DG SANCO COST-BENEFIT ANALYSIS OF THE PUBLIC … final report.pdf · In addition, DG SANCO is...

Final Report for

European Commission Health & Consumer Protection

Submitted by

Agra CEAS Consulting

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Job No2319/MC/11 March 2008

DG SANCO COST-BENEFIT ANALYSIS

OF THE PUBLIC HEALTH EXECUTIVE AGENCY

http://www.ceasc.com/

DG SANCO CBA OF THE PHEA: Final Report

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Contents Abbreviations........................................................................................................................... iv 1. Introduction and objectives................................................................................................. 5 2. Methodology ......................................................................................................................... 7

2.1. OVERVIEW OF OPTIONS....................................................................................................................................7 2.1.1. Delivery of the Public Health Programme ......................................................................................................... 7 2.1.2. The objective of transferring additional responsibilities ................................................................................. 8

2.2. ASSESSMENT OF THE VARIOUS OPTIONS.........................................................................................................9 2.2.1. Identification of costs and benefits ...................................................................................................................... 9 2.2.2. Division of tasks: defining the degree of outsourcing ..................................................................................... 9 2.2.3. Key parameters.......................................................................................................................................................10

3. Extension of PHEA’s existing mandate beyond 2010 ..................................................... 12 3.1. THE PUBLIC HEALTH PROGRAMMES ............................................................................................................ 12

3.1.1. The current Public Health Programme (2003-08) .......................................................................................12 3.1.2. The new Public Health Programme (2008-13).............................................................................................14

3.2. REVIEW OF PHEA OPERATIONS TO DATE................................................................................................... 15 3.2.1. Establishment of the Agency ...............................................................................................................................16

3.2.1.1. Transition phase ............................................................................................................................ 16 3.2.1.2. Staffing.............................................................................................................................................. 19

3.2.2. Assessment on Agency performance.................................................................................................................22 3.2.2.1. Effectiveness, efficiency and quality........................................................................................... 22 3.2.2.2. Working arrangements with DG SANCO............................................................................. 25 3.2.2.3. Impact on DG SANCO............................................................................................................... 25 3.2.2.4. Overall conclusion ........................................................................................................................ 26

3.2.3. Lessons learned .......................................................................................................................................................27 3.2.3.1. Lessons for PHEA and DG SANCO........................................................................................ 27 3.2.3.2. Lessons with wider application.................................................................................................. 28

3.3. OPTIONS FOR THE DELIVERY OF THE PUBLIC HEALTH PROGRAMME...................................................... 29 3.3.1. Closure of PHEA and full return of PHP responsibilities to DG SANCO ................................................29 3.3.2. Extension of current PHEA mandate beyond 2010.....................................................................................30

3.4. COMPARISON OF OPTIONS ........................................................................................................................... 30 3.4.1. Staff requirements..................................................................................................................................................30 3.4.2. Financial costs..........................................................................................................................................................32 3.4.3. Qualitative factors ..................................................................................................................................................33

3.5. CONCLUSIONS AND RECOMMENDATIONS................................................................................................. 34 4. Broadening PHEA’s mandate to include consumer policy and/or food safety training.................................................................................................................................................. 35

4.1. THE CONSUMER POLICY PROGRAMME......................................................................................................... 35 4.2. THE FOOD SAFETY TRAINING PROGRAMME................................................................................................ 42 4.3. OPTIONS FOR THE DELIVERY OF THE CONSUMER PROGRAMME AND FOOD SAFETY TRAINING ......... 45

4.3.1. Continuation of current situation .......................................................................................................................45 4.3.2. Outsourcing to PHEA.............................................................................................................................................45

4.3.2.1. The consumer policy programme............................................................................................. 46


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4.3.2.2. The food safety training programme........................................................................................ 48 4.3.3. Outsourcing to a Brussels-based Executive Agency ......................................................................................49

4.4. COMPARISON OF OPTIONS ........................................................................................................................... 51 4.4.1. Staff requirements..................................................................................................................................................51

4.4.1.1. Baseline............................................................................................................................................ 51 4.4.1.2. Status-quo ....................................................................................................................................... 53 4.4.1.3. Outsourcing ................................................................................................................................... 54

4.4.2. Financial costs..........................................................................................................................................................56 4.4.3. Qualitative factors ..................................................................................................................................................58

4.5. CONCLUSIONS AND RECOMMENDATIONS................................................................................................. 59 Appendix 1: Detailed calculations......................................................................................... 61 Appendix 1.A: Staffing requirements (baseline).................................................................. 62 Appendix 1.B: Cost benefit analysis...................................................................................... 67 Appendix 2: DG SANCO organigramme............................................................................. 88 Appendix 3: PHEA organigramme ....................................................................................... 90 Appendix 4: List of persons consulted .................................................................................. 92 Appendix 5: List of background documents......................................................................... 95


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Tables Table 3-1: Annual budget of the current Public Health Programme, 2005-07 (€ million) ...................... 14 Table 3-2: Estimate of human resources required for PHEA (FTEs)............................................................ 19 Table 3-3: Time to contract under the Public Health Programme (2004-2006) ....................................... 23 Table 3-4: Staff structure, SANCO/C (Public Health) ..................................................................................... 31 Table 3-5: Financial results: extension of PHEA’s mandate in time compared to closure ...................... 32 Table 4-1: Consumer action programme: annual budget breakdown (in € million) ................................. 36 Table 4-2 Indicative distribution of tasks under the outsourcing scenario: consumer action

programme ........................................................................................................................................................ 47 Table 4-3 Indicative distribution of tasks under the outsourcing scenario: food safety training

programme ........................................................................................................................................................ 48 Table 4-4: Staff structure, SANCO/B (Consumer Affairs).............................................................................. 52 Table 4-5: Financial results: outsourcing of consumer policy and/or food safety training....................... 57 Table 4-6: Financial results: outsourcing of consumer policy and/or food safety training, assuming a

‘new’ staff mix ................................................................................................................................................... 58 Table A-1: Staff requirements for PHP options 3.3.1 and 3.3.2, closure or extension in time of PHEA

.............................................................................................................................................................................. 64 Table A-2: Staff requirements for consumer policy programme, options 4.3.1 and 4.3.2 ...................... 65 Table A-3: Staff requirements for food safety training programme, options 4.3.1 and 4.3.2 ................. 66 Table B-1: Full results for option 3.3.1, closure of PHEA ............................................................................... 74 Table B-2: Full results for option 3.3.2, extension of PHEA........................................................................... 76 Table B-3: Full results for option 4.3.1, no outsourcing of consumer policy or food safety training... 78 Table B-4: Results for option 4.3.1 separated by programme, no outsourcing of consumer policy or

food safety training .......................................................................................................................................... 80 Table B-5: Full results for option 4.3.2, outsourcing of consumer policy and food safety training....... 81 Table B-6: Results for option 4.3.2 separated by programme, outsourcing of consumer policy and

food safety training .......................................................................................................................................... 84 Table B-7: Cost of closure/extension of the Agency under different assumptions .................................. 85 Table B-8: Cost of outsourcing consumer policy and/or food safety training under different

assumptions ....................................................................................................................................................... 87


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Abbreviations

CBA: Cost Benefit Analysis CEOS: Conditions of Employment of Other Servants of the Communities CP Consumer Policy (programme) DG: Directorate General DG SANCO: DG Health and Consumer Protection EA: Executive Agency EACEA: Education Audiovisual and Culture Executive Agency FST Food Safety Training (programme) FTE: Full Time Equivalent IEEA: Intelligent Energy Executive Agency MS: Member State(s) NFPs: National Focal Points PHP: Public Health Programme PHEA: Public Health Executive Agency PMO: Pay Masters Office European Commission (Office for administration and payment

of individual entitlements) SLAs Service Level Agreements


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1. Introduction and objectives

On 15 December 2004, the European Commission created an Executive Agency for the Public Health Programme (PHEA) with a mandate for the period 1 January 2005 to 31 December 2010. This Agency is established in Luxembourg and is entrusted with the following tasks:

• implementation of the Public Health Programme (PHP) (according to Decision No. 1786/2002/CE) and of annual work programmes;

• execution of the budget for all the operations necessary for the management of the public health programme; and,

• logistical, scientific and technical support.

The Agency therefore carries out the following tasks:

• launches annual calls for proposals, carries out their evaluation, negotiates and signs the grant agreements and manages the projects awarded for co-funding;

• opens service contracts and calls for tender;

• disseminates know-how and best practices generated by the projects;

• organises technical meetings;

• fosters exchange and co-ordination between all players involved and with other Community and national authorities and activities through a network of National Focal Points for the PHP; and,

• provides feedback on project results to DG SANCO policy makers and other stakeholders in order to improve the PHP.

The PHEA has an administrative sector and a scientific unit and is managed by a Director who reports to a Steering Committee. Within the scientific unit, a head oversees several project officers, who act as a link to individual project leaders. The project officers follow project implementation, in collaboration with financial officers. A co-ordinator manages the annual call for proposals with the assistance of the project officers. There is also an IT team and administrative support staff. The Agency has an annual administrative budget of €4.1 million. Although the Agency’s mandate began from 1 January, 2005, it should be noted that the Director and Head of Scientific Unit only took up their posts from 1 January, 2006. Whilst the Agency was responsible for the calls for proposals for 2006, the 2005 programme was in fact managed under the auspices of DG SANCO.

The existing Public Health Programme expires at the end of 2008. A new programme was adopted on 23 October 2007 for the 2008-13 period, in the context of which the Commission needs to update the previous cost benefit analysis (CBA) undertaken in 2002 prior to setting up the PHEA.


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In addition, DG SANCO is considering extending the scope of the mandate given to the PHEA to include:

• implementation of actions in the area of consumer policy (management of administrative and financial aspects of the consumer policy programme); and,

• tasks related to Community training on food safety law.

Before any extension of scope, or extension of current scope in time, a cost-benefit analysis (CBA) must be undertaken. In accordance with the terms of reference, this CBA covers two main tasks:

1. Update of the mandate of the existing PHEA. This currently runs to 31 December,

2010 and there is an obligation to update the initial CBA within the context of the new Public Health Programme for the 2008-13 period.

2. Extension of scope. The CBA should also investigate the possibility of extending the scope of PHEA to include parts of consumer policy and the food safety training programme.


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2. Methodology

2.1. Overview of options

Carrying out a cost-benefit analysis involves the consideration of alternative options as well as the main proposal (Tavistock Institute, 2003)1. This chapter presents the main proposal and alternative options in relation to extending the mandate of the PHEA in time beyond 2010 and in relation to extending the scope of PHEA to include aspects of the consumer action programme and food safety training. Typically a CBA considers options based around three basic alternatives as follows:

• the do nothing alternative;

• the do minimum alternative; and,

• the do something alternative.

It is not appropriate to use options based strictly on these alternatives in this case, although most options which will be considered are variants of these. The possible options, and sub-options within these, are elaborated further and assessed with respect to the continuation of PHEA under its current remit, i.e. the delivery of public health programme implementation in section 3.3, and with respect to the consumer programme and Community training on food safety law in section 4.3.

2.1.1. Delivery of the Public Health Programme

There are only two options here:

• extend the current mandate beyond 2010; or,

• reassign the implementation of the PHP to DG SANCO.

It is noted that a CBA prior to the establishment of PHEA was carried out in 20022, and the current analysis has taken into consideration the results of this previous CBA. The nature of the tasks relating to the PHP programme and a consideration of these basic options are set out in Chapter 3. Essentially this task comprises an update of the original CBA carried out in 2002 prior to the establishment of PHEA. In doing this it will be necessary to consider the performance of PHEA to date and the economic costs and benefits (i.e. non-monetary advantages and disadvantages) that are incurred by the Commission (DG SANCO) and the stakeholders as a result of PHEA’s operation.

1 The European Commission notes that it is important to demonstrate that alternative options have been adequately considered.

2 Eureval-C3E (2002) Externalisation arrangements for the Public Health Action Programme: a cost benefit assessment. 25 July, 2002.


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The analysis here is constrained by the fact that, as will be further discussed in Chapter 3, the Agency has only been fully operational for one year. This means that the Agency’s performance to date has been considerably influenced by the transition in handover of responsibility and by the inevitable learning curve involved.

2.1.2. The objective of transferring additional responsibilities

It is important to bear in mind the perspective from which this CBA is taking place. DG SANCO’s remit covers a number of different areas and DG SANCO must decide on a way forward that is most suitable for the DG as a whole, not at the level of sub-units within the DG. This means that compromises between different DG SANCO functions may have to be made in order to provide the best global solution for the DG. To add to this, PHEA is already established in Luxembourg with a mandate covering actions in relation to public health; the cost of transferring additional functions to PHEA might therefore be marginal in that overheads may not increase proportionally. The central objective of transferring additional responsibilities from DG SANCO to PHEA would be the same as in relation to the initial establishment of the Agency3, i.e. to allow the efficient implementation of specific Commission policies whilst allowing the Commission itself to focus on its core role of policy development. This entails consideration of whether specific policies might be implemented more cost-effectively by transferring implementation responsibility for them to the Agency. Essentially this would allow the Commission to focus on core activities and functions, such as policy development, whilst PHEA, as a dedicated agency, would be able to concentrate on the implementation of technical projects which require a high level of technical and financial expertise throughout the project cycle. Such expertise in contract administration, contract monitoring and project management already exists within the Agency4. Under such an arrangement DG SANCO would retain control over, and responsibility for, implementation activities managed by the PHEA. Additionally, DG SANCO must consider the efficiency of implementation of all policies under consideration and in this regard, spreading the Agency’s fixed cost across more activities might prove cost-effective. There are therefore two objectives to bear in mind: one at the level of the individual policies and the other at a global level within DG SANCO. Consideration of an extension in the Agency’s scope to include tasks under consumer policy and food safety training is more complex as it involves a number of possible basic options as follows:

3 See Commission Decision of 15 December 2004.

4 It is noted, nonetheless, that the Agency’s current experience is mainly in the context of grant approval through calls for proposals, not contract management of projects awarded through calls for tenders. It is understood that the procedures for both the award of grants/tenders and for the project monitoring are different in each case.


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• continuation of the status quo, i.e. no extension of PHEA’s scope to include responsibility for either of these tasks;

• extension of PHEA’s scope to include responsibility for some tasks under the consumer programme, food safety training, or both;

• outsourcing of consumer policy and/or food safety training to other existing Executive Agencies based in Brussels, for example the Education, Audiovisual and Culture Executive Agency, the Executive Agency for Competitiveness and Innovation, etc..

It is possible that sub-options exist within these basic options, for example, in terms of exactly which functions might be outsourced and which retained within DG SANCO. The nature of the tasks relating to consumer policy and food safety training and a consideration of the basic options and sub-options are set out in Chapter 4.

2.2. Assessment of the various options

2.2.1. Identification of costs and benefits

This exercise has entailed an analysis and comparison of the financial costs and benefits and consideration of other qualitative advantages and disadvantages between the various options, as stipulated in Article 3 of Regulation 58/2003 on the cost-benefit analysis required for the setting-up and winding-up of executive agencies. The full exploration of the various costs and benefits took place in a series of interviews within DG SANCO, notably with officials responsible for both financial and policy aspects of the Public Health Programme, the training programme and the consumer policy actions (in Directorates A, B, C and E, and the financial cells, A.3 and O.4). Detailed meetings were also held with key PHEA staff. Further interviews took place with DG Budget and DG Admin staff, particularly on horizontal issues. Finally, we consulted with the Committee on Budgets of the European Parliament. The full list of people interviewed is provided in Appendix 2. The analysis culminates in the calculation of Net Present Value (NPV) for the various options. The relative NPVs are then assessed in the light of DG SANCO’s objectives in order to present the best way forward. In addition, the more qualitative advantages and disadvantages of each option (e.g. quality, policy continuity and effectiveness issues) are discussed in order to complement the analysis.

2.2.2. Division of tasks: defining the degree of outsourcing

The consultants followed up initial discussions, held internally within DG SANCO, through a number of detailed meetings in Directorates A, B, C and E as well as PHEA. The purpose was to clarify and confirm the tasks justifying outsourcing and build on the outcome of the initial internal discussions.

Once these discussions and interviews with the relevant Commission services and PHEA came to agreed possible options for the division of tasks these were translated into financial costs. Non-monetary implications were also identified according to a number of key parameters.


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2.2.3. Key parameters

The key parameters used in this analysis, as identified through the process described above, include financial and non-financial components. Financial parameters include:

• staff time and costs;

• overhead costs; and,

• mission costs (arising in particular as a result of PHEA’s location in Luxembourg).

Staff costs are the most significant element of all financial costs. The various options presented have different implications in terms of staff numbers, time and profiles as they influence programme management in a different way. The analysis is based on staff requirements at the baseline, i.e. as the programmes under review currently stand and are currently implemented. Thus, the baseline situation depicts the present programme management within DG SANCO, which reflects the present prioritisation and work load of tasks. This has been established through a bottom-up approach, for each programme strand and on a task-by-task basis, through detailed interviews with DG SANCO/PHEA. Once established, the baseline has been extrapolated into future programme management under the different options. It is noted that, in comparing between the different options, we have taken into account the various staff profiles (Commission staff categories, external staff) that are required for programme implementation in each case. All financial data for the Commission and for PHEA were supplied respectively by DG Budget and PHEA. With regard to data on Commission staff costs, DG Budget explained that the use of the average staff cost was the accepted approach. We have therefore followed this approach in this cost-benefit analysis. However, in an effort to refine the analysis further we have also run the calculations using differentiated costs, for which both the assumptions and the results are presented in Appendix 1.B. The overall financial costs are calculated on the basis of the potential saving to the Community budget as a whole and not just to the individual DG concerned. The implications of outsourcing in terms of the costs of horizontal services has been taken into account in the analysis, to the extent this was possible using the available data. Non-monetary parameters include:

• the quality and efficiency of delivery;

• flexibility and simplification of the procedures used;


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• proximity of outsourced activities to final beneficiaries;

• visibility of the Community as promoter of the Community programme concerned; and,

• the need to maintain an adequate level of know-how inside the Commission.

Ideally the views of beneficiaries would have been taken into account. This was not done because the Agency has only been in full operation since 2006 and it was deemed too soon for beneficiaries to be consulted on its performance. The hand over process is also likely to make it difficult for beneficiaries to be able to distinguish the performance of the Agency from that of DG SANCO. Consideration of such parameters also takes into account staff issues, in the sense that it can be assumed that if dedicated, specialised staff are used for each task, the quality and efficiency of overall delivery should improve.


