Special Report No 6/2007 on the effectiveness of technical assistance in the context of capacity development together with the Commission's replies
Date: 2007-10-17
Institutions: European Court of Auditors
Subjects: EU financing, audit, development aid, development policy, report, technical cooperation, third country

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IV

(Notices)

NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES

COURT OF AUDITORS

SPECIAL REPORT No 6/2007

on the effectiveness of technical assistance in the context of capacity
development together with the Commission’s replies

(pursuant to Article 248(4), second subparagraph, EC)

(2007/C 312/02)

TABLE OF CONTENTS

Paragraph

Page

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

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

AUDIT SCOPE AND APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Does the Commission have a sound strategy for institutional capacity development,
including the use of technical assistance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inadequate institutional analysis in Country Strategy Papers . . . . . . . . . . . . . . . . . .

No guidance on technical assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Are technical assistance activities within capacity development projects well designed?

Project choice relevant but design often inadequate . . . . . . . . . . . . . . . . . . . . . . . . .

Local ownership essential but not systematically addressed by the Commission . . .

Are technical assistance activities implemented efficiently? . . . . . . . . . . . . . . . . . . . . . . .

Long preparation phase often leads to outdated project design . . . . . . . . . . . . . . . .

Problems during procurement and project start-up reduce time available for imple-
mentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Experts often replaced after award of contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inappropriate selection criteria for technical assistance . . . . . . . . . . . . . . . . . . . . . .

I-VIII

1-6

7-8

9-43

9-12

10-11

12

13-17

14-16

17

18-34

19-21

22-26

27

28

5

6

7

7

8

8

8

8

8

9

9

9

10

10

11

12

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Paragraph

Page

Limited choice between procurement procedures . . . . . . . . . . . . . . . . . . . . . . . . . . .

29-30

Inefficient use of technical assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Donor coordination varies between countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Implementation arrangements not yet favorable to local ownership . . . . . . . . . . . .

Are technical assistance activities and performance adequately monitored and evaluated?

Are technical assistance activities effective in terms of capacity development? . . . . . . . . .

Technical assistance contribution satisfactory but success of projects not guaranteed

Sustainability uncertain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31

32

33-34

35-39

40-43

40-42

43

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

44-48

Annex I — List of the projects and programmes examined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annex II — Effectiveness and prospects of sustainability of projects and programmes examined . . . . . . . . . .

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

12

12

12

12

13

13

13

14

14

17

18

19

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ACP

African, Caribbean and Pacific Countries.

GLOSSARY

Financing agreement

Document signed between the Commission and the partner country, describ-
ing a particular project or programme to be funded. It represents the formal
commitment of the European Union and the partner country to finance the
measures described.

Financing decision

Decision taken by the Commission, on the basis of a financing proposal, to
commit funds to a particular project or programme.

Financing proposal

Draft document prepared by the Commission services, submitted to the rel-
evant Financing Committee of Member States’ representatives for an opin-
ion, and having received a favourable opinion, submitted to the Commission
for decision. The document describes the background, nature, scope and
objectives, implementation measures and the amount of funding foreseen for
a particular project or programme.

MDGs

Millennium Development Goals consisting of eight goals to be achieved by
2015 — which range from halving extreme poverty to halting the spread of
HIV/AIDS and providing universal primary education — were agreed upon
by all countries and the world’s leading development institutions at the
UN Millennium Summit of September 2000.

OECD/DAC

Development Assistance Committee of the Organisation for Economic Coop-
eration and Development.

Paris Declaration on
Aid Effectiveness

Statement adopted at a High Level Forum in Paris, 28 February — 2 March
2005 by a large number of countries and organisations, containing a num-
ber of commitments concerning ownership, harmonisation, alignment,
results and mutual accountability, all with the aim of increasing aid effective-
ness.

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EXECUTIVE SUMMARY

I.
Technical assistance is a resource used in many development projects and programmes of different types
and can be defined as ‘experts contracted for the transfer of know-how and skills and the creation and strength-
ening of institutions’. In recent years, it has been increasingly used to support capacity development of central
and local government services in beneficiary countries, in areas such as public finance management, health and
education, among others. This change of focus towards the functioning of government services has been the
result of a growing awareness among donors, including the European Union, that a lack of institutional capac-
ity is a fundamental obstacle to sustainable development (see paragraphs 1 to 6).

The purpose of the Court’s audit was to determine the extent to which the Commission ensures that
II.
technical assistance contributes to institutional capacity development in beneficiary countries. This was done
by assessing the Commission’s approach towards capacity development and the use of technical assistance and
its management of the design and implementation of technical assistance activities within capacity develop-
ment projects (see paragraphs 7 to 8).

III.
Although institutional capacity building has been recognised in the European Community’s develop-
ment policy as a key element in the fight against poverty, the Commission has not included in its Country Strat-
egy Papers a comprehensive assessment of institutional capacity weaknesses nor identified priority needs for
capacity development within beneficiary governments’ administrations and institutions. Neither does the Com-
mission have guidelines on the role technical assistance should play in this context (see paragraphs 9 to 12).

IV.
Project choice is mostly relevant but design is often inadequate due to over-ambitious objectives, tight
timeframes and insufficient assessment of the existing weak institutional environment and level of local own-
ership of the projects (see paragraphs 13 to 17).

V.
Project implementation is often hindered by a number of problems, including a long preparation and
start-up phase, which makes the project design outdated by the time implementation starts and significantly
reduces the time available for implementation. Recruitment of technical assistance often adds to the delays as
the experts selected are frequently not available once contracts have been awarded. Current procurement pro-
cedures for contracting technical assistance are not conducive to the participation of public institutions, while
in certain areas better qualified experts may be found within such organisations. Donors still provide technical
assistance support mainly through separate, uncoordinated projects, while implementation arrangements do
not encourage local ownership (see paragraphs 18 to 34).

VI.
Project reporting, monitoring and evaluation are in most cases adequate. However, there is no man-
agement information system in place to assess and record the performance of technical assistance companies
or experts, and provide information when decisions on the procurement of technical assistance are taken (see
paragraphs 35 to 39).

VII.
Project results vary considerably but the Court concludes that, in the light of the often difficult envi-
ronment in which they take place, project results and the contribution made by the technical assistance used
can be considered as reasonable. The quality of the technical assistance provided was generally found to be
satisfactory, but other important factors have reduced the effectiveness of the support provided. Although the
Commission does not have control over some of these factors, it should nevertheless better anticipate them
(see paragraphs 40 to 43).

VIII.
On the basis of these observations, the Court makes detailed recommendations which could help the
Commission to establish a more focussed and structured approach to the use of technical assistance, in order
to provide more effective support for capacity development (see paragraphs 44 to 48).

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INTRODUCTION

Development cooperation is sub-divided into two types of
1.
cooperation or assistance: financial assistance and technical assis-
tance, or in other words ‘money’ and ‘know-how’ or ‘ideas’. This
report covers the Court’s audit of technical assistance, which the
Commission defines as ‘Specialists, consultants, trainers, advisers
etc. contracted for the transfer of know-how and skills and the
creation and strengthening of institutions’ (1).

2.
Technical assistance is a resource used in many develop-
ment projects and programmes of different types, and its impor-
tance or effectiveness is judged through its contribution to the
outputs and results of the related projects and programmes.
Specific areas or tasks in the context of development cooperation,
in which technical assistance has played or plays a role include:

(a)

the design and supervision of works,
construction;

such as

road

(b) project management, whereby experts carry direct responsi-

bility for implementation of activities;

The importance of capacity development has also been
4.
stressed in a recent OECD/DAC document (3), which states:
‘Adequate country capacity is one of the critical missing factors
in current efforts to meet the Millennium Development Goals.
Development efforts in many of the poorest countries will fail,
even if they are supported with substantially increased funding, if
the development of sustainable capacity is not given greater and
more careful attention’ (4).

Further evidence of the importance of capacity develop-
5.
ment can be found in the Paris Declaration on Aid Effectiveness
of March 2005 (5), which states that partner countries’ capacity to
plan, manage, implement and account for results of policies and
programmes is critical for achieving development objectives. It
emphasises the need for donors to base their support on partner
countries’ national development strategies, institutions and pro-
cedures as much as possible and to provide support to address
existing weaknesses in partner countries’ institutional capacities.
Although capacity development can be supported through a vari-
ety of other measures — such as training, scholarships, computer
equipment and software, documentation and even physical infra-
structure — technical assistance is the main instrument used in
this context.

6.
The Commission’s accounting and management informa-
tion systems did not allow the Court to obtain precise and reli-
able information on the amounts spent on technical assistance,
either by the European Development Funds or through the Gen-
eral Budget. The Court has estimated the total value of commit-
ments for technical assistance contracts, which were signed
during the period 2000-2005 and were still open at the begin-
ning of 2006, at about 2 200 million euro (6). The share of tech-
nical assistance absorbed by capacity development activities could
not be estimated.

