2015 Discharge of the EU decentralised agencies

WRITTEN ANSWERS - QUESTIONS TO THE AGENCIES

Hearing on 24 January 2017

II. QUESTIONS TO BE ANSWERED BY INDIVIDUAL AGENCIES

BEREC: reply on the next page

BEREC Office ref. No MC(17) 03

Riga, 09 January 2017

Sent by e-mail only

Subject: Submission of BEREC Office reply on the individual questions

Reference: Email dated 18/11/2016 received from the Coordination of Agencies regarding

CONT questionnaire for the decentralised agencies 2015 discharge (hearing 24

Jan 2017 am)

Dear Secretariat of the CONT Committee,

In what regards the 2015 Discharge of the EU decentralised agencies, section Written

questions to the agencies, please find below the BEREC Office replies to the questions

received:

1. The Court refers to a 4-year framework contract for which the Office exhausted the

maximum financial amount available around 2 years before to its conclusion. Could the

Office provide further information on this underestimation of its needs, and on what

steps it has since taken to prevent this reoccurring?

In 2014 the BEREC Office had two separate framework contracts for organising meetings

and events: one for plenary and related preparatory meetings as well as other events in

Latvia and another one for meetings and events outside of Latvia within Europe. The main

reason for underestimation of the needs in the framework contract for meetings outside of

Latvia stems from unexpected changes in the organisation of the last plenary meeting in

2014.

The plenary meeting was initially planned to be hosted by one of the BEREC observers

which was consequently expected to cover the majority of the cost of the organization of

this meeting.

However, the plenary meeting was eventually relocated to Brussels and, in line with the

rules of procedures, the BEREC Office was requested to organise and fully finance it.

With that extra-ordinary request the BEREC Office exhausted the maximum financial

amount foreseen by the relevant framework contract as the latter was initially not tailored

for the organization of events of such a magnitude. Although the other framework contract

for meetings in Latvia would still have sufficient room for financing big events, it was not

possible to use it due to its scope.

In order to prevent the reoccurring of such underestimation, the BEREC Office launched

an open tender procedure which resulted in the conclusion of a multiple framework contract

in cascade with three companies in January 2016 for four years, covering meetings and

events in all Europe.

2. Which company provided the event organisation services from January-August 2015,

when purchase orders and low-value contracts were used in order to avoid an open

procurement procedure?

The name of the company who provided the event organisation services from January-

August 2015 is SIA Latvia Tours. Please find below some additional information.

The BEREC Office signed a very low value contracts for EUR 6 000 with SIA Latvia Tours

on the basis of a single tender following negotiation procedure without prior publication of

a contract notice for provision of catering services, video recording and preparation of

badges for a workshop, which took place on 3 March 2015. Due justification for the choice

of the procedure was provided in a note for the file.

On 13 February 2015, the BEREC Office published an ex-ante advertisement for a low

value procurement procedure for the organisation of the 3rd BEREC Stakeholder Forum

Meeting, 15 October 2015, Brussels. To ensure higher competition the publication was also

advertised through the BEREC professional LinkedIn account, which at that period of time

was followed by 249 followers.

The BEREC Office received expression of interest from 3 companies. All of them were

invited to negotiate. Following the consultation with the candidates 2 of them informed the

BEREC Office in writing that they did not plan to submit tender. The BEREC Office received

only one tender, which was administratively and technically valid from SIA Latvia Tours.

Therefore, the BEREC Office accepted the offer and signed a contact with that candidate.

The contract was signed on 1 April 2015.

The two services requested were different in place, time, scope and format and were

therefore not considered as split of a single service contract.

The estimated values of the contracts were established on the basis of market researches,

which have proved to be relatively precise based on the expenditure incurred (EUR 6 000

– for the very low value contract and EUR 54 069,91 – for the low value contract not

exceeding EUR 60 000).

I remain at your disposal in case of any further need for additional information.

Yours sincerely,

signed

László IGNECZI

Administrative Manager of the BEREC Office

CDT1. Cancelled carry-overs are always a reason for specific concern for the discharge

authority. How do you intend to improve the estimation of the cost of externaltranslators?

The Translation Centre has carried over appropriations of EUR 1.7 million and 2.2million for external translation services from 2013 and 2014 respectively. The carried-over amounts all relate to specific order forms signed during the year, but for whichthe Centre at the end of the year has not received the invoice or, in some cases, notreceived the requested language service. The level of carry-overs is therefore exactlythe level that is necessary for the legal commitments. More than 99% of thesecarried-over appropriations are paid: in 2015, only 0.76% of the appropriationscarried-over from 2014 were cancelled, and in 2014, the level was only 0.16%.

The Centre has put a lot of effort during 2015-2016 in improving its estimate of the costof external translation services, when establishing the budget (C1 appropriations). Tothis aim, the Centre monitors outsourcing volumes and outsourcing costs closely, andthis has led to considerable changes in the forecast over the past three budgets.However, the cost of external translation services also depends on the demand fromthe Centre's clients. If the demand is lower than forecast, the Centre's demand forexternal translation services will also be lower than forecast. Therefore, the Centreasks all its clients to provide updated budget forecasts during the year, so that theCentre may amend its budget.

CEDEFOP: reply on the next page

Cedefop’s reply to the CONT Members´ questions intended for the CONT hearing on the decentralised Agencies’ 2015 discharge, addressed to Cedefop:  CEDEFOP

As the building provided by the Greek State is located on an active fault line, repair work and strengthening was necessary. What were the costs of the works carried out? Did the Greek State cover all these costs? What are the cost estimates for the future for addressing various safety issues such as the issue concerning the building's glass facade and the skylights of the conference rooms?

Cedefop’s reply:

a) Cedefop building repair works:

By Joint Ministerial Decision under Ref. No. ∆1/70/03.02.2011, the responsibility of assigning and managing the preparation of the procurement procedures, geotechnical investigation and engineering studies for the project entitled 'Works for the restoration of damages and the extension of the building of the European agency CEDEFOP' in Thessaloniki, and the responsibility for the implementation of the project were assigned to a state Authority called 'EGNATIA ODOS S.A.'. The project was solely funded by the Public Investments Programme of the Ministry of Infrastructure, Transport and Networks (SAE 073/5).

The total cost of the project i.e. geotechnical research, studies (architectural, structural, electromechanical) and implementation, amounted to approximately EUR 1.7 million (including VAT). The initial financial envelope of the project was EUR 2,100,000.

According to the results of structural analysis and constant monitoring of the building since 2011, by the state Authorities (TECHNICAL REPORT: IN_2013-NOV-06_2602) ‘’the Cedefop building is not expected to present serious constructional malfunctions for the next 10 years’’. These analyses are being reviewed and validated and the final technical report on the long-term behaviour of the building was expected by end of October 2016. Hence, no other safety issues are expected for the future.

b) Replacement of the building’s glass facades and skylights:

The cost of the implementation of the project for the replacement of the main façade, the facades of the conference rooms and their skylights, was EUR 178,224 (net). Due to the criticality of the windows issue, the works were financed from the Cedefop budget. Works have been completed in November 2016 and all areas of the building affected by the works are fully accessible and operational. Cedefop is actively following up the financial liability issue with the Ministry of Infrastructure, Transport and Networks.

 

CEPOL1. Has the Agency strengthened its administrative links with the EIT in order to lower

costs?

Yes, CEPOL is in close contact with EIT especially with an eye on cooperation onprocurement and staff related issues. We work together on scrutinising theImplementing Rules on the Staff Regulations as forwarded by the Commission and/orthe Standing Working Party and have advanced plans to come to a common staffcommittee. In 2016 CEPOL and EIT have organised a number of training activities(KPI’s, Project Management, Expenditure lifecycle training, PMO pensions) that wereopen from staff from both Agencies.

The information session from PMO pensions was also available for staff from theCommission representation in Budapest.

2. How has the expanded responsibilities and increased mandate affected the Agency´sefficacy? Does the Agency consider that its current resource levels are sufficient?

CEPOL appreciates the expanded responsibilities and increased mandate. However,CEPOL is convinced that the current resource levels are insufficient. Based on 5-yearevaluation that was finalised in 2016 as well as on earlier reports, there is a clear needfor a significant reinforcement of the Agency with both human and financial resources.

EASA1. How has the Agency improved its conflict of interest and independence policies?

2. Has the Agency investigated the possible misconducts in the Member States relatedto securing the Air Rescue Service?

3. How does the Agency monitor that the Member States abide by aviation regulations?

“It is the responsibility of the Member States to determine whether aircraft operationsare considered to be subject to Regulation (EC) No 216/2008 i.e. the EASA BasicRegulation or if they are to be regarded as military, customs, police, search and rescue,fire fighting, coastguard or as “similar activities or services”. In the latter case, thoseoperations will be subject to national rules in accordance with Article 1(2)(a) of theBasic Regulation.

Article 24 of the Basic Regulation mandates the Agency to conduct standardisationinspections of the Member States to monitor the application by their national competentauthorities of the Basic Regulation and its implementing rules and reports to theEuropean Commission in this regard. Regulation (EU) No 628/2013 laying down theworking methods of the Agency for conducting those inspections and limits the scopeto monitoring the application by competent authorities of the Basic Regulation (BR)and its implementing rules in the fields covered by Article 1(1) of the BR. As aconsequence, and in line with the provisions of Article 1(2) of the Basic Regulation,operations within the meaning of Article 1(2)(a) are not subject to Standardisation. It isup to each Member State to consider how such activities are carried out.

More information on the scope of EASA standardisation activities you can find it in theEASA Annual Activity Report 2015.(https://www.easa.europa.eu/system/files/dfu/EASA%20Annual%20Activity%20Report%202015.pdf)

However, it should be noted that, also according to this provision, Member States “shallundertake to ensure that such activities or services have due regard as far aspracticable to the objectives of this Regulation”. To our understanding, this obligationshould contribute to the achievement in the Member States of similar safety standardsto the ones established in the EU relevant rules.

Furthermore, we would like to draw your attention to the proposal of the EuropeanCommission for the ongoing revision of Regulation 216/2008. The proposed newArticle 2(3) introduces the possibility for Member States to apply certain provisions ofthe new Regulation 216/2016 to activities and services performed by state aircraft,such as customs, police, search and rescue, firefighting, coastguard or “similaractivities or services”. Once this possibility has become law, If a Member State makesuse of the opt-in for a certain activity, the latter will have to comply with the relevantprovisions of Regulation 216/2008 and its implementing rules.”

EBA1. Given its location in the UK, it can be expected that the EBA will be significantly affected

by the outcome of the UK referendum on 23 June 2016. At this stage, could the EBAprovide details of its current and future contractual commitments and liabilities, specificallythose linked to its physical presence in the UK. In particular, could it give details on anypossible costs associated with early termination?

Following table provides detail of current contractual commitments and liabilities, linked toEBA’s physical presence in the UK1.

Contract Number Contract Subject ContractStart Date

Contract EndDate

Max. PotentialContractual

Commitment/Liability in EUR

EBA/2015/05/OVSREG/SER/OP

Interim Staff - BusinessAnalysts 18/05/2016 17/05/2020 1 million

EBA/2015/08/OPS/SER/OP

Catering Services andSupplies 05/07/2016 04/07/2020 0.8 million

EBA/2014/06/OPS/SER/RT (Lot 1)

Interim Staff - Interim Stafffor IT 20/03/2015 19/03/2019 13 million

EBA/2012/021/OPS/IT/RT

IT Infrastructure ServiceSupplier (Service Contract) 10/12/2012 09/12/2019 13.3 million

EBA/2012/021/OPS/IT/RT

IT Infrastructure ServiceSupplier (FrameworkContract)

10/12/2012 09/12/2019 1.26 million

EMA/2012/18/HR Medical Services 28/06/2013 27/06/2017 0.35 million

EBA/2013/002/OPS/SUP/OP Office Stationery 24/10/2013 23/10/2017 0.42 million

EBA/2013/003/OPS/SER/OP

Interim Staff for GeneralAdministration 09/07/2013 08/07/2017 2.98 million

EBA/2015/03/OPS/SER/NEG Insurance Broking Services 09/07/2015 08/07/2017 0.05 million

1 Details of EBA’s office lease and the costs associated with its early termination are provided separately inmore detail.

The EBA contracts allow for early termination so long as notice is provided. The notice period rangesbetween 1 to 3 months. There would be no financial penalties for early termination of theabovementioned contracts if the notice period is observed. There would however be considerableextra procurement work in respect of a significant number of new procurement procedures thatwould need to be carried out at short notice and increased operational risk in terms of a potentialdisruption to services if the timing of the relocation decision does not provide sufficient time for thetransition to the new location.

Given that the Agency entered a rental contract for its London premises in December 2014,which has a duration of 12 years, could the Agency provide additional details on the terms andconditions of this contract?

The EBA signed a 12-year rent with a start date of 8 December 2014. Under normalcontractual conditions, there is a liability to pay the full rent for the entire period. In order toreduce this potential liability, the EBA during the contractual negotiations in 2013 (well-aheadof the availability of specific information on the UK Referendum) negotiated a possibility ofexercising a break-out in half time, i.e. 6 years after the commencement of the rent, in casethe Budgetary Authority makes a decision to change the location. This means, that in case ofexercising the break clause, the EBA we be relieved of the obligation to pay the rent for theremaining 6 years.

In addition, the EBA negotiated an incentive, which was 32 month of rent free period on thebasis of a 12 year lease, and utilised this incentive up front after the commencement of thecontract. In case of exiting the rental agreement half term, the EBA will have to pay back halfof this incentive, i.e. 16 months of rent. A part of this incentive (25 months of rent) was usedto finance the fit out of the new offices (such as air condition, partitions, flooring, networkcabling, etc.) without asking for any additional budgetary resources, and the rest resulted inan actual rent free period of the first 7 months of rent during 2015.

In addition, as under commercial leases it is stipulated that a tenant is liable to restore theproperty to its original condition (i.e. remove the fit out installed by the EBA at the premises)when leaving the premises. These so called “dilapidation expenses” are payable at the end ofthe rental agreement. In case of an early termination of the lease, these expenses will incurat an earlier date. The exact amount is subject to negotiations based on expert estimates asto how much the works actually cost.

