Proposal for a COUNCIL REGULATION laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Introduction

The Commission, whose task it is to implement Community policy, has been entrusted with implementing and managing an increasing number of ever more complex programmes. Performing these tasks requires a very substantial investment in human resources.

To deal with this situation, the Commission has had to rely heavily on resources outside the Institution. In the absence of suitable legal instruments, there has been a growing trend towards outsourcing to private firms (technical assistance offices).

Over the years, this form of outsourcing has given rise to many difficulties, such as the difficulty of defining the limits of outsourcing, practical management problems, a lack of visibility for the Commission and loss of executive control.

2. New forms of externalisation

The Commission has therefore felt the need to examine the general matter of how to organise the management of Community programmes in the context of the administrative reform it launched at the beginning of 2000.

While stressing the need to improve the conditions under which Community programmes are implemented, the Commission is insisting on the absolute priority of re-focusing on its own institutional missions. It therefore intends to set up specialised management arrangements which will be both effective and transparent.

In its Communication on externalisation of the management of Community programmes which accompanies this proposal for a regulation, the Commission sets out the advantages and limitations of externalisation and the features of the new forms of management it envisages and describes the different instruments to be used for the various tasks to be externalised.

3. Executive agencies

3.1. The most innovative of the legal instruments for externalisation envisaged by the Commission is the executive agency, which is the subject of this proposal for a regulation. These are to be Community agencies which are legal entities in their own right, which will be instructed by the Commission, under the control and responsibility of the latter, to participate in the management of Community programmes adopted by the legislator.

3.2. The Commission is not proposing with this Regulation to create such agencies directly, but to lay down a detailed statute for them. Thereafter it will be able to decide to use executive agencies conforming to this statute as and when the need arises to manage specific Community programmes, provided that the act setting up such programmes provides that external technical assistance may be used.

3.3. The advantage of using Community public bodies such as the proposed executive agencies is that a major portion of the management of programmes can be delegated to them, if this is appropriate, including public service missions and budget execution.

3.4. Using a Community executive agency staffed with specialised and highly competent temporary staff should make it easier to attain the goals of the programmes concerned and in some cases to ensure that Community action has greater visibility.

3.5. The Commission is proposing that this Regulation lay down the statute of executive agencies, particularly as regards their structure, governing bodies and staff; their powers and responsibilities; operating procedures and relations with the Commission; the budget and financial arrangements; the checks to which they must be subject and their legal and financial responsibilities.

Tasks

3.6. Executive agencies may be entrusted with all or part of one or more Community programmes, except for activities which require discretionary powers relating, in particular, to political choices in the implementation of programmes. Such acts will remain the exclusive responsibility of the competent Institutions.

Each executive agency will be made responsible for the day-to-day management of Community programmes, within the bounds of the objectives set by the legislator, the programming defined by the Commission and the appropriations placed at its disposal. It could therefore manage some or all of the phases in the lifetime of each individual project, from identification to checks on proper implementation. In order to be able to do this, the executive agency must be empowered to adopt individual decisions. It must also be able to adopt the budget execution acts needed to carry out individual projects as well as other related acts (awarding public procurement contracts, signing contracts and agreements, etc.).

An executive agency could also be called on to gather and process information on the implementation of the programmes concerned. This specific knowledge will allow the agency to draw up recommendations to the Commission regarding the future development of programmes. The Commission would then have to examine these recommendations and, where necessary, make the appropriate proposals to the legislative and budgetary authorities.

Frame of reference and controls

3.7. Of course, the exercise of these powers will have to be strictly circumscribed in order to ensure that the institutional balance of the Community's legal system is preserved and that the interests of third parties affected by an agency's decisions are protected. This control will be exercised in the first instance by the legislative authority, through the provisions laid down in this Regulation and, where applicable, in the regulations establishing the Community programmes that executive agency is involved in managing. The second line of control will be provided by the terms, criteria, parameters and procedures to be defined by the Commission in the legal act delegating management tasks to the executive agency (instrument of delegation), which will also set out the details of the controls by means of which the Commission departments responsible for a programme will be in a position to ensure the executive agency is operating properly. The third line control will be the agency's annual work programme, which will have to comply with the programming defined by the Commission in accordance with the regulations establishing the programmes concerned.

