The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants

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3 DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT D: BUDGETARY AFFAIRS The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants STUDY Abstract This study provides a sound understanding, notably through estimates, of the costs linked to grant management from both the grant provider (EU / National / Regional Authorities) and the grant seeker (applicant / beneficiary) perspective. It covers EU policy fields related to Competitiveness for growth and jobs, Economic, social and territorial cohesion, and Common Agricultural Policy Pillar I, within the Multiannual Financial Framework The study aims to analyse the differences between the different grants processes and to identify areas for improvement in the grant management processes. Finally, the study formulates a number of recommendations aimed at removing cost-generating inefficiencies and unnecessary burden, and indicates possibilities to leverage good practices from any grant instrument, in other instruments. P/D/ALL/FWC/ /10/2016 PE EN

4 This document was requested by the European Parliament's Committee on Budgets. It designated Mr Siegfried Mureșan, MEP, to follow the study. AUTHOR(S) Mr Thierry Van Schoubroeck, Mr Tim De Meyer, Mr Mathieu Saunier, Mr Steven Van Noten (Deloitte) RESPONSIBLE ADMINISTRATOR Mr Alexandre Mathis Policy Department on Budgetary Affairs European Parliament B-1047 Brussels LINGUISTIC VERSIONS Original: EN Executive Summary : DE, FR ABOUT THE EDITOR To contact the Policy Department or to subscribe to its newsletter please write to: poldep-budg@europarl.europa.eu Manuscript completed in October Brussels, European Union, This document is available on the Internet at: DISCLAIMER The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorized, provided the source is acknowledged and the publisher is given prior notice and sent a copy.

5 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants CONTENTS CONTENTS 3 LIST OF ABBREVIATIONS 5 LIST OF TABLES 7 LIST OF FIGURES 7 EXECUTIVE SUMMARY 9 ZUSAMMENFASSUNG 15 SYNTHÈSE INTRODUCTION Objective of the study Scope of the study Data collection methodology Different stakeholders required different methodologies Difficulties encountered The results of the data collection process Collected data at EU level Collected data at national / regional level Collected data at beneficiary level REGULATORY BACKGROUND Regulatory evolution Multiannual Financial Framework regulatory environment The Treaty on the Functioning of the European Union The 2012 EU Financial Regulation and Rules of Application Reduction of administrative burden Digitisation of communication and administrative activities Enhanced reduction of administrative burden for SMEs Legal security, simplification and harmonisation Protection of the Commission s financial interests, guarantees and controls Supplementary levels of rules impacting EU funding through grants Establishing Regulations Multi-annual, Annual and Sectoral Work Programmes Call for Proposals, Grant Agreements / Framework Partnerships Relevant categories of rules impacting EU grants Rules on digitised management Rules on expenditure eligibility Simplified Cost Options general schemes Simplified Cost Options variants 46 3

6 Policy Department D: Budgetary Affairs Rules on reporting A BRIEF INTRODUCTION ON THE GRANT PROCESS Process at EU level Process at national / regional level Process at applicant / beneficiary level OVERALL ASSESSMENT OF EUROPEAN GRANTS A cost assessment of grants management Grant management at European level Grant management at national and regional level Grant management at the beneficiary level Overall summary of the cost assessment of managing grants A qualitative assessment of the grant management Issues related to grant processes At EU level At national / regional level At beneficiary level Implemented solutions Further foreseen simplification CONCLUSIONS SIMPLIFICATION/IMPROVEMENT OPPORTUNITIES AND OTHER RECOMMANDATIONS 89 REFERENCES 93 ANNEX 96 4

7 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants LIST OF ABBREVIATIONS CEF CF DG DG AGRI DG CONNECT DG EAC DG EMPL DG ENER DG ENV DG GROW DG MARE DG MOVE DG REGIO DG RTD EACEA EAFRD EAGF EaSI EASME EC ERCEA Connecting Europe Facility Cohesion Fund Directorate-General European Commission Directorate-General for Agriculture and Rural Development European Commission - Directorate-General for Communications Networks, Content and Technology European Commission - Directorate General for Education and Culture European Commission- Directorate-General for Employment, Social Affairs and Inclusion European Commission- Directorate-General for Energy European Commission - Directorate-General for Environment European Commission - Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs European Commission - Directorate-General for Maritime Affairs and Fisheries European Commission - Directorate-General for Mobility and Transport European Commission- Directorate-General for Regional Policy European Commission - Directorate-General for Research and Innovation Education, Audiovisual and Culture Executive Agency European Agricultural Fund for Rural Development European Agricultural Guarantee Fund Employment and Social Innovation Executive Agency for Small and Medium-sized Enterprises European Commission European Research Council Executive Agency 5

8 Policy Department D: Budgetary Affairs ERDF ESF EU FP FR European Regional Development Fund European Social Fund European Union Framework Programme Financial Regulation H2020 Horizon 2020 INEA IT REA SME Innovation and Networks Executive Agency Information Technology Research Executive Agency Small and medium-sized enterprise 6

9 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants LIST OF TABLES Table 1: Collected data at EU level 35 Table 2: Collected data at national / regional level 36 Table 3: Collected data at beneficiary level 37 Table 4: Number of Full-Time Equivalent managing the H2020-programme at EU level 57 Table 5: Cost assessment of the H2020-programme at EU level 58 Table 6: Number of Full-Time Equivalent managing the CEF-programme at EU level 59 Table 7: Cost assessment of the CEF-programme at EU level 59 Table 8: Number of Full-Time Equivalent managing the CF and ERDF-programme at EU level 60 Table 9: Cost assessment of the ERDF and CF-programme at EU level 61 Table 10: Number of Full-Time Equivalent managing the ESF-programme at EU level 61 Table 11: Cost assessment of the ESF programme at EU level 62 Table 12: Number of Full-Time Equivalent managing the EaSI-programme at EU level 62 Table 13: Cost assessment of the EaSI programme at EU level 63 Table 14: Number of Full-Time Equivalent managing the EAGF-programme at EU level 64 Table 15: Cost assessment of the EAGF programme at EU level 64 Table 16: Number of Full-Time Equivalent Case study on the ERDF-programme, Managing Authority Baden- Württemberg 66 Table 17: Cost assessment of the ERDF programme, Baden-Württemberg 67 Table 18: Number of Full-Time Equivalent Case study on the ESF-programme, Managing Authority Czech Republic (excl. the region of Prague) 67 Table 19: Cost assessment of the ESF programme, Czech Republic (excl. the region of Prague) 68 Table 20: Number of Full-Time Equivalent Case study on the EAGF-programme, Managing Authority Slovenia 69 Table 21: Cost assessment of the EAGF programme, Slovenia 70 Table 22: Time spent by beneficiaries Case study on Horizon 2020, Belgium 71 Table 23: Time spent by beneficiaries Case study on Connecting Europe Facility, Germany 71 Table 24: Time spent by beneficiaries Case study on European Regional Development Fund, Belgium 72 Table 25: Time spent by beneficiaries Case study on European Social Fund, Belgium 73 LIST OF FIGURES Figure 1: Deloitte's approach to collecting both quantitative and qualitative data 33 Figure 2: Grant management process 51 7

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11 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants EXECUTIVE SUMMARY Introduction The purpose of this study is to provide the European Parliament with sound understanding, through estimates, of the costs linked to EU grants management, from both the perspective of the grant provider and the grant seeker. Alongside the assessment of the costs of grants management, the study also addresses what initiatives are in place to reduce administrative burden, and which could still need to be implemented to render grants management a less labour-intensive and cumbersome activity. To do so, the study looks into the existing regulatory background of the grants management process, as well as improvement initiatives highlighted in these Regulations to tackle existing issues. These initiatives, pledged in EU regulation, are then illustrated in practice through a quantitative and qualitative assessment of the cost linked to grants management at three different levels: the level of the European Commission, Managing Authorities at national and regional level (grant providers) and at the level of the grant beneficiaries (grant seekers). The report focuses on grants programmes, initiated by the European Commission to beneficiaries for the implementation of projects or activities in relation to European Union policies. Throughout the study, three fields - Competitiveness for growth and jobs, Economic, social and territorial cohesion, and Common Agricultural Policy Pillar I are addressed as they are critical to the objectives of the EU 2020 strategy and the Juncker Commission agenda. As a result, the report identifies cost and efficiency drivers and formulates a number of recommendations aimed at removing cost-generating inefficiencies and unnecessary burden, and indicates areas where good practices can be leveraged from one grant instrument to all others. The study has been prepared by Deloitte for the European Parliament, Directorate General for Internal Policies, Policy Department D: Budgetary Affairs. It is based on data collected from comprehensive desk research, quantitative data from the Commission and Executive Agencies, qualitative data collected via interviews with Commission DGs and Executive Agencies, filled in questionnaires from a selection of Managing Authorities at national level and a set of interviews with grant beneficiaries. Regulatory background One of the goals of the report is to situate the actual study within the context of existing EU regulatory frameworks that dictate the grants management process, and indirectly drive costs, in order to better understand where these costs come from and what can be done to address them. Specifically with regard to the rules and Regulations governing EU budget spending through grants, a number of different concerns over matters of simplification and harmonisation have been regularly raised for decades by grants beneficiaries. The study identifies the improvements implemented along the successive generations of Funding Programmes. Notably, it highlights that the 2012 EU Financial Regulation acknowledges the need for improving grants management at different levels and sets out guiding principles for further initiatives to reach an enhanced grants implementation environment. Such improvements concern 9

12 Policy Department D: Budgetary Affairs the reduction of administrative burden in general and for SMEs in particular, the digitisation of communication and administrative activities, legal security, and simplification and harmonisation, whilst keeping a focus on protecting the Commission s financial interests, guarantees and controls. Additional initiatives for improvements are highlighted in the Funding Programme s own specific rules as noted above. Yet, the study clearly establishes that each Funding Programme analysed in the framework of the Multiannual Financial Framework (MFF) still contains its own sets of specific and differentiated rules on grants at the levels of establishing Regulations, work programmes, calls for proposals and implementation phases. The grant management process Having closely outlined existing grant regulations, and initiatives taken within these to address issues of administrative burden, the study outlines the generic process of managing grants over all grant programmes. Whilst there are understandably (minor) differences between different grant management processes, a generic model can be used that is applicable to most programmes and contains all the important activities of a normal grants management process. The generic process consists of three process steps: 1. A first step starts with the initiation of the call for proposal and ends with the publication of the awarded grants/signed agreements, and includes the development of proposals, the evaluation of submitted proposals and in some cases a negotiation on the final agreement; 2. A second step containing all the activities carried out during the implementation of the project, and usually includes the payment of one or more pre-financing, the submission and assessment of operational and financial reports, and the reimbursement of the beneficiary; 3. A third and final step occurs after the closure of the project, where the focus points are the ex post audits and the finalisation of the financial compensation of the beneficiary. If grant management is organised at Member States / Managing Authorities / National Agencies level (under shared or indirect management), the European Commission incurs additional costs related to the monitoring, supervising and reporting of grants. The process at the level of the applicant or beneficiary diverges slightly from the three main steps that occur at both EU and national or regional level: 1. Applying for grants involves searching calls for proposal, registering their organisation and developing proposals for the application to a specific grant; 2. Negotiation of contracts is not applicable to all grant schemes but involves undertaking a redress procedure and developing a revised proposal amongst other things; 3. Grant / financed project implementation mainly involves beneficiaries carrying out project execution, monitoring, reporting and seeing out the closure of the grant process on their side via the submission of final reports and deliverables; 4. Grant/ project closure requires beneficiaries to follow steps necessary for the ex post audit to be carried out (if applicable). Overall cost assessment of European grants Based on the understanding of the generic process of grants management introduced above, the study draws an objective picture of the costs of managing grants and provides insights on the grants 10

13 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants management processes in more details. The study presents an assessment and estimation of the costs related to implementing the grant programmes. Because of the limited number of available data points, case studies are used for all three levels to estimate the costs and to examine its cost impact. The quantitative cost assessment at European level is carried out through online surveys and interviews with the European Commission DGs and Executive Agencies, which provided data on the costs related to the implementation of the grants management process. Data provided by the European Commission indicates that the Commission spends approx. EUR 300 million to implement the grant programmes in scope of this study (excl. Erasmus+) at EU level and to supervise the Managing Authorities involved under shared management. Comparing these costs to the value of grants signed on an annual basis, the grant programmes under direct management cost on average 0.8% of the value of the signed agreements, and the programmes under shared management 0,10% of the committed value. It needs to be noted that these average percentages need to be carefully interpreted, as the observed cost ratios differ significantly between the different grant programmes. For the grant programmes under direct management costs vary between 0,05% and 9,6% of the value of the signed agreements, and for the programmes under shared management between 0,07% and 0,15% of the committed value. Important factors driving these cost differences include: legislations, management modes, levels of process automation, reporting requirements, varying depth of controls and size of individual grants across the different grant programmes. Grant management at national and regional level follows a similar pattern although the study team only had reliable data for a limited number of grant programmes. Based on the (limited) number of case studies, the estimated average cost of managing grants compared to the value of grants signed is 5% of the value of the signed agreements. Also here, a wide variety of these percentages are noted between the different grant programmes, depending on the same varying cost drivers. Cost assessment at beneficiary level focuses on case studies based on interviews with beneficiaries. However, these cases are only illustrative and not necessarily representative of other beneficiaries. For the beneficiaries analysed in the study, the cost incurred varies between 1% and 19% of the received funding. Again, it is important to note that the percentages are highly reliant on a number of factors such as complexity of the grant subject, the value of the received funding, the experience of the grant applicant/ beneficiary, the underlying legislation, the management mode, the level and depth of control or the level of automation of the process. The qualitative assessment of the grant management process, based on online questionnaires, interviews and meetings with the Commission and Executive Agencies, is also conducted at the three levels of actors involved in the process. At EU level, according to received information, the processes at the level of Directorates-General and Executive Agencies have been significantly simplified over the past years. Nevertheless, some activities do still contain administrative burden (non-exhaustive): Horizon 2020: different procedures to gather and manage all the documents, paper trails in workflows; Employment and Social Innovation: paper trails in workflows; Connecting Europe Facility: burdensome ex ante assessment of cost claims; 11

14 Policy Department D: Budgetary Affairs Across programmes: lack of harmonisation across different grant programmes, different levels of digitisation and automation, different levels and depth of controls. At national / regional level, the qualitative assessment of authorities working on EU grants under shared management highlight a sizeable amount of inefficiencies: Extensive reports to the European Commission; Preparation for and cooperation with controls and audits of Managing Authorities by the supervising Directorates-General; Unclear Regulation / legal changes create a more complex process and increase the time spent to be compliant with the new rules; Project audits are still considered very complex and time consuming. The qualitative assessment at beneficiary level also presents significant room for improvement despite multiple simplifications already in place: SMEs and newcomers encounter difficulties when gathering all the administrative information, and finding and getting familiar with rules; The proposal and submission stage remains to be burdensome, especially if the proposal is related to a multi-partner project where coordination and the number of administrative documents required significantly increase the time spent on administrative activities; Managing Authorities often install additional validation activities for beneficiaries, which require beneficiaries to provide additional information; Submission of supporting documents continues to burden grant beneficiaries, and for the fact that for smaller grants the same administrative documents are requested as for larger grants increases the level of irritation with beneficiaries; Audit checks at the end of the project are reported to be burdensome, especially as often national rules are added on top of the EU legislation (so-called gold-plating ); The obligation to present original documents to verify the incurred costs even multiple years after the closure of the project, requires an excessive level of storage; Limited digitisation involves that some requested documents are still exchanged on paper. Simplifications in place and foreseen initiatives Over the past years, several simplification exercises have been implemented to reduce administrative burden for beneficiaries. According to the information received from the European Commission and Executive Agencies, following improvements have been implemented: Horizon 2020: a simple cost reimbursement approach, streamlined ex ante checks, etc. Erasmus+: simplification of the reimbursement of beneficiaries; Connecting Europe Facility: streamlined and harmonised programme, including the introduction of electronic tools for exchanges with beneficiaries, streamlining of procedures, the replacement of grant decisions by grant agreements; European Regional Development Fund and Cohesion Fund: simplification of operational programmes, simpler rules for the management of projects, egovernment solutions, etc.; European Structural Investment Funds: revision of Simplified Cost Options, extension of a European Territorial Cooperation flat rate, etc. 12

15 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants On top of the simplifications already in place, the Commission s Directorates-General and Executive Agencies have already identified further simplification measures to reduce administrative burden at both beneficiary level and implementing organisation. These include enabling small beneficiaries (individuals or SMEs) to claim their costs via simplified forms, digitising the grant management process further, reducing the additional activities or forms requested by the Managing Authorities during the grant implementation and closure phase, and only requesting administrative documents when they are required. Other improvements should facilitate the communication between the European Commission and Managing Authorities, for example through the reinforcement and harmonisation of analytical criteria of some documents. Remaining simplification/ improvement opportunities and other recommendations To some extent, the ongoing debates and further proposals mirror the concerns formulated by the EU grants stakeholders in the present study. They may have therefore already been addressed in the following recommendations. Regarding the regulatory framework and rules: Further efforts should be undertaken for harmonising rules across all EU Funding Programmes and Work Programmes. This is particularly important when projects involve synergies between programmes and potentially the mobilisation of funds from different programmes. Moreover, it would reduce the monitoring of rules at beneficiaries level as well at the skills required for the global grants management; A specific attention should also be given to the stability of the regulatory framework during a given Multi-annual Financial Framework. The legal security that must be guaranteed to grants stakeholder requires a robust set of rules aiming at minimising the number of rules amendments; It is essential to ensure an efficient communication environment in order to avoid unforeseen situations for beneficiaries, which could result in irregularities and financial difficulties; Member State, regional and local authorities throughout Europe should avoid practicing gold-plating (installing legal obligations that go beyond EU requirements). Regarding digitisation and automation of activities: Digitisation initiatives in some grant programmes could be deepened or exported to others; The Commission should invest in putting in place a holistic change management approach, as the changes for the Commission and Executive Agencies staff, for moving to paperless grants processes, will be substantial; To ensure that the functionalities of the new IT systems are used to the full potential, this change management plan should include a plan for IT adoption; The Commission will need to put in place sufficient trainings and guidance material for Commission and Executive Agencies staff to make sure all stakeholders involved are equipped to follow the newly designed processes and become acquainted with the new IT tools. 13

16 Policy Department D: Budgetary Affairs Regarding business process improvement and workload optimisation: On top of these IT improvements, the Commission could further investigate, in terms of business process improvement (e.g. by performing process analytics), if there are still additional simplifications to be made regarding the different grant management processes (e.g. by removing unnecessary process steps, removing unnecessary loops in a process, avoiding unneeded checks and routing slips, etc.). Moreover, the Commission could further optimise task allocations and perform a constant workload assessment, resulting in a possible rebalancing of the resource allocation. Regarding reporting requirements: The output-based rationale behind Simplified Cost Options (SCOs) should be fully exploited at the level of reporting requirements, and reflections should be conducted towards the necessity of some information requirements (such as full details on activities carried out) when it appears that beneficiaries have clearly achieved the results for which their actions are financed; This reflection should be pushed further within the debates on an EU budget focused on results, with the objective of finding the appropriate balance between the notion of payments based on outputs, results and impacts on the one hand, and the necessary compliance checks on the other hand. This aligns with the objective of the Commission s proposal to implement a stronger and clearer performance framework linking performance, objective-setting, indicators, results and the principle of sound financial management; Governments at all levels should aim for asking for the same information only once. This calls for an optimisation of sharing of information between different government bodies in order to avoid duplicative data requests to grant applicants / beneficiaries. Regarding financial information systems: Finally, in order for the Commission to be able to report better on the financial performance of its activities regarding grant management, the financial information systems of the Commission should be reviewed and a system based on the principles of Activity-Based Management should be put in place to allow for better management and reporting on the cost of the different stages and activities within the grant management process. This reporting will also facilitate the monitoring of the efficiency gains achieved by implementing the recommendations made in this report. Concluding remarks Grant management is an important financial instrument for the European Union. The instrument comes with complex, and often burdensome processes that have been simplified in the past, but still present additional room for improvement. The total amount of costs for the Commission, Executive Agencies and Managing Authorities related to managing the grant processes, and the societal cost at the side of the grant applicants and beneficiaries could be further reduced as a result. 14

17 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants ZUSAMMENFASSUNG Einleitung Ziel dieser Studie ist es, dem Europäischen Parlament mittels Schätzungen ein fundiertes Verständnis von den Kosten zu vermitteln, die sowohl aus Sicht der Geber als auch aus Sicht der Empfänger von Finanzhilfen mit der Verwaltung von EU-Finanzhilfen verbunden sind. Neben der Bewertung der Kosten der Verwaltung von Finanzhilfen beschäftigt sich die Studie auch mit der Frage, mit welchen Initiativen derzeit der Verwaltungsaufwand verringert wird und was noch erforderlich wäre, um die Verwaltung von Finanzhilfen zu einem weniger arbeitsintensiven und umständlichen Unterfangen zu machen. Dazu wird in der Studie der bestehende Regulierungsrahmen der Verwaltung von Finanzhilfen beleuchtet, und es werden die in den Regelungen hervorgehobenen Verbesserungsmaßnahmen untersucht, mit denen bestehende Probleme gelöst werden sollen. Diese Maßnahmen, die in EU-Verordnungen festgelegt sind, werden dann in der Praxis durch eine quantitative und qualitative Bewertung der Kosten im Zusammenhang mit der Verwaltung von Finanzhilfen auf drei verschiedenen Ebenen aufgezeigt: der Ebene der Europäischen Kommission, der Ebene der nationalen und regionalen Verwaltungsbehörden (Geber von Finanzhilfen) und der Ebene der Empfänger (Begünstigten) von Finanzhilfen. Der Bericht konzentriert sich auf von der Europäischen Kommission initiierte Finanzhilfeprogramme zur Durchführung von Projekten oder Maßnahmen in Verbindung mit politischen Maßnahmen der Europäischen Union. In der Studie werden drei Bereiche Wettbewerbsfähigkeit für Wachstum und Beschäftigung, Wirtschaftlicher, sozialer und territorialer Zusammenhalt und die Gemeinsame Agrarpolitik Säule I untersucht, da sie für die Erreichung der Ziele der Strategie Europa 2020 und der Agenda der Juncker-Kommission von großer Bedeutung sind. Demzufolge werden in dem Bericht kostentreibende und effizienzfördernde Faktoren ermittelt und eine Reihe von Empfehlungen zum Abbau Kosten verursachender Ineffizienzen und zur Verringerung unnötigen Aufwands formuliert sowie Bereiche aufgezeigt, in denen bewährte Verfahren von einem Finanzierungsinstrument auf alle anderen übertragen werden können. Die Studie wurde von Deloitte für das Europäische Parlament, Generaldirektion Interne Politikbereiche, Fachabteilung D: Haushaltsfragen, erstellt. Sie beruht auf Daten, die mithilfe umfassender Sekundärerhebungen gesammelt wurden, quantitativen Daten von der Kommission und von Exekutivagenturen, qualitativen Daten, die in Interviews mit Generaldirektionen der Kommission und Exekutivagenturen gewonnen wurden, von einer Auswahl von Verwaltungsbehörden auf nationaler Ebene ausgefüllten Fragebögen und einer Reihe von Interviews mit Finanzhilfeempfängern. Regulierungsrahmen Eines der Ziele des Berichts besteht darin, die Studie in den Kontext bestehender Regelungsrahmen der EU zu stellen, die für die Verfahren der Verwaltung von Finanzhilfen gelten und indirekt kostentreibend wirken, um besser zu verstehen, woher diese Kosten rühren und was getan werden kann, um diesen Kosten zu begegnen. Insbesondere hinsichtlich der Regelungen und Verordnungen für die Verwendung der EU-Haushaltsmittel in Form von Finanzhilfen wurde von 15

