Special report No 6/2005 on the trans-European network for transport (TEN-T) together with the Commission's replies
Date: 2005-12-15
Institutions: European Court of Auditors
Subjects: EU financing, audit, common transport policy, project evaluation, report, trans-European network, transport network

21.4.2006

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Official Journal of the European Union

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 6/2005

on the trans-European network for transport (TEN-T) together with the
Commission’s replies

(pursuant to the second subparagraph of Article 248(4) of the EC Treaty)

(2006/C 94/01)

TABLE OF CONTENTS

Paragraph

Page

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

AUDIT SCOPE, OBJECTIVES AND APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Allocation of TEN-T financial aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal framework and administrative procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal and regulatory requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation and selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Project monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Organisational structure and staff allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Coordination of EU transport infrastructure funding . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-IV

1-6

7-10

11-79

11-24

25-51

25-29

30-43

44-51

52-64

65-79

80-91

ANNEX 1 — Description of TEN-T management system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TEN-T legal and policy framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TEN-T application, evaluation and selection process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TEN-T organisational structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TEN-T budgetary framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ANNEX 2 — Map showing TEN-T priority axes and projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

3

4

5

6

6

9

9

10

12

13

16

18

21

21

23

24

24

26

27

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GLOSSARY

CF

—

Cohesion Fund

DG REGIO —

Directorate-General for Regional Policy

DG TREN —

Directorate-General for Energy and Transport

EGNOS

EIB

EIF

ERDF

FAC

FTE(s)

ISC(s)

ITS

MEANS

MIP(s)

PMS

PP(s)

PPP

PSR(s)

RTD

SF(s)

SNE(s)

TEN

TEN-T

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

European Geostationary Navigation Overlay Service

European Investment Bank

European Investment Fund

European Regional Development Fund

Financial Assistance Committee

Full-time equivalent(s)

Inter-service consultation(s)

Intelligent transport systems

Measures for evaluating actions of a structural nature

Multiannual indicative programme(s)

Programme management system

Priority project(s)

Public-private partnership

Project status report(s)

Research, technological development and demonstration activities

Structural Fund(s)

Seconded Nnational expert(s)

Trans-European network

Trans-European transport network

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SUMMARY

I.
The Community contributes to the establishment of trans-European networks in the area of transport
(TEN-T) to promote cohesion, interconnection and interoperability of national networks as well as access to
such networks across the European Union. To achieve this, the Community finances infrastructure projects
and studies for roads, railways, inland waterways, airports, ports, satellite navigation and traffic management
systems. The budget for the period 2000 to 2006 administered by the Directorate-General for Energy and
Transport (DG TREN) amounts to 4 425 million euro.

II.
The Court’s audit assessed the extent to which the Commission’s management system, including the
design and implementation of the legal framework, administrative procedures and internal control system, was
conducive to the economic, efficient and effective implementation of TEN-T.

III.

The Court found that:

— the execution of the 14 TEN-T priority projects is currently behind schedule and only 8 out of the 14 have
realistic chances to be completed by the initial deadline of 2010 (1). In particular, cross-border sections
are facing major difficulties since they receive less priority at national level and require greater coordina-
tion efforts,

— TEN-T financial aid is allocated in an overly fragmented way and is not sufficiently focused on cross-border
projects (or project sections). As such, TEN-T cannot achieve its European added value to the fullest,

— the Commission’s financing decisions notified to beneficiaries still show some important weaknesses and
the difference in scope between the two main intervention forms (studies and works) is not sufficiently
clear,

— the Commission established complex annual procedures for evaluating and selecting TEN-T projects,
despite the multiannual character of MIP projects, making evaluation a comparatively heavy procedure.
In addition, all project information had not always been available for the evaluation and selection. Not all
evaluation criteria established by the TEN financial regulation were assessed by the Commission and the
evaluation was not properly documented in all cases,

— the Commission’s project monitoring tools are insufficient. The different reports on project status and
progress submitted by beneficiaries do not always provide sufficiently relevant information to the project
officers, who in addition do not systematically carry out on-site project inspections and ex post impact
assessments,

— the Commission’s obligation in project evaluation and monitoring is impeded by the excessive workload

of staff allocated within DG TREN to the TEN-T activity,

— the coordination of Community funding of transport infrastructure projects does not allow the Commis-

sion to detect all cases of over- or double-funding.

(1) Report of the High Level Group on the trans-European transport network, 27 June 2003, paragraph 7.

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IV.

The Court recommends that the Commission:

— together with the Member States, gives priority to the financing of those TEN-T project sections, in par-
ticular cross-border project sections, whose completion is necessary if TEN-T is to achieve its European
added value,

— amends and completes key aspects of its model financing decision, in particular by defining more clearly
the scope of the activities to be co-financed under studies on the one hand and works on the other,

— develops a consistent and coherent TEN-T evaluation methodology and documents it in a publicly avail-
able manual. It should also reduce the number of different application and evaluation forms, and revise
their content so that all relevant evaluation and selection criteria required by the legislator are covered.
Where appropriate, external experts should be used for such evaluations,

— strengthens the monitoring of projects by defining minimum standards for project status reporting and
performing on-site project inspections and expost impact assessments more frequently, so that lessons can
be learnt on how to implement TEN-T more efficiently and on how to optimise the effectiveness of the
Community funding in this area,

— considers a return to a centralised form of TEN-T project management within DG TREN, and adapts the

number and expertise of the staff resources allocated to TEN-T,

— establishes, where necessary in cooperation with the Member States, appropriate legal bases, procedures
and tools to improve the coordination of transport infrastructure funding and to identify potential cases
of over- or double-funding.

— the ‘TEN-T policy guidelines’ which set out the objectives,
priorities and broad lines of measures. They define the basic
conditions a project should meet in order to qualify as a
project of common interest, and thus be considered for
TEN-T funding (5),

INTRODUCTION

1.
With the entry into force of the Maastricht Treaty in 1993,
the Community became responsible for contributing to the estab-
lishment and development of trans-European networks in the
area of transport (TEN-T) (2). In order to support projects of com-
mon interest which are implemented by Member States and inter-
national organisations, the Commission set up specific measures
for TEN-T in the early 1990’s. Budgetary expenditure on TEN-T
has increased from 182 million euro in 1993 to 661 million euro
in 2005.

The aim of TEN-T is to promote the interconnection
2.
and interoperability of national transport networks, as well as the
access to such networks, specifically taking into account the need
to link island, landlocked and peripheral regions with the central
regions of the Community (3).

— the ‘TEN financial regulation’ laying down the general rules
for the granting of Community financial aid for all trans-
European networks including TEN-T (6),

Community expenditure on TEN-T is directly managed by
3.
the Directorate-General for Energy and Transport (DG TREN) (4).
Annex 1 provides a comprehensive description of different aspects
of the TEN-T management system. From a legal and regulatory
perspective, TEN-T is governed by:

(2) Articles 154 to 156 of the EC Treaty.
(3) Article 154(2) of the EC Treaty.
(4) As opposed to indirect, shared or decentralised management

(e.g. Structural Funds).

(5) Decision No 1692/96/EC of the European Parliament and of the
Council of 23 July 1996 on Community guidelines for the develop-
ment of the trans-European transport network (OJ L 228, 9.9.1996,
p. 1) as amended by Decision No 1346/2001/EC of 22 May 2001
(OJ L 185, 6.7.2001, p. 1) and Decision No 884/2004/EC of 29 April
2004 (OJ L 167, 30.4.2004, p. 1).

(6) Council Regulation (EC) No 2236/95 of 18 September 1995 laying
down general rules for the granting of Community financial aid in the
field of trans-European networks (OJ L 228, 23.9.1995, p. 1) as
amended by Regulation (EC) No 1655/1999 of 19 July 1999
(OJ L 197, 29.7.1999, p. 1), Regulation (EC) No 788/2004 of 21 April
2004 (OJ L 138, 30.4.2004, p. 17) and Regulation (EC) No 807/2004
of 21 April 2004 (OJ L 143, 30.4.2004, p. 46).

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— the multiannual indicative programme (MIP) for the period
2001 to 2006 (7) providing the budgetary framework for the
priority projects (PPs) endorsed by the 1994 European Coun-
cil held in Essen (the so-called ‘Essen-projects’,
see
Annex 2) (8), the Community contribution to the ‘Galileo’
‘coherent groups of
project and an additional
projects’ (9), and

four

— the Commission’s financing decision which serves as the
legal basis for each TEN-T action financed and is to be noti-
fied to Member States and beneficiaries. In exceptional cases,
financing
grant
agreements (10).

complemented

decisions

are

by

(7) Commission Decision C(2001) 2654 final of 19 September 2001 as
amended by Decision C(2004) 3242 of 26 August 2004 and Deci-
sion C(2005) 213 of 3 February 2005.

4.

south: Madrid-Barcelona-Perpignan-

(8) The priority projects identified in Annex 1 to Commission Decision
C(2001) 2654 final of 19 September 2001 are the following:
high-speed train/combined transport north-south
1.
high-speed train Paris-Brussels-Köln-Amsterdam-London
2.
high-speed
train
3.
Montpellier-Madrid-Vitoria-Dax
high-speed train east: Paris-Metz-Strasbourg-Appenweier-
(Karlsruhe) with junctions to Metz-Saarbrücken-Mannheim and
Metz-Luxembourg
convential rail/combined transport: Betuwe line Rotterdam-
NL/D border-(Rhine/Ruhr)
high-speed train/combined transport: France-Italy-Lyon-Turin-
Milan-Venice-Trieste
7. Greek motorways:

Patras-Athens-
Thessaloniki-Promahon (Greek/Bulgarian border) and Via
Egnatia:
Igoumenitsa-Thessaloniki-Alexandroupolis-Ormenio
(Greek/Bulgarian border)-Kipi (Greek/Turkish border)

Pathe: Rio Antirio,

5.

6.

8. multimodal

link Portugal/Spain with the rest of Europe by
developing rail, road, sea and air transport links as appropriate
in the three principal
Iberian corridors: — Galicia (La
Coruña)/Portugal (Lisbon) — Irún/Portugal (Vallodalid-Lisbon)
— south-west corridor (Lisbon/Seville)

Ireland/United Kingdom/Benelux Road Link

9. Nordic triangle (rail/road)
10.
11. west coast main line (rail).
The following three priority projects are not included in Annex 1 as
they are already complete:
— Öresund fixed link (completed in 2000)
— railway axis Cork-Dublin-Belfast-Stranraer (completed in 2001)
— Malpensa Airport (completed in 2001).

(9) There are four coherent groups of projects (see Annex 1 to Commis-

sion Decision C(2001) 2654 final of 19 September 2001):
— Group 1-2: Removal of bottlenecks on the railway network

to improve freight and passenger traffic

— Group 3: Intra-Community cross-border projects and cross-bor-

der projects with third countries

— Group 4: Intelligent transport systems for road
— Group 5: Intelligent transport systems in the air sector.

(10) When a beneficiary is an international organisation or an EEIG, the
Commission financing decisions are complemented by grant agree-
ments signed by the Commission and the beneficiary. In addition to
the information provided in the Commission financing decision,
grant agreements include a more detailed description of the project
activities.

Community financial aid may take one or several of the
4.
following five forms: co-financing of studies, direct grants
to investments or works, interest subsidies on loans granted by
the European Investment Bank (EIB) or other financial bodies,
contributions towards fees for guarantees for loans from the
European Investment Fund (EIF) or other financial institutions,
risk capital participation for investment funds or comparable
financial undertakings.

The TEN financial regulation provides for a total budget of
5.
4 875 million euro for the period 2000 to 2006 for all TEN sec-
tors (transport, telecommunications and energy infrastructures)
combined, of which a maximum of 75 % can be allocated for the
purposes of MIPs for these sectors (11). The remaining budget of
at least 25 % is available for non-MIP projects.

6.
Of the total amount of 4 875 million euro, the Commis-
sion allocated 4 425 million euro to TEN-T, of which, so far,
70 % is reserved for the MIP to be distributed as follows (12):

— 1 551 million euro (50 %) to the PPs,

— 680 million euro (22 %) to the ‘Galileo’ programme,

— 815 million euro to the so called ‘coherent groups of

projects’, of which

— 425 million euro (14 %) to the removal of railway

bottlenecks,

— 141 million euro (5 %)

to intra-Community cross-
border projects and cross-border projects with third
countries,

— 249 million euro (8 %) to Intelligent Transport Systems

(ITS) projects (both road and air), and

— 30 million reserve (1 %).

The remainder of the TEN-T budget (at least 25 %) is foreseen for
non-MIP projects.

AUDIT SCOPE, OBJECTIVES AND APPROACH

7.
The Court’s audit assessed the extent to which the Com-
mission’s management system, including the design and imple-
mentation of the legal framework, administrative procedures
and internal control system, was conducive to the economic, effi-
cient and effective implementation of TEN-T (13).

(11) Article 5a of Regulation (EC) No 2236/95 as amended by Regulation

(EC) No 1655/1999.

(12) Annex I to Commission Decision C(2001) 2654 of 19 September
2001 as amended by Commission Decision C(2005) 213 final of
3 February 2005.

(13) The implementation by the Member States of their obligations relat-
ing to project evaluation, monitoring and financial control as defined
by the TEN financial regulation are not addressed by this audit (in
particular Articles 12 and 15 of Regulation (EC) No 2236/95 as
amended by Regulation (EC) No 1655/1999, Regulation (EC)
No 788/2004 and Regulation (EC) No 807/2004).

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The specific audit objectives were to ascertain the extent to

OBSERVATIONS

8.
which:

(a)

the allocation of Community financial aid, the forms of aid
and the rules applicable to the financial participation of the
Community permit an effective implementation of TEN-T;

Allocation of TEN-T financial aid

(b)

the Commission financing decision and the administrative
procedures, and their implementation, were adequate to per-
form a transparent evaluation, selection and monitoring of
projects without entailing inefficiencies;

Slow execution of TEN-T priority projects

(c)

the organisational structure and staff resources favour an effi-
cient management of TEN-T actions;

(d)

the Commission’s mechanisms for the coordination of trans-
port infrastructure projects financed by the Community were
appropriate to detect cases of over- or double-funding.

The Court also verified whether, and to what extent, the Commis-
sion has taken corrective action with respect to its previous obser-
vations on TEN-T (14).

The Court audited all procedures, from the submission of
9.
proposals to, where applicable, ex post financial audits. As part
of its system analysis, the Court established a comprehensive
description of the Commission’s management system and identi-
fied the most important internal controls. A total of 72 TEN-T
actions were sampled for compliance testing of the internal con-
trols operated by the Commission (15). To allow broad conclu-
sions to be drawn, the sample provided coverage of all transport
modes (16), of all EU-15 Member States and represents over
577 million euro expenditure. Out of these 72 actions, 35 were
audited on the spot.

The audit also comprised a review of the TEN-T legal
10.
bases and model financing decisions adopted by the Commission.
Furthermore, the Court issued questionnaires to the competent
national ministeries and carried out a staff survey on issues such
as programming, project ex ante evaluation, selection, monitor-
ing and control. Finally, in cooperation with the Commission, the
Court established a project database providing statistical data on
TEN-T actions financed.

