LETTER OF AGREEMENT

South Baltic Cross-border Co-operation Programme 2007-2013

LETTER OF AGREEMENT

on the implementation of the

South Baltic Cross-border Co-operation Programme 2007-2013

signed on…..(day/month/year).....

by and between:

The Minister of Regional Development, ul. Wspólna 2/4, 00-926 Warsaw, Poland, acting as the Managing Authority designated in the South Baltic Cross-Border Co-operation Operational Programme 2007-2013 hereinafter referred to as the Managing Authority,

represented by:

………,

on the basis of the power of attorney No …… dated ………. attached to the Letter of Agreement,

acting on behalf of the Republic of Poland,

and

......

represented by:

…………………………………..

and

......

represented by:

…………………………………..

…….,

acting on behalf of the ………………….

In accordance with the following documents:

  1. Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ L 210, 31.7.2006, p. 25), hereinafter, referred to asthe General Regulation;
  1. Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/2006 (OJ L 210, 31.7.2006, p. 1), hereinafter, referred to asthe ERDF Regulation;
  1. Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (OJ L 45, 15.2.2007, p. 3), hereinafter, referred to as the Implementing Regulation;

And with consideration of the above, the parties agreed the following:

Definitions

  1. Each time the Letter of Agreement refers to:

a)ERDF – this shall mean the European Regional Development Fund;

b)Programme – this shall mean the South Baltic Cross-Border Co-operation Programme 2007-2013;

c)OP -this shall mean the South Baltic Cross-Border Co-operation Operational Programme 2007-2013, approved by the Decision of the European Commission No. C (2007) 6499, dated on 20th December 2007;

d)Opinion – this shall mean,according to Article 71 (2) of the General Regulation the opinion on compliance with Articles 58 - 62 of the General Regulation;

e)Non-compliance opinion – this shall mean the opinion issued according toArticle 71 (2) of the General Regulation, including any reservations;

f)Compliance opinion – this shall mean the opinion issued according to Article 71 (2) of the General Regulation, including no reservations.

Preamble

The Republic of Poland, the Kingdom of Denmark, Mecklenburg-Vorpommern (Federal Republic of Germany), the Republic of Lithuania, and the Kingdom of Sweden,hereinafter referred to as Member States, each single state as Member State,have agreed on the South Baltic Cross – Border Co-operation Operational Programme 2007 – 2013 approved by the European Commission on 20th December 2007.

With reference to Article 59 (3) of General Regulation and in accordance with the OP, the MS have decided to sign an agreement of identical type and wording on the implementation of the Programme and regulating especially aspects of sound management and financial control systems of the Programme, procedures, financial responsibilities and financial flows.

Member States greed that this Letter of Agreement will be countersigned by the appointed Certifying Authority for the Programme.

Each Member State will sign the Letter of Agreement with the Managing Authorityacting on behalf of the Republic of Poland as a bilateral agreement, however all executed copies of this Letter of Agreement will constitute a multilateral agreement. Any amendments to it may be done only upon unanimous agreement of all the MemberStates and the Managing Authority.

§ 1.

