FP6 Contract and Financial Reporting The Basics for EC Consortia Linda Polik Research Services linda.polik@admin.ox.ac.uk
Overview of Presentation 1) Contractual Issues 2) Financial Issues 3) Reporting & Deliverables 4) Consortium Agreement
Contractual Issues - Project Duration Start date of project - fixed start date of 1 May 2006 for a duration of 36 months (costs can be incurred only during the lifetime of the project) Extension of project duration without increase in budget is unproblematic but requires a contract amendment Contract terminates upon last payment by Commission or earlier according to provisions of contract
The Model Contract CORE CONTRACT ANNEX I ANNEX II ANNEX III Scope Consortium Start Date Duration Payment Modalities Reporting Payment Technical annex Objectives Milestones Tasks Role of participants Deliverables General Conditions Definitions Implementation and deliverables Termination and responsibility In-/Eligibility of Costs Specific Provisions Depending on the project type Standard terms and conditions for all projects Special clauses Communication Law Signatures Unique to each project Unique to each project Audits Cost statements Intellectual property rights Standard terms and conditions for all projects Special Clauses Depending on the project type
Responsibilities of the Coordinator Sole contact between all contractors and Commission Administration & financial aspects scientific coordination editing of publications & reports general supervision receive and disburse funds to partners inform Commission of budget transfers report use of financial resources Submission of reports and cost statements Keep overall, management-level project accounts
Responsibilities of Contractors Carry out and monitor research Name the person in control, and advise of changes, events of force majeure, non-delivery, any problems Provision of required information (e.g. cost statements, justification of costs, audit certificates, scientific progress reports) Participation in relevant meetings Avoidance and advice of incompatible commitments Adhere to fundamental ethical principles, local health & safety regulations, have their own insurance cover, comply with national laws
Responsibilities of Contractors Signatory to the contract Joint and several liability to Commission for carrying out the project Full rights to own results they generate and to use all project results for internal research purposes Obligation to protect and use results (including publication and dissemination) Full rights of access for commercial use on favourable conditions (terms & conditions detailed in Consortium Agreement and Database Licence)
Financial Issues Cost Models Additional cost (AC) - for participants unable to identify indirect costs at project level = Reimbursement is 100% of additional costs with a flat-rate overhead of 20% of all direct costs Full cost (FC) for participants who can identify indirect costs at project level = EC contribution is 50% of total project costs (this includes the organisation s full overhead rate) Full direct costs with fixed overhead rate (FCF) EC pays 50% of all direct costs Overheads determined as flat rate of 20% of all direct costs
Costs Definitions Direct costs Costs that can be directly associated with the work being done Additional direct costs Those that are in addition to normal recurring costs and not covered by any other funding Indirect costs (overheads) Those costs that cannot be directly attributed to the work, but are related to it In FC: actual indirect cost (capable of verification) AC and FCF: 20% contribution to indirect costs Eligible costs Costs which are actual, economic and necessary
Eligible costs No pre-defined cost categories no pre-defined eligible costs Incurred during the project s lifetime Determined according to each organisation s usual accounting principles Recorded in each organisations accounts Not subject to taxes, VAT, interest etc. you have to strip all identifiable taxes from account
Problematic Direct Costs Common office equipment: computers, laptops and software Cost of laboratory space and related expenses Postage, telephone charges, photocopying General administration and management Miscellaneous recurring consumables Airport tax, VAT
Non-Eligible Costs Any identifiable indirect taxes, including VAT or duties Interest owed Provisions for possible future losses or charges Exchange rate losses Costs declared, incurred or reimbursed in respect of another Community project Cost of return on capital Debt and debt service charges Excessive or reckless expenditure Any cost which does not meet the definition of eligible costs Current costs, notional costs, opportunity costs
Charging Salary Costs to the Project Not an issue for FC partners but for AC Issue is NOT permanence but source Where does salary come from (i.e. government)? What proportion of salary is already being paid? Does contract demand external funding? What happens if funding runs out?