18 Policy Department D: Budgetary Affairs Finanzhilfeempfängern immer wieder eine Reihe verschiedener Sorgen betreffend Fragen der Vereinfachung und Harmonisierung zum Ausdruck gebracht. In der Studie wird herausgearbeitet, welche Verbesserungen bei den aufeinanderfolgenden Generationen von Finanzierungsprogrammen erzielt wurden. So wird insbesondere hervorgehoben, dass in der Haushaltsordnung der EU von 2012 anerkannt wird, dass die Verwaltung von Finanzhilfen auf verschiedenen Ebenen verbessert werden muss, und dass Leitlinien für weitere Initiativen zur Verwirklichung eines besseren Umfelds für die konkrete Leistung von Finanzhilfen festgelegt werden. Diese Verbesserungen betreffen den Abbau von Verwaltungsaufwand ganz allgemein und insbesondere für die KMU, die Digitalisierung von Kommunikations- und Verwaltungstätigkeiten, Rechtssicherheit sowie Vereinfachung und Harmonisierung, wobei der Schutz der finanziellen Interessen der Kommission sowie Garantien und Kontrollen nicht aus dem Blick geraten dürfen. Zusätzliche Initiativen für Verbesserungen werden in den eigenen speziellen Regelungen des Finanzierungsprogramms wie oben erwähnt hervorgehoben. In der Studie wird jedoch klar festgestellt, dass jedes im Rahmen des mehrjährigen Finanzrahmens (MFR) untersuchte Finanzierungsprogramm immer noch seine eigenen speziellen Regelungen für Finanzhilfen hinsichtlich der Ausarbeitung von Verordnungen, der Arbeitsprogramme, der Aufforderungen zur Einreichung von Vorschlägen und der Durchführungsphasen hat. Verfahren der Verwaltung von Finanzhilfen Nach einem Überblick über die bestehenden Bestimmungen für die Gewährung von Finanzhilfen und die in diesem Rahmen ergriffenen Initiativen zur Lösung problematischer Fragen des Verwaltungsaufwands wird in der Studie das allgemeine Verfahren der Verwaltung von Finanzhilfen für sämtliche Finanzhilfeprogramme umrissen. Selbstverständlich gibt es (geringe) Unterschiede zwischen den verschiedenen Verfahren der Verwaltung von Finanzhilfen, doch kann ein allgemeines Modell herangezogen werden, das für die meisten Programme gilt und alle wichtigen Tätigkeiten eines normalen Verfahrens der Verwaltung von Finanzhilfen umfasst. Das allgemeine Verfahren besteht aus drei Verfahrensphasen: 1. Eine erste Phase beginnt mit der Initiierung der Aufforderung zur Einreichung von Vorschlägen und endet mit der Veröffentlichung der gewährten Finanzhilfen/unterzeichneten Vereinbarungen, und sie beinhaltet die Ausarbeitung von Vorschlägen, die Bewertung der eingereichten Vorschläge und in einigen Fällen Verhandlungen über die endgültige Vereinbarung; 2. eine zweite Phase beinhaltet alle Tätigkeiten während der Umsetzung des Projekts und umfasst in der Regel auch eine oder mehrere Vorfinanzierungen, die Vorlage und Bewertung von Tätigkeits- und Finanzberichten und die Auszahlung der Finanzhilfen an den Begünstigten; 3. eine dritte und letzte Phase folgt nach Abschluss des Projekts; Schwerpunkt dieser Phase sind Ex-post-Prüfungen und die endgültige Festlegung der Höhe der Finanzhilfe für den Begünstigten. Sorgen die Mitgliedstaaten / Verwaltungsbehörden / nationalen Agenturen für die Verwaltung der Finanzhilfen (unter geteilter oder indirekter Mittelverwaltung), entstehen der Kommission zusätzliche Kosten für die Überwachung, Kontrolle und Berichterstattung im Zusammenhang mit den Finanzhilfen. 16

19 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Das Verfahren auf der Ebene des Antragstellers oder Begünstigten unterscheidet sich etwas von den drei wichtigsten Phasen auf EU-Ebene und nationaler oder regionaler Ebene. 1. Die Beantragung von Finanzhilfen beinhaltet die Suche nach Aufforderungen zur Einreichung von Vorschlägen, die Registrierung ihrer Organisation und die Ausarbeitung von Vorschlägen für die Beantragung einer spezifischen Finanzhilfe; 2. Die Aushandlung von Verträgen ist nicht auf alle Finanzhilfeprogramme anwendbar, beinhaltet jedoch unter anderem ein Rechtsbehelfsverfahren und die Ausarbeitung eines geänderten Vorschlags; 3. Die Ausführung der Finanzhilfen/Durchführung des finanzierten Projekts beinhaltet vor allem die Durchführung des Projekts, Überwachung, Berichterstattung und Begleitung des Abschlusses des Finanzhilfeverfahrens durch die Begünstigten mittels Übermittlung der Abschlussberichte und endgültigen Ergebnisse; 4. Der Abschluss der Finanzhilfe / des Projekts erfordert, dass die Begünstigten die notwendigen Maßnahmen zur Durchführung der (gegebenenfalls erforderlichen) Ex-post- Prüfung ergreifen. Bewertung der Gesamtkosten von EU-Finanzhilfen Auf der Grundlage des Verständnisses des oben erwähnten allgemeinen Verfahrens der Verwaltung von Finanzhilfen wird in der Studie ein objektives Bild der Kosten der Verwaltung von Finanzhilfen gezeichnet und ein detaillierterer Einblick in die Verfahren der Verwaltung von Finanzhilfen gegeben. Es wird eine Bewertung und eine Einschätzung der Kosten in Verbindung mit der Durchführung der Finanzhilfeprogramme vorgenommen. Da nur eine begrenzte Anzahl von Daten vorliegt, wird für alle drei Ebenen zur Schätzung der Kosten und zur Prüfung der Kostenauswirkungen auf Fallstudien zurückgegriffen. Die quantitative Bewertung der Kosten auf EU-Ebene wird durch Online-Umfragen und Interviews mit den Generaldirektionen der Kommission und Exekutivagenturen vorgenommen, die Daten über die Kosten im Zusammenhang mit der Durchführung der Verfahren der Verwaltung von Finanzhilfen geliefert haben. Von ihr selbst gelieferten Daten zufolge gibt die Kommission etwa 300 Mio. EUR aus, um die Finanzhilfeprogramme, die in dieser Studie beleuchtet wurden (außer Erasmus+), auf EU-Ebene durchzuführen und die im Rahmen der geteilten Mittelverwaltung eingebundenen Verwaltungsbehörden zu beaufsichtigen. Vergleicht man diese Kosten mit dem Wert der geschlossenen Finanzhilfevereinbarungen auf jährlicher Basis, so kosten die Finanzhilfeprogramme unter direkter Mittelverwaltung durchschnittlich 0,8 % des Werts der geschlossenen Finanzhilfevereinbarungen, und die Programme unter geteilter Mittelverwaltung 0,10 % des Werts der gebundenen Mittel. Dabei ist festzustellen, dass diese durchschnittlichen Prozentsätze vorsichtig interpretiert werden müssen, da sich die festgestellten Kosten-Nutzen-Verhältnisse zwischen den verschiedenen Finanzhilfeprogrammen erheblich unterscheiden. Für die Finanzhilfeprogramme unter direkter Mittelverwaltung variieren die Kosten zwischen 0,05 % und 9,6 % des Werts der geschlossenen Finanzhilfevereinbarungen, und für die Programme unter geteilter Mittelverwaltung zwischen 0,07 % und 0,15 % des Werts der gebundenen Mittel. Wichtige Faktoren, die diese Kostendifferenzen bedingen, sind u. a.: Rechtsvorschriften, Methoden der Mittelverwaltung, Grad der Prozessautomatisierung, Berichtspflichten, 17

20 Policy Department D: Budgetary Affairs unterschiedliche Kontrollintensität und Höhe einzelner Finanzhilfen in den verschiedenen Finanzhilfeprogrammen. Die Verwaltung der Finanzhilfen auf nationaler und regionaler Ebene weist ein ähnliches Muster auf, auch wenn dem Studienteam nur für eine begrenzte Zahl von Finanzhilfeprogrammen verlässliche Daten zur Verfügung standen. Auf der Grundlage der (begrenzten) Zahl von Fallstudien belaufen sich die geschätzten Kosten der Verwaltung von Finanzhilfen im Vergleich zum Wert der bewilligten Finanzhilfen auf 5 % des Werts der geschlossenen Finanzhilfevereinbarungen. Auch hier wurde eine große Streuung dieser Prozentsätze zwischen den verschiedenen Finanzhilfeprogrammen festgestellt, die von denselben variierenden kostentreibenden Faktoren abhängen. Die Kostenbewertung auf der Ebene der Begünstigten stützt sich hauptsächlich auf Fallstudien, die auf Interviews mit Begünstigten beruhen. Diese Fälle dienen jedoch lediglich Illustrationszwecken und sind nicht unbedingt repräsentativ für andere Begünstigte. Für die in der Studie untersuchten Begünstigten variieren die angefallenen Kosten zwischen 1 % und 19 % der erhaltenen Finanzhilfen. Es ist wichtig, festzuhalten, dass die Prozentsätze stark von einer Reihe von Faktoren abhängen, wie der Komplexität des Gegenstands der Finanzhilfe, dem Wert der erhaltenen Finanzhilfe, der Erfahrung des Antragstellers/Begünstigten der Finanzhilfe, den maßgeblichen Rechtsvorschriften, der Methode der Mittelverwaltung, dem Umfang und der Intensität der Kontrollen und dem Grad der Prozessautomatisierung. Die qualitative Bewertung der Verfahren der Verwaltung von Finanzhilfen, die auf Online- Fragebögen, Interviews und Sitzungen mit der Kommission und den Exekutivagenturen beruht, erfolgt ebenfalls auf den drei Ebenen der an dem Verfahren beteiligten Akteure. Auf EU-Ebene wurden den eingegangenen Informationen zufolge die Verfahren auf der Ebene der Generaldirektionen und der Exekutivagenturen in den letzten Jahren erheblich vereinfacht. Dennoch bringen einige Tätigkeiten immer noch gewissen Verwaltungsaufwand mit sich (nicht erschöpfend): Horizont 2020: unterschiedliche Verfahren der Sammlung und Verwaltung aller Dokumente, papierlastige Workflows; Beschäftigung und soziale Innovation: papierlastige Workflows; Fazilität Connecting Europe : aufwändige Ex-ante-Prüfung von Kostenerstattungsanträgen; programmübergreifend: fehlende Harmonisierung der unterschiedlichen Finanzhilfeprogramme, unterschiedlicher Digitalisierungs- und Automatisierungsgrad, unterschiedlicher Umfang und unterschiedliche Intensität der Kontrollen. Auf nationaler / regionaler Ebene wird bei der qualitativen Bewertung der Behörden, die EU- Finanzhilfen unter geteilter Mittelverwaltung bearbeiten, ein nicht unwesentliches Maß an Ineffizienz deutlich: Aufwändige Berichte an die Europäische Kommission; Vorbereitung von und Mitwirkung an Kontrollen und Prüfungen der Verwaltungsbehörden durch Überwachung der Generaldirektionen; Unklare Vorschriften / Gesetzesänderungen verkomplizieren die Verfahren und erhöhen den Zeitaufwand zur Einhaltung der neuen Bestimmungen; Projektprüfungen werden immer noch als sehr komplex und zeitraubend angesehen. 18

21 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Auch bezüglich der qualitativen Beurteilung auf der Ebene der Begünstigten besteht trotz vielfältiger bereits verwirklichter Vereinfachungen noch reichlich Verbesserungsbedarf. KMU und Neulinge stoßen auf Probleme, wenn es darum geht, sämtliche administrativen Angaben beizubringen und einschlägige Regelungen ausfindig und sich damit vertraut zu machen. Die Phase der Einreichung von Vorschlägen und Angeboten bleibt beschwerlich, insbesondere wenn der Vorschlag mit einem Projekt in Verbindung steht, an dem mehrere Partner beteiligt sind und bei dem sich aufgrund der Zahl der erforderlichen Verwaltungsdokumente die mit administrativen Tätigkeiten verbrachte Zeit erheblich erhöht. Die Verwaltungsbehörden schreiben häufig zusätzliche Validierungstätigkeiten für die Begünstigten vor, deretwegen diese zusätzliche Informationen beizubringen haben. Die Beibringung von Belegen stellt weiterhin eine Belastung für die Finanzhilfeempfänger dar, und da für kleinere Finanzhilfen dieselben Verwaltungsdokumente erforderlich sind wie für größere Finanzhilfen, nimmt das Maß an Verärgerung bei den Begünstigten zu. Es wird berichtet, dass Rechnungsprüfungen zum Projektende belastend sind, insbesondere da zu den Rechtsvorschriften der EU häufig noch nationale Vorschriften hinzukommen (sog. Gold-Plating ). Die Verpflichtung zur Vorlage von Originaldokumenten zur Überprüfung der angefallenen Kosten selbst viele Jahre nach Abschluss eines Projekts hat zur Folge, dass übermäßig viele Dokumente aufbewahrt werden müssen. Die begrenzte Digitalisierung bringt mit sich, dass einige der erforderlichen Dokumente immer noch in Papierform geliefert werden. Bereits erfolgte Vereinfachungen und geplante Initiativen In den letzten Jahren wurden verschiedene Vereinfachungen bewirkt, um den Verwaltungsaufwand der Begünstigten zu verringern. Nach den von der Kommission und den Exekutivagenturen eingegangenen Informationen wurden folgende Verbesserungen erreicht: Horizont 2020: einfaches Verfahren der Kostenerstattung, rationeller gestaltete Ex-ante- Prüfungen usw. Erasmus+; Vereinfachung der Kostenerstattung für die Begünstigten; Fazilität Connecting Europe : rationeller gestaltetes und harmonisiertes Programm, einschließlich der Einführung elektronischer Instrumente für den Kontakt mit den Begünstigten, Straffung der Verfahren, Ersetzen von Finanzhilfebeschlüssen durch Finanzhilfevereinbarungen; Europäischer Fonds für regionale Entwicklung und Kohäsionsfonds: Vereinfachung operativer Programme, einfachere Vorschriften für das Projektmanagement, egovernment- Lösungen usw.; Europäische Struktur- und Investitionsfonds: Änderung der vereinfachten Kostenoptionen, Ausweitung eines Pauschalsatzes für die Europäische Territoriale Zusammenarbeit usw. Über die bereits erfolgten Vereinfachungen hinaus haben die Generaldirektionen der Kommission und die Exekutivagenturen bereits weitere Vereinfachungsmaßnahmen ermittelt, um sowohl auf der Ebene der Begünstigten als auch der Organisation der Durchführung den Verwaltungsaufwand zu verringern. Dazu gehört unter anderem, kleinere Begünstigte (Einzelpersonen oder KMU) in die 19

22 Policy Department D: Budgetary Affairs Lage zu versetzen, die Erstattung ihrer Kosten mittels vereinfachter Formulare zu beantragen, die Digitalisierung der Verfahren der Verwaltung von Finanzhilfen weiter voranzutreiben, die zusätzlichen Tätigkeiten oder Formulare, die von den Verwaltungsbehörden während der Ausführung und des Abschlusses der Finanzhilfen verlangt werden, zu verringern und nur dann Verwaltungsdokumente zu verlangen, wenn sie notwendig sind. Durch weitere Verbesserungen sollte die Kommunikation zwischen der Kommission und den Verwaltungsbehörden erleichtert werden, etwa durch die Verschärfung und Harmonisierung der analytischen Kriterien für einige Dokumente. Noch verbleibende Möglichkeiten der Vereinfachung/Verbesserung und weitere Empfehlungen In gewissem Maße spiegeln die laufenden Diskussionen und weiteren Vorschläge die Bedenken wider, die von den an EU-Finanzhilfen Beteiligten in dieser Studie zum Ausdruck gebracht wurden. Sie könnten also schon in den folgenden Empfehlungen berücksichtigt sein: Hinsichtlich Regulierungsrahmen und Regelungen: Es sollten weitere Anstrengungen zur Harmonisierung der Regelungen in allen Finanzierungs- und Arbeitsprogrammen der EU unternommen werden. Dies ist besonders wichtig, wenn es bei bestimmten Projekten um Synergien zwischen Programmen und eventuell die Mobilisierung von Mitteln aus unterschiedlichen Programmen geht. Außerdem würde sich dadurch auch die Überwachung der Regelungen auf der Ebene der Begünstigten sowie hinsichtlich der erforderlichen Fähigkeiten für die Verwaltung von Finanzhilfen insgesamt verringern. Besondere Aufmerksamkeit sollte auch der Stabilität des Regulierungsrahmens während eines bestimmten mehrjährigen Finanzrahmens geschenkt werden. Die Rechtssicherheit, die den an Finanzhilfen Beteiligten garantiert werden muss, erfordert ein stabiles Regelwerk, damit die Regelungen möglichst selten geändert werden. Es muss unbedingt für ein effizientes Kommunikationsumfeld gesorgt werden, um unvorhergesehene Situationen für die Begünstigten zu vermeiden, die zu Unregelmäßigkeiten und finanziellen Schwierigkeiten führen könnten. Die Mitgliedstaaten und die regionalen und lokalen Behörden in ganz Europa sollten ein Gold-Plating (das Festlegen über die Anforderungen der EU hinausgehender gesetzlicher Auflagen) vermeiden. Hinsichtlich Digitalisierung und Automatisierung bestimmter Tätigkeiten: Die Digitalisierungsinitiativen in einigen Finanzhilfeprogrammen könnten intensiviert oder in andere Programme exportiert werden. Die Kommission sollte in die Einführung eines ganzheitlichen Ansatzes für das Änderungsmanagement investieren, da es im Zusammenhang mit dem Übergang zu papierlosen Finanzhilfeverfahren für das Personal der Kommission und der Exekutivagenturen erhebliche Veränderungen geben wird. Um sicherzustellen, dass die Funktionalitäten der neuen IT-Systeme voll ausgeschöpft werden, sollte in diesen Plan für das Änderungsmanagement auch ein Plan für die Einführung von IT-Systemen enthalten sein. 20

23 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Die Kommission wird ausreichende Fortbildungsmaßnahmen durchführen und dem Personal der Kommission und der Exekutivagenturen Anleitungen geben müssen, damit sichergestellt ist, dass alle Beteiligten in der Lage sind, mit den neu gestalteten Verfahren umzugehen und sich mit den neuen IT-Instrumenten vertraut zu machen. Hinsichtlich Verbesserung der Geschäftsprozesse und Optimierung der Arbeitsbelastung: Über diese Verbesserungen im IT-Bereich hinaus könnte die Kommission in puncto Verbesserung der Geschäftsprozesse (z. B. durch Prozessanalysen) weitere Untersuchungen darüber anstellen, ob hinsichtlich der unterschiedlichen Verfahren der Verwaltung von Finanzhilfen noch zusätzliche Vereinfachungen erforderlich sind (etwa durch Abschaffung unnötiger Verfahrensschritte, den Abbau überflüssiger Wiederholungen in einem Verfahren, die Vermeidung unnötiger Kontrollen und Laufzettel usw.). Darüber hinaus könnte die Kommission die Aufgabenzuteilung weiter optimieren und eine ständige Bewertung der Arbeitsbelastung durchführen, was zu einer möglichen Austarierung der Ressourcenallokation führen könnte. Hinsichtlich Berichtspflichten: Die hinter den vereinfachten Kostenoptionen stehende outputorientierte Herangehensweise sollte auf der Ebene der Berichtspflichten voll ausgeschöpft werden, und es sollten Überlegungen über die Notwendigkeit gewisser Informationsanforderungen (wie umfassende Details über durchgeführte Tätigkeiten) angestellt werden, wenn Begünstigte die Ergebnisse, für deren Erreichung ihre Maßnahmen finanziert wurden, offenbar eindeutig erreicht haben. Diese Überlegungen sollten im Rahmen der Debatten über einen ergebnisorientierten EU- Haushalt vorangetrieben werden, um ein geeignetes Gleichgewicht zwischen dem Konzept der output-, ergebnis- und auswirkungsorientierten Zahlungen einerseits und den nötigen Konformitätsprüfungen andererseits zu finden. Dies steht in Einklang mit dem mit dem Kommissionsvorschlag verfolgten Ziel, einen stärkeren und klareren Leistungsrahmen durchzusetzen, der die Aspekte Leistung, Zielsetzung, Indikatoren und Ergebnisse und den Grundsatz der wirtschaftlichen Haushaltsführung miteinander verknüpft. Die Regierungen auf allen Ebenen sollten bestrebt sein, dieselbe Information nur einmal zu verlangen. Dies erfordert eine Optimierung des Informationsaustausches zwischen unterschiedlichen Regierungsstellen, um doppelte Datenanfragen an Antragsteller/Begünstigte von Finanzhilfen zu vermeiden. Hinsichtlich Finanzinformationssystemen: Damit die Kommission besser über das finanzielle Ergebnis ihrer Tätigkeiten im Bereich der Verwaltung von Finanzhilfen berichten kann, sollte schließlich das Finanzinformationssystem der Kommission überholt werden, und es sollte ein auf den Grundsätzen des maßnahmenbezogenen Managements beruhendes System eingerichtet werden, um das Kostenmanagement und die Kostenberichterstattung für die verschiedenen Phasen und Tätigkeiten innerhalb der Verfahren der Verwaltung von Finanzhilfen zu verbessern. Durch diese Berichterstattung wird auch die Überwachung der Effizienzgewinne erleichtert, die durch die Umsetzung der in diesem Bericht formulierten Empfehlungen erzielt wurden. 21

24 Policy Department D: Budgetary Affairs Abschließende Bemerkungen Die Verwaltung von Finanzhilfen ist ein wichtiges Finanzinstrument für die Europäische Union. Dieses Instrument ist mit komplexen und häufig aufwändigen Verfahren verbunden, die zwar in der Vergangenheit vereinfacht wurden, jedoch immer noch weiter verbesserungsfähig sind. Die der Kommission, den Exekutivagenturen und den Verwaltungsbehörden in Verbindung mit der Verwaltung der Finanzhilfen entstehenden Gesamtkosten sowie die gesellschaftlichen Kosten seitens der Antragsteller und Begünstigten von Finanzhilfen könnten demzufolge weiter verringert werden. 22

