Changes from report parliamentary committee draft to plenary report

Buildings and administration

Change 97

Changed138.214. Notes that the new central corporate financial system of the Commission, SUMMA, was planned to go into production by the end of 2023 and had progressed in line with the objective of going live at the beginning of 2024; notesregrets that the deadline for implementing the new accounting system was extended by one year because implementing the connections of operational programmes (shared management, e-grants, e-procurement, staff payments) with SUMMA simultaneously has proven to be a more complex exercise than expected; stresses with concern that the cost of the SUMMA programme since its inception at the beginning of 2018 until the end of 2022 was around EUR 95 million and that its timeline extension will require additional resources in 2024, estimated at around EUR 7 million euro;

Change 98

Added215. Notes the adoption on 5 April 2022 of the ‘Communication on greening the Commission’, which aims to achieve climate neutrality by 2030, including an action plan to reduce its greenhouse gas emissions; notes the Commission intends to achieve these objectives by acquiring more energy efficient and greener buildings, shifting to dynamic collaborative workspaces and reducing the number of offices, and reiterates its warning that staff wellbeing and satisfaction should be taken into account in all future decisions in this regard;

216. Notes the media reports on negotiations between the Belgian Government and the Commission on a real estate transaction worth nearly EUR 1 billion and, likewise, the Commission’s plans to rent office spaces in the Brussels North area, including reluctance on the part of the staff concerned; stresses that any development in the Commission’s real estate policies shouldn't degrade the working conditions of its personnel;

Change 99

Added217. Is concerned that the Commission has refused to provide records of the discussions with a pharmaceutical company and regrets the lack of transparency related to the text messages between the Commission’s President and the pharmaceutical companies regarding the purchase of COVID-19 vaccines; notes the European Ombudsman decision on the related case 1316/2021/MIG considering that not recording text messages in its document register constitutes “maladministration” and is concerned that the Commission has not followed up on the recommendation to conduct another search for relevant text messages; notes that, to date, the Commission has not made available to the Members of the European Parliament the non-redacted versions of the contracts signed; recalls the Parliament resolution of 13 July 2023 on public access to documents – annual report for the years 2019-2021;

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European Schools

218. Notes with satisfaction that the Court, in its Annual Report on the accounts for he European Schools for the 2022 financial year, found no material errors in the final consolidated annual accounts of the European Schools for 2022; welcomes further improvements highlighted by the Court in the quality of the final individual and consolidated accounts compared to previous years;

219. Notes with concern that both the Court and the external auditor found immaterial errors, which mainly related to the calculation of provisions for post-employment benefits and that the audit opinions of the external auditor were not in line with the framework contract concluded with the Office of the Secretary-General (the ‘Central Office’);

220. Notes that the Court, while praising improvements in recruitment and procurement procedures in the Central Office, found, for two out of the seven schools it reviewed (Frankfurt and Luxembourg I), shortcomings in these procedures; notes with concern that the Court, once again, noted weaknesses in terms of payment procedures for both the Central Office and the two schools that were reviewed;

221. Recalls that the Parliament, in its resolution of 12 September 2023 on the system of European Schools: state of play, challenges and perspectives, stressed that the current system of teacher recruitment in the European Schools System (EES) has serious shortcomings, resulting in a mismatch between the needs on the ground and the actual staff seconded by the Member States, issues with yearly recruitment plans, difficulties in finding qualified teachers and staff, precarious working conditions for locally recruited teachers and other educational staff and problems with continuous professional development;

Recommendations

222. Calls on the Commission to:

(i) take into account on an equal footing the efficient use of office spaces and the health and well-being of staff while implementing the new HR strategy, in particular regarding people with disabilities, as well as duly involve staff representatives when changing work conditions;

(ii) remain vigilant regarding the prevention, identification and adequate management of burnout cases in the larger context of staffing, workload and staff well-being;

