Ralf Knig

1
Contractual Negotiations

• Ralf König
• FFG/EIP
• Unit for International Cooperation

2
Life cycle of a FP6 Project

• Phase 1 Feasibility, from an idea onwards
• Phase 2 Towards a proposal submission
• Phase 3 Evaluation
• Phase 4 Contract negotiation
• Phase 5 Run of the Project (management)

3
Content

• Contract Negotiation Procedure
• Contract
• Structure
• Specific elements

4
Legal Framework
EC TREATY
INTERNATIONAL AGREEMENTS
PARTICIPATION AND DISSEMINATION RULES
FRAMEWORK PROGRAMME
CONTRACTS
SPECIFIC PROGRAMMES
GUIDELINES ON EVALUATION AND SELECTION
PROCEDURES
Other relevant EC Regulations FINANCIAL
REGULATION
WORK PROGRAMMES
Calls for proposals
5
Negotiation procedure

• 1. Commission sends invitation to negotiate
• saying favourably evaluated
• Evaluation summary report (ESR) -
  recommendations for project negotiation
• deadline for returning Contract Preparation
  Forms (CPF)
• informing who is ? Project officer ?
  Administrative officer
• indicating necessary changes in technical content
• Contract Preparation Forms

6
Negotiation procedure

• 2. Proposal coordinator sends to
  Commission Draft CPF forms ( A forms)
• Technical annex ( Part B)
• Documented accounts for last 3 year
• Legal documents establishing the organisation
  (non-public bodies)
• 3. Negotiation meeting(s)
• (for NOEs - finalise list of researchers)
• 4. Coordinator sends final CPF forms (signed) and
  final Technical annex
• 5. Project starts following contract signature by
  Commission
• 6. Partners sign Accession to the contract form
  with coordinator

7
Electronic handling of CPF (1)
1. Contract preparation forms administrative
budgetary part gt CPF editor -
www.cordis.lu/fp6/contract-prep.htm gt CPF Data
file - Administrative officer ? partially
filled in by EC already gt Document CPF Editor
Users Guide 2. Annex I Description of work
content gt Word Format gt Document Negotiation
Guidance Notes for Coordinators of
.................. http//www.cordis.lu/fp
6/find-doc.htm
8
Electronic handling of CPF (2)
A1 General Information on the
proposal A2a-A2c Information on
participants A3.1 Financial Information whole
period gt Indication of overheads gt Indicat
ion of subcontracting
similar to proposal submission
A3.2 Financial Information breakdown by
period A4 Coordinators banking information
additional information
A5 Additional financial information
annexed to CPF A6 Simpliefied balance
sheet and profit and loss account
not apply to all coordinators
A2 form 1. Send data file to all project
partner 2. Import of A2 partner data in original
data file
9
(No Transcript)
10
Technical Annex - Description of work
Table of Contents (should include page
numbering) 1. Project summary 2. Project
objective(s) and state of the art 3. Participants
list 4. Relevance to the objectives of the
specific programme and/or thematic
priority 5. Potential Impact 6. Project
management and exploitation/dissemination
plans 7. Workplan for whole duration of the
project 8. Project resources and budget
overview 9. Other issues (optional) Appendix A
- Consortium description A.1 Participants and
consortium A.2 Sub-contracting A.3 Third
parties A.4 Funding of third country
participants
11
Contract Structure

• Core contract (standard with specifics of
  project)
• Annex I (technical tasks - the project)
• Annex II General Condition (applicable
  to every instrument)
• Annex III Instrument specific provisions
  (specific to individual instrument)

12
Core - Contract Structure

• Art. 1 - Scope
• Art. 2 - Constitution of the Consortium
• Art. 3 - Evolution of the consortium
• Art. 4 - Entry into Force of the Contract and
  Duration of Project
• Art. 5 - Community financial contribution
• Art. 6 - Reporting periods
• Art. 7 - Reports
• Art. 8 - Payment modalities
• Art. 9 - Special clauses
• Art. 10 - Amendments
• Art. 11 - Communication
• Art. 12 - Applicable law
• Art. 13 - Jurisdiction
• Art. 14 - Annexes forming an integral part of
  this contract

