FP7 Simplification Workshop
WG 1
“Community financial contribution”
Report
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
General Remarks
¾ Generally, WG participants supported the extended use of lump-sum and flat-rate
financing as a major mode to simplify the implementation of EC funded research
actions
¾ Participants also support continuity as way to avoid new complexity: no change
for the sake of change!
¾ WG Participants also considered that the use of three forms a grant may take
• lump sums
• flat-rate financing taking the form of a scale of unit costs
• reimbursement of eligible costs (including flat-rates and pre-set lumps)
should be analysed according to the characteristics and objectives of
the different funding schemes (“a Marie Curie action is not identical to a
collaborative research project”)
¾ However, as far as the form (and its detailed implementation) a grant may take is
concerned, sensitive divergent views exist among participants.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
1- Forms of EC Grant (1)
¾ Each form has its own advantages and disadvantages (1/2) :
• Lump-sum and scale of unit costs:
9 advantages:
ƒ avoid justification of costs
ƒ easy to calculate and pay
ƒ simplify reports
9 disadvantages:
ƒ may provide (substantially) less support than a reimbursement
of eligible costs for the same level of efforts;
ƒ may be contrary (especially scale of unit costs) to attraction of
best researchers in university/industry by attractive wages.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
1- Forms of EC Grant (2)
¾ Each form has its own advantages and disadvantages (2/2) :
•Reimbursement of eligible costs:
9 advantages:
ƒ guarantee that all eligible costs will be taken into consideration
for the calculation and the payment of the support (“more in line
with the reality of the activity”);
ƒ can be based on existing practices, in particular participants’
usual accounting and management practices.
9 disadvantages:
ƒ requires justification of eligible costs;
ƒ may lead to micro-management if usual accounting and
management principles of contractors are (each time)
questioned;
ƒ may provide less financial security (reimbursement of actual
costs) by opposition to a lump sum where the EC contribution is
fixed.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
1- Forms of EC Grant (3)
¾ Participants saw potential for a significant reduction of time-to-contract,
especially in negotiation phase, for all three forms of grants:
• For Lump-sum and scale of unit costs: no negotiation on the costs of
the resources expected to be involved ;
• For Reimbursement of eligible costs: the same result may be
achieved if:
9 definition of eligible costs is simplified;
9 the cost of the resource is not questioned as being in conformity
with participant usual accounting and management practices;
9 possibility to use flat-rates and/or pre-set lump-sums for certain
items is allowed.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
1- Forms of EC Grant (4)
¾ Some WG participants considered that the use of scale of unit costs (flat-rate
financing) must be implemented for funding schemes where SMEs are involved.
But other WG participants prefer the use of reimbursement of eligible costs, also for
funding schemes where SMEs are involved.
The same opposition also applied for universities.
¾ Some WG participants considered that a form of simplification should be to
propose an alternative to the consortium:
• either a scale of unit costs
• or a reimbursement of eligible costs
¾ It must be highlighted that no WG participant evoked the possibility of an
alternative between lump sum and scale of unit costs or between lump sum and
reimbursement of eligible costs (reason: scale of unit cost appears as a proxy of
costs of resources)
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
1- Forms of EC Grant (5)
¾ Some WG participants highlighted the fact that proposing an alternative (scale of
unit costs or reimbursement of eligible costs) at the level of the consortium has
however the disadvantage to require an agreement among the members of a
consortium.
Other WG participants mentioned that proposing the alternative at the level of each
participant may also lead to another complexity which is the use of two different
form of funding inside the same consortium.
¾ All participants agreed that in any case, the reporting must be adapted to each
form of grant.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
2- Lump- sums
¾ As far as lump sum financing is concerned, no suggestion on how to calculate
the EC contribution for Networks of Excellence has been proposed by WG
participants.
¾ However, it has been mentioned by some WG participants that at least cost of
the wages of staff involved in the NoE must be covered by the lump sum and that
as a consequence, the staff dimension must be part of the calculation method.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
3- Scale of unit costs
¾ As far as items to be used in order to design a scale of unit costs are concerned,
the following items have been proposed:
• categories of personnel involved
• coefficient per country to be applied on categories of personnel
• a flat rate in order to cover other items like indirect costs, equipment,
travel, ...