INSTITUTIONAL STRUCTURE

  1. The Member States designate Polish Ministry of Regional Development, Territorial Co-operation Department to act as theManaging Authority (hereinafter referred to as the MA) within the meaning of Article 59 (1) lit a of the General Regulationand in compliance with Article 60 of the General Regulation,Articles 14 and 15 of the ERDFRegulation,and Chapter 11 of the OP.
  2. The Member States designate Polish Ministry of Regional Development, Department of Certifying Authority to act as theCertifying Authority (hereinafter referred to as the CA) within the meaning of Article 59 (1) lit b of the General Regulationand in compliance with Article 61 of the General Regulation,Articles 14 and 17 of the ERDFRegulation, and Chapter 11 of the OP.
  3. The Member States designate Polish Ministry of Finance, the General Inspector of Fiscal Controlto act as theAudit Authority (hereinafter referred to as the AA) within the meaning of Article 59 (1) lit c of the General Regulationand in compliance with Article 58 lit b, 59 (4) and 62 of the General Regulation,Article 14 (2) of the ERDFRegulation,and Chapter11 of the OP.
  4. On behalf of the Member States, the Monitoring Committee (hereinafter referred to as MC) satisfies itself as to the effectiveness and quality of the implementation of the Programme, in accordance with Article 65 and 66 of the GeneralRegulation. In accordance with Article 14 (3) of the ERDFRegulation,Article 63 and 64 of the General Regulationand following the Article 2 (2) of the Rules of procedure of the MC,Member State has appointed up to six representatives to sit in the MC.Member Statehas appointeda headof its MC delegation and may appoint other person coordinating works of the MC who will serve as the sole addressee for the MA for all enquires and reports.
  5. For the purpose of selecting projects for co-financing and co-ordinating the monitoring of projects’ implementation theSteering Committee (hereinafter referred to as SC)is established. According to the Article 2 (2) of the Rules of procedures of the SC,MemberStatehas appointed up to six representatives to sit in the SC. The MC hasapproved the Rules of procedures of the SC.
  6. In compliance with Article 14 of the ERDF Regulation and Chapter 11 of the OP, the MA as well as the MC, the SC, and the AA shall be assisted by the Joint Technical Secretariat (hereinafter referred to as JTS). The JTS shall act under the supervision of the MA, that shall undertake the necessary steps to ensure the appropriate conditions for the hosting of the JTS.
  7. Contact Points(hereinafter referred to as CPs)will be established in Sweden, Germany, Lithuania and Denmark (Bornholm). The MA will sign an agreement in form of the Subsidy Contract with each of the hosting organisations of the CPs regulating the tasks of the CPs. In compliance with Chapter 11 of the OP, the CPs will particularly support the JTS/MA on tasks related to informationand promotion activitiesas well as project development.

§ 2.

DUTIES OF THE MA, CA AND AA

  1. As set out in Article 15 (1) of the ERDFRegulation and Article 60 of the General Regulation,the MA is responsible for the management and implementation of the Programme in accordance with the principle of the sound financial management.The MA main responsibilities are set out in Chapter 11 of the OP.
  2. The respective tasks and responsibilities of the MA, CA, andAA as well as the mechanism of their co-operation are laid down in the OP and in the Description of the Management and Control System set out according to Article 71 of the GeneralRegulation.
  3. The Description of the Management and Control System shall be provided by theMA according to Article 71 of the GeneralRegulation and in accordance with the model set out in Annex XII of Implementing Regulation (following Article 21 of the Implementing Regulation). The unified Description of the Management and Control System shall be completed basing on elements of descriptionsof thefirst level control systems (and their relevant amendments) as set up by the Member States according to Article 16 of the ERDFRegulation.
  4. The MA will provide the MemberState with an on-line access (read only) to the information stored in the monitoring system to be used under the Programme, according to Article 60 c) of General Regulation.
  5. The MA will ensure thatthe MemberStateis submitted by the JTS with the list of control bodies declared by the Beneficiaries located on its territory.
  6. In order to ensure the fulfillment ofArticle 60 lit b of the General Regulation, referring to Article 15 (1) of the ERDF Regulation the MA will rely on the first level control systems set up according to Article 16 of the ERDFRegulation in those Member Stateshosting a Beneficiary.
  7. The function of the CA will be carried out in compliance with Article 61 of the GeneralRegulation. The CA main responsibilities are set out in Chapter 11 of the OP.
  8. For the purpose of certification, the CA shall ensure that it has received adequate information from the MA on the procedures and verifications carried out in relation to expenditures and that it takes account of the results of all audits carried out by or under the responsibility of the AA.
  9. The CA shall send a forecast of the possible applications for payment for the current and the subsequent financial year to the European Commission no later than 30 April of each year, as stated in Article 76 (3) of the General Regulation.
  10. Pursuant to Title VII – Sections 2 and 4 of the General Regulation, the CA issues the certificates, statements of expenditure, and the applications for payment. The certificates and statements of interim and final expenditure referred in these Articles shall be drawn up in the form prescribed in Annex X of the Implementing Regulation.
  11. According to Article 20 of theImplementing Regulation, the CA shall send a statement to the European Commission identifying the amounts withdrawn and/or recoveredand/or to be recovered for each priority axis in the format described in Annex XI of Implementing Regulation.
  12. The functions of the AA will be carried out in compliance with Article 62 of the General Regulationand Article 16 -18 of the Implementing Regulation. The AA main responsibilities are set out in Chapter 11 of the OP.
  13. The AA will be assisted by theGroup of Auditors according to Article 14 of the ERDFRegulation and Chapter 11 of the OP,and comprisingof representatives of Member States.
  14. According to Article 71 (2) of the GeneralRegulation, the AA assisted by the Group of Auditors shall assess the management and control system set up for the Programme implementation and next draw up a report on its conclusions giving an opinion on compliance with Articles 58 -62 of the GeneralRegulation, to be transmitted to the European Commission. The opinion shall be drawn up in accordance with the model set out in Annex XIII of the Implementing Regulation.
  15. Without prejudice to these provisions and the common decisions of the MC and SC for the Programmethe MA, CA, AA, and the JTS in the implementation of their tasksshall act in full accordance with Polish institutional, legal and financial provisions.

