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Points of View:

Making SME participation simple

Wolfgang Burtscher

The European Commission has unveiled proposals to make participating in EU-funded research less complicated and more attractive to small and medium-sized enterprises (SMEs). From reducing administrative burdens to increasing the 'Tolerable Risk of Error', these simplifications would allow SMEs to focus on results, not red tape.

We talk to Wolfgang Burtscher, Deputy Director-General of DG Research, to get his views on the proposed simplifications and on changes already implemented.


Proposed changes for the future FP

The European Commission's proposals for change include:

Lump sum approach

An avenue to be further explored is to adopt a results-based approach using lump sums for entire projects. Current funding procedures are based on actual costs where payment claims are provided, reimbursed and often audited to ensure the claim is valid. 'But all of this involves heavy administration,' says Mr Burtscher. 'A lump sum ruling would significantly reduce these administrative layers and put the focus on research, not on accounting and administration.'

A key challenge in a results-based approach is to establish upfront what are the results or outputs of a project against which the lump sum would be released. But in doing so, the focus can shift from the assessment of the inputs of a project to its research output a major improvement.

'Tolerable Risk of Error' (TRE)

Simplifying procedures is a tool not only to attract participants but also to reduce the likelihood of errors. So there is no alternative to simplification. But in parallel, a balance must be achieved between the administrative costs of control and the risk of errors. This is where the TRE enters the picture. The European Commission proposes that an error rate of around 3.5% compared to the current 2% would be acceptable and justified.

'This is a crucial point,' says Mr Burtscher. 'We need to ensure that SMEs can concentrate on their work and the intensity of ex-post audits is at a reasonable level. Whether by negligence or simple human error, mistakes happen. We believe that an error rate of around 3.5% is justified, and if the budgetary authority (i.e. the European Parliament and Council) could agree to it, we could review our control strategy to lower the control burden pending on SMEs.'

Adapted accounting requirements

The European Commission also proposes to widen the acceptance of the accounting practices of the beneficiaries, including the use of average personal cost, rather than imposing its own system. Furthermore, an additional proposal is to settle fixed hourly rates for the participation of SME owners whose personnel cost cannot be calculated according to the standard eligibility rules due to legislative or accounting constraints. Such a change would save time and streamline procedures in favour of the beneficiary, adding also security on the correctness of the costs charged.

Funding work programmes

Depending on the theme, annual Work Programmes of Cooperation will include an SME strategy, SME-dedicated calls or SME-friendly measures with earmarked budgets. It is expected that five themes will include targeted calls for SMEs in the 2011 Work Programmes. Calls could also be optimised through structure and timing changes; having calls outside of holiday periods, extending deadlines and reducing the size of consortia would all benefit SMEs.

'We have launched these proposals to make improvements for the benefit of SMEs in this and the next Framework Programme,' concludes Mr Burtscher. 'The focus is now shifting from finance and accounts to research and results. It is more about trust and breeding success, not hindering it. After all, you cannot have simplification and still carry on bean counting.'