(14) Court of Auditors, Annual reports for the financial years 2001
(OJ C 295, 28.11.2002, paragraphs 4.11 to 4.36 and 4.74), 2002
(OJ C 286, 28.11.2003, paragraphs 6.22 to 6.42 and 6.57) and 2003
(OJ C 293, 30.11.2004, paragraph 6.24).

(15) Account was thereby taken of the Commission’s 24 Standards for
Internal Control, adopted in December 2001, which must be fol-
lowed by all Commission services in the management of their
resources (see European Commission, ‘Standards for Internal Control
within the Commission’s services’ (SEC(2001) 2037, 31 December
2001 and SEC(2003) 1287 final of 26 November 2003)).

(16) Railway, road, inland waterway, ports, airports, satellite navigation,

intelligent transport systems for road and railway transport.

11.
The initial deadline set by the TEN-T policy guidelines
adopted by the Council and the European Parliament for com-
pleting the TEN-T network was 2010 (17). Only three out of
14 PPs decided in 1994 and 1996 have been completed so far,
while an additional five PPs are expected to be finalised within the
deadline set. For the six remaining PPs, only the main project sec-
tions are expected to be completed by 2010. In particular, cross-
border sections of TEN-T projects are facing delays as these sec-
tions receive less priority at national level and require greater
coordination efforts from the Member States concerned (see para-
graph 15). In 2003, the Commission acknowledged these impor-
tant delays, which are mainly due to insufficient financing at
European and at Member State level and to a lack of coordina-
tion between the different sources of EU, national or regional
public funds (18).

12.
Following enlargement, the European Parliament and the
Council decided to add a further 16 PPs (with deadlines for
completion ranging between 2008 and 2019) when revising the
TEN-T policy guidelines in 2004 despite difficulties in complet-
ing the existing PPs (see Annex 2) (19).

(17) Article 2(1) of Decision No 1692/96/EC.
(18) Communication from the Commission on ‘Developing the trans-
solutions
collection systems’,

European transport network.
and Interoperability of
COM(2003) 132 final of 23 April 2003.

Innovative

electronic

funding

toll

(19) The 16 additional priority projects are (see Annex III to Decision

No 884/2004/EC):
1. Galileo
2.
3.
4.
5.
6.
7. motorways of the sea (Baltic Sea, sea of western Europe, sea of

freight railway axis Sines/Algecirias-Madrid-Paris
railway axis Paris-Strasbourg-Stuttgart-Wien-Bratislava
Rhine/Meuse-Main-Danube inland waterway axis
high-speed rail interoperability on the Iberian peninsula
Fehrman Belt railway axis

8.

9.
10.

axis Athina-Sofia-Budapest-Wien-Praha-Nürnberg/

south-east Europe, sea of south-west Europe)
railway
Dresden
railway axis Gdansk-Warszawa-Brno/Bratislava-Wien
railway axis Lyon/Genova-Basel-Duisburg-Rotterdam/Antwer-
pen

11. motorway axis Gdansk-Brno/Bratislava-Wien
12.
13.
14.

railway/road axis Ireland/United Kingdom/continental Europe
‘Rail Baltica’ axis Warszawa-Kaunas-Riga-Tallinn-Helsinki
‘Eurocaprail’ on the Bruxelles/Brussel-Luxembourg-Strasbourg
railway axis
railway axis of the Ionian/Adriatic intermodal corridor
inland waterway axis Seine-Scheldt.

15.
16.

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Budget allocation not sufficiently focused on cross-border sections

13.
The overall objective of TEN-T is to ensure the cohesion,
interconnection and interoperability of national networks, as as
well as access to such networks across the European Union (see
paragraph 2).

14.
An analysis of the distribution of the TEN-T budget by
EU-15 Member States between 2001 and 2003 shows that with
few exceptions, each Member State received a share of the annual
TEN-T budget, either through the MIP or non-MIP budget

(see Table 1). Moreover, the share of the total budget allocated to
each Member State remained nearly constant (i.e. annual devia-
tions of not more than 1 % for 9 out of 15 Member States) and
projects included in the selection proposal which were finally not
retained were replaced by another project(s) from the same Mem-
ber State. This corroborates the statements made by the represen-
tatives of two Member States (20) in the TEN-T programme com-
mittee (FAC) in the Court’s survey, and documentary evidence in
the case of one Member State (21), that the principle of ‘fair share’
is an essential element taken into account in the TEN-T budget
allocation.

Table 1

2001-2003 distribution of TEN-T budget by EU 15 Member States

MS

Amount
allocated to
the
projects
2001

% of the
total

Amount
allocated to
the
projects
2002

% of the
total

Amount
allocated to
the
projects
2003

AT

BE

DE

DK

ES

12,1

18,7

76,0

5,9

23,6

EU (1)

173,4

FIN

FR

GR

IRL

IT

LU

NL

PT

SE

UK

13,0

61,4

17,7

8,0

41,6

1,1

44,0

10,5

13,5

24,8

2,2

3,4

13,9

1,1

4,3

31,8

2,4

11,3

3,2

1,5

7,6

0,2

8,1

1,9

2,5

4,5

14,4

15,0

76,2

0,1

23,7

2,6

2,7

13,5

0,0

4,2

18,1

15,7

73,1

1,5

31,5

272,7

48,4

201,2

11,4

32,4

10,7

3,0

52,0

0,0

23,0

0,0

8,9

20,0

2,0

5,7

1,9

0,5

9,2

0,0

4,1

0,0

1,6

3,5

13,1

98,7

1,0

0,0

71,3

0,0

29,8

7,0

14,8

33,3

% of the
total

3,0

2,6

Amount
allocated to
the
projects
2001-2003

44,6

49,4

(million euro)

% of the
total

3,2

2,9

12,0

225,3

14,2

0,3

5,2

33,1

2,2

16,0

0,2

0,0

7,6

78,8

647,2

37,5

192,4

29,4

11,0

11,7

164,9

0,0

4,9

1,2

2,4

5,5

1,1

96,8

17,5

37,2

78,1

0,5

4,5

35,3

2,4

10,2

1,4

0,9

8,8

0,2

6,0

1,2

2,6

5,5

Total

545,4

100,0

563,4

100,0

610,1

100,0

1 718,9

100,0

(1) EU means projects managed by international organisations (such as ESA, Eurocontrol).

(20) The Netherlands and Sweden.
(21) Finland.

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Most of the TEN-T project sections financed are located
15.
within the boundaries of the Member States. Of the 118 MIP
infrastructure project sections (22), only nine sections cover more
than one Member State. These cross-border project sections face
most difficulties in obtaining national financing and encounter
administrative and legal difficulties in their management. In addi-
tion, no adequate funding priority has been given by the Com-
mission to these type of projects. Indeed, the MIP decision only
provides for 5 % of its budget to cross-border projects, of which
only 2 % to intra-Community cross-border projects (23) (see para-
graph 6). Moreover, 70 % of the 2000 to 2006 MIP budget for
the nine cross-border sections remains to be committed in 2005
and 2006, in particular those related to the railway links between
Spain and France, and Austria and Italy.

Too-fragmented budget allocation

17.
TEN-T financial aid may not exceed 50 % of the cost of
studies, and 10 % of the cost of infrastructure works (25) with an
overall limit of 10 % of the total investment cost, except for
projects concerning satellite positioning and navigation systems
and for projects crossing borders or natural barriers for which
grants can cover up to 20 % of the total investment cost.

An analysis of the forms of intervention mentioned in
18.
paragraph 4 and used for projects committed between 1995
and 2004 showed (see Diagram 1):

— that nearly all of the actions (99 %) concerned studies or works,

— a very limited use of interest subsidies on loans and risk capi-

tal facility (26), and

16.
Although the TEN financing regulation increased the
funding threshold for project sections crossing borders or natu-
ral barriers from 10 to 20 % in time, to be used from the 2004
financing decisions onwards, this has not led to any cross-border
sections being financed at increased financing rates as of June
2005 (24). If the difficulties in completing the railway cross-
border sections persist, the trans-European added value of TEN-T
will not be exploited to the fullest.

— that contributions towards fees for guarantees for loans from
the EIF or other financial institutions have not been used at all.

19.
40 % of the TEN-T actions committed between 1995
and 2004 concerned works. Even though the TEN financial regu-
lation states that this form may only be used ‘in duly justified
cases’, the audit found that specific justifications were hardly ever
provided when using this form of aid.

Number of actions and budgets committed by form of aid used between 1995 and 2004

Diagram 1

Source: ECA’s project database.

(22) Excluding coherent groups of projects Nos 4 and 5 consisting of

intelligent transport systems projects.

(23) The remaining 3 % is envisaged for cross-border projects with third

countries and the new EU-10 Member States.

(24) A new proposal to amend the TEN financial regulation which pro-
vides for a further increase up to 50 % is now being discussed by the
budgetary authorities.

(25) Although no limit is envisaged by the TEN financial regulation, the
Commission applies a threshold of 10 % for infrastructure works.
(26) Between 1995 and 2004, only 13 interest subsidies on loans and one
risk capital facility have been granted on a total of 1 143 actions sup-
ported.

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Co-financing of studies is the most used intervention
20.
mechanism (59 % of the actions). Unlike works, studies are attrac-
tive even for countries and regions benefiting from other EU
infrastructure funding programmes, such as the Structural
and Cohesion Funds (27). This is mainly due to the high
co-financing rate for studies in TEN-T.

Projects belonging to the ‘Coherent Group of Projects’,
24.
for which almost 40 % of the budget remains to be committed,
should be closely monitored. In particular, this is required for the
group of cross-border projects where 56 % of the budget remains
to be committed in 2005 and 2006. This highlights the overall
difficulties in completing cross-border project sections which are
either part of PPs or of coherent groups of projects.

In the period 1995 to 2004, the average rate of funding
21.
for works and studies amounted to respectively 3,5 % (as com-
pared to 10 %) and 25,4 % (as compared to 50 %) of the total esti-
mated eligible costs (28). These average funding rates are consid-
erably below the maximum allowed for either form of aid.
Moreover, the TEN-T budget is spread over a very large number
of actions, many of which did not require TEN-T financing and/or
did not fully comply with the evaluation and selection criteria (see
paragraph 39).

Legal framework and administrative procedures

Legal and regulatory requirements

Financing decision still contains weaknesses

22.
The above observation and the delays in executing PPs
(see paragraph 11), indicate a lack of prioritisation in the selec-
tion of TEN-T actions for funding thereby reducing the desired
catalytic effect of the Community financing (see paragraph 42).
Furthermore, the low average of actual funding for works raises
questions whether the Commission’s proposal for a new TEN
financial regulation increasing the maximum funding limits for
works will achieve its intended results of attracting more public
and private financing (29).

25.
The Commission financing decision is the main legal
basis for awarding TEN-T financial aid to single projects and has
therefore to specify clearly the scope, timing, form, budget and
financial conditions for TEN-T financial aid (see Annex 1). It was
only in 2002 that the Commission started consistently to notify
such decisions to beneficiaries, despite this being required by the
TEN financial regulation (31). Since then, the Commission has
revised the model financing decision every year leading to a more
complete and clear legal basis (32).

More than half of the current MIP budget for cross-border projects not
yet committed

23.
During the period 2001 to 2004 a total amount of
1 926 million euro had been committed for MIP projects, 63 %
of the total budget available for that purpose. A further 1 129 mil-
lion euro remains to be committed in the period 2005 to 2006.
To be in the position to commit the remaining 37 % in 2005
and 2006, will require strict monitoring of the MIP project execu-
tion by the Commission and the Member States. The measures
contained in the amended policy guidelines on how to deal with
significant project delays are adequate on a long-term perspec-
tive (30). However, to address delays in the short term, projects
not progressing as planned should be the subject of a more strin-
gent review by the Commission. In consultation with Member
States it should be envisaged, where necessary, to provide for an
immediate budget transfer within the MIP programme to projects
implemented according to, or ahead of, planning.

(27) Between 1995 and 2004, 84 % of the budget allocated to CF coun-

tries was used for studies.

(28) The average funding allocated to a work action amounts to 5,0 mil-
lion euro, while the average funding to a study action amounts
to 3,4 million euro.

(29) From 10 to 15 % and in some cases to 30 or even 50 % (see Article 7
of the Proposal for a Regulation of the European Parliament and the
Council, COM(2004) 475 final of 14 July 2004).

(30) Article 19a(4) and (5) of Decision No 1692/96/EC as amended by

Decision No 884/2004/EC.

26.
Although the Commission also took steps to improve the
description of activities covered by the financing decisions, the
Court’s suggestion of introducing a binding model structure for a
technical annex has not been implemented (33). Such a model
should oblige beneficiaries to provide a minimum level of infor-
mation respecting a pre-defined structure linking activities to
budget. This would facilitate project progress monitoring
and contribute to a more effective and efficient operation of
financial and technical controls of the activities financed by the
Commission and Member States.

The financing decision does not indicate what technical
27.
and financial information on project status must be provided by
beneficiaries and in what form. Due to this absence of standard-
ised reporting (or appropriate guidelines), the technical and/or
financial information submitted together with each request for
payments was not always sufficient to allow the Commission:

— to carry out a robust evaluation of TEN-T projects (see para-

graph 37), and

(31) Article 10 of Regulation (EC) No 2236/95.
(32) Following these revisions, the version used in 2004 now specifies the
responsibilities of each actor involved in the execution of a TEN-T
action in a clearer manner. It includes fixed start and end dates,
requires a detailed budget breakdown by activities from the benefi-
ciaries, specifies deadlines for reporting, defines more clearly the eli-
gibility of costs and clarifies the publicity obligation.

(33) Annual report concerning the financial year 2002, paragraph 6.37.

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— to verify the eligibility of activities and/or costs claimed by
beneficiaries. In some cases, final payments were made even
though the required information on the results of a
co-financed study were not provided with the request for
payment (34). This indicates that in these cases, the Commis-
sion’s internal controls showed deficiencies.

Evaluation and selection

A complex application and ex ante evaluation process

Scope of studies and of works not sufficiently clear

The Court’s audit evidenced that errors at beneficiary
28.
level were mostly related to the following characteristics of TEN-T
financial aid:

— lack, or unclear definition, of the scope of studies and works
in the TEN financial regulation and financing decision,

— a substantially higher funding rate for studies, which induced
beneficiaries to claim the reimbursement of costs directly
related to works as study projects.

29.
This led to payments by the Commission for construc-
tion works at the increased rate in 30 % of the study transactions
tested. Unambigious definitions of the scope of both ‘studies’ (35)
and ‘works’ (36), proposed by the Court to prevent the risk of
errors, still remain to be transposed into the model financing
decisions.

(34) In 6 out of 10 applicable cases, request for final payments were sub-
mitted without the required information on the results of the study
being available.

(35) A study is any preparatory analysis, survey, plan or design made
before the start of implementation aiming at defining the character-
istics of a project and the measures necessary to develop and imple-
ment the different phases of a given project and necessary precondi-
tion for the building permit and the final decision by relevant
authorities to start implementation. Studies may include services of
material nature (such as test structures, geological surveys, exploring
of the construction site and drilling of trial bore tunnels) provided
that: 1. they are necessary for the building permit or the final deci-
sion to start implementation, and 2. they do not result in a product
intended for general use. A study results in a descriptive or analytical
document entailing technical, economic, financial, legal and environ-
mental domains.

