Communication from the Commission to the Council and the European Parliament - Proposal for basic acts for grants currently covered by the Commission's administrative autonomy (part A of the budget) or its institutional prerogatives: general introduction
Date: 2003-05-27
Institutions: European Commission
Subjects: Community budget, accounting entry, budgetary power, economic support, financial regulation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 27.5.2003
COM (2003) 274 final

COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Proposal for basic acts for grants currently covered by the Commission's administrative
autonomy (part A of the budget) or its institutional prerogatives: general introduction

COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Proposal for basic acts for grants currently covered by the Commission's administrative
autonomy (part A of the budget) or its institutional prerogatives: general introduction

1. 

THE PRESENT SITUATION

A number of grants have for many years been financed on the basis of appropriations
entered  in  part  A  (administrative  appropriations)  of  the  Commission  section  of  the
budget (section III). The main reason why they were located in that section was that
there were no basic acts allowing them to be classified as operational appropriations.
Their  inclusion  in  part  A  means  that  they  may  be  regarded  as  Commission
administrative expenditure, which does not require basic acts for its implementation.

Similarly,  a  number  of  grants  are  financed  from  Part  B  of  the  budget  (operational
appropriations)  without  being  covered  by  a  specific  basic  act.  These  grants  are
generally  entered  in  Chapter  B3-30  and  thus  do  not  require  a  basic  act  because  of
institutional prerogatives in the field of information.

Lastly, there are a number of grants that were temporarily attached to existing basic
acts, i.e. the grants relating to the Platform of European Social NGOs (B3-4105 and
B5-803).

Most  of  these  grants  have  a  common  aim,  namely  to  strengthen  organisations  or
promote action that reinforces the European message. They are, however, applied in
very different areas of activity governed by different Treaty provisions.

2. 

REASONS FOR CHANGING THE STATUS QUO

2.1. 

Implementation of ABB

Once  it  was  decided  to  base  the  construction  of  the  Commission  budget  on
Activity-based  Budgeting  (ABB),  which  is  now  enshrined  in  Article 41  of  the
Financial  Regulation,1  it  became  clear  that  there  was  a  need  to  adopt  proposalsfor
basic instruments for part A grants that had none.

The  Commission  accordingly  undertook  a  review  of  the  budget  appropriations  that
should  be  regarded  as  administrative  and  those  that  were  operational.  Some
expenditure currently classified as operational appropriations, such as the BA lines or
the  administrative  part  of  the  research  appropriations  (B6),  has  been  placed  in  the
administrative part of the budget (Chapter 01). Conversely, some expenditure, such
as  the  Part  A  grants,  which  had  been  regarded  as  "administrative",  has  been
reclassified as operational appropriations.

1

Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the  Financial  Regulation
applicable to the general budget of the European Communities.

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However,  Article  49(2)  of  the  new  Financial  Regulation  provides  that,  with  the
exception  of  institutional  prerogatives,  pilot  projects,  preparatory  measures  and  the
administrative appropriations for each institution, all operational expenditure requires
a  basic  act  in  order  to  be  implemented.  It  was  accordingly  necessary  to  propose
establishing basic acts for the grants currently in Part A.

This  intention  to  establish  basic  acts  for  grants  currently  in  Part  A  was  publicly
announced  by  the  Commission  in  a  declaration  linked  to  the  approval  of  the  new
Financial  Regulation:  "the  European  Parliament  and  the  Council  note  the
Commission's  intention  to  present  a  proposal  for  a  framework  regulation  in  which
the overall selection criteria and the award of operating grants to the bodies referred
to in Article 108(1)(b) can be specified."

2.2. 

Definition of institutional prerogatives

Certain grants in the operational part of the budget were implemented as institutional
prerogatives  as  part  of  the  Commission's  information  policy.  When  the  basic
instruments  for  the  Part  A  grants  were  established,  it  was  also  suggested  that  in
future some of these grants should also have their own specific basic instrument.

2.3. 

Approval of the new Financial Regulation

The  new  Financial  Regulation  includes  a  Title  VI  entirely  devoted  to  the  award  of
grants. It emphasises the principles of transparency, equal treatment, no-cumulation,
non-retroactivity  and  co-financing.  The  relationship  between  these  principles  and
certain grant pre-allocation practices on the part of the budgetary authority must be
clarified. It is therefore important to establish basic acts enabling authorising officers
to  follow  clearly  defined  principles  so  that  it  is  possible  both  to  comply  with  the
requirements of the new Financial Regulation and to take into account the wishes of
the  budgetary  authority  (minutes  of  the  Council  10003/02  ADDI,  dated  13  June
2002).