(c) advisory services, in the past often for areas such as agricul-
tural or rural development. More recently increasing use has
been made of them to improve central government services,
including public finance management, health, education, and
the judiciary and also to help other public institutions, local
authorities or non-state actors.

AUDIT SCOPE AND APPROACH

7.
The purpose of the Court’s audit was to determine the
extent to which the Commission ensures that Commission-
financed (7) technical assistance contributes to institutional capac-
ity development in beneficiary countries. More specifically, the
audit set out to answer the following questions:

3.
The change of focus towards the functioning of central
and local government services has been the result of a growing
awareness among donors, including the European Union, that a
lack of institutional capacity is a fundamental obstacle to sustain-
able development. Capacity development has therefore become
one of the focal areas in the European Community’s Development
Policy of 2000 as well as in the new policy formulated in 2005 (2).

(1) In this report the term ‘expert’ will be used to denote the different pro-

viders.

(2) Communication from the Commission to the Council and the Euro-
pean Parliament: The European Community’s Development Policy,
26.4.2000 COM(2000) 212 final.
Joint Statement by the Council and the representatives of the Govern-
ments of the Member States meeting within the Council, the Euro-
pean Parliament and the Commission: ‘The European Consensus on
Development’, General Affairs and External Relations Council on
22 November 2005 (14820/05).

(a) Does the Commission have a sound strategy for institutional
technical

including the use of

capacity development,
assistance?

(b) Are technical assistance activities within capacity develop-

ment projects well designed?

(3) DAC Network on Governance: ‘The challenge of capacity develop-
ment: working towards good practice’, February 2006. DAC is the
Development Assistance Committee of the Organisation for Eco-
nomic Cooperation and Development (OECD).
(4) Millennium Development Goals or MDGs:

see www.un.org/

millenniumgoals and glossary.

(5) See www.aidharmonization.org and glossary.
(6) Divided almost equally between the EDFs (covering all ACP countries)
and the general budget (covering the three main geographical pro-
grammes for the Middle East and southern Mediterranean, Latin
America and Asia).

(7) Either through the General Budget of the European Union or through

the European Development Funds.

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(c) Are technical assistance activities implemented efficiently?

(d) Are

technical

assistance

activities

and performance

adequately monitored and evaluated?

(e) Are technical assistance activities effective in terms of capac-

ity development?

8.
The Court audited the Commission’s approach and activi-
ties, at policy and project level, in relation to 12 beneficiary coun-
tries, selected from four different geographical areas receiving
development assistance: Africa, Asia, Latin America and the Medi-
terranean region (1). Five of these countries were visited on the
spot, while the other seven countries were covered through a
documentary review and questionnaires sent to the Delegations
and the beneficiary authorities of the respective countries. From
an inventory of capacity development projects, 32 projects were
selected which involved 33 technical assistance contracts being
implemented during the period 2000-2006. The total amount
committed to the projects audited was 400 million euro, with
some 144 million euro devoted to technical assistance spending.
The complete list of the 32 projects and programmes examined
is included in Annex I.

OBSERVATIONS

Does the Commission have a sound strategy for institutional
capacity development, including the use of technical assistance?

The Commission translates the principles of the overall
9.
European Community’s development policy into specific coun-
try strategies, usually covering five-year periods, by preparing
Country Strategy Papers and more detailed National Indicative
Programmes for all
individual beneficiary countries. For the
regions covered in the audit, the Court examined, on the basis of
these documents (2), whether the Commission makes a system-
atic assessment of recipient countries’
institutional capacity
strengths and weaknesses, and whether these countries’ overall
capacity development needs are identified and prioritised, and
translated into technical assistance needs.

Inadequate institutional analysis in Country Strategy Papers

10.
The examination of the Commission’s relevant policy
documents, for the countries covered in the audit, as well as the
individual countries’ own national development plans and/or
so-called Poverty Reduction Strategy Papers, revealed a growing
recognition of the importance of capacity development. However,

(1) The 12 countries are: Algeria, Angola, Benin, Uganda, Vietnam (all vis-
ited), and Chad, Indonesia, Mexico, Morocco, Nigeria, Peru, Sierra
Leone (documentary review).

(2) At the time of the audit the current Country Strategy Papers (CSPs)
covered the period 2002-2007 (for the EDF-countries) or 2002-2006
(for the non-EDF countries). Where new draft CSPs for the period
2007/8-2013 were already available, these were also examined.

the Commission did not present a comprehensive assessment at
country level of institutional weaknesses, nor identify priority
needs for capacity development within beneficiary governments’
administrations and institutions. As a result, the selection of focal
sectors for EC support was made without such information being
available, with the risk that potentially important sectors or pro-
grammes in need of donor support may not have been identified.

11.
In 2005, the Commission prepared an internal Concept
Paper on Institutional Assessment and Capacity Development,
describing the meaning and importance of capacity development.
The paper provides guidance on how to assess institutional capac-
ity and support capacity development processes. However, these
guidelines are not applicable to the Country Strategy Papers. At
the lower level of sector plans greater attention is paid to capac-
ity development issues — albeit in very general terms. These plans
are prepared after the focal sectors to be supported in a specific
beneficiary country have been decided.

No guidance on technical assistance

12.
Although technical assistance is a long-established and
frequently used instrument in Commission-financed capacity
development projects and programmes, the Commission has not
defined the role of technical assistance and its contribution to
capacity development. Neither are there specific guidelines for use
by the Delegations when preparing projects, describing when and
how to use the instrument in relation to capacity development.
In addition, the ‘Twinning’ instrument, which has been success-
fully used to provide technical assistance to pre-accession coun-
tries (and more recently also to ‘Neighbourhood Policy’ countries),
has so far not been available to the ACP-, Asian, or Latin-
American countries. While the concept paper mentioned in para-
graph 11 contains some considerations on technical assistance
issues, it provides no guidance on the use of the various kinds of
technical assistance in different situations, sectors or countries.

Are technical assistance activities within capacity development
projects well designed?

13.
For the 32 projects audited, the Court assessed to what
extent the choice of these projects was consistent with the Com-
mission’s, and the partner countries’, national strategies, whether
the project designs set clear objectives and related performance
indicators and adequately justified the proposed type and amount
of technical assistance. The Court further examined whether the
beneficiary authorities had actively participated in project prepa-
ration, and provided clear indication of ownership of the project.

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Project choice relevant but design often inadequate

Local ownership essential but not systematically addressed
by the Commission

14.
All the projects audited were consistent with the Com-
mission’s own Country Strategy Papers and with the sector pri-
orities established therein, and they were generally in line with the
overall development priorities of
the beneficiary countries
concerned.

About three-quarters of the projects examined showed

15.
one or more of the following design weaknesses:

— project designs were overly complex,

involving multiple

components and stakeholders;

— they set over-ambitious objectives and relatively short imple-

mentation periods;

— project objectives were described in general terms, and when
performance indicators were established, these were mostly
of a very general, qualitative nature, compromising their abil-
ity to adequately assess subsequent performance;

— the existing institutional weaknesses in the project environ-

ment were insufficiently assessed.

17.
Ownership of the planned institutional development, on
the part of the beneficiary institution and the people working for
it is a key factor, determining the environment in which the tech-
nical assistance can operate and thereby contributing to the suc-
cessful implementation of the capacity development plans. Being
conscious of this, the Commission generally involved local ben-
eficiary institutions in the design phase of its projects. However,
it did not sufficiently assess the risk that a beneficiary government
might not fulfil its commitments. The fact that a beneficiary gov-
ernment signs a financing agreement with a donor does not auto-
matically imply that the assumptions, formulated in most project
agreements about the government’s commitment to reform, will
be fulfilled. Nor does it mean that the project will be supported
by all the people within the institution, or affected in some way
by the project, as demonstrated by a lack of interest displayed in
several cases by staff of the institutions receiving aid.

Box 2

Example of inadequate local ownership

These factors, in turn, impede the proper formulation and imple-
mentation of the technical assistance tasks.

Health project — Benin

Whereas all projects examined included technical assis-
16.
tance as a major input, in about half of the cases the project docu-
ments proposed certain types (international or local) and amounts
(long-term or short-term assignments) of technical assistance,
without giving clear reasons for the proposed combination of
technical assistance resources. Furthermore, there was also a lack
of clarity regarding the expected role of the experts because the
advisory tasks relating to the project’s capacity development
objectives usually had to be combined with a ‘gap-filling’ role to
support the institution concerned in its regular tasks.

