How to write effective EU project proposals: Introduction to Full application preparation. Application Package for Applicants. Common mistakes. Natasa Gospodjinacki Kiev, 3-4 September 2015

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Seminar on Project Preparation
Procurement
Baku, 31 August – 1 September 2015

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Procurement
Procurement

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How long does it take to procure?
Procurement

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So you have won a grant and are ready to start implementing your project but to do so you
may need the services of experts, to produce information materials (services), to buy
computer or other equipment (supplies) or in some cases, to commission construction
work (works). That, is you may need to procure services, supplies and/or works.
Procurement
When conducting the procurement procedure, you should take care
that:
• The correct procedure is being used;
• The forms to be utilised are in line with international standards and provisions of
Annex IV of your contract.
• The rule of origin of supplies is applied;
• The eligibility rule is observed;
If the beneficiary (or beneficiary‟s partners) fails to comply with any of these rules
expenditures in question will be considered as not eligible for EC financing.

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Rules for procurement
• Rules for procurement are defined in ‘Annex IV Procurement by grant
Beneficiaries in the context of European Community external actions’
annexed to the grant contract;
• Annex IV is applicable to the Beneficiary and all partners, regardless of
their legal status (public or private) or nationality (EU or partner country);
• For what is NOT described in Annex IV (detailed procedures, tender
documents):
• Either partner’s own procedures, but must be in accordance with
Annex IV rules, in particular „best international practice‟;
• Or may use Chapters 3 (Service), 4 (Supply), 5 (Works) of PraG and
related annexes (templates).
Procurement

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Annex IV requirements
Annex IV:
1. General principles
2. Eligibility for contracts (rules of nationality & origin)
3. Rules common to all tender procedures
4. Rules applicable to service contracts
5. Rules applicable to supply contracts
6. Rules applicable to work contracts
7. Use of negotiated procedure
8. Special cases
BUT
• References to other chapters of PRAG, e.g. what “international open tender” means, etc.
Procurement

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Difference between a call for proposals and a
call for tender
Procurement

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Procurement (Tender) Types
• Service contracts: These cover engagement of service providers, companies
and/or individuals (experts). Service contracts are used for preparation of studies,
evaluation reports, experts‟ or trainers‟ engagement, printing and publishing
services, translation, conference/events organisation, catering etc.
• Supply contracts: These cover the purchase or rental of supplies/equipment. The
delivery of products may in addition include installation and maintenance.
• Works contracts: These cover either the execution, or both the execution and
design of a „work‟. A „work‟ means the outcome of building or civil engineering works
taken as a whole that is sufficient in itself to fulfil an economic or technical function.
• Grants
among them different threshold of publication (see next slide)
Procurement

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Thresholds
Procurement

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Important note!
Artificial slicing in order to avoid
threshold for publication
NOT ALLOWED
Procurement

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• selection criteria
- eligibility
- financial/economic standing
- technical/professional capacity
• award criteria
- technical criteria
- price
• once published, criteria may not be changed
Selection and award criteria
Procurement

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Awarding principles
• transparency (the tender documents must contain clear and open
criteria and procedures - they must be accessible to all tenderers);
• proportionality (whatever is being requested should be limited to
what is necessary to achieve the specific purpose);
• equal treatment (the award process must be completely impartial -
the bids are selected using published eligibility and evaluation criteria);
• non-discrimination; and
• sound competition.
Procurement

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Why excluding an applicant/tenderer?
a) bankruptcy or similar situation;
b) convicted for offence in their professional conduct;
c) proven grave professional misconduct;
d) not paid social security contributions or taxes;
e) judgement for fraud, corruption, illegal activities;
f) breach of contract financed by EC funds;
Reasons for exclusion
Procurement

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As well as:
 Attempt to obtain confidential information, to influence committee
decision;
 Misrepresentation in supplying the information required;
 + ethical grounds incl. impartiality/human rights/conflict of interest
(section I.7 of Rules and procedures for contracts financed from
the EC general Budget in the context of external actions).
Procurement
Reasons for exclusion (2)

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Rules of nationality/origin
Participation in tender procedures managed by the Beneficiary(ies) is open
on equal terms to all natural and legal persons of the Member States and
the States and territories of regions expressly covered and/or allowed by the
Financial Regulation and the basic acts or other instruments governing the aid
programme under which the grant is being financed.
Tenderers must state in their tenders the country of which they are nationals
by presenting the usual proof of nationality under their national legislation.
This rule does not apply to the experts proposed under service tenders
financed by the grant.
For each basic act, the detailed list of eligible countries are listed in
Annexes A2a and A2b of Practical Guide.
Procurement