(36) Works include any service and procurement after the start of imple-
mentation (including preparatory measures to make the start of
implementation possible) that involves the actual implementation,
construction or mise-en-service of a given physical structure or
project serving a general usage purpose (and as to be defined in more
detail in the Commission decision or contract for any particular
project). All supervision and/or oversight activities, necessary detailed
design, or design of alternative solutions should be considered as
integral parts of the works, regardless if the beneficiary or an exter-
nal party performs them. Works also include the implementation
and/or construction of any physical environmental mitigation mea-
sures described in the relevant environmental impact assessment.

30.
Applications for TEN-T financial aid are submitted annu-
ally either through the MIP or non-MIP procedure (see Annex 1).
Despite the multiannual character of the MIP, annual evaluation
procedures are organised to allocate funds to MIP projects. This,
together with the parallel running of an annual non-MIP proce-
dure, considerably increases the administrative burden for the
Commission and the Member States and thereby reduces the
overall efficiency of the evaluation and selection process (37). In
addition, as priority is given to financing of MIP projects, the bud-
get available for non-MIP depends on the outcome of the MIP
procedure, which unnecessarily delays the progress of non-MIP
project selection.

The administrative procedures for application and ex
31.
ante evaluation are complex. Various models of application and of
evaluation forms have been established by the Commission and
used in parallel (38). The Court identified several cases whereby
this administrative complexity created additional work for the
Commission’s staff, without having had a fundamental impact on
the quality of the project selection or the allocation of Commu-
nity funds.

32.
Although the Commission has taken the first steps
towards simplifying the administrative process by merging the
preliminary and detailed application for non-MIP proposals in
2004, there remains room for further simplification of the appli-
cation and evaluation process, in particular within the MIP.

Proposal submission deadline not always respected

A deadline is set by the Commission for submitting
33.
applications for financial aid. Compliance with this deadline
ensures an equal treatment of project applicants and allows Com-
mission staff sufficient time to evaluate proposals (or project
progress for second year financing).

(37) See paragraphs 52 and 64 on TEN-T staffing.
(38) The forms to be used depend on whether the project is a MIP or non-
MIP project, financed for the first year or subsequent years and
whether the project concerns a study or works.

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The audit showed that a significant number of applica-
34.
tions for financial aid were not submitted within the deadline,
despite rules on timely submission having been clarified and con-
firmed by the Commission (39).

Project selections not sufficiently justified

Until 2004, full project information not available at preliminary
evaluation and selection stage

A proper and transparent evaluation requires that all rel-
35.
evant project information is available at the start of the process.
However, the preliminary application forms used until 2004 as a
basis for the first evaluation did not oblige applicants to provide
all the essential information even though required by the TEN
financial regulation (40).

36.
As a result, the initial evaluation and selection of MIP
projects was performed on the basis of application forms which
contained incomplete project information (see paragraph 40).
Consequently, proposals did not comply with all submission cri-
teria prior to the main evaluation stage. For MIP, a robust evalu-
ation is particularly important as the MIP decision prioritises bud-
get on the basis of which projects are subsequently allocated
TEN-T financial aid. For instance, one of the PPs for which MIP
budget indicatively allocated 13 million euro for the period 2001
to 2003 only received funding in 2004 (41). Since the preliminary
and detailed application forms for MIP had not been merged
before 2004, this deficiency persisted until then.

37.
From the second financing year onwards, evaluations are
mainly carried out on the basis of project status reports (PSRs),
which the audit found provide insufficient information for this
purpose. An analysis of the PSRs submitted for projects audited
showed that the information provided by Member States was
insufficiently precise, in particular regarding the status of the
work in previous periods. This is due to the format of the model
report, which does not require Member States to provide detailed
information. As a result, the quality of the selection of projects
largely depends on the qualification, experience and conscien-
tiousness of the individual project officers evaluating the propos-
als, the time available to perform an adequate progress review and
the cooperation from the Member States in providing additional
data if, and when, necessary.

(39) Despite the rules being clarified in DG TREN’s Manual of Procedures
and the TEN-T Handbook, the Court’s audit found that for 28 out of
72 projects, proposals were submitted up to 56 days after the dead-
line.

(40) Such as a cost-benefit analysis, a statement on the examination of
alternative possibilities of public and private financing, a description
of the control measures to be operated by the Member State, direct
or indirect socio-economic effects, in particular on employment and
the provisional timetable of work, which is limited to an indication
of the start and completion date of the project.
(41) PP14 — West Coast Main Line Modernisation.

38.
The TEN financial regulation specifies the basic condi-
tions for awarding Community aid (42) and the project selection
criteria (43). The project application and appraisal forms used by
the Commission do not mention or do not sufficiently guide
towards assessing compliance with these conditions and criteria.
Where relevant questions are included in the project appraisal
forms, the replies given by the evaluators are often limited to a yes
or no reply, without providing the required supporting
justifications.

39.

More specifically, the audit evidenced that:

— the additionality condition requiring that ‘Community aid
shall be granted, in principle, only if achievement of a project
meets financial obstacles’ had not been met in almost 20 %
of the actions audited, as beneficiaries indicated in their
detailed application form that the action ‘would go ahead as
planned’ even if TEN-T financial assistance was not
awarded (44),

— the project appraisal form does not address the condition
that financial aid requested for a project section does not
exceed 10 % of the total investment costs of the overall
project. Although the audit found that actual funding rates
are below the maximum rates allowed (see paragraph 21),
condition remains
the

verification of

annual

this

(42) The TEN financial regulation specifies the following four basic con-

ditions (see Article 5 of Regulation (EC) No 2236/95):
— Community aid shall be granted, in principle, only if achieve-

ment of a project meets financial obstacles,

— Community aid shall not exceed the minimum considered nec-

essary for the launch of a project (Article 5(2)),

— regardless of the form of intervention chosen, the total amount
of Community aid under this Regulation shall not exceed 10 %
of the total investment cost (20 % in specific cases) (Article 5(3)),
— the financial resources provided for under this Regulation shall
not, in principle be assigned to projects or stages of projects
which benefit from other sources of Community funding.
Compliance with the conditions which have been added following
the 2004 revision of the TEN-T guidelines and the TEN financial
regulation has not been analysed as it is too early to assess their appli-
cation.

(43) The criteria specified in the TEN financial regulation can be sum-
marised as follows (see Article 6 of Regulation (EC) No 2236/95):
— degree of contribution to objectives and priorities of the TEN-T

policy guidelines,

— project is potentially economically viable,
— the financial profitability of the project is insufficient at the time

of application,

— the maturity of the project, stimulative effect on public and pri-
vate finance, soundness of the financial package, the direct
or indirect socio-economic effects in particular on employment
and the environmental consequences should be taken into
account,

— in case of cross-border projects, timing of the different parts

should be taken into account.

(44) In 12 out of 72 applicable cases audited.

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particularly relevant in those cases where studies are not fol-
lowed by infrastructure works. Within the sample audited,
the audit found that the studies co-financed for the EGNOS
project did not comply with this condition, based on the
available estimates (45),

— the degree of contribution to the objectives and priorities of
the TEN-T policy guidelines are not always adequately
assessed. Project evaluators are required to rate the contribu-
tion to priorities or policy objectives using a scale of marks
without providing a justification for their assessment. Also,
the audit found that in several cases not all objectives were
assessed (46),

— compliance with other evaluation criteria is assessed with a
‘yes/no’ or a ‘high/medium/low’ reply. Although evaluators
are invited to add remarks or to justify their choice, this is
usually not done. For instance, with regard to the cost ben-
efit and socio-economic analysis of the project, no assess-
ment is made on the adequacy of the approach or method-
ology applied. Furthermore, the Commission only verifies
compliance with the requirements to provide this informa-
tion, without specifying the implication on the decision
and/or on the amount of Community funding, and

— questions set out in the evaluation forms were frequently not
answered (47) or incorrectly replied to (48), by the Commis-
sion staff evaluating applications.

40.
As for the initial evaluation of MIP projects, the audit
showed that for most MIP projects an appraisal form had not
been completed. An analysis of those forms where the Commis-
sion had documented its evaluation indicated the same deficien-
cies and weaknesses as identified for the non-MIP evaluations
(i.e. not all questions answered, etc.).

41.
Due to the lack of justifications provided by the evalua-
tors and the absence of evaluation guidelines or indicators, it is
unclear how the verification of compliance with the established
criteria takes place and how Commission staff carrying out the
evaluations arrive at the final conclusion on whether the condi-
tions or formal requirements are fulfilled in order to select pro-
posals for funding.

42.
The MIP programme provides a multiannual allocation
of TEN-T financing. Nevertheless, the TEN financial regulation
requires annual project evaluations and selections to prioritise

(45) EGNOS AOC Pre-operational implementation critical design studies.
Since 1995, the Commission co-financed 11 studies, whereby the
total amount of funding awarded until 2004 (130,4 million euro)
exceeds the maximum threshold with an amount of 29,7 million
euro.

(46) In 15 out of 31 applicable actions audited not all objectives were

assessed by the Commission.

(47) This was the case for the evaluation of studies where the questions
on the economic and financial appraisal were not answered even
though required in the application form.

(48) For 15 actions where a proposal had been submitted beyond the
deadline a positive reply was given to the question inquiring about
the respect of the deadline for submission of proposals.

funding within the MIP (49). In this context, a robust and trans-
parent evaluation is essential to assess the extent to which indi-
vidual projects fulfil the policy objectives and the selection crite-
ria to achieve the allocation of funding intended by the TEN-T
policy guidelines. Given the weaknesses and deficiencies described
above for evaluation, but also in the monitoring of ongoing
projects from second year financing onwards (see paragraphs 44
to 50), the multiannual MIP budget has been allocated to catego-
ries of projects (i.e. projects of common interest, coherent groups
of projects and Galileo), individual projects, project sections and
actions, without a proper assesment of the legally required crite-
ria. In the Court’s view, the weaknesses highlighted above have a
negative impact on the prioritisation of projects within the MIP
programme.

No general use of external experts in the evaluation process

43.
The Court’s recommendation of extending the use of
external experts in the evaluation process to all transport modes
has not been followed up by the Commission as it was consid-
ered ‘a sensitive issue for reason of confidentiality’ (50). It should
be noted that many other Community programmes, such as
Cohesion Fund and the RTD framework programmes, use exter-
nal experts as evaluators whereby the confidentiality issue is
addressed by a declaration to be signed by the evaluators (51). As
shown by the evaluation of ITS projects, the use of external
experts would have led to a better documented and jusitified
evaluation and selection process (see paragraphs 38 and 39). In
addition, experts supporting project officers during the evaluation
would contribute to a more time and cost efficient evaluation and
add objectivity and expertise to the process (see paragraphs 56
to 58). It is also a possibility explicitly provided for by the TEN
financial regulation, which specifies that the Commission may
seek any specialist advice it requires, including the opinion of the
EIB (52).

Project monitoring

TEN-T project monitoring tools are insufficient

44.
In order to ensure that Community aid is used efficiently,
the Commission and Member States have a shared responsibility
to systematically monitor progress of projects, where appropri-
ate, with the cooperation of the EIB or other bodies. The purpose
is to assess the manner in which projects and the programme
have been carried out and to evaluate the impact of their imple-
mentation (53). In addition, project monitoring is an essential ele-
ment in the annual evaluation and selection of MIP project pro-
posals requesting financial aid from the second year onwards (see
paragraph 42).

(49) Article 10 of Regulation (EC) No 2236/95.
(50) Annual Report concerning the financial year 2001, paragraph 4.35

and reply from the Commission.

(51) Note however that Title III of the Financial Regulation (Article 160(3))
provides for specific rules applicable to the contracting of experts for
the RTD framework programmes.

(52) Article 9(3) of Regulation (EC) No 2236/95.
(53) Article 15 of Regulation (EC) No 2236/95.

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TEN-T project monitoring by the Commission mainly

45.
relies on the following two elements:

However, the Commission does not regularly carry out
49.
monitoring activities or ex post impact assessments to verify
whether:

— reporting by beneficiaries (in particular annual PSRs (54) and

respected (56),

financial and technical progress reports),

— policy objectives have been achieved and priorities have been

— on-the-spot project inspections carried out by (or on behalf

of) the Commission.

46.
As already mentioned in the case of project evaluations
(see paragraph 37), the PSR’s submitted for the transactions
audited showed that the information provided is often insufficient
in detail or sometimes even lacking, complicating an adequate
project evaluation and selection, and also having a negative
impact on project monitoring. This has been corroborated by the
Court’s survey of DG TREN project staff.

In addition to the PSR, project officers also receive tech-
47.
nical and financial progress reports when cost statements are sub-
mitted by the Member States or project promoters. As mentioned
in paragraph 27 there is no model structure for the technical and
financial reporting that require Member States to provide a mini-
mum level of information to the project officers.

48.
A second element in the project monitoring process con-
sists, in the case of projects funding infrastructure works, of
on-the-spot inspections to the project site which, in the majority
of the cases, only take place prior to the final payment. For most
of the actions, the project officer, accompanied by a financial
officer, performs a technical and financial review of the action
concerned after the submission of the final payment claim to the
Commission and prior to the final payment (55).

(54) The individual project financing decisions defining the monitoring
obligations in more detail specify that PSRs have to be submitted on
an annual basis by the Member States to the Commission by 31 Janu-
ary (as from 2004 onwards, by 31 March). In the model PSR estab-
lished by the Commission, Member States are required to describe on
about one page the activities achieved, the reasons for any delay in
project execution, to state whether the objectives remain unchanged,
to indicate whether the project benefits from other Community
funds, the payments made, to annex relevant information to prove
compliance with EU legislation and to provide a cost breakdown.
Two tables are to be annexed to the PSR’s for MIP projects providing
an overview of the expenditure committed and incurred.

(55) 80 % of the decisions closed in 2004 where preceded by an on-the-

spot mission.

— initial conditions for financial aid and project objectives have

been fulfilled or achieved,

— the actual added value of the TEN-T financial aid for the
project and of the project to the creation of a trans-European
transport network compared to what has been stated at
project application stage.

50.
Furthermore, as in the case of evaluations (see para-
graph 43), no use is made in the monitoring process of external
experts or expertise available in other Commission services, other
institutions (such as the EIB) or within Member States.

Complete and reliable TEN-T project data not readily available

As recommended by the Court in the 2001 and 2002
51.
Annual Reports, the Commission integrated the different TEN-T
databases into a central IT system towards the end of 2003 (57).
Although efforts have been made by the Commission to establish
a user’s manual, to train users and add functionalities, this IT sys-
tem is not commonly used by project officers and therefore does
not contain up-to-date and reliable information. The Court’s sur-
vey of DG TREN project staff showed that project officers are not
using the system as it is not user-friendly and too much oriented
towards the needs of the RTD framework programmes. As a
result, the Commission cannot provide reliable and complete
information in its reporting, without extensive and time-
consuming reconciliation work with accounting information
contained in the Commission’s central accounting system.

Organisational structure and staff allocation

Evaluation and monitoring of TEN-T impeded by a too high workload
per project officer

Table 2 shows the budget and staff allocation for all

52.
activities carried out within DG TREN as of 2004.