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3. Extension of PHEA’s existing mandate beyond 2010

3.1. The Public Health Programmes

3.1.1. The current Public Health Programme (2003-08)

The current Public Health Programme (PHP) was adopted for the period 2003 to 20085. This continues and expands on actions undertaken under previous programmes6. The Programme aims to protect and improve human health, based on three general objectives:

• health information;

• rapid reaction to health threats; and,

• health promotion through addressing health determinants.

The PHP includes activities such as networks, co-ordinated responses, sharing of experience, training and dissemination of information and knowledge. The aim is to embody an integrated approach towards protecting and improving health. In order to ensure an integrated approach, particular attention is paid to the creation of links with other Community programmes and actions. Achieving the overall aim and the general objectives of the Programme requires effective co-operation of the Member States and dialogue with all key partners including non-governmental organisations. Under the PHP, institutions, associations, organisations and bodies in the health field are encouraged to submit projects for implementing specific priorities, defined on an annual basis by the Commission. In this task the Commission is assisted by a Committee composed of national representatives of each Member State. Measures under the PHP are eligible for funding through project subsidies and public procurement contracts. The Financial Regulation7 and its Implementing Rules8 are the reference documents for

5 Decision No 1786/2002/EC of the European Parliament and the Council, as amended by Decision No 786/2004/EC to take account of enlargement.

6 Although consolidating eight programmes that existed previously in this subject area, the 2003-08 PHP is expanded geographically in that it covers 31 countries (EU-25 plus EFTA/EEA, Bulgaria, Romania and Turkey) rather than the EU-15 as was the case with previous programmes. This has introduced extended and more complex networks and actions, a greater need for coordination and an increasing number of projects involving typically an many countries as possible.

7 Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ L 248, 16.09.2002.

8 Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ L 357, 31.12.2002 and Commission Regulation (EC, Euratom) No 1261/2005 of 20 July 2005 amending Regulation (EC, Euratom) No 2342/2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ L 201, 2.8.2005.


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the implementation of the PHP. Under these documents the granting and monitoring of subsidies are subject to specific provisions. Grants must comply with the co-financing rule, the non-profit rule, the non-retroactivity rule and the non-cumulation rule. To be eligible for financial support, projects must contribute to a high level of health protection and be consistent with one or more of the specific objectives set out in the programme. Eligible projects are identified following calls for proposals and are selected and funded according to the relevant Decision.

In implementing the programme, priority was given in 2006 to projects which:

• provided European added value: proposals which offered relevant economies of scale at European level, involved as many eligible countries as possible and were capable of being applied elsewhere. Proposals which offered something new in relation to the existing situation and were not of a recurrent nature;

• supported policy developments at Community level in the field of public health;

• devoted appropriate attention to an efficient management structure, a clear evaluation process and an understandable description of the expected results; and,

• included adequate diffusion of results at European level to appropriate target audiences. The running period of any project to be co-funded, should normally not exceed a maximum of three years. Projects to be co-funded are identified by applying three sets of criteria:

• Exclusion criteria: assessment of eligibility;

• Selection criteria: assessment of the applicant’s financial and operational capacity to complete the proposed project; and,

• Award criteria: assessment of quality in relation to the cost of the project.

Total funding for the 2003-08 period (six years) amounts to some €353.77 million9, or an average €58.96 million per year. During the period of PHEA’s operation (2005-07), this has been divided as shown in Table 3-1. The bulk of the funds are spent through calls for proposals for the three strands of the Public Health Programme, which together typically account for around 85% of the available budget. Calls for tenders account for approximately 10% of the budget and direct grants for most of the remaining 5%.

9 Amount indicated on the basis of appropriations for the EU-25 (and EEA/EFTA and applicant countries). The original financial framework for programme implementation was €312 million (Decision No 1786/2002/EC), but this was later increased to the €354 million to provide for enlargement (Decision No 786/2004/EC).


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Table 3-1: Annual budget of the current Public Health Programme, 2005-07 (€ million)

2005 2006 2007

Budget available (a), of which:

€61.46 €55.82 €41.87

operational appropriations €53.69 €53.86 €40.64

administrative appropriations €7.78 €1.95 €1.23

To be spent on (b):

calls for proposals (c) €43.49 €43.02 €33.89

calls for tenders (c) €4.87 €5.31 €4.06

direct grants (d) €4.83 €4.78 €2.03

other (e) €0.50 €0.75 €0.65 (a) Estimate on the basis of commitments. Includes contributions from third countries (EEA/EFTA and

applicant countries). (b) Estimated, indicative maximum amounts. (c) Covers the 3 strands of the PHP (d) For cooperation with international organisations. (e) Includes allowances for scientific committees and sub-delegation of projects to Eurostat.

Source: Annual Work Plans (2007: Commission Decision of 12/02/07; 2006: Commission Decision of 10/02/07; 2005 Work Plan).

3.1.2. The new Public Health Programme (2008-13)

The Second Programme of Community Action in the Field of Health for the 2008-13 period was adopted on 23 October 200710. The new programme will come into force on 1 January 2008. The budget is €321.5 million over the period of the programme. The new programme has three broad objectives which align future health action with the overall Community objectives of prosperity, solidarity and security, and the actions taken in the current programme. The intention is to create synergies with other Community programmes and policies. The objectives are to:

1. improve citizens’ health security; 2. promote health (including the reduction of health inequalities); and, 3. generate and disseminate health information and knowledge.

10 COM(2006)234, which updates a previous proposal dated 6 April 2005 for a Community Programme for Health and Consumer Protection for the 2007-2013 period. The update was made following the European Parliament’s first reading of the 2005 proposal (COM(2005)115) and in light of the final decision on the budget for 2007-13 made by the inter-institutional agreement on the Community financial framework in May 2006 (COM(2006)234 of 24/5/06). The resource constraints imposed by the budget are taken into account in the May 2006 programme proposal, as adopted on 23 October 2007. The revised budget for the PHP is approximately one third of the amount foreseen in the April 2005 proposal.


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Under the first objective, actions will be taken to protect citizens against health threats. This includes working to develop EU and Member State capacity to respond to threats. This objective will also cover actions such as those in the field of patient safety, injuries and accidents and community legislation on blood, tissues and cells and in relation to the International Health Regulation. Under the second objective, actions will be taken to foster healthy active ageing and to help bridge inequalities, with a particular emphasis on the newer Member States. These actions will incorporate actions to foster co-operation between health systems on cross-border issues such as patient mobility and health professionals. This objective will also cover action on health determinants such as nutrition, alcohol, tobacco and drug consumption, as well as the quality of social and physical environments. Actions taken under the third objective will be taken to exchange knowledge and best practice in areas where the Community can provide genuine added-value in bringing together expertise from different countries, for example, rare diseases and cross-border issues related to co-operation between health systems. It will provide for action on horizontal issues concerning gender health and children’s health. It will also cover key issues of common interest to all Member States such as mental health. Objective 3 will also allow for action to expand EU health monitoring and develop indicators and tools as well as ways of disseminating information to citizens in a user-friendly manner, such as through the health portal. Our analysis takes into account that under the new programme on average some €53.6-64.3 million will be available on an annual basis11, which represents roughly the budget available on average per year under the 2003-08 PHP. DG SANCO/C do not anticipate any major change from the previous programme in terms of the number of projects likely to be involved as the thematic strands and programme structure will remain largely the same. The current programme typically involves 50-60 projects per year, running for 3-4 years, resulting in an even larger number of concurrently running projects. Nonetheless, the Agency suggested that the projects have become more complex than in the past, both in technical content and in terms of the networks of partners involved (for example, the tendency has been for the programme to encourage participation from as many Member States as possible).

3.2. Review of PHEA operations to date

According to the 2002 CBA on the externalisation of the management of the Public Health Programme and the 2004 PHEA Delegation Act12, the aim of setting up PHEA has been twofold:

11 Average amount over the period from January 2008 to December 2013, assuming the new programme is implemented at some point from its entry into force on 1 January 2008 to the expiry of the current programme at 31 December 2008.

12 Commission Decision delegating powers to the Agency for the Public Health Programme, 15 December 2004 (not published).


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1. To improve the relations between the Public Health Programme and the communities of

health experts in the Member States. 2. To refine the expected results of the programme so as to enable the Commission to

concentrate on results when managing externalised tasks. The following sections assess how effective the Agency has been in fulfilling these aims. It is important to note from the outset that the Agency has in effect only been in operation since January 2006, i.e. for one round of calls. During this period DG SANCO remained the authorising body for budgetary payments, and the Agency’s full autonomy was achieved on 15 December, 2006. This makes it difficult to assess the Agency’s performance as it has only been operating in full since January 2007. To compound this problem, the period available for examination is also likely to have been influenced by the handover of responsibility and by the inevitable learning curve. Whilst these issues and constraints are discussed further where appropriate in the following sections, the Agency’s performance has been assessed mainly on the basis of our interviews with Agency and DG SANCO staff and the information available to date.

3.2.1. Establishment of the Agency

3.2.1.1. Transition phase

There was a transition phase between the creation of the PHEA and it being granted full autonomy. This was mainly due to the approach taken for the handover of duties and responsibilities from the relevant units of DG SANCO. In particular, the Delegation Act, as adopted and strictly applied by the Commission, foresaw a two-phase delegation of tasks to PHEA in 2005 and 2006. Furthermore, the fact that the selection process and secondment of the Director and Head of Scientific Unit took one year after the creation of the Executive Agency meant that recruitment of the other staff could only take place after January 2006. It is noted that this gradual process is not uncommon with the experience of other Executive Agencies13, and that it was consistent with the strategic road map14 agreed with the Agency’s Steering Committee.

13 For example, the Intelligent Energy Executive Agency (IEEA) became autonomous nearly two years after its creation.

14 The Delegation Act foresees an assessment by the Director General of the internal control systems and procedures, the accounting systems and the procedures in particular for contracts and grants before the Agency begins its tasks. To avoid undue delays before PHEA became operational for some tasks, a strategic road map was adopted by the steering committee which comprised 3 major milestones. In line with the Guidelines on the creation of Executive Agencies, the second milestone foresaw the autonomy for the execution of the Public Health Programme budget. This was requested by PHEA in due time (4 August, 2006), but delays induced by the necessity to perform the requested assessments did not make this possible.


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As outlined in the PHEA Delegation Act, the various areas of the PHP were to be delegated to the Agency in two phases. In 2005, the Agency would manage projects relating to strand 3 of the programme (health determinants, i.e. actions 3.1 to 3.6 of the Annex to Decision 1786/2002/EC) and some of those relating to strand 2 (actions 2.6 and 2.7 of the same Annex). As of 2006, the Agency would take over the management of all areas of the programme. PHEA was thus to take about half the workload in 2005 and all the workload in 2006. Older projects were not taken on by the Agency. This meant that the 2005 call was effectively implemented by DG SANCO. The Director and Head of Scientific Unit took up their PHEA posts from January 2006 and the 2006 call was managed by the Agency, although the preparatory work had been carried out by DG SANCO15. Full autonomy was only reached on 15 December, 2006 (i.e. to allow execution of the 2007 budget appropriations) with DG SANCO remaining as the authorising officer for budgetary matters until this point. This process was consistent with the strategic road map2 which comprised the following three major milestones as reported in the Director’s Annual Activity Report 2006:

• The set up of the necessary logistic, organisational and procedural structure to accompany the submission, the opening and the evaluation of the 2006 Public Health Call for Proposals;

• The implementation of the Internal Control System of the Agency, in particular the operational and financial procedures and financial validation circuits in compliance with the relevant Commission regulation; and,

• The establishment of the Agency’s budget and accounting (informatics) systems allowing the Agency to take over full responsibility for all delegated tasks.

The necessary operational procedures to effectively execute and co-ordinate the assessment phase of the 2006 call for proposals were put in place and a PHEA Handbook of Procedures was finalised in May, 2006. PHEA financial circuits were implemented, along with a number of Internal Control Standards which accompany and consolidate this process. These ensure that the relevant internal control procedures are in place and that they are both adequate and in compliance with the principle of sound financial management. Full achievement of horizontal objectives was attained with the appointment of an accountant and the preparation of the Agency accounting system. DG SANCO’s Internal Audit Capability assessed the achievement of the above milestones in June, October and November, 2006 and concluded that the Agency should be granted full autonomy from 15 December, 2006.

15 For example, the 2006 information day was handled jointly by DG SANCO and PHEA.


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While the delays in granting full autonomy to PHEA were therefore largely dictated by the complexity of the regulations and their strict application16, the delays in staffing the Agency at key positions appear to have been rather less anticipated. Recruitment of the remaining staff was inevitably delayed. Thus, staff were appointed and recruited over a period of 18 months from the theoretical establishment of the Agency on 1 January 2005; at the time of writing this process is still on-going (as detailed in the following section). In terms of infrastructure, IT and facilities, the Agency signed Service Level Agreements (SLAs) with the Medical Service of the Commission, the Pay Master Office (PMO) and the Translation Centre in 2006. Agreements with DG Administration, DG Budget and DG Informatics have yet to be signed. The IT system was expanded from existing processes/systems developed by DG SANCO and the 2006 call for proposals demonstrate its usability. The transition phase may have been made harder due to a lack of certain resources, which were not explicitly provided for in the ‘Financial Fiche’ setting up the Agency (such as IT staff, human resources manager, communication officer). It is noted that the establishment of all Executive Agencies has experienced to some extent from similar difficulties and the issues raised here in connection with PHEA are not unique. It is also noted that, overall, the staffing request made in the ‘Financial Fiche’ permitted nonetheless the Agency to function. The main costs associated with set up within the Agency were incurred in 2006 and accounted for the equivalent of 50% of total resources. These set up costs included, inter alia, the preparation of the PHEA Handbook of Procedures, implementation of financial circuits and establishment of internal control procedures mentioned above. Substantial effort was also made within DG SANCO in 2005 and, to a lesser extent, in 2006. Recruitment costs in this period were also significant and the Director’s Annual Report 2006 notes persistent difficulties in the recruitment of key staff, and in the secondment of some Commission personnel to the Agency, which caused significant delay and put at risk the achievement of the milestones set out above. Recruitment has been easier and less resource-intensive since January 2007 as all Executive Agencies now have access to the Commission’s EPSO list (a directory of standard expert profiles from which Commission Services can draw its list of potential recruits). However, the EPSO list may not help with some of the more specialised tasks required by the Agency.

16 It is noted that none of the other existing Executive Agencies were subject to such a detailed audit.


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3.2.1.2. Staffing

Following on from the recommendations of the original CBA on the externalisation of the Public Health Programme17, the ‘Financial Fiche’ for the setting up of PHEA18 estimated that a total of 37 members of staff would be necessary for the operation of the Agency. Of these, 9 would be temporary staff, of which 8 would be seconded from the Commission. The estimated annual staffing requirements are detailed in Table 3-2. As from 2009 and for a period of two years, the activity of the Agency is projected to be reduced (phased out), to be focused on finalising actions and managing residual operations relating to the 2003-08 PHP.

Table 3-2: Estimate of human resources required for PHEA (FTEs)

2005 2006 2007 2008 2009 (b) 2010 (b)

Temporary staff: seconded officials from the Commission (a)

8 8 8 8 6 3

Temporary staff: Agency 1 1 1 1 0 0

Contractual staff 16 28 28 28 20 12

Other external staff - - - - - -

Total human resources 25 37 37 37 26 15

(a) Represents ‘frozen’ positions at Commission level as a result of the transfer.

(b) The Agency is projected to continue activities for at least 2 years, until 2010, to finalise actions under the 2003-08 PHP. The phasing our rate is 70% of the staff of a full operational year in 2009, and 40% in 2010.

Source: European Commission, 2004 (PHEA ‘Financial Fiche’).

Furthermore, the ‘Financial Fiche’ foresaw that the 37 posts would be distributed as follows:

• 1 Director

• 1 Deputy Director

• 1 Accountant

• 8 Financial Managers

• 18 Technical Managers

• 8 secretaries.

As outlined in the PHEA ‘Delegation Act’ and discussed above, the PHEA was to take about half the workload associated with implementing the PHP in 2005 and all the workload in 2006. The gradual approach for the take-over of the PHP management guided PHEA’s recruitment needs and process.

17 The study considered that the management as such of the programme would require 76 people in SANCO/C and 30 people in the Executive Agency. It therefore recommended an executive agency with approximately 34 staff, 30 for the management of the programme and 4 for administrative management.

18 Legislative financial statement for the setting up or extension of the lifetime of an Executive Agency: Executive Agency for the Public Health Programme. Version of 9/9/04 (original in French).


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The intention has been not to have staff who are not fully utilised at any moment in time. Whilst this progressive approach was foreseen in the ‘Financial Fiche’, this did not anticipate that the first secondments would only take place in January, 2006 and as a result foresaw that the Agency would be fully staffed by end of 2006 (Table 3-2).

Whilst the Agency was established on 1 January 2005, the two most important head positions, the Director and the Head of Scientific Unit were only formally filled on 1 January 200619. Following this, there was a progressive start-up with staff recruitment. By May 2006 a critical core group of staff was in place, thus enabling the Agency to take on board the tasks related to the evaluation of the 2006 call for proposals (the preparatory work for this was undertaken by DG SANCO, and the 2006 information day was handled jointly with DG SANCO). The delays in the recruitment process resulted from, firstly, the appointment of the Director from 1 January, 2006. Clearly no other appointments could be made before this date. There were also difficulties in identifying officials willing to be seconded to an Executive Agency, the adoption by the Commission of new guidelines on Executive Agencies which created more stringent conditions for the secondment of officials. Finally, salary levels offered to contract agents are, for comparable experience, lower than those offered in the Commission. On 31 December 2006, the Agency comprised 25 staff members, of which 7 were seconded officials, 1 a temporary agent and 17 contract agents20. By February 2007, the total staff of PHEA had reached 32 members21. PHEA was planning to have the full forecast number of staff (37 people) by the end of 2007. The current PHEA organisation chart (situation as at 1 May 2007) is attached in Appendix 3. The PHEA has a Director and is composed of a scientific unit and an administrative sector22. As the situation currently stands, the total current staff is composed of:

• 5 ADs (of which 4 only have so far been appointed), namely:

• the Director (seconded);

• the Head of the Scientific Unit (seconded);

• the Head of the Administrative Sector (appointed from August 1, 2007 after several publications of the post and a selection process lasting more than a year);

19 Date on which they took up their duties, appointment was a few months earlier. The Director was appointed by Commission Decision of 15 December 2005.

