Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Simplifying the implementation of the research framework programmes
Date: 2010-04-29
Institutions: European Commission
Subjects: EU financing, audit, computer system, innovation, operating cost, research and development, research programme

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EUROPEAN COMMISSION 

Brussels, 29.4.2010 
COM(2010)187 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS  

SIMPLIFYING THE IMPLEMENTATION OF THE RESEARCH FRAMEWORK 
PROGRAMMES 

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TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

3.3 

4. 

5. 

6. 

Introduction .................................................................................................................. 3 

Simplification measures already in place, but….......................................................... 4 

Further possibilities for simplification of rules and procedures................................... 5 

Strand 1: Streamlining proposal and grant management under the existing rules....... 5 

Strand 2: Adapting the rules under the current cost-based system .............................. 7 

Strand 3: Moving towards result-based instead of cost-based funding...................... 10 

Revisiting the EU research and Innovation funding landscape ................................. 11 

The way forward ........................................................................................................ 11 

Conclusion.................................................................................................................. 13 

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1. 

INTRODUCTION 

Research  and  innovation  are  at  the  core  of  the  Commission's  initiative  "Europe  2020  –  a 
strategy  for  smart,  sustainable  and  inclusive  growth"1.  Following  the  endorsement  by  the 
Spring European Council of the main elements of the strategy, concrete steps are now being 
undertaken  to  flesh  out  the  Europe  2020  flagship  initiatives.  A  "European  plan  for  research 
and  innovation",  the  "Innovation  Union"  flagship,  will  set  out  priorities  and  directions  to 
improve  framework  conditions  for  Europe's  research  and  its  capacities  for  creativity  and 
innovation. To act on this in partnership more decisively than ever is needed in view the fierce 
global race for knowledge and its translation into innovative products, processes and services 
that create jobs and fuel growth. 

In  order  to  deliver  on  the  2020  strategy  objectives,  based  on  a  common  ownership  of  the 
strategy called for by the European Council, regional, national and European public funding 
initiatives in research and innovation should be as effective as possible, in order to promote 
the highest quality research. For  maximum impact such initiatives at  European level should 
therefore  be  highly  attractive  and  accessible  to  the  best  researchers  worldwide,  to  Europe's 
industry and entrepreneurs, to universities and other research and innovation actors.  

Prerequisites for attractiveness and accessibility include clarity of objectives and instruments; 
an overall participant orientation of the initiatives and their implementation; consistency and 
stability  of  rules  and  conditions;  and  lightness  and  speed  of  administrative  procedures  and 
processes, from application, over reporting, to auditing. 

This  Communication  assesses  where  we  stand  on  this  as  concerns  Europe's  current  major 
public funding initiative for research and technological development, the Seventh Framework 
Programme  (FP7).  A  lot  has  been  and  is  being  done  in  terms  of  simplification  following 
discussions  in  Council  and  Parliament,  the  independent  review  of  the  ERC's  structures  and 
mechanisms2  and 
the  recent  public  consultation  of  stakeholders3.  Further  concrete 
simplification measures for immediate implementation under the current legal framework are 
presented.  

But  what  else  and  more  should  and  could  be  done  in  view  of  the  imminent  "Innovation 
Union"  flagship  initiative?  This  Communication  also  provides  possible  directions  for  more 
radical  simplification.  Directions  which  could  subsequently  be  translated  into  concrete 
actions, either under the current framework or in the form of new legislative proposals. Some 
of  these  directions  however  would  require  a  new  political  balance  concerning  trust  and 
accountability and could in all likeliness also be extended to other European funding actions 
in  the  areas  of  research  and  innovation,  such  as  the  Competitiveness  and  Innovation 
Programme  (CIP)  and  the  European  Institute  of  Innovation  and  Technology  (EIT).  The 
purpose of presenting these directions at this stage is to facilitate the interinstitutional debate 
in the frame of the upcoming "Innovation Union" flagship proposals. 

