Speaking Notes
MEP Ehler Horizon 2020 Press Conference
European Parliament, 28th May 2013
Christopher John Hull, Secretary General, EARTO
1.
Stakeholders Need an Option on Full-Cost
Reimbursement
I was not pleased to read that Commissioner Geoghegan-Quinn came to
Parliament on March 19th and told ITRE: “the 100/20 system has been
widely acclaimed by stakeholders, notably universities and public research
organisations … The proposal is also strongly endorsed by industry”. To
put it kindly: that was less than the whole truth.
All of the key stakeholder groups have said we need an option on full-cost
reimbursement for organisations with high-end research facilities:
 EARTO (350 RTOs) has said it repeatedly.
 EUA (850 universities, 30 national university associations) has said the
same.
 Business Europe (41 business federations, 35 countries) has said it, too
– in fact had repeated its call for a real-cost reimbursement just four
days before she spoke.
 Science Europe (51 national research funding and performing
organisations, 35 countries, €30bn per annum, i.e. three times what
the FP spends) has also said it.
2.
Why Do They Need It?
H2020 is an innovation programme. Tackling grand challenges (Pillar
Three), boosting industrial leadership (Pillar Two), and developing radical
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innovations (FETs in Pillar One) is going to need major research efforts in
both basic research as well as technology development that use high-end
research infrastructure. Those facilities are necessarily expensive to build,
maintain and operate. A flat-rate system as proposed by Commission and
Council won’t cover the costs adequately, so the projects won’t get done.
It’s simple economics.
For non-profit research organisations, which is what most RTOs are, if you
compare FP7 with the Commission’s 100+20 flat-rate proposal for H2020,
then the critical point is whether you have indirect costs of more than
60% of direct costs, i.e. 75% of 160 = 120. But the average RTO has
indirect costs equivalent to about 100% of direct costs. So, under 100/20,
the effective reimbursement rate would be 120/2 = 60%, i.e. a reduction
of 25% (15 percentage points) compared with FP7’s 75%.
3.
What’s Going to Happen If They Don’t Get It?
In January 2012 EARTO did a survey of its members. 21 RTOs – including
most of the bigger ones, which are major FP participants – reported about
their probable participation in H2020 under the 100/20 flat-rate model.
About half expected their participation to drop by 20% compared with
FP7.
The other half expected a drop of between 20% and 50%.
These are key players whose full participation will be critical for the
success of H2020
4.
Transferring Indirect Costs to Direct Costs
The Commission said last October that the problem of reduced
reimbursement in H2020 can be solved by moving some indirect costs to
direct costs, and it promised to produce guidelines.
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First, the guidelines were promised seven-and-a-months ago and we
haven’t seen a single word so far.
Second, the Commission has discussed the idea of shifting indirect costs
to direct costs with key stakeholders at special workshops earlier this
year. Some of my members were there, and so was I. We have heard
nothing that makes us think that it will be possible to shift significant costs
from indirect to direct.
Third, one of my members that was involved in those discussions has now
made an estimate of what 100/20 or 100/25 would mean.
Conclusion: if they participated in H2020 at the same level as in FP7 they
would make a loss of €5m per year.
Consequence: in H2020 they will propose (i) no projects using high-end
infrastructure and (ii) no projects with themselves as coordinators (in FP7
coordination is reimbursed at 100%; in H2020 under flat-rate the loss
would be so great that coordination is out of the question, even if there
could be some strategic benefits in doing it).
5.
So What’s the Answer
About 25,000 organisations will have participated in FP7. It will probably
be about the same in H2020.
The vast majority of them will be happy with an attractive flat rate. So
let’s have that as the default. That will produce massive simplification for
the Commission and beneficiaries.
But for that very small minority of key players that need to cover the
costs of high-end research facilities, let’s have an option on full-cost
reimbursement.
Flat Rate for Those Who Want It
Full Cost for Those Who Need It
European Association of Research and Technology Organisations
rue Joseph II 36-38, B-1000 Brussels
+32-2-502 86 98
[email protected]
www.earto.eu