20 Annual Activity Report 2006 of the PHEA, 27 March 2007.

21 Source: report to Steering Committee of 20 March 2007.

22 The administrative sector is not a Unit as such, as there are no resources to have a Head of Unit. Heads of Unit must be at least AD9. The current rules allow for only two posts higher than AD8 (namely the Director and the Head of the Scientific Unit).


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• the Accountant (temporary agent, not seconded23);

• the Internal Controller (seconded); and,

• 4 ASTs, namely:

• the head of the financial cell (seconded);

• a programme coordinator (seconded);

• a financial manager (seconded);

• and a human resources person (seconded); and,

• The rest of the staff are contract agents.

As noted above, according to the ‘Financial Fiche’, there is a provision for 9 temporary agents, 8 of whom would be Commission officials (seconded). The latest rules on this are laid down in specific guidelines on creating and managing Executive Agencies, which were adopted by the Commission at the end of May 200624. Within the definition of ‘temporary agent’ there is a range of status which has implications for conditions of return to the Commission services at the end of the secondment period25. These guidelines stipulate that one third of temporary agents should be Commission officials seconded ‘in the interests of the service’, with a minimum number of 6 officials in small agencies (such as PHEA). The idea is to have a core team with the Commission background and experience to manage a team of staff employed from outside the institutions. Beyond career progression as such, there are no further implications in terms of remuneration between the different types of temporary agents (employed at the same grade). The actual structure of PHEA today is therefore in line with the original provisions of the ‘Financial Fiche’.

23 The accountant is not a Commission official. Although the secondment of the accounting officer was initially stipulated by the standard financial regulations of EAs (Commission Regulation 1653/2004), several EAs had difficulties finding suitable staff and this provision was amended in 2005 to allow the recruitment of an accountant from outside the Commission services (Commission Regulation 1821/2005). This contributed to delays in the recruitment of an accounting officer in PHEA. The Agency’s accountant was appointed by the Steering Committee in September 2006.

24 The temporary staff employed by the Executive Agency are temporary staff within the meaning of Article 2(a) of the CEOS (Conditions of Employment of Other Servants of the Communities) and may be either seconded officials or hired directly from outside the Commission. A distinction is made between positions of responsibility, which are given first to Community officials seconded by the institutions, and other posts, which are filled by temporary staff hired directly by the Executive Agency. Positions of responsibility are posts which have proved to meet at least one of the two following criteria: a) management functions; and, b) posts of commitment, including the negotiation and conclusion of scientific contracts. These positions of responsibility are usually filled by officials seconded ‘in the interests of the service’ within the meaning of Articles 37(a) and 38 of the Staff Regulations. If a position of responsibility cannot be filled by such an official, it will be filled by appointing a temporary member of staff. In any case, these responsibilities cannot be entrusted to contract staff.

25 Staff seconded ‘in the interests of the service’, as opposed to voluntary secondment (‘seconded on request’), can keep their post and continue their career progression in the Commission during the period of their secondment.


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In terms of the contract agents26, the Agency has flexibility to vary the initial estimates of the ‘Financial Fiche’, as long as it stays within the global budget. Thus, the number of scientific officers was decreased and the number of posts in key positions such as IT, human resources manager, Internal Audit Capability and communications officer were increased in order to ensure adequate functioning of the Agency.

3.2.2. Assessment on Agency performance

3.2.2.1. Effectiveness, efficiency and quality

There are few objective, quantitative ways in which to assess the effectiveness of the Agency in managing the programme implementation tasks. These indicators, as identified and substantiated during the analysis, are presented below.

1. Time to contract:

One approach we considered pursuing was to benchmark the Agency’s performance in terms of time to contract with other Commission services. However, DG Budget explained that the information required to do this was not available within the Commission, while issues of comparability can also be raised because the various EU programmes tend to be very different in content and implementation. It was therefore decided to simply consider time to contract under the Agency in comparison to time to contract under DG SANCO. It is noted that, although there are fewer issues of comparability in this case, the number of contracts to be signed and the staff resources available (both financial and scientific) have an impact on time to contract and these vary from year to year. The 2006 call was the first to be implemented by the Agency and under this call contracts may be signed up until 31 December, 2007. In the comparison that follows, it is assumed that 86 contracts will be signed from the 2006 call (based on the budget available). The actual date of signature has been used where possible and for contracts which are unsigned at the time of writing the worst case scenario has been assumed, i.e. signature on the last possible date, 31 December, 200727. With these caveats in mind, Table 3-3 presents data for the 2004, 2005 (both DG SANCO) and 2006 (PHEA) calls.

26 Contract staff are employed by the Executive Agency within the meaning of Article 3(a).1b of the CEOS (Conditions of Employment of Other Servants of the Communities).

27 It was pointed out by PHEA that previous experience suggests that the last projects are usually the most complex to finalise.


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Table 3-3: Time to contract under the Public Health Programme (2004-2006)

Calls for proposals Number of contracts signed Time to contract (days)

2004 72 354

2005 61 375

2006 86 274

Source: Data supplied by PHEA.

This comparison clearly shows an improvement under the Agency. However, it should be noted that caution should be exercised when basing conclusions on one year of data, especially where assumptions have been made. It should also be noted that performance is likely to vary from year to year (as seen between 2004 and 2005).

Interviews with Agency staff suggested that it is becoming recognised that PHEA can offer a high level of expertise. This is partly because the Agency is able to implement an appropriate recruitment policy leading to a high level of technical and financial expertise in line with expectation in the Decision setting up the Agency28. DG SANCO/C staff reported confidence in the operation of the Agency and note that performance is improving daily now that the second call cycle is underway and the experience of the first call cycle can be utilised. Other measures of effectiveness put forward by PHEA include the following:

2. Information days: in 2006 an information day was held in Luxembourg and was attended

by 300 people. In 2007, an additional five information days were held in various different Member States and the total number of attendees doubled as a result. This has clearly expanded dissemination of the PHP.

3. Establishment of National Focal Points (NFPs): NFPs were established by PHEA in various Member States. The objective of these is to facilitate the exchange of project ideas, information and best practice in order to improve project bids (these also contribute to strengthening the connections between the PHP and experts in Member States). The intention is to increase the number of multi-national projects and to facilitate bids from the new Member States (and from institutes) who are currently under-represented.

4. Number of negotiation meetings prior to contract signature: 50% of approved projects were negotiated prior to contract signature under DG SANCO and this has been increased to 80% under PHEA (the remainder being signed without prior negotiation meetings). PHEA staff believe that direct contact with the beneficiaries allows a better understanding of the technical issues surrounding the contracts and generally improves communication. It also allows policy considerations to be passed from the Agency to

28 Commission Decision of 15 December 2004 setting up an executive agency, the “Executive Agency for the Public Health Programme”, for the management of Community action in the field of public health – pursuant to Council regulation (EC) No 58/2003 (2004/858/EC).


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beneficiaries. Generally negotiations are thought to improve overall project management and to increase the transparency and accountability of the process to stakeholders.

An important indicator of the Agency’s performance to date would be beneficiary satisfaction. However, following extensive consideration, it has not been possible to carry out a survey of beneficiaries, given the relatively short period in which the Agency has been in full operation. This is partly because beneficiaries may find it difficult to distinguish between DG SANCO/C as the previous programme managers and the PHEA as the current programme managers at this point in time. For example, the Information Day for the 2006 call was carried out jointly by PHEA/DG SANCO whereas the 2007 Information Day was carried out solely by PHEA.

Beyond the assessment of the above indicators, a series of important more qualitative conclusions can be made in terms of the Agency’s effectiveness. The specialisation of tasks within the Agency has had a beneficial impact on programme implementation. DG SANCO officials reported that when project implementation was the responsibility of DG SANCO, there were insufficient resources to follow projects more than the absolute minimum required (see the comment above on closer management of the programme). This is no longer the case and staff within the Agency are able to follow projects more closely which is likely to improve project performance (it was considered too early to assess whether this benefit has actually been realised). Furthermore, senior officials within DG SANCO/C noted that resource constraints had prevented DG SANCO from taking some of the steps since taken by the Agency to improve programme delivery. The implication is that the Agency should be able to more effectively (and efficiently) implement the programme than was possible under DG SANCO. Efficiency is further enhanced by the simple organisational structure of the Agency which comprises short and direct communication lines. Finally, the Agency prioritised training activities geared towards efficiency and effectiveness in 2006, although it was recognised in the Director’s 2006 Annual Report that further efforts needed to be made in improving the operational effectiveness of some of the internal control standards (the weaknesses identified did not significantly affect sound operational management). On the other hand, the most significant concern, which was raised mainly by DG SANCO/C, related to communication with the outside world and the delineation of responsibilities between the Agency and DG SANCO. DG SANCO/C officials commented that some outside partners view the Agency as an extra layer between them and the Commission and that as a result it is important to make clear exactly what the role of the Agency is and what role DG SANCO performs. It was nonetheless felt that this was normal when there are structural changes and that, whilst this apparent confusion is a (temporary) nuisance, it is not a critique of the Agency. The Agency agrees that joint efforts with DG SANCO may be necessary to clarify respective roles and responsibilities.


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3.2.2.2. Working arrangements with DG SANCO

Communication with DG SANCO/C was intensive during the setting up period and involved a large number of face-to-face meetings, which were facilitated by the location of PHEA and DG SANCO/C in the same building. Close physical location was considered an important factor by both organisations in the efficiency of the setting up process. Now that this establishment phase has been completed it is no longer considered important to share premises because communications channels have been clearly defined and contacts between relevant officials have been established (the Agency will move to new premises in Luxembourg during the course of 2008).

The relationship between PHEA staff and DG SANCO/C staff is constantly improving, as the integration of the Agency with SANCO is largely considered to be progressing daily. Initially some staff within DG SANCO/C felt disempowered to some extent by the handing over of responsibilities for fear of losing contact with stakeholders, beneficiaries and projects, and there was some concern that external staff (i.e. contractual agents) would not be able to manage the programme satisfactorily. Such difficulties and concerns are likely to be normal when responsibilities are handed over. By and large, the view of both PHEA staff and DG SANCO/C staff is that, two years after the establishment of the Agency and one year after the Agency took over full responsibility for calls, this period is now at, or coming to, an end. The length of this transition phase may therefore be considered to be normal given the gradual handover of responsibilities. Transition has been helped by a series of meetings between the organisations to build trust. The gradual transfer of responsibilities may have exacerbated these issues and prolonged the period over which any resentments might have been felt. On the other hand, an advantage of a slower transition is that it allows mutual understanding and trust to be built up through more extensive contacts between the competent Commission services and the Agency.

3.2.2.3. Impact on DG SANCO

According to senior DG SANCO/C staff, the impact of the Agency on DG SANCO has been beneficial in that managing the call for proposals and the subsequent projects produces a significant administrative burden and this is no longer something DG SANCO staff have to deal with. The time spent previously on administrative tasks is now spent on policy tasks, which was the key rationale for setting up the Agency according to the legal basis29. This outsourcing of administrative functions has therefore allowed a greater policy focus. It is clear that there has been greater involvement with stakeholders, other Commission services and international organisations which has been beneficial in

29 Commission Decision of 15 December 2004 setting up an executive agency, the “Executive Agency for the Public Health Programme”, for the management of Community action in the field of public health – pursuant to Council regulation (EC) No 58/2003 (2004/858/EC).


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terms of policy formation. This has been especially useful in the context of the Commission’s constrained resources, where there is no real possibility for expansion. There is also a better match between the skill set of DG SANCO staff and the tasks they have to carry out. The outsourcing of administrative functions has allowed DG SANCO staff to build up the specialist skills for which they have been trained and recruited in the Commission services. According to DG SANCO officials, it had proved relatively inefficient to have technical staff dealing with contractual and financial matters for which they were not trained and releasing them from these duties has been beneficial. This point was also made in the ‘Financial Fiche’ where it is explained that this situation arose in 1999 following the closure of a technical assistance office which had employed 45 people which was not compensated for with additional resources. Between 1999 and the establishment of the Agency a lack of human resources within DG SANCO is considered to have led to insufficient use being made of the results of the projects carried out under the PHP.

On the other hand, there are also some perceived disadvantages, although it appears that these are, or can be, mitigated against. The main disadvantage is that having project management within DG SANCO facilitated their feedback into the policy cycle (this can also be referred to as “knowledge management”). That said, the point was also made that reporting steps have been put in place and the risk of project feedback being lost to policy formulation has therefore been minimised. Another point of view expressed on this issue is that over familiarity with a small number of projects might actually be detrimental to policy formation in that too much weight might be attached to the projects with which the policy officer is familiar. DG SANCO staff are also required to have oversight of the Agency’s operation and this requires resource commitment in terms of ensuring that communication channels are set up appropriately. This is necessary to ensure that the policy direction is adequately communicated to those implementing the programme. The time commitment required for oversight is certainly less than was required for contract administration and DG SANCO officials are clear that there has been a net gain in staff time which can be devoted to policy issues. The Agency receives copies of weekly reports from DG SANCO and staff are also copied in to relevant e-mail exchanges and are provided with necessary documentation. These low-cost measures (supplemented by meetings when necessary) ensure that the link between programme implementation and policy is maintained. In the view of DG SANCO officials, the costs of this information sharing are very minor compared to the savings made from not having to carry out the contract administration.

3.2.2.4. Overall conclusion

For the reasons given above concerning the timing of the establishment of the Agency and the decision to opt for a gradual establishment it has been difficult to provide a robust conclusion on the performance of PHEA to date. However, early indications drawn from interviews with Agency and DG SANCO/C staff, and supplemented by available indicators of performance, suggest that the


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Agency has had a beneficial impact on programme implementation, mainly as a result of its specialised function. This in turn has had a positive impact on the activities of DG SANCO/C by releasing staff from contract administration to concentrate and specialise further on policy issues. Time to contract appears to have been reduced and relations between the PHP and the communities of health experts in the Member States (a stated aim in setting up PHEA) have been enhanced through the holding of information days outside Luxembourg, thus attracting twice the number of attendees compared to the previous year. National Focal Points have been established which also contribute to achieving this aim. A higher proportion of contracts are now negotiated prior to signing which should improve overall project management and increase the transparency and accountability of the process to stakeholders. Finally, the perception within PHEA is that time to payment has been reduced, given the more straightforward processing of payments within the Agency as compared to within DG SANCO.

3.2.3. Lessons learned

It is possible to identify two sets of lessons learned from the period of operation of PHEA to date. The first concern the operation of PHEA itself (many of which are in the process of being addressed in any case) and the second may apply to the establishment of Executive Agencies more generally

3.2.3.1. Lessons for PHEA and DG SANCO

None of the issues raised are considered to compromise the successful operation of PHEA and all can be mitigated at relatively low cost and effort. The most notable risk factor in the operation of PHEA appears to relate to the dissemination of policy direction into project selection and feedback from project results into policy formulation. There are processes in place to ensure that communication is adequate, but there are some points worth bearing in mind. First, in relation to policy direction in project selection, it was felt that the lack of an apparently formal role for DG SANCO in project selection might pose a risk that important policy direction is not adequately communicated to PHEA. The current informal relationship appears to be sufficient, but this should be reviewed periodically and appropriate steps taken should problems arise. Second, in relation to the risk of project feedback being lost to policy formulation, the steps taken to mitigate this should be reviewed periodically to ensure that they remain sufficient. The extent to which there is a lack of clarity amongst beneficiaries in terms of the role and remit of the Agency and DG SANCO should be investigated30. If necessary, steps should be taken to clarify the situation.

30 This could be done for example in the context of the forthcoming interim evaluation of the Agency.


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3.2.3.2. Lessons with wider application

The main lesson to be learned with possible relevance to the setting up of other Executive Agencies relates to the delays between PHEA’s creation and it being granted full autonomy. As discussed in section 3.2.1.1, this was mainly due to the approach taken for the handover of duties and responsibilities from the relevant units of DG SANCO. Whilst this approach was obviously taken with the best of intentions (for example, to allow procedures to be properly enforced, and contacts and trust to be built up), in practice it created some problems. The main problem in terms of day to day operation is that it prolonged the period over which responsibilities were transferred, thus exacerbating the perception of disempowerment that might have been felt by some DG SANCO/C staff. The transition phase is always likely to be difficult and the shorter this is the better.

Other issues arising which might have resonance for other Executive Agencies are rather similar to those raised in other cost-benefit analyses, notably the one on the extension of the EACEA31. It should be noted that the timing of this CBA (November 2006) gave no opportunity for these lessons to be applied in respect of the establishment of PHEA. There were problems in recruiting on secondment from the Commission, particularly in relation to the accountant, and ultimately the Regulation stipulating that the accountant must be seconded was amended. The reasons for this difficulty are likely to be similar to those set out in the EAC CBA, namely the uncertainty of the implications of taking on such a secondment. The impact of changes in the staff regulation and early problems with the dual career structure (also mentioned in the EAC CBA) are also likely to have been factors. Of course, the location of PHEA in Luxembourg would not help in this regard given that people have non-work considerations as well as professional ones. Whilst Commission staff have been able to focus more on policy issues since the establishment of the PHEA, there has been a requirement for oversight of the Agency. The net impact has been positive, but the requirements for oversight must not be ignored ex-ante. It was pointed out in some of our interviews that the creation of Executive Agencies is often seen as a starting point when in fact it is really a change in delivery mechanism. There is therefore a risk that policy implementation can be disjointed and that some of the history of programme implementation can be lost. This can, for example, result in the funding of projects with aspects similar to previous projects. This can be mitigated against through the secondment of officials from the Commission as long as they bring with them previous experience of the programme. Without this experience, other methods may be needed to ensure the continuation of policy delivery. Finally, it should be recalled that the financial fiche did not consider set up costs or the cost of certain overheads and in this context considerable efforts were made by DG SANCO staff in 2005

31 Technopolis report entitled Cost-benefit analysis concerning the extension of the Education, Audiovisual and Culture Executive Agency for the years 2009-2015. November 2006.


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and Agency staff in 2006 to ensure that the Agency was in a position to implement the PHP (in addition to normal tasks in relation to actually managing contracts). This should be avoided in future.

3.3. Options for the delivery of the Public Health Programme

There are only two options here: extend the current mandate beyond 2010; or, reassign the implementation of public health policy to DG SANCO.

3.3.1. Closure of PHEA and full return of PHP responsibilities to DG SANCO

The baseline status quo (or do nothing) alternative in this case would mean winding down the PHEA by December 31, 2010, when the Agency’s current mandate expires.