Below is an extract of most relevant parts from the rental agreement:

“…Lease Commencement date: 8 December 2014

Lease Expiry date: 7 December 2026

Tenant option to terminate: Agency can terminate the contract at the expiry of the sixth year of theTerm by giving landlord not less than nine months’ notice but only if the following conditions are met:

1. at the date of expiry of the notice the Tenant has paid the rents reserved by Clause 3.12 in relationto the period ending on such date so that on the immediately preceding Quarter Day the Tenant shall

2 yearly and proportionately for any fraction of a year the Initial Rent and from and including each Review Datesuch Rent as shall become payable under and in accordance with the provisions of the Third Schedule in each

only be obliged to pay principal rent for the period ending on the date of the expiry of the notice ofthis Lease

2. on the expiration of the notice, the Tenant has given up occupation of the Premises free from anyright of occupation of a third party

3. by the expiration of the notice the Tenant has paid to the Landlord the sum which is equivalent tosixteen months’ Rent at the rate reserved by Clause 3.1 at the expiry of the sixth year of the Term and

4. from and after expiry of the sixth year of the Term, the Tenant ceases to operate in London or haveany role or function having effect in or undertaken from London and

5. funding for a London headquarters for the Tenant is discontinued by the European Commission…”

Has the Agency already taken any steps up until now regarding its possible future relocation?

Following the outcome of UK referendum, the EBA has drafted impact assessments for all supportareas, namely IT, Human resources, Procurement, Corporate Services and Communications. As thereare a lot of aspect unknown at this stage (new location, conditions available in the new hostingcountry, etc.) these assessments are based on number of assumptions and are subject to update toreflect the development.

2. How has the Agency reprioritized after budget cuts?

After the final budget has been approved by the Commission the EBA started a reprioritisationexercise looking at:

- Overall headcount and distribution per activity- Tasks per activity- Task delayed from previous year

With a top down approach, looking at the strategic direction and priorities of the agency, the EBAidentified those tasks that had to be postponed, those that could do with a lower intensity or alower level of engagement and those that it was not able to do.

The outcome of the exercise is included in the revised Work Programme that was approved by theManagement Board and adopted by the Board of Supervisors. The revised Work Programme wasalso sent to the EU institutions and published on the website.

3. Has the rulebook for anti-fraud authentication and secure communication for digitalpayments been adopted?

The revised Payment Services Directive (PSD2) has entered into force on 13 January 2016 andapplies from 13 January 2018. In support of achieving the objectives, the PSD2 has conferred onthe EBA the development of 11 Technical Standards (TS) and Guidelines. One of these is the TS on“Strong Customer Authentication and Common and Secure Communication” under Article 98

case to be paid to the Landlord (…) by equal quarterly payments in advance of each Quarterly Day in every year(…)

PSD2. In order to develop the mandate with the early input of external stakeholders, the EBA haspublished a Discussion Paper in December 2015, as well as a Consultation Paper in August 2016with a proposed draft of the TS, the latter of which resulted in a record of 226 stakeholderresponses, covering 2,000 pages.

The EBA is currently in the process of assessing these responses to assess which, if any, changesneed to be made to the TS before finalising and submitting it to the EU Commission for adoption.The PSD provides for the EBA to submit the RTS by 13 January 2017. Given the record number ofresponses received, the EBA is likely to deliver with a delay by six weeks.

In addition, the EBA is developing two complementary sets of Guidelines under Article 96(3) onincident reporting and under Article 95(3) on operational and security risks. These Guidelines willbe delivered in mid-2017, in time for the application date of the PSD on 13 January 2018.

4. Have the minutes of the Agency's management board meeting been made public?

Yes.

5. What percentage of cases of access to document under 1049/2001 has the Agencyrefused/partially refused in 2015 and what was the most used reason for refusal?

In 2015, the EBA received one access to documents request under Regulation 1049/2001. The EBAagreed to disclose the document concerned.

6. What measures / rules has the Agency implemented or introduced in 2015 to avoid andfight against real or perceived conflict of interests, in particular with the economic sector itregulates? Were there any cases reported, investigated or concluded in 2015?

The EBA had adopted in October 2014 a conflict of interest policy and has in place an ethicsguideline since 2012. Staff, but also members of the Board of Supervisors and their alternates haveto declare actual or potential conflicts of interest, including economic interests. Such interests tobe declared include in particular holdings in shares of financial institutions. The Conflict of InterestDeclarations of the members and alternates of the Board of Supervisors and the declarations ofthe EBA’s top management are published on the EBA’s website. The declarations are updatedannually and also ongoing when new members or alternates to the Board of Supervisors areappointed.

For staff the purchase of shares in financial institutions that are subject to the EBA’s area ofcompetence is generally forbidden. For other dealings in financial instruments a system ofnotifications, which are reviewed by the Ethics Officer, has been established. Where potentialconflicts of interest have been identified, measures have been implemented to mitigate thesituation. All existing and new staff is asked to sell shares in financial institutions that theypurchased previous to the employment at EBA or received during their employment (e.g. byinheritance). A system of prior clearance has been established to avoid that such shares are notsold in periods (e.g. during the stress test exercise) where the EBA has insider information. Toensure a high level of transparency regarding EBA’s contacts to external stakeholders, the EBA

documents all meetings with external stakeholders and publishes them quarterly on the EBAwebsite.

EASO: reply on the next page

ECDC: reply on the next page

European Centre for Disease Prevention and Control – Phone: +46 (0)8 586 010 00 – Fax: +46 (0)8 586 010 01 Postal address: SE – 171 83 Stockholm, Sweden – visiting address: Tomtebodavägen 11A

info@ecdc.europa.eu – www.ecdc.europa.eu – An agency of the European Union – www.europa.eu

To the Secretariat of the Budgetary Control Committee of the European Parliament

Email: cont-secretariat@europarl.europa.eu Stockholm, 4 January 2017 Our ref: DIR-2017-OUT-0023-AARuKr

Re: ECDC response to the individual question from the CONT Committee regarding the

Discharge of the Agency’s budget for financial year 2015

Please find our reply here below:

QUESTION(S) TO BE ANSWERED BY INDIVIDUAL AGENCIES

Question to ECDC:

1. The Court found weaknesses affecting the transparency of the procurement

procedures, such as the lack of a clear link with the annual work programme,

insufficient substantiation of the estimated contract value or absence of financial

benchmark to assess the tenderer's financial capacity. What measures have been

introduced to improve the transparency of procurement procedures?

ECDC response:

ECDC has reviewed the process of compiling and updating of the financing decision

for its procurements in its annual work programme to ensure that it complies with

Article 68 of its Financial Regulation and Article 58 of the Rules of Application.

Templates have been created to support the documentation of the estimation of the

contract value for all procedures. The templates for procurement documents have

been revised to systematically include a minimum threshold for the tenderer’s financial

capacity.

Yours sincerely,

Dr Andrea Ammon

Acting Director

ECHA1. How has the Agency improved its independence and conflict of interest policy? What

measures / rules has the Agency implemented or introduced in 2015 to avoid and fightagainst real or perceived conflict of interests, in particular with the economic sector itregulates? Were there any cases reported, investigated or concluded in 2015?

ECHA has had measures in place to avoid conflicts of interest since the start of itsoperations. In 2011, ECHA adopted its first conflict of interest policy, which was lastupdated in 2014. The whole lifespan of the cooperation with ECHA is covered:external experts are assessed against detailed eligibility criteria before appointment.Once appointed, they fill out annually a declaration of interest (published on theECHA website) and declare ad hoc conflicts at the start of each meeting. ECHA staffmembers are already checked for conflicts of interest once they are put on a reservelist. Once recruited they fill out annually a declaration of interest (published on theECHA website for the managers), which is checked each time a task is assigned tothem that leads up to a regulatory decision. Procedures were put in place in all ECHAprocesses to avoid potential conflicts of interest of staff or committee members incase work. After active employment, conditions may be imposed on former staffmembers with regard to new employment for a period of two years.

With regard to the latter post-employment duty, the Agency adopted in 2015 internalguidelines for the staff, including also potential conditions that can be imposed by theAppointing Authority with regard to new employment situations.

Furthermore, the Agency has a Conflict of Interest Advisory Committee at itsdisposal, which is an advisory body that gives recommendations to the ExecutiveDirector and the Management Board on individual cases of perceived conflict ofinterest, where needed.

Due to the stringent measures in place to avoid conflicts of interest, no actual conflictof interest situations have appeared during 2015.

2. How does the agency appoint and use external experts? How do the external expertscontribute to ECHA's policy areas and does ECHA monitor and report on the usage ofexperts? Are they subject to ECHA's policy on prevention and management of conflictsof interests?

ECHA’s Committees are composed of national delegates, appointed by MemberState authorities or the ECHA Management Board. ECHA’s founding legal actforesees that the Agency’s Committees may have in addition a limited number of co-opted members. ECHA makes use of this latter option since September 2015 (in total9 co-opted members). The members were co-opted by the Committees for RiskAssessment and Socio-Economic Analysis on the basis of a public call for expressionof interest covering risk assessors and socio-economic analysts in general as well asspecialists for occupational hygiene and exposure assessment in the workplace.These co-opted members may act as rapporteurs but have no voting rights. TheECHA policy on prevention of conflicts of interest applies to them in full. A report tothe Management Board on the experiences is scheduled for 2017.

3. Have the minutes of the Agency's management board meeting been made public?

ECHA’s Management Board minutes are available on the website:

https://echa.europa.eu/about-us/who-we-are/management-board/management-board-meetings/2015

4. What percentage of cases of access to document under 1049/2001 has the Agencyrefused/partially refused in 2015 and what was the most used reason for refusal?

In 2015, ECHA granted full access to 27% and partial access to 68% of requesteddocuments. The main reasons for partial refusal were the protection of privacy andintegrity of the individual and the protection of commercial business information. Inprinciple, in cases of partial access, most of the content in documents is disclosed tothe applicants.

In 2015, ECHA refused access to 5% of documents requested. The main reasons forrefusal were the protection of ongoing decision-making process, the protection ofcommercial business information and the protection of court proceedings.

Please also note that fact sheets on access to documents are publicly available alsofor 2015.

EEA1. What is the name of the single contractor used for various services the Agency signed

a framework contract with? Why were fixed-price offers requested instead of reopeningthe competition? How can the Agency justify the conclusion of a framework contractwith a single contractor instead of agreements with multiple suppliers and/or directservice contracts?

It is assumed that reference is made to the following framework contracts which wereexamined by the European Court of Auditors as part of the payments and procurementsample:

− Framework service contract No EEA/MDI/14/010/Lot 1 on GMES InitialOperations/Copernicus land monitoring services – Validation of products, inparticular validation services for the geospatial products of the Copernicus landcontinental and local components including in-situ data awarded to the consortiumled by Systèmes d’Information à Référence Spatiale in partnership with GAF AG,Joanneum Research and e-GEOS

− Framework service contract No EEA/SES/12/001/Lot 2 on support toimplementation of the Shared Environmental Information System (SEIS) in Eionetand Neighbouring countries, Lot 2 – ENPI South region covering also South EastEurope (with focus on the Mediterranean region) awarded to the consortium led byUmweltbundesamt GmbH in partnership with CENIA, Zoï Environment Network,Geie Semide, Cedare and SC Eau de Web SRL

− Framework service contract No EEA/MDI/14/001 on Copernicus Initial Operations2011-2013 – Land monitoring services – Local component: Riparian zonesawarded to the consortium led by GAF AG in partnership with Indra, Metria andGeoville

The level of competition of the particular market of satellite imagery production andanalysis is relatively limited due to the few number of service providers operating inthe related sectors and the stability and consistency of the prices applied. Furthermore,the technical nature and complexity of the services to be provided require thecombination of different expertise that the service providers operating in this marketcan only provide when joining forces into a consortium. The choice of awarding aframework contract with a single economic operator is therefore a conscious oneresulting from an assessment of tangible factors from the related market.

EFCA1. When can we expect the Agency to fully comply with Internal Control Standards 10

(Business Continuity), 11 (Document Management) and 12 (Information andCommunication)? What are the reasons for the failure to comply fully with thesestandards?

All internal control standards are implemented with different levels of implementation.For Internal Control Standard (ICS) 10 (Business Continuity), 11 (DocumentManagement) and 12 (Information and Communication) fully implementation was notyet achieved due mainly to budget constrains in particular regarding IT relatedexpenditure.

The Agency expects to achieve full compliance already in the beginning of 2017 forICS 10 (Business Continuity) and ICS 12 (Information and Communication). For ICS10 (Business Continuity) a proof of concept was performed during 2016 with EUIPOand the implementation of the EFCA ICT recovery site in EUIPO is expected tohappen on the 1st quarter of 2017. For ICS 12 (Information and Communication) theagency with support of an external consultancy firm is currently establishing anInformation Security Management System (ISMS) based on the standards ISO27001 and 27002 the implementation will occur during 2017. To achieve a higherdegree of implementation on ICS 11 (Document Management) the agency isexpecting to use the European Commission system (ARES); currently the Agencyhas already in place a platform called FISHNET that allows the agency to manageand exchange information and documents with its operational stakeholders and themembers of the Administrative Boards.

The Internal Control System of EFCA is considered robust and stable and its level ofimplementation is reported each year in the Annual Report. The risks associated withthe late implementation of those standards have always been mitigated by theAgency and at no stage has there been a negative impact for the Agency activities.

EIT: reply on the next page

2015 Discharge of the EU decentralised agencies

WRITTEN QUESTIONS TO THE AGENCIES

Hearing on 24 January 2017

II. QUESTIONS TO BE ANSWERED BY INDIVIDUAL AGENCIES

EIT

1. What is the procedure for approving grants funded by the EIT? Is the EIT Director

solely responsible for grant approval? What ex-ante and ex-post controls/audits are

these grants subject to?

1. Grant allocation procedure

Each year the EIT Governing Board defines the principles and criteria for the allocation of the

annual EIT financial contribution to the implementation of the Business Plans of the

Knowledge and Innovation Communities (KICs) and the modalities of the assessment

process.

The annual EIT financial contribution is allocated based on two components:

- Support funding: predictable support to KICs’ long‐term strategy, equally distributed among

KICs of the same wave (i.e. KICs in a different stage of maturity);

- Competitive funding: in line with Article 14 (7) of the EIT Regulation, an appropriate share

of the EIT financial contribution to KICs is allocated based on a competitive review among

KICs of the same wave, rewarding KICs for performance and ambition.

