Cost-benefit analysis concerning the options for the management of the Tempus and ICI Programmes 2007-2013 Addendum to the Cost-benefit analysis concerning the extension of the Education, Audiovisual and Culture Executive Agency for the years 2009-2015 Final Report April 2008
Technopolis Ltd produced this study. The views of the authors do not necessarily reflect those of the Commission, or the Directorates General for Education and Culture, Information Society and Media or the EuropeAid Cooperation Office. The European Commission does not guarantee the accuracy of the data included in this study, nor does it accept responsibility for any use made thereof. The consultants would like to record their thanks to the persons consulted in the course of the study who gave freely of their time and experience to assist in the work. Technopolis Ltd 3 Pavilion Buildings Brighton BN1 1EE United Kingdom Tel +44 1273 204320 Fax +44 1273 747299 www.technopolis-group.com
TABLE OF CONTENTS Executive Summary 2 1 Introduction 9 2 Background 10 3 The Tempus programme 12 3.1 The programme... 12 3.2 Current structure and programme management... 14 4 ICI 15 5 Options 16 5.1 Scenarios... 16 5.1.1 Transfer to the EACEA... 17 5.1.2 Total internalisation within the Commission... 17 5.1.3 Internalisation within the Commission with limited outsourcing... 17 5.1.4 Continuation of support from the ETF for the Tempus programme... 18 5.2 Factors to be assessed... 18 5.2.1 Qualitative factors... 18 5.2.2 Financial Costs and benefits... 22 5.3 Analysis... 26 5.3.1 Ability to address resource constraints... 26 5.3.2 Capacity to provide specific skills... 26 5.3.3 Potential savings to the Community budget... 27 6 Conclusions 27 6.1 Tempus... 27 6.2 ICI... 28 i
Executive Summary This study is an addendum to the study carried out in November 2006 in accordance with Article 3.2 of the decision establishing the Education, Audiovisual and Culture Executive Agency, and addresses the following issues: The justification of the intervention of the Executive Agency in the management of the Tempus Programme (2007-2013), covering implementation of the programme up and including a period to allow the closure by the Agency of part of the files managed by it during the programme. The justification of the intervention of the Executive Agency in the management of the Multi-annual programme for cooperation with industrialised countries and other high-income countries and territories 2007-2013 The aim of this study is to assess, in terms of costs and benefits, the justification of the intervention of the Executive Agency in the management of the programmes. Tempus is the trans-european programme of cooperation in higher education, established in 1990. It supports the modernisation of higher education in Eastern Europe, Central Asia, the Western Balkans and the Mediterranean region through the restructuring of higher education systems in these countries in order to adapt them to the requirements of a market economy. The new phase of the Tempus (Tempus IV) programme will cover 2007 2013. For the period 2007-2013, the annual Tempus budget is expected to be in the order of 50 million. The first call for proposals under Tempus IV was launched in January 2008. The management of the Tempus III programme is currently split between DG EAC and the Tempus Unit at the ETF in Turin. The Commission is responsible for all the policy and design issues related to the programme, and this situation will not change. DG EAC is responsible for processing individual budgetary commitments and financial transactions. The Tempus Department at the ETF assists DG EAC at all stages of the project cycle (launch of call for proposals, reception of proposals, selection procedure, technical and financial analysis of project reports, field monitoring, audits, information and publications and general administrative support) and liaises on a day-to-day basis with the projects. In 2006, resources involved in running the programme consisted of 33 people in the ETF, and 4 people in DG EAC for tasks relating directly to the programme's management 1 (financial initiation and related operations and co-ordination with ETF's Tempus Department). The ICI is the Multi-annual programme for cooperation with industrialised countries and other high-income countries and territories 2007-2013. ICI promotes cooperation with 17 industrialised and other high-income countries and territories in North 1 An additional 9 people work in DG EAC on the policy and design issues related to the programme and the strands of the programme implemented solely by the Commission. They have not been considered in this study, as their number is independent of the scenarios considered. 2
America, the Asia-Pacific region and the Gulf region. The programme has three main priority areas, of which the third is concerned with people-to-people links, where the main initiatives will be to strengthen cooperation in the field of education and to promote civil society dialogues. The actions in the field of education, which are part of this study, are new actions introduced in 2007. The costs and benefits of the management of these actions by the Agency are compared to the following alternative hypotheses: Total internalisation of management within the Commission departments with an "all permanent officials" scenario and, for the Tempus programme only, a "permanent officials with contractual agents 2 " scenario. For the Tempus Programme only, internalisation of management within the Commission departments, but with limited outsourcing 3. For the Tempus Programme, continuation of the current arrangements with support being provided by the European Training Foundation in Turin. There is no prima facie assumption that the same solution would be appropriate for both programmes, and the decisions are assumed to be unrelated since they may be based on different factors reflecting different needs. The assessment criteria for the study are those set out in the agencies regulation. They fall into two categories the qualitative factors relating to issues of feasibility and quality but to which it is not possible to ascribe a financial cost, and quantitative factors where a financial cost can be set against them. In terms of qualitative costs and benefits the key issues have been summarised as follows: Exhibit 1 Criterion Tasks justifying outsourcing Impact on human resources Efficiency