It is important to note from the outset that, according to the Commission’s guidelines for the establishment and operation of executive agencies 32, it is logical to entrust the implementation of a renewed programme to the agency currently responsible for its execution, as long as the agency has operated satisfactorily and has implemented the previous programme properly. Subject to the results of a proper evaluation of the Agency33, this has been concluded to be the case here and the presumption is therefore for continuation. Re-internalising programme implementation at this point would therefore not seem to be a realistic option34. This option requires consideration of two cost elements:

1. The costs of winding-down PHEA; and, 2. The transfer of current responsibilities back to DG SANCO post-2010.

Both cost elements include implications for current PHEA staff and implications for staffing requirements within DG SANCO. For the wind-down costs of PHEA it is important to consider the Agency’s wind-up costs in the first place. The costs of winding up the PHEA are difficult to quantify as such but are considered to be significant. A number of Commission staff as well as PHEA staff devoted a substantial part of their FTE year in setting up the Agency prior to 2005 and/or during the transition phase (2005-06), as discussed above.

32 Guidelines for the establishment and operation of executive agencies financed by the general budget of the European Communities, SEC(2006) 663 final.

33 Due to take place in 2008.

34 This is not to say that there would be no potential advantages. For example, some DG SANCO officials noted that an advantage of re-internalisation would be the joining up of programme implementation with the development of policy, although others noted that policy formulation can be adversely affected where there is over-familiarity with a small number of projects.


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Leaving aside the costs of winding up the PHEA, the cost of closing down PHEA as such would be marginal. The major cost element to consider is salaries, and closing down the PHEA is not expected to have any major cost implications in this regard. Seconded staff would return to the parent DG, with salaries at the same level, i.e. whether staff are on the PHEA or DG SANCO payroll. Temporary agents and contract agents would have only limited rights to compensation as their employment conditions are linked to the lifetime of the Agency35. In addition to the staffing issue, the loss of the advantages brought about through outsourcing programme implementation in the first place should also be considered (see Section 3.2). The original rationale for the setting up of the Agency recognised the fact that the requirement to carry out contract administration was hampering policy-related work within DG SANCO. Also, the Council and European Parliament stressed the need to strengthen significantly the technical and financial expertise for managing the 2003-08 PHP during its negotiation; it can be assumed that similar expertise will be required for the 2008-13 PHP.

3.3.2. Extension of current PHEA mandate beyond 2010

This alternative would mean extending the current operating remit of PHEA until 2015, i.e. when the implementation of the proposed new public health programme for the 2008-13 period is expected to be completed. The main advantage of such an extension is that it would utilise the expertise gathered together within the Agency and also the experience that has been built up under the 2003-08 PHP. Further, the rationale set out for the establishment of the Agency still holds and our assessment of performance to date confirms that ex-ante expectations in terms of benefits both to programme implementation and within DG SANCO have been met. Not extending the remit of the Agency would also cause a degree of confusion amongst beneficiaries. Finally, the disadvantages set out above in respect of re-internalisation can be seen as arguments in favour of continuation.

3.4. Comparison of options

3.4.1. Staff requirements

As already indicated, staff requirements and their cost implications are the main cost element to consider when comparing between the two options, i.e. closure of PHEA and re-internalisation of PHP implementation in DG SANCO/C as opposed to an extension of PHEA mandate.

35 As stipulated in the Commission’s guidelines of May 2006.


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A priori, in the case of re-internalisation of the programme’s implementation to DG SANCO, the additional staff requirements would need to be broadly similar to the staff resource currently employed by the Agency. Although the required number of staff may be assumed to be the same, the structure of the staff (in terms of Commission staff versus contract agents, and in terms of staff grades) is expected to be very different. As pointed out by the Commission’s horizontal services (DG ADMIN, DG BUDGET) as well as previous CBAs36, the Commission tends to recruit a minimum number of contract agents because their employment is limited to a three-year period. This has significant implications in terms of retaining knowledge as staff turnover would be high, while recruitment and training costs would also be significant. These issues would mean that staff would have to be Commission personnel and therefore more expensive. Thus, DG Budget and DG ADMIN recommend that re-internalisation scenarios are carried out assuming the extensive use of Commission staff in line with current trends. The current staff structure of Directorate C is indicated in Table 3-4 below.

Table 3-4: Staff structure, SANCO/C (Public Health)

Officials Contract staff TOTAL (a)

AD AST C 4 6 1

C1 3 4 7

C2 5 3 2

C3 9 7 2

C4 12 5 1

C5 9 7 2

C6 11 6 1

C7 6 7 1

Total 59 45 17 138

(a) Including national experts and temporary staff – excluding those, the total number of staff is 121.

Source: DG SANCO

On the other hand, externalisation scenarios assume a higher reliance on contractual agents. As specified in the Commission’s guidelines of May 2006 and the CEOS, an Agency could have a maximum three quarters of contractual agents with the remaining one quarter being temporary agents. Of the latter, a maximum one third would be seconded Commission officials and two thirds temporary agents externally recruited. Beyond these assumptions, it is assumed under both scenarios that the new PHP will be broadly similar to the current PHP, in terms of budget, technical content and number of contracts. These 36 E.g. EACEA CBA, Technopolis, November, 2006.


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assumptions are based on the evidence and information collected during our interviews with DG SANCO and PHEA. As outlined in section 3.1.2, a condition for these assumptions to hold is naturally that the budget indicated in the current Commission proposals is approved and becomes available. Furthermore, it is assumed that in the option where the PHEA mandate is extended, the distribution of activities and tasks between the Agency and DG SANCO/C will continue to be as currently (i.e. as envisaged when the PHP was first externalised). The period 2011-2013 refers to the period when full capacity will be needed to manage the new programme. In accordance with the previous CBAs and experience, a two-year phase out period is assumed for the winding down of the Agency, i.e. 2014-15. The phasing out rate is 70% of the staff of a full operational year in 2014, and 40% in 2015.

3.4.2. Financial costs

The results of the cost benefit analysis relating to the closure or extension of PHEA in time are set out in Table 3-5. The cost (expressed in Net Present Value - NPV) of closing down the Agency and re-internalising the delivery of the PHP for the 2008-13 period (including a two year period to close down projects) amounts to some €42.4 million. In contrast, the cost of extending the mandate of the Agency to cover this period will cost €23.4 million. Most of the difference between these two figures results from the additional staff cost that would be incurred within DG SANCO if delivery were to be re-internalised. These scenarios, as well as the assumptions used in their construction, are explored further in Appendix 1. The full costings for option 3.3.1 (closure of PHEA) are presented in Table B-1, while those for option 3.3.2 (extension of PHEA in time) are presented in Table B-2 (Appendix 1.B)

Table 3-5: Financial results: extension of PHEA’s mandate in time compared to closure

Net Present Value (2008-15)

Closure of PHEA (current staff mix) €42,432,489

Closure of PHEA (new staff mix) €35,088,628

Extension of PHEA in time €23,351,012

Notes:

• Assumes new PHP starts in 2008

• Average staff costs within the Commission and the Agency are used.

• Service Level Agreements are not included.

• The discount rate is 2.5%.

• The inflation rate is 2.0%.

Source: for full results see Appendix 1.B, Table B-1, Table B-2 and Table B-7.


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A key assumption in the above calculations on the closure of PHEA is the staff mix for the re-internalisation of the PHP activities in DG SANCO. In particular, it is assumed that the staff mix in DG SANCO/C would follow the current pattern which heavily draws on Commission staff, notably grade AD (nearly half of the current staff mix in DG SANCO/C is that grade) and grade AST (which accounts for 37% of the total staff), with contract agents only accounting for the remaining 14%. If the new staff requirement from the PHP re-internalisation was to be fulfilled with a higher percentage of contract agents than is the current practice (this ‘new’ staff mix is presented in more detail in Appendix 1.A), then the difference in costs between the two options would narrow down due to the lower cost of contract agents. The cost of the closure scenario would then come down to €35.1 million.

3.4.3. Qualitative factors

The qualitative advantages and disadvantages pertaining to each option have been outlined in detail in the relevant chapter examining each option. The main points in favour and against are restated below. Closure of PHEA as planned in 2010

Advantages: • Ease of communication between policy/programme formulation and policy

implementation units

• More direct control of programmes Disadvantages: • Could exacerbate current DG SANCO staff constraints

• Loss of ability for DG SANCO staff to focus on policy

• Loss of experience gained within the Agency

• Loss of dedicated staff expertise within the Agency

• Disruption to current implementation of policy

• Potential confusion amongst beneficiaries

• Decrease in contract management/programme implementation efficiency

Extension of PHEA

Advantages: • Continuity of programme delivery is assured

• Clarity of procedure and an established service to beneficiaries

• Allows DG SANCO staff to remain focused on policy development

• Offers the ability to improve Agency performance based on experience gained to date

Disadvantages: • Maintains some distance between policy development and implementation (although it was felt that with time this becomes less of a disadvantage)


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3.5. Conclusions and recommendations

Based on the results of the cost benefit analysis it is recommended that the mandate for the Agency be extended to 2015 in order to implement the 2008-13 Public Health Programme. The qualitative factors associated with an extension to the mandate add further argument in favour of this option.


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4. Broadening PHEA’s mandate to include consumer policy and/or food safety training

4.1. The consumer policy programme

The programme of Community action in the field of consumer policy for 2007-1337 was adopted by the European Parliament and the Council on 18 December 2006. This provides a global financial envelope of some €156.8 million over the seven year period. The new programme builds and expands on previous actions in the area of consumer policy which were undertaken between 2004 and 200738. The budget available on average per year under the new programme (€22.4 million) is slightly increased from that available under the previous one (€20.45 million)39. In practice, the budget available each year can vary significantly from that theoretical average depending on the annual work programme and the decision of the budgetary authority, within the limits set by the global financial envelope for the period. The programme aims to complement, support and monitor the policies of the Member States and to protect consumer interests including by promoting their rights to information, education and more effective organisation. In this context, the programme sets out two objectives:

1. to ensure a high level of consumer protection, through improved evidence, consultation and

representation; and, 2. to ensure the effective application of consumer protection rules, through enforcement co-

operation, information, education and redress.

A combination of eleven actions, with a number of instruments under each, are envisaged under the programme. These objectives and the priority areas for the entire period are also laid down in the latest EU consumer policy strategy40.

37 Decision 1926/2006/EC of the European Parliament and of the Council of 18 December 2006.

38 Decision 20/2004/EC of the European Parliament and of the Council of 8 December 2003.

39 The budget set by Decision 20/2004/EC was increased following the accession of the 10 new Member States in 2004. Decision 20/2004/EC set a total budget of €72 million for the EU-15 Member States for the four year period (2004-07), of which €54 million covers the period up to 31 December 2006. Following the accession of the new Member States, Decision 786/2004/EC (of the European Parliament and of the Council of 21 April 2004) set a total budget of €81.8 million, of which €60.6 million for the period until 31 December 2006. Both the Council and the Parliament had insisted on the need to make the budget allocation for 2007 provisional and subject to the Financial Perspectives post-2006.

40 A joint strategy for health and consumer policy for 2007-13 was first adopted by the Commission in April 2005. In order to respond to a demand from stakeholders, the Council and the European Parliament the strategy was developed further, as presented on 13 March 2007 in COM(2007) 99 final.


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Each year, a work plan details the actions to be pursued in accordance with the priorities for the year and a budgetary allocation is made within the overall financial envelope. The latest work programme for 2007 sets a total budget allocation for 2007 for the EU27 at €17.1 million (Table 4-1).

Table 4-1: Consumer action programme: annual budget breakdown (in € million)

Actions under the 2007-13 programme (Decision 1926/2006) 2007

Total budget (a), of which: €17.1

Expenditure on administrative management (b) €0.9

Community activities in favour of consumers, as follows (c): €16.2

Objective 1: ensure a high level of consumer protection, of which: €8.1

Improved evidence base (d) €4.5

Contributions to the functioning of European consumer organisations (e) €2.6

Training for staff of consumer organisations (f) €0.6

Objective 2: ensure effective application of consumer protection rules, of which: €8.2

Contributions to joint actions and the European Consumer Centres (g) €2.2

Information and Education (h) €6.0 (a) Excludes additional contributions for EFTA/EEA countries (± €400,000 per year). (b) Budget line 17 01 04 03. (c) Budget line 17 02 02. All amounts are indicative estimates according to the annual work programme. (d) Includes studies, Euro-barometer surveys and focus groups. Under actions 1, 2 and 4 of Decision 1926/2006. (e) Under actions 5 and 6 of Decision 1926/2006. (f) Under action 7 of Decision 1926/2006. (g) No further budget breakdown is available in the WP. Under actions 8 and 9 of Decision 1926/2006. (h) Includes information campaigns, the ‘Europa Diary’ and consumer education tools. No further budget breakdown

is available in the WP. Under actions 10 and 11 of Decision 1926/2006.

Actions under the 2004-07 programme (Decision 20/2004) 2006 (d) 2005 2004

Total budget (a), of which: €20.2 €20.2 €20.2

Expenditure on administrative management (b) €1.0 €1.1 €1.1

Community activities in favour of consumers, as follows (c):

€19.2 €19.1 €19.1

Objective 1: a high common level of consumer protection, of which:

€1.2 €4.3 (d) €3.5

Development of a knowledge-based policy €1.0 €3.7 (d) €1.8

Objective 2: effective enforcement of consumer protection rules, of which:

€9.5 €5.6 €6.6

European Consumer Centres network €8.6 €3.9 €5.8

Contributions to joint actions €0.8 €0.6 €0.8

Objective 3: involvement of consumer organisations in EU policies, of which:

€7.9 €6.5 €7.2

Information campaigns €2.0 €1.6 €2.0 (f)

Education and capacity building €3.3 €2.2 €2.4


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2006 (d) 2005 2004

Contributions to the functioning of European consumer organisations

€2.6 €2.6 €2.5

Horizontal matters (e) €1.0 €3.0 €2.3 (g) (a) Excludes additional contributions for EFTA/EEA countries (± €400,000 per year), and/or contributions for

Romania and Bulgaria. (b) Budget line 17 01 04 03. (c) Budget line 17 02 01. All amounts are indicative estimates according to the annual work programme, as amended

during the year. (d) In 2005, the “development of a knowledge-based policy” was a separate action outside ‘Objective 1’. To ease

presentation, is has been included here in the total Objective 1 budget for that year. (e) Includes evaluations and financial contributions for specific projects at Community or national level. (f) Almost entirely earmarked for information campaigns. In 2004, the information campaigns (which in 2005 and

2006 appeared under the heading Objective 3) were included under the total budget for ‘Horizontal Matters’. (g) In 2004, the financial contributions for specific projects (which in 2005 and 2006 appeared under the heading

‘Horizontal Matters’) was included under the total budget for Objective 3.

Source: DG SANCO/B, Consumer Policy Annual Work Plans.

In the context of the present CBA, seven distinct areas of action under the current consumer policy programme were identified as possible candidates for outsourcing. These actions involve the launch of calls for proposals (leading to the approval of grants, with some co-financing by Member States)41, and/or calls for tenders (leading to contracts; in this case the Community financing is 100%)42; in some cases they involve calls for tender within existing framework contracts. Details of each action are as follows:

I. Improved evidence basis

The type of activities that allow DG SANCO to develop its evidence base of statistics and other qualitative and quantitative data relating to consumers and their concerns include studies, data collection, Eurobarometer surveys and the use of focus groups. These activities are contracted out to independent experts via open calls for tender, with the exception of the Eurobarometer and focus groups which are restricted tenders through existing framework contractors.

41 Grants are direct financial contributions, by way of donation, from the budget in order to finance either an action intended to achieve an objective forming part of a European Union policy, or the functioning of a body which has an objective forming part of a European Union policy. In the field of consumer policy, grants are inter alia delivered for Financial Support to European Consumer Organisations and Member States for joint surveillance and enforcement actions.

42 Service, supply or work contracts are normally awarded by open tender procedure or restricted procedure (addressed to firms that have qualified under the selection criteria of a Call for Expression of Interest). The contractor is chosen at the end of a specific selection and award procedure. The main purposes for the publication of a tender are: (1) to ensure openness and transparency of operations as well as non-discrimination placing all tenderers on an equal footing; (2) to obtain the best value for money.


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The importance of such activities can vary substantially from year to year, as indicated in Table 4-1, but in 2007 these represent over a quarter of the total consumer programme budget, or €4.5 million. This year’s activities involve 7 contracts in total, of which 3 tenders are launched by DG SANCO, 2 tenders sub-delegated to Eurostat and 2 activities (Eurobarometer and focus groups) are commissioned to framework contractors.

II. European Consumer Centres Network (ECC-Net)

This network is the result of two previous programmes, which have been merged since 2005. In its current form, the network comprises 27 centres, one in each Member State (EU-25) plus Norway and Iceland. Two more are due to open in the recently acceded Member States (Romania, Bulgaria), so there will be 29 centres in total by the end of 200743. Nearly half of the centres are hosted by government offices (e.g. Ministry, consumer agencies or institutes, depending on the set-up in each Member State), the others by consumer organisations; in two cases they are a ‘legal entity’. These ‘hosts’, which are effectively the beneficiaries of the programme, are nominated by the Member States themselves. The actions are 50% co-financed by Member States (except in the first 2 years when the Community funding rate reaches 70%). As the eligible bodies are already designated, the implementation of this action involves a restricted call. Each year, DG SANCO (B.5) issues a call for proposals by sending an invitation letter to the Member States to present proposals. The call is launched in autumn each year, followed by an evaluation with a view to signing an agreement by the end of the year44. The grant agreements run from the following year and are for a period of 2 years. Thus, at any point in time there are 27 contracts in place (there will be 29 from the end of 2007). The financing of the European consumer centres represents between 20% and 25% of the total consumer programme budget, or €4 million on average per year (the actual budget can vary substantially from year to year as indicated in Table 4-1). This makes it one of the largest components of the consumer programme. The network is very visible in the Member States, and the Commission (DG SANCO/B.5) provides substantial daily coaching both during the negotiations with the designated Member State organisations on their proposed work programme and during the programme execution.

43 Although there is only one centre per country, in some cases the centre can have several locations within a Member State.