(56) For instance, whether the initial cost-benefit analysis made at the
project evaluation stage is still valid and what has been the actual
impact of the Community intervention on public/private financing,
on employment or on the environment.
(57) Programme management system (PMS).

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Budget and staff allocation to DG TREN activities as of end 2004

Table 2

DG TREN activities — 2004 budget and full-time employed (FTE) staff

Activity

Budget
(in million euro)

% of total

FTE Staff

% of total

Inland, air and maritime transport

Trans-European networks for transport

Trans-European networks for energy

Conventional and renewable energies

Nuclear energy

Research related to energy and transport

Administrative support for DG TREN

Policy strategy and coordination for DG TREN

76

672

18

64

154

235

23

0

6

54

1

5

12

19

2

0

167

55

6

108

281

103

201

89

17

5

1

11

28

10

20

9

Source: European Commission, DG TREN 2004 Annual Activitiy Report and 2005 Annual Management Plan.

Total

1 243

100

1 009

100

Adequate staffing is a prerequisite for efficient and effec-
53.
tive programme management. As of 2004, the 459 ongoing
TEN-T actions were managed by 18 full-time equivalent (FTE)
project officers, an average of 26 actions per FTE project officer.
In addition, the actual number of actions managed by each project
officer differed substantially (ranging from 2 to 71 actions by FTE
project officer), indicating an unbalanced allocation of actions
and staff allocated to TEN-T between (and within) the director-
ates managing TEN-T. Moreover,
the high number of
actions (24 %) managed by seconded national experts (SNEs),
seconded to the
who are only on a temporarily basis

Commission, raises concerns about the continuity of project
management.

54.
The results of the staff survey requesting information
from project officers about the average working time spent per
activity reveals that most staff resources are allocated to technical
project monitoring (35 %) and proposal evaluation and selection
(16 %) (see Diagram 2). However, a large amount of time is, on
average, also spent on ‘support to policy papers and/or legislative
proposals’ (11 %), despite policy units existing within each of the
four operational Directorates.

Diagram 2

Average time by activity

Source: Court of Auditors.

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The high workload of the project officers involved in a
55.
wide range of activities implies that insufficient attention can be
paid to key activities such as project evaluation and monitoring,
including periodic on the spot inspections. Given that these
inspections are an essential element of project monitoring, this is
not considered satisfactory by the Court.

Qualification of TEN-T project officers: limited expertise on transport
issues

TEN-T project officers play a major role in the project
56.
evaluation, selection and monitoring processes. In particular in
context of the MIP, the decision to continue, suspend or cancel
project financing largely depends on the assessment made by
project officers, generally without the assistance and advise of
external experts. In these circumstances, it is essential that project
officers have the necessary technical knowledge related to trans-
port issues.

57.
However, an analysis of the technical expertise of project
officers (58) showed that less than half have a degree in transport-
related subjects (59). In addition, a significant number of the statu-
tory staff lacked professional experience relating to transport
prior to their recruitment as a TEN-T project officer. In compari-
son, 8 out of 11 SNEs dispose of such professional experience.
Although the absence of prior professional experience in a field
does not necessarily imply a lack of competence, sufficient tech-
nical expertise in transport issues is essential for the quality of the
evaluation, selection and monitoring of such complex technical
projects.

58.
Moreover, these deficiencies are not adequately addressed
by training measures. An analysis of the training activities
attended between 2001 and 2004 by 30 project officers (of which
six were SNEs) showed that 24 out of 30 (including four SNEs)
followed at least one training course on financial or procedural
issues. However, only 16 out of 30 (including three SNEs) fol-
lowed a course on transport-related issues (60). In addition, the
average duration of these courses was less than one day.

Use of SNEs limited by Commission rules

59.
The limited technical expertise of the majority of the
TEN-T statutory project staff is compensated, to a certain extent,
by the professional experience offered by SNEs. The temporary
nature of their assignment and the Commission’s internal rules

(58) The CVs of 13 statutory project staff and of 11 SNEs (who are or have
been working on TEN-T projects since 2001) have been analysed.
(59) Such as a DESS in transport, an MSc in transportation and traffic

planning, engineer in field transport infrastructures.

(60) The analysis of the training activities was carried out on the basis of
the information contained in the training cards and passports of each
individual staff member.

applicable to SNEs (61) limit their contribution to the evaluation,
selection and monitoring process.

60.
Although these rules have been in force since May 2002,
it took DG TREN almost two years to clarify the practical impli-
cations of these rules for SNEs (62). In addition, the audit identi-
fied that contrary to the rules, some SNEs are managing projects
originating from their Member State and are initiating and autho-
rising financial transactions.

61.
The Commission’s rules are intended to avoid any poten-
tial conflict of interest. However, they necessarily imply that SNEs
can only partly contribute to project-management-related activi-
ties. In turn, this means additional work for the Commission’s
statutory staff, and a less efficient allocation of resources. More-
over, SNEs consider that their expertise is not being used to its
fullest extent, and the results of their work is not visible within the
Commission.

TEN-T staff allocation and qualification not suited to new challenges

62.
To be able to manage the TEN-T activity with a substan-
tially larger number of projects and budget share from 2007
onwards, DG TREN will have to adapt, as quickly as possible, its
organisational structure, staff allocation and qualifications to
meet these new challenges.

(61) Commission decision C(2002) 1559 of 30 April 2002 as amended
by Commission Decision C(2003) 406 of 31 January 2003 and Com-
mission Decision C(2004) 577 of 27 February 2004. Article 6 stipu-
lates that SNEs ‘shall under no circumstances (…) represent the Com-
mission on his or her own with a view to entering into commitments
(financial or otherwise) or negotiating on its behalf’. In addition, the
rules state that ‘every effort must be made to avoid any conflict of
interests or appearance of such conflict in relation to the SNEs duties
while seconded to the Commission’. In addition, Article 52 of the
Financial Regulation (EC, Euratom) No 1605/2002 of 25 June 2002
states that ‘there is a conflict of interests where the impartial and
objective exercise of the functions of player in the implementation of
the budget or an internal auditor is compromised for reasons involv-
ing family, emotional life, political or national affinity, economic
interest or any other shared interest with the beneficiary’.

(62) The practical implications of these rules are that a SNE:

— can go alone on mission or participate in external meetings only
as an observer or for information purposes, except in special cir-
cumstances authorised by the Director-General,

— cannot be involved in any procedural phase of authorising
implying that a SNE cannot initiate

financial transactions,
or verify any financial transactions,

— cannot act as member of an evaluation committee, and
— cannot act as project officer for projects originating from the
SNEs own Member State and from the organisation from which
he/she is seconded.

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Within the Commission, the creation of a TEN-T Execu-
63.
tive Agency is currently under consideration. According to a cost-
benefit analysis (CBA) commissioned by DG TREN, setting up
such an agency could lead to efficiency gains, mainly through (63):

— staff being fully devoted to TEN-T management, without hav-

ing to deal with policy issues, and

— more flexibility in hiring staff.

However, the conclusions of the CBA do not stand scru-
64.
tiny,
in particular due to the overly optimistic parameters
and incorrect reference data used in the calculation of the finan-
cial consequences. In addition, most of the identified efficiency
gains could also be achieved with TEN-T being managed by DG
TREN ‘in-house’.

Coordination of EU transport infrastructure funding

Three main EU programmes funding transport infrastructure

65.
The main sources of Community financing for trans-
European transport infrastructure projects are TEN-T, the Struc-
tural Funds (SFs), in particular the European Regional Develop-
ment Fund (ERDF), and the Cohesion Fund (CF) (64). The
co-financing rate for individual projects via the ERDF is between
75 and 85 % (65) of total eligible costs while the CF contributes
up to 85 % of eligible expenditure. In contrast, the Community
contribution from the TEN-T budget heading is limited to 10 %
of the overall total investment cost of a project regardless of the
form of intervention chosen, except for some projects where the
contribution can reach 20 % (see paragraph 17).

(63) Cost-benefit assessment of the externalisation of the management of
Community financial support to the TEN-T Networks, final report of
June 2004.

(64) The CF and ERDF provide the major share of funding for transport
projects in the eligible Member States or regions, both in terms of
total funds available and the co-financing rate for individual projects.
The Community contributions from CF and ERDF in the period 2000
to 2003 can be estimated at roughly 3,3 to 3,5 billion euro per year,
whereas the TEN-T annual average budget amounts to 580 million
euro. Apart from the subsidies provided by these three Community
instruments, the European Investment Bank grant loans for the
financing of transport infrastructure.

(65) The ceilings for contributions from the Structural Funds are set in
Article 29(3) of Regulation (EC) No 1260/1999 (OJ L 161,
26.6.1999, p. 1) at 75 % of total eligible cost in regions covered by
Objective 1, 80 % in regions located in a Member State covered by
the Cohesion Fund, and 85 % for the outermost regions and outlying
Greek islands. In the case of investment in infrastructure generating
substantial net revenue, the contribution may not exceed 40 % in
Objective 1 regions.

Incomplete legal provisions relating to multiple financing

The legal bases governing ERDF (66) do not include
66.
explicit provisions for the case of simultaneous funding from an
SF and other EU funding programmes. As far as the CF is con-
cerned, the question of duplication and overlapping is addressed
by Article 9 of Council Regulation (EC) No 1164/94 establishing
a CF (67) stating that ‘The combined assistance of the Fund and
other Community aid for a project shall not exceed 90 % of the
total expenditure relating to that project’. Since the maximum rate
of assistance granted by the CF alone is 80 to 85 % of public or
equivalent expenditure, there is a margin of 5 to 10 % left for
other Community aid, such as TEN-T.

67.
The TEN financial regulation specifies in Article 5(4) that
‘The financial resources provided for under this regulation shall
not, in principle, be assigned to projects or stages of projects
which benefit from other sources of Community funding’. By
using the wording ‘in principle’ the regulation does not exclude
co-financing of a TEN-T project by two or more sources of Com-
munity funding. There are no further provisions in the TEN finan-
cial regulation clarifying the use of multiple funding sources.

68.
The funding of a transport project by different EU fund-
ing programmes entails the risk of over- or double-funding of the
same project or project section by different Community funding
sources. In addition, this risk also exists if due to a combination
of funding from the TEN-T programme and:

— the CF: the 90 % threshold of the CF is exceeded,

— the ERDF (or the CF): more than 100 % of eligible costs are
funded, which would result in either the Member State or the
project promoter making a profit from the Community bud-
get. This risk, however, is limited to the case of studies, which
may receive up to 50 % of their total cost from the TEN-T
programme.

Terminology used in the project applications and appraisal
insufficiently clear and consistent

forms

69.
To limit the risk of over- or double-funding, it is impor-
tant that the Commission has accurate and relevant information
on past, current and future EU financing of a project proposal.
Member States are obliged to indicate other Community funding
in the applications for the TEN-T programme, as well as in the
in
applications for projects to be financed by the CF, and,

(66) Regulation (EC) No 1783/1999 of the European Parliment and of the
Council of 12 July 1999 on the European Regional Development
Fund (OJ L 213, 13.8.1999, p. 1) and Council Regulation (EC)
No 1260/1999 of 21 June 1999 laying down general provisions on
the Structural Funds.

(67) Council Regulation (EC) No 1164/94 of 16 May 1994 establishing a

Cohesion Fund (OJ L 130, 25.5.1994, p. 1).

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principle, also in the financing plans included in the program-
ming documents of the SFs. However, in the latter case, the infor-
mation available in the Commission is limited, due to the decen-
tralised management of the SFs.

In addition, evaluation practices or programmes existing
75.
in the stuctural policy area, such as MEANS (68), aiming at
improving methods of evaluation of infrastructure projects, are
not used for the evaluation of TEN-T projects.

70.
The Court’s analysis of completed application forms
showed that the question relating to financing from different EU
funding sources is understood differently by individual Member
States, which led in some cases to incorrect or incomplete infor-
mation on other EU financing sources being given to a TEN-T
project.

71.
The detailed application forms used for TEN-T project
proposals ask whether an application has been, or will be, made
for support from any other Community source. The wording and
the scope of the question differ between the application forms for
works or for studies, but also between the annual models and
even sometimes between the language versions. For instance, the
term ‘project’ in the application for works was frequently inter-
preted by Commission staff as referring to the specific project sec-
tion for which EU funding is requested rather than the project as
a whole.

Insufficient information to allow coordination through inter-service
consultations

76.
Inter-service consultations (ISCs) represent the Commis-
sion’s formal approach to coordination whereby all other Com-
mission services, including the Legal Service, provide within a
deadline of 10 working days an opinion (69) on a list of projects
proposed for EU funding. By way of this procedure, the different
Commission services verify, amongst other things, whether there
is any potential overlap of EU funding (70).

72.
In addition, in the TEN-T project appraisal forms, the
question ‘The Project is without other EU funding support’ is
interpreted by the Commission as referring only to the section for
which financing is requested and not to the project as a whole. In
application forms, however,
the same term is interpreted
differently.

Limited use of expertise from other Commission services or the EIB for
evaluation purposes

77.
The effectiveness of inter-service consultations largely
depends on the quality and accessibility of information available
in each of the Commission services. Given the limited amount of
time available to reply to the ISC, relevant information must be
accurate and readily available for consultation. However, no data-
base centralising information on EU funding allocated to trans-
port projects is available within the Commission, nor within any
of the services concerned. This is in particular the case for the
ERDF managed by DG REGIO, where Member States can only
indicate measures, but are not required to provide detailed infor-
mation on projects within their operational programmes or pro-
gramme complements as projects are not approved at this stage.

73.
To assist in the evaluations on ERDF and CF proposals,
the Commission concluded a cooperation agreement and frame-
work contract with the EIB. In the case of projects jointly financed
by both institutions, the EIB makes freely available all its techni-
cal and economical analyses and conclusions, at both the
appraisal and monitoring stages. In the case of projects for which
no application has been made for EIB financing, recourse can be
made to the expertise of the EIB for an ex ante evaluation of tech-
nical or financial aspects of a proposed project for funding. In
addition, DG REGIO makes use of other external experts for
project assessments. To this end, a multiannual framework con-
tract has been concluded with a consortium of consultants in the
transport field.

As mentioned in the section on evaluation and selection
74.
(paragraph 43), TEN-T proposals are mainly evaluated by Com-
mission staff in DG TREN. No use is made of the specific exper-
tise offered by DG REGIO or by the EIB. Such resources could be
of particular use for ex ante inspections of projects located in
regions or Member States eligible for ERDF or CF funding.

This lack of information limits the validity of the ISCs
78.
carried out. This is evidenced by the reply given to several ISCs
launched for TEN-T projects where a favourable opinion was
given, but with a reservation stating that overlap with other EU
funding cannot be excluded.

(68) Means for evaluating actions of a structural nature.
(69) Either a favourable opinion (with or without comments), a suspended
opinion (e.g. pending submission of further information) or an
unfavourable opinion. No opinion within a deadline of 10 working
days implies a tacit favourable opinion. The time limit is increased
to 15 working days if the main body of the text (minus annexes) is
longer than 20 pages.