25 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants SYNTHÈSE Introduction Cette étude a pour objectif de permettre au Parlement européen de se faire, à partir d estimations, une idée plus précise des coûts que la gestion des subventions de l Union implique, à la fois pour les fournisseurs et pour les demandeurs. Parallèlement à cette évaluation des coûts, l étude passe en revue les initiatives en cours qui visent à réduire la charge administrative et s efforce de déterminer ce qui peut être fait d autre pour alléger la gestion des subventions et réduire le besoin de main d œuvre que requiert cette activité. Pour ce faire, l étude examine le cadre réglementaire en vigueur en matière de gestion des subventions, ainsi que les possibilités d amélioration qui y sont proposées en vue de résoudre les problèmes actuels. Les initiatives en ce sens qui sont prévues dans la réglementation de l Union sont ensuite illustrées concrètement au travers d une évaluation quantitative et qualitative des coûts liés à la gestion des subventions à trois niveaux différents: celui de la Commission européenne, des autorités de gestion au niveau national et régional (celles chargées de l octroi des subventions) et des bénéficiaires (soit les demandeurs de subventions). Le rapport se concentre sur les programmes de subventions lancés par la Commission aux fins de la mise en œuvre de projets ou d activités en rapport avec les politiques de l Union européenne. L étude se penche sur trois domaines compétitivité pour la croissance et l emploi, cohésion économique, sociale et territoriale et politique agricole commune I er pilier) qui jouent un rôle déterminant dans la réalisation des objectifs de la stratégie Europe 2020 et du programme de la Commission Juncker. En conséquence, le rapport recense les facteurs de coût et d efficacité et formule un certain nombre de recommandations visant à supprimer toute charge inutile ainsi que les sources d inefficacités coûteuses. Il indique, en plus, les domaines où des bonnes pratiques peuvent être transposées d un instrument de subvention aux autres. L étude a été réalisée par Deloitte pour la direction générale des politiques internes, département thématique D: affaires budgétaires, du Parlement européen. Elle s appuie sur des données issues de recherches documentaires approfondies, des données quantitatives fournies par la Commission et les agences exécutives ainsi que des données qualitatives obtenues à partir d entretiens avec les directions générales de la Commission et des agences exécutives, de questionnaires remplis par des autorités de gestion au niveau national et de divers entretiens avec les bénéficiaires de subventions. Contexte réglementaire Le rapport vise notamment à ancrer l étude proprement dite dans les cadres réglementaires de l Union qui régissent le processus de gestion des subventions et, indirectement, génèrent des coûts, afin de mieux comprendre d où ces coûts proviennent et ce qui peut être fait pour 23

26 Policy Department D: Budgetary Affairs y remédier. Ainsi, en ce qui concerne les règles et dispositions régissant les dépenses du budget de l Union liées aux subventions, les bénéficiaires des aides ont régulièrement, au fil des décennies, mis en évidence une série de problèmes traduisant un besoin de simplification et d harmonisation. L étude recense les améliorations apportées par les différentes générations de programmes de financement. Elle souligne notamment que le règlement financier de 2012 insiste sur la nécessité d améliorer la gestion des subventions à différents niveaux et fixe des principes directeurs devant servir de base à des initiatives visant à améliorer les modalités de mise en œuvre des subventions. Ces améliorations concernent la réduction de la charge administrative, d une manière générale, et celle des PME en particulier, la numérisation des activités administratives et de communication, la sécurité juridique ainsi que la simplification et l harmonisation, l accent étant mis sur la protection des intérêts financiers de la Commission, ainsi que des garanties octroyées et des contrôles exercés par celle-ci. D autres propositions d amélioration sont détaillées dans les dispositions du programme de financement, comme indiqué ci-dessus. Toutefois, l étude fait clairement apparaître que chaque programme de financement analysé en lien avec le cadre financier pluriannuel (CFP) , reste doté d'un ensemble de règles bien spécifiques en matière de subventions en ce qui concerne les règlements de base, les programmes de travail, les appels à propositions et les phases de mise en œuvre. Le processus de gestion des subventions Après un examen détaillé de la réglementation actuelle en matière de subventions et des initiatives envisagées pour résoudre les problèmes de charge administrative, l étude passe en revue le processus générique de gestion des subventions pour les différents programmes de subvention. Si, en toute logique, des différences (mineures) existent entre les différents processus de gestion des subventions, l on peut dégager un modèle générique susceptible d être appliqué à la plupart des programmes et qui reprend toutes les activités essentielles du processus «classique» de gestion des subventions. Ce processus générique s articule en trois étapes: 1. La première étape débute par le lancement de l appel à propositions et s achève par la publication des subventions accordées/conventions signées, et comprend l élaboration de propositions, l évaluation des propositions reçues et, dans certains cas, une négociation concernant la convention définitive; 2. La deuxième étape reprend toutes les activités menées au cours de la mise en œuvre du projet, et elle inclut généralement le versement d un ou plusieurs préfinancements, la présentation et l évaluation des rapports opérationnels et financiers, et le remboursement du bénéficiaire; 3. La troisième et dernière étape, qui intervient une fois le projet achevé, correspond aux audits ex post et à l octroi des dernières compensations financières au bénéficiaire. 24

27 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Si la gestion des subventions est organisée au niveau des États membres/des autorités de gestion/des organismes nationaux (dans le cadre de la gestion partagée ou indirecte), la Commission européenne doit supporter des frais supplémentaires liés au contrôle, au suivi et à la notification des subventions. Au niveau du demandeur ou bénéficiaire, les trois principales étapes du processus s écartent légèrement de ce qui se fait à la fois au niveau européen et au niveau national ou régional: 1. Pour les «demandes de subventions», il s agit de rechercher les appels à propositions, d enregistrer l organisme en question et d élaborer des propositions en vue de solliciter une subvention spécifique; 2. La «négociation de contrats» ne s applique pas à tous les programmes de subventions, mais suppose notamment la mise en œuvre d une procédure de recours et l élaboration d une proposition révisée; 3. Pour ce qui est de la «mise en œuvre du projet financé au moyen de subventions», les bénéficiaires se chargent, pour l essentiel, de mener à bien le projet, d assurer le suivi et les tâches de notification et d accomplir la partie de la procédure en matière de subventions qui leur incombe, avec la présentation des rapports finaux et des éléments livrables; 4. Pour la clôture du projet financé au moyen de subventions, les bénéficiaires doivent suivre les étapes nécessaires à la réalisation de l audit ex post (le cas échéant). Évaluation du coût global des subventions européennes Après avoir décortiqué le processus générique de gestion des subventions mentionné ciavant, l étude dresse un tableau objectif des coûts liés à la gestion des subventions et analyse plus en détails les processus sous-jacents. L étude présente une évaluation et une estimation des coûts liés à la mise en œuvre des programmes de subventions. En raison du nombre limité de données individuelles disponibles, des études de cas sont utilisées aux trois niveaux pour réaliser une estimation des coûts et déterminer l incidence en termes de coûts. L évaluation quantitative des coûts au niveau européen s effectue à l'aide d enquêtes en ligne et d entretiens avec les DG de la Commission européenne et les agences exécutives, qui ont fourni des données sur les coûts liés à la mise en œuvre du processus de gestion des subventions. Selon les données de la Commission européenne, celle-ci débourse à peu près 300 millions d euros pour la mise en œuvre, au niveau de l Union, des programmes de subventions visés par l étude (à l exclusion du programme Erasmus+) et pour la supervision des autorités de gestion intervenant dans le cadre d une gestion partagée. Si l on compare ces coûts à la valeur des conventions de subvention signées chaque année, les programmes de subvention faisant l objet d'une gestion directe coûtent en moyenne 0,8 % de la valeur des conventions signées et ceux relevant de la gestion partagée, 0,1 % des montants engagés. Soulignons toutefois que ces pourcentages moyens doivent être interprétés avec prudence, car de fortes variations ont été relevées d un programme à l autre. En ce qui concerne les 25

28 Policy Department D: Budgetary Affairs programmes de subventions faisant l objet d une gestion directe, les coûts vont de 0,05 % à 9,6 % de la valeur des conventions signées, et pour ceux relevant de la gestion partagée, de 0,07 % à 0,15 % du montant engagé. Des facteurs importants expliquent ces différences de coûts: dispositions législatives, modes de gestion, niveaux d automatisation des processus, exigences de déclaration, niveau des contrôles et montant des différentes subventions pour chacun des programmes. La gestion des subventions au niveau national et régional suit grosso modo le même schéma, même si l équipe chargée de l étude ne disposait de données fiables que pour certains programmes de subventions. En partant d un nombre restreint d études de cas, le coût moyen de la gestion des subventions a été évalué à 5 % de la valeur des conventions signées. Ici aussi, de grandes variations ont été observées d un programme à l autre, les coûts étant influencés par les mêmes facteurs. L évaluation des coûts au niveau du bénéficiaire provient essentiellement des études de cas basées sur des entretiens avec les bénéficiaires. Toutefois, ces cas sont donnés à titre d illustration et ne sont pas nécessairement représentatifs. En ce qui concerne les bénéficiaires examinés dans le cadre de l étude, les coûts s échelonnent entre 1 % et 19 % des financements reçus. À nouveau, il faut souligner que les pourcentages dépendent fortement d une série de facteurs, tels que la complexité du projet subventionné, la valeur du financement reçu, l expérience du demandeur/bénéficiaire de la subvention, le cadre législatif, le mode de gestion, le niveau et l étendue du contrôle ou le degré d automatisation du processus. L évaluation qualitative des processus de gestion des subventions, effectuée sur la base de questionnaires en ligne, d entretiens et de réunions avec des représentants de la Commission et des agences exécutives, est aussi réalisée aux trois niveaux de participation des acteurs au processus. Pour ce qui est de l Union, d après les informations reçues, les processus au niveau des directions générales et des agences exécutives ont été considérablement simplifiés ces dernières années. Néanmoins, pour certaines activités, des contraintes administratives demeurent (liste non exhaustive): Horizon 2020: existence de procédures différentes pour rassembler et traiter tous les documents, flux de travail axés sur les documents papier; Emploi et innovation sociale: flux de travail axés sur les documents papier; Mécanisme pour l'interconnexion en Europe: évaluation ex ante des déclarations de coûts très lourde; Au niveau des programmes: manque d harmonisation entre les différents programmes de subventions, différents niveaux de numérisation et d automatisation, variations dans les niveaux et l étendue des contrôles. 26

29 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Au niveau national ou régional, l évaluation qualitative des autorités intervenant dans la gestion partagée des subventions de l Union a mis en évidence un nombre considérable d inefficacités: Rapports détaillés à la Commission européenne; Préparation et coopération aux inspections et aux audits des autorités de gestion par les directions générales chargées de la surveillance; Absence de clarté de la réglementation/des modifications juridiques, qui ajoute à la complexité du processus et allonge les délais nécessaires pour se conformer aux nouvelles règles; Audits des projets toujours considérés comme très complexes et chronophages. L évaluation qualitative au niveau des bénéficiaires présente également une nette marge d amélioration, en dépit des nombreuses simplifications déjà réalisées: les PME et les nouveaux arrivants éprouvent des difficultés à réunir tous les renseignements administratifs, à trouver les règles en vigueur et à se familiariser avec elles; le stade de la proposition et de la soumission demeure lourd à gérer, en particulier si la proposition concerne un projet multipartenarial où la coordination et le nombre de pièces administratives nécessaires font augmenter notablement le temps consacré aux activités de gestion administrative; les autorités de gestion instaurent souvent des opérations de validation supplémentaires pour les bénéficiaires, qui doivent fournir des renseignements complémentaires; la présentation des pièces justificatives reste pesante pour les bénéficiaires de subventions, dont l irritation est aggravée par le fait que les mêmes pièces sont à fournir, que les subventions soient faibles ou élevées; les opérations de contrôle réalisées à la fin des projets passent pour contraignantes, compte tenu notamment du fait que, bien souvent, des règles nationales se surajoutent à la législation de l Union («surréglementation»); l obligation de présenter les originaux des pièces pour la vérification des frais engagés même plusieurs années après l'achèvement du projet impose un trop grand archivage; la dématérialisation restant limitée, certaines pièces demandées s'échangent encore sous format papier. Simplifications réalisées et initiatives prévues Ces dernières années, plusieurs actions de simplification, destinées à alléger la charge administrative des bénéficiaires, ont été menées à bien. Selon les informations communiquées par la Commission européenne et les agences exécutives, les améliorations suivantes ont été réalisées: Horizon 2020: mise en place d'un système simple de remboursement des frais, rationalisation des contrôles ex ante, etc. Erasmus+: simplification du remboursement des bénéficiaires; Mécanisme pour l'interconnexion en Europe: rationalisation et harmonisation du programme grâce, notamment, à la mise en place de systèmes électroniques d'échanges avec les bénéficiaires, à la simplification des procédures, au remplacement des décisions de subvention par des conventions de subvention; 27

30 Policy Department D: Budgetary Affairs Fonds européen de développement régional et Fonds de cohésion: simplification des programmes opérationnels, simplification des règles de gestion des projets, solutions d administration en ligne, etc.; Fonds structurels et d'investissement européens: révision des options de coûts simplifiés, taux forfaitaire de coopération territoriale européenne, etc. Outre les simplifications déjà réalisées, les directions générales de la Commission et les agences exécutives ont, d ores et déjà, dégagé de nouvelles pistes d allègement de la charge administrative, tant au niveau des bénéficiaires qu à celui des organismes chargés de la mise en œuvre. Il s agit notamment des mesures suivantes: permettre aux petits bénéficiaires (personnes physiques ou PME) de demander le remboursement de leurs frais en employant des formulaires simplifiés, poursuivre la dématérialisation de la gestion des subventions, réduire les opérations et formalités exigées par les autorités de gestion pendant la phase de mise en œuvre et de bouclage et ne réclamer les pièces que lorsqu elles sont nécessaires. D'autres améliorations sont censées permettre de faciliter la communication entre la Commission européenne et les autorités de gestion, grâce notamment au renforcement et à l harmonisation des critères d analyse de certaines pièces. Autres pistes de simplification et d amélioration et recommandations diverses Dans une certaine mesure, les discussions en cours et les propositions qui en émanent font écho aux préoccupations formulées dans le cadre de la présente étude par les acteurs concernés par les subventions. Certaines des recommandations suivantes sont donc susceptibles d y apporter une réponse. Cadre réglementaire et dispositions en vigueur: Il y a lieu de redoubler d efforts pour harmoniser les règles applicables aux différents programmes de financement et de travail de l Union. Cette mesure revêt une importance toute particulière lorsque les projets font appel à des synergies entre programmes et peuvent nécessiter la mobilisation de crédits de différents programmes. En outre, elle permettrait de réduire l effort de veille de la réglementation déployé par les bénéficiaires ainsi que les compétences mises en œuvre pour assurer l ensemble de la gestion des subventions; Il convient également de porter une attention particulière à la stabilité du dispositif réglementaire pendant la durée d un cadre financier pluriannuel donné. Il est impératif d'assurer aux acteurs concernés par les subventions la sécurité juridique qui s'impose grâce à un corps de règles solide permettant de réduire autant que possible le nombre de modifications; Il est indispensable de mettre en place un dispositif de communication efficace permettant d épargner aux bénéficiaires des imprévus susceptibles d engendrer des irrégularités et des difficultés financières; Les autorités nationales, régionales et locales, partout en Europe, doivent éviter de se livrer à la «surréglementation» (qui consiste à instaurer des obligations réglementaires allant audelà des prescriptions définies au niveau de l Union). 28

31 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Numérisation et automatisation des activités: Les initiatives de numérisation mises en œuvre dans certains programmes de subventions pourraient être approfondies ou essaimer dans d'autres; Il serait bon que la Commission investisse dans la mise en place d une démarche globale de gestion du changement, son personnel et celui des agences exécutives étant amenés à faire face à des évolutions importantes, avec le passage à la dématérialisation des subventions; Pour que les fonctionnalités des nouveaux systèmes informatiques puissent être utilisées à plein, il convient d'assortir le programme de gestion du changement d un plan d adoption des technologies informatiques; La Commission devra mettre suffisamment de formations et de supports d'information à la portée de ses agents et du personnel des agences exécutives pour que tous les acteurs concernés soient à même d'appliquer les nouvelles méthodes définies et puissent se familiariser avec les nouveaux outils informatiques. Amélioration des méthodes de travail et optimisation de la charge de travail: Outre ces améliorations à prévoir en matière informatique, la Commission pourrait, dans un souci d amélioration des processus métiers (grâce à la réalisation d une analyse des processus, par ex.), chercher à savoir si des simplifications supplémentaires sont possibles dans les différentes phases de gestion des subventions (suppression des opérations superflues, élimination des «boucles» intempestives dans les processus, limitation des contrôles et des fiches de circulation injustifiés, etc.). Par ailleurs, la Commission pourrait également optimiser la répartition des tâches et réaliser une évaluation permanente de la charge de travail susceptible de donner un lieu à rééquilibrage de l affection des ressources. Rapports et informations à présenter: Il faut tirer tout le parti possible de la logique de réalisation à la base des options de coûts simplifiés en l appliquant aux obligations de déclaration; il convient notamment de s interroger sur le caractère indispensable de la communication de certaines informations (compte rendu exhaustif des activités réalisées, par exemple), lorsqu il s avère que les bénéficiaires ont manifestement réalisé les objectifs auxquels le financement de leurs actions devait contribuer; Cette réflexion doit trouver son prolongement dans les débats menés autour d un budget de l Union axé sur les résultats, dans l objectif de concilier le souci de fonder les paiements sur les réalisations, les résultats et les incidences d'une part, et les contrôles de conformité qui s imposent, d'autre part. Cette démarche est conforme à l objectif, tracé par la Commission dans sa proposition, qui consiste à mettre en place un cadre de performance plus solide et plus clair articulant la performance, la fixation d objectifs, les indicateurs, les résultats et le principe de bonne gestion financière. Les autorités à tous les échelons devraient s attacher à ne demander la même information qu «une seule fois». Pour y parvenir, il est indispensable d optimiser les échanges d'information entre les différentes instances de façon à éviter que les demandeurs et les bénéficiaires de subventions n aient à répondre plusieurs fois aux mêmes demandes de renseignement. 29

32 Policy Department D: Budgetary Affairs Systèmes d'information financière: Enfin, pour permettre à la Commission de mieux rendre compte de la performance financière de son action dans le domaine de la gestion des subventions, il y a lieu de procéder à l examen des systèmes d'information financière en son sein et de mettre en place un système fondé sur les principes de gestion par activité permettant de mieux gérer le coût des différentes opérations et activités menées dans le cadre du processus de gestion des subventions et d améliorer la remontée d'information en la matière. La communication de ces informations permettra de mesurer plus facilement la progression des performances permise par la mise en œuvre des recommandations formulées par le présent rapport. Observations finales La gestion des subventions est, pour l Union européenne, un instrument financier important s'accompagnant d opérations complexes, souvent lourdes, qui ont déjà fait l objet de simplifications par le passé, mais restent susceptibles d'améliorations. Une telle démarche pourrait permettre de réduire encore le volume total des coûts associés à la gestion des subventions assurée par la Commission, les agences exécutives et les autorités de gestion, et le coût sociétal mesuré au niveau des demandeurs et des bénéficiaires. 30

33 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants 1. INTRODUCTION 1.1. OBJECTIVE OF THE STUDY The European Commission awards money to beneficiaries in the form of grants in order to implement projects or activities in relation to European Union policies. The EU budget foreseen for these grants is substantial, making it a very important EU policy instrument. Grants are the major funding schemes of EU policies for all of policy areas, EU Funding Programme or budget management type reaching up to 80% of the EU budget expenditure. This situation remains unchanged across the past and present financial perspectives. In the current Multiannual Financial Framework for the period , EUR 958 billion (2011 prices) have been foreseen for this seven years period. Over 85% is allocated to the grant categories in scope for this assignment: Heading 1 Smart and Inclusive growth, composed of: o Competitiveness for growth and jobs (125 billion euros) Heading 1a; o Economic, social and territorial cohesion (325 billion euros) Heading 1b; Heading 2 Sustainable Development : Natural resources, composed of: o Common Agricultural Policy Pilar I (277,8 billion euros); o Common Agricultural Policy Pilar II (93,5 billion euros). As such, they are of critical importance for achieving the strategic objectives of the EU 2020 strategy and the Juncker Commission agenda. They are also on top of the frontline solutions to meet the challenges of the crises faced by the Union and its Member States. The purpose of this study is to provide the European Parliament sound understanding, notably through substantiated estimates, of the costs linked to grant management from both the grant provider (EU / National / Regional Authorities and the grant seeker (applicant / beneficiary) perspective. The EU policy fields covered are: Competitiveness for growth and jobs, Economic, social and territorial cohesion, and Common Agricultural Policy Pillar I, in the framework of the Multiannual Financial Framework Furthermore, the study aims to analyse the differences between the different grants processes and to identify areas for improvement in the grant management processes. Finally, the study formulates a number of recommendations aimed at removing cost-generating inefficiencies and unnecessary burden, and indicates possibilities to leverage good practices from any grant instrument, in other instruments SCOPE OF THE STUDY This study estimates the costs linked to a grant approved for a project financed under one of the main European policies: i) Sustainable growth (European Agricultural Guarantee Fund, European Agricultural Fund for Rural Development), ii) Economic, social and territorial cohesion (Regional convergence, Cohesion Fund, European Social Fund) or iii) Competitiveness for growth and jobs (Horizon 2020, Connecting Europe Facility, Education, Training, youth and Sport). 31

34 Policy Department D: Budgetary Affairs The project scope covers the entire grants management process, from the first phase, the call for proposal and award phase, until the Grant / Project closure phase. The analysis and costestimations are therefore addressed from the launch of the calls for proposals until the approval of the grant. From a terminology perspective, a grant approval is materialised by a final payment from the grant provider (not to be confused with the grant award which is the ultimate step of a call for proposal process). Considering that payments, or conversely funds recoveries, may still occur at the level of ex post audits during the closure stage, the costs analysis has been performed on an end-toend basis, i.e. the stages of call for proposal / grant award, implementation and closure. The costs analysis has been conducted from both the grant provider (EU / National / Regional Authorities) and the grant seeker (applicant / beneficiary) perspective. Given the number of programmes and instruments inherent to Multiannual Financial Framework Headings 1a ( Sustainable growth - Competitiveness for growth and employment ), 1b ( Sustainable growth - Cohesion for growth and employment ), and Heading 2 ( Preservation and management of natural resources ), the number of European Commission (EC) Directorates-General and Executive Agencies involved, the diversity of national public authorities (relevant Ministries and other public bodies to which EU funds implementation is delegated) and, last but not least, the thousands of projects financed / grants awarded annually to multiple categories of beneficiaries (multiplied by the number of unsuccessful applicants concerning calls for proposals), the costs identification exercise was undertaken: on a high level basis, towards an incorporation of the programmes / instruments utilised in the three policy fields mentioned above and towards a sufficient geographical coverage; on a detailed basis, towards a limited selection of programmes, instruments, Member States, EU Institutions and beneficiaries. In this study, a distinction has been made between grants managed under direct, indirect and shared management: Grants managed under direct management are grants that are distributed and managed by the European Commission, Union delegations, and /or Executive Agencies; Grants under indirect management are implemented with third countries, international organisations, national agencies, etc.; Grants under shared management are distributed and managed at Member State or regional level. It should be noted that data has been collected based on a limited number of cases that have nevertheless enabled us to draw general conclusions at the level of the Member States and at the level of the policy or programme. In terms of geographical coverage, the project team aimed at analysing Member States where a large share of each programme in scope is spent ( net beneficiaries in one of the three policy fields). However, a limited number of Member States that are net contributors were also analysed. 32

