Note: in large part the rules for purchase of goods and services, subcontracting, linked third parties etc. are common to all H2020 project and are explained in detail in the Annotated Model Grant Agreement (AMGA). While the EIC Accelerator will be based on the Mono-Beneficiary Model Grant Agreement, the same rules apply. We have tried here to simplify the rules and to add relevant info specific for EIC Accelerator participants - this page is meant to be a tool of quick consultation and does not substitute an in-detail reading of the material linked.
Generally speaking, the beneficiary must have the appropriate resources to implement the action. If it is necessary to implement the action, the beneficiary may:
- purchase goods, works and services (see Article 10);
- use in-kind contributions provided by third parties against payment (see Article 11);
- use in-kind contributions provided by third parties free of charge (see Article 12);
- call upon subcontractors to implement action tasks described in Annex 1 (see Article 13);
- call upon linked third parties to implement action tasks described in Annex 1 (see Article 14).
In these cases, the beneficiary retains sole responsibility towards the Commission for implementing the action.
Purchase of goods and services (See AMGA ARTICLE 10 — PURCHASE OF GOODS, WORKS OR SERVICES)
If necessary to implement the action, the beneficiary may purchase goods, works or services. The beneficiary must make such purchases ensuring the best value for money or, if appropriate, he lowest price. In doing so, it must avoid any conflict of interests (see Article 35 of the AMGA).
The purchase of goods and services entitles the beneficiary of the EIC Accelerator to indirect costs (25% calculated on top of the 70% costs covered by the Accelerator funding).
Subcontracting (See AMGA ARTICLE 13 — IMPLEMENTATION OF ACTION TASKS BY SUBCONTRACTORS)
If a company is unable to accomplish necessary activities of the project, those activities may be assigned to subcontractors. However, activities assigned to subcontractors may under no circumstances include project core tasks. The subcontracting as well as its budget have to be mentioned in the proposal.
1. Characteristics of subcontracting:
it must be based on business conditions. This means that the subcontractor charges a price, which usually includes a profit (— this distinguishes it from linked third parties; see Article 14 of the AMGA).
The subcontractor works without the direct supervision of the beneficiary and is not hierarchically subordinate to the beneficiary (— this distinguishes it from tasks implemented by in-house consultants; see under).
Subcontractor's motivation is pecuniary, not the research work itself. The subcontractor is paid by the beneficiary in exchange for its work.
Responsibility towards the EU for the subcontracted work lies fully with the beneficiary.
The beneficiary remains responsible for all its rights and obligations under the GA, including the tasks carried out by a subcontractor.
Subcontractor has no rights or obligations towards the Commission/Agency or the other beneficiaries (it has no contractual relation with them).
2. Additional cost eligibility condition: Best value for money or lowest price
The beneficiaries must base their subcontracts either on the best value for money (considering the quality of the service proposed, i.e. the best price-quality ratio) or on the lowest price.
This requirement reflects the general cost eligibility condition set out in Article 6.1(a)(vii) of the AMGA (i.e. that costs must be reasonable and comply with the principle of sound financial management) and applies it specifically to the subcontracting context.
The best value for money principle does NOT in all cases require competitive selection procedures. However, if a beneficiary did not request several offers, it must demonstrate how best value for money was ensured.
For the best price-quality ratio, price is an essential aspect (together with quality criteria, such as technical quality, etc.), but it is NOT automatically necessary to select the offer with the lowest price. Selecting the lowest price may however be appropriate for automatic award procedures where the subcontract is awarded to the company that meets the conditions and quotes the lowest price.
In order to provide a good analysis of the price-quality ratio, the criteria defining quality must be clear and coherent with the purposes of the action task that is subcontracted.
3. IMPORTANT: Subcontracting from outside the EU
As stated in the EIC Accelerator Guidelines for Applicants v 1.1 (page 4, in the Glossary) other partners, such as research providers or larger companies, can be involved as third parties, usually in a subcontracting relationship, and do not necessarily need to be established in the EU or countries associated to Horizon 2020.
4. Additional cost eligibility condition
The tasks to be implemented and the estimated cost for each subcontract must be set out in the proposal. The name of the subcontractors is in principle not necessary.
If the name of the subcontractor is known at the time of the grant signature the beneficiary may indicate it. However, the fact that the name of the subcontractor is indicated does not imply the approval of the Commission of the subcontract (or the subcontracting costs). For example, if the subcontractor was not selected based on best value-for-money the Commission may reject the costs even if its name was indicated.
