DIFFERENCES BETWEEN THE GRANT AGREEMENTS UNDER THE FPA 2014 AND THE CERTIFICATE 2021

The Commission may still impose ADMINISTRATIVE SANCTIONS (formerly “penalties”) on Partners. The related article of the MGA (Art. 34) is simplified and contains a reference to the applicable provisions of the Financial Regulation.

Partners will have the possibility to request three  alternative arrangements in Chapter 14.1 of the Single Form using the drop-down menu, amongst others limited visibility and communication. Moreover, in Chapter 14.2 is given the chance to the Partner to request, using free text, exceptional alternative arrangements ATTENTION! only in very rare and very exceptional cases.

AMENDMENT REQUESTS will be made in HOPE/APPEL as usual, and the reply from the Commission will be electronically signed in ARES.

Deadlines to approve the amendment will be NEW! 45 days instead of 30. NEW! Tacit rejection: no answer from the other party entails the rejection of the modification request.

The MGA does not mention clerical errors, but they will continue to be fixed with an exchange between the parties.

The notification of non-essential changes in the FPA is kept in the MGA for changes in activities.

As in the FPA, changes to the budget are not considered an amendment as long as they do not imply a substantive or important change to the description of the action.

Addition of amounts for subcontracts requires an amendment or simplified approval (approval given with the final periodic report).

The timing to submit the modification request is the same as in the FPA. In exceptional cases, the beneficiary may request an amendment after the end of the implementation period of the Action. However, the acceptance or rejection of the proposed amendment will not be given with the notification of the final payment as with the FPA, but in a separate communication.

NEW! The steps to be taken for changing the coordinator in multi-beneficiary grants are detailed in the MGA (info missing in the FPA as all grants were mono-beneficiary). In general terms, it would entail an amendment request. Moreover, if a change of coordinator is requested without its agreement, the submission must be made by another beneficiary (acting on behalf of the other beneficiaries) outside of APPEL, as only the coordinator has access to APPEL.

Annex 5 is specific to each DG, as it contains some additions and derogations to the 44 Articles of the MGA that are applicable across the Commission. The Commission will publish the MGA’s guidelines, the so-called Annotated Model Grant Agreement (AGA), common to all services of the Commission and Executive Agencies for what concerns the 44 common articles. On the other side, DG ECHO will provide the specific guidelines on Annex 5 together with guidance on the Certificate.

APPLICABLE LAW remains EU law, supplemented if necessary by the law of Belgium.

The provisions on ASSIGNMENT OF CLAIMS are the same as in the FPA.

Regarding CHECKS, REVIEWS, AUDITS, AND INVESTIGATIONS, the MGA includes the same obligation to keep documents and information available at headquarters, at least in copy.

Beneficiaries have the obligation to keep the originals with a clarification introduced in the MGA: digital and digitalised documents are considered originals if they are authorised by the applicable national law. Non-original documents may be accepted if they offer a comparable level of assurance. It remains also the obligation for the beneficiaries to make available the records and supporting documents of the action.

The Commission will still have the possibility to extend (extrapolate) results of checks, reviews, audits or investigations in other grants in cases of systemic or recurrent errors, irregularities, fraud or breach of obligations that have a material impact on the grant.

ATTENTION! The budget and the model for the financial statement (Annex 4) serve different purposes: the budget is an estimation, whilst the financial statement is the declaration of the costs incurred by the beneficiaries.

ATTENTION! The certificate on the financial statements is mentioned in the MGA, but does not apply to DG ECHO.

Confidentiality obligations no longer apply if the disclosure of the sensitive information is required by EU, international or national law. The sentence “such disclosure is unlikely to endanger beneficiaries or humanitarian staff” of the FPA disappears from the text. However, the Commission would never disclose sensitive information if the safety of humanitarian workers is at stake. NEW! Provisions on classified information, may not be released to any third party (including participants involved in the implementation of the action) without prior express written approval from the Commission.

The provisions on CONFLICT OF INTEREST in the MGA are taken over from the FPA.

Costs related to accepting or distributing contributions in-kind by other donors, including the running costs of equipment donated in-kind, may be considered eligible where mentioned in the Single Form and if directly linked to the implementation of the Action.

Actual costs have to be actually incurred, during the implementation period of the action (also after if they relate to the drafting of the final periodic report); they have to be included in the budget, identifiable and verifiable, compliant with national law, reasonable, justified and in line with financial sound management.

The rules on ELIGIBILITY OF COSTS in the MGA are substantially the same as in the FPA.

Field office costs can be declared as unit costs according to the usual accounting practices of the beneficiary.

Beneficiaries may still claim a lower percentage of indirect costs, despite the fact that the MGA mentions a fix 7%.

