1. Background

The European Defence Fund (EDF) has a budget of around EUR 8 billion for 2021-2027.[1]

The EDF aims to support research and innovation in the defence sector, and promote cooperation and a collaborative approach.

The European Commission is responsible for deciding how to allocate funding under the Defence Fund. In doing so, it is assisted by external experts, who contribute to the evaluation, ethics review and budget estimate assessment of proposals.

According to the EDF Regulation[2], the Commission must establish a list of external experts, who are selected based on their skills, experience and knowledge, taking account of the tasks to be assigned to them.

The Commission must seek to ensure an appropriate rotation of the experts and appropriate private-public sector balance.

Normally, when the Commission selects and remunerates external experts to assist in the evaluation of proposals, lists of the experts are published on the Funding & Tenders Portal of the Commission,[3] thus allowing for some public scrutiny. The EDF Regulation explicitly derogates from this general rule.[4]

At the same time, there is no public information on how the Commission applies rules to:

(i) Mitigate the risks of conflicts of interest to which external experts may give rise, or

(ii) Strike an appropriate balance in the composition within the external expert groups and evaluation panels. This is further complicated by a lack of transparency concerning the experts.

2. Strategic initiative

Given the lack of public information around the selected external experts involved in the ethics screening and the evaluation of project proposals for the European Defence Fund,^[5]  the Ombudsman considers it even more important that the Commission conducts a robust internal conflicts of interest assessment of the appointed experts. In view of this, on 9 December, the Ombudsman wrote to the Commission with two questions:

I. What measures are in place to ensure that the involvement of external experts in the ethics screening and the evaluation of proposals for the European Defence Fund does not give rise to risks of conflicts of interest?

II. Which of the codes of conduct included in the model expert contract referred to in the call for applications of candidate experts applies to experts involved in the European Defence Fund?

3. Reply

On 28 April 2023, the Commission replied, setting out the applicable legal framework and addressing the Ombudsman’s questions.

The Commission also provided additional information. ^[6]  

The reply is summarised below.

Legal framework

EDF proposals are submitted and evaluated based on the EDF Regulation.^[7]

The legal framework on avoiding conflicts of interest is set out in the EU Financial Regulation.^[8] The Commission has also issued guidance in this respect.^[9]

Avoiding and assessing risks of conflicts of interest

There are two pools of experts for the EDF^[10], namely experts that help with the

i. Evaluation of all admissible projects^[11], and

ii. Ethics screenings of shortlisted projects^[12] (Commission staff conduct an initial ethics screening).

Both groups of experts are chosen from a database of experts, ‘Expert Management Internal’, where experts can express interest in reply to calls from the Commission.

When Commission project officers preselect experts from the database, they conduct a preliminary check of absence of conflict of interest.^[13]

The Commission then applies a “corporate approach” regarding conflict of interest management, whereby experts (i) acknowledge the code of conduct in the contract that they sign, before starting to work, and (ii) confirm by signing a declaration in the Funding & Tenders Portal electronic exchange system, for each individual proposal that they evaluate, that there are no conflicts of interest.

The Commission also informs experts about potential conflicts of interest and several checks are carried out at subsequent stages of the evaluation process.

Prior to receiving project proposals, each expert must also declare by email that they have no conflict of interest.^[14]

Before proposal(s) are assigned to an expert, the relevant Commission project officer checks, based on the experts’ CVs, that the experts appointed to assess a proposal do not have the same employer as any of those applying for funding for projects.

The Commission project officer also prepares an internal note that reports and details the principles the project officer followed for the preselection of the experts, individually and as a whole. This includes verifying expertise, availability, apparent absence of conflicts of interest, and diversity of backgrounds. This note is then submitted to the relevant head of unit.

Upon receipt of proposal(s) by the experts, the Commission project officer organises a briefing meeting with the experts, at which the Commission gives information on:

i. maintaining the absence of conflicts of interest;

ii. conflicts of interest stemming from the code of conduct, including a list of potential cases where the Commission would investigate; and

iii. when to inform the Commission on a potential conflict, the consequences and how it is treated.

In cases where the expert declares a conflict of interest, the Commission project officer investigates and, with the support of a legal officer from the Commission, may recommend exclusion of the expert. The conclusion is set out in a note to file, which registered in the Commission’s file management system (ARES), and addressed to the call coordinator and their managers.

Subsequently, experts sign several documents reconfirming that they do not have conflicts of interest. The software used for the management of the evaluation of proposals also requires the experts to reaffirm the absence of conflict of interest.

