WRITTEN QUESTION E-0622/96 by José Torres Couto (PSE) to the Commission (13 March 1996)

Subject: European Social Fund from 1986 to 1996 (subcontracting)

The Commission's DG V has been speaking of problems as regards subcontracting, a practice employed by vocational training bodies. Can the Commission provide complete and detailed information about the laws and written regulations which since 1986 have governed, restricted, or debarred the use of subcontracting and give precise reasons for its thinking on this important and sensitive subject?

Answer given by Mr Flynn on behalf of the Commission (22 May 1996)

Article 2 of the Financial Regulation applicable to the general budget of the European Communities states that appropriations must be used in accordance with the principles of sound financial management, particularly economy and cost-effectiveness ((OJ L 356, 31.12.1977, as amended (OJ L 240, 7.10.1995). )).

Certified amounts must be based on real costs, with supporting invoices or other equally valid documentary evidence. Where the promoter purchases goods or services, the transaction must be consistent with transparency criteria and the service provider must be selected according to the rules of competition. To be eligible, expenditure must also satisfy the following criteria:

* it must be provided for in national and Community regulations;

* it must be provided for and approved in the context of the application for assistance;

* it must not exceed the amount initially approved;

* it must be supported by documentary evidence;

* it must be necessary and legitimate.

In view of the absence of legal standards and written regulations referring specifically to subcontracting in connection with the European Social Fund (ESF), expenditure on subcontracting must be assessed on the basis of these principles. This renders ineligible any unjustified increase in expenditure resulting from:

* serial or unjustified subcontracting, which does not increase the value of the goods or services but merely inflates costs;

* subcontracting which gives rise to excessive profit margins which would not exist if the promoter had complied with the rules of sound financial management;

* contracts where the amounts to be paid to intermediaries are expressed as a percentage of the co-financing provided.

The Commission endeavours to ensure the legitimacy of costs which are submitted, where necessary by on-the-spot checks.

The Community regulations applicable are as follows:

* Council Regulation (EEC) No 2950/83 of 17 October 1983 on the implementation of Decision 83/516/EEC on the tasks of the European Social Fund ((OJ L 289, 22.10.1983. ));

* Council Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments ((OJ L 374, 31.12.1988. ));

* Council Regulation (EEC) No 4255/88 of 19 December 1988 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the European Social Fund3;

* Council Regulation (EEC) No 2082/93 of 20 July 1993 amending Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments ((OJ L 193, 31.7.1993. ));

* Council Regulation (EEC) No 2084/93 of 20 July 1993 amending Regulation (EEC) No 4255/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the European Social Fund4.