REPORT on discharge in respect of the implementation of the budget of the Clean Sky Joint Undertaking for the financial year 2010

4.4.2012 - (C7‑0298/2011 – 2011/2239(DEC))

Committee on Budgetary Control
Rapporteur: Monica Luisa Macovei

1. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on discharge in respect of the implementation of the budget of the Clean Sky Joint Undertaking for the financial year 2010

(C7‑0298/2011 – 2011/2239(DEC))

The European Parliament,

–   having regard to the final annual accounts of the Clean Sky Joint Undertaking for the financial year 2010,

–   having regard to the Court of Auditors' report on the annual accounts of the Clean Sky Joint Undertaking for the financial year ended 31 December 2010, together with the replies of the Joint Undertaking[1],

–   having regard to the Council's recommendation of 21 February 2012 (06086/2012 - C7-0050/2012),

–   having regard to Article 319 of the Treaty on the Functioning of the European Union,

–   having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities[2], and in particular Article 185 thereof,

–   having regard to Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking[3], and in particular Article 11(4) thereof,

–   having regard to the Financial Rules of the Clean Sky Joint Undertaking adopted by Decision of its Governing Board on 7 November 2008,

–   having regard to Opinion No 2/2011 on the Clean Sky Joint Undertaking’s Financial Rules, delivered by the Court of Auditors on 8 February 2011,

–   having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities[4], and in particular Article 94 thereof,

–   having regard to Rule 77 of, and Annex VI to, its Rules of Procedure,

–   having regard to the report of the Committee on Budgetary Control (A7-0115/2012),

1.  Grants the Executive Director of the Clean Sky Joint Undertaking discharge in respect of the implementation of the Joint Undertaking's budget for the financial year 2010;

2.  Sets out its observations in the resolution below;

3.  Instructs its President to forward this Decision and the resolution that forms an integral part of it to the Executive Director of the Clean Sky Joint Undertaking, the Council, the Commission and the Court of Auditors, and to arrange for their publication in the Official Journal of the European Union (L series).

2. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the closure of the accounts of the Clean Sky Joint Undertaking for the financial year 2010

(C7‑0298/2011 – 2011/2239(DEC))

The European Parliament,

–   having regard to the final annual accounts of the Clean Sky Joint Undertaking for the financial year 2010,

–   having regard to the Court of Auditors' report on the annual accounts of the Clean Sky Joint Undertaking for the financial year ended 31 December 20, together with the replies of the Joint Undertaking[5],

–   having regard to the Council's recommendation of 21 February 2012 (06086/2012 - C7-0050/2012),

–   having regard to Article 319 of the Treaty on the Functioning of the European Union,

–   having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities[6], and in particular Article 185 thereof,

–   having regard to Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking[7], and in particular Article 11(4) thereof,

–   having regard to the Financial Rules of the Clean Sky Joint Undertaking adopted by Decision of its Governing Board on 7 November 2008,

–   having regard to Opinion No 2/2011 on the Clean Sky Joint Undertaking’s Financial Rules, delivered by the Court of Auditors on 8 February 2011,

–   having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities[8], and in particular Article 94 thereof,

–   having regard to Rule 77 of, and Annex VI to, its Rules of Procedure,

–   having regard to the report of the Committee on Budgetary Control (A7-0115/2012),

1.  Approves the closure of the accounts of the Clean Sky Joint Undertaking for the financial year 2010;

2.  Instructs its President to forward this Decision to the Executive Director of the Clean Sky Joint Undertaking, the Council, the Commission and the Court of Auditors, and to arrange for its publication in the Official Journal of the European Union (L series).