(iii) reinforce the measures to support women pursuing a management career in order to increase the number of applications from highly qualified women to middle and senior management functions within both the Commission and the Union agencies;

(iv) continue its work to strengthen the geographical balance of its staff at all levels while at the same time fulfilling the requirements in the Staff Regulations regarding competences and merits of candidates;

Change 100

Added(v) address without further delay and in an efficient way the challenges faced by members of staff who are assigned to and reside in Luxembourg;

(vi) making appropriate investments in building IT capabilities and resources for EPSO to be more efficient and effective and, in particular, to ensure optimal testing conditions in future selection processes; and

(vii) ensure a better and stricter risk management approach towards the readiness of the SUMMA deployment and avoid material risks of temporary disruption until the new accounting system is fully operational;

Change 101

Removed145. Furthermore, calls on the Commission and the European Schools to:

Added(viii) follow up on the Ombudsman’s recommendation in case 1316/2021/MIG, as well as ensure that its internal guidelines on document registration are in line with Regulation (EC) No 1049/2001;

Added223. Furthermore, calls on the Commission to continue to support the European Schools to:

(i) implement without delay the Court’s recommendations in its Report on the accounts of the European Schools for the 2022 financial year, and to keep the discharge authority informed on the progress;

(ii) urgently resolve ongoing teacher shortages and ensure a stable and fair employment situation for all by retaining staff and reducing turnover, thereby also avoiding a brain drain; and

Change 102

Removed(iii) feature the financial contributions from the Union to the European Schools as a separate budget line, in future Union budgets, in order to increase transparency, ensure strategic planning and facilitate parliamentary scrutiny under the discharge procedure;

Added(iii) perform an in-depth review under an independent chairperson of the governance and management structures across the System of European Schools and involve the Directorate General for Education, Youth, Sports and Culture of the Commission;

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CHAPTER II - Recovery and Resilience Facility (RRF)

General remarks

224. Recalls that the outbreak of the COVID-19 pandemic in 2020 abruptly changed the economic and social outlook of the Union and led to a unified effort to launch the recovery package for Europe, consisting of the 2021-2027 MFF and NGEU, of which the cornerstone is the RRF; recalls that the objective of the RRF is to provide Member States with financial support to mitigate the serious economic and social impact of the COVID-19 pandemic and make European economies and societies more sustainable, resilient, inclusive and better prepared for the challenges and opportunities of the green and digital transitions; recalls that the RRF is an innovative, temporary instrument based on performance, which means that payments are linked to the satisfactory fulfilment of milestones and targets (M&Ts) reflecting progress on reforms and investments included in the national recovery and resilience plans (RRPs), which are set in a Council Implementation Decision;

225. Notes that all 27 RRPs were adopted by the end of 2022, allocating EUR 335,1 billion in grants and EUR 165,3 billion in loans, that will be paid out upon the fulfilment of 2 557 measures (consisting of approximately one third for reforms and two thirds for investments), and their related 6 237 milestones and targets, by 2026; notes that, in 2022, the Commission disbursed a total, including pre-financing, of EUR 74,4 billion (EUR 47,2 billion in grants and EUR 27,2 billion in loans);

226. Notes that the REPowerEU Plan was launched in May 2022 to help the Union to reduce its dependency on Russian fossil fuels by saving energy, producing clean energy and diversifying its energy supplies, which is aligned with the green transition; notes that the amendments introduced to Regulation (EU) 2021/241 (‘the RRF Regulation’) by Regulation (EU) 2023/435 on REPower EU added additional financing and priorities to the RRF; notes that all 27 Member States have submitted modified RRPs to include REPowerEU chapters, but also to request additional loan support, to make adjustments following the update of the maximum financial contribution or to make amendments due to objective circumstances, as enabled by the RRF Regulation; notes that the revision of the RRPs are subject to the same assessment criteria as the original plans, together with specific requirements applicable to the REPowerEU chapters;