Mission costs (travel, accommodation, and per-diem) remain eligible.

The other costs category in the FPA is now called other goods, works and services (e.g. bank fees for transfers to the country of operation, dissemination of information, evaluation or monitoring of the Action, quality assurance measures, insurance costs not related to personnel or volunteers, translations, reproduction, consumable, supplies, etc.).

The award of procurement contracts in the FPA becomes subcontracting costs (e.g. contracts for goods, works or services that are part of the action tasks) and purchase costs. The distinction between both cost categories will be explained with examples in the guidelines.

For services and works, costs must still relate to activities performed during the eligibility period of the Action and for supplies they must relate to supplies used or delivered during the eligibility period of the Action. This does not appear in the MGA but will be clarified in the guidelines.

Costs of purchases of land or buildings remain ineligible, although they are not explicitly mentioned in the MGA.

The MGA describes the eligibility criteria for simplified costs options (unit costs, flat rate, lump sums, etc.). 

NEW! On staff costs, the main change in the MGA is the calculation of costs of employees or equivalents, using as a basis the daily rate for the person. The maximum number of day-equivalents per person for a year cannot be higher than 215.

The provisions on VAT remain the same: only non-deductible VAT is eligible.

The amount allowed for standard visibility  is increased (from EUR 8000 to EUR 10000) with a ceiling of 1% of the direct eligible costs of the action (0.5% in the FPA).

Volunteers costs are not eligible.

On DAMAGES the MGA specifies that the beneficiaries must compensate the Commission if the damage was caused by gross negligence or wilful act. The liability does not extend to indirect or consequential losses or similar damages (such as loss of profit, loss of revenue, or loss of contracts), provided such damage was not caused by a wilful act or by a breach of confidentiality.

On DATA PROTECTION, the MGA now contains the updated references to EU Regulations (General Data Protection Regulation or GDPR and Regulation 2018/1725). The MGA states that “Beneficiaries must process personal data under the Agreement in compliance with the applicable EU, international and national law on data protection”. 

ATTENTION! In the FPA, the eligibility period of the action could be different from the implementation period of the action, whilst in the MGA the period of eligibility of costs is always the same as the project starting date.

In the MGA, reimbursement of full price of equipment and goods is the rule, with the obligation to transfer or donate them after the end of the action, unless exempted by DG ECHO. If not, only the depreciation costs are eligible (regardless of the fact the Commission is the single largest donor of the action). Low value equipment (equipment with a value below EUR 1000, instead of previous EUR 750 per item) is exempted from the obligation of transfer or donation. If the cost per item is between EUR 1001 and EUR 2500 , the exception applies if the total costs of the items does not exceed EUR 15 000.

Remaining goods not exceeding 20% of goods purchased during the action per category of items (against double ceiling of 5% and EUR 750 per category of items in the FPA) are excluded from the obligation of transfer or donation.

ATTENTION! The amounts and thresholds abovementioned will be detailed in the guidelines.

On ETHICS, actions must still be carried out in line with the highest ethical standards and comply with ethical principles and relevant EU, international and national legislation. NEW! With the MGA, beneficiaries must commit to and ensure the respect of fundamental EU values, such as the respect for human dignity, freedom, democracy, equality, the rule of law and human rights, including also minority rights.

NEW! Derogations on the exchange rate are not possible under the MGA. More in general, the previous system of permanent derogations granted to Partners is no longer in place.

ATTENTION! Financial guarantees are mentioned all over the MGA, but they do not apply to DG ECHO.

The funding rate remains below 100% unless in exceptional and justified situations or due to the urgent nature of the action.

NEW! The Commission may carry out impact evaluations of the action, measured against the objectives and indicators of the EU programme funding the grant. If needed, the Commission may be assisted by independent, external experts.

Regarding the rules on INTELLECTUAL PROPERTY RIGHTS (IPR), the MGA clarifies that the Commission has the right of use on materials, documents and non-sensitive information received from beneficiaries for policy, information, communication, dissemination and publicity purposes during the action or afterwards.

Impact evaluations Partners will have to fulfil the same obligations. Specific rules are foreseen in Annex 5 to the MGA such as limited communication and visibility in case the implementation of such obligations would harm the safety of persons involved in the action (please see below alternative arrangements). Moreover, special logos highlighting the contribution of European Union Humanitarian Aid must be used by the beneficiary (“Funded/Co-funded by European Union Humanitarian Aid”).

The rules on interest on late payment are the same (rate applied by the European Central Bank (ECB) for its main refinancing operations in euros + 3.5%).

