Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities
Date: 2002-12-23
Institutions: European Commission
Subjects: financial management, financial regulation, fund (EU), general budget (EU), implementation of the budget

31.12.2002

EN

Official Journal of the European Communities

L 357/1

I

(Acts whose publication is obligatory)

COMMISSION REGULATION (EC, Euratom) No 2342/2002

of 23 December 2002

laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/
2002 on the Financial Regulation applicable to the general budget of the European Communities

TABLE OF CONTENTS

PART ONE

COMMON PROVISIONS .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . .

TITLE I

SUBJECT . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . .

7

7

7

7

8

8

9

BUDGETARY PRINCIPLES . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . .

Principles of unity and budget accuracy . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . .

Principle of annuality . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . .

(Chapter 4 of the Financial Regulation) Principle of unit of account . . . . . . . .. . . . . . . . .. . . . . .

(Chapter 5 of the Financial Regulation) Principle of universality . . . .. . . . . . . . .. . . . . . . . .. . . . . .

(Chapter 6 of the Financial Regulation) Principle of specification . . .. . . . . . . . .. . . . . . . . .. . . . . . 10

(Chapter 7 of the Financial Regulation) Principle of sound financial management . . . . . . 11

(Chapter 8 of the Financial Regulation) Principle of transparency . . .. . . . . . . . .. . . . . . . . .. . . . . . 12

ESTABLISHMENT AND STRUCTURE OF THE BUDGET .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 12

Establishment of the budget . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 12

Structure and presentation of the budget . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 13

IMPLEMENTATION OF THE BUDGET . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 13

General provisions . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 13

Methods of implementation . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 14

General provisions . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 14

Special provisions . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 15

Financial actors . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 16

Rights and obligations of the financial actors . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 16

Authorising officer . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 17

Accounting officier . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 18

Imprest administrator . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 20

Liability of the financial actors . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 22

General rules . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 22

Rules applicable to authorising officers by delegation and subdelegation .. . . . . . . . .. . . . . . . . .. . . . . . 22

Revenue operations . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 23

Own resources . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 23

Estimate of amounts receivable . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 23

Establishment of amounts receivable . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 23

Authorisation of recovery . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 24

Recovery . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 24

TITLE II

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

TITLE III

Chapter 1

Chapter 2

TITLE IV

Chapter 1

Chapter 2

Section 1

Section 2

Chapter 3

Section 1

Section 2

Section 3

Section 4

Chapter 4

Section 1

Section 2

Chapter 5

Section 1

Section 2

Section 3

Section 4

Section 5

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Chapter 6

Expenditure operations . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 26

Section 1

Section 2

Section 3

Section 4

Section 5

Chapter 7

Chapter 8

TITLE V

Chapter 1

Section 1

Section 2

Section 3

Section 4

Chapter 2

TITLE VI

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

TITLE VII

Chapter 1

Chapter 2

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Commitment of expenditure . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 26

Validation of expenditure . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 27

Authorisation of payments .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 28

Payment of expenditure . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 29

Time limits for expenditure operations . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 29

IT systems . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 30

Internal auditor . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 30

PROCUREMENT . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 31

General provisions . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 31

Scope and award principles .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 31

Publication . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 32

Procurement procedures . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 33

Guarantees and control . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 43

Specific provisions applicable to contracts awarded by the Community institutions
on their own account . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 44

GRANTS . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 45

Scope . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 45

Award principles . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 46

Award procedure . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 48

Payment and control . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 50

Implementation . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 51

PRESENTATION OF THE ACCOUNTS AND ACCOUNTING . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 52

Presentation of the accounts . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 52

(Chapter 3 of the Financial Regulation) accounting . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 55

Organisation of the accounts . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 55

Accounting ledgers . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 55

Chart of accounts . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 56

Registration . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 56

Reconciliation and verification . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 57

Budget accounts . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 57

Chapter 3

(Chapter 4 of the Financial Regulation) property inventories . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 58

PART TWO

SPECIAL PROVISIONS . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 59

TITLE I

TITLE II

TITLE III

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

TITLE IV

TITLE V

(TITLE II OF THE FINANCIAL REGULATION) STRUCTURAL FUNDS . . .. . . . . . . . .. . . . . . . . .. . . . . . 59

(TITLE III OF THE FINANCIAL REGULATION) RESEARCH . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 59

(TITRE IV OF THE FINANCIAL REGULATION) EXTERNAL ACTIONS . . .. . . . . . . . .. . . . . . . . .. . . . . . 60

General provisions . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 60

Implementation of actions . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 60

Procurement . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 60

Grants . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 67

Imprest accounts and inventories . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 68

(TITLE V OF THE FINANCIAL REGULATION) EUROPEAN OFFICES . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 68

(TITLE VI OF THE FINANCIAL REGULATION) ADMINISTRATIVE APPROPRIATIONS . . . . . . 69

PART THREE

TRANSITIONAL AND FINAL PROVISIONS . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 69

TITLE I

TITLE II

TRANSITIONAL PROVISIONS . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 69

FINAL PROVISIONS . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . 70

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THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

merged with the funds of the international organisation.
Where pre-financing which remains the property of the
Communities yields interest, this interest should be paid
to the budget as miscellaneous revenue.

Having regard to the Treaty establishing the European Atomic
Energy Community,

(5)

Having regard to Council Regulation (EC, Euratom) No 1605/
2002 of 25 June 2002 on the Financial Regulation applicable
to the general budget of the European Communities (1), and in
particular Article 183 thereof,

Having consulted the European Parliament, the Council, the
Court of Justice of the European Communities, the Court of
Auditors, the European Economic and Social Committee, the
Committee of the Regions, the Ombudsman and the European
Data Protection Supervisor,

Whereas:

(1)

(2)

(3)

(4)

The provisions of Regulation (EC, Euratom) No 1605/
2002 (hereinafter ‘the Financial Regulation’) have been
simplified to confine the Regulation to the basic princi-
ples and definitions relating to the establishment, execu-
tion and control of the general budget of the European
Communities (hereinafter ‘the budget’).

These implementing rules should therefore not only
supplement the Financial Regulation in respect of the
provisions thereof for which it expressly refers to the
implementing rules but also in respect of the provisions
whose application requires the implementing measures
to be determined in advance. In the interests of clarity, it
is necessary to replace Commission Regulation (Euratom,
ECSC, EC) No 3418/93 of 9 December 1993 laying
down detailed rules for the implementation of the Finan-
cial Regulation of 21 December 1977 (2), as
last
amended by Regulation (EC) No 1687/2001 (3).

To ensure that sectoral rules are consistent with the
budgetary principles set out in the Financial Regulation,
an inventory should be produced of all regulatory instru-
ments relating to budget execution and provision made
for this inventory to be drawn up by the Commission
and submitted to the budgetary authority.

As regards the budgetary principles,
in particular the
principle of unity, the requirement that interest on pre-
financing to be repaid to the budget be identified means
that any pre-financing which remains the property of
the Communities must be identified. Such pre-financing
remains the property of the institution unless the basic
act, within the meaning of Article 49 of the Financial
Regulation, provides otherwise and unless it
is paid
under a procurement contract, or to staff or members of
the institutions, or to the Member States. This rule
should be spelled out according to the type of manage-
(direct or indirect centralised management and
ment
shared management). It does not apply to joint manage-
ment since in such cases the Community funds are

(1) OJ L 248, 16.9.2002, p. 1.
(2) OJ L 315, 16.12.1993, p. 1.
(3) OJ L 228, 24.8.2001, p. 8.

For the principle of annuality, it is important to clarify
the meaning of annual appropriations and the prepara-
tory stages of
if
completed by 31 December, may allow the carryover of
commitment appropriations which will then have to be
used by 31 March of the following financial year.

the commitment procedure which,

As regards the principle of the unit of account, the rates
to be used for conversion between the euro and the
other currencies for the requirements of the manage-
ment of the cash flow and the accounts should be speci-
fied.

treatment

the budget

As regards the derogations from the principle of univers-
ality,
to be given to assigned
revenue, in particular to contributions by Member States
or third countries to certain Community programmes,
should be specified, as must the limits on the netting of
expenditure and revenue.

As regards the principle of specification, a precise defini-
tion should be given of the calculation of the percentage
of appropriations which the institutions are authorised
to transfer by virtue of the autonomy they enjoy and
provision should be made for the budgetary authority to
be given full information through a detailed explanation
of the requests for transfers which have to be submitted
to it.

As for sound financial management, it is necessary to
specify the objectives of the ex ante, interim and ex post
evaluations of
the
minimum frequency with which they are to be carried
out and the information to be given in the legislative
financial statement.

the programmes and activities,

(6)

(7)

(8)

(9)

(10) As for the establishment and presentation of the budget,
it is necessary to determine the contents of the general
introduction to the budget,
the working documents
backing up the budget and the budget remarks for
ensuring that the budgetary authority is fully informed.
In the new activity-based budgeting (ABB) presentation,
the definition and classification of administrative appro-
priations should also be set out.

(11) As regards implementation of the budget, it is appro-
priate first to clarify the forms which may be taken by
basic acts in the Community field and in the fields
covered by the Treaty on European Union. The
maximum amounts of appropriations which may be
implemented for preparatory actions and pilot schemes
without the existence of a basic act should be deter-
mined and the provisions of
the Treaties conferring
specific powers directly on the Commission should be
listed.

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(12) Acts likely to constitute a conflict of interests should also
be defined, together with the procedure to be followed
in such cases.

(13) As

for

implement

the different methods of

implementing the
budget, it should be laid down that, when the Commis-
sion does not
the budget directly in its
departments, it must first ascertain that the entities to
implementing tasks have
which it plans to entrust
management procedures and control and accounting
systems which are adequate and appropriate with regard
to the requirements of sound financial management.

(14)

(15)

(16)

In respect of indirect centralised management, that is to
say, of management delegated by the Commission to
executive agencies or to bodies governed by Community
law or national public-sector bodies or bodies with a
public-service mission, it is also necessary to lay down
the framework for such delegation of powers and the
arrangements for its implementation by act of delegation
or agreement. The executive agencies, which remain
under Commission control, should be recognised as
authorising officers by delegation of that institution for
implementation of
the Community budget. Where
national bodies have to carry out acts of budget imple-
mentation, they should offer adequate financial guaran-
tees and be chosen in a transparent manner following a
cost-effectiveness analysis showing the reasons for dele-
gating management to such a body. The Commission
should seek the opinion of the relevant committee, in
accordance with the basic act
for implementing the
appropriations concerned, before delegating powers to
national bodies. Private-law entities performing prepara-
tory or ancillary tasks on the Commission's behalf
should be selected in accordance with procurement
procedures.

For shared management with the Member States or
decentralised management with third countries,
the
stages and objectives of the procedure for the clearance
of accounts should be laid down without prejudice to
the specific provisions contained in the relevant sectoral
regulations.

Finally, for joint management, it should be made clear
that the share contributed by each donor to each type of
expenditure need not be identified but that the subsi-
dised actions must none the less be subject to compre-
hensive controls; the international organisations eligible
for this type of management should be identified.

including in terms of

(17) As regards the role of the financial actors, the reform of
financial management, together with the dropping of
centralised ex ante controls, increases the responsibilities
of the authorising officers in all revenue and expenditure
operations,
control
systems. The budgetary authority should in future be
informed of the appointment or termination of duties of
an authorising officer by delegation. Consequently, the
tasks, responsibilities and principles of the procedures to
be observed should also be laid down. The internalisa-
in particular, a clear
tion of ex ante controls requires,
distinction between tasks relating to the initiation of

internal

operations in implementation of the budget and tasks
relating to the verification of such operations. Moreover,
each institution should adopt a code of professional
standards applicable to the staff responsible for ex ante
and ex post verifications. Provision should then be made
for the responsibilities assumed to be accounted for in
an annual report to the institution which must, inter alia,
give the results of the ex post verifications; arrangements
should also be made for keeping the supporting docu-
ments relating to the operations carried out. Finally, all
the various forms of negotiated procedure for the award
of public contracts should, since they represent deroga-
tions, be the subject of a special report to the institution
and of a communication to the budgetary authority.

(18)

(19)

In order to clarify responsibilities, a precise definition
should also be given of the tasks and responsibilities of
the accounting officer in connection with the accounting
systems, treasury management, the management of bank
accounts and third-party files. The arrangements for the
termination of the accounting officer's duties should also
be spelled out.

The conditions for the use of imprest accounts, a system
of management which forms an exception to normal
budgetary procedures, should also be laid down, and the
tasks and responsibilities of the imprest administrators,
as well as those of the authorising officer and accounting
officer
imprest
in connection with the control of
accounts, should be set out. The budgetary authority
should be informed of any appointment or termination
of duties.

(20) Once the tasks and responsibilities of each financial
actor have been defined, they may be held liable only
under the conditions laid down in the Staff Regulations
of Officials of
the European Communities and the
Conditions of Employment of Other Servants. However,
a new specialised financial irregularities panel should be
set up in appropriate manner in each institution to
determine whether irregularities of a financial nature
have occurred. The procedure by which an authorising
officer may seek confirmation of an instruction and thus
be released from any liability should also be laid down.

(21) As regards revenue, except for the special case of own
resources covered by Council Regulation (EC, Euratom)
No 1150/2000 of 22 May 2000 implementing Decision
94/728/EC, Euratom on the system of the Communities'
own resources (1), it is necessary to specify the tasks and
controls falling within the responsibility of the author-
ising officers at the different stages of the procedure:
establishment of the estimate of amounts receivable and
the debit note
then the recovery order; dispatch of
informing the debtor that the amount receivable has
been established; calculation of any default interest due;
and, finally, the decision, where necessary, to waive an
entitlement subject to criteria guaranteeing compliance
with sound financial management. The accounting offi-
cer's role in the collection of revenue and in allowing
any additional time for payment should also be speci-
fied.

(1) OJ L 130, 31.5.2000, p. 1.

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(22) As regards expenditure, the relationship between finan-
cing decisions, global commitments and individual
commitments should be defined, as should the character-
istics of those different stages. The distinction between a
global commitment and an individual commitment
depends on the extent to which the beneficiaries are
identified
Provisional
amounts
involved.
commitments are
limited to routine administrative
expenditure and expenditure in connection with the
European Agricultural Guidance and Guarantee Fund
(EAGGF). To restrict the volume of dormant commit-
ments, appropriations corresponding to commitments
for which no payment has been made for three years
should be decommitted.

and

the

(23)

It is then necessary to clarify the relationship between
validation, authorisation and payment operations and
the controls to be carried out by the authorising officer
when validating expenditure, with the endorsement
‘passed for payment’, and when authorising payment by
checking the validity of the release from all liability, for
which the authorising officer now has sole responsibility.
The documents to be produced in support of payments
should be specified and rules laid down for the clearing
of pre-financing and interim payments. Finally, the time-
limits applicable to validation and payment operations
should be laid down, account being taken of Directive
2000/35/EC of
the
Council of 29 June 2000 on combating late payment in
commercial transactions (1).

the European Parliament and of

(24)

For the internal audit, it is necessary to lay down the
procedure for appointing the auditor and to guarantee
his
independence within the institution which has
appointed him and to which he must report on his
activities; the budgetary authority should be informed of
any appointment or termination of duties.

(25) With regard to procurement,

the option taken is to
insert
in the present Regulation the provisions of
Council Directives 92/50/EEC (2), 93/36/EEC (3) and 93/
37/EEC (4), as last amended by Commission Directive
2001/78/EC (5), relating to the procedures for the award
of public service, supply and works contracts respec-
tively. Consequently,
it is first necessary to define the
various types of procurement contract; the advertising
and publication measures applicable; the conditions in
which use may be made of a particular form of proce-
dure and the main features of the existing procedures;
the specification of selection criteria and the possible
award arrangements; rules for access to tender docu-
ments and for communication with tenderers or candi-
dates; and,
for cases where the Commission awards
contracts on its own account, the various thresholds
applicable and the rules for estimating the value of the
contracts to be awarded.

(26)

The purpose of
the award of
the procedures
contracts is to satisfy the needs of the institutions on the
best possible terms while guaranteeing equal access to

for

(1) OJ L 200, 8.8.2000, p. 35.
(2) OJ L 209, 24.7.1992, p. 1.
(3) OJ L 199, 9.8.1993, p. 1.
(4) OJ L 199, 9.8.1993, p. 54.
(5) OJ L 285, 29.10.2001, p. 1.

public contracts and complying with the principles of
transparency and non-discrimination. With a view to
ensuring transparency and the equal treatment of candi-
dates, as well as the full responsibility of authorising offi-
cers in the final choice, it is necessary to lay down the
procedure for opening and then evaluating tenders and
requests to participate,
from the appointment of a
committee up to the substantiated and documented
award decision, which ultimately
rests with the
contracting authority. The financial guarantees needed to
protect the Communities' financial interests should also
be specified.

(27)

(28)

Finally, it is necessary to delimit the contracting authori-
ties' powers to impose administrative penalties, in order
to ensure that penalties are proportionate and dissuasive
and to secure equal treatment as between the various
institutions and as between departments.

The scope of the Title on grants should also be clarified,
particularly with regard to the different methods for
implementing the budget, but also with regard to the
type of action or body of general European interest
eligible for a grant. The characteristics of the annual
work programme and of calls for proposals should be
specified, as should the possible exceptions in this
context and the possibility of retroactive effect, particu-
larly in the context of humanitarian aid and the manage-
ment of crisis situations, for which the constraints are
very specific.

(29) Again with regard to the requirements of transparency,
equal treatment for applicants and the enhancement of
the accountability of authorising officers,
the award
procedure should be laid down, from the application for
the grant to its evaluation, by a committee, in the light
of previously specified selection and award criteria,
before the authorising officer takes his final, appropri-
ately documented decision.

(30)

then requires that

Sound financial management
the
Commission protect itself with guarantees: at the stage
of grant applications, by arranging financial audits for
applications involving larger amounts; then, at the time
of paying pre-financing, by requiring advance financial
guarantees; and, finally, at the stage of final payment, by
arranging financial audits for the requests which involve
the largest amounts and which present most risk. Sound
management and compliance with the no-profit and co-
financing principles also require rules to be laid down
delimiting the possible use of flat-rate payments. Finally,
the sound management of Community funds means that
the grant beneficiaries themselves must comply with the
principles of transparency and equal treatment of poten-
tial contractors, as well as with the principle that the
contract must be awarded to the tender offering best
value for money when the action is partly sub-
contracted.

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(31)

Finally, powers for imposing penalties in that context
should be aligned with those conferred in the context of
procurement.

exceptions which reflect the specific operational features
of that sector, mainly as regards procurement and the
award of grants.

(32) As regards the keeping and presentation of the accounts,
each of the generally accepted accounting principles on
which the financial statements must be based should be
defined. It is also necessary to specify the conditions for
entering a transaction in the accounts and the rules for
valuing assets and liabilities and for the constitution of
provisions.

(33)

It should be specified that the institutions' accounts must
be accompanied by a report on budgetary and financial
management and details should be given of the content
and presentation of the elements making up the financial
statements (balance sheet, economic outturn account,
cash-flow table and annex) and the budget implementa-
tion statements (budget outturn account and annex).

(34) On accounting matters, it should be specified that the
accounting officer of each institution must produce
documents describing the organisation of the accounts
and the accounting procedures of that institution and
define the conditions to be respected by the compu-
regards
terised accounting systems,
security of access and the audit trail for any changes
made to the systems.

in particular as

(35) As regards the keeping of the accounts, it is necessary to
specify the principles applicable to the accounting
ledgers, the trial balance, the periodical reconciliation of
the totals in that balance and the inventory, and to
specify the components of the chart of accounts adopted
by the Commission's accounting officer. The rules
applicable to the registration of operations, in particular
the double-entry method, the rules for the conversion of
operations which are not denominated in euro and the
supporting documents for accounting entries, should be
laid down. The content of the accounting records should
also be specified.

(40) As regards procurement, these implementing rules take
over the substance of the provisions of the Commission
Decision of 10 November 1999 on the simplification of
the management systems for the award of contracts in
the framework of the cooperation programmes imple-
mented by the Directorates-General
for external rela-
tions, (1) resulting in procurement rules which differ
from the standard rules by virtue of the different thresh-
olds set and the management procedures, which have
been adapted to external actions.

(41) As for grants, it is necessary to list the types of action
for which derogation is possible from the principle of
co-financing referred to in Article 109 of the Financial
Regulation. This applies in particular to humanitarian
aid and aid in crisis situations and actions for the protec-
tion of the health or fundamental rights of peoples.

(42)

(43)

To guarantee the sound management of Community
appropriations,
it is also necessary to specify the pre-
conditions and the rules to be contained in the agree-
ments when the management of appropriations is decen-
tralised or if use is made of imprest accounts.

The provisions of the Financial Regulation relating to
European Offices should be supplemented by specific
the
rules for the Office for Official Publications of
European Communities and by provisions authorising
the Commission's accounting officer to delegate some of
his tasks to staff in those Offices. Operational procedures
should also be laid down for the bank accounts which
the European Offices may be authorised to open in the
Commission's name.

(36)

Finally, it is necessary to lay down the rules relating to
the property inventory and to clarify the respective
responsibilities in this field of the accounting officers
and authorising officers, as well as the rules applicable
to the resale of property entered in the inventory.

(44) As regards administrative appropriations, each institu-
tion should inform the budgetary authority of significant
building projects which are under way, that is to say, of
those increasing the building stock.

(37) As regards the Structural Funds, it should be specified
that the repayment of payments on account in respect
of a given operation does not have the effect of reducing
the contribution from the Fund to that operation.

(45)

It is necessary to identify the bodies which may receive
grants charged to the budget and which have to be given
a set of rules in accordance with the conditions laid
down in Article 185 of the Financial Regulation.

(38)

The types of action, direct and indirect, which may be
financed in the research sector should be specified.

(46)

The various thresholds and amounts referred to in this
Regulation should be regularly updated by linking them
with the inflation recorded in the Community, with the
exception of the thresholds applicable to procurement,

(39)

like the
For external actions, the implementing rules,
Financial Regulation itself, aim to make provision for

(1) SEC(1999) 1801.

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HAS ADOPTED THIS REGULATION:

PART ONE

COMMON PROVISIONS

TITLE I

SUBJECT

Article 1

Subject

(Ar t i cle 1 of t he Fi na nci a l R e g ulati on)

This Regulation sets out the rules for implementing the provi-
sions of Regulation (EC, Euratom) No 1605/2002 (hereinafter
‘the Financial Regulation’).

The institutions concerned by this Regulation are the institu-
tions within the meaning of the Financial Regulation.

Article 2

Inventory of legislative acts concerning the implementa-
tion of the budget

( A r ti c le 2 of th e F i n a nci a l R e g u la t i on)

The Commission shall keep an inventory of the acts referred to
in Article 2 of the Financial Regulation. It shall update that
inventory each year and inform the budgetary authority accord-
ingly.

TITLE II

BUDGETARY PRINCIPLES

CHAPTER 1

Principles of unity and budget accuracy

5.
Paragraphs 1 to 4 shall be without prejudice to the entry
of pre-financing on the assets side of the financial statements,
as will be laid down in the accounting rules provided for in
Article 133 of the Financial Regulation.

Article 3

The authorising officers shall provide the accounting officer
with details enabling him to identify pre-financing which
remains the property of the Communities.

Scope of pre-financing remaining the property of the
Communities

(A r ti c le 5(4) of th e Fi na nc i a l R e g u la ti on)

Article 4

Pre-financing within the meaning of Article 105 shall
1.
remain the property of the Communities, unless the basic act,
within the meaning of Article 49(1) of the Financial Regulation,
provides otherwise. That provision shall not concern pre-finan-
cing paid under a contract within the meaning of Article 88 of
the Financial Regulation, or to Member States, or under the
pre-accession aid, or the advances referred to in Article 265. It
shall not apply to joint management within the meaning of
Article 53 of the Financial Regulation.

2.
In the case of direct centralised management within the
meaning of Article 53 of the Financial Regulation involving a
number of partners, the rule referred to in paragraph 1 of this
Article shall apply solely to the principal contractor.

In the case of decentralised management and in the case
3.
of
indirect centralised management within the meaning of
Article 53 of the Financial Regulation, the rule referred to in
this Article shall apply only to the entity
paragraph 1 of
receiving pre-financing direct from the Commission.

4.
The rule referred to in paragraph 1 shall apply to pre-
financing paid under contracts or agreements concluded after
the entry into force of this Regulation.

Entry in the budget of interest yielded by Community
funds

( A r ti cl e 5 ( 4 ) o f th e F i na nc i a l R e g u la ti o n)

1. Where pre-financing which remains the property of the
Communities in accordance with Article 3 yields interest or
equivalent benefits, these shall be paid to the general budget of
the European Communities (hereinafter ‘the budget’) as miscel-
laneous revenue.

Authorising officers shall ensure that, under contracts and

2.
agreements concluded with beneficiaries:

(a) such pre-financing is paid to accounts which allow the

funds paid by the Communities to be identified; and

(b) the beneficiaries inform the authorising officer responsible
of the amount of any interest or equivalent benefits yielded
by those funds at least once a year if such interest repre-
sents significant amounts and in any event whenever
requests are made for interim payments or payments of
balances that clear the pre-financing.

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In accordance with Chapter 5 of Title IV, the authorising
3.
officer responsible shall, upon payment of the pre-financing,
draw up an estimate of amounts receivable covering any
interest or equivalent benefits yielded by the pre-financing.

in accordance with
The authorising officer responsible shall,
the timetable referred to in point (b) of paragraph 2, draw up a
recovery order for the amount of interest referred to in para-
graph 1.

4. Where pre-financing is paid from the same budget line,
under the same basic act and to beneficiaries covered by the
same award procedure, the authorising officer may draw up a
single estimate of amounts receivable for a number of debtors.

CHAPTER 2

Principle of annuality

Article 5

Appropriations for the financial year

(A r ti cle 8(3) of th e Fi na nc i a l R e g u la ti on)

The commitment appropriations and payment appropriations
entered in the budget for a financial year and which have to be
the appropriations
used during that year shall consist of
appropriations
that
authorised
authorised for the financial year are:

year. The

financial

for

the Financial Regulation,

(b) for individual commitments within the meaning of Article
76 of
the advanced stage of
preparation of the contracts or agreements. This advanced
stage of preparation of the contracts or agreements shall
mean the completion of the selection of potential contrac-
tors or beneficiaries.

Appropriations carried over in accordance with Article
3.
9(2)(a) of
the Financial Regulation which have not been
committed by 31 March of the following financial year shall be
automatically cancelled.

The Commission shall inform the budgetary authority by 15
April of the appropriations cancelled in this way.

Appropriations carried over in accordance with Article
the Financial Regulation may be used until 31

4.
9(2)(b) of
December of the following financial year.

The accounts shall identify appropriations carried over in

5.
this way.

6.
The appropriations for staff expenditure referred to in
Article 9(6) of the Financial Regulation are those for remunera-
tion and allowances for members and staff of the institutions.

(a) appropriations provided in the budget,

including by

amending budgets;

(b) appropriations carried over;

(c) appropriations made available again in accordance with

Articles 157 and 181(5) of the Financial Regulation;

(d) appropriations arising from payments on account which

have been repaid in accordance with Article 228;

(e) appropriations provided following the receipt of revenue
assigned during the financial year or during previous finan-
cial years and not used.

Article 6

Carryover of appropriations

(A r ti c le 9(2) of th e Fi na nc i a l R e g u la ti on)

1.
The commitment appropriations referred to in Article
9(2)(a) of the Financial Regulation may be carried over only if
the commitments could not be made before 31 December of
the financial year for reasons not attributable to the authorising
officer and if the preparatory stages are sufficiently advanced to
make it reasonable to surmise that the commitment will be
made by no later than 31 March of the following year.

2.
The preparatory stages referred to in Article 9(2)(a) of the
Financial Regulation, which should be completed by 31
December of the financial year in order to allow a carryover to
the following year, are in particular:

(a) for global commitments within the meaning of Article 76
of the Financial Regulation, the adoption of a financing
decision or the closing by that date of the consultation of
the departments concerned within each institution for the
adoption of the decision;

CHAPTER 3

(Chapter 4 of the Financial Regulation)

Principle of unit of account

Article 7

Rate of conversion between the euro and other currencies

( A r ti cl e 1 6 o f th e F i na nc i a l R e g u la ti o n)

1. Without prejudice to specific provisions arising from the
application of sectoral regulations, conversion between the euro
and another currency shall be made using the daily euro rate
published in the C series of the Official Journal of the European
Communities.

If no daily euro rate is published in the Official Journal of
2.
the European Communities for the currency in question,
the
Commission shall use the accounting rate referred to in para-
graph 3.

3.
For the purposes of the accounts provided for in Articles
132 to 137 of the Financial Regulation and subject to Article
213, conversion between the euro and another currency shall
be made using the monthly accounting rate of the euro. That
accounting rate shall be established by the Commission by
means of any source of information it regards as reliable, on
the basis of the rate on the penultimate working day of the
month preceding that for which the rate is established.

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Article 8

Rate to be used for conversion between the euro and
other currencies

(A r ti cle 16 of th e Fi na nc i a l R e g u la ti on)

1. Without prejudice to specific provisions deriving from
the application of sectoral regulations, the rate to be used for
conversion between the euro and other currencies shall be that
of the day on which the payment order or recovery order is
drawn up by the authorising department.

In the case of euro imprest accounts, the rate to be used

2.
shall be determined by the date of the payment by the bank.

3.
In the case of imprest accounts in national currencies,
referred to in Article 16 of the Financial Regulation, the rate to
be used shall be that of the month of the expenditure from the
imprest account.

4.
For expenditure financed by the European Agricultural
Guidance and Guarantee Fund (EAGGF), Guarantee Section, the
rate to be used for month ‘n’ in respect of which such expendi-
ture has been declared in accordance with Article 3 of Commis-
sion Regulation (EC) No 296/96 (1) shall be that for the tenth
day of month ‘n+1’ or for the first preceding day for which a
rate is quoted.

That rate shall also be used for the corresponding advances
provided for in Articles 4 and 5 of Regulation (EC) No 296/96.

Article 9

Information on cash transfers by the Commission between
different currencies

(A r ti cle 16 of th e Fi na nc i a l R e g u la ti on)

Each quarter the Commission shall send the Member States a
statement of transfers carried out between different currencies.

CHAPTER 4

(Chapter 5 of the Financial Regulation)

Principle of universality

Article 10

Structure to accommodate assigned revenue and provision
of corresponding appropriations

(A r ti c le 18 of th e Fi na nc i a l R e g u la ti on)

1. Without prejudice to Articles 12 and 13, the structure to
accommodate assigned revenue in the budget shall comprise:

(a) in the statement of revenue of each institution's section, a

budget line to receive the revenue;

(b) in the statement of expenditure, the remarks shall show
which lines may receive the appropriations corresponding
to the assigned revenue which are made available.

(1) OJ L 39, 17.2.1996, p. 5.

