RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 16/02/2014 1 Not legally binding Legal Framework EC TREATY FRAMEWORK PROGRAMME SPECIFIC.

RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 10/04/23 1

Not legally binding

Legal Framework

EC

TREATY

FRAMEWORK PROGRAMME

SPECIFIC PROGRAMMES

PARTICIPATION AND DISSEMINATION RULES

CONTRACTSOther relevant EC Regulations

FINANCIAL REGULATION

INTERNATIONAL AGREEMENTS

WORK PROGRAMMES

GUIDELINES ON EVALUATION AND

SELECTION PROCEDURES

&Calls for proposals


Not legally binding

Guidelines

Will provide supplementary information and guidance notes:

Financial guidelines

Negotiation guidelines

Consortium agreement guidelines

Project management guidelines


Not legally binding

General Principles Reflect requirements of the Legal Framework

Simplification

No different categories of contractors

Reduction of the number of contracts

Collective approach

Greater flexibility

the Work Programme may adjust Rules

flexibility in the composition and changes to consortium

Greater autonomy for participants


Not legally binding

The instrumentsRULES APPLIES TO ALL

Integrated Projects: new Networks of excellence new Specific targeted research or innovation projects Specific research projects for SMEs

– Co-operative research projects

– Collective research projects new

Integrated infrastructure initiatives new Actions to promote human resources and mobility (Some are new) Co-ordination actions Specific support actions Article 169 new (specific rules to this instruments)


Not legally binding

Contract Structure

Core contract (standard with specifics of project)

Annex I (technical tasks - the “project”)

Annex II General Conditions(applicable to every

instrument)

Annex III Instrument specific provisions (specific to instrument)


Not legally binding

Contract Structure

Annex IV - Form AConsent of contractors identified in the core-contract (article 1.2) to accede to the contract. To be signed by the contractor concerned and by the coordinator.

Annex V - Form BAccession of new legal entities to the contract. To be signed by the new contractor concerned and by the coordinator

Annex VI - Form CFinancial statement per activity. Specific to each Instrument and/or type of action. To be filled periodically by each contractor


Not legally binding

Core-Contract Structure Art. 1 - Scope Art. 2 - Constitution of the Consortium Art. 3 - Evolution of the consortium Art. 4 - Entry into Force of the Contract and Duration of Project Art. 5 - Community financial contribution Art. 6 - Reporting periods Art. 7 - Reports Art. 8 - Payment modalities Art. 9 - Special clauses Art. 10 - Amendments Art. 11 - Communication Art. 12 - Applicable law Art. 13 - Jurisdiction Art. 14 - Annexes forming an integral part of this contract


Not legally binding

Annex II - General conditions Structure

Article II.1 - Definitions

Part A: Implementation of the ProjectSection 1 - Implementation and deliverablesSection 2 - Termination of the contract and responsibility

Part B: Financial ProvisionsSection 1 - General financial provisionsSection 2 - Controls, recoveries and sanctions

Part C: Intellectual Property Rights


Not legally binding

Annex II - General Conditions Structure Part A: Implementation of the Project

SECTION 1 - IMPLEMENTATION AND DELIVERABLES Art.II.2 - Activities Art.II.3 - Performance obligations Art.II.4 - Force majeure Art.II.5 - Suspension and prolongation of the project Art.II.6 - Subcontracting Art.II.7 - Reports and deliverables Art.II.8 - Evaluation and approval of reports and deliverables Art.II.9 - Confidentiality Art.II.10 - Communication of data Art.II.11 - Information to Member States and Associated States Art.II.12 - Publicity Art.II.13 - Liability Art.II.14 - Assignment


Not legally binding

Part A: Implementation of the Project

SECTION 2 - TERMINATION OF THE CONTRACT AND RESPONSIBILITY

Art.II.15 - Termination of the contract and participation of contractors

Art.II.16 - Termination for breach of contract and irregularityArt.II.17 - Technical collective responsibilityArt.II.18 - Financial collective responsibility

Annex II - General Conditions Structure


Not legally binding

Part B: Financial provisions SECTION 1 - GENERAL FINANCIAL PROVISIONS

Art.II.19 - Eligible costs of the projectArt.II.20 - Direct costs Art.II.21 - Indirect costs Art.II.22 - Cost reporting modelsArt.II.23 - Receipts of the projectArt.II.24 - Community financial contributionArt.II.25 - Reimbursement ratesArt.II.26 - Audit certificatesArt.II.27 - Interest yielded by pre-financingArt.II.28 - Payment modalities



Not legally binding

Part B: Financial provisions

SECTION 2 - CONTROLS, RECOVERIES AND SANCTIONS

Art.II.29 - Controls and audits Art.II.30 - Liquidated damages Art.II.31 - Reimbursement to the commission and

recovery orders



Not legally binding

Part C: Intellectual Property Rights

Art. II.32 - Ownership of knowledgeArt. II.33 - Protection of knowledgeArt. II.34 - Use and disseminationArt. II.35 - Access rightsArt. II.36 - Incompatible or restrictive

commitments



Not legally binding

Participation New Every legal entity that contributes to the project (incl.