3.8. Agencies will also be subject to a further system of checks, this time of a political nature, carried out by the European Parliament when it gives discharge in respect of the operating budget, and by the Commission, which would in turn be answerable to the other Institutions; audits carried out by both the Commission's internal auditor and the Court of Auditors to ensure the correctness and proper functioning of the agency's own in-house checking systems; anti-fraud inspections by the European Anti-Fraud Office (OLAF); monitoring by the Court of Justice of the legality of the acts adopted by the agency.

Budgetary and financial arrangements

3.9. The budget of each executive agency will be restricted to its operating costs. Most of its budget revenue will come from an annual grant adopted by the Budgetary Authority on a proposal from the Commission. That grant should be a specified percentage of the annual financial allocation to the programmes which the agency is involved in managing, and should be commensurate with the tasks entrusted to it. The budget would be administered in accordance with an ad hoc financial regulation based on the general Financial Regulation and drawn up by the Commission after consulting the Court of Auditors.

3.10. The operating appropriations for the programmes which the agency is involved in managing will continue to be entered in the general budget of the European Union and administered in accordance with the Financial Regulation applicable thereto. The Commission would remain fully answerable to the Budgetary Authority for the execution of these appropriations, leaving intact its full powers under Article 274 of the Treaty.

Governing bodies, staff and location

3.11. The distribution of powers between the governing bodies of each executive agency will make its director responsible for running the agency and the operational management of Community programmes.

3.12. A steering committee will adopt the annual work programme and supervise the running of the agency.

3.13. The agency's staff is to be subject to the rules and regulations applicable to "other servants". The managerial functions would be performed by seconded Commission officials. Since the mission of an executive agency is to participate in managing programmes with a limited duration, it is appropriate that the posts and contracts of its staff should also be temporary.

3.14. Turning to the matter of location, it should be borne in mind that the Commission and the executive agency will have to collaborate intensively and continuously if they are to ensure that Community programmes are managed efficiently. It is therefore justifiable to provide that the agency will have its head office in the same location as the Commission departments.

Programmes financed from sources other than the general budget

3.15. Management of programmes not funded from the general budget requires a separate provision. This is because there are differences between the rules governing these programmes and Community programmes proper, although there are substantial similarities in the way the two types of programme are implemented, particularly in terms of the role played by the Commission. It is therefore proposed that the Commission be allowed to use executive agencies of the kind covered by of this Regulation mutatis mutandis, and in accordance with the rules and procedures laid down in the specific legal bases applicable to programmes outside the general budget.

The role of the Commission

3.16. The executive agencies to which this proposed Regulation applies differ somewhat from the existing Community agencies.

In institutional terms, the main difference lies in the crucial role that the Commission would play in the organisation and running of an executive agency.

3.17. Thus, it would be for the Commission to decide to set up such agencies, assisted when necessary by a committee of Member States' representatives, to manage one or more Community programmes. It would also be for the Commission to adopt ad hoc acts of delegation specifying the scope of the tasks entrusted to each agency and determining the terms, criteria, parameters and procedures whereby the agency will perform these tasks.

Although executive agencies would have autonomy of management, they would be closely supervised by the Commission, which would appoint the director and the members of the steering committee, as well as sanctioning the content of the annual work programme.

3.18. The Commission's role is justified by the specific nature of the tasks to be entrusted to an executive agency.

Indeed, the sole raison d'être of such agencies is to participate in managing Community programmes, a task which is one of the Commission's exclusive prerogatives: not only does the secondary legislation establishing such programmes require the Commission to adopt the relevant implementing measures, but the implementation of these programmes is financed from appropriations for the execution of which the Commission is directly answerable to the Budgetary Authority under Article 274 of the Treaty.

3.19. Executive agencies should therefore properly be considered as an instrument assisting the Commission in discharging its management missions. This means that the decision-making process should not be further complicated. Moreover, if the Commission is to be truly answerable to the other Institutions, it must be able to maintain adequate control over the operation of each executive agency. If the Commission were to be left distant in its relationship with these agencies, as would be the case, for example, if different management and control procedures were proposed, the logic of the system covered by this proposal would not be balanced.