In the case referred to in point (a) of the first subparagraph, if
the amount of such revenue is foreseeable, it shall be entered
on the line. If it is not foreseeable, a token entry (p.m.) shall be
made and the estimated revenue shall be shown for informa-
tion in the remarks.

2.
The appropriations corresponding to assigned revenue
may be made available, both as commitment appropriations
and as payment appropriations, when the revenue has been
received by the institution, save in the case provided for in
Article 161(2) of the Financial Regulation. They shall be made
available automatically save in the case of repayments of
payments on account, referred to in Article 156 of the Finan-
cial Regulation, and in the case of
financial corrections in
connection with the Structural Funds.

Article 11

Contributions

from Member

States

to

research

programmes

(A r ti cle 18(1)(a ) of the Fi nanc i a l R eg ulati on)

1.
The Member States' contributions to the financing of
certain supplementary research programmes, provided for in
Article 5 of Regulation (EC, Euratom) No 1150/2000, shall be
paid as follows:

(a) seven twelfths of the sum entered in the budget shall be
paid by no later than 31 January of the current financial
year;

(b) the remaining five twelfths shall be paid by no later than

15 July of the current financial year.

2. Where the budget has not been finally adopted before the
start of a financial year, the contributions provided for in para-
graph 1 shall be based on the sum entered in the budget for
the previous financial year.

3.
Any contribution or additional payment owed by the
Member States to the budget shall be entered in the Commis-
sion's account or accounts within thirty calendar days of the
call for funds.

4.
Payments made shall be entered in the account provided
for in Regulation (EC, Euratom) No 1150/2000 and shall be
subject to the conditions laid down by that Regulation.

Article 12

Assigned revenue resulting from the participation of EFTA
States in certain Community programmes

(Artic le 18(1)(d) of t he Fina ncia l R e g u lat i on)

1.
The budget structure to accommodate the participation of
the EFTA States in certain Community programmes shall be as
follows:

(a) in the statement of revenue, a line with a token entry (p.m.)
shall be entered to accommodate the full amount of the
EFTA States' contribution for the financial year in question.
The estimated amount shall be shown in the budget
remarks;

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(b) in the statement of expenditure:

(i) the remarks for each line relating to the Community
activities in which the EFTA States participate shall
show ‘for information’ the estimated amount of the
participation;

(ii) an annex, forming an integral part of the budget, shall
set out all the lines covering the Community activities
in which the EFTA States participate.

The annex referred to in point (b)(ii) of the first subparagraph
reflects and is part of the structure to accommodate the appro-
priations corresponding to such participation, as provided for
in paragraph 2, and to allow the expenditure to be imple-
mented.

2.
Under Article 82 of the Agreement on the European
Economic Area (EEA), the amounts of the annual participation
of the EFTA States, as confirmed to the Commission by the
EEA Joint Committee in accordance with Article 1(5) of
Protocol 32 annexed to that Agreement, shall give rise to the
provision, at the start of the financial year, of the full amounts
of
the corresponding appropriations for commitments and
appropriations for payments.

to adjust

If, in the course of the financial year, additional appro-
3.
priations are provided on the budget lines with EFTA State
participation without the EFTA States being able, during that
year,
their contributions accordingly in order to
comply with the ‘proportionality factor’ provided for in Article
82 of the Agreement on the European Economic Area, the
Commission may, as a provisional and exceptional measure,
use its cash resources to pre-finance the share of the EFTA
States. Whenever such additional appropriations are provided,
the Commission shall, as soon as possible, call in the corre-
sponding contributions from the EFTA States. The Commission
shall
inform the budgetary authority each year of any such
decisions taken.

The pre-financing shall be regularised as soon as possible in the
budget for the following financial year.

the financial contributions of

In accordance with Article 18(1)(d) of the Financial Regu-
4.
lation,
the EFTA States shall
constitute assigned revenue. The accounting officer shall adopt
appropriate measures to ensure that use of the revenue arising
from those contributions and of the corresponding appropria-
tions is monitored separately.

In the report provided for in Article 131(2) of the Financial
Regulation, the Commission shall show separately the stage of
implementation,
in both revenue and expenditure, corre-
sponding to EFTA State participation.

(b) at the same time, and without prejudice to Article 74 of
the Financial Regulation, entry of those amounts in the
statement of revenue shall give rise to the provision, in the
statement of expenditure, of commitment appropriations
and payment appropriations. These appropriations shall be
implemented in accordance with Article 17 of the Financial
Regulation.

Article 14

Passing for payment of the net amount

( A r ti c le 2 0 ( 1 ) of t h e F i na nci a l R e g u l a ti on)

to Article 20(1) of

Pursuant
the
following deductions may be made from payment requests,
invoices or statements, which shall then be passed for payment
of the net amount:

the Financial Regulation,

(a) penalties

imposed on parties

to contracts,

including

procurement contracts;

(b) adjustments for amounts paid unduly, which can be made
by means of direct deduction against a new payment of the
same type to the same payee under the chapter, article and
financial year in respect of which the excess payment was
made, and which give rise to interim payments or
payments of balances.

Discounts, refunds and rebates on individual
invoices and
payment requests shall not be recorded as Community revenue.

Article 15

Accounts for recoverable taxes

( A r ti c le 2 0 ( 2 ) of t h e F i na nci a l R e g u l a ti on)

Any taxes borne by the Communities under Article 20(2) of
the Financial Regulation shall be entered in a suspense account
until they are refunded by the States concerned.

CHAPTER 5

(Chapter 6 of the Financial Regulation)

Article 13

Principle of specification

Proceeds of sanctions imposed on Member States declared
to have an excessive deficit

( A r t i c le 18( 1 ) ( b ) of th e F i n a n c i a l R e g u l a t i o n )

The budget structure to accommodate the proceeds of the sanc-
tions referred to in Section 4 of Council Regulation (EC) No
1467/97 (1) shall be as follows:

(a) in the statement of revenue, a line carrying a token entry
(p.m.) shall be entered to accommodate the interest on such
amounts;

(1) OJ L 209, 2.8.1997, p. 6.

Article 16

Transfer procedures

( A r ti c le 2 2 ( 1 ) of t h e F i na nci a l R e g u l a ti on)

1.
Each institution may propose to the budgetary authority,
within its own section of the budget, transfers from one title to
another exceeding the limit of 10 % of the appropriations for
the financial year on the line from which the transfer is to be
made. It shall inform the Commission accordingly.

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Those transfers shall be subject to the procedure laid down in
Article 24 of the Financial Regulation.

Each institution may, within its own section of

2.
budget, make transfers within articles.

the

(b) for all lines relating to external action, the implementation
of appropriations up to the end of the month preceding
the request for transfer and an estimate of requirements up
to the end of the financial year,
including a comparison
with the initial estimate;

Article 17

tions.

(c) an analysis of the possibilities of reallocating appropria-

Rules concerning the calculation of limits on transfers

(A r ti c le 23 of th e Fi na nc i a l R e g u la ti on)

1.
The percentages referred to in Article 22(1) and points (b)
and (c) of the first subparagraph of Article 23(1) of the Finan-
cial Regulation shall be calculated at the time the request for
transfer is made.

the Financial Regulation,

2.
For the purposes of the limit referred to in Article 22(1)
and points (b) and (c) of the first subparagraph of Article 23(1)
of
to be taken into
consideration shall be the sum of the transfers to be made on
the line from which the transfer is being made after adjustment
for earlier transfers made.

the amount

CHAPTER 6

(Chapter 7 of the Financial Regulation)

Principle of sound financial management

Article 21

Evaluation

Article 18

Administrative expenditure

(A r ti cle 23 of th e Fi na nc i a l R e g u la ti on)

The expenditure referred to in point (b) of the first subpara-
graph of Article 23(1) of the Financial Regulation shall cover,
for each policy area, the items referred to in Article 27.

( A r ti cl e 2 7 o f th e F i na nc i a l R e g u la ti o n)

1.
All proposals for programmes or activities occasioning
expenditure or a reduction in revenue for the budget shall be
the subject of an ex ante evaluation, which shall identify:

(a) the need to be met in the short or long term;

(b) the objectives to be achieved;

Article 19

(c) the results expected and the indicators needed to measure

Grounds for requests for transfers of appropriations

them;

( A r ti c le s 22 a nd 2 3 o f th e F i na nc i a l R e g u la ti o n)

(d) the added value of Community involvement;

Proposals for transfers and all information for the budgetary
authority concerning transfers made under Articles 22 and 23
of the Financial Regulation shall be accompanied by appro-
priate and detailed supporting documents showing the imple-
mentation of appropriations and estimates of requirements up
to the end of the financial year, both for the lines to which the
appropriations are to be transferred and for those from which
they are to be taken.

(e) the risks, including fraud, linked with the proposals and the

alternative options available;

(f) the lessons learned from similar experiences in the past;

(g) the volume of appropriations, human resources and other
administrative expenditure to be allocated with due regard
for the cost-effectiveness principle;

Article 20

(h) the monitoring system to be set up.

Grounds for requests for transfers from the emergency aid
reserve

(A r ti cle 26 of th e Fi na nc i a l R e g u la ti on)

Proposals for transfers to allow the utilisation of the emergency
aid reserve, referred to in the first subparagraph of Article
26(2) of the Financial Regulation, shall be accompanied by
appropriate and detailed supporting documents showing:

(a) for the line to which the transfer is to be made, the most
recent
information available for the implementation of
appropriations and the estimate of requirements up to the
end of the financial year;

2.
All programmes or activities shall then be the subject of
an interim and/or ex post evaluation in terms of the human
and financial resources allocated and the results obtained in
order to verify that they were consistent with the objectives set,
as follows:

(a) the

results obtained in carrying out

a multiannual
programme shall be periodically evaluated in accordance
with a timetable which enables the findings of that evalua-
tion to be taken into account for any decision on the
renewal, modification or suspension of the programme;

(b) activities financed on an annual basis shall have their results

evaluated at least every six years.

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Point (b) of the first subparagraph shall not apply to each of
the projects or actions conducted within those activities, for
which the requirement may be met by the final reports sent by
the bodies which carried out the action.

In order to prevent any risk of fraud or irregularity which
2.
might adversely affect
the Communities'
the protection of
financial interests, the financial statement shall provide infor-
mation regarding existing and planned fraud prevention and
protection measures.

Article 22

Financial statement

(A r ti c le 28 of th e Fi na nc i a l R e g u la ti on)

Any proposal

for an act submitted to the legislative
1.
authority which may have an impact on the budget, including
changes in the number of posts, shall include a financial state-
ment.

shall

financial

statement

and
The
economic data for the assessment by the legislative authority of
the need for Community action. It shall provide appropriate
information as regards coherence with other financial instru-
ments and any possible synergy.

contain the

financial

In the case of multiannual operations, the financial statement
shall contain the foreseeable schedule of annual requirements
in terms of appropriations and posts and an evaluation of their
medium-term financial impact.

CHAPTER 7

(Chapter 8 of the Financial Regulation)

Principle of transparency

Article 23

Provisional publication of a summary of the budget

( A r ti cl e 2 9 o f th e F i na nc i a l R e g u la ti o n)

As soon as possible after the final adoption of the budget and
within no more than four weeks, a summary of the budget
figures shall be published on the Internet site of the institutions,
on the Commission's initiative, pending official publication in
the Official Journal of the European Communities.

TITLE III

ESTABLISHMENT AND STRUCTURE OF THE BUDGET

CHAPTER 1

(a) in respect of staff of the institutions:

Establishment of the budget

Article 24

General introduction to the preliminary draft budget

(A r ti c le 33 of th e Fi na nc i a l R e g u la ti on)

The Commission shall draw up the general introduction to the
preliminary draft budget.

Each of the sections of the preliminary draft budget shall be
preceded by an introduction drawn up by the institution
concerned.

The general introduction shall comprise:

(a) financial tables covering the entire budget;

(b) as regards the titles in the Commission section:

(i) a description of the policies substantiating entitlement
to the appropriations requested, with due account for
the principles and requirements set out in Articles 27
and 33(2)(d) of the Financial Regulation;

(ii) the grounds for changes in appropriations from one

financial year to the next.

Article 25

Working documents in support of the preliminary draft
budget

( A r ti c le s 30 a nd 3 3 o f th e F i na nc i a l R e g u la ti o n)

In support of
working documents shall be provided:

the preliminary draft budget,

the following

(i) a statement of the policy for permanent and temporary

staff;

(ii) for each category of staff, an organisation chart of
budgetary posts and persons in post on the date of the
presentation of the preliminary draft budget, indicating
their distribution by grade and administrative unit;

(iii) where a change in the number of persons in post is
proposed, a statement of the reasons justifying such
change;

(iv) a list of posts broken down by policy area;

(b) a detailed statement of borrowing and lending policy;

(c) in respect of subsidies to the bodies referred to in Article
32 of the Financial Regulation, an estimate of revenue and
expenditure prefaced by an explanatory memorandum
drawn up by the bodies concerned and, for the European
Schools, a statement showing revenue and expenditure
prefaced by an explanatory memorandum.

Article 26

Preliminary draft amending budgets

( A r ti c le 3 7 ( 1 ) of t h e F i na nci a l R e g u l a ti on)

Preliminary draft amending budgets shall be accompanied by
statements of grounds and the information on the implementa-
tion of the budget for the preceding and current financial years
available at the time of their establishment.

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CHAPTER 2

Article 28

Structure and presentation of the budget

Article 27

Administrative appropriations

(A r ti cle 41 of th e Fi na nc i a l R e g u la ti on)

Where the statement of expenditure of a section of the budget
is presented in a nomenclature based on a classification by
purpose, administrative appropriations shall be divided into
separate headings by title according to the following classifica-
tion:

(a) expenditure on staff authorised in the establishment plan:
there shall be an amount of appropriations and a number
of employment posts corresponding to this expenditure;

Actual expenditure in the last financial year for which the
accounts have been closed

(Arti cle 46(1)(e ) of t he Financ ial R e g ulation)

For the purposes of establishing the budget, actual expenditure
in the last financial year for which the accounts have been
closed shall be determined as follows:

(a) in commitments: commitments entered in the accounts
during the financial year against appropriations for that
financial year as defined in Article 5;

(b) in payments: payments made during the financial year, that
is to say, for which a payment order has been sent to the
financial year as
bank, against appropriations for that
defined in the same article.

Article 29

Budget remarks

( A r ti c le 4 6 ( 1 ) ( g ) of th e F i n a n ci a l R e g u la t i on )

(b) expenditure on external staff (including auxiliary staff and
agency staff) and other management expenditure (including
representation expenses and meeting expenses);

The budget remarks shall include:

(a) the references of the basic act, where one exists;

(c) expenditure on buildings and other related expenditure,
including cleaning and maintenance, rental and hiring, tele-
communications, water, gas and electricity;

(d) support expenditure.

The Commission's administrative
type
common to all titles shall also be set out in a separate summary
statement classified by type.

expenditure of

a

(b) all appropriate explanations concerning the nature and

purpose of the appropriations.

Article 30

Establishment plan

(Artic le 4 6(1)(3 )(a) of the Fina nc ia l R e g u la ti on)

The staff of the Supply Agency shall appear separately in the
Commission establishment plan.

TITLE IV

IMPLEMENTATION OF THE BUDGET

Article 32

Maximum amounts for pilot schemes and preparatory
actions

CHAPTER 1

General provisions

Article 31

Possible forms of basic acts

( Ar ti c le 4 9 ( 1 ) of t h e F i na n ci a l R e g u l a ti o n)

(Ar ti c le 49(2)(a) a nd (b) of the Fi nanci a l R eg u lati on)

1.
In the Community field, a basic act may take the form of
a regulation, a directive, a decision (1) within the meaning of
Article 249 of the EC Treaty or a decision sui generis.

2.
In the field of the common foreign and security policy a
basic act may take one of the forms specified in Articles 13(2),
14 and 23(2) of the Treaty on European Union.

3.
In the field of police and judicial cooperation in criminal
matters a basic act may take one of the forms specified in
Article 34(2) of the Treaty on European Union.

(1) Entscheidung or Beschluss.

1.
The total amount of appropriations for the pilot schemes
referred to in Article 49(2)(a) of the Financial Regulation may
not exceed EUR 32 million in any budget year.

2.
The total amount of appropriations for new preparatory
actions referred to in Article 49(2)(b) of the Financial Regula-
tion may not exceed EUR 30 million in any budget year, and
the total amount of appropriations actually committed for
preparatory actions may not exceed EUR 75 million.

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Article 33

(c) committing undue or wrongful acts or failing to carry out

acts that are mandatory.

Specific powers of the Commission under the Treaties

( A r t i c le 49( 2 ) ( c ) of th e F i n a n c i a l R e g u la ti o n )

The articles of

1.
specific powers on the Commission are as follows:

the EC Treaty which directly confer

2.
The competent authority referred to in Article 52(1) of
the Financial Regulation shall be the hierarchical superior of
the member of staff concerned. The hierarchical superior shall
confirm in writing whether or not there is a conflict of inter-
ests. If there is, the hierarchical superior shall personally take
any appropriate decision.

(a) Article 138 (social dialogue);

(b) Article 140 (studies, opinions and consultations on social

matters);

(c) Articles 143 and 145 (special reports on social matters);

CHAPTER 2

(d) Article 152(2)

(initiatives
health protection matters);

(e) Article 155(2)

(initiatives
trans-European networks);

to promote coordination on

Methods of implementation

to promote coordination on

(f) Article 157(2)

(initiatives

to promote coordination on

matters relating to industry);

(g) Article 159, second paragraph (report on progress made

towards achieving economic and social cohesion);

(h) Article 165(2)

(initiatives
research and technological development);

to promote coordination on

(i) Article 173 (report on research and technological develop-

ment);

(j) Article 180(2) (initiatives to promote coordination of devel-

opment cooperation policies).

The articles of the Euratom Treaty which directly confer

2.
specific powers on the Commission are as follows:

(a) Article 70 (financial support, within the limits set by the
budget, for prospecting programmes in the territories of
the Member States);

(b) Article 77 et seq. (safeguards).

In the presentation of

3.
the preliminary draft budget,
further detail may be added to the lists set out in paragraphs 1
and 2, with an indication of the articles in question and the
amounts involved.

Article 34

Definition of a conflict of interests

( Ar ti c le 5 2 ( 2 ) of t h e F i na n ci a l R e g u l a ti o n)

1.
Acts likely to be vitiated by a conflict of interests within
the meaning of Article 52(2) of the Financial Regulation may,
inter alia, take one of the following forms:

(a) granting oneself or others unjustified direct or indirect

advantages;

(b) refusing to grant a beneficiary the rights or advantages to

which that beneficiary is entitled;

Se c ti on 1

General provisions

Article 35

Prior checks carried out by the Commission

( A r ti c l e s 53 a nd 5 6 of th e F i na nc i a l R e g u l a ti o n)

1. Where the Commission implements the budget by shared,
decentralised or indirect centralised management, it shall first
carry out document and on-the-spot checks into the existence,
relevance and proper operation within the entities to which it
entrusts implementation, in accordance with the rules of sound
financial management, and, in cases of decentralised manage-
ment, in full or in part depending on the degree of decentralisa-
tion agreed, of:

(a) procedures applied;

(b) control systems;

(c) accounting systems;

(d) procurement and grant award procedures.

The Commission shall

2.
review such arrangements as
necessary whenever there are substantial changes to procedures
or systems in order to ensure continued compliance with the
conditions set out in paragraph 1.

The entities referred to in paragraph 1 shall provide the
3.
Commission, within a specified time-limit, with any informa-
inform it without delay of any
tion it requests and shall
substantial changes
systems. The
Commission shall, as appropriate, set out those obligations in
the instruments of delegation or in the agreements concluded
with those entities.

in their procedures or

4. Where the Commission implements the budget by joint
management, the verification agreements concluded with the
international organisations concerned shall apply.

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S e c ti on 2

Special provisions

Article 36

Direct centralised management

(A r ti c le 53 of th e Fi na nc i a l R e g u la ti on)

it shall analyse
the Financial Regulation,
Article 54(2) of
compliance with the principles of economy, effectiveness and
efficiency. If that analysis shows that delegation best satisfies
the requirements of sound financial management, the Commis-
sion shall, before proceeding to implement
the delegation,
request the opinion of the competent committee provided for
in the basic act, which may also give its opinion on the
planned application of the selection criteria.

Article 39

Where the Commission implements the budget on a centralised
basis directly in its departments, implementation tasks shall be
performed by the financial actors within the meaning of Arti-
cles 58 to 68 of the Financial Regulation and in compliance
with the conditions laid down in this Regulation.

Designation of national public-sector bodies or private-
law entities with a public-service mission

(Arti cle 54(2)(c ) of t he Financ ial R e g ulation)

Article 37

Exercise of powers delegated to executive agencies

( A r t i cl e s

5 4 ( 2 ) ( a )

5 5 ( 2)
a n d
R e g u l a t i o n )

o f

t h e

F i n a nc i a l

1.
Decisions to delegate powers to executive agencies shall
authorise them, as authorising officers by delegation, to imple-
ment appropriations relating to the Community programme
the management of which is entrusted to them.

2.
The powers delegated to the executive agency shall be
exercised by the director of the agency pursuant to Article
55(2) of the Financial Regulation.

3.
The Commission's instrument of delegation shall contain
the same provisions as are listed in Article 39(2). It shall be
formally accepted in writing by the director on behalf of the
executive agency.

Article 38

Eligibility of national public-sector bodies or private-law
entities with a public-service mission and conditions for
delegation of powers to them

( A r t i c le 54( 2 ) ( c ) of th e F i n a n c i a l R e g u la ti o n )

The Commission may delegate tasks involving the exer-
1.
cise of public authority to national public-sector bodies or
private-law entities with a public-service mission only if they
are governed by the law of one of the Member States, or the
States of the European Economic Area (EEA) or the countries
that have applied to join the European Union, unless the basic
act provides otherwise.

2.
The Commission shall ensure that the bodies or entities
referred to in paragraph 1 offer adequate financial guarantees,
issued preferably by a public authority, in particular as regards
full recovery of amounts due to the Commission.

3. Where the Commission is planning to entrust tasks invol-
ving the exercise of public authority, and in particular tasks of
budget implementation, to a body referred to in point (c) of

1.
The national public-sector bodies or private-law entities
with a public-service mission shall be subject to the law of the
Member State or the country in which they have been set up.

2.
Such bodies or entities shall be chosen in an objective
and transparent manner, following a cost-effectiveness analysis,
to match the implementation requirements identified by the
Commission. That choice may not entail any discrimination
between the various Member States or countries concerned.

3.
In cases of management by a network, requiring the
designation of at least one body or entity by Member State or
by country concerned, the body or entity shall be designated
by the Member State or the country concerned in accordance
with the provisions of the basic act.

In all other cases the Commission shall designate such bodies
or entities in agreement with the Member States or countries
concerned and in accordance with the provisions of the basic
acts.

Article 40

Compliance with the procurement rules

( A r ti cl e 5 7 o f th e F i na nc i a l R e g u la ti o n)

Where the Commission entrusts tasks to private bodies under
Article 57(2) of the Financial Regulation,
it shall conclude a
contract in accordance with the provisions of Title V of Part
One of the Financial Regulation.

Article 41

Detailed

arrangements

for

indirect

centralised

management

(Ar tic le s

54(2)(b)

a nd

(c)

of

the

Fina ncia l

Re gulati on)

1. Where the Commission entrusts implementing tasks to
agencies, bodies or entities under points (b) and (c) of Article
54(2) of the Financial Regulation, it shall conclude an agree-
ment with them.

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The agreement referred to in paragraph 1 shall include

2.
the following provisions:

(a) a definition of the tasks assigned;

(b) the conditions and detailed arrangements for performing
the tasks, including appropriate provisions for demarcating
responsibilities and organising the controls to be carried
out;

(c) the rules on reporting to the Commission on how the tasks

are performed;

(d) the conditions under which performance of the tasks termi-

nates;

(e) the detailed arrangements for Commission scrutiny;

(f) the conditions governing the use of separate bank accounts,
the beneficiary of the interest yielded and the use made of
it;

(g) the provisions guaranteeing the visibility of Community

action in relation to the other activities of the body;

(h) an undertaking to refrain from any act which may give rise
to a conflict of interests within the meaning of Article
52(2) of the Financial Regulation.

The agencies, bodies or entities referred to in paragraph 1

3.
shall not have the status of authorising officers by delegation.

Article 42

Clearance-of-accounts procedures

in decentralised or

shared management

( Ar ti c le 5 3 ( 5 ) of t h e F i na n ci a l R e g u l a ti o n)

The purpose of

1.
the clearance-of-accounts procedure
referred to in Article 53(5) of the Financial Regulation shall be
to ensure that expenditure by the Member States in the context
of shared management or by third countries in the context of
decentralised management and which may be chargeable to the
Community budget is in order and consistent with the applic-
able Community rules.

2. Without prejudice to specific provisions contained in
sectoral rules, the clearance-of-accounts procedure shall consist
in:

(a) the declaration of expenditure by the Member States or
third countries in the form of accounts certified by a tech-
nically competent department or body functionally inde-
pendent of the spending agency;

(b) document and, where appropriate, on-the-spot checks by
the Commission, subject to no limitations or restrictions,
on the content of those accounts and on the underlying
transactions, including checks made with beneficiaries;

(c) establishment by the Commission of the amount of expen-
diture recognised as chargeable to the budget, following an
adversarial procedure and after the Member States or third
countries have been notified;

(d) calculation of

the financial correction arising from the
difference between declared expenditure and expenditure
recognised as chargeable to the budget;

(e) recovery or repayment of the balance arising from the
difference between recognised expenditure and the sums
already paid to the Member States or third countries.
Recovery shall be by offsetting as specified in Article 83.

3.
In the context of decentralised management, the clear-
ance-of-accounts procedure described in paragraphs 1 and 2
shall apply in accordance with the degree of decentralisation
agreed.

Article 43

Joint management

(A r ti c le s 53 a nd 165 of the Fi n a nci a l R e g u lati on)

1.
The appropriations used in joint management with inter-
national organisations within the meaning of Articles 53 and
165 of the Financial Regulation shall finance actions, perfor-
mance of which requires the pooling of resources from a
number of donors, where it
is not reasonably possible or
appropriate to assign the share contributed by each donor to
each type of expenditure.

The Commission shall ensure that suitable arrangements exist
for the control and audit of the action in its entirety.

The international organisations referred to in paragraph 1

2.
are as follows:

(a) international public-sector organisations set up by intergo-
vernmental agreements, and specialised agencies set up by
such organisations;

(b) the International Committee of the Red Cross (ICRC);

(c) the International Federation of National Red Cross and Red

Crescent Societies.

CHAPTER 3

Financial actors

Se c ti on 1

Rights and obligations of the financial actors

Article 44

Rights and obligations of the financial actors

( A r ti cl e 5 8 o f th e F i na nc i a l R e g u la ti o n)

Each institution shall provide each financial actor with the
required to perform his duties and a charter
resources
describing in detail his tasks, rights and obligations.

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S e c ti on 2

Authorising officer

Article 45

Assistance for authorising officers by delegation and
subdelegation

(A r ti c le 59 of th e Fi na nc i a l R e g u la ti on)

1.
The authorising officer responsible may be assisted in his
duties by officials or other servants (hereinafter ‘staff’) entrusted,
under his responsibility, with certain operations required for
the implementation of the budget and production of the finan-
cial and management information.
In order to prevent any
conflict of interests, staff assisting authorising officers by dele-
gation or subdelegation shall be subject
to the obligations
referred to in Article 52 of the Financial Regulation.

Each institution shall

2.
inform the budgetary authority
whenever a grade A1 authorising officer by delegation takes up
his duties, changes duties or terminates his duties.

Article 46

Internal provisions governing delegations

(A r ti c le 59 of th e Fi na nc i a l R e g u la ti on)

In accordance with the Financial Regulation and this Regula-
tion, each institution shall lay down in its internal rules such
measures for the management of appropriations as it considers
necessary for proper implementation of
the
budget.

its section of

(b) the principle of sound financial management referred to in
Chapter 7 of Title II of the Financial Regulation is applied.

4.
The ex post verifications on documents and, where
appropriate, on the spot shall check that operations financed
by the budget are correctly implemented and in particular that
the criteria referred to in paragraph 3 are complied with. These
verifications may be organised on a sample basis using risk
analysis.

5.
The officials or other staff responsible for the verifications
referred to in paragraphs 2 and 4 shall be different from those
performing the tasks of initiation referred to in paragraph 1
and shall not be their subordinates.

Article 48

Management and internal control procedures

( A r ti c le 6 0 ( 4 ) of t h e F i na nci a l R e g u l a ti on)

The management and internal control systems and procedures
shall be designed to:

(a) achieve the objectives of

the policies, programmes and
actions of the institution in accordance with the principle
of sound financial management;

(b) comply with the rules of Community law and minimum

control standards established by the institution;

(c) safeguard the institution's assets and information;

(d) prevent and detect irregularities, errors and fraud;

(e) identify and prevent management risks;

Article 47

(f) ensure reliable production of financial and management

information;

Segregation of duties of initiation and verification of an
operation

( Ar ti c le 6 0 ( 4 ) of t h e F i na n ci a l R e g u l a ti o n)

Initiation of an operation shall be understood to mean all
1.
the operations which are normally carried out by the staff
referred to in Article 45 and which are preparatory to the
adoption of the acts implementing the budget by the compe-
tent authorising officer, holder of a delegation or a subdelega-
tion.

2.
Ex ante verification of an operation shall be understood to
mean all the ex ante checks put in place by the authorising
officer responsible in order to verify its operational and finan-
cial aspects.

3.
Each operation shall be subject at least to an ex ante verifi-
cation. The purpose of that verification shall be to ascertain
that:

(a) the expenditure and revenue are in order and comply with
the provisions applicable, in particular those of the budget
and the relevant regulations and of any acts adopted in
implementation of the Treaties or regulations and, where
appropriate, the terms of contracts;

(g) keep supporting documents relating to and subsequent to
implementation

implementation

budget

and

budget
measures;

(h) keep documents relating to advance guarantees for the
institution and keep a log to enable such guarantees to be
adequately monitored.

Article 49

Keeping of supporting documents by authorising officers

( A r ti c le 6 0 ( 4 ) of t h e F i na nci a l R e g u l a ti on)

The management
keeping of original supporting documents shall provide for:

systems and procedures concerning the

(a) such documents to be numbered;

(b) such documents to be dated;

(c) registers, which may be computerised, to be kept identi-

fying the exact location of such documents;

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(d) such documents to be kept for at least five years from the
date on which the European Parliament grants discharge
for the budgetary year to which the documents relate.

Documents relating to operations not definitively closed shall
be kept for longer than provided for in point (d) of the first
subparagraph, that is to say, until the end of the year following
that in which the operations are closed.