Box 1

Example of project design weaknesses

Support Programme to the Health Sector — Angola

The project objectives included strengthening institutional capacities
at the central and provincial levels, improving basic health services,
improving the availability of essential medicines and establishing a
system for the prevention of HIV. Although the evaluation of a pre-
vious project had mentioned the difficulty found in ensuring an active
role by the Ministry of Health, the feasibility study did not carry out
an assessment of the local capacities to ensure the effective implemen-
tation of this ambitious project. Only when the project had started,
was it noticed that some of the Angolan partners did not have
adequate capacity to implement the project. The inception report pre-
pared by the experts concluded that the project was too ambitious,
but no changes were made until 18 months before the end of the
project, when the objectives and activities were significantly reduced.

The project objective was to improve the quality and accessibility of
health care services. However, the experts had to deal with many
problems, such as the malfunctioning of the human resources man-
agement in the health sector, which was characterised by frequent
transfers and arbitrary appointments, negatively influencing the moti-
vation of staff. The weak involvement of the Ministry in the project
caused many delays, e.g. it refused to second staff to act as local coun-
terparts to the project management unit. Other staff supposed to act
as contact points between the different directorates of the Ministry
and the project lacked motivation because they considered that they
should be paid for this activity which they regarded as ‘extra’ work.
The Commission rightly opposes such payments.

Are technical assistance activities implemented efficiently?

18.
In order to assess whether the projects were implemented
efficiently, the Court examined whether the project started on
time and was implemented as planned, whether the procurement
and mobilisation of technical assistance proceeded without undue
delays, whether the level of coordination with other related
projects or activities was adequate and whether the project imple-
mentation arrangements encourage ownership by the beneficiary
institutions.

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Long preparation phase often leads to outdated project
design

Problems during procurement and project start-up reduce
time available for implementation

The preparation phase of the projects examined gener-
19.
ally took between one and two years. It involved a number of
required steps, including one or more preparatory consultants’
missions (for identification and formulation), two rounds of
advice and comments by the Quality Support Group (1) in the
Commission’s Headquarters, and submission of the financing
proposal to the relevant Member States’ advisory committee.

20.
After the proposal has been approved by the Commis-
sion, a procurement procedure follows (see paragraphs 22 to 26),
in order to contract the required experts. By the time they arrive
on the spot to start the project — which is in most cases at least
two to three years after the design phase started — local condi-
tions have often changed: there have been new political or other
developments (elections, new appointments, new national poli-
cies), or other donors have started projects. As a result, the experts
often find that the original project assumptions are no longer
valid or some of the activities planned are no longer relevant. This
means that in such cases the experts first have to review the ben-
eficiary’s current capacity development needs and revise the
project design accordingly before they can start with the regular
task of preparing the project’s detailed work plan.

Technical assistance required for the implementation of
22.
projects is normally procured through an international restricted
tender procedure (2). This procedure requires some six to eight
months to complete. As the procurement procedure generally
starts only after the financing agreement has been signed, it takes
at least ten months before the experts are in place (eight months
for procurement and two months for mobilisation of the experts).
This period is taken into account when the formal implementa-
tion period of
is determined in the financing
agreement.

the project

23.
However, the Court’s audit of the 32 projects has shown
that many problems have arisen during tender procedures, or
were linked to the start of projects, which delayed the launching
of project activities and reduced the available implementation
period. Typical problems include:

(a)

tenders which fail for lack of sufficient numbers of valid
offers and therefore have to be relaunched;

21.
However, such revisions rarely occur at the start of a
project, because of the administrative work and time involved in
getting approval to change a financing agreement. The Commis-
sion usually starts the project as designed and waits for the Mid-
Term Review (normally carried out after some two years of
implementation), before a decision is made about changes. By
then, the time remaining to implement any necessary changes is
very limited and overall effectiveness is compromised.

(b) delays in setting up the tender evaluation committee;

(c)

late arrival of experts;

(d)

late appointment of required local counterpart staff;

Box 3

Example of a long preparation period causing design
to be outdated

(e) difficulties with setting up project support structures, such as
office facilities, project bank accounts, project manuals and
procedures;

European Technical Assistance Programme for Vietnam (ETV2)

(f)

the preparation of the overall work plan proving more diffi-
cult than expected;

The project was prepared with the help of two separate missions, in
October 2000 and July 2002. The financing agreement was signed in
April 2003, but for various reasons the technical assistance contract
was not signed until August 2005. The project started in January
2006, mainly as a result of the original team leader no longer being
available and having to be replaced. By that time 3,5 years had passed
since the project was formulated and, given the rapid pace of change
in Vietnam, many activities which had been defined were no longer
relevant. A major task for the experts, therefore, during the inception
phase was to redesign the project, with the result that less than half
of the planned time was available for the implementation of the
project activities.

(g)

the need to revise the project design during the inception
period.

The overall result was that the actual implementation period for
practically all the projects examined had become, or was likely to
become, too short to have all the planned activities implemented
and the expected results achieved.

(1) Quality Support Groups are Commission inter-service groups which
perform peer reviews of external assistance measures managed by
EuropeAid during their identification and formulation.

(2) Practical Guide to contract procedures for EC external actions: for ser-
vices contracts with a value of 200 000 euro or more an international
restricted tender procedure is compulsory.

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Apart from the overall time limit set for project imple-
24.
mentation, there is also a contracting deadline to respect (the
so-called D + 3 rule), introduced in the 2003 Financial Regula-
tions (1). Therefore, all the delays arising after the date of the
Financing Decision, e.g. during the tender for the main technical
assistance contract or during the start-up phase, effectively limit
the period during which further implementation-related contracts
for works, supplies or other services can be concluded. Several
projects designed since this rule came into force have already
been, or are likely to be, affected. As from 1 May 2007 a modi-
fication to the Financial Regulation applicable to the general bud-
get (2) has come into effect, which eases the constraint of the
D + 3 rule to some extent, with the 3 year period starting from
the date of the financing agreement. However, any delay occur-
ring after this date will still have the same effect of reducing the
implementation period as well as the period available for
contracting.

Example of reduced implementation period due to delays

Box 4

Development of Human Resources for Health — Uganda

The technical assistance contract was signed in September 2003,
some 18 months after the financing agreement was signed, and the
first experts arrived 2 months after that. A combination of factors had
caused the tender procedure to have taken so long, including the
transfer of the health training schools from the Ministry of Health to
the Ministry of Education, and internal changes at the time in the Del-
egation (staff leaving, devolution, transfer of portfolios). Although the
financing agreement had an implementation period of five years, and
the technical assistance contract a performance period of four years,
the 20 months’ delay at the start had left only three years and three
months for implementation.

25.
It is technically possible to start the procurement process
earlier — i.e. before the financing agreement is signed, or even
before the financing decision is taken — in which case the pro-
curement notice must be published with a ‘suspension clause’ (3).
This would help to reduce the time period which normally passes
between signing the financing agreement and the start of project
activities. The use of such a clause is actually provided for, at least
for the ACP countries, in one of the Annexes to the ACP-EU Part-
nership Agreement (the Cotonou-Agreement of 23 June 2000),
‘in order to ensure early project start-up’ (4).

26.
According to the Commission’s internal guidelines on
procurement this possibility should only be used in exceptional
cases (without indicating what these could be). The Commission
considers that there is a risk that tenders may have to be cancelled
and that, if this occurs too frequently, the interest of potential ser-
vice providers in future Commission-financed projects may be
reduced. The suspension clause is therefore rarely used. However,
the risk that a project is completely cancelled after the prepara-
tion has been completed and the financing decision has been
taken is, in practice, limited. The Commission should clarify in its
guidelines under what circumstances and conditions the suspen-
sion clause may be used.

(1) Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on
the Financial Regulation applicable to the general budget of the Euro-
pean Communities (OJ L 248, 16.9.2002, p. 1), Article 166; and the
Financial Regulation of 27 March 2003 applicable to the 9th EDF
(OJ L 83, 1.4.2003, p. 1), Articles 53 and 54. This rule requires con-
tracts for works, supplies or services to be concluded not later than
3 years after the date when the Commission takes the Financing Deci-
sion concerning a project.

(2) Council Regulation (EC, Euratom) No 1995/2006 of 13 Decem-
ber 2006 amending Regulation (EC, Euratom) No 1605/2002 on the
Financial Regulation applicable to the general budget of the European
Communities (OJ L 390, 30.12.2006, p. 1), Article 100. The Finan-
cial Regulation applicable to the 9th EDF has not yet been modified in
this respect.

(3) This means that the award of the contract will be subject to the con-
clusion of a financing agreement and the provision of funding.
(4) ACP-EU Partnership Agreement, Annex IV — Implementation and

Management Procedures, Article 19.

