I. Steering Committee and Council

FIEC FLASH – April 2006

European Construction Industry Federation

FIECFLASH

N° 42, April 2006 - PUBLISHED 10 TIMES A YEAR

SUMMARY

I. Steering Committee and Council

1.Forthcoming meetings

II. Current issues

A. "Services" Directive

1. The Austrian Presidency is determined to achieve a “common position”

B. ECO

1. Public procurement : hearing in the European Parliament on 20th April

2.TENs : the Court of Auditors publishes a critical audit of the Commission's management system

3.EU 2005 budget : Only € 1 Bln. of unspent EU funding

4. Agreement on the "Financial perspectives" 2007-2013 : the MEPs give their views

B. SOC

1.Commission’s Communication on the Posting Directive

2. Third hearing on Posting of the EP Employment and Social Affairs Committee (20/4/2006)

3. FIEC-FETBB Posting Database – State of advancement of the work

4. «Safe Start” campaign of the Bilbao Agency to promote health and safety among young people

C. TEC

1.Jacques McMillan to address the TEC Plenary meeting in Brussels on 12th May 2006 on the Revision of the New Approach

2.€ 4.2 billion “competitiveness and innovation programme” to boost growth and jobs

I. Steering Committee and Council

1.Forthcoming meetings

On invitation of our Austrian member federations and on the occasion of the Austrian EU-Council Presidency, both the FIEC Steering Committee (8-9/6/2006) and Council (9/6/2006) will meet in Vienna.

II. Current issues

A. "Services" Directive

1. The Austrian Presidency is determined to achieve a “common position”

The Commission’s modified proposal of 4/4/2006 was addressed in the “Competitiveness” Council’s informal meeting in Graz on 20-21/4/2006 and by the Council Working Group of civil servants as from 22/42006. As has been reported in the press, a number of countries were critical about the modified proposal. Despite this complication, the Austrian Council Presidency is determined to achieve an agreement on the “common position”, the latest in the Competitiveness Council meeting on Thursday 29/6/2006.

B. ECO

1. Public procurement : hearing in the European Parliament on 20th April

On 20/4, the European Parliament's Internal Market and Consumer Protection Committee (IMCO) organised a hearing on the functioning and effectiveness of the public procurement directives.

The hearing was organised around 3 sessions :

1. Implementation of public procurement rules and inter-communal cooperation : problems and perspectives;
2. "In-house" public procurement procedures and the refinement of the "Teckal criteria";
3. Implementation, remedies, thresholds and PPPs : will life become easier for cross-border participation in tenders ?

The vast majority of the speakers (9 out of 12) were representatives of public clients, mainly regional and local authorities, which of course gave a unilateral view on the issues discussed.

Their principal views were that :

• the thresholds defining the scope of the Directives should be increased, in order to reduce the administrative burden for public clients;
• "In-house" procurement should be facilitated ("the EU-Court does not respect the intentions of the legislator");
• a specific and detailed EU legislation on PPPs is urgently needed (EU "guidelines" on this issue would only create additional confusion);
• modifications in the new public procurement Directives are needed, in order to allow municipalities to co-operate more efficiently.

Amongst the few non-public speakers there was Mr. Elco Brinkman, FIEC Vice-President responsible for "Communication", speaking as the President of "Bouwend Nederland". He indicated that the new Directives were too young to be modified and that we needed time in order to be able to effectively assess their efficiency. These Directives will not dramatically increase cross-border procurement for construction projects, because construction remains mainly a local activity, but there will certainly be an impact at the national level. He also added that it is important, particularly for SMEs, that there is no EU legislation below the thresholds, where only the basic principles of transparency, equality of treatment and non-discrimination should of course continue to apply. He mentioned that the Directives, even with the "competitive dialogue", are not adequate for complex projects and that construction is an innovative sector, but the limited demand from the public sector is not facilitating its development. Finally, he concluded by saying that "in-house" procurement should be limited to a strict minimum, because it doesn't ensure fair competition between public-owned and private companies and therefore it doesn't guarantee the best quality for the best price.

Bertrand Carsin, Director at DG MARKT at the European Commission, outlined the recent Commission initiatives on public procurement and explained that an impact study would be completed next year on PPPs, as requested by several stakeholders wanting clarification of the matter. In this respect, he mentioned the results of the wide consultation carried out by the Commission with the Green Paper on PPPs, which indicated that a majority of stakeholders is not in favour of EU legislation in this field. He regretted that the EP didn't express its opinion during this consultation.

Mr. Carsin also said that in his opinion it is premature to speak about modifications of the new Directives and added that the EP, as co-legislator in the "co-decision" procedure, has had the opportunity to give its input during the legislative procedure.

On other work being carried out at the European Commission, Mr. Carsin said his services were in the process of finalising an explanatory report on public procurement below the thresholds, in order to help contracting authorities in cases where public procurement contracts are not subject to existing EU legislation.

In her conclusions, MEP Mrs. Weiler (D-PSE), said that this experts' hearing had clearly indicated the need for further legislation, in particular in the areas of PPP ("contrary to what the representative of the Commission told us") and in-house ("the citizens are willing to pay a higher price, if the high quality of the services of general interest remain the responsibility of the state.")

