategy, the main principles of the Commission’s real estate policy as outlined in the Communication COM(2007) 501 are to the largest extent still up-to-date (2).

The Commission only partially accepted the recommendation, given the planning documents (MAPFs and Working Document on Buildings accompanying the Draft Budget) are already updated annually.

3.64 Second indent. The Commission did not accept the recommendation but will assess margin for improvements.

The Commission could provide each year in the Working Document on Buildings accompanying the Draft Budget, the information about advance payments that would be made for the various projects.

3.64 Third indent. The Commission partially accepted the recommendation as it considers the required building management procedure is in place. This might be reassessed in the mid-term.

3.64 Fourth indent. The Commission accepted the recommendation and would like to highlight that in real estate matters the different size, needs and localisation of each institution lead to the specific characteristics that can have an important influence on comparison results.

Reports on the ‘Functioning Single Market and sustainable Monetary Union’

(b) Special report 3/2018 – Macroeconomic Imbalance Procedure (MIP)

3.68. Overall, the Commission considers implementation of the MIP to be positive. The Court of Auditors surveyed Members of the Economic Policy Committee (EPC) and only about 10 % of them considered the MIP ineffective. To improve transparency, the Commission has made public in the MIP Compendium the principles that are followed to identify and assess imbalances as well as introduced MIP assessment matrices in the IDRs. Regarding the profile of the Commission’s analysis, the IDR conclusions are reported in a Commission Communication accompanying the IDRs, not in the IDR themselves because, according to the regulation, they must take the general context into account. Finally, the initial identification of imbalances is not conceived of as an early warning system and so is based on variables of high quality data. However, the Commission’s in-depth analysis does use the latest macroeconomic forecasts which, by design, take general market conditions into account, including possible sovereign conditions reflecting contagion from outside.

3.69. The Commission accepts most of the ECA’s recommendations and is committed to implementing them. In fact, many recommendations contained in the report focus on reinforcing and improving aspects of the MIP that the Commission is already addressing.

(c) Special report 18/2018 – Is the main objective of the preventive arm of the Stability and Growth Pact (SGP) delivered?

3.70. The Commission is currently in the process of implementing those recommendations that it accepted. The Council issued its conclusions on the report in December 2018 and invited the Commission to reflect on the findings and recommendations of the ECA and to report back to the Council within two years. The Commission has accepted this deadline.

3.71 First indent. The Commission reviewed the parameters of the matrix of requirements as part of a wider review of flexibility under the SGP, published in May 2018. The Commission did not accept the recommendation to address the cumulative effects of permitted deviations as Regulation (EC) No 1466/97 specifically provides for the 0,25 % of GDP allowable margin of deviation and the Commission cannot impose restrictions on this.

3.71 Second indent. The Commission did not accept the recommendations referred to in this sentence, i.e. recommendations 2(a) and 2(b). The temporary deviation under the structural reform clause is not directly linked to the actual budgetary costs of the reform because some very beneficial structural reforms do not always create significant direct budgetary costs, while such reforms carry substantial economic or political costs. In such cases, directly linking the temporary deviation to the budgetary costs would effectively nullify the incentivizing intent of the clause. The Commission also did not accept the recommendation to discontinue the investment clause in its current form as it considers it to be an important element of the flexibility package introduced in 2015.

3.71 Third indent. The Commission will examine these issues as part of its upcoming review of the 2-pack and 6-pack legislation. The parameters of the matrix of requirements already sets higher requirements for more heavily indebted Member States.

3.71 Fourth indent. The Commission implemented these recommendations in time for the recent publication of its 2019 Spring Package.

Part 3 — Follow-up of recommendations

3.75. The 11 recommendations which are not implemented at all were not accepted by the Commission.

Conclusions and recommendations

Conclusions

3.79. Performance is in most cases not linear over time but only starts slowly during implementation. Taking this and the late start of certain programmes into account, the Commission considers progress is on track overall. The Commission agrees it is necessary to monitor very carefully implementation progress and take necessary measures in case there are shortcomings. The Commission is of the view that the process of aggregating performance on indicators into programmes and headings has its limitations. The Commission has intentionally not calculated an average of distance to target per programme. A single figure cannot fully capture the complexity inherent in spending tens of billions of euros .

3.80. The current performance framework for the EU budget has been distinguished by the OECD ( 3 ) as best in class among its peers. The Commission has made proposals to improve it further for the future financial framework. However, there are many challenges associated with data collection and transmission, particularly for programmes under shared management. These and other factors, including the multiannuality of programmes, make European budget performance reporting a challenging task. However, there are many challenges associated with data collection and transmission, particularly for programmes under shared management. These and other factors, including the multiannuality of programmes, make European budget performance reporting a challenging task. (a) First indent: The performance indicators for the EU’s financial programmes are defined in the legal acts underpinning these programmes. The Commission agrees that result and impact indicators are important to measure performance. A balance between types of indicators is necessary. Second indent: The Commission agrees that all indicators should help to measure the achievements of the EU budget. Third indent: There is always a trade-off to consider between an exhaustive list of indicators covering every aspect of the objectives and the resources implied. (b) First indent: The Commission – relying also on Member States and other reporting entities – is continuously improving its performance reporting. In its analysis of the dataset available in March 2019 the Commission found that 63 % of the indicators have ‘full performance information’ meaning data points, baseline and target, which the Commission considers a reasonable figure. For the performance framework of the post-2020 spending programmes the Commission has now launched a broad project aiming to ensure that such underlying performance information is set for the programmes in a consistent manner and according to an agreed schedule. (c) First indent: Data availability and quality largely depend on reporting obligations that result from the legislative process. When data are reported by Member States and public authorities the Commission has limited capacity to influence their quality. The Commission notes that three-quarters of indicators had the most recent data available. For some programmes, data will only become available later in the implementation period. (d) First indent: The Commission accepts that certain indicator targets might not be sufficiently ambitious but maintains that overall the performance framework is robust. The Commission also emphasises its commitment to improving the system in the next multiannual financial framework.

3.81. The Commission agrees with the ECA that data availability could be improved. However, the Commission considers that a balance has to be achieved between different types of indicators but there is no particular proportion of input and output indicators that automatically presents a weakness (see Commission reply to paragraph 3.23). The fact that progress cannot be calculated is linked to both the availability of the data and how the available data is used to calculate that progress (see Commission reply to paragraph 3.28). While there might be unambitious targets on some indicators in some programmes, it is in most cases not straightforward to identify them (see Commission reply to paragraph 3.35).