1 
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COM(2010) 2020, 3.3.2010. 
Report of a panel of independent experts for the review of the structures and mechanisms of the ERC; 
23 July 2009 and Commission Communication COM(2009) 552, 22.10.2009. 
Consultation on ideas for simplifying the implementation of the EU RTD Framework Programmes, 
24.7.-30.9.2009, http://ec.europa.eu/research/consultations/fp-simplification/consultation_en.htm; 
Consultation on the review of the financial regulation, 19.10.-18.12.2009 
http://ec.europa.eu/budget/consultations/FRconsult2009_en.htm. 

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Simplification  is  also  a  major  goal  of  the  upcoming  Commission  proposal  on  the  triennial 
review  of  the  Financial  Regulation.  The  Commission  intends  to  seize  that  opportunity  to 
review budget delivery mechanisms and set financial rules for the next financial framework. 
Since the Financial Regulation provides the general framework for the implementation of the 
EU budget, including research expenditure, its successful review will allow further progress 
in  simplification  in  the  research  area,  including  through  translating  it  in  the  sectoral  RTD 
legislation. Simplification will therefore be one of the key elements of the preparation of the 
future Framework Programmes for Research and Technological Development (FP8).  

2. 

SIMPLIFICATION MEASURES ALREADY IN PLACE, BUT… 

Compared  to  its  predecessors  FP7  brought  about  a  number  of  widely  acknowledged 
simplifications. Some come from the legal basis of FP74, others are based on the continuous 
efforts  of  the  Commission  in  improving  implementation  rules  and  processes.  These 
achievements in FP7 include notably:  

–  Considerable reduction of ex-ante controls and revised protective measures for financially 
weak participants designed to ease the participation of SMEs and high-tech start-ups. 80% 
of FP7 participants are exempt from ex-ante financial capacity check. 

–  Major reduction of the number of certificates on financial statements to be provided with 
periodic cost claims. 75% of FP7 participants are exempt from providing such certificates. 

–  Introduction of a unique registration facility, thus avoiding repeated requests for the same 

information. 

–  Introduction  of  the  possibility  of  ex-ante  certification  of  the  accounting  methodology  for 

recurring participants (currently under restrictive conditions). 

–  Streamlining of the project reporting requirements. 

–  Progress towards optimised IT tools ("e-FP7") as a mean for rationalising all interactions. 

–  Improvements to the services and guidance documents for applicants. 

These  concrete  measures  have  already  led  to  a  reduction  of  time-to-grant  and  of  the 
administrative  effort  for  managing  projects.  However,  the  feedback  received  in  stakeholder 
consultations shows that access to the programmes and preparation of proposals are still too 
difficult, in particular for newcomers, that the administrative burden for project administration 
and  accounting  is  perceived  as  too  high  and  that  time-to-grant  and  time-to-pay  are  still  too 
long.  Moreover,  the  error  rates  detected  in  ex-posts  audits,  in  particular  for  personnel  and 
indirect costs, are still above the materiality threshold defined by the Court of Auditors. This 
fact is also calling for further simplification of rules. 

4 

OJ L 412, 30.12.2006, p. 1; OJ L 391, 30.12.2006 p. 1; OJ L 400, 30.12.2006, p. 1.  

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3. 

FURTHER POSSIBILITIES FOR SIMPLIFICATION OF RULES AND PROCEDURES 

The  possibilities  for  further  simplification  as  presented  below  are  structured  in  three  main 
strands:  a  first  strand  with  the  improvements  and  simplifications  that  the  Commission  will 
implement  under  the  current  legal  and  regulatory  framework  (short  term),  a  second  strand 
with  changes  to  the  rules  but  still  under  the  current  cost-based  model,  and  a  third  strand 
suggesting more far-reaching changes towards a result-based funding using lump sums.  

Under  the  first  strand,  practical  improvements  to  processes  and  tools  are  presented  that  the 
Commission  has  already  started  implementing.  These  improvements  will  lead  to  a  further 
reduction of time-to-grant and time-to-pay.  

The second strand covers changes to the existing rules allowing a broader acceptance of usual 
accounting  practices  (including  average  personnel  costs),  the  reduction  of  the  variety  of 
special  conditions,  a  provision  for  owner-managers  of  SMEs  and  a  change  to  the  grant 
selection process. These options, in addition to accelerating the processes, would contribute to 
a reduction of the error rate in the cost based approach. 

