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7TH FRAMEWORK PROGRAMME : MUCH AT STAKE FOR RESEARCHERS IN DISCUSSIONS ON FUNDING RULES.

A first reading agreement between the Council of Ministers and the European Parliament on the rules of participation' for the 7th Framework Programme (FP7) is by no means certain, according to those close to the negotiations, in a situation where failure to reach a compromise would throw into doubt the possibility of getting FP7 up and running on time.

The rules of participation' set out the terms under which all research funding will be provided by the Commission to third parties - be they private enterprises, research centres or universities; large firms, or SMEs - to carry out research projects. These indirect actions' will form the vast bulk of activities carried out under FP7. The rules themselves set out vital technical detail and criteria for would-be funding recipients such as the minimum conditions that must be met to get a grant, the amounts of funding on offer and how it will be paid, as well as how the results of the research, not least the Intellectual Property Rights, will be handled afterwards.

BEHIND THE SCENES

The EP Committee on Industry, Research and Energy (ITRE) finished adopting its amendments to the rules on 12 September, while the Council adopted its general approach' on 29 May. As such, they are now a major element of the informal high-level trialogue discussions that have been ongoing between the institutions since 5 September. These meetings are vital as, owing to the fact that the rules are the only area of FP7 legislation other than the high level documents where the EP has co-decision powers, they pose a potential threat to the deadline of getting the legislation in place in time for 1 Jan 2007 (when the existing FP6 expires), with those involved indicating that meeting this date will be a struggle if the dossier has to go to second reading.

At the most recent meeting, on 19 September, the Council presented an initial proposal to the EP negotiators, to which they will now need to develop a response. This is still an early phase, however, with respective positions on crux issues still not fully clear.

One key element of the rules, where both sides are prepared to acknowledge that there is disagreement, is that of the cost models' to be used under FP7. These have a direct impact on how much money participants will receive from their involvement in research activities. As under FP6, Community support is to be provided through co-financing, with the Commission reimbursing a proportion of eligible' direct and indirect costs. Which costs are eligible is something defined in the rules, while the assessment of what is a direct and an indirect cost follows standard accountancy principles. The EU executive has proposed to abandon one of the models used during FP6 - the so called additional cost' (AC) model, under which direct costs were reimbursed through funding, which covered 100% of the extra expenses participants incurred because of the project, such as the hiring of an extra temporary researcher. To keep things simple, under this model indirect costs were covered by a flat rate payment amounting to 20% of the direct ones. Use of this cost model was restricted to non-commercial and non-profit organisations, such as universities, which lacked an accounting system capable of identifying the share of their direct and indirect costs that arose from the research project.

KEEPING IT SIMPLE

By discontinuing its use under FP7, the Commission's plan was to leave all participants with a free choice between updated versions of the two remaining models: the full cost' model, under which all eligible direct and indirect costs are simply reported and reimbursed according to which co-financing limits apply to the project, and the full cost with flat rate' model, which does the same thing except that Community funding to meet indirect costs once again comes in the form of a flat rate on the direct ones, although the level of this rate will be worked out project by project.

Both the Council and Parliament disagree with aspects of this approach, but do so in different ways. For the Council, the impetus was to ensure that higher education institutions, NGOs and other public bodies which had benefited from the AC model would not lose out, leading it to develop a simplified approach,' which would allow such participants to work out their approximate indirect costs and, so long as these were then signed off by an auditor as being credible, have them used as the basis for calculating the flat rate. Ministers also stipulated that in general the Commission should establish flat rates based on as close an approximation as possible to the real indirect costs that had occurred. The EP's favoured approach, however, is far closer to that used for FP6, where the flat rate is established in advance of the framework programme and set out in the rules of participation. To this end, MEPs have drawn up a sliding scale set at 60% for 2007-2009, 45% for 2010-2012 and 30% for 2012 onwards.

TO THE UPPER LIMITS

It is clear that another crucial area where EP and Council will need to align their approaches will be on the upper co-financing limits. All parties agree with the main principle that in general the maximum level of support for R&D activities should be 50% of total eligible costs, but while the Council only makes subtle changes to the Commission's definitions of who can apply for special higher rates, Parliament goes much further, establishing an upper funding limit of 75% for space and security research, and making 75% the minimum for non-profit public bodies, higher education establishments, research organisations and SMEs. Equally, the recruitment of researchers linked to project execution has been added to the list of activities eligible for 100% support.

Another point will be the use of hidden contractors' using intellectual property arising from the projects, which is an issue of concern especially to SMEs and universities. The Commission's original proposal foresaw that intellectual property arising from a project could be used by any affiliates of the participants involved, thus allowing large companies to fully exploit the Intellectual Property Rights. Although the Council does not explore this issue in its general approach, the EP has introduced several caveats, namely that the affiliate has to be based in a member state or an associated country, and that they must grant reciprocal access to other participants in the project to information needed to exploit the intellectual property in question.
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Publication:Europe Energy
Date:Sep 27, 2006
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