Special Report No 9/99 concerning research activities in the field of agriculture and fisheries (FAIR programme - Fisheries, Agriculture and Agro-Industrial Research), together with the Commission's replies
Date: 1999-12-16
Institutions: European Court of Auditors
Subjects: EU programme, farming sector, fishing industry, report, research

30.3.2000

EN

Official Journal of the European Communities

C 92/1

I

(Information)

COURT OF AUDITORS

concerning research activities in the field of agriculture and fisheries (FAIR programme (cid:151)
Fisheries, Agriculture and Agro-Industrial Research), together with the Commission(cid:146)s replies

SPECIAL REPORT No 9/99

(pursuant to Article 248(4), second subparagraph, EC)

(2000/C 92/01)

CONTENTS

Paragraph

Page

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Research activities in the field of agriculture and fisheries . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Court(cid:146)s audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SUMMARY OF THE PRINCIPAL OBSERVATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

GENERAL FEATURES OF AGRICULTURAL RESEARCH MEASURES . . . . . . . . . . . . . . . . . . . . .

Legal framework and objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ORGANISATION OF THE FAIR PROGRAMME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Implementation framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definitions and rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management structure and methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 to 4

1 to 2

3 to 4

5 to 12

13 to 19

13 to 14

15 to 17

18 to 19

20 to 55

21 to 42

22 to 30

31 to 42

43 to 55

44 to 49

50 to 55

MANAGEMENT OF FAIR PROGRAMME ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56 to 110

Rules and practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57 to 74

Dating of contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Authorising Officer(cid:146)s role and position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interdepartmental consultation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Entry in the accounts and monitoring of staff and operating costs . . . . . . . . . . . . . . . . .

Existence of private agreements with contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cooperation with the FAIR Programme Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58

59

60 to 61

62 to 65

66 to 68

69 to 74

Implementation of the management, monitoring and control procedures . . . . . . . . . . . . . . .

75 to 110

Pressure of time limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Formalisation of the management of the measures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

76 to 80

81 to 90

Financial and technical requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91 to 110

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111 to 118

The Commission(cid:146)s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

2

2

2

4

4

5

5

5

7

7

8

9

9

10

11

11

11

11

11

12

12

12

13

13

14

15

17

18

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INTRODUCTION

Research activities in the field of agriculture and fisheries

1. Agriculture has always constituted a traditional field for
research, owing to its social and economic importance within the
European Union. This field received the first grants of Commu-
nity finance, on the basis of Article 41 of the Treaty establishing
the European Economic Community (EEC), long before a Com-
munity research policy was established. Subsequently, work in
this field has only increased in intensity, thanks to the diversifica-
tion of Community research activities made possible by Article
235 of the Treaty and, above all, following the entry into force of
the Single Act in July 1987, thanks to the incorporation of a new
budget heading reserved for research and technological develop-
ment (RTD) activities. For example, between 1987 and 1991 agri-
cultural research formed part of five specific programmes (1)
under the EEC(cid:146)s second research framework programme (2) and
received a total budget of ECU 205 million. These small-scale pro-
grammes were subsequently replaced, under the third framework
programme (1990 to 1994) (3), by a single specific agricultural
and agro-industrial research programme called AIR (4), which was
granted a budget of ECU 377 million.

(1) Council Decision 87/516/EEC, Euratom of 28 September 1987 con-
cerning the framework programme for Community activities (1987
to 1991), OJ L 302, 24.10.1987, as amended by Decision 88/193/EEC,
Euratom of 28 March 1988, OJ L 89, 6.4.1988.

(2) Council Decision 90/84/EEC of 26 February 1990 adopting a specific
Community research and technological development programme in
the field of competitiveness of agriculture and management of agri-
cultural resources (1989 to 1993), OJ L 58, 7.3.1990 (CAMAR).
Council Decision 89/160/EEC of 23 February 1989 on a first multi-
annual programme for biotechnology-based agro-industrial industrial
research and technology development (1988 to 1993), OJ L 60,
3.3.1989 (ECLAIR).
Council Decision 89/411/EEC of 20 June 1989 adopting a specific
research and technological development programme in the field of
food science and technology (1989 to 1993), OJ L 200, 13.7.1989
(FLAIR).
Council Decision 87/534/EEC of 19 October 1987 adopting Commu-
nity research and coordination programmes in the fisheries sector
(1988 to 1992), OJ L 314, 4.11.1987 (FAR).
Council Decision 89/626/EEC adopting a research and technological
development programme in the field of forestry (1990 to 1992), OJ
L 359, 8.12.1989 (FOREST).

(3) Council Decision 90/221/EEC, Euratom of 23 April 1990 concern-
ing the framework programme of Community activities in the field
of research and technological development (1990 to 1994), OJ L 117,
8.5.1990, as amended by Decision 93/167/EEC, Euratom of 15 March
1993, OJ L 69, 20.3.1993.

(4) Council Decision 91/504/EEC of 9 September 1991 adopting a spe-
cific research and technological development and demonstration pro-
gramme for the European Economic Community in the field of agri-
culture and agro-industry, including fisheries (1990 to 1994), OJ
L 265, 21.9.1991 (AIR).

2. The fourth framework programme (5) (fourth FP), which was
adopted for the 1994 to 1998 period with a total of ECU 11 879
million, comprises four large-scale measures. Community research
activities in the field of agriculture and fisheries are covered mainly
by the first of these activities and receive a total budget of ECU
739,5 million. They are intended to improve production, promote
the development of modern agricultural holdings and render
agriculture and forestry less intensive, more environment-friendly
and more compliant with end-users(cid:146) demands for quality and
safety. Table 1 shows the proportion of the fourth FP budget allo-
cated to each.

The Court(cid:146)s audit

3. The Court(cid:146)s audit was focused on examining the procedures
for managing and monitoring these activities. As the audit was
focused more specifically on the FAIR (6) specific Community
research programme, attention was paid to analysing the rules,
procedures and methods implemented by the Commission, both
within the Directorates-General (DGs) managing the programme
and on the basis of a sample of beneficiaries and/or research con-
tracts. To this end, nine on-the-spot audits were carried out in
seven Community countries, during the course of which 27 pro-
gramme beneficiaries, coordinators or partners involved in 44
research contracts were audited. For the purposes of the investiga-
tion, the audit field was extended to checking other files in spe-
cific isolated cases. Table 2 provides a summary of the number
and value of the projects audited on the spot.

4. The audit commenced at the end of March 1998, following
the initial enquiry, and was completed by a draft special report
adopted by the Court in July 1999. The observations contained in
this report are based mainly on four sector letters addressed to the
Commission in December 1998 and February 1999 respectively.
The Court received the replies to them in June and July 1999.

SUMMARY OF THE PRINCIPAL OBSERVATIONS

5. The FAIR specific research programme is a continuation of
several previous experiments. Although it was granted more
appropriations and implemented by means of formally more var-
ied activities, its structure and management methods were not
adapted sufficiently. The fact that there are no quantified objec-
tives, either pre-defined or based on previous activities, also makes
it difficult to measure the results and check how far it is suited to
the strategy it is supposed to promote (see paragraphs 1 and 13
to 19).

(5) Decision No 1110/94/EC of the European Parliament and of the
Council of 26 April 1994 concerning the fourth framework pro-
gramme of the European Community activities in the field of the
research and technological development and demonstration (1994 to
1998), OJ L 126, 18.5.1994. Decision No 2535/97/EC of 1 December
1997 amending Decision No 1110/94/EC for the second time, OJ
L 347, 18.12.1997.

(6) Council Decision 94/805/EC of 23 November 1994 adopting a spe-
cific programme of research, technological development and demon-
stration in the field of agriculture and fisheries,
including agro-
forestry, aquaculture and rural
industry,
development (1994 to 1998), OJ L 334, 22.12.1994 (FAIR).

food technologies,

.

.

3
0
3
2
0
0
0

Breakdown by measure of the fourth framework programme(cid:146)s budget

Table 1

Fourth framework programme

(in million ECU)

A. Information technologies
B. Industrial technologies
C. Environment
D. Life sciences and technologies

- Biotechnology
- Biomedicine and health
- Agriculture and fisheries

- FAIR specific programme
- Institutional activities (*)
- Competitive activities (*)

E. Non-nuclear energy
F. Transport
G. Finalised socioeconomic research

Measure 1

Agriculture and
fisheries

Life sciences and
technologies

595,5
374,0
739,5

658,0
50,0
31,5

RTD and
demonstration
programme

3 668,0
2 140,0
1 157,0
1 709,0

1 076,0
263,0
147,0

Measure 2

Measure 3

Measure 4

Total for fourth FP

Cooperation with third countries and international organisations

Dissemination and exploitation of the results

Researchers(cid:146) training and mobility

(*) To provide scientific and technical support to Community policies.
Source: Commission.

Total

10 160,0

575,0

352,0

792,0

792,0

11 879,0

575,0

352,0

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Summary by type of the number and value of FAIR programme projects audited on the spot

Table 2

Types of projects audited on the spot

Value
(in million ECU)

Number

Shared-cost research projects

Demonstration projects

Concerted actions (including networks)

SME cooperative research projects

Supporting measures

Grants

35,0

3,1

3,2

0,9

0,4

0,1

Total

42,7

31

2

7

2

1

1

44

6. Certain rules for implementing the programme were not
applied correctly, as a result of lack of clarification or insufficient
detail. For example, apart from the scientific and technical selec-
tion criteria, selection criteria concerning the compliance of
projects with common agricultural policy (CAP) objectives were
applied. In the case of the FAIR1 call, they were not clarified
beforehand. The order of priority of the projects selected as it
resulted from the external scientific evaluation, was changed con-
siderably. The principle that financing decreases in proportion to
the proximity to the market of the proposals submitted was also
rarely applied as a means of fixing the amounts of financial con-
tributions (see paragraphs 20 to 30).

7. As there was no joint selection and evaluation procedure
under the fourth FP, the managing departments drew up proced-
ures specific to the FAIR programme. These procedures, which
were inadequate and, in some cases, poorly applied, did not fully
ensure that the selections made were transparent. As for final
evaluation, the obligations resulting from the four previous spe-
cific programmes were not fulfilled. The Commission interpreted
the fourth FP(cid:146)s new provisions concerning final evaluation in such
a way that, in practice, this exercise is no longer carried out (see
paragraphs 31 to 39).

10. The fact that there was no coordinated policy concerning
information systems that was applicable to all the DGs managing
the fourth FP resulted in separate computer applications being
developed, which hindered coordinated management of the activi-
ties and effective exploitation and dissemination of the informa-
tion available. Not only did these applications deprive the Com-
mission of comprehensive data, but they also gave rise to additional
costs (see paragraph 52).

11. The Court(cid:146)s audits revealed cases where the regulatory or
contractual provisions had not been adhered to. Shortcomings
and weaknesses were also detected in the manner in which the
management, monitoring and control procedures were imple-
mented (see paragraphs 56 to 110).

12. The standard contract in force for research projects contains
defects that are likely to affect European Community interests. For
example, there is no requirement for contractors to be jointly and
severally liable. Their obligations as regards justifying declared
expenditure are unsatisfactory. Lastly, the conditions governing
the application of penalties are too restrictive (see paragraphs 40
to 42).

8. Some agricultural research projects were also financed by
other Community instruments or forms of intervention. The
Commission(cid:146)s lack of familiarity with the former meant that they
were not coordinated with those of the FAIR programme. The
Commission(cid:146)s management tools do not enable complementarity
to be assessed or the risk of redundant aspects to be eliminated
(see paragraphs 53 to 55).

GENERAL FEATURES OF AGRICULTURAL RESEARCH
MEASURES

Legal framework and objectives

9. As with the previous programme, measures under the FAIR
programme were co-managed by three DGs. This shared manage-
ment was the result of historical and organisational consider-
ations. As the DGs(cid:146) respective responsibilities and powers had not
been formalised, the management of the programme lacked clar-
ity and homogeneity. Optimum use was not made of the staff and
technical resources available (see paragraphs 43 to 51).

13. Under the fourth FP, agricultural research receives contribu-
tions from two specific programmes via three types of measures:
indirect, direct and competitive. Indirect measures are imple-
mented under the (cid:145)agriculture and fisheries(cid:146) specific research pro-
gramme, generally termed the FAIR programme, which has a
budget of ECU 658 million. Its field of disciplines ranges from

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agro-industry to food technologies, and includes forestry, aqua-
culture and rural development (1). Direct measures and competi-
tive activities, with budgets of ECU 50 million and ECU 31,5 mil-
lion respectively, come under the specific programme for (cid:145)RTD,
including demonstration (2), to be carried out for the EC, on the
one hand, by the JRC and, on the other, by means of activities
within the framework of a competitive approach and intended for
scientific and technical support to Community policies(cid:146). Direct
measures are assigned directly to the JRC for implementation, and
competitive activities are implemented within the framework of
a competitive approach.

14. Whilst these research measures are the continuation of pre-
vious experiences, they also crystallise changes that have gradu-
ally taken place within the programmes. They incorporate, inter
alia, new research topics to take account, in the light of the CAP
and the common fisheries policy (CFP), of new concerns relating
to quality, safety and environmental protection. The (cid:145)mad cow(cid:146)
crisis also obliged them to respond to the urgent need for research
in the field of transmissible spongiform encephalopathies (TSE).
In so doing, these measures have anticipated the new directions
taken by the fifth FP, two of whose key activities, with a budget of
some ECU 810 million, are devoted to agricultural research: (cid:145)Food,
nutrition and health(cid:146) and (cid:145)Sustainable management of agriculture,
fisheries and forestry(cid:146).

Special features

15. The distinctive feature of the agricultural research area is that
it benefits from the sizeable contribution made by other types of
Community intervention and policies outside the scope of the
fourth FP that are directly or indirectly oriented towards agricul-
ture and fisheries. It is difficult to draw up an accurate quantita-
tive and qualitative list of the above, however, as the most that is
known, in financial terms, is that 5,6 % (3) of the budget for struc-
tural measures (i.e. ECU 8 518 million) is allocated to RTD.

16. Competitive activities comprised an innovation under the
fourth FP. They were, however, initiated in the absence of any

(1) General objectives of the FAIR programme: (a) increase undertakings(cid:146)
competitiveness in the agriculture and fisheries sectors by developing
new methods and integrated production and processing lines; (b)
improve the management of rural and forest areas as a contribution
to the reformed common agricultural policy (CAP) and Community
rural-development policy; (c) ensure environmental and health pro-
tection in the fisheries and aquaculture sectors by way of support to
the common fisheries policy (CFP) objectives.

(2) Council Decision 94/918/EC of 15 December 1994 adopting a spe-
cific programme for research and technological development, includ-
ing demonstration, to be carried out for the European Community,
on the one hand, by the JRC and, on the other, by means of activities
within the framework of a competitive approach and intended for sci-
entific and technical support to Community policies (1995 to 1998),
OJ L 361, 31.12.1994.

(3) Commission Communication to the Council, the European Parlia-
ment, the Economic and Social Committee and the Committee of the
Regions (cid:145)Reinforcing cohesion and competitiveness through research,
technological development and innovation(cid:146), COM(98) 275 (final),
27.5.1998.

clear organisation of the terms of their implementation and the
procedures for monitoring them. Against this background, the
JRC often helped to prepare specifications for the various calls for
proposals. In the meantime, the specific nature of the research
areas was such that the market was not always in a position to
respond. As a result, although the JRC was not allowed to tender,
some projects were allocated to it in the end for the simple reason
that it was the only body that was at all competent in the areas
concerned.