(70) The same is done for CF projects and ERDF measures, but with dif-
ference that the IDC is carried out in two steps: upon receipt of the
project application or draft operational programme and when the
draft financing decision is established. Additional IDC’s take place in
case a Member State applies for financing of a so-called major project
(with financial aid exceeding 50 million euro) within the operational
programme.

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Additional coordination measures not fully exploited

In addition to the ISC, there are also other possibilities
79.
to improve coordination of EU transport funding (71). However,
these alternatives are not fully and systematically exploited by the
Commission (72).

CONCLUSIONS AND RECOMMENDATIONS

Need to concentrate TEN-T funding on project sections with highest
European added value

80.
The Court found that TEN-T financial aid has not always
been allocated in the most effective way. The slow execution of
PPs (in particular of cross-border project sections), the large num-
ber of actions financed and the low average of funding rates used,
had a negative impact on the prioritisation of the TEN-T financ-
ing (see paragraphs 11 to 24).

— the Commission should introduce minimum funding rates in
the TEN regulation and ensure that the Community contri-
bution for each individual project is sufficient to provide the
desired catalytic effect, and

— the Commission should complement the proposed increase
in the share of Community funding by a bilateral agreement
with the Member States to take the necessary financial and
technical measures to implement the selected projects within
the agreed time-frame,
for cross-border
sections (74).

in particular

Legal framework needs to be completed and applied consistently

For beneficiaries, the model financing decision is the
82.
main legal basis setting the conditions to be observed for obtain-
ing TEN-T financial aid. Despite several modifications, the model
financing decision has still to be improved to ensure an efficient
project monitoring and effective operation of controls (see para-
graphs 25 to 29).

To create a consistent and complete legal framework, the

83.
Commission should:

81.
The Commission and the Member States, who have com-
bined responsibility for achieving efficient and effective budget
allocation and project execution, should take the following
measures:

— introduce forms of aid which best achieve the TEN-T policy

objectives and discontinue forms of aid not used,

— Member States should prioritise their project proposals more
accurately on the basis of clear eligibility, selection and award
criteria, to be established by the Commission. The Commis-
sion should only select proposals on the basis of these crite-
ria, irrespective of Member States’ concern for a ‘fair share’,

— the Commission and the Member States should give the
highest priority to the execution of existing PPs, in particular
cross-border sections, and should support legislative and
policy measures facilitating the coordination of TEN-T
projects. In this context, the nomination of ‘European coor-
dinators’ as provided for by the 2004 TEN-T policy guide-
lines is welcomed (73),

(71) Such as participation in committee or panel meetings (e.g. monitor-
ing Committees for CF and ERDF measures), TEN-T financial assis-
tance committee and TEN-T evaluation panel meetings; joint inspec-
relevant
tions or ex post
documentation (such as project progress reports); or informal con-
tacts between Commission staff of different services.

impact assessments; exchange of

(72) Invitations to committee and evaluation meetings are issued, but
meetings are not systematically attended; on-the-spot inspections are
generally carried out by each DG independently and project-related
reports are not systematically shared with other Commission services
(and if so, usually not analysed); and ex post impact assessments are
carried out by external experts for most structural actions but find-
ings are not communicated to DG TREN.

(73) See Article 17a of Decision No 1692/96/EC as amended by Decision

No 884/2004/EC.

— complete the model of its financing decision by introducing
clear definitions of ‘studies’ and ‘works’, harmonising the
structure for the description of works, and standardising
technical and financial reporting, and

— ensure consistency in the application of the financing deci-
sion towards Member States and beneficiaries once an
adequate model financing decision has been agreed upon.

More efficient, transparent and strictly applied evaluation procedure

Despite the multiannual character of MIP projects, the
84.
Commission established a complex annual administrative frame-
work to evaluate and select MIP and non-MIP projects. These
heavy administrative procedures have not always led to relevant
information being fully available for the evaluation and to a prop-
erly documented evaluation process.
there is
no coherent and consistent methodology established by the Com-
mission on how to assess the basic conditions for financing and

In addition,

(74) See draft opinion of the European Parliament Committee on Trans-
port and Tourism for the Committee on Budgets on the proposal for
a European Parliament and Council Regulation determining the gen-
eral rules for the granting of Community financial aid in the field of
the trans-European transport networks and energy and amending
Council Regulation (EC) No 2236/95.

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to check compliance with the submission and evaluation criteria.
As a result, evaluations and selections of proposals were carried
out by the Commission in an ad hoc manner, and in the absence
of documented and publicly available guidelines (see para-
graphs 30 to 43).

To ensure a more time and cost-efficient, transparent and

85.
strictly applied evaluation process, the Commission should:

— disconnect the current annual MIP and non-MIP evaluation
and selection procedure, and establish a reserve list of non-
MIP proposals to absorb any non-utilised MIP budget,

More rigorous project monitoring

86.
For ongoing projects, the information provided by ben-
eficiaries to the Commission is often too limited to allow project
officers to carry out an effective and efficient project monitoring.
In particular, the Commission’s monitoring does not regularly
verify whether essential conditions, such as the implementation
of policy objectives or the overall funding limits, are complied
with during the lifetime of the project (see paragraphs 44 to 51).

To achieve a more rigorous and transparent project

87.
monitoring, the Commission should:

— revise the existing model of the PSR obliging beneficiaries to
provide all relevant information on the status and planning
of the project,

— limit the paper work by establishing a single model applica-
tion and evaluation form covering all essential project
information,

— set minimum requirements as to the technical and financial
information to be given allowing for a benchmarking
between projects and Member States of the progress made,

— introduce a two-step evaluation process firstly assessing
essential criteria such as the basic conditions for financial aid,
economic viability, maturity and compatibility with environ-
mental legislation and, secondly, assessing pre-selected pro-
posals against the remaining evaluation criteria,

— establish a publicly available evaluation manual, as required
by the Commission’s internal control standards (ICS), and
specific guidelines prior to each call for proposals in order to
enable Member States to carry out their pre-evaluations in
full knowledge of the Commission’s methodology,

— revise the model project appraisal form obliging the Com-
mission’s evaluators to explain and document in a more
explicit and comprehensive way the results of the evaluation
for all criteria stipulated in the legal basis,

— use the assistance of external experts on a general basis and
make use more frequently of expertise and information avail-
able in other DGs, in particular DG REGIO, and at the EIB
allowing a more efficient use of staff and providing objective
and specific technical expertise where required, and

— reduce the number of evaluation exercises within a new six-
year MIP programme using multiannual legal commitments
systematically (75). This should allow staff resources to be
transferred to evaluation and monitoring.

— carry out on-site inspections at an early stage in the project
so that corrective action can be taken in due time comple-
mented, where necessary, by regular ex post impact assess-
ments. Such ex post evaluation should be organised once dif-
ferent sections of a project have been completed, as such an
evaluation of individual actions might not prove to be
cost-effective,

— use external experts more frequently for monitoring pur-
poses and the information and expertise available in other
DG’s, other institutions, such as the EIB, and within the
Member States, and

— continue its efforts to establish a single IT system or database
providing reliable and complete information on TEN-T
projects.

Need to adapt organisational structure and resources

88.
Project evaluation and monitoring are impeded by the
excessive workload of staff allocated within the Commission to
the administration of TEN-T. The lack of educational background
and/or limited professional experience in specific transport-
related areas for a significant number of TEN-T project officers is
not sufficiently addressed by training measures. The involvement
of SNEs compensate for the lack of expertise to a certain extent.
However, the temporary nature of their assignment and the Com-
mission’s internal rules applicable to SNEs limit their contribu-
tion to the evaluation, selection and monitoring process (see para-
graphs 52 to 64).

89.
Given the expected substantial increase of TEN-T in bud-
getary terms, it is essential that the Commission makes efficient
use of its staff resources. For that purpose, the Court recommends
the Commission to:

(75) As already envisaged by the TEN financial regulation for some type
of projects (see Article 5(5) of of Regulation (EC) No 2236/95 as
amended by Regulation (EC) No 807/2004).

— analyse the adequacy of the TEN-T staff and its qualifications

in respect of actual needs,

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— encourage project officers to participate in training activities

focusing on transport specific issues,

— review the role of SNEs in project-management-related tasks
and, to the extent possible, assign SNEs primarily to policy-
related responsibilities,

— consider a return to a more centralised form of project man-
agement, with a specific unit dealing with cross-border
projects, bringing together all project-related expertise, lim-
iting coordination activities, allowing for more efficient and
flexible resource management and providing the national
authorities with a single contact point for all transport
modes, and

— alternatively, to delegate the programme management to an
executive agency or a similar body, but only if justified by a
robust cost-benefit analysis.

Coordination of Community transport infrastructure funding to be
further strengthened

90.
The coordination of Community funding of transport
infrastructure within the European Union does not allow the
Commission to identify all cases of over- or even double-funding.
The main reason for this is that the legal bases of the different EU

programmes are ambiguous as to whether, and if so under what
conditions and to what extent, multiple financing of projects is
admissible (see paragraphs 65 to 79).

91.
To strengthen the coordination of Community transport
infrastructure funding, the Commission is recommended to take
following additional action:

— revise the application, appraisal and monitoring forms or
reports to include an explicit question about whether a
TEN-T project, and not only a project section, is receiving or
has received other funding,

— exchange relevant information in a timely manner between
its services (mainly DG TREN and DG REGIO), but also with
national administrations and the European Investment Bank
requiring, inter alia, the setting up of appropriate procedures
and tools, such as a common database containing informa-
tion on all EU funded transport projects, and

— award TEN-T financial aid to projects receiving multiple EU
funding only upon signature of a ‘modus operandi’ between
the Commission and the Member State concerned on how to
funding mechanisms. Such an
separate the different
approach would also facilitate project monitoring and con-
trol of the costs claimed by beneficiaries.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 15 December
2005.

For the Court of Auditors
Hubert WEBER
President

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ANNEX 1

DESCRIPTION OF TEN-T MANAGEMENT SYSTEM

TEN-T legal and policy framework

TEN-T policy guidelines

1. Decision No 1692/96/EC on Community guidelines for the development of the trans-European transport network
defines the basic conditions a project should meet in order to be qualified as a project of common interest and thus be
considered for TEN-T funding (1). The guidelines list, by way of illustration, the 14 projects of common interest or pri-
ority projects (PPs) adopted by the European Councils held in Essen in 1994 and in Dublin in 1996.

2.

3.

TEN-T projects should pursue the objectives and meet one or more of the priorities defined in the decision. These relate
to, amongst other things, sustainable mobility, interoperability, elimination of bottlenecks, completion of missing links,
studies to improve design and better implementation of the network. The projects should fall within, or relate to, the
geographical scope of the network as shown in plans annexed to the decision, address the specifications identified for
each transport mode and be economically viable, justified on the basis of a cost-benefit analysis.

The decision was amended by Decision No 1346/2001/EC (2) extending the scope of the network to inland ports, sea-
ports and inter-modal terminals and, more importantly, by Decision No 884/2004/EC (3). The latter amendment intro-
duced the following main changes to the guidelines:

— the number of PPs has been increased from 14 to 30 integrating the networks of the 10 new Member States and

adding the new concept of ‘motorways of the sea’ (4),

— the PPs are declared to be of European interest, which implies in particular that

— these projects should be given priority by the Member States when programming the applications for Com-

munity aid under TEN-T, Cohesion Fund and Structural Funds,

— specific monitoring and reporting requirements apply, and

— specific coordination measures should be taken by the Member States in the event cross-border projects or

sections,

— the extension of the timing for completion of the network from 2010 to 2020 and the introduction of a date for

completing the work for each of the priority project sections,

— the possibility of designating European Coordinators to facilitate the coordinated implementation of cross-border

projects in particular.

TEN financial regulation

4.

Regulation (EC) No 2236/95 of 18 September 1995 (5) provides the financial framework and lays down the general
rules for the granting of Community financial aid in the field of trans-European networks for Transport, Energy and
Telecommunications. It was amended by Regulation (EC) No 1655/1999 (6) introducing the multiannual indicative pro-
gramme (MIP) for the period 2001 to 2006 and by Regulations (EC) No 788/2004 (7) and (EC) No 807/2004 of
21 April 2004 (8).

5.

The budgetary resources envisaged for the implementation of the Regulation are 4 600 million euro for the period
2000 to 2006.

(1) Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996 on Community guidelines for the development

of the trans-European network, (OJ L 228, 9.9.1996, p. 1).

(2) Decision No 1346/2001/EC of the European Parliament and of the Council of 22 May 2001 (OJ L 185, 6.7.2001, p. 1).
(3) Decision No 884/2004/EC of the European Parliament and of the Council of 29 April 2004 (OJ L 167, 30.4.2004, p. 1).
(4) The 30 priority projects include the three already completed priority projects; i.e Öresund fixed link completed in 2000, Malpensa Air-

port completed in 2001 and Conventional rail link Cork-Dublin-Belfast-Larne-Stranraer completed in 2001.

(5) Council Regulation (EC) No 2236/95 of 18 September 1995 (OJ L 228, 23.9.1995, p. 1).
(6) Regulation (EC) No 1655/1999 of the European Parliament and of the Council of 19 July 1999 (OJ L 197, 29.7.1999, p. 1).
(7) Regulation (EC) No 788/2004 of the European Parliament and of the Council of 21 April 2004 (OJ L 138, 30.4.2004, p. 17).
(8) Regulation (EC) No 807/2004 of the European Parliament and of the Council of 21 April 2004 (OJ L 143, 30.4.2004, p. 46).

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6.

The main conditions defined by the Regulation are the following:

— the aid may not exceed 50 % of the cost of studies, and 10 % of the cost of infrastructure works with an overall
limit of 10 % of the total investment cost, except for projects concerning satellite positioning and navigation sys-
tems and, since April 2004, for projects crossing borders or natural barriers for which the subsidies may reach
20 % of the total investment cost,

— Community aid shall be granted, in principle, only if achievement of a project encounters financial obstacles,

— projects should be economically and financially viable and show an adequate degree of maturity. An environ-

mental impact assessment must be made for each project,

— applications for financial aid shall be submitted by or in agreement with the Member State concerned and include

all information necessary for the examination of the project,

— the Commission shall take annual decisions to grant aid, where applicable, following an opinion from the Pro-
gramme Committee. The 2004 amendment makes it possible to finance certain projects also on a multiannual
basis,

— Community aid may cover only project-related expenditure incurred by the beneficiaries or by third parties

responsible for the implementation of a project,

— implementation of projects is subject to effective monitoring and evaluation,

— Member States and Commission shall take the necessary financial control measures.

The multiannual indicative programme (MIP)

7.

8.

9.

Commission Decision C(2001) 2654 final of 19 September 2001 established a MIP for the transport sector covering
the period 2001 to 2006. It was the subject of budget revisions in 2004 and 2005 (9). The MIP decision provides in its
Annex I a list and an indicative budget breakdown for the 14 PPs endorsed by the European Councils of Essen in 1994
and Dublin in 1996 and four ‘coherent groups of projects’. In addition, a budget breakdown for the ‘Galileo’ project is
provided. In Annex II, an additional listing of project parts and stages is shown, with an indicative annual budget
breakdown.