Experts often replaced after award of contract

27.
In one-third of the contracts examined, almost immedi-
ately after they had won the contract for supplying technical
assistants, the consultancy companies informed the Commission
that key experts were no longer available. In some cases, this was
due to the late completion of the tender evaluation and award of
the technical assistance contract, which meant that experts were
no longer committed as to their availability (5). In other cases, the
nonavailability occurred within the validity period. The most
common reason given was health problems. There is a risk that
companies deliberately propose experts with good CVs in order
to win the contract, while knowing that the expert will not be
available to take up the assignment. In all cases, finding replace-
ments delays the start up of the project.

Example of replacement of expert after award of contract

Box 5

Following an efficient tender procedure, a consortium of several
organisations won the technical assistance contract, principally on the
strength of its proposed team leader. However, this team leader never
took up his duties as he was withdrawn shortly after the contract was
signed because it was discovered that he was susceptible to a disease
which occurs in the country in question. This is something which
should have been known earlier. His replacement arrived at the
project almost three months later.

(5) Experts are required to sign a statement that they will be available dur-

ing the validity period of the offer, which is usually 90 days.

C 312/12

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Official Journal of the European Union

21.12.2007

Inappropriate selection criteria for technical assistance

28.
The regular withdrawal of key experts raises the question
as to whether the criteria used for evaluation of proposals for
technical assistance are actually appropriate (1). The most impor-
tant single criterion used in the technical evaluation of tenders for
service contracts is the evaluation of the curriculum vitae of the
long term experts proposed, in particular that of the team leader.
Only in some cases are interviews with experts organised. Other
potential
indicators for technical quality are not taken into
account, such as the overall capacity of the company, and/or the
Commission’s actual experience of the company or the proposed
experts in previous Commission-financed contracts.

Limited choice between procurement procedures

29.
When it comes to the recruitment of experts for the
implementation of capacity development projects, there is only a
limited choice between different sources from which to recruit
i.e.
experts. There are basically two ways to recruit experts,
through the Framework Contract system (2), or through a
restricted international tender for services (see paragraph 22).

In both cases the contract under which experts are to be
30.
hired is signed with a consulting firm. In certain areas of exper-
tise such as public finance management or public administration,
better qualified experts may be found within other types of
organisation, such as the national administrations of Member
States, e.g. in the case of public finance management, within
national Treasuries, Ministries of Finance or Central Banks, simi-
lar to what happens in ‘Twinning’ projects in pre-accession coun-
tries. In cases where very specific local expertise is required,
neither of the two procedures is in practice conducive to tapping
into the local or regional market for technical expertise.

Inefficient use of technical assistance

31.
International experts were not always used efficiently,
because of the different roles assigned to them. Although they are
principally selected on the basis of their technical expertise, the
Commission also expects experts to play a role in project man-
agement and financial control. Under the current Financial Regu-
lation the international technical assistance team leader is no
longer the Co-Director for the project with joint signatory pow-
ers, as was the practice under the previous Financial Regulation.
However, in practice, the team leader not only verifies but also
prepares the project work plans and budgets, the reports, tender

(1) According to the Commission’s guidelines, the technical aspects (i.e.
the ‘quality’) of the services are given a ‘weight’ of 80 % in the overall
assessment. The financial aspect is not only determined by the remain-
ing 20 % weight in the combined assessment, but also by the fact that
all offers should stay within the limit of the available budget.

(2) Because of frequent use of short-term service contracts throughout the
project cycle, the Commission has established, through an interna-
tional tender, so-called Framework Contracts (FWC). These are global
contracts, which establish the essential terms (e.g. duration, subjects,
prices, and conditions of performance) for the award of specific, indi-
vidual contracts required during a given period.

dossiers, draft contracts and payment proposals from the project
account. In some cases these administrative duties were taking up
a disproportionate amount of time, thus reducing the time the
expert(s) can spend on technical capacity development activities.
It also leads to a certain ambiguity concerning the experts’
accountability, i.e. to the beneficiary institution or the Delegation,
which complicates their tasks and can compromise the climate of
confidence between the expert(s) and the local counterparts.

Donor coordination varies between countries

The level of coordination of capacity development pro-
32.
grammes varies considerably between the countries concerned.
This ranges from limited exchanges of information to more elabo-
rate systems of sectoral and/or thematic working groups which
bring together all active partners and display a high level of coor-
dination, with the Commission usually being one of the most
active donors in this respect. Where a programme of general bud-
get aid or a sector policy support programme had been estab-
lished, coordination was better organised and more intensive.
However, even then the technical assistance was often still pro-
vided through separate projects, whereby each donor applied its
own procedures.

Implementation arrangements not yet favorable to local
ownership

33.
Project Implementation Units (or Project Support Units)
are still set up in most countries as temporary structures, for the
duration of a project and in parallel to the existing national
administration, although in several cases they are already more
integrated within the regular institutional structure of the benefi-
ciary administration. In none of the countries concerned was the
procurement of, and payment for, Commission-financed techni-
cal assistance being managed through national systems and pro-
cedures, as the Commission considered these to be unreliable and
lacking transparency. However, several of these countries (i.e.
Benin, Chad, Morocco, Sierra Leone, Uganda and Vietnam) are
recipients of Commission-financed budget aid, whereby expendi-
ture of the funds is, by definition, subject to the national financial
procedures. This illustrates an incoherence in the Commission’s
approach regarding the use of the beneficiary countries’ public
financial management and procurement systems under its differ-
ent aid instruments.

34.
In the context of the Paris Declaration (see paragraph 5)
donors have undertaken a number of commitments to align their
support with partner countries’ development strategies, institu-
tions and procedures. Several of these commitments are directly
related to the issue of capacity development. In this context the
European Union formulated in three areas even stricter targets for
itself, i.e. to provide all capacity-building assistance through coor-
dinated programmes with an increasing use of multi-donor
arrangements; to channel 50 % of government to government
assistance through country systems; and to avoid the establish-
ment of any new Project Implementation Units. Given the design
of most current capacity development projects, the Commission’s
task to meet its commitments under the Paris Declaration is a
challenging one.

21.12.2007

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Official Journal of the European Union

C 312/13

Are technical assistance activities and performance adequately
monitored and evaluated?

Are technical assistance activities effective in terms of capacity
development?

The quality and timeliness of reporting by the experts
35.
was generally satisfactory and projects are in most cases moni-
tored actively by the Delegations’ staff. In addition, there are two
main systems in place for the external monitoring and evaluation
of projects:

(a)

the Results-Oriented Monitoring system (ROM), carried out
by consultants under the authority of the Commission;

Technical assistance contribution satisfactory but success of
projects not guaranteed

40.
Overall, the actual or likely results for the 32 projects
audited vary considerably (see Annex II). Ten projects were still at
too early a stage of implementation to allow any reasonable
anticipation of their likely results. As far as the remainder of the
projects is concerned:

— one-third of the projects have been, or are likely to be, suc-

cessful in reaching their objectives (see Box 6);

(b) Mid-Term Reviews of projects, which are provided for in the
project’s financing agreement and carried out by consultants
selected and/or approved by the Commission and the part-
ner country.

— one-third of the projects have experienced some problems
and have achieved, or are likely to achieve, only part of their
objectives (see Box 7);

36.
Both systems are used regularly. In some cases projects
had been visited by the ROM consultants a short time after the
start of activities, so that only the project design could be assessed
and not the efficiency or effectiveness of implementation or the
results.

The ROM system represents good practice, particularly as
37.
it involves regular visits to projects during their implementation.
However, the Court found in a number of cases that the scores
given to projects were unrealistic or inappropriate or that the
scores given by consecutive ROM visits to the same project were
not consistent. This may be influenced by the fact that these vis-
its are necessarily very brief (in view of the large number of
projects) and because of regular changes of monitoring staff.

38.
Mid-Term Reviews are carried out for most projects and
are generally seen as a very useful instrument providing a bal-
anced, outside view on a project. Their recommendations are
often used by the Delegations when deciding on changing, refo-
cusing or extending projects. However, with the current trend of
reducing implementation periods, it becomes more difficult to
schedule a Mid-Term Review in such a way that a project has had
sufficient time to progress, yet also leave sufficient time to imple-
ment and benefit from the recommendations.

— one-third of the projects have experienced significant prob-
lems and have achieved, or are likely to achieve, very few of
the planned objectives (see Box 8).

Box 6

Example of a successful project

Support to decentralisation in Benin

The project’s objective was to establish at municipal level the admin-
istrative capacity to provide an improved level of public services to
the population.

An innovative approach was followed whereby a single international
expert, responsible for leading and coordinating activities at central
level, was combined with a large team of local experts, who had the
specific local knowledge and provided support at the local level. This
required an initial training of the local teams by the international
expert in order to ensure a common approach and develop standar-
dised tools. The project design included clear objectives and perfor-
mance indicators, although they were not
initially quantified.
Mobilisation of the expert was within six months of signing the
financing agreement. Upon the start of the project the expert refined
the logical framework and established a database for monitoring and
evaluation. Despite a difficult environment, due to the lack of clear
political support for the decentralisation process, the project has
largely achieved its objectives. The Commission, taking a long-term
view towards development in this area, has prepared a second phase
for the project, to support the implementation of the municipal devel-
opment plans and to increase the capacity of the supervisory institu-
tions.