17. Over the past decade, activities of the type supported by the
FAIR programme have been marked by a large increase in appro-
priations and greater diversity in the measures financed. They are
co-managed by three DGs and relate to 68 subareas grouped into
six main areas (4). The diversity of the measures and the scope of
the programme have given rise to important links with other
fourth FP activities or Community instruments.

Financial data

18. On 31 December 1998, the commitment appropriations
allocated to the FAIR programme amounted to ECU 595 million,
ECU 565 million of which was set aside for operational measures.
Tables 3 and 4 provide a breakdown of the related contracts by
area and project type.

19. Of the programme(cid:146)s six areas of intervention, the first five
require a concentration of resources. The sixth, which covers con-
sultation activities and has an indicative budget of 8 % of the pro-
gramme(cid:146)s appropriations, is aimed at setting up European net-
works. On 31 December 1998, only seven contracts were being
financed directly by this area. The related Community contribu-
tion amounted to ECU 3,6 million, accounting for hardly 0,55 %
of the appropriations. Until the fourth of the scheduled six calls
it was still difficult to determine its content, owing to the lack of
clear definition.

ORGANISATION OF THE FAIR PROGRAMME

20. The agricultural research measures carried out under the
FAIR programme have the benefit of the many previous experi-
ences on which they are based, their diversity of form and scope,
and the growing interest they generate. However, in the absence
of reforms, the increase in the funds allocated has taken its toll on
the management of the programme as far as its implementation
and the mechanism and methods for managing the activities are
concerned.

(4) Area 1: integrated production and processing chains; area 2: scaling-up
and processing methodologies; area 3: generic science and advanced
technologies for nutritious foods; area 4: agriculture, forestry and
rural development; area 5: fisheries and aquaculture; area 6: other
activities, mainly implemented by concertation.

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Table 3

Financial implementation by area

Areas

Implementation as at 31.12.1998

Value of contracts
(in million ECU)

Number of contracts

1. Integrated production and processing chains

2. Scaling-up and processing methodologies

3. Generic science and advanced technologies for nutritious foods

4. Agriculture, forestry and rural development

5. Fisheries and aquaculture

6. Objectives achieved by concertation

265,9

179,1

95,4

3,6

Total for projects

544,0

Supporting measures

21,0

Total number of programme operations

565,0

Source: Commission data as at 11.6.1999.

555

350

239

7

1 151

177

1 328

Financial implementation by type of FAIR programme projects

Table 4

Types of projects

Implementation as at 31.12.1998

Value
(in million ECU)

Number of contracts

Shared-cost projects
- of which specific TSE calls
- of which joint TSE calls

Concerted actions
- of which TSE

Demonstration projects

Thematic networks

SMEs
- feasibility awards
- cooperative research

Grants

Supporting measures

Source: Commission data as at 11.6.1999.

Total

8
1

1

177
28

8,8
2,1

0,6

6,7
27,9

438,5

38,6

5,1

0,9

34,5

26,4

21,0

565,0

450

114

6

2

256

323

177

1 328

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Implementation framework

21. The weaknesses described in the paragraphs below are the
result of certain features specific to the FAIR programme, as well
as of lack of precision in the regulatory framework and manage-
ment structure.

Definitions and rules

Strategy and objectives

22. The FAIR programme fits in with the research strategy laid
down for the fourth FP: it reflects its guidelines and specifies its
scientific and technological objectives in the field of agriculture
and fisheries. The economic sectors involved, the strategic and
general objectives targeted, and the methods proposed for meet-
ing them are thus set out in its first Annex. However, its imple-
mentation and scientific and technological content are described
in general terms. The description of the objectives would have
benefited from being accompanied by quantitative indicators. It
would similarly have been useful to place greater emphasis on the
link with the outcome of previous Community research.

Types of activities

In accordance with the specific rules laid down in Annex III
23.
to the FAIR programme, the latter is based on a broad range of
measures. Although 84 % of the appropriations continue to be
devoted to shared-cost research projects, 16 % are set aside for less
traditional measures. The latter include, more particularly, research-
ers(cid:146) training and mobility grants and measures to promote SMEs.
These thematic measures, which had already been tested under
other specific programmes or the previous programme, but on a
small scale, were not new. For the Commission, integrating the
thematic measures into the existing decision-making and imple-
mentation procedure has, nevertheless, created considerable extra
work because of their particular rules and the fact that the man-
agement of these measures is shared by several departments.

24. The sum of the training and mobility grants awarded under
the FAIR programme accounted for a total Community contribu-
tion of ECU 26,4 million in respect of 323 contracts at the end of
December 1998. They are all processed in a standard manner, as
laid down in the specific (cid:145)Researchers(cid:146) training and mobility(cid:146) pro-
gramme. The files, which are high in number but low in unit
value, are subject to complex management procedures, in which
different managing directorates are involved at different times.
Beneficiaries also have to cope with a selection, evaluation and
decision-making mechanism that is incompatible with the rapid
processing of applications. The instrument(cid:146)s effectiveness is dimin-
ished by the length of the delays and frequent withdrawals. The
value of this measure within the programme is moreover difficult
to measure when beneficiaries are not followed up on a regular
basis, once the training contract has ended, given that the most
recent details concerning their situation are already historic. A
specific provision should be laid down in the contract so that the
risk of repeat financing of study subjects previously financed by
Community funds is avoided.

25. The scientific, administrative and financial management of
the measures to promote SMEs is itself complex, owing to the
specific nature of the related rules of application and the particu-
lar attention that needs to be paid to beneficiaries. During the
course of the programme, the DG for Science, Research and
Development(cid:146)s Unit for the Coordination of SMEs had to make
belated adjustments (in April 1998). Despite the efforts made and
the support activities undertaken under the FAIR programme,
notably by establishing special information networks, only 5,5 %
of the appropriations were used, instead of the 10 % maximum
laid down by the Council Decision adopting the FAIR programme.

In order to promote dissemination, the Commission took
26.
the initiative of financing the FAIR network activities or focal
points, which were aimed more particularly at providing informa-
tion to SMEs in the agro-industrial sector. At the end of the pro-
gramme, 34 projects had received a total subsidy of ECU 1,2 mil-
lion. Although the latter had played their part in helping to
improve notification of the targeted undertakings, the audits
highlighted the weaknesses of the methods used to implement
them, which were due principally to the failure clearly to demar-
cate these projects, which were sectoral by nature, so as to distin-
guish them from those managed by similar bodies already estab-
lished in the Member States that were financed exclusively from
national funds. The subsidies were also granted on the basis of a
contract that did not formally incorporate the content and terms
governing the implementation of the work financed.

Selection criteria and financial contribution

27. The selection criteria and financial-contribution rules selected
under the FAIR programme are based on rules common to RTD
activities, which are laid down in the fourth FP and the related
Council Decisions (1). As the Council Decision adopting the pro-
gramme did not lay down distinctive criteria, the FAIR research
projects had to be selected on the basis of their scientific and tech-
nical qualities. In some areas, however, particularly in area 4 for
(cid:145)Agriculture, forestry and rural development(cid:146), which links research
with CAP and rural-development requirements, additional selec-
tion criteria were applied. As far as the abovementioned area is
concerned, these criteria, such as the priority given to agricultural-
policy aspects in the selection procedure, were not clarified before-
hand. When the first call was issued, they were poorly understood
by the potential beneficiaries of the research measures.

28. The global control of the proposals submitted in response to
the first call revealed that, after the proposals had been evaluated,
13 projects that had been rated scientifically excellent by indepen-
dent experts and 47 very good proposals awarded marks of A+

(1) Council Decision 94/762/EC of 21 November 1994 concerning the
rules for the dissemination of the research results from the specific
programmes of research, technological development and demonstra-
tion of the European Community, OJ L 306, 30.11.1994, and Council
Decision 94/763/EC of 21 November 1994 concerning the rules for
the participation of undertakings, research centres and universities in
research, technological development and demonstration activities of
the European Community, OJ L 306, 30.11.1994.

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and A respectively were not selected for inclusion in the list of
activities to be financed. The reason given was that these projects
did not meet the evaluation criteria applied to area 4 concerning,
inter alia, project conformity with CAP objectives. The Commis-
sion was, however, prevailed upon to review its list of projects in
order to comply more strictly with the selection rules agreed for
the programme. For example, 10 proposals that had been awarded
a B by the experts and were selected because of the benefits they
offered in respect of CAP objectives were replaced by projects of
a higher scientific quality. This readjustment of the selection cri-
teria in favour of the projects(cid:146) higher scientific and technical qual-
ity was only partial, however: an examination of the Commis-
sion(cid:146)s review revealed that the 10 B proposals rejected had all
been transferred to a reserve list, and five of them were financed
in the end.

29. Where appropriate provisions authorise the use of selection
criteria other than the traditional ones of scientific and technical
excellence, prior explanations concerning their nature, import
and combination are essential. Failing this, the transparency of
the procedure for selecting proposals cannot be guaranteed.

30. Other general provisions of the fourth FP or of the above-
mentioned Council Decisions were unclear. For example, Com-
munity financing of RTD projects has rarely been decreased in
proportion to the proximity to the market. The Commission failed
to define either the rules for application or the terms for fixing the
corresponding sliding-scale rates.

Procedures

Programme evaluation

tion of three of them (1). To date it has merely referred back to the
reports concerning the most recent five-year evaluation of the
research programmes, for which the objective of the evaluation
exercise is different. The report on the evaluation of the specific
programmes of agricultural research measures has produced few
developments as regards the real nature of the final evaluation of
completed programmes, even though it proposed to incorporate
this aspect. The report on framework programmes, drawn up in
February 1997 by the group of experts appointed by the Com-
mission, states that (cid:145)given the time available, the group decided to
concentrate essentially on the future, rather than linger over the
past(cid:146).

34. Up until July 1997, when the Commission published a call
for applications (2) in order to draw up a list of experts, the cri-
teria for selecting expert programme assessors had not been
specified clearly. In the absence of provision to the contrary, the
selection of an expert who had sat or was sitting on the FAIR
Programme Committee (see paragraph 69) was not precluded.
Thus, a Member State representative, whose term of office had
ended in July 1995, was selected to draw up the 1995 annual
follow-up report by the DGs managing the programme. The pos-
sibility of selecting candidates with previous experience in follow-
ing up programmes was confirmed, but without enabling one
and the same group of experts to be used, as was the case with
the 1995 and 1996 follow-up exercises.

Proposal evaluation

35. The procedure introduced to evaluate proposals provides no
assurance as to either its transparency or the strictness of moni-
toring, even though a tangible improvement was detected during
the course of the FAIR programme.

31.
In order to meet the obligations arising from the fourth FP
and specific programmes, in 1995 the Commission introduced a
new approach to following up and evaluating Community research
activities which involved two separate procedures: annual
follow-up and five-year evaluation of research programmes.

36. The procedure provides for two successive stages: scientific
evaluation of the proposals and preparation of the list of activi-
ties proposed for Community financing that is submitted to the
FAIR Programme Committee and for a Commission Decision.

32. The five-year evaluation is a three-fold exercise which involves
incorporating the final evaluation of the previous FP, evaluating
all specific programmes under way and carrying out an ex ante
evaluation in preparation for the next FP. Within this approach,
however, the scope and content of the final evaluations, as
described in the specific programmes(cid:146) legal provisions, are not
specified. The final evaluation exercise has not been actually been
carried in the case of some specific programmes.

37. The task of scientific evaluation is entrusted to groups of
independent experts who are asked to grade the scientific and
technical value of the proposals submitted on the basis of ques-
tionnaires drawn up beforehand, and to decide on a summary
analysis. However, this system for marking proposals does not in
itself enable the final mark awarded to be justified completely. For
example, in the case of some of the proposals examined, the
marking scheme did not establish an acceptable degree of consis-
tency between, on the one hand, the experts(cid:146) individual evalua-
tions and the global evaluation submitted by their group and, on

33. Although the specific agricultural research programmes
under the second FP have come to an end, the Commission has
not yet adopted the provisions needed to carry out the final evalua-

(1) CAMAR, FOREST and FAR.
(2) OJ C 232, 31.7.1997.

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the other, the global evaluations in relation to each other. With
regard to the FAIR programme demonstration projects, there was
greater assurance of such consistency, as the evaluation tied a
point-based marking system in with the experts(cid:146) comments, based
on a combination already used for many programmes managed
by the DG for Science, Research and Development.

statement, which is equivalent to documentary evidence of pay-
ment for the Commission, does not provide a satisfactory guar-
antee as to the reality and compliance of the costs. As a result, the
conditions laid down in the Financial Regulation (1) concerning
the validation of expenditure are met only in exceptional cases.

38. Although the selection of the independent proposal evalua-
tion experts called for care, few rules were established at the level
of either the fourth FP or the FAIR programme to ensure its trans-
parency. The evaluation guide drawn up for the programme did,
however, provide some precise details and impose certain restric-
tions. It emphasised, inter alia, the private, independent and con-
fidential nature of the service to be provided. It also precluded the
selection of any expert whose organisation would be a partner to
the proposal submitted for evaluation by the person concerned.
Nevertheless, the lack of a specific procedure and legal framework
did not give these provisions the force they deserved. In some
cases, the links that were found between the expert assessors and
the organisations presented in the research proposals examined
confirmed this.

Decision-making procedures

39. After RTD proposals have been evaluated and a favourable
opinion has been received from the Programme Committee, the
Commission decides on the finance to be granted using the writ-
ten procedure. This decision, which determines the estimated
amount required for each measure presented, is subsequently
binding on the Directors-General, who, when negotiating con-
tracts, are free to adjust the amounts only within the fixed limits
of more than 5 % and less than 20 % of the contributions decided
upon. The smooth running of this delegation mechanism is, how-
ever, dependent on the quality of the preliminary analytical work
carried out by the managing departments, but these departments,
which frequently experience difficulties in adhering to the tight
timetable imposed, are not subject to any specific obligation as
regards the scope and form of this analysis. A contract was thus
concluded in which the amount of the initial contribution had
been adjusted to bring it within the regulatory ceiling limits in
order to obviate the need for a new decision and the resultant
delay.

Contractual provisions

40. Some of the standard-contract provisions, notably those
concerning the definition and extent of beneficiaries(cid:146) obligations,
have continued to be defective. According to the terms of Article
1, the contractors(cid:146) overriding obligation is to implement the
project so that the targeted results are achieved. Except where
restrictive conditions are stipulated in the contract, the partners
are obliged to meet the obligations of any defaulting contractor.
Under the terms of the standard contract, however, this joint
responsibility is limited to carrying out the work and does not
extend to the financial aspects of contracts. The audits have shown
that the Commission is ill-equipped when it comes to recovering
unduly paid-out Community subsidies from beneficiaries, par-
ticularly as the financial risks taken by the Community are poorly
assessed (see paragraph 91 to 93).