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Origin - definition
The term „origin‟ is defined in the relevant EU legislation on rules of origin for customs purposes: the
Customs Code (Council Regulation (EEC) No 2913/92) in particular its Articles 22 to 24 thereof,
and the Code's implementing provisions (Commission Regulation (EEC) No 2454/93).
• The country of origin is not necessarily the country from which the goods have been shipped
and supplied.
• Two basic concepts are used to determine the origin of goods, namely the concept of “wholly
obtained” products and the concept of products having undergone a "last substantial
transformation".
• If only one country is involved in the production, the "wholly obtained" concept will be
applied. In practice, these goods wholly obtained in a single country shall be regarded as
having their origin in that country. This will be restricted to mostly products obtained in their
natural state and products derived from wholly obtained products.
• If two or more countries are involved in the production of goods it is necessary to
determine which of those countries confers origin on the finished goods. For this purpose the
concept of "last, substantial transformation" is applied.
Procurement

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Rule of origin
All supplies purchased under a procurement contract, or in accordance with a grant
contract, financed under the EU budget or the EDF shall originate from an eligible
country as per the corresponding Instrument.
However, according to the CIR, when the value of the
supplies to be purchased is below 100 000 euros per
purchase, the supplies do not have to originate from an eligible
country (full untying).
Within a grant or works contract, the rules of origin apply only to
supply purchase for an amount equal or above 100 000 euros.
Procurement

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Exceptions to the rule on origin
• Exceptions to the rule on nationality and origin may be made in
some cases;
• The award of such contract is decided on a case-by-case basis
by the Commission before the procedure is launched;
• The derogation must be mentioned in the procurement notice.
Procurement

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Derogation
 The contract notice will have to indicate that the tender
procedure benefits from the derogation.
 If the procurement procedure is to be divided into lots, this
applies per lot.
 The division into lot shall not be used to get around the
rules of origin.
 The services would have to pay special attention to the
legitimacy of the division into lot to avoid artificial slicing.
Procurement

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How to prepare a
tender dossierProcurement

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Procurement procedures – internet
Procurement

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Procurement

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Procurement

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Tender Launch
 Deadline for Submission = min. 30 days
 Deadline for Questions 21 days
 Deadline for Answers 11 days
Tenders are valid for 90 days
Procurement

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Submission of Tenders
• Tenders must be submitted in accordance with the double
envelope system,
 i.e., in an outer parcel or envelope containing two
separate, sealed envelopes,
 one bearing the words "Envelope A - technical offer" and
 the other "Envelope B - financial offer"
• All parts of the tender other than the financial offer must be
submitted in Envelope A.
Services

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Evaluation Committee
Procurement

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Contracting
• Once tenderer is selected, informed by letter and asked to submit
additional info within 15 days
• Once received, the contract is prepared, signed and sent to
contractor who signs within 30 days
• Once signed by all, other tenderers informed with reasons
• Attention – irregularities:
Sequence not followed;
Contractor forced to sign ASAP and not within 30 days
Services

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Cancel the tender procedure
in exceptional circumstances:
• none of the tenders satisfies the selection/award criteria of the
tender procedure;
• no tender achieves the minimum threshold during the technical
evaluation;
• the total price (comprising both the fees and the provision) of all
tenders exceeds the maximum amount available for the contract;
• irregularities in the procedure, in particular where these have
prevented fair competition;
• force majeure.
Procurement

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Main differences
 Services are awarded based on 80/20 ration of quality and price
while Supplies and Works are awarded to lowest technically
compliant offer;
 You may have services as a part of supply tender, but should not
have supplies as a part of service tender;
 Works - This is the ONLY type of procedure for which CA may ask
Tenderers to “pay” in order to receive the Tender Dossier (to cover
cost of copying and posting).
Procurement

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What are the key factors to take into account in
procurement?
Procurement
What to do What NOT to do
Do identify the applicable rules to your organisation Do not acquire services, supplies and works ‘as usual’
Do plan all procurement at the beginning of the project Do not assume that procurement can be done quickly
Do be aware of the thresholds for all subcontracting
Do not artificially split contracts to avoid the
requirements e.g. by year or by category or by partner.
Artificial splitting is not allowed and will make the total
amount of all contracts ineligible (more information on
artificial splitting is in section 3.6 below)
Do consult your auditor in case of doubt or just to
double check
Do not trust only your past experience even if you had
similar grants in the past – rules change
Do revise your usual procedures to verify that they are
compliant with Annex IV of your grant contract
Again do not do it ‘as usual’
Do provide all information required, make sure the
Terms of Reference are clear and include check-lists for
tenderers
Do not assume that tenderers have enough experience
to submit eligible bids