35 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants 1.3. DATA COLLECTION METHODOLOGY Different stakeholders required different methodologies The study team had foreseen different data collection approaches for the various stakeholder groups in scope of the research. The figure below gives an overview of this diversified approach: Figure 1: Deloitte's approach to collecting both quantitative and qualitative data For the first stakeholder group in scope, the European Commission and its Executive Agencies, the study team used a dual data collection approach: a widespread initial online survey covering all relevant grant schemes and interviews for a limited number of grant schemes. For the second stakeholder group, the national and regional authorities, the study team has used a similar dual data collection approach (online survey and interviews), depending on the provision of good quality contact details of Member State and/or regional Managing Authorities, provided by the European Commission services / Executive Agencies. For the third stakeholder group, the applicants / beneficiaries, the study team conducted a limited set of telephone interviews as case studies, based upon contact details provided by Member State and/or regional Managing Authorities. The study team was able to find contact details from the Financial Transparency System 1, national authorities websites, and personal contacts of the study team. The study also conducted desk research to collect relevant data useful for the analysis. 1 Financial Transparency System

36 Policy Department D: Budgetary Affairs Difficulties encountered The study team encountered some difficulties in the execution of the research, notably in the collection of cost data. As the European Parliament wanted the Members of the European Parliament to be able to scrutinise the cost of European grants, our questionnaire towards the European Commission and Executive Agencies involved in grants management aimed at collecting detailed Full-Time Equivalent and cost data, notably at each of the different high level steps of the grant process. The Commission and Executive Agencies have indicated that their current budgeting and accounting systems do not allow to generate Full-Time Equivalent and cost data at the level of detail requested, and that as a result, they could not take part in the survey. Following discussions and alignment between the European Parliament and the Commission 2 the study team has received some Full-Time Equivalent and cost data, however at a less granular level of detail as initially requested, which has allowed the team to conduct part of the necessary analysis. Furthermore, the cost information is not harmonised across the different DGs, which calls for prudence in making comparisons between DGs or grant instruments. This delayed the study timeline substantially, as the problem was only resolved during the summer of Moreover, the missing information at European level led to additional difficulties to collect data both at EU (because of the holiday period) and national level, due to missing contact details. Further, the response rate to our survey for the Managing Authorities at national level (for shared management instruments) and to the interview invites sent to Beneficiaries was low. All this, and the fact that the study team had to deviate to other means of data collection (such as extensive desk research), hindered the study team in drafting a comprehensive overview of the cost at EU and national level. As an alternative, the study team was able to build the report, based on the information collected, at a higher, aggregated level, using illustrative case studies. The reader should therefore not expect a full cost figure of managing EU grants at EU or national level, but rather illustrations of this cost for certain grant instruments. As the grant instruments in scope of the study are quite different from a content perspective (e.g. a research grant under H2020 vs. a student grant under Erasmus+), it was also not possible to make sound comparisons between different grant instruments. Nonetheless, the study team was able to draft a sound analysis that should give the European Parliament sufficient insight in the costs of managing EU grants, and a view on simplification of grant processes already undertaken at different management levels. Moreover, the study team has managed to indicate a number of possible future improvements that can still be implemented or expanded on in the future. In summary, this Final Report is based upon data collected from extended desk research, high-level quantitative data from the Commission and Executive Agencies, qualitative data collected via interviews with Commission DGs and Executive Agencies, filled in questionnaires from a selection of Managing Authorities at national level and a set of interviews with grant applicants / beneficiaries. 2 Exchange of letters available in the annex 34

37 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants 1.4. THE RESULTS OF THE DATA COLLECTION PROCESS In the sections below, an overview is presented of the quantitative information that was collected during the study (e.g. number of grant agreements, number of Full-Time Equivalent, and cost of support functions). During the interviews and via the surveys, the study team also collected qualitative information, which is not reflected here given the diversified nature of this information Collected data at EU level The study team contacted the Commission s Directorates-General and Executive Agencies to complete an online survey. In the end, most of the information received was submitted via Word- or Excel-documents, containing the requested data (albeit at a higher level of granularity) supplemented with some important caveats. Nonetheless, the documentation included useful information and touched upon the different topics of the online survey. The table below indicates what type of data has been received per Directorate-General or Executive Agency. Table 1: Collected data at EU level HEADING PROGRAMME DG / EX. AGENCY RECEIVED INFORMATION Horizon 2020 Research Family 3 Number / value of grant agreements Number of Full-time Equivalent managing grants Costs on grants management (IT, missions, etc.) Heading 1 A Connecting Europe Facility Connecting Europe Facility DG MOVE INEA Number of Full-time Equivalent managing grants Costs on grants management Number / value of grant agreements Number of Full-time Equivalent managing grants Costs on grants management (IT, missions, etc.) Time-to-grant and time-to-pay Cohesion Fund & European Regional Development Fund DG REGIO 4 Number of Full-time Equivalent managing grants Costs on grants management (IT, missions, etc.) Heading 1B Employment and Social Innovation DG EMPL Number / value of grant agreements Number of Full-time Equivalent managing grants Costs on grants management (IT, missions, etc.) Time-to-grant and time-to-pay European Social Fund DG EMPL Number of Full-time Equivalent managing grants Costs on grants management (IT, missions, etc.) Head -ing 2 European Agricultural Guarantee Fund 5 DG AGRI Number of Full-time Equivalent managing grants Costs on grants management (IT, missions, etc.) 3 The research family consists out of eight Directorates-General (DG RTD, DG CNECT, DG EAC, DG AGRI, DG HOME, DG GROW, DG MOVE and DG ENER), four Executive Agencies (REA, ERCEA, EASME and INEA), seven Joint Undertakings, the European Institute of Innovation & Technology, and the European Global Navigation Satellite Systems Agency. Only the Directorates-General and Executive Agencies were in scope of this study. 4 DG REGIO accumulated the figures on its grant programmes ERDF and CF, implicating that the study team needed to make some assumptions to perform the individual assessment of both programmes. 5 DG AGRI submitted the cost figures for both EAGF and EAFRD (out of scope for this study), implicating that the study needed to make some assumptions to estimate the costs on the EAGF programme. 35

38 Policy Department D: Budgetary Affairs Collected data at national / regional level For the grants under shared management, the study team has sent out a tailored online survey to all National Agencies and Managing Authorities. The table below indicates the results of the survey, including the Member State, region, grant programme, etc. for all the respondents. Table 2: Collected data at national / regional level COUNTRY / REGION Belgium (Walloon region) Bulgaria Denmark, Sweden and the regions Oslo, Akershus, Østfold, Buskerud, Vestfold, Telemark, Aust-Agder and Vest-Agder in Norway Finland, Estonia, Sweden, Latvia Germany (Baden-Württemberg) Germany, Netherlands Poland Czech Republic Portugal (Mainland, Azores and Madeira Islands) Belgium (German speaking Community) Germany Romania Spain Italy Cyprus Slovenia Spain (Andalusia) Sweden PROGRAMME European Regional Development Fund European Regional Development Fund European Regional Development Fund European Regional Development Fund European Regional Development Fund European Regional Development Fund European Regional Development Fund European Regional Development Fund, European Social Fund European Regional Development Fund, European Social Fund, Cohesion Fund European Social Fund European Social Fund European Social Fund European Social Fund European Agricultural Guarantee Fund European Agricultural Guarantee Fund, European Agriculture Fund for Regional Development European Agricultural Guarantee Fund, European Agriculture Fund for Regional Development European Agricultural Guarantee Fund, European Agriculture Fund for Regional Development European Agricultural Guarantee Fund, European Agriculture Fund for Regional Development 36

39 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants As indicated in the table above, the study team has received information from a wide range of Managing Authorities. However, some caveats need to be made regarding the information collected: Most responding Managing Authorities have submitted the requested quantitative information, but the received data is rather limited and cannot be used to make extrapolations nor to compare different Managing Authorities. Another important remark to be made is that some Managing Authorities might have a different level of in-house expertise and experience, are organised in a more agile and cost efficient way, have already implemented simplifications, etc.; The received qualitative information includes useful insights into current administrative burden, vis-à-vis both the beneficiaries and the European Commission, and into proposed simplification opportunities. Taking into account the diversity between the grant programmes, the reported information will be limited to the most important feedback, applicable to most or all grant programmes Collected data at beneficiary level Finally, to collect information at all different levels, the study team conducted several interviews with beneficiaries to gather their points of view on the grant management process, and to get a sound understanding of the administrative burden beneficiaries face and any (implemented or foreseen) simplifications. The table below lists the interviewed beneficiaries and gives an overview of the most important data collected. Table 3: Collected data at beneficiary level COUNTRY GRANT PROGRAMME RECEIVED INFORMATION Belgium Horizon 2020 Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Belgium Belgium Belgium Bulgaria European Regional Development Fund European Regional Development Fund Erasmus+ Connecting Europe Facility Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Belgium Horizon 2020 Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden 37

40 Policy Department D: Budgetary Affairs COUNTRY Belgium Germany Germany GRANT PROGRAMME European Social Fund Connecting Europe Facility European Regional Development Fund RECEIVED INFORMATION Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Data on time spent per activity per process step Qualitative information on the activities per process step Germany Horizon 2020 Data on time spent per activity per process step Qualitative information on the activities per process step Qualitative information on simplification and admin burden Greece Horizon 2020 Qualitative information on the activities per process step Spain European Agriculture Guarantee Fund Data on time spent per process step As can be noted in the table above, a good spread among the different headings and grant programmes was achieved. Unfortunately, the participation rates were rather low in some Member States because of a reluctance on behalf of the beneficiaries to respond to our questionnaire, due to language barriers, time constraints, etc. 38

41 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants 2. REGULATORY BACKGROUND 2.1. REGULATORY EVOLUTION The simplification and harmonisation of the rules governing EU budget spending through grants has been a matter of discussion within the Union for decades. Different criticisms 6 are frequently raised by stakeholders concerning the grant rules defined in the various EU policy areas, such as: Complexity, heterogeneity, lack of clarity and inconsistency; Insufficient guidelines and diverging interpretations; Heavy reporting requirements imposed, including those resulting from the EC accounting officer s decision to adopt a dual accounting based on accrual accounting principles; Inadequacy to some categories of beneficiaries; Systematic and excessive focus on compliance to the rules rather than on results; Uncertain and potentially heavy audit impacts towards expenditure eligibility; and, last but not least; Disproportionate burden along grants lifecycle. Ultimately, questions over EU grant schemes attractiveness and efficiency, and their capacity to meet the Union s objectives are everlasting. Working groups 7, communications 8, initiatives 9 and rules simplifications 10 have been set up, undertaken, and adopted since 2010 with the aim of better organisation, systematic, widely spread and user-friendly collaborative environment, enhanced communication and simplified, coherent and harmonised regulatory framework to achieve the Europe 2020 strategy / Juncker agenda notably via Union s subsidies during the multi-annual framework. During the past two decades, the complexity, inconsistency, lack of clarity, legal uncertainty, inadequacy and administrative burden inherent to the succession and coexistence of FP5, FP6 and FP7 have been major concerns that have led to reflecting on best-fit solutions towards 6 See notably: - Financial Rules in the Research Framework Programmes - Streamlining rules for participation in EU research programmes, EP EU financing for NGOs in the area of home affairs, security and migration, EP 31/01/ See notably: /623/EC: Commission Decision of 31 August 2007 setting up the High Level Group of Independent Stakeholders on Administrative Burdens - The prerogatives and works of the High Level Group monitoring simplification for beneficiaries of ESI Funds: 8 See notably: - 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,, Brussels, 29 April 2010 COM(2010) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Regulatory Fitness and Performance (REFIT): Results and Next Steps, Brussels, COM(2013) 685 final 9 See notably the ABM / ABM+ programmes: Possible priority items for the HLG concerning the implementation of the Action Programme for Reducing Administrative Burdens in the Member States Background of the Action Programme , See infra, chapter 3. 39

42 Policy Department D: Budgetary Affairs egovernment, streamlining financial rules across programmes and actions, and reducing the administration of grants in the Research policy area. As a result, collaborative IT platforms (Unique Registration Facility, Research Portal etc.) were developed in the course of FP7 implementation, and the new H2020 (as well as the other Funding Instruments and rules 11 acknowledge the possibility to widen the use Simplified Cost Options 12 to calculate beneficiaries costs and claim their reimbursements. Recently, the High Level Group on Monitoring Simplification for Beneficiaries of European Structural and Investment Funds 13 formulated conclusions, points of attention and several recommendations to the Commission on the dimensions of Simplified Cost Options. At this stage, it is interesting to note the High Level Group on Own Resources conclusions and recommendations, namely they while not literally mentioning it as a best practice, refer H2020 towards additional options for payments simplification; highlight the concept of- and current lack of emphasis in the global Simplified Cost Options mechanisms elaboration, calculation, monitoring and auditing. Although this concept goes beyond the scope of the present study, it is nevertheless worth highlighting that this element aligns with the EU Financial Regulation trends towards performance-based or result-oriented budget execution, management, audit and discharge. call for even more harmonisation of financial rules considering the growing number of collaborative projects between European Structural and Investment Funds and research and innovation. This chapter describes the financial rules applicable at the different stages of grants lifecycles from the EU regulatory environment perspective, across the policy areas in the scope of this study. Its objective is threefold: Describe financial rules at all levels of- and in the context of- the EU norms hierarchy; Identify and describe the financial rules common to- or differentiating the instruments inscope of this study; Identify their differences, heterogeneous complexity and lack of clarity. The objective of this chapter is not to provide an exhaustive analysis of the rules in scope. It focuses on the rules of interest for the purpose of this study, in particular those that: Reflect improvements towards grants implementation under the current Multiannual Financial Framework; Are subject to criticisms from the different stakeholders encompassed in the study. To this end, the following sections describe the main regulatory concepts addressed at the different level of norms hierarchy, and highlight in particular specific topics regarding digitisation, cost schemes and reporting matters. 11 See Chapter Simplified Cost Options are alternative cost calculation methods to the standard eligible costs reimbursement scheme. They take the form of lump sums, flat rates or unit costs mechanisms See section ERDF, ESF, CF, EARDF, European Maritime and Fisheries Fund 40

43 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants 2.2. MULTIANNUAL FINANCIAL FRAMEWORK REGULATORY ENVIRONMENT Unlike for other types of expenditure such as procurement, grants rules are rarely found in a single EU Regulation adopted by the Legislative Authority. General principles are established at the level of the Multiannual Financial Framework Regulation and the EU Financial Regulation, but each Funding Programme contains its own set of specific rules at the level of establishing regulations, work programmes and calls for proposals The Treaty on the Functioning of the European Union Part Three of the Treaty on the Functioning of the European Union sets out the rules of Union Policies and Internal actions, but financial rules governing these policies are limited to the provisions of the Multi-annual Financial Framework (articles 312 to 336), in particular: Article 322 (ex Article 279 Treaty Establishing the European Commission) 1. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, and after consulting the Court of Auditors, shall adopt by means of regulations: (a) the financial rules which determine in particular the procedure to be adopted for establishing and implementing the budget and for presenting and auditing accounts; (b) rules providing for checks on the responsibility of financial actors, in particular authorising officers and accounting officers The 2012 EU Financial Regulation and Rules of Application From the perspective of the secondary legislation (EU Financial Regulation / Rules of Application, Euratom), the EU Financial Regulation 2012 recitals introduce the guiding principles that further define the rules applicable to EU funding through grants notably Recital (2) recalls the necessity for the Regulation to maintain and strengthen the key elements of the [ ] basic principles for grants. As a consequence, rules governing grants are still defined on a high level basis and set as a principle their detailed definition and implementing rules at programme specific level. This situation introduces by nature risks of increased complexity, inconsistencies and incoherence among the different policy areas, and calls for reinforced monitoring and alignment mechanisms at this level. The following sections illustrate the main topics addressed by the EU Financial Regulation / Rules of Application on a high-level basis, towards an enhanced grants implementation environment: Reduction of administrative burden Recital (4) acknowledges from the experience gained in the use of lump sums or flat-rate financing that [ ] such forms of financing significantly simplified administrative procedures and reduced the risk of error substantially and that output-based funding has proved appropriate for certain types of actions. Consequently, it calls for making the conditions for using simplified forms of grants determined on the basis of lump sums, unit costs and flat rates [ ] more flexible. This is translated in EU Financial Regulation Article FR which provides that Grants may take any of the following forms: (a) reimbursement of a specified proportion of the eligible costs [ ] actually incurred; 41

44 Policy Department D: Budgetary Affairs (b) reimbursement on the basis of unit costs; (c) lump sums; (d) flat-rate financing; (e) a combination of the forms referred to in points (a) to (d) Digitisation of communication and administrative activities Recital (33) underlines the role of the Regulation to foster the objective of e-government, and in particular the use of electronic data in the exchange of information between the institutions and third parties As a rule, Article 121 FR establishes that The Commission may establish secure electronic systems for exchanges with the beneficiaries Enhanced reduction of administrative burden for SMEs Recital (44) addresses the role of entities with limited administrative resources towards achieving the objectives of the Union (in other words, the impact notably of SMEs and small non-profit organisations for growth and jobs creation) and acknowledges the importance of facilitating their access to Union funding [ ] by further simplifying procedures applicable to low value grants. In particular: Article FR foresees that pre-financing guarantees shall not be required in the case of low value grants 15 ; Article FR 136 sets a reduce period of three years (instead of five years) after the payment of the balance for record-keeping of supporting documents, statistical records and other records pertaining to a grant in the case of low value grants Legal security, simplification and harmonisation Recital (45) addresses the necessity to ensure legal certainty and establish a single set of basic financial rules which beneficiaries can refer to throughout Union programmes, and highlights the role of the Regulation so as to lay down the cost eligibility criteria and specific conditions governing certain categories of costs and [ ] provide for their consistent application. Such rules being detailed at the level of EU Funding Instruments and Work Programmes and Calls for Proposals / Grant Agreements, the achievement of such harmonisation is subject to various specifications. For example, Article FR establishes that Calls for proposals shall specify the categories of costs considered as eligible for Union funding, and empowers the Authorising Officer to declare the (or not) the following categories of costs eligible: (a) costs relating to a pre-financing guarantee lodged by the beneficiary of the grant [ ]; (b) costs relating to external audits [ ]; 14 The Commission is furthermore empowered to adopt delegated acts concerning details of the electronic exchange system, including the conditions under which documents submitted by means of such systems, including grant agreements, are to be deemed originals and to have been signed. 15 i.e. Grants for which amounts are lower or equal to EUR

45 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants (c) value added tax ( VAT ) where it is not recoverable under the applicable national VAT legislation and is paid by a beneficiary other than a non-taxable person [ ]; (d) depreciation costs, provided they are actually incurred by the beneficiary; (e) salary costs of the personnel of national administrations to the extent that they relate to the cost of activities which the relevant public authority would not carry out if the project concerned were not undertaken Protection of the Commission s financial interests, guarantees and controls Recital (55) recalls that the principle of Sound financial management requires that the Commission protect itself with guarantees at all stages of the budget implementation: at the stage of grant applications, by arranging financial audits for applications involving larger amounts ; at the time of paying pre-financing, where the risks as assessed by the authorising officer justify, by requiring advance financial guarantees, and at the stage of interim payment or payment of the balance, by arranging submission of certificates established by auditors for the payment requests which involve the largest amounts and which present most risk Supplementary levels of rules impacting EU funding through grants Establishing Regulations Regulations establishing EU Funding Programmes 16 contain rules on financing through grants. These complement yet sometimes at a high level the general principles defined at the level of secondary law, limited (inconsistently throughout the various establishing regulations) to: Stating that EU Funding Programmes may use grants as a form of financial assistance; Providing that forms of financing, in particular grants, shall be established by the Work Programmes they refer to, notably the forms of grants and eligible costs; Addressing specific categories of expenditure that may (or not) be eligible: o Equipment and infrastructure which is treated as capital expenditure o Expenditure related to environmental studies on the protection of the environment and on compliance with the relevant Union law o Exceptions to the non-eligibility of expenditure related to the purchase of land (funds transferred from other funds) o Defining general rules on the conditions for participation, specifying that they may be supplemented by rules on submission of proposals contained in Work Programmes. Detailing funding rates However, in the framework of the European Structural and Investment Funds, some rules are more detailed, notably regarding Simplified Cost Options. 16 See for example: Regulation (EU) No 1316/2013 of the European Parliament and the Council of 11 December 2013 establishing the Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010; 43

46 Policy Department D: Budgetary Affairs Multi-annual, Annual and Sectoral Work Programmes Work programmes contain different categories of financial rules specifically designed for the context of each Funding Instrument. They set out the regulatory framework and sometimes the fully detailed rules towards the implementation stages of programmes see section Call for Proposals, Grant Agreements / Framework Partnerships Calls for Proposals, grant agreements and framework partnerships contain the most details sets of financial rules governing grants. At this level, very specific and tailored rules vary from one programme to another, concerning costs coverage, costs schemes, costs eligibility, reporting requirements, certification requirements, audit rules etc. More information regarding these rules are presented in section RELEVANT CATEGORIES OF RULES IMPACTING EU GRANTS The financial rules of the programmes implemented in the framework of the Multiannual Financial Framework have in principle incorporated the lessons from the past addressing administrative burden and efficiency. They also account for the fact that a growing number of actions are implemented in a collaborative way across Funding Programmes, raising the importance of consistency and coherence. Other rules such as those relating to exclusion or selection criteria are rather stable over the multiannual financial perspectives and do not as such represent a particular subject of attention when inquiring on the red tape caused by EU grants rules. Therefore, the following sections identify categories of rules and topics that have evolved in the successive generations of programmes and merit specific attention to assess how they may have positively or negatively impacted the funding of the Union s objectives through grants Rules on digitised management The trends towards egovernment may be acknowledged at two levels in particular: Firstly, the development and utilisation of IT collaborative platforms for the exchange of information between stakeholders at the different stages of grants lifecycle, is a generalised practice that: Is mandatory for what concerns all official exchanges between Managing Authorities and the Commission 17 ; is offered to applicants and beneficiaries at the stages of: o Registrations; o Call for proposals; o Reports uploads; o Cost claims and supporting documents uploads. 17 See for example Common Provisions Regulation Article 74.4.: All official exchanges of information between the Member State and the Commission shall be carried out using an electronic data exchange system. 44