3.20. Nevertheless, the powers entrusted to the Commission and the tasks devolved on each executive agency under this proposal in no way encroach on the prerogatives and powers of the other Institutions.

Using an executive agency should not jeopardise the safeguards imposed by the legislator, particularly through committee procedures, on the Commission's exercise of the implementing powers delegated to it.

4. Choice of legal basis

Implementing Community programmes falls within the scope of Articles 2 and 3 of the Treaty. However, the Treaty provides for no powers for the adoption of this Regulation other than those laid down in Article 308, which is therefore the necessary legal basis for this proposal.

5. Subsidiarity and Proportionality

In some cases, a Community programme (in its entirety or certain sections of it) has to be managed at Community level either because of its very nature or because the stated objectives could not be adequately and effectively achieved using national bodies. The act laying down the statute of the agencies has a Community dimension and must take the general and binding form of a Regulation, without thereby going beyond what is necessary to attain the objectives sought.

6. Comments on the articles

Article 1 defines the main object of the proposed Regulation, which is to lay down the statute of the executive agencies.

Article 2 defines two fundamental terms in the Regulation, namely executive agency and Community programme.

Article 3 provides that the power to decide on the creation and abolition of each individual executive agency should be delegated to the Commission, assisted by a regulatory committee. This provision states explicitly that each agency created must comply with the general statute laid down in the proposal. It also provides that a decision setting up an executive agency can fix its life span and requires any decision abolishing an agency to specify how it is to be dismantled.

Article 4 states that executive agencies are Community bodies with a public service mission and establishes their legal personality and legal capacity.

Article 5 recommends that each executive agency should be established in one of the places where the Commission's departments are located, to allow for the necessary intensive on-going collaboration between the agency and those departments. It also provides that an executive agency can set up branch offices in other countries in order to better perform the tasks entrusted to it.

Article 6 specifies the tasks with which an executive agency can be entrusted in managing Community programmes. Tasks entailing a scope for discretion which might involve translating political choices into action are explicitly ruled out. By contrast, an executive agency may be required to collect, analyse and transmit information to the Commission which can serve to guide implementation of the programmes concerned; to make recommendations to the Commission regarding the implementation of programmes; to manage the different phases of individual projects under a programme, which might require the Commission to delegate to it the relevant decision-making powers; and, lastly, to carry out budget implementation and related operations with a view to implementing such individual projects. This Article specifies that an instrument of delegation by the Commission is require in order to charge an agency with the relevant tasks. This instrument is to set out the terms, criteria, parameters and procedures with which the executive agency must comply when performing its tasks and must detail the controls which the relevant Commission departments are to apply to ensure that the agency operates properly.

Article 7 provides for agencies to be directed by a steering committee and a director with authority over staff.

Article 8 lays down the procedure for appointing the steering committee and specifies its term of office. It also describes how the chairperson of the board is to be chosen, how its meetings are to be called, and the voting procedure.

Article 9 lists the tasks of the steering committee, including adopting the executive agency's annual work programme, which must comply with the programming defined by the Commission, adopting the agency's operating budget, and all other decisions relating to the general organisation or supervision of the agency.

Article 10 lays down how the director is to be appointed and the term of office. It specifies that the Commission is to appoint as director an official within the meaning of the rules and regulations applicable to officials and other servants of the European Communities.

Article 11 lists the tasks of the director, including representing the executive agency; participating without voting rights in the meetings of the steering committee and preparing the committee's decisions; implementing the agency's annual work programme and carrying out the day-to-day operations delegated to the agency to manage Community programmes; preparing and implementing the agency's operating budget; dealing with all matters concerning the agency's staff.

Article 12 lays down the principles governing the executive agency's operating budget, provides for a grant from the general budget of the EU and describes the establishment plan in detail, specifying that posts are to be temporary.

Article 13 maps out the procedure for drawing up the operating budget: the director prepares the draft, which is then submitted to the Commission; once the Commission has checked that it complies with the annual programming, it includes a proposal for a grant in the preliminary draft budget; the grant is approved by the budgetary authority; the steering committee definitively approves the operating budget in the light of the level of the grant finally fixed by the budgetary authority. The amount of annual grant proposed by the Commission is to be a specified percentage of the annual financial allocation to the Community programmes which the executive agency is involved in managing.