41.
In addition, if detailed supporting documents for amounts
above a certain limit and specific types of expenditure are not for-
warded to the managing departments, the current expenditure

42. Lastly, the standard-contract provision (2) that enables the
Commission to cancel the contract in the event of, inter alia, a
serious financial irregularity, is rarely invoked in practice, and yet
controls regularly reveal frequent errors in the expenditure declared
which, while they may not constitute serious financial irregulari-
ties, are no less prejudicial to Community interests. The Commis-
sion is unequipped to deal with this situation and is not in a posi-
tion to impose appropriate penalty measures. In addition, some
contractors, due to the lack of specific clauses in their contracts
with the Community, circumvent the national legislation in force
when implementing research projects. For example, the rules gov-
erning public contracts and the remuneration or recruitment of
officials to public bodies are usually ignored.

Management structure and methods

43. Up until the third FP, agricultural research measures were
covered by sectoral programmes, which were entrusted to vari-
ous Commission DGs, i.e. XII for Science, Research and Develop-
ment, VI for Agriculture or XIV for Fisheries, according to the tar-
geted area. The Commission has since incorporated these activities
into a single specific programme, but the research axes have not
been fully incorporated into a common legislative framework, in
that it also had no major impact on the structures and methods
for managing the activities concerned.

Management structure

Co-management of the programme

44. Agricultural research measures under the FAIR programme
continue to be managed by three DGs (XII, VI and XIV) which are
responsible for 41 %, 40 % and 19 % of the appropriations respec-
tively. Pursuant to the authorisation rules concerning RTD, DG
XII is the lead DG.

(1) Article 41 of the Financial Regulation stipulates that (cid:145)validation of any
expenditure shall be subject to the submission of supporting docu-
ments showing the creditors(cid:146) claim and the service rendered or the
existence of a document justifying payment(cid:146).

(2) Article 5(3) of the general conditions annexed to the standard con-
tract provides that the Commission may immediately and in writing
cancel the present contract or terminate the participation of a con-
tractor:
(a) (i) when the Commission has requested action be taken to rectify,
within a reasonable time limit that may not be less than one
month and that shall have been stated in writing, the non-
performance of the present contract and this action has not
been taken satisfactorily or

(ii) when a serious financial irregularity exists;

(b) when the ownership at the level of a contractor, an associated con-
tractor or an associated undertaking changes and this change is such
that it is prejudicial to the project or the Community(cid:146)s interests.

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45. Within this co-management framework, each DG managing
the programme is responsible for one or more research areas:
roughly speaking, DG XII manages agro-industrial projects in
areas 1,
(cid:145)Integrated production and processing chains(cid:146), 2,
(cid:145)Scaling-up and processing methodologies(cid:146) and 3, (cid:145)Generic science
and advanced technologies for nutritious foods(cid:146); DG VI manages
contracts in area 4 for (cid:145)Agriculture, forestry and rural develop-
ment(cid:146) and DG XIV those in area 5 for (cid:145)Fisheries and aquaculture(cid:146),
while area 6 for (cid:145)Other activities, mainly implemented by concer-
tation(cid:146) may concern measures in any of the above areas. In its
capacity as leader, DG XII also provides the secretariat for the
programme and ensures that a number of joint procedures are
applied. Had the lead DG(cid:146)s powers been put in writing, as far as
jurisdiction, responsibilities and decision-making powers at the
scientific and financial levels are concerned, its role would have
been easier. In reality, it has done little in areas for which it is not
responsible as far as notification, decision-making or arbitration
are concerned.

Implementation methods

46. The imprecise nature of the rules on joint management and
decision-making for FAIR programme activities partly explains
the evident differences in the managing DGs(cid:146) implementation
methods. For example, as regards the organisation of the first calls
for proposals and the procedures for evaluating projects submit-
ted, some methods applied by the associated DGs were far removed
from those selected by the lead DG for the programme.

47. There were six calls for proposals for the FAIR programme,
numbered FAIR1 to FAIR6. In addition to these, there were three
calls for measures concerning transmissible spongiform encepha-
lopathies (TSE): the first was specific to the programme and the
remaining two were conducted jointly with the two additional
specific life sciences research programmes. These calls were con-
ducted under a tight schedule at the rate of two or three per
annum. This sustained rate enabled the proposals to be targeted
and, consequently, the beneficiaries(cid:146) and departments(cid:146) efforts to
be spread in a more balanced manner over the entire duration of
the programme(cid:146)s implementation. This rate was not applied by
the DG for Agriculture, however, which preferred annual calls,
which were not properly targeted and thus resulted in extra work
and great pressure to meet the budget timetable. In the course of
the programme, however, DG VI gradually targeted its calls in
conjunction with the other DGs.

ECU 13,6 million was issued on 17 March 1998. However, the
procedures for these three calls, which were held at close inter-
vals, were dissimilar: the procedures applied to the separate FAIR
call, issued four months prior to the first joint call, were mark-
edly different from those subsequently agreed for the two joint
calls. These three successive calls, which resulted in the selection
of eight, two and nine FAIR proposals respectively, mobilised con-
siderable resources, both internal and external, given the Com-
mission departments(cid:146) concern to take all the measures needed to
guarantee the transparency and quality of the selection procedure.

49.
In the absence of a procedure for evaluating proposals for
the fourth FP, as of 1994 a special guide was drawn up for the
FAIR programme by the three Directorates co-managing the pro-
gramme. However, after the external scientific evaluation laid
down by the guide, the departments managing area 4 for (cid:145)Agri-
culture, forestry and rural development(cid:146) submitted the proposals
for this area for internal evaluation by various units of the DG for
Agriculture, so that their relevance and compliance with the CAP
and rural development could be assessed. In the case of the FAIR1
call, this internal analysis resulted in considerable changes in the
order of priority of the projects selected as established by the
external scientific evaluation. Inadequate information and for-
malisation rendered the procedure for selecting the proposals for
this area less transparent.

Management methods

50. The FAIR specific programme faced increasing demands
which the Commission departments were determined to meet,
but with limited management resources. These limits were ren-
dered all the more appreciable by the fact that the programme(cid:146)s
management was divided between three DGs, which, individually,
were unable to derive maximum benefit from the staff and equip-
ment made available to them.

Staff

48. The calls for proposals reserved for TSE measures (specific
or joint) were issued following events relating to (cid:145)mad-cow dis-
ease(cid:146), which called for increased research work in specific areas in
accordance with the plan of action drawn up by the Commission.
The specific call was issued on 17 December 1996 and had a bud-
get of ECU 8,8 million. The first joint call was issued shortly after-
wards on 29 April 1997. As the budget of ECU 35 million (ECU
11,5 million of which was for the FAIR programme) set aside for
TSE measures was not fully utilised, ultimately a new joint call for

51. Over 90 scientific and financial managers share the manage-
ment and monitoring of some 1 300 FAIR programme contracts.
Almost a third of these staff have short-term contracts for a maxi-
mum duration of six months or a year, which results in high staff
turnover. As a result, 14 of the 44 research projects examined had
been administered by at least two managers (two of them by three).
Lastly, although the Commission departments had undertaken to
ensure that the division of tasks within the scientific and financial
teams was improved, the scientific manager still frequently admin-
isters too many projects. This is prejudicial to sound monitoring.

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Information systems

Rules and practices

52. The information systems on which management of the FAIR
programme is based are organised on an individual basis. Each
DG has developed its own computerised tools for the scientific
and financial management of projects on a unilateral basis. Part
of the reason for this is the lack of a coordinated computerisation
policy governing the management of research activities. These
individual developments, which impede information exchange
and genuine coordination between the departments managing
the programme, are unjustified. They give rise to unnecessary
costs and delay the introduction of a shared comprehensive sys-
tem. In fact, not one department has a comprehensive and histori-
cal database recording the programme(cid:146)s elements in terms of
projects and beneficiaries. The incomplete nature of the systems
used deprives managing departments of genuine management
and control tools, as there is no scope for research, extensive
cross-checking or, more simply, statistical enquiries.

Coordination and cooperation mechanisms

53.
In the field of agricultural research, the Court(cid:146)s audits of bene-
ficiaries confirmed the existence of activities similar to those aided
by the FAIR programme, but financed outside the fourth FP.

54. Such financing is possible on a large scale under the Struc-
tural Funds. Nevertheless, the Commission has taken no satisfac-
tory action to reduce the risks of dual financing and duplication
of effort. This has been aggravated, however, by the increased
number of demonstration projects within specific research pro-
grammes. The declarations made by the partners in the research
proposals, which are neither recorded in the form of contractual
provisions, nor centralised in a database common to the DGs
concerned, cannot be considered satisfactory.

55.
In 1996, the lead DG for the FAIR programme had planned
to establish better cooperation with the departments managing
agricultural policies in order to help overcome the information
gap. Its efforts failed, however. With regard to coordination with
national research work, the measures taken to date have not pro-
duced concrete results. As far as agriculture is concerned, the
former information system was abandoned, but not replaced.

MANAGEMENT OF FAIR PROGRAMME ACTIVITIES

56. Over the four years of the programme(cid:146)s implementation,
efforts have been made to improve the management of the activi-
ties. However, a certain number of weaknesses in the regulations
and practices in force, and shortcomings in the implementation
of the management, monitoring and control procedures persist.

57. The practices described below had the direct or indirect effect
of easing or even circumventing the rules in force.

Dating of contracts

58.
In order to make up for the delay in relation to the timetable
for conducting the first call, the DG for Agriculture had to speed
up the negotiation phase, given the budgetary constraint, to
enable contracts to be signed by 31 December 1995. As the nego-
tiations had not been completed by that date, many contracts
were finalised only at the beginning of the following financial
year, but the Commission still dated them December 1995. This
practice of back-dating contracts was not limited solely to the
proposals under the first FAIR call. In fact, out of 48 projects
studied, 18 similar cases were identified in respect of different
calls, but all for area 4. This procedure contravenes Article 6(5)
of the Financial Regulation, which provides that (cid:145)the commit-
ments shall be entered in the accounts on the basis of the com-
mitments contracted up to 31 December(cid:146). The effect of this prac-
tice was to create unsound relations between the Commission and
its partners. In February 1998, the Commission put an end to this
practice, which was legally unacceptable.

The Authorising Officer(cid:146)s role and position

59. The analysis of delegation with regard to the commitment of
expenditure reveals that the deputy Authorising Officer of the
unit responsible for managing area 4 projects was hierarchically
subordinate to the file manager, the unit head. As a result of this
situation, he was responsible for preparing files to be submitted
to the manager and for signing the corresponding commitments
of expenditure. In 1996 over 98 % of the commitments of expen-
diture were authorised in this manner by this official alone, who
was subordinate to the manager. As is confirmed by the Treaty (1)
and the Financial Regulation (2), the Authorising Officer is one of
the principal parties involved in implementing the budget and is
solely responsible for carrying out certain acts for which he is
specifically held accountable. These provisions are not being
respected, at least in their spirit, if the deputy Authorising Officer
is in a position that is hierarchically inferior to the manager. If the
Authorising Officer is hierarchically subordinate, he does not pos-
sess the independence necessitated by the responsibilities con-
nected with his duties.

Interdepartmental consultation

60.
Interdepartmental consultation is an obligation under the
Commission(cid:146)s Rules of Procedure that is intended to ensure the
transparency and consistency of the final decisions it is called
upon to make. Interdepartmental consultations for the purpose of

(1) Article 209(c) of the EC Treaty.
(2) Articles 21 and 73 of the Financial Regulation.

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selecting research proposals for the FAIR programme have been
held on the basis of a list of projects identified by their number,
title, cost and the estimated Community contribution. In practice,
this information was insufficient to enable the DGs concerned to
make a genuine analysis of the proposals and judge their benefit
in full knowledge of the facts.

in the second set of accounts is used to calculate the maximum
percentage authorised by the Council to cover staff costs. The
other expenditure is included in what is known as administrative
expenditure and is therefore used to calculate the related autho-
rised ceiling.

61. The regulatory time limit for consultation of 10 working
days prior to submission of a file to the Secretariat-General has
also rarely been adhered to. For example, the DGs consulted in
connection with the first three calls were granted between just
one and four days. Such time limits did not enable them to apply
themselves as necessary to analysing the proposals and to react
promptly to possible dual-financing risks. Considerable risks were
thus identified in connection with the INNOVATION specific pro-
gramme for the (cid:145)dissemination and exploitation of the results of
RTD and demonstration activities(cid:146) (1), some of the proposals for
which proved similar to those financed by the FAIR programme.

Entry in the accounts and monitoring of staff and
operating costs

62. As at 31 October 1998, the Commission listed 93 staff
financed using FAIR research programme appropriations. Of this
total, 54 contributed exclusively to the management of FAIR mea-
sures, while the remainder were actually assigned to other pro-
grammes or departments. The actual departmental organisational
charts indicate that 91 staff were physically assigned to tasks
related to the programme. 37 of these staff are financed from
sources other than the FAIR budget heading and 21 by operating
appropriations. This separation of budgetary management from
the physical management of staff assigned to a programme is
arbitrary. It complicates, if not interferes, with the monitoring of
the corresponding expenditure for no reason.

63. The Council Decision adopting the FAIR specific programme
provides for maximum staff and operating costs of 3,3 % and 4 %
of the programme(cid:146)s budget respectively. To ensure that these
thresholds are adhered to, the Commission has introduced a flat-
rate method for allocating expenditure which consists of dividing
it between the specific programmes in proportion to the budget-
ary allocation fixed for each. It emerges from this that the maxi-
mum percentages imposed are always adhered to, but also that
the true costs of staff and, more importantly, the programme are
unknown.

64. Staff costs are recorded in two sets of appropriation accounts
entitled (cid:145)Staff(cid:146), which covers seconded national experts (SNEs) and
temporary staff, and (cid:145)Official research staff(cid:146), covering permanent
officials and auxiliary staff. However, only expenditure recorded

(1) Council Decision 94/917/EC of 15 December 1994 adopting a spe-
cific programme for the dissemination and optimisation of the results
of activities in the field of research and technological development,
including demonstration (1994 to 1998), OJ L 361, 31.12.1994.

65.
In addition to these accounting and budgetary practices, it
should be noted that, in order to adhere to the authorised per-
centage, the calculation of staff costs does not take account of
expenditure relating to at least 21 permanent officials, who are
remunerated using appropriations for administrative expenditure
under Part A of the budget.

Existence of private agreements with contractors

66. The Commission authorised private financial agreements
with several contractors. They served as a pretext for some con-
tractors not to submit detailed data concerning their real costs
when the on-the-spot audits were carried out. These agreements
in fact exempted them from the obligation of drawing up true
overhead rates and sanctioned the use of flat rates for all Euro-
pean projects. The existence of such agreements was by no means
the exception. It was possible to identify 24 private framework
agreements, conventions or arrangements on the basis of Com-
mission information.

67. Amongst the above, several cases were detected where the
overhead amounts were not calculated in accordance with the
contractual mechanism. The overheads declared by two of the
beneficiaries audited were even exorbitant. Despite the fact that
the findings of audits carried out by external firms confirmed this,
no corrective action was taken by the Commission departments
responsible. In addition, these agreements could have been con-
tested on legal grounds when the fourth FP ended, mainly because
they were so out-of-date: none of them had been drawn up at the
time of the fourth FP and 17 of them were over 10 years old.

68. The conclusion of financial agreements that derogate from
the general terms and conditions of standard contracts impedes
smooth monitoring and control of the financial aspects of files
and affects the transparency of the contractual procedures. Prac-
tices of this kind in fact grant unjustified easy terms to some con-
tractors without being even mentioned in the provisions of the
contracts signed.

