Select Committee on European Scrutiny First Report


EXTERNALISATION OF THE MANAGEMENT OF COMMUNITY PROGRAMMES


(22051)
5314/01
COM(00) 788

Commission Communication on externalisation of the management of Community programmes, including presentation of a Framework Regulation for a new type of executive agency.

Draft Council Regulation laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes.
Legal base:Article 308 EC; consultation; unanimity
Document originated: 13 December 2000
Forwarded to the Council: 15 January 2001
Deposited in Parliament: 24 January 2001
Department: Treasury
Basis of consideration: EM of 11 March 2001
Previous Committee Report: None
To be discussed in Council: No date set
Committee's assessment: Legally and politically important
Committee's decision: Not cleared; further information requested

Background

5.1  As part of its process of reform, the Commission set out in December 1999 to develop a coherent and manageable 'externalisation' policy. 'Externalisation' in this context means the carrying out of executive tasks implementing Community policies by bodies other than the Commission. The 'externalisation' policy is being developed in order, amongst other things, to correct the aberrations caused by poor control of the various technical assistance offices.

5.2  The objective is to allow the Commission's permanent staff to be assigned to its essential tasks, to regain control of executive and support activities and, overall, to improve efficiency.

The document

5.3  The document consists of a Communication from the Commission together with a proposed Council Regulation. In its Communication, the Commission makes it clear that externalisation cannot be used to absolve the Commission of its responsibilities conferred under the Treaties, such as those delegated to it under Article 202 EC, or the responsibility for implementing the budget under Article 274 EC. The Commission also observes that its "public-authority tasks" cannot be devolved to private bodies.

5.4  The Communication refers to three types of externalisation. "Devolution" is the delegation of executive responsibilities to Community public bodies such as executive agencies (these being the subject of the proposed Council Regulation). "Decentralising" is the delegation of executive responsibilities to national public bodies "with a public service mission backed by the State" and which would act as partners in implementing some Community policies. "Outsourcing" would take place through the letting of contracts to the private sector.

5.5  Executive agencies are intended to carry out tasks related to implementing and managing Community programmes, but would not have "discretionary powers in translating political choices into action" (Article 6 of the draft Regulation). They will be specialised management bodies sufficiently distinct from the Commission to enjoy the maximum authority and flexibility in day-to-day management but with the Commission retaining enough control to ensure that its strategic objectives are met. The Regulation would lay down the conditions and institutional arrangements for the creation of executive agencies. Executive agencies would then be set up, as and when needed, by Commission decision after consulting a committee composed of Member States' representatives.

5.6  Decentralisation would be based on a network of agencies set up in Member States, and in some cases, also in non-member countries. This would satisfy two requirements. First, it would assist in running broad-based programmes which the Commission could not manage using its own staff or an executive agency and which it would not be desirable to manage in an excessively centralised fashion, but where central authorities must still be able to intervene as necessary. Secondly, seeking collaboration with national partners would allow local peculiarities to be taken into account. For any given programme there would be a regulatory instrument setting up a programme and providing for management by a network of national agencies, a Commission decision setting out the responsibilities of the Commission and of the Member States concerning national agencies, and an operating agreement and decentralised measures agreement between the Commission and each national agency setting out the conditions under which Community funds would be made available and applied.

5.7  Outsourcing will be carried out where it is both appropriate and cost-effective and will be used to mobilise resources which the Commission cannot find among its own staff and which it would not be appropriate to entrust on a long-term basis to an agency. New standard form contracts will be introduced and guidance will be issued on the monitoring of outsourcing contracts.

5.8  The proposal for a Regulation is based on Article 308 EC. Article 2 of the Regulation defines an executive agency and a Community programme. Article 3 empowers the Commission to establish or wind up an executive agency. Such a decision is to be made in accordance with the regulatory procedure[3] provided for in Article 5 of Decision 1999/468/EC. Article 4 provides for an executive agency to be a Community body with a legal personality separate from the Commission.