The competitive funding allocation mechanism is built on different sets of criteria:

- Past performance: assessment of the technical and financial implementation of activities

carried out by the KICs based on previous years’ KIC reports;

- Future outlook: assessment of the KIC Business Plans with the involvement of external

experts, and assessment of implementation of KICs’ multiannual strategy by the EIT

Governing Board, including a Hearing with KIC representatives.

As a result of the competitive review, the EIT Governing Board takes a formal decision on the

maximum annual EIT financial contribution to the KICs, and entrusts the EIT Director with the

implementation of the decision.

Following the approval of the final Business Plans and budgets of the KICs, adjusted in

accordance with the maximum financial allocation decided by the EIT Governing Board, the

EIT Director awards the annual grants. Finally, the EIT Director, representing the EIT, signs

the Specific Grant Agreement with each of the KICs. The approved Business Plans and

budgets form part of the Specific Grant Agreements, and serve as basis for the implementation

of KIC activities.

2. Partial financial autonomy of the EIT

As regards the question whether the EIT Director is solely responsible for grant approval, it is

important to note that the EIT has not yet been granted full financial autonomy from the

European Commission. According to the formal working arrangements in place between the

Commission and the EIT, the EIT has to request the approval of DG Education and Culture

(DG EAC) of the Commission, prior to implementation of any steps related to the KIC grants,

where a decision of the authorising officer is required. Upon approval of DG EAC, the EIT may

proceed with the relevant steps of the grant procedure. In practice, this means that the EIT

has to submit to DG EAC the complete files, including supporting documents, for comments

and approval, prior to the approval of KICs' reports, awarding of grants, signature of grant

agreements, and amendments of agreements, pre-financing and other payments. The EIT

Director can authorise commitments and payments, or sign grant agreements, after DG EAC

has issued its approval.

3. Ex-ante and ex-post controls of grants

In accordance with the EIT grant assurance strategy, both ex-ante and ex-post controls are

core building blocks of the EIT's grant assurance.

Ex-ante controls

Following the implementation of activities, KICs shall submit a request for payment of the

balance accompanied by the KIC Reports. The EIT assesses the progress and results of

implemented KIC activities, through evaluation of work done and resources used as compared

to the approved Business Plan.

The EIT ex-ante verification of KIC Reports consists of the following elements:

- Verification of completeness and formal admissibility;

- Performance assessment of the implementation of the knowledge triangle integration, with

respect to the achievement of the planned objectives and activities, the quality and results

of the supported activities as well as a verification of the reality and eligibility of the reported

activities; and

- Verification of financial statements and supporting documents, accompanied by the

certificates on financial statements (CFS), with the aim of assessing the reality and eligibility

of expenditure reported as well as the legality and regularity of underlying transactions.

CFSs play an important role in building assurance over KIC grants in terms of cost

compliance. Therefore, the EIT places a large degree of reliance on CFS provided by

independent auditors, to prevent the reimbursement of ineligible expenditure. For this

purpose, the EIT has fully adopted the methodology and CFS templates developed under

the Horizon 2020 framework. All exceptions and findings reported in the CFSs are

thoroughly followed up by the EIT. In line with Article 34 of the Horizon 2020 Rules for

Participation, a CFS is compulsory for every KIC Partner receiving an EIT grant of EUR

325,000 or more for the reimbursement of their actual costs in a given year. This threshold

means in practice that around 80%-90% of the EIT grant paid to KICs is subject to audit

certificates every year (i.e. the proportion of the total grant paid to KIC Partners whose

grants exceed the above mentioned threshold).

In case of improper implementation of KIC activities or non-respect of the relevant provisions

foreseen in the legal framework, the EIT disallows the associated costs and calculates the

final grant amount approved, with a view to establishing the final balance to be paid or recovery

any amounts unduly paid.

Ex-post controls

The EIT implements on-the-spot ex-post audits on KICs with the help of external independent

auditors. The main objective of ex-post controls is to provide assurance on the regularity and

legality of transactions in the framework of overall control activities set up by the EIT. The ex-

post controls intend to make the KICs aware of the importance of correct cost declaration,

avoiding occasional or systematic overstatement of declared costs. If the conclusion of the ex-

post control is that the final grant amount paid was too high, any grants unduly paid are

recovered from the KICs.

The selection of KIC Partners audited is a combination of risk-based and random sample to

extend the overall coverage. The EIT identifies and compares the level of risks presented by

individual KICs and for individual KIC Partners. The risk assessment considers specific risk

factors with weights and levels of expenditure spent by different KIC Partners. On this basis,

the EIT establishes a risk ranking which is used for selecting KICs and KIC Partners for on-

the-spot visits. The risk-based sample is complemented by a random sample in order to

ensure a more representative coverage of KIC Partners over the duration of the Framework

Partnership Agreements.

2. With reference to the previous question and given that EIT grants became part of the

Horizon 2020 programme, how did the EIT and the Commission anticipate and plan

for the transition period in 2013-14, and how was this integrated into the procedure for

grant approval for the discharge year in question?

1. The EIT and the applicable legal framework

• The EIT was established in 2008 by Regulation No 294/2008 of the European Parliament

and Council (hereinafter “the EIT Founding Regulation”), as a new initiative at Community

level, to complement existing Community and national policies and initiatives by fostering the

integration of the ‘knowledge triangle’ across the European Union. The EIT is an

independent body which provides funding with the objective of bringing together the

‘knowledge triangle’ of business, education and research to form dynamic cross-border

partnerships, Knowledge and Innovation Communities (KICs).

• The EIT provides funding to KICs via grants based on annual EIT-KIC Grant Agreements

under the Framework Partnership Agreements.

• The EIT spends ca. 95% of its budget on the annual grants awarded to the KICs for the

implementation of their education, research, innovation and business creation activities that

are set out in the annual KIC Business Plans. The annual EIT-KIC Grant Agreements are

signed in the beginning of the calendar year based on Business Plans prepared by KICs and

assessed by the EIT in the previous year following the funding allocation decision taken by

the EIT Governing Board and award of grant by the EIT Director. The EIT selected and

designated the first three KICs in 2009, which started their operations in 2010. EIT and the

first three KICs signed seven-year Framework Partnership Agreements in 2010.

• The funding activities of EIT are subject to the provisions of Regulation No 966/2012 of the

European Parliament and of the Council on the financial rules applicable to the general budget

of the Union (hereinafter “the EU Financial Regulation”), to Commission Delegated Regulation

No 1268/2012 of 29 October 2012 on the rules of application of the EU Financial Regulation

(hereinafter “the Rules of application of the EU Financial Regulation”) as well as to

Commission Regulation No 2343/2002 of 23 December 2002 on the framework Financial

Regulation for the bodies referred to in Article 185 of the EU Financial Regulation (hereinafter

“the Framework Financial Regulation”).

• The Financial Rules of the European Institute of Innovation and Technology (hereinafter “EIT

Financial Rules”), applicable to grants provided by the EIT to KICs until 31 December 2013,

were adopted by the EIT Governing Board on 20 April 2009 in line with the above

mentioned regulations, taking also into account Commission Decision (C(2009)2661) of

3/4/2009 (hereinafter “the Commission Decision on Derogations”). In said Decision, the

European Commission granted consent to the derogations requested by the EIT from the

Framework Financial Regulation.

• One of the derogations concerned the flat-rate financing of indirect costs of certain types of

beneficiaries. Non-profit public bodies, higher education establishments, research

organisations and SMEs unable to identify with certainty their real indirect costs were allowed

to claim 40% of the total eligible direct costs for the financing of their indirect costs, as opposed

to the maximum of 20% allowed by Article 181 (3) of the Framework Financial Regulation.

Recital (14) of the Commission Decision on Derogations justifies this derogation by the fact

that “the same flat rate applies to beneficiaries in indirect actions funded by the Seventh

Framework Programme for Research” (hereinafter “FP7”) and makes an explicit reference to

the Regulation No 1906/2006 of the European Parliament and of the Council of 18 December

2006 establishing the Seventh Framework Programme (hereinafter “the FP7 Regulation”).

Although the EIT was not formally part of it, the financial rules and derogations

applicable to EIT KIC grants were modelled after the rules of the FP7 as provided for

in the FP7 Regulation.

• Starting from 1 January 2014, the EIT became integral part of “Horizon 2020 – the

Framework Programme for Research and Innovation (2014-2020)” (hereinafter “Horizon

2020”), i.e. the successor of FP7. Regulation No 1291/2013 of the European Parliament and

of the Council establishing Horizon 2020 (hereinafter “the Horizon 2020 Regulation”) and

Regulation No 1290/2013 of the European Parliament and of the Council laying down the rules

for participation and dissemination in Horizon 2020 (hereinafter “the Horizon 2020 Rules for

Participation”) are directly applicable to the EIT from 1 January 2014.

• The EIT Founding Regulation has been amended by Regulation (EU) No 1292/2013 of the

European Parliament and Council, which entered into force on 1 January 2014. The EIT

Governing Board adopted new financial rules implementing the changes brought by the

Horizon 2020 Regulation and the Horizon 2020 Rules for Participation on 27 December 2013,

which entered into force on 1 January 2014 (hereinafter “the new EIT Financial Regulation”).

• 2014 was the first year of Horizon 2020 in line with the Horizon 2020 Regulation and the

Horizon 2020 Rules for Participation adopted on 11 December 2013. With regard to ongoing

actions, Article 57 (2) of the Horizon 2020 Rules for Participation contains the following

transitional provision: “Without prejudice to paragraph 1, this Regulation shall not affect the

continuation or modification, including the total or partial termination, of the actions concerned,

until their closure, or until the award of financial assistance by the Commission or funding

bodies under Decision No 1982/2006/EC or any other legislation applying to that assistance

on 31 December 2013, which shall continue to apply to the actions concerned until their

closure.” Throughout 2013, the EIT and the Commission (DG Education and Culture) were

following the negotiations of the new Horizon 2020 legal basis in the Council and European

Parliament. However, as the final rules were adopted in December 2013 only, when the EIT

had already concluded its grant allocation process for 2014, the EIT assumed that year 2014

and the ongoing actions were covered by the above mentioned transitional provisions.

2. The rules concerning the treatment of indirect costs and the circumstances leading

to their adoption

• In substance, the most important change in cost eligibility brought by Horizon 2020

compared to both FP7 projects and the EIT-KIC grants concerned the treatment of indirect

costs. Previously, universities, research organisations and SMEs were allowed to report, and

get reimbursed for, indirect costs at a flat rate of 40% on top of direct costs. Under Horizon

2020, a single flat-rate of 25% exists for every beneficiary (as provided for Article 29 of the

Horizon 2020 Rules for Participation: “indirect eligible costs shall be determined by applying a

flat rate of 25 % of the total direct eligible costs”).

• The EIT initially intended to maintain the derogation provided for in the Commission

Decision on Derogations and continue to allow for the 40% flat-rate option for the reporting of

indirect costs by non-profit public bodies, higher education establishments, research

organisations and SMEs. This was indicated in the draft new EIT Financial Regulation

submitted by the EIT to DG Budget on 29 November 2013.

• The EIT was informed by DG Budget on 17 December 2013 that regardless of the initial

approach to maintain existing derogations, the derogation allowing for the 40% flat-rate option

shall not be maintained in the new EIT Financial Regulation.

• The EIT followed the instruction of DG Budget and the new EIT Financial Regulation was

adopted accordingly by the Governing Board of the EIT on 27 December 2013 and entered

into force on 1 January 2014. However, in line with the transitional provisions of the Horizon

2020 Rules for Participation mentioned above, the EIT assumed that the new EIT Financial

Regulation will only be used for the grant cycle that starts in 2014 leading to the signature of

the 2015 EIT-KIC Grant Agreements, as the ongoing actions should be governed by the

“legislation applying to that assistance on 31 December 2013”.

3. Circumstances of the determination of the flat rate for indirect costs for non-profit

public bodies, higher education establishments, research organisations and SMEs in

the 2014 EIT-KIC Grant Agreements

• Based on the transitional provision provided in Article 57 (2) of the Horizon 2020 Rules for

Participation, calls for proposals under FP7 were launched by DG Research and Innovation

until as late as December 2013 and grant agreements resulting from those calls were signed

until as late as October 2014. Several of those multi-annual grant agreements are still running

in 2016 and follow the financial rules and derogations of the FP7 legal framework, including

the use of the 40% flat-rate (and in certain cases a 60% flat-rate) for claiming indirect costs

for non-profit public bodies, higher education establishments, research organisations and

SMEs.

• The EIT-KIC Grant Agreements signed in February 2014 were based on the annual call for

the preparation of the 2014 KIC Business Plans launched by the EIT in April 2013. In

accordance with Article 189 of the Rules of Application of the EU Financial Regulation, the

obligatory content of such a call shall specify the arrangements for Union financing. As

indicated in Chapter 4.3.4. of the Vade Mecum on Grant Administration published by DG

BUDGET (hereinafter “the Grants Vade Mecum”), the arrangements for Union financing shall

include information on the “indirect costs for the action grants”. In line with these provisions

and the EIT Financial Rules in force at that time, the EIT annual call allowed KIC Partners

falling into the categories “non-profit public bodies, higher education establishments, research

organisations and SMEs” to establish their project budgets for activities planned for 2014 using

the 40% flat-rate for budgeting indirect costs. Therefore, the KICs participating in the call relied

on this provision when constructing and submitting their proposals, i.e. their 2014 Business

Plans. The deadline for the submission of the 2014 Business Plans expired on 30 September

2013.

• In line with the applicable rules, the EIT Governing Board, following the evaluation of the

2014 Business Plans by external experts, decided on the 2014 funding allocation to KICs on

5 December 2013, i.e. before the adoption of the rules concerning Horizon 2020 on 11

December 2013.