Article 14 specifies that the director of an agency is responsible for implementing the operating budget, and is accountable for its management to both Parliament and the Commission, as well as the steering committee. Parliament will grant discharge to an agency for the execution of its budget no more than two years after the end of the budget year concerned.

Article 15 provides that the Commission, assisted by a regulatory committee and after receiving the opinion of the Court of Auditors, is to adopt the financial regulation which executive agencies are to apply to execute their operating budget. This financial regulation must be based as closely as possible on the Financial Regulation applicable to the general budget of the European Union.

Article 16 specifies that the operating appropriations of the programmes which the executive agency is involved with managing will continue to be entered in the general budget of the EU and not in the agency's operating budget, even in cases where the Commission delegates budget execution tasks to the agency. In such cases, the delegated authorising officer in the executive agency is to be its director, who must comply with the requirements of the Financial Regulation applicable to the general budget of the European Union.

Article 17 stipulates that this proposed Regulation is also to apply to the delegation of tasks to an executive agency for the purpose of managing programmes financed from sources other than the general budget of the European Union. In such cases, account must be taken of the specific regulatory framework applicable to those programmes, particularly as regards drawing up the agency's operating budget and the financial regulation applicable to the operating appropriations it is required to manage.

Article 18 deals with executive agency staff, and specifies that it is to consist of officials seconded from the Community Institutions and temporary officials recruited directly by the agency itself. The applicable law is to be the Staff Regulations and other rules applicable to officials and other servants of the European Communities, and the detailed rules are to be adopted by the steering committee in agreement with the Commission. The Protocol on the privileges and immunities of the European Communities is to apply to both agencies and their staff.

Article 19 lists the supervision to which executive agencies are subject: the checks carried out by the Commission's internal auditor, who reports to both the Commission and to the agency itself; checks by OLAF, on the basis of the inter-institutional agreement on internal investigations conducted by OLAF; and checks by the Court of Auditors under Article 248 of the Treaty.

Article 20 specifies the contractual and non-contractual liability of the Agency, stipulating that the Court of Justice is to have jurisdiction in any disputes concerning its non-contractual liability.

Article 21 extends the Court of Justice's monitoring of the legality of the acts adopted by the Commission under Article 230 of the Treaty to cover acts adopted by executive agencies which are intended to have binding legal effect.

Article 22 specifies the terms of access to the executive agencies' documents, referring by analogy to the rules to be adopted in implementation of Article 255 of the Treaty. The steering committee will draw up the necessary provisions as detailed implementing rules during the first year of operation of an agency. This Article also imposes an obligation of confidentiality on the members of the steering committee, the director, the agency's staff and all other persons participating in its activities, with regard to information subject to professional confidentiality.

Article 23 sets up the Executive Agency Committee, the regulatory committee which is to assist the Commission in adopting the measures to implement this Regulation. Reference is made to Article 5 of Decision 199/468/EC for the procedure to be followed.

Article 24 contains the traditional clause on entry into force of the Regulation, which is to be the third day after its publication.

2000/0337 (CNS)

Proposal for a COUNCIL REGULATION laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 308 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C

Having regard to the opinion of the European Parliament [2],

[2] OJ C

Whereas:

(1) The Legislative Authority is creating an increasing number of programmes in a wide range of fields targeting a variety of categories of beneficiaries which are operations provided for in Article 3 of the Treaty (Community programmes). The Commission is normally responsible for adopting measures to implement such programmes.

(2) Implementation of these Community programmes is financed, at least in part, from appropriations entered in the general budget of the European Union. Under Article 274 of the Treaty, the Commission is responsible for executing that budget.

(3) To enable the Commission to fulfil its proper responsibilities towards the other Institutions and the citizens of the Union, it must be able to focus primarily on its institutional missions. It should therefore be able to delegate some if its tasks relating to the management of Community programmes to third parties. Moreover, externalising certain management tasks could be a more efficient and effective way of achieving the goals of such Community programmes.