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CONFLICT OF INTEREST

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A Conflict of interest:
…occurs when the impartial and objective exercise of the
functions of the contracting authority, or observance of the
principles of competition, non-discrimination against or equality of
treatment of candidates, tenderers, applicants and contractors…
…is compromised for reasons involving family, emotional life,
political or national affinity, economic interest or any other
shared interest with a beneficiary of EU-funded programmes.

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Conflicts of interests and corruption are not the
same thing!
Corruption usually requires an agreement between at least two
partners and a bribe/payment/advantage of some kind.
A conflict of interests arises where a person may have the
opportunity to put private interests before his or her professional
duties.

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A conflict of interest may arise where, for instance :
a member of the evaluation committee or someone in the
contracting authority or others involved in the procedure,
grant themselves, or others:
 unjustified direct or indirect advantages by influencing
the outcome;
 or allow an expert or company to obtain information
leading to an unfair advantage in subsequent or related
procedures.

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TYPES OF CONFLICTS OF INTEREST
Actual conflict of
interest
Perceived conflict
of interest
Potential conflict
of interest
A public official is in
a position to be
influenced by their
private interests
when doing their job.
A public official is in
a position to appear
to be influenced by
their private
interests when doing
their job.
A public official is in
a position where
they may be
influenced in the
future by their
private interests
when doing their job.
Source: ICAC, Managing Conflict of Interest in the Public Sector, November 2004.

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Examples
• The space rented for the project office was part of a residential unit.
Inspection of documents revealed that the real estate belonged to the project
director, the other part being his own living space. Besides the clear case of
conflict of interest, it was unclear how the utilities were charged to the project.
• The office rented for the project was the apartment of the project
accountant/NGO president.
• The accountant of the project was also auditor in the company selected for
expenditure verification.
• NGO awarded several contracts to an IT advisory firm, owned by a member
of the Board of Trustees of the NGO.
• The family members (son, husband) of NGO president were hired in the
project without having proper qualifications and experience.
• A staff member of the final beneficiary of the project was hired as expert.

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Examples
• The spouse of a contracting authority‟s desk officer in charge of
monitoring a tendering procedure works for one of the bidders.
• A person owns shares in a company. This company takes part in a
tendering procedure in which this person is appointed as a member of
the evaluation committee.
• The head of a contracting authority has spent a week‟s holiday with
the CEO of a firm which bids in a tendering procedure launched by
the contracting authority.
• An officer in a contracting authority and the CEO of one of the
tendering firms have responsibilities in the same political party.

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Examples
Tendering and Purchasing: A person owns shares in a company. This
company takes part in a tendering procedure in which this person is appointed as
a member of the evaluation committee.
Staff Recruitment : A member of a selection panel has a close relationship with
one of the applicants for the job. This conflict of interest could bias, or could
reasonably be expected to bias, the decision of the panel.
Secondary employment : Two police officers have second jobs as bouncers at a
nightclub. Local residents have complained to the police several times about
noise levels at the club and problems with drunks and underage drinking, but no
action appears to have been taken. The impartiality of the police officers has
been compromised as it may be perceived that they are using their influence to
make sure the club is not investigated.

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Examples
Dealing with former public officials : A senior employee of a government
department awarded a particular firm several valuable contracts. Shortly after
awarding the contracts, he resigned from his job and went to work for the firm. It
could appear that the offer of employment was a personal benefit, in return for
favors given. Other competitors might be disadvantaged if staff at the agency
were influenced by their previous colleague and continued to award contracts to
his firm. This situation must be carefully managed to ensure favoritism or the
perception of favoritism does not occur.
Gifts, benefits and hospitality: A regular supplier offered the purchasing officer
of a government department a free weekend for two at a beach resort. The
officer's impartiality when dealing with the supplier could be compromised if she
accepted the offer.