2.TENs : the Court of Auditors publishes a critical audit of the Commission's management system

On 20th April, the European Court of Auditors published the results of a rather critical audit carried out on the Commission's management system regarding the Trans-European transport projects (TENs).

The Court's audit assessed the extent to which the Commission's management system, including the design and implementation of the legal framework, administrative procedures and internal control system, was adequate for the economic, efficient and effective implementation of the TENs.

The audit indicated that the realisation of the 14 "Essen" priority projects is currently behind schedule. In particular, cross-border sections are facing major difficulties since they receive less priority at national level and require greater co-ordination efforts. Furthermore, the financial aid is allocated in a fragmented way and is not sufficiently focused on cross-border projects or project sections.

The audit also considered that complex annual administrative procedures for evaluating and selecting projects have been established by the Commission and these have not always led to relevant information being available for the evaluation. Consequently, this has caused some problems in properly documenting the evaluation process. In addition, not all evaluation criteria established by the TENs Regulation were fully addressed by the Commission.

The tools used by the Commission to follow up TENs priority projects are insufficient to allow monitoring to be carried out effectively and efficiently. The various reports on project status and progress submitted by beneficiaries do not always provide sufficiently relevant information to the Commission. Furthermore, the Commission did not systematically carry out either on-site project inspections or ex-post impact assessments.

This is mainly due to the excessive workload on Commission project officers. Moreover, according to this audit, many of these project officers do not have sufficient technical expertise on transport issues.

The co-ordination of the various sources of Community funding for transport infrastructure projects by the various Directorates-General (DGs) does not allow the Commission to detect all cases of over- or double funding.

The Court recommended that the Commission, together with the Member States, should give priority to financing those project sections, in particular cross-border sections, whose completion is essential for a proper functioning of the TENs network.

According to the Court, project monitoring should be strengthened by defining minimum standards for the reporting of project status, by more frequently performing on-site project inspections and by carrying out ex-post impact assessments.

The Court considered that the Commission should envisage returning to a centralised form of project management within DG TREN. This should also entail the adaptation of the number and expertise of staff resources to be in line with the requirements of managing the TENs activities given the substantially increased number of projects.

Finally, the Commission should establish appropriate legal bases, procedures and tools in order to improve the co-ordination of transport infrastructure funding and to identify potential cases of over- or double funding. This should be done, where necessary, in cooperation with the Member States.

In its replies, the Commission acknowledged most of the observations raised by the Court and it is already taking corrective action for many of them, such as :

• the development of new model financing decisions,
• the modification of project application and appraisal forms,
• the definition of TENs evaluation guidelines,
• the revision of project reporting procedures,
• the allocation of more staff to TENs project management,
• the creation of a TENs Executive Agency,
• an improved co-ordination of EU transport infrastructure funding within and between the Commission services.

The Commission considers that the state of advancement of TENs priority projects is mainly under the control of the Member States. Member States also share the responsibility with the Commission in addressing the fragmentation and focusing of budget allocation.

3.EU 2005 budget : Only € 1 Bln. of unspent EU funding

Budget execution reached a record high in 2005 : only 1% of the EU budget, or € 1.077 Mln., was left unused. This figure, coupled with extra revenue of € 1.292 Mln., will reduce this year’s national contributions to the EU budget by a total of € 2.410 Mln., a new record low since 1997.

If unused special reserves are excluded from the calculations (by definition reserves are meant to be used only for unexpected expenditure), the level of planned but unused EU funding in 2005 was even lower than € 1 Bln.; it amounted to € 871 Mln., or 0.8% of the total budget of € 105,7 Bln. (payment appropriations).

For agriculture, the sum not spent amounted to € 157 Mln. or 0,3% out of € 48 510 Mln. For structural funding it was € 58 Mln. (0.2%) out of a total € 32 641 Mln. As regards external actions, unused funding was limited to € 181 Mln. or 3.5% of the total allowance. Compared to 2004, a proportionally higher level of unspent funding was registered for the pre-accession strategy, with € 463 Mln. left out of a total of € 3.428 Mln. (13.5%), due mainly to the late transmission of payment claims by national authorities.

Examples of full budget implementation in 2005 include strategically important instruments such as: Trans-European Networks, which promote modern and efficient transport, telecommunications and energy infrastructure; the Schengen facility, with projects aimed at improving border controls in the new Member States; and the MEDA programme, which offers technical and financial support to accompany the reform of economic and social structures in the EU’s Mediterranean partners.

The extra revenue in the EU budget came mainly from third-party contributions: € 1.167,5 Mln. out of € 1292 Mln.. The overall surplus of € 2 410 Mln. represents 2.3 % of the 2005 budget. In 2004 the surplus amounted to 2.6% of the total; in 2003 to 5.9% and in 2002 to 7.8%.

The surplus from 2005 will reduce the sums payable by Member States this year. Contributions of all Member States will be lowered, most significantly in the case of the largest countries like Germany (€ -496 Mln.), the UK (€ -415 Mln.), France (€ -383 Mln.) and Italy (€ -314 Mln.).

