Opinion of the European Economic and Social Committee on the Draft Commission Regulation (EC, Euratom) amending Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities  (SEC(2005) 1240 final)
Date: 2006-03-15
Institutions: European Economic and Social Committee
Subjects: financial regulation, general budget (EU)

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Official Journal of the European Union

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— compliance with the CEN technical

standards for

the

services provided;

— possession of

the necessary technical-professional and
economic-financial capacities, measured by objective and
non-discriminatory criteria.

2.7.2.1
In the event of holding fund/2007-2015 operational
programme agreements, there must be provision for penalties,
revocation and dismissal of a holding fund on the grounds of
inefficiency, irregularity or serious failures to fulfil obligations.
Management should be monitored at two-yearly intervals, with
the support of regional economic and social partners, with
transparent procedures for the publication of reports, which
should be forwarded to the central national authorities, the
European Parliament,
the
Regions.

the EESC and the Committee of

2.7.3
Financial entities or consortia established in another
Member State or in one of the countries which has signed the
agreement on public contracts, as set out in the Annex to the
WTO Agreement must be allowed to qualify under the same
conditions as those applied to national participants, on the
basis of documents complying with the legislation of the coun-
tries in question, which demonstrate that all the requirements
for qualification are met.

2.7.4
These provisions should also apply to the accreditation
procedures for intermediary credit institutions: these must be
subject to systematic performance monitoring arrangements,
the relevant
defined in conjunction with representatives of
economic and social partners, and also to a periodic accredita-
tion review. In all cases, replacement of part of the accredited
elements must be ensured every three years.

Brussels, 15 March 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the Draft Commission Regulation
(EC, Euratom) amending Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for
the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regu-
lation applicable to the general budget of the European Communities

(SEC(2005) 1240 final)

(2006/C 110/09)

On 12 October 2005 the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned
Draft Commission Regulation.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 24 February 2006. The rappor-
teur was Mr Burani.

At its 425th plenary session, held on 15-16 March 2006 (meeting of 15 March), the European Economic
and Social Committee adopted the following opinion by 146 votes to one with one abstention.

1. Conclusions

transparency, streamlining procedures,

faster
scope: greater
responses and greater confidence in the social partners are
signs of welcome progress in public governance.

1.1
The EESC congratulates the Commission on its complex,
meticulous work on simplifying administrative procedures;
however, it notes a certain discrepancy between the state-
ment made at the beginning of the Explanatory Memorandum
(‘the following draft … deals with technical amendments which
can be introduced under the current Financial Regulation’) and
the actual scope of many of the amendments.

1.1.1 Many of the ‘technical’ amendments concerning rela-
tions with businesses and the public are ‘political’ in nature and

At

1.2
the same time the EESC stresses the need for
caution: the desire to benefit the social partners must take into
account the fact that there must be a limit to flexibility for
treasury administrators — i.e. potential losses must be set against
actual savings in that difficult but necessary exercise known as
risk assessment. This exercise may be very unpopular with
administrators but it is the only sensible path to take.

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2. Background

2.1
The proposal lays down implementing rules for Finan-
cial Regulation No 1605/2002, which is currently in force. In
order to shorten implementation times,
it also takes into
account a number of technical amendments made by the new
for a Council Regulation on the Financial Regu-
Proposal
lation (1) which is in the process of being adopted. The EESC
has already issued an opinion on the latter document (2).

3.2 Without wishing to refer
to the abused and over-
invoked principles of public morality, the EESC points out the
danger of adopting a less vigilant attitude towards the legality
of expenditure transactions concerning amounts considered to
be ‘low’, particularly in the case of calls for tender and grants.
The public must not receive the impression that, because
procedures are being streamlined,
it will be possible to find
unlawful ways of obtaining funds from public authorities: a
perception of this kind would be a blow to Europe's image.

As

the EESC refrains

in its earlier opinion,

2.2
from
commenting on strictly technical accounting aspects, which
can be addressed more effectively by technically qualified EU
bodies with direct experience in the matter. Instead, as in its
it focuses on rules which could affect third
earlier opinion,
parties (civil society organisations) which enjoy relations with
the European institutions.

2.3
Three of the technical accounting principles — unity,
annuality, unit of account — remain essentially unchanged and
are just slightly amended or clarified. As regards the fourth
principle — sound financial management — the proposal is
based on existing criteria but clarifies the content of an ex ante
evaluation and provides clearer guidelines on the scope of ex
ante, interim and ex post evaluations, taking into account the
proportionality principle. The EESC is very pleased to note the
Commission's intention to ‘redirect’ the priorities of the evalua-
tion, ‘in order to focus on proposals with a real impact on busi-
ness and citizens’.

the Commission stresses

Again mindful of the expectations of business and the
2.4
public, and concerned to ensure that public funds are used
sensibly,
that pilot projects and
preparatory actions should be subject to an evaluation if they
are to be continued as a programme. However,
in order to
simplify procedures, where projects or actions have already
been evaluated, as in the case of joint actions undertaken by
the Commission and the Member States, such evaluation
should not be duplicated.