Cooperation with the FAIR Programme Committee

Quality and scope of the information forwarded

69. The main task (2) of the Programme Committee, compris-
ing representatives of the Member States, is to assist the Commis-
sion in adopting certain measures. Depending on the nature and

(2) The Programme Committee(cid:146)s role is described in the Council Deci-
sion of 13 July 1987 laying down the rules for exercising the imple-
mentation powers conferred upon the Commission and in Articles 5
to 7 of the Council Decision concerning the FAIR specific programme.
Article 7 lays down, inter alia, the measures on which its opinion is
required or of which it should be notified regularly.

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value of the projects concerned, the Commission departments
receive its opinion or provide it with information concerning the
activities implemented under the programme. Cooperation with
the Committee in the area of agricultural research has been dif-
ficult on occasions, as is evidenced by the Committee(cid:146)s reproaches
regarding the quality and scope of and time taken to present the
information that has been submitted to it.

In order to take account of the commitments undertaken by
74.
the Commission in response to the European Parliament with
regard to transparency (2), at the moment of their appointment to
the Programme Committee, any members who were not civil ser-
vants were supposed to sign a statement certifying that no (cid:145)con-
flict of interest existed between the Committee(cid:146)s work and their
own private interests(cid:146). No such statement was sought, however.

70. The Court(cid:146)s audit revealed that the Commission had not
provided the Programme Committee with the all the necessary
items of information in writing. In other cases it had complied
with the regulatory provisions, but had not adhered to the time
limits for forwarding the information agreed during the Commit-
tee(cid:146)s proceedings. Consequently, the Committee was not always
able to fulfil its role properly. For example, in the case of both the
work programme, the FAIR1 financing proposal and interim bud-
getary information on the programme, the Committee(cid:146)s favour-
able opinion could only be obtained under pressure of the time
limits that the Commission departments had placed themselves
under in order to meet the budget timetable and avoid losing the
appropriations at the end of the financial year.

71. Taking account of the thresholds fixed by the Commission
for this specific programme, there was no need to submit some
activities to this Committee for its opinion. For example, inas-
much as the Commission had set a maximum threshold cost of
ECU 1 million as a compulsory eligibility criterion (1) for SME
cooperative research projects alone, not one proposal gave rise to
a Community contribution in excess of the intervention threshold
of ECU 0,5 million, the level above which the Committee(cid:146)s opin-
ion would have been required. The Programme Committee was
therefore notified of the list of SME proposals, but was not
required to deliver its opinion.

72. Lastly, even though certain agricultural research activities,
such as institutional and competitive activities to provide scien-
tific and technical support to Community policies, were imple-
mented outside the FAIR specific programme, no coordination
mechanism was provided.

Independence of Committee members

73. According to the Rules of Procedure laid down for the Com-
mittee, Member States(cid:146) representatives must not have an interest
in or be associated with a body that is party to the proposals sub-
mitted for an opinion. Although the audits revealed that at least
54 members of the FAIR Programme Committee held their office
at the same time as being responsible for contracts, it could not
be verified that the stipulated provisions had been complied with
inasmuch as the minutes of the meetings did not report whether
the members involved in or concerned with a proposal had taken
part in the discussions.

Implementation of the management, monitoring and control
procedures

75. Cases were detected where there had been a lack of discipline
and punctiliousness in the implementation of the management,
monitoring and control procedures, both internally and in rela-
tion to project beneficiaries.

Pressure of time limits

76. The pressure of the budget timetable is frequently at the root
of the weaknesses detected. As the departments lack sufficient
time, preparation of the management of activities has been
neglected on occasions.

77. The partners managing FAIR projects thus worked until
March 1997 on the guide to drawing up technical reports relat-
ing to the previous programme up. The new guide was drawn up
only belatedly and could not be distributed prior to the above
date. The initial evaluations concerning the concerted actions
were made on the basis of the questionnaire for shared-cost
projects. This questionnaire was unsuitable, however, as there was
no point in asking several of the questions concerned. An appro-
priate form specific to concerted actions was prepared subse-
quently. It was discussed in principle in February 1996, but was
not accepted until a year later and could not be used until FAIR5,
the programme(cid:146)s penultimate call.

78. Furthermore, following the renegotiation of the list of FAIR1
proposals with the Programme Committee, the Commission(cid:146)s
corresponding decision with regard to the DG for Agriculture was
taken late, in December 1995. In the case of the contracts signed
before the end of 1995, the time available had been too short to
allow the normal negotiation procedure to take place.

79. This Commission Decision was also taken using an acceler-
ated written procedure. Although use of this procedure is restricted,
i.e. reserved, according to the procedural guidelines manual, for
legislative acts that are urgent, due to unforeseen and exceptional
circumstances, there was no information that made it possible to
ascertain whether the conditions for its application, as laid down

(1)

In a footnote to the information file relating to technological stimula-
tion measures in favour of SMEs.

(2) Note from the Commission Secretary-General dated 13.11.1996,

SEC(93) 2118.

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in the abovementioned manual, had been met. The need to make
up for an administrative delay is, in fact, an unacceptable justifica-
tion for the need for a reduced time limit.

126 had been put in category B, whereas the number of shared-
cost projects or concerted actions put in category B which had
been financed accounted for no more than 40 of the 310 cases
concerned.

80. Lastly, although the time limit for responding to calls is not
regulated, it is customary practice to grant beneficiaries three
months to respond. The time limits of 59 and 77 days for the
specific call and the first joint TSE call respectively were shorter,
however. Time limits that do not allow those submitting pro-
posals to mobilise their efforts properly are hardly compatible
with the requirement for quality in Community research activi-
ties. They are also likely to compromise the fair treatment of
potential beneficiaries. It emerges from the Court(cid:146)s audits that, of
the 53 FAIR-TSE proposals received, eight were submitted by at
least one independent expert who had worked on the report used
as a basis for drawing up the Commission(cid:146)s plan of action and
that, following the selection procedure, five of the same propos-
als, out of the 19 projects selected, received Community financ-
ing.

Formalisation of the management of the measures

81. The weaknesses identified hereafter derive fairly regularly
from insufficient formalisation of the work carried out.

Proposal evaluation and selection

82. Discipline was especially lacking when proposals were
selected, notably in two main areas. The first was unsatisfactory
formalisation of the independent experts(cid:146) final evaluations. At the
end of the external evaluation stage, each group of experts is
asked to refine its initial classification. As this final analysis is not
documented, the increased marks given in respect of the pro-
posals examined could not be explained.

83. The second area was the quality of the information drawn
up by the Commission to justify its selection of certain measures
that had been marked B by the expert assessors. Inasmuch as the
rule is that only the best proposals may be financed, the Com-
mission has an obligation to give solid reasons for departing from
this rule. It is required to show that selection was not at the cost
of projects of higher scientific and technical quality and that the
proposals selected are susceptible of genuine improvements. This
was not always demonstrated in practice, however. When justifi-
cations were provided, the Commission undertook to take account
of the experts(cid:146) criticisms, but it did not define the specific steps
on which it deemed the granting of Community support would
be conditional.

Contract negotiation

85. Certain aspects of the contract negotiation stage were also
insufficiently formal. Whilst the results of discussions concern-
ing technical specifications are stated in the files, the financial
negotiations, in contrast, are less frequently satisfactorily docu-
mented. Files in DG XII departments, in particular, bear little trace
of the budgetary negotiations relating to the proposals, and the
information required is often insufficient to enable eligible costs
to be analysed.

86. The negotiation sheets, originally drawn up by DG XII, have
not been adapted to the other managing departments(cid:146) require-
ments and circumstances. Apart from irrelevant replies, some
also contain obvious errors that had neither been detected nor
corrected by the end of the negotiation. The most frequent errors
concern the type or nature of the body and whether it formed
part of a group or not.

In 13 of the 44 cases audited, the budgetary negotiations
87.
were limited to reducing the budgets for the proposals submitted.
These reductions, which were, on occasion, clearly motivated by
the comments made by expert assessors, were still not accompan-
ied by an analysis that would allow their sufficiency and the impact
they would have on the proposed work to be assessed, thus giv-
ing free rein to the partners to decide for themselves the repercus-
sions they would have on the projects(cid:146) tasks and objectives. The
budgets initially proposed by the contractors were reduced sys-
tematically and on a unilateral basis by DG VI(cid:146)s departments. Far
from having the anticipated effects, they induced the partners to
increase the costs budget in their proposals by a proportional
amount.

88.
In other cases there was no evidence in the final contracts
that experts(cid:146) comments had been taken into account. Various
situations show that a better response to experts(cid:146) recommenda-
tions, reservations or doubts would have spared the Commission
the difficulties it subsequently encountered in implementing the
research work.

84. The audits also revealed that the evaluation marks awarded
by the independent experts to technological stimulation measures
(exploration incentives and cooperative research projects) in favour
of SMEs were lower overall than those for the FAIR programme(cid:146)s
other shared-cost projects. This peculiarity was not explained. For
example, out of 203 measures financed as at 31 December 1997,

89. The technical annex to projects, which forms an integral
part of research contracts, does not take sufficient account of the
changes decided at the end of the negotiation. With regard to
organisation and coordination procedures, the audits also revealed
significant differences between the technical annex(cid:146)s theoretical
description and actual practice. In addition, little detailed infor-
mation is provided concerning the qualifications of the teams
scheduled to carry out the research tasks. This factor sometimes

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made it easier for the management and piloting of projects to be
delegated to third parties without the Commission(cid:146)s prior con-
sent, even though this is required under standard-contract provi-
sions (1).

natural persons when they were actually due to the organisations
that were the project partners. The lack of effective constraints,
attributable to the managing departments(cid:146)
lax requirements,
explains this situation in part.

90.
It was found that customary clauses were repeatedly omit-
ted from some managing departments(cid:146) research contracts. For
example, information concerning the nature, status or position of
the signatories was regularly omitted, while in some cases the
standard provisions relating to States and associated partners were
not mentioned.

Financial and technical requirements

Tenderers(cid:146) financial standing

91. There were no specific instructions concerning the need to
verify tenderers(cid:146) financial standing before concluding contracts.
Owing to the lack of records in the files, it was not even possible
to establish whether the Commission departments had actually
carried out the analyses, and more especially as, out of the sample
of projects audited, very few of the financial documents forwarded
by the partners for negotiation purposes had been kept.

92.
In practice, few bank guarantees were taken. Furthermore,
those checked were unsatisfactory and not based on relevant cri-
teria. DG XII has thus held bank guarantees for only four FAIR
contracts since the programme began. All of them relate to the
project coordinator, irrespective of the competence and financial
health of the other contractors involved. Owing to the fact that
the partners are not jointly and severally liable financially, the
guarantees are insufficient to ensure that Community interests are
adequately protected. Moreover, two of the four guarantees were
issued for too short a term.

93. The bank guarantees requested have not been monitored
centrally within the Directorates managing the programme. Each
Directorate took decisions to request guarantees individually, irre-
spective of the information already available in any other Direct-
orate, which therefore gave rise to marked differences in both the
content and scope of the risks covered.

Contractors(cid:146) obligations

94.
It was frequently established during the audits that the part-
ners did not pay the requisite attention to the clauses contained
in research contracts and that many elementary rules were ignored,
whether through misinterpretation or deliberately. The errors,
oversights and shortcomings that were detected hardly differ in
their nature and impact from one contractor to another: the
accounting and analytical procedures are defective or non-existent,
and the provisions concerning the determination and justification
of time spent and eligible costs are not adhered to. On two occa-
sions payments made by coordinators, which were onward pay-
ments of the Community contribution received, had been to

(1) Article 2(2) of the general conditions annexed to the standard con-

tract.

95.
In many cases, however, there were many conspicuous signs
in the information provided to the Commission of the poor qual-
ity of the procedures or of non-compliance with standard-contract
provisions. The lack of certification provided for in the contrac-
tual provisions, the exorbitant or inconsistent hourly rates and
overhead expenses, or even non-adherence to the timescales stipu-
lated in the contract, did not result, for example, in a single invest-
igation by the Commission. Consequently, no action was taken to
rectify the situation.

96. Third parties, i.e. subcontractors employed in respect of
Community research projects, may be party to a contract, subject
to certain conditions, one of which requires the Commission(cid:146)s
prior written consent (2). This restriction, which is not coupled
with any other reservation concerning the reason for subcontract-
ing and the nature of the tasks entrusted to external service pro-
viders, is unsatisfactory in respect of the Commission(cid:146)s rights of
control, since the rights conferred upon it by the standard con-
tract are limited to mere technical control of and access to the
third parties concerned, to the exclusion of any right of financial
control.

97. The on-the-spot audits also revealed that the conditions
imposed by the standard contract with regard to subcontracting
had been misinterpreted and therefore poorly applied. In certain
cases the main purpose of some subcontracts was to relieve the
coordinator of the actual task of conducting the scientific co-
ordination of the projects or even to circumvent the national rules
applicable to contractors. Of the 44 projects audited on the spot,
at least five cases where subcontracting was involved served as a
pretext for practices open to criticism. The most common involved
the conclusion of contracts between partners in one and the same
project or with an associated undertaking, where the internal
profits invoiced were not regularised, the conclusion of contracts
or additional clauses that were not first authorised by the Com-
mission and the failure to justify the precise nature of the service
provided and the related costs.

Financial and technical monitoring of activities

98. The procedures for monitoring activities also revealed many
disparities as regards quality and efficiency. In some cases the
cause was a lack of instructions.

(2) Article 3(2) of the general conditions annexed to the standard con-
tract stipulates that the contractors may conclude subcontracts, sub-
ject to the Commission(cid:146)s prior written approval, when the total value
of the operations subcontracted exceeds 20 % of the contractor(cid:146)s esti-
mated reimbursable costs for the project, provided that the contract
contains detailed data concerning the latter.

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99. The nature of the scientific and financial attestations pro-
vided by the managers at the end of their analysis of the periodic
technical reports and financial statements is unsatisfactory in
some departments. Owing to lack of information concerning sig-
nificant events and the stage reached in the projects, the attesta-
tions are not documented.

100. On-the-spot visits are organised during the course of each
project, but with varying regularity and frequency. Meetings are
also organised in Brussels during which the coordinators are asked
to present their projects and say how far they have got with their
work.

101. Apart from the fact that the time limits for processing state-
ments of expenditure exceed the contractual time limit, the meth-
ods used by the three DGs managing the programme to pay the
Community contribution differ. However, one of the methods
contravenes the contractual provisions. The periodic advances
paid, which are dependent on the expenditure accepted, are cal-
culated on the basis of an advance timetable for expenditure that
is not laid down in the contract. In some cases, this method gives
rise to Community payments in the course of the project that are
considerably higher than the contribution corresponding to the
costs actually incurred.

Auditing of activities

102. The DGs managing the FAIR programme have made no
coordinated efforts between them to audit research activities.
Moreover, the DG for Agriculture had neither the resources nor
the time needed to carry out satisfactory audits, given the number
of projects being managed and the volume of finance granted. DG
XII(cid:146)s internal audit unit carried out a higher number of audits, yet
they were not selected on the basis of any type of specific risk
analysis and in some cases they were carried out after excessive
delays.

103. The audits carried out were primarily financial in focus and
mainly involved auditing declared expenditure. Verification of the
reality, compliance and benefit of the scientific work carried out
and the results achieved is, on the other hand, poorly organised
during the audits, as the scientific managers(cid:146) technical control
mainly involves a check on the files on the basis of annual reports
forwarded by contractors or during visits to projects when part-
ners hold meetings.