Systematic assessment of technical assistance perfor-
39.
mance, by companies and experts, does not take place. Any
assessment carried out, either by a Delegation or by a local ben-
eficiary or the local contracting authority (in the case of the EDF)
is done on an ad-hoc and informal basis only. The Commission
does not have any system to allow even this limited information
to be shared. The lack of an adequate management information
system in relation to technical assistance means that valuable
experience from the past in working with certain firms or experts
cannot be exploited when new decisions on the procurement of
technical assistance are taken.

41.
As technical assistance is the main input used in capacity
development projects, its quality obviously has a significant influ-
ence on the project results. Performance by experts was generally
considered satisfactory by the beneficiary institutions and the Del-
egations. Although in about half of the projects audited there
have been cases of replacement of experts, this was usually due
to personality differences but sometimes to underperformance.
There have been only a few cases where a whole team of experts
did not perform well and had to be replaced. However, good qual-
ity technical assistance does not necessarily ensure the success of
a project, as other factors have a decisive influence on the
outcome.

C 312/14

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Official Journal of the European Union

21.12.2007

For the large majority of projects, an insufficient imple-
42.
mentation period has been a major contributory factor to projects
not being able to produce their results within the time allocated
by the financing agreement. The duration of many of these
projects has been, or will be, extended, which should lead to fur-
ther results being obtained. Extensions of the time period alone
are not sufficient to guarantee a successful completion of projects.
Other important factors influencing the effectiveness of the
projects are the institutional environment in the beneficiary coun-
tries and the degree of ownership displayed by the beneficiary
institutions during the preparation and implementation of the
projects. For the countries visited by the Court, these factors have
been generally positive in Vietnam and Uganda, and to a lesser
extent in Algeria and Benin, but this was not the case in Angola.
Such variations in local institutional capacity and ownership go a
long way towards explaining the differences in the results
obtained or expected from the projects audited by the Court in
the respective countries. Some of these factors are outside the
direct control of the Commission, which nevertheless should bet-
ter anticipate them.

Sustainability uncertain

43.
The prospects for the project results to be sustainable, i.e.
that any improvement in capacity will be permanent, are in many
cases uncertain (see Annex II). The inadequate implementation
periods of many projects has led to a great deal of pressure to get
project activities completed as quickly as possible, while not cre-
ating the proper conditions for a gradual withdrawal from the
project of the external assistance. Sustainability will depend
mostly on the commitment and the capacity of the beneficiary
governments and institutions to continue to support develop-
ment and implementation of reforms in the functioning of cen-
services, and more generally of public
tral government
administration, after the Commission’s support has come to an
end. Apart from the political will required for such continued
support, there are usually also financial implications, in terms of
increased costs to the national or local government budget. In
many countries audited, this creates significant doubts about the
continuation of many reform and capacity development pro-
cesses without on-going technical and/or financial assistance.

Box 7

Example of a project with partial results
and uncertain sustainability

Training of primary school teachers — Angola

Poor project preparation and delays led to half of the planned activi-
ties being dropped. As a result, the project did not achieve its full
objectives, as only 4 training centres are operational, against a target
of 16, and 11 000 teachers were trained compared with an original
target of 14 250. The government of Angola has not respected its
commitments to finance these provincial training centres. Without
classrooms, water or electricity, their infrastructure was totally inad-
equate and courses were taking place in the primary schools, oblig-
ing the children to have their courses in the playground. Teachers
were generally happy with the training provided, but they had not yet
received the formal certification by the Ministry of Education and
therefore did not yet have the related professional upgrading or sal-
ary increases. A statistical data system was installed but not working.
Other equipment provided by the project was not working due to
lack of maintenance and spare parts.

Box 8

Example of a project with unsatisfactory results

Health Sector Support Programme — Sierra Leone

Project design took place under difficult circumstances in the late
nineties, when the security situation was still very unstable. The
project objectives were overly ambitious, in view of this difficult situ-
ation and the complexity of the decentralisation process. Delays in
recruitment and inadequate performance of the experts, as well as the
lack of ownership by the Ministry of Health, which did not provide
the required local counterpart staff, have seriously affected the activi-
ties of the project. As a result, the project has fallen far short of its
objectives. At the end of 2006, the Commission’s services were pre-
paring a rider to the financing agreement to decommit 13 mil-
lion euro (from the original contribution of 28 million euro) and
extend the project by two and a half years with a view to try to com-
plete parts of the two more successful components, i.e. the primary
health care at decentralised level and the pharmaceutical component.

CONCLUSIONS AND RECOMMENDATIONS

Does the Commission have a sound strategy for institutional
capacity development, including the possible use of techni-
cal assistance?

Although institutional capacity building has been recog-
44.
nised in the European Community’s development policy as a key
element in the fight against poverty, the Commission has not
included in its Country Strategy Papers an overall assessment and
prioritisation of existing institutional weaknesses in individual
countries, nor is such information used for the selection of focal
sectors for EC support. Neither does the Commission have guide-
lines on the role technical assistance should play in this context
(paragraphs 9 to 12).

Recommendation 1

In its Country Strategy Papers, the Commission should make a com-
prehensive and structured analysis of existing institutional capacity
weaknesses and of capacity development needs.

Recommendation 2

The Commission should develop guidelines on technical assistance
defining its role in the area of capacity development and providing a
sound approach and tools to consider when and how to use it.

21.12.2007

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Official Journal of the European Union

C 312/15

Are technical assistance activities within capacity develop-
ment projects well designed?

Recommendation 4

At the project level, technical assistance-related capacity
45.
development projects selected for support are mostly consistent
with the, usually very widely formulated, overall national devel-
opment strategies of the countries concerned, but they often lack
a detailed justification of the specific technical assistance needs.
Project objectives are frequently over-ambitious, given the tight
timeframes set, and do not take sufficiently into account the weak
institutional environment in which the projects take place, the
level of local ownership of the project and the commitment to the
proposed institutional changes, thereby impeding the proper for-
mulation and implementation of the technical assistance tasks
(paragraphs 13 to 17).

The procedures governing the project preparation and start-up phase,
including the procurement of technical assistance, should be reviewed,
in order to create more time for implementation, and more flexibil-
ity should be allowed during the inception phase to adjust the project
design and/or the Terms of Reference for the technical assistance to
changes in circumstances.

Recommendation 5

The evaluation criteria in technical assistance tenders should be
reviewed, in order to better reflect the quality and previous experience
of the experts and the consultancy company.

Recommendation 3

Recommendation 6

Design of capacity development projects should be improved, by
facilitating effective ownership and leadership of the national part of
the process, by better defining specific capacity development objec-
tives and related technical assistance requirements, by avoiding overly
complex implementation structures, by being more realistic in terms
of objectives to be achieved and by planning longer implementation
periods.

Are technical assistance activities within capacity develop-
ment projects implemented efficiently?

46.
For a number of reasons, implementation periods are in
most cases too short to implement all project activities and
achieve the project objectives. This, in many cases, leads to a nec-
essary extension of the project period. The main problems affect-
ing project
thereby reducing the technical
assistance effectiveness and efficiency, are the following:

implementation,

— the long preparation phase often makes the project design
outdated by the time implementation starts (paragraphs 19
to 21);

— the lengthy process of procuring the technical assistance and
starting up the project significantly reduces the implementa-
tion time (paragraphs 22 to 26);

— experts selected are frequently not available once contracts

have been awarded (paragraphs 27 to 28);

More options should be considered regarding procurement possibili-
ties to allow the best possible choice of technical expertise, including
expertise from public institutions and expertise available in the ben-
eficiary country or the region.

Recommendation 7

In line with the Paris Declaration commitments, the Commission
should increase its use of technical assistance through coordinated
programmes and apply, where possible, implementation arrange-
ments which encourage local ownership.

Are technical assistance activities and performance effec-
tively monitored and evaluated?

47.
The Court found that the reporting, monitoring and
evaluation of technical assistance activities were in most cases
adequate. Project reporting, monitoring and evaluation are car-
ried out regularly and used to identify and address problems and
to adjust and refocus projects where necessary. However, there is
no system in place to assess and record the performance of tech-
nical assistance companies or experts, which could be used for
future reference when experts or technical assistance companies
are being recruited for Commission-financed projects (para-
graphs 35 to 39).