Under the third strand, options paving the way to future more profound changes are presented, 
by  introducing  a  result-based  approach  that  would  entail  a  major  shift  of  the  control  efforts 
from  the  financial  to  the  scientific-technical  side.  This  approach  would  minimise  the 
administrative  burden  for  accounting  and  the  needs  for  financial  ex-ante  and  ex-post 
checking.  

3.1. 

Strand  1:  Streamlining  proposal  and  grant  management  under  the  existing 
rules 

FP7  is  one  of  the  biggest  public  research  grant  programmes  in  the  world  with  an  annual 
budget that increases year-on-year, reaching € 10 billion in  2013. These funds are allocated on 
the  basis  of  research  excellence,  involving  the  reception  of  up  to  30 000  proposals,  the 
conclusions  of  6 000  grants  with  about  36 000  participants  and  the  issuing  of  10 000 
payments each year. All this must be achieved while assuring proper accountability. To this 
end,  the  Commission  has  established  and  is  permanently  improving  a  complex  business 
process  that  needs  properly  adapted  resources,  management  structures  and  skills.  The 
Commission,  supported  by  the  executive  agencies,  strives  for  an  optimised  implementation, 
translating  any  given  regulatory  framework  into  the  least  burdensome,  least  complex  and 
quickest system of proposal and grant management. 

(1) User support, guidance, transparency, IT tools and processes 

Easily  understandable  documents,  proficient  help  services,  efficient  IT  tools  and  optimised 
business processes have a potential for reducing average time-to-grant and time-to-pay by 
several  months.  The  Commission  will  continue  its  efforts  on  providing  efficient  and  user-
friendly  IT-supported  grant  management  processes.  The  Research  Participant  Portal  will  be 
developed into the unique platform for all interactions with beneficiaries. By the end of 2010, 
all processes of grant management as well as a system for expert evaluators will be integrated. 
Proposal  submission  and  evaluation  will  be  integrated  in  2011-2012.  Parallel  paper  streams 
will  be  abolished  by  the  use  of  electronic  signatures  replacing  paper  signatures  wherever 
possible,  starting  in  2010  with  the  financial  statements.  IT  systems  will  provide  workflow 
support  and  online  help.  A  web-based  document  repository  and  a  tracking  system  for 
transactions in proposal and grant management will be installed by the end of 2011, so that 

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participants get feedback on the status of all transactions and have access to all documentation 
related to their proposal or grant. 

The  new  IT  system  for  reporting  will  allow  the  automatic  publication  and  dissemination  of 
any publishable reports and results of projects. 

Some  of  the  IT  services  of  the  research  framework  programme  are  used  also  by  the 
Competitiveness and Innovation Programme (CIP). The Commission will further explore the 
possibilities  of  providing  more  unique  IT  tools  for  the  Community  research,  education  and 
innovation programmes. 

The  Commission  will  work  on  the  improvement  of  the  clarity  and  accessibility  of  guidance 
documents and services, by streamlining the guides, removing unnecessary jargon and using 
consistent terminology - to reduce the entrance barriers for newcomers, in particular SMEs.  

(2) Uniform application of rules 

The stakeholder consultations reveal that the divergent interpretation and application of rules 
and the lack of coordination  in  the  planning of audits by the  different Commission services 
are a source of irritation for beneficiaries and put into question the Commission's credibility. 
Within  the  boundaries  of  the  applicable  legal  framework,  the  Commission  is  committed  to 
ensuring that its organisational set up provides for uniform interpretation  and application of 
the  rules  and  procedures.  Furthermore,  the  Commission  will  provide  a  coherent  audit 
programming respecting the single audit approach. 

(3) Optimising the structure and timing of calls for proposals 

Following the schedule of calls and topics is sometimes complicated for potential applicants. 
SMEs in particular would generally prefer calls with larger topics or even open calls with cut-
off  dates  in  order  to  shorten  the  time  to  the  next  possible  funding  application.  The 
Commission  will  build  on  its  experience  in  implementing  such  calls  to  see  whether  this 
approach  could  be  extended.  This  could  be  in  conjunction  with  two-stage  submission  and 
evaluation, where this is likely to curb the problem of oversubscription and excessive effort 
for proposal preparation. 