• Based on the funding allocation decision of the EIT Governing Board, and following the award

by the EIT Director, the 2014 EIT-KIC Grant Agreements were signed in February 2014. In

line with the initial conditions of the EIT annual call, and in consistency with the approach

followed by the European Commission with regard to ongoing FP7 actions, the grant

agreements included the option for non-profit public bodies, higher education establishments,

research organisations and SMEs to claim indirect costs based on 40% flat- rate on top of

direct costs. The EIT paid the final balance of grants to KICs in 2015 accordingly, i.e. KIC

Partners falling into the categories mentioned in the previous sentence were reimbursed for

their indirect costs based on a 40% flat rate.

• It is important to note that the EIT fully complies with the Horizon 2020 rules, including the

use of a single flat-rate of 25% for indirect costs, starting from the EIT-KIC Grant Agreements

2015 (i.e. the grant cycle that started in April 2014).

3. If the amount of €5.5 million considered as an overpayment by the Court was ultimately

deemed irregular, what would be the recovery procedure, and what would the

consequences of this be for the EIT?

1. Position of the EIT concerning the relevant finding of the Court of Auditors

• The EIT disagrees with the relevant findings of the Court of Auditors. The EIT is of the opinion

that the provision concerning the 40% flat rate in question in the 2014 EIT-KIC Agreements

was lawful and consequently no irregular payment was made for the reimbursement of indirect

costs of Knowledge and Innovation Communities under the 2014 EIT/KIC Grant Agreements.

• As mentioned above, the EIT is part of Horizon 2020 and applies the provisions of the Horizon

2020 Rules for Participation as of 1 January 2014. These rules include Article 57(2) of the

Horizon 2020 Rules for Participation which provides explicitly for the following transitional

measure also referred to above: „Without prejudice to paragraph 1, this Regulation shall not

affect the continuation or modification, including the total or partial termination, of the actions

concerned, until their closure, or until the award of financial assistance by the Commission or

funding bodies under Decision No 1982/2006/EC or any other legislation applying to that

assistance on 31 December 2013, which shall continue to apply to the actions concerned until

their closure”.

• The EIT is of the opinion that the legislation applicable to the EIT financial assistance on 31

December 2013, i.e. the EIT Financial Rules, qualify as “any other legislation” in application

of this particular provision. Therefore, for ongoing actions, the transitional provision of the

Horizon 2020 Rules for Participation allowed the EIT to use its Financial Rules that were

applicable to the EIT-KIC grants in the period 2010-2013 (including on 31 December 2013),

which explicitly allowed the use of a 40 % flat rate for reporting indirect costs by higher

education institutions, research organisations, non-profit public bodies and SMEs. Therefore,

the use of the flat rate of 40 % by these bodies was legal and regular under the 2014 grant

agreements.

• The EIT considers that the very purpose of the transitional measure provided in Article 57

(2) of the Horizon 2020 Rules for Participation is to ensure the continuity of the legal framework

applicable to ongoing actions at the time of their initiation. The general phrasing of this

provision clearly reflects the intention to provide for the continuity of all ongoing actions. This

view is shared by the European Commission, which has requested an opinion by its Legal

Service to provide for an additional confirmation that the rules were correctly applied by the

EIT.

• The EIT further considers that apart from the specific transitional provision in question, the

use of the disputed provision regarding the flat rate of 40% for indirect costs in the 2014 EIT-

KIC Grant Agreements is justified by the general principles of EU law.

• As mentioned above, the Horizon 2020 Rules for Participation entered into force on 1

January 2014, i.e. after the issuing of the EIT annual call (April 2013), after the expiry of the

deadline indicated in the call (30 September 2013) and after the evaluation of the submissions

by external experts and the decision on the funding allocation by the EIT Governing Board (5

December 2013). Changing the conditions concerning indirect costs at that stage would have

been contrary to the EU Financial Regulation. The Grants Vade Mecum makes it clear that

substantial amendments to calls for proposals (such as changes to the proposed financing

conditions) may only be made before the closing date of the submission of proposals.

Furthermore, the principles of legal certainty and legitimate expectations also require that

funding rules are not changed after a call for proposal has been launched. In particular, funding

rules could not have been lawfully changed after the evaluation of the 2014 Business Plan

proposals had been finalised and the funding allocation decision of the EIT Governing

Board for 2014 had been taken on 5 December 2013. Based on the above, the EIT’s

Knowledge and Innovation Communities clearly had reasonable and legitimate expectations

that the previous funding rules could still be applied for 2014 and that the transition

arrangements could apply.

• Furthermore, altering the conditions concerning indirect costs would also have been

contrary to the principle of equal treatment of beneficiaries of the EU Research

Programmes. As mentioned above, although EIT was not formally part of FP7, its financial

rules were based on the FP7 Regulation. This was in particular the case for the derogation

concerning the application of the 40% flat rate for non-profit public bodies, higher

education establishments, research organisations and SMEs. Furthermore, the majority of

EIT’s beneficiaries (i.e. KIC Partners) concerned, such as leading universities and research

centres, are beneficiaries of grants under both FP7 and other Horizon 2020 programmes. As

also pointed out above, based on calls for proposals launched by DG Research and Innovation

until December 2013, the European Commission continued to use the 40% flat- rate for these

beneficiaries in 2016. Therefore, applying the same 40 % flat rate to the transition from the

pre-H2020 EIT financial assistance to Horizon 2020 as from FP7 to Horizon 2020 ensured

consistency and equal treatment. A unilateral change in the relevant conditions by the EIT in

the 2014 EIT-KIC Grant Agreements would have constituted an unjustified differentiation of

beneficiaries of Research programmes in identical situation.

• Following the publication of the Court of Auditors’ audit report, the EIT, together with DG

Education and Culture, has asked for a formal opinion of the Legal Service of the Commission

on the legality of applying a flat rate of 40% for indirect costs of non-profit public bodies, higher

education establishments, research organisations and SMEs in the 2014 EIT-KIC Grant

Agreements. The Legal Service concluded that the grant agreements signed between the EIT

and KICs in February 2014 could provide for the reimbursement of indirect costs at a flat rate

of 40% for non-profit public bodies, higher education establishments, research organisations

and SMEs unable to identify with certainty their real indirect costs. In addition, the Legal

Service noted that it was not possible for the EIT to sign in 2014 grant agreements in which

conditions for the EIT financing would be different from those specified in the call for 2014 KIC

business plans launched in April 2013. In order to introduce a condition relating to

reimbursement of indirect costs at a flat rate of 25%, instead of 40%, the EIT would need to

launch a new call specifying this modification of the proposed financing conditions. It was

however not necessary and could have led to disruption of the EIT and KICs activities.

2. Potential consequences of the Court of Auditors’ qualified opinion

• The report of the Court of Auditors on the annual accounts of the EIT for the financial year

2015 has been submitted to the Budgetary Authority as part of the 2015 discharge procedure.

Although the Court of Auditors also audited the EIT in 2014 and 2015 and the grant

agreements were already concluded and available to the Court, they did not comment on this

issue. The EIT was therefore surprised that in 2016 the Court raised this issue. This means

there is little opportunity to take corrective actions as the grant agreements have been fully

implemented and the related reporting and payments are closed since 2015.

• In fact, the EIT signed the 2014 grant agreements with KICs in February 2014 and paid EUR

95.4 million pre-financing already in March 2014. The Court of Auditors carried out three audit

missions at the EIT premises between the signature of grant agreements (February 2014) and

the final payments (August-September 2015) as follows. Had the Court raised their

disagreement in the interpretation of the applicable legal basis during any of these audits, the

EIT could have asked for the legal opinion of the European Parliament and the Council.

• In case the Budgetary Authority, based on the qualified audit opinion of the European Court

of Auditors, does not grant discharge to the EIT Director in respect of the implementation of

the Institute’s budget for the financial year 2015, the only remedial action the EIT can

potentially take is to recover the „irregular” funding paid to the Knowledge and Innovation

Communities, which include universities, research organisations and SMEs. A recovery would

in practice be difficult as the beneficiaries followed the applicable rules that were issued to

them by the EIT and could challenge such a recovery for which the EIT has in practice no

basis. If a recovery would nevertheless be enforced it could lead to serious liquidity problems

if not bankruptcy of the Legal Entities of the Knowledge and Innovation Communities as they

would have no possibility to recover such amounts from their partners or compensate for them.

• As grant payments claimed by the KICs, and made by the EIT in 2015, were fully in line with

the provisions of the 2014 EIT-KIC Grant Agreement, and taking into account the legal context

as outlined above, a recovery could potentially lead to legal actions from many of the

EIT’s most important beneficiaries. This would result in significant reputational damage

for the EIT, the Commission and the European Union as a whole that could affect the

credibility of the institutions and hamper the attainment of their objectives under

Horizon 2020 and beyond.

4. Given that the KICs are business-orientated entities, how is performance integrated

into the remuneration policies for senior management in the KICs?

The remuneration policies for senior management vary across KICs but most of them use a

combination of fixed and variable components where the variable component of the

remuneration is paid upon achievement of pre-determined, quantifiable performance targets

linked to the strategic objectives of the KIC.

As the EIT explained in its official replies to the report of the European Court of Auditors, while

the practice of reimbursing bonuses, as variable and performance-based components of

remuneration, may be unusual, the objectives pursued by KICs as business-driven

organisations, such as aiming for financial sustainability, are also unusual and cannot be found

in other programmes. The use of variable elements as part of the basic remuneration can

provide a strong incentive for good performance and ensure that value for money is achieved.

In fact, performance-based remuneration of KIC management staff is considered most

appropriate in a business-driven model.

It is important to note that the Court of Auditors has not questioned the legality and regularity

of paying bonuses and has not stated that it would contradict to the principles of sound

financial management either. Actually, bonuses, as variable components of the basic

remuneration, are explicitly foreseen as eligible cost in the Horizon 2020 legal basis on the

following three conditions:

• The variable complement is authorised by national law, collective labour agreement or the

employment contact (or equivalent appointing act).

• The amount to be actually paid as variable complement is determined on the basis of

objective conditions which are, at least, established and documented in the internal regulations

of the beneficiary.

• The variable complement cannot be paid to the employee at the sole discretion of the

manager (arbitrary complement). The decision to grant the complement must be based on

objective conditions, which should be documented in a procedure and be verifiable.

In the particular case reported by the Court of Auditors, all three conditions have been met by

the KIC in question in respect of the bonuses paid. The bonuses are explicitly set out in the

employment contracts and they are determined based on the achievement of objective and

quantified performance targets established on an annual basis linked to the KIC’s objectives

and to the EIT core KPIs measuring the KICs’ performance. The KIC CEO in question had

achieved his performance targets in 2014, which entitled him to the bonus set out in his

employment contract (a non-exhaustive list of performance targets was as follows: 250 new

students in all education programmes, number of graduates with employment contracts signed

six months after graduation, 14 start-ups/spin-offs where the KIC has at least 5% equity stake,

20 new technologies filed for patenting). The performance appraisal of the KIC management

team based on the achievement of performance targets was carried out and the decision on

the payment of bonuses was taken by the Supervisory Board of the KIC.

Furthermore, the EIT is of the opinion that Recommendation No 3 of the Court of Auditors’

Special Report 4/2016 is relevant in this context. According to the Court of Auditors, “the EIT

should seek greater autonomy and make use of the flexibility in Horizon 2020’s legal basis. In

particular, it should adopt specific rules tailored to the needs of the KIC partners.” This is

exactly what the EIT has done when accepting the performance-based remuneration system

introduced by the KIC Legal Entity in question.

The Court of Auditors also states in its comment that the bonuses “should be taken into

account in the ceiling for the EIT funding of individual salaries which will be applied with effect

from the 2016 grant agreement”.

While the EIT considers that both the total level of salaries and the practice of paying

performance-based components comply with the relevant rules and the principles of sound

financial management, the EIT has introduced, as from 2016, ceilings for the EIT contribution

to management and overhead costs and staff costs in order to encourage KICs to work further

towards financial sustainability. In practice, the EIT applies a double cap system now: 1) an

overall cap, in terms of percentage of total EIT funding, for the management and overhead

costs; 2) individual caps per job category to determine the maximum EIT funding for staff

costs. The overall cap is set at 18% in 2016 and will be gradually reduced to 12% by 2018.

The individual salary caps are based on the salary scales for officials of the European Union

as set out in the EU Staff Regulations. We consider these caps as reasonable and justified for

the type of innovative activities carried out by the EIT’s beneficiaries.

The use of performance based remuneration elements is also in line with the overall move of

EU programmes towards more performance based budgeting and the improved linkage

between the achievement of results and budget allocations. It is also a widely used practice

in business and also in several Member States in the public administration. The EIT as an

innovation agency with a business driven model for its Knowledge and Innovation

Communities considers that it should be at the forefront of performance based approaches.

5. How has the EIT improved its strategic vision for its future?

The EIT’s current vision and strategic objectives are enshrined in the EIT Regulation and the

EIT’s current Strategic Innovation Agenda 2014-2020. Our vision is to become the leading

European initiative that empowers innovators and entrepreneurs to develop world class

solutions to societal challenges, and create growth and skilled jobs. Our strategy has been

designed to contribute to the achievement of this vision and is also fully aligned with several

of the priorities of the Juncker Commission. In recent years, we have seen an increasing level

of results and impact from our activities. This success is based on the application of closer

integration of business, research and education, which is the unique feature of the EIT. Our

future strategy will build on this successful model where currently over 800 excellent partners

form the biggest and most powerful European innovation community, which we expect to

further expand in the coming years.

In recent years, the EIT has further developed its strategic vision with regard to key features

of its Innovation model, such as the achievement of the financial sustainability of the

Knowledge and Innovation Communities, the nurturing of entrepreneurial minds through

education and skills development activities and the widening of participation in EIT activities

through outreach in areas of Europe with lower innovation capacity. These areas have been

in the focus of the EIT’s multiannual strategic objectives in recent years.

The EIT is currently preparing its next draft Strategic Innovation Agenda (SIA) 2021-2027 to

be submitted to the European Commission at the latest by 30 June 2018 as required by Article

17 of the EIT Regulation. This seven-year strategy will define the priority fields and strategic

objectives for the EIT, including:

• An assessment of its socio-economic impact and capacity to generate the best innovation

added-value;

• An analysis of potential and appropriate synergies and complementarities between EIT

activities and other Union initiatives, instruments and programmes;

• An estimate of financial needs and sources and an indicative financial plan.