Recoveries

105. The efficiency of the recovery procedure depends on sound
cooperation between the three departments involved, i.e. author-
ising, accounting and legal. In practice, the Accounting Officer(cid:146)s
role is limited to entering the recovery orders in the accounts and
notifying Authorising Officers, who, prior to any litigation, are
still responsible for clarifying the situation with regard to debtors.
However, owing to the lack of appropriate control at this stage,
files forwarded to the Accounting Officer so that recovery orders
could be issued were either incomplete or submitted late.

106. An analysis of the Commission(cid:146)s periodic accounts con-
cerning the financial years 1996 and 1997 and the beginning of
1998, which list the recovery orders issued and not regularised by
year, revealed low recovery rates overall. Three files, which have
been under examination by the Commission(cid:146)s Legal Service since
July 1996 and August 1997, and whose due dates have expired,
account for 92 % of the ECU 3,4 million that remains to be recov-
ered.

AIR programme demonstration projects in the (cid:145)non-food(cid:146) area

107. The AIR programme, under area 1, entitled (cid:145)Non-food(cid:146),
financed seven demonstration projects, each of which was co-
ordinated by a European Economic Interest Grouping (EEIG) set
up for the sole purpose of seeing its project through. These
projects, which received a Community contribution of ECU 45
million, fixed at the level of 30 % of their eligible costs, followed
on from costly preliminary studies amounting to ECU 4,7 mil-
lion and were conducted from 1991 to 1992 as part of the (cid:145)Prepa-
ration, support and monitoring activities(cid:146). Notwithstanding this,
each met with considerable difficulties. The management and
monitoring of them were also marked by numerous shortcom-
ings and anomalies.

108. At the end of the external evaluation, they were all put in
category B, without the improvements required to justify their
selection having been documented.

109. Although the contracts were signed between October and
November 1992, the actual date for commencing work on three
of them had been set before the contract was signed. As they
could not be implemented within the stipulated time limit of 36
months, contract extensions had to be granted on several occa-
sions.

104. Lastly, because there is no clear division of the tasks and
responsibilities between the managing and the audit departments,
there is no proper guarantee that observations concerning con-
tractors who are beneficiaries of the FAIR programme are fol-
lowed up, which partially reduces the benefit of the audits and
deprives them of the deterrent effects they have on third parties
that are involved. Several significant cases revealed that audit find-
ings were insufficiently exploited and disseminated.

110. The manner in which they were organised within the EEIG
framework proved to be at variance with everyday Community
procedures for the technical and financial management of con-
tracts. As a result, Community financing was granted without any
specific bank guarantee being obtained, while each EEIG(cid:146)s capital
was insignificant in relation to the amount allocated and the costs
of the work whose implementation was to be self-financed. In
addition, owing to the delays in implementing the work, the

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C 92/17

initial advances paid proved too high, which induced the Com-
mission to reduce the size of subsequent payments. The end of
the budgetary financial year resulted in the amounts that had
been retained being paid in the end.

managing the framework programme and to use common com-
puterised management tools.

CONCLUSION

111. The FAIR specific programme has continued and further
developed research efforts made previously in the field of agricul-
ture. To be specific, this has been reflected in the growth in its
appropriations and the diversification of the activities financed.
However, the act of making additional resources available would
have been more effective if it had been accompanied by a suitable
structure and appropriate management methods.

112. Efforts will have to be made to develop indicators and meet
the obligations regarding final evaluation of previous programmes.
Measurement of the results and impact of the research activities
could thus be improved and the stakes involved in the programme
expressed in more concrete terms. Global understanding of the
programme and the relevance of the priorities selected would
then be increased, and it would be possible to verify subsequently
that the achievements matched the initial objectives.

113. Coordination of research activities carried out under the
programme and, more broadly, in the context of all Community
policies, should be increased. Improved utilisation of, or an
improvement in, the existing coordination tools would, firstly,
ensure that the efforts made complemented each other and con-
verged and, secondly, obviate redundant work.

114. Procedural homogeneity and overall consistency between
the programme(cid:146)s activities would be improved if the lead role
devolved to one of the DGs formally bestowed on it certain rights
in the area of scientific and financial management of the activit-
ies. The Commission should also endeavour to define a consist-
ent policy with regard to information systems for all the DGs

115. Commission Decisions concerning the selection and financ-
ing of activities would be better understood and a higher number
of beneficiaries would become involved, if the key procedures for
implementing the programme were specified and clarified prior
to its implementation.

116. Provisions applicable to the entire framework research pro-
gramme should be defined in order to guarantee the quality and
independence of expert assessors and improve the justification of
the results of selections. Bearing in mind the specific nature of
some FAIR programme measures, the rules on cooperation with
the Programme Committee should be reviewed to enable it express
its opinion concerning the financing of measures, irrespective of
the amount involved.

117. The legal and technical quality of contracts is unsatisfactory
and should be improved. Provision should be made for joint and
several financial liability on the part of contractors and for more
appropriate penalisation methods. Given the high level of Com-
munity financing and in order to comply with the provisions of
the Financial Regulation, whenever supporting documents are
not submitted, certification by an accredited authority of the
expenditure concerned should be required. In addition to the
above improvements, the managing departments(cid:146) checks on the
technical and financial clauses in contracts should be increased.

118. Certain weaknesses detected in the manner in which the
programme was implemented could have been avoided. Better
planning of the activities, an effort to formalise the proposal
evaluation and contract negotiation stages and, lastly, more strin-
gent requirements and greater discipline in the area of monitor-
ing and control of the activities would help improve the pro-
gramme(cid:146)s quality. Recognition of the efficiency of both the
programme and Community management depends on all the
above.

This report was adopted by the Court of Auditors at the Court meeting of 16 December 1999 in Luxembourg.

For the Court of Auditors

Jan O. KARLSSON

President

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THE COMMISSION(cid:146)S REPLIES

INTRODUCTION

Research activities in the field of agriculture and fisheries

1, 2 and 5. The FAIR programme evolved from a series of pro-
grammes which were run separately by three different Directorates-
General (DGs) under the second framework programme, dealing
with fisheries, agriculture, food, and renewable resources. These
were grouped together under FP3 (the third framework pro-
gramme) in the AIR programme, where one specific programme
covered research from the farmer, or fisherman, to the final con-
sumer. This was further developed in FAIR, which was created as
a more focused and integrated effort based on the results of the
previous programmes.

In order to meet the evolving objectives in the field of agricultural,
agro-industrial and fisheries research, the Commission regularly
reformed its organisational structures, especially with a view to
using increasing programme budgets in the most efficient man-
ner possible.

The objectives of the FAIR programme were defined by the cor-
responding Council Decision and in the work programme adopted
by the Commission, which described in detail the scientific and
technological objectives, the research priorities and the imple-
menting rules.

The Commission considers that it is intrinsically difficult to set
quantitative objectives in a precompetitive research programme;
moreover research involves elements of novelty and uncertainty.
The Commission is, however, equipped with tools which can
measure the success or failure of research programme objectives
by means of five-year assessments and annual monitoring. These
were carried out concomitantly from the beginning of this pro-
gramme. The independent experts who carried out the annual
monitoring always considered that the FAIR programme success-
fully met the assigned objectives over the course of the pro-
gramme.

ary 1994, nearly a year before the start of FP4. This document
described in layman(cid:146)s terms the general procedures for evaluat-
ing proposals and preparing RTD contracts, including the rules
for the selection of experts. The Commission implemented these
procedures in a very transparent way for the FAIR programme.
Furthermore, a specific evaluation manual for FAIR was prepared
and used by the three DGs co-managing the programme.

All projects selected by the Commission within the programme
were judged to be of high scientific quality by the independent
experts who carried out the evaluation of proposals. Where
appropriate, projects which were felt to impinge on Community
policies (CAP, CFP) were further analysed according to the rel-
evance criteria contained in supplementary documentation made
publicly available in the course of the programme. This analysis
was performed after the scientific evaluation and was used to
complement, not to replace, the conclusions of the external evalu-
ation.

The Commission considers that the obligations concerning the
final evaluation of programmes were respected. In accordance
with the new evaluation scheme for Community research pro-
grammes adopted by a Commission Decision in 1995, the final
evaluation of some specific programmes of the second and third
framework programmes was included in the five-year assessment
carried out in 1996. As to the principle of proportionately decreas-
ing the financing of projects with respect to the proximity to the
market, it should be noted that the vast majority of FAIR projects
are precompetitive research projects; the principle therefore
applied in only two cases.

8. Concerning coordination with other Community policies,
regular contacts were established between the services concerned.
The Commission nevertheless acknowledges that additional efforts
are necessary, in cooperation with the Member States, to improve
the coordination mechanisms, particularly at the level of indi-
vidual projects financed by the Community.

SUMMARY OF THE PRINCIPAL OBSERVATIONS

6 and 7. While the Commission did not adopt an evaluation
manual for the FP4 programmes (as is now the case for FP5), it
did issue a management manual for public consumption in Janu-

9. For FAIR, a key element was the development of effective col-
laboration and joint management between the three DGs involved.
The many joint actions were carried out on the initiative and
under the direction of the DG in charge of the overall running of
the programme, which also provided coordination on horizontal
activities. The FAIR annual monitoring reports, a good indepen-
dent yardstick, state that there was good cohesion between the
three DGs, which resulted in a well-run and effective programme
delivering significant results.

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10. The information systems of the FAIR programme developed
from a situation in the past where the three DGs ran separate spe-
cific programmes. In the course of FAIR, the three DGs pooled
the information on proposals and contracts on a regular basis.

ORGANISATION OF THE FAIR PROGRAMME

Implementation framework

11 and 12. The Commission implemented the FAIR programme
within a strict regulatory and contractual framework. With regard
to the specific cases and situations mentioned by the Court, the
Commission is taking the necessary steps to remedy them. With
regard to the programme implementation and procedures, the
Commission indicates in its reply to the report the improvements
it has already taken on board and those planned for the future.

21. The Council clearly outlined the objectives of the FAIR pro-
gramme in the text adopted on 23 November 1994 (Decision
94/805/EC). Moreover, the FAIR work programme set out in detail
the scientific and technological objectives, the research tasks and
the implementation schedule, including dates for calls for propos-
als.

GENERAL FEATURES OF AGRICULTURAL RESEARCH
MEASURES

Definitions and rules

Strategy and objectives

Special features

16. The JRC, it is true, did obtain certain contracts in accordance
with the rules governing these activities, but the Commission
would point out that the JRC was not the body awarding the con-
tract. The rules on public contracts moreover provide for a private
treaty (Article 58 of the Financial Regulation) where a tendering
procedure has not yielded a result, i.e. no technically acceptable
tender has been received.

Financial data

In the early calls of the programme, most concerted action
19.
proposals concerned Areas 1 to 5. The Commission revised the
work programme for FAIR in December 1996 and further clari-
fied Area 6 by stressing that thematic networks should include
primary producers, processors, and those responsible for (cid:145)scien-
tific cohesion(cid:146) between States involving technology transfer
between different regions in Europe. This was done in discussion
with the FAIR Programme Committee in November 1996 and
resulted in more interest in the area in subsequent calls.

22. One must assess the quantification of results in precompetit-
ive research programmes against the fact that research involves
novelty and unknown parameters. The Commission put in place
an extensive system for evaluating research programmes by pan-
els of independent external experts: five-year assessment and
annual monitoring of the FP and the specific programmes.

The five-year assessment report focused on a cross-section of pre-
vious programmes implemented between 1991 and 1996; it was
one of the key inputs in the preparation of FP5. The report stated
(cid:145)based on a detailed assessment of a randomly
the following:
selected sample of 15 % of the AIR projects, the panel concluded
that the programme as a whole is very successfully meeting its
objectives(cid:146). In addition, the annual monitoring is of use in order
to measure the performance of the programme against its objec-
tives, examining outputs and measurement indicators (e.g. patent
generation, industrial impact, etc.).

Types of activities

23. Two important tools for reaching the FAIR programme(cid:146)s
objectives were the research training grants and the stimulation
measures for SMEs. These measures followed the harmonised
procedures set up for all specific programmes under FP4. This
harmonisation, together with the coordination established by the
Training and Mobility of Researchers specific programme for
training grants and by the Directorate-General for Research(cid:146)s SME
Coordination Unit, facilitated their execution within the FAIR
programme.

Based on the strategy outlined above, the Commission allocated
to Area 6 relevant concerted actions coordinating research across
the thematic areas. The FAIR Programme Committee endorsed
this approach. It should be noted that the programme made it
possible to implement a total of 115 concerted actions and seven
thematic networks; this contributed to strengthening the coordi-
nation of research efforts across Europe.

24.
In the case of training grants, the average period of time
between submission of proposals and signature of contracts for
selected proposals was between six and nine months for the
Directorate-General for Agriculture, except in 1995; between six
and nine months for the Directorate-General for Research and

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between eight and nine months for the Directorate-General for
Fisheries. Furthermore, according to Article 8(3) of the general
provisions, the grant-holder has a period of up to six months after
the signature of the contract to start the research work, which
helps explain some of the time lags mentioned by the Court.

preparing proposals, seeking partners, etc. The increase in the
participation of SMEs in FP4 was mainly due to such actions. The
FAIR programme co-financed these networks (50 %), and the
projects contained timetables, a precise methodology and a list of
deliverables.

The Commission addressed the question of possible double financ-
ing in several ways. In their project proposals, the applicants had
to mention the possible links of the proposed work with any
other Community programme or Community-funded project and
the originality of the work and degree of innovation constituted
one of the evaluation criteria considered by the independent
experts. In addition, the Commission services further analysed
this issue during the preparation of projects to be shortlisted and
during inter-service consultations.

Furthermore, the Commission services monitor the work of the
grant-holders. Contractors must send scientific annual progress
reports, cost statements and final reports to the Commission for
approval, and the Commission keeps updated files on the projects.
There is no systematic monitoring on expiry of the training con-
tract.

25. As a result of the Commission(cid:146)s efforts to encourage the
inclusion of SMEs in the RTD framework programmes, their par-
ticipation trebled between the third and fourth framework pro-
grammes, and over 14 500 SMEs were associated with FP4. The
Commission(cid:146)s procedures did not therefore become more com-
plex. The Directorate-General for Research(cid:146)s SME Coordination
Unit made some adjustments to the rules concerning SMEs in the
course of the programme which had a positive impact on the par-
ticipation of SMEs in FP4.

As regards the FAIR programme, the 1998 monitoring report
mentions that the Commission services made constant efforts to
raise awareness of SME-related measures in the programme. The
final budget allocated to these measures depended on the quality
of the proposals received. Moreover, the response was uneven
across the different areas of the FAIR programme, which reflects
the existence of SMEs in the different research areas. The response
by SMEs was particularly high in Areas 1, 2 and 3 of the FAIR
programme, which led to an allocation of up to 9,1 % of the
indicative budget
for SME measures in these areas to the
Directorate-General for Research, 1,4 % to the Directorate-General
for Agriculture and 6,9 % to the Directorate-General for Fisher-
ies.

When it came to FP5, the Commission introduced a standard
grant agreement formally incorporating all the constituent parts
of the project to be financed.

