Changes from report parliamentary committee draft to plenary report

3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

▸5 unchanged paragraphs

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European High Performance Computing Joint Undertaking for the financial year 2022

(2023/2177(DEC))

The European Parliament,

– having regard to its decision on discharge in respect of the implementation of the budget of the European High Performance Computing Joint Undertaking for the financial year 2022,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

Changed– having regard to the opinionreport of the Committee on Industry, ResearchBudgetary andControl Energy,(A9-0095/2024),

Change 3

Removed– having regard to the report of the Committee on Budgetary Control (A90000/2024),

AddedA. whereas the European High Performance Computing (EuroHPC) Joint Undertaking (the ‘Joint Undertaking’) located in Luxembourg, was set up in October 2018 for a period until 31 December 2026;

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ChangedA.B. whereas in July 2021, the EuropeanCouncil Highadopted Performancea Computingnew (EuroHPC)founding JointRegulation Undertakingextending locatedthe inlifetime Luxembourg,and wasremits setof upthe inJoint OctoberUndertaking 2018under the Multiannual Financial Framework (MFF) 2021-2027, for athe period untilending on 31 December 2026;2033;

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ChangedB.C. whereas inthe Julynew 2021,work theprogramme Councilfor adopted2021 aand 2022 including new foundingactivities Regulationand extendingfinancing as set out in the lifetimenew andfounding remitsRegulation ofwere only adopted by the Joint UndertakingUndertaking’s undergoverning theboard Multiannualin FinancialDecember Framework2021 (MFF)and programmethat 2021-2027,this fordelayed theimplementation periodof endingactivities, ondevelopment 31of Decemberinternal 2033;control activities and recruitment;

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ChangedC.D. whereas the EuroHPC Joint Undertaking is a public-private partnership, enabling the pooling of resources from the EU,Union, participating countries,states, and private members for the development and deployment of high-performance computing in Europe;

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ChangedD.E. whereas its members are the EU,Union, represented by the Commission, the Participatingparticipating States,states, and three private members, represented by the European Technology Platform for High Performance Computing, the Big Data Value association, and the European Quantum Industry Consortium;

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ChangedE.F. whereas, according to regulation (EU) 2018/1488, the Participatingparticipating Statesstates and Privateprivate Membersmembers were only required to contribute to the administrative costs from 2024 onwards; whereas this was repealed under the new regulation (EU) 2021/1173 and, since August 2021, the administrative costs are covered by the financial contributions of the Commission, on behalf of the Union (Horizon(under Horizon 2020 and Connecting Europe Facility1);Facility 1);

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ChangedF.G. whereas under the 2021-2027 Multinnual Financial Framework (MFF),MFF, the EuroHPC Joint Undertaking receives significantly more funds from the Horizon Europe, Digital Europe and Connecting Europe Facility programmes, to support the acquisition and development of high-performance computing,computing and quantum computers as well as the upgrading and operation of the infrastructures for supercomputers and quantum computers;supercomputers;

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ChangedG.H. whereas, to increase transparency, the Joint Undertaking should disclose in its annual accounts, relevant information regarding members’ contributions at programme level; whereas, for each programme under which they operate, the Joint Undertaking should present per member category up to the year-end, all relevant information made available by the members including the legal contribution targets set for the respective programme, the volume of contributions received, and the volume of legal commitments; whereas the Joint Undertaking should continue to improve the transparency;

General

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Changed1. Notes that the report of the Court of Auditors (the ‘Court’s report’) finds that the accounts of the Joint Undertaking for the year ended 31 December 2022 present fairly, in all material respects, its financial position at 31 December 2022, the results of its operations, its cash flows, and the changes in net assets for the year ended, in accordance with its Financial Regulation and with accounting rules adopted by the Commission’s accounting officer; notes, in addition, fromthat according to the Court’s report that the underlying transactions to the accounts are legal and regular in all material respects;

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Added2. Welcomes the Joint Undertaking's objective and role in developing a supercomputing ecosystem in Europe;

3. Notes, however, that the Court assessed the risk to the legality and regularity of recruitment procedures as medium for the Joint Undertaking, due to the need to recruit a large number of staff quickly, to implement its enhanced remits and activities under the 2021-2027 MFF;