3. General comments

Of course,

3.1
the comments made by the EESC in its
above-mentioned opinion on the Proposal for a Regulation
apply to the implementing rules as well. Although the simpli-
fied procedures and more flexible criteria for applying the rules
are to be welcomed, it would not be acceptable if it were to
become the norm to consider every sum below a pre-estab-
lished threshold as negligible. In other words, the EESC agrees
that the thresholds below which simplified procedures are to
be used should be raised, but that does not mean that a more
relaxed attitude can be adopted or that the level of control of
expenditure can drop under the pretext
that any material
damage would not, in practice, affect the budget as a whole.

(1) COM(2005) 181 final.
(2) OJ C 28 of 3.2.2006, p.83.

The EESC believes that careful scrutiny of OLAF reports
3.3
by the Commission's accounting authorities would reveal
whether existing and forthcoming simplifications are sound
and where any weak points are: the information on exposed
fraud cases could provide useful pointers.

4. Specific comments

4.1
The new Article 85(a) concerns appeals by third
parties against a Commission decision imposing a fine,
constraint or penalty: to protect the Community's interests the
accounting officer has to require the petitioner to provisionally
lodge the amounts concerned or else provide a financial guar-
antee (in technical terms, surety). The guarantee must stipulate
that — should the appeal be turned down — the guarantor
will pay the amount requested by the authority immediately,
unconditionally and without the need for prior prosecution of
the debtor. Technically, this is surety which must be redeemed
at the first request, along the lines of the estoppel principle
used by many tax authorities and customary in calls for tender.

The EESC has no particular objections to this kind of
4.1.1
guarantee. It merely notes that surety which is to be redeemed
at the first request is more burdensome than normal surety and
that commissions are proportionate to the length of validity of
the guarantee. In view of the burden incumbent on the peti-
the procedures for examining appeals should be
tioner,
made moderately more expeditious than they are at present.
Although it does not directly concern the Financial Regulation
or its implementing rules, this aspect, which is regretted by
certain social partners, warrants close analysis in the context of
administrative authorities' relations with third parties.

The new Article 90 lays down,

4.2
inter alia, that where
procurement and grants linked to sectoral programmes are
concerned, adoption of the annual work programme is consid-
ered as the financing decision necessary for the expenditure
to be included in the Community budget. Although this is an
internal accounting measure, it may well speed up the proce-
dures for allocating funds and the EESC therefore believes it
could benefit creditors or beneficiaries.

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4.3
Article 129 is designed to simplify the management of
contracts with a value below specified thresholds. Hence,
where the amounts concerned are relatively small, the authority
is authorised to use a ‘negotiated procedure’ (or, to be more
accurate, private treaty), after consulting a number of candi-
dates, specifically:

— for

contracts with a value

less

than or

equal

to

EUR 60 000: five candidates;

— for

contracts with a value
EUR 25 000: three candidates;

less

than or

equal

to

— contracts with a value less than or equal to EUR 3 500

may be awarded on the basis of a single tender.

In practice, the new provision does not introduce any new
elements but merely raises the thresholds laid down by the
previous rules.

4.3.1
Articles 130 and 134 also introduce a number of
simplifications. Article 130 states that, for contracts with a
value below EUR 60 000, the contracting authority may limit
the documents relating to the invitation to tender ‘to
what is strictly necessary’ (on the basis of its own criteria
and under
its own responsibility, of course). Article 134
provides that the documentary evidence of eligibility to take
part in the call for tenders may be replaced by a declaration
on the candidate's or tenderer's honour, without prejudice
to the authority's right to request the evidence supporting that
initial declaration at a later date.

Another simplification introduced by Article 134 is
4.3.2
the waiver of
the obligation to submit documentary
evidence if such evidence has already been submitted to that
or another contracting authority for another purpose no earlier
than six months previously. In this case, too, the documentary
evidence is replaced by a declaration on the candidate's or
tenderer's honour.

tenderers'

Article 135 also makes concessions concerning the
4.3.3
documentary proof of candidates' or
financial,
economic, technical and professional capacity. The article
stipulates that the authority may, on the basis of their assess-
ment of the risks, decide not to require this proof. The
facility is, however, limited to contracts with a value equal to
or less than EUR 60 000 where the beneficiary of the contract
is the authority itself or to contracts with various different
values (depending on the case) where the beneficiary is a third
party. Another restriction is the stipulation that, where it is
decided not
to require proof, no pre-financing or interim
payment may be made: this is a guarantee for the authority but
an important consideration for the other party, who may
decide to submit the documentary proof anyway to avoid what
could be a considerable expense.

4.3.4
The EESC endorses all these provisions making the
procurement process — which is costly for both candidates

and the authority — less burdensome where relatively modest
amounts are concerned. However, it points out the need for
great care to be taken to prevent any abuse: the more flexible
the procedures, the greater the temptation to abuse them.

