Sittings · Document

DRAFT REPORT (2023/2181(DEC)) 2023-12-15

On discharge in respect of the implementation of the budget of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022

Committee on Budgetary Control · Rapporteur: Michal Wiezik

PR_DEC_JointUndertakings

1. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on discharge in respect of the implementation of the budget of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022

(2023/2181(DEC))

– having regard to the final annual accounts of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022,

– having regard to the Court of Auditors’ annual report on the EU Joint Undertakings for the financial year 2022, together with the Joint Undertakings’ replies,

– having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2022, pursuant to Article 287 of the Treaty on the Functioning of the European Union,

– having regard to the Council’s recommendation of February 2024 on discharge to be given to the Joint Undertaking in respect of the implementation of the budget for the financial year 2022 (00000/2024 – C90000/2024),

– having regard to Article 319 of the Treaty on the Functioning of the European Union,

– having regard to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, and in particular Article 71 thereof,

– having regard to Council Regulation (EU) 2021/2085 of 19 November 2021 establishing the Joint Undertakings under Horizon Europe and repealing Regulations (EC) No 219/2007, (EU) No 557/2014, (EU) No 558/2014, (EU) No 559/2014, (EU) No 560/2014, (EU) No 561/2014 and (EU) No 642/2014, and in particular Article 26 thereof,

– having regard to Commission Delegated Regulation (EU) 2019/887 of 13 March 2019 on the model financial regulation for public-private partnership bodies referred to in Article 71 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council,

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

– having regard to the opinions of the Committee on Transport and Tourism and the Committee on Industry, Research and Energy,

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

1. Grants the Executive Director of the Single European Sky ATM Research 3 Joint Undertaking discharge in respect of the implementation of the Joint Undertaking’s budget for the financial year 2022 / Postpones its decision on granting the Executive Director of the Single European Sky ATM Research 3 Joint Undertaking discharge in respect of the implementation of the Joint Undertaking’s budget for the financial year 2022;

2. Sets out its observations in the resolution below;

3. Instructs its President to forward this decision and the resolution forming an integral part of it to the Executive Director of the Single European Sky ATM Research 3 Joint Undertaking, the Council, the Commission and the Court of Auditors, and to arrange for their publication in the Official Journal of the European Union (L series).

2. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the closure of the accounts of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022

(2023/2181(DEC))

– having regard to the final annual accounts of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022,

– having regard to the Court of Auditors’ annual report on the EU Joint Undertakings for the financial year 2022, together with the Joint Undertakings’ replies,

– having regard to Article 319 of the Treaty on the Functioning of the European Union,

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

– having regard to the opinions of the Committee on Transport and Tourism and the Committee on Industry, Research and Energy,

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

1. Approves the closure of the accounts of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022 / Postpones the closure of the accounts of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022;

2. Instructs its President to forward this decision to the Executive Director of the Single European Sky ATM Research 3 Joint Undertaking, the Council, the Commission and the Court of Auditors, and to arrange for its publication in the Official Journal of the European Union (L series).

3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022

(2023/2181(DEC))

– having regard to its decision on discharge in respect of the implementation of the budget of the Single European Sky ATM Research 3 Joint Undertaking for the financial year 2022,

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

– having regard to the opinions of the Committee on Transport and Tourism and the Committee on Industry, Research and Energy,

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

A. whereas the Single European Sky Air Traffic Management Research 3 (SESAR 3) JU, located in Brussels, was set up in November 2021 under the Horizon Europe programme for the period ending on 31 December 2031; notes that the SESAR 3 JU replaced and succeeded the SESAR JU that was set up in February 2007 under the Seventh Research Framework Programme (FP7) for a period of eight years (SESAR 1) and extended in June 2014 to continue to operate under the Horizon 2020 programme for a period until 31 December 2024;

B. whereas SESAR 3 JU is a public-private partnership for the development of modernised air traffic management in Europe and to accelerate through research and innovation the delivery of the Digital European Sky; whereas its founding members are the EU, represented by the Commission, the European Organisation for the Safety of Air Navigation (Eurocontrol), and more than 50 organisations covering the entire aviation value chain, from airports, airspace users of all categories, air navigation service providers, drone operators and service providers, the manufacturing industry and scientific community;

C. 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 including the legal contribution targets set for the respective programme, the volume of contributions received, and the volume of legal commitments;