Besides improving the efficiency of the implementation of the TEN-T programme, the main objective of the MIP is to
respond to the call by public and private investors for ‘legal certainty that Community financial aid will continue in
one or several future years if implementation proceeds as planned’ (10). This certainty should provide better guarantees
to promoters and encourage public-private partnership (PPP) solutions (11). At the same time, the MIP should provide
the flexibility to take into account unforeseen technical, financial, environmental or legal project developments, by
either increasing, reducing or withholding the yearly financial aid as indicated in the MIP decision.

The MIP decision also introduced simplification to the management of the TEN-T programme. During the implemen-
tation of the MIP programme the Financial Assistance Committee (FAC) should only be informed about the progress of
the programme and the financing decisions adopted. The Committee should therefore no longer provide an opinion.
In addition, in order to obtain Community aid for the second year, Member States submit short project status reports
(PSR’s) instead of detailed application forms.

Commission financing decision

10. The implementation of TEN-T project sections (or actions) is based on a model financing decision to be notified to
Member States and beneficiaries. The current model of a financing decision consists mainly of the following elements:

— identification of the Member State, beneficiary and entity responsible for implementing the action,

— project description (title, duration, location, activities, form and amount of aid),

— a budget breakdown by activity and financial and administrative conditions.

(9) Commission Decision C(2001) 2654 of 19 September 2001 final as amended by Decision C(2004) 3242 of 26 August 2004 and Deci-

sion C(2005) 213 of 3 February 2005.

(10) See recitals of the Commission Decision of 19 September 2001.
(11) Some projects, such as the Dutch High Speed Rail Link and the French-Spanish Perpignan-Figueras line, have a PPP part, but this part is

not co-financed by the EU.

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11. The structure and contents of the decision have been modified on an annual basis since 2002.

TEN-T application, evaluation and selection process

12. The project evaluation and selection procedure and the administrative forms to be used in this process depend on the
type of project. Table 3 provides an overview of the model forms established by DG TREN to formalise the TEN-T appli-
cation and evaluation procedure.

Table 3

Overview of model forms used in application and evaluation procedure

Model Form description

MIP model

NON-MIP model

Preliminary application forms for studies

Preliminary application forms for works

Detailed application forms for studies

Detailed application forms for works

Project appraisal form

Project appraisal form for new actions

Project appraisal form for continuing actions

Project appraisal form for ITS projects

Project Status Report

x (1)

x (1)

x (1)

x (1)

x

x

x

x

x (2)

x (2)

x (2)

x (2)

x

x

(1) A separate model exists for the initial MIP and for the MIP revision.
(2) Preliminary and detailed application forms for non-MIP projects have been merged to one form in 2004.

13. For MIP projects, starting in the period 2001 to 2003, an initial evaluation took place in October and November 2000
on the basis of preliminary application forms. When the project was submitted for its first year of financing a detailed
application form had to be submitted. Since 2000, the Commission has been using project appraisal forms to record
the results of project evaluations. The results of the evaluation of the detailed application forms are recorded in a project
appraisal form labelled ‘New projects’. The purpose of this evaluation is mainly to see if the information contained in
the detailed application form corresponds to that in the preliminary application form submitted in 2000. For the sub-
sequent years of financing an assessment of the project’s progress is performed on the basis of a PSR. A separate project
appraisal form is used for this evaluation which is labelled ‘Continuation’.

14. For non-MIP projects, DG TREN launches a call for proposals at the end or at the beginning of each year inviting Mem-
ber States, organisations or project promoters to submit proposals, before a deadline indicated by the Commission,
using a preliminary application form. Until 2004, the evaluation of a non-MIP proposal also followed a two-phase pro-
cess. The preliminary application forms were evaluated by the Commission using the model project appraisal form for
non-MIP projects. Where a project proposal was selected by the Commission for funding the Member State concerned
was asked to submit a detailed application form before the deadline specified by the Commission, which is prior to the
meeting of the FAC where the Commission’s proposals are discussed with the Member States representatives. As of end
2004, the preliminary and detailed application forms were merged. The progress of non-MIP projects is checked on
the basis of PSR’s submitted by the Member States using a model specifically designed for non-MIP progress reporting.

15. The state of progress of the non-MIP evaluation procedure depends on the outcome of the MIP evaluation due to the
priority given to the allocation of the MIP budget. In practice, this means that the non-MIP evaluation panel meeting
can only take place once it has been decided how much of the total TEN-T budget is to be allocated to the MIP projects.
The remaining TEN-T budget is allocated to the selected non-MIP project proposals.

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16. Until 2004, each project proposal was evaluated by one project officer: the Commission’s desk officer in charge of (a)
specific Member State(s) or the official in charge of a specific transport mode. In 2004, it was decided to have propos-
als evaluated by two project officers in order to ensure a more objective evaluation (12). The results of the individual
evaluations are discussed at a panel meeting where the proposals from the different Directorates are presented and given
a preliminary ranking. Finally, the TEN-T evaluation committee chaired by Directorate B adopts a draft proposal for
the allocation of the TEN-T budget and submits it for approval to the Director-General.

TEN-T organisational structure

17. The TEN-T programme is centrally managed by DG Energy and Transport (DG TREN). DG TREN has been operational

since January 2000, following the merger of Directorate-General Energy and Directorate-General Transport.

18. The total number of DG TREN posts (statutory and non-statutory including vacancies) has increased substantially, from

654 in 2001 to 1 046 at the beginning of 2005.

19. Besides TEN-T, DG TREN also implements the following main activities: trans-European networks for energy; inland,
air and maritime transport; conventional and renewable energies; nuclear energy; security; the RTD framework pro-
gramme activities related to energy and transport and policy strategy and coordination for DG TREN.

20. Four out of 10 DG TREN Directorates are involved in the TEN-T programme: Directorate B ‘Trans-European Networks
Energy and Transport’, Directorate E ‘Inland Transport’, Directorate F ‘Air Transport’ and Directorate G ‘Maritime and
River Transport; intermodality’.

21. Seven units are currently dealing with TEN-T project management; unit B3 ‘TEN project management’, unit B4 ‘TEN
project evaluation and financial management’ (created in 2004), unit B5 ‘Satellite navigation system (Galileo), intelli-
gent transport’ (integrated in Directorate B in 2005), unit E2 ‘Rail transport and interoperability’, unit F2 ‘Air traffic
management and airports’, unit G2 ‘Short sea shipping, inland navigation and ports’ and unit G3 ‘Motorways of the sea
and intermodality’. In addition, staff in the financial cells of each Directorate are dealing with the financial aspects of
TEN-T project management.

22. Unit B3 plays a leading role in the evaluation, selection and commitment process of the TEN-T programme. It pro-
vides, among other things, the secretariat of the TEN-T FAC meetings, coordinates the MIP and non-MIP budgetary
implementation and is in charge of horizontal issues such as PPPs and coordination with other programmes.

TEN-T budgetary framework

23. The budgetary requirements and funding limits specified in the TEN financial regulation and model financing decision

are the following:

— for the TEN-T budget allocation per transport mode:

— the allocation of at least 55 % of the total TEN-T funding to railways (including combined transport),

— the allocation of maximum 25 % of the total TEN-T funding to roads,

— and for the intervention mechanisms:

— the co-financing of studies, which may not exceed 50 % of the total eligible costs of a study, except in duly

substantiated cases (13),

— direct grant to investments or work (as defined in the Commission financing decision): maximum funding

up to 10 % of the costs (14),

— risk capital participation should not exceed 1 % of the total TEN-T financial resources, with the possibility of

increasing it to 2 % as from 2003 following a review of the use of this instrument (15).

(12) A third evaluator in case of conflicting evaluation results.
(13) Article 4(1)(a) of TEN financial regulation.
(14) Annex II to the Commission financing decision, paragraph 1.1. ‘Definitions’.
(15) Article 4(1)(e) of TEN financial regulation.

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The total amount of Community aid, regardless of the intervention chosen, should not exceed 10 % of the total invest-
ment cost, with an exception of 20 % for projects concerning satellite positioning and navigation systems (from 1 Janu-
ary 2003 following a review). In addition, an exemption is given under certain conditions, for projects of European
interest started before 2010 with the aim of eliminating bottlenecks and/or filling in missing sections, if such sections
are cross-border or cross natural barrier (16).

(16) Article 5(3) of TEN financial regulation.

C 94/26

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Official Journal of the European Union

21.4.2006

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21.4.2006

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Official Journal of the European Union

C 94/27

THE COMMISSION’S REPLIES

SUMMARY

III.

— The management of the projects and their state of advance-
ment is mainly under the control of the Member States. To
date, three projects are already complete; five are expected to
be completed by 2010, while major parts of three other
projects will be finished by 2010. With the 2004 revision of
the TEN-T policy guidelines, the deadline for the gradual
establishment of the TEN has been extended until 2020
(Article 2(1) of Decision No 1692/96/EC as amended in
2004).

— The Member States submit project proposals respecting the
TEN-T guidelines which aim to ensure the maximum Euro-
pean added value of the TEN-T programme. The Member
States share the responsibility to achieve a more efficient and
effective budget allocation. The 2004 revision of the TEN-T
guidelines adopted by the European Parliament and the
Council introduced the principle of concentrating commu-
nity financial aid on 30 Priority Projects. The Commission
supports cross-border projects as one of the eight priorities
set out in the TEN-T guidelines.

— The 2004 and 2005 model financing decisions were progres-
sively developed and now address the weaknesses identified
In the new draft TEN Regulation
by
(COM(2004) 475) a clear operational definition for works
and studies is proposed. However, this definition will be sub-
ject to further reflection.

the Court.

— The multiannual character of the MIP (multiannual indicative
programme) does not exonerate the Commission from the
annual check on progress of these projects, nor from the
reconsideration of the indicative allocation of aid. In 2005,
the application and appraisal forms have been revised to
address the observations made by the Court. In addition, spe-
cific TEN-T evaluation guidelines will be established.

— Other elements, such as regular meetings with Member States
representatives mostly on the occasion of on-the-spot project
inspections, guarantee a suitable monitoring and a solid
information basis for the work of the Commission. The 2005
new model
financing decision provides more detailed
requirements with regard to the technical and financial
reporting. The reporting procedures will be revised as well.
However, taking into account the cost/efficiency aspect of its
actions, the Commission does not consider that the number
of on-site visits is insufficient. As only very few projects have
been completed, the Commission has not yet carried out ex
post impact assessments but these are planned for the MIP
2000 to 2006, in 2007.

— The Commission is already allocating more staff to the man-
agement of the projects, within the limit of the budget avail-
able. It also plans to create an executive agency for the man-
agement of the TEN-T projects.

— Although no cases of over- or double-funding have been
detected hitherto, the Commission has taken action (inter alia,
Memorandum of Understanding with the European Invest-
ment Bank signed in June 2005 and the organisation of com-
mon missions with DG REGIO), to further strengthen the
coordination.

IV.

— In order to achieve the European added value of the TEN-T
programme, the Commission has to support cross-border
projects as one of the eight priorities mentioned in the TEN-T
guidelines of the European Parliament and the Council. The
Commission and the Member States are in favour of
increased support to cross-border projects. Since 2004,
cross-border projects for works can receive a higher funding
(up to 20 %), and a percentage of up to 50 % is foreseen in
the new draft TEN Regulation.

— The key aspects of the model financing decision have been
amended in the 2004 and mainly in the 2005 model, and a
clear operational definition of studies and works is proposed
in the new draft TEN Regulation.

— The development of a single methodology has proved to be
extremely difficult for such a different variety of projects in
the various transport modes (rail, motorways, air, etc.). In
addition to the existing general project appraisal guidelines,
the Commission will develop specific TEN-T guidelines. Since
2004, the Commission is limiting the number of forms tak-
ing into account the various types of Community aid. A new
appraisal form was established in 2005 covering all relevant
evaluation and selection criteria. External experts including
experts from DG REGIO are already consulted when consid-
ered appropriate, in particular when it is felt that in-house
technical expertise is not available.

— For several years, the Commission has sent, annually, a model
project status report to the beneficiaries, which may be fur-
ther improved. Taking into account the cost-efficiency aspect
of its actions, the Commission considers that on-site visits
are sufficiently frequent. Many of the projects, especially in
the MIP, have been well known for some years. The fre-
quency of visits has been in proportion to the information
needs of the Commission. In order to improve the system of
on-site inspections, the Commission is developing a more
systematic monitoring system. The Commission is also devel-
oping an ex post evaluation methodology for projects. An ex
post evaluation of the entire MIP programme 2001 to 2006
will be carried out in 2007, respecting the ‘Evaluation stan-
dards and good practices’.

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— Decentralisation has allowed the Commission to take advan-
tage of expertise available in other departments and syner-
gies with other programmes (Marco Polo, RTD, Galileo, etc.).
The creation of a TEN-T agency will bring about centralisa-
tion but will also offer simplification as well as higher qual-
It will
ity and effectiveness of project management.
strengthen coordination between all parties concerned with,
or involved in project implementation.

— The Commission considers the expertise of its staff as adapted
and, sufficient to cover its needs. The agency will enable the
Commission to call on an increased number of specialists
with appropriate technical skills.

— Even though no cases of over- or double-funding have been
detected hitherto, the Commission has already taken action
and intends to further improve the coordination of EU trans-
port infrastructure funding. Inter alia, it will remind benefi-
ciaries of TEN-T funding of the need to report any multiple
financing of TEN-T projects.

OBSERVATIONS

11.
The management of the projects and their progress is
mainly under the control of the Member States that finance the
larger part of most of the TEN-T projects.

As of today, three projects have already been completed and five
are expected to be completed by 2010, while major parts of three
other projects will be finished by 2010.

The coordination problem is a genuine one since it is necessary
to establish a delicate balance between different priorities, which
do not necessary coincide at regional, national and Community
level.

14.
The TEN-T budget consists of MIP and non-MIP ele-
ments. The MIP budget, representing a large part of the TEN-T
budget, is allocated to priority projects located in all EU-15 Mem-
ber States. Since a global amount per project is indicatively allo-
cated at the beginning of the programme, variations are logically
limited. The non-MIP budget allocation requires a positive opin-
ion from the TEN Financial Assistance Committee which consists
of Member States representatives.

15.
The Commission has to deal with projects proposed or
agreed with by the Member States. The subject of the cross-border
projects is only one out of eight priorities in the TEN-T guidelines
set up by the European Parliament and the Council. In the MIP
framework decision, cross-border projects are included in all four
coherent groups of projects of common interest and in the Pri-
ority Projects Group and not only in the group GR 3 to which the
Court limits its observations (for example the Brenner Tunnel, the
Figueras-Perpignan project or the Lyon-Turin section). The Com-
mission underlines that the majority of the cross-border projects
are in the study phase, and therefore consume lower amounts.
Many of these projects will be in the investment phase in the next
MIP and are likely to consume a bigger share of the programme.

Moreover, the Commission has taken measures to give more pri-
ority to cross-border sections, such as the nomination of Euro-
pean coordinators and the proposal of the new draft TEN Regu-
lation to increase the Community financial aid for trans-frontier
project sections to 50 %.

16.
For 2005 and 2006, the increased funding threshold for
project sections crossing borders or natural barriers from
10 to 20 % will be applied. EUR 30 million have been reserved
for this higher threshold in the MIP budget.

18.