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Changed3.4. Notes, in addition, that the risk related to the JUJoint Undertaking operational contract expenditure was assessed by the Court as medium due to its complex procurement procedures for high-value contracts;

Budgetary and financial management

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Changed4.5. Notes that, for 2022, the available payment budget amounted to EUR 629.9629,9 million (EUR 348.2348,2 million in 2021) and the available committed budget amounted to EUR 1 374.5374,5 billionmillion (EUR 753.4753,4 million in 2021); notes that the available budget includes unused appropriations of previous years, which the Joint Undertaking re-entered in the budget of the current year, assigned revenues and reallocations to the next year;

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Changed5.6. Notes that the Court categorises the risk to budget management as medium because of weaknesses observed in the budget planning and monitoring process and the complex and lengthy acquisition process for supercomputers;

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Changed6.7. Notes withthat concerndue to the length of time it takes to procure supercomputers, the low implementation of both 2022 operational - commitment and payment appropriations were at 79% and 24% respectively (2% and 47% in 2021) - and administrative budgets - 45% for administrative commitment appropriations and 37% of its administrative payment appropriations;

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Changed7.8. Notes that the Court assessedrisks thein riskrelation to programme implementation as medium due to the highpossibility riskof thatthe EuroHPCJoint mayUndertaking not achieveachieving the minimum contributions targets for their private members by the end of the Horizon 2020 programme; notesunderstands that, according to the Joint Undertaking, the lower achievement rates are explained by the involvement of Participatingparticipating States;states;

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Changed8.9. Notes that, in 2022, the JUJoint Undertaking only implemented 45% of its administrative commitment appropriations and 37 % of its administrative payment appropriations, partly due to the nopartial achievementcompletion of its recruitment plan for 2022 and to the no reallocation of significant amounts of unused payment appropriations of previous years when planning its 2022 budget; understands that the late adoption of the Joint Undertaking’s new founding regulation made the achievement of its ambitious recruitment plan impossible;

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Changed9.10. Agrees with the Court that the JUJoint Undertaking should establish a time-scheduled action plan for finalising the implementation of projects approved under previous MFFs;

11. Is concerned that the Court assessed the information on members’ contributions at programme level as insufficient;

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Changed11.12. Notes that in the Joint Undertaking’s 2022 annual accounts, the amounts of contributions recognised per member category (EU(Union and private members) differ significantly among each other, because EUUnion cash contributions are validated and recognised when paid to the JUJoint Undertaking at the beginning of the project implementation, but members’ in-kind contributions are only recognised after validation of the costs incurred and declared for project implementation; is concerned that the gap between the recognised amount of cash contributions on the one hand and in-kind contributions on the other hand, was addressed in anot suboptimalsufficiently wayaddressed in the JU’sJoint Undertaking’s 2022 annual accounts byand notcould be improved in future by providing information on the JUJoint Undertaking members’ legal commitments at year end, in terms of signed grant agreements and contracts; welcomes the commitment of the Joint Undertaking to fully address the issue in the next year's annual accounts;

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Changed12. Is concerned, moreover, that in its 202213. annualCalls accounts,on the JUJoint didUndertaking’ notto disclose important information regarding members’ contributions at programme level, relevant for the complete communication of the JU’sJoint Undertaking’s achievements at the year-end; notes, in particular, that the JUJoint Undertaking did not compare the contributions received from each member category up to the year-end under each programme with the legal contribution targets set for the respective programme;

14. Is worried with the Court’s finding that private members will not achieve their minimum contribution target at the end of the programme implementation;

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Changed14.15. NotesWelcomes that, at the end of 2022, the JUJoint Undertaking fully committed the maximum EUUnion operational contribution of EUR 526 million for signed grant agreements and contracts under the Horizon 2020 and CEFConnecting 1Europe Facility (CEF 1) programmes; takes note with concern that, of this, around EUR 266.3266,3 million (or 50.650,6 %) remains to be paid in the coming years for projects yet to be completed;