Recommendations

Recommendation 3.1 (Indicators in the programme statements)

The Commission accepts the recommendation. The Commission is required pursuant to the Financial Regulation to report in the Programme Statements on all indicators set out in the legal bases of the spending programmes as agreed by the European Parliament and the Council based on proposals made by the Commission.

a) The Commission considers that an appropriate balance between types of indicators is necessary to monitor and evaluate performance and this balance should reflect the specificities of individual programmes.

Recommendation 3.2 (Performance frameworks for the programmes)

The Commission accepts this recommendation. The Commission notes that it will be necessary to use a limited number of indicators for which it is not meaningful to define quantitative baselines, milestones or targets.

d) The Commission notes that it has to take account of feasibility and cost considerations as well as the fact that it requires a corresponding commitment of, in particular, Member States and beneficiaries to submitting high quality data on time.

Recommendation 3.3 (Timely information for the performance indicators)

The Commission accepts the recommendation. The Commission notes that it has to take account of feasibility and cost considerations as well as the fact that it requires a corresponding commitment of, in particular, Member States and beneficiaries to submitting high quality data on time.

Recommendation 3.4 (Documentation of targets)

The Commission accepts the recommendation.

Recommendation 3.5 (Improvement of the Programmes’ Performance Overview)

The Commission accepts the recommendation.

a) The Commission considers that it will be able to implement this part of the recommendation only at the start of the MFF 2021-2027.

Annex 3.3 — Detailed status of 2015 recommendations by report

Special report 01/2015: Inland Waterway Transport in Europe - No significant improvements in modal share and navigability conditions since 2001

Reply to paragraph 52, recommendation 1(a): The Commission notes that this recommendation was addressed to the Member States.

Reply to paragraph 54, recommendation 2 (a): The Commission took the actions that were possible within the timeframe defined for the implementation of the recommendation and considers it as implemented. It examined the situation of the inland navigation sector by means of a dedicated Market Observation analysis. The revision of the strategy itself will occur in the more general context of the revision of the TEN-T framework (see recommendation 2c below).

Reply to paragraph 54, recommendation 2 (c): This action will be completed with the revision of the TEN-T Regulation foreseen by 31 December 2023.

Special report 02/2015: EU-funding of Urban Waste Water Treatment plants in the Danube river basin – further efforts needed in helping Member States to achieve EU waste water policy objectives

Reply to paragraph 108, recommendation 1 (a): The Commission did not accept this recommendation.

Reply to paragraph 110, recommendation 2 (a): The Commission fully implemented the part of recommendation 2(a) that it accepted. For most of the waste water load (all agglomerations above 2 000 p.e.) financial information is reported. Only agglomerations below 2 000 p.e. do not report. The reasons for this are the following: a) unjustifiable additional administrative burden, b) would increase delays in reporting (ECA recommends elsewhere reducing the delay in reporting), c) no explicit reporting obligation in the Directive.

Reply to paragraph 115, recommendation 3 (a): The Commission did not accept this recommendation.

Reply to paragraph 115, recommendation 3 (b): The Commission did not accept this recommendation.

Reply to paragraph 115, recommendation 3 (c): The Commission considers this recommendation fully implemented.

Reply to paragraph 115, recommendation 3 (d): The Commission considers this recommendation fully implemented. The Commission has taken the recommended action.

For the 2014-2020 programming period requirements on reporting on financial instruments are provided in Article 46 Common Provisions Regulation (Regulation (EU) No 1303/2013), and Annex I of the Commission Implementing Regulation (EU) No 821/2014. The latter sets out a model for reporting on financial instruments. In section VIII of the reporting model the Member States have to provide information on the amount of other contributions, outside European Structural and Investment Funds raised by financial instruments, including public and/or private contributions, both committed in the funding agreements and paid at the level of final recipients.

Reply to paragraph 117, recommendation 4 (a): The Commission did not accept this recommendation.

Reply to paragraph 117, recommendation 4 (b): This recommendation is partially implemented.

Reply to paragraph 119, recommendation 5 (b): The Commission did not accept this recommendation.

Special report 03/2015: EU Youth Guarantee - first steps taken but implementation risks ahead

Reply to paragraph 89, recommendation 1: This recommendation is addressed to the Member States.

Special report 04/2015: Technical assistance - what contribution has it made to agriculture and rural development?

Reply to paragraph 90, recommendation 1: The Commission considers the recommendation as fully implemented. Under the principle of shared management, Member States describe in their Rural Development Programmes how technical assistance will be used and are in the position to provide an overall assessment of how it is implemented.

Furthermore, it should be underlined that monitoring indicators only provide a part of the information needed for evaluation and that evaluation goes well beyond the data analysis of the monitoring tables. The Common evaluation questions for rural development, as laid down in Annex V of the Commission Implementing Regulation (EU) No 808/2014 include Question 20: ‘To what extent has technical assistance contributed to achieving the objectives laid down in Article 59 of Regulation (EU) No 1303/2013 and Article 51(2) of Regulation (EU) No 1305/2013?’

The ex-post evaluation of the Rural Development Programmes is expected to be prepared and submitted to the Commission by December 2024.

Reply to paragraph 90, recommendation 2: The Commission did not accept this recommendation.

Reply to paragraph 93, recommendation 4: The Commission considers the recommendation as fully implemented. Monitoring Table B2.3 distinguishes for Technical Assistance support - other than National Rural Network – the total public expenditure for administrative costs and other costs, the latter including studies and training. As a general principle, the definition of additional indicators to be collected by Member States and Regions has to keep the right balance between the added value on one hand and the administrative burden on the other. This is the reason why the amount of detailed information collected at this level is intentionally kept limited.

The Commission is not in the position to provide ex-ante evidence on the eventual outcomes of the evaluation questions. Under shared management, the evaluation of the rural development programmes is done at the level of the Member States or Regions in accordance with the common evaluation approach as laid down in Article 14 of the Commission Implementing Regulation (EU) No 808/2014.

Special report 05/2015: Are financial instruments a successful and promising tool in the rural development area?