Selection criteria and financial contribution

27. The success and legitimacy of the RTD framework pro-
grammes are linked, among other things, to the strict application
of known selection criteria for proposals for projects to be
financed. The criteria of CAP/CFP relevance are additional to the
criteria of scientific quality and never led to the selection of
projects of inadequate scientific quality.

28. As regards the 10 (cid:145)B(cid:146) proposals replaced by high-quality sci-
entific projects, these were good-quality proposals according to
the rules of the research programme. Graded B, they were put, in
the light of their relevance, on a reserve list. Five of them subse-
quently received funding thanks to savings made on projects on
the main list. This procedure is correct.

29. The rules in no way exclude the application of criteria of
compatibility with Community policies, clearly explained and laid
down in addition to the criteria of scientific quality which are not
called into question. As soon as explanations were provided after
the first call for proposals, these difficulties disappeared.

30. As the vast majority of projects under the FAIR programme
are precompetitive research projects (more than 95 %), criteria for
proximity to the market rarely apply (two cases).

The Commission is aware of the need for a clear explanation of
the key concepts when a new framework programme is prepared.
This is why, in the case of FP5 standard contracts provide for fixed
rates of 35 % for projects which are close to markets and 50 % for
those that are further away.

Procedures

Programme evaluation

26. The Commission, recognising the need to help SMEs take
part in the programme, took the initiative of establishing SME
focal points in the Member States, not just for dissemination
activities but more importantly to provide assistance to SMEs in

31 to 33. The Commission several years back established a sys-
tem of RTD programme and project evaluation which constitutes

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a major tool for optimising the implementation of programmes
and for their strategic development. This set-up involves evaluat-
ing the activities undertaken during the past five years. The 1996
evaluation exercise covered the whole of FP3, which ended in
1994, and also the final evaluation of the FP2 programmes.

logical to find some degree of discrepancy between different
experts in a panel on a given project. This is independent of the
marking system, whether it is point-based or grade-based.

34. The Commission is particularly attached to ensuring the
independence of experts called on to evaluate RTD programmes
and projects. The expert the Court mentions was no longer a
member of the FAIR Programme Committee at the time of the
selection of the experts for the FAIR-1995 monitoring and had
indeed retired from his ministry. Moreover, the Member States
nominate the members of the Programme Committee and, at the
time of establishing the monitoring panel, the Commission did
not identify any incompatibility between the expert(cid:146)s earlier
involvement in the FAIR Programme Committee and his later par-
ticipation in the monitoring panels.

With a view to improving the situation, the Commission intro-
duced a special procedure for the selection of experts for FP5 and
took steps to ensure that a member of a programme committee
is not eligible to be a member of the annual monitoring panel for
the same programme. One or more members of an annual moni-
toring panel may be reappointed to ensure continuity between
successive annual exercises, but not the whole panel of experts.

Proposal evaluation

In the case of FAIR, following the individual evaluations, the pan-
els assembled to discuss the marks they had awarded, with a
Commission official acting as moderator for the group. During
these consensus meetings, the experts agreed on a final grade for
each of the groups of criteria and on an overall grade for the pro-
posal. They justified their grades with comments to provide feed-
back to the proposal coordinator and agreed on an overall and
fully documented summary report that the experts signed.

38.
It should be stressed that the Commission has harmonised
the evaluation procedures to be applied to all specific programmes
under FP5, as explained in the manual of proposal evaluation pro-
cedures the Commission has adopted.

As for the FAIR programme, the Commission services created a
database of experts in 1995. By the end of the programme, it con-
tained 2 600 names supplied by the Member States. Strict criteria
for selection from the database according to the area of the pro-
gramme being evaluated were always in force: competence and
experience, impartiality, fair geographical distribution, varieties of
backgrounds (types of organisations) of the candidates, references.
Subsequently, the Commission always put together expert groups
on the basis of expertise in the relevant areas, availability and dis-
tribution of type of organisation and country of origin. In all
cases the Commission made the greatest effort to avoid inviting
experts from institutes involved in the proposals to be evaluated.
When this was unavoidable, the Commission asked the expert to
abstain from the evaluation.

35. The evaluation of projects is a key stage in the management
of RTD programmes. Whereas the Commission did not adopt an
evaluation manual for the FP4 programmes, there was a proce-
dure and a framework set out to govern the choice of evaluation
experts.

Decision-making procedures

The Commission issued a management manual for public con-
sumption in January 1994, nearly a year before the start of FP4.
This manual was widely available in all Community languages.
The document described in layman(cid:146)s terms the procedures for
evaluating proposals and preparing RTD contracts, including the
rules for selecting experts. The document restated the rules for the
regular rotation and replacement of experts, after the Commis-
sion had first announced them in a paper of June 1993 ((cid:145)Manage-
ment of Community RTD activities (cid:151) an agenda for change(cid:146)).

37. Panels composed of on average four to six independent
experts examined each proposal for the FAIR programme. It is

39. The Commission services perform a thorough analysis of all
projects and did not deliberately keep the adjustment of the Com-
munity contribution within the limits that did not require a new
Commission decision. The Commission wishes to point out that
out of the 640 proposals selected 70 % (454 proposals) had a
reduction of between 0 % and 5 % and only 4 % (24 proposals)
had a reduction of between 15 % and 20 %. Moreover, for one
proposal for which there was a reduction higher than 20 %, there
was a new Commission decision.

Contractual provisions

40. The contract represents another important stage in a research
project, and it is the Commission(cid:146)s view that the provisions of the
standard contract concerning beneficiaries(cid:146) obligations are not
in particular as regards the financial responsibility
defective,
between partners in a research project.

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In the standard contracts for FP4 the Commission provided for
joint responsibility for the technical implementation of projects,
and the situation is the same for FP5. The Commission did not,
however, make provision for joint financial responsibility in either
FP4 or FP5, and it considers this to be fully justified.

As for circumvention of national legislation, the Commission is
not in a position to undertake checks relating to such activities by
contractors, having neither the powers nor the means. It is the
responsibility of contractors to ensure that the national rules in
force governing public contracts, remuneration and recruitment
of agents of public bodies are applied.

In the event of the bankruptcy of one of the contractors, the
Community will be protected by the national law applicable. A
defaulting contractor will not affect the implementation of the
project since the joint responsibility for implementation of the
project means that the other contractors will have to take the nec-
essary steps to complete the project without being reimbursed by
the Commission for the extra cost incurred. It can thus be said
that in such cases joint responsibility also has financial conse-
quences for the contractors.

41. The Commission takes the view that the current procedures
are in accordance with the Financial Regulation, and in particular
Article 41(1) thereof: (cid:145)Validation of any expenditure shall be sub-
ject to the submission of supporting documents showing the
creditor(cid:146)s claim and the service rendered or the existence of a
document justifying payment(cid:146).

The statements of costs submitted by contractors fulfil this func-
tion. The standard contract requires all contractors to keep
accounts and appropriate documentation. The Commission can
request additional supporting documents to substantiate and jus-
tify the costs listed in the statements and also during on-the-spot
checks.

42. As regards cancellation of contracts for financial irregulari-
ties, three different cases can arise: firstly the case of serious finan-
cial irregularities; secondly errors which do not constitute seri-
ous irregularities and thirdly the circumvention of national
legislation.

In the first case, the Financial Regulation and the warning system
set up by UCLAF in July 1997 require detailed reasons, backed up
by supporting documents, to cancel the contract, end participa-
tion and/or request reimbursement of payments made by the
Commission. The Commission may take appropriate measures
only when it has sufficient proof.

In the second case, the Commission takes the initiative of correct-
ing the errors to ensure proper performance of the contract. In
any case the contract rules protect the financial interests of the
Community, as do the recovery orders which the Commission
issues after the contract has expired.

Management structure and methods

43. There is a common and complete legislative framework for
agricultural research: the Council Decision adopting the FAIR
programme. This fully outlines the objectives of the programme,
the scientific areas, the funding and breakdown between areas,
and the specific rules for implementing the programme. The leg-
islative authority and the Commission have continuously adapted
the structures of the programme, its management and its resources
to the new priorities. This was also true for the FAIR programme
covered by this report.

Management structure

Co-management of the programme

44. The FAIR programme was co-managed by three DGs, each
with its own special interests, but working in close collaboration
to design and implement a homogeneous system, coordinating
on each of the essential components: the work programme and
subsequent revisions; the info-pack for the programme, the evalu-
ation manual, the guide to compiling periodic and final reports
on the progress of projects, calls for proposals, common rules for
the establishment of databases of exports, the rules for the exter-
nal evaluation of proposals, shortlists, Commission decisions,
meetings of the Programme Committee, periodic monitoring and
evaluation exercises, etc.

These activities were conducted appropriately, on the initiative
and under the direction of the lead DG.

In order to meet the evolving objectives in the field of agricultural
research, the Commission regularly reformed its organisation,
especially with a view to using the increasing budget in the most
efficient manner. For FAIR, a key element was developing effec-
tive collaboration and joint management between the three DGs
involved, as evidenced by the meetings (GPIS) at Director level the
Commission held during FAIR so as to ensure the efficient run-
ning of the programme and the daily contacts at the level of unit
heads and scientific officers.

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The minutes of these meetings demonstrate the collaboration
between the three DGs and the fact that the Directorate-General
for Research also provides coordination on horizontal activities
such as SME measures, demonstration, ethical aspects, training
and annual monitoring.

the later stages of the procedure (negotiation of contracts and
technical annexes), which were the same for all calls for propos-
als since they followed the rules common to the whole frame-
work programme. Again for the sake of standard procedures,
each TSE project selected contained a checklist relating to samples,
safety and ethical aspects, irrespective of the call for proposals
concerned.

45. The six regular calls for proposals, which the Commission
established at the outset of the programme in accordance with
Article 5 of the Council Decision on FAIR, followed the same pro-
cedures and implementation rules, and the three DGs jointly
organised and managed them. As to the evaluation of proposals,
it should be noted that, for all 3 328 evaluations, the Commis-
sion services followed to the letter and under strict control the
guide for the evaluation process that the three DGs adopted in
March 1995. In the case of Area 4 of the FAIR programme, and
because of the direct relevance of projects in this area to the CAP,
prior to preparing the shortlists, the Directorate-General for Agri-
culture carried out extensive consultations with its policy and
market departments on those proposals rated A+, A, B+ or B by
the independent experts.

Implementation methods

46. Although it is regrettable that the timetable for the imple-
mentation of the FAIR programme put considerable pressure on
the Directorate-General for Agriculture, it should be acknowl-
edged that it took steps on its own initiative to remedy the situ-
ation after the first call and particularly in preparation for its
activities under FP5.

47. The Commission was able to respond promptly and effi-
ciently to the TSE emergency or (cid:145)mad cow disease(cid:146). In the case of
the two TSE joint calls the Commission proposed, based on the
evaluation guidelines established by the Directorate-General for
Research, a specific evaluation manual which took on board the
different aspects of the three programmes (FAIR, Biomed and Bio-
tech). In addition, the manual also addressed the issue of safety
and ethical aspects, which were particularly important in this field
of research. The joint Programme Committee (FAIR, Biomed and
Biotech) unanimously endorsed both the contents of the two joint
calls and the evaluation manual.

As regards the specific call for proposals from the Directorate-
General for Agriculture on TSEs, it was published and imple-
mented under the FAIR programme alone and the evaluation pro-
cedures for the FAIR programme were thus followed (evaluation
forms and guide, the FAIR grading system, etc.) together with a
two-tier scientific evaluation of the proposals. This procedure is
correct.

It should be pointed out that the differences in the evaluation pro-
cedure had no effect on the quality of the proposals selected or at

No criticism was levelled against the implementation of the TSE
calls by the Directorate-General for Agriculture or the Directorate-
General for Research, particularly regarding the use of FAIR pro-
cedures on the one hand and ad hoc procedures on the other.

In the next call for proposals it was involved in (FAIR 3) the
48.
Directorate-General for Agriculture saw to it that it supplied all
the necessary information beforehand. The problems that arose
with the first call for proposals thus disappeared.

49. Agricultural research has evolved from a situation where
three DGs ran separate research programmes into one where,
starting with FP3 (AIR), they run a single programme.

Throughout this period, and particularly under the FAIR pro-
gramme, a strong partnership existed between the three DGs
involved. As described earlier, the directors met regularly to decide
on direction and strategic issues. At the level of heads of units or
technical staff, there are almost daily contacts between the DGs,
and a strong spirit of partnership has progressively developed.
There is no factual basis for the assertion that they did not (cid:145)derive
the maximum benefit from the staff and equipment(cid:146).

On the contrary, the annual monitoring reports on the running
of the programme, a good independent yardstick, state that there
was a very good cohesion between the three DGs, which resulted
in a well-run and effective programme that delivered significant
results.

Management methods

50. At the heart of the management of the RTD programmes,
including FAIR, is the scientific officer. The Commission does not
consider that the fact that more than one scientific officer man-
ages a project during its lifetime has a negative effect on the qual-
ity of the management. On the contrary, mobility of the scientific
staff and assignment of different tasks may increase the overall
efficiency and it is in line with the Commission(cid:146)s personnel policy.

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Staff

51. The information systems of the FAIR programme developed
from a situation in which the three DGs ran separate programmes.
From the start of the FAIR programme, the three DGs pooled the
information on proposals and contracts on a regular basis. This
was essential in formulating replies to the different monitoring
exercises, for the FAIR homepage on the CORDIS website, and in
preparing project catalogues for the programme. The Commis-
sion is unaware of any factual basis for the negative consequences
the Court draws from the existing structure of the information
systems.

Information systems

52 to 54. The departments responsible for the Structural Funds
and those responsible for research policy have worked together
for years.

With the aim of improving the management of projects and
drawing the attention of future contractors to the rules on com-
bining public contributions under FP5, the Commission made a
number of additions to the contract preparation forms to be com-
pleted by those submitting proposals at the negotiation stage.
These forms now contain clear information, some of it in the
form of tables and precise legal references, about the rules on
combining public contributions as laid down by, on the one hand,
the WTO Agreement on Subsidies and Countervailing Measures
and, on the other, the Community guidelines on State aid for
research and development. They also alert those submitting pro-
posals to the need for State aid measures to be duly notified in
accordance with the relevant provisions of the Treaty.

As far as agriculture is concerned the AGREP system to which the
Court refers in the last sentence of point 54, was designed to carry
out a survey of agricultural research projects in the Member States
and then to centralise the main points in a common database.
There is no need to provide for its replacement since a system of
this kind has become superfluous since the advent of the Internet,
which enables the same information to be accessed directly and
very easily.

The Commission discussed a new information system on national
agricultural research programmes with the Member States in the
Standing Committee on Agricultural Research (STAR); this gave
rise to the specification being established, plus a feasibility study.
The purpose of the system is quite different from that of AGREP
in that it does not merely compile a list of projects, it analyses
research strategies.

MANAGEMENT OF FAIR PROGRAMME ACTIVITIES

ruary 1998, and has not backdated any of the 100 or so FAIR
contracts signed since then under the various categories covered
by the research programme (shared-cost research projects, train-
ing grants, measures to assist SMEs, accompanying measures, etc.).
It goes without saying that there will be no backdating in the
future either.

The Authorising Officer(cid:146)s role and position

59. The authorising officers to whom the Directorate-General
for Agriculture delegates receive their appointment in a personal
capacity from the Director-General, to whom they are account-
able.

In this special function they are not therefore dependent on their
direct hierarchical superior.