Applicants  also  plead  for  longer  periods  in  which  to  form  consortia  and  prepare  proposals. 
Wherever  possible  within  the  logistical  and  budgetary  constraints,  the  Commission  will 
increase  the  time  between  call  publication  and  deadline  beyond  the  standard  three  months. 
When three month periods are unavoidable, these will avoid major holiday periods.  

(4) Adapting sizes of consortia 

In  future  work  programmes,  the  Commission  will  take  care  to  adapt  the  indications  on 
expected sizes of projects to the needs in the specific fields, allowing, where appropriate, for 
smaller  consortia.  The  simpler  management  of  smaller  consortia  bears  a  potential  for 
reducing average time-to-grant and time-to-pay. 

(5) More extended use of prizes 

Prizes  are  provided  for  in  the  Financial  Regulation  and  the  FP7  Rules  for  Participation.  A 
prize  is  a  reward  following  a  contest.  Prizes,  apart  from  administrative  simplicity,  have  the 
advantage  of  a  high  leverage  effect  –  the  prize  is  paid  only  to  the  winner,  i.e.  the  overall 

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research effort induced by the prize can be a multiple of the amount of the prize5. In addition, 
prizes  set  scientific-technical  targets  without  specifying  the  path  to  reach  them  or  the 
scientific  disciplines  to  be  involved,  thus  inciting  unconventional  solutions  and  multi-
disciplinarity.  

The Commission will initiate a pilot action under FP7. 

3.2. 

Strand 2: Adapting the rules under the current cost-based system 

(1) Broader acceptance of usual accounting practices 

The Commission considers it necessary to clarify in the rules for participation the concept of 
eligible actual costs, in such a manner that they could be considered as eligible if registered 
in  the  beneficiary's  accounts  according  to  its  usual  accounting  practice  in  compliance  with 
applicable  accounting  and  auditing  standards.  Such  an  approach  avoids  the  need  for 
beneficiaries  to  set  up  separate  accounting  systems,  provides  more  legal  certainty  for 
beneficiaries and diminishes the risk of errors.  

(2) Average personnel costs 

As an exception to the principle of actual costs, the rules for participation state that average 
personnel  costs  are  deemed  eligible  if  they  do  not  "significantly"  deviate  from  actual  costs. 
The acceptability criteria are currently defined in a Commission Decision6 of June 2009. The 
margin  of  deviation  has  been  defined  in  the  light  of  the  materiality  threshold  for  errors 
established by the European Court of Auditors. The current acceptability criteria can be met 
only  by  very  few  beneficiaries7  thereby  limiting  the  intended  simplification  impact  of 
certifying average costs. 

For  this  reason,  the  Commission  considers  that  any  average  personnel  cost  methodologies 
applied as usual accounting practice by the beneficiary could be accepted, as long as they are 
based  on  actual  personnel  costs  registered  in  the  accounts  and  any  double  funding  of  costs 
under other cost categories is excluded. This option has a very large simplification potential. 
Beneficiaries could apply in all cases their usual accounting practice under the sole condition 
that it is based on the payroll costs registered in the statutory accounts. The approach would 
include the vast majority of methodologies, including those based on "cost centres". Inherent 
to  this  approach,  deviations  between  averages  claimed  and  actual  costs  would  be  accepted, 
regardless  of  the  size  or  sense  of  the  deviations.  To  provide  higher  assurance  one  could 
require that the average cost methodology applied must have been accepted in national public 
research programmes or have been certified by national public authorities.  

This  proposal  is  in  line  with  the  spirit  of  the  discharge  resolution  for  20078,  in  which  the 
European  Parliament  has  asked  the  Commission  to  make  FP7  compatible  with  general 
business practices.  

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Example:  US$ 10 million  prize  of  X  Prize  foundation  (http://www.xprize.org)  for  commercial  space 
craft induced private R&D investments of more than US$ 100 million. 
C(2009) 4705. 
About nine out of ten organisations using average personnel costs as their usual accounting practice do 
not  meet  the  current  criteria.  Up  to  March  2010,  the  Commission  only  accepted  the  certified 
methodologies of 12 organisations for using average costs. 
OJ L255, 26.9.2009, p. 24. 