(4) Externalisation of management tasks should stay within the limits set by the institutional system as laid out in the Treaty. This means that missions assigned to the Institutions by the Treaty where anything is left to the discretion of the Institution concerned and which involve translating political choices into practice may not be externalised.

(5) Externalisation should only be used after assessment of a number of factors (such as a cost-benefit analysis that includes the costs for coordination and controls, efficiency and flexibility in the implementation of externalised tasks, simplification of the procedures used, proximity of externalised activities to final beneficiaries, visibility of the Community as promoter of the programme concerned, the need to maintain an adequate level of know-how inside the Commission).

(6) One form of externalisation consists in using Community bodies which are legal entities in their own right (executive agencies).

(7) In order to ensure uniformity of executive agencies in institutional terms, their statute should be laid down by regulation, and in particular certain essential aspects of their structure, tasks, operation, budget system, supervision and responsibility.

(8) As the Institution responsible for implementing the various Community programmes, the Commission is qualified to assess whether, and to what extent, it is appropriate to entrust management tasks relating to one or more specific Community programmes to an executive agency. Recourse to an executive agency does not relieve the Commission of its responsibilities under the Treaty, particularly Article 274. It must therefore be able to closely circumscribe the action of each executive agency and maintain real control over its operation, particularly its governing bodies.

(9) This means that the Commission must have the power to decide to create (and, where appropriate, abolish) an executive agency in accordance with rules laid down by the legislator. Since the decision to set up an executive agency is a measure of general scope within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [3], such decisions should be adopted by use of the regulatory procedure provided for in Article 5 of that Decision.

[3] OJ L 184, 17.7.1999, p. 23.

(10) The Commission must also be able to appoint both the members of the steering committee of each executive agency and its director, to ensure that in delegating tasks which are its own prerogative to an executive agency, the Commission does not thereby relinquish control of it.

(11) The activities performed by an executive agency must also fully comply with the programming that the Commission defines for the Community programmes which the agency is involved in managing. The agency's annual work programme must therefore be subject to the Commission's approval.

(12) To ensure that externalisation is effective and that full benefit is drawn from the expertise which an executive agency can offer, the Commission must be allowed to delegate to it all or part of the implementing tasks for one or more Community programmes, except for those demanding discretionary powers in translating political choices into action. Tasks which may be delegated include managing all or some of the phases in the lifetime of a given project, executing the budget, gathering and processing information to be passed on to the Commission, and preparing recommendations for the Commission.

(13) Since the budget of an executive agency would be intended to finance only its operating costs, its revenue should consist chiefly of a percentage, to be determined by the Budgetary Authority, of the financial allocation to the Community programme which the agency is involved in managing.

(14) In order to protect the scope of Article 274 of the Treaty, the operating appropriations of the Community programmes which an executive agency is involved in managing must continue to be entered in the general budget of the European Union and must be implemented by direct charging to the general budget. The financial operations relating to these appropriations must therefore be carried out in accordance with the Financial Regulation governing the general budget of the European Communities.

(15) It should also be possible to entrust an executive agency with tasks relating to the management of programmes that are financed from sources other than the general budget of the European Union. In such cases, this Regulation should apply, subject to specific provisions in the legal bases of the programmes concerned.

(16) The objective of transparency and reliability in the management of executive agencies requires that internal and external checks be made on their operation, that agencies be made accountable for their actions and that the public should have access to the documents they hold, on terms and within limits similar to those referred to in Article 255 of the Treaty.

(17) Each executive agency must collaborate intensively and continuously with the Commission departments responsible for the Community programmes that it is involved in managing. To facilitate this collaboration as much as possible, each executive agency should be located at the place where the Commission departments are sited.

(18) The Treaty provides for no powers for the adoption of this Regulation other than those conferred by Article 308,

HAS ADOPTED THIS REGULATION:

Article 1

Scope

This Regulation defines the statute of executive agencies to which the Commission, under its own control and responsibility, may entrust certain tasks relating to the management of Community programmes.

Article 2

Definitions

For the purposes of this Regulation:

(a) " Executive agency" means a legal entity established in accordance with this Regulation,

(b) "Community programme" means any operation or set of operations or other initiative which the relevant legal basis or budgetary authorisation requires to be implemented by the Commission for the benefit of one or more categories of specific beneficiaries, by committing expenditure .