Reply to paragraph 100, recommendation 3: The co-legislators have not provided legal requirements for setting up targets for revolving effects. The reason for that is that the revolving nature associated with every financial instrument is specific to each instruments and its design. It also depends on external factors such as market demand and economic development. Similarly, the Commission only provided additional implementing rules related to revolving in its implementing Regulations (EU) No 964/2014 and (EU) 2016/1157, placed in the sections on lending policy. The legal framework and implementing rules can only provide principles for setting the targets and for the management of resources paid back.

In particular, the target lending volume and range of interest rate cannot be set at the EU level ex-ante with pre-defined targets. It can only be assessed case by case within the ex-ante assessment of each financial instrument (in accordance with Article 37 of Regulation (EU) No 1303/2013) and shall be taken into account to determine the nature of the instrument (revolving or non-revolving instrument). The aspect of leverage also has to be examined during the ex-ante assessment process. Resources paid back to financial instrument shall be either reused within the same financial instrument (revolving within the same financial instrument) or after being paid back to managing authority or fund of funds they shall be used in accordance with Article 44 (for the same objective set under a priority before the end of the eligibility period) and Article 45 (in accordance with the aim of the programme after the end of the eligibility period) of Regulation (EU) No 1303/2013.

With these provisions as amended in the Omnibus Regulation (Regulation (EU, Euratom) 2018/1046) the Commission considers the recommendation as implemented, with the exception of the targets that can only be defined in the ex-ante assessment of each financial instruments and cannot be set horizontally by the Commission.

Special report 08/2015: Is EU financial support adequately addressing the needs of micro-enterprises?

Reply to paragraph 68, recommendation 1: Concerning the still remaining weakness mentioned by the ECA in Annex 3.4, it should be noted that to include specific indicators in an OP is optional for Managing authorities. However, the regulation foresees a mandatory common output indicator for entities (Regulation (EU) No 1304/2013, Annex I (2)).

Reply to paragraph 72, recommendation 4: The Commission did not accept this recommendation.

Special report 09/2015: EU support for the fight against torture and the abolition of the death penalty

Reply to paragraph 55, recommendation 4: While agreeing with the ECA’s conclusion that this recommendation has not been implemented, the Commission reiterates that it does not accept the recommendation.

Reply to paragraph 56, recommendation 6: While agreeing with the ECA’s conclusion that this recommendation has not been implemented, the Commission reiterates that it does not accept the recommendation.

Special report 12/2015: The EU priority of promoting a knowledge-based rural economy has been affected by poor management of knowledge-transfer and advisory measures

Reply to paragraph 94, recommendation 1(b): The recommendation by ECA is considered as fully implemented. There are different methodologies to conduct a recurrent analysis of training needs and the most appropriate approach depends on the design of the respective Agricultural Knowledge and Innovation System (AKIS), which varies by Member State. Therefore, the Measure Fiche can only describe in general terms the most efficient way of conducting such a needs assessment.

The update to the Measure Fiche as implemented by the Commission is considered to provide the appropriate degree of detail and to be sufficient to guide Member States to conduct a recurrent needs-assessment.

Reply to paragraph 94, recommendation 1(d): The recommendation by ECA is considered as fully implemented. All rural development measures are only approved to be added in the Rural Development Programmes if a Member State demonstrates an underlying strategic need. That need would be evident from the Rural Development Programme strategy which in turn is based on the SWOT analysis and the resulting needs assessment each Member State had to conduct at the outset of the Rural Development Programming phase.

In the Annual Review Meetings and Monitoring Committees the ‘Annual Implementation Reports (AIR)’ are assessed, which report on the implementation progress of all programmed measures of the Rural Development Programmes. In case of implementation difficulties or delays, the situation is analysed and remedial action is sought.

Reply to paragraph 96, recommendation 2(b): The recommendation by ECA concerning the guidance documents and public procurement including information on in-house delivery is considered as fully implemented.

As regards the monitoring of Member States procedures by conformity audits see Commission reply to Recommendation 5 in relation to Special report 12/2015.

Reply to paragraph 98, recommendation 3(a): The recommendation by ECA is considered as fully implemented. The Commission provides guidance, which serves as a document to clarify certain legal interpretations and to disseminate examples of good practices of implementation of the EU law to the Member States.

The issue of the reasonableness of costs is regularly discussed with Member States in various contexts: the latest event was the Error rate seminar that took place in June 2018 during which aspects of the reasonableness of costs and the use of Simplified Cost Options were discussed.

Trainings may be organised upon Member States’ requests, and several trainings have already been organised concerning this topic. It should also be noted, that the uptake of Simplified Cost Options is significantly increasing throughout the implementation of the Rural Development Programmes, which means that the assessment of the reasonableness of costs is used less frequently by the Member States.

Reply to paragraph 98, recommendation 3(b): The recommendation by ECA is considered as fully implemented. Article 51 of Regulation (EU) No 1303/2013 requires that in 2017 and 2019 the annual review meetings between the Commission and each Member State cover all programmes. These review meetings shall take into account the progress reports on the implementation of the Partnership Agreement. Among others, this report shall set out information on the implementation of mechanisms to ensure coordination between the European Structural and Investment Funds and other Union and national funding instruments and with the European Investment Bank. These review meetings are additional means to ensure the complementarity and synergies between European Structural and Investment Funds programmes in a given Member State, and provides a basis to introduce improvements when necessary.

Reply to paragraph 100, recommendation 4(b): The Commission remains of the position that it is not responsible for monitoring that feedback systems to improve upcoming trainings are in place.

As to reliable information on the quality and effectiveness of the knowledge-transfer and advisory services, Annex V of Implementing Regulation (EU) No 808/2014 specifies the common evaluation questions (EQ) for rural development: EQ 1, referring to Focus Area 1A, reads: ‘To what extent have RDP interventions supported innovation, cooperation and the development of the knowledge base in rural areas?’ This EQ shall be answered in the enhanced Annual Implementation Report submitted in 2019 and in the ex-post evaluation.

The recommendation by ECA is therefore considered as fully implemented.

Reply to paragraph 102, recommendation 5: The Commission considers this recommendation as fully implemented. As regards the audits in the field of knowledge transfer and innovation that were not carried out in the practice were planned in the Multiannual Work Programme 2016-2019 for year n+2 i.e. for 2018-2019. Following a new Central Risk Assessment carried out in 2017 their risk scoring was lower due to the lower expenditure and, given the available resources, it was decided to take on board other audits (with higher risk and more expenditure).