Project Managers)

General Rule: Participant = contractor

Every legal entity contributing to a project must have a contractual link with the Community

Exceptional cases: subject to very restrictive rules– Third parties identified in Annex I– Subcontractors


Not legally binding

ParticipationThird parties identified in Annex I

In most of the cases they do not participate, they simply make their resources available to a contractor, this is not a case of participation but only a question of eligibility of the cost of these resources

In exceptional cases: “participation” of members of entities such as EEIG,UMR, SMEs Associations:

these entities are contractors (EEIG, UMR)their members can do some of the work on the project even though they are third partiescontractor and third parties must have a previous agreement, normally the constitutionthe third parties, the agreement and the tasks must be identified in Annex I


Not legally binding

ParticipationSubcontracting

Contractors shall ensure that the work to be performed can be carried out by them.

Exception: where it is necessary to subcontract certain elements of the work, this should be clearly identified in Annex I.

Minor services may be subcontracted: which do not represent core elements of the projectwhich cannot be directly assumed by contractorswhere necessary for the performance of the project


Not legally binding

Signature and entry into force

Contractual link of all contractors with the Commission New Contract enters into force upon signature of coordinator and Commission All the contractors are identified in the core contract [Art. 1.2] Coordinator must ensure other contractors sign within delays

Distribution of advance - Several options available: minimum number of participants/all participants

Evolution of consortium possible: where one or more does not sign the Form A [article 2] in case of enlargement (new contractors) [article 3]

Project begins in the date established in the contract (this can be before the contract enters into force but usually later)


Not legally binding

Amendments Art.10 of Core Contract & Art.8 of Annex II Request in writing New at the request of the coordinator, deemed to act on behalf

of the consortium New Tacit amendments with implicit agreement of the

Commission within 6 weeks only for modification and evolution of the consortium and for technical reports

New in IP/NoE, enlargement of the consortium to new contractors and new activities may be foreseen. This enlargement follows a competitive call launched by the consortium with evaluation of proposals by external experts


Not legally binding

LIABILITY (1)New: Collective responsibility of the contractors

Mechanism by which a contractor may be held liable, technically and/or financially, fully or partially, for the action of another contractor

Why? Reinforce the protection of the financial interests of

the Community, both quantitative (only pay what is due to be paid) and qualitative (ensure that the project continues)

Consequence of FP6 principle of “autonomy of the consortium”: if the money is granted to the consortium, which decides on its allocation, then the consortium as a whole is to be held liable


Not legally binding

LIABILITY (2)• Implementation: applied as a last resort Breach of contract Depending on the nature of the breach, the

consortium will be invited to find the appropriate solution (technical responsibility)

If no solution is found, the defaulting contractor is excluded and the consortium is requested to continue the project (technical responsibility with financial consequences)

If the consortium refuses to perform: 1 - the contract is terminated 2 - the consortium is requested to reimburse money

owed by the defaulting contractor (collective financial responsibility)


Not legally binding

LIABILITY (3)• Implementation: limitations Limited in proportion to the participant’s share of

costs in the project, up to the total payment they are entitled to receive

IOs, public bodies or entities guaranteed by MS/AS solely responsible for their own debts

Exceptions for specific actions for SME’s, fellowships, duly justified cases of specific support actions

Without prejudice to civil and criminal actions to be launched against the defaulting contractor


Not legally binding

LIABILITY (4)• Additional impacts Raises awareness among contractors: 1 - constitution of the consortium 2 - projects with real and lasting common interests

(avoid artificial transnational projects) 3 - establishment of internal auto-controls and

checks and balances within the consortium Limits systematic requests for bank guarantees and

performance of ex-ante financial controls: 1 - as foreseen in the new financial regulations 2 - depending on the impact of the limitations (risk

assessment - to be detailed in “Guidelines on negotiations”)


Not legally binding

Financing : what ?

