FICHE 21 MODEL OF DELEGATED ACTS SETTING OUT STANDARD SCALES OF UNIT COSTS VERSION 2-21 OCTOBER Version

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1 Version FICHE 21 MODEL OF DELEGATED ACTS SETTING OUT STANDARD SCALES OF UNIT COSTS AND LUMP SUMS DEFINED BY THE COMMISSION VERSION 2-21 OCTOBER 2013 Regulation Article European Social Fund Regulation (ESF) Article 14.1 Simplified cost options Common Provisions Regulation (CPR) Art Payment Applications This document is provisional, without prejudice to the on-going negotiations in the Trilogues between the European Parliament and the Council (in line with the principle that "nothing is agreed until everything is agreed"). This document is a draft that shall be adjusted following the expert meeting. It does not prejudge the final nature of the basic act, nor the content of any delegated or implementing act that may be prepared by the Commission.

2 1. EMPOWERMENTS This fiche covers one empowerment provided for the Commission to adopt delegated acts based on the procedure referred to in Article 16 of Regulation (EU) No [ ESF] of the European Parliament and of the Council. Article 14(1) of the ESF Regulation sets out that: "1. In addition to the methods referred to in Article 57 of Regulation (EU) No [ ], the Commission may reimburse expenditure paid by Member States on the basis of standard scales of unit costs and lump sums defined by the Commission. The amounts calculated on this basis shall be regarded as public support paid to beneficiaries and as eligible expenditure for the purpose of applying Regulation (EU) No (..) /2012 (CPR). For this purpose the Commission shall be empowered to adopt delegated acts in accordance with Article 16 concerning the type of covered, the definitions of the standard scales of unit costs and lump sums and their maximum amounts, which may be adjusted according to the applicable commonly agreed methods." 2. MAIN OBJECTIVES AND SCOPE The main objective of this note is to provide the model of delegated acts that the Commission will use to define some standard scales of unit costs and lumps sums (see elements in annex 1). In addition, the note will cover: some procedural issues necessary to organise the process between the Commission and the Member States (see point 4 of this note); a model to be used to submit the data to the Commission in order to assess the standard scales of unit costs and lump sums (see annex 2). 3. MAIN ELEMENTS OF THE DELEGATED ACTS The delegated acts should include: The type of covered; The definitions of the standard scales of unit costs and lump sums; The maximum amounts of the standard scales of unit costs and lump sums. These amounts should be expressed in national currencies; Some adjustment methods (optional) 4. BACKGROUND INFORMATION The purpose of Article 14.1 ESF is the following: 2/11

3 to open the possibility for the Commission to re-use existing statistical data on ESF (type) at national or at EU level in order to define some standard scales of unit costs and lump sums. to introduce the possibility for the Commission to reimburse funds to Member States on the basis of standard scales of unit cost and lump sums, but independently of the financial arrangements between the Member State and the beneficiary. The delegated act will allow the managing authority(ies) of a Member State to transform outputs and results of into amounts included in the statement of expenditure. However the relationship with the expenditure on the ground is severed - the amount declared to the Commission by the Member State is based on the agreed cost of each unit delivered, or a result achieved and does not necessarily need to correspond to expenditure incurred by the beneficiary or to payments made to the beneficiary by national authorities. The Regulation does not detail any process or deadlines for the Commission to define these standard scales of unit costs and lump sums, nor the source of the data to be used. The Commission made some tests on Eurostat data to define some standard scale of unit costs, however the results were not conclusive: the indicators used were too general and lead to extreme variations of unit costs between Member States. Therefore the Commission proposes to Member States to submit their own data, together with an optional assessment of the audit authority. Member States should keep in mind the following dates for the submission of data for a delegated act on Art ESF by the European Commission: Deadline for submission of data from MS Adoption of the Delegated Act by the Commission 1 st deadline: 1 April October nd deadline: 1 October April rd deadline: 1 April October th deadline: 1 April October th deadline: 1 April October 2017 In 2014 two deadlines for submission of data are foreseen. Where the Commission, within 45 days following the submission of the data, considers that they do not meet the requirements, it will send its observations to the Member State. The Commission will adopt the delegated act within 180 calendar days after the respective deadline. All proposals by the Member States submitted at a given deadline and which, according to the Commission, meet the requirements, will be integrated in a single delegated act.. 3/11