After the Special report, the risk profile of the audit field was increased. As a consequence, DG AGRI selected and carried out 5 audits (in AT, DK, FR, IT, SE). It should be understood that, due to expenditure being very low, even if an increase of the risk factor of the audit field in the risk analysis was done, the number of selected transactions is still limited.

Moreover, in the new audit approach that DG AGRI is carrying out since July 2018, the focus is on the work of the Certification Body (CB) for all non-IACS measures, including the measures related to knowledge transfer and innovation. Whenever such a measure is in sample 1 of the CB it will also be selected by DG AGRI in its audit.

Special report 13/2015: EU support to timber-producing countries under the FLEGT action plan

Reply to paragraph 58, recommendation 1: This recommendation was partially accepted in 2015 by the Commission, as earmarking a budget for implementing the FLEGT Action Plan is only feasible for thematic programmes/budget lines. For the period 2014-2020, the Commission earmarked 145 million euro for implementing the FLEGT Action Plan under the Thematic Programme Budget Line and developed Annual Action Plans detailing what action areas of the FLEGT action plan were to be financed.

Special report 16/2015: Improving the security of energy supply by developing the internal energy market: more efforts needed

Reply to paragraph 117, recommendation 3: The Commission considers the recommendation is fully implemented through the extension of the regulatory framework and the setup of a platform.

Reply to paragraph 123, recommendation 7 (b): The Commission had partially accepted the recommendation and took the requested action on the accepted elements.

Reply to paragraph 126, recommendation 9: The Commission had not accepted the recommendation. However, it took the actions considered necessary to address the underlying issues.

Special report 17/2015: Commission’s support of youth action teams: redirection of ESF funding achieved, but insufficient focus on results

Reply to paragraph 84, recommendation 2 (a): The Commission considers the recommendation is fully implemented.

The Commission insists that the examination of opportunities to improve results, is an on-going, standard practice. The Commission examines each reprogramming request, whether triggered by the need to incorporate new additional funds or not, primarily with a view of achieving better results, and discusses at length with the Member State. So far, the Commission had not taken the initiative to propose new modifications as it would have been unnecessary and highly inefficient.

Reply to paragraph 84, recommendation 2 (b): The Commission considers the recommendation is fully implemented.

The Commission insists that such as assessment is carried out diligently and has always been standard practice. Reporting on every single detail of the assessment process, on elements that are required by the Regulations and have always been standard practice, is seen as unnecessary and inefficient, hence the absence of detailed information on the checklists.

Reply to paragraph 84, recommendation 2 (c): The Commission insists that this recommendation is fully implemented to the degree that it remains relevant. This recommendation has lost relevance during the 2014-2020 as Annual Implementation Reports are no longer considered as the means of communicating detailed, but only summarised information. The Commission insists that sufficient, relevant information is transmitted through the Annual Implementation Reports and more detailed information is provided through other means of reporting (e.g. evaluation reports; technical meetings and monitoring committees – the discussions of which are reflected in minutes and notes to the file).

Reply to paragraph 86, recommendation 3: The Commission considers the recommendation is fully implemented.

The Commission insists that systematic plausibility and reliability checks are carried out as standard practice. Evidence exists on this being a standard practice (guidance documents from the evaluation unit and from the ESF coordination unit; checklists for accepting reports). Documenting every single check carried out, would be unnecessary and inefficient.

Special report 20/2015: The cost-effectiveness of EU Rural Development support for non-productive investments in agriculture

Reply to paragraph 74, recommendation 1 (a): According to Article 75 of Regulation (EU) No 1305/2013, the enhanced Annual Implementation Report 2018 will be submitted by the Member States to the Commission end of June 2019. The Commission will only be in the position to complete the respective monitoring at that time.

Reply to paragraph 77, recommendation 3 (a): The Commission considers this recommendation as implemented as the required action of advising the Member States to set up additional indicators was accomplished. The Commission monitors the implementation of the Rural Development Programmes through the set of common context, result and output indicators under the 2014-2020 Common Monitoring and Evaluation System.

Evaluations are carried out by/on behalf of the Member States while the synthesis of these evaluations at EU level is done under the responsibility of the Commission services. The mandatory elements of the 2014-2020 Common Monitoring and Evaluation System, contained in the implementing act, include a list of the indicators to be used to monitor the performance of the policy. Beyond these indicators, the Commission cannot do more but only to advise/encourage the Member States to set up the additional indicators.

The recommendation to ‘advise those Member States where Non-productive investments support is significant, to define specific result indicators for the Non-productive investments types most frequently funded’ was fulfilled through the guidelines on the ‘Assessment of Rural Development Programmes results: How to prepare for reporting on evaluation in 2017’.

The Commission cannot oblige the Member States to establish such additional indicators as it goes beyond the mandatory elements of the Common Monitoring and Evaluation System (CMES) framework for 2014-2020.

Reply to paragraph 81, recommendation 5 (b): The Assurance and Audit Directorate of DG AGRI will continue including ECA’s findings in its preparatory work for the Multiannual Work Programme (MAWP). ECA’s findings are among the standard criteria used when establishing the MAWP.

Special report 23/2015: Water quality in the Danube river basin: progress in implementing the water framework directive but still some way to go

Reply to paragraph 172, recommendation 1 (d): This recommendation is addressed to the Member States.

Reply to paragraph 172, recommendation 1 (e): This recommendation is addressed to the Member States.

Reply to paragraph 172, recommendation 1 (f): This recommendation is addressed to the Member States.

Reply to paragraph 182, recommendation 2 (b): This recommendation is addressed to the Member States.

Reply to paragraph 182, recommendation 2 (c): This recommendation is addressed to the Member States.

Reply to paragraph 182, recommendation 2 (d): This recommendation is addressed to the Member States.

Reply to paragraph 191, recommendation 3 (b): The Commission did not accept this recommendation.

Reply to paragraph 191, recommendation 3 (e): Further work is foreseen and this recommendation is expected to be fully implemented by the end of 2020.

Reply to paragraph 191, recommendation 3 (f): This recommendation is addressed to the Member States.

Reply to paragraph 191, recommendation 3 (g): This recommendation is addressed to the Member States.