It will take into account the results of the monitoring and evaluations of the EIT, which are

currently under preparation including an impact study and dedicated reviews which the EIT

carries out on knowledge triangle integration, education, business creation and innovation

activities. It will also consider the recommendations of the high level group set up by

Commissioner Navracsics which presented its final report to the EIT in December 2016. A

working group composed of members of the EIT Governing Board and its staff has been

formed in November 2016 to develop the future strategy of the EIT.

6. How has the Agency improved its HR policies to attract qualified employees and

reduce the employee fluctuation?

The EIT has achieved full staffing through a series of measures that were implemented in the

last two years and substantially improved the staff management, recruitment process, reduced

turnover and improved the work environment. As of 15 December 2016, the EIT employs 59

staff for the 63 authorised positions and two more letters of offer have already been accepted

increasing the headcount to 61 by February 2017. This is the highest number of staff employed

in the history of the EIT. Recruitment for the remaining vacant posts is ongoing. One Head of

Unit post mentioned in the Court of Auditors’ report as being vacant since 2013 was filled in

August 2015. The selection procedure for the other Head of Unit post has been finalised and

the post will be filled early 2017.

In order to reduce staff turnover and achieve full staffing, the EIT has implemented the

following actions.

• The EIT put in place an appraisal and re-classification system in autumn 2014 to provide a

better career perspective to EIT staff.

• The EIT has signed a contract for provision of interim staff services in order to temporarily

replace staff on long-term maternity leave.

• The EIT has introduced a traineeship programme and offers five-month traineeships similarly

to other EU institutions and agencies to assist permanent staff.

• In the area of vacancy management, the EIT has improved its staff on-boarding and off-

boarding checklists, made selection procedures more effective and efficient, enabling longer

reserve lists established in shorter time and with more attention to potential conflicts of interest.

• Joint recruitment panels with CEPOL, another EU agency based in Budapest, have been set

up in order to increase efficiency.

• The EIT also revised and improved its training policy to ensure that staff has the required

skills and competences.

• The EIT has signed cooperation agreements with international schools and kindergartens in

Budapest based on a new schooling policy to be able to attract and retain qualified staff with

a family.

• The EIT has been applying short-term internal redeployment of staff in order to address

temporary high workload in certain areas and will continue to use and expand this concept to

increase efficiency and balance out temporary workload differences among different parts of

the EIT.

• Furthermore, the EIT is exploring the possibility to offer permanent contracts and has

reinforced internal communications to increase staff commitment and engagement.

Nevertheless, the actions taken by the EIT cannot compensate for the effects of the

unreasonably low correction coefficient of 69% applicable in Budapest. The correction

coefficient has declined steadily over the past four years, while the cost of living in Budapest,

in particular as regards housing, has not decreased. Staff departing have repeatedly quoted

in exit interviews the unattractive salary package as one of the main reasons for leaving the

EIT, together with better career perspectives elsewhere as the EIT, unlike the Commission

and most other agencies, cannot offer indefinite contracts due to limitations in its Regulation.

EMCDDA1. Why was the ceiling specified in the framework contract for signing specific contracts

not respected? How does the Agency plan to improve the procedure for monitoringframework contracts?

In line with the relevant financial provisions, the referred ceiling, as mentioned in therelevant contract notice, indicated the estimated value of the contract, rather than amaximum threshold. In this context the framework contract 2 did not mention anymaximum threshold.

Furthermore, the Agency is planning to improve the procedure for monitoringframework contracts following the new Legal Kernel Commitment that the Commissionwill make available as from 2017 to the Commission itself and the Agencies.

2. How will the Agency regulate the early warning system with regard to increasingnumber of new synthetic drugs?

Over the past few years the huge growth in availability of new psychoactivesubstances (NPS) has driven greater complexity into the drug problem. As a resultEurope is seeing major new challenges emerging that can rapidly threaten publichealth. Alongside an increase in the number of non-fatal and fatal poisonings beingreported to the EMCDDA Early Warning System on NPS, a striking development isoutbreaks of mass poisonings, which can involve hundreds of people over a shortperiod of time and have the potential to overwhelm emergency medical services.Outbreaks of infectious diseases have also been reported.

The Commission’s proposal for a regulation amending Regulation (EC) No1920/2006 as regards information exchange, early warning system and riskassessment procedure on new psychoactive substances is expected to enter intoforce in 2017. This regulation will further strengthen the provisions concerning theearly warning on new psychoactive substances and will make more efficient the riskassessment procedure by shortening the deadlines for all stages of the procedure.

In addition, the Agency is implementing a work programme to strengthen the EUEarly Warning System (EWS). This includes strengthened situational awareness, riskand crisis communication, planning as well as response and recovery activities(including emergency preparedness and crisis response) and includes the integrationof major new systems into the EWS:

new electronic information, monitoring and reporting system (EDND) (whichallows secure data submission and management);

open source information monitoring system (which provides additional realtime data on emerging threats);

toxicovigilance system (which allows early detection of an emergingtoxicological problem such as poisonings);

signal management system (which will systematically identify, assess,prioritise, and respond to signals of potential public health concern); and,

risk communication system (which will strengthen situational awareness,planning, response and recovery to public health issues, including potential

crisis situations such as mass poisonings).

Together this approach will strengthen early warning activities by ensuring highquality data from a broad range of sources and allow the use of an integrated and allhazards approach to identify, assess, understand, prioritise, and respond to signalsof potential public health concern related to new psychoactive substances.

ENISA1. Why is it necessary to relocate staff to Athens? How many people are affected? What

are the estimated costs of the relocation?

The Agency clearly states that it doesn’t have any advantage in having two officesand the Agency keeps stressing with the local authorities and the EC the advantageto realocate the Agency in the single office in Athens.

The remaining staff in Heraklion are 14.

The estimated cost regarding the relocation of all staff as well as the furniture isestimated around 360.000 Euros

EFSA: reply on the next page

EFSA’S ANSWERS TO CONT QUESTIONNAIRE UNDER THE 2015

DISCHARGE EXERCISE FOR EU DECENTRALISED AGENCIES

January 2017

EFSA

1. How many times, in 2015, has EFSA used confidential information as a key element

for granting permits or for authorizations renewals? How does EFSA evaluate the

fact that attributing a key role to confidential information can affect the credibility and

the principle of transparency of the Agency’s decisions?

By law, EFSA is not responsible for the granting or renewing of market

authorisations of regulated products. This task rests with the risk managers in

the European Commission and the Member States.

As an agency of the European Union, EFSA operates within the legislative

framework adopted by the EU Legislators. Within the domain of “regulated

products“ the Authority assesses products, substances, organisms, processes

and claims under more than 20 different authorisation procedures. These legal

acts set out in detail the administrative steps EFSA has to comply with. A

principle common to these acts is that the burden of proof that a product is safe

rests with the individuals and/or companies submitting applications for market

authorisation (or the renewal thereof). For that purpose, applicants commission

studies according to internationally agreed protocols (e.g. OECD guidelines) to

be submitted to EFSA as part of their application dossier. EFSA complements

the assessment of applicant's studies with an assessment of the information and

data available in the open scientific literature or in other regulatory authorities’

outputs. As stipulated in the legal framework, applicants have the right to submit

confidentiality claims on the information contained in their application dossier.

Consequently EFSA, by law, has to use on regular basis legitimate confidential

information for the safety assessment of regulated products.

The power to decide on whether or not data or information submitted by

applicants should be considered confidential is delegated by the EU legislators,

usually to the European Commission. This is the case, for example, for GMOs,

feed additives, smoke flavourings, and food contact materials.

EFSA is aware that stakeholders may perceive the partial granting of confidential

status to application dossiers as an impediment to the transparency of EFSA’s

scientific processes. However, the applicable legal framework is not a choice

made by EFSA; the Authority executes the rules put in place by the legislators.

Within its own remit EFSA does its utmost to make the process of risk

assessment as transparent and as reproducible as possible. EFSA’s Strategy

2020 focuses particularly on the importance of openness and accessibility.

In 2015, EFSA delivered 306 scientific opinions on applications for market

authorisations. All EFSA’s scientific outputs are published online in the EFSA

Journal. Whenever the Authority identifies a safety concern or is unable to

conclude on the safety of a product, EFSA publishes these findings

transparently, irrespective of whether they were based on confidential or publicly

available data.

2 | P a g e

In the absence of a more liberal legal framework and in order to increase

transparency and trust in the EU risk assessment process, EFSA engages with

its institutional partners and stakeholders to come to voluntary agreements for

widening the access to information used in the risk assessment process.

EFSA would very much welcome a clearer European legislative framework

allowing the proactive publication of more data.

2. How has the Agency improved its independence and conflict of interest policy,

particularly with regard to expert groups and external consultants? What measures,

criteria and rules has the Agency implemented or introduced in 2015 to avoid and

fight against real or perceived conflict of interests, in particular with the economic

sector it regulates? How has the Ombudsman’s relevant ruling been taken into

account? Were there any cases reported, investigated or concluded in 2015?

EFSA operates a robust system to prevent the occurrence of conflicts of interest

among its experts, staff and consultants. The internal framework preventing

conflicts of interest was last amended in 2014, following an ex post evaluation on

the rules previously in force.

The rules in force prevent the occurrence of conflicts of interest by means of a

systematic and detailed evaluation on whether activities (interests) performed by

the expert over the last five years and activities the expert is supposed to

perform for EFSA (for a certain scientific task in a certain role) overlap.

Based on that evaluation, EFSA may apply measures to ensure the expert is not

put in a situation which may give rise to a conflict of interest. The evaluation

criteria EFSA uses to assess experts, staff or consultants’ interests are published

on EFSA’s website, thus allowing interested parties to scrutinise whether

declarations of interest were screened by the Authority in compliance with its

own rules. This also serves to empower the concerned individual to know in

advance of engaging in another activity whether or not it is likely to impact on his

or her involvement at EFSA. The potential impact on the reputation of the

concerned individual, as well as the risk of dismissal from EFSA’s activities, is

relied upon as a mitigation measure against incomplete or false declarations of

interest.

To allow EFSA to identify and prevent potential conflicts of interest as early as possible, experts working for EFSA’s Scientific Committee, Panels and working Groups are required to declare their interests at three levels:

1. In writing at least once a year, on the entire scope of EFSA’s responsibilities

via the “Annual declaration of all interests”;

2. In writing once before each meeting in relation to the items of the agenda of

this meeting, via the “Specific declaration of interests related”; and

3. Orally, once before each meeting commences, via the “Oral declaration of

interests”.

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EFSA’s pre-2012 system concerning the independence of scientific expertise

has been acknowledged by the European Court of Auditors (ECA) and described

as “relatively effective” for conflicts of interest prevention.1

Since then, EFSA further improved its approach by building on suggestions

gleaned from the European Parliament, stakeholders and ECA inputs, which

were addressed in the rules currently in force. This inter alia includes the

transparent description of screening criteria for declarations of interest and a

robust procedure to investigate breaches of trust.

The scheme in place for EFSA’s external experts appears to be effective, as can

be inferred by a constantly decreasing trend (Table 1) in the incidence of

confirmed breach of trust cases and of prevented conflicts of interest.

Year DoIs

Screened (ADoI+SDoI)

Potential CoI

prevented (ADoIs+SDoIs)

Ratio Meeting

agenda items

Breach

of trust cases

Staff members

leaving EFSA

2011 8526 356 4.2% 39,500 2 Total : 25

Private sector : 3

Restrictions : 1

2012 6869 272 4% 36,609 1 Total : 28

Private sector : 4 Restrictions : 0

2013 6191 247 4% 36,501 0 Total : 29

Private sector : 4

Restrictions : 3

2014 6962 145 2.1% 34,456 0 Total : 20 Private sector : 2

Restrictions : 2

2015 7607 96 1.3% 32,200 0 Total: 28

Private sector: 5

Restrictions: 2

Table 1

In 2014 and 2015, EFSA put much emphasis on the redesign of the applicable

rules and in improving compliance as well as internal coordination and support,

with the aim of achieving better efficacy in the overall system. In 2015, as

already acknowledged by the European Parliament in last year’s discharge

exercise, EFSA started piloting the centralisation of the validation of the

declarations of interest submitted by its external scientific experts. The

centralisation in EFSA’s legal affairs unit was achieved a few months later in

2016, in full consideration of the EP’s previous recommendations.

In 2015, EFSA started an internal reflection on how to further develop the 2011

policy on independence and the 2014 rules on declarations of interest. This

resulted in a concept paper presented to EFSA’s Management Board in June

2016 which is available on EFSA’s website. The review process is still ongoing

and will be completed in 2017.

Concerning the European Ombudsman, the following complaint was closed in

2015:

1 Deloitte, Input document to inspire the debate between EFSA and its stakeholders regarding the future of the

EFSA DoI policy and its Implementing Rules May 2014, p. 7.

4 | P a g e

case 346/2013/SID on alleged conflict of interest in the Working Group on

Genetically Modified Insects, where EFSA rejected the remarks of Ms O’Reilly to

screen not only all the interests held by the experts themselves, but also those

carried by their respective employers, when belonging to the academic sector. In

its recently published report 'Putting it Right': How the EU institutions responded

in 2015 (OUT2016-006518), the Ombudsman expresses “disappointment” at the

rejection of her remarks. EFSA takes note of this position and confirms that an

implementation of the remarks expressed in the Ombudsman’s decision is

practically not feasible. EFSA lacks the legal basis to oblige universities and

comparable entities to which its experts are affiliated to disclose the entirety of

their economic or professional links on a global scale. Similarly, the Authority

also lacks the ability to process and evaluate this information, let alone to

enforce or sanction breaches of, or resistance to, such requests. Further, as

documented in its Annual Reports, EFSA confirms that it is systematically

screening all the interests declared by all its experts, including those working for

the academic sector, with a view to preventing the occurrence of situations that

would lead to conflicts of interest. Interests declared by experts working in the

academic sector are subject to the same rules and scrutiny applied to all other

experts. This already includes a consideration of the nature of relevant entities,

their funding, whether they pursue public interest objectives and if they have in

place independence governance features comparable to EFSA. Therefore,

EFSA is already exercising a high level of scrutiny on interests held by its

experts working in the academic sector.

3. How does the agency appoint and use external experts? How do the external experts

contribute to EFSA’s policy areas and does EFSA monitor and report on the usage of

experts? Are they subject to EFSA’s policy on prevention and management of

conflicts of interests?