Article 50

Article 53

Transmission of financial and management information to
the accounting officer

( A r ti cl e 6 0 o f th e F i na nc i a l R e g u la ti o n)

The authorising officer by delegation shall send the accounting
officer, in accordance with the rules adopted by the latter, the
financial and management information required for the perfor-
mance of the accounting officer's duties.

Code of professional standards

Article 54

( Ar ti c le 6 0 ( 5 ) of t h e F i na n ci a l R e g u l a ti o n)

Report on negotiated procedures

1.
The staff designated by the authorising officer responsible
to verify financial operations shall be chosen on the grounds of
their knowledge, skills and particular qualifications as evidenced
by diplomas or by appropriate professional experience, or after
an appropriate training programme.

Each institution shall draw up a code of professional stan-

2.
dards which determine, on matters of internal control:

(a) the level of technical and financial competence required of

the staff referred to in paragraph 1;

(b) the obligation for such staff to undergo continuing training;

(c) the mission, role and tasks allocated to them;

(d) the rules of conduct, in particular the standards of ethics
and integrity that they must comply with and the rights
they enjoy.

3.
Each institution shall put in place the appropriate struc-
tures to distribute to authorising departments and update peri-
odically appropriate information concerning the control stan-
dards and the methods and techniques available for
that
purpose.

Article 51

Failure of the authorising officer by delegation to take
action

( Ar ti c le 6 0 ( 6 ) of t h e F i na n ci a l R e g u l a ti o n)

Failure by the authorising officer by delegation to take action,
as referred to in Article 60(6) of the Financial Regulation, shall
mean the absence of any reply within a reasonable time given
the circumstances of the case and, at all events, within a month
at most.

Article 52

Ex post verification and annual activity report

( Ar ti c le 6 0 ( 7 ) of t h e F i na n ci a l R e g u l a ti o n)

The result of the ex post verifications shall, with other matters,
in the annual activity report submitted by the
be set out
authorising officer by delegation to his institution.

( A r ti cl e 6 0 o f th e F i na nc i a l R e g u la ti o n)

Authorising officers by delegation shall record, for each finan-
cial year, contracts concluded by the negotiated procedures
referred to in Articles 126, 127, 242, 244, 246 and 247. If the
proportion of negotiated procedures in relation to the number
of contracts awarded by the same authorising officer by delega-
tion increases appreciably in relation to earlier years or if that
proportion is distinctly higher than the average recorded for
the institution, the authorising officer responsible shall report
to the institution setting out any measures taken to reverse that
trend. Each institution shall send a report on negotiated proce-
dures to the budgetary authority. In the case of the Commis-
sion, that report shall be annexed to the summary of the
annual activity reports referred to in Article 60(7) of the Finan-
cial Regulation.

Se c ti on 3

Accounting officer

Article 55

Appointment of the accounting officer

( A r ti cl e 6 1 o f th e F i na nc i a l R e g u la ti o n)

Each institution shall appoint an accounting officer from offi-
cials
the
European Communities.

to the Staff Regulations of Officials of

subject

The accounting officer shall, obligatorily, be chosen by the
institution on the grounds of his particular competence as
evidenced by diplomas or by equivalent professional experi-
ence.

Article 56

Termination of duties of the accounting officer

( A r ti cl e 6 1 o f th e F i na nc i a l R e g u la ti o n)

1.
An interim statement of account shall be drawn up
without delay in the event of termination of the duties of the
accounting officer.

That statement shall be made up of the accounts provided for
in Title VII of Part One of the Financial Regulation, closed on
the last day of the month in which the accounting officer
terminates his duties.

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No interim statement of account shall be required where
2.
the accounting officer terminates his duties at the end of a
financial year.

3.
The interim statement or, in the circumstances referred to
in paragraph 2, the provisional accounts referred to in Article
128 of the Financial Regulation shall be transmitted by the
accounting officer who is terminating his duties or, if this is
not possible, by an official
to the new
accounting officer, who, within no more than one month from
the date of transmission, must sign in acceptance and may
make reservations.

in his department

4.
Each institution shall inform the budgetary authority of
the appointment or termination of duties of its accounting
officer.

Article 57

Opinion on accounting and inventory systems

(A r ti cle 61 of th e Fi na nc i a l R e g u la ti on)

Where financial management systems set up by the authorising
officer provide data for the institution's accounts or are used to
substantiate data in those accounts, the accounting officer must
give his agreement to the introduction or modification of such
systems.

The accounting officer shall also be consulted regarding the
introduction or modification by the authorising officers respon-
sible of inventory systems and systems for valuing assets and
liabilities.

The accounting officer shall negotiate the operating terms
2.
for accounts with financial institutions, in accordance with the
principles of
sound financial management, efficiency and
competitive tendering.

At

3.
relaunch competitive tendering between financial
with which accounts have been opened.

least every five years the accounting officer shall
institutions

The accounting officer shall ensure strict compliance with
4.
the operating terms for accounts opened with financial institu-
tions.

5.
The Commission's accounting officer shall be responsible,
after consulting the accounting officers of the other institutions,
for harmonising the operating terms for accounts opened by
the various institutions.

Article 60

Signatures on accounts

( A r ti cl e 6 1 o f th e F i na nc i a l R e g u la ti o n)

The terms governing the opening, operation and use of
accounts shall provide, depending on internal control require-
ments, that cheques, bank credit transfer orders or any other
banking operations must be signed by one or more duly
authorised members of staff.

To that end each institution shall communicate to all financial
institutions with which it has opened accounts the names and
specimen signatures of the authorised officials.

Article 58

Treasury management

Article 61

Management of account balances

(A r ti cle 61 of th e Fi na nc i a l R e g u la ti on)

( A r ti cl e 6 1 o f th e F i na nc i a l R e g u la ti o n)

The accounting officer shall ensure that his institution has
1.
at its disposal sufficient funds to cover the cash requirements
arising from budgetary implementation.

2.
For the purposes of paragraph 1, the accounting officer
shall set up cash management systems enabling him to draw
up cash-flow forecasts.

3.
The Commission's accounting officer shall divide up the
funds available in accordance with Regulation (EC, Euratom)
No 1150/2000.

Article 59

1.
The accounting officer shall ensure that the balance on
the bank accounts provided for in Article 59 does not deviate
significantly from the cash-flow forecasts referred to in Article
58(2) and in any event:

(a) that none of those accounts is in debit;

(b) that the balance of accounts held in other currencies is peri-

odically converted into euro.

2.
The accounting officer may not maintain balances in
foreign currency accounts which might cause excessive losses
to the institution as a result of exchange rate fluctuations.

Management of bank accounts

Article 62

(A r ti cle 61 of th e Fi na nc i a l R e g u la ti on)

Transfers and conversion operations

the

For

requirements of

treasury management,

1.
the
accounting officer may open accounts in the name of the insti-
tution with financial institutions or national central banks or
cause such accounts to be opened. In duly warranted circum-
stances, he/she may open accounts in currencies other than the
euro.

( A r ti cl e 6 1 o f th e F i na nc i a l R e g u la ti o n)

Without prejudice to Article 69, the accounting officer shall
conduct transfers between accounts opened in the name of the
institutions, and conduct currency
institution with financial
conversion operations.

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Article 63

Methods of payment

(A r ti c le 61 of th e Fi na nc i a l R e g u la ti on)

Payments shall be made by bank credit transfer or by cheque.

Article 64

Third-party files

(A r ti cle 61 of th e Fi na nc i a l R e g u la ti on)

Se c ti on 4

Imprest administrator

Article 66

Conditions of use of imprest accounts

( A r ti cl e 6 3 o f th e F i na nc i a l R e g u la ti o n)

1. Where, owing to the limited amounts involved, it is mate-
rially impossible or inefficient to carry out payment operations
by budgetary procedures, imprest accounts may be set up for
the payment of such expenditure.

1.
The accounting officer may make payments by bank
credit transfer only if the bank account details of the payee
have first been entered in a common file by institution.

2.
The imprest administrator may provisionally validate and
pay expenditure, on the instructions of the authorising officer
responsible.

Entry in the file of the payee's bank account details or modifi-
cation of those details shall be based on a document, in paper
or electronic form, certified by the payee's bank.

2. With a view to payment by bank credit transfer, author-
ising officers may enter into a commitment towards a third
party on behalf of their institution only if that third party has
provided the documentation required for its entry in the file.

Authorising officers shall check that the bank account details
communicated by the payee are still valid when each payment
order is drawn up.

In connection with pre-accession aid, individual commitments
may be concluded with the public authorities in the countries
applying for accession to the European Union without a prior
entry in the third-party file. In such cases the authorising officer
shall do his utmost to ensure that the entry is made as quickly
as possible. The agreements shall provide that communication
to the Commission of the payee's bank account details is a
condition to be fulfilled before the first payment can be made.

3.
The creation of an imprest account and the appointment
of an imprest administrator shall be the subject of a decision
by the accounting officer, on a duly substantiated proposal
from the authorising officer responsible. That decision shall set
out the respective responsibilities and obligations of the imprest
administrator and the authorising officer.

Amendment of the operating terms for an imprest account
shall also be the subject of a decision by the accounting officer
on a duly substantiated proposal from the authorising officer
responsible.

Article 67

Conditions governing creation and payment

( A r ti cl e 6 3 o f th e F i na nc i a l R e g u la ti o n)

The decision setting up an imprest

and
1.
appointing an imprest administrator and the decision amending
the operating terms for an imprest account shall specify in
particular:

account

Article 65

(a) the maximum amount which may be initially provided as

an imprest, and its purpose;

Keeping of supporting documents by the accounting
officer

(b) whether a bank account or post office giro account is to be

opened in the name of the institution;

(A r ti cle 61 of th e Fi na nc i a l R e g u la ti on)

Supporting documents for the accounting system and for the
preparation of the accounts referred to in Article 121 of the
Financial Regulation shall be kept for at least five years from
the date on which the European Parliament grants discharge
for the budgetary year to which the documents relate.

However, documents relating to operations not definitively
closed shall be kept for longer, that is to say, until the end of
the year following that in which the operations are closed.

Each institution shall decide
supporting documents are to be kept.

in which department

the

(c) the nature and maximum amount of each item of expendi-
ture which may be paid by the imprest administrator to
third parties or collected from them;

(d) the frequency with which supporting documents must be
produced,
the procedure for producing them and the
arrangements for transmitting them to the authorising
officer for settlement;

(e) the procedure to be followed if the imprest has to be

replenished;

(f) that imprest transactions will be settled by the authorising
officer by no later than the end of the following month, so
that the accounting balance and the bank balance can be
reconciled;

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(g) the period of validity of the authorisation given to the

imprest administrator by the accounting officer;

(h) the identity of the appointed imprest administrator.

accounts. The accounting officer shall endow the imprest
accounts. Imprests shall be paid to the bank account opened
for the imprest.

In proposals for decisions setting up imprest accounts the

2.
authorising officer responsible shall ensure that:

(a) priority is given to the use of budgetary procedures where
there is access to the central computerised accounting
system;

(b) imprest accounts are used only in substantiated cases.

With the exception of specific imprests in the field of humani-
tarian aid and the management of crisis situations within the
meaning of Article 168(2), the maximum amount referred to in
point (c) of paragraph 1 may not exceed EUR 30 000 for each
item of expenditure.

The imprest administrator may make payments to third

3.
parties on the basis and within the limits of:

(a) prior budget and legal commitments signed by the author-

ising officer responsible;

(b) the positive residual balance of the imprest account, in cash

or at the bank.

Imprest accounts may also be endowed directly by miscella-
neous local revenue such as that arising from:

(a) sales of equipment;

(b) publications;

(c) miscellaneous repayments;

(d) interest.

The imprest shall be settled, in terms of expenditure or miscel-
laneous or assigned revenue, in accordance with the decision
setting up the imprest account referred to in Article 67 and the
provisions of the Financial Regulation. The amounts in ques-
tion shall be deducted by the authorising officer when he
subsequently replenishes the imprest accounts concerned.

2.
In order, in particular, to avoid any exchange losses, the
imprest administrator may make transfers between different
bank accounts relating to the same imprest.

Payments from imprest accounts may be made by bank

4.
credit transfer, cheque or other means of payment.

Checks by authorising officers and accounting officers

Article 70

Payments made shall be followed by formal final valida-
5.
tion decisions and/or payment orders signed by the authorising
officer responsible

Article 68

Choice of imprest administrators

(A r ti cle 63 of th e Fi na nc i a l R e g u la ti on)

Imprest administrators shall be chosen from category A, B or C
officials. Should the need arise, imprest administrators may be
chosen from staff subject to the Conditions of Employment of
Other Servants of a level equivalent to those categories. Imprest
administrators shall be chosen on the grounds of their knowl-
edge,
skills and particular qualifications as evidenced by
diplomas or by appropriate professional experience, or after an
appropriate training programme.

( A r ti cl e 6 3 o f th e F i na nc i a l R e g u la ti o n)

1.
The imprest administrator shall keep an account of the
funds at his disposal, in cash and at the bank, and of payments
made and amounts received, in accordance with the rules and
on the instructions given by the accounting officer. Statements
of that account shall be accessible at all times to the authorising
officer responsible and a monthly list of transactions together
with supporting documents shall be sent
in the following
month by the imprest administrator to the authorising officer
for settlement of the imprest operations.

2.
The accounting officer shall carry out, or have carried out
by an official or other servant in his own department or in the
authorising department specially empowered for that purpose,
checks, which should normally be effected on the spot and
without warning, to verify the existence of the funds allocated
to the imprest administrators and the bookkeeping and to
check that imprest transactions are settled within the time-limit
set. The accounting officer shall communicate the findings of
those checks to the authorising officer responsible.

Article 69

Endowment of imprest accounts

(A r ti c le 63 of th e Fi na nc i a l R e g u la ti on)

Article 71

Procurement procedure

( A r ti cl e 6 3 o f th e F i na nc i a l R e g u la ti o n)

1.
The accounting officer shall make payments endowing
imprest accounts and shall monitor those accounts from the
point of view of opening of bank accounts and delegation of
signatures and controls on the spot and in the centralised

Payments made from imprest accounts may, within the limits
laid down in Article 129(4), consist simply in the payment of
costs against invoices, without prior acceptance of a tender.

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CHAPTER 4

Liability of the financial actors

S e c ti on 1

General rules

Any

instructions

circumstances
confirmed
3.
described in Article 66(2) of the Financial Regulation shall be
recorded by the authorising officer by delegation responsible
and mentioned in his annual activity report.

the

in

Article 74

Financial irregularities

Article 72

(Ar tic le s

60(6)

and

66(4)

of

th e

F ina ncia l

Re gulati on)

Bodies responsible in matters of fraud

( A r t i cl e s

6 0 ( 6 )

a n d

6 5 ( 2 )

of

t h e

F i n a nc i a l

R e g u l a t i o n )

The authorities and bodies referred to in Articles 60(6) and
65(2) of the Financial Regulation shall be understood to mean
the bodies designated by the Staff Regulations of Officials and
the Conditions of Employment of Other Servants of
the
European Communities (hereinafter ‘the Staff Regulations’) and
the decisions of the Community institutions concerning the
terms and conditions for internal investigations in relation to
the prevention of
fraud, corruption and any other illegal
activity detrimental to the Communities' interests.

S e c ti on 2

Rules applicable to authorising officers by delegation and
subdelegation

Article 73

Confirmation of instructions

( Ar ti c le 6 6 ( 2 ) of t h e F i na n ci a l R e g u l a ti o n)

1.
An authorising officer by delegation or subdelegation
who receives a binding instruction which he considers to be
irregular or contrary to the principle of sound financial
management, in particular because the instruction cannot be
carried out with the resources allocated to him, shall,
in
writing, so inform the authority from which he received the
delegation or subdelegation. If the instruction is confirmed in
writing and that confirmation is received in good time and is
sufficiently clear, in that it refers explicitly to the points which
the authorising officer by delegation or subdelegation has chal-
lenged, he may not be held liable; he shall carry out the instruc-
tion, unless it constitutes a breach of criminal law or of the
relevant safety standards.

Without prejudice to the powers of the European Anti-Fraud
Office (OLAF), the specialised financial irregularities panel shall
be competent in respect of any infringement of a provision of
the Financial Regulation or of a provision relating to financial
management or the checking of operations resulting from an
act or omission of an official or other servant.

Article 75

Financial irregularities panel

(Ar tic le s

60(6)

and

66(4)

of

th e

F ina ncia l

Re gulati on)

1.
Cases of financial irregularities, as referred to in Article
74 shall be referred by the appointing authority or, where
appropriate, by the authority authorised to conclude contracts
of employment to the panel referred to in Article 66(4) of the
Financial Regulation for an opinion.

Where a case is referred to it by the appointing authority or
the authority authorised to conclude contracts of employment,
the panel shall deliver an opinion evaluating whether irregulari-
ties within the meaning of Article 74 have occurred, how
serious they are and what their consequences might be. Should
the panel's analysis suggest that the case referred to it is a
matter for OLAF, it shall without delay return the case-file to
the appointing authority or to the authority authorised to
conclude contracts of employment and shall inform OLAF at
once.

When the panel referred to in the first subparagraph is directly
informed of a matter by a member of staff in accordance with
Article 60(6) of the Financial Regulation, it shall transmit the
file to the appointing authority or, where appropriate, to the
authority authorised to conclude contracts of employment and
shall inform the member of staff accordingly.

2.
Paragraph 1 shall also apply in cases where an author-
ising officer learns, in the course of acting on a binding instruc-
tion, that the circumstances of the case may give rise to an irre-
gular situation.

Each institution shall, depending on its own internal orga-
2.
nisation, specify the operating arrangements of
the panel
referred to in Article 66(4) of the Financial Regulation and its
composition, which shall include an outside personality with
the required qualifications and expertise.

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CHAPTER 5

Revenue operations

S e c ti on 1

Own resources

Article 76

Rules applying to own resources

(A r ti c le 69 of th e Fi na nc i a l R e g u la ti on)

The authorising officer shall draw up a schedule indicating
when the own resources defined in the Decision on the system
of the European Communities' own resources will be made
available to the Commission.

Own resources shall be established and recovered in accordance
with the rules adopted pursuant to the Decision referred to in
the first paragraph.

S e c ti on 2

Estimate of amounts receivable

Article 77

Estimate of amounts receivable

(A r ti c le 70 of th e Fi na nc i a l R e g u la ti on)

Estimates of amounts receivable shall specify the type of
1.
revenue and the budget item to which they are to be booked
and, as far as possible, the particulars of the debtor and the esti-
mated amount.

When drawing up an estimate of amounts receivable,
authorising officer responsible shall check in particular that:

the

(a) the revenue is booked to the correct budget item;

(b) the estimate is in order and complies with the provisions
applicable and the principle of sound financial manage-
ment.

2.
Subject to Article 161(2) of the Financial Regulation, an
estimate of amounts receivable shall not have the effect of
making commitment available.
In the cases referred to in
Article 18 of the Financial Regulation, appropriations may be
made available only after the sums due have actually been
recovered by the Communities.

Se c ti on 3

Establishment of amounts receivable

Article 78

Procedure

( A r ti cl e 7 1 o f th e F i na nc i a l R e g u la ti o n)

The establishment by the authorising officer responsible
1.
of an amount receivable shall constitute recognition of the right
of the Communities in respect of a debtor and establishment of
entitlement to demand that the debtor pay the debt.

The recovery order shall be the operation by which the
2.
authorising officer responsible instructs the accounting officer
to recover the amount established.

3.

The debit note shall be to inform the debtor that:

(a) the Communities have established the amount receivable;

(b) payment of the debt to the Communities is due on a certain

date (hereinafter ‘the due date’);

(c) failing payment by the due date the debt shall bear interest
at the rate referred to in Article 86, without prejudice to
any specific regulations applicable;

(d) wherever possible the institution shall effect recovery by

offsetting after the debtor has been informed;

(e) failing payment by the due date the institution shall effect
recovery by enforcement of any guarantee lodged in
advance;

(f) if, after all those steps have been taken, the amount has not
been recovered in full, the institution shall effect recovery
by enforcement of a decision secured either in accordance
with Article 72(2) of the Financial Regulation or by legal
action.

The authorising officer shall send the debit note to the debtor
with a copy to the accounting officer.

Article 79

Establishment of amounts receivable

( A r ti cl e 7 1 o f th e F i na nc i a l R e g u la ti o n)

To establish an amount
responsible shall ensure that:

receivable the authorising officer

(a) the receivable is certain and not subject to any condition;

(b) the receivable is of fixed amount, expressed precisely in

cash terms;

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(c) the receivable is due and is not subject to any payment

time;

(d) the particulars of the debtor are correct;

(e) the amount to be recovered is booked to the correct budget

item;

(f) the supporting documents are in order; and

(g) the principle of sound financial management is complied
with, in particular with regard to the criteria referred to in
point (a) of Article 87(1).

Se c ti on 5

Recovery

Article 82

Collection formalities

( A r ti cl e 7 3 o f th e F i na nc i a l R e g u la ti o n)

Upon the

the
1.
accounting officer shall make an entry in the accounts and shall
inform the authorising officer responsible.

recovery of

an amount

receivable,

Article 80

A receipt shall be issued in respect of any cash payments

2.
made to the accounting officer or imprest administrator.

Supporting documents for the establishment of amounts
receivable

(A r ti cle 71 of th e Fi na nc i a l R e g u la ti on)

1.
The establishment of an amount receivable shall be based
on supporting documents certifying the Communities' entitle-
ment.

2.
Before establishing an amount receivable the authorising
officer responsible shall personally check the supporting docu-
ments or, on his own responsibility, shall ascertain that this has
been done.

The supporting documents shall be kept by the author-

3.
ising officer in accordance with Articles 48 and 49.

S e c ti on 4

Authorisation of recovery

Article 81

Establishment of the recovery order

(A r ti cle 72 of th e Fi na nc i a l R e g u la ti on)

1.

The recovery order shall specify:

(a) the financial year to which the revenue is to be booked;

(b) the references of the act or legal commitment which is the
source of the debt and gives rise to the entitlement to
recovery;

(c) the budget article and any other subdivision that may
apply, including, where appropriate, the references of the
corresponding budget commitment;

(d) the amount to be recovered, expressed in euro;

(e) the name and address of the debtor;

(f) the due date; and

(g) the possible method of recovery,

including in particular
recovery by offsetting or enforcement of any guarantee
lodged.

2.
The recovery order shall be dated and signed by the
authorising officer responsible, then sent to the accounting
officer.

Article 83

Recovery by offsetting

( A r ti cl e 7 3 o f th e F i na nc i a l R e g u la ti o n)

At any point in the procedure the accounting officer shall, after
informing the authorising officer responsible and the debtor,
recover established amounts receivable by offsetting in cases
where the debtor also has a claim on the Communities that is
certain, of a fixed amount and due relating to a sum established
by a payment order.

Article 84

Recovery procedure failing voluntary payment

( A r ti c l e s 72 a nd 7 3 of th e F i na nc i a l R e g u l a ti o n)

1. Without prejudice to Article 83, if the full amount has
not been recovered by the due date specified in the debit note,
the accounting officer shall
inform the authorising officer
responsible and shall without delay launch the procedure for
effecting recovery by any means offered by the law, including,
where appropriate, by enforcement of any guarantee lodged in
advance.

2. Without prejudice to Article 83, where the recovery
method referred to in paragraph 1 cannot be used and the
debtor has failed to pay in response to the letter of formal
notice sent by the accounting officer, the accounting officer
shall enforce a recovery decision secured either in accordance
with Article 72(2) of
the Financial Regulation or by legal
action.

Article 85

Additional time for payment

( A r ti cl e 7 3 o f th e F i na nc i a l R e g u la ti o n)

The accounting officer,
in collaboration with the authorising
officer responsible, may allow additional time for payment only
at the written request of the debtor, with due indication of the
reasons, and provided that the following two conditions are
fulfilled:

(a) the debtor undertakes to pay interest at the rate specified in
Article 86 for the entire additional period allowed, starting
from the date on which the payment was originally due;
and

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(b) in order to safeguard the Community's rights, the debtor
lodges a financial guarantee covering the debt outstanding
in both the principal sum and the interest, which is
accepted by the institution's accounting officer.

The guarantee referred to in point (b) of the first paragraph
may be replaced by a joint and several guarantee by a third
party approved by the institution's accounting officer.

In the case referred to in point (c) of paragraph 1, the
2.
authorising officer responsible shall act
in accordance with
predetermined procedures established within each institution
and shall apply the following criteria which are compulsory
and applicable in all circumstances:

(a) the facts, having regard to the gravity of the irregularity
giving rise to the establishment of the amount receivable
(fraud, repeat offence, intent, diligence, good faith, manifest
error);

Article 86

Default interest

( Ar ti c le 7 1 ( 4 ) of t h e F i na n ci a l R e g u l a ti o n)

1. Without prejudice to any specific provisions deriving
from the application of sectoral rules, any amount receivable
not repaid on the due date shall bear interest in accordance
with paragraphs 2 and 3.

2.
The interest rate for amounts receivable not repaid on the
due date shall be the rate applied by the European Central Bank
to its principal refinancing operations, as published in the C
series of the Official Journal of the European Communities, in force
on the first calendar day of the month in which the due date
falls, increased by:

(a) seven percentage points where the obligating event is a
public supply and service contract referred to in Title V;

(b) three and a half percentage points in all other cases.

Interest

shall be

3.
calendar day
following the due date specified in the debit note up to the
calendar day on which the debt is repaid in full.

calculated from the

Any partial payments shall first cover the interest deter-

4.
mined in accordance with paragraphs 2 and 3.

5.
In the case of fines, where the debtor provides a financial
guarantee which is accepted by the accounting officer in lieu of
provisional payment, the interest rate applicable from the due
date shall be the rate referred to in paragraph 2 increased by
only one and a half percentage points.

Article 87

Waiving of recovery of an established amount receivable

(A r ti c le 73 of th e Fi na nc i a l R e g u la ti on)

1.
The authorising officer responsible may waive recovery of
all or part of an established amount receivable only in the
following cases:

(a) where the foreseeable cost of recovery would exceed the
amount to be recovered and the waiver would not harm
the Community's image;

(b) where the amount receivable cannot be recovered in view

of its age or the insolvency of the debtor;

(c) where recovery is inconsistent with the principle of propor-

tionality.

(b) the impact that waiving recovery would have on the opera-
tion of
interests
(amount involved, risk of setting a precedent, undermining
of the authority of the law).

the Communities and their

financial

Depending on the circumstances of the case, the authorising
officer responsible may also have to take the following addi-
tional criteria into account:

(a) any distortion of competition that would be caused by the

waiving of recovery;

(b) the economic and social damage that would be caused were

the debt to be recovered in full.

3.
The waiver decision referred to in Article 73(2) of the
Financial Regulation shall be substantiated and shall refer to the
diligence exercised to secure recovery and the points of law
and fact on which the waiver is based. The authorising officer
responsible shall waive recovery in accordance with the proce-
dure provided for in Article 81.

4.
The waiving of recovery of an established amount recei-
vable may not be delegated by the institution where the
amount to be waived:

(a) is EUR 1 000 000 or more; or

(b) is EUR 100 000 or more, where this represents 25 % or

more of the established amount receivable.

Beneath the thresholds set out in the first subparagraph, each
institution shall lay down in its internal rules the conditions
and procedure for delegating the power to waive recovery of
an established debt.

5.
Each institution shall send to the budgetary authority
each year a report on the waivers referred to in paragraphs 1
to 4 involving EUR 100 000 or more.
In the case of the
Commission, that report shall be annexed to the summary of
the annual activity reports referred to in Article 60(7) of the
Financial Regulation.

Article 88

Cancellation of an established amount receivable

( A r ti cl e 7 3 o f th e F i na nc i a l R e g u la ti o n)

1.
In the event of a mistake as to a point of law, the author-
ising officer responsible shall cancel the established amount
receivable in accordance with Articles 80 and 81; cancellation
shall be suitably substantiated.

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Each institution shall lay down in its internal rules the
2.
conditions and procedure for delegating the power to cancel an
established amount receivable.

in cases relating to expenditure on staff management or on
communications activities engaged in by the institutions for the
coverage of Community events on communication activities
performed by the Institutions and aimed at covering commu-
nity events, directly by payments.

Article 89

Technical and accounting adjustment of an established
amount receivable

Article 92

(A r ti cle 73 of th e Fi na nc i a l R e g u la ti on)

receivable upwards or downwards

The authorising officer responsible shall adjust the estab-
1.
lished amount
the
discovery of an error of fact necessitates the alteration of the
amount, provided that the correction does not imply relin-
quishment of the Communities' established entitlement. Such
adjustment shall be made in accordance with Articles 80 and
81 and shall be suitably substantiated.

if

2.
Each institution shall lay down in its internal rules the
conditions and procedure for delegating the power to make a
technical and accounting adjustment of an established amount
receivable.

CHAPTER 6

Expenditure operations

Article 90

Financing decision

(A r ti cle 75 of th e Fi na nc i a l R e g u la ti on)

The financing decision shall determine the essential elements of
an action involving expenditure from the budget.

S e c ti on 1

Commitment of expenditure

Article 91

Global and provisional commitments

( Ar ti c le 7 6 ( 2 ) of t h e F i na n ci a l R e g u l a ti o n)

The global budget commitment shall be implemented
1.
either by the conclusion of a financing agreement,
itself
providing for the subsequent conclusion of one or more legal
commitments, or by the conclusion of one or more legal
commitments.

Financing agreements in the field of financial assistance and
budgetary support which constitute legal commitments may
give rise to payments without the conclusion of other legal
commitments.

2.
The provisional budget commitment shall be imple-
mented either by the conclusion of one or more legal commit-
ments giving rise to an entitlement to subsequent payments or,

Adoption of a global commitment

( A r ti cl e 7 6 o f th e F i na nc i a l R e g u la ti o n)

A global commitment shall be made on the basis of a

1.
financing decision.

The global commitment shall be made at the latest before the
decision on the selection of beneficiaries is taken and, where
implementation of the appropriations concerned involves the
adoption of a work programme within the meaning of Article
166, at the earliest after that programme has been adopted.

2. Where the global commitment is implemented by the
conclusion of a financing agreement, the second subparagraph
of paragraph 1 shall not apply.

Article 93

Decommitment failing payment within three years

( A r ti cl e 7 7 o f th e F i na nc i a l R e g u la ti o n)

The amount of a budget commitment corresponding to a legal
commitment for which no payment within the meaning of
Article 81 of the Financial Regulation has been made in a
period of three years following the signing of the legal commit-
ment shall be decommitted.

Article 94

Single signature

( A r ti cl e 7 6 o f th e F i na nc i a l R e g u la ti o n)

1.
The rule that there be a single signatory for the budget
commitment and the corresponding legal commitment may be
departed from in the following cases alone:

(a) where the commitments are provisional;

(b) where global commitments relate to financing agreements

with third countries;

(c) where

the

institution's decision constitutes

the

legal

commitment;

(d) where the global commitment is implemented by a number
of legal commitments, for which different authorising offi-
cers by delegation are responsible;

(e) where,

in connection with imprest accounts available for
external action,
legal commitments must be signed by
members of staff of the local units referred to in Article
254.