5.9  Article 6 sets out the functions which may be conferred on an executive agency. It provides that the Commission may entrust an executive agency with any tasks required to implement a Community programme, "except for those demanding discretionary powers in translating political choices into action". An executive agency may draw up recommendations to the Commission on the implementation of a Community programme, may manage projects, may execute budgets and gather, analyse and present information. The Commission is to define the functions in the instrument of delegation.

5.10  Articles 7 to 11 deal with the structure of the executive agencies. Each is to have a steering committee and a Director appointed by the Commission. Articles 12 to 17 cover the operating budget. All revenue and expenditure of the agency is to be included in the operating budget and is to be in balance. On the basis of the draft operating budget adopted by the steering committee, the Commission is to propose, as part of the annual budget procedure, an annual grant to the agency's operating budget. The Director of the agency is to act as the delegated authorising officer and is to comply with the Financial Regulation applicable to the general budget of the European Communities.[4]

5.11  Article 18 provides that staff of the agency, who may either be seconded from Community institutions or directly recruited by the agency, shall be subject to the rules and regulations applicable to officials and other servants of the European Communities. By virtue of Article 19, the Commission's internal auditor and financial controller shall have the same powers and tasks with regard to an executive agency as within the Commission's departments. An executive agency is to subscribe to the inter-institutional agreement[5] on internal investigations conducted by the European Anti-Fraud Office (OLAF).

5.12  Article 20 provides for the contractual and non-contractual liability of the agency, and Article 21 for the review by the Court of Justice of the legality of acts of the agency. The agency is to grant the public the same access to documents as is enjoyed in relation to documents of the European Parliament, Council and Commission.[6] Finally, Article 23 provides for a Committee, composed of representatives of the Member States to assist the Commission.

The Government's view

5.13  In her Explanatory Memorandum of 11 March 2001, the then Economic Secretary to the Treasury (Miss Melanie Johnson) describes the policy implications of the document as follows:

    "The Government welcomes any proposals which have as their aim better financial and operational management of the implementation of Community policy. It agrees that the Commission's policy for externalising tasks needs a thorough overhaul to prevent repetition of past management failures.

    "The purpose of externalising tasks should be to take advantage of specialist expertise which cannot be provided internally or can be provided more effectively or efficiently by external bodies. It should also provide greater flexibility, particularly by allowing the Commission to call on human and management resources for a limited period of time linked to implementation of particular programmes, without incurring any ongoing obligation."

5.14  On the financial implications of the document, the Minister notes that the Commission has not produced a financial analysis to accompany the proposal. The Minister expects costs to be minimal as executive agencies will replace existing means of implementing programmes and should lead to cost efficiencies through more effective management, but will be seeking clarification on this point from the Commission.

Conclusion

5.15  We agree with the Government in welcoming proposals leading to better financial and operational management of the implementation of Community policy. However, the mechanisms used must not dilute the responsibility or the accountability of Community institutions, notably the Commission.

5.16  We note that Article 4 of the draft Regulation provides for the agency to enjoy a legal personality separate from that of any other institution, from which it would follow that the agency alone is legally responsible for its acts. We would be grateful for the Minister's views on how this provision is to be reconciled with the principle set out in the preamble that "recourse to an agency does not relieve the Commission of its responsibilities under the Treaty, particularly Article 274".

5.17  We find the draft Regulation far from clear on the question of which tasks may be delegated by the Commission to an agency. The exception of tasks "demanding discretionary powers in translating political choices into action" seems to us to be vague and difficult to apply in practice. We would be grateful for the Minister's views on this issue and, in particular, on whether it would be preferable for the list in Article 6 to be exclusive, rather than illustrative, so as to achieve more certainty.

5.18  We shall hold the document under scrutiny pending the Minister's reply.



3   Of the three procedures set out in that Council Decision, the regulatory procedure gives the greatest control to the representatives of the Member States. Back

4   OJ No. L 356, 31.12.77, p.1 as amended, most recently by Council Regulation 762/2001 OJ No. L 111 20.4.01 p.1. Back

5   OJ No. L 136, 31.5.99, p.15. Back

6   (20968) 5817/00; see HC 28-xiii (2000-01), paragraph 9 (2 May 2001). Back


 
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