EUROPEAN COMMISSION Brussels, 20.9.2021 SWD(2021) 263 final COMMISSION STAFF WORKING DOCUMENT Follow-up by the Member States on the recommendations of the PIF Report 2019 Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 32nd Annual Report on the protection of the European Union's financial interests - Fight against fraud - 2020 {COM(2021) 578 final} - {SWD(2021) 257 final} - {SWD(2021) 258 final} - {SWD(2021) 259 final} - {SWD(2021) 262 final} - {SWD(2021) 264 final}



TABLE OF Contents List of abbreviations3 Executive Summary4 1.Follow-up by recommendation8 1.1.Emergency spending8 1.1.1.Keeping verification and monitoring measures at a high level9 1.1.2.Ensuring the use of emergency procurement based on a case-by-case assessment14 1.1.3.Transition to e-procurement processes17 1.1.4.Measures to further strengthen transparency in the use of EU funds, in particular in relation to emergency procurement19 1.2.Reporting of irregularities22 2.Member States’ replies28 2.1.Austria28 2.2.Belgium29 2.3.Bulgaria31 2.4.Croatia49 2.5.Czechia51 2.6.Denmark54 2.7.Estonia54

2.8.Finland56 2.9.France57 2.10.Germany58 2.11.Greece59 2.12.Hungary63 2.13.Ireland68 2.14.Italy70 2.15.Latvia72 2.16.Lithuania75 2.17.Luxembourg76 2.18.Malta77 2.19.Netherlands79 2.20.Poland80 2.21.Portugal85 2.22.Romania86 2.23.Slovakia90 2.24.Slovenia98 2.25.Spain100 2.26.Sweden103





List of abbreviations AFCOS Anti-fraud coordination service AMIF Asylum, Migration and Integration Fund CA Certifying authority CRII Coronavirus Response Investment Initiative DG Directorate-General EAFRD European Agricultural Fund for Rural Development EAGF European Agricultural Guarantee Fund EC European Commission EMFF European Maritime and Fisheries Fund ERDF European Regional Development Fund ESF European Social Fund ESI Emergency Support Instrument IMS Irregularity Management System ISF Internal Security Fund MA Managing authority OP Operational Programme OTSC On-the-spot checks PIF Protection of the EU’s financial interests PPE Personal protective equipment VAT Value added tax Executive Summary In the 2019 report on the protection of the European Union’s financial interests, known as the ‘PIF Report’, the Commission made a set of recommendations to the Member States concerning emergency spending and the reporting of irregularities. This document collects and summarises the Member States’ replies for the follow-up on the 2019 PIF report recommendations and provides updated information, initiatives and measures taken in 2019/2020 in the respective areas of expenditure. Recommendations on emergency spending The Commission recalls that verifications and monitoring measures should be kept at a high level. Emergency procurement should be used on the basis of a case-by-case assessment. The present situation is also the right opportunity to complete the transition to e-procurement processes for those Member States which have not already achieved this. Member States should consider the possibility of further strengthening transparency in the use of EU funds, in particular in relation to emergency procurement. Spending related to the COVID-19 crisis has and will put further pressure on EU bodies and national authorities disbursing EU funds. The Commission has stepped up its fraud prevention work to ensure that EU money continues to get the highest possible level of protection against fraudsters who may try to take advantage of the current situation. Likewise, the Member States were asked not to lower their guards against the risks highlighted in the 2019 PIF report. A total of 22 Member States reported ensuring that verification and monitoring measures are kept at a high level; Malta and Slovakia reported partial implementation of this point. Most Member States stated that the current extraordinary situation due the COVID-19 outbreak does not affect the regime of mandatory verifications and monitoring measures and that these are being kept at a high level nevertheless. Several Member States have taken specific measures to adjust to the current extraordinary situation. For example, Bulgaria reported carrying out verifications through telephone interviews; Greece and Croatia issued special instructions on alternative approaches for on-the-spot checks. Ireland, Spain and Finland reported use of IT tools for remote checks. Italy updated its first-level control manuals for remote on-the-spot checks. Latvia reported paying extra attention to cases involving force majeure where COVID-19 was cited as justification for extending deadlines. Poland put special arrangements in place, making it easier to implement and account for projects co-financed out of EU funds. The arrangements include suspending application of the guidelines issued by the Polish Minister for Regional Development and the possibility to discontinue checks and audits in exceptional situations or, where feasible, perform them remotely or electronically. Slovenia reported that measures related to the COVID-19 pandemic were generally applied only based on data from official records managed by verified state institutions or legal entities founded by the State. This was one of the reasons why there was significantly less suspicion of fraud or artificially created conditions. In all, 23 Member States reported that they fully ensured the use of emergency procurement based on a case-by-case assessment. Slovakia reported partial implementation. Most Member States stated that any cases of emergency procurement were duly checked in advance and subject to strict rules, regardless of the COVID-19 crisis. Several Member States, like Greece, Spain, France, Croatia, Poland and Sweden, have also issued guidelines on emergency procurement in the context of COVID-19. Some 18 Member States reported full implementation of the transition to e-procurement processes; 6 reported partial implementation. On measures to further strengthen transparency in the use of EU funds, in particular for emergency procurement, 17 Member States replied that they had done so, while 8 reported that they had not. Further measures taken by Member States include testing the use of the ARACHNE system, setting up a platform to report fraud and corruption, guidelines on emergency procurements emphasising the importance of transparency and efficient use of financial resources, and other measures to enhance transparency. Most of the Member States that have not taken any further measures reported that they had not done so because the measures already in place were considered sufficient. Recommendation on reporting of irregularities

For the 2014-2020 programming period, the reporting of irregularities, in particular non-fraudulent ones, needs to be closely monitored. The current programming period saw a significant decrease in the detection and reporting of non-fraudulent irregularities compared to the previous period, particularly in relation to cohesion policy. The Commission recommended careful monitoring to ensure that the decrease is the result of new preventative measures, and not of increased deficits in detection and reporting. Some 22 Member States reported full implementation of this recommendation. A further four Member States replied that they had partly implemented it. Most Member States ensured that their reporting of irregularities was carefully monitored. Belgium reported carrying out an additional check at each annual closure, during which the managing, certifying and audit authorities compared their data so that any irregularity was duly reported. The Danish Fisheries Agency stated that every quarter of the year, the agency’s control team coordinates with the agency’s economics department over the detection of irregularities. Croatia and Slovakia also mentioned such quarterly irregularity reports. The Bulgarian managing authorities replied that their reporting of irregularities was subject to strict controls. Lithuania reported that the information on irregularities and related data was constantly monitored in the 2014–2020 European Union Structural Funds Management and Monitoring System (SFMIS2014), which was the main source of information for reporting irregularities to the Commission. Poland reported that it duly complied with its obligations to report any irregularities found in respect of EU funds to the European Commission and to monitor them on a continuous basis. Czechia replied that the reporting of irregularities for the 2014–2020 programming period was ensured in accordance with the methodological guide for the financial flows of programmes co-financed by the European Structural Funds, the Cohesion Fund and the European Maritime and Fisheries Fund for the programming period 2014–2020. The Estonian authorities reported that all implementing bodies must report all detected or prevented irregularities via the electronic system. Ireland reported the continued use of the irregularity management system (IMS), but stated that further training for staff of managing authorities was required. Greece explained that not all managing authorities and intermediate bodies (IBs) had been registered in the IMS for the direct electronic transmission of irregularities, but that this process was ongoing. Germany and the Netherlands reported that their respective advanced management/control systems had been in place for years, and included a major focus on the reporting of irregularities. All the relevant Spanish authorities reported that the reporting of non-fraudulent irregularities had been monitored similarly to previous years and in particular similarly to the 2007–2013 programming period. Latvia reported that irregularities were monitored and that no significant reduction in the irregularities had been identified. The Hungarian AFCOS operates a working group on irregularity reporting to ensure its irregularity reporting obligation under the EU sectoral regulations is met uniformly and in full; an additional aim is to make the content of irregularity reports more useful for preventing domestic fraud/irregularities. Finland reported that in their training sessions held in 2020, the certifying authority and managing authority had reminded the intermediate bodies about keeping information on irregularities updated.



1.Follow-up by recommendation Methodology and thematic analysis The following section provides a comprehensive overview on the implementation of each recommendation by the Member States and summarises the replies received for each recommendation. This section is divided into two sub-sections, one for the recommendations on emergency spending and one for the reporting of irregularities. Each recommendation is analysed first by providing results as to the number of Member States that addressed each of the recommendation questions and second, by summarising of the most important details they provided. The Member States’ original replies are listed later in this document, under Section 2: ‘Member States’ Replies’. 1.1.Emergency spending The Commission asked the following questions to the Member States with regard to addressing the first set of recommendations: Q.1. Have you ensured that verification and monitoring measures are kept at a high level? If you implemented fully the recommendation, could you indicate how this was achieved? Can you share any specific finding in relation to such measures? Have detections increased, decreased or remained stable overall? If you implemented partially the recommendation, could you explain why you think that it was a partial implementation and why a full implementation was not possible?