47 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Such platforms development and maintenance fall under the sole responsibility of grants providers 18, i.e. EU Institutions or Members States Managing Authorities depending on policy areas, instruments and budget management types. Secondly, Funding Programmes and their rules have extensively incorporated the legal validity of electronic signatures 19 and systematically offer the option for beneficiaries to process applications and grants via a digitalised environment. This validity of electronic signatures is a condition for the efficiency of digitised management Rules on expenditure eligibility The standard rules for the payment of grants to beneficiaries remains the reimbursement of eligible costs evidenced ex post by supporting documents. Simplified Cost Options were however introduced in some programmes implemented during the Financial Perspective and are now generalised across Multiannual Financial Framework Funding Programmes Simplified Cost Options general schemes Financial rules across policy-specific regulations and instruments have incorporated the possibility for beneficiaries to use cost calculation methods based on other criteria than real cost reimbursement, i.e. lump sums, flat rates and unit costs 20. These alternative cost options are notably foreseen to calculate and agree upon reimbursable indirect costs on an ex ante basis. Such agreements however, are not binding at the level of final auditing and eligible costs acceptance. These are advisable when 21 : Funding authorities want to focus more on outputs and results instead of inputs real costs are difficult to verify and to demonstrate reliable data on financial and quantitative implementation of operations are available there is a risk that accounting documents are not properly retained the operations belong to a standard framework Simplified Cost Options methods already exist for similar types of operations and beneficiaries under a nationally funded scheme or under another EU instrument 18 See for example Common Provisions Regulation Article.122.3: Member States shall ensure that no later than 31 December 2015, all exchanges of information between beneficiaries and a managing authority, a certifying authority, an audit authority and intermediate bodies can be carried out by means of electronic data exchange systems. Such systems aim at facilitating interoperability with national and Union frameworks and allow for the beneficiaries to submit all information [ ] to the management and control systems for operational programmes. referred 19 See for example Article 22 of H2020 Regulation: All exchanges with participants, including the conclusion of grant agreements, the notification of grant decisions and any amendments thereto, may be made through an electronic exchange system set up by the Commission or by the relevant funding body [ ]. 20 See for example Common Provisions Regulation Article 67 : 1. Grants and repayable assistance may take any of the following forms: (a) reimbursement of eligible costs actually incurred and paid, together with, where applicable, contributions in kind and depreciation; (b) standard scales of unit costs; (c) lump sums not exceeding EUR of public contribution; (d) flat-rate financing, determined by the application of a percentage to one or more defined categories of costs. Fund-specific rules may limit the forms of grants or repayable assistance applicable to certain operations. [ ] 3. The options referred to in paragraph 1 may be combined only where each option covers different categories of costs or where they are used for different projects forming a part of an operation or for successive phases of an operation

48 Policy Department D: Budgetary Affairs At the level of the European Structural and Investment Funds Common Provisions Regulation, general principles introduce harmonisation of the simplified cost options rules across the various Funding Programmes. Firstly, the use of Simplified Cost Options must comply with the following general principles: The cost calculation method must be established in advance; It must be fair, i.e. based on reality; It must be equitable, i.e. complying with an equal treatment of beneficiaries and/or operations); It must be verifiable (i.e. evidence-based). Secondly, EU rules foresee several methodologies when dealing with Simplified Cost Options, including statistical-based approaches or other objective information, and the utilisation of individual beneficiary-specific data (historical data of individual beneficiaries, application of the usual cost accounting practices of individual beneficiaries) Simplified Cost Options variants Simplified Cost Options theoretically introduce substantial administrative burden reduction in the sense that funding authorities do not proceed to a verification of the real costs incurred by categories of expenditure in other words, it is not necessary for the grant beneficiary to provide exhaustive supporting documents at the stages of costs claims. Yet the elaboration and verification of ex ante calculations can prove complex, and the overall system is likely to be all but simple and harmonised (as a consequence of the objective of flexibility offered to beneficiaries to meet their personal situation). (1) Possibility to make use of Simplified Cost Options schemes other than those defined in a given regulation Article 68(1) Common Provisions Regulation foresees the possibility to have recourse to rules from other Union policies (e.g. those prevalent within the financial perspectives 22 or from H for flat rates) or from Member States schemes for grants 24. (2) Diversity of treatment of cost categories in function of the option used Direct costs encompass costs directly attributable to a financed activity implemented by the beneficiary insofar as the direct link is evidenced. Eligible direct costs generally include: the costs of personnel working under an employment contract with the beneficiary or an equivalent appointing act and assigned to the action (and assimilated); costs of travel and related subsistence allowances, provided that these costs are in line with the beneficiary's usual practices on travel; the full costs of purchase of equipment [infrastructure] and other assets shall be eligible, provided that they are treated as capital expenditure; the costs of rental or lease of equipment or other assets are also eligible; the depreciation costs of equipment or other assets; costs of consumables and supplies; 22 Article 67(5) (b) Common Provisions Regulation 23 Article 68(1) (c) Common Provisions Regulation 24 Article 67(5) (c) Common Provisions Regulation 46

49 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants costs arising directly from requirements imposed by the agreement (dissemination of information, specific evaluation of the action, audits, translations, reproduction), including the costs of requested financial guarantees; costs entailed by service contracts, including costs of environmental studies on the protection of the environment and on compliance with the relevant Union law; duties, taxes and charges paid by the beneficiary. Indirect costs are those which cannot be linked directly to a granted activity implemented by the beneficiary (overheads including administrative staff expenditure, management costs, building, installations, energy, communication etc.). The different Simplified Cost Options schemes do not treat these costs the same way. (3) Diversity of methods, rates and cost-bases for flat rates Flat-rate systems set as a rule three types of categories of costs: Type 1: categories of eligible costs on whose basis the rate is to be applied to calculate the eligible amounts; Type 2: categories of eligible costs that will be calculated with the flat rate; Type 3: where relevant, other categories of eligible costs: the rate is not applied to them and they are not calculated with the flat rate. However, the regulations include certain specific flat rate financing systems. Article 68(1) Common Provisions Regulation details some flat rate financing systems for calculating indirect costs: General system: flat rate financing for indirect costs with the maximum rate of 25 %, which can be based: o only on two types of costs direct costs and indirect costs; or o on three types of costs: limited direct costs, indirect costs calculated on the basis of limited direct costs, direct costs other than the limited ones. Flat rate of up to 15 % of direct staff costs to calculate the indirect costs, which can be based on three categories of costs: direct staff costs, indirect costs, direct costs other than staff costs; Possibility to re-use a flat rate for indirect cost schemes existing in Union policies, based on those used under Horizon 2020 and under LIFE and specified in a delegated act. (4) Diversity of methods for unit costs The standard scales of unit costs can be process-based, aiming at covering through a best approximation the real costs of delivering an operation. It can also be outcome-based (output or result) or defined on both process and outcome. (5) EU Funds specificities Some rules are specific to certain Funds, for example: ESF: o Specific flat rate financing scheme o Compulsory use of unit costs, flat rate financing or lump sums for small ESF operations; o Calculation by reference to a draft budget in the case of grants and repayable assistance below EUR of public support; 47

50 Policy Department D: Budgetary Affairs o Several methods for setting financial thresholds related to the applicability of simplified costs or of calculation methods ESF/ERDF: o ESF-ERDF cross-financing with unit costs or lump sums EARDF: o Specific rules for the ex ante verification of costing schemes European Territorial Cooperation: o Specific rules on eligibility of expenditure for cooperation programmes with regard to staff costs, office and administrative expenditure, travel and accommodation costs, external expertise and service costs, and equipment expenditure are established at EU level Rules on reporting Each payment request must be accompanied by a set of reports which vary based on the Funding Instrument / action granted, the type of cost calculation scheme used, the size of the beneficiary, and the existence (or not) of a consortium and a designated coordinator in the framework of the action funded. The reports must be issued at interim and final payments stage, and must reflect a wide variety of information through different type of reports: (1) Technical reports (2) Financial statement (3) Where applicable: Certificates by public authorities (4) Where applicable: Certificates by approved auditors As regards technical reports requested information, this generally includes: An explanation of the work carried out by the beneficiaries including the identification of activities supporting the ultimate goal of the action granted; At interim / final stages: an overview of the progress / conclusions towards the objectives of the action, including milestones and deliverables; Explanations justifying the differences between work expected to be carried out in accordance with Annex 1 and that actually carried out; Where applicable: Details on the exploitation and dissemination of the results As regards financial reports contents, these vary in function of the cost option retained, but in general the following information is requested the difference lying in the quantity of supporting documents to be provided: An individual financial statement detailing the eligible costs (actual costs, unit costs, flat-rate costs or lump sum costs); An explanation of the use of resources and, where relevant, information on subcontracting and in-kind contributions provided by third parties; A periodic summary financial statement. 48

51 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants It must be noted that whereas financial reports offer the flexibility for beneficiaries to choose the cost option best adapted to their situation 25, the requested information in technical reports minimises the impact of this improvement, notably concerning the detailed identification and description of activities undertaken whose usefulness could be considered as questionable insofar that results are achieved. 25 And as such : Achieve to some extent the goal of minimising their administrative burden in terms of reporting and, Respond to a output-based approach instead of a strict compliance to the rules 49

52 Policy Department D: Budgetary Affairs 3. A BRIEF INTRODUCTION ON THE GRANT PROCESS In this chapter, we will discuss the generic process of managing grants over all programmes. Figure 2 below defines a process that is applicable to most programmes, and contains all the important activities of a grants management process. It is important to note that there are (minor) differences between different grant management processes, but the divergence from the generic process is limited. The generic process, as shown in the Figure 2 below, consists of three process steps. The first step starts with the initiation of the call for proposal and ends with the publication of the awarded grants / signed agreements, and includes the development of proposals, the evaluation of submitted proposals and in some cases a negotiation on the final agreement. The second process step contains all the activities carried out during the implementation of the project, and usually includes the payment of one or more pre-financing, the submission and assessment of operational and financial reports, and the reimbursement of the beneficiary. The final step occurs after the closure of the project, where the focus points are the ex post audits and the finalisation of the financial compensation of the beneficiary 26. Activities carried out by the Commission s Directorates-General and Executive Agencies on monitoring and supervising the grant programmes managed at regional or national level are not included in this overview process, but data on these activities has been collected as well in order to get a comprehensive view on the workload of the Directorates-General and Executive Agencies on grants management. Excluded from the scope of our study are the activities related to the process of policy making. 26 Ex post audits are not systematically conducted. As provided in Article 66(6) FR and Article 49 RAP, on-the-spot checks are conducted where appropriate, and may be organised on a sample basis according to risk. 50

53 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Figure 2: Grant management process 51

54 Policy Department D: Budgetary Affairs 3.1. PROCESS AT EU LEVEL At European level, the activities to implement the grants management process are relatively similar between the different programmes managed directly (thus excluding those implemented under shared or indirect management) and only the execution of these activities might differ, e.g. due to a different level of complexity, a different level of digitisation, different information systems across Directorates-General and Executive Agencies, etc. In the first phase of the grant management process, the Call for proposal and award phase, the following process steps need to be completed: Prepare and publish call: the DG or Executive Agency might launch a call to request applicants to submit proposals on a certain topic, which is aligned with the strategic objectives of the grant programme; Answer questions and provide clarifications: applicants might face some questions during the development of the proposal. The grant provider should provide (all) applicants with clarifications that were assessed as relevant; Receive and open proposals: once the deadline has passed, all the proposals that have been received should be opened and the applicant should be informed that its proposal has been received and will be evaluated; Check eligibility (ex ante check): the evaluator will perform a quick check on the received documents and will validate whether the applicant is compliant with all the rules (e.g. size of the applicant, country of origin) and whether the applicant has submitted all the requested documents (e.g. registration, inventory, forms); Evaluate proposals and project costs: eligible projects will be evaluated on a number of relevant criteria. Once the project has been positively evaluated, the evaluator will assess whether the proposed project costs have been correctly estimated; Negotiation (if applicable): if the evaluator assessed the project costs as too high, they might negotiate with the applicant on the granted amount. This creates the possibility to get more insight information in the cost estimations and to reach a consensus between both parties; Award: within the limitations of the budget restrictions of a call for proposal or the yearly budget, proposals will receive a grant to fund the proposed project; Ex post publication: applicants will be informed on the outcome of the evaluation and will receive a written answer on the assessment and the received grant. The second generic phase of the grant management process, the grants / financed project implementation phase, includes the following steps: Process budgetary and legal commitment: an official commitment is made to reimburse costs; Process pre-financing (if applicable): projects sometimes require a large investment from beneficiaries that need to pay costs upfront while they often do not have the financial capacity to do so. The granting authority can resolve this problem by financing the project upfront, after which the beneficiary should prove whether the costs were actually incurred; 52

55 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Receive and assess operational interim and final reports: during the project, the beneficiary submits operational reports that contain updates on the project (e.g. the progress, intermediate outcomes, planning, etc.). At the end, the final report should report on the final deliverables of the project; Receive and process financial interim and final report(s) (cost claims): the beneficiary incurs its costs spread over the entire project period. As these accumulated costs will increase to a substantial amount, the beneficiary can submit interim financial reports to claim its costs and significantly shorten the financing period. At the end of the project, the beneficiary should submit its final report including all the incurred costs; Process interim and final payment(s) (or recovery order where relevant): after the beneficiary has submitted a financial report, the granting authority should compensate these costs during the project (if it did not grant a pre-financing). At the end, it should compensate the difference between the past payments and the claimed amount; Perform on-the-spot check (where relevant): if additional monitoring is needed, an on-thespot check can be organised to control the project outcomes. In the last phase of the grant management process, the grant / project closure phase, the Directorate-General / Executive Agency undertakes the following high-level steps: Perform ex post controls / project audits: an audit will be organised to check whether everything occurred according to the grant rules. The beneficiary needs to be able to prove whether all submitted expenses were incurred and relevant. These audits do not occur for all grants but target high-risk projects or take a small sample; Issue recovery order and cash-in (where relevant): in case the provided (pre-)financing was estimated too high and could not be proven with bills and tickets. The beneficiary should reimburse the granting authority with the amount mentioned on the recovery order; Execute additional payment (where relevant): the beneficiary should receive additional reimbursements based upon his submitted expenses, if needed and justified. The granting authority should process a final payment, when the requested cost reimbursement has been approved; Close file: the formal closure of the project. At this point in time all documentation will be properly archived. If grant management is organised at Member State / Managing Authority level (under shared management), the European Commission incurs additional costs related to the monitoring, supervising and reporting of grants PROCESS AT NATIONAL / REGIONAL LEVEL The grant management process under shared and indirect management at Member State / Managing Authority / National Agencies level consists of the same activities as presented in the previous section. The process also includes three different phases, being the call for proposal and award, grants / financed project implementation and grant / project closure. 53

56 Policy Department D: Budgetary Affairs Next to these activities, the implementing organisation should report on the progress and results to the responsible Directorates General, where assessments will be made of the implementation of the grant programme PROCESS AT APPLICANT / BENEFICIARY LEVEL The grant management process at beneficiary / applicant level consists out of four main steps. In the first phase of the grant management process, the applying for grants phase, the applicant needs to undertake the following steps: Search call for proposal: grant providers (Directorate-General, Executive Agency, Member State or Managing Authority) launch a call for proposals to guide applicants proposals in a certain direction. These calls are communicated via online platforms, information sessions, discussion platforms, etc.; Find a new grant: applicants will submit a proposal when the topic of the proposal is aligned with the overall objectives of the grant programme; Register their organisation: the organisation should be registered on the online platform, where general information regarding the organisation will be requested (e.g. location, bank account, social security). The organisations only need to register themselves one time to be compliant with the rules, and only need to update the provided data when something has changed over time; Familiarise with programme rules and administrative obligations: before writing the proposal, the organisation should file all the required forms, make sure all evidence is added related to the exclusion and selection criteria, familiarise itself with the way to submit the application, etc.; Develop proposal: this includes the development of the proposal including the context description, financial calculations, requested grant amount, etc.; Consult contractors: some grant requests look for partnerships including multiple organisations across borders, or organisations look for subcontractors to increase their expertise required to submit the proposal. This includes gathering required documentation, discussing the content, negotiating the distribution of grants, etc. The second generic phase of the grant management process, the negotiation of contracts phase, is not applicable to all grant schemes and includes the following steps: Undertake a redress procedure: when the organisation was not granted the requested amount and if it does not agree with the evaluators, it is possible to launch a redress procedure. During this procedure, it has to prove the novelty and added value of its proposal, and prove that it should receive the grant; Familiarise with the negotiation rules: when the grant provider and applicant have diverging opinions on the amount of the grants, it can be the case that a negotiation occurs between both interested parties to define the amount of the grant; Develop revised proposal: grant beneficiaries are requested to develop a revised proposal in which they should elaborate more on the financial proposition, or to prove the added value of their proposal; 54

57 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants In the third generic phase of the grant management process, the grant / financed project implementation phase, the grant beneficiary needs to take the following steps: Familiarise with the project management rules: e.g. find the right information, understanding of the reporting requirements, get support; Carry out project execution, monitoring, reporting and closure: grant beneficiaries have a contractual obligation to report on work progress, and to submit due deliverables. Interim and final payments are made to beneficiaries based on approved reports. Data that needs to be submitted can be financial statements, deliverables, reports, forms, clarifications (if needed), etc.; In the last phase of the grant management process, the grant / project closure phase, the beneficiary undertakes the following high-level steps: Familiarise with the audit rules: e.g. find the right information, understanding of the reporting requirements, get support; Gather information for the audit: grant beneficiaries should be ready for an audit, making sure that they have the required supporting documents available; Comply with the audit requests & complete the audit follow-up: grant beneficiaries need to be ready and available to support the audit by providing the necessary explanations and the necessary documents. 55

58 Policy Department D: Budgetary Affairs 4. OVERALL ASSESSMENT OF EUROPEAN GRANTS The goal of this chapter is to draw an objective picture of the costs of managing grants, and provide additional information / insights on the grant management processes. It starts by assessing the costs related to implementing the grant programmes at EU and national / regional level, and draws short case studies of the process at beneficiary level. Afterwards, current issues and simplifications (in the pipeline), impacting beneficiaries and implementing organisations, are scrutinised A COST ASSESSMENT OF GRANTS MANAGEMENT Grant management at European level The online surveys and interviews with the European Commission DGs and Executive Agencies provided significant amounts of data on the costs related to the implementation of the grant management processes, which are sometimes organised in a different way, due to e.g. different sizes of the grants, requiring a regional approach, different requirements and reimbursement methods. Because of these discrepancies, it is impossible to compare the efficiency between different implementing organisations and grant programmes. This assessment only provides an indication of the cost of managing grants. As discussed in previous chapters, the study team encountered difficulties regarding the data collection process and the received data. Here below, three important remarks should be drawn: The study team was not able to calculate the cost per grant, as no data was received on the number of on-going and closed projects i.e. in a particular year, the on-going grants were initiated during the previous years and Multiannual Financial Framework; The study team collected data on the number of Full-Time Equivalent, enabling the calculation of the labour cost needed to implement the grant programme in a given year; No information was received for the Erasmus+ programme. However, the study team has estimated the average cost of one Full-Time Equivalent working in the Commission, based on the following data: Administrative expenditure appropriations : o Expenditure related to officials and temporary staff; o Expenditure related to external personnel working with the institution; o Expenditure related to external personnel of the Commission in Union delegations; Allocation of establishment plan posts per 31/12/ Based upon the data above, the estimated average cost for one Full-Time Equivalent is EUR per annum. 27 Definitive adoption (EU, Euratom) 2016/150 of the European Union s general budget for the financial year 2016: 28 Annex to the Communication to the Commission - Allocation of establishment plan posts for SEC(2016) 171 final 56

59 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants This estimation will be used in the following sections to indicate the cost of managing grants for the different grant programmes. Heading 1A: Competitiveness for Growth and Jobs Case study on Horizon 2020 Horizon 2020 is managed by several public organisations, called the Research Family. This group of European institutions include eight Directorates-General (DG RTD, DG CNECT, DG EAC, DG AGRI, DG HOME, DG GROW, DG MOVE and DG ENER), four Executive Agencies (REA, ERCEA, EASME and INEA), seven Joint Undertakings, the European Institute of Innovation & Technology, and the European Global Navigation Satellite Systems Agency. The Joint Undertakings and the latter Agencies are not included in the scope of this study, but affect the supervision cost incurred by the Directorates- General. The organisations in scope of this study combined their responses to ensure coherence in the figures provided. Furthermore, the research family does combine the supporting services in the Common Support Centre, hosted by DG RTD. Responding individually would lead to distorted figures, where the costs incurred by DG RTD would be elevated, while the other members of the research family would have no costs related to supporting services. Number of Full-Time Equivalent working on grant management Across all DGs and Executive Agencies of the research family, Full-Time Equivalent are currently working on the activities related to policy, horizontal support and other instruments AND managing the grant programmes. The table below shows to which extent the total number of Full- Time Equivalent is allocated to the high-level processes, and on which parts of the grant management process public servants are working. Table 4: Number of Full-Time Equivalent managing the H2020-programme at EU level ACTIVITY Call for proposal & award Grant / financed project implementation Grant / project closure 2 2 Full-Time Equivalent related to grant management Source: Deloitte analysis based on the information received from the research family It is important to note that this number of Full-Time Equivalent includes staff members implementing both FP7 and Horizon As H2020 only started in 2014 and FP7 grants were still awarded until the end of 2013, several grant agreements / projects under the FP7 framework are still on going. Besides, the indicated number of Full-Time Equivalent under the Grant / project closure activity is an underestimation of the actual situation, as these staff members are included in the grant / financed project implementation step. 57

60 Policy Department D: Budgetary Affairs Estimated cost for managing grants under H2020 When multiplying the total number Full-Time Equivalent for 2015 that are working on research grant management (1 474 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR ), the overall labour cost for H2020 can be estimated at EUR per annum. On top of this, the research family has indicated that other costs (such as missions, meetings, IT cost, etc.) amounts to EUR Comparing the incurred cost to the value of grants signed H2020 is implemented under direct management, so the overall value created in 2015 equals the value of the signed agreements at EU level. The study team is aware that some activities, undertaken by the research family DGs or Executive Agencies, are related to grants from previous years and even the previous Multiannual Financial Framework. Nonetheless, as the signed agreements of 2015 are implemented during the next years, the costs incurred in the future, related to the implementation of the 2015 signed agreements, are not captured neither. Therefore, the study assumes that comparing the value of the signed agreements with the incurred costs, in any given year, gives the reader an indication of the cost for managing a hundred euro of grants. Table 5: Cost assessment of the H2020-programme at EU level Source: Deloitte analysis based on the information received from the research family Case study on Connecting Europe Facility Connecting Europe Facility (CEF) is the EU funding instrument supporting the development of high performing, sustainable and efficiently interconnected trans-european networks in the fields of transport, energy and digital services. The Innovation and Networks Executive Agency (INEA), supporting the European Commission (DG MOVE, DG ENER and DG CNECT) in achieving and monitoring its objectives for CEF, is the main managing body of the programme. Number of Full-Time Equivalent working on grant management DG MOVE and INEA submitted data on the number of Full-Time Equivalent implementing the grant management process. As noted before, INEA implements the largest share of the programme, and received 812 proposals in 2015 (compared to 98 in 2014). Important to notice is that no proposals were completely evaluated in 2014, when 362 proposals 29 received funding in These figures should be taken into account when analysing the data in table Cost incurred by research family to implement the H2020 programme EUR Value of signed agreements under the H2020 programme EUR Cost to create 100 euro of value EUR 2 29 It should be noted that the number of proposals is not equal to the number of signed agreements, as a proportion of proposals are negatively evaluated. 58