and flexibility Summary of qualitative costs and benefits ETF Not ETF core business No change baseline scenario Finance related tasks carried out in Internalised within Commission Not Commission core business Commission bound by establishment plan and limited in potential use of contract agents No need for extra verification Option Internalised with outsourcing Only limited tasks can be outsourced in this way no significant benefit Some tasks could be outsourced but there would be a high co-ordination cost Management chain is broken Executive Agency Programme management is Agency core business with opportunities for sharing resources and skills Agency can recruit higher proportion of contract agents, and has the possibility to offer contracts not limited in time to temporary and contractual staff Agency has single management chain 2 3 The contractual agents are financed under the expenditure on administrative management of the respective instruments (ENPI, DCI, IPA) financing Tempus For the ICI the scale is such that outsourcing is not appropriate (see below) 3
Criterion of outsourced tasks Proximity of activities to final beneficiaries Visibility of Commission as promoter Need to maintain adequate level of know-how within the Commission ETF Turin have to be rechecked in Commission Beneficiaries have to deal with two different bodies, ETF and Commission Two entry points may cause some confusion but all European Distance from Brussels makes close working more complicated. The know-how remains with the Agency and there is no possibility for ETF personnel to move to the Commission except through normal recruitment competitions Internalised within Commission means lower staff resources and faster turn round times Single point of contact for beneficiaries High Skills remain in the Commission Option Internalised with outsourcing unless only very specific tasks are outsourced. Contracting is slow and costly Risk of adding confusion for beneficiaries, if too many tasks are outsourced Depends on level and type of outsourcing Specific skills could be lost if reliance on external providers Executive Agency and can benefit from in house knowledge and flexibility. No need for additional checks on transactions Agency is main contact point for project promoters. Current participants in the Tempus programme already deal with the Agency on other programmes they are involved in Agency is seen externally as part of the Commission Key staff are seconded from the Commission and would repatriate skills when their period is over As the ETF is a "decentralised" agency, its role is not to implement programmes, but to be a centre of expertise in its domain. Therefore, the Commission and the ETF itself have decided that the new Tempus programme should no longer be implemented with the support of the ETF. It has not therefore been included in the financial analysis. The major financial cost of all the options is in the staff. Competences must cover all the aspects of programme implementation, from the call for proposals and the evaluation procedure to the selection decision and subsequent project management. In the case of Tempus, given the proposed evolution of contract numbers over the life of the programme, the proposed staffing has a marked downward profile. This can be seen in Exhibit 2, below which shows the staffing evolution compared to the number of contracts managed over the life of the programme, with the staffing declining at a faster rate than the contracts managed. 4
Exhibit 2 Tempus Evolution of staffing 4 and contracts managed Other costs to be taken into account are infrastructure costs, including premises, utilities and office equipment, IT infrastructure and telecommunications costs, miscellaneous staff costs including socio-medical infrastructures, local taxes and general operating costs. In the case of Commission premises, these costs are covered in the general overhead (with the exception of specific IT costs in DG EAC). The Agency uses, through service level agreements or separate contracts, the services of several Commission horizontal services or other service providers (IT infrastructure, training), but as a separate legal entity, it must negotiate the prices of these services and pay for them out of its own budget. As this is not the case for Commission services, an accurate comparison of these general costs is very difficult. In the case of the EACEA these costs are therefore highly visible and attributed to the programme budget, which is less the case inside the DG, and to an extent in the ETF due to the budget structure. Secondly, in the case of the EACEA, resources will be required to manage these issues. These are not additional resources from the Commission perspective, since the tasks would otherwise be assured by the PMO, the OIB, DG DIGIT or other horizontal services, so we would not anticipate a marked difference in cost to the Community budget. Programme operating costs incurred are judged to be independent of the scenario and therefore form part of the total cost calculation for all the scenarios. 4 Staff numbers are as at the end of each year. Staff numbers should be reduced to 21 posts by the end of 2010. 5
On this basis the cost differences are as follows: Exhibit 3 Total costs of options Tempus Programme Total cost 2008 5-2015 ( 000) 6 Cost difference ( 000) Cost difference (%) Executive Agency 24,562 0 0.0% All Commission (100% officials) 29,102 4,539 18.5% All Commission 7 (with 60% officials and 40 % Contractual agents) 25,700 1,137 4.6% Commission with private market 28,261 3,698 15.1% ETF 29,934 5,372 21.9% For the ICI programme 8, a similar approach is taken with the exception that the options of the Commission scenario with the use of contractual agents and outsourcing to the private market are not considered. In the latter case, this is because the vast bulk of the activities relate to contract and financial management which by definition cannot be outsourced. It would therefore be difficult to find a critical mass of activities to make outsourcing worthwhile, especially given the costs (and timetables) of procurement. Exhibit 4 Total costs of options ICI programme Cost difference Total cost 2008- Cost difference 2015 9 ( 000) 6 ( 000) (%) Executive Agency 2,341 0 0.0% All Commission 3,166 825 35.23% Three fundamental criteria are taken into account in judging the options The ability to address resource constraints