If you did not implement the recommendation, could you please explain why? Q.2 Have you ensured that emergency procurement is used on the basis of a case-by-case assessment? If you implemented fully the recommendation, could you indicate which procedures you have put in place to achieve that? If you implemented partially the recommendation, could you explain why you think that it was a partial implementation and why a full implementation was not possible? If you did not implement the recommendation, could you please explain why? Q.3 Have you already completed the transition to e-procurement processes? If partially or not, could you briefly explain at which point you are in the process? Q.4 Have you taken any measures to further strengthen transparency in the use of EU funds, in particular in relation to emergency procurement? If yes, could you specify which ones and how they strengthen the existing transparency framework? If not, could you explain why and how your current system already ensures an adequate level of transparency? The table below represents the overall results of the implementation of the Commission’s recommendations on emergency spending, based on the Member States’ replies to each of the questions above. 1.1.1.Keeping verification and monitoring measures at a high level The Member States were asked to provide information on whether they had ensured that verification and monitoring measures were kept at a high level. A total of 22 Member States replied that they had fully implemented this point. Malta and Slovakia reported partial implementation, while Austria had not implemented it. Denmark stated that the question was not of relevance to it and Cyprus did not reply to the question. Several Member States provided details for their replies (in summary): Belgium reported that the body managing the ERDF in Flanders still applied the usual verification measures, with no exceptions. The Flemish Government’s Department of Agriculture and Fisheries kept track of all deviations from the normal functioning of verifications and control systems and only lowered control rates for measures that had a record of low error rates. For other measures, the department applied either alternative checks or a small adaptation of the on-the-spot check where possible, or delayed the on-the-spot check until the situation improved. Overall, the department kept the same level of assurance during the COVID19-crisis. Bulgaria reported on measures taken by several managing authorities, an executive agency and the National Fund Directorate within the Ministry of Finance to ensure full verification of expenditure during the COVID-19 pandemic. These measures include verifications through telephone interviews and updates to the manual for the management and implementation of the operational programme and the management and control systems of the operational programme in line with the needs arising from the coronavirus outbreak. Besides that, the usual layers of monitoring, verifications and controls remained in place so that overall, a high level and quality of monitoring and checks could be assured.

Czechia reported that its verification and monitoring measures were constantly run at a high level. The processes for awarding public contracts in procurement procedure are electronic by law and electronic tools must be used to receive bids. Buyers are also obliged to store their procurement procedure documentation, which enables effective verification and monitoring. Internal and external audits and other compulsory checks of recipients and managing authorities alike are carried out as planned despite some difficulties and challenges. The managing authority is closely cooperating with auditors and recommendations are addressed in time and subsequently also duly reviewed. Detections have remained stable. Germany reported that it had advanced management/control systems in the agriculture and fisheries sector. These systems have been operating at a high level for years and are continuously adapted to new challenges and objectives. For the measures under the ERDF and the ESF, the existing high level has been maintained, in particular for the administrative checks to be carried out. Germany continues to carry out an annual self-assessment to combat fraud. The number of cases of fraud and suspected fraud remains low. The Estonian authorities responsible for the ESI, agricultural-fisheries and internal policies Funds report that they will continue with the professional verification and monitoring measures. The implementing agency for agricultural and fisheries Funds started to test using ARACHNE. Throughout the COVID-19 pandemic, Ireland’s Southern Regional Assembly (SRA) and Northern and Western Regional Assembly (NWRA) have continued Article 125 management verifications, albeit remotely. All relevant areas of the verification process are covered. The Department of Agriculture, Food and Marine implements robust administrative checks on all aid applications and procurement practices that are in line with EU and national legislation. It also performs on-the-spot checks, which satisfy the fund requirements. The accounting officer is provided with confirmation on an annual basis that these checks are in place, for administered funds charged to national and EU budgets from senior management. External auditors review the internal financial controls and any recommendations are acted upon. The Greek Special Institutional Support Service reported that the provisions of the regulatory framework on administrative verifications continued to apply. Special instructions were issued for on the-spot checks for the 2019–2020 accounting year, following the measures taken to contain the COVID-19 pandemic, including alternative approaches taking account of the restrictions in place. Finally, when the annual accounts are submitted, the authorities confirm that the instructions have been followed and that adequate administrative verifications have been carried out on the expenditure included in the accounts. All the relevant Spanish authorities reported that the verification and monitoring measures had been kept at high level, similar to previous years. This was due to the implementation of measures such as making intensive use of IT tools to perform the checks and verifications remotely. In some cases, on-the-spot verifications were delayed due to the restrictions lockdown measures adopted during 2020. However, the verifications have been, or will be, carried out when the circumstances allowed (or allow) the corresponding authorities to do so properly, making use of the flexibility allowed by different Commission DGs in this sense. There is no evidence that the COVID-19 crisis has influenced the level of detections. Following the outbreak of COVID-19 and its consequences, the French National Agency for Territorial Cohesion fully relayed to the ERDF managing authorities the instructions set out by the European Commission and the platform for replies to national authorities on Coronavirus Response Investment Initiative Plus (CRII+) measures. In Croatia, the procedures in place remain fully applicable under the current exceptional circumstances triggered by the COVID-19 outbreak. The COVID-19 outbreak posed particular difficulties for healthcare facilities and residential homes for the elderly and seriously ill adults and adults with disabilities. To respond to this situation, the Ministry of Regional Development and EU Funds, the managing authority for the competitiveness and cohesion 2014-2020 operational programme, granted an exemption for on-the-spot checks of operations in these facilities. Under the exemption, the checks could be performed remotely in real time using IT tools. The emergency caused by COVID-19 does not change or alter any Italian regulatory or statutory requirement. At national level, to ensure that verification and monitoring of operations could continue, the Agency for Territorial Cohesion, updated the first-level control manuals for both programmes so that on-the-spot checks could be carried out remotely. The Latvian Rural Support Service (responsible for EMFF, EAFRD and EAGF) has not scaled back inspection and monitoring during the COVID-19 crisis. For area payments, a number of control tools were introduced and developed to make on-the-spot checks more efficient. These include the use of drones (enabling inspections to be carried out faster and more efficiently). For investment projects, the Rural Support Service performed remote inspections. The Central Finance and Contracting Agency (responsible for ESF, ERDF and Cohesion Fund) paid extra attention to cases where force majeure due to COVID-19 was cited as justification for extending deadlines. Given the extensive control mechanisms available and applied, Latvia did not find any increase in breaches of procurement procedure that could be attributed to the COVID-19 emergency. Lithuania reported having adjusted its public procurement inspection questionnaires to take account of changes to the Law on public procurement and accompanying secondary legislation in order to ensure implementation of EU rules. To ensure the integrity-based, transparent and accountable use of public funds, the Hungarian Public Procurement Authority ensures that verification and monitoring measures are kept at a high level when reviewing the legality of public procurements. Methods in place to ensure high-quality verification and monitoring include checking the legality of notices, checking the legality of negotiated procedures without publication, and checking the performance and amendment of contracts. In terms of EU support, the managing authorities and the ministry responsible for public procurement carry out checks on the regularity of public procurement procedures conducted using support awarded under EU programmes. As the audit authority, the Directorate-General for Audit of European Funds (EUTAF) is responsible for carrying out system audits, carrying out sample audits on projects, monitoring the findings of audit reports, following up on recommendations and implementing action plans. Irrespective of the COVID-19 crisis, the Maltese Department of Contracts has always endeavoured to ensure that public funds (both local and EU) are closely monitored in order to ensure a high level of protection. At present, any emergency spending above the local threshold (i.e. above EUR 139 000 excl. VAT) must be validated by presenting the applicable documentation to justify and substantiate requests to use less restrictive procurement methods. In addition, if the estimated procurement value is above EUR 1 million, the contracting authority concerned must attain budget clearance from the Ministry for Finance and Employment. Further to the above, as and where applicable, the managing and auditing bodies run checks to ascertain that public funds are properly managed. Austria reported that it had not implemented the recommendation because there was no specific EU-related emergency procurement in place in the agriculture sector. In the context of the COVID-19 pandemic, Poland has put in place a number of mechanisms to ensure appropriate monitoring of the spending of, accounting for and control of EU funds. Special arrangements were put in place, making it easier to implement and account for projects co-financed using EU funds. These include suspending the application of the guidelines issued by the Ministry for Regional Development and the possibility to discontinue checks and audits in exceptional situations or, where feasible, perform them remotely or electronically. As a result, the control work, including system audits and project expenditure checks, is being carried out efficiently despite the constraints arising from the epidemic. Furthermore, the Law on public procurement has been amended to strengthen control mechanisms and measures for monitoring public procurement. The verification mechanisms also function properly for the Agricultural Funds. Portugal reported that procurement in response to the pandemic was being monitored at the highest level, with reports sent to the relevant supervisory authorities and the Ministry of Finance. The Romanian Ministry of Investments and European Projects reported that ANAP, the national agency for public procurement, has performed standard ex ante checks to determine whether the conditions for running negotiated procedures without publication were being met, and whether such procedures were being carried out properly. There is a standard checklist for managing authorities, whose checks are ex post of the procedure itself, but ex ante of the reimbursement of expenses from European funds. This checklist indicates how to check how beneficiaries have met the specific requirements to use the exemptions provided for in procurement legislation. Slovenia’s Agency for Agricultural Markets and Rural Development (AAMRD) has a well-established system for detecting and preventing fraud and artificially created conditions, as well as for preventing conflicts of interest. Applications for measures related to the COVID‑19 epidemic are generally decided only based on data from official records managed by verified state institutions or legal entities founded by the state, which is one of the reasons why there is significantly less suspicion of fraud or artificially created conditions in these measures. Each application received so far has been examined administratively using the four-eye principle; for each application, Slovenia checks whether there is a suspicion of fraud and artificially created conditions and whether there may be a conflict of interest. In the case of advance payments, it was consistently checked whether the required securities were lodged. Based on the replies provided by the Slovak AFCOS partners, verification and monitoring measures have been maintained at a high level, even during the pandemic. Managing authorities regularly update their procedures and, if relevant, measures allowing for a more flexible approach in this particular situation are adopted. However, one of the current challenges is the planning and performance of on-the-spot checks, as personal contacts should be kept to a minimum during the pandemic. Finland reported that during the COVID-19 pandemic, the managing authority had instructed the intermediate bodies to conduct checks and monitoring using the means and tools already in place (such as remote access and electronically), while maintaining high quality and not reducing the quantity.

