A.

whereas the Shift2Rail Joint Undertaking (the ‘Joint Undertaking’) was established in June 2014 for a period of 10 years by Council Regulation (EU) No 642/2014 (1);

B.

whereas the founding members are the Union, represented by the Commission, and rail industry partners (key stakeholders, including rail equipment manufacturers, railway companies, infrastructure managers and research centres) with the possibility of other entities participating in the Joint Undertaking as associated members; whereas contributions of members other than the Union should not be limited to only covering the administrative costs and the co-financing required to carry out research and innovation actions, they should also relate to additional activities;

C.

whereas the main objectives of the Joint Undertaking are to contribute to the achievement of the Single European Railway Area, and to enhance the attractiveness, competitiveness, sustainability, and integration of the European railway system, facilitating, among others, a modal shift from road and air to rail transport;

D.

whereas the Joint Undertaking started to work autonomously in May 2016;

1.

Notes from the report of the Court of Auditors (the ‘Court’) on the annual accounts of the Joint Undertaking for the financial year 2020 (the ‘Court’s report’) that the annual accounts present fairly, in all material respects, the financial position of the Joint Undertaking on 31 December 2020, 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; notes, furthermore, from the Court’s report that the underlying transactions to the accounts are, in all material respects, legal and regular;

2.

Notes that for the period set in the Regulation, the maximum Union contribution to the activities of the Joint Undertaking is EUR 450 000 000 (including EFTA contributions), to be paid from Horizon 2020; notes that all members of the Joint Undertaking other than the Union (industry grouping) are to contribute total resources of at least EUR 470 000 000, consisting of at least EUR 350 000 000 to the operational activities of the Joint Undertaking and at least EUR 120 000 000 of in-kind contributions to the Joint Undertaking’s additional activities;

3.

Notes that, in total, more than 400 public and private entities, representing the railway sector, participate to the Joint Undertaking’s research and innovation activities; notes, moreover, that in 2020 the cooperation in Member States as well as with international parties increased, as exemplified by the signing of a Memorandum of Understanding with the Basque Region, of another with the Canadian Urban Transit Research & Innovation Consortium and another with the Permanent Secretariat of the Transport Community in 2020;

4.

Notes that the final budget available in 2020 (including re-entered unused appropriations of previous years, assigned revenues and reallocations to the next year) comprised commitment appropriations of EUR 89 711 000 and payment appropriations of EUR 80 289 000; notes that, in 2020, the utilisation rates for the available commitment and payment appropriations were 94 % and 76 %, respectively;

5.

Notes that the Joint Undertaking’s available active Horizon 2020 budget in 2020 was EUR 84 081 000 in commitment appropriations and EUR 75 779 000 in payment appropriations; notes furthermore from the Court’s report that at the end of 2020 the Joint Undertaking implemented 100 % and 80 % respectively of the commitment appropriations and payment appropriations available for Horizon 2020 projects; notes that the implementation rate for the operational payment appropriations declined compared to 2019 (88 %) because one grant agreement awarded under the 2020 call for proposals could not be signed by the end of 2020 and the related pre-financing had to be delayed accordingly;

6.

Notes that as at the end of 2020, the private members contributed a total of validated EUR 131 181 000, comprising a total of EUR 9 238 000 in cash, EUR 121 942 000 in validated in-kind contributions, and additionally a total in-kind contribution to additional activities of EUR 204 806 156 (as of 31 January 2021), compared to the Union total cash contribution of EUR 297 741 000 (as at the end of 2020);

7.

Notes that there are different procedures across the Joint Undertakings regarding the calculation for the in-kind contributions and calls for their harmonisation;

8.

Notes that, in July 2020, the Joint Undertaking Governing Board selected 19 proposals for funding as a result of the 2020 call launched in January 2020 based on the amended Annual Work Plan 2020; notes that in 2020, 19 grants for a total value of approximately EUR 147 700 000 were awarded, and 18 of them were signed; notes that at the request of the Consortium, taking into consideration the need to reorganise the project allocations between work packages, one grant agreement signature was postponed to 2021; notes that in total 242 participants, of which 29 % were represented by small and medium-sized enterprises (SMEs) in the open call projects, were retained for funding in the 19 research and innovation topics under the 2020 call and the applications represented participants from 30 countries, of which 19 Member States and 3 countries associated to the Horizon 2020 Framework Programme were retained for funding;

9.

Commends the measures taken by the Joint Undertaking to limit delays in the projects following the COVID-19 crisis; notes that due to the COVID-19 crisis, some of the payments initially foreseen for the year 2020 became due only in 2021; notes in that regard that the Joint Undertaking made use of Title 4 in its budget in accordance with its Financial Rules;

10.