General

1. Notes, from the Consolidated annual activity report, that the Digital European Sky programme commenced in 2022 with the approval of the multiannual work programme and the first biannual work programme, and the launch of the first two calls within the framework of Horizon Europe for (1) exploratory and industrial research and (2) fast-track to innovation and market uptake; notes that of the 127 project proposals received, 48 have been selected, representing a total investment of EUR 350 million;

2. Notes, that in 2022, the Single European Sky ATM Research (SESAR) Joint Undertaking (JU) made progress in completing the research and innovation (R & I) activities of the SESAR 2020 programme while enabling the new SESAR 3 JU partnership to become fully functional and the Digital European Sky R & I programme to get up and running;

3. Notes, furthermore, that the activities developed are an important contribution to the European Commission’s strategic priorities and initiatives, namely the single European sky, the European Green Deal and a Europe fit for the digital age;

Budgetary and financial management

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

5. Notes that, for 2022, the available budget was EUR 146.9 million in payment appropriations (EUR 69.9 million in 2021) and EUR 158.8 million in commitment appropriations (EUR 34.8 million in 2021);

6. Notes that the changes in the size of the JU’s budget largely depend on the implementation phase of the multiannual research and innovation programmes; notes that, in 2022, the JU started with the implementation of the Horizon Europe programme, therefore, the 2022 budget includes the commitment budget for the first Horizon Europe calls planned for 2022, and the payment budget for the related pre-financing payments;

7. Notes that the Governing Board (GB) adopted the 2022 budget in December 2021 and that this decision approved some transitional elements related to the annual work programme, budget, staff establishment plan and procurement plan of the SESAR 3 JU for 2021 and 2022; notes that the 2022 budget was amended twice in October 2022, and with the third amendment, in December 2022;

8. Notes, from the Court’s report, that, in the JU’s 2022 annual accounts, the amounts of contributions recognised per member category (EU, private members, and Eurocontrol) differ significantly from each other; notes that this is because EU cash contributions are validated and recognised when paid to the JU 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;

9. Notes that the Court considered that the gap between the recognised amount of cash contributions on the one hand and in-kind contributions on the other hand, is addressed in a suboptimal way in the JU’s 2022 annual accounts by not providing information on the JU members’ legal commitments at year end, in terms of signed grant agreements and contracts;

10. Notes, as regards the implementation of Horizon 2020, that, at the end of 2022, the JU had fully committed the maximum EU operational contribution of EUR 555.8 million for signed grant agreements and contracts under the programme and that of this committed amount, around EUR 65.7 million (or 11.8 %) remains to be paid in the coming years for projects and contracts yet to be completed; notes, in addition, that the private members had legally committed to provide their entire in-kind contributions of EUR 280 million, defined as target in the industry membership agreement and that of this amount, industry members reported EUR 278.5 million (or 99.5 %) at the end of 2022; notes, moreover, that Eurocontrol had fully committed the target of EUR 467 million of operational contributions, defined in the bilateral agreement and that of this amount, it reported EUR 313.6 million (or 67 % of the target) at the end of 2022;

11. Notes that, for Horizon 2020 activities, the JU received no new operational commitment appropriations, as the JU had finished its last call for proposals by the end of 2020; notes that the JU’s implementation rate for its 2022 operational budget was significantly lower than in previous years (54% in 2022 - 93% in 2021), owing to the rising costs and delivery problems faced by beneficiaries in the wake of the COVID-19 crisis and the war of aggression against Ukraine; notes, therefore, that the duration of most Horizon 2020 projects had to be prolonged and final payments postponed to 2023;

12. Notes, that the Horizon Europe appropriations for 2022 were fully implemented for the first two calls launched in April 2022; notes that the Commission made a cash contribution of EUR 83.5 million for the implementation of these projects in 2022; notes, however, that as the evaluation phase was not finalised by the end of the year, the cash contributions could only be used in the first half of 2023, when the grant agreements are signed, and the related pre-financing payments can be made;

Management and control systems

13. Notes that, for Horizon 2020 and Horizon Europe expenditure, the Common Audit Service of the Commission’s DG RTD performed the ex-post audits; notes that for Horizon 2020 expenditure (clearings and final payments), the JU reported a representative error rate of 2.4 % and a residual error rate of 1.8 %; notes 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;