61 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Table 6: Number of Full-Time Equivalent managing the CEF-programme at EU level ACTIVITY Call for proposal & award 25,8 52 Grant / financed project implementation 0,03 10,4 Grant / project closure 0,20 Full-Time Equivalent related to grant management Source: Deloitte analysis based on the information received from the DG MOVE and INEA Estimated cost for managing grants under CEF When multiplying the total number Full-Time Equivalent for 2015 that are working on grant management (63 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR ), the overall labour cost for CEF can be estimated at EUR per annum. On top of this, other costs (such as missions, meetings, IT cost, etc.) have been reported, amounting to EUR Comparing the incurred cost to the value of grants signed CEF is implemented under direct management, so the overall value created in 2015 equals the value of the signed agreements at EU level. The study team is aware that some activities, undertaken by DG MOVE and INEA, are related to grants from previous years and even the previous Multiannual Financial Framework. Nonetheless, as the signed agreements of 2015 will be implemented during the next years, the costs incurred in the future, related to the implementation of the 2015 signed agreements, are not captured neither. Therefore, the study assumes that comparing the value of the signed agreements with the incurred costs, in any given year, gives the reader an indication of the cost for managing a hundred euro of grants. Table 7: Cost assessment of the CEF-programme at EU level Source: Deloitte analysis based on the information received from DG MOVE and INEA Heading 1B: Economic, Social and Territorial Cohesion Case study on European Regional Development Fund & Cohesion Fund The European Regional Development Fund (ERDF) and Cohesion Fund (CF) are implemented through shared management, which means DG REGIO relies on Managing Authorities to implement the grant programmes. Because of the shared management, DG REGIO does not incur any costs to 2015 Cost incurred by DG MOVE and INEA to implement the CEF programme EUR Value of signed agreements under the CEF programme EUR Cost to create 100 euro of value EUR 0,05 59

62 Policy Department D: Budgetary Affairs implement its grant management, except for the monitoring / supervising costs of the Managing Authorities. DG REGIO reports three different types of supervision activities, including: Programme management: controls throughout the different design, implementation and monitoring phases, involving all staff in geographical directorates including coordination functions, as well as staff involved in financial circuits; Direct support to programme management: thematic support to geo desks, staff involved in legal affairs, IT systems; Assessment by the Commission of management and control systems in Member States: including analysis of Audit Authority reports and Annual Control Reports, own audit work and the monitoring of the interruption and suspension process. Number of Full-Time Equivalent working on grant management The table below provides an overview of the estimations per different activity, for the year In addition, DG REGIO employs 75 Full-Time Equivalent to develop and maintain IT tools that are not directly attributable to the controlling activities. Table 8: Number of Full-Time Equivalent managing the CF and ERDF-programme at EU level ACTIVITY 2015 Programme Management 356,4 Direct support to programme management 125,1 Assessment by the Commission 85,5 Full-Time Equivalent related to grant management 567 Source: Deloitte analysis based on the information received from the DG REGIO Estimated cost for managing grants under European Regional Development Fund & Cohesion Fund When multiplying the total number Full-Time Equivalent for 2015 working on grant management (567 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR ), the overall labour cost for the European Regional Development Fund & Cohesion Fund can be estimated at EUR per annum. On top of this, other costs (such as missions, meetings, IT cost, etc.) have been reported, amounting to EUR Comparing the incurred cost to the value of grants signed ERDF and CF are implemented via shared management, meaning the European Commission DG REGIO is financing Managing Authorities to implement the grant management process. Due to missing information on the overall value of the signed agreements in 2015 (dispersed over all Managing Authorities), the study team takes into account the commitments made by DG REGIO, which indicates the total value created through the grant programmes ERDF and CF. 60

63 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Table 9: Cost assessment of the ERDF and CF-programme at EU level Source: Deloitte analysis based on the information received from DG REGIO Case study on European Social Fund The European Social Fund (ESF) is, similar to ERDF and CF, implemented via shared management, meaning that DG EMPL relies on Managing Authorities to implement the ESF programme. Number of Full-Time Equivalent working on grant management The number of Full-Time Equivalent per activity, similar to the previous chapter, includes data both the ESF programme and on the Fund for European Aid to the Most Deprived (FEAD excluded from the project scope). It must be pointed out, however, that the importance of FEAD is rather limited (payments in 2015: EUR 45,4 million for FEAD and EUR 2 591,7 million for ESF). Table 10: Number of Full-Time Equivalent managing the ESF-programme at EU level Source: Deloitte analysis based on the information received from the DG EMPL Estimated cost for managing grants under ESF When multiplying the total number Full-Time Equivalent for 2015 working on grant management (242 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR ), the overall labour cost for ESF can be estimated at EUR per annum. On top of this, other costs (such as missions, meetings, IT cost, etc.) have been reported, amounting to EUR Comparing the incurred cost to the value of grants signed The ESF grant programme is implemented via shared management, meaning the European Commission DG EMPL is financing Managing Authorities to implement the grant management process. Due to missing information on the overall value of the signed agreements in Cost incurred by DG REGIO to implement the ERDF and CF programme EUR Value of commitments under the ERDF and CF programme 30 EUR Cost to create 100 euro of value EUR 0,11 ACTIVITY 2015 Programme Management 157 Direct support to programme management 36 Assessment by the Commission 49 Full-Time Equivalent related to grant management European Commission, Directorate-General for Regional and Urban Policy (2016), Annual Activity Report 2015, Annex 3, p5 61

64 Policy Department D: Budgetary Affairs (dispersed over all Managing Authorities), the study team takes into account the commitments made by DG EMPL, which indicates the total value created through the grant programme ESF. Table 11: Cost assessment of the ESF programme at EU level Source: Deloitte analysis based on the information received from DG EMPL Study case on Employment and Social Innovation The last grant programme under heading 1B is the programme Employment and Social Innovation (EaSI), directly managed by DG EMPL. The management of the grant exists out of two main activities: Design, implementation and monitoring: operational staff (including evaluation) involved in the planning and in the implementation & monitoring phases, and staff involved in financial transactions (throughout the different phases) and in legal advice; Ex post audits. Number of Full-Time Equivalent working on grant management Table 12: Number of Full-Time Equivalent managing the EaSI-programme at EU level Source: Deloitte analysis based on the information received from the DG EMPL Estimated cost for managing grants under EaSI When multiplying the total number Full-Time Equivalent for 2015 working on grant management (28 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR ), the overall labour cost for EaSI can be estimated at EUR per annum. On top of this, other costs (such as missions, meetings, IT cost, etc.) have been reported, amounting to EUR Comparing the incurred cost to the value of grants signed EaSI is implemented under direct management, so the overall value created in 2015 equals the value of the signed agreements at EU level. The study team is aware that some activities of DG EMPL are related to grants from previous years and even the previous Multiannual Financial Framework. Nonetheless, as the signed agreements of this year will be implemented during the next years, the 2015 Cost incurred by DG EMPL to implement the ESF programme EUR Value of commitments under the ESF programme 31 EUR Cost to create 100 euro of value EUR 0,15 ACTIVITY 2015 Design, implement and monitoring 26 Ex post audit 2 Full-Time Equivalent related to grant management European Commission, Directorate-General for Employment, Social Affairs and Inclusion (2016), Annual Activity Report 2015, Annex 3, p7 62

65 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants costs incurred in the future, related to the implementation of the 2015 signed agreements, are not captured neither. Therefore, the study assumes that comparing the value of the signed agreements with the incurred costs, gives the reader an indication of the cost for managing a hundred euro of grants. Table 13: Cost assessment of the EaSI programme at EU level Source: Deloitte analysis based on the information received from DG EMPL Heading 2: Sustainable growth: Natural resources Common Agricultural Policy Pillar I Case study on European Agricultural Guarantee Fund The European Agricultural Guarantee Fund (EAGF) is implemented through shared management, which means that implementation tasks are shared between the Commission and the Member States. While the European Commission defines the conditions of implementation and allocates funds to national/regional Managing Authorities and Paying Agencies, it is up to the Member States' administrations (at national, regional and local level) to take responsibility for day-to-day management. Therefore, the role of the European Commission is limited to monitoring and supervising the Paying Agencies, responsible for the management and control of the European Union funds, notably payments to beneficiaries and financial reporting to the Commission. Key activities carried out by DG AGRI are: Programme management (design, implementation and monitoring phases): The staff involved in these activities mainly relate to the geographical desks and the financial unit; Direct support to programme management: other direct Commission costs related to shared management activities, corresponding to staff responsible for legal affairs, evaluation and IT systems; allocation following a proportion estimated by the concerned units; Annual cost of audit work: this covers the assessment by the Commission of the level of assurance from the management and control systems in Member States, including analysis of Certification Bodies (Audit Authorities) reports and audit opinions, own audit work and the clearance procedures. Number of Full-Time Equivalent working on grant management Next to the European Agricultural Guarantee Fund, DG AGRI also implements the EAFRD programme (European Agricultural Fund for Rural Development). The total amount of executed payments in 2015 is used to allocate the number of Full-Time Equivalent to both programmes. As the payments for EAGF totalled up to EUR million and for EAFRD up to EUR million, 323 Full-Time Equivalent are working on the monitoring and supervising of the Paying Agencies under the EAGF programme Cost incurred by DG EMPL to implement the EaSI programme EUR Value of signed agreements under the EaSI programme EUR Cost to create 100 euro of value EUR 9,60 63

66 Policy Department D: Budgetary Affairs Table 14: Number of Full-Time Equivalent managing the EAGF-programme at EU level ACTIVITY 2015 Programme Management 186 Direct support to programme management 32 Assessment by the Commission 105 Full-Time Equivalent related to grant management 323 Source: Deloitte analysis based on the information received from the DG EMPL Estimated cost for managing grants under EAGF When multiplying the total number Full-Time Equivalent for 2015 that are working on grant management (323 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR ), the overall labour cost for EaSI can be estimated at EUR per annum. On top of this, other costs (such as outsourced audit costs) have been reported, amounting to EUR Comparing the incurred cost to the value of grants signed The EAFG grant programme is implemented via shared management, meaning the European Commission DG AGRI is financing Managing Authorities to implement the grant management process. Due to missing information on the overall value of the signed agreements in 2015 (dispersed over all Managing Authorities), the study team takes into account the commitments made by DG AGRI, which indicates the total value created through the EAGF grant programme. Table 15: Cost assessment of the EAGF programme at EU level Source: Deloitte analysis based on the information received from DG AGRI 2015 Cost incurred by DG AGRI to implement the EAGF programme EUR Value of commitments under the EAGF programme 32 EUR Cost to create 100 euro of value EUR 0,07 32 European Commission, Directorate-General for Agriculture and Rural Development (2016), Annual Activity Report 2015, Annex 3, p6 64

67 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Summary of the cost assessment at European level The European Commission employs approx Full-Time Equivalent on the grant programmes in scope of this study (except for Erasmus+). Taking into account a yearly average cost of EUR per Full-Time Equivalent and a total of EUR ,00 incurred for other costs (e.g. IT, experts, missions, meetings), the European Commission spends EUR to implement the grant programmes at EU level or to supervise the Managing Authorities involved under shared management. Comparing these costs to the created value on an annual basis (via either the value of the signed agreements or the commitments made), the grant programmes under direct management cost the European Commission and Executive Agencies on average between 0,05% and 9,6 of the value of the signed agreements and the programmes under shared management between 0,07% and 0,15% of the committed value. The study team wants to emphasise that comparing different programmes is not possible because grants differ in average size, a different number of calls for proposal have been launched, the number of Managing Authorities differ from grant programme to grant programme, the administrative tasks related to each grant programme may differ in terms of complexity, etc Grant management at national and regional level The following sections include a brief analysis on the Full-Time Equivalent employed and costs incurred by National Agencies and Managing Authorities, based upon data collected via the online survey. Due to the inability to compare the responding agencies / authorities, and the impossibility to extrapolate the data to an EU-wide figure, case studies are used to get a grasp of the workload incurred by National Agencies and Managing Authorities implementing the grant management processes. Only for the European Regional Development Fund (ERDF) and European Social Fund (ESF) under Heading 1B, the study team had reliable data to report on the Full-Time Equivalent cost. For the transposition of Full-Time Equivalent numbers to cost figures, the study team has used average Eurostat data on labour cost for the relevant Member States 33. Heading 1B: Economic, Social and Territorial Cohesion European Regional Development Fund The case study on the ERDF-programme is on the German Managing Authority for the region Baden- Württemberg. Per year, the Managing Authority launches a number of calls for proposal to invite beneficiaries to submit their fund request on a predefined topic. In 2015, 15 calls were initiated, for which 200 proposals were received in total. After the evaluation of the proposals, 55 applications were granted a total value of EUR 38 million. 33 Eurostat : Labour costs per hour in EUR, , 65

68 Policy Department D: Budgetary Affairs Number of Full-Time Equivalent working on grant management Table 16: Number of Full-Time Equivalent Case study on the ERDF-programme, Managing Authority Baden-Württemberg ACTIVITY 2015 Full-Time Equivalent related to grant management 41 Call for proposal & award 12 Grant / financed project implementation 8 Grant / project closure 21 Full-Time Equivalent on reporting to the European Commission 4 Total Full-Time Equivalent 45 Source: Deloitte analysis based on the information received from the Managing Authority Baden- Württemberg, related to the ERDF-programme As the table indicates, 45 Full-Time Equivalent are currently implementing the grant programme, of which 41 Full-Time Equivalent are effectively managing the grants process. Four Full-Time Equivalent are carrying out additional activities related to reporting to the European Commission, including the reporting on the budgetary commitments, following up the European controls and check the compliance with European grants. Estimated cost for managing grants under ERDF in Baden-Württemberg When multiplying the total number Full-Time Equivalent for 2015 that are working on grant management (45 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR calculating 8 hours per working day and 220 working days per year) 34, the overall labour cost for managing ERDF in Baden-Württemberg can be estimated at EUR per annum. On top of this, other costs (such as mission cost, IT cost, expert costs, etc.) have been reported, amounting to EUR Comparing the cost to manage grant to the value of grants signed The Managing Authority is implementing the grant programme at regional level, so the overall value created in 2015 equals the value of the signed agreements at EU level. The study team is aware that some activities are related to grants from previous years and even the previous Multiannual Financial Framework. Nonetheless, as the signed agreements of this year will be implemented during the next years, the costs incurred in the future, related to the implementation of the 2015 signed agreements, are not captured neither. Therefore, the study assumes that comparing the value of the signed agreements with the incurred costs, in any given year, gives the reader an indication of the cost for managing one euro of grants. 34 Eurostat : Labour costs per hour in EUR, , Germany, EUR 32,2 per hour 66

69 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Table 17: Cost assessment of the ERDF programme, Baden-Württemberg Source: Deloitte analysis based on the information received from the Managing Authority Baden- Württemberg, related to the ERDF-programme European Social Fund The Managing Authority of the Czech Republic (excl. the region of Prague) has initiated two calls for proposal in These calls resulted in received proposals, of which 4212 were positively evaluated, and received funding. In total, the Managing Authority signed grant agreements worth EUR Number of Full-Time Equivalent working on grant management Table 18: Number of Full-Time Equivalent Case study on the ESF-programme, Managing Authority Czech Republic (excl. the region of Prague) Source: Deloitte analysis based on the information received from the Managing Authority Czech Republic (excl. the region of Prague), related to the ESF-programme Overall, 218 Full-Time Equivalent are currently working on the implementation of the grant management process. One noticeable figure is the number of Full-Time Equivalent working on the grant / project closure, which indicates the rather limited reporting during the project and the quite extensive ex post audits installed to validate the requested funding. Estimated cost for managing grants under ESF in Czech Republic (all regions except the region of Prague) When multiplying the total number Full-Time Equivalent for 2015 that are working on grant management (218 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost 2015 Cost incurred to implement the ERDF programme EUR Value of signed agreements under the ERDF programme EUR Cost to create 100 euro of value EUR 10,40 ACTIVITY 2015 Full-Time Equivalent related to grant management 206 Call for proposal & award 7 Grant / financed project implementation 38 Grant / project closure 161 Full-Time Equivalent on reporting to the European Commission 12 Total Full-Time Equivalent

70 Policy Department D: Budgetary Affairs (EUR calculating 8 hours per working day and 220 working days per year), the overall labour cost for managing ESF in Czech Republic (all regions except the region of Prague) can be estimated at EUR per annum. On top of this, other costs (such as mission cost, IT cost, expert costs, etc.) have been reported, amounting to EUR Comparing the cost to manage grant to the value of grants signed The Managing Authority is implementing the grant programme, so the overall value created in 2015 equals the value of the signed agreements at EU level. The study team is aware that some activities are related to grants from previous years and even the previous Multiannual Financial Framework. Nonetheless, as the signed agreements of this year will be implemented during the next years, the costs incurred in the future, related to the implementation of the 2015 signed agreements, are not captured neither. Therefore, the study assumes that comparing the value of the signed agreements with the incurred costs, in any given year, gives the reader an indication of the cost for managing one euro of grants. Table 19: Cost assessment of the ESF programme, Czech Republic (excl. the region of Prague) Cost incurred to implement the ESF programme EUR Value of signed agreements under the ESF programme EUR Cost to create 100 euro of value EUR 6 Source: Deloitte analysis based on the information received from the Managing Authority Czech Republic (excl. the region of Prague), related to the ESF-programme Heading 2: Sustainable growth: Natural resources Common Agricultural Policy Pillar I European Agricultural Guarantee Fund Finally, the Slovenian Managing Authority reported on the EAGF-programme, which is implemented with and without call for proposals. Overall, proposals / grant requests were received in 2015, which resulted in signed agreements (implicating a very high success rate) for a total value of EUR Eurostat : Labour costs per hour in EUR, , Czech Republic, EUR 9,9 per hour 68

71 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Number of Full-Time Equivalent working on grant management Table 20: Number of Full-Time Equivalent Case study on the EAGF-programme, Managing Authority Slovenia ACTIVITY 2015 Full-Time Equivalent related to grant management 107 Call for proposal & award 45 Grant / financed project implementation 45 Grant / project closure 17 Full-Time Equivalent on reporting to the European Commission 6 Total Full-Time Equivalent 113 Source: Deloitte analysis based on the information received from the Managing Authority Slovenia, related to the EAGF-programme As the table indicates, 113 Full-Time Equivalent are currently implementing the grant programme, of which 107 Full-Time Equivalent are effectively managing the grants process. Six Full-Time Equivalent are carrying out additional activities related to reporting to the European Commission, including the reporting on the budgetary commitments, following up the European controls and check the compliance with European grants. Estimated cost for managing grants under EAGF in Slovenia When multiplying the total number Full-Time Equivalent for 2015 that are working on grant management (113 Full-Time Equivalent) with the estimated average Full-Time Equivalent cost (EUR calculating 8 hours per working day and 220 working days per year) 36, the overall labour cost for managing EAGF in Slovenia can be estimated at EUR per annum. On top of this, other costs (such as mission cost, IT cost, expert costs, etc.) have been reported, amounting to EUR Comparing the cost to manage grant to the value of grants signed The Managing Authority is implementing the grant programme at regional level, so the overall value created in 2015 equals the value of the signed agreements at EU level. The study team is aware that some activities are related to grants from previous years and even the previous Multiannual Financial Framework. Nonetheless, as the signed agreements of this year will be implemented during the next years, the costs incurred in the future, related to the implementation of the 2015 signed agreements, are not captured neither. Therefore, the study assumes that comparing the value of the signed agreements with the incurred costs, in any given year, gives the reader an indication of the cost for managing one euro of grants. 36 Eurostat : Labour costs per hour in EUR, , Slovenia, EUR 15,8 per hour 69

72 Policy Department D: Budgetary Affairs Table 21: Cost assessment of the EAGF programme, Slovenia Cost incurred to implement the EAGF programme EUR Value of signed agreements under the EAGF programme EUR Cost to create 100 euro of value EUR 3,20 Source: Deloitte analysis based on the information received from the Managing Authority Slovenia, related to the EAGF-programme 2015 Summary of the cost assessment at national or regional level Based on the (limited) number of case studies above, the estimated average cost of managing grants compared to the created value is between 3,2 % and 10,4% of the value of the signed agreements. It needs to be noted that no firm conclusions can be derived from this limited number of case studies and that it cannot be extrapolated to other Managing Authorities Grant management at the beneficiary level This chapter includes case studies on the grant processes from a beneficiaries point of view, captured via interviews. It should be noted that these case studies are only illustrative and not necessarily representative of other beneficiaries. The study was not able to collect data on all grant programmes. Nevertheless, the case studies here below will give the reader a good view on the cost beneficiaries incur when dealing with different grant programmes. Important to note is that the time on applying for grants is spent in any case, even when no grant was received. This implicates some applicants incur a cost without receiving any money in return. Heading 1A: Competitiveness for Growth and Jobs Horizon 2020 The beneficiary in this case study, located in Belgium, has built up an extensive experience in applying for grants under different instruments, for instance Trans-European Transport Network, FP7, and Horizon During the interview, the beneficiary pointed out two important remarks: 1/ experience with applying for grants significantly reduces the time spent on the activities to get familiar with application and reporting rules, and 2/ compared to FP7, the H2020 process was significantly simplified, especially the most burdensome activities. 70

73 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Table 22: Time spent by beneficiaries Case study on Horizon 2020, Belgium STAGE TIME SPENT INSIGHTS Applying for grants Negotiating contracts Project management 54 days 14 days 13 days The processes to find relevant partner(s) and to develop the proposal requires more than 90% of the time spent. No experience with a redress procedure, nonetheless amendments are required when a new partner was added, a new time line was introduced, or any other internal changes (quite time consuming). On top of the number of days, it takes on average 4 to 6% of the project budget to properly manage the project. Ex post audits 9 days Audits require actual data, which asks a lot of time. Entire process 90 days Source: Deloitte analysis based on the information received from a Belgian beneficiary under the H2020 programme Overall, the organisation spent 90 days (without taking into account the days spent on project management) of administrative activities to apply for and manage the grant. When using the EUROSTAT data on average labour cost in Belgium (energy sector, in which the beneficiary is active) 37, the overall labour costs for this beneficiary amounts to EUR Moreover, it costs the beneficiary EUR ,2 to apply for the grant, a cost incurred by all applicants. Overall, the company therefore incurs a cost equal to 9,6% of the received funding. Connecting Europe Facility A German beneficiary applied for two grants under the CEF instrument (energy and transport), resp. in 2014 and The latter proposal could be submitted in electronic format, which has been perceived as a real improvement and saved a lot of time. Nonetheless, the electronic procedure is still reported as being complicated due to the very formalistic and inflexible approach. Table 23: Time spent by beneficiaries Case study on Connecting Europe Facility, Germany STAGE TIME SPENT INSIGHTS Applying for grants Negotiating contracts Project management Ex post audits 120 days 32 days 40 days N/A The most time consuming task is to develop the technical elements of the proposal. A timeframe of 3 to 4 months was needed to familiarise with the negotiation rules and to negotiate the contract. There were multiple reporting activities needed during the project implementation. Entire process 192 days Source: Deloitte analysis based on the information received from a German beneficiary under the Connecting Europe Facility programme 37 Eurostat : Labour costs per hour in EUR, , economic activities: Electricity, gas, steam and air conditioning supply Belgium: EUR 74,1 71

