WRITTEN QUESTION E-2165/03

by Vitaliano Gemelli (PPE-DE) to the Commission

(30 June 2003)

Subject: Contractual rules of the fifth scientific and technological research programme

The fifth scientific and technological research programme is based on a number of contractual rules which at times are couched in excessively general terms and in some cases are so vague as regards their substance that they fail to provide legal certainty or protect contracting parties, which are often vulnerable to mistreatment and complete latitude of interpretation on the part of the Commission. The Commission is thus behaving improperly towards other contracting parties.

In particular, for the purposes of administering payments for the CRAFT projects, the Commission refers to Article 3 of Annex II to the contract, the substance of which is very vague. The article in question stipulates that, whenever a periodic payment is made, an amount corresponding to a portion of the advance will be recovered, the total of which is calculated on the basis of the relationship between eligible costs and expenditure for the period in question.

That being the case, can the Commission therefore say why, without laying down specific criteria or notifying them to the other contracting party (which is not allowed to alter the text of the article), at the time of an intermediate payment, it automatically recovers, according to its practice, 40 % of the advance granted to a consortium when a contract was concluded, causing particular inconvenience to public research institutes, which cannot use their own resources in anticipation of the money that they should receive under a contract from the Commission?

Can it also say what steps it will take to ensure that such improper behaviour does not continue under the sixth framework programme and to protect parties with which it enters into contracts?

Answer given by Mr Busquin on behalf of the Commission

(6 August 2003)

The Fifth Framework Programme and the model contract established for research and technological development (RTD) actions under that programme provide for a maximum advance fund of 40 % of the total Community financial contribution, whether the indirect action is a cooperative research project (CRAFT) or a traditional research project. The actual amount of the advance fund provided depends on the length of the project, the nature of the project and the expected expenditure over the first period and any financial security that may be imposed by the Commission.

The model contract requires that this advance fund be recuperated in part, over the life of the project, at the time of each subsequent payment for costs incurred. Specifically the contract states that On each periodic payment, an amount corresponding to a part of the initial advance shall be recovered, which amount is calculated on the basis of the relation between the eligible costs approved by the Commission and the forecast expenses for the period considered. Therefore, generally speaking either where actual costs incurred or approved are low or where forecast expenses are low, a greater proportion of the advance fund will be recuperated. In certain exceptional cases, it might be that the entire advance fund would be recuperated at a periodic payment, particularly in short-term projects such as CRAFT projects.

For the Sixth Framework Programme a different approach is foreseen. Generally speaking, the advance fund (pre-financing) will be up to a maximum of 85 % of the first 18 months of the project. This amount will be settled at the end of the first periodic payment and a new pre-financing for the next 18 months will be granted (again up to 85 % of the costs expected to be incurred during that period). In this way the advance funds will keep tandem with the actual costs incurred. For projects lasting one year or less, the maximum pre-financing possible is 80 % of the total Community financial contribution unless the contract is governed by collective responsibility of the contractors(1), in which case 85 % of the total can be provided.

(1) Or where the contractors are public bodies.