14. Notes that to assess the operational payments controls of the JU, the Court audited randomly sampled Horizon 2020 payments made in 2022, at the level of the final beneficiaries; notes, furthermore, that the Court did not find serious quantifiable errors at the JU beneficiaries sampled; notes, nevertheless, that for one case the Court reported a systemic issue resulting from ineligible costs declared by the beneficiary for non-mandatory certificates of financial statement, related to interim financial statements;

15. Notes that the Court considered that the JU lacked a structured risk-based approach to ex-ante controls for Horizon 2020 grants;

16. Reminds that, according to Article 21 of the JUs’ financial rules, the purpose of ex-ante controls is to prevent errors and irregularities before the authorisation of operations and to mitigate risks of non-achievement of objectives;

17. Notes, in this regard, that for SESAR, based on the review of internal documentation, and interviews with JU staff, the Court found that at the end of 2022, the JU’s risk monitoring approach only considered beneficiaries that had been ex-post audited, mainly top beneficiaries; notes, moreover, that potentially risky beneficiaries that had never been ex-post audited and newcomers were therefore excluded from the risk assessment;

18. Notes, in addition, that the JU did not assess risk at project level;

19. Agrees fully with the Court that SESAR should enhance its risk monitoring approach to ex-ante controls to identify potentially risky beneficiaries currently not included in the population (such as beneficiaries that had never been ex-post audited and newcomers) and risky projects;

20. Regrets that the JU showed weaknesses in the use of the reinforced monitoring tool; reminds in this regard that the tool it is designed to help in targeting ex-ante controls on the most important risks assessed for a project or beneficiaries, allowing officer at any moment during the project implementation, to record identified important risks and trace the respective monitoring and risk mitigating action;

21. Notes that for an effective and efficient use of the tool, officers should define a relevant and achievable deadline (due date) for the targeted completion of the reinforced monitoring action; notes, however, that, for SESAR, upon expiry of the defined due date, the reinforced monitoring flag was neither renewed nor closed and that, additionally, the risk level was not reassessed by the officer after the implementation of the control actions;

22. Agrees with the Court that SESAR 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;

23. Notes that, according to the Court’s assessment, the importance for Joint Undertakings to implement their specific risk-based approach to grant management has increased under Horizon Europe;

24. Highlights that the beneficiary and/or project structure of the SESAR 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 and, as a result, the risk factors identified in previous programmes may no longer be relevant and new risk factors may emerge;

25. Agrees with the Court that these changes highlight the importance for SESAR (and JUs in general) to implement or adapt their specific risk-based approach to grant management;

26. Welcomes the Joint Undertaking's commitment to address the new risk factors stemming from the Horizon Europe framework and adaptation of its new risk-based approach to ex-ante controls as well as putting in place new risk-based tools for assessing risks at project level and for newcomers; invites the Joint Undertaking to provide information on these activities in its 2023 annual activity report;

Procurement and staff

27. Notes that due to its ramp-up activities, the SESAR 3 Joint Undertaking focused on the management of its existing contracts covered by operational appropriations and on selecting the providers of specific programme management services and, as a consequence, the SESAR 3 JU decided to move the indicative dates of some operational procurements to the first quarter of 2023;

28. Notes that the SESAR 3 Joint Undertaking’s approved 2022 staff establishment plan allows for 37 temporary agents, one contract agent and two seconded national experts, as set out in the annual general budget of the European Union for the European Commission;

29. Notes that the effective allocation of staff remained a priority for the SESAR 3 JU during 2022 and that efforts were focused on the professional and career development of its staff, in addition to ensuring that allocated staff were used in the most economic, efficient and effective way;

30. Notes that the vacancy rate at the end of 2022 was 8.1 %; notes from the Consolidated Annual Activity Report, that as the SESAR 3 JU staff establishment plan has only 37 temporary agent positions, each temporary staff departure increases the relevant vacancy rate by 2.7 %;

31. Notes that, regarding gender and geographical balance, the SESAR 3 Joint Undertaking remained committed to ensuring that its overall balance remains stable, notes that at the end of 2022, 59 % of the 37 staff were female and 41 % were male, with 15 nationalities represented;

Follow-up of previous years’ observations

32. Notes that “observations” in the Joint Undertakings specific annual reports are in fact “not timed recommendations” by the Court; notes that ECA annually follows-up on those observations by assessing their status as “open” or “closed”;

33. Notes that the JU has taken action in response to the Court’s observation issued in 2021.