Special report 24/2015: Tackling intra-Community VAT fraud: More action needed

Reply to paragraph 116, recommendation 6: The Commission did not accept this recommendation. The recommendation has been overtaken by the Commission’s proposal, currently discussed by the Council, for a ‘definitive VAT system’, overhauling the current VAT system for intra-EU trade and including new rules on reporting obligations.

Reply to paragraph 117, recommendation 7: The Commission did not accept this recommendation. The sectorial reverse charge mechanism as an anti-fraud measure is optional and mainly oriented towards specific national fraud problems. The Commission proposal for ‘definitive VAT system’, currently discussed by the Council, foresees the abolition of the sectorial reverse charge (in relation to goods in a first phase) as it deals structurally with the root of the intra-EU fraud problem.

Special report 25/2015: EU support for rural infrastructure: potential to achieve significantly greater value for money

Reply to paragraph 101, recommendation 1(b): The Commission considers that the recommendation is fully implemented.

The platform for exchange of best practice – the European Network for Rural Development – is established and used by Member States as projects and best practices in implementation appear during the current programming period 2014-2020. Further assessments as to potential deadweight can only be done on a case-by-case basis and during programme evaluation, for which the Commission has issued guidance.

In addition, the Commission has, with the adoption of the rural development programmes for the current period 2014-2020, mitigated the risk of non-achievement of added value for the EU funds.

Reply to paragraph 101, recommendation 1(d): The Commission considers this recommendation as partly implemented, as its implementation is on-going. Regular contacts are established between the different services of the Commission. When rural development programmes are approved or amended, other services of the Commission are included in the process via formal Inter-Service Consultations and contributions are taken into account. Moreover the modifications of Partnership Agreements are also jointly done. The enhanced Annual Implementation Reports for 2018, to be submitted in 2019 are supposed to provide more insights as to the effectiveness of arrangements for ensuring complementarity between EU funds. A revised guidance for these Annual Implementation Reports has been published in September 2018.

Reply to paragraph 106, recommendation 2(b): The Commission considers this recommendation as fully implemented. The Commission has delivered several presentations on the new options introduced with the Omnibus Regulation (Regulation (EU, Euratom) 2018/1046) on simplified cost options. There was a presentation in the Rural Development Committee and a presentation during the European Innovation Partnership for ‘Agricultural Productivity and Sustainability’ (EIP-AGRI) seminar in October 2018, as well as a presentation for the Spanish Paying Agencies Conference in November 2018. During those presentations, discussions took place on how the use of Simplified Cost Options can replace the need to assess the reasonableness of costs, and how Member States can overcome any difficulties concerning this aspect. The European Network for Rural Development workshop is scheduled for 20 of June 2019, titled ENRD Workshop ‘Simplified Cost Options: experience gained and new opportunities’.

Reply to paragraph 109, recommendation 3 (a): The Commission intends to assess the efficiency and effectiveness of the funds under the Rural Development Programmes 2014-2020, in accordance with the Common Monitoring and Evaluation System (Article 110 of Regulation (EU) No 1306/2013). It will be done based on the Member States’ interim evaluations reported in 2019 and ex-post evaluations submitted to the Commission by the end of 2024 (Article 78 of Regulation (EU) No 1305/2013).

Annex 3.4 — Improvements achieved and remaining weaknesses of partially implemented recommendations by report

Special report 01/2015: Inland Waterway Transport in Europe - No significant improvements in modal share and navigability conditions since 2001

Paragraph 54, recommendation 2 (a): There is no evidence of effective coordination efforts across MS.

Reply: The recommendation was to carry out in-depth analyses in view of further development of the strategy. The Commission took the actions that were possible within the time frame defined for the implementation of the recommendation and considers it as implemented. It examined the situation of the inland navigation sector by means of a dedicated Market Observation analysis. In addition to this the Commission is also conducting studies related to the potential of waterborne transport (ports and inland water-ways) according to different scenarios of evolution of the EU economy and of infrastructure developments. The revision of the strategy itself will occur in the more general context of the revision of the TEN-T framework. The study conducted by the Commission related to the potential of waterborne transport (ports and inland waterways) according to different scenarios of evolution of the EU economy, industrial trends and TEN-T developments was to be concluded in February 2019. However, due to delays faced by the consultant in charge of the study as well as the need to bring significant improvements to the study, the final report is currently under approval by the Commission services

Following discussions with the Council and the EP, the Commission has started the work with the MS and stakeholders for the preparation of the future Naiades III programme, to be put in place after 2020, to further improve the efficiency of the inland navigation sector.

Special report 02/2015: EU-funding of Urban Waste Water Treatment plants in the Danube river basin – further efforts needed in helping Member States to achieve EU waste water policy objectives

Paragraph 110, recommendation 2 (a): No such information has been collected for agglomerations below 2 000 p.e.

Reply: The Commission duly considered recommendation 2(a) and did not accept the part of this recommendation for agglomerations below 2 000 p.e. The Commission did not accept to request Member States to provide information on the financial amounts for agglomerations below 2 000 p.e. The reasons for this are the following: a) unjustifiable additional administrative burden, b) would increase delays in reporting (ECA recommends elsewhere reducing the delay in reporting), c) no explicit reporting obligation in the Directive.

Paragraph 115, recommendation 3 (c): DG ENV’s conclusion regarding our recommendation, i.e. the need for mandatory measurements of overflows, is still pending.

Reply: Following ECA’s recommendation, the Commission has carried out a dedicated study on the issue of storm water overflows and has included this question as part of the evaluation of the Urban Waste Water Treatment Directive (UWWTD). The evaluation is coming to a close and will be published by the fourth quarter of 2019. The evaluation is backward-looking but it does look at the residual impact of combined sewer overflows under a full compliance scenario. This has been modelled and conclusions will be integrated in the Evaluation Staff Working Document (expected by the fourth quarter of 2019). Based on the evaluation conclusions, the Commission can decide to follow-up with an impact assessment on whether the UWWTD should be amended, including with regard to setting requirements concerning measurements and rules for overflows. In view of the above, the Commission considers that the recommendation is now fully implemented.

Paragraph 115, recommendation 3 (d): There is still a risk of oversized wastewater treatment plants.

Reply: The Commission considers this recommendation fully implemented. The Commission has taken the recommended action.