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Changed15.16. Notes that, at the end of 2022, the Participatingparticipating Statesstates signed contractual commitments amounting to EUR 447.3447,3 million for the JU’sJoint Undertaking’s Horizon 2020 and CEF 1 activities; notes that, in respect of these commitments, they declared financial contributions of EUR 124.8124,8 million to the JUJoint Undertaking for pre-exascale supercomputers procured by the JUJoint Undertaking itself, and EUR 38 million of in-kind contributions related to the hosting entities’ operating costs; notes, in addition, that the Participatingparticipating Statesstates paid EUR 48.248,2 million directly to the contractors of the petascale supercomputers that are jointly procured by the JUJoint Undertaking and the Participatingparticipating States;states; notes that the remaining difference between commitments and declared contributions arises from Participatingparticipating Statesstates only recognising and reporting their costs to the JUJoint Undertaking when the Horizon 2020 projects they support have been completed;

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Changed16.17. Notes, however, that, at the end of 2022, the JU’sJoint Undertaking’s private members had only committed and reported EUR 11 million (or 2.62,6 %) in in-kind contributions for Horizon 2020 projects, a figure considerably below the minimum private members’ target of EUR 420 million to be achieved by the end of the Horizon 2020 programme; notes that the Court found that the JU’sJoint Undertaking’s current financing arrangements for Horizon 2020 grant actions only allow private members to provide in-kind contributions for one type of project (innovation projects, capped at 30 % of project costs); notes that, consequently, the JU’sJoint Undertaking’s financing arrangements could not leverage private members’ in-kind contributions at the level of the target set in its founding regulation for the Horizon 2020 programme;

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Changed17.18. Fears that the significant reduction in private members’ in-kind contributions to the JU’sJoint Undertaking’s operational activities presents a risk to the overall achievement of its parts of the Horizon 2020 research and innovation programme;

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Changed18.19. Agrees with the Court that to ensure the achievement of their private members’ contribution targets for the 2021- 2027 MFF, EuroHPCthe Joint Undertaking’ should, based on a strategic programme implementation plan, monitor the private members’ individual contribution achievements on an annual basis;

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Changed19.20. Notes that, according to the newRegulation EuroHPC(EU) founding2021/1173 Regulation,, the JUJoint Undertaking will have to implement projects amounting to EUR 7 billion, of which EUR 3 billion should be leveraged from the Participatingparticipating Statesstates and EUR 900 million from private members, in the form of cash and in-kind contributions; welcomes this significant increase, compared to the previous MFF programme,MFF, of around EUR 1.41,4 billion; regrets, however, that as the Joint Undertaking’s financing arrangements remain the same for the 2021-2027 MFF, there is a high risk that the JUJoint Undertaking will not achieve the private members' contribution targets under the new founding Regulation; calls on the Commission to re-assess the feasibility of the current contribution targets from the private members in the new founding Regulation;

Procurement and staff

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Changed20.21. Is concerned that the JU’sJoint Undertaking’s lengthy processprocess, which must be in line with the EU Financial Regulation, for the acquisition of supercomputers significantly affected the implementation of the 2022 operational budget; understands that delays by Hosting Entities and supply issues for key components also contributed to the low implementation rate;

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Changed21.22. Notes that the lower implementation rate for the operational commitment budget arose from the fact that the JUJoint Undertaking could not make an important global commitment related to an exascale computer hosting agreement, due to delays in the negotiation process with the Participatingparticipating Statestate and the hosting consortium;

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Changed22.23. Notes, moreover, that the main reasons for the low implementation rate of the operational payment budget were (i) delays in completing the pre-exascale supercomputers that prevented interim payments related to the JU’sJoint Undertaking’s operating grants; (ii) delays in the procurement for supercomputers that prevented the related pre-financing payments; (iii) the postponement of the CEF 2 call on Hyperconnectivity to 2023 due to the need of a pre-study; and (iv) delays in beneficiaries’ cost claims for ongoing research activities;

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Changed23.24. Notes, fromaccording to the ECACourt’s report, that the Commission's Internal Audit Service (IAS) carried out a limited review on the JU´sJoint Undertaking´s human resource management in 2022; notes that, regarding recruitment planning, the review reported that the JUJoint Undertaking lacked a documented analysis of resource needs, based on a robust ex-ante workload assessment to better prioritise the planned recruitments;

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Changed24.25. Notes that.that, in response, in December 2022, the JUJoint Undertaking developed an action plan, which the IAS considered to be adequate;