Notes that at the end of 2020, 72 projects were ongoing (36 calls for members and 36 open calls): 55 projects were distributed on the 5 innovation programmes, 9 projects on the cross cutting activities and 8 projects in Innovation Programme X;

11.

Notes that the Joint Undertaking uses the common Key Performance Indicators (KPIs) for Horizon 2020 and for cross-cutting issues, as well as KPIs specific to the Joint Undertaking such as for the efficiency of the railway transport system; notes that during 2020 the Joint Undertaking continued the work to maintain the ‘Shift2Rail 2030 Impact Forecast Model’ ensuring the next release, resulting from the update of the data input from the different projects and technology demonstrators;

12.

Commends the Joint Undertaking’s continued reporting, since 2018, on its contribution to the attainment of the United Nation’s Sustainable Development Goals, and, in particular, on its contribution to the reduction of the life-cycle cost of the railway transport;

13.

Notes that by the end of 2020, the Shift2Rail Programme reached pivotal milestones in term of implementation as almost all the Joint Undertaking resources are committed for the Shift2Rail Programme activities, and at least 60 % of the Shift2Rail Programme has been realised with a view to reaching the TRL6/7 operational demonstrations planned for conclusion during 2023;

14.

Notes that it is estimated that the total value of the activities performed in 2020 amounts to EUR 119,4 million (of which EUR 110,3 million was delivered by the members other than the Union);

15.

Notes that the current activities of the Joint Undertaking are progressing towards their demonstrations in 2022 and 2023 and this will ensure a proper phasing out and phasing in between two Programmes in the Shift2Rail successor Europe’s Rail Joint Undertaking; notes that the Joint Undertaking’s technological demonstrators are the building blocks of a more systemic railway transformation which is strategically driven by the Commission’s European Green Deal, the Digitalisation Agenda and, more recently, the Sustainable and Smart Mobility Strategy; notes that, during spring 2020, the Joint Undertaking further supported the development of the High Level Paper on Shift2Rail’s successor, Europe’s Rail Joint Undertaking (EU-Rail), and, following the submission of the first version of the High Level Paper in December 2019, the Joint Undertaking continued the coordination of the various inputs in the first half of 2020; notes that during August 2020, the Commission launched its invitation for entities to manifest the interest to become candidate founding member of the Europe’s Rail Joint Undertaking;

16.

Encourages the Joint Undertaking to develop, integrate, demonstrate, and validate innovative technologies and solutions in order to remove the remaining technical obstacles holding the rail sector back in terms of interoperability, product implementation and efficiency, and to reduce the negative externalities in close cooperation with stakeholders of the entire railway value chain in particular SMEs, research and technology centres and universities;

17.

Highlights the need to further develop synergies between the new partnership and existing funding mechanisms and to make full use of opportunities for projects funded under Union programmes such as the Connecting Europe Facility, the Digital Europe Plan, the European Regional Development Fund and the Cohesion Fund, as well as InvestEU;

18.

Notes that, in the 2020 Annual Activity Report of the Joint Undertaking regarding gender balance on the indicators for monitoring H2020 for that year the Joint Undertaking had the same percentage of women on the Governing Board as last year, namely 16 %, while they made up 33 % of the Joint Undertaking’s Representatives and 33 % of the Scientific Committee; regrets that the figures for women are the same compared to the previous year 2019;

19.

Notes with concern the challenges associated with the COVID-19 pandemic for employees; welcomes the fact that the Joint Undertaking carried out a staff survey for the first time and that an action plan was drawn up, which includes the establishment of a ‘well-being training programme’ to provide support for staff during the COVID-19 pandemic; asks management to ensure that appropriate support structures for the psychological wellbeing of staff are in place;

20.

Notes that on 31 December 2020, considering the exceptional temporary contract agent recruitment to replace a temporary agent, 24 position were filled, comprising 2 seconded national experts, 5 temporary agents, and 16 contract agents as per establishment plan; notes that for the first year the Joint Undertaking carried out a staff survey with the aim of measuring staff engagement and of monitoring the extent to which the Joint Undertaking’s predefined internal control framework was already embedded in staff behaviour;

21.

Notes that in 2020 in the interest of sound financial management and to the possible extent, the Joint Undertaking made use of Service Level Agreements with relevant Commission services and Union Agencies (ICT, training, payroll, mission, experts reimbursements, interim staff, etc.) and participated in inter-institutional framework contracts (e.g. IT, audit, office furniture, insurance, human resources services) by signing Memoranda of Understanding, and that, in addition, the Joint Undertaking led or participated in inter-Joint Undertaking’s framework contracts (e.g. IT and data protection services), also with the objective to enhance synergies; notes, moreover, that in 2020, the Joint Undertaking launched its first call for Prize, under Horizon 2020;

22.