74 Policy Department D: Budgetary Affairs Overall, the beneficiary incurred a total administrative cost of EUR ,40 38 (including 35 days for external consultancy). Compared to the received funding of EUR 8,5 million, the administrative cost is relatively low (1%). The reason for this is the large grant amount received. If the subject of the grant would have been a small study, with limited funding, the proportion of administrative costs would have been substantially higher. Moreover, it costs the beneficiary EUR to apply for the grant, a cost incurred by all applicants. Heading 1B: Economic, Social and Territorial Cohesion European Regional Development Fund A Belgian city requested funding by submitting a proposal for multiple calls, spread over multiple programmes. Their response relates to the submission for a grant in the ERDF-programme, for which they note that the administrative burden has increased over the past years. They also indicate that there exist many differences between grant programmes, even though the required activities are rather similar. Table 24: Time spent by beneficiaries Case study on European Regional Development Fund, Belgium STAGE TIME SPENT INSIGHTS Applying for grants Negotiating contracts Project management 27 days N/A 903 days The initial analysis on the call for proposals to determine whether they would submit or not was quite time consuming. 840 days are spent on carrying out the project implementation, monitoring, reporting and closure. Ex post audits 75 days It depends a lot on the type of the audit and the level of controls. Entire process days Source: Deloitte analysis based on the information received from a Belgian beneficiary under the European Regional Development Fund programme According to the beneficiary, they spend many resources on the grant implementation, especially compared to the limited time spent on the application for the grant. The total costs incurred by the beneficiary add up to EUR , which is only 2,35% of the grant value (EUR ,71).The beneficiary indicated that the investment was fair compared to the received funding. However, the beneficiary indicated that the different reporting activities and the numerous audits they received were most burdensome. Moreover, it costs the beneficiary EUR 8 445,6 to apply for the grant, a cost incurred by all applicants. European Social Fund For the ESF-programme, a Belgian non-profit organisation was interviewed that applied for four grants in three years. Over time, the beneficiary did not notice any improvements to reduce the 38 Eurostat : Labour costs per hour in EUR, , economic activities: Electricity, gas, steam and air conditioning supply Germany: EUR 46,4 39 Eurostat : Labour costs per hour in EUR, , economic activities: average Belgium: EUR 39,1 72

75 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants administrative burden. Nonetheless, the application process was perceived as efficient and did not require a large investment from the beneficiary (e.g. call for proposals clearly communicated, no necessary registration). Table 25: Time spent by beneficiaries Case study on European Social Fund, Belgium STAGE TIME SPENT INSIGHTS Applying for grants Negotiating contracts 10 days 2 days The development of the proposal was the only significant administrative task. Project management Ex post audits 18 days Especially the financial reporting is very time consuming. 6 days Entire process 36 days Source: Deloitte analysis based on the information received from a Belgian beneficiary under the European Social Fund programme The beneficiary indicated that the 36 days spent on the grant management process is relatively low, because of e.g. the fact that the Managing Authority sends a notification if a call for proposals is launched; there is no requirement to register; and they have previous experience with the grant programme so that no efforts were needed to familiarise with the programme rules. These efficiency gains implicate that the beneficiary only incurs a cost of EUR ,8 40. As the organisation receives on average EUR per grant, this cost equals 19 % of the received funding. Moreover, it costs the beneficiary EUR to apply for the grant, a cost incurred by all applicants. Summary of the cost assessment at beneficiary level Based on the (limited) number of case studies above, the beneficiaries incur, on average, an average cost between 1 % and 19 % of the received funding. It should be noted that the percentages indicated here should not be used for making comparisons between grant programmes, as these percentages are highly reliant on a number of factors such as complexity of the grant subject, value of the received funding, the experience of the grant applicant/ beneficiary, etc. Moreover, the applicants always incur a minimum cost, even without receiving any funding, estimated between EUR and EUR Eurostat : Labour costs per hour in EUR, , economic activities: average Belgium: EUR 39,1 73

76 Policy Department D: Budgetary Affairs Overall summary of the cost assessment of managing grants 1. Direct management EU level When comparing the overall costs of grant management at EU level (direct management) to the created value on an annual basis (via the value of the signed agreements), the grant programmes under direct management cost the European Commission and Executive Agencies on average between 0,05% and 9,6%. 2. Shared management EU and national / regional level authorities When comparing the overall costs of grant management at EU level under shared management to the value of grants signed on an annual basis the estimated average cost of managing grants compared to the value of grants signed is between 0,07 % and 0,15 %. The estimated average cost of managing grants compared to the value of grants signed at Managing Authority level (derived from a limited number of case studies) is between 3,2 % and 10,5 %. 3. For beneficiaries Beneficiaries incur on average a cost of between 1 % and 19 % of the received funding. The fixed cost incurred by applicants just to apply for a grant, even without receiving any funding, is between EUR and EUR It should be noted that the percentages indicated here above should not be used for making comparisons between grant programmes, as these percentages are highly reliant on a number of factors such as complexity of the grant subject, value of the received funding, the experience of the grant applicant / beneficiary, etc A QUALITATIVE ASSESSMENT OF THE GRANT MANAGEMENT On top of the cost / Full-Time Equivalent assessment of the different grant programmes in the previous chapter, the study team has also collected evidence on more qualitative aspects of grant management, via online questionnaires, interviews and meetings with the Commission and Executive Agencies. In this chapter, the main reported issues related to the grant processes are presented, alongside simplifications that have already been implemented or will be taken up in the future Issues related to grant processes Current issues related to the grants management process are presented in the sections below per level of the grant management process At EU level At European level, the Directorates-General and Executive Agencies not only implement different grant programmes, but also spend time supervising and monitoring National Agencies and Managing Authorities. According to the received information, the processes at the level of 74

77 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Directorates-General and Executive Agencies have been significantly simplified over the past years. Nonetheless, some activities do still contain administrative burden. Topical evidence of this is presented, as illustrative cases, for some grant programmes, here below: Under the Horizon 2020 programme, organisational staff still experience administrative burden because of the decentralised procedure to gather and manage all the documents of the Directorates-General, Executive Agencies and Joint-Undertakings. Moreover, despite the ongoing rollout of paperless processes amongst the research family, the actual workflows still contain paper trails, which increases time spent (e.g. printing documents, scanning of signed agreements) and costs. Additionally with DG EMPL, implementing the Employment and Social Innovation programme, the same issue regarding paper workflows exists. To implement the Connecting Europe Facility programme, it was noted that the most burdensome provision relates to the ex ante assessment of cost claims, which is extremely complex to perform. As these claims have not been incurred at the time of the assessment, the evaluator spends a lot of time to check the feasibility of these costs and whether the costs need to be claimed. On top of this, there are still a number of cross-cutting issues remaining as well: A lack of harmonisation across different grant programmes, causing a suboptimal use of potential synergies and efficiency gains; The level of digitisation and automation (which is proven to be a key lever for workload reduction) diverges across the different management modes / grant programmes / DGs and Executive Agencies; The level and depth of controls is also an important cost driver At national / regional level Further, at national / regional level, for the authorities working on EU grants under shared management there is still a sizeable amount of inefficiencies reported. Many of these are crosscutting across the different grant programmes. We have listed the most striking examples below. National Agencies and Managing Authorities allocate staff on grant implementation but also on properly reporting to the European Commission, e.g. reporting budget commitments, following up on the European controls and compliance with European rules. These latter activities are quite demanding for the National Agencies and Regional Authorities, as they need to provide extensive reports including data on controlling statistics. In addition, they are often requested to complete several surveys, of which the process is not coordinated and which lack a clear logic or a proper explanation on certain questions. Besides, the supervising Directorates- General frequently control and audit Managing Authorities, which in turn asks a certain degree of preparation and cooperation with European public servants. Moreover, if multiple Directorates- General supervise a Managing Authority, there seems to be a lack of coordination between these different checks and audits. Secondly, Managing Authorities often complain that they need to work in the framework of unclear regulation. Many regulatory documents have been updated with multiple amendments, which 75

78 Policy Department D: Budgetary Affairs increases the regulatory package. The complexity and lack of clarity (due to the numerous amendments) complicate the implementation of the grant programme. Regarding the legislation, many efforts have been spent to simplify the grant management process, but these legal changes sometimes cause the opposite effect, namely a more complex process, increasing the time spent to be compliant with the new rules. Finally, the project audits performed by Managing Authorities are still very complex and time consuming. Managing Authorities under the ESF programme, for instance, are complaining about the required resources to verify all the documents and timesheets submitted by the beneficiary, who incurs a high administrative burden to gather, archive and submit all the cost tickets. Due to this complexity, error rates are unacceptably high and the necessity arises to interrupt and suspend the payments to the Member States 41. Illustrative case study: focus on EAGF in Slovenia The Slovenian Managing Authority dealing with EAGF noted that there were clear burdensome activities vis-à-vis the European Commission or Executive Agencies. Namely, communication could be improved with faster and more precise answers from the European Commission, as well as binding rules. They noted that there was a lot of administrative work, with incomprehensible Regulations, too many rules, submission of invoices instead of applying flat-rate costs, unclear provisions or even too many changes of Regulations. They noted the widespread use of electronic tools within their own organisation, whilst stressing that these could always be extended to reduce administrative burden At beneficiary level Despite the multiple simplification exercises already implemented to make the application process for beneficiaries more efficient and less burdensome, there are still plenty of opportunities to simplify this process. A key focus point is that SMEs and newcomers encounter difficulties when gathering all the administrative information, which is often vaguely described in the rules regarding the grant programme. The investment to get familiarised with the rules alone can add up to several days or weeks, especially when applying for a large grant. On top of this familiarisation process, the SME / newcomer applicant will spend more time to collect all the required documents compared to experienced applicants or large organisations that have sufficient administrative capacity. The most time-consuming activity at beneficiary level is therefore the proposal preparation and submission stage, especially if the proposal is related to a multi-partner project. For such proposals, the coordinator spends a significant amount of time in coordinating the development of the proposal but also the preparation of the project and gathering all the signatures required to submit the proposal. Moreover, the requested administrative documentation is multiplied by the number of partners, which significantly increases the time spent on administrative activities. 41 European Commission, Simplified Cost Options in the European Social Fund 76

79 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants If the grants management process is implemented at national or regional level, the Managing Authorities often install additional validation activities at all parts of the grant lifecycle. This validation demands a significant effort on behalf of the beneficiary to provide all the required information, sometimes in different templates or forms compared to the standard checks. In addition, beneficiaries that have a weak financial capacity are requested to submit additional information so Managing Authorities are able to perform further checks on their financial status. Moreover, applicants are often required to submit a lot of supporting documents to prove their financial sustainability, compliance with EU legislation, etc. The gathering of these documents often comes with a substantial workload, while some documents are only necessary if the applicant is selected for the grant. Further, the requested information is often very detailed (e.g. name of staff), which increases the possibility that amendments need to be submitted in case other staff members will execute the project. Furthermore, for smaller projects (under EUR ) the same administrative documents are requested as for larger grants, which implicates that the benefits of smaller grants decrease significantly (see case studies on the costs incurred by beneficiaries). Related to the audit checks at the end of the project, often national rules are added on top of the EU legislation (so-called gold-plating ), which increases the administrative burden associated with the implementation of projects. Furthermore, beneficiaries often receive multiple ex post audits, often with different procedures and methods. Implementing a harmonised approach and rules will significantly reduce the efforts spent on the preparation of ex post audits. Related to the previous issue, beneficiaries are often obligated to present original documents to verify the incurred costs. As the ex post audits can occur multiple years after the closure of the project, beneficiaries are required to store these records / documents for excessive periods. Searching for all the required documents after several years is very time consuming and easily takes the beneficiary several days. Finally, some requested documents are still on paper and cannot be submitted online, despite the numerous efforts to digitise the process, e.g. implementation of online registration platform, online submission of proposals, online notification of calls for proposal, etc. For instance, some public organisations are not allowing an electronic signature, despite the fact that everything is submitted online. The beneficiary either can send the signed documents via mail, or needs to scan the documents and then upload them online. 77

80 Policy Department D: Budgetary Affairs Illustrative case study: focus on Connecting Europe Facility (CEF) in Germany A CEF grant applicant and beneficiary pointed to three remaining improvements: (1) Rigidity of forms for submission of the proposal: the forms limit the room for flexibility, to provide relevant information or specific explanations on a project, in particular because the number of characters is pre-set; (2) Highly complex and difficult eligibility and selection criteria for proposals: understanding and adhering to the requirements in this respect requires a high investment in terms of labour. Beneficiaries often need to rely on a full-time external consultant to develop the proposal on the project proposal was needed, in particular with regard to compliance with formal requirements. This is reported to be very costly. Moreover, the fact that the process for applying for CEF has changed for the period , brought additional administrative burden. In total, developing the proposal was reported to take 4-6 person months. However, the beneficiary considered the change from a paper-based to an electronic proposal submission to be an improvement. Nonetheless, the electronic procedure is still reported to be complicated due to the very formalistic and inflexible approach. Most burdensome is the Project of Common Interest obligation to produce a Cost-Benefit Analysis and to showcase Cross-Border Cost Allocation. These two very costly types of analysis are required to be eligible for grants under CEF. (3) Lack of clarity of rules: despite the possibility to ask the European Commission or contact points at national level for clarification, answers do not always provide more clarity. In particular, there seems to be a lack of transparency and clarity of the European Commission s guidelines on calculation of the Cost-Benefit Analysis and Cross-Border Cost Allocation. However, the beneficiary considers the cooperation with DG ENER and Innovation and Networks Executive Agency (INEA) as very positive. Moreover, for the regulator at national level ( Bundesnetzagentur ) beneficiaries need to provide a German translation of certain documents. It would simplify the process and reduce costs, if beneficiaries could provide these documents exclusively in English. Illustrative case study: focus on European Social Fund in Belgium (German-speaking Community) A beneficiary noted that for them, the administrative burden is considered to be high compared to the benefits, even more so considering the uncertainty about the success of a project application. For example, despite noting the clarity of the rules in place, drafting the budget, financial monitoring and reporting were considered to be particularly resource-consuming. The beneficiary also questioned the detail required for financial reporting and control by providing a counter-example of cost-effectiveness for audit purposes. The beneficiary has to provide receipts for every expense (even for the smallest expenses, e.g. of EUR 1). This certainly seems counter-productive if the controls, performed at the different levels of the EUR 1 receipt are actually more resource-intense than the expense of EUR 1 itself. Similarly, the beneficiary complained that the grant processes are exclusively paper-based and recommended the provision of an IT platform on which they could electronically edit their reports to facilitate the reporting and save time. 78

81 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Illustrative case study: focus on Horizon 2020 in Belgium The example of the Belgian private SME company provides qualitative and quantitative information on the cost of grants at all stages of the process as well. As regards the qualitative shortcomings underlined, it was mentioned that many things have improved within the current Multiannual Financial Framework, but that EU granting environment globally remains much more complex and burdensome than national granting environments (notably compared to systems implemented in Scandinavian countries and even in Belgium): Although the Research Portal is unquestionably an improvement as it provides a one-stop shop, its robustness and user-friendliness may still be improved; The digital proposal submission process itself is very simple, but the difficulties lie in finding the right call for proposal corresponding to the action or project where EU funding is justified. In this regard, it is an absolute necessity to spend substantial time for Info days and contacts with National Contact Points; The burden is to be found beyond the sole administrative rules. The EU granting environment is particularly competitive, which makes the research, finding and building of relationships with the right partners in a consortium one of the most burdensome activities, in order to attain acceptable success rates when applying. The EU-language is very specific and may prove rather hermetic for small businesses who are not familiar with EU environment. Combined with a certain complexity and high number of requirements to deal with, it becomes almost impossible for these unfamiliar SMEs not to procure the services of euro-consultants in order to level up their chances of being awarded. Overall, exclusion and selection criteria are not an issue. Award criteria however, take years of experience to get familiarised with, and several days to deal with for each call, and are not really adapted to small companies who are not "equipped": o very specific language, o understanding the work package and deliverables requested, o requests towards management structure and risk management, o understanding and identifying the fitness between the project candidate for EU funding and the Work Programme A huge improvement for SMEs comes from the removal of the obligation to provide financial guarantees. However, the rules on the payments of pre-financing (time limits in particular) result in periods of negative cash flows for beneficiaries. Although improvements were made in terms of reporting harmonisation, the reporting template is still rather burdensome to complete: o Activity report and project management reporting are not adapted; o Even though eligible costs calculation and validation may be done through flat rate, the whole report still requires a lot of redundant details (such as the evidence of the effective number of activities implemented - travels, forums, conferences, meetings etc.) whereas results are clearly achieved. This is not in line with the objective of such a simplified cost option. Audits are rare in the cases of small grants (their probability increases with red lights indicators such as excessive number / amounts of grants awarded, or with a bad relationship with funding authority s grant manager). Yet should they happen, they mirror the red tape preceding them at the stages of actions implementation, and simplifying the process upfront would de facto simplify the audit process. 79

82 Policy Department D: Budgetary Affairs In general, documents requested by EU bodies must be sent both by in pdf and by ordinary mail. This increases time and costs. The administrative burden is not proportional to the grant amount, and surely not adapted to small grants. Illustrative case study: focus on Erasmus+ Despite the progress noted by a beneficiary in terms of the online grant processes, the beneficiary also noted some areas that could still be improved for the reduction of administrative burden. The respondents indicated that overall the time required for applying for grants and ex post audits is too high relative to the size of the grant, which is small. They similarly suggested that the guidelines regarding the grant administration are not clearly communicated and should have clearer rules, for example on reporting. For them, clearer rules could be possible improvements to counter-balance the length of time they witness, for example, in applying for grants and ex post audits. Illustrative case study: focus on European Agricultural Guarantee Fund in Spain A beneficiary of EAGF funds in Spain indicates that despite the time spent on the EAGF grant process, the benefit of receiving the grant is worthwhile. However, there is room for improvement in terms of administrative burden. For example, it was noted that the beneficiary needs to send all its information in different formats, including Excel tables, the software of the administration or memos. This process would need to be simplified, as would the high levels of duplication within the documents they need to provide Implemented solutions Over the past years, several simplification exercises have been implemented to reduce the time spent by beneficiaries on e.g. submitting proposals and to facilitate the reporting and management of projects. The paragraphs below tackle some of these implemented simplifications per grant programme. Following the new Multiannual Financial Framework , the grant management process under the Horizon 2020 programme has been significantly simplified compared to the FP7 process. The study team refers the reader to the study on H2020. Here below, an overview is given on implemented simplifications: A simple cost reimbursement approach, comprising a single reimbursement rate in a project (independently of organisation categories and activity types) and a single flat rate for indirect costs; Streamlined ex ante checks, including fewer ex ante financial capacity checks (only private coordinators are checked) and a reduced number of certificates on financial statements (only one per beneficiary, at the end of the project); Simplified requirements for work-time recording for project staff; A reduction of the audit burden: audits only up to two years after the end of a project (as compared to five years before) and the revised audit strategy focusses on risks and fraud detection; Acceleration of the processes for signing grants, with a maximum time of eight months from the call deadline to the grant signature; 80

83 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Electronic-only management of proposals, grants and expert contracts, with the Participant Portal as the unique one-stop shop for all interactions with applicants, beneficiaries and experts. This includes a rationalised and harmonised electronic internal workflow as well; Streamlined and more user-friendly documentation for applicants and beneficiaries; Centralised and harmonised procedure documentation for all European Commission, Agency and Joint Undertakings staff implementing H2020 (GoFund platform). Internally with the Commission and Executive Agencies, an H2020 common approach has been rolled out within the research family. This common approach entails the digitisation of the grant process, aiming at achieving a fully paperless process. Illustrative case study: focus on Horizon 2020 in Belgium and Luxembourg Beneficiaries interviewed for the purpose of this study indicated that the administrative burden for research grants has decreased significantly over time. For instance, the Participant Portal 42 (the single entry point for electronic administration of research funding) in general and the Unique Registration Facility (the registration tool for participants) 43 in particular are reported to be good tools that reduce the administrative burden for applicants / beneficiaries of research grants. These tools are well structured, if errors are made by the applicant / beneficiary, these are pointed out, and data that has already been submitted is being re-used (the only once principle for data collection meaning that data already available (even with another government body) should not be requested again). Overall, the H2020 participant portal is in general considered as the current best practice and the reference in terms of access to information, user-friendliness, and extensiveness of functionality (information about call for proposals, registration, proposals submission, grants operational and financial management and closure). To a high extent, navigation in the H2020 portal is intuitive and the fact that the Commission structures registration activities via pre-defined questions in a unique format constitutes an appreciable guidance, and creates habits and conditions for a positive learning curve. The Erasmus+ programme has mainly implemented improvements to simplify the reimbursement of beneficiaries. Before, the beneficiary needed to submit the cost tickets to get the incurred costs refunded, implicating a high administrative cost that reduced the added value of the grants. In order to reduce these administrative activities, DG EAC has implemented a system of unit costs or lump sum, which means that beneficiaries will receive a fixed amount for a certain cost (e.g. a fixed amount for a flight ticket from Paris to London). Illustrative case study: focus on Erasmus+ A beneficiary indicated that there have been some improvements for administrative burden in the past, notably in terms of the implementation of online application forms. However, at the same time problems still exist that are related to the online platforms for example technical problems, which meant that some of their partners were not able to contribute

