Proposal for a Council Regulation amending Financial Regulation applicable to the 9th European Development Fund
Date: 2006-11-27
Institutions: European Commission
Subjects: European Development Fund, financial management, financial regulation, general budget (EU), implementation of the budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.11.2006 
COM(2006) 721 final 

2006/0239 (CNC) 

Proposal for a 

COUNCIL REGULATION 

amending Financial Regulation applicable to the 9th European Development Fund 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

On  27  March  2003,  the  Council  adopted  the  Financial  Regulation  applicable  to  the  9th 
European  Development  Fund1  which  is  in  many  respects  coherent  with  Council  Regulation 
(EC, Euratom) N° 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the 
general budget of the European Communities2 (hereinafter, “General Financial Regulation”). 

On 3 May 2005, the Commission adopted a proposal for the tri-annual revision of the General 
Financial  Regulation  (COM(2005)  181)  introducing  simplifications  of  administrative 
procedures,  in  particular  in  external  actions,  while  maintaining  a  high  level  of  protection  of 
the Communities’ financial interests in the light of the risks involved. On 18 May 2006, the 
Commission  adopted  a  modified  proposal  for  revision  of  the  General  Financial  Regulation 
(COM(2006) 213). 

The following draft proposal for a Regulation amending the Financial Regulation applicable 
to the 9th European Development Fund aims at transposing a limited number of modifications 
proposed  by  the  Commission  in  the  context  of  the  revision  of  the  General  Financial 
Regulation. 

In particular, in line with amendments to Article 53 of the General Financial Regulation, the 
use of bodies, including “national agencies”, will be authorised in decentralised management. 

The revision also anticipates the envisaged modifications of Annex IV of the revised Cotonou 
agreement  via  the  addition  of  an  Article  19c  which  will  refer  in  a  more  generic  way  to  the 
Community regulations for the tendering procedures, will lead to deletion of articles 21, 23, 
25 and 27 to 30 of Annex IV and is expected to come into force by January 2008.  

The  proposed  amendments  are  considered  necessary  and  urgent  in  order  to  facilitate 
implementation of the 9th European Development Fund.  

1 
2 

OJ L 83, 1.04.2003, p.1. 
OJ L 248, 16.09.2002, p.1. 

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2006/0239 (CNC) 

Proposal for a 

COUNCIL REGULATION 

amending Financial Regulation applicable to the 9th European Development Fund 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having regard to the Partnership Agreement between the members of the African, Caribbean 
and  Pacific  Group  of  States  of  the  one  part,  and  the  European  Community  and  its 
Member States, of the other part, signed in Cotonou on 23 June 20003 (hereinafter referred to 
as  the  ‘ACP-EC  Agreement’),  as  revised  by  Agreement  of  25  June  2005  signed  in 
Luxemburg4, 

Having  regard  to  the  Decision  No 5/2005  of  the  ACP-EC  Council  of  Ministers  of  25  June 
2005  on  transitional  measures  applicable  from  the  date  of  signing  to  the  date  of  entry  into 
force of the revised ACP-EC Partnership Agreement5, 

Having regard to Council Decision 2001/822/EC of 27 November 2001 on the association of 
the overseas countries and territories with the European Community ("Overseas Association 
Decision")6, 

Having regard to the Internal Agreement between Representatives of the Governments of the 
Member States,  meeting  within  the  Council,  on  the  Financing  and  Administration  of 
Community  Aid  under  the  Financial  Protocol  to  the  Partnership  Agreement  between  the 
African,  Caribbean  and  Pacific  States  and  the  European  Community  and  its  Member  States 
signed in Cotonou (Benin) on 23 June 2000 and the allocation of financial assistance for the 
Overseas Countries and Territories to which Part Four of the EC Treaty applies7 (hereinafter 
referred to as the ‘Internal Agreement'), and in particular Article 31 thereof, 

Having regard to the proposal from the Commission8, 

Having regard to the opinion of the Court of Auditors9, 

Having regard to the opinion of the European Investment Bank10, 

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4 
5 
6 
7 
8 
9 
10 

OJ L 317, 15.12.2000, p. 3. 
OJ L 287, 28.10.2005, p. 4. 
OJ L 287, 28.10.2005, p. 1. 
OJ L 314, 30.11.2001, p. 1. 
OJ L 317, 15.12.2000, p. 355. 
OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 

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Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

Council  adopted  on  27  March  2003  the  Financial  Regulation  applicable  to  the  9th 
European Development Fund11, which lays down the legal framework for the financial 
management of the 9th European Development Fund (EDF). 