Community Financial Contribution (Arts 5 and II.24) Based on activities: Articles II.2 and II.25

Based on costs: Articles II.19, II.20 and II.21

Based on costs reporting models: Art II.22

Confirmed by an audit certificate: Art II.26


Not legally binding

Financing

Grant for integration

Grant to the budget

Flat-rate

Networks of excellence

Integrated Projects

Specific targeted research projects

Specific research projects for SMEs

Integrated initiatives relating to infrastructure

Actions to promote human resources & mobility

Coordination actions

Specific support actions


Not legally binding

Financing

Type of activity (a)

Research and technological development (including innovation related activity)

Demonstration Training Other specific support activities New Consortium Management : costs reimbursed

up to 100% within the limit of 7% of Community contribution (AC contractors “apply FCF”)


Not legally binding

Financing

Maximum reimbursement rates of

eligible costs

Research and technological

development or innovation activities

Demonstration activities Training activitiesManagement of the

consortium activitiesOther specific activities

(*)

Network of excellence100%

(up to 7% of the contribution)(AC : eligible direct costs)

100%

Integrated projectFC/FCF : 50%

AC : 100%FC/FCF : 35%

AC : 100%100%

100%(up to 7% of the contribution)

(AC : eligible direct costs)

Specific targeted research or innovation project

FC/FCF : 50%AC : 100%

FC/FCF : 35%AC : 100%



Specific research project for SMEs

FC/FCF : 50%AC : 100%

100%(for collective research only)



Integrated infrastructures initiative

FC/FCF : 50%AC : 100%

FC/FCF : 35%AC : 100%


(AC : eligible direct costs)100%

Coordination action 100%(FC indirect costs : f lat rate(**))


(AC : eligible direct costs)(FC indirect costs : f lat rate(**))

100%(FC indirect costs : f lat rate(**))

Specific support action


(AC : eligible direct costs)(FC indirect costs : f lat rate(**))

100%(FC indirect costs : f lat rate(**))

(*): Other specif ic activities means: - for Netw ork of Excellence : Joint Programme of Activities, except management of the consortium activities.- for Integrated infrastructures initiative: any "specif ic activity" covered by Annex I, including transnational access to infrastructures- for Coordination Action: Coordination activities, except management of the consortium activities- for Specif ic support action: any "specif ic activity" covered by Annex I, including transnational access to infrastructures

(**): Flat rate for FC indirect costs : 20% of all their eligible direct costs minus the eligible direct costs of sub-contracts.

Type of activity (b)


Not legally binding

FinancingCosts New principles: 1 - cost categories are replaced by conformity to contractors’

own accounting rules and legal environment 2 - simplify the eligibility criteria 3 - focus resources on the reality and the necessity of the cost,

rather than on formality (cost categories) Therefore, costs must be :

actual, economic and necessary for the project incurred during the duration of the project (exception: costs

of the final reports) recorded in the accounts (or third parties)

and must exclude indirect taxes, duties, interests, costs reimbursed in respect of another Community project, and not give rise to profit


Not legally binding

FinancingCost Reporting Models

FC: actual direct and indirect costs (not available for Coordination Actions and Specific Support Actions)

New FCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of total actual direct costs, except costs of subcontracts - all instruments)

AC: actual additional direct costs + flat rate for indirect costs (20% of total actual additional direct costs, except costs of subcontracts - all instruments)


Not legally binding

Financing SMEs, non- commercial or non-profit organisations established either under public or private law, international organisations: FC/FCF

Physical persons: AC mandatory

Private companies (other than above): FC

AC: only for those non- commercial or non-profit organisations established either under public or private law or international organisations that do not have an accounting system that allows the share of their direct and indirect costs relating to the project to be distinguished.

General Rule: a legal entity applies the same cost model in ALL contracts established under FP6 except may move from AC to FCF/FC or from FCF to FC (“one way ticket”)


Not legally binding

FinancingCosts under FC/FCF

Direct costs must be eligible costs that can be related directly to the project

Indirect costs must be : for FC eligible costs determined by the contractor,

in accordance with its usual accounting practices and the definition of indirect costs [article II.21]

for FCF a flat rate is applied to the direct costs to cover indirect costs.


Not legally binding

FinancingCosts under AC

Direct additional costs must be direct costs additional to the normal recurring costs of the contractor and not covered by any other sources of funding.Three possibilities of charging costs related to personnel:

personnel with a temporary contract to complete a doctorate ;personnel with a temporary contract for working under the

Community contract concerned ;personnel whose employment contract depends full or in part on

additional external financing.