Capacity to provide specific management or technical skills Potential savings to the Community budget For Tempus the Executive Agency solution is more cost effective than either of the Commission solutions. The Tempus Unit at the ETF has a higher cost than the Agency. In addition, (one single entry point to the programme would be a benefit to the participants. Currently they have to deal with both the Commission and the ETF, leading to duplication of effort. A move to the Agency would mean that the aim of 5 6 7 8 9 Total cost of options is based on a hand-over of the Tempus programme from the ETF and the Commission to the Executive Agency on July 1, 2008. Tables A.4 to A.8 show the annual 2008 costs for each scenario (see also Appendix, point A.2) At constant prices The budget comments of budget headings 19.010401 (DCI), 19.010402 (ENPI) and 22.010401 (IPA) authorise expenditure on temporary support staff (contract staff) at headquarters within certain budgetary limits for the implementation of centralised actions In this study, the term ICI programme is used to mean the education part of the programme only. Budget comments do not authorise the use of contractual staff for the management of the ICI programme Total costs are based on a transfer from the Commission to the Executive Agency on July 1, 2008. Tables A.9 and A.10 show the annual 2008 costs for each scenario 6
having a single management chain could be achieved and efficiency gains would be expected, not least in these costs of co-ordination and checks of financial dossiers. The Executive Agency option compares well with the all Commission option. Under the Commission scenario with all permanent officials, the Executive Agency scenario would result in a net saving over the life of the programme. Under the Commission scenario with permanent officials and contractual agents, the Agency scenario would result in a small net saving over the life of the programme. However, bringing Tempus implementation together with other programmes in the area would provide the opportunity for profiting from synergies, and from sharing horizontal support functions, which again may lead to savings. In addition the Agency solution provides a degree of stability in staffing which would be more difficult to achieve with the solution using contract agents within the Commission due to the difference in the staffing regimes. The planned transfer also builds in significant staff savings over the life of the programme, as the Agency is able to build on efficiencies and process economies. It is not possible to judge the extent to which this would be the case in the Commission, so the model uses the same assumptions in both cases. However, such experience as exists to date does suggest that the Executive Agency is more likely to achieve these economies. The Executive Agency solution therefore offers the most effective solution to the management of the Tempus programme, providing access to resources, the potential for future economies and a degree of stability, in particular of personnel, that other solutions cannot match. The ICI programme is a relatively small programme with operational similarities to the EU/US and EU-Canada co-operation programmes which are already managed by the Agency. It would make operational sense to have the administration in the same place as other similar programmes to also benefit from economies of scale, and potential process economies. It also enables the programme to draw on the horizontal support and expertise from other programmes to support it, and reduces the fragmentation of the management of programmes in the field of education, which is advantageous for the beneficiaries. Within the scenarios considered here, the Agency model is more cost-effective than managing the programme within the Commission, and has the advantage of bringing the programme together with other activities of a similar nature, providing access to support and expertise, the opportunity for synergies and a more logical entry point for the specific beneficiary target group. 7
RECOMMENDATIONS Tempus The management of the Tempus programme should be transferred to the Executive Agency, as this is the most effective solution on the basis of cost and potentials for efficiency gains. There are also other qualitative benefits which would enhance the overall effectiveness of the programme management. ICI The Executive Agency should be tasked with managing the education part of the ICI programme as this provides a range of synergies and is the most cost-effective solution. 8
1 Introduction The Education, Audiovisual and Culture Executive Agency was created by a decision of the Commission of 14 January 2005. Its mission is to implement certain strands of Community programmes in the fields of education and vocational training, culture, audiovisual, citizenship and youth. Its mandate has been extended by Commission decision 2007/114/CE of February 8, 2007 until 31 December 2015 to cover the new programmes 2007-2013. The role of the Agency is set out in the general rules governing recourse to an Executive Agency, notably by the framework Regulation 58/2003, and by the act of delegation of the Commission of 26 April 2007 (C/2007/1842), The Agency has three parent DGs Information Society and Media (DG INFSO) for the Media programme, EuropeAid Cooperation Office (DG AIDCO) for the Erasmus Mundus "External Cooperation windows" programme 10 and Education and Culture (DG EAC) for the remainder of the programmes. The mandate of the Agency covers tasks related to the management of projects throughout their lifecycle, in particular operations required to launch and conclude grant procedures, including calls for proposals, evaluations of projects, selections, notifications, signing and modifying agreements, contracting, monitoring of projects, payments, and contacts with beneficiaries. This study is an addendum to the study carried out, in accordance with Article 3.2 11 of the decision establishing the Agency, and addresses the following issues: The justification of the intervention of the Executive Agency in the management of the Tempus Programme (2007-2013), covering implementation of the programme up until 2014 12 with an additional one-year period (i.e. until 2015) to allow the closure by the Agency of part of the files managed by it during the programme 13. The justification of the intervention of the Executive Agency