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Widening  the  current  acceptability  criteria  could  increase  the  number  of  potential  users  but 
even  higher  margins  for  deviation  would  not  cover  widespread  practice  such  as  the  "cost 
centre" based approach. 

(3) Limiting the variety of rules 

As  mentioned  above,  another  source  of  complication  is  the  tendency  to  cover  with  special 
provisions an increasing number of activities (e.g. research, demonstration, management) and 
types of participants (e.g. research organisations, universities, non-profit organisations). As a 
consequence, legislative acts, guidance documents, ex-ante checks and all related IT systems 
become  increasingly  complex,  creating  confusion  and  requiring  yet  more  guidance  for 
applicants and further slowing down the processes. For reversing this tendency, the return to a 
common  set  of  basic  principles  instead  of  a  "tailor-made"  approach  seems  appropriate, 
provided that policy objectives can still be met. 

The  Commission  suggests  in  particular  two  possibilities,  both  of  which  would  lead  to  a 
considerable reduction in complexity, together with a potential for shortening average time-
to-grant and time-to-pay by several weeks: 

–  Reduce  the  number  of  combinations  between  funding  rates,  organisation  types  and 
activity types. The option preferred by the Commission would be a single reimbursement 
rate  for  all  activity  types  and  categories  of  organisations;  another  could  be  a  uniform 
reimbursement  rate  over  all  activity  types,  so  that  only  the  differentiation  by  the  two 
existing major categories of organisations would remain.  

–  Reduce the number of methods for determining indirect costs. The option preferred by 
the Commission with the highest simplification potential would entail a single flat rate for 
charging indirect costs for all types of organisations and funding schemes. This approach 
would also contribute to reducing the error rate detected in ex-post audits, since experience 
shows  that  actual  cost  accounting  is  error-prone.  Although  it  would  slightly  weaken  the 
motivation for universities to move towards analytical accounting, it would give them the 
possibility  to  organise  such  a  transition  according  to  their  own  and  the  national  needs. 
Feedback from university associations shows that the move towards analytical accounting 
will in many cases require more time than originally expected.  

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(4) Interest on pre-financing 

Potential for simplification exists also in the treatment of interest gained from pre-financing 
payments. Currently, coordinators are obliged to open interest-bearing bank accounts and the 
interest  gained  is  recovered  by  the  Commission.  As  some  organisations  are  unable  to  open 
interest-bearing  accounts,  the  Commission  has  to  establish  a  register  of  exceptions.  The 
removal  of  the  obligation  to  open  interest-bearing  bank  accounts  would  spare  the  related 
administrative effort. 

A yet bigger simplification could be achieved by fully or partially suppressing the obligation 
to recover interest on pre-financing. 

(5) More lump sum elements in the current cost-based approach 

Wide use is already made of lump sum reimbursements in the "People" programme, and lump 
sum options for certain cost categories exist in other specific programmes. However, feedback 
from  the  stakeholder  consultations  shows  that  many  beneficiaries  see  limited  simplification 
potential in the extension of lump sums to further cost categories (e.g. travel costs, scales of 
unit costs for personnel etc.). The establishment of scales of unit costs for personnel, based on 
statistical  analysis,  would  be  very  complex,  considering  the  great  variety  of  personnel  costs 
between  countries,  regions,  sectors,  industry  branches  etc.  Nevertheless,  the  following  two 
exceptions are presented:  

–  Time recording for personnel cost accounting is perceived as particularly burdensome by 
some  beneficiaries.  Such  a  requirement  could  only  be  dropped  if  lump  sums  for 
personnel  per  beneficiary,  based  on  an  ex  ante  estimation  of  the  personnel  costs  per 
beneficiary for the project, were to be established and agreed during grant negotiations. 

–  As an option for improving the conditions of participation for SMEs, in which the owner-
managers carry out a major part of the project themselves without a salary registered in 
the accounts, the Commission will introduce a lump sum system based on the scales of unit 
costs used under the specific programme "People".  

More far-reaching options based on fully abandoning actual costs and introducing lump sums 
for whole projects are presented in Chapter 3.3.  