Change 103

Changed149.227. Recalls that, under NGEU, the Commission can raise up to EUR 806,9 billion between mid-2021 and 2026 through the issuance of EU-bonds;Union-bonds; notes that in June 2022, the Commission announced a funding plan for the period June to end-December 2022 and raised an additional EUR 50 billion in long-term funding for NGEU, complemented by short-term EU-bills issuances, bringing the total outstanding amount of NGEU bonds to EUR 171 billion, of which EUR 36,5 billion were raised by issuing green bonds; notes that this debt consists of borrowed amounts with different maturities, ranging from 1 year to more than 25 years; notes that repayment of NGEU debt will only start after 2028;

Change 104

Changed150.228. Notes the efforts of the Commission to raise funds on the financial markets to provide the financial means for the RRF; notes that, in 2020, an amount of EUR 14,9 billion was planned in the MFF 2021-2027 to cover the interest payments for NGEU non-repayable support; is concerned about the impact of the higher interest rates on the purchasing power of the Union budget, with the interest rates on 10-year EU-Bonds increasing from 0,09 % in 2021 to 3,2 % in 2023; notes that Commission’s AAA borrowing costs are higher than some Member States with a lower rating; notes that borrowed amounts need to be repaid and borrowing activities remain needed not only to raise new funds, but also to replace existing debt; is concerned about the rising interest rates, particularly in 2022, and the resulting debts and uncertain capacity to repay the loans, taking into account the large amount of money that the Commission is borrowing in order to finance the RRF; notes however that the debt is currently EUR 90 billion less than initially forecasted; notes the Commission’s long-term plan for repayment of the debt and calls on the Commission to regularly update it and inform the discharge authority of any new risks that might influence its implementation; notes the Commission’s statement that the Union will meet its obligations towards bondholders in all circumstances and its proposal for a technical modification to the MFF to optimise the budgetary treatment of NGEU borrowing costs; notes that information on the EU debt and planned repayments are part of the regular reporting within the NGEU dialogue; requests that the Commission continues to provide more information to the European Parliament on how repayment will be made and from which institutions funds are being borrowed; emphasises that this debt burdens the EU budget;

Change 105

Added229. Welcomes the Commission’s estimate that the full implementation of quantifiable milestones and targets up until the end of 2026 funded by NGEU Green Bonds, corresponding to 57 % of the NGEU Green Bond eligible expenditure, can reduce Greenhouse gas (GHG) emissions by 44 million tonnes of CO2 per annum– equivalent to 1,2 % of the aggregate for the Union’s GHG emissions in 2022, and insists on proper implementation; stresses furthermore the importance that reforms and investments under the Recovery and Resilience Plans meet the climate targets of the regulation and fully respect the “do no significant harm” principle;

Court’s observations

Change 106

Changed151.230. WelcomesNotes that the Court issued a qualified opinion on the legality and regularity of the RRF expenditure in 20222022; is legalconcerned andthat regularthe inCourt allconcluded materialthat aspects,11 exceptout forof the13 effectsRRF ofpayments themade in 2022 were affected by quantitative findings inand 11that 6 of these payments andwere theaffected by material errorerror; notes that in 6the paymentsCourt’s estimatedopinion, byexcept for those matters, the Court,RRF whichexpenditure areaccepted in the basisaccounts for itsthe qualifiedyear opinion2022 concerningis thelegal RRFand expenditure;regular in all material respects; notes that the nature of the RRF spending model relies on the judgementsassessments to be made by the Commission and thus, the Court does not provide an error rate but estimates the minimum financial impact of its findings to be below, but close to the materiality threshold;