In line with its founding regulation, EFSA uses external scientific experts in its

Scientific Committee, Scientific Panels and in the Working Groups. EFSA’s

Scientific Panel experts are the main actors in EFSA’s scientific assessment

work and are responsible for adopting EFSA’s opinions. Each of the 10 Panels is

dedicated to a different area of the food and feed chain. The Scientific

Committee has the task of supporting the work of the Panels on cross-cutting

scientific issues. It focuses on developing harmonised risk assessment

methodologies in fields where EU-wide approaches are not yet defined.

As part of its Annual Report published on EFSA’s website, the Authority reports

every year in a detailed manner on how it uses its experts, including the number

of meetings held, the outputs finalised and adopted, the money spent by the

Authority in the organisation of meetings and related activities.

Concerning the experts’ selection, EFSA follows a procedure adopted by EFSA’s

Management Board. A distinction should be made between, on the one hand,

members of EFSA’s Scientific Panels and of EFSA’s Scientific Committee and,

on the other hand, members of working groups:

For EFSA’s Scientific Panels and Scientific Committee, at least one year

before their re-establishment, EFSA publishes an open call for applications

5 | P a g e

from scientific experts specialised in the fields within the remit of EFSA’s

Scientific Committee and Panels. The Management Board nominates the

new Scientific Committee and Panel members, based on a shortlist

submitted by the Executive Director. The experts are selected on the basis

of their scientific merits and after having been cleared of any conflicts of

interests.

To be noted that this procedure includes a quality assurance mechanism,

which involves an independent external review of EFSA’s evaluation of the

application process. Observers from the European Parliament, the European

Commission and the EFSA’s Management Board take part in this external

review.

For the working groups, members are identified via a search of relevant

scientific databases taking into account the required scientific profile needed

for the working group and are appointed by the responsible Working Group

Chair in agreement with EFSA.

All experts are subject to EFSA’s policy on prevention and management of

conflicts of interests. The whole system was mainly, but not exclusively,

designed for preventing conflicts of interests of EFSA’s external scientific

experts. Before appointing any expert, the Annual Declarations of Interests are

assessed in accordance with EFSA’s Independence policy and rules.

4. Could the Agency please present the main results of the systemic review of its Policy

in Independence and Scientific Decision Making Process?

The systemic review of the 2011 Policy on independence is on-going (December

2016). In October 2016, EFSA established a Working Group of its Management

Board, the aim being to fine-tune the approach discussed by the Board in June

2016 and to analyse the requests and suggestions from the European

Parliament and other institutional partners or interested parties, as well as the

policy options available to the Authority to address these. In parallel, EFSA

outsourced an ex post evaluation of the 2011 Policy and of the 2014 Rules on

Declarations of Interest. The evaluation and the input of the Management Board

Working Group will serve as the basis for a draft policy on independence that will

be put out for public consultation in spring 2017. EFSA’s objective is to have a

new policy on independence adopted by its Board in summer 2017.

5. Will the Agency publish the remunerations for expert’s declared activities?

EFSA is fully committed to complying with the transparency requirements set out

in the applicable legal framework. The Authority systematically publishes, with no

restrictions, the declarations of interests submitted by its experts, including any

cash flow declared therein. However, EFSA’s independence policy does not set

any threshold and applies the same scrutiny criteria to all declared interests,

irrespective of their actual amount. The financial aspect of experts’ professional

activities is intrinsically reflected by means of a revenue assumption

implemented by the different interest categories reflected in the rules combined

with the pre-defined preventive actions linked to each of these. This means that,

6 | P a g e

even in absence of explicit cash flow declarations, the EFSA system allows for

the identification of conflict of interests.

6. What percentage of the declarations of interests has the Agency checked in 2015?

Since the adoption of its 2011 policy on independence, EFSA assesses and

validates 100% of the declarations of interest submitted by its experts. On

average, this corresponds to a grand total ranging from 6.000 to 7.000

declarations of interest per year that are assessed and validated by EFSA’s staff

in accordance with its policy on independence and rules on declarations of

interest. Furthermore, twice per year, EFSA performs additional compliance and

veracity checks by staff not involved in the ordinary checks mentioned above.

This further compliance and veracity check is executed as an additional level of

reassurance on a sample of all the Declarations of Interests checked in the year

to verify whether they are complete and if the screening and validation process

has been performed in accordance with EFSA's rules. The outcome of these

compliance and veracity checks are communicated to the Parliament and made

publicly available in EFSA's annual reporting.

7. Have the minutes of the Agency's management board meeting been made public?

Since its establishment in 2002, EFSA publishes the minutes of its Management

Board on its website. Furthermore, the meetings are open to the public upon

registration, and the audio recordings of the public sessions are available on the

Authority’s website.

8. What percentage of cases of access to document under 1049/2001 has the Agency

refused/partially refused in 2015 and what was the most used reason for refusal?

Each request filed under the Regulation on Public Access to Documents (PAD)

is assessed in accordance with the applicable legal framework and case law. All

PAD requests handled in 2015 resulted in documents or data being disclosed by

EFSA.

Because of exceptions applicable to some of these cases, 64% of PAD requests

resulted in granting a partial access to the requested documents. In this respect,

the most invoked protective ground for partial access was the exception on

personal data (applied to 51% of partial access cases), followed by the exception

on commercial interests (applied to 33% of partial access cases) and the

exception for ongoing decision-making (applied to 23.5% of partial access

cases).

eu-LISA: reply on the next page:

eu-LISA

1. In its responses to questions for the 2014 discharge, the Agency informed the Parliament that it had adopted “a structured approach to budget ownership” in 2015, with completion in 2016. Has this new approach yielded positive results with regard to strengthening and refining budgetary management?

The budget ownership model was introduced in 2016 as planned. It formalised and distributed budgetary responsibility planning-implementation-monitoring among managers in the Agency, at the level of head of Unit and above. Based on risk assessment, each item in the budget was assigned specific operational initiators and verifiers, whereas the financial circuits are centralised under the Finance and Procurement Unit; each line has a dedicated authorising officer by delegation, with a defined cascade of alternates should the principal be unavailable. The system evaluation indicates that the budget ownership model was successful and achieve the target of strengthening internal control without disrupting financial management. As regards the impact of the model on the accuracy of budget planning, the system will need testing at the end of the 2017 financial year.

2. Why was the delegation by the authorising officer missing when the call for expression and the pre-selection of candidates for participation in a negotiated procedure took place?

The market prospection was carried out by the operational initiating agent, under the supervision of his line manager, by resorting to a two-step approach assisted by an external consultant for the technical aspects:

• a desk survey resulting in a long list of 15 potential candidates;

• a call for expressions of interest launched via an email separately sent to the companies in the long-list; this resulted in a short-list of 4 potential candidates, then invited to take part in the negotiated procedure.

The second step aimed at assessing companies’ willingness to participate as well as, though summarily, their overall technical and financial fitness to execute the project. In this last respect, it must be emphasized that the technical parameters used to draw a short-list out of the initial long-list were not obligatory selection criteria but general drivers -basically consisting of readily available corporate, administrative, legal, financial and marketing data promptly to be retrieved and transmitted- to help companies self-assess their own capability in relation to the envisaged project. Those parameters were refined and compulsorily used as selection criteria only during the call for tenders.

Based on the above:

• no pre-selection, under the meaning of the FR and RAP (i.a. formal application of pre-set selection criteria), took place before the launch of the negotiated procedure;

• the call for expressions of interest was used as part of the market prospection and not as a procurement procedure (no time limits are set for inquires in the scope of a market prospection).

3. What is the current state of the modernisation of the building in Strasbourg? Can the Agency specify the related costs?

Following the approvals from the Council of the EU on 5 May 2015 and the European Parliament on 8 June 2015, the European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA), concluded ongoing tender procedure. A Design and Build (D&B) contract for the Upgrade and Extension of its Operational Centre in Strasbourg has been signed on 10 June 2015 with the French General Contractor Spie Batignolle Est (SBE). Scope of the contract included:

• Construction of a new office building for eu-LISA staff; • Construction of a new secured gate and Entry and Control Station Building; • Construction of a new Energy building; • Reconstruction and extension of the existing data centre facility.

Contract has a total duration of 26 months to be executed in two phases:

• a design phase, aiming on refinement of design prepared in advance and introduced during the tender. Its duration has been established to 4 months;

• an execution phase with duration 22 months as from the end of Design phase.

The contract value is EUR 21.5 million, plus a 2% contingency. The contract execution was initiated without delay with a Service Order sent out on 11 June 2015 following a kick-off of the Design phase held on 18 June 2015. To ensure overall oversight and governance of the project a Steering Committee for this project was established, chaired by the Head of Operations Department. A project team has been put in place, including external consultants knowledgeable in French building laws. As of the time of writing this report the project is 3.5 months behind initial schedule as the Design phase took longer than initially planned. The reason is twofold and is related to:

• Delay of contractor to submit in time all elements of detailed design of the site; • Introduction of several changes in the original design by the Agency like:

o Creation of a basement to include social facilities for staff on site (operations occur 24/7 on shifts), additional storage rooms and training rooms;

o Creation of an additional working space for up to 20 desks to increase total capacity of the new building.

Purpose of the changes was to refine design of the new site and to improve working conditions for the staff of the agency.

In parallel with technical works to finalize design, Agency performed extensive negotiations on a contractual amendment with contractor, to reflect agreed changes in the contract. At present negotiations are concluded and an amendment is signed. It shall be noted that regardless of changes in design the budget of the contract with the contractor was not affected and remains within initially approved margin (21,530,252.46 €). Preparatory works for Execution phase started on 22.02.2016 and Execution phase itself started on 29.04.2016. Reinforced security measures has been put in place to ensure protection of the site during the Execution phase. As of the time of writing of this report progress of construction works is as follows:

• New secure gate and Entry and Control Station Building is in operation as of mid-November 2016;

• Construction of the new office building advances with structural works, to be concluded by the end of December 2016; the building is expected to be ready for use in July 2017;

• Works on the new Energy are progressing; • Contractor is in a process of due diligence of the present data centre as an element of

preparatory works to start reconstruction.

The current financial situation of the costs is presented in the table below:

# Description of expenditure

Planned (€)

Actual (amount

committed by 31.12.2016)

(€)

Variation (+) vs

planned (€)

Amount paid by 31.12.2016 (€)

% paid

A- foreseen in the description provided to the Council and European Parliament

1 Deloitte consultancy (already paid)

1,200,000.00 1,200,482.30 482.30 1,200,482.30 100%

2 Costs of land 173,000.00 173,000.00 0.00 173,000.00 100%

3 Main Reconstruction project - C2

10,232,443.00 10,232,443.46 0.46 10,232,443.46 100%

4 Main Reconstruction project - C1

11,297,809.00 11,297,809.00 0.00 11,297,809.00 100%

5

Contingency for reconstruction project (2% of the main reconstruction projects C1+C2)

430,605.04 0.00 -430,605.04 0.00 0%

6 External consultancy for works supervision

600,000.00 516,750.00 -83,250.00 270,240.00 52%

7 Removal of modular containers

12,995.00 60,000.00 47,005.00 45,481.25 76%

SUB TOTAL A 23,946,852.04 23,480,484.76 -466,367.28 23,219,456.01 99%

B- not foreseen in A but incurred 8 Legal advice 0 60,000.00 60,000.00 42,081.84 70% 9 Notary fees 0 3,284.45 3,284.45 2,756.52 84%

10 Architectural services 0 1,000.00 1,000.00 1,000.00 100% 11 Utilities 0 9,425.00 9,425.00 0.00 0%

SUB TOTAL B 0.00 73,709.45 73,709.45 45,838.36 62% TOTAL A+B 23,946,852.04 23,554,194.21 -392,657.83 23,265,294.37 99%

4. In view of the reform of the Dublin system and as foreseen in the European Agenda on Migration, has eu-LISA assessed the related possible impact on the management of Eurodac system?

• An initial assessment has been performed by eu-LISA, based on the information available at the time of the preparation of the proposal for the Eurodac Reform. The assessment concerned the impact to the Central System. The results of the assessment have been provided to the European Commission and incorporated into the proposal for reform of the Dublin system.

• The Agency works in close cooperation with the European Commission and the Member States to further support the implementation of the necessary changes in the system.

5. In the area of migration, the Agency executed a pilot project in Greece in cooperation with Frontex and EASO, aimed at establishing technical and organisational measures to increase the efficiency of the registration process and data transmission capacity. What have been the key results of this project?

• From August to November 2015 eu-LISA together with Frontex and EASO conducted a pilot project to assess the processes and technological capacity to register asylum seekers and irregular migrants in the hotspot at Lesbos. eu-LISA focused on technological aspects and mapped the current technologies used by Greek authorities and the challenges encountered.

• The expertise needed on the spot to facilitate a smooth registration process from technological point of view was also assessed as well as security and statistics related aspects.

• eu-LISA identified what is required in order to increase efficiency of the registration in Eurodac. For the future eu-LISA proposed a “registration package” to improve the technological capacity to carry out registration. A flexible solution could be developed that could be available upon request to Member States in need to complement their existing capacity to perform registration in Eurodac.

• In addition, there is a need for standardization and harmonization of the use of technology and devices through development of national reference architecture. It will aim to optimize the use of technology from operational and financial point of view.

• Considering that technology plays a crucial role in enabling efficient and effective response to the migration crisis, eu-LISA reassured its readiness to contribute to the debate and share views on the ways to meet the needs of MS to facilitate registration processes.

6. With respect to prevention and management of conflicts of interests and the Anti-fraud Strategy and Action Plan adopted by eu-LISA Management Board on 18 Nov 2015, what is the state of play on the implementation of the Action Plan? To what extent have the guidelines for Agencies' anti-fraud strategies, elaborated by OLAF, been implemented?

A change of the action owner has delayed the development of the rules on the prevention and management of conflict of interests. The Agency aims at adopting the rules by the end of 2017 and start implementing them next day after adoption.

EMA: reply on the next page

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© European Medicines Agency, 2017. Reproduction is authorised provided the source is acknowledged.