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Examples
Local Government Planning Approvals
A senior council planner often had to advise applicants on how to make their
development applications comply with council's codes. He suggested to some
applicants that they should use the services of a local architectural firm where his
brother worked.
Although the necessary work was mainly done by staff at the firm, the planner
was sometimes paid to prepare the drawings himself. The planner's job was to
act in the public interest and to provide impartial advice about council's policies.
By recommending his brother's firm, he put the private interests of his brother and
himself before his public duty.
A similar conflict can occur when councils have a dual role as developer and
regulator. Councils that decide to develop a piece of land they own may make
decisions in their own commercial interest and unfairly disadvantage other
developers. It may be difficult for councils to be impartial when they are effectively
having to assess their own applications.

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Examples
Licensing
A health inspector is friendly with the owner of a local butcher's shop and often
gets given extra meat with his family's order. As part of his job, the inspector has
to inspect the butcher's shop to check it complies with health regulations. The
personal relationship between the butcher and the inspector, and his acceptance
of free meat, could reasonably be expected to influence his assessment of the
health standards in the shop.

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Examples
Elected officials
Many councilors have business and professional interests in the local
government area they represent. Conflicts can arise if their public positions allow
them access to information and opportunities that could be used to advance their
personal and business interests. For example, a councilor may be tempted to
influence an application to set up a new business in the town if his own business
could lose custom as a result
Source: (ICAC Practical Guide, 1996. http://www.icac.nsw.gov.au/files/html/pub2_27cp.htm

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What action must be taken if a risk of conflict of interests is identified or a
conflict of interests is declared/detected before or during the procedure?
Subject to the relevant national law, relevant measures to safeguard the
public procurement procedure should be taken.
The following steps should be considered, depending on the existence or
not of a declaration of absence of conflict of interests, the nature of the
conflict of interests and the stage of the procedure:
 where appropriate discussing the elements of facts with the
person concerned to clarify the situation
 excluding the person concerned from the public procurement
procedure, whether he/she is a staff member or an external expert,
 change in division of duties and responsibilities among the staff
 cancelling the procurement procedure.

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Declarations of absence of conflicts of interests
It is highly recommended that people be asked to sign a declaration of
absence of conflict of interests as soon as they take part in the procedure.
The declaration of absence of conflict of interests should contain the
definition of a conflict of interests and all the requirements of any code of
conduct or ethics applicable to the process and related to conflict of
interests.
The declaration should give:
(a) a clear reference to the procurement procedure concerned;
(b) the signatory‟s full name, date of birth, position in the organisation, and
function in the public procurement procedure;
(c) the date of signature.

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The declaration should enable the signatory to declare officially:
 whether to his/her knowledge he/she is in an apparent/potential/actual
conflict of interests linked to the procurement procedure referred to;
 whether there are circumstances that might place him/her in an
apparent/potential/actual conflict of interests in the near future; and
 that he/she commits to declaring immediately any potential conflict of
interests in the event of any circumstance that might lead to such a
conclusion.
The declaration should include a reference to the
disciplinary/administrative/criminal sanctions for making a false
declaration.

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GC -ARTICLE 4 - CONFLICT OF INTERESTS
• The Beneficiary(ies) shall take all necessary measures to prevent or end
any situation that could compromise the impartial and objective
performance of this Contract. Such conflict of interests may arise in
particular as a result of economic interest, political or national affinity,
family or emotional ties, or any other relevant connection or shared
interest.
• Any conflict of interests which may arise during performance of this
Contract must be notified in writing to the Contracting Authority without
delay. In the event of such conflict, the Coordinator shall immediately
take all necessary steps to resolve it.

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GC -ARTICLE 4 - CONFLICT OF INTERESTS
• The Contracting Authority reserves the right to verify that the
measures taken are appropriate and may require additional
measures to be taken if necessary.
• The Beneficiary(ies) shall ensure that its staff, including its
management, is not placed in a situation which could give rise to
conflict of interests. Without prejudice to its obligation under this
Contract, the Beneficiary(ies) shall replace, immediately and
without compensation from the Contracting Authority, any
member of its staff in such a situation.

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Sub-granting - suggested practice
(but please consult with your CA about all the details)
Procurement

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Sub-granting - Background
Procurement
The European Commission (EC) re-introduced in May 2007 the
option of sub-granting in its grant contracts1.
Sub-granting is an indirect financial contribution through an EC
grant Beneficiary to a sub-grant Beneficiary for an action intended
helping to achieve an objective of the EC grant contract.
Before the award of financial support to third parties, the EU
Delegation will have to be informed. The modalities for information
will be defined before signature of the grant contract.