The new MGA (Model Grant Agreement) is a contractual template created to be used by all Commission DGs and Executive Agencies. In DG ECHO, it will replace the specific agreements signed under the FPA that were complemented by the General Conditions (Annex II to the FPA) and the Principles and procedures applicable to procurement contracts (Annex III). As of 2021, for each action, the Commission and the Partners will sign a GRANT AGREEMENT. The MGA contains a preamble, a data sheet, 44 Articles and 5 annexes.

NEW! The MGA introduces the possibility to have MULTI-BENEFICIARY GRANTS. To this extent, two or more DG ECHO Certified Partners can team up in a consortium and sign the grant agreement via an accession form (Annex III to the MGA). The coordinator of the consortium will receive and distribute the payments, be the intermediary for communication with the Commission, transfer the funds to the co-beneficiaries, review and submit the reports and the individual and consolidated financial statements of the beneficiaries (cost claims) etc. The members of the consortium must have internal arrangements regarding their operation and coordination, but a formal, written consortium agreement will not be compulsory (DG-ECHO will not ask for it).

Under multi-beneficiary grants, the beneficiaries are jointly responsible for the technical implementation of the action. With regards to financial liability for recoveries, it works as follows: at final payment stage, the coordinator is fully liable for recoveries, even if it has not been the final recipient of the undue amounts. At beneficiary termination or after final payment instead, recoveries will be made directly against the beneficiaries concerned. In case of enforced recoveries, a beneficiary is jointly and severally liable for repaying the debts of another beneficiary, limited up to its maximum grant amount.

The budget of the action, (model in Annex 2 to the MGA), will have to be presented per beneficiary, with flexibility to make transfers between them, as long as this does not imply any substantive or important change to the description of the action.

The type of PARTICIPANTS has been enlarged with the MGA: beneficiaries (the “Humanitarian Organisations” in the FPA) and recipients of financial support to third parties. The latter category mainly includes Implementing Partners, whose involvement has to be justified in the Single Form.

ATTENTION! For the time being, affiliated entities and associated partners are not allowed under DG ECHO funded actions. 

The deadline to make PAYMENTS will be 60 days for the final payment, as under the FPA. There will be a pre-financing payment (general rule is 80% of the EU contribution) paid either 30 days following reception of the signed agreement or NEW! 10 days before the starting date of the action, if the action is deferred. For further instalments, NEW! the deadline is 60 days (instead of 30) from the reception of the pre-financing report. In multi-beneficiary contexts, the coordinator is responsible for transferring the payments without unjustified delay (which does not mean immediately!). The coordinator has to report on the distribution of payments only if required by the Commission.

Moreover, the Commission will make a payment of the balance (final payment) within 60 days from reception of the final periodic report, as foreseen also in the FPA. The Commission may still, at any time, suspend the payment deadline (stop the clock). NEW! If the suspension exceeds two months, the beneficiary may request the Commission to confirm if the suspension will continue.

The grounds and the procedure for the suspension of payments by the Commission remain in substance the same. In multi-beneficiary agreements, the coordinator is informed of the payment suspension only after the beneficiary concerned has submitted observations to the formal notification of the intention to suspend by the Commission.

The additional pre-financing request will be made with a pre-financing report. It will have to be submitted only when the pre-financing payment is divided into different instalments, each time the beneficiary wants to receive one. ATTENTION! A template for this report will be published on ECHO partners website.

NEW! The set of procurement provisions in Annex III to the FPA is not included in the MGA, which entails a real simplification. According to the MGA, contracts have to be awarded using the beneficiary’s usual purchasing practices provided that the best value for money (or lowest price) is ensured and there is no conflict of interest.

Regarding the purchase of food and medical supplies, the provisions are set in a separate document (https://www.dgecho-partners-helpdesk.eu/files/referencedocumentfile/2021/MedicalFoodSuppliesV1_1.pdf). These provisions continue to be binding but DG ECHO will have more flexibility to adapt them if necessary. On medical supplies, the rules will be very similar (obligation to buy from HPCs or pre-certified suppliers, fulfilment of minimum standards, etc.) with modifications on the provisions for medical devices. For food, the changes are minor.

NEW! QES. Grant agreements and formal exchanges with beneficiaries (e.g. amendments, termination letters, etc.) will be signed electronically by the Commission in ARES. Partners who use a Qualified Electronic Signature (QES) will likewise be allowed to sign the grant agreement and formal communications electronically.

The RECOVERY procedure remains substantially the same as under the FPA. The Commission issues a debit note after the beneficiary has received a pre-information letter to which it has been given the opportunity to submit observations. If the debit note is not paid, the Commission can offset the amount, then take legal action and adopt an enforceable decision.

ATTENTION! In multi-beneficiary grants, if offsetting is not possible, the beneficiaries are jointly and severally liable for the debts of other beneficiaries.