EMA/10938/2017 European Medicines Agency

EMA reply to questionnaire from European Parliament Hearing on Agencies discharge for Financial Year 2015 (24 January 2017)

II. Questions to be answered by individual Agencies.

1. The Agency planned to implement automation of the operational processes for the collection of fees by the end of 2015. Has this resulted in fewer instances of due dates for payments not being respected?

The rules relating to the Agency’s collection of fees are governed by fee regulation No 297/95 and pharmacovigilance fee regulation No 658/2014. The Agency’s Terms and Conditions for payment state that the invoice is payable within 30 days from the date of the invoice.

In 2015, due to the implementation of the pharmacovigilance fee regulation, invoices issued by the Agency increased by 147%. In order to cope with the additional workload in a zero-growth environment, the Agency set up an invoicing portal, which allows its debtors to view, download and pay their invoices, as well as raise disputes on the invoice. In addition the Agency also improved its dunning procedure. A pre-reminder notice is sent to all debtors five days prior to the invoice due date, reminding of the upcoming due date and making reference to the provision of the financial regulations on interest charges in the event of non–payment of an invoice by its due date.

As a consequence of the actions taken, the collection of payments has improved in 2016 and is expected to further improve in 2017. While instances of late payments remain unavoidable, despite the significant increase in workload and no recourse to additional resources, the Agency has been able to maintain its positive levels of cash-flow and a satisfactory collection rate.

2014 2015 2016 (Jan-Nov) Invoices issued 7,561 18,699 17,919 % collected within 30 days 44% 42% 45% % collected within 45 days 79% 72% 78% Although there had indeed been some delays in the collection of fees and the subsequent payment to the national competent authorities, this delay has not (and will not) impact on the Agency’s and Member States’ ability to perform their public health tasks, including pharmacovigilance activities.

The financial transactions concerning Pharmacovigilance fees are handled completely separately from the Agency’s core responsibility in the area of pharmacovigilance.

EMA reply to questionnaire from European Parliament EMA/10938/2017 Page 2/7

All safety monitoring and regulatory activities such as signal detection, PSUR assessments, safety referrals, inspections etc. have been performed as required by the EU pharmacovigilance legislation.

In August 2016 the European Commission published a report on the pharmacovigilance related activities of the Member States and the EMA which demonstrates the successful operation of these activities. The report can be found here: http://ec.europa.eu/health/files/pharmacovigilance/pharmacovigilance-report-2012-2014_en.pdf

2. Given its location in the UK, it can be expected that the EMA will be significantly affected by the outcome of the UK referendum on 23 June 2016. At this stage, could the EMA provide details of its future contractual commitments and liabilities, specifically those linked to its physical presence in the UK, and particularly giving details on any possible costs associated with early termination? Given that the Agency entered a rental contract for its London premises in 2015, which is not expected to expire until 2039 and which foresees payable rent of €560 million for this period, could the Agency provide additional details on the terms and conditions of this contract? Has the Agency already taken any steps up until now regarding its possible future relocation?

The rental contract does not include early termination clause where the Agency would be released from the liabilities of rent and associated costs. This was noted in the opinion of the Committee on Budgets of 24 May 2011. The payable rent is estimated to €347,6 million for the remaining period from 2017 to 2039. The amount disclosed in the annual accounts includes landlord services, rates (occupied), landlord insurance and estate charge.

The Agency is currently exploring the applicability to this rental contract of general law principles such as the impact and consequences of major unforeseeable circumstances beyond the control of either party, bearing in mind however that the costs associated to the relocation are likely to play a role in the negotiations on the withdrawal agreement between the EU and the UK Government.

In addition, all procurement contracts entered into by EMA which may result obsolete after the effective date of Brexit may be terminated at 60-day prior written notice. The Agency is currently planning its future procurement needs also in light of location-dependent activities and the aforesaid termination clause.

As of 24 June 2016 the Agency has started to prepare for any possible scenario following the UK referendum on EU membership and the UK’s eventual exit from the EU by establishing a dedicated Task Force (the Operation and Relocation Preparedness (ORP) Task Force). Work undertaken and still ongoing focusses on (1) relocation preparedness, (2) operational and financial preparedness, (3) HR related matters and (4) communication (both internal and external) aspects. This has resulted so far in a number of finalised documents publicly available to explain how the Agency operates with key facts and figures, as well as details about the EMA premises (in terms of the specifications of the EMA premises). Work ongoing now focusses on the impact of loss of EMA staff in case of relocation (with scenarios up to 50% loss of internal expertise) and loss of external expertise due to a possible non-availability of UK expertise in the 7 EMA scientific committees and other EMA (scientific) fora. This impact assessment including remedial solutions should be available by the end of Q1 2017.

3. Have the minutes of the Agency's management board meeting been made public?

All minutes are made available on the website by the Agency within 2 days from adoption by the board.

The Agency has published the Management Board minutes since March 2009, on the below external webpage:

http://www.ema.europa.eu/ema/index.jsp?curl=pages/about_us/general/general_content_000104.jsp&mid=WC0b01ac0580028c31

EMA reply to questionnaire from European Parliament EMA/10938/2017 Page 3/7

4. What percentage of cases of access to document under 1049/2001 has the Agency refused/partially refused in 2015 and what was the most used reason for refusal?

Decisions on access in 2015[1]

Access given

Yes 445

Partial 8

No 48

Not Applicable[2] 96

Total closed 597

Granted 75% Partial 1% Refusal 8% N/A (not clarified, RFI, withdrawn) 16% Decision on appeals in 2015[3]

Appeals

Final refusal 10

Release 6

Partial 1

Not Applicable[4] 0

Total closed 17

Granted 36% Partial 5% Refusal 59% The Agency did not collect statistical data on the reasons for refusal of access to documents in 2015, however we are committed to providing this data for 2016. The reasons for which access to documents is refused are set out in Article 4 of Regulation (EC) No 1049/2001. Please find below a link to the regulation: http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1469001454533&uri=CELEX:32001R1049

5. What measures / rules has the Agency implemented or introduced in 2015 to avoid and fight against real or perceived conflict of interests, in particular with the economic sector it regulates? Were there any cases reported, investigated or concluded in 2015?

Scientific committees’ members and experts

The revised Policy 0044 on handling of declarations of interests of scientific committees’ members and experts became effective as of 30 January 2015.

[1] Including initial requests received in previous years but closed in 2014 [2] Request became RFI / Document is not held by the Agency / Clarification is not received / Withdrawn [3] Including appeals received in previous years but closed in 2014 [4] Withdrawn

EMA reply to questionnaire from European Parliament EMA/10938/2017 Page 4/7

The revision of the Policy took into account the experience gained since its last revision in 2012, and the outcome of the European Medicines Agency (EMA) public workshop on conflicts of interests held in September 2013. The revision aimed at achieving the right balance between ensuring the impartiality and independence of experts involved in the Agency’s work, versus the need to secure the best-possible scientific expertise to continually deliver high-quality scientific expertise.

The most important changes introduced relate to the introduction of a three year cooling-off period for the majority of declared interests with restrictions in involvement decreasing over time. However, in case of a previous executive role in a pharmaceutical company or a lead role in the development of a medicinal product during previous employment with a pharmaceutical company, this now results in a lifetime (i.e. during the term of the mandate) non-involvement with the company concerned or the medicinal product. For some interests, such as financial interests, there continues to be no cooling-off period once the financial interest ceased to exist.

The requirements for experts who are members of scientific committees remained stricter than for those participating in advisory bodies and ad hoc expert groups. Similarly, requirements for chairs and members in a leading role, e.g. rapporteurs, remained stricter than those for the other committee members.

The Agency updated the policy in October 2016 to further clarify the restrictions applied when an expert takes up a job in industry and to align the restriction applied in case of close family members of committee and working party members with interests in the pharmaceutical industry with those already applied to Management Board members.

A revised Breach of Trust procedure came into effect on 24 April 2015. The procedure was aligned with the revised Policy 0044 and amended in line with the experience gained since the introduction of the procedure in 2012.

In particular, an additional step was introduced by which the Agency seeks clarification/information from the expert before the procedure is formally launches, in particular by requesting the rationale for the absence of the information to be declared. The Agency subsequently assesses the information provided in order to establish whether the omission of the expert needs to be considered as a breach of trust.

No breach of trust procedure was formally initiated in 2015.

An ex ante control is carried out systematically on all new experts since June 2013. The ex ante control checks that the information has been entered in the correct section(s) of the electronic declaration of interests (e-DoI) and that the time periods in the declaration of interests match with those given in the Curriculum Vitae (CV).

In 2015, 491 e-DoIs were checked before the new experts were uploaded in the EMA’s experts database. For 18 experts (3.7%), an error was noted in the e-DoI. All experts were requested to submit an updated e-DoI with a higher, same or lower interest level than the original e-DoI.

Ex post controls are performed annually on different aspects of the process since 2012. An ex post control was conducted in 2015 to check the current e-DoI against the e-CV and the previous e-DoI, to check documented evaluation of the e-DoIs and documented implementation of restrictions at meetings.

A hundred experts, who were invited to meetings at the Agency during the period 1 February to 31 July 2015, were randomly selected. Overall, the control showed that the system for handling declarations of interests for meeting participation works well. No major problems with the e-DoI completion by the experts or the e-DoI evaluation by EMA staff were identified.

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The following improvements were recommended:

• Reinforcing for Scientific Advisory Group (SAG) meetings the requirement that participants are to have an up-to-date and signed e-DoI prior to involvement in the SAG activity in order to allow for the correct restrictions to be applied where necessary.

• Reinforcing for all meetings the requirement that participants are to be uploaded in the experts’ database prior to their first involvement in an EMA activity. If not feasible, in exceptional circumstances, e.g. SAGs, this should be done shortly after the meeting.

• Introducing the same principles for the evaluation of e-DoIs to all inspector working groups by applying to all of them the rules applicable for scientific committees’ and working parties’ members.

• Including applicable restrictions following the assessment of e-DoIs or absence thereof in the meeting minutes of the Committee for Medicinal Products for Human Use (CHMP) Vaccine working party and Coordination Group for the Mutual Recognition and Decentralised Procedure-Human (CMDh) Paediatric Regulation working party to harmonise the wording used across committees and working parties.

• Creating a virtual dedicated internal forum to address complex situations not covered by the policy and procedural guidance on the handling of declarations of interests of scientific committees’ members and experts.

The following has been initiated in 2015:

• A check of all human and veterinary scientific committees’ members’ and alternates’ e-DoI versus their CV and previous e-DoI has been completed in January 2015 following the implementation of the revised Policy 0044.

• The Agency updated its Policy 0044 in April 2015 to restrict involvement of experts in the assessment of medicines if they plan to take up a job in pharmaceutical industry. This restriction is reflected in a new guidance document.

In 2015, 4 experts notified the Agency of such intention, and were immediately restricted from any further involvement in the Agency’s activities.

• For scientific committees’ members and alternates, the Agency performs a pre-screening of the declared interests and requests the nominating authority to confirm acceptability of identified restrictions prior to any formal acceptance of a nomination from the nominating authority. This practice was already in place for all new CHMP and Committee for Medicinal Products for Veterinary Use (CVMP) members and alternates since 2012 and was extended at the end of 2015 to all other scientific committees. In case a nominating authority would appoint a member or alternate to a scientific committee or other forum, or an expert for participation in an activity of the Agency where the expert has declared interests which are incompatible with involvement in the Agency’s activities, the Agency would not allow this member or expert to participate, and would inform the nominating authority accordingly.

Management Board members

Policy 0058 on handling of competing interests of Management Board members was revised in December 2015 to achieve a better balance in managing declarations of interests of Management Board (MB) members versus the specific role and responsibilities of the Management Board and to maintain alignment with Policy 0044.

The involvement in Management Board activities now takes into account four factors: the nature of the declared interest, the timeframe of the interest, the type of Management Board activity/topic

EMA reply to questionnaire from European Parliament EMA/10938/2017 Page 6/7

and the likelihood of impact on the industry (the pharmaceutical industry or any other industry related to any declared personal interests) and what action is requested from the Management Board.

The policy came into effect on 1 May 2016.

The Agency revised the policy in 2016 addressing the outcome of the 2015 Agency’s annual review of its independence policies and their state implementation, keeping policy 0058 aligned with the policy for scientific committees’ members and experts (policy 0044) as well as the revised Decision rules for EMA staff.

In December 2015, the Management Board also endorsed a revised Breach of Trust procedure for Management Board members. This sets out how the Agency deals with incorrect or incomplete declarations of interests by Management Board members, and it has been aligned with the procedure for scientific committees’ members and experts.

No breach of trust procedures were initiated in 2015 for Management Board members.

EMA staff

No new initiatives regarding staff have been taken during 2015 in view of an imminent revision of the MB Decision on rules concerning the handling of declared interests of staff members of the EMA and candidates before recruitment, which was finalised in October 2016. This revision ensured alignment, where relevant, with the revised policies in place for the Management Board members (Policy 0058) and the Scientific Committees’ members and experts (Policy 0044). The main changes resulting from the revision in 2016 are as follows:

• Key definitions have been revised.

• The principles for identification and mitigation of competing interests have been revised in relation to a staff member’s scientific/regulatory duties or administrative/technical duties.

• The cooling off period has been changed to “current” and “0-3” for both scientific and non-scientific staff.

• A 5-year cooling-off period has been introduced for managers (with a scientific/regulatory role) with a previous executive role in pharmaceutical industry/lead role in the development of a medicinal product.

• Position in a governing body of a professional organisation with an interest in the field of pharmaceuticals has been added for transparency reasons.

The Agency has in place implementing rules to reinforce a systematic approach to assessing declared interests of the Agency’s staff, and to provide the required assurance on the independence of its staff members to stakeholders and the public. The rules apply in general to all temporary and contract agents, national experts on secondment, trainees, interims and visiting experts and to both staff members and candidates for recruitment.

On leaving the Agency, staff members are required to seek permission to engage in an occupation within a period of two years of leaving the Agency, in accordance with Article 16 of the Staff Regulations. Applications are reviewed to establish any potential conflict of interests, and if so required, on the basis of an opinion of the Agency's Joint Committee, the Executive Director will issue a decision, which may impose restrictions on the staff member to mitigate against any potential conflict of interests. For 2015, a total of 28 applications were made, resulting in 23 authorisations without restrictions and 5 applications with restrictions.