In Sweden, 18 379 procurement procedures were initiated in accordance with procurement regulations in 2019. The simplified procedure is the most commonly used procurement procedure. Most public contracts run for 3–4 years (including any extension options). In 57% of all procedures, 1–3 tenders are submitted. The average number of tenders submitted in 2019 was 4.5. The average number of tenders submitted decreased for several years before 2018 and 2019. Of all procurement procedures, 6.6% underwent a review procedure in 2020. Directive-compliant procurement is subject to a review procedure more often than procurement not governed by the EU Public Procurement Directives. Procedures with many tenderers undergo a review procedure more often than procedures that have only a few tenderers. 1.1.2.Ensuring the use of emergency procurement based on a case-by-case assessment The Member States were asked to provide information on whether they ensured that emergency procurement was based on a case-by-case assessment. Some 23 Member States replied that they fully implemented this point, and Slovakia reported partial implementation. Austria does not implement it. Denmark stated that the question was not of relevance to it, while Cyprus did not reply. Several Member States provided details for their replies (summarised below). Belgium reported that the body managing the ERDF in Flanders still applied the usual verification measures; every public procurement contract is checked for correct implementation (100% monitoring). Use of the emergency procedure is an exception that is always subject to thorough checks. The Flemish Government’s Department of Agriculture and Fisheries reported that procurement procedures are seldom used and, if they are, are always based on a case-by-case assessment. The Bulgarian Law on public procurement provides for various options that allow for quick procurement, including in cases of extreme urgency. These possibilities are in line with the relevant European directives. In cases where there is an urgent need to select a contractor, the contracting authority has the possibility to shorten the time limits for submission of applications and/or bids for competitive procedures. Under the Law on procurement, the contracting authority must justify the exceptional circumstances. In this vein, the award of emergency contracts in the country is subject to legally binding rules and a case‑by-case assessment by the individual contracting authority. The Czech Law on public procurement provides for emergency procurement procedures. The use of these procedures is in the sole responsibility of the contracting authority and in the case of control, the fulfilment of the conditions for their use will be assessed on a case-by-case basis. These procedures should be used by the contracting authority exclusively for urgent purchases related to managing the current threat. However, none of the Czech managing authorities providing input to this document used emergency procurement in 2020. Germany replied that it fully applied the relevant rules on procurement, including on e‑procurement. The Estonian authorities responsible for the ESI and HOME Funds reported that all emergency procurements were checked before payment. The implementing agency for AGRI and FISH Funds reported that it did not foresee any COVID-19 related emergency procurement. Ireland reported emergency procurement of personal protective equipment (PPE) due to the ongoing COVID-19 crisis. The managing authorities ensured that the process was fully in line with the Procurement Directives. Greece’s Single Public Procurement Authority (HSPPA) issued a guideline on Specific matters concerning the award and management of public contracts in the context of the response to the COVID-19 health crisis and the measures taken to prevent the spread of the virus. The purpose of the guideline is to help contracting authorities/entities and economic operators make correct use of the possibilities offered by the EU Directives and of the special or exceptional time-limited provisions established by law. In addition, the HSPPA issued opinions on legislative proposals that provided for derogations from national legislation for emergency procurement. The Spanish State Public Procurement Advisory Board adopted and published in April 2020 an information note addressed to the contracting authorities, which clearly states that the COVID-19 pandemic does not itself allow contracting authorities to use the emergency procedure for public procurement. The note states that contracting authorities can use this procedure only based on a case-by-case assessment. The purpose of the assessment is to check if each case’s circumstances meet the specific requirements laid down by law for use of this exceptional procedure. France replied that the European Commission’s communiqué on the ‘mon ANCT’ information-sharing space of the national agency for territorial cohesion (ANCT) had been sent to the managing authorities. Meetings and working groups have been organised, and national CRII FAQs and a management note have been drawn up. These cover most of the relevant provisions and highlight the exceptional nature of emergency procurements as a case-by-case derogation. The Croatian Law on public procurement allows contracting authorities to award under certain circumstances public procurement contracts based on a negotiated procedure without prior publication of a call for tenders. This is specifically the case if the deadlines for open or restricted procedures or competitive negotiated procedures cannot be met due to extreme urgency caused by events the contracting authority could not foresee. However, the circumstances invoked by the contracting authority to justify extreme urgency must not in any event be attributable to its own actions. The European Commission’s communication on the method of procurement in the conditions of a pandemic has been published on the Public Procurement Portal, and the Croatian Ministry of Economy and Sustainable Development provides expert assistance by giving opinions to those entities that need it. Italy’s ‘Cura Italia Decree’ on measures to strengthen the National Health Service and provide economic support to families, workers and businesses in response to the COVID-19 epidemiological emergency does not provide for any derogation from ordinary open public procurement procedures. However, the ‘Cura Italia Decree’ lays down specific and limited derogations from the ordinary procedures provided for in the Public Procurement Code for the duration of the health emergency. In particular, provision has been made for exceptional procedures to purchase specific categories of goods and services. According to the Latvian Law on public procurement, emergency procurement is based on a case-by-case assessment. In such cases, the contracting authorities are responsible for justifying the use of the negotiated procedure. Lithuania reported that emergency purchases had separate requirements. Hungary reported that in 2019, there had been just 273 instances where contracting authorities had informed the President of the Public Procurement Authority that they were initiating a negotiated procedure without publication. By comparison, there were 329 negotiated procedures without publication in 2018, 482 in 2017 and 870 in 2016. The President of the authority’s legal review powers include rigorous verification in all cases to check that the conditions are met for using the negotiated procedure without publication on an exceptional basis. If the Authority establishes during its review that not all the conditions are met for the legal basis chosen, or that the legal basis cannot be clearly established, it will request clarification to remedy the infringement. This paves the way in such cases for the organisation of a public procurement procedure with publication. Contracting authorities generally respond to requests for clarification immediately and in full. Malta reported that all emergency spending was on a case-by-case basis. Contracting authorities must present duly justified cases to the competent authority, which in turn approves the request (or not), based on the explanations provided and documentation submitted. The Netherlands and Austria replied that they had had no emergency procurements in place.