13
Amendments

• Art.10 of Core Contract Art.8 of Annex II
• Request in writing
• At the request of the coordinator, deemed to act
  on behalf of the consortium
• New Tacit amendments with implicit agreement of
  the Commission within 6 weeks only for
  modification and evolution of the consortium and
  for technical reports
• New in IP/NoE, enlargement of the consortium to
  new contractors and new activities may be
  foreseen. This enlargement follows a competitive
  call launched by the consortium with evaluation
  of proposals by external experts

14
Signature and entry into force

• Contractual link of all contractors with the
  Commission
• Contract enters into force upon signature of
  coordinator and Commission
• All the contractors are identified in the core
  contract Art. 1.2
• Coordinator must ensure other contractors sign
  without delays
• Evolution of consortium possible where one
  or more does not sign the Form A article 2
  in case of enlargement (new contractors)
  article 3
• Project begins on the date established in the
  contract (this can be before the contract enters
  into force) or in the month after signature of
  both parties

15
Annex II - General conditions Structure

• Article II.1 - Definitions
• Part A Implementation of the Project
• Section 1 - Implementation and deliverables
• Section 2 - Termination of the contract and
  responsibility
• Part B Financial Provisions
• Section 1 - General financial provisions
• Section 2 - Controls, recoveries and sanctions
• Part C Intellectual Property Rights

16
Annex II - General Conditions Structure

• Part A Implementation of the Project
• SECTION 1 - IMPLEMENTATION AND DELIVERABLES
• Art.II.2 - Activities
• Art.II.3 - Performance obligations
• Art.II.4 - Force majeure
• Art.II.5 - Suspension and prolongation of the
  project
• Art.II.6 - Subcontracting
• Art.II.7 - Reports and deliverables
• Art.II.8 - Evaluation and approval of reports
  and deliverables
• Art.II.9 - Confidentiality
• Art.II.10 - Communication of data
• Art.II.11 - Information to Member States and
  Associated States
• Art.II.12 - Publicity
• Art.II.13 - Liability
• Art.II.14 - Assignment

17
Annex II - General Conditions Structure

• Part A Implementation of the Project
• SECTION 2 - CONTRACT TERMINATION
  RESPONSIBILITY
• Art.II.15 - Termination of the contract and
  participation of contractors
• Art.II.16 - Termination for breach of contract
  and irregularity
• Art.II.17 - Technical collective responsibility
• Art.II.18 - Financial collective responsibility

18
Participation

• New Every legal entity that contributes to the
  project (incl. Project Managers)
• General Rule Participant contractor
• Every legal entity contributing to a project
  must have a contractual link with the Community
• Exceptional cases subject to very restrictive
  rules
• Third parties identified in Annex I (Technical
  Annex
• Subcontractors

19
Participation

• Subcontracting
• Contractors shall ensure that the work to be
  performed can be carried out by them.
• Exception where it is necessary to subcontract
  certain elements of the work, this should be
  clearly identified in Annex I.
• Minor services may be subcontracted
• which do not represent core elements of the
  project
• which cannot be directly assumed by contractors
• where necessary for the performance of the
  project

20
Third Parties

• No rights or obligations vis-à-vis EC or other
  contractors
• Contractor is responsible for
• ensuring all work is carried out
• any IPR generated is protected and used and
  available for any necessary access rights (via
  subcontract or agreement with third party)
• ensuring that third party meets
  requirements(auditing etc)

21
LIABILITY (1)

• New Collective responsibility of the
  contractors
• Mechanism by which a contractor may be held
  liable, technically and/or financially, fully or
  partially, for the action of another contractor
• Why?
• Reinforce the protection of the financial
  interests of the Community, both quantitative
  (only pay what is due to be paid) and qualitative
  (ensure that the project continues)
• Consequence of FP6 principle of autonomy of the
  consortium if the money is granted to the
  consortium, which decides on its allocation, then
  the consortium as a whole is to be held liable

22
LIABILITY (2)

• Implementation applied as a last resort
• Breach of contract
• Depending on the nature of the breach, the
  consortium will be invited to find the
  appropriate solution (technical responsibility)
• If no solution is found, the defaulting
  contractor is excluded and the consortium is
  requested to continue the project (technical
  responsibility with financial consequences)
• If the consortium refuses to perform
• 1 - the contract is terminated
• 2 - the consortium is requested to reimburse
  money owed by the defaulting contractor
  (collective financial responsibility)

