Press release:           

The absorption of structual funds is strongly hampered by institutional weaknesses

         Given the experience of over 2 years in writing and project implementation of SOP HRD, Solidarity Research and Developpment Social Center members notes that the operating mechanisms of involved institutions in proper functioning of this program,continues to be  deficient, beeing the principle cause of very low level of structural funds absorption.           

         The biggest problem is the lack of support for organisations that implement projects,  doubled by obstacles raised by state institutions, which should support the beneficiaries involved in this activities.

        Given the Monitoring Commitee meeting of the Sectoral Operational Programme Human Resources Development from 15-16.XI.2010, we submit to major deficiencies occurred and proposals that would considerable increase funds absorption in this program:

-  Is necessary the supplementation to support the implementation of projects by increasing the amount of pre-financing and improving the mechanisms for its accordance. Given the pre-financing accordance in a single tranche, leaves unreasolved a number of issues related to cash flow (esspecially in the context- frequently- the failure to meet repayment of Managing Authority/ Intermediate Bodies) we ask increasing of pre-financing quantum with 50%, thereafter the difference of 20% will be given during the project. In this regard, should be noted that activities in the project represent, in most cases, the progress of some public activities, mostly by non-public organizations, them using private money in public. Delays in reinbursements lead to immobilization of significant amounts of private money in the process, the involved organizations in project implementation becoming, forced, creditors of the State in increasingly longer terms.

-  The lack of incentive pay for MA/RIB employees, directly proportional to workload and the importance of their work, with insufficient number of employees of these bodies, lead to excessive shortness procedures due to lack of staff and interest in solving the occured problems. It is necessary to implement a flaxible wage system, based on efficiency, which allows proportionate earnings with the results and increase of the employees number.

-  Lack of VAT to present, put the beneficiaries into difficulties in terms of cash flow support. We ask as urgent solution, to unlock these amounts, the possibility to be able to support the VAT from pre-financing and reinbursemenets, or to introduce a mechanism to compensate the state debt amounts owned by the State (often more than one year) to organizations that implement projects. We demand compensation for debt, resepctivly offsetting amounts owed to the state with the amounts the state ows us from forgiveness of VAT.

- Delays in reinbursement amounts for reimbursement claims causes severe cash flow problems, considerably complicating project implementation by immobilizing the funds of organizations that implement in expenses of which repayment delays, sometimes even months.  We consider that reducing the payment period to 20 days and introduction of penalties for late repayments similar to those which beneficiaries must pay for late payment of debts to the state. As we must report as income the amounts resulted by interests on pre-financing, so should be reported as beneficiary losses (and funded by project amounts) the interests they would have produced the fixed amounts of beneficiaries in costs made to the repayment date (especially for late repayments). Is recommended the modification of reimbusement process (essential for the absorption of funds), money can be reinbursed once   with the application, following to apply corrections to the following reinbursments.

- The introduction of a mechanism of state support, which opens the possibility of obtaining credits for supporting cash flow from comercial banks cash, based on financing contracts and refund claims. So far, desinterest of banks is remarked for supporting the organizations that implements projects on this Sectorial Programme, even if  benefit from running programs, dubled by state desinterest for supporting ones who might absorb structural funds. Should be considered the possibility to guarantee with Financing contract (eventually even with refund claims) and purchesed goods on project of some loans for supporting cash flow.

- Managing Authority and Intermediate Bodies orientation to support the beneficiaries, focusing on prevention and not on penalization.

- Heavy procedures, bureaucratic, make absorption of funds very difficult; the obssesion for fonts, for comma, for predetermined formula, for form in damage of fund, delays very much carrying out the procedures. Is necessary a greater flexibility, shorter  terms for beneficiaries, pro-active attitude of institutions employees involved in monitoring project implementation.

-  Is necessary provision costs for archival storage resulted in the projects, these costs being eligible throughout obligation of archiving documents. The obligation of keeping the documents until 2021, shall have the concomitant right to be able to spend the amounts needed to meet this obligation. In this sense, storage cand be acquiered with specialized companies, contracts beeing paid during project implementation. Contracts can provide the right of these documents by interested authorities, at storage place.

- Compatible systems: Action web allowing mode to import data from Excel. Action Web format for expenditures is to heavy, operation with it consumming many resources.

- Changing unilateral appearance of Financing contracts, in which MA/RIB have only rights (without sanction), and beneficiaries have only obligations, with extremely few rights. Financing contracts shouldn’t have a unilateral character, in total conflict with the Civil and Comercial Code.

- Given the current market conditions, ceilings costs with accommodation, cu transport and subsistence must be identical for internal and external. The ordinance no.1117/2010 has a discriminatory character and ignores the real costs.

 - Is necessary that all project expenditure accounts be eligible because are costs that are strictly related to good progress of the project. Otherwise, many ongoing projects or even close to completion would risk to fall because of the fully taken budgets and the addition of inexplicable costs (initially unexpected) would lead to exceeding the maximum budget.

-  Clarifying many ambiguous aspects that makes difficult project implementation, as:

1. Contraction audit services by beneficiary, under terms extensions by beneficiary to whole pertnership, means that the auditor must audit partners (including moving to their centers)?

2. How many financial experts must be employed on the project:one or two (given that formally is required only one), but financing contracts, through the method to describe their work, gives the impression that there are necessary: an accountant expert for registration of accounting documents and an accountant expert/certifying accountant)? The provisions in this area must be consonant with legal and statutory provisions (eg. BELAR- Body of Expert and Licensed Accountants of Romania).

3. Remove created ambiguities by redefinition of term beneficiary and introduction of lead partnership one, etc.

-  Remove legislative inconsistency by harminizing provisions through special laws with legislative framework created for projects implementation.

-  Introducing the possibility of concluding civil contracts for each member of management team, so that it can be created a legal framework to train material liability of those involved for whole project implementation and for their accountability for proper conduct of activities. Currently, the organizations that implement projects have real difficults with the imposed forms of Labor Code, being obliged to conclude Individual emplyement contracts which limits the possibility to introduce the responsability for whole project implementation. Employees who take their salaries regardless of the results (eventually delaying the activities) and after few months of implementation, they quit without being held accountable for their facts. Civil Contracts – management – linking achivement gains to obtain final results provided by necessary mechanisms to practice the final obligation of the beneficiary/partnership leader.

-  Flexibility of  Labor Code provisions in terms of project activities (exceptionally), limitations imposed by them (eg.working time, work programme, form of employement etc.) being in total coflict with the concrete needs of project implementation.

   Manager,

Rotilă Viorel