¾ Some WG participants also mentioned the necessity to take into account:
• the field of research concerned
• and moreover the case of multidisciplinary project
¾ Some WG participants highlighted the difficulty to establish the value of these
items, mentioning, as an example, huge disparities existing in the same country
between the same kind of personnel even working in the same field of research.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (1)
¾ A large consensus among WG participants on:
• the possibility for any participant to charge its actual direct and indirect
eligible costs, according to its usual accounting and management
practices
• the possibility for any participant to opt for a flat rate deemed to cover its
indirect eligible costs
However, the question of the amount of the flat rate: 20%? Is it sufficient?
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (2)
¾ Some WG participants also proposed to:
• allow the possibility for participants to use for certain type of costs,
especially for personnel costs, their own usual scale of unit costs
(confere: scale of wages of universities).
• use pre-set flat rates or lump sums for certain type of costs such as
travel costs.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (3)
¾ European Court of Auditors representatives proposed an approach based on the
definition of 3 categories of eligible costs:
• Personnel costs
• Main other direct costs: to be negotiated project by project (equipment,
…)
• A flat-rate deemed to cover other costs like indirect costs and some
“small” costs like travel and subsistence, …
¾ Some WG participants supported this approach, other were in disagreement
considering that any eligible costs must be able to be reported.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (4)
¾ As far as level of support rates are concerned (1/2):
• Some WG participants mentioned that universities without economic
activities (=> no other source of revenue) have to receive a contribution
allowing them to cover 100% of their specific direct costs (especially the
costs of staff specifically hired for the project).
• It was also mentioned that it is important that such level of support is
achieved, concerns were raise in this respect with a view to envisaged
abolition of the traditional additional cost model.
• Several participants underlined the importance to maintain of the
principle of cofinancing and to avoid double funding. In this context, the
definition of cofinancing and receipts must be adressed.
• It has also to be taken into account that some EU universities have now
the obligation to move to a “full economic costs” accounting system;
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (5)
¾ As far as level of support rates are concerned (2/2):
• Some WG participants have evoked the question of the level of support
rate for R&D and demonstration activities, depending on the results of the
current revision of the Community State Aid Framework on Research and
Development.
• It has also been proposed to allow the reimbursement of eligible costs
incurred during the negotiation of the project and for the design and the
modification of the content of the consortium agreement (especially for
small actors, like SMEs)
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (6)
¾ As far as audit certificates are concerned (1/2):
• All WG participants agreed that the number of audit certificates per
contractor and per project must be reduced (1 or 2 maximum);
• Some WG participants evoked the possibility to exonerate some
contractors to provide an audit certificate if the share of the EC
contribution they generate is under a certain ceiling to be established.
• In this context, some WG participants have proposed:
9 either to remove the 7% ceiling for management activities
9 or to consider the costs of audit certificates as not being part of the
7% ceiling.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
4- Reimbursement of
eligible costs (7)
¾ As far as audit certificates are concerned (2/2):
• It has also been evoked the fact that by removing the term “necessary
costs” and replacing it by “costs determined and used according to
participants usual accounting and management practices, in implementing
the principles of economy, efficiency and effectiveness”, audit certificates
will certify that costs declared by the contractor are fully in conformity with
the definition of eligible costs (which is not the case under FP6: necessity
is not certified and must be justified by contractor and assessed by
Commission officials).
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
5- Other issues
¾ All WG participants request a uniform interpretation of financial and legal rules in
any Commission services
¾ They also request for stabilised and clear rules before the launch of FP7
¾ More specific questions have also been addressed:
• VAT: is it possible to make it eligible costs for legal entity which are not
allowed to get it back?
• Delays for reporting: is it possible to extend the delay for periodic reports
from 45 to 60 calendar days?
• Co-financing: How to ensure co-financing where a funding scheme
propose a support up to 100% of eligible costs?
• Financial liability: which form?
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING
Nota Bene
It must be noted that any position provided by the WG participants are not
necessarily their final position but only personal positions or positions resulting from
the WG brainstorming.
FP7 Simplification Workshop – WG1 “Community financial contribution” – Luxembourg, 16-17/06/2005 – NOT LEGALY BINDING