Article 3

Creation and winding-up of executive agencies

1. The Commission may decide to set up an executive agency with a view to entrusting it with certain tasks relating to the management of one or more Community programmes. That decision may set the duration of existence of the agency.

2. Where the Commission considers that it no longer needs the services of an executive agency which it has created, it may decide to wind it up. In such cases, the Commission shall appoint two liquidators to liquidate the agency. In the same decision, the Commission shall specify the conditions on which the executive agency is to be liquidated. The net assets after liquidation shall be transferred to the general budget of the European Union.

3. The Commission shall adopt the decisions referred to in paragraphs 1 and 2 in accordance with the procedure laid down in Article 23(2) hereof.

4. All executive agencies set up under paragraph 1 must comply with this Regulation.

Article 4

Legal status

1. An executive agency is a Community body and has a public service mission.

2. An executive agency shall be a legal entity in its own right. In each of the Member States, it shall enjoy the most extensive legal capacity accorded to legal entities under national law. It may, in particular, acquire or dispose of movable and immovable property and be a party to legal proceedings.

Article 5

Headquarters

An executive agency shall have its headquarters in one of the places where the Commission departments are located. It may decide to set up branch offices, both inside and outside the territory of the Member States, if this will serve to improve the performance of its tasks in implementing the Community programmes it is called on to manage.

Article 6

Tasks

To attain the object stated in Article 3(1), the Commission may entrust an executive agency with any tasks required to implement a Community programme, except for those demanding discretionary powers in translating political choices into action.

In particular, executive agencies may be entrusted with the following tasks:

(a) drawing up recommendations to the Commission about the implementation of a Community programme;

(b) managing some or all of the phases in the lifetime of specific individual projects in the context of implementing a Community programme, and carrying out the necessary checks to that end, by adopting the relevant decisions where the Commission has empowered it to do so;

(c) adopting budget execution acts concerning both revenue and expenditure in implementation of a Community programme, and all other related actions, where the Commission has empowered it to do so;

(d) gathering, analysing and passing on to the Commission all the information needed to guide the implementation of a Community programme.

The terms, criteria, parameters and procedures with which an executive agency must comply when performing the tasks referred to above and the details of the controls to be applied by the Commission departments responsible for Community programmes which an agency is involved in managing shall be defined by the Commission in the instrument of delegation.

Article 7

Structure

1. An executive agency shall be managed by a steering committee and a director.

2. An executive agency's director shall have authority over its staff.

Article 8

Steering Committee

1. Each steering committee shall consist of five members appointed by the Commission.

2. The term of office of the members of the steering committee shall be at least two years. The appointment may be renewed. On expiry of their term of office, or should they resign, the members shall remain in office until their appointment is renewed or a replacement has been appointed.

3. The steering committee shall choose a chairperson and vice-chairperson from among its members.

4. The steering committee shall meet when convened by the chairperson, at least twice a year. It may also be convened at the request of its members, by at least a simple majority, or at the request of the director.

5. Any member of the steering committee unable to attend a meeting may be represented by another member specially empowered for the meeting concerned. Each member may represent only one other member. Should the chairperson be unable to attend, the steering committee shall be chaired by the vice-chairperson.

6. The steering committee's decisions shall be adopted by a simple majority of votes. In the event of a tie, the chair shall have the casting vote.

Article 9

Tasks of the steering committee

1. Each steering committee shall adopt its own rules of procedure.

2. On the basis of a draft submitted by the director after approval by the Commission, the steering committee shall adopt the executive agency's annual work programme no later than the beginning of each year. The work programme must comply with the programming defined by the Commission in accordance with the legal acts establishing the Community programmes which the executive agency is involved in managing.

The annual work programme may be amended during the year following the same procedure, in particular to take account of Commission decisions on the Community programmes concerned. The operations included in the annual work programme shall be accompanied by an estimate of the necessary expenditure.

3. The steering committee shall adopt the executive agency's operating budget in accordance with the procedure laid down in Article 13 hereof.

4. The steering committee shall obtain the Commission's agreement before deciding to accept any legacies, gifts and grants from sources other than the Community.