in the management of the Multi-annual programme for cooperation with industrialised countries and other high-income countries and territories (ICI) 2007-2013 The study was undertaken following an intensive period of data collection, including meetings with Commission officers concerned with the management of the programmes 10 11 12 13 This programme is financed under several external relations programmes (IPA, ENPI, DCI) "An evaluation of the operation of the Agency, including a cost-benefit analysis as referred to in Article 3(1) of Regulation (EC) No 58/2003, shall be drawn up by the Commission in 2006, with a view to the possible revision or extension of the tasks of the Agency in the framework of the new generation of programmes in the fields of education, audiovisual and culture." Commission Decision of 14 January 2005 setting up the Education, Audiovisual and Culture Executive Agency for the management of Community action in the fields of education, audiovisual and culture in application of Council Regulation (EC) No 58/2003 (2005/56/EC) Article 3.2 Under the n+1 rule 2014 is still a full year of implementation for funds committed the previous year. If the mandate of the Executive Agency is not extended beyond 2015, the Commission will take over the open files for the remaining period 2016 and 2017, the phasing out plan of the Tempus programme being 3 years 2015-2017. 9
in both the DGs and in the Agency. It has also had to take account of a continuously evolving situation regarding the detailed implementation of the programmes. 2 Background The Education, Audiovisual and Culture Executive Agency (EACEA) was originally set up for the remaining duration of the former generation of programmes in the fields of education, audiovisual and culture and its mandate has been extended to cover the following new programmes from 2007 to 2013: Lifelong Learning Programme Youth in action Culture 2007 Citizens for Europe Media 2007 The management of some projects of the external relations programmes in the field of higher education and youth, which coming under the Agency's current areas of competence, have also been entrusted to the Agency. They are funded under the provisions of the External Cooperation programmes (IPA, ENPI, DCI) and the EU/USA and EU/Canada cooperation in the field of higher education. This common Agency, a Community organisation of public law supervised jointly by two DGs (DG EAC and DG INFSO), was set up in January 2005 and began operating at the beginning of 2006. It replaced the Technical Assistance Offices, which both DGs still used until the end of 2005. It also took over tasks which sometimes had to be managed internally by the Commission departments because of the limitations on the scope of Technical Assistance Offices, or where there had previously been no external resources or because the size of some individual programmes did not justify the recourse to TAOs. In 2007, DG AIDCO became the 3 rd parent DG with the extension of the mandate to cover some programmes in the field of external relations. The aim of this study is, in accordance with Article 3.2 14 of the decision establishing the Agency to assess, in terms of costs and benefits, the justification of the intervention of the Executive Agency in the management of the Tempus programme. It also examines the possibility of including the management of the Multi-annual programme for cooperation with industrialised countries and other high-income countries and territories (ICI). The report is an addendum to the report for the extension of the mandate for the programmes already entrusted to the Agency, but contains a recapitulation of certain core elements to ensure that it can be read as a stand-alone document. 14 "An evaluation of the operation of the Agency, including a cost-benefit analysis as referred to in Article 3(1) of Regulation (EC) No 58/2003, shall be drawn up by the Commission in 2006, with a view to the possible revision or extension of the tasks of the Agency in the framework of the new generation of programmes in the fields of education, audiovisual and culture." Commission Decision of 14 January 2005 setting up the Education, Audiovisual and Culture Executive Agency for the management of Community action in the fields of education, audiovisual and culture in application of Council Regulation (EC) No 58/2003 (2005/56/EC) Article 3.2 10
At the time of the cost benefit analysis setting up the Agency, the option of also transferring Tempus into the Executive Agency was examined. Despite the fact that some benefits could have been realised by doing this, the value of these benefits was insufficient to justify changing the management arrangements for the programme at that time, but it was agreed that the situation should be reviewed for any new programme. This was specifically the case for two major reasons firstly the Tempus programme was entering its final years of implementation and no decision had been taken on its continuation, which was not the case for the other programmes under review at the time. Secondly, there was not the same imperative to move the programme since the ETF was in a position to continue management of the programme within the requirements of the Financial Regulation, whereas the other programmes at that time were supported by Technical Assistance Offices which had to be closed down. A major task of the study was to update data and information (quantitative and qualitative) on a number of items costs, human resource issues, quality of service factors, transition effects, legal issues relating to current arrangements and to the possible alternatives (Executive Agency, private market or Commission). Estimates were made of the magnitude and importance of uncertainties and risks at each stage. The interviews were undertaken for collection of data that consisted of two major components: A quantitative part relating to the estimation of division of effort spent on the tasks identified. The estimation of staff numbers was initially undertaken by the Commission and Agency staff and has been reviewed in the light of the workload and benchmarked against other agencies, both Commission and national. A more qualitative part relating to issues such as the details of processes involved in the tasks, examining the expected variations of costs, manpower and other resource requirements, understanding the workloads, variations in workload over