Change 107

Changed152.231. Notes that the Court audited 244 out of 274 milestones and all 37 targets included in 2022 payment requests for grants; notesregrets that the Court considers that 15 of them were affected by regularity issues (below 5 % of the total); notes that the Court considers that the requirements had not been satisfactorily fulfilled for 8 M&Ts in 8 payments and that the Commission had made the corresponding payments; notes that the Court’sCourt's conclusions are based on itsextensive audit work and that the Commission contests the Court's interpretation of the legal requirements set by the Council or qualitative judgements different from the Commission; notes that all the RRF payments aremust be assessed against the framework communicated and applied by the Commission, who alsomust takestake into consideration for each payment the opinion of the Economic and Financial Committee and the scrutiny by Member State experts under the comitology procedure;

Change 108

Removed153. Notes that the Court considers that a case of double funding occurred in 2022, even though the measure in question does not have any costs attached to it under the RRF; notes the Commission’s observation that, according to the RRF Regulation, ‘double funding’ is explicitly linked to costs and thus, there can be no 'double funding' if the Member State has not submitted any cost estimate as part of its national plan; notes that the Commission underlines that reforms are essential criteria for the Commission's positive assessment of RRPs, but that the inclusion of no-cost reforms does not increase their financial envelope, although in this way the plans ensure their effective and timely implementation;

Added232. Notes that the Court has identified what it considers to be two cases of continuation of a pre-existing project, that started before the eligibility period, and targets that were a substitution of recurring national budgetary expenditure; is concerned about such situations, although this conclusion does not agree with the Court’s own consideration that recurring actions refers to types of expenditure like staff and operating costs of government entities; recalls that the RRF shall not be used to finance recurring budgetary expenditure and calls for adequate measures to be taken, including partial payments, when such cases are identified by the Commission;

Removed154. Notes that the Court also identified several cases of weak design in M&Ts and problems with the reliability of information that Member States included in their management declarations, although the effects of those findings are considered material but not pervasive by the Court; notes that the Commission agrees to review M&Ts provided there is a legal justification to change the elements of a Council Implementing Decision, namely that a Member State submits an amended plan and a legal basis justifies the changes;

Added233. Recalls the Court’s observation in Special Report 21/2022 and its Annual Report for 2021 that milestones and targets often lack clarity and are not well defined and that the Court makes the same observation in its annual report 2022; calls on the Commission to draw on lessons learned when designing future performance based instruments;

Removed155. Notes that, by end 2022, the Commission reported 6 cases of potential irregularities to OLAF, identified during ex-post audits or from open sources in respect of RRF supported actions; notes that, in 2022, OLAF disseminated a risk framework for the RRF and provided over 50 fraud awareness-training sessions to Commission departments, agencies and other external partners, including Member States’ authorities;

Added234. Is concerned by the Court’s findings in SR 26/2023 that milestones and targets vary in ambition between Member States and considers this is yet another example where the Commission does not treat MemberSstates equally; notes that the Commission confirmed the differences and will try to enhance equal treatment during the implementation phase; considers that Member States by default should be treated equally and regrets this has not been the case when negotiating the RRPs; insists that equal treatment should be ensured when evaluating the completion of milestones and targets;

Removed156. Welcomes the systematic audit work of the Court regarding the RRF, with emphasis on the protection of the Union’s financial interests, which is providing a thorough analysis of the relevant aspects of the Facility and valuable insight into its implementation; notes with satisfaction that the Commission broadly accepts and applies the Court’s recommendations and acknowledges that many of the issues identified by the Court are related to the legal basis of the RRF and linked to its innovative nature and functioning; considers that the Court’s recommendations stemming from its audit work on the RRF are particularly relevant to the co-legislators for future Union performance-based financing instruments;

Added235. Notes with concern that the Court considers that a case of double funding occurred in 2022, even though the measure in question does not have any costs attached to it under the RRF; notes the Commission’s observation that, according to the RRF Regulation, ‘double funding’ is explicitly linked to costs and thus, there can be no 'double funding' if the Member State has not submitted any cost estimate as part of its national plan; notes that the Commission underlines that no-cost reforms do not increase the financial envelope but are nevertheless essential criteria for the Commission's positive assessment of RRPs, as well as their full implementation for the relevant payments;