Indirect costs consist of a flat rate applied to the direct costs.


Not legally binding

FinancingReceipts

Three kinds of receipts must be taken into consideration in order to avoid any possibility of profit:

Financial transfers or their equivalent to the contractor from third parties ;

Contributions in kind from third parties;

Income generated by the project.

In the first two cases (financial transfers or contributions in kind), these endowments are considered as receipts of the project if the third party has provided them specifically to be used in the project.

If, on the other hand, these endowments are at the discretion of the contractor they are not to be considered as receipts.


Not legally binding

FinancingReceipts

In the first two cases, where contributions from third parties are used for the project by the contractor, the latter is required to inform the third party of this use and in accordance with the national legislation or practice in force.

In the case of income generated by the project itself:

General rule: any income generated by the project itself, including the sale of assets bought for the project, are considered as income to the project (receipts)

Derogation: income generated by the use of the knowledge resulting from the project is not considered as a receipt


Not legally binding

Financing

Reports and deliverables All reports and deliverables shall be submitted

within 45 days of the end of the period in question. The project is divided into reporting periods of 12

months for IP and NOE For other instruments, reporting periods are

established on an ad hoc basis in the contract P1: from month 1 to month X P2: from month X+1 to month Y P3: from month Y+1 to month Z final: from month N+1 to the last month of the project


Not legally binding

Financing

Reports and deliverables The consortium will submit the following reports to the

Commission:

For each reporting period: a periodic activity report a periodic management report a report on the distribution between contractors supplementary reports required by Annex to this contract an audit certificate when required


Not legally binding

FinancingReports and Deliverables

In addition to the periodic reports of the last period, for the last period:

a final activity report a final management report supplementary reports required by Annex to this

contract a report on the distribution between contractors made

after the end of the project of the Community financial contribution - shall be 60 days after receipt of the final tranche


Not legally binding

FinancingAudit certificates

Article II.26 each contractor shall provide an audit certificate

prepared and certified by an external auditor (for

public bodies - competent public officer) for each period for which an audit certificate is

required (article 7 - option 2)every 12 months for IP/NoE (article 7 - option 1)where requesting a Community financial contribution

exceeding 750.000€ for a specific reporting period, even though an audit certificate is not required for this specific period


Not legally binding

Financing : how ?

Payment Modalities

Periodic pre-financing (based on the applicable periodicity)

The Community financial contribution is paid to the coordinator on behalf of the contractors: the consortium decides on the allocation of each tranche of its between the contractors (consortium agreement)


Not legally binding

Financing

Payment modalities The Community financial contribution shall be paid

in accordance with the provisions of Article 8 and II.28. Differences between:

1] one single reporting period 2] several reporting periods

- with an audit certificate for each period

- without an audit certificate for each period 3] one single reporting period - lump sum


Not legally binding

Payments and reporting schedule for an IP

(example of a 4 year contract)

Activity report

Reported costs

Activity report Detailed work plan

Reported costs Adjusted advance

Activity report Detailed work plan

Reported costs Adjusted advance

Activity report

Reported costs

Detailed work plan

Adjusted advance

Detailed work plan

Initial advance

0 6 12 18 24 30 36 42 48

Months


Not legally binding

Payments and reporting schedule for a STREP, CA or SSA

(example of a 3 year contract)Final activity report

Reported costs + audit certificate (mandatory)

Final payment

Periodic activity report (mid-term review : optional)

Reported costs+ (audit certificate if required)

Intermediate pre-financing or

paymentNB: impact on the total pre-financing

Detailed work plan

Initial advance

0 6 12 14 18 20 24 26 30 36 38

Months


Not legally binding

Controls (1)

reinforce scientific monitoringand ex-post financial controls

Simplified and streamlined ex-ante controls due to the collective responsibility

Simplified and streamlined day-to-day financial management due to the audit certificates and the new approach on eligible costs (no more formal conformity with cost categories)

Reorient resources in qualitative monitoring and control: 1 - assessment of the scientific outputs 2 - appraisal of the necessity of the costs with regards

to these outputs


Not legally binding

Controls (2)How?

