Practical Aspects of Negotiations Negotiation Kick-off meeting / 7 th Call CSJU

1. Practical Aspects of Negotiations Negotiation Kick-off meeting / 7th Call CSJU Brussels, 24-02-2011 Andrzej Podsadowski GRA-ITD PO

2. Introduction • Negotiations step by step: • 1.1 Big Picture • 1.2 Opening Negotiations • 1.3 Financial/Legal Negotiations • 1.4 Technical Negotiations • 1.5 Hints from Project Implementation • 1.6 Special case – not validated PIC • 1.7 Examples of payments • 1.8 Miscellaneous • Q&A / Discussion

3. 1.1 Big Picture (1/5) Negotiations = GA Preparations !!! DoW Part A Neg. Rep. Part B (Coordinator’s signature first) (Internal CSJU) Legal & Financial Negotiations Technical Negotiations Opening of Negotia-tions GPF/ NEF Draft Grant Agreement Pink File ESR Selection & approval of winner Financial Viability Check (Excel) (CSJU ED signature) Grant Agreement Date of CSJU ED signature = GA coming into force Validation of Beneficiaries • Validation of beneficiaries: • The Grant Agreements can only be offer to (FP7) validated legal entities. • Each legal entity is validated only once for all participations in FP7. Project Implementation

4. Grant Agreement Project Implementation Start Date KoM Pre-financing – 45 days 1.1 Big Picture (2/5) Project’s Start 1st day of the month following the month when GA is signed Standard procedure GA coming into force Negotia-tions Fixed Starting Date A way to manage “eligible cost” & Time schedule of ITD Pre-financing – 45 days Grant Agreement Negotia-tions Project Implementation Start Date KoM Time gain

5. Payments 1.1 Big Picture (3/5) Legal dependencies CSJU Grant Agreement Grant Agreement Implementation Agreement or Accession to ITD’s Cons A. Coordi- nator TM Member of ITD 1st step: The coordinator and Executive Director of CSJU to sign. (Internal) Consortium Agreement (DESCA or IMG4 template) 2nd step: Each and every beneficiary (all members of the consortium performing the project to sign Annex III – Form A – [3 copies] Accession of beneficiaries to the Grant Agreement !!! Those forms to be sent to the coordinator and to CSJU (CSJU to receive within 45 days from Project coming into force) CSJU does not interfere with it. CSJU is only to be notified in respect to the existence of the agreement.

6. 1.1 Big Picture (4/5) Negotiation activities CSJU GPF/ NEF A2.5 ; A2.6 ; A4 !!! !!! During the project implementation, the coordinator is obligated to send Periodic/Final reports to TM (except FormC/cost). PO cooperates with TM on approval Grant Agreement Financial Viability Check (Excel) Coordi- nator TM Member of ITD (Internal) Consortium Agreement (DESCA or IMG4 template) Neg. Rep. DoW Implementation Agreement or Accession to ITD’s Cons A.

7. GA coming into force Grant Agreement Pre-financing – 45 days 1.1 Big Picture (5/5) Reasons for postponing the pre-financing ! Excerpts from “Core GA” Art.6 p.1 ….A pre-financing shall be paid to the coordinator within 45 days following the date of entry into force of this grant agreement. The coordinator shall distribute the pre-financing only to the beneficiaries who have acceded to the grant agreement Delivery of Form A to CSJU (within 45 days) Notification whether Implementation A. or Accession is in place CSJU will wait until All notifications are delivered Notification whether the (internal) Consortium agreement is in place Excerpts from Art.1 of “core Grant Agreement”. 2. The coordinator shall send to the JU one duly completed and signed Form A per beneficiary at the latest 45 calendar days after the entry into force of the grant agreement… 3. Should any legal entity identified above, fail or refuse to accede to the grant agreement within the deadline … the JU is no longer bound by its offer to the said legal entity(ies). The consortium may propose to the JU …appropriate solutions to ensure the implementation of the project.

8. 1.2 Opening Negotiations (1/2) • 1st e-mail: Letter Opening Negotiations • addressee: the coordinator and TM in cc: • Confirmation of commencing negotiations (already the Coordinator has been informed regarding „above threshold” status • (Tentative) deadlines • ESR • 2nd e-mail: Introduction to the process and document’s templates • (from NEF) A2.5 ; A2.6 ; A4 (Bank account/Financial Identification) to be sent back to CSJU a.s.a.p • Financial Viability Check tool – as above, (all coordinators, exception - „public body”, and other beneficiaries requesting more than EUR 500.000, • optional templates: • i) Negotiations report, • ii) Implementation Agreement/Accession, • iii) IMG4/DESCA template for consortium agreement • Reference documents/guidelines (e.g. IPR, DoW, Special Clauses, subcontracting, etc.)

9. 1.2 Opening Negotiations (2/2) • 3rd e-mail: Link to NEF (1st Negotiation Session) • addressee: the coordinator • all data for preparation of GA (please upload DoW!) • (Tentative) deadlines • in case more than 1 beneficiary – the coordinator could/should assign rights for filling in NEF • Practical hints: • Status of PIC (ask PO !!!) – critical …. Potential slow down • A2.5 ; A2.6 ; A4, Financial Viability Check tool – important, please send it a.s.a.p. • Access to NEF by coordinator … check whether it works… • Ask PO for any clarification and help … • Do not hesitate to close negotiation session when you feel all relevant information is correct and in the system … There is no limit for number of Negotiation Sessions • In case you spot a „mistake” in submitted session … contact PO – next negotiation session would be open

10. 1.3Financial/Legal Negotiations (1/2) • The total costs, total eligible costs and the maximum CSJU financial contribution. Special attention should be given to the methodology to calculate the personnel costs and the indirect costs. • A table of the estimated breakdown of the budget and the Community financial contribution per activity to be carried out by each of the beneficiaries is established. • The amount of the pre-financingis established. • The start date and the duration of the project are agreed upon (2 options: Fixed Starting Date OR Standard Starting Date) • The operational capacity of the proposed coordinator to be verified, i.e. whether that organisation has the required management skills, capabilities and experience to carry out the coordinator’s role. • The need for the inclusion in the Grant Agreement of any special clauses is established. • Where applicable, a 'road map' is established for any planned competitive calls relating to the later addition of new project partners and the budget available for the Consortium's expansion agreed upon. • The timing of the reporting periods is established. • Any subcontracting or third-party issues must be clarified. (2 options for subcontracting) • The financial capacity of the coordinator and any other applicant with an EC contribution exceeding EUR 500,000, except for public bodies, higher and secondary education establishments and entities whose participation is guaranteed by a Member State or an Associated Country, is assessed

11. Here: A 2.5 A 2.6 A4 (Financial Identification) Part A Part B Please upload NEF with DoW (version nr and the date of issue)

12. 1.4Technical Negotiations (1/2) • The purpose: 1. DoW (Annex I to GA) => upload NEF! • Please follow guidance for DoW contents • 2. Negotiations Report • Reporting Periods • a) for TM supervision • b) for GA (indicated in NEF) • Starting Date • Legal obligations against ITD(Implementation A. or Accession) • The proposal may need to be adapted to meet the recommendations of the evaluation,as described in the Negotiation Mandate. • The CSJU/TM verifies whether the project objectives are 'SMART' (S-Specific, M-Measurable,A-Attainable, R-Realistic, T-Timely).

13. 1.4Technical Negotiations (2/2) • The full work plan of the project has to be defined in sufficient detail. • The work to be carried out by each of the beneficiaries and any potential futureexpansion of the consortium has to be defined in sufficient detail. • The list of deliverables and their content, timing and dissemination level are agreed. • The project milestones and their assessment criteria are agreed. • An indicative time schedule for the project reviews, synchronized with thereporting periods, could be established (if not pre-defined in the special conditions of theGrant Agreement). • All (above mentioned) data in NEF • Data from NEF would be transferred to SESAME (reporting) • (Final) reporting not finalized yet

14. 1.5 Practical hints for project implementation (1/4) The structure of Grant Agreement Major Changes to “core text” or DoW via Amendments Annex VII – Form E Annex VI – Form D Annex V – Form C Annex IV – Form B • Annex II – General Conditions (!!! Important to know) • Annex III – Form A – Accession of beneficiaries to the Grant Agreement • Annex IV – Form B – Request for accession of a new beneficiary • Annex V – Form C – Financial Statement • Annex VI – Form D – Terms of reference for the certificate on the financial ststements • Annex VII – Form E – Terms of reference for the certificate on the methodology Annex III – Form A Annex II – Gen Cond Annex I - DoW Grant Agreement Core text

15. 1.5 Practical hints for project implementation (2/4) Project Implementation Examples of Payments at The end of this ppt Period 1 Periods 2 - 4 To be agreed: How CSJU is to be notified regarding acomplished deliverables ? (Copies in Periodic Reports) 30 d 105 d 105 d Interim Payment FINAL Payment 60 d 60 d • Pre-financing ≤ 80% of CSJU contribution to first 18 month • Σ(Pre-financing + Interim payments) ≤ 80% CSJU contribution Societal implication Final CSJU contribut. Periodic Report Periodic Report Final Report Plan for Using & Dissemin. Recommendation: Plan for Using & Dissemin. (FP6)

16. 1.5 Practical hints for project implementation (3/4) Conclusions p.1 • TM is focused on „technical part DoW” … do not forget: • Dissemination and Exploitation • Gender issue • Flexibility (tailoring to the case) is more than important: • Starting date (eligibility of cost) is a challenge … (for coordinator:) in case of Fixed Starting date before GA is signed do „cash flow” in order to be sure the project is affordable • Check „cash flow” against expected payments … to minimize riskof project failure; Reporting periods could be of different duration • In case of „no financial records” or weak Financial Viability either amount of pre-financing or a collateral would be agreed/negotiated • Ideally if Reporting periods corresponds to important milestones

17. 1.5 Practical hints for project implementation (4/4) Conclusions p.2 • Subcontracting (also described in DoW) … do not forget: • Only minor topics • No IPR (Intellectual Property Rights) • Impossible between members of the consortium (Wind Tunnel Test is the exception) • Misunderstandings and challenging items: • Reporting periods in Negotiations Report … it is intended as an input to Grant Agreement (independently from reporting to TM) • Legal relationships between the project consortium and ITD … quite often TM doesn’t knows who within ITD deals with that issue (Legal Department of TM’s employer) • Documents/Guidelines (and templates) are available in published CSJU Calls or CORDIS … in case of difficulties please contact PO • for more than 1 beneficiary the project consortium agreement is to be concluded

18. 1.6 Special case – not validated PIC (1/3) • General purpose: • the existence; • the legal status; • the operational capacity; and • the financial capacity Categories of legal entities Opening Letter (requested documents) Should depend on PIC status NOT the case • PIC status: • Validated • Temporary • No PIC

19. 1.6 Special case – not validated PIC (2/3) Verification of existence and legal status (affects CSJU contribution rate !) For natural persons: i) A legible photocopy of the valid identity card or passport; ii) If applicable, an official VAT document. For public bodies: iii) A copy of the resolution, law, decree or decision establishing the entity in question; or, failing that, any other official document attesting to the establishment of the entity as a public body; iv) If applicable, an official VAT document. For other legal entities: v) A copy of any official document (e.g. official gazette, register of companies, etc)showing the participant's legal name and address and the registration number given to it by the national authorities; vi) A copy of the VAT registration document, if any, and only if the VAT number doesnot appear on the official document referred to above. The request for validation and supporting documents must be provided to Central Validation Team via Participants Portal (task for LEAR).

20. 1.6 Special case – not validated PIC (3/3) Financial viability check (affects garantee/collateral to GA) Purpose In order to be financially viable, a legal entity must be: • liquid: capable of covering its short-term commitments; • solvent: capable of covering its medium and long-term commitments; • profitable: generating profits, or at least with self-financing capacity. all coordinators, exception - „public body”, and other beneficiaries requesting more than EUR 500.000, In case of „Not validated beneficiary” CSJU assists fast validation by CVT

21. 1.7Examples of payments (1/4) A general case A project: Max. CSJU contribution 400 k€ 80% - 320 k€ 20% - 80 k€ Period 1 (18m) Period 2 (12m) Period 3 (12m) Max CSJU contribution: 100 k€ Max CSJU contribution: 200 k€ Max CSJU contribution: 100 k€ No Guarantee Fund (no deduction from pre-financing) Actual/eligible cost * “rate”: 140 k€ Actual/eligible cost*rate: 190 k€ Actual/eligible cost*rate: 110 k€ Money owned by CSJU Pre-financing: 80 k€ Transfer of ownership of 80 k€ (pre-financing) Money owned by the consortium Interim payment after P1: 140 k€ Interim payment after P2: 100 k€ Because ∑ of payments = 320 k€ (80 + 140 + 100) Final payment: 80 k€ Total: 400 k€ • Pre-financing ≤ 80% of CSJU contribution to first 18 month • Σ(Pre-financing + Interim payments) ≤ 80% CSJU contribution

22. 1.7Examples of payments (2/4) Single Reporting Period Max. CSJU contribution: 100 k€ Pre-financing: ≤ 80 k€ Actual/eligible cost*rate: 98.5 k€ Final payment: 18.5 k€ No Guarantee Fund (no deduction from pre-financing) Should be FormC certified/audited? A certificate on the financial statementsshall be submitted for claims of interim payments and final payments when the amount of the JU financial contribution claimed by a beneficiary under the form of reimbursement of costs is equal to or superior to EUR 200 000, when cumulated with all previous payments for which a certificate on the financial statements has not been submitted. A certificate on the financial statements will be submitted in all cases at the end of the project for all costs for which a certificate on the financial statements has not been submitted previously. (Form D – Annex VI). Periodic and Final Reports to be delivered

23. 1.7Examples of payments (3/4) Periodic report The consortium shall submit a periodic report to the JUfor each reporting period and a copy of it (excluding the financial statements) to the responsible ITD memberas defined in Annex I, within 60 days after the end of each respective period. The reporting shall comprise: • a) an overview, including a publishable summary, of the progress of work towards the objectives of the project, including achievements and attainment of any milestones and deliverables identified in Annex I. This report should include the differences between work expected to be carried out in accordance with Annex I and that actually carried out, • b) an explanation of the use of the resources, and • c) a financial statement, from each beneficiary together with a summary financial report consolidating the claimed JU contribution of all the beneficiaries in an aggregate form, based on the information provided in Form C (Annex V) by each beneficiary Reporting Tools SESAM & FORCEC

24. 1.7Examples of payments (4/4) Final report The consortium shall submit afinal report to the JU and a copy of it to the responsible ITD memberas defined in Annex I, within 60 days after the end of the project. The report shall comprise: a) a final publishable summary report covering results, conclusions and socioeconomic impact of the project. b) a report covering the wider societal implications of the project, including gender equality actions, ethical issues, efforts to involve other actors and spread awareness c) the plan for the use and dissemination of foreground. When providing a copy of their periodic and final reports to the responsible ITD member, the beneficiary(ies) may make the content of such reports subject to confidentiality provisions !!!. The coordinator shall submit a report on the distribution of the JU financial contribution betweenbeneficiaries. This report must be submitted within 30 days after receipt of the final payment

25. 1.8 Miscellaneous (1/3) • Timing • “opportunity window for negotiations” … although, the deadlines in Negotiations Letter are indicative ones, please try to follow them (due to PO/CSJU workload missing deadlines could amplify “shift to the right”) • Project’s Kick-off (do not wait for Kick-off Meeting) … please start project’s activities as it is indicated in the Grant Agreement (and Negotiations Report/NEF) • Start with PIC and Implementation Agreement/Accession A. first…. as those issues are the most time consuming…

26. 1.8 Miscellaneous (2/3) • “Clean Sky vs. FP7 Collaborative Research projects” … • No “Guarantee Funds” (5% of total max CS contribution is not deducted) • 200 k€ threshold for audit on cost statements (instead of 375 k€) • Pre-financing calculated by PO • “technical side” supervised by TM (deliverables/milestones and Reports) • Payments after approval of Reports by PO • Communication via e-mail … please be precise with “subject” • Receipts … (deducted from payment)… be careful with indicating! II.17. Receipts of the project Receipts of the project may arise from: a) Resources made available by third parties to the beneficiary by means of financial transfers or contributions in kind which are free of charge: i. shall be considered a receipt of the project if they have been contributed by the third party specifically to be used on the project; ii. shall not be considered a receipt of the project if their use is at the discretion of the beneficiary's management. b) Income generated by the project: i. shall be considered a receipt for the beneficiary when generated by actions undertaken in carrying out the project and from the sale of assets purchased under the grant agreement up to the value of the cost initially charged to the project by the beneficiary; ii. shall not be considered a receipt for the beneficiary when generated from the use of foreground resulting from the project.

27. A. II.10 Impact assesment A. II.10 Contribution to standards (beneficiary initiative) A. II.9 Confidentiality A. II.22 Financial audits and controls Keep original docs ! A. II.23 Technical audits and reviews A. II.23 Ethics audits A. II.25 Excluding from grants in case of an offence ≤ 2 years A. II.25 Doubling of financial penaltis if repeated offence A. II.43 End of entitlements between JU and beneficiary 1.8 Miscellaneous (3/3) … years after End of project 2 years 5 years 10 years

28. Q&A / Discussion

29. Thank You all