For the 2014-2020 programming period requirements on reporting on financial instruments are provided in Article 46 Common Provisions Regulation (Regulation (EU) No 1303/2013), and Annex I of the Commission Implementing Regulation (EU) No 821/2014. The latter sets out a model for reporting on financial instruments. In section VIII of the reporting model the Member States have to provide information on the amount of other contributions, outside European Structural and Investment Funds raised by financial instruments, including public and/or private contributions, both committed in the funding agreements and paid at the level of final recipients.

Paragraph 117, recommendation 4 (b): The adoption of the revised Fertilising Products Regulation is still pending. Inclusion of sewage sludge in the list of fertilisers depends upon the results of an ongoing technical study.

Reply: The Fertilising products Regulation was adopted in May and will be published on 25 June. A Delegated Act on the basis of the STRUBIAS study may introduce new component material categories in Annex 2 of the Regulation establishing recovery rules for certain materials, such as ashes and precipitation salts recovered from sewage sludge, and sold on the market as Fertilising Products with the CE mark (European conformity mark).

Special report 04/2015: Technical assistance (TA) - what contribution has it made to agriculture and rural development

Paragraph 90, recommendation 1: The added value of the actions taken following the recommendation is questionable. While the Commission has implemented recommendation 1 (clarify and monitor), its action did not address our underlying finding identified in the report, i.e. that a large share of MS spending on TA ‘effectively amounts to budget support’. The use of TA for general administrative costs is not against EU Regulations and is therefore allowed by the Commission. As part of the monitoring, proper evaluation of these costs and comparison between the MS could help to identify best/worst practices to be included in the guidance fiche and the recommendations to MS.

Reply: Under the principle of shared management, Member States describe in their Rural Development Programmes how technical assistance will be used and are in the position to provide an overall assessment of how it is implemented.

Furthermore, it should be underlined that monitoring indicators only provide a part of the information needed for evaluation and that evaluation goes well beyond the data analysis of the monitoring tables. The Common evaluation questions for rural development, as laid down in Annex V of the Commission Implementing Regulation (EU) No 808/2014 include Question 20: ‘To what extent has technical assistance contributed to achieving the objectives laid down in Article 59 of Regulation (EU) No 1303/2013 and Article 51(2) of Regulation (EU) No 1305/2013?’

The ex-post evaluation of the Rural Development Programmes is expected to be prepared and submitted to the Commission by December 2024.

The Commission considers the recommendation as fully implemented.

Paragraph 93, recommendation 4: The Commission did not take enough actions for the establishment of the performance framework at Commission level, according to the evidence available to the auditors. The Commission encouraged the MS, through the recommendation in its observation letters for 2014-2020 RDP approval, to set adequate indicators for TA, but this is not compulsory. No information about the state of implementation of the performance framework at MS level was available from the Commission. Very little required monitoring data was available, and this data was not used in practice. The indicators for NRN and for the other costs (which also cover TA support for capacity building) are not balanced taking account of the relative size of the expenditure related to these items.

Reply: Monitoring Table B2.3 distinguishes for Technical Assistance support - other than National Rural Network – the total public expenditure for administrative costs and other costs, the latter including studies and training. As a general principle, the definition of additional indicators to be collected by Member States and Regions has to keep the right balance between the added value on one hand and the administrative burden on the other. This is the reason why the amount of detailed information collected at this level is intentionally kept limited.

The Commission is not in the position to provide ex-ante evidence on the eventual outcomes of the evaluation questions. Under shared management, the evaluation of the rural development programmes is done at the level of the Member States or Regions in accordance with the common evaluation approach as laid down in Article 14 of the Commission Implementing Regulation (EU) No 808/2014.

The Commission considers the recommendation as fully implemented.

Special report 05/2015: Are financial instruments a successful and promising tool in the rural development area?

Paragraph 100, recommendation 3: The Commission has not defined exact targets for revolving effects. The actual impact of stricter fund management on revolving effects remains open.

The co-legislators have not provided legal requirements for setting up targets for revolving effects. The reason for that is that the revolving nature associated with every financial instrument is specific to each instruments and its design. It also depends on external factors such as market demand and economic development. Similarly, the Commission only provided additional implementing rules related to revolving in its implementing Regulations (EU) No 964/2014 and (EU) 2016/1157, placed in the sections on lending policy. The legal framework and implementing rules can only provide principles for setting the targets and for the management of resources paid back.

In particular, the target lending volume and range of interest rate cannot be set at the EU level ex-ante with pre-defined targets. It can only be assessed case by case within the ex-ante assessment of each financial instrument (in accordance with Article 37 of Regulation (EU) No 1303/2013) and shall be taken into account to determine the nature of the instrument (revolving or non-revolving instrument). The aspect of leverage also has to be examined during the ex-ante assessment process. Resources paid back to financial instrument shall be either reused within the same financial instrument (revolving within the same financial instrument) or after being paid back to managing authority or fund of funds they shall be used in accordance with Article 44 (for the same objective set under a priority before the end of the eligibility period) and Article 45 (in accordance with the aim of the programme after the end of the eligibility period) of Regulation (EU) No 1303/2013.

With these provisions as amended in the Omnibus Regulation (Regulation (EU, Euratom) 2018/1046) the Commission considers the recommendation as implemented, with the exception of the targets that can only be defined in the ex-ante assessment of each financial instruments and cannot be set horizontally by the Commission.

Special report 07/2015: The EU police mission in Afghanistan: mixed results (EEAS)

Paragraph 85, recommendation 2 (a): No evidence of the actual training courses. No country specific elements. No evidence for the pre-deployment training of local staff.

Reply: The EEAS agrees with the ECA assessment.

Paragraph 86, recommendation 3 (b): Available evidence does not demonstrate implementation of the recommendation for local trainers/trainees.

Reply: The EEAS agrees with the ECA assessment.

Paragraph 86, recommendation 3 (d): Evidence for mentoring files, mentoring milestones and mentoring logbooks has not been identified.

Reply: The EEAS agrees with the ECA assessment.

Paragraph 86, recommendation 3 (e): Specific guidelines for handover for mentors have not been found in the supporting documentation.

Reply: The EEAS agrees with the ECA assessment.

Paragraph 86, recommendation 3 (f): Specific instructions/evidence for synergies with mentoring activities and for clearly linking project objectives with MIP milestones have not been found by the auditors.

Reply: The EEAS agrees with the ECA assessment.