The implementing rules regarding grants appear to be
4.4
sympathetic to the concerns of the social partners, taking into
account — as far as can be inferred from the provisions as a
whole — the specific nature of beneficiaries. As an initial
measure, Article 164 provides that, for grants with a value of
less than or equal to EUR 25 000, the authorising officer may
require greatly simplified documentary evidence: the EESC
endorses this procedure although it notes both the heavy
responsibilities incumbent upon the authorising officer and
the danger that, in certain cases, the benefit of simpler rules
will be cancelled out by an — understandable — reluctance to
take these responsibilities on.

4.5
Various other provisions facilitate or provide access
to Community funds for various types of institutions. To this
end, where bodies with a de jure or de facto monopoly are
concerned, Article 168 merely requires an informal investiga-
tion, to be recorded in the form of a reasoned declaration by
the authorising officer. Article 162, which provided for oper-
ating grants — which do not decrease with renewal — for
bodies pursuing an aim of general European interest,
extends the list of possible beneficiaries to bodies involved in
research,
innovation or the promotion of citizenship. Article
172 enables authorising officers to accept co-financing in
kind (such as voluntary work) as contributions from the insti-
tutions receiving funding.

4.5.1
The EESC welcomes all of these provisions but points
out once again that more flexible rules will bring greater risks
for
for
the Community budget and more responsibilities
authorising officers, and require tighter controls.

4.6
There are number of other provisions simplifying
procedures. All educational establishments will now be
exempt from the verification of financial capacity (Article
176), whereas in the past only secondary schools and higher
education establishments benefited from this provision. For
grants with a value of less than or equal to EUR 25 000, the
authorising officer may draw up a less detailed grant agreement
(Article 164). Moreover, under Article 173, the obligation to
submit proof of an external audit will not apply to grant
agreements with a value of less than EUR 750 000, agreements
for an action with value of less than EUR 100 000 and agree-
ments with a number of beneficiaries who have signed a docu-
ment accepting joint and several liability.

The EESC understands why the Commission wants to
4.6.1
in principle,
simplify procedures as much as possible and,
agrees with it. However, it fears that it may be going too far. It
is one thing to exempt parties from submitting costly and
sometimes unnecessary documentation, but it is quite another

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to waive the obligation for grant recipients to declare the state
of their finances, when the thresholds set — particularly for the
cases covered by Article 173 — are far too high. The aim
should always be to strike the right balance between the
expected benefits (savings in time and money for both the
Commission and the public) and the potential costs (loss of
public money, calculated in terms of the probability and size of
the risk).

The

criterion of

4.7
caution and risk assessment
mentioned in point 4.6.1 above has, moreover, already been
adopted with regard to pre-financing: a guarantee (surety or
other form of guarantee) is required as a general rule for all
pre-financing with a value equal to the grant, and for any pre-
financing exceeding 80 % of the amount of the grant and above
EUR 60 000.

4.7.1
The EESC believes that the above provision is based
on the sound principle of caution as referred to in point 4.6.1,
but wonders whether these criteria might not also have been
applied to genuine grants (e.g. the cases cited in point 4.6),

Brussels, 15 March 2006.

given that, in terms of actual risk, the difference between
pre-financing and grant is very often — with a few, some-
times significant exceptions — more administrative than real.

4.8
Article 165 introduces a criterion which is entirely
acceptable but has not always been applied in the past: where
the recipients of grants are bodies which pursue an aim of
general European interest, the Commission is entitled to
recover the percentage of the annual profit corresponding
to the Community contribution to the budget of the bodies
concerned. This provision only applies in cases where the rest
of the body's budget is financed by Member States' authori-
ties which are themselves required to recover their share of the
profits.

4.8.1
The EESC fully endorses this provision but finds it
difficult to believe that the text as it stands can be intended to
the Commission should not also be entitled to
imply that
recover profits in cases in which the rest of the budget is
financed not by public authorities but by private entities.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on Regrowing raw materials —
development outlook for producing materials and energy

(2006/C 110/10)

On 14 July 2005 the European Economic and Social Committee, acting under Article 29(2) of its Rules of
Procedure, decided to draw up an opinion on Regrowing raw materials — development outlook for producing
materials and energy.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 27 February 2006. The rapporteur was
Mr Voss.

At its 425th plenary session, held on 15 and 16 March 2006 (meeting of 15 March), the European
Economic and Social Committee adopted the following opinion by 95 votes to 19, with 15 abstentions.

1. Conclusions and recommendations

— the increasing demands for sustainable solutions in the

context of security and development policy;

The relaunch of

the Lisbon strategy has established
1.1
sustainability as a primary objective of EU policy. The EESC
believes that
this own-initiative opinion on regrowing raw
materials could act as a spur to progress in key areas:

— a sustainable, environment-friendly raw materials base with

jobs in Europe's regions;

— security of supply and diversification of raw materials in

the EU;

— making Europe a dynamic, knowledge-based economic
space with high-potential technologies responding to rising
global demand;

— sea change in the use of raw materials as a strategy for
the same time, safe-

protecting the climate, whilst, at
guarding biodiversity.