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An ex post control was performed in 2015 on the checking of conflicts of interests of EMA Product Leads (EPLs) in the Scientific and Regulatory Management Department within the Human Medicines Evaluation Division. The purpose of the ex post control was to verify if the procedure for checking of conflicts of interests of EPLs was followed correctly and in a timely manner prior to product allocation to the staff member. The sample for the ex post control was selected from the EPL allocations made during the period from 1 January to 31 August 2015 for products submitted for initial marketing authorisation. It consisted of 29 EPL nominations for staff with a declaration of interest with a risk level 2 or 3. The results showed that for one staff member with a risk level 2 a decision for checking of conflicts of interests was not completed at the time of product allocation, but has subsequently been done and restrictions were not necessary. Overall the control showed that the procedure is being properly followed. No major findings were found and no need for improvements was identified.

Annual review

As of 2015 the EMA performs a yearly review of all its independence policies and the status of implementation for discussion at its Management Board. Identified room for further improvement will subsequently be taken into account to optimise the EMA handling of competing interests. An annual report is drafted and published following discussion at the Management Board.

EUROFOUND: reply on the next page

Reply to specific 2015 Discharge questions

EUROFOUND

1. In 2015, Eurofound achieved and exceeded its key performance indicator onstaff capacity. However in the budget for 2016 the number of posts was cut to95 – 2 below the already hired personnel. How do you manage to overcomethis situation and the staff shortage?

Reply: The overall staff cut of 10% for Eurofound as a ‘cruising-speed agency’(rather than a 5% cut as for all other institutions), had and still has a significantimpact on the organisation as all posts were filled in previous years. This onlyallowed reducing the establishment plan in cases of fluctuation, retirement and non-renewal of fixed-term contracts. Nevertheless, up to this day Eurofound managed tocomply with the reductions imposed by the Commission. The problems wereovercome through carefully identifying the posts to be reduced in accordance with aset of strategic criteria. Preference was given to focusing reductions on supportareas, to minimise the impact on core activities. Nevertheless, there was impact onthe delay of some projects (see question below). Also, there were difficultdiscussions in relation to negative priorities with the Bureau of the Governing Boardand the remaining staff members were required to show flexibility in taking onadditional responsibilities.

2. In 2015 the Agency improved its performance in comparison to 2014 asregard the number of outputs planned in its working programme and yet thetarget of 80 % has not been achieved. What specific resources are needed inorder to guarantee the achievement of the key performance indicator onprogramme delivery?

Reply: Missing the target for delivery of outputs in 2015 which, in other words,means a delay in delivery of these outputs (but not dropping the related projects!) isdown to numerous reasons - amongst them delays by contractors but also our ownscarcity of staff resources (see question above). For 2016 a realistic number ofprojects and deliverables, in line with the available (reduced) resources, wereplanned and implemented. The key performance indicator of programme delivery for2016 shows, therefore, a significant improvement to almost 100%. Unfortunately,with the current resources outlook Eurofound’s flagship pan-European surveys arenot secured in the long term – at least not with the current sample size which ensurestheir validity. Also, Eurofound cannot commit to embark on further work, such as onMigrants and Refugees or Undeclared Work, despite strong requests from theGoverning Board.

EUROPOL: reply on the next page

Europol Unclassified – Basic Protection Level Releasable to the European Parliament (EP) and the Council

Page 1 of 1

The Hague, 11 January 2017

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Discharge proceedings by the European Parliament (EP) on the implementation of the budget for the financial year 2015

Europol’s answers to the specific questions by the Budgetary Control (CONT) Committee of the European Parliament:

1. “What security measures has the Agency put in place against a potential terrorist attack?”

Europol’s answer: • The evolution of the terrorist threat in Europe is characterised by an increasingly heterogene-

ous terrorist profile. From an overall perspective, the security threat has evolved into a new international dimension of unprecedented scale, which is evidenced by the series of terror at-tacks in the recent past across EU Member States and beyond. In December 2016, Europol’s European Counter Terrorism Centre (ECTC) published a report on the changes in modus operandi of jihadist terrorism. https://www.europol.europa.eu/newsroom/news/islamic-state-changing-terror-tactics-to-maintain-threat-in-europe

• Europol’s headquarters is based in the Netherlands, the competent authorities have assessed the current threat as substantial (Level 4 out of 5). By definition of the threat level, this means the “chance of an attack in the Netherlands is real but that there are no specific indi-cations that terrorists are preparing to carry out an attack in the Netherlands.”

• Europol is in close contact with the competent authorities of the Netherlands, with a view to continuously assessing the related implications for Europol, including situational security measures as well as the adjustment of business continuity arrangements. Details on the security measures are not disclosed to the general public, as the release of this information would imperil the security response undertaken.

2. “Is the agency working on an internal control system that would ensure securing sensitive data against a potential cyber-attack?”

Europol’s answer: • Europol’s evolving capabilities, in particular the European Cybercrime Centre (EC3) and, since

2016, the European Counter Terrorism Centre (ECTC), have increased the cyber threat profile of the organisation.

• At Europol, an information security management system is in place and adapted on an ongo-ing basis, in line with relevant international standards and best practice examples from indus-try.

• Europol’s arrangements include processes to maintain and continuously refine the organisa-tion’s: - Security configuration, including the ICT (network) architecture, accreditation of operat-

ed networks and systems etc.; - Vulnerability management, especially regarding core business data of Europol; - ICT asset portfolio, including the operated software (patch life cycle); as well as - Security incident and related risk management activities. Since 2013, Europol also operates a 24/7 monitoring and response capability in that context.

• In 2016, in particular Europol’s ICT network architecture was updated, with a view to harden-ing the protection of Europol’s core business data and related systems, including information exchange capabilities with EU Member States and third parties. As part of these measures, the network hosting core business data and systems was accred-ited at the level of ‘EU Confidential’.

• Europol is vigilant of the developing cyber security landscape and cooperates with relevant national authorities (e.g. Computer Emergency Response Teams - CERTs) and EU partners (European Union Agency for Network and Information Security - ENISA). Regular cyber security awareness events (cyber security month etc.) complement the re-sponse measures.

FRA: reply on the next page

FRA – Note 1

2015 Discharge of the EU decentralised agencies WRITTEN QUESTIONS TO THE AGENCIES Hearing on 24 January 2017 QUESTION TO BE ANSWERED BY INDIVIDUAL AGENCIES – FRA

1. “In its resolution on the 2014 discharge of FRA, the Parliament asked to be kept informed on follow-up on the rulings handed down by the Civil Service Tribunal in 2015, following the conclusion of the Ombudsman in complaint 178/2013/LP that the Agency had committed maladministration. Could the Agency provide such an update?”

Answer: The European Ombudsman’s case 178/2013/LP is not related to any of the court’s cases to which FRA was or is a party. However, the Agency would like to inform the European Parliament as follows:

- Case T-107/13 P, FRA is in the process of recovering its legal costs from the appellant. - Case T-658/13 P, FRA complied with the ruling. - Joint case F-25/14 and F-106/13, implementation in progress (appeal pending). FRA

has reintegrated the appellant and paid his legal costs. With regards to the case 178/2013/LP, the Agency provided additional comments to the European Ombudsman with regards to her findings.

FRONTEX

1. Does the Agency’s amended Founding regulation include any changes regarding thefinancial instruments at its disposal for funding Joint Operations and other activities?

In the amended regulation (EU)2016/1624 it is stated that the Agency shall finance or co-finance its activities from its budget in accordance with the financial rule applicable to theAgency. The binding term “grant” in the previous regulation was removed.

2. What specific measures have been taken or are planned by the Agency to improveits procedure for estimating costs to be accrued?

The estimation of costs to be accrued was done by the Accounting Officer based on a reportwhich excluded a part of the pre-financing as to be accrued; this omission was not realisedon time by the Accounting Officer; the Accounting Officer also did not consult his counterpartin the partner agency. Therefore, a part of the potentially to be accrued costs was not takeninto consideration during the preparation of the accounts.

The measures taken by the Accounting Officer responsible for estimating correctly theaccruals are that it will be based on all relevant data and information available, includinginformation from partner agencies which are concerned by the accruals. The AuthorisingOfficer will increase from his side the efforts to ensure that such shortfalls will not repeatedby cross checking the available data and more closely cooperating with the AccountingOfficer.

3. Could the Agency provide further details on the mitigating measures put in place toprevent double funding under the Internal Security Fund?

In 2016 mitigating measures put in place in cooperation with DG HOME so far are theaccess to the ISF database, where all plans and reports of the beneficiaries are madeavailable. Training on the functionalities of the Shared Fund Management common systemtool took place in Frontex premises in November 2016 for all the relevant users.

Furthermore, DG HOME invites Frontex to the relevant Asylum, Migration and Integrationand Internal Security Funds Committee meetings that take place. At the September 2016meeting Frontex had the opportunity to present the situation from its perspective and todiscuss with Member States.

Frontex also carries out ex-ante and ex-post controls whereby it checks supportingdocuments and simultaneously raises awareness amongst the Beneficiaries.

The issue of double funding is also regularly discussed in relevant Frontex meetings withbeneficiaries.

4. Has the Agency been able to conclude the Headquarters Agreement with Poland andif not, why not?

In line with the European Border and Coast Guard Regulation the Headquarters Agreement(HQA) must be concluded by 7 April 2017. Currently the negotiations between the PolishGovernment and Frontex are at its last stage; the agreement is pending on technical details

only. The final draft of the HQA is expected to be approved at the Management Boardmeeting in March 2017.

5. The ex-post audit to Iceland detected irregular payments totalling 1.4 million EURrelated to the depreciation of a vessel participating in several operations from 2011-2015.Why did the Agency seek to recover only the payments since January 2015 and amountingto 0.6 million, instead of the entire 5 years period, when the rules allow the recovery ofirregular payments made in the last five years?

In line with the stipulations contained in the template for Framework Partnership Agreementsof DG BUDG, the Authorising Officer may take the decision to recover all or part of thepayments made. It needs ot be recalled that the grant Beneficiaries are MS public authoritiesdealing with border management and migration issues.

Furthermore, the implementing rules to the Frontex Financial Regulation provide that theAuthorising Officer may waive recovery of an established amount where recovery isinconsistent with the principle of proportionality. Since the inception of ex-post controls bythe agency and in order to respect the principle of transparency and equal treatment towardsthe Agency’s beneficiaries, the authorising officer acted in accordance with the Agency’sbest practise of recovering irregular payments referring to the last 2 years of the cooperation.

The AO had respected the principle of proportionality in the light of the very specificfinancing scheme put in place by the agency, limiting it to 2 years. In line with that principleand after having received external legal advice the Authorising Officer announced to recoverEUR 0.6m; the recovery covers grants awarded since 2014. He also announced for thesame reason not to reimburse EUR 0.2m due in 2016.

6. Has the agency strengthened its cooperation withc Member States in terms ofpooling and sharing of the land, sea and air instruments?

In order to implement the new elements of the EBCG Regulation on pooling of resourcesand to strengthen its cooperation with Member States in this regards, the Agency took thefollowing measures:

• Define the European Border and Coast Guard Teams profiles;

• Develop the Rapid Reaction Pool of European Border and Coast Guard Teams;

• Develop the Rapid Reaction Equipment Pool as part of the Technical EquipmentPool;

• Define the European Return Intervention Teams profiles and develop the Pools offorced-return monitors, forced-return escorts and return specialists.

GSA1. The Agency’s Multiannual Work Programme for 2014-20 was only adopted in March

2015. Could the Agency provide an explanation for this delay?

The Agency’s Multiannual Work Programme (MAWP) 2014-2020 has so far not beenadopted, although a first version was provided to the GSA Administrative Board in June2014. The Agency has been hampered in its development of the MAWP due to therapidly changing status of the European GNSS programme, which is managed by theCommission and on which all GSA’s activities are dependent. Following thedevelopment of further versions of the MAWP and in discussion with the Commission,it has finally been decided to include the MAWP as part of the Single ProgrammingDocument (new work programme format), which covers the period 2017-2020.

2. Why is it necessary to wait until 2020 for the next validation of the accounting systemswhen the last validation took place in 2012?

The only system in the GSA directly inputting data to the accounts is ABAC, which isnot the property of the Agency and is regularly validated centrally by DG Budget.

The main reasons why a validation of the GSA local systems is not foreseen earlierare:

1. These local systems do not in any way interface with the ABAC system;2. There has been no amendment to the financial circuits, processes or

information flows after the last validation;3. There has been no amendment to the core functioning of these local systems.

After review and confirmation of GSA’s accounting system by DG BUDG as new GSA’saccountant in 2015, it was foreseen that a periodical validation of the local systems willtake place as stipulated in the Service Level Agreement between DG BUDG and theGSA. GSA is included in DG BUDG’s risk assessment since 2015. The risk summarytable is attached to the Work Programme that is sent to the ECA. These risk criteriaresulted in low risk. Would the next risk assessment result in a higher risk a newvalidation would be triggered.

3. What is the reason for the lack of having a Business Continuity Plan in place in Prague?

The Agency’s global BCP has so far not been updated. The reason for this is theAgency’s decision to focus in priority on securing continuity plans for its new sites,based on the assessment that for the purpose of ICS 10 the existing BCP wasmomentarily sufficient for its headquarters pending stabilisation of its operations andactivities within such headquarters. It is the Agency’s intention to proceed to such BCPupdate at global level within this year. A business continuity impact assessment to thateffect was launched in Q4 2016.

4. Do you intend to provide in the future the same level of detail when reporting aboutbudgetary implementation, as most other Agencies do?

The GSA is consistently investigating ways to improve its reporting on budgetaryimplementation and is currently examining the budgetary reports of other agencies inorder to identify best practice.

5. Do you have any plan in place to tackle the high staff turnover?

The Agency recognises a relatively high turnover, resulting from certain difficulties inattracting and retaining key staff in a very competitive and technical segment of theemployment market, essentially due to its HQ location and the relateddisproportionately low and steadily decreasing EU correction coefficient affectingsalary levels in Prague, CZ. The Agency is pursuing all available ways in order toincrease its attractiveness, e.g. by insisting on the significance of its mission and byintroducing a package of social measures, in addition to importantly covering schooltuition fees for GSA staff in absence of European schools in Prague.