Paragraph 88, recommendation 5 (a): No comprehensive and common EEAS/Commission strategy has been developed yet for the downsizing and closure of CSDP missions. The weakness that mission closure plans are to be submitted only three months ahead of the end of the operational phase of the mandate has not been remedied. The available guidelines do not comprehensively address the different risks inherent in the downsizing and closure process.

Reply: The EEAS agrees with the ECA assessment.

Paragraph 88, recommendation 5 (b): Specific instructions/evidence on how to avoid accumulation of assets and how to prevent financial risk exposure in accumulating assets have not been found by the auditors; nor have examples of timely central instructions/evidence from the EEAS and the Commission to CSDP missions for avoiding asset accumulation.

Reply: The EEAS agrees with the ECA assessment.

Special report 08/2015: Is EU financial support adequately addressing the needs of micro-entrepreneurs

Paragraph 68, recommendation 1: As there is no specific indicator for micro-entrepreneurs, there is still no available information for the 2014-2020 period on how much grant funding is allocated to micro-entrepreneurs.

Reply: Concerning the still remaining weakness mentioned by the ECA in Annex 3.4, it should be noted that to include specific indicators in an OP is optional for Managing authorities. However, the regulation foresees a mandatory common output indicator for entities (Regulation (EU) No 1304/2013, Annex I (2)).

Special report 10/2015: Efforts to address problems with public procurement in EU cohesion expenditure should be intensified

Paragraph 99, recommendation 1 (a): Currently only about a fourth of the cases in IMS contain detailed information on the sub-category, which will improve with new cases being recorded and old cases being closed. The analysis tool and the interfaces between the IMS and MS databases are at an advanced stage but have still to be finalised.

Reply: The Irregularity Management System (IMS) has been updated in order to include a specific category of irregularities related to public procurement infringements. This category is then articulated on 26 dedicated typologies which can describe in detail the main reasons for these breaches. This categorisation is fully aligned with that used by DG REGIO and national audit authorities.

Before exploiting the analytical possibilities offered by this new categorisation, a critical mass of data needs to be reached. To date, out of the 19 891 irregularities referring to infringement of public procurement rules, 7 593 (38 %) contain information based on this new categorisation. Consequently, a meaningful analysis of such data will be achieved progressively, as Member States update older irregularities and new ones come in.

The situation is therefore progressively improving and the Commission is reminding national authorities to update the information and be mindful to data quality whenever possible (dedicated subgroup of the COCOLAF committee or Annual coordination meetings with Audit Authorities).

Paragraph 105, recommendation 6 (a): Further stages of e-procurement still need to be implemented as foreseen by the directive (e-invoicing by April 2019).

The Commission should urge all MS to actively participate in and use the ARACHNE database.

Reply: The last legally binding phase of e-procurement (electronic submission of tenders) is in force since October 2018. As part of the Single Market Strategy, the Commission is supporting the development of contract registries in the Member States. Contract registries significantly contribute to increase the transparency of data in public procurement. A working group of the multistakeholders forum (EXEP) has been set up to work in this area to share good practices and has also produced a guideline on contract registers.

As regards data-mining tools, the Commission is taking the recommended action. It is actively promoting the use by responsible national authorities of Arachne, a preventive risk-scoring tool it has developed. This tool may bring significant improvements in management verifications, but also in the prevention and detection of various risks related, for example, to public procurement procedures, conflicts of interest and the concentration of grants under particular operators. It can also help identifying red flags of fraud suspicion. The Commission is aware and supportive of the use of other comparable data-mining tools.

The following actions have been taken:

1) Provision of technical and capacity building support to MS, particularly ‘priority countries’, for the implementation of e-procurement requirements in the public procurement directives by the end of 2018.

2) Sharing best practices to support e-procurement transition via the EXEP – Multi-stakeholder forum on e-procurement (last EXEP meeting was on 22 May 2019). A conference on Digital Transformation in Public Procurement has taken place on 18 October 2018.

3) Sharing best practices and supporting the implementation (notably via the activities of European Multi-Stakeholder Forum on Electronic Invoicing) of the EU e-invoicing standard which was published in 2017 and with a deadline of April 2019.

4) Handling of legal issues relative to e-procurement (State Aid, interpretation of the Directive, etc.).

Special report 11/2015: Are the fisheries partnership agreements well managed by the Commission?

Paragraph 90, recommendation 1 (b): Since there are, however, no documented regional strategies, progress is still to be made with regard to the Commission’s definition and documentation of regional strategies.

Reply: The Commission takes note of the ECA final assessment. It considers that each individual evaluation made in the context of Sustainable Fisheries Partnership Agreement (SFPA) negotiations already integrates the regional context, aiming at ensuring consistency among the provisions of different SFPAs of a same region.

It will nevertheless define further SFPA regional strategies in the overall evaluation of SFPAs planned for 2020/2021.

Paragraph 93, recommendation 2 (a): However, current procedures for monitoring the licensing process are still affected by weaknesses. Progress remains to be made regarding the Commission’s monitoring and the follow-up of the licensing process.

Reply: The Commission takes note of the ECA final assessment. Commission services managing the licensing process are already in a position to check accuracy and completeness of data on the basis of existing internal guidelines and record all requests received in a database.

To streamline further the process, an IT project has been developed which is currently on-going. The licensing process should therefore be fully automated by the end of 2021.

Special report 12/2015: The EU priority of promoting a knowledge-based rural economy has been affected by poor management of knowledge-transfer and advisory measures

Paragraph 94, recommendation 1 (b): The information in the guidance document is not detailed enough on how to conduct a recurrent analysis of training needs.

Reply: There are different methodologies to conduct a recurrent analysis of training needs and the most appropriate approach depends on the design of the respective Agricultural Knowledge and Information System (AKIS), which varies by Member State. Therefore, the Measure Fiche can only describe in general terms the most efficient way of conducting such a needs assessment.

The update to the Measure Fiche as implemented by the Commission is considered to provide the appropriate degree of detail and to be sufficient to guide Member States to conduct a recurrent needs-assessment.

The recommendation by ECA, therefore, is considered as fully implemented.

Paragraph 94, recommendation 1 (d): The MS’ compliance concerning the setting-up of advisory services is not monitored by the Commission within the monitoring committees and the annual review meetings.

Reply: All rural development measures are only approved to be added in the Rural Development Programmes if a Member State demonstrates an underlying strategic need. That need would be evident from the Rural Development Programme strategy which in turn is based on the SWOT analysis and the resulting needs assessment each Member State had to conduct at the outset of the Rural Development Programming phase.