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Guidelines for grant Applicants
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The Calls for Proposal Guidelines specify that the Applicant must set out the
following in the proposal on sub-granting:
(i) the objectives and results to be obtained with the financial support;
(ii) the different types of activities eligible for financial support, on the basis of
a fixed list;
(iii) the types of persons or categories of persons which may receive financial
support;
(iv) the criteria for selecting these entities and giving the financial support;
(v) the criteria for determining the exact amount of financial support for each
third entity, and
(vi) the maximum amount which may be given.

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Ineligible activities
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As sub-granting does not imply the transfer of responsibility, the Beneficiary of the
EC grant needs to take into consideration the eligibility of all expenditure and that
costs related to the following actions are considered to be ineligible:
• debts and debt service charges (interest);
• provisions for losses or potential future liabilities;
• costs declared by the Beneficiary(ies) and financed by another action or work
programme receiving a Union (including through EDF) grant;
• purchases of land or buildings, except where necessary for the direct
implementation of the Action, in which case ownership shall be transferred to the
final beneficiaries and/or local Beneficiary(ies), at the latest at the end of the
Action, in accordance with Article 7.5;
• currency exchange losses;
• credits to third parties, unless otherwise specified in the Special Conditions.

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Selection of sub-grant Beneficiaries
Procurement
• Sub-grants awarded by the Beneficiary are subject to the nationality rules as
referred to in Annex IV. (eligibility is governed by the same criteria as for
Beneficiaries and Partners as published in the Call for Proposals
Guidelines for Applicants);
• In order to select the most suitable sub-grant Beneficiary, the Beneficiary has
to evaluate according to the criteria set out in the Description of the Action
(Annex I) and following the principles of transparency, fairness and non-
discrimination, which should be reflected in the selection criteria in a
justifiable and well documented manner.
• The evaluation process of a sub-grant Beneficiary must be well
documented and might be subject to prior approval by the Contracting
Authority.

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Evaluation of sub-grant proposals
Procurement
For the proper evaluation of sub-grant proposals the Beneficiary may use the
following evaluation grid and include the selection criteria as established in
Annex I of the EC grant contract.
Once proposals for sub-granting have been assessed, a list could be
established with the proposed actions ranked according to their total score.
Score
1. Operational criteria
As listed in the Description of the Action (Annex I).
2. Financial criteria
As listed in the Description of the Action (Annex I).
Total score

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Contractual Agreement between Grant Beneficiary
and Sub-grant Beneficiary
Procurement
• Sub-granting is bound by the provisions of the Special and General
Conditions of the EC grant contract.
• The Beneficiary shall be accountable to the Contracting Authority for
the implementation of the Action. It shall undertake that the conditions
applicable to it, especially under Articles 1, 3, 4, 5, 6, 7, 8, 10, 14, 16 and
17 of the General Conditions (Annex II) shall also apply to its sub-grant
Beneficiary.
• The Beneficiary shall include provisions to that effect as appropriate in
its formal agreement with the sub-grant Beneficiary so as to ensure the
proper execution of the EC grant contract.

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Contractual Agreement between Grant Beneficiary
and Sub-grant Beneficiary (1)
Procurement
Below issues could be taken up in a formal agreement between the
Beneficiary and the sub-grant Beneficiary:
A. Purpose of the sub-grant:
In the agreement reference should be made to the fact that the sub-grant is
awarded in the context of an EC grant contract with the Beneficiary
including reference to the Special and General Conditions.
Moreover, a clear description of the activities expected to be carried out by
the sub-grant Beneficiary should be provided.

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Implementing modalities
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The following issues need to be addressed:
• Implementation period: start and end date;
• Maximum amount of sub-granting in Euro. Please note that reference to local
currency should be avoided in order not to incur exchange rate losses, which are
ineligible;
• Indication of eligible budget items (attach copy of the budget to the agreement
with a clear reference to the budget items sub-granted.)
• Definition of responsibilities of the sub-grant Beneficiary regarding personal
taxes, social and related benefits for the personnel working under the grant;
• Declaration of the sub-grant Beneficiary;
• Contact addresses of the Parties.

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Payment and reporting modalities
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• Payment arrangements: specify the amount of pre-financing and payment
installments.
• Payments should be based on the periodic financial reports submitted applying the
percentage of EC contribution to the agreed bank account.
• Original documents should be sent with each request for payment and the grant
Beneficiary shall return these documents after stamping them "certified as original".
• Beneficiary should designate authorized signatories and track the transactions
related to the sub-grant.
• Agreement on the type and frequency of narrative and financial reporting:
template to be used in line with EC grant contract.
• Agreement on the consequences of a lower than expected EC payment as a result of
the application of the maximum funding percentage under the EC grant contract: who
pays the sub-grant Beneficiary in case the total eligible costs are lower than
expected.