Added236. Notes with concern that the Court also identified several cases of weak design in M&Ts and problems with the reliability of information that Member States included in their management declarations, notes that the Commission agrees to review M&Ts provided there is a legal justification to change the elements of a Council Implementing Decision, namely that a Member State submits an amended plan and a legal basis justifies the changes;

Added237. Stresses that, by end 2022, the Commission reported 6 cases of potential irregularities to OLAF, identified during ex-post audits or from open sources in respect of RRF supported actions; welcomes that, in 2022, OLAF disseminated a risk framework for the RRF and provided over 50 fraud awareness-training sessions to Commission departments, agencies and other external partners, including Member States’ authorities;

Added238. Emphasises that the protection of the financial interests of the Union is a top priority and that more precise implementation and performance monitoring will help prevent and reduce fraud at early stages; emphasises that in particular rule of law and anti-corruption related M&Ts are essential in hindering corrupt individuals, organisationsn, governments or criminal systems; calls on the Commission to monitor closely the fulfilment of rule of law and anti-corruption M&Ts and report on possible reversals;

Added239. Expresses concern about the Court’s finding that reporting of fraud involving RRF expenditure lacks a standardised approach with strong coordination and cooperation between Member States; welcomes that the Commission has already adapted the Irregularity Management System so it can be used for the RRF by the competent national authorities; encourages the Commission, EPPO and other relevant entities on Union and national level to engage in a structured cooperation to identify and report, according to their respective competence, cases and possible patterns of fraud and crimes against the financial interest of the Union to better protect the taxpayers’ money; asks Member States to strengthen their capacities to uncover crimes in this area;

Added240. Welcomes the effort made in the systematic and comprehensive audit work of the Court regarding the RRF, with emphasis on the protection of the Union’s financial interests, which provides a thorough analysis of the relevant aspects of the Facility and valuable insight into its implementation; notes with satisfaction that the Commission broadly accepts and applies the Court’s recommendations and acknowledges that many of the issues identified by the Court are related to the legal basis of the RRF; considers that the Court’s recommendations stemming from its audit work on the RRF are particularly relevant to the co-legislators for future Union performance-based financing instruments;

Added241. Stresses the fact that the RRF was established as the Union’s common instrument for mitigating the serious economic and social impact of the COVID-19 pandemic and for making European economies and societies more sustainable, resilient, inclusive and better prepared for the challenges and opportunities of the green and digital transitions, and its financial means thus can not be understood as Member States’ own budget resources; emphasises the crucial role of the Court and the Commission in their proactive ex-ante and ex-post controls in making sure the funds are spend effectively with satisfactory fulfillment of M&Ts;

Audit and control

Change 109

Changed157242. NotesUnderlines that the control framework is tailored to the unique nature of the RRF and built upon two types of controls, namely (i) controls by the Commission to provide reasonable assurance over the legality and regularity of commitments and payments, based on the satisfactory achievement of M&Ts as set in the Council Implementing Decisions approving the RRPs, and (ii) controls by the Member States to ensure adequate protection of the financial interests of the Union as provided in Article 22 of the RRF Regulation;

Change 110

Changed158243. WelcomesNotes that, based on the Court’s recommendations and the experience gained, the Commission presented its methodologies on (i) assessing the satisfactory fulfilment of M&Ts, (ii) calculating the suspended amounts in case of non-fulfilment of a milestone or target, and (iii) dealing with potential situations where M&Ts initially assessed as satisfactorily fulfilled by the Commission were subsequently reversed by the Member State; welcomes that the Commission accepts the recommendation to carry out a revision of its ex-post audit procedures to verify the potential reversal of targets after the payment, although is concerned that the methodology does not provide legal clarity in case a milestone or target is reversed after the implementation period of the RRF;