84 Policy Department D: Budgetary Affairs The Connecting Europe Facility programme, implemented in three different sectors (transport, energy and digital services), has been streamlined and harmonised over the past years. Simplifications included: the introduction of electronic tools for exchanges with the beneficiaries; streamlining of procedures; the replacing of grant decisions by grant agreements which has reduced the time-to-grant; interim payments every two years to improve continuity; coordinator workshops at the start of grant agreement preparation. Simplifications, implemented for both the European Regional Development Fund and Cohesion Fund programme, were analysed in the study Measuring the impact of changing regulatory requirements to administrative cost and administrative burden of managing EU Structural Funds 44. Here below, a few of the implemented modifications are listed: Programme: o Replacement of the National Strategic Reference Framework by a Partnership Contract; o Simplification of the operational programmes; Management and control systems as well as financial management arrangements: o Ex ante assessment of the management and control systems: replacement of the compliance assessment with a national accreditation with a proportionate review by the Commission; o Replacement of the final closure at the end of the period, with a process of rolling closure on annual basis; Day to day programme and project management: o egovernment solutions: the ecohesion project ensures that, within the Regulatory framework, beneficiaries of Structural Funds will be able to use a legally binding fully electronic and paperless exchange with bodies managing these Funds (at national, regional and local level); o Simpler rules for the management of projects, including simpler rules for eligibility of expenditure and revenue generating projects; o Introduction of the performance framework, performance review and reserve; o Focus on a set of common (output) indicators. 44 European Commission, Directorate-General for Regional Policy (2012), Measuring the impact of changing regulatory requirements to administrative cost and administrative burden of managing EU Structural Funds (ERDF and Cohesion Funds) 82

85 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Illustrative case study: focus on Cohesion Policy: the e-cohesion case An example of how the European Commission has initiated administrative burden reduction for beneficiaries is e-cohesion. E-Cohesion is an initiative that was launched under the Action programme for reducing administrative burdens in the EU ( ) and is now embedded in the Common Provisions Regulation 45 for ERDF, CF and ESF funding programmes. E-Cohesion foresees the electronic exchange of information between beneficiaries and Managing Authorities involved in the implementation of Cohesion Policy during the programming period The experience and perception towards e-cohesion portals fitness, efficiency and user-friendliness may vary from one beneficiary to another, but are in general very positive in terms of access to information, communication and reduction of administrative burden. The efficiency and user friendliness we perceive from portals is of course dependent on the frequency of its utilisation. As a public sector organisation active in the Research & Innovation policy area, we deal with applications for several years notably as member of consortia in the framework of several generation of instruments: H2020, ERDF, and Erasmus+. More generally, we have years of experience as a member of networks, and we have well-established communication channels with National Contact Points. Overall, we consider the H2020 participant portal as the best practice and the reference in terms of access to information, user-friendliness, and extensiveness of functionality (information about call for proposals, registration, proposals submission, grants operational and financial management and closure). To a high extent, navigation in the H2020 portal is intuitive and the fact that the Commission structures registration activities via pre-defined questions in a unique format constitute an appreciable guidance, and creates habits and conditions for a positive learning curve. As regards e-cohesion national portals, the combination of (1) communication through our networks, National Contact Points and contact points at Managing Authorities level, (2) information duties of the Commission and (3) the utilisation of web portals result in a rather efficient and reasonably limited burdensome environment as well. Illustrative case study: focus on European Regional Development Fund in Emilia Romagna (Italy) As early as 2001, Emilia Romagna established a Regional Desk Network for SMEs to offer a single desk to potential beneficiaries. This desk offers i.e. a single access point for information, webinar trainings, direct access for the beneficiaries to the information system covering all the steps of the project, standardisation and simplification of application forms for permissions, flat rate financing for indirect costs and staff costs, etc. 45 Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/

86 Policy Department D: Budgetary Affairs A revision of the Financial Regulation has been adopted regarding the European Structural Investment Funds (European Social Fund, European Regional Development Fund, Cohesion Fund, European Agricultural Fund for Rural Development and European Maritime and Fisheries Fund). One of the four main changes focused on the reduction of the administrative burden of beneficiaries. Examples of adopted administrative burden reductions are: the revision of the Simplified Cost Options, including e.g. the removal of the upper limit for lump sums, compulsory use of Simplified Cost Options for ERDF and ESF where public support does not exceed EUR for operations not implemented exclusively through public procurement, and the extension of European Territorial Cooperation flat rate to all European Structural and Investment Funds. 46 Furthermore, DG EMPL has broadened the application of Simplified Cost Options 47, which affects both the Managing Authorities and beneficiaries under the ESF programme. Previously, beneficiaries were required to submit all the tickets of incurred costs during the projects, including the most trivial cost amounts. After submission, Managing Authorities were then required to verify and check numerous documents and time sheets, resulting in a high workload and error rate. Thanks to a better use of Simplified Cost Options, the red tape will be significantly reduced but also allows grant programmes to shift to a more result based approach, in which beneficiaries will be remunerated if an output is achieved Further foreseen simplification The Commission s Directorates-General and Executive Agencies have already identified further simplification measures, to further reduce the administrative burden at both beneficiary level and implementing organisation: After projects are closed, beneficiaries are required to submit all the forms including the incurred expenses and the cost claims. For small beneficiaries, the completion of these forms comes with a high workload, certainly because of the complexity of the forms and the required expertise to complete them. The European Commission envisages enabling small beneficiaries (individuals or SMEs) to claim their costs via simplified forms that can be completed by the financial officer or by the project manager, instead of a (specialised) accountant; As discussed in the paragraphs on administrative burden, some processes are currently not digitised which requires beneficiaries to spend more time to be compliant with the legislation and to submit all the documents. Therefore, the key priority is to digitise the grant management process further, which is currently on the agenda of the European Commission (cfr. the roll-out of the paperless process at H2020 to other grant programmes). However, language barriers faced by beneficiaries might cause some issues to implement the online platform; Reduce the additional activities / forms requested by the Managing Authorities during the grant implementation and closure phase; Only request administrative documents when they are required, e.g. only after the project has been won and not when submitting the proposal. 46 European Commission - Scientific Advice Working Party meeting of 22 September 2016 Mid Term Review Legislative changes affecting the ESI Funds and the EU Solidarity Fund 47 Delegated Regulation amending Commission Delegated Regulation (EU) 2015/2195 of 9 July 2015, regarding the definition of standard scales of unit costs and lump sums for reimbursement of expenditure by the Commission to Member States (Article 14.1 ESF) 84

87 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Several improvements should facilitate the communication between the European Commission and Managing Authorities. Hereafter, foreseen improvements are enlisted: When questions are raised by the Managing Authorities, the European Commission often provides an answer to the questions that result in follow-up questions. The replies from the Commission should therefore be more clear and the response time could be decreased; Reinforcement and harmonisation of analytical criteria of some documents, such as Operating Programme implementation reports; A better coordination between Directorates-General, certainly if the Managing Authority is implementing multiple grant programmes; Improve the continuity between the different programming periods to avoid that Managing Authorities need to change their way of working for each and every programming period over and over again; Moreover, DG DIGIT s 2015 Summer Review aimed at enhancing the EU s grant processes, focussing on the opportunities of digitising the process. This review took the H2020 process as a starting point and developed two proposals for enhancing the efficiency of the grant management process: on the one hand, to roll out the common approach for direct grants across all relevant DGs and Executive Agencies, by enabling the possibility to plug & play with the building blocks of the H2020 common solution; on the other hand, to define a corporate approach for indirect grant management including investment plans to allow the (partial) use of the H2020 common solution and the development of new common modules or services. Both proposals will result in a significant efficiency gains, estimated between 10% and 32% 48 for the direct grants management process (excl. the H2020 programme). Several other initiatives are on-going to increase the efficiency of the grants management process. First, the Commission has established a High Level Group of Independent Experts on Monitoring Simplification for Beneficiaries of the European Structural and Investment Funds. Secondly, it needs to be noted that the European Commission is currently revising the Financial Regulation, which should lead to further simplifications on the grant management process. 48 European Commission DG CONNECT, DG RTD, REA Efficiency Study Measuring efficiency gains of moving to paperless processes,

88 Policy Department D: Budgetary Affairs 5. CONCLUSIONS Although many efforts have been taken at EU, national, regional level to reduce the administrative burden related to grants management, both for government bodies that need to deal with the administrative follow-up as for the applicants / beneficiaries, there is still room for improvement. Even though within the scope of this study it was not possible to estimate the full cost figure for managing grants in Europe, the study team was able to collect sufficient evidence to state that managing grant processes on many occasions and for all actors still resembles a quite labourintensive and cumbersome activity. The study has found that the following factors are driving up the cost and the complexity of the grant management processes: 1. Legislation The legislation in play although simplified in many aspects over the past years is still quite burdensome for the following reasons: a. The different legislative levels of grant management create a level of administrative burden that is by nature higher than a more simplified model. The establishing Regulations, secondary law, multi-annual, annual and sectoral Work Programmes, calls for proposal, grant agreements, framework partnerships, etc. all provide for (financial) rules in the system. Also at national / regional level, authorities need to transpose EU rules into national / regional legislation, or might even add additional rules, which is instrumental in adding to the complexity of the systems. b. The lack of harmonisation across different grant programmes often creates confusion on the side of the beneficiaries, which need to get acquainted with different types of grant management, control systems, administrative requirements, etc. when applying for different types of grants. It is evident that such a massive financial instrument requires sufficient rules and regulations in order to obtain the required level of confidence that the EU budget is spent wisely. Nevertheless, our research has proven that further simplifications of the legal frameworks related to EU grants would still be welcome, and a further harmonisation across different grant instruments and programmes could reduce the administrative burden and level of irritation on the side of the grant beneficiary. 2. Management Mode The management mode (direct vs. indirect vs. shared management) is also a lever for additional administrative burden. By nature, a management mode with different management layers creates even more layers of reporting, controls, follow-up, etc. Of course, the massive system of shared management funding has been installed for good reasons, and it is not imaginable that all the work that is today ongoing in the Member States and regionals of Europe on this could be executed at central level. 86

89 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Nevertheless, the European legislator, in its ongoing reflections on the ideal way to distribute funding across Europe, and in the current Multiannual Financial Framework mid-term review debate, should consider this. 3. Level of automation In this era of increasing digitisation and automation, the level of automation of grant schemes is a key lever for simplification. Earlier studies and best practices implementation in this area have proven that, both at the side of the public administration distributing the grants and at the side of the grant beneficiary, egovernment solutions can reduce time spent on administrative tasks, and therefore the administrative cost / burden. Further expanding these best practices to other grant programmes and further increasing the level of sophistication of these egovernment tools (such as online portals for beneficiaries, paperless processes for public administration, etc.) by embracing the digital revolution is a must to make the EU grant systems fit for the next decades. 4. Required reporting The required reporting is also a key workload driver, according to beneficiaries. Both financial and progress reporting procedures generate a considerable administrative workload given the level of detail required and the often high reporting frequency. Again, applying new technologies might be crucial to reducing the burden and irritation level of beneficiaries. In addition, the Managing Authorities in shared management mode have a vast reporting requirement vis-à-vis the Commission. 5. Level and depth of controls The level and depth of controls is also often indicated as a source of administrative burden. Several studies highlight that controls and audits are often too frequent, sometimes overlap and could be better coordinated across different authorities / grant programmes. This burdens beneficiaries of grants, but also the EU authorities and Managing Authorities at national / regional level that need to implement the controls. Apart from these five direct cost drivers, two other influencing factors come into play when evaluating the level of administrative burden of the grant beneficiaries: 6. Size of the individual grant The size of the individual grant is often a decisive factor for a beneficiary in the evaluation of the grant administration workload. On the one hand, the size of the individual grant will often be a decisive element when considering applying for a grant or not i.e. does the size of the grant justify the investment in terms of workload related to the application? In addition, the success rate will have an impact on the decision to apply for a grant, as a fixed cost i.e. time spent on the applying for grants phase is incurred and cannot be reimbursed when the application was not funded. 87

90 Policy Department D: Budgetary Affairs Moreover, the size of the individual grant will be an important consideration point when assessing the administrative burden: the time required for all the administrative tasks related to grants might be considered excessive or not depending on / compared with the size of the individual grant. 7. Type of beneficiary The type of beneficiary (e.g. an SME vs. a large Non-Governmental Organisation) is an influencing factor in the estimation of the administrative burden. Indeed, grant management rules (e.g. eligibility and selection criteria rules) are often quite difficult to digest, especially for newcomers in the domain, such as start-ups and SMEs, whereas large consortia, universities, etc. often are much better equipped and resourced to deal with all the administrative tasks. Again, it needs to be noted that on all of the elements above, action has been taken already to mitigate the issues, albeit not across all grant programmes to the fullest extent. As this study has shown, good practices that have been implemented in this area still yield substantial efficiency gains for government, which could be transposed to other grant instruments. Beneficiaries and public administrations working on grant management often recognise and appreciate efforts undertaken in the past years to reduce their administrative burden, but also indicate some remaining burdensome provisions. 88

91 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants 6. SIMPLIFICATION/IMPROVEMENT OPPORTUNITIES AND OTHER RECOMMANDATIONS The different causes of administrative burden analysed in this report reflect improvement achievements within the MFF Funding Programmes, as well as needs for further efforts. In the course of 2016, discussions and proposals on these needs were undertaken on several occasions, namely: In the framework of the public consultation on the revision of the Financial Regulation applicable to the general budget of the Union (closed on 27 May 2016); Within the proposal 49 for a Regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union and amending the current financial regulation; During the debates held on the topic of an EU budget focused on results (conference held by Vice-President Commissioner K. Georgieva on 27 September 2016). On top of this, the drive of European Commission President Juncker to improving the quality of EU policies and legislation, to ensure that EU legislation better serves the businesses / citizens affected, and the appointment of a Vice-President, Frans Timmermans, to coordinate Better Regulation in the Commission, have pushed the different DGs and Executive Agencies working on grant management to reduce administrative burden further. In addition, the recent launch of the REFIT Platform, a stakeholder group on administrative burden, as part of the 2015 Better Regulation Agenda 50, is a key driver in the simplification process. The REFIT platform allows national authorities, citizens and other stakeholders to provide inputs in the Better Regulation debate, in form of suggestions, ideas, etc. In turn, also at national level, Member States continue to work on reducing administrative burden at their level. To some extent, the ongoing debates and further proposals mirror the concerns formulated by the EU grants stakeholders in the present study. They may have therefore already been addressed in the following recommendations. Regulatory framework and rules The Commission s proposal addresses among others measures to promote the use of simplified forms of grants where appropriate, simplify the authorisation of simplified cost options, simplify the determination of the value of contributions in-kind, recognise volunteer work as eligible costs. However, in the aftermath of the present analysis, the improvement of the EU granting process gives rise to additional recommendations at several levels: Towards the rules coherence and simplicity, further efforts should be undertaken for harmonising rules across all EU Funding Programmes and Work Programmes. This is 49 Brussels, COM(2016) 605 final 2016/0282 (COD) 50 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Better regulation for better results - An EU agenda, COM(2015) 215 final 89

92 Policy Department D: Budgetary Affairs particularly important when projects involve synergies between programmes and potentially the mobilisation of funds from different programmes. Moreover, it would reduce the monitoring of rules at beneficiaries level as well at the skills required for the global grants management. A specific attention should also be given to the stability of the regulatory framework during a given multi-annual financial framework. The legal security that must be guaranteed to grants stakeholder requires a robust set of rules aiming at minimising the number of rules amendments. Finally, it is essential to ensure an efficient communication environment in order to avoid unforeseen situations for beneficiaries, which could result in irregularities and financial difficulties. Member State, regional and local authorities throughout Europe should avoid as good as possible to practice gold-plating (installing legal obligations that go beyond EU requirements) when it comes to transposing / implementing EU legislation to avoid that businesses / citizens in one Member State need to go through much heavier administrative processes as compared to grant applicants / beneficiaries elsewhere. Digitisation The automation of the activities involved in the global grant process is unanimously acknowledged as a considerable improvement over the past years. Nevertheless, further recommendations may be formulated to improve the utilisation of digital platforms. Re-using good practice tools from one grant programme in others should be investigated further. Reflections towards simplicity and user-friendliness should be held further, notably for the benefit of small-size candidates who do not have specialised resources to find their way easily in these applications. In addition, the legal validity of paperless communications should be extended, notably on the topic of electronic signatures recognition. Cases of double sending of documents (electronically and by mail) are still encountered and are frequently challenged by grants beneficiaries who do not understand such requirements from funding authorities. Not only for beneficiaries of grants, but also for authorities dealing with grant management, moving from paper processes to paperless workflows will reduce the workload, as good practices have proven e.g. in the domain of H2020 grants. Cost estimation exercises on potential efficiency gains and workload reduction already undertaken (e.g. for H2020), could be duplicated in other areas to make the business case. As a move towards fully paperless processes will bring drastic changes in the way of working at the Commission and Executive Agencies, the following elements need to be taken into account: The Commission should invest in putting in place a holistic change management approach, as the changes for the Commission and Executive Agencies staff, for moving to paperless grants processes, will be substantial. Internal and external communication efforts 90

93 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants should be augmented in order to make all staff and beneficiaries are aware of the future processes, the benefits for them, etc. To ensure that the functionalities of the new IT systems are used to the full potential, this chance management plan should include a plan for IT adoption; In addition, the Commission will need to put in place sufficient trainings and guidance material for Commission and Executive Agencies staff to make sure all stakeholders involved are equipped to follow the newly designed processes and become acquainted with the new IT tools. A central coordination of the learning activities will need to ensure a coherent implementation of the new processes across the different entities involved. Business process improvement and workload optimisation On top of these IT improvements, the Commission could further investigate, in terms of business process improvement (e.g. by performing process analytics), if there are still additional simplifications to be made regarding the different grant management processes (e.g. by removing unnecessary process steps, removing unnecessary loops in a process, avoiding unneeded checks and routing slips, etc.). Moreover, the Commission could further optimise task allocations and perform a constant workload assessment, resulting in a possible rebalancing of the resource allocation. Reporting requirements Reporting templates and requirements should be further harmonised and simplified. This recommendation must be understood at two levels. Firstly, the output-based rationale behind simplified cost options should be fully exploited at the level of reporting requirements, and reflections should be conducted towards the necessity of some information requirements (such as full details on activities carried out) when it appears that beneficiaries have clearly achieved the results for which their actions are financed. Secondly, this reflection should be pushed further within the debates on an EU budget focused on results, with the objective of finding the appropriate balance between the notion of payments based on outputs, results and impacts on the one hand, and the necessary compliance checks on the other hand. This aligns with the objective of the Commission s proposal to implement a stronger and clearer performance framework linking performance, objective-setting, indicators, results and the principle of sound financial management. Moreover, governments at all levels should aim for asking for the same information only once. This calls for an optimisation of sharing of information between different government bodies in order to avoid duplicative data requests to grant applicants / beneficiaries. Financial information systems Finally, in order for the Commission to be able to report better on the performance of its activities regarding grant management, the financial information systems of the Commission should be 91

94 Policy Department D: Budgetary Affairs reviewed and a system based on the principles of Activity-Based Management and Costing should be put in place to allow for better follow-up management and more granular reporting on the cost of the different stages and activities within the grant management process. This reporting will also facilitate to monitor the efficiency gains achieved by implementing the recommendations made in this report. 92

95 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants REFERENCES Reports and official documents Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Region (2010): Simplifying the implementation of the research framework programmes, COM(2010) 187, 29 April 2010 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Region (2013): Regulatory Fitness and Performance (REFIT): Results and Next Step, COM(2013) 685, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions (2015): Better regulation for better results - An EU agenda, COM(2015) 215 final Communication to the Commission (2016), Allocation of establishment plan posts for 2016, SEC(2016)171/F1, European Commission (2012), Financial Regulation: What's new for beneficiaries of EU funds?, MEMO, , Brussels European Commission (2013), Possible priority items for the HLG concerning the implementation of the Action Programme for Reducing Administrative Burdens in the Member States, Brussels, European Commission (2014), DG CONNECT, DG RTD, REA - Efficiency Study Measuring efficiency gains of moving to paperless processes, Brussels European Commission (2014), Guidance on Simplified Cost Options, Brussels, September 2014 European Commission (2015a): Estimating potential efficiency gains from digitising EC business processes, Brussels European Commission (2015b): EaSI performance in Executive summary of EaSI Performance Monitoring Report 2014, , Brussels European Commission (2015c): EU budget Financial report, Brussels European Commission (2016): Horizon 2020 Monitoring Report 2014, , Brussels European Commission (a), Simplified Cost Options in the European Social Fund European Commission (b), Scientific Advice Working Party meeting of 22 September 2016 Mid Term Review Legislative changes affecting the ESI Funds and the EU Solidarity Fund European Commission, Directorate-General for Agriculture and Rural Development (2016), Annual Activity Report 2015 European Commission, Directorate-General for Employment, Social Affairs and Inclusion (2016), Annual Activity Report 2015 European Commission, Directorate-General for Regional and Urban Policy (2012), Measuring the impact of changing regulatory requirements to administrative cost and administrative burden of managing EU Structural Funds (ERDF and Cohesion Funds) 93

96 Policy Department D: Budgetary Affairs European Commission, Directorate-General for Regional and Urban Policy (2016), Annual Activity Report 2015 European Parliament (2009): EU financing for NGOs in the area of home affairs, security and migration, Brussels European Parliament (2010): Financial Rules in the Research Framework Programmes - Streamlining rules for participation in EU research programmes, Brussels President Jean-Claude Junker (2014): Political Guidelines for the next European Commission A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change, , Brussels Legislation Commission Decision of 31 August 2007 setting up the High Level Group of Independent Stakeholders on Administrative Burdens (2007/623/EC), L 253/40, Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (2003/361/EC), L 124/36, Commission Regulation (EU) No 1408/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid in the agriculture sector, L 352/9, Delegated Regulation amending Commission Delegated Regulation (EU) 2015/2195 of 9 July 2015, regarding the definition of standard scales of unit costs and lump sums for reimbursement of expenditure by the Commission to Member States (Article 14.1 ESF) Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006, L 347/320, Regulation (EU) No 1316/2013 of the European Parliament and the Council of 11 December 2013 establishing the Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010 Regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union and amending Regulation (EC) No 2012/2002, Regulations (EU) No 1296/2013, (EU) 1301/2013, (EU) No 1303/2013, EU No 1304/2013, (EU) No 1305/2013, (EU) No 1306/2013, (EU) No 1307/2013, (EU) No 1308/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014,(EU) No 283/2014, (EU) No 652/2014 of the European Parliament and of the Council and Decision No 541/2014/EU of the European Parliament and of the Council, Brussels, COM(2016) 605 final 2016/0282 (COD 94

97 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Websites Definitive adoption (EU, Euratom) 2016/150 of the European Union s general budget for the financial year 2016: European Commission frequently asked question on EU Budget: European Commission Horizon 2020 SMEs: European Commission Multiannual Financial Framework (figures and documents): European Commission Regional Policy: High Level Group monitoring simplification for beneficiaries of ESI Funds: European Commission Regional Policy: Priorities for : European Commission Regional Policy: SME Competitiveness: European Commission Research and Innovation: Participation Portal: Eurostat : Labour costs per hour in EUR, , Financial Transparency System: 95

98 Policy Department D: Budgetary Affairs ANNEX Letter from Mr Arthuis, Chair of the Committe on Budgets of the European Parliament to Ms Georgieva, Vice-President for Budget and Human Resources of the European Commission 96

99 The costs of each euro from the EU budget to implement EU policies in different Member States: Mastering implementation costs of European grants Reply of Ms Georgieva, Vice-President for Budget and Human Resources of the European Commission to the letter of Mr Arthuis, Chair of the Committe on Budgets of the European Parliament. 97

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