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Evaluation, audits, visibility
Procurement
• It is advisable that both parties agree about audit approach and
modalities
and
• that monitoring missions and checks of the sub-grant Beneficiary
accounts and records are carried out by the Beneficiary of the EC
grant.
• Any publication or information on the project should be agreed in
advance between the two parties.

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Evaluation, audits, visibility (1)
Procurement
Prior approval by the Contacting Authority should be provided upon
concluding an agreement with the sub-grant Beneficiary.
Should the sub-grant Beneficiary fail to implement the approved
activities in accordance with the Description of the Action (Annex I) and with
a view to achieving the objectives laid down therein, a recovery order of
the sub granted amount should be enforced.
Note that the Contracting Authority does not acknowledge any contractual
link between itself and the sub-grant Beneficiary.

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Information of the Beneficiary of sub-granting
Procurement
The Beneficiary of the EC grant should inform the sub-grant Beneficiary about
the content of the annexes of the Special Conditions of the EC grant contract:
• Annex II: General Conditions applicable to European Community-financed
grant contracts for external Actions;
• Annex III: Budget for the Action;
• Annex IV: Contract-award procedures;
• Annex V: Standard request for payment and financial identification form;
• Annex VI: Model narrative and financial report;
• Annex VII: Model report of factual findings and terms of reference for an
expenditure verification of an EC financed grant contract for external actions;

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Declaration by the Beneficiary of a sub-grant
Procurement
In order to provide the Beneficiary with a reasonable assurance that the sub-
grant Beneficiary is able to carry out the agreed upon actions, the authorised
signatory of the sub-grant Beneficiary should declare that they will be excluded
from participation if:
a) they are bankrupt or being wound up, are having their affairs administered
by the courts, have entered into an arrangement with creditors, have
suspended business activities, are the subject of proceedings concerning
those matters, or are in any analogous situation arising from a similar
procedure provided for in national legislation or regulations;
b) they have been convicted of an offence concerning their professional
conduct by a judgment which has the force of res judicata;

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Declaration by the Beneficiary of a sub-grant (1)
Procurement
c) they have been guilty of grave professional misconduct proven by any means which the
Beneficiary can justify;
d) they have not fulfilled obligations relating to the payment of social security contributions
or the payment of taxes in accordance with the legal provisions of the country in which
they are established or with those of the country of the Beneficiary or those of the country
where the contract is to be performed;
e) they have been the subject of a judgment which has the force of res judicata for fraud,
corruption, involvement in a criminal organisation or any other illegal activity detrimental
to the Communities' financial interests;
f) they are currently subject to an administrative penalty referred to in section 2.3.5 of the
Practical Guide to contract procedures for EC external actions.
The authorised signatory of the sub-grant Beneficiary must certify that he is not in one of the
situations listed above and signed on behalf of the sub-grant holder. At the approval stage the
Contracting Authority will ensure that this declaration is provided by the sub-grant Beneficiary.

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VAT
Procurement
• As is the case with EC grant Beneficiaries VAT is not eligible for sub-grant
Beneficiaries (except if duly justified).
• In order to insure that zero VAT is granted the Beneficiary shall inform the
Ministry of Finance at an early stage of the sub-granting component of its
EC grant contract.
• If there is any problem in obtaining the zero VAT the EC office should be
informed in order to facilitate the procedure.
• Procedure defers from one country to another.

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Audits
Procurement
• In case of sub-granting in the EC grant contract the auditor should be
informed at an early stage.
• Before submitting a proposal to the EC, an auditor should be consulted
for a price quote, which would take into account the sub-granting as this
would entail more work for the auditor and therefore a higher audit fee.
• Ensure that enough funds are included in the project budget to cover this
type of audit.

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Audits (1)
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• During the audit of actions with sub-granting, the auditor should verify
the expenditures of each sub-grant Beneficiary and ensure that the
activities involved are in line with those of the EC grant contract.
• Furthermore, the auditor should verify the eligibility of the costs
incurred by the sub-grant Beneficiary, the respect of the zero-VAT
issues and the use of the correct exchange rates as per the provisions
under the EC grant contract.
• The Beneficiary should keep copies of all supporting documents
related to sub-grants for the period as specified in the General
Conditions of the EC grant contract. As for the sub-grant Beneficiaries
original copies should be kept for the same period.