44 The selection and award criteria are detailed in Appendix 4 of the 2007 Consumer Policy Work Programme.


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III. European consumer organisations

The provision of financial contributions to the functioning of European consumer organisations, is foreseen in actions 5 and 6 of Decision 1926/2006. Although based on an open call, BEUC45 and ANEC46 are the only two organisations that benefit from this funding at the moment. A funding requirement is that beneficiary organisations are mandated to represent the interest of European consumers in at least half to two thirds of all Member States. The co-funding rate is 50% in the case of BEUC (which receives funding more specifically in the context of action 5 of Decision 1926/2006), and rises to 95% in the case of ANEC (which receives funding under action 6). In total, some €2.6 million is earmarked for these actions, and this amount appears to remain stable year-on-year (Table 4-1). Each year DG SANCO/B launches an open call for proposals, following which there is a selection and evaluation procedure leading to the award of grants47. Monitoring the work carried out by the beneficiary organisations involves the extensive assessment of their interim and final reports. This task has been complicated by the apparent lack of a standardised framework within which the work programme of the beneficiaries can be outlined and results/outputs reported and assessed against pre-determined performance criteria. In this context, the development of objective and measurable criteria/indicators has become the focus of work more recently within the Units responsible for the implementation of this action in Directorate B, and will continue to be in the foreseeable future. The development of such indicators is important irrespective of the considerations for outsourcing some tasks to an Executive Agency, but would facilitate the transfer of tasks if outsourcing is to be taken forward. It is also noted that, following the evaluation of the two beneficiary organisations (BEUC and ANEC) in 2006, SANCO/B is currently in the process of responding to the recommendations made including discussions with the beneficiaries on how to implement these.

IV. Information campaigns Information campaigns are foreseen in each of the new Member States, under actions 10 and 11 of Decision 1926/2006 on improving consumer information and education as part of the accession process. The campaigns are one-off actions, and are run by Member States, although small Member States which are culturally similar can be combined within one

45 BEUC, the European Consumer Organisation, has a membership which includes 40 independent national consumer organisations from some thirty European countries (EU, EEA and applicant countries).

46 ANEC, the European consumer voice in standardisation, represents consumers from all EU Member States and the 3 EFTA countries (Iceland, Norway and Switzerland).

47 The selection and award criteria are detailed in Appendixes 1 and 2 of the 2007 Consumer Policy Work Programme.


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contract. These contracts are awarded on the basis of an open call for tender. The calls are sub-divided into lots for 3 types of expertise: communication professionals; local consumer law/counselling expertise; and, technical assistance in quality control. However, by the time the Agency adopted any role in the implementation of this action, the current information campaign programme would be largely complete. It appears that two campaigns remain under the current cycle48, one for the Baltic countries and one for Bulgaria/Romania, the calls for both of which are due to be launched shortly and to be finished by spring 2008. A maximum €3 million is estimated to be available for these campaigns in 2007 (in previous years, some €2 million were earmarked for this action, Table 4-1).

V. Education Consumer education has become an integral part of a comprehensive consumer policy that aims at building consumer awareness and confidence in the internal market. This includes four distinct activities:

a) the production of an information leaflet dealing with consumer issues which is

distributed to schools in the EU-25 (Europa Diary, fourth edition in 2007); b) web-based adult education tools (DOLCETA, maintenance and development of new

modules in 2007); c) training courses for personnel of consumer organisations; and, d) development of European Masters courses.

Activities a) to c) are run through calls for tender within existing framework contracts, with one framework contractor for each activity, which extend over a period of four years, i.e. to 2009 or 2011 depending on the activity49. Activity d) involves a call for proposals for the development of a European Integrated Master Degree in Consumer Issues (launched in May 2007, selection process in November 2007), but this is an one-off action and will be completed by 2009/10.

48 By the time it ends, the current cycle will have covered the 12 new Member States over a period of 5 years, with 2 information campaigns organised on average per year.

49 In the case of activity a), the current framework contract was signed in 2006 and the next call for a framework contract is due in 2009. In the case of activity b), the current framework contractor is the ‘European Universities Continuing Education Network, but a new call was recently launched (tenders to be opened in July 2007), and the next call is due in 2011. In the case of activity c), the framework contract was signed in 2003 (current contractor is BEUC, the European Consumers’ Organisation), and there will be a new call for framework contract in July 2007.


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VI. Joint actions to improve co-operation between national authorities There are two sets of such joint actions, one that falls under the General Product Safety Directive50 (under the responsibility of SANCO/B.3) and one under the Consumer Protection Co-operation Regulation51 (SANCO/B.5). The former action began in 2004 (and is now in its fourth year), the latter is new and was begun in 2007. Contributions may only be awarded to a public body or a non-profit-making body designated by Member States or the competent authority concerned and agreed by the Commission52. The contribution covers 50-70% of the total cost of the actions. In line with the eligibility provisions of the legal basis of these actions, these are restricted calls. Each year, Member States are invited by letter to present proposals. A committee evaluates the proposals and, on the basis of predetermined selection and award criteria53, the Commission decides which ones to fund and subsequently enters into grant agreements. The whole process lasts from January to July each year. Some of the funded projects run for up to 3 years, but there are a relatively small number of projects at any point in time. The estimated budget for each set of actions in 2007 is between €500,000 and €600,000 (i.e. €1-1.2 million in total), but the actual figure tends to vary according to need and Member State response54. DG SANCO is currently involved in following up the funded actions, to ensure that the objectives are met. For example, there are projects that are important for the future of market surveillance in Europe, and for these it is therefore important to maintain active DG SANCO involvement. Nonetheless, overall, the level of human resources currently engaged in the implementation of these actions is relatively limited, in view of the fact that this involves a small number of contracts and the responsibility for the execution of the actions falls on the co-ordinating Member State which has the role and responsibilities of the project leader.

50 Article 10 of the General Product Safety Directive (2001/95/EC). Financial contributions to joint actions aim to improve the effective application of Directive 2001/95/EC through co-operation between national authorities responsible for the assessment, market surveillance and enforcement of the safety of non-food consumer products and services.

51Articles 16 and 17 of the Consumer Protection Cooperation Regulation ((EC) No 2006/2004). Financial contributions to joint actions aim to improve the effective application of Regulation 2006/2004 through co-operation between competent authorities.

52 In the case of actions falling under Regulation (EC) No 2006/2004, it can only be the competent authority designated under Article 4 of the Regulation.

53 These are detailed in Appendix 3 of the 2007 Consumer Policy Work Programme.

54 This budget is a ceiling. For example, the budget for joint actions under the GPS Directive was €550,000 in 2006, but only €350,000 was eventually used as only one proposal was received. This year (2007) DG SANCO expects a higher number of proposals. A key reason for the relatively low response is Member State reluctance to take a lead role in view of what are perceived to be as fairly complex requirements of the EU Financial Regulations, and the fact that the type of organisations eligible to apply do not usually have the relevant skills and resources to cope with these requirements.


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VII. Exchange of officials This action involves financial contributions for travel and subsistence expenses in the form of lump sums towards the exchange of officials between competent national authorities of the Member States. This is the first year this type of action will be running (the first invitation to Member States is to be sent by summer 2007), thus the system is only currently being set up. As in the case of the joint actions for co-operation between national authorities, this action has two components: one in the context of the General Product Safety Directive (under the responsibility of DG SANCO/B.3) and one under the Consumer Protection Co-operation Regulation (DG SANCO/B.5). Some €150,000 are available for each, or €300,000 in total. Although it is too early to know the level of human resources required for the execution of this action, it is anticipated that this will be minimal. Not only this is one of the smallest components of the entire consumer programme, but it will also be implemented through a simplified application process based on the provisions of the Financial Regulations on lump-sum financing. The intention is to allocate the grants on a first-come-first served basis depending on a small number of policy priorities, so there will be no evaluation process as such. This would entail fairly routine document checks and paper work to ensure the eligibility conditions and financial requirements are met by the applicants. At any point in time, there will be no more than 10-20 projects running concurrently. The processing of relevant project documents (both technical and financial) should be standard (the Financial Regulations foresee simplified procedures in the case of lump-sum funding), while all projects are expected to be complete within the end of the financial year in which the grants are awarded.

The above actions represent the totality of the annual consumer policy budget excluding expenditure on administrative management, Table 4-1). If the information campaigns are excluded (in view of the uncertainty over the future of this action), the rest of the above actions represent an estimated 90% of the total. However, in this case, it can be expected that the money released from this action would be directed to the other actions or to new activities within the overall framework of actions envisaged by Decision 1926/2006.

4.2. The food safety training programme

“Better Training for Safer Food"55 is a more recent initiative of the Commission aimed at organising a Community (EU) training strategy in the areas of food law, feed law, animal health and animal welfare rules, as well as plant health rules56. The programme was first launched in 2005 (for implementation in 2006) and is currently in its third year.

55 Commission Communication of 20.09.2006 (COM(2006) 519).

56 The legal basis for this initiative is Article 51 of Regulation (EC) No 882/2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules. In addition, Article 2(1)(I) of Directive 2000/29/EC provides the legal basis for training in the plant health sector.


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The main objective is the organisation and development of a Community training strategy with a view to:

• ensuring and maintaining a high level of consumer protection and of animal health, animal welfare and plant health;

• promoting a harmonised approach to the operation of Community and national control systems; creating an equal level playing field for all food businesses;

• enhancing trade of safe food; and,

• ensuring fair trade with third countries and in particular developing countries.

The intention is to design training for all staff of competent authorities of Member States involved in official control activities in order to keep them up-to-date with all aspects of Community law in this area and to ensure that controls are carried out in a more uniform, objective and adequate manner in all Member States. In line with its objectives, this training is also open to participants from third countries and specific training sessions are organised in this case as necessary. This programme is implemented through calls for tender. The most recent ones were launched during 2006 for training activities to take place in 2007. These involved two calls for tender, of which one was for training to be provided in the Member States and the other for training in selected third countries. These calls were divided into a number of lots which focused on the policy areas of food and feed safety, animal health, animal welfare, and plant health. A total of six contractors have been retained for the twelve lots tendered under this programme. Of these, eight are to be carried out in the EU and four in third countries. The eight training courses taking place in the EU will cover:

1. training workshops on HACCP; 2. a training workshop on best practices for veterinary checks in airport border inspection

posts; 3. a training workshop on best practices for veterinary checks in seaport border inspection

posts; 4. training workshops on EU standards relating to animal by-products; 5. a training workshop on welfare standards concerning the stunning and killing of animals (in

slaughterhouses or disease control situations); 6. training workshops on monitoring and controls of zoonoses and applying microbiological

criteria in foodstuffs; 7. training workshops on controls on food contact materials; and, 8. a training workshop and a follow-up meeting on the evaluation and registration of plant

protection products.

The four training courses taking place in third countries will cover:


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1. sustained training and assistance in developing strategies for Highly Pathogenic Avian

Influenza disease control; 2. third country workshops on EU standards for fishery and aquaculture products, residues and

contaminants in fruit, vegetables, nuts, herbs and spices, and food contact materials; 3. training sessions for laboratory staff of ASEAN countries in the application of food testing;

and, 4. training workshops on the EU Rapid Alert System for Food and Feed and the possible

introduction of a similar system in other regions of the world. The training programme is drafted annually, on the basis of the evaluation of the results from the previous year's activity57, comments and recommendations provided by the training participants, research and assessment of current training needs, and intra-DG SANCO, Inter-Service Steering Group and Member State consultations. In order to ensure efficient development and management of the training activities, the training sector maintains close contact with all contractors, DG SANCO staff and staff of other Commission Services (for example, with DG RELEX for the activities in third countries) to ensure a high level of flexibility and quick response. This is vital, given the organisational complexity, the wide geographical spread of the workshops (EU based and worldwide activities, such as Africa), and the number of invited countries and participants. For the purposes of information exchange and the coordination of the training activities, specific consultation and coordination bodies have been set up. In particular:

• A network of National Contact Points for the programme (in each Member State, candidate country and EFTA country);

• An Inter-Services Steering Group (composed of representatives from DG SANCO, Secretariat General, the Legal Service and from DGs Agriculture and Rural Development, Budget, Development, Enlargement, Enterprise and Industry, External Relations, Fisheries and Maritime Affairs, Internal Market and Services, Research, Taxation and Customs Union and Trade, as well as the EuropAid Cooperation Office and the European Anti-Fraud Office;

• An intra-SANCO coordination group, including all project co-ordinators.

The budget available for this training programme has increased significantly since the programme started, from €4.0 million in 2005 to over €7.5 million a year in 2006 and 200758.

57 The current management method foresees an evaluation system for the training activity based on questionnaires distributed during the training activities, involving participants from MS and third country national authorities.

58 This refers to the budget year. Implementation year is the following year (+1).


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According to a first evaluation report of the training programme57, this has been well received both by Member States and by third countries59. An estimate of the future training needs was made by the Commission services in its internal Extended Impact Assessment on this programme60. Based on the experience of the initial training phase, the Commission envisages an increase of the training activities up to a total of 6,000 trainees per year. The objective is to reach more than 10% of the potential trainees in Member States and key third countries (in particular developing countries). This represents more than a doubling of the current target population of trainees, and would therefore reflect a substantial increase in the programme’s planned budget (from the current €7.5 million to a forecast average of €15.0 million annually), provided the funding was made available61. Furthermore, DG Development is considering putting at the disposal of DG SANCO some €10 million over three years for food safety training activities.

4.3. Options for the delivery of the consumer programme and food safety training

A number of possible options and sub-options exist for the delivery of the consumer programme and the programme of Community training on food safety law. Where PHEA is involved, the inherent assumption is made that it would continue post-2010, at least under its current remit (Public Health Programme). The basic options, and associated sub-options, are set out in the following four sections.

4.3.1. Continuation of current situation

The status quo (or do nothing) alternative in this case would mean DG SANCO continuing to deliver the entire consumer action programme and Community training on food safety law. The PHEA would continue its operations under the Public Health Programme and there would be no further transfer of responsibilities under the two other programmes discussed here. The current DG SANCO resources devoted to the two programmes are presented as a baseline in Appendix 1.A. The implementation of both programmes comprises an element of project/contract management and an element of financial management and is detailed per task and/or per strand.

4.3.2. Outsourcing to PHEA

This option involves outsourcing the consumer programme or food safety training or both to PHEA, whilst the Agency continues to implement the Public Health Programme post-2010.

59 Report on the activities carried out in 2006.

60 SEC(2006) 1163 of 20 September 2006.

61 This is a budget forecast only, the budget is decided annually, at the level of DG SANCO and internally within DG SANCO, within the overall framework of the current Financial Perspectives (2007-13).


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Our interviews with the teams of DG SANCO officials currently responsible for the execution of the consumer action and food safety training programmes (Directorates B and E, respectively) have indicated that the delegation of the administrative/financial/contract management tasks, along the lines presented in the sub-sections below, is considered to be largely straightforward. On the other hand, the general thrust of the discussions was that at least two elements are essential to DG SANCO’s policy role and it is therefore the strong preference of the Directorates currently responsible that these remain substantially in-house. These are:

• tasks under the programmes’ implementation which are closely linked to the knowledge-base that is required for effective policy development; and,

• programme drafting, as well as some involvement in the control and oversight of the programmes’ execution, to ensure that the initial objectives are being met.

More details on the tasks involved in the outsourcing scenario for each programme and sub-component are presented in the sub-sections below. Our interviews with officials within PHEA indicate that an extension of remit to encompass actions in the field of consumer policy and food safety training would potentially enrich the Agency in terms of the possibility for synergies.

4.3.2.1. The consumer policy programme

The scenarios examined here are based on internal discussions between the competent DG SANCO services (Directorates A, B and E), as elaborated through further interviews and cross-checking by the consultants. On this basis, we have drawn the distribution of tasks for the entire consumer policy programme (encompassing the seven actions outlined in section 4.1). This is presented in Table 4-2. The distribution of tasks refers to the potential transfer of the complete budget implementation process, with the exception of drafting the objectives, scope, selection and award criteria as shown in the underlying table. Also, an element of oversight and control of the entire implementation would remain within DG SANCO. The rationale is that DG SANCO/B deems it appropriate, and indeed essential, to monitor the substantive implementation of projects and the technical quality of the output which is considered to be closely linked to the knowledge base required for its policy development.


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Table 4-2 Indicative distribution of tasks under the outsourcing scenario: consumer action programme

Nr. Phase - tasks To be done by: Comments

PHEA SANCO

1. Setting overall policy objectives; defining actions, eligibility, selection and award criteria (annual work programme)

X

2. Drafting and launching calls for proposals/tender

X

DG SANCO may provide input to PHEA to draft the substantive parts of the terms of reference of the call.

3. Receiving, storing and opening of proposals,/tenders

X

4. Evaluating proposals/tenders X X PHEA is in charge of the evaluation process. DG SANCO provides input to ensure coherence with policy objectives.

5. Preparing agreements/contracts. Awarding grants/contracts

X PHEA´s director as responsible AOD awards grants/contracts

6. Monitoring of action/contract implementation (incl. analysis of interim and final reports)

X

7. Expenditure operations (budgetary commitments, payments, analysis and approval of financial reports

X

8. Archiving (storage) of project files X

9. Reporting to DG SANCO on project implementation

X

10. Project evaluation before final payment

X DG SANCO should have access to each grant/contract at any stage of the procedure

11. Policy development based on project results

X

12. Programme evaluation X

Source: Internal discussions between DG SANCO services (Dir. A and B), and interviews with the consultants.


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4.3.2.2. The food safety training programme

Internal discussions have been held between DG SANCO services, and detailed interviews were undertaken by the consultants with the programme team (Directorate E). Building on the outcome of the internal DG SANCO discussions, the interviews carried out by the consultants aimed to establish possible scenarios for the outsourcing of the implementation of this programme (encompassing the actions outlined in section 4.2). Following these, the tasks which have been identified as possible candidates for transfer to the Executive Agency are outlined in Table 4-3.

Table 4-3 Indicative distribution of tasks under the outsourcing scenario: food safety training programme


PHEA SANCO

1. Preparation and adoption of annual training programmes: defining training objectives, training standards (quality of learning materials and qualification of tutors). Training subjects (trainees, participants) and budget.

X Involves DG SANCO, Inter-Service Steering Group and Member State consultations.

2. Implementation of calls for tenders. This involves the following tasks:

• Drafting tender documents;

• Launching calls;

• Receiving & opening tenders;

• Evaluation of tenders;

• Conclusion of contracts;

• Expenditure operations;

• Monitoring contract execution.

X

X

X

X

X

X

X

X

DG SANCO may provide input to PHEA to draft the substantive parts of the call.

PHEA is in charge of and responsible for the evaluation. DG SANCO provides input to ensure coherence with policy objectives.

Contracts should be signed by PHEA's Director. As PHEA signs contracts, it will execute expenditure operations.

3. Management of training projects/contracts

X

4. Information exchange and coordination:

• Coordination with MS/stakeholders;

• Networking with national and

X


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PHEA SANCO

EU training bodies;

• Chairing and managing inter-services steering group

5. Communication activities (web site, publications, dissemination and promotion of the programmes etc.)

X

X

PHEA executes an annual (or multi-annual) communication plan the overall policy lines of which have been provided by DG SANCO.