Charging Costs to the Project Any cost specific to the project Staff costs can be charged for AC participants if: personnel with a temporary contract for working under the Community contract concerned personnel with a temporary contract with a view to completing a doctorate personnel whose employment contract depends wholly or in part on additional external financing. Only costs not covered by normal recurring financing (government core funding) are eligible. personnel have option to work additional hours (overtime)
Cost Reporting Not reported as specific items such as consumables, equipment, personnel, travel etc. Reported according to activity: research, demonstration, management, training Will have to be in position to report costs by activity Justification of costs in management report in relation to science / work carried out
FP6 Financial Guidelines Final updateable version of March 2005 Payment modalities according to types of grant Costs and cost models Payments Controls Recoveries and sanctions Examples, cost statement forms Find all necessary documents at: http://www.cordis.lu/fp6/find-doc.htm (includes Financial Statements forms in Excel format, Reporting Guidelines, Financial Guidelines, templates)
Payment and Reporting STREP (3 yrs) Final reporting period Second reporting period Final report Audit Periodic activity report Reported costs Reported costs Third advance payment Mid-term assessment Mid-term report First reporting period Periodic activity report Audit Reported costs Second advance payment Start of the project Initial advance payment Detailed work plan 0 6 12 18 24 30 36
Periodic Reports All due within 45 days of end of reporting period Periodic Activity Reports (usually annual) and final report as defined in Art. 6 and 7 of EC contract Interim Activity Reports may be required if mentioned in the Technical Annex Periodic Management Report including financial statements (form C) from all partners and consolidated financial summary for consortium in Euro Audit Certificates as often as required by Art. 7 of the EC contract (annually for IPs and NOEs) Periodic Funding Distribution Reports Update of Project Fact Sheet
Activity Report Overview of activities carried out by the consortium during the period Description of progress towards project objectives Description of progress towards milestones/deliverables Problems encountered and corrective action taken Updated plan for using and disseminating knowledge (Tacit approval if no response after 90 days)
Management Report Justification of resources deployed by each contractor Form C linked to activities necessity justified AC global estimate of all resources used (incl. person months of permanent staff) financial statement per activity one to be provided by each contractor Audit certificate one to be provided by each contractor Summary periodic financial report consolidating claimed costs based on information in Form C
Final Report All due within 45 days after end of project Publishable Final Activity Report covering the main aspects of work, objectives, results, conclusions Final Management Report for the full duration of the project consolidating the claimed costs of all contractors Audit Certificates from all contractors Final Funding Distribution Report consolidating the funding distributed to each contractor over the full duration of the project Final Report on Gender Action Plan (IPs and NOEs only)
Reporting Guidance Notes You can download the Reporting Guidance Notes from the web at: http://www.cordis.lu/fp6/find-doc.htm#reporting Project Reporting Guidance Notes contain Templates Form C per type of project Funding distribution table Questionnaires on horizontal issues
Deliverables Reports (contractual, policy statements, guidelines, handbooks, draft standards, procedures, strategies) Prototypes (technical, commercial) Data (Statistics, databases, trends) Software (Algorithm, code, database, system) IPR (Patent, trade mark, copyright) Educational material (lectures, courses, modules, CDs) Meetings (workshops, seminars, conferences, summer schools) Media (Web site, CD ROM, Video) Publications (journal, newsletter, book, conference paper)
Time Sheets (or equivalent) Can only claim for hours worked Also useful for equipment NOT only for time spent on the project Certified by senior staff Kept by ALL staff working on the project For those staff NOT charged, indicates shared cost element
Model Cost Statement (Form C) Commission models according to instrument Basic project identification information 1. Declaration of resources (made available by 3 rd parties) 2. Eligible costs by activity (Research, Demonstration, Training, Management, Other) 3. Declaration of receipts by activity (income from other sources) 4. Declaration of interest on pre-financing 5. Requested EC Contribution (total for period) 6. Audit certificates information 7. Conversion rates used (per partner) 8. Contractor s certification
The Audit Certificate To give the Commission reasonable assurance that costs claimed conform with the legal and financial provisions Determined according to cost model (AC / FC) Costs claimed fulfil the eligible cost definition Receipts Interest from pre-financing Exchange rate Project management tool Cost reimbursed 100% - but no VAT One certificate per contractor Layout according to Commission template
Commission Audit As well as spot checks, the Commission can audit: For contractors and sub-contractors Scientific aspects Technological aspects Ethical aspects Financial aspects Any other aspect financial accounting or management principles Keep all documentation up to 5 years after the end of project!
Consortium Agreement Specifying terms in model contract All members of consortium (but not the Commission) Subject to EC contract and Rules of Participation Defines management structure, responsibilities of Coordinator and partners, and decision-making procedures in the various bodies of the consortium Details Payment modalities Details of IPR ownership, use and access Identification of pre-existing know-how Recuperation of advance payments
Consortium Agreement Liabilities and compensation Confidentiality Rules for publications Proposed action where defaulting contractor Confidentiality agreement (non-disclosure) Defaults and remedies / sanctions Settlement of disputes Annexes (e.g. Database Licence) Any amendments require written approval of all partners
Summary of FP6 IPR conditions For carrying out the project Access rights to pre-existing know-how (PEKH) Access rights to knowledge resulting from the project If needed by participant to carry out his own work under the project Royalty-free unless otherwise agreed before signing the contract Royalty-free For use purposes (exploitation and further research) If needed by participant to use his own knowledge On non-discriminatory and reasonable market conditions to be agreed Possibility for participants to agree on exclusion of specific pre-existing know-how of a participant from this obligation Royalty-free unless otherwise agreed before signing the contract Best practice: royalty-free access for further research but favourable conditions for commercial use
Intellectual Property Rights Access Rights on a non-exclusive basis Access Rights do not include rights to sub-license Access Rights may be requested up to 2 years after end of project if needed to Use own Knowledge If Knowledge is not Used then dissemination Ownership belongs to those who did the work Joint ownership subject to separate agreements
Database Licence Database is owned by Coordinator Each partner owns the copyright in its own data All partners cross-license data to each other for academic purposes (teaching and research) Any commercial use of data requires consent of Coordinator, and is subject to a separate agreement specifying the terms All publications of data have to acknowledge ownership / copyright of the EUREQUAL consortium