Under Polish public procurement law, contracting authorities in EU projects are required to use public procurement procedures in emergency situations on the basis of a case-by-case assessment in accordance with Directive 2014/24/EU. The President of the Public Procurement Office and both the audit authority and coordinating authority recommend the case-by-case approach as the standard method for contracting authorities to award contracts under all operational programmes. Managing authorities, intermediate bodies, implementing bodies and other authorised control bodies verify whether the procurement procedure has been carried out correctly in accordance with this principle. The Public Procurement Office has published instructions on how to apply the extraordinary arrangements, and the coordinating authority has further disseminated these instructions via the managing authorities in the context of the principle of competitive tendering, which applies below the thresholds laid down in the Law on public procurement. Portugal reported that the procurement procedures had been conducted in line with the legal framework specifically established for the purpose. In April 2020, the Public Procurement Coordination Unit of the Romanian Ministry of European Funds explained to all managing authorities that negotiations procedures without publication should be applied as exceptions under stricter conditions and asked them to inform all beneficiaries of this. At the beginning of this year, it was underlined to all managing authorities that: (i) for public procurement verifications, it is important to take into account and monitor additional risks arising during the award of contracts signed during the pandemic; and (ii) emergency procurement should be used only on case-by-case basis. The Romanian Government issued an emergency ordinance on emergency medical stocks, as well as some measures related to the establishment of quarantine. These measures authorised the National Office for Centralised Procurement (ONAC) to procure a list of medical emergency products of strict necessity, only via negotiated procedures without prior publication. The decisions on these procurement procedures were approved based on individual analysis. ONAC properly managed all emergency procurement procedures and implemented the Commission Communication on how to carry out such procurements. Slovenia replied that it had not carried out emergency public procurement in the field of cohesion policy, but that it would use it on case-by-case basis whenever the timeframe would require this. Under the Slovak Law on public procurement, the contracting authority can apply the direct negotiation procedure (without publication) only when the need for goods, services or works was caused by an emergency situation which could not be foreseen and was not caused by the contracting authority. In addition, the goods, services or works must be necessary to satisfy the need and the standard procedures cannot be used. If the direct negotiation procedure is used due to an emergency, the contracting authority is obliged to notify the Public Procurement Office before concluding the contract, stating the reasons for the use of this procedure. However, this is not necessary if the contracting authority has published the notification of its intention to conclude a contract. Based on the replies from the Slovak AFCOS partners acting as managing authorities/intermediate bodies, it seems that so far emergency procurement has not often been used in projects co-financed from their operational programmes. Finland replied that the reporting of projects exceeding the thresholds was guided by the IT system for Structural Funds projects. In 2020, the managing authority organised training for intermediate bodies on the procedures for projects below the thresholds. The Swedish National Agency for Public Procurement launched a guidance paper presenting its views on procurement and changes to contractual terms that the procurement rules would allow during the COVID-19 pandemic. 1.1.3.Transition to e-procurement processes Member States were asked to provide information on whether they had already completed the transition to e-procurement processes. Some 18 Member States replied that they had fully implemented the recommendation, while 6 reported partial implementation. Austria has not implemented the recommendation, and Ireland and Cyprus did not reply to this question. Several Member States provided details for their replies (summarised below). The Belgian body managing the ERDF in Flanders reported that since 1 January 2020, communication and exchange of information between the awarding authority and undertakings, including electronic submission and receipt of tenders, must be carried out using electronic means of communication at all stages of the award procedure. The Flemish Government was an early adaptor of e-procurement, working since 2013 with (mandatory) digital e-procurement for public procurement procedures involving publication. The Bulgarian centralised automated information system for public procurement has been operating since 1 January 2020. Since that date, the following three groups of contracting entities are required to use the system: executive authorities, mayors of certain municipalities and representatives of certain sectoral contracting entities. Given the exceptional epidemic situation in the country, the obligation to use the new system came into effect for all other contracting entities from a later date, 14 June 2020. Estonia reported that 98% of its public procurements were e-procurements. Greece reported that the transition to e-procurement procedures for awarding public contracts with an estimated value of more than EUR 60 000.00 plus VAT was complete and covered the stages from publication of the notice, to the submission, opening and evaluation of tenders, and to the award of the contract. Spain explained that implementation was only partial. This was because while some relevant authorities had reported having fully implemented the recommendation, others had reported that some parts of their procurement processes were not electronic yet. The authorities are actively working to fully complete the transition to e‑procurement and acknowledge that the COVID-19 crisis has accelerated this process. This was also highlighted by the Independent Office for the Regulation and the Supervision of Public Contracts in its most recent annual supervisory report. France reported that it had not yet moved to open data for public procurement. Nevertheless, verifying the basic and regulatory requirements for making public procurement fully digital is part of the managing authorities’ monitoring of public procurement. Lithuania explained that all published procurements should be carried out through the central procurement information system. So far, some of the unpublished low-value purchases are non-electronic. The Netherlands reported that not every fund was completely digital yet, but efforts were being made to ensure digital processes were utilised to the fullest. Austria explained that there was no public procurement in the Ministry of Agriculture, Regions and Tourism. All relevant actions take place in the Federal Procurement Office. On 1 January 2021, the new Polish Law on public procurement entered into force. The Law introduces a number of amendments and new legal arrangements that affect the whole public procurement process, from the planning of the procedure itself, conducting the procedure and awarding the public contract, to the final stage of implementing and evaluating the contract). Under the new Law, the procurement process will be fully electronic.

Slovenia replied that procedures above the threshold for publication on the national public procurement platform, JN Portal, and the revision procedure were completely electronic. In Slovakia, e-procurement is partly implemented. The current state of play is the following: the communication and exchange of information must be carried out electronically. Public procurement can be currently conducted electronically through the EVO (e-public procurement) system managed by the Public Procurement Office, through the EKS (electronic contracting system) system managed by the Ministry of Interior, as well as through the various private e-auction systems. The EKS system is integrated with the Register of Economic Operators, while the EVO system is integrated with the central public administration portal, offering additional features and connection to other national systems and public registers. Finland stated that the procedure for projects exceeding the EU thresholds was completely electronic. 1.1.4.Measures to further strengthen transparency in the use of EU funds, in particular in relation to emergency procurement Member States were asked to report whether they had taken any further measures to strengthen transparency in the use of EU funds, in particular in relation to emergency procurement. A total of 17 Member States replied that they had done so, while 8 Member States had not. Denmark stated that the question was not of relevance to it, and Cyprus did not reply. Several Member States provided details for their replies (summarised below). In Belgium, the Flemish Government’s Department of Agriculture and Fisheries explained that it had not taken any further measures because they had transparent procedures in place, especially due to the mandatory use of e-procurement. In the case of emergency procurement specifically, Flemish legislation states that for emergency procurements that reach the European threshold it is mandatory to publish an announcement of the awarded contract within 30 days of closure, including the results of the award procedure. During the COVID‑19 crisis, internal communication from the Flemish Government drew attention to this rule and other tips via a webpage. Bulgaria replied that the national electronic platform currently ensured a sufficiently high level of publicity and transparency of the procurement process in the country. The Public Procurement Register, which is part of the platform, contains an electronic file for any public contract above a certain value. The system currently allows the user to consult all public contracts and contracts financed under European programmes. Czechia explained that it had not taken any further measures because a structural reform of the Law on public procurement was not necessary to strengthen transparency in the use of EU funds. Transparency is already ensured, e.g. by a well-functioning system of electronic tools (where the controlling entities may be granted access rights and the role of surveillance). Some managing authorities have been the subject of standard auditing procedures, which even recently did not call for further strengthening of existing transparency procedures. The main focus of managing authorities during the pandemic was on maintaining and sustaining operational functionality without compromising any of the required functions. The Estonian Implementing Agency for AGRI and FISH Funds has started to test ARACHNE and will implement it in its daily procedures. The Estonian authorities responsible for the ESI and HOME Funds reported that all emergency procurements are checked before payment. The Irish Southern Regional Assembly (SRA) and Northern and Western Regional Assembly (NWRA) (MA SEROP/BMWROP) reported the continued use of detailed Article 125 management verifications and improvements to the checklists used. Greece’s Single Public Procurement Authority (HSPPA) provided contracting authorities and entities with clarifications on compliance with publication formalities in the tender procedure if there is a change in the terms of the contract notice. In addition, the HSPPA has set up a platform for reporting fraud and corruption, and irregularities in general, in the field of public procurement, which meets the conditions for the implementation of Directive (EU) 2019/1937 on the protection of whistleblowers. The Spanish Law on public procurement requires the award and formalisation of a contract to be published in all cases in the centralised electronic procurement portals. This includes emergency contracts, which are not exempt from this obligation. An information note was issued, clearly stating that the exemption from certain requirements in case of emergency procedures does not apply to obligations regarding publication of the award and formalisation of the contract. Croatia reported that during the COVID-19 crisis, the Ministry of Economy and Sustainable Development issued recommendations on determining and submitting the tender guarantee in the new situation. These recommendations were in addition to the guidance from the European Commission on using the public procurement framework in the COVID-19 emergency. Recommendations on the public opening of tenders were also issued, proving that the public procurement system is adapting to the new circumstances. Italy explained that the state of emergency did not affect the applicable compliance requirements in the use of EU funds. The first-level controls continue to ensure the transparency and regularity of the procurements procedures. The Latvian Procurement Monitoring Bureau ensures sample-based ex ante checks of procurement procedures in EU-funded projects. The Bureau’s Administrative Penalties Department carries out sample-based examinations to verify the justification of emergency procurements. Furthermore, guidelines have been prepared on transparency in public procurement, as well as several guidelines on emergency procurements emphasising the importance of transparency and efficient use of financial resources. The Corruption Prevention and Combating Bureau, in cooperation with the State Audit Office and Procurement Monitoring Bureau, developed and published anti-corruption suggestions for maintaining principles of good governance and the application of the lighter procurement procedure for emergency procurements directed at fighting the spread of COVID-19. Lithuania reported that any person who suspected that EU funding had been spent wrongly could inform the relevant authorities using an online form. This message may be sent anonymously, if needed. In addition, lack of transparency in public procurement may be reported to the Public Procurement Office. The Hungarian Public Procurement Authority’s activities to strengthen transparency include: (i) the keeping of various records, such as a list of prohibited tenderers and a code of ethics; (ii) the receipt and thorough investigation of public-interest reports and complaints; and (iii) publishing the authority’s key opinions in its journal, the Közbeszerzési Értesítő Plusz online public procurement bulletin. The Public Procurement Authority also ensures full transparency of public procurement procedures through its computerised publication systems. In addition, the Prime Minister’s Office took several measures to strengthen competition and transparency in connection with public procurement procedures. Malta explained that most procurements (works/services/supplies) using public funds (including EU funds) were conducted through standard procurement procedures; since open calls for tender tend to be the default procedure in Malta, it is evident that the process is transparent. With specific regard to emergency spending, the Department of Contracts, irrespective of the COVID-19 crisis, has in place a method to assess the validity of any such requests. The Netherlands reported that it had maintained the same level of transparency in the use of the EAFRD, EAGF, AMIF and ISF Funds, but had had no emergency procurement in these specific Funds.