time (trends and seasonal effects), and the extent of system flexibilities to cope with these variations. It also took into account skill requirements, possible losses of key skills and the need to attract certain skills. It looked at opportunity costs, especially where these concerned the potential for staff in the Commission to focus on core activities, and finally examined quality considerations and expectations, performance standards and process sensitivities and risks. Wherever available, quantitative data was used to support the cost benefit analysis (for example, costs relating to buildings, time spent on tasks by Commission officials, existing subcontracting for given tasks). The most important method of data collection involved structured interviews with those currently involved in the administration of the Programmes, both in the DG and in the Agency. We also investigated, with the help of Commission experts including staff of the existing agencies, DG Admin and DG Budget, more general issues relating to the possible alternative administrative arrangements, such as the start-up costs for new arrangements and close out costs for the Agency, and the phasing out at the end of the programme period, any possible transitional arrangements, ability to meet legal requirements and control mechanisms. We also took into account the costs of coordination and control, e.g. communication between the Commission s services and 11
the Executive Agency, and between the DGs involved in the operation and management of the Agency. Finally, we attempted to put into the present context some of the general, less tangible costs and benefits associated with externalisation of tasks from the DGs. In particular, one should account for the specific nature of some of the activities, where they require specialist experience or highly technical knowledge. The information used for this study was collected in the course of interviews with all the directors and heads of unit in the DGs and in the Agency responsible for the various programme strands. The ETF in Turin was also visited and the key staff consulted. A wide range of both programme and administrative documents were also consulted, together with documents from other Executive agencies, existing and planned. 3 The Tempus programme 3.1 The programme Tempus is the trans-european programme of cooperation in higher education, established in 1990. It supports the modernisation of higher education in Eastern Europe, Central Asia, the Western Balkans and the Mediterranean region 15 through the restructuring of higher education systems in these countries in order to adapt them to the requirements of a market economy. The new phase of the Tempus (Tempus IV) programme will cover 2007 2013. For the period 2007-2013, the annual Tempus budget is expected to be in the order of 50 million. The first call for proposals under Tempus IV was launched in January 2008. The indicative planning for appropriations to be managed by the Agency was as follows: Exhibit 5 Tempus indicative appropriations 16 Operational credits (mio ) 2007 2008 2009 2010* 2011* 2012* 2013* Total 2007-2013 DG AIDCO ENPI 38 30 30 30 30.3 31.4 32.5 222.2 DG AIDCO DCI 5 5 3 3 3 3 3 25 DG ELARG IPA 19.6 19.5 19.5 16.5 134 13 13 114.1 62.6 54.5 52.5 49.5 46.3 47.4 48.5 361.3 * indicative figures: the Multi annual Indicative Programming documents 2010-2013 for the IPAinstrument and 2011-2013 for the ENPI and DCI instruments are not yet adopted. Tempus is financed through three instruments with their own funding regulations: 15 16 Full list of participating countries: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia, including Kosovo under UN 1244, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, the Russian Federation, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Algeria, Egypt, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, Tunisia Commitment appropriations of year n are used to sign contracts in n+1 12
the Instrument for Pre accession Assistance that covers the candidate and potential candidate countries the European Neighbourhood and Partnership Instrument that covers countries of Eastern Europe, and the Mediterranean countries the Development and Cooperation Instrument which provides assistance to countries from the Central Asian region. The Tempus programme is currently managed by European Commission's DG Education and Culture with assistance given by the European Training Foundation in Turin. The ETF is a decentralised Agency, of a type that is not normally involved in the management of programmes. Also involved in the management of the programme are the contact points in the EU Member States and National Tempus Offices in the 27 partner countries. Within the Commission DGs RELEX, ELARG and AIDCO ensure the budgetary programming, prepare the financing decisions on the respective budget lines and make global budgetary commitments. Tempus projects are organised as consortia between institutions in EU Member States and those in the partner countries. In each EU Member State, the National Contact Point offers advice and assistance to prospective and current Tempus projects. In Tempus partner countries, the EU is aided by the National Tempus Offices that facilitate partner search and provide information on Tempus in their countries. The contact points and Tempus Offices are not under consideration in this report. The structure and implementation of the new Tempus programme were agreed in June 2007. Under Tempus III there were the following types of action: Joint European Projects (JEPs) with a duration of two or three years with a maximum budget of 300 to 500,000 (depending on their duration) that had to be co-funded for at least 5% of its total amount. Structural Measures with a duration of one year with a maximum budget of 150,000 that had to be co-funded for at least 5% of the total amount. Complementary Measures with a duration of one year with a maximum budget of 150,000 that had to be co-funded for at least 5% of the total amount. In addition, individual mobility measures accounted for about 3% of the total funding. Under the new programme it is proposed to increase the size of individual projects, and to discontinue the individual mobility measures. In addition it is planned to simplify the management of the programme so that there is one single deadline in each year, and that application, funding and reporting procedures should be streamlined to reduce the administrative burden and increase the transparency of the programme. All these factors should reduce the implementation workload. It is also planned, however, to enable Higher Education Institutions in the partner countries to act as grant holders and to reinforce the monitoring activities, which will have resource implications in both cases. The structure of the new Tempus programme will not differ markedly from the previous phase. Tempus IV will provide for three components: Joint Projects, Structural Projects and accompanying measures (meetings of project co-ordinators 13