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If

legal

the authorising officer responsible who signed the
2.
budget commitment is not available and remains unavailable
for a period incompatible with the time-limits for concluding
the
shall be
concluded by the person designated under the deputisation
rules adopted by each institution, provided that that person has
the status of authorising officer in accordance with Article
59(2) of the Financial Regulation.

commitment,

commitment

legal

that

(n) the use of telecommunications services;

(o) financial charges;

(p) legal expenses;

(q) damages, including interest;

(r) work equipment;

(s) water, gas and electricity;

Article 95

(t) periodical publications on paper or in electronic versions.

Registration of individual legal commitments

(A r ti c le 77 of th e Fi na nc i a l R e g u la ti on)

In the case of a global budget commitment followed by several
individual
legal commitments, the authorising officer respon-
sible shall register in the central accounts the amounts of these
commitments. The authorising
successive
officer responsible shall check that the aggregate amount does
not exceed the amount of the global commitment covering
them.

individual

legal

The registration in the accounts shall indicate the references of
the global commitment against which the individual commit-
ments are being booked.

The authorising officer responsible shall register the amounts in
the accounts before signing the corresponding individual legal
commitment.

Article 96

Administrative

expenditure

covered

by

provisional

commitments

(A r ti cle 76 of th e Fi na nc i a l R e g u la ti on)

Items regarded as routine administrative expenditure which
may give rise to provisional commitments shall
include the
following:

(a) expenditure on staff, whether or not covered by the Staff
Regulations, on other human resources and pensions and
on the remuneration of experts;

Se c ti on 2

Validation of expenditure

Article 97

Validation and ‘passing for payment’

( A r ti cl e 7 9 o f th e F i na nc i a l R e g u la ti o n)

Validation of

1.
shall be based on
any expenditure
supporting documents within the meaning of Article 104
attesting the creditor's entitlement, on the basis of a statement
of services actually rendered, supplies actually delivered or
work actually carried out, or on the basis of other documents
justifying payment.

The authorising officer responsible shall personally check
2.
the supporting documents or shall, on his own responsibility,
ascertain that this has been done, before taking the decision
validating the expenditure.

The validation decision shall be expressed by the signing
3.
of a ‘passed for payment’ voucher by the authorising officer
responsible or by an official or other servant
technically
competent, empowered by formal decision of the authorising
officer. Such empowerment decisions shall be kept for future
reference.

Article 98

(b) expenditure relating to Members of the institution;

Passing for payment of procurement contracts

(c) training expenditure;

(d) expenditure on competitions, selection and recruitment;

(e) mission expenses;

(f) representation expenses;

(g) meeting expenses;

(h) freelance interpreters and/or translators;

(i) exchanges of officials;

(j) recurring rentals of movable and immovable property;

(k) miscellaneous insurance;

(l) cleaning and maintenance;

(m) welfare expenditure;

( A r ti cl e 7 9 o f th e F i na nc i a l R e g u la ti o n)

For payments corresponding to procurement contracts,
endorsement ‘passed for payment’ shall certify that:

the

(a) the institution has received and formally registered an

invoice drawn up by the contractor;

(b) the invoice itself, or an internal document accompanying
the invoice received, has been endorsed ‘certified correct’
and signed by an official or other servant
technically
competent and duly empowered by the authorising officer
responsible;

(c) all aspects of the invoice have been checked by the author-
ising officer responsible or on his responsibility with a view
to determining in particular the amount to be paid and the
validity of the payment as discharge of the debt.

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The endorsement ‘certified correct’, referred to in point (b) of
the first paragraph shall certify that the services provided for in
the contract have been properly provided, or that the supplies
provided for in the contract have been properly delivered, or
that the work provided for in the contract has been properly
carried out. For supplies and work, the official or other servant
technically competent shall draw up a provisional acceptance
certificate, then a final acceptance certificate at the end of the
guarantee period laid down in the contract. Those two certifi-
cates shall count as the ‘certified correct’ endorsement.

Article 99

Passing for payment of grants

(A r ti cle 79 of th e Fi na nc i a l R e g u la ti on)

For payments corresponding to grants, the endorsement ‘passed
for payment’ shall certify that:

(a) the institution has

received and formally registered a

payment request drawn up by the beneficiary;

(b) the payment request itself, or an internal document accom-
panying the payment request received, has been endorsed
‘certified correct’ and signed by an official or other servant
technically competent, empowered by the authorising
officer responsible; by such endorsement, he certifies that
the action or work programme carried out by the benefi-
ciary is in all respects in compliance with the grant agree-
ment;

(c) all aspects of the payment request have been checked by
the authorising officer responsible or on his responsibility
with a view to determining in particular the amount to be
paid and the validity of the payment as discharge of the
debt.

Article 100

Passing for payment of staff expenditure

(c) in respect of overtime: a statement signed by the authorised
official or other servant certifying the amount of overtime
worked;

(d) in respect of mission expenses:

(i) the travel order signed by the competent authority;

(ii) the statement of mission expenses, signed by the official
on mission and by the administrative superior to whom
the appropriate powers have been delegated, and
showing, in particular, the place of mission, the dates
and times of departure and arrival at
the place of
mission,
subsistence expenses, and
other expenses duly authorised on production of
supporting documents;

travel expenses,

(e) in respect of other staff expenditure: the supporting docu-
ments referring to the decision on which the expenditure is
based and giving all the components of the calculation.

Article 101

Material form of ‘passed for payment’

( A r ti cl e 7 9 o f th e F i na nc i a l R e g u la ti o n)

In a non-computerised system, ‘passed for payment’ shall take
the form of a stamp incorporating the signature of the author-
ising officer responsible or of an official or other servant tech-
nically competent, empowered by the authorising officer
responsible in accordance with Article 97. In a computerised
system, ‘passed for payment’ shall take the form of validation
using the personal password of the authorising officer respon-
sible or of an official or other servant technically competent,
empowered by the authorising officer responsible.

Se c ti on 3

Authorisation of payments

(A r ti cle 79 of th e Fi na nc i a l R e g u la ti on)

Article 102

For payments corresponding to staff expenditure, the endorse-
ment
the following
supporting documents exist:

‘passed for payment’ shall certify that

Checks on payments by the authorising officer

( A r ti cl e 8 0 o f th e F i na nc i a l R e g u la ti o n)

(a) in respect of monthly salary:

(i) the complete list of staff, giving all the components of

remuneration;

(ii) a form (personal information sheet) based on decisions
taken in each individual case, showing, whenever such
change occurs, any change in any component of remu-
neration;

(iii) in the case of recruitments or appointments, a certified
true copy of the recruitment or appointment decision
which accompanies the validation of the first salary
payment;

(b) in respect of other remunerations (staff paid on an hourly
or daily basis): a statement signed by the authorised official
or other servant showing the days and hours worked;

When drawing up the payment order, the authorising officer
responsible shall ensure that:

(a) the payment order has been properly issued, meaning that
corresponding validation decision has been taken
a
previously in the form of ‘passed for payment’, that the
particulars of the payee are correct and that the amount is
due;

(b) the payment order corresponds to the budget commitment

against which it is booked;

(c) the expenditure is charged to the correct

item in the

budget;

(d) appropriations are available.

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Article 103

Article 105

Mandatory details on payment orders and transmission to
the accounting officer

Booking of pre-financing and interim payments

(A r ti c le 80 of th e Fi na nc i a l R e g u la ti on)

( A r ti cl e 8 1 o f th e F i na nc i a l R e g u la ti o n)

1.

The payment order shall state:

(a) the financial year to which the expenditure is to be booked;

(b) the budget article and any other subdivision that may

apply;

(c) the references of the legal commitment giving rise to an

entitlement to payment;

(d) the references of the budget commitment against which it

is to be booked;

(e) the amount to be paid, expressed in euro;

(f) the name, address and bank account details of the payee;

(g) the object of the expenditure;

(h) the means of payment;

(i) the entry of items in the inventory in accordance with

Article 222.

2.
The payment order shall be dated and signed by the
authorising officer responsible, then sent to the accounting
officer.

S e c ti on 4

Payment of expenditure

Article 104

Supporting documents

(A r ti cle 81 of th e Fi na nc i a l R e g u la ti on)

the actions financed with the terms of

1.
Pre-financing, including in cases where it is split into a
number of payments, shall be paid either on the basis of the
contract, the agreement or the basic act, or on the basis of
supporting documents which make it possible to check the
conformity of
the
contract or agreement
Interim payments and
in question.
payments of balances shall be based on supporting documents
which make it possible to check that the action financed has
been carried out in accordance with the terms of the contract
or agreement concluded with the beneficiary or of the basic
act.

The authorising officer responsible shall

2.
in
compliance with the principle of sound financial management,
the nature of the supporting documents referred to in para-
graph 1 in accordance with the basic act and the contracts and
agreements concluded with the beneficiary. Interim and final
technical and financial implementation reports, shall constitute
supporting documents for the purposes of paragraph 1.

lay down,

Pre-financing is intended to provide the beneficiary with a

1.
float. It may be split into a number of payments.

2.
An interim payment, which may be repeated, is intended
to reimburse expenditure incurred by the beneficiary on the
basis of a statement of expenditure when the action is in
progress.
It may clear pre-financing in whole or in part,
without prejudice to the provisions of the basic act.

3.
The closure of the expenditure shall take the form of the
payment of the balance, which may not be repeated and clears
all preceding payments, or a recovery order.

Se c ti on 5

Time limits for expenditure operations

Article 106

Payment time limits and default interest

( A r ti cl e 8 3 o f th e F i na nc i a l R e g u la ti o n)

1.
Sums due shall be paid within no more than forty-five
calendar days from the date on which an admissible payment
request
the
authorising officer responsible; the date of payment shall be
understood to mean the date on which the institution's account
is debited.

is registered by the authorised department of

The payment request is not admissible if at least one essential
requirement is not met.

2.
The payment period referred to in paragraph 1 shall be
thirty calendar days for payments relating to service or supply
contracts, save where the contract provides otherwise.

3.
For contracts or agreements under which payment
depends on approval of a report, time for the purposes of the
payment periods referred to in paragraphs 1 and 2 shall not
begin to run until the report in question has been approved,
either explicitly with the beneficiary being informed, or impli-
citly because the time allowed by the contract for approval has
expired without being suspended by means of a formal docu-
ment sent to the beneficiary.

The time allowed for approval may not exceed:

(a) 20 calendar days for straightforward contracts relating to

the supply of goods and services;

(b) 45 calendar days for other contracts and grant agreements;

The supporting documents shall be kept by the author-
3.
ising officer responsible in accordance with Articles 48 and 49.

(c) 60 calendar days for contracts involving technical services

which are particularly complex to evaluate.

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supporting

appropriate

The authorising officer responsible may suspend the time
4.
limit for payment by informing creditors, at any time during
the period referred to in paragraph 1, that the payment request
cannot be met, either because the amount is not due or because
the
documents have not been
produced. If information comes to the notice of the authorising
officer responsible which puts in doubt the eligibility of expen-
diture appearing in a payment request, the authorising officer
may suspend the time limit for payment for the purpose of
further verification, including an on-the-spot check, in order to
ascertain, prior to payment, that the expenditure is indeed
eligible. The authorising officer shall inform the beneficiary in
question as soon as possible.

Time for the purposes of the remainder of the payment period
shall begin to run again from the date on which the properly
formulated payment request is first registered.

On expiry of the time limits laid down in paragraphs 1
5.
and 2, the creditor may, within two months of receiving late
payment, demand interest in accordance with the following
provisions:

(a) the interest rates shall be those referred to in the first

subparagraph of Article 86(2);

(b) the interest shall be payable for the period elapsing from
the calendar day following expiry of the time-limit
for
payment up to the day of payment.

The first subparagraph shall not apply to Member States.

CHAPTER 7

IT Systems

Article 107

Description of IT systems

(A r ti cle 84 of th e Fi na nc i a l R e g u la ti on)

Where computer systems and subsystems are used to process
budget
implementation operations, a full and up-to-date
description of each system or subsystem shall be required.

Each description shall define the content of all data fields and
describe how the system treats each individual operation. It
shall show in detail how the system guarantees the existence of
a complete audit trail for each operation.

CHAPTER 8

Internal auditor

Article 109

Appointment of the internal auditor

( A r ti cl e 8 5 o f th e F i na nc i a l R e g u la ti o n)

1.
Each institution shall appoint its internal auditor in accor-
dance with arrangements adapted to its specific features and
requirements. The institution shall
inform the budgetary
authority of the appointment of the internal auditor.

Each institution shall determine,

in accordance with its
2.
specific features and its requirements, the scope of the mission
of the internal auditor and shall lay down in detail the objec-
tives and procedures for the exercise of the internal audit func-
tion with due respect for international internal audit standards.

3.
The institution may appoint as internal auditor, by virtue
of their particular competence, an official or other servant
covered by the Staff Regulations chosen from nationals of the
Member States.

4.
If two or more institutions appoint the same internal
auditor they shall make the necessary arrangements for him to
be declared liable for his actions as laid down in Article 114.

The institution shall inform the budgetary authority when

5.
the duties of the internal auditor are terminated.

Article 110

Operational resources

( A r ti cl e 8 6 o f th e F i na nc i a l R e g u la ti o n)

The institution shall provide the internal auditor with the
resources required for the proper performance of his audit
function and a mission charter detailing his tasks, duties and
obligations.

Article 111

Work programme

Article 108

Periodical save

( A r ti cl e 8 6 o f th e F i na nc i a l R e g u la ti o n)

The internal auditor shall adopt his work programme and

1.
shall submit it to the institution.

(A r ti cle 84 of th e Fi na nc i a l R e g u la ti on)

The data in computer systems and subsystems shall be saved
periodically and kept in a safe place.

2.
The institution may ask the internal auditor to carry out
audits not included in the work programme referred to in para-
graph 1.

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Article 112

Reports of the internal auditor

(A r ti c le 86 of th e Fi na nc i a l R e g u la ti on)

The internal auditor shall submit to the institution the
1.
annual internal audit report provided for in Article 86(3) of the
indicating the number and type of
Financial Regulation,
internal audits carried out,
recommendations
made and the action taken on those recommendations.

the principal

That annual report shall also mention any systemic problems
detected by the specialised panel set up pursuant to Article
66(4) of the Financial Regulation.

Each institution shall consider whether the recommenda-
2.
tions made in the reports of its internal auditor are suitable for
an exchange of best practices with the other institutions.

Article 113

Independence

(A r ti c le 87 of th e Fi na nc i a l R e g u la ti on)

The internal auditor shall enjoy complete independence in the
conduct of his audits. He may not be given any instructions
nor be restricted in any way as regards the performance of the
functions which, by virtue of his appointment, are assigned to
him under the Financial Regulation.

Article 114

Liability of the internal auditor

(A r ti cle 87 of th e Fi na nc i a l R e g u la ti on)

The institution alone, proceeding in accordance with this
Article, may act to have the internal auditor, as an official or
other servant subject to the Staff Regulations, declared liable
for his actions.

The institution shall take a reasoned decision to open an inves-
tigation. That decision shall be communicated to the interested
party. The institution may put in charge of the investigation,
under its direct responsibility, one or more officials of a grade
equal to or higher than that of the member of staff concerned.
In the course of the investigation, the views of the interested
party shall be heard.

The investigation report shall be communicated to the inter-
ested party, who shall then be heard by the institution on the
subject of that report.

On the basis of the report and the hearing, the institution shall
adopt either a reasoned decision terminating the proceedings
or a reasoned decision in accordance with Articles 22 and 86
to 89 of the Staff Regulations. Decisions imposing disciplinary
measures or financial penalties shall be notified to the inter-
ested party and communicated, for information purposes, to
the other institutions and the Court of Auditors.

The interested party may bring an action in respect of such
decisions before the Court of Justice of the European Commu-
nities, as provided for in the Staff Regulations.

Article 115

Action before the Court of

Justice of

the European

Communities

( A r ti cl e 8 7 o f th e F i na nc i a l R e g u la ti o n)

Without prejudice to the remedies allowed by the Staff Regula-
tions, the internal auditor may bring an action directly before
the Court of Justice of the European Communities in respect of
any act relating to the performance of his duties as internal
auditor. Such an action must be lodged within three months
running from the calendar day on which the act in question is
notified.

Such actions shall be investigated and heard as provided for in
Article 91(5) of the Staff Regulations.

TITLE V

PROCUREMENT

CHAPTER 1

General provisions

S e c ti on 1

Scope and award principles

Article 116

Definitions and scope

(A r ti c le 88 of th e Fi na nc i a l R e g u la ti on)

Building contracts cover the purchase, long lease, leasing,
1.
rental or hire purchase, with or without option to buy, of land,
existing buildings or other real estate.

delivery of products may in addition include siting, installation
and maintenance.

3. Works contracts cover either the execution, or both the
execution and design, of works or the realisation, by whatever
means, of a work corresponding to the requirements specified
by the contracting authority. A 'work' means the outcome of
building or civil engineering works taken as a whole that is
sufficient of itself to fulfil an economic or technical function.

4.
Service contracts cover all intellectual and non-intellectual
services other than those covered by supply contracts, works
contracts and building contracts. These services are listed in
Annexes IA and IB to Council Directive 92/50/EEC.

Supply contracts cover the purchase,

leasing, rental or
2.
hire purchase, with or without option to buy, of products. The

5.
A contract covering both products and services shall be
considered a service contract where the value of the services in
question exceeds that of the products included in the contract.

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The terms ‘supplier’,

‘contractor’ and ‘service provider’
6.
refer to three categories of economic operator, natural or legal
persons, who supply products, execute works and provide
services respectively. Economic operators who have submitted
a tender are referred to as ‘tenderers’. Those who have asked to
be allowed to take part in a restricted or negotiated procedure
are referred to as ‘candidates’.

The pre-information notice shall be the notice by which
2.
the contracting authorities make known, by way of indication,
the estimated total value of contracts, by category of service or
groups of products, and the essential characteristics of works
contracts which they intend to award during a budgetary year,
where the estimated total value is equal to or greater than the
thresholds laid down in Article 157.

Departments of

7.
considered to be contracting authorities.

the Community institutions shall be

Article 117

Framework contracts and specific contracts

(A r ti c le 88 of th e Fi na nc i a l R e g u la ti on)

A framework contract is a contract concluded between a
1.
contracting authority and an economic operator
the
purpose of laying down the essential terms governing a series
of specific contracts to be awarded during a given period, in
particular as regards the duration, subject, prices, conditions of
performance and the quantities envisaged.

for

The contracting authority may also conclude multiple frame-
work contracts, which are separate contracts with identical
terms awarded to a number of suppliers or service providers.
The specifications referred to in Article 130 shall then specify
the maximum number of operators with whom the contracting
authority will conclude contracts.

The duration of framework contracts may not exceed four
years, save in exceptional cases justified in particular by the
subject of the framework contract.

The pre-information notice shall be sent to the Office for Offi-
the European Communities as soon as
cial Publications of
possible and by no later than 31 March of each budgetary year
in the case of supply and service contracts and, in the case of
works contracts, as
the decision
approving the programme for those contracts.

soon as possible after

3.
The contract notice shall be the means by which the
contracting authorities make known their intention to launch a
procurement procedure. It shall be compulsory for contracts of
an estimated value equal to or greater than the thresholds laid
down in points (a) and (c) of Article 158(1).

In an open procedure the contract notice shall specify the date,
time and place of the meeting of the opening committee, which
shall be open to the tenderers.

Contracting authorities wishing to organise a contest shall issue
a notice announcing their intention.

4.
The award notice shall give the outcome of the procure-
ment procedure. In the case of contracts the value of which is
equal to or greater than the thresholds laid down in Article
158, the award notice shall be compulsory. It shall not be
compulsory for specific contracts awarded under a framework
contract.

Contracting authorities may not make undue use of framework
contracts or use them in such a way that the purpose or effect
is to prevent, restrict or distort competition.

The award notice shall be sent to the Office for Official Publica-
tions of the European Communities no later than forty-eight
calendar days after the procedure is closed, that is to say, from
the date on which the contract is signed.

2.
Specific contracts based on the framework contracts
referred to in paragraph 1 shall be awarded in accordance with
the terms laid down in the framework contract.

The notices shall be drawn up in accordance with the

5.
models annexed to Directive 2001/78/EC.

Only specific contracts concluded under

3.
contracts shall be preceded by a budget commitment.

framework

S e c ti on 2

Publication

Article 118

Advertising of contracts covered by the public procure-
ment directives

(A r ti c le 90 of th e Fi na nc i a l R e g u la ti on)

Publication shall consist in a pre-information notice, a

1.
contract notice and an award notice.

Article 119

Advertising of contracts not covered by the public
procurement directives

( A r ti cl e 9 0 o f th e F i na nc i a l R e g u la ti o n)

Contracts with a value below the thresholds provided for
1.
in Articles 157 and 158 and the service contracts referred to in
Annex IB to Council Directive 92/50/EEC shall be advertised by
appropriate means in order to ensure competitive tendering
and impartiality of the procurement procedure. Such adver-
tising shall involve:

(a) if no contract notice as referred to in Article 118(3) has
been published, notice of a call for expressions of interest
for contracts covering a similar subject with a value equal
to or greater than the amount referred to in Article 128(1);

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(b) the annual publication of a list of contractors, specifying

the subject and the value of the contract awarded.

2.
A list of contractors to whom building contracts are
awarded shall be published annually, with an indication of the
subject and value of the contracts awarded. That list shall be
sent to the budgetary authority; in the case of the Commission,
it shall be annexed to the summary of the annual activity
reports referred to in Article 60(7) of the Financial Regulation.

3.
Information relating to contracts with a value equal to or
greater than the amount referred to in Article 128(1) shall be
sent to the Office for Official Publications of the European
Communities; the annual lists of contractors shall be sent by
no later than 31 March following the end of the financial year.

Ex ante advertising and the annual publication of the list of
contractors for the other contracts shall be on the Internet site
of the institutions; ex post publication shall take place by no
later than 31 March of the following financial year. Publication
may also be in the Official Journal of the European Communities.

Article 120

Publication of notices

(A r ti cle 90 of th e Fi na nc i a l R e g u la ti on)

The Office for Official Publications of

the European
1.
Communities shall publish the notices referred to in Articles
118 and 119 in the Official Journal of the European Communities
no later than twelve calendar days after their dispatch.

That period shall be reduced to five calendar days in the case of
the fast-track procedures referred to in Article 142 and if the
notices have been prepared and sent electronically.

The contracting authorities must be able to provide

2.
evidence of the date of dispatch.

Article 121

Other forms of advertising

(A r ti cle 90 of th e Fi na nc i a l R e g u la ti on)

In addition to the advertising provided for in Articles 118, 119
and 120, contracts may be advertised in any other way, notably
in electronic form. Any such advertising shall refer to the
notice published in the Official Journal of the European Commu-
nities, as provided for in Article 120, if one has been published,
and may not precede the publication of that notice, which
alone is authentic.

Se c ti on 3

Procurement procedures

Article 122

Types of procurement procedure

( A r ti cl e 9 1 o f th e F i na nc i a l R e g u la ti o n)

Contracts shall be awarded by call for tender, using the
1.
open, restricted or negotiated procedure after publication of a
contract notice or by negotiated procedure without prior publi-
cation of a contract notice, where appropriate following a
contest.

Calls

2.
tender
economic operators may submit a tender.

shall be open where all

for

interested

Calls for tender are restricted where all economic operators
may ask to take part but only candidates satisfying the selection
criteria referred to in Article 135 and invited simultaneously
and in writing by the contracting authorities may submit a
tender.

The selection phase may be repeated for each individual
contract or may involve drawing up a list of potential candi-
dates under the procedure referred to in Article 128.

In a negotiated procedure,

3.
the contracting authorities
shall consult tenderers of their choice who satisfy the selection
criteria laid down in Article 135, and negotiate the terms of
the contract with one or more of them.

In negotiated procedures where a contract notice is published,
as referred to in Article 127, the contracting authorities shall
simultaneously and in writing invite the selected candidates to
negotiate.

Contests are procedures which enable the contracting
4.
authority to acquire, mainly in the fields of architecture and
civil engineering or data processing, a plan or design proposed
by a selection board after being put out to competitive tender
with or without the award of prizes.

Article 123

Number of

candidates

in restricted or negotiated

procedures

( A r ti cl e 9 1 o f th e F i na nc i a l R e g u la ti o n)

Such advertising may not introduce any discrimination between
candidates or tenderers nor contain details other than those
contained in the contract notice, if one has been published.

1.
In a restricted procedure, including the procedure referred
to in Article 128, the number of candidates invited to submit a
tender may not be less than five, provided that a sufficient
number of candidates satisfy the selection criteria.

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The contracting authority may also provide for a maximum
number of twenty candidates, depending on the subject of the
contract and on the basis of objective and non-discriminatory
selection criteria. In such cases, the range and criteria shall be
indicated in the contract notice or the call for expressions of
interest referred to in Articles 118 and 119.

In any event, the number of candidates invited to tender must
be sufficient to ensure genuine competition.

In negotiated procedures

2.
the number of candidates
invited to negotiate may not be less than three, provided that a
sufficient number of candidates satisfy the selection criteria.

In any event, the number of candidates invited to tender must
be sufficient to ensure genuine competition.

The second subparagraph shall not apply to contracts involving
very small amounts, as referred to in Article 129(3).

Article 124

Arrangements for negotiated procedures

(A r ti c le 91 of th e Fi na nc i a l R e g u la ti on)

shall negotiate with tenderers

the
Contracting authorities
tenders they have submitted in order to adapt them to the
requirements set out in the contract notice referred to in Article
118 or in the specifications and in any additional documents
and in order to find the tender offering best value for money.

During the negotiation, the contracting authorities shall ensure
equal treatment for all tenderers.

Article 125

Contests

(A r ti c le 91 of th e Fi na nc i a l R e g u la ti on)

The rules for the organisation of a contest shall be

1.
communicated to those interested in taking part.

The number of candidates invited to take part must be suffi-
cient to ensure genuine competition.

The selection board shall be appointed by the authorising
2.
officer responsible. It shall be made up exclusively of natural
persons who are independent of participants in the contest.
Where a particular professional qualification is required for
participation in a contest, at least one third of the members of
the selection board must have the same or an equivalent quali-
fication.

The selection board shall be autonomous in its opinions. Its
opinions shall be adopted on the basis of projects submitted to
it anonymously by the candidates and solely in the light of the
criteria set out in the contest notice.

3.
The proposals of the selection board, based on the merits
of each project, and its observations, shall be recorded in a
report signed by its members.

Candidates shall remain anonymous until the selection board
has given its opinion.

4.
The contracting authority shall then take a decision giving
the name and address of the candidate selected and the reasons
for the choice by reference to the criteria announced in the
contest notice, especially if it departs from the proposals made
in the selection board's opinion.

Article 126

Use of a negotiated procedure without prior publication
of a contract notice

( A r ti cl e 9 1 o f th e F i na nc i a l R e g u la ti o n)

Contracting authorities may use the negotiated procedure
1.
without prior publication of a contract notice in the following
cases:

(a) where no tenders or no suitable tenders have been
submitted in response to an open procedure or restricted
procedure after the initial procedure has been completed,
provided that the original terms of the contract as specified
in the documents relating to the invitation to tender
referred to in Article 130 are not substantially altered;

(b) where,

for technical or artistic reasons, or for reasons
connected with the protection of exclusive rights,
the
contract can be awarded only to a particular economic
operator;

(c) in so far as is strictly necessary where,

for reasons of
extreme urgency brought about by unforeseeable events
not attributable to the contracting authorities and likely to
jeopardise the Communities' interests,
it is impossible to
comply with the time-limits set for the other procedures
and laid down in Articles 140, 141 and 142;

(d) where a service contract follows a contest and must, under
the rules applying, be awarded to the successful candidate
or to one of the successful candidates; in the latter case, all
successful candidates shall be invited to participate in the
negotiations;

(e) for additional services and works not

initially considered nor

included in the
first
project
through unforeseen circumstances
concluded but which,
independent of
the contracting authority, have become
necessary for the performance of the services or works,
subject to the conditions set out in paragraph 2;

contract

in the

(f) for additional contracts consisting in the repetition of
similar
services or works entrusted to the contractor
awarded an earlier contract by the same contracting autho-
rities, provided that the subject of the contract conforms to
a basic project and that the first contract was awarded
under the open or restricted procedure;

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(g) for supply contracts:

(i) in the case of additional deliveries which are intended
either as a partial replacement of normal supplies or
installations or as the extension of existing supplies or
installations, where a change of supplier would oblige
the contracting authority to acquire equipment having
different technical characteristics which would result in
incompatibility or disproportionate technical difficulties
in operation and maintenance;
the length of such
contracts may not exceed three years;

(ii) where the products are manufactured purely for the
purpose of research, experiment, study or development,
with the exception of commercial viability tests and
large-scale production aimed at recovering research and
development costs;

(h) for building contracts, after prospecting the local market;

(i) for contracts with a value below the threshold laid down in

Article 129(2).

For the additional services and works referred to in point
2.
(e) of paragraph 1, the contracting authority may make use of
the negotiated procedure without prior publication of a
contract notice on condition that the award is made to the
contractor performing the contract:

(a) where such additional contracts cannot be technically or
economically separated from the main contract without
serious inconvenience for the contracting authority; or

(b) where such services or works, although separable from the
performance of the original contract, are strictly necessary
for its completion.

restricted procedure which has been completed, provided
that the original terms of the contract as specified in the
documents relating to the invitation to tender referred to in
Article 130 are not substantially altered;

(b) for service and works contracts, in exceptional cases where
the nature of the services or works or the risks attaching
thereto do not permit prior overall pricing by the tenderer;

(c) where the nature of the service to be procured, in particular
in the case of financial services and intellectual services, is
such that contract specifications cannot be established with
sufficient precision to permit the award of the contract by
selecting the best
tender in accordance with the rules
governing open or restricted procedures;

(d) for works contracts, where the works are performed solely
for purposes of research, testing or development and not
recovering
with the aim of ensuring profitability or
research and development costs;

(e) for the service contracts referred to in Annex 1B to Council
Directive 92/50/EEC, subject to point (i) of Article 126(1).

2.
In the cases referred to in point (a) of paragraph 1,
contracting authorities may refrain from publishing a contract
notice if
the
tenderers who satisfy the selection criteria and who, during the
previous procedure, submitted tenders in accordance with the
formal requirements of the procurement procedure.

they include in the negotiated procedure all

Article 128

The aggregate value of additional contracts may not exceed
50 % of the amount of the initial contract.

Restricted procedure involving a call for expressions of
interest

3.
In the cases referred to in point (f) of paragraph 1, the
option of using the negotiated procedure shall be pointed out
as soon as the first contract is put out to competitive tender,
and the total estimated cost of the additional contracts shall be
taken into consideration in calculating the thresholds referred
to in Article 158. That procedure may be used only during the
three years following conclusion of the original contract.