5. The steering committee may decide to set up branch offices of the executive agency as referred to in Article 5 hereof.

6. The steering committee shall adopt any special rules needed to implement the right of access to the executive agency's documents in accordance with Article 22(1) hereof.

7. No later than 31 March each year, the steering committee shall adopt and present to the Commission an annual report on the activities of the executive agency during the previous year and their financing.

8. The steering committee shall perform the other tasks entrusted to it by this Regulation.

Article 10

Director

1. The Director of the agency shall be appointed by the Commission, and shall be an official within the meaning of the rules and regulations applicable to officials and other servants of the European Communities.

2. The director shall be appointed for a term of four years. The appointment may be renewed. After receiving an opinion of the steering committee, the Commission may remove the director from office before expiry of this term of office.

Article 11

Tasks of the director

1. The director shall represent the executive agency. He or she shall be responsible for its management.

2. The director shall prepare the work of the steering committee, in particular the draft annual work programme of the executive agency. The director shall participate, without voting, in the work of the steering committee.

3. The director shall ensure that the annual work programme of the executive agency is implemented. In particular, the director shall be responsible for performance of the tasks referred to in Article 6 and shall adopt the relevant decisions to that effect. The director shall act as the executive agency's delegated authorising officer for executing the operational appropriations relating to the programmes which the agency is involved in managing, where the Commission has empowered the agency to perform budget execution tasks.

4. The director shall draw up the provisional statement of revenue and expenditure and, as authorising officer, shall execute the executive agency's operating budget in accordance with the Financial Regulation as referred to in Article 15 hereto.

5. The director shall be responsible for preparing and publishing the reports which the executive agency must present to the Commission. This includes the annual report on the activities of the executive agency referred to in Article 9(7) and all other reports, of a general or specific nature, which the Commission asks the executive agency to produce.

6. The director shall be empowered under the arrangements applicable to other servants of the European Communities to act vis-à-vis the staff of the executive agency as the authority authorised to conclude employment contracts. The director shall be in charge of all other matters relating to the staff of the executive agency.

Article 12

Operating budget

1. All revenue and expenditure of an executive agency shall be the subject of forecasts for each financial year (identical with the calendar year) and shall be entered in its operating budget, which shall include the establishment plan submitted to the Budgetary Authority. The establishment plan, consisting exclusively of temporary posts, shall specify the number, grade and category of the staff employed by the executive agency during the financial year concerned.

2. The revenue and expenditure of the executive agency's operating budget shall be in balance.

3. An executive agency's revenue shall include a grant entered in the general budget of the European Union, without prejudice to other revenue.

Article 13

Preparation of the operating budget

1. Each year the director shall draw up a draft operating budget for the executive agency, covering the agency's running costs for the following financial year, and submit it to the steering committee.

2. No later than 1 March each year, the steering committee shall adopt the draft operating budget for the following year and submit it to the Commission.

3. On the basis of this draft budget and in the light of the Commission's programming for the Community programmes which the executive agency is involved in managing, the Commission shall propose, as part of the annual budget procedure, the annual grant to the executive agency's operating budget as a specified percentage of the annual financial allocation to the programmes concerned.

4. At the beginning of each budget year, the steering committee shall adopt the executive agency's operating budget, on the basis of the annual grant thus determined by the competent Budgetary Authority, at the same time as it adopts the annual work programme, adjusting the budget in accordance with the different contributions granted to the executive agency and any funds from other sources.

Article 14

Execution and discharge of the operating budget

1. The director shall execute an executive agency's operating budget.

2. No later than 31 March each year, the director shall submit detailed accounts to the European Parliament, the Court of Auditors, the Commission and the steering committee showing all the revenue and expenditure for the previous budget year.

3. The European Parliament shall grant discharge to an executive agency for the execution of its budget no later than 30 April of year n+2.

Article 15

Financial regulation applying to the operating budget

The financial regulation applicable to the operating budget of the executive agency shall be adopted by the Commission, after receiving the opinion of the Court of Auditors, in accordance with the procedure laid down in Article 23(2) and in compliance with Article 142 of the Financial Regulation applicable to the general budget of the European Union [4].