3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

with observations forming an integral part of its Decision on discharge in respect of the implementation of the budget of the Clean Sky Joint Undertaking for the financial year 2010

(C7‑298/2011 – 2239/2011(DEC))

The European Parliament,

–   having regard to the final annual accounts of the Clean Sky Joint Undertaking for the financial year 2010,

–   having regard to the Court of Auditors' report on the annual accounts of the Clean Sky Joint Undertaking for the financial year ended 31 December 2010, together with the replies of the Joint Undertaking[9],

–   having regard to the Council's recommendation of 21 February 2012 (06086/2012 - C7-0050/2012),

–   having regard to Article 319 of the Treaty on the Functioning of the European Union,

–   having regard to Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities[10], and in particular Article 185 thereof,

–   having regard to Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking[11], and in particular Article 11(4) thereof,

–   having regard to the Financial Rules of the Clean Sky Joint Undertaking adopted by Decision of its Governing Board on 7 November 2008,

–   having regard to Opinion No 2/2011 on the Clean Sky Joint Undertaking’s Financial Rules, delivered by the Court of Auditors on 8 February 2011,

–  having regard to Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 on the framework Financial Regulation for the bodies referred to in Article 185 of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities[12], and in particular Article 94 thereof,

–   having regard to Rule 77 of, and Annex VI to, its Rules of Procedure,

–   having regard to the report of the Committee on Budgetary Control (A7-0115/2012),

A.     whereas the Clean Sky Joint Undertaking ("the Joint Undertaking") was set up in December 2007 for a period of 10 years to accelerate the development, validation and demonstration of clean air transport technologies in the Union for earliest possible deployment,

B.     whereas the Joint Undertaking started to work autonomously in November 2009,

C.     whereas the Court of Auditors states that it has obtained reasonable assurances that the Joint Undertaking's annual accounts for the financial year 2010 are reliable and that the underlying transactions are legal and regular,

D.     whereas the maximum contribution for the period of 10 years from the Union to the Joint Undertaking is EUR 800 000 000 to be paid from the budget of the Seventh Research Framework Programme,

E.     whereas the budget of the Joint Undertaking for the financial year 2010 amounted to EUR 168 553 053,

Budget and Financial Management

1.      Notes that the structure and presentation of the Joint Undertaking’s 2010 budget were not in line with the requirements of its founding Regulation (EC) No 71/2008 nor with its Financial Rules; understands from the Joint Undertaking that the structure and presentation of the budget have been adapted in the 2011 budget; calls on the Court of Auditors to assure the discharge authority that the structure and presentation of the Joint Undertaking’s budget are now fully in line with its Founding Regulation (EC) No 71/2008 and its Financial Rules;

2.      Acknowledges that the Joint Undertaking's final budget included commitment appropriations of EUR 168 000 000 and payment appropriations of EUR 129 000 000;

3.      Highlights from the final annual accounts of the Joint Undertaking that while the utilisation rate for commitment appropriations was 96 %, the rate for payment appropriations was only 58 %; notes with concern that it reflects the significant delays in the implementation of the activities as compared with the initial plan;

4.      Is concerned about the low implementation of the budget of the Joint Undertaking for the financial year 2010 and regrets the EUR 53 000 000 cash balance, at the end of the year representing 41 % of the available payment appropriations;

Internal control systems

5.      Notes from the Court of Auditors that the Joint Undertaking has not completely implemented its internal controls and financial information systems during 2010 and that further work is needed on the ex-ante control procedures applied for the validation of cost claims; urges the Joint Undertaking to implement the necessary measures for finalising its internal controls and financial information systems;

6.      Acknowledges from its 2010 Annual Activity Report (AAR) that the Joint Undertaking created a checklist for the Integrated Technology Demonstrators to improve the quality of the submitted cost claims and to clarify the reporting needs for certain aspects of claims;

7.      Recognises that the Joint Undertaking rejected cost claims in cases where a member or an associate did not submit the required audit certificate in accordance with the terms of reference of the grant agreements; notes in particular from the Final Account that in 2010 the Joint Undertaking has validated costs claimed by members for the execution of projects in 2008 and 2009 and that the assessment of the eligibility of certain costs resulted in the rejection of approximately 11 % of the expenses; notes with satisfaction that overpaid pre-financing was recovered by the Joint Undertaking;

8.      Notes that the Court of Auditors stated that, when validating the cost claims, the Joint Undertaking did not take into account exceptions included in the audit certificates in four cases; calls therefore on the Joint Undertaking to take into due account the exceptions included in the audit certificates when validating the underlying cost claims;