(6) Accelerating project selection 

Under  the  legal  base  for  FP7,  committees  of  Member  States  representatives  are  to  provide 
opinions  on  the  majority  of  the  selection  decisions  on  individual  projects.  The  Commission 
proposes  to  remove  this  legal  requirement  in  the  future  framework  programmes.  The 
comprehensive  system  of  information  flow  to  these  committees  renders  this  process  step 
unnecessary in the future. This would lead to a reduction of time-to-grant by several weeks 
and to a removal of administrative burden both for Member State and Commission services.  

For the future framework programmes the Commission will also consider whether in certain 
areas  the  introduction  of  Commission  decisions  instead  of  grant  agreements  could  speed  up 
the process. 

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3.3 

Strand 3: Moving towards result-based instead of cost-based funding  

The  options  above  already  open  up  many  possibilities  for  simplification  but  they  will  not 
remove  the  administrative  efforts  connected  with  cost  reporting  and  financial  auditing.  A 
more  profound  change  would  be  to  move  away  from  cost-based  system  focused  on  input 
towards a system of funding based on prior definition and acceptance of output/results. In 
this context, some questions posed by the European Court of Auditors9 are highly relevant: 

–  Is it possible to recast programmes in terms not of eligible inputs but in terms of acceptable 
outputs, with projects based on a set of concrete objectives, and disbursement linked to the 
achievement of results? 

–  Insofar  as  expenditure  schemes  continue  to  be  based  on  inputs,  is  it  possible  to  radically 
simplify the basis of calculation? Could the EU, for example, make far greater use of lump 
sum or flat rate payments instead of the reimbursement of actual costs? 

The  Commission  therefore  suggests  exploring  the  three  options  below.  All  would  entail  a 
lump sum per project as a whole leading to the removal of all checks on actual costs incurred 
and a shift of the control efforts from the financial to the scientific side. Lump sums would be 
fixed  amounts  covering  the  overall  costs  of  implementation  of  an  operation,  removing  the 
obligation  for  beneficiaries  to  present  supporting  documents  related  to  expenditure,  and 
allowing also major simplifications in the financial audit of projects. 

Result-based  approaches  require  a  careful  definition  of  output/result  at  the  level  of  each 
individual  project  and  a  thorough  analysis  in  order  to  fix  lump  sums  that  are  based  on  a 
reliable  estimation  of  eligible  costs  necessary  for  the  implementation  of  the  project  and 
guarantee sound financial management, which might lead to longer time-to-grant. Moreover, 
a  reinforced  scientific/technical  monitoring,  including  external  experts,  would  have  to  be 
installed as a basis for the payment decisions. The implementation would require a different 
balance of skills, an adapted project management approach in the Commission and extended 
cooperation with external experts. The payment of the grants would be entirely based on the 
assessment of outputs/results. 

To  better  assess  the  opportunities  and  difficulties  inherent  in  result  based  approaches,  pilot 
actions in selected areas should precede their extended application. 

The three options suggested for exploring result-based approaches are: 

(1) Project-specific lump sums as a contribution to project costs estimated during grant 
evaluation/negotiation, and paid against agreed output/results:  

In this approach, an ex-ante estimation of adequate total eligible costs of the project and the 
definition  of  measurable  output/results  would  be  part  of  the  evaluation  and  negotiation 
process. A project-specific lump sum would be established on the basis of the estimated total 
eligible costs. The lump sum would be paid (fully or partially) on the basis of the acceptance 
of the agreed output/result. This may include interim payments. 

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Response  by  the  European  Court  of  Auditors  to  the  Commission  Communication  'Reforming  the 
Budget, Changing Europe'. 

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(2)  The  publication  of  calls  with  pre-defined  lump  sums  per  project  in  a  given  subject 
area  and  selection  of  the  proposals  promising  the  highest  scientific  output  for  the 
specified lump sum:  

Here,  the  evaluation  of  proposals  would  include  an  award  criterion:  the  resources  that  the 
consortium is willing to invest itself in addition to the lump sum. The approach would provide 
an incentive for a higher leverage effect of EU funds. 