Austria explained that it had not taken any additional measures because a voluminous set of checks and controls was in place in the agriculture sector (control costs are up to 50% of the subsidy paid for some sectors, putting the cost-benefit ratio into question). Checks and controls are also in place in the cohesion policy (ERDF) sector. The procurement procedures in force under Polish public procurement law, including the case-by-case approach, are fully in line with Directive 2014/24/EU. In the absence of any specific arrangements at EU level for emergency COVID-19-related procurement, Polish legislation does not impose additional requirements on contracting authorities over and above the procedures and methods set out in the Law and in Directive 2014/24/EU (thus avoiding ‘gold-plating’). Contracting authorities are required to apply the arrangements laid down in public procurement law by taking a case-by-case approach. The paying agency’s rules on the EU Agricultural Funds also ensure transparency in the use of these funds. All the costs incurred by beneficiaries are verified for compliance with public procurement rules. The agency is continuously taking steps to make the use of funds more transparent, including by putting into practice the guidance and recommendations of both the national and the EU audit and control services, and by self-monitoring. The above actions relate to the whole range of EU financial support, including public procurement. Portugal replied that the existence of a specific legal framework made it possible to identify which procedures were covered, thus making the procurement process more transparent and ensuring compliance with the specific rules applicable. Romania reported that the National Office for Centralised Procurement (ONAC) had drawn up a contracting strategy for most of the procurement procedures for the goods on the list of medical emergency stocks products of strict necessity. The office had also taken measures to strengthen transparency by publishing a prior notice on the national electronic public procurement platform (SEAP) and on the office’s website. In general, the national public procurement legislation ensures an adequate level of transparency. The ex post verification of the managing authority is in accordance with the legal provisions of the public procurement. The Slovenian Government Office for Development and European Cohesion Policy reported that it always requested two offers in general. The office also indicated that it had not carried out emergency procurement in the field of cohesion policy. Under the amended Slovak Law on public procurement, the contracting authority must comply with the principles of equal treatment, non-discrimination, transparency, proportionality, effectiveness and economy. Finland explained that it had not taken any additional measures because the Law on procurement, which entered into force in 2017, is considered to adequately ensure the principle of transparency. The Swedish National Agency for Public Procurement offers guidance on anti-corruption measures at a strategic level and measures at different phases of the procurement process. It defines corruption as the abuse of one’s position to achieve undue advantage for one’s own or someone else’s gain; this includes conflicts of interest. 1.2.Reporting of irregularities The Commission provided the following question to the Member States on how they were addressing the recommendation on irregularities reporting: Q.5 Have you ensured that the reporting of irregularities, in particular non-fraudulent, for the 2014-2020 programming period is closely monitored? This section summarises the results, based on the Member States’ replies. For the 2014-2020 programming period, the Commission recommended close monitoring of the reporting of irregularities, in particular of non-fraudulent irregularities. A total of 22 Member States reported full implementation of this recommendation, while 4 replied that they partly implemented it. Cyprus did not reply to the question. The Member States’ replies are summarised below. The Belgian body managing the ERDF in Flanders reported that at each annual closure of accounts, the managing, certifying and audit authorities carried out an additional check consisting in the comparison of their data so that any irregularity could be duly reported. Staff at the Flemish Government’s Integrity Office and members of the public can raise concerns about integrity and wrongdoing by contacting Audit Flanders, the Integrity Office or the Ombudsman. The Flemish Government’s Department of Agriculture and Fisheries reports all irregularities above a threshold of EUR 10 000 via the IMS system. The Bulgarian managing authorities replied that their reporting of irregularities was subject to strict controls. They have set up systems to enter and check the information recorded on any irregularity detected during the implementation of their projects. Irregularity officers report irregularities in strict compliance with the conditions, procedures, deadlines and templates provided for in the Regulation on the administration of irregularities under the European Structural and Investment Funds. The managing authorities report irregularities through IMS, working closely with the AFCOS Directorate; no difficulties or problems have been identified. Any irregularity detected under the programme is duly reported in both the UMIS 2020 and IMS systems in the cases provided for. Czechia replied that irregularities for the 2014–2020 programming period were reported in accordance with the Methodological guide for the financial flows of programmes co-financed by the European Structural Funds, the Cohesion Fund and the European Maritime and Fisheries Fund for the programming period 2014–2020. The procedures are included in the managing authorities’ internal documents. Recorded irregularities are regularly monitored in accordance with the methodologies of the Ministry of Finance and the Ministry of Regional Development. At the same time, cooperation is under way with the financial administration bodies, which are responsible for supervising compliance with the Law on budgetary rules, including the recovery of funds from grant beneficiaries.

The Danish Fisheries Agency stated that every quarter, the agency’s control team coordinates with its economics department over the detection of irregularities. If there are irregularities, these are reported through IMS. These are then checked by the Danish agricultural agency. Corrections are send back to the Danish Fisheries Agency to ensure that the reporting is useful. The Danish business authority stated that it had a procedure for reporting irregularities in IMS that was in line with the Commission’s regulation and the OLAF handbook. The Estonian authorities responsible for the ESI, AGRI, FISH and HOME Funds reported that all implementing bodies must carry out a risk assessment procedure and report all detected or prevented irregularities via the e-based system. Germany reported that it had had advanced management/control systems for years. This includes a major focus on fraud prevention and the reporting of irregularities. The systems also ensure proper reporting of non-fraudulent irregularities. The Federal Ministry of Finance, as the coordinating body, regularly organises workshops in this area. The Irish Southern Regional Assembly (SRA) and the Northern and Western Regional Assembly (NWRA) (MA SEROP/BMWROP) reported the continued use of the IMS system, but stated that further training was required for the staff of managing authorities. Greece reported that the managing authorities of operational programmes and the audit authority followed a specific procedure (‘Reporting irregularities to the European Commission’). However, the audit authority reported that the recommendation was partially implemented because not all managing authorities and intermediate bodies had been registered in the IMS for the direct electronic transmission of irregularities. The registration of these authorities and bodies is ongoing, with access due to be granted shortly. They will then be able to report any potential irregularities they have detected. All the relevant Spanish authorities reported that the reporting of non-fraudulent irregularities had been monitored similarly to in previous years, in particular to the 2007–2013 programming period. This suggests that falls in the number of non-fraudulent irregularities reported in the 2014–2020 programming period compared with 2007–2013 (not the case in all the reporting authorities) could be for other reasons, as highlighted in the 2019 PIF report. There is no evidence that this decrease is due to a worse performance in non-fraudulent irregularity reporting. France reported that for the period 2017–2019, the audit authority (CICC) entered all reports of non-fraudulent irregularities (and suspected fraud) in the IMS application. Since 2020, the managing authorities are responsible for reporting. These authorities request reports through the ‘SYNERGIE’ IT system. The audit authority checks, validates or rejects the reports and sends them to the Commission via the SYNERGIE application. To ensure that non-fraudulent EAGF and EAFRD agricultural irregularities for the 2014–2020 programming period are regularly reported, CICC EAGF sends regular reminders to the paying agencies responsible for submitting irregularities to the irregularity management system (IMS). Under common national rules issued by the Croatian Ministry of Regional Development and EU Funds intermediate bodies are obliged to file quarterly irregularity reports, using the IMS, to the Ministry of Finance’s Service for Combating Irregularities and Fraud. The reports contain all relevant information on the course, type and scope of actions/activities taken by the competent authorities in the relevant quarter. Intermediate bodies keep a register of irregularities listing all established and pending irregularities from the beginning of the eligibility period. These procedures make the necessary data available and enable decision-makers to take one step further in assessing whether and how goals are being achieved over time to prevent, detect, report and act upon irregularities. In Italy, the Agency for Territorial Cohesion monitors the use of Funds and supervises the implementation of programmes and projects co-financed by the EU. The Latvian Ministry of Agriculture and Rural Support Service (responsible for EMFF, EAFRD and EAGF) reported that the recommendation had been fully implemented. The irregularities in the Funds administered by the RSS are being monitored and no significant reduction in the irregularities has been identified. The RSS regularly reviews and improves the process of reporting the irregularities, including the revision of COVID-19-related fraud risks. The Central Finance and Contracting Agency (responsible for ESF, ERDF and Cohesion Fund) reported that a detailed irregularity detection, correction and reporting system was in place and was complied with closely. The Latvian managing authority has established guidelines to ensure the management of irregularities. Every quarter, the authority exports open irregularity cases from IMS and checks whether is it necessary to update information and forward it to the EU Fund Cooperation Institution (the Central Financing and Contracting Agency). Lithuania reported that the following monitoring measures had been put in place: risk analysis, on-the-spot-checks, cooperation with law enforcement authorities, and monitoring of risky projects. The information on irregularities and related data is constantly monitored in the 2014–2020 European Union Structural Funds management and monitoring system (SFMIS2014), which is the main source of information for reporting irregularities to the Commission. The preparation and submission of irregularity reports is described in detail in the manual of procedures. So far, however, monitoring has been done manually, reviewing all relevant information. In Hungary, AFCOS is responsible for providing the staff of the relevant national authorities with appropriate training on IMS. AFCOS also provides day-to-day assistance to ensure problem-free use of the system. AFCOS operates a working group on irregularity reporting to meet the reporting obligation laid down in the EU sectoral regulations uniformly and in full, and to make the content of irregularity reports more useful in preventing domestic fraud/irregularities. This group is composed mainly of experts from the managing authorities dealing with irregularity management and representatives of the certifying authority. The Maltese Planning and Priorities Coordination Division, as the managing authority of the Cohesion Funds, has a system in place in which administrative verifications cover 100% of the expenditure items included in applications for payment. Where the number of transactions included are voluminous, the managing authority undertakes a sample check of the transactions included in a payment claim, based on a pre-established and internally agreed methodology. On irregularity detection and reporting, when a public-sector beneficiary detects an irregularity, a report is sent to the director (Policy Development and Programme Implementation) of the relevant line ministry. The director counter-signs the report and forwards it immediately to the managing authority, copying in the audit authority and the certifying authority. The Netherlands reported that the existing procedures for EAFRD and EAGF had been functioning for years and that these procedures have been maintained at the same level. The authorities’ input concerning non-fiscal data has increased in recent years. The authorities are still improving their input on such non-fiscal data. Due to the amount of findings and the different national and EU IT systems, not all the findings are reported yet. The Dutch authorities have also found that interoperability can be very helpful to improve the input given by a Member State. The outcome of the new procedures is obvious, with more data are being shared but not yet all. On agriculture and rural development, Austria reported the provision of area-based LPIS-GIS support for farmers and on-the-spot checks (OTSC) inspectors and IT support, including standardised invoice lists, documented standard processes and OTSC reports. Risky market schemes are slowly decreasing in value and number of beneficiaries. On cohesion policy (ERDF), Austria reported an improved set of checks and controls, including an additional separate sheet on the risk of fraud for project reviews and a mandatory fraud risk assessment for each programme unit since 2014–2020. In addition, the audit authority’s checklist on public procurement law has been expanded this year, with significantly more questions added to the checklist. Poland reported that it duly complied with its obligations to report to the European Commission any irregularities found in respect of EU funds and to monitor them on a continuous basis. The authorities for each operational programme draw up appropriate procedures concerning the obligation to notify the Commission, including implementing instructions, taking into account the provisions set out in the national procedure drawn up on the basis of the relevant sectoral regulations and issued by the Government Commissioner for Combating Fraud against Poland or the EU. Therefore, the system in Poland for reporting irregularities and fraud (including cases of suspected fraud) is uniform and robust. The monitoring of cases of reportable irregularities includes control and analytical tasks to ensure that the data in the irregularity reports are consistent, complete and reliable. Portugal reported that the procedures put in place involved the managing authorities, certifying authorities and audit authorities, thereby ensuring that different aspects of the spending process are covered. Moreover, in its annual audits, the audit authority checks that all the irregular amounts detected are indeed reported. Romania reported that documentary checks of the managing authorities, audit missions and the anti-fraud department (DLAF) checks had led to the discovery of the irregularities reported in the IMS. All cases of irregularities are monitored for each managing authority, especially those that require reporting to the Commission under the sectoral regulations. The tool for monitoring these cases is the Register of irregularities/debts, so there is no possibility to overlook the reporting of such a case. Although managing authorities have intensified their checks, the number of identified irregularities has decreased since the previous programming period. This was due to the experience gained by the beneficiaries in project implementation, as well as the constant assistance provided by managing authorities in project implementation. Slovenia reported that the reduction in fraud was mainly due to a better co-financing agreement, which was mandatory for all intermediary bodies. In the period 2021–2027, Slovenia will try to include additional provisions on whistleblowers and similar institutes. The Slovak Ministry of Finance, acting as the certifying authority, stated that the recommendation had been fully implemented. As there are no new procedures regulating reporting of irregularities, no significant changes took place compared to 2019. However, the recommendation is fully implemented thanks to procedures already in place from the beginning of the 2014–2020 programming period. Cooperation between the managing authority, certifying authority and the National Office for OLAF in Slovakia is realised through an information monitoring system (ITMS2014+) in which all irregularities are recorded in detail. In addition, the monthly/quarterly reports are compiled in this system, meaning that each new irregularity, whether fraudulent or non-fraudulent, and any update on already reported irregularities, is automatically included in the report if it meets all the conditions. All irregularities in the 2014–2020 programming period are monitored using an IT system, so reporting was not affected by the pandemic.

