RESOLUTION (EU) 2018/1455 OF THE EUROPEAN PARLIAMENT

of 18 April 2018

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget for the SESAR Joint Undertaking for the financial year 2016

THE EUROPEAN PARLIAMENT,

—	having regard to its decision on discharge in respect of the implementation of the budget of the SESAR Joint Undertaking for the financial year 2016,

—	having regard to Rule 94 of and Annex IV to its Rules of Procedure,

—	having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Transport and Tourism (A8-0077/2018),

A.	whereas the SESAR Joint Undertaking (the ‘Joint Undertaking’) was set up in February 2007 to run the Single European Sky Air Traffic Management Research (SESAR) programme, which aims to modernise traffic management in the Union;

B.	whereas, following the adoption of Council Regulation (EU) No 721/2014 (1), the SESAR 2020 Programme (‘SESAR 2020’) extended the lifetime of the Joint Undertaking until 31 December 2024;

C.	whereas the Joint Undertaking was designed as a public-private partnership, with the Union and Eurocontrol as founding members;

whereas the Union contribution for the deployment phase of the SESAR 2020 2014 to 2024 funded by Horizon 2020 is EUR 585 000 000; whereas under the new Horizon 2020 Membership Agreements, the contribution from Eurocontrol is expected to be around EUR 500 000 000, and the contribution from the other partners from the aviation industry is expected to be around EUR 720 700 000 of which around 90 % should be in-kind;

Follow-up to the 2015 discharge

Notes that the Joint Undertaking incorporated into its procedures the common template for the declaration of absence of a conflicts of interests;

General

Observes from the report of the Court of Auditors (the ‘Court’) on the Joint Undertaking’s annual accounts for the year ended 31 December 2016 (the ‘Court’s report’) that those accounts present fairly, in all material respects, the financial position of the Joint Undertaking at 31 December 2016, the results of its operations, its cash flows, and the changes in net assets for the year then ended, in accordance with its financial rules and with accounting rules adopted by the Commission’s accounting officer;

Acknowledges that the Court's report states that the transactions underlying the annual accounts of the Joint Undertaking for the financial year 2016 are, in all material respects, legal and regular;

Budget and financial management

Notes that in 2016, the payment budget of the Joint Undertaking was EUR 157 100 000 (2015: EUR 136 900 000);

Notes from the Court's report that the final 2016 budget available from the Seventh Framework Programme (‘FP7’) and Horizon 2020 included commitment appropriations of EUR 101 400 000 and payment appropriations of EUR 162 800 000;

Notes that according to the Court’s report the utilisation rates for commitment and payment appropriations were 95,7 % and 63,2 % respectively; expresses concern that the low implementation rate for payment appropriations was caused by delays in the implementation of the studies and developments conducted by the members of the Joint Undertaking; acknowledges that one of the main reasons for the delay in implementation of payments for member studies and developments has been difficulties in adapting the common Horizon 2020 IT tools to the special needs of the Joint Undertaking; however prioritisation should be given to ensure these issues do not arise again in the future;

Notes that 383 cost statements were audited as part of the 2016 audit, representing all 15 Members and amounting to EUR 77 000 000 or 10 % out of the total costs claimed of EUR 728 800 000, with a residual error rate of 1,34 %;

Multiannual budget implementation under FP7 and TEN-T

Notes that out of the total operational and administrative budget of EUR 892 800 000 for SESAR 1 Programme (‘SESAR 1’) activities, by the end of 2016 the Joint Undertaking had made commitments of EUR 827 400 000 and payments of EUR 704 200 000 (79 % of the available budget);

Notes that out of the EUR 1 254 500 000 of in-kind and cash contributions to be made by the other members to the operational and administrative activities of the Joint Undertaking (EUR 670 200 000 from Eurocontrol and EUR 584 300 000 from the air traffic sector members), by the end of 2016 the Joint Undertaking had validated contributions of EUR 910 000 000 (EUR 427 700 000 from Eurocontrol and EUR 482 300 000 from the air traffic sector); notes moreover that in-kind contributions of EUR 133 500 000 from other members had been reported to the Joint Undertaking by the end of 2016 (EUR 49 200 000 from Eurocontrol and EUR 84 200 000 from the air traffic sector members);

10.

Notes that at the end of 2016, cumulative cash contributions from the Union amounted to EUR 597 100 000, compared to total in-kind and cash contributions of EUR 476 900 000 from Eurocontrol, and EUR 566 500 000 from the air traffic sector members;

Multiannual budget implementation under Horizon 2020

11.

Notes that out of the EUR 585 000 000 of Horizon 2020 funds allocated to the Joint Undertaking for the implementation of SESAR 2020, by the end of 2016 the Joint Undertaking had made commitments of EUR 61 600 000 and payments of EUR 49 900 000 (8,5 % of the allocated funds); notes, moreover, that those payments were mainly pre-financing payments for the first wave of SESAR 2020 projects;

12.

Notes that by the end of 2016, the cumulative Union cash contributions to the operational activities of the Joint Undertaking amounted to EUR 56 800 000;

13.

Highlights that other members should make in-kind and cash contributions of EUR 1 220 700 000 to the operational activities of the Joint Undertaking for SESAR 2020 (EUR 500 000 000 from Eurocontrol and EUR 720 700 000 from the air traffic sector); expresses concerns that at the end of 2016 no in-kind and cash contributions had been validated by the Administrative Board, however notes that SESAR 2020 projects were in their early stages; acknowledges the fact that it is expected that members will submit their first cost declarations in 2018 and the Joint Undertaking will then start to validate the related in-kind contributions;

14.

Notes that the Joint Undertaking faced difficulties in adapting the Horizon 2020 IT tools to its particular needs, which resulted in delay in the implementation of payments for member studies and developments; deplores that EUR 14,5 million payment appropriations — related to SESAR 2020 calls for proposals and activities initially budgeted in 2016 — had to be cancelled by an amended budget for 2016 due to external factors beyond control of the Joint Undertaking; is concerned about the continuing rising trend for outstanding commitments (RAL), which increased from EUR 72,1 million to EUR 83,8 million during 2016, and calls for this trend to be reversed following transition to SESAR 2020;

15.

Welcomes the signing of the renewed Eurocontrol/SESAR Joint Undertaking agreement in 2016, which outlines the new role of Eurocontrol as a co-founder of SESAR and includes a series of commitments and engagements regarding the implementation of SESAR 2020; also welcomes the expansion of membership to 19 members, representing over 100 companies across the industry, who will participate in the industrial research, validation and demonstration activities of SESAR 2020; takes note of the adoption of the first edition of the Joint Undertaking’s Single Programming Document for the period 2017-2019;

Procurement and recruitment procedures

16.

Notes from the Court’s report that at 31 December 2016, the Joint Undertaking employed 44 staff (2015: 41);

17.

Points out that the Joint Undertaking undertook six procurement procedures with an approximate value of EUR 22 300 000 in compliance with the Joint Undertaking’s financial rules to ensure fair competition amongst suppliers and the most efficient use of Joint Undertaking funds;

18.

Notes that in its procedures for the procurement of services, the Joint Undertaking sets a maximum contract budget; is concerned by the fact that this maximum amount is not based on a systematic cost estimation process and a reasonable market price reference system; notes moreover that this does not ensure the cost-effectiveness of its multi-annual service contracts, as experience shows that most of the bids received were close to the maximum budget; welcomes the fact that following the observation of the Court, the Joint Undertaking introduced in April 2017 a methodology to systematically assess during the procurement planning phase the needs and costs for contracts;

19.

Notes the results of the 2016 Human Resources benchmarking exercise: 62 % operational posts, 30 % administrative and 8 % of neutral posts;

Prevention and management of conflicts of interests and transparency

20.

Notes that during 2016 nine audits were carried out by a different external audit company due to an identified conflict of interest of the Member with the statutory auditor; takes note that the Joint Undertaking has a revised framework contract in place for audit services with three external audit firms and the audit activity is performed solely by those firms; highlights the fact that no material issue has been identified in the audits performed to date that would require the attention of the Administrative Board;

Internal Control

21.

Welcomes with satisfaction that the Joint Undertaking has set up ex-ante control procedures based on financial and operational desk reviews, and performs ex-post audits of beneficiaries;

22.

Expresses concern that the Joint Undertaking has not yet introduced specific guidance for the members and their external auditors concerning the declaration and certification of members’ in-kind contributions to SESAR 2020 projects; is moreover concerned that the Joint Undertaking has not established internal guidance on its ex-ante checks of cost claims for SESAR 2020 projects; welcomes the fact that in December 2016 the Joint Undertaking’s Administrative Board adopted the document ‘Methodology and Validation process for In kind contributions (IKC) in the SJU (SESAR 2020 Programme only)’; notes that the Joint Undertaking is supposed to investigate whether there is a need to adapt the Commission’s Horizon 2020 ex-ante control strategy to specific risks related to SESAR 2020 projects;

23.

Calls on the Joint Undertaking to establish a systematic internal procedure to reassess a finding of weak financial viability in respect of a grant project coordinator, including measures to mitigate and compensate for the increased financial risk; notes the absence of specific guidance for the members and their external auditors regarding the declaration and certification of members’ in-kind contributions to SESAR 2020 projects and invites the Joint Undertaking to develop Terms of Reference and a model certificate before any in-kind contributions are received in 2018;

24.

Welcomes the fact that the Joint Undertaking has continued to apply a multi-faceted approach for the purpose of effectively reviewing, managing and mitigating risks, and expects the Joint Undertaking to pay particular attention to critical corporate risks it has identified regarding ATM Master Plan and SESAR 2020; welcomes the fact that the Joint Undertaking’s Administrative Board adopted the Anti-Fraud Strategy on 18 March 2016;

25.

Notes that as regards SESAR 1, 21 audit exercises in five selected Members were planned of which 14 were completed in 2016 as part of the third cycle of audits in all 15 Members as described in the Ex-Post Audit Strategy of the Joint Undertaking; is concerned by the residual error rate for the year 2016 of 6,21 %; however, is satisfied that the SESAR 1 cumulative residual error rate is 1,34 %;

Internal audits

26.

Notes that in October 2015 the Commission’s Internal Audit Service (IAS) performed an audit on ‘Operational governance and Master Plan update’; observes that the IAS issued three recommendations; invites the Joint Undertaking to report to the discharge authority on the implementation of the remaining open recommendations;

27.

Notes that in October 2016, the IAS performed an audit on Horizon 2020 processes; notes the fact that that audit assessed the Joint Undertaking’s compliance with Horizon 2020 processes, namely with regards to topic identification, the evaluation and selection of proposals and the preparation of the grant agreements;

Calls for proposals

28.

Notes that for the restricted call for industrial research which was limited to the Joint Undertaking’s industry members, the Joint Undertaking awarded grants to project consortia, despite the fact that, in two cases, the checks of the financial viability of the beneficiaries performed by the research executive agency indicated that the financial capacity of the coordinating industry member of the consortia was weak; notes that this implies a higher financial risk to the completion of those projects and the financial risk is also higher for the other projects in which these two beneficiaries are involved; notes that the Executive Director’s decision in those two cases was based on complementary ad-hoc risk assessments performed by Joint Undertaking staff; is concerned by the fact that the Joint Undertaking has not yet established a systematic internal procedure to reassess a weak financial viability of a grant project coordinator, including measures to mitigate and compensate for the increased financial risk; notes that following the results of complementary risk assessments carried out in accordance with the Horizon 2020 guidelines, the Joint Undertaking found that rejecting the project coordinators on the sole basis of the analysis conducted by the research executive agency could have exposed the Joint Undertaking to a significant risk of litigation; notes that the Joint Undertaking agrees that an internal procedure for the reassessment of a weak financial viability of a grant project coordinator, including measures to mitigate and compensate for the increased financial risks, should be established;

Communication

29.

Recognises the need for the Joint Undertaking to communicate with Union citizens, through the Union institutions, concerning the significant research and collaboration that it is undertaking; stresses the importance of highlighting the real improvements achieved as a consequence of that work, which are important part of its mandate, as well as the fact that it works with other joint undertakings in promoting public awareness of the benefits of their work.

30.

Calls on the Commission to ensure the direct involvement of the Joint Undertaking in the process of the Horizon 2020 mid-term review in the sphere of further simplifications and harmonisation of joint undertakings.

Other issues

31.

Is pleased that all SESAR 1 projects were closed from an operational standpoint at the end of 2016 and that 61 solutions which are ready for industrialisation and deployment, contained in the first edition of the SESAR Solution Catalogue, have been delivered to the aviation community; notes that 54 solutions initiated in SESAR 1 will be further developed in SESAR 2020, exemplifying the efforts to ensure an effective transition between the two programmes;

32.

Calls on the Joint Undertaking and the Commission to evaluate the results of the deployment of SESAR solution, especially from the point of view of assuring the interoperability and of the steps forward in completion of the Single European Sky; taking into account that the deployment phase is already in progress, calls on the Joint Undertaking to start the development of the Pilot Project regarding a new architecture of the European airspace that will contribute substantially to the financial effectiveness of the deployment;

33.

Welcomes the publication of the ‘SESAR European Drones Outlook Study’ in November 2016; considers that a variety of innovations, including technologies related to Air Traffic Management, are required to safely integrate drones into European airspace; notes with interest its overview of the development of the European drone market to 2050 and the huge potential for Europe and its global competitiveness, as well as the actions that need to be taken in the coming 5 to 10 years to unlock that potential, including support for research and development achieved by setting up, at Union level, an ecosystem that encompasses both a regulatory framework and technology, and that brings together all key public and private stakeholders, and results in the provision of increased levels of Union funding, boosting small and medium-sized enterprises in the sector in particular;

34.

Notes that European airspace management remains fragmented and the Single European Sky as a concept has not yet been achieved; reiterates the vital role of the Joint Undertaking in coordinating and implementing research into the SESAR project, which is a pillar project of the Single European Sky, although the deadline for meeting the SESAR project objectives has been deferred from the original date of 2020 to 2035;

35.

Draws attention to the importance of the resolving the problem of the fragmentation of the European sky, as at present the European Single Market is not exploiting to the full the advantages offered by the Single European Sky.

(1) OJ L 192, 1.7.2014, p. 1.