That Regulation takes into account as a cornerstone Council Regulation (EC, Euratom) 
No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general 
budget  of  the  European  Communities12,  hereinafter  referred  to  as  the  'General 
Financial Regulation'.  

Decision No 2/2002 of the ACP-EC Council of Ministers of 7 October 2002 regarding 
the  implementation  of  Articles  28,  29  and  30  of  Annex  IV  to  the  ACP-EC 
Agreement13 has specified the general regulations and general conditions applicable to 
works,  supply  and  service  contracts  financed  by  the  EDF,  as  well  as  the  rules 
governing procedure, conciliation and arbitration in relation to such contracts. 

This  Regulation  should  anticipate  the  envisaged  amendments  of  Annex  IV  of  the 
revised Cotonou agreement which will refer in a more generic way to the Community 
regulations for the tendering procedures and which should be reflected by references 
to Annex IV in Articles 74, 76, 77 and 78 of the Financial Regulation applicable to the 
9th EDF.  

It  is  appropriate  to  take  into  account  those  amendments  and  the  modifications 
proposed  by  Council  Regulation  (EC,  Euratom)  No  …/…  of  […]  amending 
Regulation (EC, Euratom) N°1605/2002 on the Financial Regulation applicable to the 
general  budget  of 
the 
implementation of the 9th EDF. 

the  European  Communities14 

to  facilitate 

in  order 

(6) 

Financial  Regulation  applicable  to  the  9th  European  Development  Fund  should 
therefore be amended accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Financial Regulation of 27 March 2003 applicable to the 9th European Development Fund is 
amended as follows: 

(1) 

Article 13(1) is replaced by the following: 

“1. 

In  the  context  of  decentralised  management,  the  Commission  shall  undertake 
the financial implementation of EDF resources in accordance with the detailed 
rules  laid  down  in  paragraphs  2,  3,  and  4  without  prejudice  to  delegation  of 
tasks to bodies referred to in Article 14(3).” 

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12 
13 
14 

OJ L 83, 1.4.2003, p. 1. 
OJ L 248, 16.09.2002, p 1. 
OJ L 320, 23.11.2002, p. 1. 
OJ L …., ../../……, p… 

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(2) 

In Article 14(1), the following subparagraph is added: 

“Indirect  implementation,  in  accordance  with  paragraphs  2  to  7  of  this  Article  and 
with  Articles  15  and  16  also  applies  in  the  case  of  delegation  of  tasks  to  bodies 
referred to in paragraph 3 of this Article in the case of decentralised management.” 

(3) 

In Article 54(3), the first subparagraph is amended as follows: 

“The  Commission  shall  be  under  an  obligation  to  effect  payment  from  EDF 
resources whenever the responsible authorising officer: 

(a) 

endorses contracts and programme estimates, as provided for in Article 80(4); 

(b) 

endorses grant agreements.” 

(4) 

In Article 74(1), the first subparagraph is replaced by the following: 

“The  procedures  for  the  award  of  contracts  relating  to  operations  financed  by  the 
EDF  to  assist  ACP  States  shall  be  those  defined  in  Annex  IV  to  the  ACP-EC 
Agreement.” 

(5) 

Articles 76, 77 and 78 are replaced by the following:  

“Article 76 

Within  the  limits  of  the  powers  conferred  on  it  by  the  ACP-EC  Agreement  and  in 
accordance with the conditions laid down in Annex IV thereto, the Commission shall 
ensure  the  broadest  possible  participation,  on  equal  terms,  in  tendering  procedures 
for contracts financed by the EDF and shall ensure compliance with the principles of 
transparency, proportionality, equal treatment and non-discrimination.” 

“Article 77 

Within  the  limits  of  the  powers  conferred  on  it  by  the  ACP-EC  Agreement  the 
Commission  shall  take  steps  to  establish,  by  analogy  with  the  relevant  rules  of  the 
general  financial  regulation,  a  central  database  containing  details  of  candidates  and 
tenderers  who  are,  according  to  the  rules  defined  in  Annex  IV  to  the  ACP-EC 
Agreement, in a situation that excludes them from participation in procedures for the 
award of contracts relating to operations financed by the EDF.” 

“Article 78 

Within  the  limits  of  the  powers  conferred  on  it  by  the  ACP-EC  Agreement  and  in 
accordance with the conditions laid down in Annex IV thereto, the Commission shall 
take the necessary steps to have international tendering procedures published in the 
Official Journal of the European Union and on the Internet.” 