6. Reporting to DG SANCO on programme implementation

X PHEA to provide regular progress reports according to a defined timetable or at request.

7. Ex-ante or ex-post evaluations (project related)

X

8. Programme evaluation X

Source: Internal discussions between DG SANCO services (Dir. A and E), and interviews with the consultants.

4.3.3. Outsourcing to a Brussels-based Executive Agency

Although it would, in theory, be possible to found a new Executive Agency in Brussels to carry out tasks relating to the delivery of consumer policy and Community training on food safety law, this is not considered to be an option worth considering. This is because (a) the PHEA is already established in Luxembourg; and, (b) there are other Brussels-based Executive Agencies already in existence to whom certain tasks could potentially be outsourced which would present a more efficient use of resources. Executive Agencies established in Brussels which might be appropriate include the Education Audiovisual and Culture Executive Agency (EACEA)62 and the Intelligent Energy Executive Agency (IEEA)63.

62 The Education Audiovisual and Culture Executive Agency (EACEA) was created by Commission Decision 2005/56/EC of 14 January 2005. Its mission is to implement certain strands of Community programmes in the fields of education and vocational training, culture, audiovisual, citizenship and youth. The EACEA assumed full financial responsibility, including the transfer of the management of on-going projects from January 2006. The Agency was established for a period lasting until 31 December 2008, when the current programmes will be completed. A new generation of programmes are under way, covering the 2007-13 period. Following a cost-benefit analysis for the extension of the Agency’s scope in the context of these programmes as well as remit for the implementation of some further programmes, the mandate of the EACEA was extended for the 2009-15 period (Commission Decision 2007/114/EC of 8 February 2007), to include the management of the Youth, and Erasmus Mundus programmes. With this latest remit, the agency has three parent Directorates-General: DG Education and Culture (EAC), responsible for the majority of the programmes entrusted to the Agency; DG Information Society and Media (INFSO), responsible for MEDIA Plus and MEDIA Training programmes; and EuropeAid Cooperation Office (DG AIDCO) responsible for EWU cooperation programmes. The tasks of the parent DGs are to


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Following extensive consideration, and discussions with the Steering Group, it was decided in the course of the analysis that this option would not be examined further as it does not represent a realistic scenario. This is essentially for the following three reasons:

1. The programmes implemented by these Agencies are markedly different from the ones

considered here, notably in terms of subject matter, layout and size/budget of the individual activities. For example, the programmes for which the EACEA is responsible involve a large number of small value contracts64 in sharp contrast to the type of contracts typically involved in the case of the consumer policy and food training programmes. The logistical, administrative, financial/accounting and management requirements that arise are therefore too different to allow these Agencies to develop synergies in the execution of the programmes.

2. The budget of the two programmes considered here is relatively small compared to the budget of the programmes with which existing Agencies deal. In view of the relatively small scale of the two programmes, there is concern that existing agencies, being understandably focused on their current remits of much larger programmes, may not be able to provide the attention required by DG SANCO for its programmes. Furthermore, there may be issues of appropriate representation in the Steering Committee of the Agencies given the small share of SANCO programmes. There is therefore concern that this may effectively lead to breaking the link with the policy needs that constitute the rationale for the programmes. The consumer action and the food safety training programme account together for about €24 million a year in current terms, compared, for example, to the annual budget of EACEA of €294 million for 200664.

monitor and control the agency, and the agency has to report periodically to all parent DGs. The total workforce of the Agency is due to reach 300 members of staff (contract agents and temporary agents).

63 Intelligent Energy – Europe (IEE) is the European Union’s programme for promoting energy efficiency and renewables; it supports financially international projects, events, and local/regional energy agencies, which promote the smarter use of energy and the growth of renewable energy sources. The Intelligent Energy Executive Agency (IEEA) implements the IEE programme. With more than 40 staff, the IEEA manages the different projects and events funded under the IEE programme, and disseminates know-how and best practices. The decision to create the IEEA was taken at the end of 2003 (Commission Decision 20/2004). Since 2006 it is fully responsible for the operation of the IEE programme and for managing its own budget. The IEEA reports to its parent Directorate General, DG TREN, on a regular basis and TREN remains responsible for programming and evaluation of the IEE programme. The Agency’s official lifetime is until the end of 2008. Following a favourable opinion by the Regulatory Committee for Executive Agencies on 14 February 2007, Decision 2004/20/EC was amended to entrust the IEEA with certain management tasks related to the implementation of the second IEE programme (the successor of the current IEE programme that has been integrated into the Entrepreneurship and Innovation Programme (EIP)), and enlarging its area of activity to include certain management tasks related to the execution of the EIP for the period 2007-2013, and certain management tasks related to the Marco Polo II Programme. In concrete terms this will mean an extension of the duration, the size and the remit of the existing IEEA as well as a new name “Executive Agency for Competitiveness and Innovation” (EACI) in order to reflect the new programmes and tasks entrusted to the agency.

64 In 2006, the EACEA was reported to be executing a budget of €293.9 million and to be responsible for the management of some 13,000 ongoing projects.


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4.4. Comparison of options

4.4.1. Staff requirements

4.4.1.1. Baseline

As already indicated under the methodology, the staff currently required for the implementation of the two programmes (baseline) is calculated in a bottom-up approach based on a detailed analysis of the different tasks that have been distinguished during the implementation cycle. In the case of the food safety training programme, it distinguishes between the different tasks of the implementation cycle, as illustrated in Table 4-3. The detailed staff requirements are indicated in Appendix 1.A.

In the case of the consumer policy programme, staff requirements are detailed for each of the main strands of the programme, as presented in section 4.1. They are aggregated for the whole of the implementation cycle for each strand (as illustrated in Table 4-2), as no further distinction between the various phases-tasks of the cycle was possible on a systematic basis for all strands. The detailed staff requirements are indicated in Appendix 1.A. The figures on the staffing requirements are presented in Full Time Equivalent (FTE), representing 1 employee that works 100% of the available time (37.5 hours per week, 40 weeks or 200 days per year). Consumer policy: The DG SANCO Units currently involved in the management of the different actions under this programme are B.1 to B.5 within Directorate B. Directorate B is currently composed of some 63 members of staff (officials and temporary agents), plus 7 national experts (ENDs), plus 8 contractual agents (Table 4-4).


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Table 4-4: Staff structure, SANCO/B (Consumer Affairs)

Officials Temporary agents

National experts

Contractual agents

Total

AD AST AD AST

B 1 3 1 5 B1 11 5 1 2 19 B2 7 2 1 2 1 13

B3 8 4 2 3 17

B4 3 1 2 2 2 2 12 B5 6 4 2 12

Total 36 19 2 6 7 8 78

AD = Administrators (former COM grade A) AST = Assistants (former COM grades B and C)

Source: DG SANCO, A.5 (Human Resources), June 2007.

Programme implementation takes up a varying proportion of some of the SANCO/B staff. Based on the interviews undertaken with the implementing teams for each action under the programme, it is estimated that, in total, this involvement amounts to 10 FTE man-years. Of this total, 4.5 FTEs are related to policy design and development (which involves inter alia the analysis and use of the programme results and outputs) and the remaining 5.5 FTEs are related to strictly administrative and financial tasks. In addition, staff from Directorate A.3 (financial cell) is involved in the financial management of the programme’s implementation, to an estimated total 2.5 FTE man-years. These inputs are detailed per action and by staff grade in Appendix 1.A. In view of the above, it can be concluded that 8 out of the total 12.5 FTE man-years are involved in administrative and financial management of the consumer policy programme, which are tasks suitable for outsourcing. Food training programme: There are currently 5 members of staff within DG SANCO/E.2 that are involved full-time with running this training programme and 1 half-time. The current staff structure is:

• 2 AD;

• 1AST (assistant);

• 1 AST (secretary) (half time), and,

• 2 contractual agents.


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It is estimated that 2 of the above members of staff are responsible for programme design and validation. The remaining 3.5 members of staff (of which, 2 are contractual agents) are involved in administrative and financial management of the food safety training programme, which are tasks suitable for outsourcing. Financial management of the programme’s implementation as such also involves a relatively minor input from DG SANCO/O.4, the financial cell (0.2 FTE). Finally, an estimated 2 FTEs of COM grade AD inputs are provided by experts in other Units within DG SANCO, mainly from Directorate E, to give on-site training. Although these inputs have been included in the calculation on total staff costs, it is noted that they are neutral for the present analysis in that it has never been considered appropriate to transfer such tasks to PHEA. The above inputs are detailed by staff grade, as well as per task and, in total, for the administrative and non-administrative part of the work, in Appendix 1.A.

4.4.1.2. Status-quo

This scenario looks at staff requirements in the event that programme implementation remains under DG SANCO. Consumer policy: It is assumed that DG SANCO would continue to manage the new consumer programme (2007-13) with the same resources as currently, given that the average annual budget is staying roughly the same as in previous years.

It is noted that there may be changes at individual action level, which may influence staff requirements, but these can not be identified with the information available at the time of writing. For example, the future of the information campaigns is not clear, given that the current cycle of this action is ending in the next year. Also, as the experience of the last few years shows, the amounts dedicated to some actions (e.g. ECC-net, studies) can fluctuate considerably from year to year, as the priorities set out in the annual work programme adjust to evolving policy needs. Finally, although the budget of some actions remains more or less constant, new elements may be introduced in the implementation of these actions. For example, in the case of support to European consumer organisations, there is currently emphasis on improving award criteria and evaluation indicators, which may increase the requirement for staff time short term, but should reduce it in the longer-term (the indicators would help standardise and simplify current time-consuming evaluation procedures). The detailed staff requirements for the consumer policy programme under this option are presented in Table A-2 (Appendix 1.A.).


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Food training programme: The budget dedicated to this programme is forecast to increase to an average €15 million annually, within the current Financial Perspectives for 2007-13. This would represent a doubling of the current budget and is expected to result in a proportional increase in the number of contracts concluded under this programme. It is therefore reasonable to assume that there will be a need for an increase in the human resources involved in the programme’s implementation. However, the increased requirement for staff resources is not anticipated to be proportional to the budget increase. On the basis of the information and experience currently available, it is assumed that the following additional staff will be required for the implementation of an expanded programme during 2007-13:

• 1 AD

• 0.3 AST (assistant) Thus, under our assumptions, the total staff requirement for programme implementation would increase from the current 5.7 to 7.0 FTEs in total. Of these, 2 would be responsible for programme design and validation, and the remaining 5 would be involved in what is the administrative and financial management of the food safety training programme. This excludes the baseline estimate of 2 FTEs of COM grade AD inputs which are provided by experts in other Units within DG SANCO, mainly from Directorate E, to give on-site training. As discussed above, this is considered in the calculation on total staff costs; however, an increase in this resource has neutral implications for the present analysis in that there has never been a question of a potential transfer of such tasks to PHEA. An estimated additional 1 FTE man-year of COM grade AD inputs from experts in other DG SANCO Units (mainly Directorate E) will be required, bringing the total staff likely to be required for this task to 3 FTEs. These assumptions are based on the condition that the budget for expanding this programme becomes available, along the lines suggested above and throughout the 2007-13 period, and that the programme is broadly implemented in the same way as currently. The detailed staff requirements for food safety training under this option are presented in Table A-3 (Appendix 1.A.).

4.4.1.3. Outsourcing

The outsourcing is based on the division of tasks outlined in section 4.3.2. A distinction has been made between the required staff at the agency and the staff that still needs to be employed at DG SANCO.


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Consumer policy: Extrapolating from the baseline, outsourcing is based on the distribution of tasks made in Table 4-2 and comments to this Table. This assumes the outsourcing of project/contract management tasks currently undertaken within DG SANCO/B and the outsourcing of financial management (DG SANCO/A.3) tasks as well as DG SANCO/B C.A. tasks (the latter is rather limited at present, at 0.2 FTEs). This would therefore involve the outsourcing of 8 FTEs (out of the total 12.5 FTE man-years required for the implementation of this programme), which are involved in the administrative and financial management of the consumer policy programme. The remaining 4.5 FTEs would stay in DG SANCO. A simple extrapolation assumes that no requirements in extra time for DG SANCO/B staff will be generated by the transfer of these tasks to PHEA. However, in a real situation, there may be some requirements for extra time during a transition phase in the course of which staff currently involved in the implementation of the programme may need to brief the Agency on its new tasks and ensure the smooth transfer of the various projects. This is especially the case in this programme, due to the wide variety of actions and implementing mechanisms that it encompasses. Given that in most cases the projects financed under the different actions of this programme run over 1-3 years, we have assumed on average a 2-year digressive transition phase. Thus we assume that in year +1 (2008), 30% of the outsourced DG SANCO inputs will continue to be spent on the programme and in year +2 (2009) this requirement would fall to 15%, eventually disappearing in year +3 (2010). These assumptions are in line with the expectations of current DG SANCO/B teams, and with the experience gained from the transfer of other Community programmes, including that of the PHP. All other factors (programme budget and duration) remain the same as in the status-quo option, i.e. it is assumed that there is no change in programme budget and duration is 2007-13 (2015). The detailed staff requirements for the consumer policy programme under the outsourcing option are presented in Table A-2 (Appendix 1.A.).


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Food training programme: Outsourcing of the food training programme is also extrapolating from the baseline, based on the distribution of tasks made in Table 4-3 and comments to this Table. This assumes the outsourcing of the project/contract management tasks currently undertaken within DG SANCO/E as well as DG SANCO/E.2 C.A. tasks. Given the expected increase in programme budget, this would involve the outsourcing of 5 FTEs (out of the total 7 FTEs required for the implementation of this programme), which would be involved in the administrative and financial management of the food safety training programme. The remaining 2 FTEs would stay in DG SANCO65. All other factors and conditions (programme budget and duration) remain the same as in the status-quo option, i.e. it is assumed that the programme budget doubles (resulting to increased staff requirements) and that the programme continues during 2007-13 (2015) subject to the budget becoming available.

As in the case of the consumer policy programme, we have assumed similar requirements for extra DG SANCO staff time during a 2-year digressive transition phase. Thus we assume that in year +1 (2008), 30% of the outsourced DG SANCO inputs will continue to be spent on the programme and in year +2 (2009) this requirement would fall to 15%, eventually disappearing in year +3 (2010). The detailed staff requirements for food safety training under this option are presented in Table A-3 (Appendix 1.A.).

4.4.2. Financial costs

The results of the cost benefit analysis relating to the outsourcing of actions in the fields of consumer policy and/or food safety training, as described in the previous sections, are set out below in Table 4-5. As these options all assume the extension of PHEA’s mandate to cover the 2008-13 PHP (see section 3.3.2), this is incorporated in the costings.

65 Excluding the estimate of 3 FTEs of COM grade AD inputs which would be provided by experts in other Units within DG SANCO, mainly from Directorate E, to give on-site training. As discussed above, this is considered in the calculation on total staff costs, but this resource has neutral implications for the present analysis in that there has never been a question of a potential transfer of such tasks to PHEA.


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Table 4-5: Financial results: outsourcing of consumer policy and/or food safety training


No outsourcing options

No outsourcing of consumer policy or food safety training €44,327,052

• No outsourcing of consumer policy €35,404,988

• No outsourcing of food safety training €32,273,076

Outsourcing options

Outsourcing of consumer policy and food safety training €38,934,279

• Outsourcing of consumer policy €31,424,256

• Outsourcing of food safety training €30,461,311

Notes:


• Service Level Agreements are not included as these are intra-Commission transfers and hence budget neutral at the Commission level.



• Assumes no transition.

Source: for full results see Appendix 1.B, Table B-3 to Table B-6 and Table B-8.

The most cost effective solution is to carry out the outsourcing of those actions in the fields of consumer policy and food safety training that it is possible to outsource according to Table 4-2 and Table 4-3. The outsourcing of actions examined here would carry a cost of some €38.9 million. Retaining the entire programme implementation within DG SANCO, as is currently the case, would imply a cost of €44.3 million. These scenarios, as well as the assumptions used in their construction, are explored further in Appendix 1. The full costings for option 4.3.1 (no outsourcing) are presented in Table B-3, and these results are further disaggregated for each of the two programmes in Table B-4. The costings for option 4.3.2 (outsourcing) are presented in Table B-5, and these results are further disaggregated for each of the two programmes in Table B-6. (Appendix 1.B) The most significant element of the potential cost saving derives from cheaper staff costs under Agency operation compared to what is the current practice in DG SANCO (which follows the wider Commission pattern). Thus, in order to isolate this factor, so as to be able to assess relative costs at a more comparable staff mix, the costs of retaining the programme implementation within DG SANCO have also been calculated using a staff mix that draws more heavily on contract agents than is the current practice. Although this is a hypothetical scenario, it is useful in isolating the staff mix factor in the calculations. The ‘new’ staff mix is explained and presented in more detail in Appendix 1.A. As can be seen from


58

Table 4-6, the cost compared to the ‘current’ staff mix scenario of Table 4-5 would come down in all cases, to €41.3 million in the case of no outsourcing, and €37.6 million in the case of outsourcing. Full results of this hypothetical scenario are presented in Appendix 1.B.

Table 4-6: Financial results: outsourcing of consumer policy and/or food safety training, assuming a ‘new’ staff mix


No outsourcing options

No outsourcing of consumer policy or food safety training €41,295,374

No outsourcing of consumer policy €33,124,935

No outsourcing of food safety training €31,521,451

Outsourcing options

Outsourcing of consumer policy and food safety training €37,585,830

Outsourcing of consumer policy €30,742,156

Outsourcing of food safety training €29,794,961

Notes:


• Service Level Agreements are not included as these are intra-Commission transfers and hence budget neutral at the Commission level.



• Assumes no transition.

Source: for full results see Appendix 1.B

4.4.3. Qualitative factors

The qualitative advantages and disadvantages pertaining to each option are set out below. It is noted that the advantages and disadvantages outlined here are relevant to the objectives sought by the transfer of additional responsibilities as indicated in section 2.1.2. These are therefore assessed from the point of view of DG SANCO as a whole and in terms of optimising the overall efficiency and effectiveness of the programmes’ implementation. Status quo

Advantages: • Full control of policy and programme implementation remains within DG

SANCO

• Retains certain skills and experience internally within the training sector of DG SANCO

• PHEA maintains focus on public health


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• Integration of the communication activity with the DG SANCO general communication plan.

• No potential disruption to programme implementation during the period that would be required for PHEA staff to gain experience on the two programmes

Disadvantages: • DG SANCO staff distracted from policy development role

• PHEA may not achieve critical mass (assuming that the transfer of tasks to PHEA under the two programmes might allow this)

• Inability to expand DG SANCO staff as necessary

• Inability to get specialised staff dedicated to the administrative/financial/ contract management tasks required by the programmes.