Article 127

Use of a negotiated procedure after prior publication of a
contract notice

(A r ti cle 91 of th e Fi na nc i a l R e g u la ti on)

Contracting authorities may use the negotiated procedure
1.
after having published a contract notice in the following cases:

(a) in the event of the submission of tenders which are irre-
gular or unacceptable, by reference in particular to the
in response to an open or
selection or award criteria,

( A r ti cl e 9 1 o f th e F i na nc i a l R e g u la ti o n)

1.
A call for expressions of interest shall constitute a means
of preselecting candidates who will be invited to submit tenders
in response to future restricted invitations
for
contracts of a value of EUR 50 000 or more, subject to Articles
126 and 127.

to tender

2.
The list drawn up following a call for expressions of
interest shall be valid for no more than three years from the
date on which the notice referred to in point (a) of Article
119(1)
is sent to the Office for Official Publications of the
European Communities.

Any interested person may submit an application at any time
during the period of validity of the list, with the exception of
the last three months of that period.

a

specific

3. Where
the
contract
contracting authority shall invite either all candidates entered
on the list or only some of them, on the basis of objective and
non-discriminatory selection criteria specific to that contract, to
submit a tender.

awarded,

to be

is

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Article 129

Low-value contracts

(A r ti c le 91 of th e Fi na nc i a l R e g u la ti on)

1.
A restricted procedure with at least five candidates being
consulted but without a call for expressions of interest may be
less than EUR 50 000,
used for contracts with a value of
subject to Articles 126 and 127.

The negotiated procedure with at least three candidates
than

2.
may be used for contracts with a value of
EUR 13 800.

less

3.
Contracts with a value of less than EUR 1 050 may be
awarded on the basis of a single tender by a negotiated proce-
dure.

4.
Payments made from imprest accounts or for expenditure
related to communications activities engaged in by the institu-
tions for the coverage of Community events may consist simply
in the payment of costs against invoices, without prior accep-
tance of a tender, where the expenditure is less than EUR 200.

Article 130

Documents relating to the invitation to tender

(A r ti c le 92 of th e Fi na nc i a l R e g u la ti on)

The documents relating to the invitation to tender shall

1.
include at least:

(a) the invitation to submit a tender or to negotiate;

(b) the attached specifications, to which shall be annexed the

general terms and conditions applicable to contracts;

(c) the model contract.

The documents relating to the invitation to tender shall contain
a reference to the advertising measures taken under Articles
118 to 121.

2.

The invitation to tender shall at least:

(a) specify the rules governing the lodging and presentation of
tenders, including in particular the closing date and time
for submission, any requirement as to the use of a standard
reply form, the documents to be attached, including those
in evidence of financial, economic, technical and profes-
sional capacity referred to in Article 135, and the address
to which they must be sent;

(b) state that submission of the tender implies acceptance of
the specifications and of the general terms and conditions
referred to in paragraph 1 to which the tender relates and
that this submission binds the contractor to whom the
contract is awarded during performance of the contract;

(c) specify the period during which a tender will remain valid

and may not be varied in any respect;

(d) forbid any contact between the contracting authority and
the tenderer during the procedure, save, exceptionally,
under the conditions laid down in Article 148, and, where
provision is made for an on-the-spot visit, specify the
arrangements for such a visit.

3.

The specifications shall at least:

(a) specify the exclusion and selection criteria applying to the
contract, save in the restricted procedure and in the nego-
tiated procedures following publication of a notice referred
to in Article 127; in such cases those criteria shall appear
solely in the contract notice or the call for expressions of
interest;

(b) specify the award criteria and their relative weighting,

if

this is not specified in the contract notice;

(c) set out the technical specifications referred to in Article

131;

(d) state the minimum requirements which variants must meet
in the procedures provided for in Article 138(2) under
which the contract is awarded to the tender offering best
value for money, where the contracting authority has not
stated in the contract notice that such variants are not
permitted;

(e) state that the Protocol on Privileges and Immunities or,
where appropriate, the Vienna Convention on Diplomatic
Relations or Consular Relations applies;

(f) specify the evidence of access to contracts, as set out in

Article 159.

4.

The model contract shall in particular:

(a) specify the penalties for failure to comply with its clauses;

(b) specify the details which must be contained in invoices or
in the relevant supporting documents in accordance with
Article 98;

(c) specify the law applicable to the contract and the compe-

tent court for hearing disputes.

5.
The contracting authorities may demand information
from the tenderer on any part of the contract that the tenderer
may intend to subcontract to third parties and on the identity
of any subcontractors.

Article 131

Technical specifications

( A r ti cl e 9 2 o f th e F i na nc i a l R e g u la ti o n)

1.
Technical specifications must afford equal access for
candidates and tenderers and not have the effect of creating
unjustified obstacles to competitive tendering.

They shall define the characteristics required of a product,
service or material or work with regard to the purpose for
which they are intended by the contracting authority.

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The characteristics

2.
include:

(a) the quality levels;

referred to in paragraph 1 shall

(b) environmental performance;

(c) design for all

requirements

(including accessibility for

disabled people);

(d) the levels and procedures of conformity assessment;

(e) fitness for use;

(f) safety or dimensions, including, for supplies, the sales name
and user instructions, and, for all contracts, terminology,
symbols, testing and test methods, packaging, marking and
labelling, production procedures and methods;

(g) for works contracts,

the procedures relating to quality
assurance and the rules relating to design and costing, the
test, inspection and acceptance conditions for works and
methods or techniques of construction and all the other
technical conditions which the contracting authority may
impose under general or specific regulations in relation to
the finished works and to the materials or parts which they
involve.

patents, types or a specific origin or production which would
have the effect of favouring or eliminating certain products or
economic operators.

Where it is not possible to provide a sufficiently detailed and
intelligible description of the subject of the contract, the refer-
ence shall be followed by the expression ‘or equivalent’.

Article 132

Price revision

( A r ti cl e 9 2 o f th e F i na nc i a l R e g u la ti o n)

1.
The documents relating to the invitation to tender shall
clearly state whether a firm, non-revisable price must be
quoted.

2.
If that is not the case, the documents relating to the invi-
tation to tender shall lay down the conditions and/or formulas
for revision of prices during the lifetime of the contract. In such
cases the contracting authority shall take particular account of:

(a) the object of the procurement procedure and the economic

situation in which it is taking place;

The

3.
follows:

technical

specifications

shall be

formulated as

(b) the type of tasks and contract and their duration;

(a) by reference to European standards, or to European tech-
nical approvals or common technical specifications, where
such exist, to international standards or to other technical
reference material produced by European standards bodies
or, failing this, their national equivalents. Every reference
shall be followed by the expression ‘or equivalent’; or

(b) in terms of performance or of functional requirements; they
shall be sufficiently detailed to enable tenderers to deter-
mine the purpose of
the contract and the contracting
authorities to award the contract; or

(c) by a mixture of those two formulation methods.

4. Where the contracting authorities make use of the possi-
bility of referring to the specifications referred to in point (a) of
paragraph 3, they may not reject a tender on the grounds that
it does not comply with those specifications if the tenderer or
candidate proves,
contracting
authority, by any appropriate means, that the tender meets in
equivalent manner the requirements set.

satisfaction of

to the

the

5. Where the contracting authorities make use of the possi-
bility provided for in point (b) of paragraph 3, of prescribing
specifications in terms of performance or of functional require-
ments, they may not reject a tender which complies with a
national standard transposing a European standard, a European
technical approval or common technical specifications, an
international standard or technical reference material produced
by a European standards body, if those specifications relate to
the necessary performance or functional requirements.

(c) its financial interests.

Article 133

Administrative and financial penalties

(Ar ti c le s 93 to 96 a nd 114 of

th e

F i n a nci a l

Re gulati on)

1. Without prejudice to the application of penalties laid
down in the contract, candidates or tenderers and contractors
who have been guilty of making false declarations or have been
found to have seriously failed to meet their contractual obliga-
tions in an earlier procurement procedure shall be excluded
from all contracts and grants financed by the Community
budget for a maximum of two years from the time when the
infringement is established, as confirmed after an adversarial
procedure with the contractor.

That period may be extended to three years in the event of a
repeat offence within five years of the first infringement.

Tenderers or candidates who have been guilty of making false
declarations shall also receive financial penalties representing
2 % to 10 % of the total value of the contract being awarded.

Contractors who have been found to have seriously failed to
meet their contractual obligations shall receive financial penal-
ties representing 2 % to 10 % of the total value of the contract
in question.

6.
Save in exceptional cases, duly warranted by the subject
of the contract, those specifications may not refer to a specific
make or source, or a particular process, or to trade marks,

That rate may be increased to 4 % to 20 % in the event of a
repeat offence within five years of the first infringement.

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In the cases referred to in points (a), (c) and (d) of Article
2.
93(1) of the Financial Regulation, the candidates or tenderers
shall be excluded from all contracts and grants for a maximum
of two years from the time when the infringement is estab-
lished, as confirmed after an adversarial procedure with the
contractor.

In the cases referred to in points (b) and (e) of Article 93(1) of
the Financial Regulation, the candidates or tenderers shall be
excluded from all contracts and grants for a minimum of one
year and a maximum of four years from the date of notification
of the judgment.

Those periods may be extended to five years in the event of a
repeat offence within five years of the first infringement or the
first judgment.

Depending on the national legislation of the country in
3.
which the tenderer or candidate is established, the documents
referred to in paragraphs 1 and 2 shall relate to legal persons
and/or natural persons including, where considered necessary
by the contracting authority, company directors or any person
with powers of representation, decision-making or control in
relation to the candidate or tenderer.

Article 135

Selection criteria

( A r ti c le 9 7 ( 1 ) of t h e F i na nci a l R e g u l a ti on)

The cases referred to in point (e) of Article 93(1) of the

3.
Financial Regulation shall be the following:

The contracting authorities shall draw up clear and non-

1.
discriminatory selection criteria.

(a) cases of fraud as referred to in Article 1 of the Convention
on the protection of the European Communities' financial
interests drawn up by the Council Act of 26 July 1995 (1);

(b) cases of corruption as referred to in Article 3 of

the
Convention on the fight against corruption involving offi-
cials of the European Communities or officials of Member
States of the European Union, drawn up by the Council Act
of 26 May 1997 (2);

(c) cases of participation in a criminal organisation, as defined
the

Joint Action 98/733/JHA of

in Article 2(1) of
Council (3);

(d) cases of money laundering as defined in Article 1 of

Council Directive 91/308/EEC (4).

Article 134

Evidence

(A r ti cle 96 of th e Fi na nc i a l R e g u la ti on)

1.
The contracting authority shall accept, as satisfactory
evidence that the candidate or tenderer is not in one of the
situations described in point (a), (b) or (e) of Article 93(1) of
the Financial Regulation, production of a recent extract from
the judicial record or, failing that, a recent equivalent document
issued by a judicial or administrative authority in the country
of origin or provenance showing that those requirements are
satisfied.

The contracting authority shall accept, as satisfactory
2.
evidence that the candidate or tenderer is not in the situation
described in point (d) of Article 93(1) of the Financial Regula-
tion, a recent certificate issued by the competent authority of
the State concerned.

Where no such certificate is issued in the country concerned, it
may be replaced by a sworn or, failing that, a solemn statement
made by the interested party before a judicial or administrative
authority, a notary or a qualified professional body in his
country of origin or provenance.

(1) OJ C 316, 27.11.1995, p. 48.
(2) OJ C 195, 25.6.1997, p. 1.
(3) OJ L 315, 29.12.1998, p. 1.
(4) OJ L 166, 28.6.1991, p. 77.

The following selection criteria shall apply in every

2.
procurement procedure:

(a) the eligibility of the tenderer or candidate to take part in
the procedure, checks having been carried out on the
possible grounds for exclusion referred to in Articles 93
and 94 of the Financial Regulation;

(b) criteria for assessing his financial, economic, technical and

professional capacity.

The contracting authority may lay down minimum capacity
levels below which it cannot select candidates.

3.
Any tenderer or candidate may be asked to prove that he
is authorised to perform the contract under national law, as
evidenced by inclusion in a trade or professional register, or a
sworn declaration or certificate, membership of a specific orga-
nisation, express authorisation, or entry in the VAT register.

4.
The contracting authorities shall specify in the contract
notice or in the call for expressions of interest or the invitation
to submit a tender, the references chosen to test the status and
the legal capacity of tenderers or candidates.

The information requested by the contracting authority as
5.
proof of the financial, economic, technical and professional
capacity of the candidate or tenderer may not go beyond the
subject of the contract and shall take account of the legitimate
interests of the economic operators as regards in particular the
protection of the firm's technical and business secrets.

Article 136

Economic and financial capacity

( A r ti c le 9 7 ( 1 ) of t h e F i na nci a l R e g u l a ti on)

Proof of economic and financial capacity may be furn-

1.
ished by one or more of the following documents:

(a) appropriate statements from banks or evidence of profes-

sional risk indemnity insurance;

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(b) the presentation of balance sheets or extracts from balance
sheets for at least the last two years for which accounts
have been closed, where publication of the balance sheet is
required under the company law of the country in which
the economic operator is established;

(c) a statement of overall turnover and turnover concerning
the works, supplies or services covered by the contract
during a period which may be no more than the last three
financial years.

(c) a description of the technical equipment, tools and plant to
be employed by the firm for performing a service or works
contract;

(d) a description of

the measures employed to ensure the
quality of supplies and services, and a description of the
firm's study and research facilities;

(e) an indication of

technical bodies
the technicians or
involved, whether or not belonging directly to the firm,
especially those responsible for quality control;

2.
If, for some exceptional reason which the contracting
authority considers justified, the tenderer or candidate is unable
to provide
contracting
authority, he may prove his economic and financial capacity by
any other means which the contracting authority considers
appropriate.

requested by the

references

the

An economic operator may, where appropriate and for a
3.
particular contract, rely on the capacities of other entities,
regardless of the legal nature of the links which it has with
them. It must in that case prove to the contracting authority
that it will have at its disposal the resources necessary for
performance of the contract, for example by producing an
undertaking on the part of
those entities to place those
resources at its disposal.

Article 137

Technical and professional capacity

( Ar ti c le 9 7 ( 1 ) of t h e F i na n ci a l R e g u l a ti o n)

Technical and professional capacity of economic opera-
1.
tors shall be evaluated and verified in accordance with para-
In procurement procedures for supplies
graphs 2 and 3.
requiring siting or
services and/or
works, such capacity shall be assessed with regard in particular
to their know-how, efficiency, experience and reliability.

installation operations,

2.
Evidence of the technical and professional capacity of
economic operators may, depending on the nature, quantity or
scale and purpose of the supplies, services or works to be
provided, be furnished on the basis of the following docu-
ments:

(a) the educational and professional qualifications of

the
service provider or contractor and/or those of the firm's
managerial staff and, in particular, those of the person or
persons responsible for providing the services or carrying
out the works;

(f) in respect of

supplies:

samples, descriptions

and/or
authentic photographs and/or certificates drawn up by offi-
institutes or agencies of recognised
cial quality control
competence attesting the conformity of the products with
the specifications or standards in force;

(g) a statement of

the average annual manpower and the
the service provider or

number of managerial staff of
contractor in the last three years;

(h) an indication of the proportion of the contract which the

service provider may intend to subcontract.

Where the services or supplies referred to in point (b)(i) of the
first subparagraph are provided to contracting authorities,
evidence of performance shall be in the form of certificates
issued or countersigned by the competent authority.

3. Where the services or products to be supplied are
complex or, exceptionally, are required for a special purpose,
evidence of technical and professional capacity may be secured
by means of a check carried out by the contracting authority
or on its behalf by a competent official body of the country in
which the service provider or supplier is established, subject to
that body's agreement. Such checks shall concern the supplier's
technical capacity and production capacity and, if necessary, its
study and research facilities and quality control measures.

4.
An economic operator may, where appropriate and for a
particular contract, rely on the capacities of other entities,
regardless of the legal nature of the links which it has with
them. It must in that case prove to the contracting authority
that it will have at its disposal the resources necessary for
performance of the contract, for example by producing an
those entities to place those
undertaking on the part of
resources at its disposal.

Article 138

Award arrangements and criteria

(b) a list:

(i) of the principal services provided and supplies delivered
in the past three years, with the sums, dates and recipi-
ents, public or private;

1.
ways:

( A r ti c le 9 7 ( 2 ) of t h e F i na nci a l R e g u l a ti on)

Contracts shall be awarded in one of the following two

(ii) of the works carried out in the last five years, with the
sums, dates and place. The list of the most important
works shall be accompanied by certificates of satisfac-
tory execution, specifying whether
they have been
carried out in a professional manner and have been
fully completed;

(a) under the automatic award procedure, in which case the
contract is awarded to the tender which, while being in
order and satisfying the conditions laid down, quotes the
lowest price;

(b) under the best-value-for-money procedure.

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The tender offering the best value for money shall be the
2.
one with the best price-quality ratio,
taking into account
criteria justified by the subject of the contract such as the price
quoted, technical merit, aesthetic and functional characteristics,
environmental
costs, profitability
completion or delivery times, after-sales service and technical
assistance.

characteristics,

running

The contracting authority shall specify,

3.
in the contract
notice or in the specifications, the weighting it will apply to
each of the criteria for determining best value for money.

The weighting applied to price in relation to the other criteria
must not result in the neutralisation of price in the choice of
contractor.

reasonable and appropriate period to prepare and submit their
tenders, taking particular account of the complexity of the
contract or the need to visit the site or consult on the spot the
documents annexed to the specifications.

2.
In open procedures, the time limit for receipt of tenders
shall be no less than fifty-two days from the date on which the
contract notice is dispatched.

3.
In restricted and negotiated procedures where a contract
notice is published, the time limit for receipt of requests to
participate shall be no less than thirty-seven days from the date
on which the contract notice is dispatched.

in exceptional cases, weighting is technically impossible,
If,
particularly on account of the subject of the contract,
the
contracting authority shall merely specify the decreasing order
of importance in which the criteria are to be applied.

In restricted procedures for contracts above the thresholds set
in Article 158, the time limit for receipt of tenders shall be no
less than forty days from the date on which the invitation to
tender is dispatched.

Article 139

Abnormally low tenders

In the restricted procedures referred to in Article 128, the time-
limit for receipt of tenders shall be no less than twenty-one
days from the date on which the invitation to tender is
dispatched.

( Ar ti c le 9 7 ( 2 ) of t h e F i na n ci a l R e g u l a ti o n)

If, for a given contract, tenders appear to be abnormally
1.
low,
the contracting authority shall, before rejecting such
tenders on that ground alone, request in writing details of the
constituent elements of the tender which it considers relevant
and shall verify those constituent elements, after due hearing of
the parties, taking account of the explanations received.

The contracting authority may, in particular, take into consid-
eration explanations relating to:

(a) the economics of the manufacturing process, of the provi-

sion of services or of the construction method;

(b) the technical solutions chosen or the exceptionally favour-

able conditions available to the tenderer;

(c) the originality of the tender.

2. Where the contracting authority establishes that a tender
is abnormally low as a result of State aid provided, it may reject
the tender on that ground alone only if the tenderer is unable
to prove, within a reasonable time determined by the
the aid in question has been
contracting authority,
awarded definitively and in accordance with the procedures
and decisions specified in the Community rules on State aid.

that

Article 140

in accordance with
4. Where the contracting authorities,
Article 118, have sent for publication a pre-information notice
containing all the information required in the contract notice
no less than fifty-two days and no more than twelve months
before the date on which the contract notice is dispatched, the
time-limit for the receipt of tenders may generally be reduced
to thirty-six days but shall in no circumstances be less than
twenty-two days from the date of dispatch of the contract
notice, in the case of open procedures, or may be reduced to
twenty-six days from the date of dispatch of the invitation to
submit a tender, in the case of restricted procedures.

Article 141

Time allowed for access to invitation to tender documents

( A r ti c le 9 8 ( 1 ) of t h e F i na nci a l R e g u l a ti on)

Provided that the request was made in good time before
1.
the deadline for submission of tenders, the specifications and
additional documents shall be sent, within six calendar days of
the receipt of the request, to all economic operators who have
requested the specifications or expressed interest in submitting
a tender.

Time limits

for

receipt of

tenders and requests

to

participate

( Ar ti c le 9 8 ( 1 ) of t h e F i na n ci a l R e g u l a ti o n)

The time limits for the receipt of tenders and requests to
1.
laid down in calendar days by the contracting
participate,
authorities, shall be long enough to allow interested parties a

2.
Provided it has been requested in good time, additional
information relating to the specifications shall be supplied
simultaneously to all economic operators who have requested
the specifications or expressed interest in submitting a tender
no later than six days before the deadline for the receipt of
tenders or, in the case of requests for information received less
than eight calendar days before the deadline for receipt of
tenders, as soon as possible after receipt of the request.

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If, for whatever reason, the specifications and the addi-
3.
tional documents or information cannot be supplied within the
time-limits set in paragraphs 1 and 2, or where tenders can be
made only after a visit to the site or after on-the-spot consulta-
tion of the documents annexed to the specifications, the time-
limits for receipt of tenders referred to in Article 140 shall be
extended to enable all economic operators to acquaint them-
selves with all the requisite information for preparing tenders,
subject to the provisions of Article 240. That extension shall be
advertised in appropriate manner,
in accordance with the
arrangements set out in Articles 118 to 121.

4.
If all the invitation to tender documents are freely, fully
and directly accessible by electronic means, the contract notice
referred to in Article 118(3) shall give the Internet address at
which those documents can be consulted.

In such cases any additional documents and information shall
also be made freely, fully and directly accessible as soon as they
are supplied to all the economic operators who have requested
the specifications or expressed interest in submitting a tender.

Article 142

Time limits in urgent cases

( Ar ti c le 9 8 ( 1 ) of t h e F i na n ci a l R e g u l a ti o n)

1. Where duly substantiated urgency renders impracticable
the time-limits laid down in Article 140(3), contracting authori-
ties may set the following time limits, expressed in calendar
days:

(a) a time limit for the receipt of requests to participate which
may not be less than fifteen days from the date on which
the contract notice was dispatched;

(b) a time limit for the receipt of tenders which may not be
less than ten days from the date of the invitation to tender.

2.
Provided it has been requested in good time, additional
information on the specifications shall be communicated to all
candidates no later than four calendar days before the deadline
for receipt of tenders.

Article 143

Methods of communication

( Ar ti c le 9 8 ( 1 ) of t h e F i na n ci a l R e g u l a ti o n)

Requests to participate shall be submitted by letter, fax or
1.
electronic mail; requests submitted by fax or electronic mail
shall be confirmed by letter before expiry of the time-limits set
in Articles 140 and 251.

2.

Tenderers may submit tenders:

(b) by hand-delivery to the premises of the institution by the
tenderer in person or by an agent, including courier service;
for which purposes the invitation to tender documents shall
specify, in addition to the information referred to in point
(a) of Article 130(2), the department to which tenders are
to be delivered against a signed and dated receipt.

3.
In order to maintain secrecy and to avoid any difficulties
where tenders are sent by letter, the invitation to tender must
include the following provision:

‘Tenders must be submitted in a sealed envelope itself
enclosed within a second sealed envelope. The inner
envelope must bear, in addition to the name of the depart-
ment to which it is addressed, as indicated in the invitation
to tender, the words Invitation to tender — Not to be
opened by the mail service. If self-adhesive envelopes are
used,
they must be sealed with adhesive tape and the
sender must sign across that tape.’

Article 144

Tender guarantees

( A r ti c le 9 8 ( 2 ) of t h e F i na nci a l R e g u l a ti on)

The contracting authority may require a tender guarantee,
lodged in accordance with Article 150, representing 1 % to 2 %
of the total value of the contract.

A tender guarantee shall be released when the contract
is
awarded. If no tender is submitted by the deadline set or if the
tender
the guarantee shall be
retained.

is subsequently withdrawn,

Article 145

Opening of tenders and requests to participate

( A r ti c le 9 8 ( 3 ) of t h e F i na nci a l R e g u l a ti on)

All requests to participate and tenders that satisfy the

1.
requirements of Article 143(1) and (2) shall be opened.

2. Where the value of a contract exceeds the threshold laid
down in Article 129(2), the authorising officer responsible shall
appoint a committee to open the tenders.

The committee shall be made up of at least three persons repre-
senting at least two organisational entities of the institution
concerned with no hierarchical
link between them. To avoid
any conflict of interests, those persons shall be subject to the
obligations laid down in Article 52 of the Financial Regulation.

(a) by post, for which purposes the invitation to tender docu-
ments shall specify that the relevant date is to be the date
of despatch by registered post, as evidenced by the post-
mark; or

In the representations and local units referred to in Article 252,
if there are no separate entities, the requirement of organisa-
tional entities with no hierarchical link between them shall not
apply.

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One or more members of the opening committee shall
3.
initial the documents proving the date and time of despatch of
each tender.

Article 147

Results of the evaluation

They shall also initial:

(a) either each page of each tender; or

(b) the cover page and the pages containing the financial
details of each tender, the integrity of the initial tender
being guaranteed by any appropriate technique employed
by a department that is independent of the authorising
department, save in the cases referred to in the third
subparagraph of paragraph 2.

Where the contract is awarded under the automatic award
procedure in accordance with point (a) of Article 138(1), the
prices quoted in tenders satisfying the requirements shall be
made public.

The members of the committee shall sign the written record of
the opening of the tenders received, which shall identify those
tenders which satisfy the requirements and those which do not,
and which shall give the grounds on which tenders were
rejected for non-compliance, by reference to the methods of
submitting tenders referred to in Article 143.

Article 146

Committee for the evaluation of tenders and requests to
participate

( Ar ti c le 9 8 ( 4 ) of t h e F i na n ci a l R e g u l a ti o n)

1.
All requests to participate and tenders declared as satis-
fying the requirements shall be evaluated and ranked by an
evaluation committee on the basis of the exclusion, selection
and award criteria announced in advance.

That committee shall be appointed by the authorising officer
responsible to give an advisory opinion for contracts with a
value above the threshold referred to in Article 129(2).

2.
The evaluation committee shall be made up of at least
three persons representing at least two organisational entities
of the institution concerned with no hierarchical link between
them. To avoid any conflict of interests, those persons shall be
subject to the obligations laid down in Article 52 of the Finan-
cial Regulation.

In the representations and local units referred to in Article 254,
if there are no separate entities, the requirement of organisa-
tional entities with no hierarchical link between them shall not
apply.

The evaluation committee may be composed of
members as the committee opening the tenders.

the same

3.
Requests to participate and tenders which do not satisfy
all the essential requirements set out in the supporting docu-
mentation for invitations to tender or the specific requirements
laid down therein shall be eliminated.

the evaluation committee may ask candidates or
However,
tenderers
to clarify the
to supply additional material or
supporting documents submitted in connection with the exclu-
sion and selection criteria, within a specified time-limit.

4.
In the case of abnormally low tenders as referred to in
Article 139 of this Regulation, the evaluation committee shall
request any relevant information concerning the composition
of the tender.

(A r ti c le s 99 a nd 100 of the Fi n a nci a l R e g u lati on)

A written record of

1.
the evaluation and ranking of
requests to participate and tenders declared to satisfy the
requirements shall be drawn up and dated. It shall be signed by
all the members of the evaluation committee. It shall be kept
for future reference.

2.

That written record shall contain at least the following:

(a) the name and address of the contracting authority, and the
subject and value of the contract or of the framework
contract;

(b) the names of the candidates or tenderers rejected and the

reasons for their rejection;

(c) the names of the candidates or tenderers to be examined

and the reasons for their selection;

(d) the reasons for the rejection of tenders found to be abnor-

mally low;

(e) the names of the candidates or contractor proposed and
the reasons for that choice and, if known, the proportion
of
the contract or the framework contract which the
contractor intends to subcontract to third parties.

The contracting authority shall

3.
giving at least the following:

then take its decision

(a) the name and address of the contracting authority, and the
subject and value of the contract or of the framework
contract;

(b) the names of the candidates or tenderers rejected and the

reasons for their rejection;

(c) the names of the candidates or tenderers to be examined

and the reasons for their selection;

(d) the reasons for the rejection of tenders found to be abnor-

mally low;

(e) the names of the candidates or contractor selected and the
reasons for that choice by reference to the selection and
award criteria announced in advance and,
if known, the
the contract or the framework contract
proportion of
which the contractor
to third
parties;

to subcontract

intends

(f) in the case of negotiated procedures, the circumstances
referred to in Articles 126, 127, 242, 244, 246 and 247
which justify their use;

(g) where

appropriate,

reasons why the
the
authority has decided not to award a contract.

contracting

Article 148

Contacts between contracting authorities and tenderers

( A r ti cl e 9 9 o f th e F i na nc i a l R e g u la ti o n)

1.
Contact between the contracting authority and tenderers
during the contract award procedure may take place, by way of
exception, under the conditions set out in paragraphs 2 and 3.

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Before the closing date for the submission of tenders, in
2.
respect of the additional documents and information referred
to in Article 141, the contracting authority may:

It shall have the effect of making the bank or financial institu-
tion or the third party stand as irrevocable collateral security,
or first-call guarantor of the contractor's obligations.

(a) at the instance of tenderers, communicate additional infor-
mation solely for the purpose of clarifying the nature of the
contract, such information to be communicated on the
same date to all tenderers who have asked for the specifica-
tions;

(b) at its own instance, if it discovers an error, a lack of preci-
sion, an omission or any other type of clerical defect in the
text of the contract notice, invitation to tender or specifica-
tions, inform the persons concerned on the same date and
in a manner identical with that applicable in respect of the
original invitation to tender.

3.
If, after the tenders have been opened, some clarification
is required in connection with a tender, or if obvious clerical
the contracting
errors
authority may contact the tenderer, although such contact may
not lead to any alteration of the terms of the tender.

in the tender must be corrected,

In every case where contact has been made, a ‘note for

4.
the file’ shall be drawn up.

Article 149

Information for candidates and tenderers

(A r t i cles

100(2)

101

a nd
R e g u l a t i o n )

of

the

Fi na nci a l

The contracting authorities shall as soon as possible
1.
inform candidates
reached
tenderers of
concerning the award of the contract, including the grounds
for any decision not to award a contract for which there has
been competitive tendering or to recommence the procedure.

decisions

and

2.
The contracting authority shall, within not more than
fifteen calendar days from the date on which a written request
is received, communicate the information provided for in
Article 100(2) of the Financial Regulation.

S e c ti on 4

Guarantees and control

Article 150

Advance guarantee

( Ar ti c le 1 0 2 of t h e F i na n ci a l R e g u l a ti o n)

1. Where suppliers, contractors or service providers are
required to lodge a guarantee in advance, it must be for an
amount and a period that are sufficient for it to be activated.

2.
The guarantee shall be supplied by a bank or an
authorised financial institution. It may be replaced by a joint
and several guarantee by a third party.

The guarantee shall be denominated in euro.