and other stakeholders, thematic conferences, studies as well as support to National Tempus Offices). Individual Mobility Grants will be discontinued. It is expected that the size and complexity of the projects will increase. In addition, higher education institutions from partner countries will become eligible to act as applicants and grant holders (which was not the case under Tempus III). The estimated volumes and evolution of contracts to be managed is estimated as shown below. Exhibit 6 Evolution of Tempus contracts Tempus III Tempus IV Total Decrease (with respect to first year) Beginning 2008 764 0 764 End 2008 441 71 512-33% End 2009 270 135 405-47% End 2010 0 193 193-74.7% End 2011 0 180 180-76.4% End 2012 0 174 174-77.2% End 2013 0 174 174-77.2% End 2014 0 174 174-77.2 % End 2015 0 116 116-84.8% End 2016 0 58 58-92.4% End 2017 0 0 0 100% 3.2 Current structure and programme management At present the management of the programme is split between DG EAC and the Tempus Unit at the ETF in Turin. The Commission is responsible for all the policy and design issues related to the programme 17, and this situation will not change. DG EAC is responsible for processing the individual budgetary commitments and financial transactions. Contract signature are equally under DG EAC's responsibility. The Tempus Department at the ETF provides technical assistance to DG EAC. It assists DG EAC at all stages of the project cycle (launch of call for proposals, reception of proposals, selection procedure, technical and financial analysis of project reports, field monitoring, audits, information and publications as well as general administrative support). ETF's Tempus Department liaises on a day-to-day basis with the projects. All formal project-related correspondence is prepared by ETF and signed by DG EAC. In the case of financial files, although the initial analysis is carried out in Turin, there is a second level of checking at the Commission since the financial responsibility lies with DG EAC. This inevitably results in some duplication of effort. In 2006, resources involved in running the programme consisted of 33 people in the ETF, and 4 people in DG EAC 18 for tasks relating directly to the programme's management. The staff within the Commission were concerned with financial 17 18 The Commission also manages the national Tempus offices and some accompanying measures An additional 9 people work in DG EAC on the policy and design issues related to the programme and the strands of the programme implemented solely by the Commission. They have not been considered in this study, as their number is independent of the scenarios considered. 14
4 ICI initiation and related operations (3 AST posts) and co-ordination with ETF's Tempus Department (1 AD post). The personnel in the Tempus Unit at the ETF were broken down as follows: Exhibit 7 ETF Tempus Department Staff (basis 2006 as last full year of programme) Full-time equivalents working in Tempus Department 29 Full-time equivalents working on Tempus in horizontal ETF 4 Departments (mailing, human resources, IT, management of technical assistance convention) TOTAL 33 The ICI is the Multi-annual programme for cooperation with industrialised countries and other high-income countries and territories 2007-2013. The Industrialised Countries Instrument (ICI) promotes cooperation with 17 industrialised and other high-income countries and territories in North America, the Asia-Pacific region and the Gulf region. The programme has three main priority areas: (1) Public diplomacy and outreach. (2) Economic partnership and business cooperation. (3) People-to-people links. The main initiatives will be to strengthen cooperation in the field of education and to promote civil society dialogues. Activities under the third priority would potentially come within the remit of the EACEA. The general objectives of actions under the people-to-people links priority focus around the use of mobility actions to promote the exchange of knowledge and information with partner countries and to contribute to mutual understanding. Specifically it aims to Support co-operation between higher education and vocational training institutions to promote joint study programmes and mobility Improve the quality of student and staff mobility, including the promotion of transparency, mutual recognition of qualifications and transferability of credits Support the mobility of professionals Exchange best practice and promote knowledge sharing on horizontal issues. This means that the types of project to be managed are very similar to (and build on) those under the co-operation agreements between the EU and the USA and the EU and Canada, which are already being managed by the Executive Agency, with two main types being envisaged: 15
Joint consortia projects between European higher and vocational education institutions and partner institutions in the target countries, involving at least two higher or vocational education institutions in different EU countries and at least one partner from the target countries. The projects are multi-annual and cofinanced by between 50 and 75% depending on the countries, or on the basis of flat rates (eg based on number of students involved). Policy orientated measures addressing strategic issues relating to education systems and policies in the EU and partner countries. The 2007 budget will mainly be implemented in 2008 and will cover Australia, New Zealand, Japan and South Korea. The budget to be managed is as follows: Exhibit 8 ICI indicative appropriations Commitment Year (mio ) 2007 19 2008 2009 2010 2011 2012 2013 2007-2013 Million 2.59 5.0 3.5 5.5 3.5 5.5 3.5 29.09 * indicative figures: the Multi annual Indicative Programming documents 2010-2013 for the ICI instrument are not yet adopted. The average size of projects is estimated to be in the region of 300,000, with approximately 10 to 15 projects to be managed from an annual call for proposals. The resources needed are therefore estimated to be around 2.5 posts, of which two would be directly involved in the "Erasmus Mundus and External cooperation" unit, to which should be added the equivalent of half a post for various horizontal support activities. It should be noted that in 2008 the agency will need to manage the workload from years 2007 and 2008 and will be immediately at cruising speed. In the first year it is assumed that only bilateral projects are involved. In subsequent years there would be both bilateral projects and the Erasmus Mundus windows. In the case of ICI, therefore, no reduction in staffing over time is anticipated. 