Outsourcing (extending the remit of PHEA to include the consumer programme or food safety training programme tasks):

Advantages: • PHEA fixed costs might be spread further than currently

• DG SANCO staff can focus on policy aspects of the programmes

• Opportunities for synergies with existing tasks within PHEA (e.g. training) Disadvantages: • May weaken the link between programme development and implementation

• May remove certain skills from DG SANCO

• Potential for confusion amongst beneficiaries

4.5. Conclusions and recommendations

Based on the results of the cost benefit analysis it is recommended that the mandate for the Agency be extended in scope, to 2015, in order to implement the two other DG SANCO programmes, the consumer policy and food safety training programmes during that period. The qualitative factors associated with an extension to the mandate add further argument in favour of this option. It would be most cost-effective to outsource the implementation of both programmes. Based on the scenarios and assumptions followed in this analysis, the cost (in Net Present Value - NPV) of implementing the two programmes over the entire period if both programmes were outsourced would be €38.9 million compared to €44.3 million if the implementation was done entirely in-house. In the case of the consumer policy programme, the cost would come to €31.4 million under the outsourcing scenario compared to €35.4 million under the status-quo, i.e. outsourcing generates savings of nearly €4 million. In the case of the food safety training programme, the cost would come to €30.5 million under the outsourcing scenario compared to €32.3 million under the status-quo, i.e. outsourcing generates savings of €1.8 million. Outsourcing both programmes generates savings of nearly €5.8 million.

All these figures include the costs of the implementation of the PHP by the Agency (€23.4 million). Excluding these, outsourcing the consumer policy programme would involve an implementation cost


60

of €8.1 million (compared to €12.1 million under the status-quo), and outsourcing the food safety training programme would involve an implementation cost of €7.1 million (compared to €8.9 million under the status-quo).


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Appendix 1: Detailed calculations


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Appendix 1.A: Staffing requirements (baseline)

The current requirements for the implementation of the consumer policy and better food safety training programmes were identified following detailed interviews with the current teams in DG SANCO Directorates B and E respectively as well as the financial cells. This baseline is presented for options 3.3.1 and 3.3.2 (PHP programme) in Table A-1, and for options 4.3.1 and 4.3.2 in Table A-2 (consumer policy programme) and in Table A-3 (food safety training). The baseline thus obtained was extrapolated for the 2008-13 period. In the case of the new outsourcing options for the two programmes (consumer policy and food safety training), the extrapolation was based on the distribution of tasks indicated respectively in Table 4-2 and Table 4-3, as derived from internal SANCO discussions and further interviews with the respective programme implementation teams carried out by the consultants. Furthermore, the extrapolation is using the following assumptions66:

• Programme budget: assumptions were made on the future programme size in terms of annual budget, method of implementation (calls for proposals, calls for tenders, and/or framework contracts), in the activity structure and number of contracts, and on how all these factors would affect staff requirements. It is assumed that the new PHP will continue at roughly the same annual budget level as the current PHP. The consumer policy programme is assumed to remain at the same budget and mode of implementation as currently; although there may be some changes in the individual activities, as outlined in the main report section 4.1, it is assumed that, overall, these would not significantly affect the overall staff requirement from current levels. The food safety training programme is assumed to at least double in budget from 2008, but this is not expected to have a proportionate effect on staff requirements, which are only assumed to increase by 50% on current levels.

• Staff profiles: the current mix of staff grades and Contractual Agents within the Commission was simply extrapolated forward from the baseline scenario. An alternative scenario in which the number and proportion of Contractual Agents within DG SANCO can be varied from current practice is also examined.

66 These assumptions are detailed in the main report, but are summarised here for completeness.


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For PHEA, the staff mix is based on the EA Guidelines of May 2006, the CEOS and DG ADMIN consultations.

• Phase out periods: there are two phase out periods, 2009/10 in the context of the PHP for the 2003-08 period and 2014/15 in the context of all three programmes for the 2008-13 period. Staff are required in these periods to close off outstanding projects. In the 2009/10 period these staff are additional to those required to implement the 2008-13 PHP. This assumes that in year -2 (2014) there would still be a need for 70% of staff resources of a full operational year, and in the year -1 (2015) there will be a need for 40%.

• Transition of tasks from DG SANCO to the Agency (options 4.3.2 and 4.3.3): the transition period represents a continued staff requirement for DG SANCO to provide continued inputs in the context of the outsourced tasks; a justification for this continued involvement would be to ensure a smooth transfer of the tasks to the Agency, although arguments have been expressed in the main report against a transition period.

In the baseline, it is assumed that there is no transition period for the handover of tasks relating to consumer policy and better food safety training. Alternatively, transition periods can be considered. We have assumed a two-year transition period in the outsourcing scenario, whereby in the first year there would be a continued staff requirement for 30% of the outsourced DG SANCO inputs, and in year 2 this continued requirement would be reduced to 15%.

• Extension in scope – outsourcing (option 4.3.2): for both programmes, this assumes outsourcing according to Tables 4-2 and 4-3.

A number of assumptions have been used in the construction of the CBA scenarios. In all cases these were discussed with, and agreed by, DG SANCO and/or PHEA as well as other relevant DGs (DG Budget and DG ADMIN). These are set out in Appendix 1.B.


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Table A-1: Staff requirements for PHP options 3.3.1 and 3.3.2, closure or extension in time of PHEA

SANCO C PHEA

AD AST (i) AST (ii) COM staff C.A. AD AST T.A. C.A. Baseline (a) 1.50 5.0 4.0 9.0 28.0 PHEA closure / transfer to SANCO (current staff mix) (b)

5.0 3.5 2.0 10.5 28.0

PHEA closure / transfer to SANCO (new staff mix) (c)

18.0 8.4 6.9 33.3 5.2

PHEA extension 1.50 5.0 4.0 9.0 28.0 Notes: Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (a) Baseline assumes PHEA will have completed recruitment and transfer of current PHP will be complete. On the basis of our interviews with SANCO/C, 1.5 of full-time-equivalent (FTEs) AST staff are currently responsible for the coordination of PHP

programme implementation. This excludes policy-related tasks of staff in SANCO/C which could be estimated in 7 of FTEs AD staff. (b) Current staff mix assumes that the mix of staff grades (AD, AST and CAs) would be the same as in PHEA (c) New staff mix assumes that SANCO uses staff profiles according to its on-going staff mix. (i) former grade B (assistant) (ii) former grade C (secretary) Source: PHEA establishment plan (for baseline)


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Table A-2: Staff requirements for consumer policy programme, options 4.3.1 and 4.3.2

DG SANCO PHEA

DIR. B DIR. A3

AD AST (i)

AST (ii)

COM staff

C.A. AD AST (i)

AST (ii)

COM staff

C.A. AD AST (i)

AST (ii)

T.A. C.A.

Baseline: Phases 1-10 (a) Status-quo 4.3 3.9 1.7 9.8 0.2 0 1.0 1.5 2.5 0 • Total Actions I to VII 3.9 3.5 1.5 8.9 0.2 0 0.9 1.2 2.1 0 • Time on existing actions (b) 0.4 0.4 0.2 0.9 0 0 0.3 0.4 0.7 0 Outsourcing to PHEA • programme implementation 2.0 1.8 0.8 4.5 0 0 0 0 0 0 0.7 0.7 0.7 2.0 6.0

Extrapolation (c) Status-quo 4.3 3.9 1.7 9.8 0.2 0 1.0 1.5 2.5 0 Outsourcing to PHEA • programme implementation 2.0 1.8 0.8 4.5 0 0 0 0 0 0 0.7 0.7 0.7 2.0 6.0 Outsourcing including transition year 1: • programme implementation 3.3 2.9 1.3 7.5 0.1 0 0.3 0.5 0.8 0 0.7 0.7 0.7 2.0 6.0 Outsourcing including transition year 2: • programme implementation 2.7 2.4 1.0 6.0 0 0 0.2 0.2 0.4 0 0.7 0.7 0.7 2.0 6.0 Notes:

Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (a) For Phases 1-10 see Table 4-2 (b) SANCO/B: allowance for time spent on actions from previous years' budgets still in process (assumes 10% of total time spent on such actions). For SANCO/A.3 based on actual time estimates. (c) For assumptions see main report. Main assumption is that programme budget and implementation (number of contracts) in 2007-2013 stays the same as in previous (2003-2008) programme. (i) former grade B (assistant) (ii) former grade C (secretary)

Source: based on internal SANCO discussions and further interviews with SANCO, Directorates A and B.


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Table A-3: Staff requirements for food safety training programme, options 4.3.1 and 4.3.2

SANCO PHEA

DIR E.2 DIR O.4

AD (c)

AST (i)

AST (ii)

COM staff (c)

C.A. AD

AST (i)

AST (ii)

COM staff

C.A. AD

AST (i)

AST (ii)

T.A. C.A.

Baseline: Phases 1-7 (a) Status-quo 2.0 1.0 0.5 3.5 2.0 0 0.2 0 0.2 0 Outsourcing to PHEA 0.3 0.3 0.3 1.0 4.0 • programme implementation 0 0.3 0.2 0.5 0 0 0 0 0 0

Extrapolation (b) Status-quo 3.0 1.5 0.5 5.0 2.0 0 0 0 0 0 Outsourcing to PHEA • programme implementation 0.8 1.0 0.2 2.0 0 0 0 0 0 0 0.3 0.3 0.3 1.0 4.0 Outsourcing including transition year 1: • programme implementation 2.0 1.3 0.4 3.7 0.6 0 0 0 0 0 0.3 0.3 0.3 1.0 4.0 Outsourcing including transition year 2: • programme implementation 1.4 1.1 0.3 2.8 0.3 0 0 0 0 0 0.3 0.3 0.3 1.0 4.0 Notes:

Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (a) For Phases 1-7 see Table 4-3 (b) For assumptions see main report. Main assumption is that programme budget is at least doubled, which will entail an increase in staff requirements but not proportional to the increase in programme size. (c) Excludes inputs from other Units in DG SANCO/E to provide on-site training, as follows: 2 FTE man years (COM AD) in baseline, assumed to increase to 3 FTEs (COM AD) with the increase in programme budget. (i) former grade B (assistant) (ii) former grade C (secretary) Source: based on internal SANCO discussions and further interviews with SANCO, Directorates E and 0.4. Estimates based on the experience of the first 2 years of the programme.


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Appendix 1.B: Cost benefit analysis

A1B.1. Assumptions

A number of assumptions have been used in the construction of the CBA scenarios. In all cases these were discussed with, and agreed by, DG SANCO and/or PHEA as well as other relevant DGs (DG Budget and DG ADMIN). These are set out below67:

• PHEA budget: the revised 2007 budget was used as the basis for calculations relating to the Agency. It should be noted that this represents a maximum expenditure and any surplus will be channelled to operational appropriations. The cost of the Agency is therefore likely to be inflated to some extent. The fact that many SLAs have yet to be signed, and as a result have not been paid, precluded the use of actual expenditure data. Some items which are classed within the Agency budget as overheads have been excluded from the analysis here as they would be incurred irrespective of whether the Agency or DG SANCO were implementing the programme (for example, the budget allocation for legal expenses relating to programme implementation). Overheads which are only incurred because of the Agency are included.

• Operational costs: these are costs incurred through programme implementation and would be incurred at the same level irrespective of whether the programme is implemented by the Agency or by DG SANCO. These costs have therefore been omitted from the analysis.

• PHEA overheads: some of these are considered to be fixed, some variable according to staff numbers and some a mixture of both. These are set out below:

2007 2008 and onwards

Buildings and associated costs: €395,000 (fixed) €425,000 (fixed, but variable beyond 44 staff, see below)

Computer equipment and software (excludes DG Budget SLA):

€20,000 (fixed) €20,000 (fixed) in 2008 plus €2,000 (variable for new staff beyond 2007 total numbers, see below). From 2009 onwards €2,000 variable only.

Furniture: €20,000 (fixed) €2,000 (variable for new staff beyond 2007 total numbers, see below)

Documentation and library expenditure:

€5,000 (fixed) €5,000 (fixed)

Office supplies: €15,000 (fixed) €15,000 (fixed)

Postal charges: €8,000 (fixed) €8,000 (fixed)

67 These assumptions are detailed in the main report, but are summarised here for completeness.


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2007 2008 and onwards

Interim Agents: €46,667 (fixed per capita) €46,667 (fixed per capita)

Data Agents: €100,000 (fixed per capita) €100,000 (fixed per capita)

Source: PHEA budget and consultations with PHEA

• Building costs: the Agency is currently located in the HITEC building alongside DG SANCO/C, although expects to move to new premises shortly. The building cost for 2007 is therefore a weighted average of cost in the HITEC building and cost in the new building. From 2008 the building cost refers to the new premises. The new building will have office space for up to 44 staff at a cost of €425,000. If staff numbers exceed this level, additional space can be obtained for the average per capita cost, i.e. €9,659.

• Office furniture/computer equipment and software: the 2007 budget includes allowance for furniture for foreseen new staff of €2,000 per capita with the same amount for computer equipment and software. Similar per capita charges are added to the Agency overhead for all new staff in excess of the 2007 total from 2008 onwards.

• Interim Agents/data collection costs: the Agency budget shows three Interim Agents and three data collection agents. These additional resources are used at time of peak workload to process data. The cost of these staff has been included as an Agency overhead. On the advice of the Agency the requirement for the Interim Agents remains at 3 throughout the period examined, whilst the requirement for data collection agents reduces from 3 to 1 from 2009 onwards as the Agency staff profile is built up.

• Service Level Agreements: SLAs are signed between the Agency and Commission services to provide various services for a charge. This charge can be fixed, variable according to staff numbers, or a mixture of both. SLAs have not been included in the analysis because these are effectively an intra-Commission transfer and do not represent an additional cost for the Commission as a result of the operation of the Agency (i.e. they are budget neutral). The inclusion of SLAs in the analysis would decrease the financial advantage shown under Agency continuation and outsourcing options. The impact of the inclusion of SLAs is considered in relation to the different scenarios in the following sub-sections.

• PHEA staff profiles: the staff mix in all scenarios is based on the EA Guidelines of May 2006, the CEOS and DG ADMIN consultations. This is as follows:

PHEA staff mix AD 10.00% AST 15.00% CA 75.00%

• Commission staff profiles: in the baseline scenario, the current mix of staff grades and Contractual Agents within the Commission was simply extrapolated forward. An alternative set


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of scenarios in which the number and proportion of Contractual Agents can be used within DG SANCO was also examined. In the case of option 3.3.1 (re-internalisation of the PHP), the DG SANCO/C staff mix under the alternative scenario is assumed to stay the same as in PHEA (i.e. increased use of contract agents than is currently the practice in the Commission). In the case of the extension in scope (option 4.3.2), the DG SANCO/B and E staff mix under the alternative scenario is assumed to follow a different pattern than is currently the case in these Directorates, with an increased use of contract agents (while financial tasks are almost thoroughly performed by contract agents). The staff mix under the baseline and the alternative set of scenarios in this case is indicated in the Table below: Baseline Alternative SANCO/B staff requirements (CP) AD 42.60% 30.00% AST (i) 38.78% 20.00% AST (ii) 16.62% 10.00% CA 1.99% 40.00% SANCO/E staff requirements (FST) AD 53.33% 30.00% AST (i) 13.33% 20.00% AST (ii) 6.67% 10.00% CA 26.67% 40.00% SANCO/A staff requirements (CP) AD 0.00% 0.00% AST (i) 40.00% 10.00% AST (ii) 60.00% 0.00% CA 0.00% 90.00% SANCO/O.4 staff requirements (FST) AD 0.00% 0.00% AST (i) 100.00% 10.00% AST (ii) 0.00% 0.00% CA 0.00% 90.00%

CP: Consumer Policy FST: Food Safety Training (i) former grade B (assistant) (ii) former grade C (secretary)

The impact of this alternative set of scenarios is examined both in the main report and in the sub-sections below.

• Commission staff costs: the Commission staff cost made available to the consultants was a weighted average across all grades. The composition of the average Commission staff cost is detailed below:


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PERSONNEL:

RÉMUNÉRATIONS ET ALLOCATIONS

Traitement de base

Indemnités relatives aux fonctions

Indemnités forfaitaires Indemnités forfaitaires de fonctions Indemnité spéciale pour les compatbes et les régisseurs d'avances Indemnités pour services continus ou pour astreinte Heures supplémentaires Autres indemnités et remboursements

Allocations relatives à la situation familiale

Allocations familiales Allocations à la naissance et en cas de décès

Indemnités relatives à l'expatriation

Indemnités de dépaysement et d'expatriation Frais de voyage annuels du lieu d'affectation au lieu d'origine Indemnités de logement et de transport Indemnités forfaitaires de déplacement Coefficients correcteurs

Charges patronales

Couverture des risques de maladie Couverture des risques d'accident et de maladie professionnelle Couverture du risque de chômage des agents temporaires Droits à pension pour les agents temporaires

Indemnités à l'entrée et à la cessation des fonctions

Frais de recrutement

PERFECTIONNEMENT PROFESSIONNEL

DÉPENSES SOCIALES

Crèches, garderies, scolarité

Service médical

Autres dépenses sociales Source: DG Budget


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Whilst the use of a weighted average is consistent with the treatment of Commission staff costs internally within the Commission and as used in previous CBAs, it may distort the overall staff costs if there is a relatively high proportion of grade AD staff; furthermore, it is not known how the staff mix involved in the programmes’ implementation compares to the Commission average. In order to assess the impact of using this average, staff costs were further disaggregated under the scenarios examined in the sub-sections below. This was on the assumption that the average cost provided by DG Budget was close to the average cost for Grade AD staff within DG SANCO, Grade AST (former grade B) staff costs were 15% lower than Grade AD costs, and Grade AST (former grade C) costs were 20% lower than Grade AD costs. Similarly, an average staff cost was also used for the Agency. This cost was also differentiated with the cost of Grade AD staff being set at 40% higher than the average and the cost of Grade AST set at 20% less than the average.

