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FP6 Financial Info & FAQs --> Contract Negotiation --> Financial Guarentees

Because of the new collective responsibility aspects of the contract, commercial (i.e. non-public) organisations will share financial liability for the others.  Thus it is advisable for the industrial partners to undertake some check of their own on the potentially financially weaker partners and perhaps request some guarantees.


Under previous Framework Programs, during contract negotiations, most companies were requested to supply internal financial data to the Commission, so their financial viability could be determined prior to the Commission authorising them to receive prepayment of part of their research grant. It has been accepted practice that companies who were reluctant to supply this sensitive information via their coordinator, did  so directly to  the project officer.


In FP6 the situation is different in that under the new Model Contract, the coordinator appears to have much more autonomy and unilateral power.  However the Contract Preparation Forms required by the Commission contain the A5 and A6 parts under which industrial coordinators have to supply - audited financial accounts for last three full financial years. Financial information for last full financial year as per the A6 form, is basically a simplified balance sheet and P&L account. The rules and tool for use of CPF Editor and the Coordinators Guide to Contract Negotiation is rather complicated with respect to forms A5 and A6. It is easily interpreted by coordinators as requiring all industrial partners to fill in A6 and give their financial information to them. After the initial calls (and not just in IST program) this is a broad occurrence. We have seen cases of companies not wishing to give this information to a coordinator who happens to be a major competitor. Because of the new felt power of coordinators the response is usually “give us the information or you are out... “


Particularly IPs are meant to mobilise sectors and this means generally competitors working together. However, there are many other reasons why a company, quite correctly, would not wish to provide this information to other organisations. It is not just potential conflict of interest with competitors, there is the whole issue of large companies perhaps wishing to buy out SMEs for their technology where internal financial knowledge could be beneficial or could be used as a lever in Consortium Agreement negotiations etc.


How companies can determine the financial viability of their partners because of the collective responsibility is a separate but related issue that be solved by use of a trusted third. I suggest that coordinators – in fact the project core team as a whole, if one exists, defines the financial criteria each non-public body partner needs to fulfil. They then supply it to some third party and each effected partner provides the third party the information. This third party would then attest to them meeting or not meeting the criteria. The third party could most easily be each organisations external auditor who would in any case have to check future cost statements. This would reduce or eliminate the costs of this exercise.


In cases where partners do not meet the criteria, financial guarantees could be requested, advances could be limited or not given or funding could be given as work is completed.

Financial Guarantee FAQs

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