In the Annual Review Meetings and Monitoring Committees the ‘Annual Implementation Reports (AIR)’ are assessed, which report on the implementation progress of all programmed measures of the Rural Development Programmes. In case of implementation difficulties or delays, the situation is analysed and remedial action is sought.

The recommendation by ECA, therefore, is considered as fully implemented.

Paragraph 96, recommendation 2 (b): The monitoring by the Commission of MS procedures as required by our recommendation is not sufficient.

Reply: The recommendation by ECA concerning the guidance documents and public procurement including information on in-house delivery is considered as fully implemented.

As regards the monitoring of Member States procedures by conformity audits see Commission reply to Recommendation 5 in relation to Special report 12/2015.

Paragraph 98, recommendation 3 (a): The Commission provided little evidence of additional training to managing authorities discussing the issue of the reasonableness of costs when SCOs are not used. Despite having some common objectives, checks on the reasonableness of costs and the use of SCOs are not the same issue. The simplified cost options cover only a small part of total spending on rural development (see Special Report 11/2018) and therefore the need for the managing authorities to assess the reasonableness of costs remains. (No further best practice in administrative procedures for assessing the reasonableness of costs has been identified by the Commission in the ENRD platform).

Reply: The Commission provides guidance, which serves as a document to clarify certain legal interpretations and to disseminate examples of good practices of implementation of the EU law to the Member States.

The issue of the reasonableness of costs is regularly discussed with Member States in various contexts: the latest event was the Error rate seminar that took place in June 2018 during which aspects of the reasonableness of costs and the use of Simplified Cost Options were discussed.

Trainings may be organised upon Member States’ requests, and several trainings have already been organised concerning this topic. It should also be noted, that the uptake of Simplified Cost Options is significantly increasing throughout the implementation of the Rural Development Programmes, which means that the assessment of the reasonableness of costs is used less frequently by the Member States.

In this respect, the recommendation by ECA is considered as fully implemented.

Paragraph 98, recommendation 3 (b): Discussion topics of the inter-service groups are general and do not cover individual programme measures. Moreover, our report (special report 16/2017) found shortcomings affecting partnership agreements and rural development programmes in terms of cross-sector complementarity and synergies.

Reply: Article 51 of Regulation (EU) No 1303/2013 requires that in 2017 and 2019 the annual review meetings between the Commission and each Member State cover all programmes. These review meetings shall take into account the progress reports on the implementation of the Partnership Agreement. Among others, this report shall set out information on the implementation of mechanisms to ensure coordination between the European Structural and Investment Funds and other Union and national funding instruments and with the European Investment Bank. These review meetings are additional means to ensure the complementarity and synergies between European Structural and Investment Funds programmes in a given Member State, and provides a basis to introduce improvements when necessary.

The recommendation by ECA, therefore, is considered as fully implemented.

Paragraph 100, recommendation 4 (b): The updated guidance document for measure 1 does not provide clear guidance for the execution of feedback procedures by the MS. Even though the example of standard methodology from our report also includes the evaluation of training programmes, this is not mentioned in the guidance text and the common understanding might be that the methodology is only for the analysis of needs.

Reply: The Commission remains of the position that it is not responsible for monitoring that feedback systems to improve upcoming trainings are in place.

As to reliable information on the quality and effectiveness of the knowledge-transfer and advisory services, Annex V of Implementing Regulation (EU) No 808/2014 specifies the common evaluation questions (EQ) for rural development: EQ 1, referring to Focus Area 1A, reads: ‘To what extent have RDP interventions supported innovation, cooperation and the development of the knowledge base in rural areas?’ This EQ shall be answered in the enhanced Annual Implementation Report submitted in 2019 and in the ex-post evaluation.

The recommendation by ECA is therefore considered as fully implemented.

Paragraph 102, recommendation 5: Several planned audits were not carried out in practice, and a possible reason for that is the low score from the risk analysis.

Our auditors acknowledge that DG AGRI started to conduct conformity audits in the field of knowledge transfer and innovation after the publication of our special report in this field. However, according to DG AGRI’s MAWP 2016-2018 (p. 49), the explanation for the absence of audits before SR 12/2015 is low expenditure during the 2007-2013 programme period.

We have no assurance that the risk profile of knowledge transfer and advisory measures has been increased to the extent stated in the Commission’s reply.

Reply: As regards the audits in the field of knowledge transfer and innovation that were not carried out in the practice were planned in the Multiannual Work Programme 2016-2019 for year n+2 i.e. for 2018-2019. Following a new Central Risk Assessment carried out in 2017 their risk scoring was lower due to the lower expenditure and, given the available resources, it was decided to take on board other audits (with higher risk and more expenditure).

After the Special report, the risk profile of the audit field was increased. As a consequence, DG AGRI selected and carried out 5 audits (in AT, DK, FR, IT, SE). It should be understood that, due to expenditure being very low, even if an increase of the risk factor of the audit field in the risk analysis was done, the number of selected transactions is still limited.

Moreover, in the new audit approach that DG AGRI is carrying out since July 2018, the focus is on the work of the Certification Body (CB) for all non-IACS measures, including the measures related to knowledge transfer and innovation. Whenever such a measure is in sample 1 of the CB it will also be selected by DG AGRI in its audit.

The Commission considers this recommendation as fully implemented.

Special report 13/2015: EU support to timber-producing countries under the FLEGT action plan

Paragraph 58, recommendation 1: The work plan is concluded for 2018-2022 instead of 2016-2020. The different timeframe has an impact on the monitoring and reporting on the FLEGT programme (see recommendation 5).

The draft work plan is not yet formally binding for the Commission, lacking all necessary approvals.

It also lacks a dedicated implementing budget, rendering performance monitoring and accountability more difficult.

Reply: The Commission recalled that this recommendation was partially accepted in 2015 as earmarking a budget for implementing the FLEGT Action Plan is only feasible for thematic programmes/budget lines.

The draft FLEGT Workplan was validated by Member States in September 2018. Therefore, the draft work plan has been approved by some responsible parties. In addition, the draft FLEGT Workplan is an accompanying document to the upcoming EU Communication on deforestation and forest degradation. Once this EU Communication is adopted, the FLEGT Workplan will automatically become a Staff Working Document and conseque