New: continuous monitoring by Commission with external experts (mandatory for IP and NoE), based on simplified procedures (no public procurement)

New:periodical reviews of results achieved and expenditure made - go/no-go procedure (12 months basis for IP & NoE - ad hoc for other instruments)

Technical (incl. ethical), technological, and financial audits


Not legally binding

SanctionsAutonomy implies accountability New: in case of irregularity in a contract... 1 - exclusion from the contract 2 - exclusion from OTHER FP6 contracts, and from

other Community policies 3 - ineligible to participate in FP6 activities, and

from other Community policies

New: liquidated damages in case of financial overstatement

Without prejudice to civil and criminal sanctions


Not legally binding

Intellectual Property Rights (IPR)

Developed on the basis of

Feedback from FP5

Features of the “new instruments” contractors may leave/join during the project “larger” projects


Not legally binding

Consistency with FP5 (similar concepts) Simplification

New Same IPR rules for all instruments (fewer exceptions)

New Same IPR rules for all contractors Increased certainty, in particular regarding

access rights (restricted to what is necessary) Increased emphasis on the management of

knowledge and IP (especially new instruments)

Principles


Not legally binding

General Concepts Definitions: no major change compared to FP5

“knowledge”, “pre-existing know-how”, “use”, “dissemination”, ...

Ownership: no major changes compared to FP5

resides with the contractor (incl. JRC) generating knowledge

exception for SME actions : cooperative research - SMEs own results not the “RTD Performers”

collective research - SME associations own results

transfer of ownership: prior notice to other participants + Commission (possible objection within 30 days)

public procurement (Commission owns results)


Not legally binding

General Concepts - Protection

Where there is commercial application and subject to legitimate interests, it is a requirement to protect

Where there is no protection, Commission may protect

Publication allowed if not detrimental to protection prior notice to Commission + other contractors

(possible objection within 30 days) Use / dissemination

Obligation to use and disseminate Commission may disseminate itself if needed


Not legally binding

Access RightsGeneral principles

New Granted on written request, access rights for use of another’s results only where necessary (not by right)

No sub-licensing (unless explicitly agreed + possible optional clause for software)

Obligatory Access Rights between contractors limited to what they really need (either for carrying out the project or for using their own knowledge) but broader Access Rights may be freely negotiated

Access Rights granted to third parties : Commission may object


Not legally binding

Access Rights

New features Feedback from FP5: need for pre-existing know-

how (Pre-Existing Know How ) to be better safeguarded

New Possibility for a contractor to exclude specific Pre-Existing Know How from the obligation to grant Access Rights to the others with the agreement of all participants before the contractor concerned signs the contract

(or before entry of a new contractor)


Not legally binding

FP6 System of Access RightsAccess rights to

pre-existing know-howAccess rights to

knowledge

If a contractor needs them for carrying out its own work under the project

For carrying out the project

Royalty-free unless otherwise agreed

before signing the contract

Royalty-free

If a contractor needs them for using its own knowledgeFor use

(exploitation + further research)

Non-discriminatory conditions to be agreed

Royalty-free unless otherwise agreed

before signing the contract

Possibility for participants to agree on exclusion of specific pre-existing know-how before signature of the contract (or

before entry of a new participant)


Not legally binding

Consortium Agreement WHY ? (1)

1 - Mandatory unless excluded by the call for proposals

2 - Management of the consortium:• distribution of funds paid to the consortium (via the coordinator)

• no automatic pre-allocation of the funds among contractors: to be decided by the consortium

• evolution of the work programme

• organisation of work to be carried out (sub-projects)

• reports presented and submitted by the consortium (via the coordinator)

• evolution of the consortium’s composition (modification)


Not legally binding

Consortium AgreementWHY ? (2)

3 - IPR issues: should be agreed before signature of the contract (mandatory for specific Pre-Existing Know How exclusion)

4 - Global Risk Management: collective responsibility technical implementation of the action = collective responsibility of

the contractors

consortium to deal with breach of contract / non-performance and imposition of financial collective responsibility and any financial security necessary for same


Not legally binding

Consortium Agreement Issues Decision-making process

governance may range from “1 participant, 1 vote” to “elective dictatorship”, via the shareholder approach

IPR

- ensure that agreements necessary for the implementation of the project have been reached - exclusion of background/sideground

- initiate common strategy on dissemination/use/protection + search for industrial partners

Global Risk Management

- establish internal auto-control and a checks and balances mechanism (periodic distribution of the funds, progress reporting, etc).

- specific issues regarding competitive calls, costs less than EC funding etc for specific instruments

RTD-A.3 Legal Unit - Participation rules and contracts 2002-2006 16/02/2014 1 Not legally binding Legal Framework EC TREATY FRAMEWORK PROGRAMME SPECIFIC.

Documents

project art

deliverables art

irregularity art

activities art

subcontracting art

confidentiality art

publicity art

liability art