In any case, the fact that delegation transfers the full responsibil-
ity and risk linked to authorisation to the authorising officers
(Article 73 of the Financial Regulation) would make them resist
any pressure and ensure that they remained independent as advo-
cated by the Court over and above the specifications laid down in
the Financial Regulation and the internal rules of procedure.

It should also be noted that before being able to authorise, autho-
rising officers must receive the agreement of the Directorate for
Agricultural Budgetary and Financial Matters, which oversees
operations. This Directorate plays an internal audit role in this
respect.

Interdepartmental consultation

60 and 61. The Commission stresses that, even if it performed
the interdepartmental consultation under tight deadlines at some
times, this never happened at the expense of the high standards
set by the procedure.

The relevant departments always had the relevant information
long beforehand in an informal manner, and they always received
updates on the slightest developments within the other
Directorates-Generals co-managing FAIR. In this way, and due to
the fact that even more information was forwarded to the depart-
ments concerned than legally required, all the departments con-
cerned had the necessary background information and could pre-
pare their comments for the consultation even before the formal
interdepartmental consultation procedure started.

Dating of contracts

58. The backdating of contracts had no financial implications.
The Directorate-General for Agriculture ended the practice in Feb-

Furthermore, during the course of the written procedure, all
information on participants, as well as a description of the con-
tents, was available to the members of the Commission. Follow-
ing its request of 24 October 1996, related to the adoption of
evaluation decisions by written procedure, the Secretariat-General
received all the relevant elements.

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Regarding the links with the Innovation programme, it must be
pointed out that the Innovation and FAIR demonstration projects
have complementary but different objectives. The Innovation pro-
gramme aimed at developing best practices in technology transfer
and validation in all scientific and technological areas, while FAIR
demonstration projects were specifically aimed at proving the
technical and economic viability of projects within the scope of
the FAIR programme. Sometimes the Commission performed the
interdepartmental consultation between these two actions under
tight deadlines but never at the expense of the high standards of
the procedure. In fact, the Directorate-General for Research clearly
identified certain proposals in the Innovation programme as hav-
ing potentially overlapping qualities with those of FAIR demon-
stration proposals, and the Commission took the requisite cor-
rective actions.

While preparing FP5, the Commission reflected on the prior con-
sultation of the departments most closely associated with research
policy, one of the topics addressed in the communication of 16
December 1997 on the management of FP5. Following this com-
munication, the Commission set up a group of directors repre-
senting all the DGs involved in the different specific programmes.
This group now meets on a regular basis and ensures the good
quality of the information flow at all levels.

Entry in the accounts and monitoring of staff and
operating costs

62. Across all the departments, out of the total of 93 personnel
(statutory and non-statutory) paid from the FAIR programme at
the end of October 1998, 57 were assigned to the direct manage-
ment of the programme, 22 to support tasks relating to the three
life-science programmes (management, contracts, ethical aspects,
demonstration) and two to support tasks in the Directorate-
General for Research. In addition, 12 people were assigned for
accounting purposes to other research programmes or opera-
tional tasks (four and eight respectively). In the case of these 12
their assignment to other duties was largely made up for by the
assignment to the FAIR programme of personnel remunerated
from other programmes. When FP5 was launched, the Commis-
sion took the necessary steps to remedy the accounting situation.

The Commission would stress that personnel management is by
no means arbitrary; it is in accordance with the rules in force, the
annual decisions of the budget authority, and the will of the leg-
islative authority adopting the specific research programmes.

tion and in accordance with the Financial Regulation, the research
budget includes a table listing seven categories of administrative
expenditure for each programme. This structure is at the forefront
of the Commission decisions for improving financial manage-
ment (SEM 2000).

The Commission attaches great importance to monitoring the
ceilings imposed by the Council on administrative expenditure. In
the case of FP4, the Council adopted two ceilings for the majority
of the programmes, including FAIR: one for expenditure on statu-
tory personnel and the other on other administrative expenses.
The Commission departments regularly analyse administrative
expenditure to ensure that research programmes are kept within
the limits laid down by the budget authority. The Commission
also informs the budget authority about the execution of admin-
istrative expenditure.

The DGs responsible for the implementation of research pro-
grammes include, in addition to the scientific services, depart-
ments with horizontal administrative or political tasks such as
personnel, budget, auditing and coordination with national poli-
cies. The staff performing these duties are in the main research
personnel, a number of whose posts are assigned to the FAIR
programme. The Directorate-General for Research manages a
number of items of expenditure, including horizontal expenditure
and expenditure on statutory personnel, via an allocation made
up of contributions from the various programmes. This arrange-
ment is in accordance with the Financial Regulation.

65. The DGs responsible for implementing the FAIR programme
have some personnel paid from the research budget and some
who, for historical and regulatory reasons, come under the oper-
ating budget. The officials concerned often perform horizontal
and administrative tasks but also hold jobs in the scientific depart-
ments.

Existence of private agreements with contractors

66 to 68.
In the course of FP4 (as under FP2 and FP3), the Com-
mission concluded agreements with contractors who had several
Community research contracts. The Commission concluded the
majority of these agreements in the 1980s, the aim being to facili-
tate the management of contracts by contractors and the negotia-
tion, administration and auditing of these contracts by the
Directorate-General for Research.

63 and 64. Personnel and operating costs come within a strict
and transparent legislative and budgetary framework which also
allows for good integration of resources.

The Commission cancelled all these agreements in May 1998; the
letters cancelling them provided, none the less, for the possibility
of concluding new agreements on costs.

The budget authority each year adopts a separate table showing
personnel for each research programme, including FAIR. In addi-

As far as FP5 is concerned, the Commission is again looking at
the possibility of concluding such contracts.

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Cooperation with the FAIR Programme Committee

Independence of Committee members

Quality and scope of the information forwarded

69. Relations and cooperation with the Programme Committee
have been both fruitful and efficient. It should be noted that the
Commission submitted to the FAIR Programme Committee more
than 20 draft measures during the lifetime of the programme. In
all cases these measures received the favourable opinion of the
Committee by unanimity or by a large majority. No delegation
was ever against any of the measures submitted. The Commission
always supplied the Committee with the requested information,
and at no stage did the Commission withhold any information
from the Committee. As a result, the Committee was generally
satisfied with the information provided, and, in many instances,
it praised the Commission services for the quality of their work.

73. On the issue of potential conflicts of interest, the Commis-
sion wishes to point out first that it is the Member States that
nominate the members of the Programme Committee. Article 6
of the Committee(cid:146)s rules states the following: (cid:145)When an opinion
of the Committee is requested on the assessment of the RTD
activities proposed for funding, the members of the EU Member
States delegations should not have an interest in or connection
with the legal entities involved(cid:146). This rule, read by the Chairman
on all appropriate occasions, called on any participant, whether a
nominated member or accompanying expert, to leave the room
during an agenda point requiring the vote of the Committee if
they were directly connected with or involved in it. Nevertheless,
it was left as a matter of trust between the Commission and the
members of the Committee, which is why the minutes recorded
the actual event (though not the names of any members who left
the room).

70. The Commission acknowledges that the Programme Com-
mittee did have limited time to examine the draft version of the
FAIR work programme. For this reason the Committee(cid:146)s chair,
which the Commission occupies, invited written comments from
the Committee members within 10 working days of the meeting
held on 21 October 1994. As stated in the minutes of that meet-
ing, the majority of the delegations expressed their satisfaction
with the scientific content and scope of the FAIR draft work pro-
gramme. The comments were mainly critical of the evaluation
criteria, and the Commission organised a meeting on 20 January
1995 to address the issues and explain in detail to the Committee
the evaluation procedure for the FAIR programme.

Following the call for proposals under FAIR 1, the Directorate-
General for Agriculture ensured that the Committee received the
requisite information in advance. The Committee expressed its
satisfaction with this information and there was no recurrence of
the problems encountered with the first call.

71.
In accordance with the Council Decision on FAIR, the Com-
mission always informed the Committee of the activities concern-
ing SME specific measures and of the outcome of the selection
processes. The information the Commission provided to the Com-
mittee was similar to that provided for other shared-cost actions.
In this respect, the Commission presented all short-lists of SME
measures in FAIR to the Programme Committee by way of infor-
mation. In turn, the FAIR Programme Committee expressed its
appreciation for the information given. It should be noted, more-
over, that it was the Council that decided on the ECU 0,5 million
threshold for triggering consultation of the FAIR Programme
Committee. The ECU 0,5 million ceiling for funding of coopera-
tive research projects was uniform across the various specific pro-
grammes under FP4.

72. There was no actual coordination mechanism; none the less,
each time the Committee asked for information, it was provided.

74. As far as the FAIR Programme Committee is concerned, it
must be pointed out that the Commission made it possible for the
Committee(cid:146)s chairman to make a declaration to the effect that
members with a direct interest in activities proposed for funding
should inform him and could not take part in the debate and the
vote. For FP5, the rules for programme committees have been
prepared with a view to preventing committee members from
taking part in deliberations on points with a potential conflict of
interest.

Implementation of the management, monitoring and control
procedures

Pressure of time limits

76. Under FP4 there was no particular pressure of time limits for
the preparation of management instruments, mainly because the
Commission already had excellent instruments from FP3 which
were suitable for the following framework programme.

77. The Commission produced the (cid:145)guidelines for the prepara-
tion of scientific periodic and final reports for FAIR shared-cost
projects and concerted actions(cid:146) in March 1997 following consul-
tation and agreement among the three DGs involved. The delay
affected only the first annual reports of FAIR-1 contracts. This
was mainly due to the services(cid:146) effort to produce a comprehensive
and user-friendly guide in conformity with the previously pro-
duced (cid:145)guidelines for the preparation of technical annexes to FAIR
contracts(cid:146). It should be noted that the Commission used the exist-
ing guidelines for AIR contracts (FP3), which were perfectly valid,
during the interim period.

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The services produced an updated version of the evaluation ques-
tionnaires for the last two calls. This included a special form for
concerted action proposals to help experts distinguish the specific
criteria necessary for concerted actions, though the original forms
were perfectly adequate for this purpose when used properly.
Moreover, the Commission services thoroughly briefed the experts
on all occasions on the operational evaluation process and on
how to use the proposal evaluation forms.

78. The Directorate-General for Agriculture encountered some
difficulties in 1995 in selecting projects for Community financ-
ing under the first call for proposals. Anxious to ensure that the
projects provided the various units concerned in the DG with
appropriate information, it consulted them widely, which meant
that it was unable to present its list of proposed projects to the
Programme Committee at the same time as the Directorate-
General for Research and the Directorate-General for Fisheries.

The list of the Directorate-General for Agriculture(cid:146)s projects was
submitted somewhat later than those of the other co-managing
DGs, so it was inevitable that the later phases leading up to the
conclusion of contracts could not be implemented in an optimum
manner; in particular there had to be an accelerated written pro-
cedure to ensure that the execution of the projects was as effec-
tive as possible despite the hitches early on.

The problems encountered with the first call for proposals did not
arise again later on: the Directorate-General for Agriculture(cid:146)s list
of priority projects was presented to the Committee together with
those of the other managing DGs. The projects were selected in
accordance with homogeneous criteria and gave rise to no more
difficulties. The Directorate-General for Agriculture thus took the
appropriate steps in June 1996 to remedy the difficulties encoun-
tered.

80.
In the case of the TSE calls, the Commission deliberately
reduced the deadlines slightly in order to speed up implementa-
tion of the action programme. In both cases the programme com-
mittees concerned issued a unanimous favourable opinion despite
the unusually short time limit. These deadlines did not prevent
those submitting proposals from mobilising their efforts prop-
erly; nor did they adversely affect the quality required in Commu-
nity research activities.

them in accordance with the high quality requirements laid down
by the Community RTD programme.

On a general note, it is pointed out that the implementation of the
research action programme on TSEs was spread over more than
a year (specific call under FAIR and two joint calls). The pro-
gramme was the subject, throughout this period and at each stage,
of unprecedented information from the Commission to raise
awareness among all potential participants. It cannot be claimed
that teams would not have been in a position to submit propos-
als on account of the time limits. Nor can it be said that the sci-
entists involved in compiling the Weissmann report (which served
as the basis for drawing up the action programme) had any
advantage in the matter for the same reason.

It is perfectly normal that scientists who contributed to the Weiss-
mann report should have taken part in TSE projects. Conversely,
the absence of such participation would have raised certain ques-
tions: it would mean that the best scientific teams in Europe with
a world reputation in their field did not wish to take part in the
Community TSE programme or that the Commission had not
selected them.

The Commission would make the general point that all aspects of
the procedure it followed throughout the implementation of the
TSE action programme were subject to detailed scrutiny and
reported in detail to the various programme committees con-
cerned, which deemed it exemplary.

Formalisation of the management of the measures

Proposal evaluation and selection

82 and 83. The guidelines of the Commission services provided
precise instructions for the ranking of proposals. Furthermore,
the Commission services thoroughly briefed the experts on the
operational ranking process. The evaluation summary reports
that the experts signed reflect the rationale for the scores of the
relevant proposals.

As described in the (cid:145)Notes for the evaluation process(cid:146), B-rated pro-
posals are (cid:145)good(cid:146) proposals, that is, (cid:145)proposals of high quality but
with elements that need improvement(cid:146). As such, B-rated propos-
als are eligible for funding, subject to budgetary constraints.

In the case of the specific FAIR call, the number and quality of the
proposals received in a very special area show that this call was
quite adequate. A total of 24 proposals were submitted, eight of
which were accepted, and the appropriations set aside for this call
for proposals were used in full for high-quality projects. This
shows that the research teams concerned in Europe did actually
have the opportunity to prepare their proposals and to establish

The Commission kept the FAIR Programme Committee fully
informed of the outcome of the evaluation and selection proce-
dures during the life of the FAIR programme. More specifically,
the Commission submitted to the members of the Programme
Committee the following information concerning all proposals:

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abstract of the proposal(cid:146)s scientific/technical content, partnership,
total cost, requested EC funding in total and per partner, evalua-
tion summary report, including comments from the evaluation
panels on the proposal(cid:146)s scientific content, partnership, antici-
pated socioeconomic benefits and, finally, the score given. In
addition, to enable the Programme Committee to acquire a global
view of the process, the Commission always provided overall
descriptive statistics.

In its effort to enable the Programme Committee to provide an
informed opinion, the Commission submitted, in addition to the
above, a justification for the inclusion of B-rated proposals selected
for funding. The Commission verbally communicated this justi-
fication to the Programme Committee during the discussion con-
cerning FAIR 1 proposals. For subsequent calls, the Commission
provided a written justification. In response, the Programme Com-
mittee expressed its appreciation of the value of the systematic
information provided by the Commission.

84. For the selection of SME exploratory awards and coopera-
tive research projects to be funded, the Commission took into
account A-and B-rated proposals, since their overall quality was
(cid:145)very good(cid:146) or (cid:145)good(cid:146) and therefore met the requirements for fund-
ing. On the basis of the scores given by the experts, the quality of
proposals under the SME specific measures was comparable to
that of shared-cost projects. The eventual decision took into
account the budgetary constraints, which explains why compara-
tively fewer B proposals received funding under the shared-cost
scheme.