[4] OJ L 356, 31.12.77, p. 1. Regulation last amended by Council Regulation (EC, ECSC, Euratom) No 2673/1999.

Article 16

Financial regulation applying to operating appropriations

1. Where the Commission has delegated tasks to the executive agency relating to the budget execution of operating appropriations for Community programmes under Article 6(c), such appropriations shall be entered in the general budget of the European Union and shall be executed by direct charging to that budget.

2. The director shall act as the executive agency's delegated authorising officer for executing these operating appropriations and shall comply to that end with the obligations laid down in the Financial Regulation applicable to the general budget of the European Communities.

Article 17

Programmes financed from sources other than the general budget

Articles 13 and 16 shall apply without prejudice to the specific provisions laid down in the legal bases of programmes financed from sources other than the general budget of the European Union.

Article 18

Staff

1. An executive agency's staff shall be subject to the rules and regulations applicable to officials and other servants of the European Communities. The steering committee, in agreement with the Commission, shall adopt the necessary implementing rules.

2. An executive agency's staff shall consist partly of Community officials seconded by the Institutions to the executive agency as temporary officials, and partly of other servants recruited by the executive agency.

3. The Protocol on the privileges and immunities of the European Communities shall apply to both the executive agency and its staff as referred to in paragraph 2.

Article 19

Supervision

1. The Commission's internal auditor and financial controller shall enjoy the same powers and perform the same tasks with regard to an executive agency as to the Commission's departments.

The auditor shall report findings and recommendations to both the Commission and the executive agency, each of which shall implement such recommendations according to its respective powers.

2. As soon as an executive agency is created it shall subscribe to the inter-institutional agreement on internal investigations conducted by the European Anti-Fraud Office (OLAF) [5]. The steering committee shall formalise this assent and adopt the provisions needed to facilitate OLAF's conduct of its internal inquiries.

[5] OJ L 136, 31.5.1999, p. 15.

3. The Court of Auditors shall scrutinise an executive agency's accounts in accordance with Article 248 of the Treaty.

4. All acts of an executive agency, in particular all decisions adopted and contracts concluded by it, must provide explicitly that the Commission's internal auditor, OLAF and the Court of Auditors may inspect files and, where necessary, make on-the-spot checks, including at the premises of final beneficiaries of funds and, where applicable, the intermediaries that distribute them.

Article 20

Liability

1. The contractual liability of an agency shall be governed by the law applicable to the contract in question.

2. In the case of non-contractual liability, an executive agency shall make good any damage caused by the agency or its servants in the performance of their duties, in accordance with the general principles common to the laws of the Member States. The Court of Justice shall have jurisdiction in disputes relating to compensation for any such damage.

Article 21

Legality of acts

The Court of Justice shall monitor the legality of acts of an executive agency intended to have binding legal effect on the same terms and conditions as laid down in Article 230 of the Treaty relating to the control of legality of the acts of the Commission.

Article 22

Access to documents and confidentiality

1. All citizens of the European Union and all physical and legal persons resident in or having their head office in a Member State shall have right of access to the documents of an executive agency subject to the same conditions and limits as those laid down in Regulation (EC) No ..../200- of the European Parliament and of the Council on access to documents of ....................200- [6].

[6] Proposal for a Regulation of the European Parliament and of the Council regarding public access to European Parliament, Council and Commission documents (COM(2000)30 final/2, 21.2.2000).

An agency's steering committee shall adopt any provisions needed to implement such right of access no later than during the first year after the creation of the executive agency.

2. The members of the steering committee, the director and members of staff and all persons involved in the activities of an executive agency shall be required, even after termination of their appointments, not to disclose information which, by its nature, is covered by confidentiality .

Article 23

Committee procedure

1. The Commission shall be assisted by a Committee for Executive Agencies, composed of representatives of the Member States and chaired by a representative of the Commission.

2. Where reference is made to this paragraph, the regulatory procedure provided for in Article 5 of Decision 1999/468/EC shall apply, subject to Article 7 of that Decision.

3. The period provided for in Article 5(6) of Decision 1999/468/EC shall be three months.

Article 24

Entry into force

This Regulation shall enter into force on the third day following its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President