2.4. 

Need to define specific basic acts for certain grants

Lastly,  there  are  also  certain  grants  attached  to  basic  acts  which  also  cover  other
actions and for which the Council has requested that a specific basic act be adopted.
These grants have also been included in this exercise in order to ensure the  overall
consistency of the ongoing work .

3. 

THE MAIN PRINCIPLES USED TO DEFINE THE BASIC ACTS FOR GRANTS

3.1. 

General approach

The grants requiring specific basic acts were first all grouped together  according to
the fields of activity they cover so  that they  can  as  far  as  possible  be  attached  to  a
specific  Treaty  article.  Thus  proposals  for  basic  acts  covering  grants  for  equal
opportunities  were  based  on  Article  13  of  the  EC  Treaty,  the  basic  instruments
covering  grants  relating  to  education,  training  and  young  people  were  based  on
Articles 149 and 150 of the EC Treaty and the basic acts covering grants relating to
culture were based on Article 151 of the EC Treaty.

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The basic acts covering grants for which there was no specific legal basis in the EC
Treaty were based on Article 308 of the Treaty. These basic acts were based on the
need to support organisations advancing the idea of the European civil society both
within the Union and with regard to third countries.

This  sectoral  approach  to  establishing  the  basic  acts  means  that  the  adoption  and
management  procedures  will  be  specific  to  each  basic  act.  Nevertheless,  the  basic
acts  were structured  in  a  similar  manner  wherever  possible.  In  addition,  each  basic
act tackles certain problems in the same manner.

3.2. 

Common approach in the basic acts

Each basic act, whether providing for operating grants or grants for actions, takes the
form of funding for a programme covering a period of two to six years. Where an act
is related to a Treaty article involving codecision, the Commission proposes that the
Council  and  Parliament  adopt  the  total  funding  required  for  the  programme
throughout its life, in accordance with the rules in Article 33 of the Interinstitutional
Agreement.

The adoption of basic acts will not alter the headings of the financial perspective to
which  the  funding  of  the  grants  is  attached,  at  least  until  expiry  of  the  current
financial perspective in 2006.

The basic acts classify grants into three groups, the "strands" of the programme; the
first  strand  covers  operating  grants  (i.e.  the  financing  of  the  beneficiary's  ongoing
activities)  for  organisations  named  in  the  basic  act,  the  second  strand  covers  other
operating grants and the third covers the financing of one-off actions, i.e. grants for
occasional activities. A basic act can cover only one subset of the three programme
strands.

Each basic act has been drafted in compliance with the Financial Regulation and its
implementing rules. In particular:

– 

Each basic act provides that, as a general rule, calls for proposals will be made,
except  in  the  following  cases  corresponding  to  operating  grants,  i.e.  the
financing of a beneficiary's ongoing activities:

– 

– 

where  the  basic  act  contains  a  reference  to  one  or  more  organisations.
This  case  covers  grants  awarded  to  "institutional"  partners  and  certain
cases  where  the  grant  concerns  a  "network  head",2  i.e.  organisations  of
general European interest;

for  certain  grants  of  the  basic  acts  related  to  “culture”  or  “citizenship”
where  the  budget  heading  names  a  beneficiary  explicitly  or  where  the
budget  identifies  the  beneficiaries  by  name  and  specifies  the  amounts
allocated  to  each  of  them  and  the  total  amount  of  the  budget  line  is
entirely pre-assigned. When a beneficiary identified in the budget fails to
comply with the conditions provided for in the Financial Regulation, the
implementing  rules  or  the  specific  articles  of  the  basic  acts  concerned,

2

A body with the object of representing a sectoral group of entities in relations with the institution.

4

                                                
the  Commission  may,  in  accordance  with  the  Financial  Regulation,
reduce the amount provided for or refrain from awarding the  grant. The
corresponding amount is not executed".