— the current procurement procedures for contracting techni-
cal assistance experts are not conducive to the participation
of national public institutions (paragraphs 29 to 30);

Recommendation 8

— donor coordination varies but in many cases technical assis-
tance support is still provided through separate uncoordi-
nated projects, while implementation arrangements do not
encourage local ownership (paragraphs 32 to 34).

Technical assistance performance by companies and experts should
be assessed systematically and a management information system for
recording, reporting and consulting this performance should be
developed.

C 312/16

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Official Journal of the European Union

21.12.2007

Do technical assistance activities produce satisfactory
results in terms of capacity development?

48.
In the light of the difficult political and institutional envi-
the results of
ronment
Commission-financed capacity development projects can be

in which they take place, overall,

considered as reasonable. While the quality of the technical assis-
tance provided was generally found to be satisfactory, other
important factors have reduced the effectiveness of the support
provided. Capacity development is a difficult task, the more so
because, as many of the projects audited have shown, existing
institutional capacity is often weak and local commitment to
institutional changes not always strongly present.

This report was adopted by the Court of Auditors in Luxembourg at
17 October 2007.

its meeting of

For the Court of Auditors
Hubert WEBER
President

21.12.2007

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Official Journal of the European Union

C 312/17

ANNEX I

LIST OF THE PROJECTS AND PROGRAMMES EXAMINED

Project Amount

TA Amount

(euro)

Algeria

COUNTRIES VISITED

Support Programme for the reform of telecommunications and postal and development services of
the Information Society (PTT)

Programme of modernisation and assistance in respect of administrative reforms (MARA)

Support Programme for education reform (Education)

Support for the reform of justice in Algeria (Justice)

Angola

Training of Primary School Teachers

Support Programme for the Health Sector

Support for the National Institute of Statistics

Strengthening the Planning and Budget Process

Benin

Support for the Health Sector

Support Programme for the starting-up of communes — PRODECOM

Support for the Integrated Programme for strengthening legal and judiciary systems

Uganda

Support for National Authorising Officer’s (NAO) Office

Poverty alleviation budgetary support IV (TA component only)

Development of Human Resources for Health

Technical Assistance to the Road Agency Formation Unit

Vietnam

European Technical Assistance Programme for Vietnam (ETV2)

Support for the Renovation of Education Management (SREM)

Institutional Support Project (ISP)

Poverty Reduction Support Credit 3 (PRSC3) (TA component only)

COUNTRIES NOT VISITED

Indonesia

Trade Support Programme

Mexico

Strengthening and modernisation of justice administration in Mexico

Facilitation of the EU-Mexico free trade agreement (PROTLCUEM) (EU contribution)

Morocco

Modernisation of jurisdictions (EU contribution)

Support for implementing the Association Agreement (PAAA) — Stage I

Nigeria

Economic Management Capacity Project (EMCAP)

Support for reforming institutions programme (SRIP)

Peru

Support for the vocational education and training system of Peru (APROLAB)

Programme in support of the reform of the Peruvian system of justice (JUSPER)

Sierra Leone

Institutional Support for the Ministry of Finance

Health sector support programme (HSSP)

Chad

Support for health policy

Budgetary support programme for the reduction of poverty and growth (2003-2006) (TA
component only)

17 000 000

25 000 000

17 000 000

15 000 000

6 000 000

25 000 000

1 900 000

13 500 000

10 200 000

8 850 000

12 150 000

1 725 000

1 190 000

17 000 000

1 999 500

11 034 800

12 000 000

8 000 000

4 500 000

13 750 742

10 899 900

8 997 400

6 175 960

950 000

7 150 000

475 000

6 500 000

2 160 000

4 681 900

1 394 630

1 725 000

921 540

2 874 844

1 746 788

5 850 560

2 979 620

2 549 100

4 100 000

8 500 000

5 488 682

4 600 000

8 000 000

27 671 000

5 000 000

12 000 000

27 600 000

6 000 000

12 000 000

4 500 000

28 000 000

42 084 965

4 000 000

2 071 825

4 249 580

4 634 720

5 000 000

939 300

10 780 409

1 200 000

1 400 000

1 262 016

7 533 000

9 757 541

4 000 000

NB: For the budget support programmes, only the TA component is taken into account in the project amount.

Total

399 005 265

144 200 057

C 312/18

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Official Journal of the European Union

21.12.2007

EFFECTIVENESS AND PROSPECTS FOR SUSTAINABILITY OF PROJECTS AND PROGRAMMES EXAMINED

ANNEX II

Effectiveness

Prospects of sustainability

COUNTRIES VISITED

Algeria
Support Programme for the reform of telecommunications and postal and development
services of the Information Society (PTT)
Programme of modernisation and assistance in respect of administrative reforms (MARA)
Support Programme for education reform (Education)
Support for the reform of justice in Algeria (Justice)
Angola
Training of Primary School Teachers
Support Programme for the Health Sector
Support for the National Institute of Statistics
Strengthening the Planning and Budget Process
Benin
Support for the Health Sector
Support Programme for the starting-up of communes — PRODECOM
Support for the Integrated Programme for strengthening legal and judiciary systems
Uganda
Support for National Authorising Officer’s (NAO) Office
Poverty alleviation budgetary support IV (TA component only)
Development of Human Resources for Health
Technical Assistance to the Road Agency Formation Unit
Vietnam
European Technical Assistance Programme for Vietnam (ETV2)
Support for the Renovation of Education Management (SREM)
Institutional Support Project (ISP)
Poverty Reduction Support Credit 3 (PRSC3) (TA component only)

COUNTRIES NOT VISITED

Indonesia
Trade Support Programme
Mexico
Strengthening and modernisation of justice administration in Mexico
Facilitation of the EU-Mexico free trade agreement (PROTLCUEM) (EU contribution)
Morocco
Modernisation of jurisdictions (EU contribution)
Support for implementing the Association Agreement (PAAA) — Stage I
Nigeria
Economic Management Capacity Project (EMCAP)
Support for reforming institutions programme (SRIP)
Peru
Support for the vocational education and training system of Peru (APROLAB)
Programme in support of the reform of the Peruvian system of justice (JUSPER)
Sierra Leone
Institutional Support for the Ministry of Finance
Health sector support programme (HSSP)
Chad
Support for health policy
Budgetary support programme for the reduction of poverty and growth (2003-2006) (TA
component only)

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×

×

×
×

×
×

×

×
×

×

×

×

×

×

×
×

10

4

15

3

10

×

×

×

×
×

×

×

7

21.12.2007

EN

Official Journal of the European Union

C 312/19

THE COMMISSION’S REPLIES

EXECUTIVE SUMMARY

I.
In the last 3-4 years the thinking on capacity development and technical assistance has substantially
evolved (in line with the aid effectiveness debate), and in 2005 and 2006 a set of good practices in these areas
have gradually been agreed upon in the donor community. This new thinking has been formally acknowl-
edged by the Paris Declaration that includes various commitments in this area. Results from the first moni-
toring exercise on Paris indicators from the DAC (report of July 2007) show that reforming technical assistance
is a complex and long-term process, challenging for all donors where partner governments also play a key role.

III.
The country analysis of all Country Strategy Papers (CSPs) gives sufficient information to prepare the
response strategy and to choose the focal sectors, where institutional aspects are covered, especially where a
sector approach is foreseen, or where capacity development is a major area of the Commission intervention.
Capacity development and technical assistance issues are addressed in different guidelines. The use of techni-
cal assistance within institutional capacity building must be addressed in a flexible way, taking into account
that good practices for both external and local technical assistance by governments vary a lot from one sector
to another and from one country to another.

IV.
The Commission attaches a particular importance to the quality of project design and has a system to
ensure quality of project design; at the identification and at the formulation level. The system was fully devel-
oped in 2005. Most of the projects examined in this report were prepared before that date.

One of the main goals of the system is to tackle the problems during project preparation, including fixing
objectives and assessing the existing institutional environment and level of local ownership of the projects.

V.
Regarding donor coordination, the Court’s statement can be accepted for the projects that have been
audited. However, the issue has been regularly addressed in the last few years and one of the main recent
achievements is the adoption of the Paris Declaration in March 2005.

The use of coordinated technical assistance also depends on other donor policies and practices and on partner
government leadership. The Commission will continue to promote this type of cooperation while acknowl-
edging that many actors intervene in these processes.

VI.
Technical assistance performance is monitored during project implementation and the Commission
takes necessary measures, including the replacement of the experts, where such performance is not in line with
contractual obligations. A ‘Contractor Assessment Form for EC-Funded Service contracts’ has to be completed
by each Project Manager for every service contract and attached to the final report. On this basis, the Project
Manager will rate the performances of the contractor and of the key experts.

Regarding the award of new contracts, an analysis of the technical capacity of the candidate firms, including
previous contract management experience, is conducted during the pre-selection procedure, where contract
references are requested to applicants. The Commission, applying objective criteria, respects the principle of
equal treatment of candidates. See also the Commission’s reply to paragraph 28.