Change 111

Removed159. Notes that the Commission verified the adequacy of the control systems of Member States as a precondition for the positive assessment of the RRPs and, in some cases, specific M&Ts on audit and control were added in the RRPs to ensure the full adequacy of the systems to protect the financial interests of the Union; notes that the satisfactory fulfilment of audit and control M&Ts was, in turn, a precondition for the first payments and welcomes that the Court did not raise any issues related to their satisfactory fulfilment assessed during 2022; notes that afterwards, the Commission performed 16 system audits in 2022 and 11 in 2023, so all Member States’ control systems will have been audited at least once by the end of 2023;

Added244. Notes that the framework for assessing M&Ts lacks explanations, including why the verification mechanism as described in the operation arrangement should not be considered for the assessment; notes that definitions of “satisfactory fulfilment” of the relevant M&Ts are defined through terms that lack a clear definition and contain discretionary elements, such as ‘minimal deviation from a requirement’ or ‘proportional delays’, and that the methodology for the determination of partial payment does not provide an explanation for the values chosen as coefficients; asks that further clarifications are given;

Added245. Expresses concern that the Commission is dependent on the information provided by the Member States and recommends a more active communication to proactively identify any potential reversal of M&Ts; welcomes that the Commission accepts the recommendation to carry out a revision of its ex-post audit procedures to verify the potential reversal of M&Ts after the payment, although regrets that it does not foresee any post-2026 monitoring on potential reversals; is particularly concerned that there is no legal provision in Regulation (EU) 2021/241 establishing the Recovery and Resilience Facility (the ‘RRF Regulation’) that addresses the reversal of M&Ts after the last date for payments from the RRF and that the Commission’s methodology, consequently, does not provide legal clarity in case a M&T is reversed after the implementation period of the RRF once all payments have been made, especially given that some important M&Ts included in RRPs are probably to be fulfilled in the last part of the RRF lifetime;

Added246. Notes that 12 national RRPs contain Rule of law or anti-corruption reforms in their milestones and targets; notes the recent case of a potential reversal of two milestones concerning the Rule of law in one Member State; emphasises the need for the Commission to pay more attention to the potential reversal of M&Ts in the area of the Rule of law as they are particularly vulnerable to arbitrary governmental decisions;

Added247. Notes that the Commission verified the adequacy of the control systems of Member States as a precondition for the positive assessment of the RRPs; notes that additional specific ‘control milestones’ were added, in turn, as a precondition for the first payments in the RRPs of 16 Member States where gaps or deficiencies required additional measures to ensure the full adequacy of the systems to protect the financial interests of the Union; is concerned about the Court’s observation of persisting weaknesses in the Member States’ control systems that put the sound financial management of RRF funding at risk and urges the Commission and national authorities to address them swiftly; welcomes that the Court did not raise any issues related to their satisfactory fulfilment assessed during 2022; notes problems with the reliability of the information provided in the management declarations by Member States, casting doubts on the possibility to rely on them when assessing milestones and targets; notes that the Commission performed 16 system audits in 2022 and 14 in 2023, including whether they check compliance with Union and national rules, so that all Member States’ control systems will have been audited at least once by the end of 2023; understands that the RRF Regulation places the principal responsibility to ensure respect for national and Union law on the Member States but is concerned about the Court’s observation on an assurance and accountability gap regarding compliance because there is an absence of compliance audits by the Commission on RRF funded investments projects; calls on an adequate and equal application of Article 22 of the RRF Regulation for all Member States and recalls that non-fulfilment of M&Ts related to a Member State's control system may lead to the suspension of the full instalment and all future instalments;

Added248. Recalls that Council Regulation (EU) 2017/1939 (the ‘EPPO Regulation’) provides that the EPPO shall be competent in respect of the criminal offences affecting the financial interests of the Union that are provided for in Directive (EU) 2017/1371 in the terms set out in the EPPO Regulation and specifically in its Chapter IV;