5 Options 5.1 Scenarios This section aims to examine the options for the extension of the mandate of the Agency. It does this through this addendum to the report on the continuation on the Agency, in which the costs and benefits of the management of these actions by the Agency is compared to the following alternative hypotheses: Total internalisation of management within the Commission departments with an "all permanent officials" scenario and a "permanent officials with contractual agents" scenario. For the Tempus Programme only, internalisation of management within the Commission departments, but with limited outsourcing 20. 19 2007 commitments will be delegated to the Agency for implementation in 2008 20 For the ICI the scale is such that outsourcing is not appropriate (see below) 16
For the Tempus Programme, continuation of the current arrangements with support being provided by the European Training Foundation in Turin. The scenarios are examined for each of the programmes. There is no prima facie assumption that the same solution would be appropriate for both programmes, and the decisions are assumed to be independent since they may be based on different factors reflecting different needs. 5.1.1 Transfer to the EACEA This option assumes that all tasks are transferred to the Agency. For Tempus this implies all tasks currently carried out by the ETF with the addition of the tasks of financial management currently carried out by DG EAC, bringing together the entire contract management cycle. For ICI, this implies that the Commission will delegate to the Executive Agency the entire management cycle. 5.1.2 Total internalisation within the Commission The full internalisation scenario is based on the notion of an arrangement within the DGs, which would undertake the work of implementation for the programme. There are two hypotheses, a first one with only permanent officials, and a second one with permanent officials and contractual agents. The scenarios do not make any assumptions about where in the Commission the work should be carried out. The first hypothesis is based on the unit being staffed by full-time established Commission personnel, and is costed accordingly in line with the original terms of reference for the study 21. The second hypothesis uses the implementation model for some external cooperation programmes, which is based on 60 % permanent officials and 40 % contractual agents as the Tempus programme is funded through the external policy budget. It is possible to recruit contract agents within the DGs on the administrative management expenditure of the external cooperation programmes. The maximum period of their employment is also limited to three years. Both bases are included to ensure consistency, firstly with the original study and secondly with the model used for external cooperation programmes. 5.1.3 Internalisation within the Commission with limited outsourcing This option, which takes advantage of the fact that the outsourcing of certain limited activities is permitted under the Financial Regulation, is a variation of the internalisation scenario. 21 This is the baseline scenario we are advised by DG Budget should be used in such decisions. It is possible to recruit contract agents within the DGs but this is on the administrative budget of the Commission whereby the maximum period of their employment is limited to three years. Furthermore, there is a risk of significant loss of know-how due to the inevitable high level of turnover among the staff, and the associated costs of recruitment and training. This does not mainly refer to knowledge of systems, since these can be documented and trained for, albeit at a significant cost since the systems are relatively complicated. However the cost in loss of relationships with the beneficiary community would be high, although not measurable. 17
5.1.4 Continuation of support from the ETF for the Tempus programme As the ETF is a decentralised agency, its role is not to implement programmes, but to be a centre of expertise in its domain. Therefore, the Commission and the ETF itself have decided that the new Tempus programme should no longer be implemented with the support of the ETF. Nevertheless the option has to be treated as the baseline for the calculation of comparative costs and the arguments behind this decision are taken into account in the assessment of the option. 5.2 Factors to be assessed The assessment criteria for the study are those set out in the agencies regulation. They fall into two categories the qualitative factors relating to issues of feasibility and quality but to which it is not possible to ascribe a financial cost, and quantitative factors where a financial cost can be set against them. 5.2.1 Qualitative factors There are a set of qualitative factors set out in the regulation and which are therefore addressed here. There are however, additional factors that were identified in the course of the interviews that are of greater importance to the programmes in comparing the different options for programme management. The following factors need to be addressed for the regulation: 5.2.1.1 Tasks justifying outsourcing Tasks that can be outsourced, be it to an Agency or to the private sector, must be tasks that do not involve the Commission's prerogative and by definition may not involve anything that is construed as policy development. The management of programmes fits into this category where it refers to the implementation of programmes that have been defined in the policy process. The tasks involved in this implementation have been considered not to be Commission core business