VIII.
In July 2007 the Commission launched a process to develop a strategy to meet aid effectiveness tar-
gets on Technical Cooperation and Project Implementation Units. Consultation with different relevant Com-
mission services, EU Member States and partner countries is a key component of this strategy.

This strategy in fact aims at the development of a structured approach, as suggested by the Court, based on a
broad consultation. It addresses many of the issues highlighted by the Court’s report and will consider its rec-
ommendations in order to ensure effective support to capacity development in line with EU targets in this area.

C 312/20

EN

Official Journal of the European Union

21.12.2007

INTRODUCTION

1.
The Commission underlines the increasing importance of
general and sector policy dialogue as a ‘third’ type of development
cooperation, particularly with respect to the support to sector
programmes. The new role of technical assistance in this context
will need to be analysed and new technical assistance needs and
requirements will need to be defined.

The Commission underlines the importance it attaches to

5.
other dimensions of capacity building.

6.
The Common Relex Information System (CRIS) reporting
follows the DAC sectoral codes but requires continuous improve-
ments in line with evolving management needs. It is being con-
sidered whether information systems should be modified to make
it possible to extract data on technical assistance components
(where this is significant).

OBSERVATIONS

Building on this Concept Paper the Commission is developing
further its methodology for institutional assessment at sector
level. The new Guidelines on EC Support to Sector Programmes
(July 2007) provide further guidance on this. Additional tools are
being piloted. The Commission organises training on these issues
also at country level.

Capacity development and technical assistance issues are
12.
addressed in different guidelines, including the guidance on Sec-
tor and Budget Support (the recently issued Guidelines on Sup-
port to Sector Programmes — July 2007 and the Guide on
General Budget Support — January 2007) and sector specific
guidance. Preparing all-encompassing guidelines for the Delega-
tions on the potential role of technical assistance in the specific
and very sensitive field of institutional capacity development is a
delicate issue that needs to be addressed in a flexible and context-
sensitive way.

The Commission has decided to prepare a participatory and com-
prehensive strategy in line with the Paris commitments and EU
targets. Twinning projects cannot be launched before appropri-
ate structures of recipient administrations are in place and a pipe-
line is prepared. Extension to other regions needs careful
consideration, in order to ensure adequate implementation and
response from EU partners.

10.
In July 2007 the Commission launched a process to
develop a strategy to meet aid effectiveness targets on Technical
Cooperation and Project Implementation Units. Consultation
with different relevant Commission services, EU Member States
and partner countries is a key component of this strategy.

15.

The Commission considers that the analysis of Country Strategy
Papers gives sufficient information to prepare the response strat-
egy and to choose the focal sectors, where institutional aspects
are covered, especially where a sector approach is foreseen, or
where capacity development is a major area of the Commission
intervention. The Commission’s approach to deal with the grow-
ing recognition of the importance of capacity development is to
mainstream institutional aspects in a holistic approach rather
than to undertake a preliminary and systematic analysis of insti-
tutional aspects.

Second indent Several improvements have been introduced in the
latest revision of the Financial Regulation and its implementing
rules. Among these, the modification of the so-called ‘d + 3 rule’
should facilitate project implementation by linking the contract-
ing time to the real duration of the project.

Third indent Accountability is one of the pillars of the Paris Dec-
laration on aid effectiveness. Strengthening measurable, results-
oriented indicators is a priority for the new programming cycle.

Moreover, institutional aspects are further analysed during the
programme design phase. In order to assess the eligibility to bud-
get support for example, a detailed assessment is systematically
made of the public finance management system.

Fourth indent Better assessment of the institutional and capacity
issues will be promoted through guidance and training.

11.
This Concept Paper was originally conceived to support
institutional and capacity analysis at sector level as a tool to facili-
tate design and implementation of the Sector Wide Approach.
This document was actually developed to complete the Guide-
lines on EC support to Sector Programmes issued in 2003. Its
content can be easily adjusted to be applied for
sub-
sector/thematic analysis and at project level. However, this meth-
odology (based on the identification of a sector ‘vantage point’)
cannot be fully applied for ‘country-wide assessments’ that are
very complex and delicate exercises, requiring ad hoc approaches.

Technical assistance contracts are mainly used where a
16.
service provider is called on to play an advisory role, to manage
or supervise a project, or to provide the experts specified in the
contract. The distinction between international and local experts
has however been abolished as of 1 February 2006.

The new Guidelines on technical assistance will allow more clar-
ity on technical assistance roles starting from the identification
and formulation phases.

21.12.2007

EN

Official Journal of the European Union

C 312/21

Box 1

The health sector support programme continued to support sectors
already covered in the previous project (7 ACP Angola 35), but still
under very difficult circumstances (post-conflict environment, institu-
tional weakness, decentralisation process). It is true that the start-up
report noted the overambitious nature of the objectives set by the pro-
gramme. The action plans and programme estimates were in fact drawn
up on the basis of the recommendations of that initial report. Today the
programme is active, useful and appreciated by central and provincial
partners in the Ministry of Health.

17.
Capacity development processes are inherently political
where many national actors with possibly diverging interests and
agendas intervene. The Commission recognizes the crucial role of
local commitment for successful implementation of its support to
capacity development and agrees that assessing commitment and
‘real demand’ deserves special attention. In this respect, method-
ological work is ongoing in order to develop an analytical tool
addressing the various factors influencing real ownership and
supporting realistic assessment of national commitment/interest.
This tool and these approaches will need to be carefully piloted
and progressively applied giving attention to the political dimen-
sion and sensitivity.

At the same time, the Commission has the possibility to suspend,
if needed, the implementation of a financing agreement when the
beneficiary state breaches one of its obligations.

19.
The duration referred to by the Court is classical in
co-operation activities, whatever the donor (World Bank, UN
Agencies, bilateral co-operation agencies). It largely results from
the project cycle.

A checking and updating exercise is generally requested
20.
from the technical assistance during the inception phase as part
of the terms of reference of their assignment.

21.
The original Logical Framework Matrix may sometimes
not be complete, or may be out of date by the time the project
starts, and therefore needs to be reviewed and, as appropriate,
improved and/or updated during project
implementation.
Amendments to financing agreements and consultants’ terms of
reference are common practice.

Box 3

There are strict rules governing the way in which con-
22.
tracts are awarded. These help to ensure that suitably qualified
contractors are chosen without bias and that the best value for
money is obtained, with the full transparency appropriate to the
use of public funds. The use of an international restricted tender
procedure is foreseen by the implementing rules of the Financial
Regulation (Budget) and the General Regulation (EDF) and can
normally be completed in six or seven months.

24.
The new starting date of the so-called ‘d + 3 rule’ with the
latest revision of the Financial Regulation already constitutes an
improvement (see also the Commission’s reply to paragraph 15).
The d + 3 rule was introduced in 2003 by the legislator to find a
balance between the necessity to control the outstanding amounts
to be contracted (RAC) and the difficulties which can arise in the
management of complex projects. It is also meant as an incentive
for the beneficiary to implement financing decisions in a shorter
period of time.

25-26.
The logic of the system of rules governing the EC gen-
eral budget requires a financing decision by the Commission
before the commitment (1) and call for tenders or proposals.
Exceptional circumstances could arise where deviation from the
normal decision-making process might be justified. As a rule,
these require that the conditions which would justify a suspen-
sion clause are outside the Commission’s control.

Provisions concerning the European Development Fund do fore-
see the possibility for ACP States to use a suspension clause, in all
duly substantiated cases and in agreement with the Commission,
in order to ensure early project start-up. The Joint ACP/EU Coun-
cil Decision No 2/2002 foresees the use of suspension clause ten-
ders in exceptional and duly justified cases (Point 5 of its Annex).

27.
Measures are in place to deal with these cases which
range from the possibility to cancel the award decision (if the
withdrawal occurs before the signature of the contract) to the
possibility to impose fines or exclude a company from future
contracts.

In view of the delayed start-up, an amendment to the financing agree-
ment is currently being processed by the Commission to give the project
sufficient implementation time and to fully adjust the project to the cur-
rent needs of Vietnam. The mid-term evaluation confirmed the approach
taken by the Commission and supports the amendment to the financing
agreement.

The Commission carefully analyses each case and ensures that,
where appropriate, the replacement of the experts is of an equiva-
lent quality.

(1) Article 75 of the Financial Regulation applicable to the general bud-

get of the European Communities.

C 312/22

EN

Official Journal of the European Union

21.12.2007

Box 5

The expert’s replacement performed satisfactorily.

The Commission recognizes that technical assistance do play dif-
ferent roles (including administrative duties) and is screening this
issue in the preparation of the future strategy on technical coop-
eration with the aim of ensuring more clarity and more account-
ability to partner governments.