§ 3

OBLIGATIONS OF THE MEMBER STATES

  1. According to Article 16 of the ERDF Regulation,the Member State shall ensure that the first level control system is set up, in order to allow the MA to ensure that the verifications take place in accordance with Article 15 of the same Regulation and in connection with Article 60 b) of the General Regulation.
  2. TheMemberStateshallprovidethe MA with a description of the first level control system indicatinginstitutions responsible for the first level control to be included in the Description of the Management and Control System.The MemberState shall without any delays inform the MA of any changes of responsible body and of the set up control system. The above-mentioned information will be updated when necessary.

The Description of the Management and Control System shall be examined by the AA according to Article 71(2) of the General Regulation. The Member State engage itself to provide the MA and AA with all information and supporting documents required for ensuringthe opinion on the compliance of the Description of the Management and Control System. The AA reserves the right to qualify its opinion on the lack of compliance of the Description of the Management and Control system (hereinafter referred to non-compliance opinion), should the system and/or the supporting documents and annexes provided be deemed insufficient.In case of a non-compliance opinion fromthe AA on the description of the management and control system or in case of observations by the European Commissionthat would refer to the possibility or necessity of the payment being suspended, noERDF – funding can be received.

  1. The MemberState has appointed representatives to the MC and the SC.
  2. The Member Stateshall support the MA and the JTS in the implementation of the Programme in order to ensure the sound financial management and control systems within the Programme and its compliance with community regulations, especially by fulfilling the Member States’ obligations as stated in this Letter of Agreement, particularly concerning the recovery of funds and the systems of management and controls, according to Article 71 of General Regulation, being set up.
  1. The MemberState is obliged to keep documentation related to the Programme implementation not shorter than during the period of three years after the Programme closure, as stated in Article 90 of the General Regulation.

§ 4

REPORTING DUTIES

  1. The MA shall submit the annual report and final report on implementation of the Programme to the European Commission in accordance with the requirements set out in Article 67 of the GeneralRegulation. Before submitting reports to the European Commission, the MA shall transmit the reports to the MC for approval as set out in Article 65 lit d of the GeneralRegulation.
  2. In compliance with Article 68 of the General Regulationthe European Commissionand theMA shall annually examine the Programme implementation taking into consideration the results achieved in the previous year. One representative of each MC national delegation,can take part in these review meetings. Should the European Commission make any comments, the MC will be informed and decisions shall be taken on how to respond to these comments. The Commission will be informed about any MC’s decisions by the MA.
  3. TheMA shall inform the MC about the annual control report as set out in Article 65 lit e of the GeneralRegulation.