Finland reported that in two training sessions held in 2020, the certifying authority and the managing authority reminded the intermediate bodies about the need to keep information on irregularities updated in the monitoring system and to monitor the status of the treatment of the findings. The Swedish Council for the Protection of the European Union’s Financial Interests (the SEFI Council) has studied the authorities’ reports of suspected crime in order to check how well the Council’s reporting policy is implemented. Another aim was to follow up on whether the SEFI Council’s guidelines for handling suspected crime need to be revised.



2.Member States’ replies This section includes the Member States' original replies to the questions regarding the implementation of the recommendations related to emergency spending and reporting of irregularities respectively. 1.3.Austria Q.1. Have you ensured that verification and monitoring measures are kept at a high level? ☒NO If you did not implement the recommendation, could you please explain why? In the sector of agriculture, no specific EU related emergency procurement is in place. Q.2 Have you ensured that emergency procurement is used on the basis of a case-by-case assessment? ☒NO If you did not implement the recommendation, could you please explain why? No emergency procurement in place. Q.3 Have you already completed the transition to e-procurement processes? ☒NO If partially or not, could you briefly explain at which point you are in the process? No public procurement in the ministry of Agriculture, Regions and Tourism. All relevant actions take place in the federal procurement office. Q.4 Have you taken any measures to further strengthen transparency in the use of EU funds, in particular in relation to emergency procurement? ☒NO

If not, could you explain why and how your current system already ensures an adequate level of transparency? In the sector of agriculture, a voluminous set of checks and controls is in place (control costs are up to 50% of subsidy paid for some sectors, putting in question the cost-benefit ratio). Also in the sector of cohesion policy (ERDF) there is a set of checks and control. The checks of the Audit Authority were enhanced in 2020, not especially for emergency procurement, but in general. Q.5 Have you ensured that the reporting of irregularities, in particular non-fraudulent, for the 2014-2020 programming period is closely monitored? ☒YES, fully implementing the recommendation If you implemented fully the recommendation, could you indicate which procedures you have put in place? Which was the outcome of these new procedures? In the sector of Agriculture: Area based LPIS-GIS support for farmers and OTSC inspectors as well. ·Rural development measures now with IT support, including standardised invoice lists, documented standard processes and OTSC reports. ·Risky market schemes are slowly decreasing in value and number of beneficiaries. Sector ERDF: In the sector of cohesion policy (ERDF) there is an improved set of checks and controls: ·A separate sheet on the risk of fraud for project reviews was added. ·Each programme unit had to carry out a Fraud Risk Assessment since 2014-2020 and update it every 2 years. This is checked by the audit authority in the course of system audits. The Audit authority checklists on public procurement law have been expanded this year, i.e. significantly more questions in the checklist. 1.4.Belgium Q.1. Have you ensured that verification and monitoring measures are kept at a high level? ☒YES, fully implementing the recommendation (EFRO VL (ERDF Flanders), DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID (Department of Agriculture and Fisheries, Flemish Government)) If you implemented fully the recommendation, could you indicate how this was achieved? Can you share any specific finding in relation to such measures? Have detections increased, decreased or remained stable overall? EFRO VL: The usual verification measures still apply, with no exceptions.

DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID: All deviations from the normal functioning of our verification and control systems are kept track of in an Excel table. We only lowered control rates for measures that had a record of low error rates. For other measures we applied either alternative checks or small adaptation of the on-the-spot check where possible, or delayed the on-the-spot check until the situation improved. Overall we kept the same level of assurance during the COVID19-crisis. Q.2 Have you ensured that emergency procurement is used on the basis of a case-by-case assessment? ☒YES, fully implementing the recommendation (EFRO VL, DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID) If you implemented fully the recommendation, could you indicate which procedures you have put in place to achieve that? EFRO VL: The usual verification measures apply, in particular every public procurement contract is checked for correct implementation (100% monitoring). Use of the emergency procedure is an exception that is always subject to thorough checks. DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID Emergency procurement procedures are seldom used and if used, they are always used on the basis of a case-by-case assessment. Q.3 Have you already completed the transition to e-procurement processes? ☒YES, fully implementing the recommendation (EFRO VL, DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID) EFRO VL: Since 1 January 2020, communication and exchange of information between the awarding authority and undertakings, including electronic submission and receipt of tenders, must be carried out using electronic means of communication at all stages of the award procedure. DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID: The Flemish government was an early adaptor of e-procurement, working with an (mandatory) digital e-procurement for public procurement procedures involving publication since 2013. Q.4 Have you taken any measures to further strengthen transparency in the use of EU funds, in particular in relation to emergency procurement? ☒NO (EFRO VL, DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID) If not, could you explain why and how your current system already ensures an adequate level of transparency? EFRO VL: see Q2. DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID: We have transparent procedures in place, especially due to the mandatory use of e-procurement. In the case of emergency procurement specifically, Flemish legislation states that it is mandatory for emergency procurements that reach the European threshold to publish an announcement of the awarded contract with inclusion of the results of the awarding procedure within 30 days after closure. During the COVID19-crisis, internal communication from the Flemish government drew attention to this rule and other tips via a webpage (link). Q.5 Have you ensured that the reporting of irregularities, in particular non-fraudulent, for the 2014-2020 programming period is closely monitored? ☒YES, fully implementing the recommendation (EFRO VL, VLAAMSEOVERHEID INTEGRITEIT, DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID) If you implemented fully the recommendation, could you indicate which procedures you have put in place? Which was the outcome of these new procedures? EFRO VL: At each annual closure an additional check is carried out during which the managing, certifying and audit authorities compare their data so that any irregularity is duly reported. VLAAMSEOVERHEID INTEGRITEIT (Flemish Government, Integrity Office): At the Flemish government, both internal employees and citizens can raise concerns regarding integrity and wrong-doing by contacting Audit Flanders, the Integrity Office and the Ombudsman.