4 If these first Delegated Acts are successful (number of demands submitted by Member States, good quality of information submitted, low error rate when this system is used), the Commission will open the possibility to adopt more delegated acts, until The length of the decision-making procedure for each stage has been established in light of time needed for internal and external consultations. It also includes the time taken by Member States to reply to Commission requests for information. If a Member State needs more time to provide information to the Commission, the data will be included in the next delegated act in order not to delay the whole process. Deadlines are set in calendar days. The calculation of the deadlines takes into account that exchanges between the Member States and the Commission are carried out electronically. In practice, it means that the start of the calculation is considered to be the date of the first formal submission by the MS of the document via SFC ("SFC2014 first sent date"). The delegated act should be in force until the end of the programming period. Before the entry into force of the Delegated Act, Member State can use the unit cost under its own responsibility but under the legal framework of Article 57. As long as the DA is not entered into force, it is not possible to make full use of Article 14.1 possibility. The data submitted and the delegated act should cover a set of unit costs and lump sums applicable to the OPs or parts of the OPs. It is recommended to include, where necessary, some adjustment factors to take into account for instance evolution in time of the costs, differences between the target groups, differences in wages between different parts of the country, etc. The limit of lump sum specified in Article 57 CPR does not apply to Art 14.1 given that it is an additional possibility. The objective is not to approve all the unit costs and lump sums used in a Member State. The unit costs and lump sums submitted to the Commission should: be usable for representing significant amounts of the programmes (the amount expected to be reimbursed for where the Unit cost / lump will be applied is more than 1 million euros at the level of the Member State); cover all or most of the costs related to an operation (the Commission does not intend to approve daily allowances for business trips for instance). Several unit costs and lump sums could be combined to support a same type of as long as the same expenditure is not reimbursed twice. be based on a fair, equitable and verifiable calculation method. Financial management, control and audit As for the JAP, the specificity of Article 14.1 provision is that financial management and control of reimbursed by the Commission according to 14.1 is exclusively based on the outputs and results attached to the standards scales of unit costs and lump sums. It should result in the simplification of day-to-day management through the exclusive focus of 4/11

5 financial audit, management and control on the performance of the operation. The reimbursement will be based on standard scales of unit costs and lump sums, defined in the delegated act. It is also noteworthy that Article 14.1 provides legal certainty on the unit costs and lump sums used as these will be covered by the Delegated Act. However, compared to simplified cost options, it is possible with the proposed arrangement to support that are exclusively procured. This allows the Managing Authorities to use standard scales of unit costs and lump sum payments on a larger scale than thus far possible. The systems a MS puts into place to collect and store output and result data have to be robust and reliable. Therefore clear definitions and monitoring arrangements are necessary in order to use this provision. Since management and control is focused exclusively on outputs and results data and given that the audit trail will be based on this system, any weakness, such as lacking data or divergent interpretations of an indicator could lead to financial corrections. A reliable monitoring system of the beneficiary is also absolutely essential since the management and control moves away from control of what has been spent to what has been achieved. To avoid all potential misunderstandings, all stakeholders have to work closely together to anticipate this quite radical shift in focus. Thus, for instance, it is crucial to come to a clear, unequivocal and undisputable common understanding of all aspects related to the unit costs and lump sums used by the Commission to reimburse the operation. Developing such a mutual understanding of indicators could be facilitated by developing the definitions for each indicator as early as possible in the process, as proposed in the annex 2. Audit activities can also pertain to public procurement issues in the case a risk assessment establishes a specific risk of irregularity, but only to verify whether the principles of public procurement have been respected. One of the consequences is that the beneficiary and the implemented projects may apply their own accounting practices, even if this would result in different amounts than those calculated with the lump sums and unit costs used. 5. MAIN CHANGES COMPARED TO THE PERIOD Article 14.1 is a new possibility for the programming period. 5/11

6 Annex 1: Main elements of Delegated Acts setting out standard scales of unit costs and lump sums under Article 14.1 of Regulation (EC) No [ ] and corresponding indicators covered by a standard scale of unit costs or lump sums included in the delegated act MS and OPs Types of Corresponding indicator(s) name Unit of measurement for the indicator Corresponding standard scales of unit costs or lump sums (amount for one unit or lump sum, in national currency) n 1 Indicator 1.1 Unit cost 1.1 n 2 Indicator 2.1 Indicator 2.2 Lump sum 2.1 Unit cost 2.1 n N Indicator N.1 Unit Cost /Lump sum N.1 Annex to the Delegated Act: Details by types of (repeated for every type of ) n Description of the type of 1.2 OPs / priority axes concerned <list of OPs concerned> < list of corresponding priority axis or axes > 1.3 Indicator name Indicator definition 1 Several complementary indicators (for instance one output indicator and one result indicator) are possible for one type of. In such cases fields 1.3 to 1.7 should be repeated for every indicator. 6/11