§ 5

SUBSIDY CONTRACT AND PAYMENTS TO BENEFICIARIES

  1. The SC is responsible for deciding on selection of theprojects to be co-financed.Based on the decision of the SC, the MA concludes a Subsidy Contract in its own name with the Lead Beneficiary on the implementation of the project using a standard form of the Subsidy Contract.
  2. To ensure a sound and efficient implementation of the projects the Subsidy Contract may only be concluded after the MA has received the confirmation from the Member Statethat adequate first level control system,mentioned in § 3 item 1 of this Letter of Agreement, has been set up.
  3. Any financial support will be granted to aBeneficiary exclusively for the activities to be implemented within the projectand described in the Application Formapproved by the SC, which isan integral part of the Subsidy Contract.
  4. The Subsidy Contract is concluded in EUR.
  5. The Lead Beneficiary shall be responsible for the obligations deriving from the Article 20(1) ofthe ERDFRegulation.
  6. Payments for the Lead Beneficiarymay only be made if the expenditures presented by all Beneficiaries, including a Lead Beneficiary,participating in the project have been incurred for the purpose of the project, correspond to the activities, and were validated by the first level controllersdesignated by the Member State in which the Beneficiary is located, in compliance with Article 16 of the ERDFRegulation. Payment to the Lead Beneficiary shall be made after approval of the Progress Report from the implementation of the entire project by the MA.
  7. Pursuant to Article 80 of the GeneralRegulation, the CA ensures that Lead Beneficiary receives payments of their the ERDF in full and as quickly as possible. No deduction with the exception of the irregularities and/or suspicions of irregularities detected by the MA, CA and/or the JTS, retention or further specific charges which would reduce the amount of the payment shall be made.
  8. In case of system error detectedpayments from the European Commissioncan be withheld. Payment suspension(s) shall be lifted as soon as the European Commission has received sufficient evidence on the solution of the systemic error(s) detected.
  9. If the requirements, defined in item 8 are not being fulfilled the MC must be informed about this fact and shall try to find a solution.
  10. Funds will be disbursed in EURto the bank account named by the Lead Beneficiary and indicated in the Subsidy Contract. The risk of the exchange rate is borne by the Beneficiaries.

§ 6

SECURITIES AND GUARANTIES, IRREGULARITIES AND LIABILITIES

  1. The MA acting on behalf of CA shall ensure that any amount paid as a result of an irregularity is recovered from the Lead Beneficiary. The Beneficiary shall repay the Lead Beneficiary any amounts unduly paid in accordance with the agreement existing between them. In case the Lead Beneficiary is not able to pay back the MA acting on behalf of the CA, the MemberState on whose territory the Beneficiary concerned is located shall reimburse the MA acting on behalf of the CA for the amount unduly paid to that Beneficiary, according to the Article 17 of the ERDF Regulation.In case the Lead Beneficiary is not able to pay back the MA acting on behalf of the CA, the MemberState shall support and assist the MA acting on behalf of the CA in the recovery of funds process, concerning the Beneficiaries located on their territory.
  2. When amounts unduly paid to a Beneficiary cannot be recovered, the MemberState shall be responsible for reimbursing the amounts lost to the general budget of the European Union, when it is established that the loss has been incurred as a result of fault or negligence on its part according to the Article 70 item 2 of the General Regulation.
  3. In case of a systemic irregularity deriving from the national control and management system, theMemberState shall bear the financial consequences.
  4. The MemberState shall ensure a system for the reimbursing to the MA acting on behalf of the CA the amount unduly paid to the Beneficiary located on their territory, in case the situation referred to in item 1 occurs.
  5. According to Article 28 of the Implementing Regulation, theMemberState hosting a Beneficiary is responsible for preventing, detecting and correcting irregularities as well as reporting irregularities detected in compliance with Article 28,29,31 and 36 of the Implementing Regulation to the European Commission, MA, CA and AA. It is also obliged for reporting of procedures instituted with respect to all irregularities previously notified and of important changes resulting from them, in compliance with Article 30 and 31 of the Implementing Regulation. The Member State engages to communicate quarterly to the MA, CA and AA any information of detected irregularities relating to amounts of less than 10.000 EUR of the ERDF, in form and on terms defined by the MA, included in the minimal standardsof the financial control system for the Programme, as definedin § 7 item 2 of this Letter of Agreement.
  6. In order to fulfill obligations described in item 5,theMemberState shall ensurethe irregularities reporting system to be applicable in the MS.
  7. In case the MA, CA, and/or the JTSis responsible for an irregularity the liability vis-à-vis the European Commission as well as the MC is with the MemberState hosting the MA and/or the CAand/or the JTS. However, in case of irregularities resulted from jointly taken decisions MemberState shall be responsible in proportion to theirERDF contribution to the Programme.

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