9.      Establishes from the AAR that the Joint Undertaking has developed an ex-post audit strategy which was adopted in December 2010; calls on the Joint Undertaking to inform the discharge authority about the level of implementation of the strategy and on the results achieved; asks the Court of Auditors, in addition, to evaluate the strategy and inform the discharge authority about its conclusions;

10.    Ascertains from the AAR that the Joint Undertaking, together with the Innovative Medicines Initiative Joint Undertaking and the Fuel Cells and Hydrogen Joint Undertaking, launched the procurement procedure for ex-post audit services from external firms; notes that the first ex-post audits were to take place in the second quarter of 2011 following the signature of the contracts with the winning tenderers;

11.    Notes the Court of Auditors' finding that the Joint Undertaking has an adequate level of IT governance and practice for its size and mission; stresses, however, that the formalisation of policies and procedures in strategic IT planning and monitoring cycle, security policies and rules, IT Risk management, Business Continuity Plan and Recovery Plan is lagging behind; calls on the Joint Undertaking to remedy the situation and provide the discharge authority with an up-to-date report on the matter;

12.    Takes note that the Joint Undertaking's Accounting Officer validated the financial and accounting systems (ABAC and SAP); notes however that the underlying business processes were not validated, in particular the system providing financial information about the validation of the cost claims; calls on the Joint Undertaking to remedy the situation and provide the discharge authority with an up-to-date report on the matter;

13.    Welcomes the fact that the Joint Undertaking adopted a comprehensive strategic internal audit plan for the period 2010-2012; regrets, nevertheless, that some of the key processes, such as the ex-ante validation of the cost claims and the ex-post audits were not planned to start before 2011;

Call for Proposals and Projects Negotiations

14.    Notes from the Joint Undertaking that it has launched five Calls in 2010; notices that the statistics related to these Calls, which were supposed to be included in Annex 6, are missing from the AAR; urges the Joint Undertaking to publish them;

15.    Acknowledges from the AAR that the Joint Undertaking invited three different observers in 2010 to ensure transparency in the evaluation process; notes from the Joint Undertaking that each of them had full access to all stages of the evaluation and to consensus meetings;

16.    Calls on the Joint Undertaking to inform the discharge authority about the verification mechanisms that it implements to ensure the full independence of experts and observers and therefore to mitigate the risks of conflicts of interest during the evaluation of tenders;

17.    Underlines that the Joint Undertaking mentioned in its AAR that the observers' evaluation reports were available on its website; regrets however that this is not the case and calls therefore on the Joint Undertaking to publish these reports immediately;

Protection of Intellectual Property

18.    Points out that, at the end of 2010, the Joint Undertaking had not yet completed the internal procedures to supervise the application of the provisions included in the consortium and grant agreements regarding the protection, use and dissemination of research results;

Performance

19.    Notes that the first interim evaluation by the Commission of the Joint Undertaking took place at the end of 2010; acknowledges that the interim evaluation identified the following weaknesses:

- the accumulation of significant delays compared to the initial plans due to difficulties in establishing the Joint Undertaking's internal procedures and regulations as well as building up the teams;

- delays of a technical nature identified by the ‘bottom-up’ work plan in June 2010;

- the lack of preparedness, both at administrative and technical levels, when starting the Joint Undertaking;

20.    Observes that the first interim evaluation draw a list of 34 recommendations to the Joint Undertaking and a list of 8 recommendations to its Management Board; asks the Joint Undertaking to inform the discharge authority on the measures introduced following the results of this first interim evaluation;

Internal Audit

21.    Takes note that the Joint Undertaking’s Financial Rules have not yet been amended to include a provision referring to the powers of the Commission’s internal auditor regarding the general budget as a whole;

22.    Notes however that the Commission and the Joint Undertaking have taken action to ensure that the respective operational roles of the Commission’s Internal Audit Service and the Joint Undertaking’s internal auditing function are clearly defined;

Lack of host State agreement

23.    Reiterates that the Joint Undertaking should rapidly conclude a host agreement with Belgium concerning office accommodation, privileges and immunities and other support to be provided by Belgium to it as provided by its Founding Regulation (EC) No 71/2008; remarks the Joint Undertaking's response that a draft of the Host state agreement has been submitted to the Belgian Government for approval.