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Changed25.26. Notes that the staffing level for EuroHPCthe Joint Undertaking under the 2021-2027 MFF was set out in the legal financial statements included in the Commission’s proposal for a new founding regulation; notes, in addition, that, to implement around EUR 7 billion of funds under the 2021-2027 MFF, EuroHPCthe Joint Undertaking received 39 additional staff posts to be recruited by 2023;

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Changed26.27. Notes with concern that, by the end of 2022, the JUJoint Undertaking had only recruited eight staff members and 20 by mid-2023, and therefore did not meet its 2022 recruitment target; notes that the Court considers that this situation negatively impacted the implementation of the 2022 administrative budget; welcomes however the gender distribution of the staff in the Joint Undertaking in 2022;

28. Observes that the proportion of contractual staff remained high with 70% at the end of 2022;

29. Stresses that the absence of key staff could adversely affect business continuity and the achievement of the Joint Undertaking’s objectives, particularly given the highly technical nature of its projects and the requirement for highly qualified staff with very specific knowledge;

Management and control systems

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Changed29.30. Notes that for Horizon 2020 and Horizon Europe co-financed expenditure, the Common Audit Service of the Commission’s DG RTD is responsible for the ex-post audits; notes that for Horizon 2020 co-financed expenditure (clearings and final payments), the JUJoint Undertaking reported a representative error rate of 2.3%2,3% and a residual error rate of 1.9%1,9%;

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Changed30.31. RegretsCalls thaton the JU’s internal control system hasJoint notUndertaking yetto foreseeninclude specific ex-post audits for CEF co-financed expenditure for the acquisition of supercomputers;supercomputers in their internal control system; notes, in addition, that for the Horizon Europe programme, ex-post audits have yet to be carried out, as the first interim payments are only expected in 2024;

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Changed31.32. Notes,Notes fromthat, according to the Court’s report, that EuroHPCJoint Undertaking performed on an ad-hoc basis risk-based ex-ante controls on risky projects, and that they had not yet implemented a structured risk-based approach to ex-ante controls by the end of 2022, notes, in particular that the JUJoint Undertaking had not aligned ex-ante controls to the high-risk factors identified by targeted risk assessments; notes, in addition, that they had not developed internal practical guidance on how to implement a risk-based monitoring, including instructions on how staff should use the risk management module available in COMPASS;

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Changed32.33. Agrees with the Court that EuroHPCthe Joint Undertaking should implement a structured risk-based approach to ex-ante controls covering relevant project and beneficiary-related risks; agrees, moreover, that the JUJoint Undertaking should develop internal, practical guidance on how to implement a risk-based monitoring at the level of projects and beneficiaries, and how staff should use the risk management module available in COMPASS;

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Changed33.34. Notes with concern that a Court’s detailed analysis of a sample of the JU’sJoint Undertaking’s reinforced monitoring cases revealed several weaknesses, which prevented their effective and efficient monitoring; notes, moreover, that in EuroHPCthe Joint Undertaking specific control actions related to the identified risks were not defined, or the due date for their implementation was not set;

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Changed34.35. Supports the Court’s assessment that EuroHPCthe Joint Undertaking should ensure that all reinforced monitoring actions are accompanied by specific control actions targeting the identified risks, and that they are followed-up at a pre-defined deadline;

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Changed35.36. Draws attention to the fact that the beneficiary and/or project structure of EuroHPCthe Joint Undertaking is changing significantly under the Horizon Europe programme, such as the increased number of SMEs, newcomers and larger consortia, as well as the requirement to only use open call procedures for Horizon Europe activities; underlines, therefore, that, as a result, the risk factors identified in previous programmes may no longer be relevant and new risk factors may emerge;

Follow-up of previous years’ observations

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Changed36.37. Notes that “observations” in the Joint Undertakings specific annual reports are in fact “not timed recommendations” by the Court;Court of Auditors (the ‘Court‘); notes that ECAthe Court annually follows-up on those observations by assessing their status as “open” or “closed”;

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Changed37.38. Notes that from the nine (9) observations issued by ECAthe fromCourt in 2020 and 2021, only two (from 2021) are closed;

39. Notes that the remaining observations relate to (i) validation and certification of in-kind contributions, (ii) staff recruitment, (iii) low contributions from private members, (iv) low implementation rates, amongst others;