Interviews with team leaders are organised more system-

28.
atically for projects entailing high level contacts.

An analysis of the technical capacity of the candidate firms, as
well as of their previous contract management experience, is con-
ducted during the pre-selection procedure, which leads to the
establishment of a short list. Contract references (up to 15) are
requested from the applicants. The Commission verifies the sat-
isfactory outcome of these when EC-financed contracts are
mentioned.

The drafting of the award criteria must be done carefully, in order
that these are not mixed up with the selection criteria. Constant
case-law of the Court of Justice recalls the importance to separate
the evaluation of the selection criteria viewpoint and the evalua-
tion of the award criteria. The ‘overall capacity of the company’ is
usually assessed in the first phase of the procedure where it is
established whether a company is capable or not of implement-
ing the project (selection criteria) and may not be assessed a sec-
ond time in the second phase of the procedure, where the quality
of the offer is evaluated (evaluation/award criteria). The Commis-
sion respects the principle of equal treatment of candidates apply-
ing objective criteria.

With respect to the participation of public institutions
30.
(from EU Member States) in technical assistance, there are impor-
tant obstacles to the use of such technical assistance, in particular
the need for prior professional experience in low income coun-
tries (present only with very few individuals) and the reluctance
of institutions to delegate well qualified and well performing staff
to work abroad.

Competition is generally open to all natural and legal persons in
eligible countries, including public bodies. Member States experts
and local experts are not excluded. Publication of tender notices
in local media is possible.

New ways to find suitable experts can be explored, as long as they
are consistent with the applicable rules (Financial Regulation,
Implementing Rules, etc).

31.
Team leader management skills are essential to organise
technical assistance inputs in a consistent and effective manner
and to ensure adequate monitoring of
technical assistance
performance.

As regards accountability, the contractor is always accountable to
the contracting authority (if the contract is signed under decen-
tralised management by the beneficiary country, the contractor is
always accountable to the local institution concerned; if the con-
tract has been concluded by the Commission, he will be account-
able to the Delegation). It is not part of the standard Terms of
Reference template that experts have to be given a role in project
management and financial control.

32.
Donor coordination has always been a pivotal matter for
the Commission and since 2005 important efforts have been
deployed to promote structured coordinated actions, including
technical assistance, in the area of capacity development. Coor-
dination, alignment, ownership are now key elements of the aid
effectiveness agenda and the Commission has made firm commit-
ments to further enhance its operationalisation. The present con-
text is conducive to coordinated technical assistance (1).

33.
The aid effectiveness agenda includes more integration of
programme management in local administrations and phasing
out PMUs. Since 2003, all EC financed Project Implementation
Units are formally integrated in national administrations:

— EC financed technical assistance is procured and managed via
EC procedures as for all possible components/activities
implemented through the project modality. In all the coun-
tries benefiting from budget support, budget support
co-exists with EC financed projects. This also meets a need to
diversify aid instruments and the related risk. Budget support
is not used to finance a specific action, disbursements are
conditional on the achievement of agreed objectives in terms
of impact and results. According to the Financial Regulation,
payments are executed by the Commission using EC proce-
dures. It is the subsequent use of such resources (which
merge with the national budget of the recipient country and
are no longer EC funds) that are subject to national financial
procedures.

— Concerning in particular international technical assistance, in
many cases partner countries are not willing to ensure pro-
curement and management for various reasons including on
one side the high cost of international experts, the workload
related to the selection and procurement procedures.

(1) Paris Declaration on Aid Effectiveness, March 2005; Aid Effectiveness
Package, March 2006; Programming guidelines 10th EDF and com-
mon framework for joint programming; Council Conclusions on a
Code of Conduct for Complementarity and Division of Labour in
Development policy, May 2007.

21.12.2007

EN

Official Journal of the European Union

C 312/23

The Commission believes that there is therefore no incoherence
in the Commission approach.

34.
The recently revised Financial Regulation for the EC gen-
eral budget and the new instruments of EC external assistance
(DCI, ENPI) as well as the implementing regulation for the
10th EDF increase the possibility for coordination with donors
(co-financing rules in the new instruments and new management
modes in Articles 53 to 57 of the Financial Regulation).

The Commission agrees that meeting the Paris Declaration tar-
gets is a complex challenge. For this reason, its strategy on tech-
Implementing Units foresees a
nical assistance and Project
comprehensive desk work as well as a broad consultative phase.
The recent survey from DAC on the monitoring of the Paris indi-
cators on Project Implementing Units and Technical Cooperation
(report of July 2007) shows that all donors share this same
challenge.

37.
The Results Oriented Monitoring (ROM) has been fine-
tuned in the course of the years and it is now largely recognised
by all Commission services (Headquarters and Delegations) as an
effective mechanism to have an impartial picture of the overall
status of projects
regular monitoring
mechanisms.

and support

the

39.

See the Commission’s reply to paragraph 28.

CONCLUSIONS AND RECOMMENDATIONS

Recommendation 1

The Commission considers that the current approach already gives
adequate consideration to relevant institutional aspects in the develop-
ment of the programming documents. The Commission attaches particu-
lar attention to institutional aspects. These are taken into account
through the entire cycle of operations starting from the programming
phase.

The current format for a common framework for drafting the Country
Strategy Papers
the Council of
(based on the Conclusions of
11 April 2006) clearly states that this document should include a joint
analysis of the country situation, covering institutional aspects. On the
basis of this assessment the choice of focal sector is made.

Recommendation 2

The Commission agrees to this recommendation. In fact, in order to meet
the EU related targets, it has already been decided to develop a strategy
to enhance the effectiveness of technical cooperation and deal with Project
Implementation Unit
this exercise,
launched in early July 2007, is to improve the quality of technical coop-
eration with a focus on technical assistance personnel in line with capac-
ity development issues and good practice in this area. The development
of Guidelines on technical assistance will be part of this process

issues. The overall purpose of

benefiting from the broad consultation with delegations, Headquarter
services, Member States and partner governments. Guidelines on techni-
cal assistance will be key in promoting a more structured and strategic
approach. Nevertheless, given the complexity of this type of intervention,
the Commission believes that these guidelines should support a flexible
and context-sensitive approach (adaptable to country and sector situa-
tions), providing tools for a better understanding of
the context
specificities.

Recommendation 3

The Commission agrees to this recommendation. The user guidance on
technical assistance will support better design of capacity development
projects, including adequate consideration of technical assistance needs.
Quality support groups will support implementation of this approach.

46.

See the Commission’s reply to paragraphs 19 to 21.

Second indent See the Commission’s reply to paragraphs 22 to 26.

Third indent See the Commission’s reply to paragraphs 27 to 28.

Fourth indent See the Commission’s reply to paragraphs 29 to 30.

Fifth indent See the Commission’s reply to paragraphs 32 to 34.

Recommendation 4

The Commission has already introduced or is introducing a number of
measures within the boundaries of the applicable legal framework, to fol-
low this recommendation (see paragraph 24). The Commission is also
screening current procedures against good practices and aid effectiveness
principles in the area of technical assistance (desk phase of the Europe-
Aid Strategy on technical cooperation and Project Implementation
Units).

Recommendation 5

The Commission finds that the existing evaluation criteria ensure that
the principle of equal treatment of candidates is respected by applying
objective criteria. See also the Commission’s reply to paragraph 28.

C 312/24

EN

Official Journal of the European Union

21.12.2007

Recommendation 6

Recommendation 8

As a general rule, the public procurement rules help to ensure that suit-
ably qualified entities are chosen and that the best value for money is
obtained, with the full transparency appropriate to the use of public
funds. The participation of experts from public institutions should be
considered in view of the competence and the experience necessary to carry
out
the technical assistance. See also the Commission’s reply to
paragraph 30.

Recommendation 7

The Commission is in the process of designing a strategy on the use of
technical assistance and technical cooperation to increase aid effective-
ness in line with the Paris Declaration. The strategy will further support
coordinated actions with partner country and other donors, under part-
ner country leadership.

Nevertheless, the use of coordinated technical assistance also depends on
other donor policies and practices and on partner government leadership.

Technical assistance performance is monitored during project implemen-
tation and the Commission takes necessary measures, including the
replacement of the experts, where such performance is not in line with
contractual obligations. A ‘Contractor Assessment Form for EC-Funded
Service contracts’ has to be completed by each Project Manager for every
service contract and attached to the final report. On this basis, the Project
Manager will rate the performances of the contractor and of the key
experts.

Regarding the award of new contracts, an analysis of the technical capac-
ity of the candidate firms, including previous contract management expe-
rience, is conducted during the pre-selection procedure, where contract
references are requested to applicants. The Commission, applying objec-
tive criteria, respects the principle of equal treatment of candidates. See
also the Commission’s reply to paragraph 28.