and are therefore suitable for externalisation. Because programmes cannot be entirely divorced from the policy process the results of the programmes need to feed into the formulation of future programmes, and policy makers need to understand what elements of the implementation mechanisms are particularly successful or problematic. On the other hand, the tasks that can be outsourced to the private sector are altogether more limited nothing that involves public authority can be outsourced. This is primarily financial management, but may also include some elements of programme implementation design. In principle, all tasks that can be outsourced to the private sector could be carried out by an Agency. In practice, however, there may be some extremely specialised tasks, especially those where it is difficult to justify maintaining a permanent resource for example software development or organisation of large conferences that an Agency in turn would consider outsourcing to the private market as a more cost effective or higher quality solution. The fact that implementation of programmes is not core Commission business is not in and of itself sufficient justification for outsourcing. What drives the justification for the outsourcing is a shortage of either specific skills or staff resources within the Commission that means that it is unable to effectively carry out these tasks. In this 18
case historically the DGs have been unable to carry out the work without recourse to external support in various forms. Therefore the justification for the need for externalisation is clear. 5.2.1.2 Impact on human resources In principle, externalisation to an Agency should free staff within the DGs to work on core issues, resulting in a saving of posts that can be reallocated to the central pool. In the Tempus case some tasks were already externalised to the ETF, so the number of posts freed in the Commission is limited to those concerned directly with the financial management of the contracts within DG EAC in fact to the management of the commitments and payments. On the other hand, the internalisation option would have significant impacts on human resources since, again in the case of Tempus, posts would have to be found to replace all the staff in the ETF. This would require an additional 28 posts 22 (including the 4 currently involved in horizontal activities at the ETF) in the first year. This reflects an overall reduction for anticipated efficiency gains of 5 staff (37 posts in the Commission with ETF scenario compared to 32 in the Commission scenario). Internalisation within the Commission, while mitigating some of the need for permanent officials, would rely heavily on short-term staff with the consequent disruptions and potential loss of know-how. The evolution of staff, however, is planned to match the estimated evolution of the contracts to be managed, which gives a sharp downward curve as follows: Exhibit 9 Tempus Evolution of staffing 23 and contracts managed 22 23 The internalisation option requires 32 posts in the first year. As there are already 4 posts in the Commission under the current arrangements, an additional 28 posts would be required. Staff numbers are as at the end of each year. Staff numbers should be reduced to 21 posts by the end of 2010. 19
The impact on the establishment plan would depend on the extent of the use of contractual agents within the Commission. ICI represents to a large extent new activities the level of human resources required (especially given the relatively small scale of the activities) is not likely to change between the different options in the short term. 5.2.1.3 Efficiency and flexibility of outsourced tasks The work to be carried out remains the same, whether it is done within the DG or an Agency. Normally we would expect an Agency, being focused on the programme implementation issues to give a higher priority to these issues leading to increased efficiency. In the case of the ETF, the tasks relating to payments are outside their remit. This results currently in a split in the process between the ETF and the DG, which inevitably results in some time delays and potentially in some duplication as tasks carried out in the ETF are rechecked by the DG. Increased flexibility of tasks is a more complex issue. The Agency has shown that some flexibility can be introduced to how tasks are managed, especially in dealing with short-term or one-off issues. For example, a task force was set up to deal with the backlogs resulting from the handover process. However, an Agency is bound to follow the same financial and management standards as the DG, and thus there are limits on the degree of increased flexibility. Outsourcing to the private sector introduces scope for some flexibility, especially through, for example, flexible staffing and resource allocations. However, the process of outsourcing and the accompanying procurement processes require a level of future planning that limits the extent to which this flexibility is possible. In principle, any outsourced solution should also respect the normal procedures of the Commission, which also introduces some limitations. Again, there is a split between activities in the management chain that may tend to limit rather than increase flexibility. 5.2.1.4 Proximity of activities to final beneficiaries In terms of geographical proximity there is no difference between the options. Of more importance is the ability of the final beneficiaries to identify their interlocutor and to have a single point of contact rather than several depending on the issue under consideration. Since current Tempus participants are used to dealing with the ETF as well as the DG, this does not represent a significant change. However, the fact of bringing Tempus implementation together with other programmes in the same policy area may be seen as helpful by the beneficiaries, many of whom are involved in several programmes, and who would find the harmonisation of approach and dealing with a single entity a positive development. The element of ICI being considered for allocation to the Agency has a focus and beneficiary population that is entirely in line with the other programmes being managed by the Agency. It follows that these beneficiaries, (especially those within the EU, but increasingly in partner countries) would find advantages in working with a single point of entry for several programmes. 20