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EuropeAidDELEGATED DELEGATED COOPERATION COOPERATION

AND CO-FINANCINGAND CO-FINANCING::Application of Aid Effectiveness Application of Aid Effectiveness

to EC proceduresto EC procedures

October 2009AIDCO/G7

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EuropeAidSUMMARY

1. Introduction

2. Common characteristics

3. Delegating to national agencies: indirect centralised management

4. Delegating to beneficiary countries: decentralised management

5. Delegating to international organisations: joint management

6. Transfer of funds from donors to the EC

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EuropeAid

1INTRODUCTION

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EuropeAidContext

• Aid effectiveness:

o Paris Declaration (2005) and Accra follow-up (2008); o European Consensus (2005); o Code of Conduct on Division of Labour (2007)

• Principles:o Ownershipo Harmonisationo Alignment

• Drivers: Use of country systems and Division of Labour

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EuropeAid

2DELEGATED COOPERATION AND CO-FINANCING

UNDER PRAG :Common characteristics

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EuropeAidNew specific legal basis for joint co-financing with and delegating to other donors

POOL FUND(Joint-co financed funds):

Managed by whom?

Donor 1 Donor 2 Donor 3

BEFORE 2007

ONLY by IOs

AFTER 2007

ALSO EC & national agencies & Benef countries

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EuropeAidManagement mode/Methods of implementation

executiveagencies

bodies set up byCommunities

"(tradit. agencies) "

bodies with a publicservice mission"(nat. agencies)"

centralisedjoint

(International

Organisations)

shared(MemberStates )

direct indirect

decentralised(Third

Countries)

The Commission may also manage funds received from other donors

(International organisations)

joint

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EuropeAidOverview

Entity Management mode

Legal instruments

Procedures for management

mode

1. Delegation to international organisation

joint management contribution agreement

procedures of the international organisation

2. Delegation to public or

private body with a public

service mission

indirect centralised management

delegation agreement

choice between the EC rules or that of

the delegated body

3. Delegation to beneficiary

country

decentralised management

financing agreement

choice between the EC rules, that of the beneficiary

country or that of other donor

4. Reception of funds by European

Commission

Defined in the AAP, usually direct centralised:

this modality refers only to the source of financing

transfer agreement

Depending on management

mode defined in AAP (usually EC’s

procedures)

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EuropeAidDELEGATED COOPERATION: Common characteristics- What does it mean?

Role of the delegatee entity (Beneficiary country, national agency, an IO): it becomes Contracting Authority instead of Commission

Launch procedures & sign contracts, Depending on the degree: manage payments to

contractors/grant beneficiaries Control

Delegated cooperation works both ways: The Commission can also be delegated by other donors : assigned revenues.

The use of Delegated Cooperation (management mode) has to be included in Financing Decision/AAP

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EuropeAidDELEGATED COOPERATIONCommon characteristics- Pillar Review

• The delegation of budgetary tasks requires an ex ante

assessment of the entity (pillars):

1) transparent procurement and grant-award procedures;

2) internal control system

3) accounting system

4) audit;

5) adequate annual ex post publication of beneficiaries

6) (for ICM only : access to documents)

Assessment carried out by G2/ responsible AO

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EuropeAid

3DELEGATION TO NATIONAL AGENCIES

Under Indirect Centralised Management

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EuropeAidIndirect Centralised management (I)

DA

MoU

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EuropeAidDelegation to a national body:Indirect centralised management (II)

CONDITIONS

- Who is concerned? Article 54(2)(c) FR/25(3)(b) FR 10th EDF:

national bodies or bodies governed by private law with a public-

service mission providing adequate financial guarantees.

- Choice of the entity: if complies with the principles of

economy, effectiveness, sound financial management and

efficiency and its is chosen in an objective, transparent and

non discriminatory manner + pillars (Art 56 FR / 26 FR 10th

EDF)

• Justification to the European Parliament.

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EuropeAidIndirect centralised management (III)

APPLICABLE PROCEDURES

- The assessment would determine the possibility for the national

body to use its own procedures or those of the Commission

(grants: difference between EDF and Budget).

- Steps: The use of the management mode and, in general, the name

of the chosen body is contained in the financing decision (Annual

Action Programme). This is approved by the relevant Committee and

the Commission (College)

- The agreement to be used is the Delegation Agreement (There

may be other documents: MoU amongst donors)

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EuropeAidIndirect centralised management (IV)

DELEGATION AGREEMENT

- Applicable fee: maximum 7%

- Contracting with third parties: procedures and rules of

nationality and origin.

- Are in-house activities eligible?

- Rules on eligibility of costs

- Financial aspects: Bank accounts and interests

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EuropeAidINDIRECT CENTRALISED MANAGEMENT (V): Sub-delegation & use of country system?

DA

MoU

FA?

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EuropeAid

4DELEGATION TO BENEFICIARY COUNTRIES

Under Decentralised Management

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EuropeAidDecentralised management (I)(EC & EDF funds)

BC acts as CA:

- Always delegated: award and signature of contracts.

-May be further decentralised:

- Payments (financial management

- Procedures to be used (finance & proc)

FA

Commission:

-Control (ex ante or ex post) always “centralised” =

residual tasks

Procedure:

-Pillar assessment for non EC procedures

-Decision college (decentralised management)

- Signature of a Financing Agreement

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EuropeAidDecentralised Management (II): Co-financing amongst donors

FA

MoU

HOW TO ENSURE REDUCTION OF TRANSACTIONAL COSTS?

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EuropeAidDecentralised Management (III): Cofinancing + Residual tasks

FADA

MoU

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EuropeAid

5DELEGATION TO INTERNATIONAL ORGANISATIONS

Under Joint Management

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EuropeAidJOINT MANAGEMENT (I)

CA

Procedure:

- Pillar assessment

- Decision college (joint management)

- Signature of a Contribution Agreement

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EuropeAid

6RECEIVING FUNDS FROM OTHER DONORS:

Assigned revenue/Transfer Agreements

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EuropeAidTRANSFER AGREEMENTS (I)How to receive funds from other donors

MoU

TATA

TA

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EuropeAidTRANSFER AGREEMENTS (II) PRINCIPLES

• Commission can receive funds from other donors:o Member Stateso Other third donor countryo International Organisations

• Authorization by the College to receive funds: Financing decision/Annual Action

Programme

• Priority of consumption of assigned revenues (funds received by donors)

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EuropeAidTRANSFER AGREEMENTS (III)MAIN ELEMENTS OF THE AGREEMENT

• Contributions would be incorporated in budget after signature of

a Transfer Agreement. Main elements:o The normal EC procedures will be followed to implement

these funds – so the Commission comply with the Financial

Regulations and Implementing Rules (audits, internal

control, procurement, accounting, etc)o Assigned revenues: “prioritary consumption” (art 10 RF)o Fee: average of 4%o Reports, visibility, etc

• Possible Memorandum of Understanding amongst donors

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EuropeAid

7MORE INFORMATION

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EuropeAidWhere can I find the information ?

− Internet on procedural aspects relating to Delegated Cooperation and Cofinancing:

http://ec.europa.eu/europeaid/work/procedures/implementation/international_organisations/index_en.htm