Code of conduct

The model contract linked to the call for applications of experts sets out, in Annex 1, various codes of conduct for different categories of experts.[15]

The Commission confirmed that the code of conduct that is applicable to EDF external experts is the one titled “EVALUATORS — ALL (except observers)”.

The code of conduct contains a general obligation of impartiality and sets out:

· situations that will automatically be considered as conflicts of interest that in certain cases can be waived in exceptional and duly justified circumstances.

· circumstances that may give rise to conflicts of interest.

Further, the code requires the expert to confirm, by signing a declaration, that no conflict of interest arises before they begin their work and to immediately inform the appointing authority if the expert is (or becomes) aware of a conflict of interest.

Additional information

The Commission said that the list of experts is not disclosed to prevent:

· the experts from being pressurised by third parties and to safeguard their independence;

· exposing the experts’ specific expertise in the sensitive field of defence industry and undermining their security credentials;

· that the link between an expert and a topic and/or proposal could be traced, with negative impacts for integrity of the evaluation process. There are a limited number of (i) call topics and (ii) sometimes of proposals received under topics.

However, the Commission said that Member States scrutinise the experts:

1. in the programme committee (which is a comitology committee), where the list of experts assisting the Commission is shared annually^[16]; and
2. by validating their security credentials prior to their appointment by the national security agencies, investigating each expert.

4. Conclusion

This initiative has enabled the Ombudsman to gain an insight into the measures the Commission has put in place to ensure that the involvement of external experts in the ethics screening and the evaluation of proposals for the EDF does not give rise to risks of conflicts of interest.

The Ombudsman thanks the Commission for its reply to her questions and the additional information provided.

Based on this, the Ombudsman observes that the Commission applies a “corporate approach” regarding conflict of interest management, which relies to a large extent on the selected experts’ self-declaration of any conflicts of interest.

The Ombudsman understands that, unless a conflict of interest is identified at the preliminary stage by the Commission’s project officer, or prior to receipt of the project proposals based on an analysis of the experts’ curriculum vitae to preclude these experts from evaluating for example proposals by their employers, no further conflict of interest assessment is carried out by the Commission.

The Ombudsman will continue to monitor developments in this important area and is reflecting on whether to examine the matter in the context of an own-initiative inquiry.

END OF NOTE

 

[1] See: https://defence-industry-space.ec.europa.eu/eu-defence-industry/european-defence-fund-edf_en.

[2] Regulation 2021/697 establishing the European Defence Fund https://eur-lex.europa.eu/eli/reg/2021/697/oj

[3] In line with Article 237 of the EU Financial Regulation.

[4] See Article 26(2) of Regulation 2021/697, which provides in its relevant parts that “[b]y way of derogation from Article 237 of the Financial Regulation, the list of independent experts shall not be made public”.

[5] See: https://www.ombudsman.europa.eu/en/opening-summary/en/163874.

[6] https://www.ombudsman.europa.eu/en/doc/correspondence/en/169355

 

[8] Regulation 2018/1046 on the financial rules applicable to the general budget of the Union: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32018R1046

[9] Guidance on the avoidance and management of conflicts of interest under the Financial Regulation

(2021/C 121/01): https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021XC0409(01)

[10] In accordance with Article 26 of the EDF Regulation

[11] In accordance with Article 237 of the Financial Regulation

[12] In accordance with Article 7 of the EDF Regulation

[13] More information on pages 8 and 9 of this Commission’s vade mecum: https://www.h2020.cz/files/pracna/H2020-Vademecum-Section-on-Proposal-Submission-and-Evaluation.
The guide states: “Do not select any of the following (since they are always presumed to have a conflict of interest):
− members of an advisory group set up by the Commission to advise on the preparation of EU or Euratom Horizon 2020 Work Programmes in an area related to the call in question
− National Contact Points or persons directly working for the Enterprise Europe Network
− members of a Horizon 2020 programme committee.”

[14] The template text used, includes the line: "I declare that I am not involved in any proposal submitted for evaluation under the EDF indicated call(s) for proposal(s) [..]”

[15] See: https://ec.europa.eu/research/participants/data/ref/h2020/experts_manual/h2020-experts-mono-contract_en.pdf

[16] See Article 34(4) of the EDF Regulation though the scrutiny of this committee appears to be limited to ensuring the transparency of the ‘security credentials’ of the experts appointed.