Article 151

Performance guarantee

( A r ti c le 1 0 2 of t h e F i na nci a l R e g u l a ti on)

1.
Subject to Article 250, a performance guarantee may be
demanded by the authorising officer in accordance with the
usual commercial terms for supply and service contracts and in
accordance with the special specifications for works contracts.

This guarantee shall be mandatory above EUR 345 000 for
works contracts.

2.
A guarantee corresponding to 10 % of the total value of
the contract may be constituted by deductions from payments
as and when they are made.

It may be replaced by an amount withheld from the final
payment in order to constitute a guarantee until final accep-
tance of the services, supplies or works.

the contract,

Guarantees shall be released in accordance with the terms
3.
of
save where the contract has not been
performed or has been performed incorrectly or completion is
In such cases a proportion of the guarantee shall be
late.
retained in proportion to the seriousness of
the damage
suffered.

Article 152

Guarantee for pre-financing

( A r ti c le 1 0 2 of t h e F i na nci a l R e g u l a ti on)

A guarantee shall be required in return for the payment of pre-
financing exceeding EUR 150 000.

The guarantee shall be released as and when the pre-financing
is deducted from interim payments or payments of balances to
the contractor in accordance with the terms of the contract.

Article 153

Suspension in the event of errors or irregularities

( A r ti c le 1 0 3 of t h e F i na nci a l R e g u l a ti on)

1.
Contracts shall be suspended under Article 103 of the
Financial Regulation in order to verify whether presumed
fraud have actually
substantial errors or
irregularities or
occurred.
the
If
contract shall resume as soon as possible.

they are not confirmed, performance of

2.
A substantial error or irregularity shall be any infringe-
ment of a provision of a contract or regulation resulting from
an act or an omission which causes or might cause a loss to
the Community budget.

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CHAPTER 2

2.

For service contracts, account shall be taken of:

Provisions applicable to contracts awarded by the Community
institutions on their own account

Article 154

Identification of the appropriate level for the calculation
of thresholds

( Ar ti c le 1 0 4 of t h e F i na n ci a l R e g u l a ti o n)

It shall be for each authorising officer by delegation or subdele-
gation within each institution to assess whether the thresholds
laid down in Article 105 of the Financial Regulation have been
reached.

Article 155

Separate contracts and contracts with lots

( Ar ti c le 1 0 5 of t h e F i na n ci a l R e g u l a ti o n)

1.
The estimated value of a contract may not be determined
with a view to evading the requirements laid down in this
Regulation, nor may a contract be split up for that purpose.

2. Where the subject of a service or works contract is subdi-
vided into several lots, each one the subject of an individual
contract, the value of each lot shall be taken into account for
the overall evaluation of the applicable threshold.

Where the overall value of lots is equal or to or exceeds the
thresholds laid down in Article 158 the provisions of Articles
90(1) and 91(1) and (2) of the Financial Regulation shall apply
to each of the lots, save those with an estimated value of less
than EUR 80 000 in the case of service contracts, or less than
EUR 1 000 000 in the case of works contracts, provided that
the aggregate amount of those lots does not exceed 20 % of the
aggregate value of all the lots making up the contract in ques-
tion.

3. Where the planned purchase of standard supplies may
give rise to simultaneous contracts in separate lots, the esti-
mated value of all those lots shall be taken as the basis for
determining the applicable threshold.

Article 156

Arrangements for estimating the value of certain contracts

(a) in the case of insurance services, the premium payable;

(b) in the case of banking or financial services,

the fees,

commissions, interest and other types of remuneration;

(c) in the case of design contracts, the fees, prizes or commis-

sions payable.

3.
In the case of service contracts which do not specify a
total price or of supply contracts for leasing, rental or hire
purchase of products, the value to be taken as the basis for
calculating the estimated value shall be:

(a) in the case of fixed-term contracts:

(i) where their term is forty-eight months or less in the
case of services or twelve months or less in the case of
supplies, the total contract value for their duration;

(ii) where their term is more than twelve months in the
case of supplies, the total value including the estimated
residual value;

(b) in the case of contracts for an indefinite period or, in the
case of services, for a period exceeding forty-eight months,
the monthly value multiplied by forty-eight.

4.
In the case of service or supply contracts which are
awarded regularly or are to be renewed within a given time,
the contract value shall be established on the basis of:

(a) either the actual aggregate cost of similar contracts for the
same categories of services or products awarded over the
previous financial year or twelve months, adjusted, where
possible, for anticipated changes in quantity or value over
the twelve months following the initial contract;

(b) or the estimated aggregate cost of successive contracts
service
the

during the twelve months
performed or first delivery or during the term of
contract, where this is greater than twelve months.

following the first

5.
In the case of works contracts, account shall be taken not
only of the value of the works but also of the estimated total
value of the supplies needed to carry out the works and made
available to the contractor by the contracting authority.

Article 157

Thresholds for pre-information notices

( Ar ti c le 1 0 5 of t h e F i na n ci a l R e g u l a ti o n)

( A r ti c le 1 0 5 of t h e F i na nci a l R e g u l a ti on)

1.
For the purposes of calculating the estimated amount of a
contract, the contracting authority shall include the contractor's
total estimated remuneration.

Where a contract provides for options, the basis for calculation
shall be the maximum amount authorised, including the use of
option clauses.

The thresholds provided for in Article 118 for publication of a
pre-information notice shall be:

(a) EUR 750 000 for the supply and service contracts listed in

Annex IA to Directive 92/50/EEC;

(b) EUR 6 242 028 for works contracts.

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Article 158

(c) EUR 6 242 028 for works contracts.

Thresholds for application of the procedures under the
public procurement directives

( Ar ti c le 1 0 5 of t h e F i na n ci a l R e g u l a ti o n)

The thresholds referred to in Article 105 of the Financial

1.
Regulation shall be:

(a) EUR 162 293 for the supply and service contracts listed in
Annex IA to Directive 92/50/EEC, with the exception of
the research and development contracts listed in category 8
of that Annex;

2.
The time limits referred to in Article 105 of the Financial
Regulation shall be those specified in Articles 140, 141 and
142.

Article 159

Evidence of access to contracts

( A r t i c l e s 1 0 6 a nd 1 0 7 o f th e F i na nc i a l R e g u la ti o n)

(b) EUR 200 000 for the service contracts listed in Annex IB
to Directive 92/50/EEC and for the research and develop-
ment service contracts listed in category 8 of Annex IA to
that Regulation;

The specifications shall require tenderers to indicate in which
State they have their headquarters or domicile and to present
the supporting evidence normally acceptable under their own
law.

TITLE VI

GRANTS

CHAPTER 1

Scope

Article 160

Scope

( Ar ti c le 1 0 8 of t h e F i na n ci a l R e g u l a ti o n)

The procedure for the award of grants and the conclusion
1.
of agreements by the Commission with the bodies referred to
in Article 54 of the Financial Regulation, in respect of the co-
financing of
the
purposes of making available the operating appropriations
which they are delegated to manage, and with the beneficiaries
of financing agreements as referred to in Article 166 of that
Regulation are not subject to the provisions of this Title.

their administrative expenditure and for

On the other hand,
pursuant to these agreements are governed by this Title.

the grants paid by these beneficiaries

2.

The provisions of this Title also govern:

(a) the benefit deriving from an interest subsidy on certain

loans;

(b) equity holdings, with the exception of those for interna-
tional financial institutions such as the European Bank for
Reconstruction and Development (EBRD), and grants which
are reimbursable in certain circumstances.

3.
Contributions paid by the Communities as subscriptions
to bodies of which they are members are not governed by the
provisions of this Title.

Article 161

Actions which may receive grants

( Ar ti c le 1 0 8 of t h e F i na n ci a l R e g u l a ti o n)

An action which may receive a grant within the meaning of
Article 108 of the Financial Regulation must be clearly identi-
fied.

No action may be split for the purpose of evading the financing
rules laid down in this Regulation.

Article 162

Bodies pursuing an aim of general European interest

( A r ti c le 1 0 8 of t h e F i na nci a l R e g u l a ti on)

A body pursuing an aim of general European interest is:

(a) a European body involved in education, training, informa-
tion or research and study in European policies or a
European standards body; or

(b) a European network representing non-profit bodies active
in the Member States or in the candidate countries and
promoting principles and policies consistent with the objec-
tives of the Treaties.

Article 163

Partnerships

( A r ti c le 1 0 8 of t h e F i na nci a l R e g u l a ti on)

Specific grant agreements may form part of framework

1.
partnership agreements.

2.
A framework partnership agreement may be concluded
with beneficiaries with a view to establishing long-term coop-
eration with the Commission.

The framework agreement shall specify the common objectives,
the nature of actions planned on a one-off basis or as part of
an approved annual work programme,
the procedure for
awarding specific grants, in compliance with the principles and
procedural rules in this Title, and the general rights and obliga-
tions of each party under the specific agreements.

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The duration of such agreements may not exceed four years,
save in exceptional cases, justified in particular by the subject
of the framework agreement.

(g) the estimated overall budget and details of the eligible costs
of the action or approved work programme, save in the
case of the flat-rate amounts referred to in Article 181(1);

Authorising officers may not make undue use of framework
agreements or use them in such a way that the purpose or
effect is to contrary to the principles of transparency or equal
treatment of applicants.

Partnership framework agreements shall be treated as
3.
grants for the purposes of the award procedure; they shall be
subject to the ex ante advertising procedures referred to in
Article 167.

Specific grants based on the framework partnership
4.
agreements shall be awarded in accordance with the procedures
laid down in those agreements, in compliance with the princi-
ples of this Title.

They shall be subject to the ex post publication procedures laid
down in Article 169.

Only the specific agreements based on the framework

5.
agreements shall be preceded by a budget commitment.

Article 164

Content of grant agreements

( Ar ti c le 1 0 8 of t h e F i na n ci a l R e g u l a ti o n)

1.

The agreement shall in particular lay down:

(a) the subject;

(b) the beneficiary;

(c) the duration, namely:

(i) the date of its entry into force and its termination;

(ii) the starting date and the duration of the action or

financial year being funded;

(d) the maximum possible funding, in the form of:

(i) the maximum amount of the grant; and

(ii) the maximum rate of funding of the eligible costs of
the action or approved work programme, save in the
case of
the flat-rate amounts referred to in Article
181(1);

(e) a detailed description of the action or, for an operating
grant, of the work programme approved for that financial
year by the authorising officer;

(f) the general terms and conditions applicable to all agree-
ments of this type, such as determination of the applicable
law, the court competent to hear disputes and acceptance
by the beneficiary of audits by the Commission, OLAF and
the Court of Auditors and of the ex post publication rules
referred to in Article 169, in accordance with Regulation
(EC) No 45/2001 of the European Parliament and of the
Council (1). The agreement may lay down the arrangements
and time-limits for suspension in accordance with Article
183;

(1) OJ L 8, 12.1.2001, p. 1.

(h) where implementation of the action involves procurement,
the principles referred to in Article 184 or the procurement
rules which the beneficiary must comply with;

(i) the responsibilities of the beneficiary, in particular in terms
of sound financial management and submission of activity
and financial reports;

(j) the arrangements and time-limits for approving those

reports and for payment by the Commission.

2.
In the cases referred to in Article 163, the framework
agreement shall specify the information referred to in points
(a),( b), (c)(i), (d)(ii), (f), (h), (i) and (j) of paragraph 1 of this
Article.

The specific agreement shall contain the information referred
to in points (a), (b) (c), (d), (e), and (g) of paragraph 1 and,
where necessary, point (i) thereof.

3.
Grant agreements may be amended only by written addi-
tional agreements. Such additional agreements shall not have
the purpose or the effect of making such changes to agree-
ments as would call into question the grant award decision or
be contrary to the equal treatment of applicants.

CHAPTER 2

Award principles

Article 165

No-profit rule

( A r t i cl e 1 0 9 ( 2) o f t h e F i n a n c i a l R e g u la ti on )

The grant may not have the purpose or effect of produ-

1.
cing a profit for the beneficiary. Profit shall be defined as:

(a) a surplus of receipts over the costs of the action in question
when the request is made for final payment of a grant for
an action, subject to the second subparagraph;

(b) a surplus balance on the operating budget of a body in

receipt of an operating grant.

In the case of actions designed specifically to strengthen the
financial capacity of a beneficiary,
in the field of external
action, the distribution to the members making up the benefi-
ciary body of a grant for an action of the surplus revenue
resulting from its activity, leading to their personal enrichment,
shall also be considered as profit.

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The provisions of paragraph 1 shall not apply to study,
2.
research or training scholarships paid to natural persons, nor
to prizes awarded following contests, nor in the case of the
flat-rate amounts referred to in Article 181(1).

Article 168

Exceptions to calls for proposals

Article 166

Annual programming

( A r t i cl e 1 1 0 ( 1) o f t h e F i n a n c i a l R e g u la ti on )

Grants may be awarded without a call for proposals only

1.
in the following cases:

(a) for the purposes of humanitarian aid, within the meaning
of Council Regulation No 1257/96 (1) and aid for crisis
situations within the meaning of paragraph 2;

(A r ti c le 110(1) of the Fi nanci a l R eg u lati on)

(b) in other exceptional and duly substantiated emergencies;

1.
The annual work programme for grants shall be adopted
by the Commission. It shall be published on the grants Internet
site of the Commission by no later than 31 January each finan-
cial year.

The work programme shall specify the basic act, the objectives,
the schedule of calls for proposals with the indicative amount
and the results expected.

Any substantial change in the grants programme shall

2.
also be published as specified in paragraph 1.

Article 167

Content of calls for proposals

(A r ti cle 110(1) of the Fi nanci a l R eg u lati on)

1.

Calls for proposals shall specify:

(a) the objectives pursued;

(b) the eligibility, selection and award criteria as referred to in
Articles 114 and 115 of the Financial Regulation, and the
relevant supporting documents;

(c) the arrangements for Community financing;

(d) the arrangements and final date for the submission of
proposals and the possible start-up date for the actions and
the planned date for closing the award procedure.

2.
Calls for proposals shall be published on the Internet site
of the European institutions and by any other appropriate
medium, including the Official Journal of the European Commu-
nities, in order to provide maximum publicity among potential
beneficiaries.

(c) to bodies with a de jure or de facto monopoly, duly substan-

tiated in the Commission's award decision;

(d) to bodies identified by a basic act as recipients of a grant.

Crisis situations shall be understood to mean, for third
2.
the
countries, situations posing a threat to law and order,
security and safety of individuals, threatening to escalate into
armed conflict or to destabilise the country, and which could
seriously harm:

(a) the safeguarding of the common values, fundamental inter-
ests, independence and integrity of the European Union;

(b) the security of the European Union, peace-keeping and
international security, promotion of international coopera-
tion or development and strengthening of democracy, the
rule of law, respect for human rights and fundamental free-
doms,
in accordance with Article 11 of the Treaty on
European Union and Article 3 of Council Regulation (EC)
No 381/2001 (2).

Article 169

Ex post publication

( A r t i cl e 1 1 0 ( 2) o f t h e F i n a n c i a l R e g u la ti on )

1.
All grants awarded in the course of a financial year,
except scholarships paid to natural persons, shall be published
on the Internet site of the Community institutions during the
first half of the year following the closure of the budget year in
respect of which they were awarded.

In cases where management is delegated to the bodies referred
to in Article 54 of the Financial Regulation, reference shall be
made at least to the address of the website where this informa-
tion can be found if it is not published directly on the Internet
site of the Community institutions.

The information may also be published by any other appro-
priate medium,
the European
Communities.

including the Official

Journal of

(1) OJ L 163, 2.7.1996, p. 1.
(2) OJ L 57, 27.2.2001, p. 5.

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The following shall be published with the agreement of

2.
the beneficiary in accordance with point (f) of Article 164(1):

(b) or the costs generally accepted on the market in question.

(a) the name and address of the beneficiaries;

(b) the subject of the grant;

Contributions involving real estate as referred to in Article
116(1) shall be excluded from the calculation of the amount of
co-financing.

(c) the amount awarded and, save in the case of the flat-rate
amounts referred to in Article 181(1), the rate of funding
of the costs of the action or approved work programme.

The obligation laid down in the first subparagraph may be
waived if publication of
the information may threaten the
safety of the beneficiaries or harm their business interests.

Article 170

Joint financing

( Ar ti c le 1 1 1 of t h e F i na n ci a l R e g u l a ti o n)

CHAPTER 3

Award procedure

Article 173

Financing applications

An action may be financed jointly from separate budget lines
by a number of authorising officers.

( A r ti c le 1 1 4 of t h e F i na nci a l R e g u l a ti on)

Article 171

Retroactive effect for management of humanitarian aid
and crisis situations

( Ar ti c le 1 1 2 of t h e F i na n ci a l R e g u l a ti o n)

In order to ensure that humanitarian aid operations and opera-
tions in crisis situations within the meaning of Article 168(2)
are conducted efficiently, expenditure incurred by a beneficiary
before the date of submission of the application shall be eligible
for Community financing solely in the following cases:

(a) where the expenditure relates to the constitution of stocks
by the applicant for use in connection with the action for
which the grant is awarded;

(b) by way of exception and for properly substantiated reasons,
where the financing decision and the grant agreement
explicitly provide for this by setting an eligibility date
earlier than the date for submission of applications.

Article 172

External co-financing

( Ar ti c le 1 1 3 of t h e F i na n ci a l R e g u l a ti o n)

The beneficiary shall supply evidence of the co-financing
1.
provided, either by way of own resources, or in the form of
financial transfers from third parties, or in kind, save in the
case of the flat-rate amounts referred to in Article 181(1).

2.
The authorising officer may, in duly substantiated excep-
tional cases, accept co-financing in kind. In such cases the value
of such contributions must not exceed:

(a) either the costs actually borne and duly supported by

accounting documents;

1.
Applications shall be made on the form distributed by the
authorising officers responsible and in accordance with the
criteria laid down in the basic act and the call for proposals.

2.
The application shall show that the applicant exists as a
legal person and has the financial and operational capacity to
complete the proposed action or work programme, subject to
Article 176(4).

For that purpose the authorising officer shall request a declara-
tion from potential beneficiaries on their honour. The profit
and loss account, the balance sheet for the last financial year
for which the accounts have been closed and any other
supporting document requested in the call for proposals shall,
depending on the analysis of management risks conducted by
the authorising officer responsible on his own responsibility,
also be attached to the application.

for

The budget

3.
the operating budget
the action or
attached to the application must have revenue and expenditure
in balance and show clearly the costs which are eligible for
financing from the Community budget, save in the case of the
flat-rate amounts referred to in Article 181(1).

For actions where the cost

to be financed exceeds
4.
EUR 300 000 and for operating grants of over EUR 75 000,
the application shall be accompanied by an external audit
report produced by an approved auditor. That report shall
certify the accounts for the last financial year available and give
an assessment of the financial viability of the applicant within
the meaning of Article 176(2).

The provisions of the first subparagraph shall apply only to the
first application made by a beneficiary to an authorising officer
in any one budget year.

In the case of agreements linking the Commission and a
number of beneficiaries, those thresholds shall apply to each
beneficiary.

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In the case of partnerships as referred to in Article 163, an
external audit covering the last two financial years available
must be produced before
is
the
concluded.

framework agreement

The authorising officer responsible may, depending on his
analysis of management risks, waive that obligation for public
bodies, secondary and higher education establishments,
the
international organisations referred to in Article 43, and benefi-
ciaries who have accepted joint and several liability in the case
of agreements with a number of beneficiaries.

5.
The applicant shall indicate the sources and amounts of
any other funding received or applied for in the same financial
year for the same action or for any other action and for routine
activities.

Article 174

Proof of applicants' eligibility

( Ar ti c le 1 1 4 of t h e F i na n ci a l R e g u l a ti o n)

Applicants shall declare on their honour that they are not in
one of the situations listed in Article 93(1) of the Financial
Regulation. The authorising officer responsible may, depending
the evidence
on the analysis of management risks, request
referred to in Article 134. Applicants shall be bound to supply
such proof, unless there is a material impossibility recognised
by the authorising officer responsible.

Article 175

Financial and administrative penalties

( Ar ti c le 1 1 4 of t h e F i na n ci a l R e g u l a ti o n)

1.
Applicants who are found guilty of false declarations may
receive financial penalties in accordance with the conditions
laid down in Article 133 in proportion to the value of the
grants in question.

Beneficiaries who have been found to have seriously failed to
meet their contractual obligations may receive financial penal-
ties in accordance with the same conditions.

2.
Applicants and beneficiaries who are in one of the situa-
tions referred to in Articles 93 to 96 of the Financial Regula-
tion may also be excluded from Community grants and
contracts in accordance with the conditions laid down in
Article 133.

Article 176

Selection criteria

The applicant must have stable and sufficient sources of
2.
funding to maintain his activity throughout the period during
which the action is being carried out or the year for which the
grant is awarded and to participate in its funding. The applicant
must have the professional competencies and qualifications
required to complete the proposed action or work programme
unless specifically provided otherwise in the basic act.

3.
Financial and operational capacity shall be verified in
particular on the basis of an analysis of the supporting docu-
ments referred to in Article 173.

4.
The verification of financial capacity shall not apply to
natural persons in receipt of scholarships nor to public bodies,
nor to the international organisations referred to in Article 43.

In the case of the partnerships referred to in Article 163, that
verification shall be performed before the framework agree-
ment is concluded.

Article 177

Award criteria

( A r t i cl e 1 1 5 ( 2) o f t h e F i n a n c i a l R e g u la ti on )

The award criteria shall be published in the call

1.
proposals.

for

The award criteria shall be such as to enable grants to be
2.
awarded either to the actions which maximise the overall effec-
tiveness of the Community programme which they implement
or to the bodies whose work programme is designed to attain
the same result. Those criteria shall be defined in such a way as
the Community funds are properly
to ensure also that
managed.

These criteria shall be applied in such a way as to enable the
selection of planned actions or work programmes which the
Commission can be confident will comply with its objectives
and priorities and guarantee the visibility of the Community
financing.

The award criteria shall be defined in such a way that it

3.
will be possible subsequently to carry out an evaluation.

Article 178

Evaluation of applications and award

( A r ti c le 1 1 6 of t h e F i na nci a l R e g u l a ti on)

The authorising officer

1.
shall appoint a
committee to evaluate the proposals, save in the case of a
Commission decision on a specific sectoral programme.

responsible

(A r ti cle 115(1) of the Fi nanci a l R eg u lati on)

1.
The selection criteria shall be published in the call for
proposals and shall be such as to make it possible to assess the
applicant's financial and operational capacity to complete the
proposed action or work programme.

The committee shall be made up of at least three persons repre-
senting at least two organisational entities of the Commission
with no hierarchical link between them. To avoid any conflict
of interests, those persons shall be subject to the obligations
laid down in Article 52 of the Financial Regulation.

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In the representations and local units referred to in Article 254
and the delegated bodies referred to in Article 160(1), if there
are no separate entities, the requirement of organisational enti-
ties with no hierarchical link between them shall not apply.

Outside experts may assist the committee by decision of the
authorising officer responsible.

2.
to
The evaluation committee may ask an applicant
provide additional proof or to clarify the supporting documents
establishing financial and operational capacity, within a speci-
fied time limit.

3.
Upon completion of its work, the members of the evalua-
tion committee shall sign a record of all the proposals exam-
ined, containing an assessment of their quality and identifying
those which may receive funding. Where necessary that record
shall rank the proposals examined.

The record shall be kept for future reference.

The authorising officer responsible shall then take his

4.
decision giving at least:

(a) the subject and the overall amount of the decision;

(b) the name of the beneficiaries, the title of the actions, the
amounts accepted and the
choice,
including where it is inconsistent with the opinion of the
evaluation committee;

reasons

that

for

(c) the names of any applicants rejected and the reasons for

that rejection.

The provisions of paragraphs 1 to 4 shall not apply to

5.
beneficiaries of grants who are identified in the basic act.

Article 179

Information for applicants

( Ar ti c le 1 1 6 of t h e F i na n ci a l R e g u l a ti o n)

Applicants shall be informed within fifteen calendar days after
the award decision has been sent to the beneficiaries.

CHAPTER 4

Payment and control

Article 180

An external audit of

the accounts produced by an
2.
approved auditor may be demanded by the authorising officer
responsible in support of any payment on the basis of his
analysis of management risks. In the case of a grant for an
action or of an operating grant,
the audit report shall be
attached to the request for payment. Its purpose is to certify
that the submitted accounts are sincere, reliable and substan-
tiated by adequate supporting documents.

An external audit shall be compulsory:

(a) in the case of grants for an action,

in respect of

the

following payments:

(i) pre-financing or interim payments the sum of which
exceeds EUR 750 000 per financial year and per agree-
ment;

(ii) payments, of balances, which exceed EUR 150 000;

(b) in the case of operating grants,

in respect of payments

which exceed EUR 75 000 per financial year.

However, in the cases referred to in points (a) and (b), an audit
shall not be necessary in respect of the first pre-financing
payment.

Depending on his analysis of management risks, the author-
ising officer responsible may waive the audit obligation in the
case of:

(a) public bodies and the international organisations referred

to in Article 43;

(b) the beneficiaries of grants in connection with humanitarian
aid and the management of crisis situations, save in respect
of payments of balances.

In the case of an agreement linking the Commission and a
number of beneficiaries, the thresholds referred to in points (a)
and (b) of the second subparagraph shall apply to each benefi-
ciary.

Article 181

Flat-rate financing

( A r ti c le 1 1 7 of t h e F i na nci a l R e g u l a ti on)

Supporting documents for requests for payments

( Ar ti c le 1 1 7 of t h e F i na n ci a l R e g u l a ti o n)

1.
In addition to cases of scholarships and prizes, the basic
act may authorise flat-rate financing for contributions of less
then EUR 5 000 or the use of scales of unit costs.

1.
For each grant, where pre-financing is split, each new
payment shall be subject to consumption of at least 70 % of
the total amount of any earlier pre-financing. The statement of
the beneficiary's outlay shall be produced in support of any
request for a new payment.

In order to ensure compliance with the principles of co-finan-
cing, no-profit and sound financial management, those flat-rate
amounts and scales shall be reviewed at least every two years
by the authorising officer responsible. The amounts shall be
approved by the Commission.

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2.

The grant agreement may authorise flat-rate cover:

(a) of the beneficiary's overheads up to a maximum of 7 % of
total eligible costs for the action, save where the beneficiary
is in receipt of an operating grant
financed from the
Community budget;

(b) of certain mission expenses on the basis of a per diem scale

approved annually by the Commission.

The authorising officer responsible may also exempt from that
obligation beneficiaries who have concluded a framework part-
nership agreement under Article 163.

Article 183

Suspension and reduction of grants

The ceiling provided for in point (a) of the first subparagraph
may be exceeded by reasoned decision of the Commission.

( A r ti c le 1 1 9 of t h e F i na nci a l R e g u l a ti on)

Article 182

Advance guarantee

( Ar ti c le 1 1 8 of t h e F i na n ci a l R e g u l a ti o n)

The authorising officer responsible may require the bene-
1.
ficiary to lodge a guarantee in advance in order to limit the
financial risks connected with the payment of pre-financing.

2. Where pre-financing represents over 80 % of the total
amount of the grant, payment may not be made until after the
beneficiary has lodged a guarantee subject to the assessment
and acceptance of the authorising officer responsible.

For NGOs operating in the field of external action, that guar-
antee shall be demanded in respect of pre-financing exceeding
EUR 1 000 000 or representing over 90 % of the total amount
of the grant.

The guarantee shall be valid for a period sufficiently long to
allow it to be activated.

The guarantee shall be provided by an approved bank or

3.
financial institution established in one of the Member States.

The

authorising

1.
suspend
payments and, depending on the stage reached in the proce-
dure, either reduce the grant or demand reimbursement pro
rata by the beneficiary or beneficiaries:

responsible

officer

shall

(a) where the agreed action or work programme is not carried
out at all, or is not carried out properly, in full or on time;

(b) where amounts exceeding the financing ceilings set in the
agreement have been paid, in particular if the agreed action
or work programme has been carried out at a lower cost
than initially forecast;

(c) where the budget for the action or the operating budget

reveals a surplus ex post.

2.
Payments may also be suspended following presumed
infringements of other clauses of the agreement. The purpose
of such suspension shall be to give time to check whether the
presumed infringements have in fact occurred and, where
appropriate, to rectify them.

CHAPTER 5

Implementation

Article 184

The guarantee may be replaced by a joint and several guarantee
by a third party or by the joint guarantee of the beneficiaries of
an action who are parties to the same grant agreement.

Implementation contracts

( A r ti c le 1 2 0 of t h e F i na nci a l R e g u l a ti on)

The guarantee shall be denominated in euro.

It shall have the effect of making the bank or financial institu-
tion, third party or the other beneficiaries stand as irrevocable
collateral security, or first-call guarantor of the grant benefi-
ciary's obligations.

The guarantee shall be released as the pre-financing is
4.
gradually cleared against
interim payments or payments of
balances to the beneficiary in accordance with the conditions
laid down in the grant agreement.

5.
The authorising officer responsible may waive the obliga-
tion laid down in paragraph 2 for public-sector bodies and the
international organisations referred to in Article 43.

1. Where implementation of the assisted actions requires the
award of procurement contracts, beneficiaries of grants shall
award the contract to the tender offering best value for money,
that is to say, to the tender offering the best price-quality ratio,
in compliance with the principles of transparency and equal
treatment for potential contractors, care being taken to avoid
any conflict of interests.

2.
For the purposes of paragraph 1, the authorising officer
responsible may require beneficiaries to abide by special rules,
determined with due respect for the value of the contracts
concerned. the relative size of the Community contribution in
relation to the total cost of the action and the management
risk.

In that case such rules shall be included in the grant agreement.

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TITLE VII

PRESENTATION OF THE ACCOUNTS AND ACCOUNTING

CHAPTER 1

Presentation of the accounts

Article 185

Article 189

Principle of consistent accounting methods

( A r ti c le 1 2 4 of t h e F i na nci a l R e g u l a ti on)

Report on budgetary and financial management during the
year

( Ar ti c le 1 2 2 of t h e F i na n ci a l R e g u l a ti o n)

1.
The principle of consistent accounting methods means
that the structure of the components of the financial statements
and the accounting methods and valuation rules may not be
changed from one year to the next.

The report on budgetary and financial management during the
year shall give an accurate description of:

(a) the achievement of the objectives for the year,

in accor-

dance with the principle of sound financial management;

(b) the financial situation and the events which have had a

significant influence on activities during the year.

2.
The Commission's accounting officer may not depart
from the principle of consistent accounting methods other than
in exceptional circumstances, in particular:

(a) in the event of a significant change in the nature of the

entity's operations;

(b) where the change made is for the sake of a more appro-

priate presentation of the accounting operations.

Article 186

Exception to the accounting principles

Article 190

( Ar ti c le 1 2 4 of t h e F i na n ci a l R e g u l a ti o n)

Principle of comparability of information

Where, in a specific case, the accounting officers consider that
an exception should be made to the content of one of the
accounting principles defined in Articles 187 to 1941, that
exception shall be duly substantiated and reported in the annex
to the financial statements referred to in Article 203.