Notes that, in 2019, the internal audit service performed an audit on the grant process and that during 2020, the Joint Undertaking took measures on the basis of its action plan to implement the four important recommendations which had been raised by the auditors; notes, furthermore, that, in October 2020, the internal audit service confirmed, on the basis of additional documentation provided, that it considered the first three recommendations to have been implemented and that, in January 2021, it considered all recommendations to have been implemented;

23.

Notes, moreover, that in 2020 the internal audit service performed an in-depth risk assessment in the Joint Undertaking as to develop a new strategic internal audit plan covering the period 2021-2023;

24.

Notes from the Court’s report that in 2020 the Joint Undertaking has set up reliable ex ante control procedures based on financial and operational desk reviews and that the Joint Undertaking implemented the Commission’s internal control framework (ICF), which is based on 17 internal control principles; notes, furthermore, that for the annual self-assessment and monitoring of the effectiveness of the control activities required by the ICF, the Joint Undertaking developed relevant indicators for all internal control principles and related characteristics;

25.

Notes that the Governing Board decision No 7/2018 adopting the rules on the prevention and management of conflicts of interests, applicable to the bodies of the Joint Undertaking, requires that up-to-date CVs and conflict of interest declarations of the Governing Board members are published on the Joint Undertaking’s website; notes from the Court’s report that, as only a few of the Governing Board members duly submitted the information, no conflict of interest declarations and only half of the CVs could be published by the end of 2020; notes from the Joint Undertaking’s that the Joint Undertaking reminded the Governing Board members several times to submit the missing declarations of conflict of interest, that as at June 2021, 28 % of the CVs and declaration of conflict of interests were still missing (12 out of 43 current active representatives), and that a status report was presented to the Governing Board members and explained that any member not having complied with the requirements in terms of conflict of interests declaration and CV is considered de facto in a conflict of interest situation, leading to an exclusion from Governing Board decision making process; calls on the Joint Undertaking to report to the discharge authority any development in that regard;

26.

Notes from the Court’s report that the Common Audit Service of the Commission (CAS) is responsible for the ex post audit of Horizon 2020 payments made by the Joint Undertaking and that, based on the ex post audit results available at the end of 2020, the Joint Undertaking reported a representative error rate of 2,9 % and a residual error rate of 1,99 % for Horizon 2020 projects (clearings and final payments); notes the Commission’s proposal for a Horizon 2020 regulation that the ultimate aim for the residual level of error at the closure of the programmes after the financial impact of all audits, correction and recovery measures have been taken into account, is to achieve a level as close as possible to 2 %;

27.

Notes that in 2020 the Joint Undertaking assessed its research and innovation activities through a third control gate exercise and that the exercise took into account the deliverables and reports submitted in the context of the annual review of the active projects coordinated by the other members while also ensuring through this process that the recommendation made during the previous control gate assessment had been properly applied;

28.

Notes that the Joint Undertaking continued to implement the Shift2Rail Anti-Fraud Strategy 2017-2020, a tailor-made anti-fraud strategy complementing the Horizon 2020 and that in accordance to that five indicators are used to report on the results of fraud prevention and detection activities, and that the related action plan for implementation of the strategy covers the different stages of the anti-fraud cycle (prevention, detection, investigation and corrective measures); notes, moreover, that during 2020, fraud awareness and fraud risks were covered through the staff survey, carried out following the adoption of a revised internal control framework, and the risk assessment respectively;

29.

Notes that the Court, as part of the operational payment controls, audited randomly sampled Horizon 2020 payments made in 2020, at the level of the final beneficiaries to corroborate the ex post audit error rates and that the detailed audits revealed in one case, a systemic error because of the use of a wrong method for the calculation of declared personnel costs and, in another case, a systemic non-quantifiable control weakness related to the absence of the beneficiary’s validation procedure for the hours declared as worked on the project, was detected; notes the Joint Undertaking’s reply that, as regards the finding concerning the absence of the beneficiary’s validation procedure for hours declared, identified in an ex post audit report performed by the CAS at the end of 2020, financial adjustments were not required and the report concluded that, in general, the time recording system of the beneficiary was reliable, and that the beneficiary had confirmed that improvements in the time recording validation system would be implemented; calls on the Joint Undertaking to report to the discharge authority developments in that regard;

30.

Emphasises that, in the Court’s Annual report on the EU Joint Undertakings for the financial year 2020, the Court found persistent systemic errors in the personnel costs declared by beneficiaries, in particular on the part of SMEs and new beneficiaries; notes that such errors were also regularly reported in the ex post audits of the CAS and its contracted auditors; highlights that, on page 39 of that report, the Court states that the streamlining of Horizon 2020 rules for the declaration of personnel costs and the wider use of simplified cost options is a precondition for future research framework programmes, in order to stabilise error rates to below materiality level; encourages the Joint Undertaking to strengthen its internal control systems given that SMEs and new beneficiaries are more error-prone.