When the raised concerns point towards fraudulent irregularities, Audit Flanders will look into it and start an in-depth investigation if necessary. Audit Flanders conducts investigations at the Flemish govern but also at the Flemish cities and municipalities. When the raised concerns deal with non-fraudulent irregularities, the Integrity Officer will address these issues and will register the concerns in a secured application and will also register the actions taken, and the expert services that were involved to tackle the issues. The Integrity Officer makes a yearly report on the number of raised concerns received and the policy measures that have been taken. This report is published online: https://overheid.vlaanderen.be/bedrijfsinformatie/co%C3%B6rdinator-integriteitszorg Since 2019 all entities of the Flemish government have also extended this duty to register and report to their integrity contact person. Each entity has at least one integrity contact person. This way the Flemish government aims to gather more detailed information on the number of concerns raised and the actions and measures taken to address these issues. DEPARTEMENT LANDBOUW EN VISSERIJ VLAAMSE OVERHEID All irregularities above a threshold of 10.000,00 euro are reported via the IMS system. 1.5.Bulgaria Q.1. Have you ensured that verification and monitoring measures are kept at a high level? ☒YES, fully implementing the recommendation If you implemented fully the recommendation, could you indicate how this was achieved? Can you share any specific finding in relation to such measures? Have detections increased, decreased or remained stable overall? Managing Authority of Operational Programme ‘Good Governance’ 2014-2020: the MA generally applies the following measures for the timely and correct implementation and reporting of the projects and the programme (Operational Programme ‘Good Governance’): ·Monitors the implementation of project activities on an on-going basis. Provides case-specific advice to beneficiaries, including on technical issues related to project reporting. Meets regularly with beneficiaries to discuss specific problems of the projects and how to resolve them, including as a mediator to coordinate the implementation of projects involving different institutions. Follows up public procurement cases concerning key projects in the Commission for Protection of Competition and the Supreme Administrative Court on an on-going basis; ·Carries out analyses at project and programme level on a monthly basis in order to address problems encountered in a timely manner; ·Requires that beneficiaries submit payment claims on time in order to ensure timely verification and certification and mitigate the risk of automatic decommitment of programme funds; ·The necessary organisation has been established by setting specific deadlines for beneficiaries’ submission of the accounts to the UMIS, after which the MA carries out verification within a short period of time; ·Regularly provides guidance/information on the most common errors in implementation, public procurement; changes in the legal framework and others to prevent errors and irregularities. Maintains and updates the information on the website of Operational Programme ‘Good Governance’; ·Proactively coordinates to clarify horizontal issues related to the implementation of measures from roadmaps to e-government strategy papers; ·Works in close cooperation with administrations/administrative units in policy areas, the implementation of which is funded and implemented under the programme (the State e-Government Agency, the Modernisation of Administration Directorate in the Administration of the Council of Ministers, the Supreme Judicial Council, etc.); ·With regard to verification, in the event of infringements, in particular incorrect and incomplete payment claims in respect of the specific expenditure and the form required, the expenditure is not verified, as the beneficiary has not submitted before the deadline all the necessary documents requested by the MA in the verification process in accordance with Article 63(1) of the European Structural and Investment Funds Act (ZUSESIF). Under Article 64(1) ZUSESIF, if a beneficiary fails to submit a document or clarification within the time limit, the expenditure concerned is not verified and may be included in a subsequent payment request; ·The MA carries out an administrative check of each payment claim for each beneficiary. Staff handling the relevant payment claim also check for any whistleblowing reports received concerning fraudulent behaviour under Annex 2 Recommended mitigating controls to the Guidelines for Member States and Programme Authorities responsible for fraud risk assessment and effective and proportionate anti-fraud measures; ·The epidemic crisis that started in March 2020 made it difficult to carry out certain activities, most often related to events. In this context, numerous enquiries have been submitted to the Operational Programme ‘Good Governance’ in order to clarify the transition from an in-person to an online format, the spending of funds in the new circumstances, the type of reporting documents to be submitted. The MA publishes guidelines in its section on the single information portal, which contain a general recommendation to do one’s best to implement projects in a timely and accurate manner, and, for public events to be carried out remotely, if possible and if it will not adversely affect their effectiveness, following the corresponding amendment of grant contracts where necessary. The two instructions of the MA are available at the following links: https://www.eufunds.bg/bg/opgg/node/4229; https://www.eufunds.bg/bg/opgg/node/4742

Managing Authority of Human Resources Development Operational Programme 2014-2020: In response to the challenges of ensuring full verification of expenditure under the Human Resources Development Operational Programme 2014-2020 (OP HRD) in the context of the COVID-19 pandemic, the MA developed an additional means of verification of programme activities through a system of telephone interviews and other audio-visual communication with staff of beneficiaries and persons from the target groups of individual projects for which expenditure has been claimed. The official who carried out the inspection records the information from these interviews in checklists which, under case-law of the Supreme Administrative Court, are official documents within the meaning of Article 179(1) of the Code of Civil Procedure due to the fact that they were issued by officials in the exercise of their duties. This method was introduced as an alternative to in-person interviews normally carried out during on-the-spot checks, due to social distancing requirements. By using this technique, it is ensured that relevant information is obtained in the verification process. On the basis of information obtained from such interviews since March 2020, it was established that a total of 3 contracts have not been implemented. A financial correction was set for one of the contracts, verification of affected expenditure was refused for another and the third contract was terminated and the beneficiary was informed that it should recover any amounts unduly received. A referral has been made to the competent authorities. Managing Authority of Operational Programme ‘Science and Education for Smart Growth’ 2014-2020: Every year, the Audit Authority of the Audit of European Union Funds Executive Agency (AEUFEA) carries out an assurance audit on the effective functioning of the management and control systems of the Managing Authority of the Operational Programme ‘Science and Education for Smart Growth’ carried out by the Audit Authority (AA). In the final report of 13 July 2020, the AA categorised the assessment of the management and control systems under Key Requirement 4 ‘Appropriate management verifications’ as Grade 2 ‘Functioning. Some improvement needed.’ In the report, the AA states that adequate measures have been taken by the MA of Operational Programme ‘Science and Education for Smart Growth’ to ensure adequate administrative capacity to implement the procedures for the verification of public procurement expenditure. Managing Authority Implementation of Operational Programme ‘Transport and Transport Infrastructure’ 2014-2020: For Operational Programme Transport and Transport Infrastructure 2014-2020, a functioning management and control system has been set up for the part of the management verifications and monitoring of the funded projects, which includes: ·administrative verifications in respect of each application for reimbursement by beneficiaries, which include: ocheck on the legality of the procedures carried out by the beneficiary for the selection of the contractor; overification of eligibility of costs claimed by beneficiaries; overification of the activities carried out and the implementation of the indicators under the project; ocheck of fraud indicators; and ocheck of whistleblowing ; ·On-the-spot checks on project implementation to verify physical and financial progress ·Periodic audits of the system by the AEUFEA, and in particular the key requirement concerning the verification of expenditure under the programme, provide reasonable assurance as to its high level. Managing Authority of Operational Programme ‘Regions in Growth’ 2014-2020: The Managing Authority of the Operational Programme ‘Regions in Growth’ 2014-2020 updated the Manual for the management and implementation of the operational programme and the Management and control systems of the operational programme in line with the needs arising from the coronavirus outbreak, and introduced structural and organisational changes. The administrative capacity in the monitoring and verification units was improved by transferring experts from other departments, thus improving the implementation of the relevant activities within the Managing Authority. The conclusion is that the MA of OPRG 2014-2020 maintains a high level and quality of monitoring and verification. The management and control systems of the Managing Authority do not report negative impacts and trends, despite the pandemic conditions and the containment measures taken by the government, in particular the challenge for some staff of the MA to carry out their duties remotely. The Managing Authority has put in place all the conditions for providing for staff without taking the risk of compromising the quality of work and of deteriorating the organisation of monitoring and verification of resources from the European Structural and Investment Funds. Managing Authority of Operational Programme ‘Environment’ 2014-2020:

The monitoring and verification process for OPE 2014-2020 has been maintained at the highest level, taking into account all findings and recommendations of both the national audit bodies and the EC and the European Court of Auditors. As the expenditure foreseen under the programme is in no way linked to addressing the consequences of the COVID-19 pandemic, no exceptional procurements and expenditure under the operational programme are planned. This was achieved by transferring to the programme of resources saved under Operational Programme ‘Innovation and Competitiveness’ which has more experience in managing funds linked to private legal entities. Thus, the responsibility for controlling exceptional expenditure was clearly defined and this allowed for a more thorough control of this type of expenditure. With regard to increasing transparency in the use of European funds, it should be borne in mind that full e-procurement was introduced in 2020 ensuring equal access to information on ongoing tenders and significantly reducing the scope for manipulation of tendering procedures. Executive Agency ‘Certification Audit of European Agriculture Funds’ In relation to the increased risk of fraud, the staff of the Agency ‘Certification Audit of European Agricultural Funds’ participated in a series of meetings with the Commission’s audit authorities on the need to extend checks during audit engagements and to enhance awareness of the increased risk of double financing and direct award of public contracts. As part of the checks to be carried out at the Agency, unjustified direct award is an indicator of fraud. National Fund Directorate within the Ministry of Finance The expenditure certification process is carried out by the National Fund Directorate within the Ministry of Finance (Certifying Authority) in accordance with the principle of separation of functions and responsibilities between the actors involved, while avoiding duplication of controls. Documentary checks prior to the preparation and submission of payment claims to the Commission are based on the accounting and control procedures established by the CB and include: ·verification of Certification Report and Declaration of Eligible Expenditure; ·review of the reports (preliminary and final) of control and audit authorities for the OP concerned and information on the implementation of the recommendations made therein; ·review of registered whistleblowing and irregularities under the OP; ·other checks related to the verified expenditure (CA verifications, on-the-spot checks of the MA, review of information on the progress of implementation and the results of the management checks carried out, etc.); ·maintaining databases for the purpose of certification of expenditure, financial management and implementation of OPs; ·keeping an audit trail. Checks on accounting records are carried out on a sample basis to confirm the eligibility of expenditure included in the Certification Report and Declaration of Eligible Expenditure and on public procurement procedures to confirm the legality of the expenditure included in the Certification Report and the Declaration of Eligible Expenditure and the results of these checks are taken into account in the certification of expenditure with the annual closure of accounts. The certification of expenditure to the European Commission through the annual accounts for the closure of an accounting year for each programme includes the following activities: ·review of payment applications prepared and submitted to the European Commission during the accounting year; ·review of the results of the CB’s verifications of compliance with the managing authority’s procedures and control activities and their impact on the amount of eligible expenditure for the accounting year concerned; ·other checks related to expenditure submitted to the Commission for reimbursement (audits, irregularities, whistleblowing, financial corrections, debts, etc.) ·preparation and submission to the Commission of annual accounts for the closure of the accounting year;

·maintaining databases for the purpose of certification of expenditure, financial management and implementation of OPs; ·ensuring an adequate audit trail; In relation to the activities listed above, the organisational structure of the CA sets the following levels of responsibilities related to the certification process: a)Expert level — control and certification experts and other experts (accountants, lawyers, liquidity management experts); b) Management level — Heads of Unit; c)Certification level — Head of the CA. In order to improve the certification process in 2020, changes were made to the checklists used for the verification of public procurement and for the preparation of the annual accounts. The changes made are based on both experience and regulatory developments in the field concerned. The certification of expenditure did not show any increase in the identified deviations and shortcomings in either the work of the Managing Authorities or the implementation of the projects. Q.2 Have you ensured that emergency procurement is used on the basis of a case-by-case assessment? ☒YES, fully implementing the recommendation If you implemented fully the recommendation, could you indicate which procedures you have put in place to achieve that? Public Procurement Agency The Public Procurement Act (ZOP) provides for various options that allow for a quick procurement, including in cases of extreme urgency. These possibilities are in line with the relevant European directives in the field. In cases where there is an urgent need to select a contractor, the contracting authority has the possibility to shorten the time limits for submission of applications and/or bids for competitive procedures (Article 74(4), Article 75(7), Article 76(6) and Article 133(4) of the Public Procurement Act, etc.). In this case (i.e. in the case of a fast-track procedure), the contracting authority should indicate in the contract notice the circumstances requiring the urgent procurement. Where it is not possible to carry out a fast-track procedure, the contracting authority may meet its need by carrying out one of the negotiated procedures referred to in Article 18(1), subparagraphs (8), (9) and (13) of the Public Procurement Act, i.e. negotiation without prior publication pursuant to Article 79(1)(4) of the Public Procurement Act if it is a public contracting authority, or a negotiated procedure without prior invitation to participate in accordance with Article 138(1) of the Public Procurement Act if it is a sectoral contracting authority (or direct negotiation under Article 182(1)(1) of the Public Procurement Act for a contract with an estimated value below the European thresholds). The application of one of the abovementioned legal bases is permissible where an urgent award of the contract is necessary due to exceptional circumstances and it is not possible to comply with time limits, including shortened deadlines, for an open, restricted or competitive procedure with negotiation. Moreover, the circumstances justifying the existence of urgency should not be attributable to the contracting authority. According to the legal definition of § 2(17) of the Additional Provisions of the Public Procurement Act, ‘exceptional circumstances’ are circumstances caused by events unforeseeable by the contracting authority, such as a natural disaster, an accident or a calamity, etc. that damage, directly endanger or may result in a subsequent occurrence of a danger to the life or health of persons, to the environment, to public order, to national security or to the defence of the country or are likely to significantly impede or impair the normal performance of the contracting authority’s statutory activities. The Public Procurement Act provides that the contracting authority must justify the exceptional circumstances when conducting a procedure under Article 79(1)(4), Article 138(1) or Article 182(1)(1) of the Public Procurement Act. In this vein, the award of emergency contracts in the country is subject to legal grounds and a case-by-case assessment by the individual contracting authority. The Public Procurement Agency (PPA) carries out an external review of legality in the award of public contracts in the event of extreme urgency and in the conduct of negotiated procedures in exceptional circumstances. Controls by the PPA are carried out in accordance with the conditions laid down in the Public Procurement Act. It should be noted that ex ante control of the PPA constitutes effective methodological support for the contracting authorities, which, under the Public Procurement Act, are responsible for the legality of their procedures. At the end of all PPA checks an opinion is issued in which findings are accompanied by recommendations and instructions to address identified inaccuracies and regulatory non-compliances. Managing Authority of Operational Programme ‘Good Governance’ 2014-2020:

The MA of the Operational Programme ‘Good Governance’ carries out a strict ex-post control of procurement, including the grounds and procedures for emergency procurement and direct contracting. Where necessary, the MA of Operational Programme ‘Good Governance’ assists beneficiaries in checking the legality of the procurement conditions laid down so as to avoid cases of unlawful emergency procurement and, where such cases are discovered at the ex-post control stage, the MA establishes an appropriate financial correction to protect the financial interests of the European Union. Article 13 of the Act on State of Emergency Measures, announced by Decision of the National Assembly of 13 March 2020, and Measures Addressing the Effects (title amended SG No 44/2020, in force as of 14 May 2020, published SG No 28 of 24 March 2020, in force as of 13 March 2020, last amended SG No 109 of 22 December 2020, in force since 22 December 2020), permits a derogation from (suspends the application of) the Public Procurement Act in its entirety for the duration of the state of emergency and the epidemic emergency and three months after it is lifted in the following cases: 1.contracting authorities purchasing hygienic materials, disinfectants, medical devices and personal protective equipment necessary to ensure containment measures and transport services in such cases; 2.purchase of medical devices, provision of testing and reporting services, purchase of medical and laboratory equipment necessary for the diagnosis and treatment of infected patients, their supplies, as well as their implementation and warranty maintenance and transport services in such cases; 3.contracting activities for the disposal of pesticides and hospital waste in accordance with Regulation No 1 on the requirements for the collection and treatment of waste in the hospitals and health care facilities. As the beneficiaries of the OP are public and non-governmental bodies, institutions and organisations and the priority axes of the OP do not imply expenditure in these sectors, the MA of OP does not control the legality of such expenditure, as such expenditure is not carried out under OP projects. Managing Authority of Human Resources Development Operational Programme 2014-2020: In the process of verifying each payment claim, part of the checks carried out include checks on all expenditure relating to the assignment of supplies, services and works to persons outside the beneficiary. All concluded contracts are checked irrespective of their value and of whether they were awarded using the procedures provided for by law or directly. The check is carried out by completing appropriate checklists and assessing the compliance of each contract with the applicable procurement rules. Where a contract has been concluded applying an exception to the scope of the Public Procurement Act (and in particular Article 13(1)(21) of the Public Procurement Act and Article 13 of the Act on State of Emergency Measures, announced by Decision of the National Assembly of 13 March 2020, and Measures Addressing the Effects), it is verified whether the factual circumstances established at the time of the conclusion of the specific contract justify the application of the relevant exception. Managing Authority of Operational Programme ‘Science and Education for Smart Growth’ 2014-2020: The MA of OP does not recommend that beneficiaries carry out negotiated procedures without prior publication. Where the conduct of such procedures is necessary for reasons of urgency, the Public Procurement Agency, in the context of the checks it carries out under Article 233 of the Public Procurement Act