7 1.5 Unit of measurement for indicator 1.6 Unit cost or Lump sum 1.7 Amount for one unit or lump sum (in national currency) 1.8 Adjustment(s) method Adjustment could concern adjustment in time, or adjustment to take care of specificities (specific target group, localisation of the operation, etc) 1.9 Arrangements to ensure the quality, collection and storage of data on the achievements. Please detail the body(ies) responsible for these three arrangements, how they will ensure the quality of data collected (guidance, trainings, etc.), the frequency of collection of data, where the data will be stored 1.10 Verification of data (who will verify, nature of the supporting documents, frequency of verification, method of verification): - verification of units attained - verification of the quality level attained 7/11

8 Annex 2: Model for submission of Member State data to the Commission A. Contact details: Member State Authority responsible for the submission of data and for contacts with the Commission A.1. Name A.2. Address A.3. Name of contact person A.4. Position of contact person A.5. Telephone A.6. The authority should represent the Member State, not a single OP. B. Main elements to be included in the delegated act of the Commission B1. Member State: B2. Summary of the main elements included in the delegated act Types of Corresponding indicator(s) name Unit of measurement for the indicator Corresponding standard scales of unit costs or lump sums (in national currency) n 1 Indicator 1.1 Unit cost 1.1 n 2 Indicator 2.1 Indicator 2.2 Lump sum 2.1 Unit cost 2.1 n N Indicator N.1 Unit Cost /Lump sum N.1 8/11

9 C. Details by types of (to be repeated for every type of ) n 1: 1.1. Description of the type of Max. ½ page, 1750 character 1.2 OPs / priority axes concerned <list of OPs concerned> < list of corresponding priority axis or axes > 1.3 Indicator name Indicator definition Max. ½ page, 1750 character 1.5 Unit of measurement for indicator 1.6 Unit cost or Lump sum 1.7 Amount (in national currency) Max. ½ page, 1750 character 1.8 Adjustment(s) method 1.9 Arrangements to ensure the quality, collection and storage of data on the achievements. Please detail the body(ies) responsible for these three arrangements, how they will ensure the quality of data collected (guidance, trainings, etc.), the frequency of collection of data, where the data will be stored Adjustment could concern adjustment in time, or adjustment to take care of specificities (specific target group, localisation of the operation, etc) Max. 1 page, 3500 char 1.10 Verification of data (who will verify, nature of the supporting documents, frequency of verification, method of verification): - verification of units attained - verification of the quality level Max. 2 pages, 7000 char 2 Several complementary indicators (for instance one output indicator and one result indicator) are possible for one type of. In such cases fields 1.3 to 1.11 should be repeated for every indicator. 9/11

10 attained 1.11 Possible perverse incentives or problems due to this indicator, how they could be mitigated, level of risk 1.12 Amounts expected to be reimbursed for where the Unit cost / lump will be applied (in Euro)) Max. 1 page, 3500 char [> 1 MEUR] Annex to Member State application: Calculation of the standard scale of unit costs and lump sums Anx 1. Source of data used to calculate the lump sum / unit cost (who produced (generated), collected and recorded the data, where they are stored, cut-off dates, validation ) Max. 1 page, 3500 characters Anx 2. Please specify why the proposed method and calculation is relevant for the type of : Max. 1 page, 3500 characters Anx 3. Please specify how the calculations have been carried out, including in particular the assumptions made in terms of quality, or quantities. Where relevant, statistical evidence, benchmarks should be used and attached to this annex under a format directly reusable by the Commission. Max. 2 pages, 7000 characters Anx 4. Please also explain, where relevant: - how revenues have been / will be taken into account Max. 1/2 page, 1750 characters - how it was ensured that only eligible expenditure were included in the standards scale of unit cost or the lump sum Max. 1/2 page, 1750 characters - the level of cross financing (with reference to Article 89 (2) of the CPR). Max. 1/2 page, 1750 characters 10/11

11 Anx 5. Optional assessment of the Audit Authority(ies) as regards the review of the calculation method (fair, equitable and verifiable) and the arrangements to ensure the verification, quality, collection and storage of data: Max. 2 pages/aa, 3500 characters 11/11