5. New subcontracts — If the need for a subcontract is not foreseen at the moment of the signature of the GA, the coordinator must request an amendment of the GA in order to introduce it. (see Article 55 of the AMGA). Exceptionally, the Commission may approve costs related to subcontracts not included without formally amending the GA (simplified approval procedure).
The new subcontract must be included and explained in the technical periodic report (in the section ‘unforeseen subcontractor’).
Approval will NOT be granted if the subcontract risks to substantially change the nature of the project (i.e. there is a doubt whether the project is still (in substance) the same as the one that was selected or whether the beneficiary has still the operational capacity to carry out the action).
Example (approval): A beneficiary loses some personnel specialised in a particular field, and as a result decides to subcontract some tasks it had originally foreseen to carry out itself. These circumstances are declared in the periodic report and it is approved by the Commission.
Linked Third Parties
Exceptionally, affiliated entities or Third parties with a legal link to a beneficiary may carry out action tasks of the project if the following conditions are fulfilled:
- the organisation would be eligible for funding by Horizon 2020 if it was a participant in the project
- the affiliation or legal link with the beneficiary is not limited to the project
- the organisation is listed in the Grant Agreement, as well as the action tasks it will carry out
- the organisation fulfills the conditions for participants signing the Grant Agreement concerning the eligibility of costs, as well as the control of expenses
- the organisation agrees to assume liability for the alleged costs, jointly with the participant or on its own, if requested so
Third parties can claim costs incurred for the project, however they are not allowed to make a profit. Costs must fulfill the general eligibilty conditions for costs in Horizon 2020.
1. Only affiliated entities or entities with a legal link to a beneficiary can be linked third parties.
‘Affiliated entity’ means:- under the direct or indirect control of the beneficiary or
- under the same direct or indirect control as the beneficiary or
- directly or indirectly controlling the beneficiary.
Affiliated entities cover not only the case of parent companies or holdings and their daughter companies or subsidiaries and vice-versa, but also the case of affiliates between themselves (e.g. entities controlled by the same entity).
‘Entities with a legal link’ refers to an established relationship (between the third party and the beneficiary), which is:
- broad and not specifically created for the work in the GA
- Accordingly, its duration must go beyond the action duration and it usually pre-dates and outlasts the GA; ad hoc collaboration agreements or contracts to carry out work in the action are NOT covered. In this latter case, both legal entities should be beneficiaries.
- a legal relationship. This may be either a legal structure (e.g. the relationship between an association and its members) or through an agreement or contract not limited to the action (e.g. a collaboration agreement for research in a particular field). If the only relation between two entities is a capital link (i.e. ownership of part of the issued share capital), the entity may only participate as a linked third party if it is an ‘affiliated entity’ (see below).
2. Characteristics of implementation by linked third parties:
- Linked third party does not charge a price, but declares its own costs for implementing the action tasks.
- Linked third party itself performs certain action tasks directly and is responsible for them towards the beneficiary.
- Linked third parties do NOT sign the GA (and are therefore not beneficiaries).
- The beneficiary remains responsible towards the Commission/Agency for the work carried out by the linked third party.
- Moreover, the beneficiaries are financially responsible for any undue amount paid by the Commission/Agency as reimbursement of costs for their linked third parties — unless the GA foresees joint and several liability (see Article 44.1).
- Work is attributed to the linked third party (in Annex 1) and is usually carried out on its premises.
- Work is under the full and direct control, instructions and management of the linked third party, who carries out this part of the action (with its employees).
Other third-party contributions (AMGA, Art 11 and 12)
When no established legal relationship as detailed above exists, third parties can still provide external support (e.g. seconded staff, laboratory space, machines, etc.) in the following forms:
- in-kind contributions against payment (Art. 11, AMGA)
- in-kind contributions free of charge (Art. 12, AMGA)
The costs for such in-kind contributions are claimed by the project participant himself. But he can claim only the amount actually incurred by the third party. No profit margins are allowed either for the third party or the project participant.
Use of in-house consultants or temp agencies (AMGA, ARTICLE 6.2.A.2 and A.3)
The costs for natural persons working under a direct contract with the beneficiary other than an employment contract (for instance in-house consultants) are eligible personnel costs, if:
- the person works under conditions similar to those of an employee (in particular regarding the way the work is organised, the tasks that are performed and the premises where they are performed);
- the result of the work carried out belongs to the beneficiary (unless exceptionally agreed otherwise), and
- the costs are not significantly different from those for personnel performing similar tasks under an employment contract with the beneficiary.