(3) A high-trust "award" approach consisting in distributing pre-defined lump sums per 
project without further control by the Commission:  

The  selection  of  the  awardees  would  be  based  on  a  highly  competitive  process.  After  the 
selection,  the  funding  would  be  given  as  a  lump  sum  without  further  financial  or  scientific 
checking  by  the  Commission.  This  is  a  high-trust  high-risk  approach.  However,  absence  of 
control by the Commission would not mean complete absence of control. The approach would 
rely  on  the  self-control  and  the  motivation  and  incentive  structure  inherent  in  the  scientific 
community.  To  make  this  motivation  and  incentive  structure  work,  the  awardees  should  be 
obliged  to  assure  maximum  transparency  on  the  use  of  the  funds  and  the  results  achieved 
towards their peers and to the general public. The risk of abuse would exist but misbehaviour 
would  severely  jeopardise  the  career  of  the  awardee  as  a  scientist.  This  scenario  would  be 
most appropriate in areas where the above-mentioned incentive mechanisms are strongest, i.e. 
in particular in the European Research Council. The advantages of the approach are obvious: 
no need for cost checking, minimised administrative effort, high speed. 

4. 

REVISITING THE EU RESEARCH AND INNOVATION FUNDING LANDSCAPE 

Transnational  research  collaboration  fostered  under  FP7  implies  an  inherent  degree  of 
complexity  because  of  the  diversity  of  national  legal  systems,  accounting  practices  and 
management cultures. 

The current FP houses a constellation of objectives, a multitude of intervention mechanisms 
with specific rules,  a  diversity  of reimbursement rates  and  the special conditions for  certain 
types of organisations. Collectively this diversified approach signifies complexity.  

The definition of a common set of basic principles rather than the current diversified approach 
would undoubtedly lead to a considerable trimming and lightening of rules, processes and IT 
systems.  A  detailed  analysis  is  necessary  to  assess  to  what  extent  this  can  be  achieved, 
allowing tailor-made approaches only where the policy objectives justify them. 

Under FP7, the number of intervention mechanism has increased with the participation of the 
EU  in  programmes  undertaken  jointly  by  several  Member  States  and  the  creation  of  Joint 
Technology  Initiatives  (JTIs).  As  the  FP7  rules  for  participation  do  not  apply  to  these 
intervention  mechanisms,  they  each  have  their  own  distinct  rules,  taking  into  account  their 
specific operating needs. These rules may differ substantially from those of the FP7 rules for 
participation.  

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The  European  Parliament,  in  its  discharge  resolution  for  200710,  points  to  this  increase  in 
diversity  and  calls  for  an  assessment  of  the  associated  problems  for  beneficiaries,  including 
lack of transparency.  

Against this background, the Commission considers that a reduction of the complexity of the 
EU  research  funding  landscape  could  also  be  a  major  source  of  simplification.  In  the 
preparation  of  the  next  framework  programmes  attention  should  therefore  be  given  in 
particular to the following two issues: 

–  Suitability and necessity of these intervention mechanisms to achieve the objectives set; 

–  Desirability  or  necessity  that  the  applicable  funding  rules  or  at  least  parts  thereof  are 

identical. 

As  regards  public-private  partnerships  (PPPs),  including  JTIs  and  the  Knowledge  and 
Innovation Communities of the EIT, there is a need to explore the best possible institutional 
set-up  that  permits  these  bodies  to  achieve  their  objectives  in  an  efficient  and  effective 
manner ("ideal house" for future JTIs). The recommendations of the report of the JTI Sherpa 
Group11 will be important in this respect.  

5. 

THE WAY FORWARD 

Most options proposed under the second and third strand require changes to the rules and will 
therefore be addressed in the triennial review of the Financial Regulation and, on that basis, in 
the forthcoming review of the regulatory framework of research policy.  

However,  depending  on  consensus  obtained  in  response  to  this  Communication  regarding 
specific  measures  the  Commission  may  present  amendments  for  FP7,  following  its  interim 
evaluation. An early amendment of FP7 rules could in particular be envisaged for the rules on 
average personnel costs presented under Chapter 3.2. 

Any such change to the FP7 rules must take into account the following important provisos. 