Article 187

Going-concern principle

( Ar ti c le 1 2 4 of t h e F i na n ci a l R e g u l a ti o n)

1.
The going-concern principle means that for the purposes
of preparing the financial statements, the institutions and the
bodies referred to in Article 185 of the Financial Regulation
shall be deemed to be established for an indefinite duration.

2. Where there are objective indications that an institution
or a body referred to in Article 185 of the Financial Regulation
is to cease its activities, the accounting officer shall present that
reasons. The
information in the
accounting officer shall apply the accounting rules with a view
to determining the liquidation value of the institution or body
concerned.

indicating the

annex,

Article 188

Principle of prudence

( A r ti c le 1 2 4 of t h e F i na nci a l R e g u l a ti on)

The principle of comparability of information means that
1.
for each item the financial statements shall also show the
amount of the corresponding item the previous year.

2. Where, pursuant to paragraph 1, the presentation or the
classification of one of the components of the financial state-
ments is changed, the corresponding amounts for the previous
year shall be made comparable and reclassified.

Where it
explained in the annex referred to in Article 203.

impossible to reclassify items,

is

this

shall be

Article 191

Materiality principle

( A r ti c le 1 2 4 of t h e F i na nci a l R e g u l a ti on)

1.
The materiality principle means that all operations which
are of significance for the information sought shall be taken
into account in the financial statements. Materiality shall be
assessed in particular by reference to the nature of the transac-
tion or the amount.

2.

Transactions may be aggregated where:

( Ar ti c le 1 2 4 of t h e F i na n ci a l R e g u l a ti o n)

(a) the transactions are identical in nature, even if the amounts

The principle of prudence means that assets and income shall
not be overstated and liabilities and charges shall not be under-
stated. However, the principle of prudence does not allow the
creation of hidden reserves or undue provisions.

are large;

(b) the amounts are negligible;

(c) aggregation makes for clarity in the financial statements.

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Article 192

No-netting principle

Article 196

Provisions

( Ar ti c le 1 2 4 of t h e F i na n ci a l R e g u l a ti o n)

The no-netting principle means that receivables and debts may
not be offset against each other, nor may charges and income,
save where charges and income derive from the same transac-
tion, from similar transactions or from hedging operations and
provided that they are not individually material.

Article 193

Principle of reality over appearance

( Ar ti c le 1 2 4 of t h e F i na n ci a l R e g u l a ti o n)

The principle of reality over appearance means that accounting
events recorded in the financial statements shall be presented
by reference to their economic nature.

Article 194

Accrual-based accounting principle

( Ar ti c le 1 2 5 of t h e F i na n ci a l R e g u l a ti o n)

1.
The accrual-based accounting principle means that trans-
actions and events shall be entered in the accounts when they
occur and not when amounts are actually paid or recovered.
They shall be booked to the financial years to which they
relate.

The accounting methods provided for in Article 133 of
2.
the Financial Regulation shall specify the obligating event for
the entry of each transaction in the accounts.

Article 195

Valuation of assets and liabilities

( Ar ti c le 1 2 5 of t h e F i na n ci a l R e g u l a ti o n)

Assets and liabilities shall be valued at purchase price or
1.
production cost. However,
fixed
assets and formation expenses shall be written down for depre-
ciation. In addition a write-down may be applied where the
value of an asset decreases and an increase in the value of a
liability may be covered by a provision.

the value of non-financial

2.
The accounting rules and methods referred to in Article
133 of the Financial Regulation may lay down that all items or
only some of them are to be valued at a value other than their
purchase price.

( A r ti c le 1 2 5 of t h e F i na nci a l R e g u l a ti on)

A provision shall be made only if the following conditions are
satisfied:

(a) a current obligation exists as a result of a past event;

(b) resources representing economic benefits will probably

have to be used to extinguish the obligation;

(c) the amount of the obligation can be reliably estimated.

Article 197

Structure of the balance sheet

( A r ti c le 1 2 6 of t h e F i na nci a l R e g u l a ti on)

The balance sheet shall be made up of the various items

1.
classified by titles and sub-titles.

Assets items shall be classified by increasing degree of

2.
liquidity, and liability items by increasing degree of callability.

Article 198

Presentation of the balance sheet

( A r ti c le 1 2 6 of t h e F i na nci a l R e g u l a ti on)

For the presentation of the balance sheet, the accounting officer
shall use at least the following headings:

Assets

— Formation expenses

— Intangible fixed assets

— Tangible fixed assets

— Financial fixed assets

— Debtors: due in over one year

— Stocks

— Debtors: due in one year or less

— Cash and cash equivalents

— Prepayments and accrued income

Liabilities

— Capital (made up of the economic result for the year, the
result brought froward from earlier years ands reserves)

— Provisions

— Creditors: due in over one year

— Creditors: due in one year or less

— Accruals and deferred income.

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Article 199

Economic outturn account

The financial cash flow shall show the treasury move-
4.
ments resulting from borrowing and lending and any other
financial source.

( Ar ti c le 1 2 6 of t h e F i na n ci a l R e g u l a ti o n)

The economic outturn account shall show the income and
charges for the year, classified according to their nature.

Article 203

Annex to the financial statements

Article 200

Presentation of the economic outturn account

( Ar ti c le 1 2 6 of t h e F i na n ci a l R e g u l a ti o n)

For the presentation of the economic outturn account, the
accounting officer shall apply the following minimum layout:

Operating income

- Operating charges

= Operating result

+/- Financial result

= Result from ordinary activities

+/- Exceptional result

= Result for the year

( A r ti c le 1 2 6 of t h e F i na nci a l R e g u l a ti on)

The annex referred to in Article 126 of the Financial Regulation
shall form an integral part of the financial statements. It shall
contain at least the following information:

(a) accounting principles, rules and methods;

(b) explanatory notes, supplying additional

information not
contained in the body of the financial statements which is
necessary for an accurate picture;

(c) off-balance-sheet commitments showing entitlements and
obligations not included in the balance sheet which could
impact on the assets and liabilities, the
have a material
financial situation or the result of the entity concerned.

Article 204

Explanatory notes

Article 201

Cash flow table

( A r ti c le 1 2 6 of t h e F i na nci a l R e g u l a ti on)

The explanatory notes shall be presented with cross references
to the items in the financial statements to which they relate
and in the same order of presentation.

( Ar ti c le 1 2 6 of t h e F i na n ci a l R e g u l a ti o n)

The cash flow table shall show treasury movements.

The treasury shall be made up of the following:

(a) cash in hand;

Article 205

Budgetary outturn account

( A r ti c le 1 2 7 of t h e F i na nci a l R e g u l a ti on)

(b) bank accounts and deposits payable on demand; and

1.

The budgetary outturn account shall contain:

(c) other disposable assets which can quickly be converted to

cash and whose value is stable.

(a) information on revenue comprising:

(i) changes in the revenue estimates in the budget;

Article 202

Cash flow classification

( Ar ti c le 1 2 6 of t h e F i na n ci a l R e g u l a ti o n)

1.
The cash flow table shall show treasury movements
broken down into operating flows, investment flows and finan-
cial flows.

The operating cash flow shall show treasury movements

2.
resulting from ordinary activities.

The investment cash flow shall show treasury movements

3.
resulting from the acquisition or sale of fixed assets.

(ii) the revenue outturn;

(iii) entitlements established;

(b) information showing changes in the total commitment and

payment appropriations available;

(c) information showing the use made of the total commit-

ment and payment appropriations available;

(d) information showing commitments outstanding,

those
carried over from the previous year and those made during
the year.

2.
As regards information on revenue, a statement shall also
be attached showing, for each Member State, the breakdown of
amounts of own resources still to be recovered at the end of
the financial year and covered by a recovery order.

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Article 206

Annex to the budgetary outturn account

( Ar ti c le 1 2 7 of t h e F i na n ci a l R e g u l a ti o n)

The annex to the budgetary outturn account referred to in
Article 127 of the Financial Regulation shall contain at least:

(a) information on the budget principles, types of appropria-

tion and the structure of the budget;

(b) information on commitments outstanding;

(c) the information required for a proper understanding of the

budget outturn.

CHAPTER 2

(Chapter 3 of the Financial Regulation)

Accounting

S e c ti on 1

Organisation of the accounts

Article 207

Organisation of the accounts

( Ar ti c le 1 3 2 of t h e F i na n ci a l R e g u l a ti o n)

1.
The accounting officer of each institution and body
referred to in Article 185 of the Financial Regulation shall draw
up and keep updated documents describing the organisation of
the accounts and accounting procedures of his institution.

In drawing up the financial statements, as little use as
information from outside the

2.
possible shall be made of
accounts.

3.
Budget revenue and expenditure shall be recorded in the
computerised system referred to in Article 208, according to
the economic nature of the operation, as current revenue or
expenditure or as capital.

Article 208

computerised systems and subsystems so that it is possible at
any time to identify the nature of the change and the person
who made it.

The description of computerised accounting systems and
subsystems shall indicate any links between those systems and
the central accounting system, particularly as regards the
transfer of data and the reconciliation of balances.

Access to the computerised systems and subsystems shall
3.
be confined to persons included on a list of authorised users
which is kept and updated by each institution.

Se c ti on 2

Accounting ledgers

Article 209

Accounting ledgers

( A r ti c le 1 3 5 of t h e F i na nci a l R e g u l a ti on)

1.
Each institution and each body referred to in Article 185
of the Financial Regulation shall keep a journal, a general ledger
and an inventory.

2.
The accounting ledgers shall consist of electronic docu-
ments which are identified by the accounting officer and offer
full guarantees for use as evidence.

3.
Entries in the journal shall be transferred to the general
ledger, itemised according to the chart of accounts referred to
in Article 212.

4.
The journal and the general ledger may be split into as
many special journals and special ledgers as are necessary to
meet requirements.

Entries recorded in special

5.
ledgers
shall be centralised at least every month in the journal and in
the general ledger.

journals and special

Article 210

Trial balance

Computerised systems

( A r ti c le 1 3 5 of t h e F i na nci a l R e g u l a ti on)

( Ar ti c le 1 3 2 of t h e F i na n ci a l R e g u l a ti o n)

The accounts shall be kept with the help of an integrated

1.
computerised system.

Each institution and body referred to in Article 185 of the
Financial Regulation shall establish a trial balance covering all
the accounts of the general accounts, including the accounts
cleared during the year, with, in each case:

2. Where accounts are kept using computerised systems and
subsystems, such systems and subsystems shall be described in
full.

That description shall define the content of all data fields and
specify how the system treats individual operations. It shall
state how the system guarantees the existence of a complete
audit trail for each operation and for any change made to the

(a) account number;

(b) description;

(c) total debits;

(d) total credits;

(e) balance.

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Article 211

Inventory

The contents of each account and class and its operation

4.
shall be laid down in the chart of accounts.

( Ar ti c le 1 3 5 of t h e F i na n ci a l R e g u l a ti o n)

The inventory is a statement of all assets and liabilities
indicating for each item the

1.
and commitments of all kinds,
quantity and value on the inventory date.

2.
The data in the inventory shall be kept and organised in
such a way as to justify the content of each of the accounts
included in the trial balance.

As regards the inventory of fixed assets, the provisions of

3.
Articles 220 to 227 shall apply.

S e c ti on 3

Chart of accounts

Article 212

Chart of accounts

( Ar ti c le 1 3 5 of t h e F i na n ci a l R e g u l a ti o n)

The chart of accounts shall be adopted by the Commis-

1.
sion's accounting officer.

Se c ti on 4

Registration

Article 213

Entries in the accounts

( A r ti c le 1 3 5 of t h e F i na nci a l R e g u l a ti on)

1.
Entries shall be made using the double entry method,
whereby any movement or variation recorded in the accounts
shall be represented by an entry establishing an equivalence
between the amount debited and the amount credited in the
various accounts affected by that entry.

The euro counterpart of a transaction denominated in a
2.
currency other than the euro shall be calculated and entered in
the accounts.

Transactions in foreign currencies in accounts which can be
revalued shall be revalued at least each time the accounts are
closed.

That revaluation shall be based on the rates laid down in accor-
dance with Article 8.

The chart of accounts shall divide the accounts into

2.
classes.

The rate to be used for conversion between the euro and
another currency to draw up the balance sheet at 31 December
of year N shall be that of the last working day of year N-1.

Each class may be subdivided into groups or subgroups, as
required.

The chart of accounts must contain at least the following

3.
classes:

(a) for the balance-sheet accounts:

(i) class 1: accounts for capital, provisions and creditors

due in over one year;

(ii) class 2: accounts for formation expenses, fixed assets

and debtors due in over one year;

(iii) class 3: stock accounts;

(iv) class 4: accounts for debtors and creditors due in one

year or less;

(v) class 5: financial accounts;

Article 214

Accounting records

( A r ti c le 1 3 5 of t h e F i na nci a l R e g u l a ti on)

All accounting records shall specify the origin, content and
booking reference of each data item and the references of the
relevant supporting documents.

Article 215

Supporting documents

(b) for the revenue and expenditure accounts:

( A r ti c le 1 3 5 of t h e F i na nci a l R e g u l a ti on)

(i) class 6: charges accounts;

(ii) class 7: income accounts;

(c) for the special accounts:

classes 8 and 9: special accounts;

(d) for off-balance-sheet transactions:

class 0: off-balance-sheet transactions.

1.
Each entry shall be based on a dated and numbered
supporting document, produced on paper or on a medium
which guarantees the reliability and safeguarding of its content
for the periods laid down in Article 49.

2.
Operations of the same type, carried out in the same
place and on the same day may be summarised in a single
supporting document.

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Article 216

Recording in the journal

The suspense accounts shall be reviewed annually by the
they can be cleared as soon as

4.
accounting officer so that
possible.

( Ar ti c le 1 3 5 of t h e F i na n ci a l R e g u l a ti o n)

Accounting operations shall be recorded in the journal by one
of the following methods, which are not mutually exclusive:

(a) day by day, operation by operation;

(b) in the form of a monthly summary of the total amounts
involved in operations, provided that all documents
allowing verification of individual operations day by day
are kept.

Article 217

Validation of entries

( Ar ti c le 1 3 5 of t h e F i na n ci a l R e g u l a ti o n)

Entries in the journal and in an inventory ledger shall be
1.
made final by means of a validation procedure prohibiting any
change to or deletion of the entry.

A closure procedure designed to freeze the chronology of
2.
records and guarantee their inviolability shall be implemented
at the latest before the final financial statements are presented.

S e c ti on 5

Reconciliation and verification

Article 218

Reconciliation of accounts

( Ar ti c le 1 3 5 of t h e F i na n ci a l R e g u l a ti o n)

1.
The balance of accounts in the trial balance shall be
reconciled periodically, and at least at the annual closure, with
the data from the management systems used by authorising
officers for the management of assets and liabilities and for the
daily input into the accounting system.

Periodically, and at

the accounts are
2.
closed, the accounting officer shall check that the data in the
inventory ledger referred to in Article 209 correspond to the
actual situation, in particular as regards:

least whenever

Se c ti on 6

Budget accounts

Article 219

Content and keeping of budget accounts

( A r ti c le 1 3 7 of t h e F i na nci a l R e g u l a ti on)

The budget accounts shall show, for each subdivision of

1.
the budget:

(a) in the case of expenditure:

(i) the appropriations authorised in the initial budget, the
appropriations entered in amending budgets, the appro-
the appropriations available
priations carried over,
following collection of assigned revenue, transfers of
appropriations and the total appropriations thus avail-
able;

(ii) the commitments and payments in respect of the finan-

cial year;

(b) in the case of revenue:

(i) the estimates entered in the initial budget, the estimates
entered in amending budgets, assigned revenue and the
total amount of estimates thus determined;

(ii) the entitlements established and the amounts recovered

in respect of the financial year in question;

(c) the commitments still to be paid and revenue still to be
recovered carried forward from previous financial years.

The commitment appropriations and payment appropriations
the first subparagraph shall be
(a) of
referred to in point
entered and shown separately.

The global provisional commitments relating to the EAGGF
Guarantee Section and the corresponding payments shall also
be recorded in the budget accounts.

Those commitments shall be presented in respect of
EAGGF Guarantee Section appropriations.

total

2.

The budget accounts shall show separately:

(a) the use of appropriations carried over and the appropria-

tions for the year;

(a) cash at bank, by reconciliation of the statements of account

from financial institutions;

(b) the clearance of outstanding commitments.

(b) cash in cash offices, by reconciliation with the data in the

cash book.

On the revenue side, amounts still
previous financial years shall be shown separately.

to be recovered from

The fixed assets accounts shall be reviewed in accordance with
Article 224.

The budget accounts may be organised in such a way as

3.
to develop a cost accounting system.

The interinstitutional liaison accounts shall be reconciled

3.
and cleared monthly.

The budget accounts
4.
systems, in books or on file cards.

shall be kept using computer

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CHAPTER 3

(Chapter 4 of the Financial Regulation)

Article 225

Resale of property

Property inventories

Article 220

Property inventories

( Ar ti c le 1 3 8 of t h e F i na n ci a l R e g u l a ti o n)

officer with technical

The system of property inventories shall be established by the
from the
authorising
accounting officer. That inventory system must supply all the
information required for keeping the accounts and safeguarding
assets.

assistance

Article 221

Safeguarding property

( Ar ti c le 1 3 8 of t h e F i na n ci a l R e g u l a ti o n)

Each of the institutions shall adopt provisions on safeguarding
the property included in their respective balance sheets and
decide which administrative departments are responsible for
the inventory system.

Article 222

Entry of items in the inventory

( A r ti c le 1 3 8 of t h e F i na nci a l R e g u l a ti on)

Members, officials or other servants and any other staff of the
institutions and bodies referred to in Article 185 of the Finan-
cial Regulation may not acquire items that are resold by these
institutions and bodies, save where those items are resold by
public tender procedure.

Article 226

Procedure for sale of fixed assets

( A r ti c le 1 3 8 of t h e F i na nci a l R e g u l a ti on)

Sales of fixed assets shall be advertised locally in appro-
1.
if the unit purchase value is EUR 8 100 or
priate fashion,
more. The period between publication of the last announce-
ment and conclusion of the sales contract shall be no less than
fourteen calendar days.

Journal of

the European Communities,

Those sales shall be the subject of a notice of sale published in
the Official
the unit
purchase value is EUR 391 100 or more. Appropriate adver-
tising may also be placed in the Member States' press. The
period between the date of publication of the notice in the Offi-
cial Journal of the European Communities and conclusion of the
sales contract shall be no less than one month.

if

( Ar ti c le 1 3 8 of t h e F i na n ci a l R e g u l a ti o n)

All items acquired whose purchase price or production cost is
EUR 420 or more, with a period of use greater than one year,
and which are not consumables shall be entered in the inven-
tory and recorded in the fixed assets accounts.

The institutions may forgo advertising where the cost of

2.
advertising exceeds the expected return from the operation.

The institutions shall always endeavour to obtain the best

3.
price for sales of fixed assets.

Article 223

Content of the inventory for each item

( Ar ti c le 1 3 8 of t h e F i na n ci a l R e g u l a ti o n)

The inventory shall contain an appropriate description of each
item and specify its location, the date of acquisition and its unit
cost.

Article 224

Inventory checks

( Ar ti c le 1 3 8 of t h e F i na n ci a l R e g u l a ti o n)

Inventory checks carried out by the institutions shall be
performed in such a way as to ensure that each item physically
exists and matches the relevant entry in the inventory. Such
checks
shall be carried out under an annual verification
programme, save for tangible and intangible fixed assets, which
shall be checked at least on a three-year basis.

Article 227

Procedure for disposing of fixed assets

( A r ti c le 1 3 8 of t h e F i na nci a l R e g u l a ti on)

A statement or record shall be drawn up by the authorising
officer whenever any property in the inventory is sold, given
away free of charge, scrapped, hired out or missing on account
of loss, theft or any other reason.

The statement or record shall indicate in particular whether the
item must be replaced at the expense of an official or other
servant of the Communities or any other person.

Where immovable property or major installations are made
available free of charge, a contract must be drawn up and the
case notified in an annual report sent to the European Parlia-
ment and the Council when the preliminary draft budget is
presented.

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PART TWO

SPECIAL PROVISIONS

TITLE I

(TITLE II OF THE FINANCIAL REGULATION)

STRUCTURAL FUNDS

Article 228

Repayment of payments on account

(A r ti cle 157 of th e Fi na nc i a l R e g u la ti on)

In accordance with the regulations on the Structural Funds and the Cohesion Fund, the repayment in full
or in part of payments on account in respect of a given operation shall not have the effect of reducing the
contribution from the Fund to the operation concerned.

Amounts repaid shall constitute assigned revenue in accordance with point (f) of Article 18(1) of the Finan-
cial Regulation.

TITLE II

(TITLE III OF THE FINANCIAL REGULATION)

RESEARCH

Article 229

Types of operations

In addition to the specific programmes referred to in

5.
Article 166(3) of the EC Treaty, the Community may adopt:

(a) supplementary programmes in which only certain Member
States take part, in accordance with Article 168 of the EC
Treaty;

( Ar ti c le 1 6 0 of t h e F i na n ci a l R e g u l a ti o n)

1.
The research and technological development appropria-
tions shall be used to carry out direct action, indirect action
under the framework programme for research referred to in
Article 166 of the EC Treaty, and the action referred to in
Article 165 of that Treaty by participation in programmes and
competitive activities conducted by the Joint Research Centre
(JRC).

2.
Direct action shall be carried out by the establishments of
the JRC and shall in principle be entirely financed from the
budget. It shall consist of:

(a) research programmes;

(b) exploratory research activities;

(c) scientific and technical support activities of an institutional

nature.

(b) programmes

undertaken by

States,
including participation in the structures created for the
execution of those programmes, in accordance with Article
169 of the EC Treaty;

several Member

(c) cooperation with third countries or international organisa-
tions in accordance with Article 170 of the EC Treaty;

(d) joint undertakings, in accordance with Article 171 of the

EC Treaty.

The activities of a competitive nature conducted by the

6.
JRC shall consist of:

(a) scientific and technical support activities under the research
and technological development framework programmes, in
principle entirely financed from the budget;

(b) services for third parties.

Article 230

Rules applicable to the JRC

Indirect action shall consist of programmes carried out
3.
under contracts to be concluded with third parties. The JRC
may participate in those activities on the same basis as third
parties.

4.
To ensure that national research policies and Community
research policy are mutually consistent, the Commission may
take initiatives in accordance with Article 165 of the EC Treaty
to the
and charge exclusively administrative expenditure
budget.

( A r ti c le 1 6 1 of t h e F i na nci a l R e g u l a ti on)

The estimates of amounts receivable referred to in Article
to the
the Financial Regulation shall be sent

1.
161(2) of
accounting officer for registration.

2. Where the activities conducted by the JRC for third
parties involve procurement, the procurement procedure shall
comply with the principles of transparency and equal treat-
ment.

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TITLE III

(TITLE IV OF THE FINANCIAL REGULATION)

EXTERNAL ACTIONS

CHAPTER I

GENERAL PROVISIONS

Article 231

Actions which may be financed

( Ar ti c le 1 6 2 of t h e F i na n ci a l R e g u l a ti o n)

Appropriations for the actions referred to in Title IV, Chapter 1
in particular,
of Part Two of the Financial Regulation may,
finance procurement contracts, grants,
including interest rate
subsidies, special loans, loan guarantees and financial assistance,
budgetary support and other specific forms of budgetary aid.

CHAPTER 2

Implementation of actions

Article 232

Financing agreement in centralised management

( Ar ti c le 1 6 6 of t h e F i na n ci a l R e g u l a ti o n)

1.
Before a financing agreement is concluded for an action
which is to be the subject of decentralised management, the
authorising officer responsible shall ensure, by means of docu-
ment and on-the-spot checks, that the management system set
up by the beneficiary third country to manage the Community
funds complies with Article 164(1) of the Financial Regulation.

2.
Each financing agreement concluded in the context of
in full or in part
decentralised management shall explicitly,
depending on the degree of decentralisation agreed, lay down
provisions:

(a) ensuring compliance with the criteria laid down in Article

164(1) of the Financial Regulation;

(b) stating that, should the minimum criteria laid down in
Article 164(1) of the Financial Regulation cease to be met,
the Commission may suspend implementation of the agree-
ment;

(c) defining the adversarial clearance of accounts procedure, as
provided for in Article 53(5) of the Financial Regulation,
which may be used to identify the liability of the third
country;

(d) setting up the financial correction mechanisms referred to
in Article 53(5) of the Financial Regulation and specified in
Article 42, in particular as regards recovery by means of
offsetting.

Article 233

Special loans

( A r ti c le 1 6 6 of t h e F i na nci a l R e g u l a ti on)

A loan contract shall be drawn up between the Commission,
acting for the Community, and the borrower in respect of any
investment project financed by a special loan.

Article 234

Bank accounts

( A r ti c le 1 6 6 of t h e F i na nci a l R e g u l a ti on)

For payments in the currency of

1.
the recipient State,
accounts denominated in euro shall be opened with a financial
institution in the recipient State in the name of the Commis-
sion or, by common agreement, of the recipient. The titles of
those accounts shall make it possible to identify the funds in
question.

The accounts referred to in paragraph 1 shall be endowed
2.
to meet actual cash requirements. Transfers shall be made in
euro and converted, where necessary, into the currency of the
recipient State as and when payments fall due, in accordance
with Articles 7 and 8.

CHAPTER 3

Procurement

Article 235

Renting of buildings

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

The only buildings contracts which may be financed from oper-
ating appropriations for external action shall be those relating
to the renting of buildings already constructed at the time the
lease is signed. These contracts shall be published as laid down
in Article 119.

Article 236

Definitions

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

Service contracts shall comprise study and technical assis-

1.
tance contracts.

A study contract is a service contract concluded between a
supplier and the contracting authority which includes studies
for the identification and preparation of projects,
feasibility
studies, economic and market studies, technical studies and
audits.

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A technical assistance contract is where the supplier is called
on to play an advisory role, to manage or supervise a project
or to provide the consultants specified in the contract.

In the event of failure to comply with the procedures
4.
referred to in paragraph 3, expenditure on the operations in
question shall not be eligible for Community financing.

2. Where a third country has qualified management staff in
its departments or entities with public-sector participation, the
contracts may be performed directly by these departments or
entities by direct labour.

Article 237

Special provisions relating to thresholds and the arrange-
ments for awarding external contracts

( A r t i cl e

1 67 ( 1 ) ( a )

a n d

( b )

of

th e

F i n a n c i a l

R e g u l a t i o n )

Articles 118 to 121, with the exception of the definitions,
1.
Article 122 (3) and (4), Articles 123, 126 to 129, 131 (3) to
(6), Article 139 (2), Articles 140 to 146, Article 148 and Arti-
cles 151 and 152 shall not apply to procurement contracts
concluded or on behalf of the contracting authorities referred
to in points (a) and (b) of Article 167(1) of the Financial Regu-
lation.

Implementation of
Chapter shall be decided by the Commission.

the procurement provisions under

this

2.
In the event of failure to comply with the procedures
referred to in paragraph 1, expenditure on the operations in
question shall not be eligible for Community financing.

3.
Contracts awarded for food aid shall be covered by the
specific arrangements of Commission Regulation (EC) No
2519/97 (1).

4.
This Chapter shall not apply to the contracting authorities
referred to in point (b) of Article 167(1) of the Financial Regu-
lation where, following the checks referred to in Article 35, the
Commission has authorised them to use their own procure-
ment procedures under decentralised management.

Article 238

Procurement by the contracting authorities referred to in
Article 167(1)( c) of the Financial Regulation

( A r t i cl e 1 67 ( 1 ) ( c) of th e F i n a n c i a l R e g u la ti on )

1.
The provisions of this Chapter shall not apply to procure-
ment by the contracting authorities referred to in point (c) of
Article 167(1) of the Financial Regulation.

The provisions of this Chapter shall not apply to actions

2.
under Regulation (EC) No 1257/96.

The specific procurement procedures to be used in the
3.
cases referred to in paragraphs 1 and 2 shall be decided by the
Commission in accordance with the principles referred to in
Article 184.

Article 239

Advertising and non-discrimination

( A r t i c l e s 1 6 7 a nd 1 6 8 o f th e F i na nc i a l R e g u la ti o n)

take

the necessary implementing
The Commission shall
measures to guarantee as wide a participation as possible, on
equal terms, in competitive tendering for the award of contracts
financed by the Community. To that end, care shall be taken in
particular to:

(a) ensure adequate advance publication, in reasonable time, of
the pre-information notices, contract notices and award
notices;

(b) eliminate any discriminatory practice or technical specifica-
tions liable to hamper wide participation on equal terms by
all natural or legal persons referred to in Article 168 of the
Financial Regulation.

Article 240

Advertising

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

1.
The pre-information notice for international calls for
tender shall be sent to the Office for Official Publications of the
European Communities as early as possible, and in any event
before 31 March each year for supply and service contracts and
as quickly as possible after
the decision authorising the
programme for works contracts.

For the purposes of this Chapter, the contract notice shall

2.
be published:

(a) at least in the Official Journal of the European Communities

and on the Internet for international calls for tender;

(b) at least in the official gazette of the recipient State or in
any equivalent publication for local invitations to tender.

Where the contract notice is also published locally, it must be
identical to the one published in the Official
the
European Communities and on the Internet and it must be
published simultaneously. The Commission shall be responsible
for publication in the Official Journal of the European Communities
and on the Internet. If the notice is published locally, this may
be done by the beneficiary.

Journal of

(1) OJ L 346, 17.12.1997, p. 23.

The award notice shall be sent when the contract

3.
signed.

is

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Article 241

(d) the phrase ‘Not to be opened before the tender-opening

session’, in the language of the tender documents.

Thresholds and procedures for awarding service contracts

( Ar ti c le 1 6 7 of t h e F i na n ci a l R e g u l a ti o n)

The thresholds and procedures referred to in Article 167
the Financial Regulation shall be as follows for service

1.
of
contracts:

(a) for contracts with a value of EUR 200 000 or more: an
international
restricted invitation to tender within the
meaning of point (b) of Article 122(2) and point (a) of
Article 240(2);

(b) for contracts with a value of

less than EUR 200 000:
competitive negotiated procedure within the meaning of
paragraph 3, provided that the use of an existing frame-
work contract is impossible or has been unsuccessful.

Contracts with a value of less than EUR 5 000 may be awarded
on the basis of a single tender.

2.
In the international restricted procedure referred to in
point (a) of paragraph 1, the contract notice shall state the
number of candidates who will be invited to submit tenders.
For service contracts the number of tenderers shall be within a
range of four to eight. The number of candidates allowed to
submit tenders must be sufficient to ensure genuine competi-
tion.