— This reflects the fact that Member States do request direct

grants for works and studies in almost in all cases.

— The use of interest subsidies on loans was not used frequently
because, as a result of the deficit criteria of the Stability Pact,
Member States do not generally finance infrastructure
through loans.

The participation in the risk capital facility has a limit of 1 % of
the budgetary resources pursuant toArticle 18 of the TEN Regu-
lation (EC) No 2236/95 (i.e. EUR 4 875 million) until the end of
2006. In the new draft TEN Regulation for the period 2007
to 2013 (COM(2004) 475) this limit no longer exists.

Since 2000, the EIF no longer provides funds for TEN infrastruc-
tures. Therefore, this instrument was not used. The instrument
was not strictly limited to guarantee EIF loans. When the proposal
for modification of the Regulation was made in 2001, the Com-
mission did not analyse the potential of the instrument and there-
fore did not propose its deletion.

19.
The intention of the European Parliament and the Coun-
cil was to apply this condition (funding of works only in duly justi-
fied cases) only to energy infrastructure projects and not to trans-
port projects. In the new draft TEN Regulation this condition has
been dropped.

21.
The Commission has to allocate a limited budget to a
high number of qualified projects. For this reason, the maximum
funding threshold is not always attained for each project. How-
ever, in future, the Commission will concentrate the funds on the
30 Priority Projects.

Regarding the remarks made in the last sentence of the Court’s
text, the Commission considers that, as explained in para-
graph 39, the TEN-T financing was duly required and compliant
with the evaluation and selection criteria.

22.
The delays are mainly due to insufficient financing at
European and at Member State level rather than to a lack of pri-
oritisation in the selection of TEN-T actions.

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The higher funding rates proposed in the new draft TEN Regula-
tion, in the line of the TEN-T guidelines 2004 adopted by the
European Parliament and the Council, will allow the Commission
to address this problem of insufficient financing, at least at Euro-
pean level, and to set clear priorities. To this extent, the condi-
tions for receiving a higher funding will be as follows:

As from 2005 onwards, the model text of the financial
27.
decision contains rules with details on the technical and financial
information that has to be provided by the beneficiaries and con-
tains models for their financial reporting.

— projects have to start before 2010,

— Member States concerned have to present a plan to the Com-
mission giving all the guarantees necessary regarding their
financial support and the timetable for the implementation
of the project.

The Commission underlines that cross-border projects
23.
are included in all four coherent groups of projects of common
interest, and not only in the group GR 3 to which the Court lim-
its its observations.

After two thirds of the planned MIP time-frame, the Commission
has committed about two thirds of the planned amounts. Mea-
sures proposed in a next MIP revision will ensure that the total
MIP budget is used on time.

— The Commission considers that the PSR form and its annexes
request all the essential information for the annual evalua-
tion process leading to the granting of support for the fol-
lowing year. Although, in previous years, the financing deci-
sion did not include models for financial reporting, it clearly
stipulated that applications for second and third payments
had to include technical and financial progress reports and a
breakdown of cost for each category of expenditure. With
those elements and the additional
information provided
when necessary, the Commission was in a position to verify
the eligibility of activities and costs claimed.

— For the cases referred in footnote 34, the Commission had at
its disposal sufficient technical supporting information to
proceed to payments (missions reports, explanatory file
notes, etc.). However, as already mentioned in the Commis-
sion’s reply to the Court’s Annual Reports concerning the
financial years 2002 and 2003, the Commission adopted a
more formal approach and no longer proceeds with final
payments in the absence of an Executive Summary.

The annual evaluation of the progress of the projects leads to a
shift of allocations if progress is too slow or faster than expected.

As indicated in paragraph 23, the utilisation of the bud-

24.
get is coherent with the elapsed time-frame.

28.

For some big projects in Group 3 (named cross-border projects
in the explanatory memorandum of the MIP decision), the Com-
mission was forced to reduce the budget in the MIP revision of
2004, due to delays in project implementation. That is the rea-
son why only the half of the budget for this Group has currently
been committed.

26.
The Commission considers that the introduction of a
binding model structure for a technical annex is not appropriate
due to the various types of projects. However, for the 2006 exer-
cise, the Commission will provide guidance to project promoters
concerning technical description and breakdown of costs.

The description of activities covered by the financing decisions
has been improved, particularly with the text of 2005. Each activ-
ity has to be described and has to correspond to a line in the cost
breakdown.

A technical structure already exists in the application form. The
Commission will reinforce it, and harmonise it with the text of
the Decision and the PSR.

— The Commission considers that a clear operational definition
of studies and works has been introduced in 2004 into the
new draft TEN Regulation and in the respective application
forms (1).

— A difference of opinion regarding the definition of works and
studies still exists between the Court and the Commission,
notably for the qualification as ‘study’ of exploratory excava-
tions necessary for the feasibility study. All aspects necessary
to obtain the construction permit can be part of the study.
This includes, for instance, pilot tunnels if the excavation of
these tunnels is required for the construction permit.

(1) Definition of studies: studies needed for the definition of a project,
including the preparatory studies, the feasibility and evaluation and
any other technical support activities including activities prior to infra-
structure works needed to complete the definition of a project and to
make decisions about its financing, including exploratory work on the
sites concerned and the preparation of the financial structure.
Definition of works: purchase and supply of components systems and
services, undertaking construction and installation works related to
the project, including the reception of installations and the entry into
service of the project.

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The observation from the Court is based on a different
29.
interpretation of the scope of studies and works. As mentioned in
paragraph 28, a clear operational definition of studies and works
is contained in the new draft TEN Regulation. However, this defi-
nition will be subject to further reflection.

application form led to the discontinuation of the funding of
14 project sections and to the revision of the planned amounts
for most of the projects. New application forms in compliance
with the new draft TEN Regulation will be established with the
introduction of a new MIP in 2007.

30.
The annual evaluation is part of project monitoring,
which is considered essential (see amongst others observations 42
and 44). Moreover, it provides information in order to take the
appropriate annual decisions, depending on the yearly budgetary
availability and on the progress of the project. The in-depth
appraisal of each project is done each year in partnership with the
Member States. The corrective measures are implemented each
year and during the revision of the MIP. For the two remaining
years 2005 and 2006 the Commission decided to merge, where
possible, the annual decisions and, in order to reduce the work-
load, to take only one decision either in 2005 or in 2006. This
approach is possible for some, but not all projects: the relevant
project must show a high level of budgetary execution for the
existing decision(s). Furthermore, it is subject to the limitation of
the annual budget.

As from 2004 onwards, the Commission works with a non-MIP
reserve list to ensure an optimal use of the budget. Within the
new Financial Perspectives 2007 to 2013, it intends to introduce
multiannual legal commitments for TEN-T projects.

31.
Since 2004, the Commission has reduced the number of
forms taking into account the various types of Community aid.

In the context of the new Financial Perspectives, the

32.
Commission will consider further simplification.

For MIP projects, project status reports (PSR) are not con-
33.
sidered as a formal application as projects are already ongoing.
Therefore, the deadline for submission of PSRs was not consid-
ered a strict one. In this context, equal treatment of projects
‘applicants’ is not applicable to the same extent as in a call for
proposals procedure.

34.
For the reasons explained above, the deadline for submis-
sion of PSRs was not considered a strict one. However, since
2005, the Commission requests a strict respect of this deadline,
even on MIP projects.

35.
The forms referred to by the Court were only used to set
up the MIP programme on an indicative basis. No project has
been selected for a decision on financial aid without a detailed
application form provided by the beneficiary.

36.
The MIP was completely revised in 2004 using detailed
application forms submitted by Member States for the evaluation.
The assessment of the information provided by the detailed

The fact that the West-Coast Main Line only received funding in
2004 shows that the annual appraisal process guarantees that the
projects are only funded when all the essential conditions are met.

37.
The Commission considers that the PSR form and its
annexes request all the essential information for the annual evalu-
ation process leading to the granting of support for the following
year. Therefore, the form should not be changed for the last year
of the MIP. However, since PSR’s are not always properly filled
out by the Member States, the reporting procedure will be
changed from 2007 onwards. Project appraisal guidelines will
include sanctions for not filling out PSR forms completely.

From 2005 onwards,

the project application and
38.
appraisal forms have been modified and take into account the
observations made by the Court.

39.

— By answering that the action ‘would go ahead as planned’,
Member States referred to the fact that they have to plan
infrastructure over a very long period. The Community aid
should therefore increase the speeding up of the implemen-
tation of the projects in the start-up phase. In the 2005 appli-
cation form, applicants are asked to give further justification
for the need for Community funding if they indicate that the
project ‘would go ahead as planned’.

— The Commission did not include this condition in the project
appraisal form because the total investment cost of a project
is only known when the project is finished. For that reason,
the compliance with this condition can only be decided at
the end of the project. In order to prevent over-financing, the
Commission applies a threshold of 10 % of the annually eli-
gible costs for works in every financing decision.

— The Commission has a different interpretation of the condi-
tion set by the TEN Regulation. It considers that the condi-
tion that funding may not exceed 10 % of the total invest-
ment cost is not applicable when infrastructure works do not
follow studies. In the new draft TEN Regulation, the maxi-
mum funding rates are separate for studies and works.
Regarding the EGNOS case, the Commission considers that
it will only be possible to confirm compliance with the maxi-
mum funding threshold at the end of the construction phase.
The project is currently in the preliminary phase which only
contains studies financed at a maximum rate of 50 %. Nev-
ertheless, the Commission is following the project closely
and is already granting less than the maximum funding
threshold in order to assure the long-term compliance with
the maximum funding rate.

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— Even if using a scale of marks is a common method of project
appraisal, the project appraisal form since 2005 no longer
provides
scales. The evaluators have to provide full
explanations.

— Appraisal by the technical officer is only the first step in a
complex decision-making process. Subsequently, the Evalu-
ation Committee considers and checks all the appraisals.
Then the Director-General revises the results of the Evalua-
tion Committee before submitting it to the Financial Assis-
tance Committee in which Member States are represented
and where each decision is discussed and eventually revised.

Moreover, the appraisal forms were changed in 2005 for MIP
first year projects and new non-MIP projects. The questions
were modified: the evaluators may no longer answer only
with ‘yes’ or ‘no’ but have to provide full explanations.

— The Commission will strengthen its internal quality control

procedures in this area.

The Commission has taken measures to ensure that the
40.
problem of incomplete appraisal forms can no longer arise in the
case of the MIP.

The following elements also play a role in the project

45.
monitoring:

— The responsible desk officers who have, in general, a long
experience in transport project management and know the
context very well.

— Monitoring meetings are organised with Member States rep-
resentatives, mainly on the occasion of on-the-spot project
inspections.

In addition, a Memorandum of Understanding was signed
between the EIB and DG TREN on 23 June 2005. This Memoran-
dum provides that the EIB and DG TREN will inform and consult
each other on a regular basis and consider having joint seminars
involving their respective services. Regular meetings on projects
planned are envisaged. The EIB will also assist DG TREN in stud-
ies, analyses and technical assistance, working groups will be set
up, and staff exchanges are planned.

46.
The Commission refers to its reply to paragraphs 37
to 39 and 45. PSR’s are only one tool in the evaluation process.
The Commission considers that PSR’s require the right informa-
tion, but in order to improve the quality of the information pro-
vided by the Member States, the reporting procedure will be
changed from 2007 onwards. Project appraisal guidelines will
include sanctions for not filling out PSR forms completely.

41.
Information on evaluation criteria is included in the call
for proposals, the application form and the appraisal form. Addi-
tionally, the internal DG TREN Manual of Procedures includes
general guidelines for evaluation. Nevertheless, specific evaluation
guidelines for TEN are under preparation.

47.
See reply to paragraph 27: as from 2005 onwards, the
model text of the financial decision contains rules explaining
which technical and financial information has to be provided by
the beneficiaries and contains models for their financial reporting.

42.
The appraisal process is complex and based on several
steps. It goes through the technical officer, the Evaluation Com-
mittee, the Director-General and the Financial Assistance Com-
mittee in which Member States are represented. It guarantees a
well-balanced prioritisation of the high quality projects within the
limited budget available, as provided for in the TEN-T guidelines
that were adopted by the European Parliament and the Council.

Although,
in previous years, the financing decision did not
include models for financial reporting, it clearly stipulated that
applications for second and third payments had to include tech-
nical and financial progress reports and a breakdown of cost for
each category of expenditure. With those elements and the addi-
tional information provided when necessary, the Commission
was in a position to verify the eligibility of activities and costs
claimed.

The Commission will reinforce its controls on compliance with
the evaluation and selection procedures.

49.
The Commission monitors regularly the projects via the
annual project status report, the technical and financial reports
for payments, on-the-spot visits, and regular meetings with the
beneficiaries.

For all modes of transport, evaluation is now carried out,
43.
both by staff dealaing with the Member State and those from the
Directorate in charge of the respective transport mode. This com-
bined approach has added objectivity to the evaluation process.
When considered necessary, in particular because in-house exper-
tise is not available, external expertise is used. As explained in
paragraph 73, the cooperation with the EIB has been reinforced
via the Memorandum of Understanding signed on 23 June 2005.
The documentation and justification of the evaluation and selec-
tion process were also addressed in the revision of the project
appraisal form in 2005.

Since 2005, the Member State concerned has to evaluate each
financial decision.

The methods for implementing ex post evaluation are currently
being developed. This will include standardised check lists for
project visits and enable the Commission to mobilise external
monitors in addition to visits by desk officers. Since most of the
projects are not yet completed, an ex post evaluation of the pro-
gramme is not yet feasible.

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For all modes of transport, evaluation is now carried out
50.
both by staff dealing with the Member State and those from the
Directorate in charge of the respective transport mode. This com-
bined approach has added objectivity to the evaluation process.
When considered necessary, in particular because in-house exper-
tise is not available, external expertise is used. Furthermore, coop-
eration with the EIB has since been reinforced via the Memoran-
dum of Understanding signed on 23rd of June 2005.

51.
The central project and contract management system of
DG TREN (PMS) needs to accommodate the requirements of a
high number of user groups (technical and financial officers, con-
trollers, management etc.). It also has to cope with a large variety
of situations (grants, subsidies, public procurement, small and
large scale projects, etc.). PMS has been adapted to incorporate the
management of TEN-T projects but this system is not designed
specifically and exclusively for that purpose. It is therefore not
surprising that certain users would prefer a simpler tool tailored
to their specific needs. DG TREN is currently preparing the next
generation of PMS (e-PMS) that will be built in a more modular
way and take advantage of technological evolution.

While in theory policy issues could be centralised in one
54.
policy unit, contributions of project officers (who are more famil-
iar with the specific problems of real life projects) will always be
needed in order to ensure a coherent and practical policy
approach.

As explained in paragraph 53, the Commission is always

55.
adapting staff allocation to needs, within limits available.

The Commission considers that with the additional allocation of
staff, sufficient resources can be devoted to the different tasks
including evaluation and monitoring.

56 and 57.
of skills and competence and not just be technical experts.

TEN-T project officers need to have a wide range

52.
The Commission does not consider that the ratio of the
budgetary size of projects relative to the number of staff is a rel-
evant ratio as the nature of the projects and activities is very dif-
ferent and not comparable. For this reason, Table 2 should be
interpreted with care.