Any simplification must outweigh the costs of its implementation; stability of existing rules is 
perceived as very important for all the users of the FP and is preferred to the change towards 
only  slightly  simpler  rules.  Changes  to  the  basic  legal  acts  require  the  ordinary  legislative 
procedure  ("co-decision"),  with  associated  lead  times  of  at  least  one  year.  Consequently, 
related changes would apply only to the last wave of FP7 calls. Two parallel systems of rules, 
processes and IT systems would have to be managed. The additional complexity for both the 
beneficiaries and the Commission services has to be taken into account. 

Simplification  is  also  intimately  linked  to  the  accountability  parameters  which  govern  EU 
research policy implementation. The Commission relies on a comprehensive control strategy 
including a very high number of on-the-spot auditing of projects and recovery of any amounts 
paid in excess to obtain reasonable assurance that payments are in compliance with the rules. 
The Commission can achieve such a positive assurance statement from the European Court of 

10 
11 

OJ L255, 26.9.2009, p. 24. 
"Designing together the 'ideal house' for public-private partnerships in European Research", Final report 
of the JTI Sherpa Group, January 2010. 

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Auditors  only  when  the  level  of  errors  is  below  2%.  The  implementation  of  this  control 
strategy  has  exacerbated  the  perceived  complexity  of  EU  research  grant  requirements  and 
may  discourage  researchers  and  industry  from  participating  in  the  community  research 
funding programmes. Until profound simplification of the research funding rules take effect, 
the  implementation  of  a  research-specific  tolerable  risk  of  error  (TRE)  would  permit  the 
Commission to review its control strategy. The purpose of this concept is to ensure a proper 
balance  between  controls  and  policy  effectiveness.  A  concrete  proposal  for  a  specific  TRE 
level  for  research  expenditure  will  be  presented  in  a  Communication  from  the  Commission 
scheduled for May 2010 to accompany the Commission proposal for the triennial revision of 
the  Financial  Regulation.  The  acceptance  of  this  concept  for  research  by  the  European 
Parliament and  Council  would  permit  the Commission to review its current control strategy 
whilst maintaining sound financial management. In particular the magnitude of controls (audit 
coverage  and  subsequent  adjustments)  could  be  addressed  with  a  view  to  lower  the  control 
burden. Such a revised control strategy could focus in a more pronounced manner on targeted 
risk based audits and fraud prevention controls, taking into account the operational experience 
of the Commission anti-fraud services. On such a basis, a solid accountability framework can 
be ensured whilst maintaining an appropriate deterrent to irregular use of EU research funds.  

Finally, any subsequent legislative proposal for introducing simplifications will be subject to a 
thorough risk assessment as part of the overall ex-ante impact assessment, and the evaluation 
of the fraud-proofing quality. 

6. 

CONCLUSION 

This Communication presents measures and options for simplifying EU research funding, for 
assuring  that  EU  research  funding  promotes  the  highest  quality  research.  The  Commission 
will soon present a proposal on the triennial review of the Financial Regulation, transforming 
some  of  the  simplification  ideas  put  forward  in  this  Communication  into  legal  proposals. 
More potential for simplification might be revealed by the FP7 interim evaluation due to be 
presented in October 2010. 

Further simplification can only be achieved with the full commitment and political support of 
the  other  EU  institutions,  in  particular  the  Council  and  European  Parliament.  Difficult 
compromises for reaching a better balance between trust and control and between risk taking 
and risk avoidance have to be made, while ensuring sound financial management. The debate 
on a research specific Tolerable Risk of Error (TRE) offers an opportunity in this respect. 

Under all circumstances the Commission in its role of steward of EU taxpayer's money will 
maintain  proper  conditions  to  ensure  sound  financial  management,  including  appropriate 
fraud prevention measures, based on a thorough risk analysis and strategy taking into account 
each strand. Simplification and TRE shall not compromise this prerequisite. 

The  Commission  calls  on  the  other  EU  institutions  to  contribute  to  the  debate  and  give 
feedback on the options outlined in this Communication, in view of the future shaping of EU 
research funding.  

The results of this debate will be introduced in the Commission proposals for the "Innovation 
Union"  flagship  initiative  under  the  Europe  2020  strategy  and  into  the  shaping  of  the  next 
framework programmes.  

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Depending  on  consensus  obtained  in  response  to  this  Communication  regarding  specific 
measures  the  Commission  may  present  amendments  still  for  FP7,  following  its  interim 
evaluation. 

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