The grounds to reduce the grant are specifically listed and described in the MGA. The grant can be reduced in case the beneficiary has committed substantial errors, irregularities, fraud or serious breach of obligations (e.g. proper implementation of the actions, conflict of interest, confidentiality, ethics, data protection, visibility, etc.) under the grant agreement or during its award. The same applies in case the beneficiary has committed under other EU grants systemic or recurrent errors, irregularities, fraud or serious breach of obligations that have a material impact on the grant.

Rights and obligations of the Partners regarding REPORTING remain very similar. In fact, the Final Report, now called periodic final report, as it is linked to a payment, still needs to be submitted within the same deadline (no later than 90 days after the end date of the action). One or several Interim reports may be requested by the Commission. The deadline to submit interim reports (progress reports) will be displayed under point 4.1 of the data sheet – continuous reporting, where any supplementary (e.g. if the action is managed remotely) or exceptional reports will also be listed. Reporting will still be done the same way in HOPE/APPEL.

NEW! Regarding RESTRICTIVE MEASURES, the beneficiaries must ensure that the EU grant does not benefit any subcontractors or recipients of financial support to third parties that are subject to them. However, the need to ensure the respect for EU restrictive measures must not impede the effective delivery of humanitarian assistance to persons in need. Consequently, individuals in need shall not be vetted.

Project reviews (general projects reviews or specific issues reviews) were called evaluations of the action by the Commission in the FPA. A draft report is submitted for comments to the beneficiary (same as FPA) but the formalities of the procedure are now more detailed. NEW! The Commission may be assisted by independent, external experts.

Rules on SENSITIVE INFORMATION are the same: the parties must keep confidential any data, documents or other material (in any form) that is identified as sensitive in writing during the implementation of the action and for at least a period of 5 years after the final payment.

Despite the fact that the specific reference stating that all information provided in the framework of an audit shall be treated confidentially disappears in the MGA, confidentiality is ensured in the contract signed between DG ECHO and its external auditors.

As of  1 of January 2021, a new Single Form (SF), slightly different from the version under the FPA, will also be in place. The new Single Form will be a part of the grant agreement, as it constitutes Annex 1 to the MGA (Description of the action).

The beneficiary may SUSPEND the implementation of the Action (as under the FPA) in case of serious threat to the safety and security of humanitarian workers or final beneficiaries under the MGA. The beneficiary may request the suspension of the grant or any part thereof, if exceptional circumstances (e.g. force majeur) make such implementation impossible or excessively difficult.

The MGA allows the Commission to suspend the Action should it consider that exceptional circumstances make its implementation excessively difficult or dangerous for the humanitarian workers and beneficiaries (Article 31.2.1 c) (ii) of the MGA).

NEW! The deadline to submit comments following the suspension is longer: 30 days vs 15 under the FPA. 

The possibility foreseen under the FPA to terminate following a suspension longer than one-third of the implementation period of the Action has not been included in the MGA.

ATTENTION! Costs incurred or contributions for activities implemented during grant suspension are not eligible (Article 31.1.1 of the MGA). However, Annex 5 contains a provision that allows the temporary interruption or reduction of activities due to exceptional circumstances. During this period, some costs would still be eligible.

The TERMINATION grounds in the MGA are very similar to the grounds in the FPA. Termination of beneficiaries (including the coordinator) for multi-beneficiary grants is described in detail in the MGA, whilst in the FPA, only the grant agreement could be terminated, as all grants were mono-beneficiary.

The beneficiaries can still terminate the grant agreement if changes in circumstances in the field are likely to make it impossible or excessively difficult to continue the implementation of the Action (such as force majeure), in case of serious threat to the safety or security of humanitarian workers or beneficiaries, or due to the inability to ensure compliance with the humanitarian principles.

NEW! In the MGA there are some extra-grounds for Commission initiated termination linked to multi-beneficiary grants. For example, if one or more beneficiaries do not accede to the Agreement or if, following termination of one or more beneficiaries, the necessary changes to the Agreement (and their impact on the action) calls into question the decision awarding the grant or breach the principle of equal treatment of applicants.

NEW! termination ground: the Commission may terminate the grant, or the participation of one or more beneficiaries if the humanitarian context has changed in a way which no longer allows the implementation of the action in accordance with the description set out in Annex 1, in the call conditions or in the specific rules and principles set out in Annex 5.

The Deadline to submit observations by the Partner is longer: 30 days are now foreseen vs. 15 days under the FPA.

The Commission may still terminate if it is not in a position to approve the final periodic  report.

The MGA has introduced some NEW!  Terminology in the contractual relations between DG ECHO and its Partners: