Reform of the Commission 2000

European Parliament – Committee on Budgets

Notice to members 4/2000

Subject: Reform and modernisation of the Commission: Communication by Mr. Kinnock Com (2000) 0010 – Volume I and II

CM /388182EN

232.988

Summary on the Reform and modernisation of the Commission: Communication by Mr. Kinnock

Context and contents

Following the resignation of the previous Commission and on the basis of the New Commissions commitment towards Parliament, the reform process has been launched according to the mandate received from the Berlin and Cologne European Councils. Vice-President Kinnock, in charge of it, has officially consulted the Parliament, the Council and the Commission staff on the strategy of the administrative reform in the form of a very complete and detailed Communication with the agreement of the President and Mrs. Schreyer, is the basis of the White Paper which is foreseen to be adopted by the Commission on 1^st March. Although within EP, COCOBU is competent for this issue, COBU should also examine the proposals, in particular those relative to financial management and allocation of resources.

The context of the reform is clear and involves all the institutions as summarized in the following: “Systems and procedures are now out of date and cannot cope with the huge volume of work, particularly executive tasks, which the Council and the Parliament have given to the Commission. It also implies that a key objective of Reform for the Union as a whole must be to achieve a better match between Commission resources and tasks. The Reform dividend from higher efficiency will certainly facilitate this. However, where analysis shows that resources are not commensurate with tasks, either additional resources will have to be made available (if need be through negative priorities), or the Commission should not be requested to carry out those tasks. All Institutions need to face up honestly to this choice”.

The form is presented as a process and not as an event. It relies on credible timetables, detailed deliverables and clearly assigned responsibilities. The Commission aims at fully implementing the programme. The action plan of the White Paper contains 84 distinct actions to be implemented by the second half of 2002.

Year	Quarter	Key Reform Action
2000	2000/I	Commission proposal for a Regulation on public access to European Parliament, Council and Commission documents. Continuing work on the development of the information technology tool (Integrated Resource Management System) to support the introduction of Activity-Based Management.
	2000/II	Commission proposal for recasting the Financial Regulation (including the suppression of the ex ante visa). Creation of an Internal Audit Service, an Audit Progress Board and a Central Financial Service. Strengthening of internal control in Commission departments. Appointment of second Deputy Secretary-General. Diffusion of Activity-Based Management.
	2000/III	Establishment of the new Strategic Planning and Programming cycle (SPP) necessary for the operation of Activity-Based Management Commission Communication on externalisation. Commission Communication on the resource implications of reform
	2000/IV	Commission Communications on discipline, professional incompetence, whistleblowing, new career system and new management policy. Commission decision on financial corrections mechanisms for the Structural Funds. Phasing out of the ex ante visa in terms of financial control. Commission Action Plan on the simplification of administrative procedures

Year	Quarter	Key Reform Action
2001	2000/I	Commission Decision on further decentralisation in terms of internal working practices. Consultation of OSPs within Commission on the proposed changes to the Staff Regulations.
	2001/II	Contracts database Commission decisions on a new evaluation system for staff, a new promotion system for staff and a new management policy. Consultation of Inter-Institutional Staff Regulations Committee on the proposed changes to the Staff Regulations.
	2001/IV	Commission submits integrated proposal to Council on the changes to the Staff Regulations necessary for Reform.
2002		Agreement by Council to the amendments to the Staff Regulations and the Financial regulation necessary for Reform. Commission adopts review of progress on Reform.

“This ambitious timetable can therefore be realised if all European Institutions participate fully.”

The reform process is composed of three pillars:

radical reform of the way in which political priorities are set and resources allocated;
important changes to human resources policy (training, quality of management, recruitment and career development);
far reaching reforms of financial management enabling each department to establish its own internal audit system appropriate to its own needs.

A culture based on service

“The Commission is at the service of the European citizen, thus translating into action the objectives defined on their behalf by their representatives in the Council and Parliament.”

The following principles underpin the Commission's commitment in line with the tenets of good governance:

accountability: “exercising good stewardship of the resources available to the Commission involves ensuring they are used efficiently and effectively in all areas.”;
responsibility: “each Commission official should feel comfortable about taking responsibilities for his/her actions and accounting for them (…) there should be meaningful channels for them to express their concerns (…) That issue of responsibility is a manner of particular concern when EU finances are involved”;
efficiency: “cost effectiveness must have a premium”. Simplification has an important role to play in this context because simpler procedures are easier to understand and so are more effective;
transparency: “transparency within the Commission's own administration is a vital prerequisite for the greater openness towards the outside world required in the Treaty”.

Among the specific actions, mention should be made of:

an inter-institutional Committee on Standards in Public Life to supervise the general code of conduct applicable to all European institutions;
measures to ensure that moneys owed by the Commission are paid promptly and the existing backlog dealt with effectively

Priority settings, allocation and efficient use of resources

In the past, Commission has not defined its priorities nor matched the programming of its activities with its allocation of human and financial resources.

The following principles are defined:

increased programming capacity;
annual orientation debates by the College on policy and budget priorities;
introduction of Activity Based Budgeting (ABB) implemented through key actions;
establishment of a comprehensive Commission wide system of Activity Based Management (ABM) for setting monitoring, delivering policy priorities and for reporting;
striking a better balance between internal and external management of activities;
promoting more efficient and performance-orientated working methods.

Activity Based Management: puts results at the centre of the functioning of the Commission, fosters cost effectiveness because it integrates decisions on priorities, policy objectives, activities and the allocation of human, administrative and financial resources. Aimed at enhancing accountability and control by the College, it should allow a clearer contribution of responsibilities and a greater flexibility for managers in the use of defined budgets, it should also facilitate much more rigorous and detailed reporting by the College and individual departments.

It will be delivered through:

the establishment of a new Strategic Planning and Programming cycle (SPP) of thirteen months (December of year N for year N + 1) producing the Annual Policy Strategy (APS) containing Commission's decisions on positive and negative priorities. The results of APS (basis for the PDB) by policy areas will be discussed by EP and Council;
the setting up of a strategic and programming function (issuing the annual policy circular, assessing the coherence of the activities, promoting performance management);
the introduction of a powerful Information Technology system for stocking and transmitting management information at strategic and operational level: Integrated Resource Management System (IRMS);
the establishment of adequate evaluation and reporting mechanisms to assess cost effectiveness of activities and to facilitate the identification of negative priorities.

A more efficient use of internal and external resources: implying that the Commission in the model of most large public administrations and private corporations for reasons of management and cost effectiveness should move away from centralisation towards increased devolution within the Institution's boundaries and beyond. Due to the lack of an overall strategy, external devolution has in the past led to the serious and well known problem of loss of accountability and control.

The Commission is committed to pursuing decentralisation; when externalisation is chosen, it should be under the basic principle that regulatory or negotiating activities and actions to allocate funds involving the exercise of discretionary power should not be externalised.

According to its decision of 14 December 1999 (taken in the context of 2000 budgetary procedure), the Commission will present by September 2000 a comprehensive policy of externalisation with the testing of a new type of implementing body headed by Commission staff.

More efficient, performance oriented working method: aiming at diminishing red tape and the excessive number of layers involved in decision making.

The original purpose of carefulness resulting in slow and inefficient procedures should be replaced by clear responsibilities set up for Commissioners, their cabinets and the Commission departments.

Human resources

Whilst the nature of the task carried out by the Commission has evolved significantly over the past 10 – 15 years, there have been few corresponding changes in its policy and rules on human resources.

Commission's management, training, career development, staff assessment, social policy and discipline rules have become outdated.

The Commission foresees that difficult resource allocation decisions will have to be taken once negative priorities have been identified. Enlargement will also be a major challenge for personal policy: early retirement will be necessary to integrate officials from new Member States.

The measures proposed are based on the following considerations:

adequacy between the staff and tasks;
developing talents and rewarding merit;
adaptation of staff rights and obligations to social and ethical EU environment;
implementing an integrated human resources;
wide consultation before implementation and changes phased into practice in a sustained manner.

Many of those principles of modernisation cannot be put in practice without a modification of the staff regulation.

The action plan will concern management, career development guidance and mobility, training, structure (a linear career system without categories with more grades and less steps per grade), evaluation (including of higher categories and procedures for underperforming staff), the working environment and equal opportunities, transparency in terms of rights and obligations (discipline, whistle blowing), adjustment of the pay and pension current system. Measures concerning non statutory staff will also be taken (including a rotation between the Commission and the Member States). The Commission will make a proposal to convert part of its budget for contractual staff into permanent posts to increase transparency and improve effectiveness.

Audit, Financial management and control

Due to the exponential growth of financial transactions (doubled in the past 5 years; external aid commitments have increased by a factor of 4 over the last two years and are set to grow by a further 46% between 1999 and 2000). The Commission's system for financial management and control is no longer adapted. Procedures need to be simpler, faster, more transparent and decentralised.

Three principles have been set up by the reform:

authorising officers and the whole management line (from the ordinary official to the Director-General and the Commission as College) must endorse responsibility for the quality, regularity and efficiency of their actions (failure to meet the standards set will result in withdrawal of the responsibility;
financial management, control and audit system will be radically overhauled (a deep recasting of the Financial Regulation could be processed speedily and adopted as soon as possible: transitory measures will be taken within the existing legal framework).

Protecting the Community financial as interest (interaction with OLAF)

The proposals for change consist in:

the abandon of the ex-ante visa (that has proved inadequate for comprehensively analysing the regularity of financial operations, the false sense of security has created a culture of deresponsibilised managers):
advice and assistance will be provided in Finance units within Dgs;
a central Financial Service under the direct responsibility of the Budget Commissioner will be created, providing advice to operational departments in the Commission and when appropriate, in the Member States;
an audit Progress Board placed under the responsibility of the vice-president for Reform wil be set up to carry out the ex-post examination of the Commission services internal control management systems and operations as well as performance in general.

All new services and the Board would be set up by 1 May 2000.

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