The list of selected candidates shall be published on the
Commission's Internet site.

three suppliers of

Under the negotiated procedure referred to in point (b) of
3.
paragraph 1, the contracting authority shall draw up a list of at
least
its choice. The procedure involves
limited competitive tendering, without publication of a notice
and shall be known as a competitive negotiated procedure not
covered by Article 124.

Tenders shall be opened and evaluated by a selection board
with the necessary technical and administrative expertise. The
members of the selection board must sign a declaration of
impartiality.

If the contracting authority does not receive at least three valid
tenders, the procedure must be cancelled and started again.

4.
The bids shall be sent in a package or outer envelope
containing two separate sealed envelopes, one bearing the
words Envelope A — Technical bid and the other the words
Envelope B — Financial bid. The outer envelope shall bear:

(a) the address indicated in the tender documents for the

submission of tenders;

(b) the reference to the call for tenders to which the tenderer is

responding;

If interviews were envisaged in the tender documents, the selec-
tion board may interview the principal members of the team of
experts proposed in the technically acceptable bids, after estab-
lishing its written provisional conclusions and before defini-
tively concluding the evaluation of the technical bids. In such
cases the experts shall be interviewed by the selection board,
preferably collectively if they form a team, and at intervals close
enough to allow comparisons to be made. Interviews shall be
conducted in accordance with a standard model agreed in
advance by the selection board and applied to all the experts or
teams called for interview. The date and time of the interview
must be communicated to the tenderers at least ten calendar
days in advance.
force majeure, preventing the
tenderer from attending the interview, a new date and time
must be sent to the tenderer.

In cases of

The contract award criteria shall serve to identify the

5.
tender offering best value for money.

The tender offering best value for money shall be selected using
an 80/20 weighting distribution between technical quality and
price. For that purpose:

(a) the score awarded to the technical bids shall be multiplied

by 0,80;

(b) the score awarded to the price bids shall be multiplied by

0,20.

Article 242

Use of the negotiated procedure for service contracts

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

1.
For service contracts, contracting authorities may use the
negotiated procedure with a single tender, after the Commis-
sion has given its agreement
the contracting
authority, in the following cases:

is not

it

if

(a) where, for reasons of extreme urgency brought about by
events which the contracting authorities could not have
foreseen and which can in no way be attributed to them,
the time limit for the procedures referred to in points (a),
(b) and (c) of Article 91(1) of the Financial Regulation
cannot be kept;

(b) where the services are entrusted to public-sector bodies or
to non-profit institutions or associations and relate to activ-
ities of an institutional nature or designed to provide assis-
tance to peoples in the social field;

(c) where appropriate, the numbers of the lots for which a

tender is being submitted;

(c) for services which are an extension of services already
started, subject to the conditions laid down in paragraph 2;

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(d) where the tender procedure has been unsuccessful, that is
to say, where no qualitatively and/or financially worthwhile
tender has been received, in which case, after cancelling the
tender procedure, the contracting authority may negotiate
with one or more tenderers of its choice,
from among
those that took part in the invitation to tender, provided
that the original terms of the contract are not substantially
altered;

(e) where the contract concerned follows a contest and must,
under the rules applying, be awarded to the successful
candidate or to one of the successful candidates, in which
case, all successful candidates shall be invited to participate
in the negotiations;

(f) where, for technical reasons, or for reasons connected with
the contract can be

the protection of exclusive rights,
awarded only to a particular service provider.

For the purposes of point (a) of the first subparagraph, opera-
tions carried out in crisis situations as referred to in Article
168(2) shall be considered to satisfy the test of extreme
urgency. The authorising officer by delegation, where appro-
priate in concertation with the other authorising officers by
delegation concerned, shall establish that a situation of extreme
urgency exists and shall review his decision regularly with
regard to the principle of sound financial management.

Services which are an extension of

2.
started, as referred to in point
follows:

services already
(c) of paragraph 1, are as

(a) additional services not covered by the principal contract
but which, as a result of unforeseen circumstances, have
the contract,
become necessary for the performance of
provided that the additional service cannot be technically
and economically separated from the principal contract
without serious inconvenience for the contracting authority
and the aggregate amount of additional services does not
exceed 50 % of the value of the principal contract;

(b) additional services consisting in the repetition of similar
services entrusted to the contractor providing services
under a first contract, provided that a contract notice was
published for the supply of the first service and the possibi-
lity of using the negotiated procedure for new services for
the project and the estimated cost were clearly indicated in
the contract notice published for the first service.

A single extension of the contract shall be possible for a value
and duration equal to no more than the value and the duration
of the initial contract.

Article 243

Thresholds and procedures for awarding supply contracts

( Ar ti c le 1 6 7 of t h e F i na n ci a l R e g u l a ti o n)

The thresholds and procedures referred to in Article 167
the Financial Regulation shall be as follows for supply

1.
of
contracts:

(b) for contracts with a value of EUR 30 000 or more but less
then EUR 150 000: a local open invitation to tender within
the meaning of point (a) of Article 122(2) and point (b) of
Article 240(2);

(c) for contracts with a value of

less than EUR 30 000:
competitive negotiated procedure within the meaning of
paragraph 2.

Contracts with a value of less than EUR 5 000 may be awarded
on the basis of a single tender.

three suppliers of

Under the negotiated procedure referred to in point (c) of
2.
paragraph 1, the contracting authority shall draw up a list of at
least
its choice. The procedure involves
limited competitive tendering, without publication of a notice,
and shall be known as a competitive negotiated procedure not
covered by Article 124.

Tenders shall be opened and evaluated by a selection board
with the necessary technical and administrative expertise. The
members of the selection board must sign a declaration of
impartiality.

If the contracting authority does not receive at least three valid
tenders, the procedure must be cancelled and started again.

Each technical and financial bid must be placed in a
itself placed in a package or outer

3.
single sealed envelope,
envelope. The inner envelope shall bear:

(a) the address indicated in the tender documents for the

submission of tenders;

(b) the reference to the call for tenders to which the tenderer is

responding;

(c) where appropriate, the numbers of the lots for which a

tender is being submitted;

(d) the phrase ‘Not to be opened before the tender-opening

session’, in the language of the tender documents.

At the place and time set in the tender documents, the tenders
shall be opened in public by the evaluation committee. At the
public tender-opening session, the names of the tenderers, the
prices quoted, the provision of the necessary tender guarantee
and any other
formality which the contracting authority
considers appropriate must be announced.

In the case of a supply contract not involving after-sales

4.
service, the sole award criterion shall be price.

(a) for contracts with a value of EUR 150 000 or more: an
international open invitation to tender within the meaning
(a) of Article
of point
240(2);

(a) of Article 122(2) and point

Where proposals for after-sales service or for training are parti-
cularly significant, the tender offering best value for money
shall be chosen, with due account for the technical quality of
the service offered and the price quoted.

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Article 244

Use of the negotiated procedure for supply contracts

( Ar ti c le 1 6 7 of t h e F i na n ci a l R e g u l a ti o n)

1.
Supply contracts may be awarded by negotiated proce-
dure with a single tender, after the Commission has given its
agreement if it is not the contracting authority, in the following
cases:

(a) where, for reasons of extreme urgency brought about by
events which the contracting authorities could not have
foreseen and which can in no way be attributed to them,
the time-limit for the procedures referred to in points (a),
(b) and (c) of Article 91(1) of the Financial Regulation
cannot be kept;

(b) where warranted by the nature or particular characteristics
of the supplies, for example, where performance of the
contract is exclusively reserved for the holders of patents or
licences to use patents;

(c) for additional deliveries by the original supplier intended
either as a partial replacement of normal supplies or instal-
lations or as the extension of existing supplies or installa-
tions, where a change of
supplier would oblige the
contracting authority to acquire equipment having different
technical characteristics which would result
in either
incompatibility or disproportionate technical difficulties in
operation and maintenance;

(d) where the tender procedure has been unsuccessful, that is
where no qualitatively and/or financially worthwhile tender
has been received. In such cases, after cancelling the tender
procedure, the contracting authority may negotiate with
one or more tenderers of its choice, from among those that
took part in the invitation to tender, provided that the
original terms of the contract are not substantially altered.

2.
For the purposes of point (a) of paragraph 1, operations
carried out in crisis situations as referred to in Article 168(2)
shall be considered to satisfy the test of extreme urgency. The
authorising officer by delegation, where appropriate in concer-
tation with the other authorising officers by delegation
concerned, shall establish that a situation of extreme urgency
exists and shall review his decision regularly with regard to the
principle of sound financial management.

(ii) exceptionally, in view of the characteristics of certain
works and after the agreement of the Commission, an
international restricted invitation to tender within the
meaning of point (b) of Article 122(2) and point (a) of
Article 240(2);

(b) for contracts with a value of EUR 300 000 or more but
less then EUR 5 000 000: a local open invitation to tender
within the meaning of point (b) of Article 122(2) and point
(a) of Article 240(2);

(c) for contracts with a value of less than EUR 300 000: a
competitive negotiated procedure within the meaning of
paragraph 2;

Contracts with a value of less than EUR 5 000 may be awarded
on the basis of a single tender.

2.
Under the negotiated procedure referred to in point (c) of
paragraph 1, the contracting authority shall draw up a list of at
least three contractors of its choice. The procedure shall involve
limited competitive tendering, without publication of a notice,
and shall be known as a competitive negotiated procedure not
covered by Article 124.

Tenders shall be opened and evaluated by a selection board
with the necessary technical and administrative expertise. The
members of the selection board must sign a declaration of
impartiality.

If the contracting authority does not receive at least three valid
tenders, the procedure must be cancelled and started again.

the
The selection criteria shall cover the capacity of
3.
tenderer to carry out similar contracts, in particular by refer-
ence to works carried out in recent years. With selection being
made in this way and since inadmissible tenders have already
been eliminated, the only award criterion shall be the price.

Each technical and financial bid must be placed in a
itself placed in a package or outer

4.
single sealed envelope,
envelope. The inner envelope shall bear:

(a) the address indicated in the tender documents for the

submission of tenders;

Article 245

(b) the reference to the call for tenders to which the tenderer is

responding;

Thresholds and procedures for awarding works contracts

( Ar ti c le 1 6 7 of t h e F i na n ci a l R e g u l a ti o n)

The thresholds and procedures referred to in Article 167
the Financial Regulation shall be as follows for works

1.
of
contracts:

(a) for contracts with a value of EUR 5 000 000 or more:

(i) in principle an international open invitation to tender
within the meaning of point (a) of Article 122(2) and
point (a) of Article 240(2);

(c) where appropriate, the numbers of the lots for which a

tender is being submitted;

(d) the phrase ‘Not to be opened before the tender-opening

session’, in the language of the tender documents.

At the place and time set in the tender documents, the tenders
shall be opened in public by the evaluation committee. At the
public tender-opening session, the names of the tenderers, the
prices quoted, the provision of the necessary tender guarantee
and any other formality which the contracting authority thinks
appropriate must be announced.

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Article 246

Article 248

Use of the negotiated procedure for works contracts

Choice of procurement procedure for mixed contracts

( Ar ti c le 1 6 7 of t h e F i na n ci a l R e g u l a ti o n)

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

1. Works contracts may be awarded by negotiated proce-
dure with a single tender, after the Commission has given its
agreement if it is not the contracting authority, in the following
cases:

(a) where, for reasons of extreme urgency brought about by
events which the contracting authorities could not have
foreseen and which can in no way be attributed to them,
the time-limit for the procedures referred to in points (a),
(b) and (c) of Article 91(1) of the Financial Regulation
cannot be kept.

(b) for additional works not included in the initial contract
through unforeseen circum-
concluded but which have,
stances, become necessary for carrying out
the work
described therein, subject to the conditions laid down in
paragraph 2;

(c) where the tender procedure has been unsuccessful, that is
where no qualitatively and/or financially worthwhile tender
has been received. In such cases, after cancelling the tender
procedure, the contracting authority may negotiate with
one or more tenderers of its choice, from among those that
took part in the invitation to tender, provided that the
original terms of the contract are not substantially altered.

For the purposes of point (a) of the first subparagraph, opera-
tions carried out in crisis situations as referred to in Article
168(2) shall be considered to satisfy the test of extreme
urgency. The authorising officer by delegation, where appro-
priate in concertation with the other authorising officers by
delegation concerned, shall establish that a situation of extreme
urgency exists and shall review his decision regularly with
regard to the principle of sound financial management.

2.
The additional works referred to in point (b) of paragraph
1 shall be awarded to the contractor already carrying out the
work:

(a) where such works cannot be technically or economically
separated from the main contract without serious inconve-
nience for the contracting authority;

(b) where such works, although separable from the perfor-
mance of the original contract, are strictly necessary for its
completion;

(c) where the aggregate value of contracts awarded for addi-
tional works does not exceed 50 % of the value of the prin-
cipal contract.

Article 247

In the case of contracts involving both supplies of services and
supplies of goods or execution of works,
the contracting
authority, after the Commission has given its agreement if it is
not the contracting authority, shall determine the thresholds
and procedures applicable by reference to the predominant
aspect assessed on the basis of the relative value and the opera-
tional significance of the various components of the contract.

Article 249

Tender documents

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

1.
The tender documents referred to in Article 130 shall be
drawn up on the basis of best international practices and in
accordance with the provisions of this Chapter regarding adver-
tising and contacts between the contracting authority and
tenderers.

For service contracts, the tender file must contain the

2.
following documents:

(a) instructions to tenderers, which must include:

(i) the type of contract;

(ii) the award criteria and their weightings;

(iii) the possibility of

interviews and the timetable for

them;

(iv) whether variants are permitted;

(v) the proportion of sub-contracting which may be

authorised;

(vi) the maximum budget available for the contract;

(vii) the currency of tenders;

(b) shortlist of candidates selected (mentioning the ban on

association);

(c) general conditions for service contracts;

(d) specific conditions which amplify, supplement or derogate

from the general conditions;

(e) terms of reference indicating the planned timetable for the
project and dates from which it is planned that the prin-
cipal experts must be available;

Use of the negotiated procedure for buildings contracts

(f) price schedule (for completion by the tenderer);

( Ar ti c le 1 6 7 of t h e F i na n ci a l R e g u l a ti o n)

Buildings contracts as referred to in Article 235 may be
awarded by negotiated procedure after the local market has
been prospected and after the Commission has given its agree-
ment if it is not the contracting authority.

(g) tender form;

(h) contract form;

(i) bank (or similar) guarantee forms for the payment of pre-

financing.

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For supply contracts, the tender file must contain the

3.
following documents:

(a) instructions to tenderers, which must include:

(i) the selection and award criteria;
(ii) whether variants are authorised;
(iii) the currency of tenders;

(b) general conditions for supply contracts;

(c) specific conditions which amplify, supplement or derogate

from the general conditions;

(d) technical annex containing any plans, technical specifica-
tions and the planned timetable for performance of the
contract;

(e) price schedule (for completion by the tenderer);

(f) tender form;

(g) contract form;

(h) bank (or similar) guarantee forms for:

(i) the tender;
(ii) payment of advances, and
(iii) proper performance.

The contracting authority may demand a tender guar-
2.
antee, within the meaning of this Chapter, representing 1 % to
2 % of the overall value of the contract for supply and works
contracts; it shall comply with the provisions of Article 150. It
shall be released when the contract is awarded.
It shall be
retained if a tender submitted by the final date for submission
is subsequently withdrawn.

A guarantee shall be required in return for the payment
3.
of pre-financing exceeding EUR 150 000. It shall be released
as and when the pre-financing is deducted from interim
payments or payments of balances made to the contractor in
accordance with the terms of the contract.

4.
A performance guarantee shall be provided by the
tenderer upon signing contracts for supplies and works for an
amount set in the tender file and corresponding at the most to
10 % of the total value of the contract. This shall remain valid
at least until final acceptance of the supplies and works. If the
contract is not properly performed the entire guarantee shall be
retained.

For works contracts, the tender file must contain the

4.
following documents:

Article 251

(a) instructions to tenderers, which must include:

(i) the selection and award criteria;
(ii) whether variants are authorised; and
(iii) the currency of tenders;

(b) general conditions for works contracts;

(c) specific conditions which amplify, supplement or derogate

from the general conditions;

(d) technical annexes containing plans, technical specifications
and the planned timetable for performance of the contract;

(e) price schedule (for completion by the tenderer) and the

breakdown of prices;

(f) tender form;

(g) contract form;

(h) bank (or similar) guarantee forms for:

(i) the tender;
(ii) payment of advances;
(iii) proper performance.

Time limits for procedures

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

1.
the
Tenders must reach the contracting authority at
address and by no later than the date and time shown in the
invitation to tender. The time-limit for receipt of tenders and
requests to participate, laid down by the contracting authori-
ties, shall be long enough to allow interested parties a reason-
able and appropriate period to prepare and submit
their
tenders.

For service contracts, the minimum time between the date of
dispatch of the letter of invitation to tender and the final date
for receipt of tenders shall be fifty days. However, in urgent
cases and with the prior authorisation of the Commission,
other time limits may be authorised.

In the event of contradiction,

5.
the specific conditions
referred to in point (d) of paragraph 2, point (c ) of paragraph
3 and point (c) of paragraph 4 shall override the general condi-
tions.

2.
Tenderers may put questions in writing no later than
twenty-one days before the closing date for receipt of tenders.
The contracting authority shall provide the answers to the
questions no later than eleven days before the closing date for
submission of tenders.

Article 250

Guarantees

( A r t i cl e s 102 a n d 1 6 7 o f t h e F i na n c i a l R e g u la t i on )

1.
By way of derogation from Article 150, advance guaran-
tees shall be denominated in euro or in the currency of the
contract they cover.

3.
In international restricted procedures, the time-limit for
receipt of tenders shall be no less than thirty days from the date
on which the contract notice is published. The period between
the date on which the letter of invitation is sent and the final
date for the receipt of tenders shall be no less than fifty days.
However,
in certain exceptional cases and with the prior
authorisation of the Commission, other time limits may be
authorised.

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In international open procedures,

the time limits for
4.
receipt of tenders, running from the date on which the contract
notice is sent, shall be at least:

The time-limits specified in paragraphs 1 to 9 are

10.
expressed in calendar days.

(a) 90 days for works contracts,

(b) 60 days for supply contracts.

in certain exceptional cases and with the prior
However,
authorisation of the Commission, other time-limits may be
authorised.

5.
In local open procedures, the time-limits for receipt of
tenders, running from the date when the contract notice is
published, shall be at least:

(a) 60 days for works contracts;

(b) 30 days for supply contracts.

However,
in certain exceptional cases and with the prior
authorisation of the Commission, other time-limits may be
authorised.

6.
For the competitive negotiated procedures referred to in
point (b) of Article 241(1), point (c) of Article 243(1) and point
(c) of Article 245(1), candidates shall be allowed at least thirty
days from the date of dispatch of the letter of invitation to
tender in which to submit their tenders.

7.
For service contracts, the period of validity of the tenders
shall be ninety calendar days from the final date for submission
of tenders. In exceptional cases, before the period of validity
expires, the contracting authority may ask the tenderers to
extend the period for a specific number of days up to no more
than forty calendar days. The tenderer whose tender is selected
must maintain the validity of the tender for a further sixty
calendar days from the date of notification of the award of the
contract.

8.
For supply contracts, the period of validity of the tenders
shall be ninety calendar days from the final date for submission
of tenders. In exceptional cases, before the period of validity
expires, the contracting authority may ask the tenderers to
extend the period for a specific number of days up to no more
than forty calendar days. The tenderer whose tender is selected
must maintain the validity of the tender for a further sixty
calendar days from the date of notification of the award of the
contract.

9.
For works contracts, the period of validity of the tenders
shall be ninety calendar days from the final date for submission
of tenders. In exceptional cases, before the period of validity
expires, the contracting authority may ask the tenderers to
extend the period for a specific number of days up to no more
than forty calendar days. The tenderer whose tender is selected
must maintain the validity of the tender for a further sixty
calendar days from the date of notification of the award of the
contract.

Article 252

Evaluation committee

( A r ti c le 1 6 7 of t h e F i na nci a l R e g u l a ti on)

1.
All requests to participate and tenders declared as satis-
fying the requirements shall be evaluated and ranked by an
evaluation committee on the basis of the exclusion, selection
and award criteria announced in advance. This committee shall
have an odd number of members, at least three, with all the
necessary technical and administrative expertise to assess the
tenders.

If the Commission is not the contracting authority,

2.
it
must be kept systematically informed. It shall always be invited
as an observer to the opening and assessment of tenders and
shall receive a copy of each of them. The contracting authority
shall send to the Commission, for its agreement, the results of
evaluation of the tenders and a proposal for the award of the
contract. Once it has received this agreement, it shall sign the
contracts and send them to the Commission.

Tenders which do not contain all

3.
items
demanded in the tender documents or which do not corre-
spond to the specific requirements laid down shall be elimi-
nated.

the essential

4.
In the case of abnormally low tenders as referred to in
Article 139, the committee shall ask for the necessary clarifica-
tions concerning the composition of the tender.

CHAPTER 4

Grants

Article 253

Financing in full

( A r ti c le 1 6 9 of t h e F i na nci a l R e g u l a ti on)

By way of derogation from the co-financing requirement
1.
in connection with grants, referred to in Article 109 of the
Financial Regulation, the financing of an action in full may be
authorised in the following cases, save where prohibited by the
basic act:

(a) humanitarian aid,

including
uprooted persons, rehabilitation and mine disposal;

assistance

for

refugees,

(b) aid in crisis situations within the meaning of Article

168(2);

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(c) actions for the protection of the health or fundamental

Article 255

rights of peoples;

(d) actions resulting from the implementation of

financing
agreements with third countries or actions with interna-
tional organisations within the meaning of Article 43.

2.
Grounds shall be provided in the award decision relating
to the action in question in the case of any derogation from
the co-financing requirement, as provided for in paragraph 1.

The authorising officer must be in a position to show that
financing in full is essential to carry out the action in question.

CHAPTER 5

Imprest accounts and inventories

Article 254

Creation of imprest accounts

(A r ti cle 63 of th e Fi na nc i a l R e g u la ti on)

For the payment of certain categories of expenditure, one or
more imprest accounts may be set up in each local unit outside
the Community in accordance with Article 63 of the Financial
Regulation. A local unit shall be, for instance, a Community
delegation, office or branch office in a third country.

The decision setting up such an imprest account shall lay down
its operating terms in accordance with Article 67 and on the
basis of the specific needs of each local unit.

Persons empowered to administer accounts

( A r ti cl e 6 2 o f th e F i na nc i a l R e g u la ti o n)

Each institution shall lay down the conditions in accordance
with which the staff it designates and empowers to administer
accounts in the local units referred to in Article 254 are
authorised to communicate the names and specimen signatures
to local financial institutions.

Article 256

Inventory and advertising of sales

( A r ti c le 1 3 8 of t h e F i na nci a l R e g u l a ti on)

In the case of the delegations, the permanent inventories
1.
of movable property belonging to the Communities shall be
kept locally. They shall be sent regularly to the central depart-
ments in accordance with the rules adopted by each institution.

Movable property in transit to the delegations shall be entered
on a provisional list before being recorded in the permanent
inventories.

The advertising arrangements for sales of delegations'

2.
movable property shall be in accordance with local usage.

TITLE IV

(TITLE V OF THE FINANCIAL REGULATION)

EUROPEAN OFFICES

Article 257

Scope

( Ar ti c le 1 7 1 of t h e F i na n ci a l R e g u l a ti o n)

The offices referred to in Article 171 of the Financial Regula-
tion are as follows:

(a) the Office for Official Publications;

(b) the European Anti-Fraud Office;

Article 258

Specific rules for the Office for Official Publications

( A r ti c le 1 7 1 of t h e F i na nci a l R e g u l a ti on)

With regard to the Office for Official Publications, each institu-
tion shall retain the powers of authorisation for expenditure
charged to the appropriations for the publication of all work
entrusted to outside bodies by the Office. The net proceeds
from the sale of publications shall be re-used as assigned
revenue by the institution which is the author of those publica-
tions, in accordance with Article 18 of the Financial Regula-
tion.

(c) the European Communities Personnel Selection Office;

Article 259

(d) the Office for the Administration and Payment of Individual

Entitlements;

Delegation of certain tasks by the accounting officer

(e) the Office for Infrastructure and Logistics in Brussels and
the Office for Infrastructure and Logistics in Luxembourg.

One or more institutions may set up additional offices provided
that this can be justified by a cost-benefit study and guarantees
the visibility of the Community action.

( A r ti c le 1 7 2 of t h e F i na nci a l R e g u l a ti on)

The Commission accounting officer, acting on a proposal from
the management committee of the Office in question, may
delegate to a member of the staff of the Office certain of his
tasks relating to the collection of revenue and the payment of
expenditure effected directly by the Office in question.

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Article 260

Treasury — bank accounts

The final cash position for each year shall be reconciled and
adjusted between the Office in question and the Commission at
the end of the financial year.

( Ar ti c le 1 7 2 of t h e F i na n ci a l R e g u l a ti o n)

To meet the cash requirements of an interinstitutional Office,
bank accounts or post office giro accounts may be opened in
its name by the Commission, acting on a proposal from the
management committee.

The accounts shall be replenished regularly by payments made
by the Commission upon receipt of calls for funds from the
Office in question. Such payments may not exceed the total
amount of the appropriations entered for that purpose in the
Commission budget for the current year.

Article 261

Implementing rules

( A r t i cl e 1 7 5 ( 1) o f t h e F i n a n c i a l R e g u la ti on )

The implementing rules
laid down by the management
committee of each office in accordance with Article 175(1) of
the Financial Regulation shall comply entirely with this Regula-
tion.

TITLE V

(TITLE VI OF THE FINANCIAL REGULATION)

ADMINISTRATIVE APPROPRIATIONS

Article 262

Scope

The institution concerned shall at the same time inform the
budgetary authority of its schedule for building projects.

( Ar ti c le 1 7 7 of t h e F i na n ci a l R e g u l a ti o n)

The administrative appropriations covered by this Title shall be
those defined in Article 27.

Article 263

Buildings

(A r ti cle 179(3) of the Fi nanci a l R eg u lati on)

Before concluding the contracts referred to in Article 179(3) of
the Financial Regulation, each institution shall
submit a
communication to the budgetary authority presenting all rele-
vant information on the operation planned, the cost to the
budget for the current financial year and for future years, its
justification as regards the principle of sound financial manage-
ment and its impact on the financial perspective.

Article 264

Rent guarantees

( A r ti c le 1 7 7 of t h e F i na nci a l R e g u l a ti on)

Rent guarantees provided by the Commission shall take the
form of a bank guarantee or a deposit on a blocked bank
account in the name of the Commission and of the lessor,
denominated in euro, save in duly substantiated cases.

Article 265

Advances to staff and members of the institutions

( A r ti c le 1 7 7 of t h e F i na nci a l R e g u l a ti on)

Advances may be paid, in accordance with the conditions laid
down in the Staff Regulations, to staff and to the members of
the institutions.

PART THREE

TRANSITIONAL AND FINAL PROVISIONS

TITLE I

TRANSITIONAL PROVISIONS

Article 266

Article 267

Transfers of research appropriations

Liquidation of the guarantee account

( Ar ti c le 1 6 0 of t h e F i na n ci a l R e g u l a ti o n)

For direct and indirect action in the field of research, referred
to in Article 229(2) to (5), the procedure for transfers of appro-
priations for the financial year 2003 shall be governed by the
first and second paragraphs of Article 95 of the Financial Regu-
lation of 21 December 1977.

1.
The credit balance of the guarantee account kept in the
general accounts in the name of each accounting officer or
assistant accounting officer and credited with the special allow-
ances granted pursuant to Article 75 of the Financial Regula-
tion of 21 December 1977 shall be paid to the persons
concerned or to those entitled under them by decision of the
institutions, after they have been granted discharge in respect
of the financial years 2001 and 2002 in accordance with the
opinion of the accounting officer where he is not personally
concerned.

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The credit balance of the guarantee account kept in the
2.
general accounts in the name of each imprest administrator
and credited with the special allowances granted pursuant to
Article 75 of the Financial Regulation of 21 December 1977
shall be paid to the persons concerned or those entitled under
them with the agreement of, and after verification by, the
accounting officer and the authorising officer concerned.

The guarantee account shall be credited with interest
3.
corresponding to the annual average of
the monthly rates
applied by the European Central Bank to its principal refinan-
cing operations, in euro, as published in the C series of the
Official Journal of the European Communities, up to the date of
liquidation.

before 1 January 2003 in a currency other than the euro shall
be calculated in euro by no later than 1 June 2003 at the rate
referred to in Article 7, applicable on 1 January 2003.

Article 269

Decentralised management of pre-accession aid

Article 268

( A r ti cl e 5 3 o f th e F i na nc i a l R e g u la ti o n)

Conversion into euro of commitments or estimates of
amounts receivable from before 1 January 2003

(A r ti c le 16 of th e Fi na nc i a l R e g u la ti on)

Budget commitments and the estimates of amounts receivable
referred to in Article 161(2) of the Financial Regulation made

In connection with the pre-accession aid referred to in Council
Regulation (EEC) No 3906/89 (1) and Council Regulation (EC)
No 555/2000 (2), the rules concerning prior checks laid down
in Article 35 shall not affect the decentralised management
already in operation with the candidate countries in question.

TITLE II

FINAL PROVISIONS

Article 270

(b) of Article 7(1) of Directive 92/50/EEC, point (a) of Article
6(2) of Directive 93/37/EEC and point (c) of Article 5(1) of
Directive 93/36/EEC.

Bodies

referred to in Article 185 of

the Financial

Regulation

( Ar ti c le 1 8 5 of t h e F i na n ci a l R e g u l a ti o n)

Bodies which actually receive a grant charged to the Commu-
nity budget and which are included in a list drawn up by the
Commission and attached to the preliminary draft budget for
each financial year shall be subject to the obligations referred
to in Articles 14(2), point (3)(d) of Article 46(1) and Article
185 of the Financial Regulation.

The Commission, which shall establish the new amounts
3.
and thresholds in accordance with the timetable and criteria set
out in paragraphs 1 and 2, shall inform the other institutions
and shall have those amounts and thresholds published in the
Official Journal of the European Communities.

Article 272

Repeal

Regulation (Euratom, ECSC, EC) No 3418/93 is repealed.

Article 271

References to the repealed Regulation shall be construed as
references to this Regulation.

Updating of thresholds and amounts

1.
The thresholds and amounts laid down in Articles 67,
128, 129, 151, 152, 173, 180, 181, 222 and 226 shall be
updated every three years in line with movements in the
consumer price index in the Community.

Article 273

Entry into force

2.
The thresholds referred to in point (b) of Article 157 and
points (a) and (c) of Article 158(1) in respect of procurement
contracts shall be adjusted every two years pursuant to point

(1) OJ L 375, 23.12.1989, p. 11.
(2) OJ L 68, 16.3.2000, p. 3.

This Regulation shall enter into force on 1 January 2003.

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This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 23 December 2002.

For the Commission

Michaele SCHREYER

Member of the Commission