Whilst standard training courses will always play an important
role in contributing to staff development, integration and moti-
vation, the majority of learning in the Commission takes place in
the workplace. On-the-job training and the transfer of staff skills
from one to another being the most effective.

53.
Staff allocation to DG TREN is determined by the Com-
mission’s annual budgetary procedure. DG TREN has also to deal
with various policy areas besides TEN-T. DG TREN has recently
allocated 12 new posts to the units dealing with TEN-T.

Concerning the number of projects allocated to each project
officer, the complexity of some TEN-T projects has to be taken
into account.

In order to face challenges for the period 2007 to 2013 with a
considerably increased budget, the Commission proposes to cre-
ate an executive agency which offers a more flexible recruitment
policy and allows an increased number of specialised officers. In
addition, the agency staff will concentrate solely on project man-
agement and will not have to deal with policy issues.

The Commission encourages mobility and addresses the problem
of continuity by implementing stable and robust processes
through a range of measures and tools assisting new desk officers
and SNE’s.

The Commission considers that most of the project officers have
the necessary professional experience. Indeed, most of the project
officers have a degree in a transport-related subject and/or sev-
eral years of previous experience on transport matters and/or a
relevant experience in TEN-T project management. For this rea-
son, the Commission considers that its staff is duly qualified for
the job.

An important part of training dispensed is training ‘on
58.
the job’. Up to now, such training activity is not formally reported
under the IT-based database on training. The Commission will
pay special attention to ensure that its agents involved with TEN-T
follow relevant available transport-related training.

59.
As pointed out in paragraph 57, the Commission con-
siders that the desk officers technical expertise is sufficient. The
expertise of SNE’s is complementary and is mainly used for policy
issues as from 2005.

In 2006, reinforcement of the abovementioned measures and the
establishment of a desk officer manual that will document all pro-
cedures are envisaged.

60.
Since end November 2003, the Commission rules on the
use of SNEs have, to a large extent, been complied with. DG
TREN will continue its efforts to reassign SNE’s to more general,
conceptual tasks related to policy design and implementation.

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The Commission’s rules form a framework to manage
61.
SNE’s responsabilities which intentionally limits the use of SNE’s,
regardless of their expertise. Avoidance of any potential conflict
of interest while using SNE’s is justified and is a priority. As from
2005 onwards, SNE’s have been mainly allocated to policy related
tasks where their expertise can be used to full extent.

Member States are also involved in the control process. Multiple
funding is one of the aspects the managing services for the Struc-
tural and Cohesion Funds are required to check for all projects.
The effectiveness of such controls is checked by the audit services
of the Member States and of the Commission.

The Commission plans to create an executive agency that
62.
will be suited to the new challenges (see reply to paragraphs 53
and 57).

69-72.
Even though no cases of over- or double-funding
have been detected hitherto, the Commission intends to further
improve the existing coordination instruments. Inter alia, it will
remind beneficiaries of TEN-T funding of the need to report any
multiple financing of TEN-T projects.

64.
The revised CBA addressed the elements raised by the
Court and confirmed its support for the creation of a TEN-T
Agency. The Commission, in the meantime, adopted the respec-
tive proposals on 20 July 2005.

In case ERDF funding is granted to smaller projects (below the
EUR 50 million threshold for notification to the Commission)
after a TEN-T grant decision, the Commission requires beneficia-
ries to inform it of such financing.

The main additional advantages identified by the CBA, include the
ability to face the challenges of the new budget period 2007
to 2013, more flexibility in recruiting transport specialists, sim-
plification of project management, raising the visibility of TEN-T
and strengthening the coordination between all parties involved
in project implementation.

Although the ERDF regulation does not include explicit
66.
provisions on multiple financing from other Community sources
except other Structural Funds, such multiple financing is prohib-
ited by the Financial Regulation (see Article 111).

In its draft regulation for general rules on the ERDF, ESF and CF
for the next period 2007 to 2013 (COM(2004) 492), the Com-
mission has now included a provision preventing multiple fund-
ing from different Community sources.

67.
TEN-T funds and the Structural Funds could finance the
same ‘project’, but particular attention is paid in order not to
finance the same action, stage or part of a project.

The wording of the 2005 application and appraisal forms is
clearer and requires more detailed information from the Member
States on the question of multiple financing.

According to the contract, the EIB can be asked for either
73.
a first assessment or a full appraisal. The use of ‘other external
experts’ is limited to strategic or ex post studies. DG REGIO also
uses its in-house cost-benefit analysis specialists. The multiannual
framework contract also covers projects in the environmental
field. It is used for both the Cohesion Fund and ISPA.

Concerning the EIB, DG REGIO intends to enhance cooperation
with the EIB in the next programming period through a new tech-
nical assistance partnership to be known as Jaspers (for Joint
assistance in supporting projects in European regions), which will
offer Member States, particularly those which joined the Union
on 1 May 2004, assistance with the preparation of major projects.

74.
DG REGIO and DG TREN are prepared to explore ways
of increasing cooperation between their staff when useful and
practicable. In June 2005, DG TREN concluded a Memorandum
of Understanding with the EIB establishing a framework for coop-
eration on policy and investment in transport and energy, nota-
bly in the development of trans-European networks.

The new draft TEN Regulation (COM(2004) 475) states that
Community financial aid is excluded for sections of projects
which receive other Community financing.

75.
In the past, DG TREN has looked at other existing meth-
odologies but they were considered not to be the most appropri-
ate for the selection of TEN-T projects. It was therefore decided
to progressively adapt existing tools to the specific needs.

To date, no cases of over- or double-funding have been
68.
detected. Different mechanisms are already in place to limit the
risk of over- or double-funding: obligation for the applicants to
provide information on financing from other Community sources
in their applications, systematic inter-service consultations on
funding proposals, and contacts between desk officers.

77.
Inter-service consultations allow the consulted DGs
enough time for a thorough examination of the projects pro-
posed for funding in order to ensure coordination, avoid overlap
with other Community funding sources and suspend where nec-
essary. The deadline can be extended, if necessary.

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The possibility to set up a database for TEN-T projects will be
explored by the Commission.

that

the Commission agrees

Even though no cases of over- or double-funding have
78.
been detected hitherto,
the
Directorates-General concerned must fully cooperate in order to
ensure that the risk of over- or multiple-funding is avoided. It
considers that the risk is being addressed with the request for
information on other funding sources in applications and the
exchange of information between the Directorates-General con-
cerned. The potential lack of information for projects of under
EUR 50 million in value, receiving funding from the ERDF, will
be reduced by reminding TEN-T beneficiaries of their reporting
obligations.

— Bilateral agreements between Member States for cross-border
projects are proposed in the new draft TEN Regulation as a
condition for funding rate up to 50 %. The model financing
decision adopted in August 2005 specifies clearly the finan-
cial and technical measures to be implemented by the Mem-
ber State beneficiary and the agreed time-frame thus obviat-
ing the need for additional bilateral agreements.

82.
The new model Commission financing decision appli-
cable as from 2005 implements the recommendations made by
the Court and will allow more efficient project monitoring and
effective operation of controls (see reply to paragraphs 26
and 27).

79.
The two Directorates-General will explore the need and
scope to extend their existing cooperation by participating in
joint missions and attending monitoring committees.

83.

CONCLUSIONS AND RECOMMENDATIONS

The Commission refers to its reply to paragraphs 14, 15
80.
and 21. It considers that the processes for selection of projects
assure an appropriate prioritisation, within a limited budget avail-
able, since the Commission selects projects amongst the Member
States’ proposals complying with the TEN-T guidelines. These
guidelines, that mention cross-border projects only as one out of
eight priorities, are adopted by the European Parliament and the
Council and intend to ensure the European added value to the
fullest. Furthermore, the 2004 revision of the TEN-T policy guide-
lines introduced the principle of concentrating Community finan-
cial aid to 30 Priority Projects which also include cross-border
projects.

81.

— The location of the priority projects and the type of comitol-
ogy procedure (where Member States are actively involved)
applied, imply an annual distribution of TEN-T budget to the
Member States.
In the new draft TEN Regulation
(COM(2004) 475) it is proposed to change the comitology
procedure and to opt for a consultative committee instead of
a regulatory committee.

— The Commission will continue to give the highest priority to
the execution of existing PP’s. With regard to cross-border
project sections, the new draft TEN regulation proposes
to increase the financial aid for projects crossing border
and/or natural barriers up to 50 %.

— The Commission revised and extended the conditions for the
use of the different forms of aid not, or not regularly, used
before in the new draft TEN Regulation. A proposal to intro-
duce a new form of aid, which should facilitate private pub-
lic partnerships projects based on availability schemes, is
under discussion.

— Clear definitions of works and studies are included in the
new draft TEN Regulation. However, this definition will be
subject to further reflection. A model for financial reporting
has been included in the 2005 model financing decision.

— The new model financing decision will be used until the end

of the current MIP programme in 2006.

84.
The multiannual character of the MIP does not exoner-
ate the Commission from the annual check of the progress of
these projects, neither from the reconsideration of the indicative
allocation of aid. Moreover, the Commission considers that the
annual evaluation is part of project monitoring, which is consid-
ered essential (see amongst others, observations 42 and 44). It
also provides information in order to take the appropriate annual
decisions, depending on the yearly budgetary availability and on
the progress of the project.

Where appropriate, for 2005 and 2006, the Commission decided
to merge the annual
(see reply to
paragraph 30).

financing decisions

— The DG TREN manual of procedures, as amended in 2005,
increases the minimum funding threshold from EUR 1 mil-
lion to 1,5 million. This should increase the funding rate.

The development of a single methodology has proved to be
extremely difficult for such a different variety of projects in the
various modes (rail, motorways, air, etc.). In addition to the exist-
ing general project appraisal guidelines, the Commission will
develop specific TEN-T guidelines.

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85.

— A reserve list for non-MIP proposals was established from
2004 onwards. The Commission plans to launch the non-
MIP procedure for the first time in 2006 before the MIP pro-
cedure starts. Therefore, the MIP and the non-MIP procedures
will be disconnected and will both run in the first half of the
calendar year.

— The Commission reduced the number of application and
appraisal forms taking into account the various types of
projects.

— The Commission will assess a two-step appraisal process in
order to exclude, at an early stage, projects not fulfillling cri-
teria which can be checked quickly and easily.

— In addition to the general appraisal guidelines, the Commis-
sion is preparing specific TEN-T appraisal guidelines.

— The 2005 model appraisal form takes into account the obser-

vations made by the Court.

— External expertise is used when considered necessary, when
in-house expertise is not available. The Memorandum of
Understanding signed with the EIB will reinforce cooperation
between DG TREN and the EIB. DG TREN and DG REGIO
will explore the need and scope to extend their existing coop-
eration by participating in joint missions and attending
monitoring committees.

— Within the new Financial Perspectives 2007 to 2013, it is the
intention to introduce multiannual legal commitments for
TEN-T projects.

86.
Apart from the information provided by beneficiaries,
there are also other elements which play a role in the project
monitoring process (see reply to paragraph 45).

The obligation for the Member States to verify the implementa-
tion of the policy objectives and the overall funding limits are
explicitly integrated into the evaluation form included in the
2005 Commission financing decision.

— The Commission also has, in respect of the cost/value pro-
portionality, regular contacts with the Member States and the
project promoters, enabling corrective actions in due time. In
2002, the Commission has launched a contract to define spe-
cific tools and methodologies for the evaluation and moni-
toring of TEN-T projects. The third phase of it started in
2005 and aims to provide the Commission with a robust
methodology for the ex post evaluation of TEN-T projects.
Moreover, in 2007 the Commission is planning an ex post
evaluation conducted by external experts of the whole MIP
2001 to 2006 programme.

— In the context of this contract, a pool of experts will be avail-
able for monitoring purposes. The cooperation with other
DGs (such as DG REGIO) will be extended (see reply to para-
graph 91) and the Memorandum of Understanding signed
with the EIB in 2005 will allow the use EIB experience and
expertise.

— The Commission agrees and is working on it: the new soft-
ware e-PMS is being developed with the aim to have also a
single IT system or database providing reliable and complete
information on TEN-T projects.

88.
Within the limits set by the annual budget and consider-
ing other high priority areas, the Commission allocated additional
statutory staff to TEN-T. In addition, the Commission is planning
to create an executive TEN-T agency.

The Commission considers that most of the project officers have
the necessary professional experience (see reply to paragraph 57).
The selection process ensures to allocate agents with adequate
competencies and skills. Training on-the-job and permanent
learning is very important in the Commission’s training policy
(see paragraph 58).

As mentioned in its reply to paragraphs 53 and 60, the Commis-
sion does address the problem of continuity by implementing
stable and robust processes. Since end November 2003, the Com-
mission rules on the use of SNEs (including those of conflict of
interest) have to a large extent been complied with. DG TREN will
continue its efforts to reassign SNE’s to more general, conceptual
tasks related to policy design and implementation.

87.

89.

— The Commission will

further develop the reporting

procedures.

— Minimum requirements as to the technical and financial
information to be given are included in the 2005 model text
for the Commission financing decision. The Commission will
develop a system allowing for two types of benchmarking on
the progress made: one for projects and one for Member
States.

— The analysis was done in the context of the cost-benefit
analysis of the externalisation of the TEN-T management.

— The Commission has already a high standard training policy
but will encourage the officials to make wider use of the
training offered.

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— The Commission will continue its efforts to reassign SNEs to

policy related responsibilities.

— Within DG TREN, decentralisation has allowed to take advan-
tage of expertise available in other departments and syner-
gies with other programs (Marco Polo, RTD, Galileo, etc.).
The creation of a TEN-T Agency will bring a centralisation
about but also offer simplification and higher quality and
effectiveness of project management, and will strengthen the
coordination between all parties concerned with or involved
in project implementation.

— On the basis of the revised CBA, the Commission proposed
to delegate the programme management to an executive
agency.

90.
No cases of over- or double-funding have been detected
hitherto. With the instruments the Commission uses already (see
paragraphs 65 to 79) it can in general be established if the project
applied for receives multiple financing by the EC. The Commis-
sion refers also to the responsibility of Member States to provide
complete and correct information. The Commission cannot check
systematically whether Member States have supplied the right
data, but in monitoring visits and audits this is one of the aspects
that are checked.

Only projects of an amount below EUR 50 million that may be
co-financed through ERDF may represent a potential risk of
double financing, as in these cases of smaller financial support,
Member States are not obliged to submit such projects to the
Commision for approval. However, the risk is addressed through
the Member States’ management and control systems and through
audit work. The Commission will also remind Member States that
beneficiaries of TEN-T funding must disclose to the Commission
subsequent awards of ERDF funding.

91.

— The 2005 forms address clearly the issue of multiple

financing.

— The two DGs will extend their cooperation by, inter alia,
inter-service consultations, attending meetings arranged by
one another and exchanging documentation wherever use-
ful and practicable. The Commission considers that the con-
trol systems already in place and a more systematic report-
ing obligation by beneficiaries will be sufficient to avoid the
risk of multiple financing. The setting-up of a database for
TEN-T projects will be explored by the Commission.

Due to the regular contacts and visits of the desk officers to the
Member States, the risk of over- or double financing is limited.

— The Commission will assess this approach.