–  Where,  in  accordance  with  the  Financial  Regulation  and  the  implementing
rules, it is necessary to apply a degressivity rate, the rate may be adjusted to the
rate of co-financing or calculated as a percentage of the grant in relation to the
amount  in  the  preceding  year.  The  method  of  calculation  used  will  avoid
increasing the amount of the grant awarded to a single organisation  from  one
year to the next, save during the transitional phase of a newly-established body.
Only organisations pursuing an aim of general European interest as defined in
article  162  of  the  implementing  rules  may  be  exempted  from  a  degressivity
rate.

– 

– 

The requirement that the co-financing percentage should be at least 20% of the
operating costs or the action, with the exception of organisations named in the
basic  instrument,  in  which  case  the  co-financing  percentage  can  be  different.
Exceptions to this rate may, however, be included in certain basic acts.

Article 110(2) of the Financial Regulation requires the Commission annually to
publish  all  grants  awarded,  with  due  observance  of  the  requirements  of
confidentiality and security.

4. 

LIST OF THE BASIC ACTS COVERED BY THIS GENERAL INTRODUCTION

The basic acts covered by this general presentation are:

–  The basic act for "promoting organisations active at European level in the field of
equality between men and women",  which comes under Article 13 of the Treaty
and covers grants in the field of equal opportunities and equal treatment currently
funded from lines A-3037 and A-3046.

–  The  basic  act  for  "promoting  bodies  engaged  at  European  level  in  the  field  of
education  and  training",  which  comes  under  Articles 149  and  150  of  the  Treaty
and covers grants currently funded from lines A-3010, A-3011, A-3012, A-3013,
A-3014, A-3017, A-3022, A-3027, A-3044, B3-1000 and B3-304.

–  The  basic  act  for  "promoting  bodies  engaged  at  European  level  in  the  field  of
youth", which comes under Article 149 of the Treaty and covers grants currently
funded from lines A-3023 and A-3029.

–  The  basic  act  for  "promoting  bodies  engaged  at  European  level  in  the  field  of
culture", which comes under Article 151 of the Treaty and covers grants currently
funded from lines A-3015, A-3035 and A-3042.

–  The  basic  act  for  "promoting  European  civic  participation",  which  comes  under
Article  308  of  the  Treaty  and  covers  grants  for  ongoing  or  specific  activities
carried  out  by  European  think  tanks  or  organisations  promoting  European  civic
participation  funded  from  lines  A-3016,  A-3020,  A-3021,  A-3024,  A-3026,
A-3030, A-3036, A-321, B3-305, B3-4105 and B5-803.

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–  The  basic  act  for  bodies  "promoting  mutual  understanding  of  relations  between
the  European  Union  and  certain  non-industrialised  regions  of  the  world",  which
comes  under  Article 308  of  the  Treaty  and  covers  grants  in  the  field  of  foreign
relations,  currently  funded  from  lines  A-3031,  A-3034  and  A-3039.  The  grant
financed  from  line  A-3033  is  not  covered  by  this  basic  act.  As  it  involves  the
advancement  of  human  rights  and  democracy,  it  should  come  under  Council
Regulations  Nos 975/99  and  976/99  of  29 April  1999  and  these  Regulations
should  be  amended  in  order  to  allow  an  operating  grant  to  be  awarded  to  the
Council of Europe's North-South Centre.

–  The  basic  act  for  "promoting  action  in  the  field  of  the  protection  of  the
Community's  financial  interests",  which  comes  under  Article 280  of  the  Treaty
and  covers  grants  to  protect  financial  interests,  currently  financed  from  lines
COM-III-A-3010 and B5-910.

The  Commission  may present  further proposals  at  a  later  date  for  certain  measures
which in the past were regarded as administrative measures but which are based on
specific articles of the Treaty and will in future be regarded as operating expenditure,
for example the financing of institutes active in the field of  business and economic
surveys (A-3500, A-3501) or certain grants in the field of development (B7-610).

5. 

TRANSITIONAL PERIOD

When  the  Financial  Regulation  was  approved,  the  three  institutions  declared  that
they  undertook  to  attain  that  objective  [adoption  of  a  framework  regulation]  to
ensure  that  the  regulation  enters  into  force  by  2004.  In  principle,  the  basic  acts
should therefore be adopted by the legislature in order to be applicable by 2004.

In  the  event  of  failure  to  achieve  that  objective,  the  Commission  will  propose
transitional derogations enabling grants to be awarded in 2004, pending adoption of
thebasic acts.

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