WRITTEN QUESTION E-3039/97 by Amedeo Amadeo (NI) to the Commission (1 October 1997)

Subject: Failure to act by the Commission - Phare programme

The EU Court of Auditors has drawn up a Special Report on the functioning of the decentralized system for the implementation of the Phare programme (1990-1995) for the Countries of Central and Eastern Europe (CEECs) ((OJ C 175, 9.6.1997, p. 4. )). We know that the Commission created decentralised implementation systems (DIS) to streamline the programmes and speed up the mobilization of financial resources. The programme management units (PMUs) responsible within the national administrations of the beneficiary countries for administering the Phare funds lack staff and training.

The Commission contributed to funding the staffing and operating costs of the PMUs but did not define the principles governing the funding, accounting procedures and monitoring. The Court of Auditors also confirms that the intensive use of technical assistance providing administrative and operational support for the PMUs is costly, particularly because of the 'restricted competition' in awarding contracts (where transparency is always lacking). Some consultancies were awarded a disproportionate number of contracts. The Commission also delayed setting up a system to monitor the PMUs' expenditure and did not ensure an adequate evaluation of the programmes carried out.

What is the Commission's answer to this very serious charge?

Joint answer to Written Questions E-3039/97, E-3040/97 and E-3041/97 given by Mr Van den Broek on behalf of the Commission (11 November 1997)

In his questions the Honourable Member picks up some of the statements and criticisms made by the Court of Auditors in its special report on the Decentralised Implementation System (DIS) for the PHARE programme, in particular the working of programme management units (PMUs), the procedure for placing service contracts and balance in the selection of tenderers.

The Commission repeats: in connection with that report it gave a full answer to the Court's remarks and did so in more detail than is possible in connection with these questions. The Commission wishes to point out again that it observed the relevant procedures and rules in a context in which it had at once to seek as far as possible to attain the objectives (which are sometimes hard to reconcile) of effectiveness, giving responsibility to the partner country, competition and openness in the placing of contracts. Here it must be borne in mind that the service contracts examined by the Court of Auditors (a 1993-94 sample) were predominantly in the field of technical assistance for a unique process of transition to a democratic and market-economy model.

As the programme has advanced beyond the stage of early emergencies, and with growing experience in the partner countries' official departments and the Commission, the fields identified as unsatisfactory by the report have been, or are on the point of being, addressed by the Commission. The chief decisions reached and corrections initiated relate to the following:

- measures to implement Article 118 (revised) of the Financial Regulation of 21 December 1977, applicable to the general budget of the European Communities; ((OJ L 356, 31.12.1977. )) in addition to publication in the Official Journal as required, PHARE service contracts are also advertised on the Internet and all expressions of interest are now subject to prequalification (the procedure was introduced in mid-1996);

- adoption of a change to restricted invitations to tender for PHARE (and TACIS) service contracts: the rules governing invitations to tender have been improved, with better information for tenderers and, in particular, disclosure of the composition of evaluation committees, and the promotion of greater diversity of contractors;

- the new guidelines for PHARE prepared by the Commission in March, continuing with the improved integration of implementation structures for this programme into the partner countries' 'normal' structures, more unbundling and decentralisation towards those countries and Commission delegations, whose staffing would be increased, the tapping of new sources of expertise alongside consultancies, such as twinnings of institutions and administrations;

- updating of the DIS Manual and its planned introduction before the end of this year, so as to combine the new provisions on transparency of contracts in a single document which also lays down in detail the procedures for (decreasing) aid for the operating costs of PMUs and provides a model for the transfer of know-how in programme management, with the aim of an effective reduction in dependence on technical assistance in this area.

The Commission expects that as a whole these steps will remedy the chief shortcomings identified in the section of the report by the Court of Auditors to which the Honourable Member refers.