(6) 

Title V is replaced by the following: 

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“DIRECT LABOUR AND INDIRECT DECENTRALISED 
OPERATIONS”. 

(7) 

Article 80 is replaced by the following: 

1. 

2. 

3. 

"Article 80 

This  Title  shall  govern  the  direct  labour  and  indirect  decentralised  operations 
provided  for  in  Article  24  of  Annex  IV  to  the  ACP-EC  Agreement.  It  shall 
apply mutatis mutandis to financial cooperation with the OCT. 

In  the  case  of  direct  labour  operations,  projects  and  programmes  shall  be 
implemented  directly  through  public  departments  of  the  ACP  State  or  States 
concerned. 

The  Community  shall  contribute  to  the  costs  of  the  departments  involved  by 
providing the equipment and/or materials that they lack and/or the resources to 
acquire  any  additional  staff  required,  such  as  experts  from  within  the  ACP 
States  concerned  or  other  ACP  States.  The  Community's  participation  shall 
cover  only  costs  incurred  by  supplementary  measures  and  temporary 
expenditure relating to execution that are strictly confined to the requirements 
of the project in question. 

The  financial  management  of  a  project  implemented  by  direct  labour  in 
accordance  with  the  first  and  second  subparagraphs  shall  be  carried  out  by 
imprest  accounts  administered  by  an  imprest  administrator  and  an  accounting 
officer, appointed by the National Authorising Officer with the prior approval 
of the Commission’s responsible authorising officer. 

tasks  relating 

In the case of indirect decentralised operations, the contracting authority within 
the  meaning  of  Article  73(1)(a)  shall  entrust 
the 
implementation of projects or programmes to bodies governed by public laws 
of  the  ACP  State  or  States  concerned  or  bodies  governed  by  private  law  that 
are legally distinct from the ACP State or States concerned. In such cases, the 
body  concerned  shall  assume  responsibility  for 
the  management  and 
implementation  of  the  programme  or  project  in  place  of  the  National 
Authorising  Officer.  Tasks  so  delegated  may  include  the  power  to  conclude 
contracts  and  manage  contracts  and  the  supervision  of  works  on  behalf  of  or 
for the account of the ACP State or States concerned. 

to 

4.  Direct  labour  operations  and  indirect  decentralised  operations  shall  be 
implemented on the basis of a programme of measures to be carried out and an 
estimate of their cost, hereinafter referred to as the ‘programme estimate’. The 
programme  estimate  is  a  document  laying  down  the  human  and  material 
resources  required,  the  budget  and  the  detailed  technical  and  administrative 
implementing arrangements for execution of a project over a specified period 
by direct labour and, possibly, by means of public procurement and the award 
of specific grants. Each programme estimate shall be prepared by the imprest 
administrator and the accounting officer referred to in paragraph 2, in the case 

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of  direct  labour  operations,  or  by  the  body  referred  to  in  paragraph  3,  in  the 
case  of  indirect  decentralised  operations,  and  shall  then  be  approved  by  the 
National  Authorising  Officer  and  the  Commission’s  responsible  authorising 
officer before the activities it provides for commence. 

5. 

6. 

In the context of the implementation of the programme estimates referred to in 
paragraph  4,  the  procurement  and  grant  award  procedures  shall  comply  with 
those laid down in Titles IV and VI respectively.  

The financing agreements referred to in Article 51(3) must make provision for 
the  implementation  of  direct  labour  operations  or  indirect  decentralised 
operations.” 

(8) 

Article 81 is amended as follows: 

(a)  The introductory part is replaced by the following: 

“In  the  case  of  indirect  decentralised  operations  the  contracting  authority 
referred  to  in  Article  73(1)  (a)  shall  conclude  a  delegation  agreement  when 
entrusting implementation tasks to a body governed by public laws of the ACP 
State or States concerned or by private law with a public service mission and a 
service contract when entrusting those tasks to bodies governed by private law. 
The Commission shall ensure that the delegation agreement or service contract 
sets out:” 

(b)  Point (b) is replaced by the following: 

“(b)  a clear definition and precise delimitation of the powers delegated to the 
body  concerned  and  the  powers  retained  by  the  National  Authorising 
Officer;” 

(c)  Point (d) is replaced by the following: 

“(d)  the  possibility  of  ex  post  review  and  financial  penalties  where  the 
granting of funds or award of contracts by the body concerned does not 
correspond to the procedures laid down at point (c);” 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 2 

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It shall be applicable for the same period as the Internal Agreement. 

Done at Brussels,  

For the Council 
The President 

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