This is due to the fact that the EU treaties do not allow for a budget deficit, and require the budget to be balanced each year. The annual surplus, which the Commission seeks to reduce to a minimum, is entered into the budget for the following year, reducing revenue required from Member States.

The total € 112.076 Mln. payment appropriations in the 2006 budget are now financed by:

• € 108.368 Mln. from MS contributions,
• € 2.410 Mln. from surplus rolled-over from 2005 and
• € 1.298 Mln. from other revenue resources (mainly contributions of third parties).

4. Agreement on the "Financial perspectives" 2007-2013 : the MEPs give their views

MEPs expressed satisfaction that a deal has been reached on the long-term EU budget but were disappointed that only an extra €4 Bln. in funding has been added to the €862.4 Bln. agreed in December. MEPs had wanted an extra €12 Bln. but the deal was nonetheless broadly welcomed by most of the political groups.

The EP Rapporteur for the budget, Reimer BÖGE (EPP-ED, DE), said he was not satisfied with this result. The Financial Perspective for the enlarged Europe and what was needed in terms of added value had vanished, he said. However, he said, “in current circumstances we have reached the very limits for an acceptable solution. We did our utmost. Parliament was not just obsessed with figures – we wanted reform of policy, new instruments, the cutting of red tape and guarantees for Parliament's role on foreign policy instruments – and a proper role in the 2008-9 review. We have managed to get these qualitative aspects on board in a satisfactory way. As far as the figures are concerned, all sides have reached the pain threshold.” There was, he said, more funding for Life Long Learning and competitiveness and an additional 40.000 students would be able to take part in European exchange programmes.

For the Commission, President BARROSO expressed his satisfaction on the agreement reached by the negotiators. “This is clearly better than the European Council's December agreement. It is good news that we now have the funds to match our ambitions for the next seven years.” He also mentioned the extra funding for TENs, Life Long learning and research. He hoped the agreement would be endorsed by the full Parliament and Council without delay.

Political group speakers

EPP-ED group leader Hans-Gert POETTERING (D) said that a lot of progress had been made which would not have been possible without the EP, and without looking beyond the national interest to the common European interest. “We are not entirely happy, but we know that more could not be achieved.” He called for national authorities to shoulder their responsibility for proper handling of EU funds, not just blaming the EU for any deficiencies.

For the Socialist group, Martin SCHULZ (D) said that while the agreement was “less that what we wanted, it was more than many expected. It was a victory for common sense.” He said the review clause was especially valuable. He noted that the Commission had undertaken to present proposals for the review.

ALDE group leader Graham WATSON (UK) also thanked the negotiating team and the Austrian Presidency. “I hope this agreement will commend itself for approval even though we are not satisfied. There is not enough for research, for Gallileo, TENs and Life Long Learning. I know it is fashionable in some national capitals to pour cold water on our common endeavour if the central force for developing our Union is no longer visionary leadership from within, then perhaps developments beyond our borders will persuade us to provide the Union with the resources we need.”

On behalf of the Greens, Monica FRASSONI(I) declared that they were "not terribly pleased" with the agreement and not particularly convinced that the EP could not have got more. She noted how the "basic problem is the same: the unwillingness by MEPs to pay for what's necessary in the EU". Ms. Frassoni spoke of her concerns that the revision clause was not included in the agreement, she asked what the fate of this clause will be and what the EU decision making process will be in terms of its external progress. She lamented the 20 Bln.€ cut for rural development and also asserted that the topics of EU taxes and EU-own resources have to be kept on the agenda. She closed by describing the agreement as an "unsatisfactory" one.

Francis WURTZ (GUE/NGL, F) said that the EU budget is "not the only instrument to foster plans for development and growth", suggesting the Central Bank as an example of another instrument. He described the budget as "an expression of political will" and in correlation, mentioned the lack of Members' States willingness to pay for the political decisions they take, suggesting enlargement, the structural funds and the cohesion funds as examples of this. Mr. Wurtz noted the "dreadful effects on research and cooperation" that the rejection of the December compromise - "a negative compromise" - had. He considered the EP's budgetary demands to be "very modest indeed" and accordingly advised: "we have to reject this farce, we have to be responsible".

Wojciech ROSZKOWSKI (UEN, PL) spoke of his mixed feelings. He talked firstly of his relief that a decision has been made after 15 months, and that the pressure on EU finances is now over. However he also spoke of his disappointment in the compromise, saying that there was a "limited distribution of EU funds" and the fact that the "Council was too tough in the face of modest demands" was "not very pleasant". Consequently he said that he could almost understand the Euro-scepticism and Europhobia, mentioning the stinginess of Member States. He declared that his group "will support this proposal", warning however that "if we are below the threshold in the annual budgets, the future of the Union is black".

B. SOC

1.Commission’s Communication on the Posting Directive

Mr. André Clappier (FNTP/F), the Chairman of SOC-3 and the FIEC Director General, accompanied by their experts, on 26/4/2006 met a civil servant from DG EMPL and discussed issues concerning the posting guidelines, the services directive, the working time directive and the temporary agency workers directive.