23
LIABILITY (3)

• Implementation limitations
• Limited in proportion to the participants share
  of costs in the project, up to the total payment
  they are entitled to receive
• IOs, public bodies or entities guaranteed by
  MS/AS solely responsible for their own debts
• Exceptions for specific actions for SMEs,
  fellowships, duly justified cases of specific
  support actions
• Without prejudice to civil and criminal actions
  to be launched against the defaulting contractor

24
LIABILITY (4)

• Additional impacts
• Raises awareness among contractors
• 1 - constitution of the consortium
• 2 - projects with real and lasting common
  interests (avoid artificial transnational
  projects)
• 3 - establishment of internal auto-controls and
  checks and balances within the consortium
• Limits systematic requests for bank guarantees
  and performance of ex-ante financial controls
• 1 - as foreseen in the new financial
  regulations
• 2 - depending on the impact of the limitations
  (risk assessment - to be detailed in Guidelines
  on negotiations)

25
Annex II - General Conditions Structure

• Part B Financial provisions
• SECTION 1 - GENERAL FINANCIAL PROVISIONS
• Art.II.19 - Eligible costs of the project
• Art.II.20 - Direct costs
• Art.II.21 - Indirect costs
• Art.II.22 - Cost reporting models
• Art.II.23 - Receipts of the project
• Art.II.24 - Community financial contribution
• Art.II.25 - Reimbursement rates
• Art.II.26 - Audit certificates
• Art.II.27 - Interest yielded by pre-financing
• Art.II.28 - Payment modalities

26
Annex II - General Conditions Structure

• Part B Financial provisions
• SECTION 2 - CONTROLS, RECOVERIES AND SANCTIONS
• Art.II.29 - Controls and audits
• Art.II.30 - Liquidated damages
• Art.II.31 - Reimbursement to the commission and
  recovery orders

27

Annex II - General Conditions Structure

• Part C Intellectual Property Rights
• Art. II.32 - Ownership of knowledge
• Art. II.33 - Protection of knowledge
• Art. II.34 - Use and dissemination
• Art. II.35 - Access rights
• Art. II.36 - Incompatible or restrictive
  commitments

28
IPR - General Concepts

• Definitions no major change compared to FP5
• knowledge, pre-existing know-how, use,
  dissemination, ...
• Ownership no major changes compared to FP5
• resides with the contractor (incl. JRC)
  generating knowledge
• exception for SME actions cooperative research
  - SMEs own results not the RTD Performers
• collective research - SME associations own
  results
• transfer of ownership prior notice to other
  participants Commission (possible objection
  within 30 days)
• public procurement (Commission owns results)

29
IPR - General Concepts

• Protection
• Where there is commercial application and subject
  to legitimate interests, it is a requirement to
  protect
• Where there is no protection, Commission may
  protect
• Publication
• allowed if not detrimental to protection
• prior notice to Commission other contractors
  (possible objection within 30 days)
• Use / dissemination
• Obligation to use and disseminate
• Commission may disseminate itself if needed

30
Access Rights

• General principles
• Granted on written request, access rights for use
  of anothers results only where necessary (not by
  right)
• No sub-licensing (unless explicitly agreed
  possible optional clause for software)
• Obligatory Access Rights between contractors
  limited to what they really need (either for
  carrying out the project or for using their own
  knowledge) but broader Access Rights may be
  freely negotiated
• Access Rights granted to third parties
  Commission may object

31
FP6 System of Access Rights
Access rights to
Access rights to
pre-existing know-how
knowledge
If a contractor needs them for carrying out its
own work under the project
For carrying out the project
Royalty-free unless otherwise agreed before
signing the contract
Royalty-free
If a contractor needs them for using its own
knowledge
For use (exploitation further research)
Non-discriminatory conditions to be agreed
Royalty-free unless otherwise agreed before
signing the contract
Possibility for participants to agree on
exclusion of specific pre-existing know-how
before signature of the contract (or before
entry of a new participant)
32
Model Contract Web site

• Contracts and translations
• Rules for participation
• Guide to Amendments of contracts
• Special clauses and Guide to special clauses
• Guide to Financial issues
• Frequently Asked Questions
• IPR Guide and Guide to Article II.35.1.b
• Consortium agreement checklist
• Negotiation documents (CPF/guidance notes)
• http//europa.eu.int/comm/research/fp6/model-contr
  act/index_en.html