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Horizontal observations on the Joint Undertakings

24.    Underlines that seven Joint Undertakings have so far been established by the European Commission under Article 187 of the Treaty on the Functioning of the European Union; notes that six Joint Undertakings (IMI, ARTEMIS, ENIAC, CLEAN SKY, FCH and ITER-F4E) are in the research area under the Commission’s DGs RTD and INFSO and one is charged with developing the new air traffic management system (SESAR) in the transport domain whose activities are supervised by DG MOVE;

25.    Notes that the total indicative resources deemed necessary for the Joint Undertakings for their period of existence amounts to EUR 21 793 000 000;

26.    Notes that the total Union contribution deemed necessary for the Joint Undertakings for their period of existence amounts to EUR 11 489 000 000;

27.    Notes that, for the financial year 2010, the overall Union contribution to the budget of the Joint Undertakings amounted to EUR 505 000 000;

28.    Calls on the Commission to provide the discharge authority annually with consolidated information on the total annual funding per Joint Undertaking made from the general budget of the Union in order to ensure transparency and clarity on the use of the Union's funds and restore trust among the European taxpayers;

29.    Welcomes the initiative of ARTEMIS to include information in its AAR on the monitoring and review of its ongoing projects; believes this is a practice that should be followed by the other Joint Undertakings;

30.    Recalls that Joint Undertakings are public-private partnerships and that as a consequence public and private interests are intertwined; is of the opinion that under the circumstances the likelihood of conflicts of interest should not be dismissed but addressed properly; calls therefore on the Joint Undertakings to inform the discharge authority on the verification mechanisms which exist in their respective structures to enable a proper management and prevention of conflicts of interest;

31.    Notes, with the notable exception of the Joint Undertaking for ITER and the Development of Fusion Energy, that Joint Undertakings are relatively small structures and geographically-concentrated; believes therefore that they should pool their resources where possible;

32.    Calls on the Court of Auditors to provide the discharge authority with a follow-up on the comments it has made for each of the Joint Undertakings in their respective report on the annual accounts for the financial year 2011;

33.    Invites the Court of Auditors to provide, within a reasonable deadline, a special report to Parliament, on the added value of the establishment of the Joint Undertakings for the efficient execution of Union research, technological development and demonstration programmes; further notes that the same report should include an assessment of the effectiveness of the Joint Undertakings’ establishment.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	27.3.2012
Result of final vote	+: –: 0:	20 0 1
Members present for the final vote	Jean-Pierre Audy, Ryszard Czarnecki, Tamás Deutsch, Martin Ehrenhauser, Jens Geier, Gerben-Jan Gerbrandy, Ingeborg Gräßle, Cătălin Sorin Ivan, Iliana Ivanova, Monica Luisa Macovei, Jan Mulder, Eva Ortiz Vilella, Aldo Patriciello, Crescenzio Rivellini, Petri Sarvamaa, Theodoros Skylakakis, Bart Staes, Georgios Stavrakakis, Søren Bo Søndergaard, Michael Theurer
Substitute(s) present for the final vote	Amelia Andersdotter, Philip Bradbourn, Zuzana Brzobohatá, Edit Herczog, Derek Vaughan

• [1]  OJ C 368, 16.12.2011, p. 8.
• [2]  OJ L 248, 16.9.2002, p. 1.
• [3]  OJ L 30, 4.2.2008, p. 1.
• [4]  OJ L 357, 31.12.2002, p. 72.
• [5]  OJ C 368, 16.12.2011, p. 8.
• [6]  OJ L 248, 16.9.2002, p. 1
• [7]  OJ L 30, 4.2.2008, p. 1.
• [8]  OJ L 357, 31.12.2002, p. 72.
• [9]  OJ C 368, 16.12.2011, p. 8.
• [10]  OJ L 248, 16.9.2002, p. 1
• [11]  OJ L 30, 4.2.2008, p. 1.
• [12]  OJ L 357, 31.12.2002, p. 72.