Contract negotiation

85 and 86. The negotiation of contracts is a key stage in the
management of research programmes, and the Commission pays
particularly attention to this when preparing each framework
programme. The contract negotiation forms are based on stand-
ard contracts and are fully in accordance with the relevant provi-
sions. The information contained in the negotiation form is what
is strictly necessary for drawing up the contract. According to the
instructions in force, any adjustment required in order to comply
with the contract provisions must be contained in a correction to
the negotiation form which is signed by those submitting propos-
als.

The amount of detail required for each cost category must clearly
reflect the scientific activities involved. It is on the basis of this
information that the cost statements are checked during the term
of validity of the contract. The standard shared-cost action (SCA)
contract also requires contractors to give a precise breakdown of
their costs in their own accounts. The statement of costs consti-
tutes a declaration by the contractors that the costs declared are
accurate and correspond exactly to the contractual definition of
eligible costs.

87. Whenever a reduction of the requested EC contribution
occurs as a result of the negotiation, it is based on a careful analy-
sis of the adequacy and correspondence between the proposed
work programme and the resources necessary to carry out the

work. The outcome of these negotiations is duly reflected in the
final technical annex and in the contract negotiation forms.

As far as the Directorate-General for Agriculture is concerned, it
points out that there are two successive stages in the procedure
leading to the establishment of the contribution allocated to each
project: in the first stage the estimated amount at the time of
selection is established; the second stage is to establish a precise
amount entered in the contract. The Court(cid:146)s remark applies only
to the first stage. In this connection, the Directorate-General for
Agriculture itself took the initiative in 1998 to put an end to sys-
tematic reductions when establishing estimated amounts, in favour
of an individual analysis. As for the second stage, for all the con-
tracts signed since the start of the programme, this was always
based on a case-by-case analysis in connection with the contract
negotiation, in accordance with the rules common to the three
co-managing DGs.

88.
It should be noted that the Commission conducts negotia-
tions for all selected proposals; the comments of the experts con-
stitute an important basis of the Commission(cid:146)s argumentation.

89. The work programme or technical annex of the research
contract contains, in as clear a manner as possible, all activities,
actions and tasks that the participants in the project are commit-
ted to undertake in order to fulfil the scientific and research object-
ives stipulated in the contract. Bearing in mind the objective of
the technical annex, namely the detailed description of the research
work, it is considered that aspects related to the capacity and qual-
ity of the participants should not be included in such a document.

Moreover, the research proposal describes the role and contribu-
tion of each of the partners in the project, their qualifications for
their role, their capacity to provide their contribution to the
project, their experience and knowledge. It also describes why
their qualifications and experience make them particularly suited
for the work allocated to them. Based on this information, the
independent experts examine the quality of the partners, particu-
larly if the resources, skills, reputation and expertise of the pro-
posers are of sufficient quality to realise the objectives of the
project. This appraisal constitutes one of the main elements of the
overall evaluation score.

The Commission further examines the quality and capacity of the
partners during contract negotiations that cover all aspects related
to the management of the projects, including the potential delega-
tion of the management to third parties. In three cases raised by
the Court in paragraph 88, the project coordinators failed to
inform the Commission as required under the contract.

Financial and technical requirements

Tenderers(cid:146) financial standing

91. The Commission systematically investigates the financial
standing of potential contractors. Under FP4, contractors were

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required to send the Commission their statements of account for
the past three years. On the basis of the data from potential con-
tractors, the Commission checks their financial standing with
regard to the project in which they wish to participate and the
work they wish to do within the project. When it comes to sub-
sequent projects, potential contractors send the Commission
updated figures.

Where there is some doubt about the potential contractor(cid:146)s finan-
cial situation, the Commission calls on external experts (financial
analysis companies), to supply information about the financial
standing of the potential contractor in question, from indepen-
dent sources covering commercial and financial activities. The
Directorate-General for Research centralises this information and
makes it available to all the departments concerned, particularly
the scientific directorates, via the central management system.

The Commission would also stress that the negotiation forms,
like the statements of costs, constitute a declaration by the party
submitting a proposal/contractor of the costs expected/incurred.
The SCA model contract also requires contractors to give a pre-
cise breakdown of their costs in their own accounts. The state-
ment of costs constitutes a declaration by contractors that the
costs declared are accurate and correspond exactly to the contrac-
tual definition of eligible costs.

attempt to establish a single model comes up against the problem
of the diversity of legislation and commercial practices. As a gen-
eral rule the Commission staff endeavour to keep financial docu-
mentation in the archives.

Contractors(cid:146) obligations

94 and 95. On a general note, the Commission would point out
that the arrangements described above for financial analyses of
contractors and checking compliance with the provisions of con-
tracts are supplemented by many audits based on a risk analysis.

96 and 97. As far as subcontracting is concerned, the FP4 stand-
ard contract requires the prior written approval of the Commis-
sion where the total amount for subcontracting exceeds 20 % of
the estimated eligible costs or where the subcontractor is estab-
lished in a country other than the contractor(cid:146)s. The contractor is
required to conclude subcontracts whereby subcontractors are
required to submit to technical inspection by the Commission.

The FP5 standard contract has introduced an additional condi-
tion: the Commission(cid:146)s prior written approval is now also neces-
sary where the total amount of subcontracts exceeds EUR 100 000.

The purpose of the Commission staff(cid:146)s analysis of the financial
situation is to evaluate the suitability of participants to take part
in the project and determine the coordinator(cid:146)s ability to repay the
initial advance received as depositary of the contractors. This
amount is at this stage not yet reflected in the costs incurred and
declared in the statements of costs. It is in the latter case that the
relevance of a bank guarantee request is evaluated, on the basis of
a classic financial analysis of the balance sheet ratios. The Com-
mission does not take this decision until after a preliminary evalu-
ation of the capacity of each contractor to commit to and meet
its obligations under the contract.

Financial and technical monitoring of activities

99. The Commission bases its approval of periodic and final
project reports on a thorough assessment of both scientific
progress and cost incurred over the reporting period. If the officer
is not satisfied with the report, he frequently asks for clarification.
In cases where difficulties arise, the scientific declaration comes
as a supplement to the scientific officer(cid:146)s appraisal of the report.

Analysing the first statement of costs (and the first interim report
on the progress of the project) enables a preliminary check to be
made on the use of this advance. On this occasion the Commis-
sion staff withhold amounts from the advance if there are reserva-
tions about the scientific and administrative assessment of the
implementation of the project.

100. The regularity and frequency of on-the-spot visits are sub-
ject to the implementation timetable for projects and to their spe-
cific requirements. Meetings of coordinators of related projects
are an important part of the follow-up strategy. The Commission
uses these meetings to monitor progress, to enhance networking
of participants and to alert all users to progress of projects.

92 and 93. Few guarantees are requested because few beneficia-
ries present a risk that warrants such action. The four guarantees
the Court mentions, although not uniform, are all along the same
lines and provide for the same conditions. It is also clear that,
depending on the projects, they contain specific elements. Any

101. The Directorate-General for Agriculture takes the view that
its method of calculating periodic payments, although different
from that of the Directorate-General for Research, is still compat-
ible with the contractual provisions. This method takes account
of the estimated expenditure requirement for the work schedule,
Community payments already made and expenditure actually
incurred during the preceding period(s).

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Lastly, it should be pointed out that when the balance for a con-
tract is paid, the Commission reviews and if appropriate rectifies
all the expenditure declared on the basis of the cost declarations
covering the entire duration of the project. There were no cases
where the total Community contribution paid by the Directorate-
General for Agriculture for a project exceeded the expenditure
declared.

the request of the departments managing the research contracts,
where it was seen from the research reports and statements of
costs received that there might be irregularities, or on the basis of
a sample of contracts under way.

Auditing of activities

102. The auditing of research activities is a vast undertaking. It
is worth pointing out that up to the end of FP4 the Directorate-
General for Research had carried out numerous audits, either at

In the last three years the Directorate-General for Research con-
tinuously increased the number of on-the-spot checks as well as
the number of RTD contracts audited across all programmes. The
table below, based on the figures published in the Court of Audi-
tors(cid:146) annual report, confirms this continuous increase.

Number of audits closed

Of which agricultural research (FP2, FP3 and FP4)

Number of audited contracts

Of which agricultural research (FP2, FP3 and FP4)

1996

42

1

55

1

1997

59

6

117

8

1998

69

8

132

9

Since 1999, the Directorate-General for Research has based its
audit plans on a selection procedure that makes use of a new risk
analysis method. This method is based on previous audit results,
on auditable contracts as well as on the Community(cid:146)s activities in
the countries participating in research activities. It also takes into
account audits on request. Furthermore, the implementation of a
new framework agreement signed with an external audit firm will
notably enhance these efforts. The Commission has already trans-
mitted a first batch of 100 audits to the external auditor. This will
increase the audit capacity of the internal auditors. It will also
allow the Commission to reach its intended coverage of audit of
contractors.

years. In view of the time and personnel available, the Directorate-
General for Fisheries tries to organise one inspection visit to each
Member State every two years, to respond to requests by the
Directorate-General for Financial Control and, on a case-by-case
basis, to visit all the contractors whose reports present an obvi-
ous problem. The number of projects financed and the amount
of Community aid granted are taken into consideration when
deciding which institutes to visit. The Directorate-General for
Fisheries plans very shortly to call on the services of the external
auditors with whom the Directorate-General for Research has
signed a framework contract.

As far as the Directorate-General for Agriculture is concerned, it
concentrated its efforts on clearly defined cases, on which ques-
tions arose as projects progressed. This targeted approach has
proved particularly effective for detecting irregularities. It should
be noted that in addition to the checks carried out by the
Directorate-General for Agriculture, additional ones are done at
its request by the Directorate-General for Financial Control.

103. Every research contract lays down the explicit terms and
conditions with regard to reporting, auditing (including on-the-
spot visits) and remedial measures. Where appropriate, the Com-
mission takes specific action against all or individual contractors
in a research project. The Commission keeps proper records of
such actions in the contract files.

At least 80 % of the participants in projects managed by the
Directorate-General for Agriculture are also partners in contracts
managed by the Directorate-General for Research. The Directorate-
General for Agriculture thus also benefits from the checks done
by the Directorate-General for Research on a series of projects car-
ried out by the same body.

Lastly, the Directorate-General for Fisheries undertook 18 on-the-
spot checks and checked 95 research contracts in the last three

104. As regards the division of tasks and responsibilities between
the managing and audit departments, the unit responsible for the
audit issues an opinion in the form of a report following an
on-the-spot check. It sends this opinion to all the authorising
departments via a network of audit correspondents. When the
inspection reports are finalised, the audit unit contacts the autho-
rising departments concerned. It is then up to these departments
to implement the recommendations made. The audit departments
of all the DGs involved in the research framework programme
receive an abstract of the report.

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The cases mentioned are three distinct cases. The Commission
fully implemented the audit conclusions in relation to the reim-
bursement of costs relating to the projects concerned in two cases.
In the third case the Commission(cid:146)s audit led to the cancellation of
the special agreement with the contractor in 1999.

110. EEIG capital, under a 1993 Council Regulation, is subject to
Community law. In return for full legal capacity, in the case of
default, members of a grouping have unlimited joint and several
liability for the grouping(cid:146)s debts to third parties. Unlimited joint
and several liability is a general principle.

Recoveries

105. The authorising departments issue numerous recovery
orders (182 for the reference period), which they then send to the
accounting officer. The authorising departments keep in regular
contact with the accounting officer on all these cases.

CONCLUSION

106. The Court mentions that three cases represent 92 % of a
total of EUR 3,4 million remaining to be recovered. The Commis-
sion(cid:146)s Legal Service has been investigating these cases since July
1996/August 1997.

AIR programme demonstration projects in the non-food field

107. The Commission acknowledges that there were certain man-
agement problems with some of the demonstration projects of
the AIR programme (FP3).

Following the preparatory work, funded as a (cid:145)promotion, accom-
panying and support activity(cid:146) (PASA), the Commission services
made a special effort to monitor these projects. This included the
joint scientific monitoring by the two DGs co-managing these
projects, mid-course seminars for six of the projects (one had
been stopped on the initiative of the services) and a symposium
for presentation of the projects(cid:146) final results. The Commission
took these initiatives in order to help exploit the results by bring-
ing together producers, users and scientists, all united by their
common interest in developing a European non-food sector nec-
essary to adapt to the effects of the CAP-reform.

The Commission fully considered the lessons from the approach
under FP3 for these demonstration projects and acted on them for
developing the demonstration area in the Life Sciences Pro-
grammes of FP4.

108. The rationale and procedures for selecting these projects
were identical to those for the AIR research projects: B-rated pro-
posals were proposals of (cid:145)good(cid:146) overall quality and therefore met
all the requirements to be eligible for funding. When duly justi-
fied, the Commission grants a contract extension in order to
maximise the outlets of research and to guarantee the full execu-
tion of the contract.

111 and 114. The Commission manages the research pro-
grammes, including FAIR, with great care. Strict rules and criteria
established by the legislative authority govern the principal stages
of evaluation, selection, management and monitoring of the
research projects. The three departments responsible for imple-
menting the FAIR programme have coordinated their efforts for
many years, particularly as regards planning calls for proposals,
evaluating and selecting projects and negotiating and monitoring
contracts. The Commission will be able to reinforce this coordina-
tion further under FP5, thanks to the recent reorganisation of its
departments and the creation of directors(cid:146) groups.

The Commission attaches great importance to adjusting its man-
agement structures and resources in line with developments in
research policy. This was also true of the FAIR programme under
FP4, deemed by the external experts appointed to evaluate it to be
effective. The Commission departments also monitor on a regular
and in-depth basis, the financial resources intended for the man-
agement of the research programmes and report to the budget
authority.

112. The Commission started developing indicators for the
annual monitoring of requirements in 1995, going on to fine-
tune them for the assessment of results and impact as well. The
Commission planned a wide-ranging investigation of the results
and impact of the programmes as part of the 1999 evaluation.

113. As regards coordination with other Community policies,
there are regular contacts between the departments concerned.
The Commission acknowledges, however, that further efforts are
needed to improve coordination on the individual projects financed
by the Community, in partnership with the Member States.

116. The quality and independence of the experts responsible for
evaluating the research project proposals are key factors in the

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framework programmes. The Commission has tightened up this
aspect of programme management under FP5,
in particular
through a common evaluation manual. The Commission, which
manages the programmes, acts entirely independently and on the
basis of known criteria, to select the projects to receive Commu-
nity financing.

117.
It is in the light of the evaluation of, and lessons learned
from past programmes that the Commission adopts standard
contracts for research projects. In this way, when preparing for
FP5 the Commission took an in-depth look at a large number of
contractual provisions, more particularly in the field of eligible
costs, always with the aim of maintaining or reinforcing the pro-
tection of the Community(cid:146)s financial interests. The Commission
will give careful consideration to the suggestions contained in the

Court of Auditors report, such as the certification of eligible costs
by an accredited authority.

118. Finally, the Commission would point out that the FAIR pro-
gramme involved thousands of participants in over 1 500 projects
making a substantial impact in relation to the programme(cid:146)s object-
ives. The independent experts responsible for evaluating the FAIR
programme acknowledged on many occasions that it was prov-
ing effective. The Court(cid:146)s report contains many points on which
the Commission will base its ongoing reflection on ways of
improving the management of research programmes, particularly
those relating to agriculture. The Commission is also taking all
the steps necessary to check the individual cases raised by the
Court and to make the appropriate improvements as soon as pos-
sible.