• Commission overheads: a figure of €22,000 per capita is used (source: DG Budget). The composition of this cost is detailed below:

FONCTIONNEMENT:

DÉPENSES IMMOBILIÈRES

Loyers et redevances non acquisitives

Redevances acquisitives

Construction et achat de biens immobiliers

DÉPENSES LIÉES AUX IMMEUBLES

Eau, gaz, électricité et chauffage

Assurances

Nettoyage et entretien

Sécurité

Aménagement des locaux

Autres dépenses liées aux immeubles

ACQUISITION D'INFORMATIONS

Acquisition d'informations

EQUIPEMENTS ET AUTRES INVESTISSEMENTS

Matériel et installations techniques générales

Matériel de transport

Mobilier

Equipement et logiciels informatique et télécommunications


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FONCTIONNEMENT:

Développement des systèmes informatiques

Mobilité

DEPENSES DE FONCTIONNEMENT COURANT

Papeterie et fournitures de bureau

Affranchissement de correspondance

Abonnements et redevances de télécommunications

Travaux de manutention et frais de déménagement

Autres dépenses de fonctionnement

Frais de réunions internes

Services informatiques (gestion de systèmes et support) Source: DG Budget

• Public Health Programme phase out periods: there are two phase out periods, 2009/10 in the context of the PHP for the 2003-08 period and 2014/15 in the context of all three programmes for the 2008-13 period. Staff are required in these periods to close off outstanding projects. In the 2009/10 period these staff are additional to those required to implement the 2008-13 PHP.

• 2008-13 PHP: the presumption is that the 2008-13 PHP will be implemented from its entry into force on 1 January 2008, in which case the new programme will replace the old one. The impact of a delayed start in 2009 is examined in the sub-sections below.

• Transition of tasks from DG SANCO to the Agency (options 4.3.2 and 4.3.3): it is assumed that there is no transition period for the handover of tasks relating to consumer policy and better food safety training. The impact of adding in a transition period is examined in the sub-sections below. The transition period represents a continued staff requirement for DG SANCO to provide continued inputs in the context of the outsourced tasks; a justification for this continued involvement would be to ensure a smooth transfer of the tasks from DG SANCO to the Agency, although arguments have been expressed in the main report against a transition period. We have assumed a two-year transition period in the outsourcing scenario, whereby in the first year there would be a continued staff requirement for 30% of the outsourced DG SANCO inputs, and in year 2 this continued requirement would be reduced to 15%.

• Inflation rate: a 2% inflation rate was used for all costs (i.e. staff costs and overhead costs) on the advice of DG Budget. An increase (decrease) in the inflation rate would widen (reduce) the gap between the cost of different options.


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• Discount factor: discounting monetary flows takes into account time preference in that people prefer to receive benefits now and defer costs until later. A discount factor of 2.5% was used in the analysis on the advice of the DG SANCO Steering Committee. An increase (decrease) in the discount factor would decrease (increase) the gap between the options.

A1B.2. Full results

This section of the Appendix contains the full results set out on an annual basis for the options considered. At the end of each Table, the NPV for the option over the entire time period is presented. Results for the closure (option 3.3.1) or extension of PHEA in time (option 3.3.2) are presented respectively in Table B-1 and Table B-2. In the case of the new outsourcing options 4.3.1 and 4.3.2, results are presented aggregated for the two programmes (consumer policy and food safety training) in Table B-3 (no outsourcing) and Table B-5 (outsourcing). Disaggregated results for each of the two programmes are presented in Table B-4 (no outsourcing) and Table B-6 (outsourcing).


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A1B.2.1. PHEA closure or extension

Table B-1: Full results for option 3.3.1, closure of PHEA

2007 2008 2009 2010 2011 2012 2013 2014 2015 NPV

2008-15PHEA staff requirements AD 5.0 5.0 3.5 2.0 AST 4.0 4.0 2.8 1.6 CA 28.0 28.0 19.6 11.2 PHEA staff costs

AD €100,225 €99,737 €99,250 €98,766

AST €100,225 €99,737 €99,250 €98,766

CA €51,213 €50,963 €50,715 €50,467

Total PHEA staff costs €2,335,998 €2,324,603 €1,619,285 €920,792

PHEA overheads €903,000 €908,546 €686,256 €682,908 SANCO/C staff requirements AD 0.0 18.0 18.0 18.0 18.0 18.0 18.0 12.6 7.2 AST (i) 1.5 8.4 8.4 8.4 8.4 8.4 8.4 5.9 3.4 AST (ii) 0.0 6.9 6.9 6.9 6.9 6.9 6.9 4.8 2.8 CA 0.0 5.2 5.2 5.2 5.2 5.2 5.2 3.6 2.1 SANCO/C staff costs

AD €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511

AST (i) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511

AST (ii) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511

CA €63,000 €62,693 €62,387 €62,083 €61,780 €61,478 €61,178 €60,880 €60,583

Total SANCO/C staff costs €175,500 €4,203,185 €4,182,682 €4,162,279 €4,141,975 €4,121,770 €4,101,664 €2,857,159 €1,624,698

Commission overhead €33,000 €842,868 €838,757 €834,665 €830,594 €826,542 €822,510 €572,949 €325,802

Grand total option 3.3.1 €3,447,498 €8,279,203 €7,326,979 €6,600,644 €4,972,569 €4,948,312 €4,924,174 €3,430,108 €1,950,500 €42,432,489


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Notes: Figures shown are inflated and discounted at 2.0% and 2.5% respectively, staff requirements are in Full Time Equivalents. Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (i) former grade B (assistant) (ii) former grade C (secretary)


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Table B-2: Full results for option 3.3.2, extension of PHEA

2007 2008 2009 2010 2011 2012 2013 2014 2015NPV

2008-15 PHEA staff requirements

AD 5.0 5.0 5.0 5.0 5.0 5.0 5.0 3.5 2.0

AST 4.0 4.0 4.0 4.0 4.0 4.0 4.0 2.8 1.6

CA 28.0 28.0 28.0 28.0 28.0 28.0 28.0 19.6 11.2

PHEA staff costs

AD €100,225 €99,737 €99,250 €98,766 €98,284 €97,805 €97,328 €96,853 €96,380

AST €100,225 €99,737 €99,250 €98,766 €98,284 €97,805 €97,328 €96,853 €96,380

CA €51,213 €50,963 €50,715 €50,467 €50,221 €49,976 €49,732 €49,490 €49,248

Total PHEA staff costs €2,335,998 €2,324,603 €2,313,264 €2,301,980 €2,290,750 €2,279,576 €2,268,456 €1,580,173 €898,552

PHEA overheads €903,000 €908,546 €686,256 €682,908 €679,577 €676,262 €672,963 €669,680 €666,413

SANCO/C staff requirements

AD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

AST (i) 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.1 0.6

AST (ii) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

CA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

SANCO/C staff costs

AD €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511

AST (i) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511

AST (ii) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511

CA €63,000 €62,693 €62,387 €62,083 €61,780 €61,478 €61,178 €60,880 €60,583

Total SANCO/C staff costs €175,500 €174,644 €173,792 €172,944 €172,101 €171,261 €170,426 €118,716 €67,507

Commission overhead €33,000 €32,839 €32,679 €32,519 €32,361 €32,203 €32,046 €22,323 €12,694



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Notes: Figures shown are inflated and discounted at 2.0% and 2.5% respectively, staff requirements are in Full Time Equivalents. Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (i) former grade B (assistant) (ii) former grade C (secretary)


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A1B.2.2. Extension of remit to include consumer policy and food safety training

Table B-3: Full results for option 4.3.1, no outsourcing of consumer policy or food safety training

2007 2008 2009 2010 2011 2012 2013 2014 2015NPV

2008-15Total PHEA staff costs (PHP) €2,335,998 €2,324,603 €2,313,264 €2,301,980 €2,290,750 €2,279,576 €2,268,456 €1,580,173 €898,552PHEA overheads €903,000 €908,546 €686,256 €682,908 €679,577 €676,262 €672,963 €669,680 €666,413Service Level Agreements €254,365 €243,173 €233,956 €232,814 €231,679 €230,549 €229,424 €180,107 €131,265Total Brussels meetings €0 €0 €0 €0 €0 €0 €0 €0 €0 Total SANCO/C staff costs €175,500 €174,644 €173,792 €172,944 €172,101 €171,261 €170,426 €118,716 €67,507Commission overhead (C) €33,000 €32,839 €32,679 €32,519 €32,361 €32,203 €32,046 €22,323 €12,694 SANCO/B staff requirements (CP) AD 4.3 4.3 4.3 4.3 4.3 4.3 4.3 3.0 1.7AST (i) 3.9 3.9 3.9 3.9 3.9 3.9 3.9 2.7 1.5AST (ii) 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.2 0.7CA 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1SANCO/E staff requirements (FST) (a) AD 6.0 6.0 6.0 6.0 6.0 6.0 6.0 4.2 2.4AST (i) 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.1 0.6AST (ii) 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.4 0.2CA 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.4 0.8SANCO/A staff requirements (CP) AD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0AST (i) 1.0 1.0 1.0 1.0 1.0 1.0 1.0 0.7 0.4AST (ii) 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.1 0.6CA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0SANCO/O.4 staff requirements (FST) AD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0AST (i) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0AST (ii) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0CA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


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2007 2008 2009 2010 2011 2012 2013 2014 2015NPV

2008-15 SANCO staff costs AD €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511AST (i) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511AST (ii) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511CA €63,000 €62,693 €62,387 €62,083 €61,780 €61,478 €61,178 €60,880 €60,583 Total SANCO/B staff costs €1,163,696 €1,158,019 €1,152,370 €1,146,749 €1,141,155 €1,135,588 €1,130,049 €787,175 €447,620Total SANCO/E staff costs €1,062,000 €1,056,820 €1,051,664 €1,046,534 €1,041,429 €1,036,349 €1,031,294 €718,384 €408,503Total SANCO/A staff costs €292,500 €291,073 €289,653 €288,240 €286,834 €285,435 €284,043 €197,860 €112,511Total SANCO/0.4 staff costs €0 €0 €0 €0 €0 €0 €0 €0 €0

Commission overhead (A, B and E) €495,825 €493,406 €490,999 €488,604 €486,221 €483,849 €481,489 €335,398 €190,721 Grand total option 4.3.1 €6,461,519 €6,439,951 €6,190,677 €6,160,479 €6,130,428 €6,100,523 €6,070,765 €4,429,710 €2,804,521 €44,327,052

Notes: The extension of PHEA’s mandate for public health policy is assumed. Figures shown are inflated and discounted at 2.0% and 2.5% respectively, staff requirements are in Full Time Equivalents. Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (a) Includes inputs from other Units in DG SANCO/E to provide on-site training, as follows: 2 FTE man years (COM AD) in baseline, assumed to increase to 3 FTEs (COM AD) with the increase in programme budget. (i) former grade B (assistant) (ii) former grade C (secretary)


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Table B-4: Results for option 4.3.1 separated by programme, no outsourcing of consumer policy or food safety training

2007 2008 2009 2010 2011 2012 2013 2014 2015NPV

2008-15Total SANCO staff costs (A, B and E) €2,518,196 €2,505,912 €2,493,688 €2,481,523 €2,469,418 €2,457,372 €2,445,385 €1,703,420 €968,634

Staff costs relating to Consumer Policy €1,456,196 €1,449,092 €1,442,023 €1,434,989 €1,427,989 €1,421,023 €1,414,092 €985,035 €560,132Staff costs relating to Food Safety Training €1,062,000 €1,056,820 €1,051,664 €1,046,534 €1,041,429 €1,036,349 €1,031,294 €718,384 €408,503 Total Commission overhead (A, B and E) €495,825 €493,406 €490,999 €488,604 €486,221 €483,849 €481,489 €335,398 €190,721

Commission overhead (CP) €275,825 €274,480 €273,141 €271,808 €270,482 €269,163 €267,850 €186,580 €106,097Commission overhead (FST) €220,000 €218,927 €217,859 €216,796 €215,739 €214,686 €213,639 €148,818 €84,624

Sub-total for Consumer Policy €1,732,021 €1,723,572 €1,715,164 €1,706,797 €1,698,471 €1,690,186 €1,681,941 €1,171,616 €666,229Sub-total for Food Safety Training €1,282,000 €1,275,746 €1,269,523 €1,263,330 €1,257,168 €1,251,035 €1,244,933 €867,202 €493,127


Notes: Figures shown are inflated and discounted at 2.0% and 2.5% respectively. The extension of PHEA’s mandate for public health policy is assumed.


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Table B-5: Full results for option 4.3.2, outsourcing of consumer policy and food safety training

2007 2008 2009 2010 2011 2012 2013 2014 2015 NPV

2008-15PHEA staff requirements (PHP) AD 5.0 5.0 5.0 5.0 5.0 5.0 5.0 3.5 2.0 AST 4.0 4.0 4.0 4.0 4.0 4.0 4.0 2.8 1.6 CA 28.0 28.0 28.0 28.0 28.0 28.0 28.0 19.6 11.2 PHEA staff requirements (CP) AD 0.0 0.7 0.7 0.7 0.7 0.7 0.7 0.5 0.3 AST 0.0 1.3 1.3 1.3 1.3 1.3 1.3 0.9 0.5 CA 0.0 6.0 6.0 6.0 6.0 6.0 6.0 4.2 2.4 PHEA staff requirements (FST) AD 0.0 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.1 AST 0.0 0.7 0.7 0.7 0.7 0.7 0.7 0.5 0.3 CA 0.0 4.0 4.0 4.0 4.0 4.0 4.0 2.8 1.6 PHEA staff costs AD €100,225 €99,737 €99,250 €98,766 €98,284 €97,805 €97,328 €96,853 €96,380 AST €100,225 €99,737 €99,250 €98,766 €98,284 €97,805 €97,328 €96,853 €96,380 CA €51,213 €50,963 €50,715 €50,467 €50,221 €49,976 €49,732 €49,490 €49,248

Total PHEA staff costs €2,335,998 €3,133,447 €3,118,162 €3,102,951 €3,087,815 €3,072,752 €3,057,763 €2,129,993 €1,211,202

PHEA overheads €903,000 €1,018,500 €744,210 €740,862 €737,531 €734,216 €730,917 €669,680 €666,413 Service Level Agreements €254,365 €295,631 €290,173 €288,758 €287,349 €285,947 €284,553 €218,508 €153,102 Total Brussels meetings €38,400 €38,213 €38,026 €37,841 €37,656 €37,473 €37,290 €37,108 €36,927 Total SANCO/C staff costs €175,500 €174,644 €173,792 €172,944 €172,101 €171,261 €170,426 €118,716 €67,507 Commission overhead (C) €33,000 €32,839 €32,679 €32,519 €32,361 €32,203 €32,046 €22,323 €12,694 SANCO/B staff requirements (CP) AD 4.3 2.0 2.0 2.0 2.0 2.0 2.0 1.4 0.8 AST (i) 3.9 1.8 1.8 1.8 1.8 1.8 1.8 1.2 0.7 AST (ii) 1.7 0.8 0.8 0.8 0.8 0.8 0.8 0.5 0.3 CA 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0


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2007 2008 2009 2010 2011 2012 2013 2014 2015 NPV

2008-15 SANCO/E staff requirements (FST) (a) AD 6.0 3.8 3.8 3.8 3.8 3.8 3.8 2.7 1.5 AST (i) 1.5 1.0 1.0 1.0 1.0 1.0 1.0 0.7 0.4 AST (ii) 0.5 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 CA 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SANCO/A staff requirements (CP) AD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AST (i) 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AST (ii) 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

SANCO/O.4 staff requirements (FST)

AD 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AST (i) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 AST (ii) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 CA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SANCO staff costs AD €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511 AST (i) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511 AST (ii) €117,000 €116,429 €115,861 €115,296 €114,734 €114,174 €113,617 €113,063 €112,511 CA €63,000 €62,693 €62,387 €62,083 €61,780 €61,478 €61,178 €60,880 €60,583 Total SANCO/B staff costs €1,163,696 €528,298 €525,721 €523,156 €520,604 €518,065 €515,538 €359,116 €204,208 Total SANCO/E staff costs €1,062,000 €582,146 €579,307 €576,481 €573,669 €570,870 €568,085 €395,720 €225,023 Total SANCO/A staff costs €292,500 €0 €0 €0 €0 €0 €0 €0 €0 Total SANCO/O.4 staff costs €0 €0 €0 €0 €0 €0 €0 €0 €0 Total Commission overhead €1,163,696 €528,298 €525,721 €523,156 €520,604 €518,065 €515,538 €359,116 €204,208



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Notes: The extension of PHEA’s mandate for public health policy is assumed. Figures shown are inflated and discounted at 2.0% and 2.5% respectively, staff requirements are in Full Time Equivalents. Staff numbers presented in decimal points due to the fact that these are Full Time Equivalent totals (FTEs) (a) Includes inputs from other Units in DG SANCO/E to provide on-site training, as follows: 2 FTE man years (COM AD) in baseline, assumed to increase to 3 FTEs (COM AD) with the increase in programme budget. (i) former grade B (assistant) (ii) former grade C (secretary)


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Table B-6: Results for option 4.3.2 separated by programme, outsourcing of consumer policy and food safety training

2007 2008 2009 2010 2011 2012 2013 2014 2015 NPV

2008-15Total PHEA staff costs €2,335,998 €3,133,447 €3,118,162 €3,102,951 €3,087,815 €3,072,752 €3,057,763 €2,129,993 €1,211,202 PHEA staff costs (PHP) €2,335,998 €2,324,603 €2,313,264 €2,301,980 €2,290,750 €2,279,576 €2,268,456 €1,580,173 €898,552 PHEA staff costs (CP) €0 €505,253 €502,789 €500,336 €497,895 €495,467 €493,050 €343,451 €195,300 PHEA staff costs (FST) €0 €303,590 €302,109 €300,635 €299,169 €297,710 €296,257 €206,368 €117,350 PHEA overheads €903,000 €1,018,500 €744,210 €740,862 €737,531 €734,216 €730,917 €669,680 €666,413 Service Level Agreements €254,365 €295,631 €290,173 €288,758 €287,349 €285,947 €284,553 €218,508 €153,102 Total Brussels meetings €38,400 €38,213 €38,026 €37,841 €37,656 €37,473 €37,290 €37,108 €36,927 Brussels meetings (CP) €19,200 €19,106 €19,013 €18,920 €18,828 €18,736 €18,645 €18,554 €18,463 Brussels meetings (FST) €19,200 €19,106 €19,013 €18,920 €18,828 €18,736 €18,645 €18,554 €18,463 Total Commission overhead €495,825 €208,801 €207,783 €206,769 €205,761 €204,757 €203,758 €141,935 €80,710 Sub-total Commission overhead (CP) €275,825 €99,338 €98,853 €98,371 €97,891 €97,414 €96,939 €67,526 €38,398 Sub-total Commission overhead (FST) €220,000 €109,463 €108,929 €108,398 €107,869 €107,343 €106,819 €74,409 €42,312 Sub-total costs relating to CP €1,751,221 €1,151,996 €1,146,376 €1,140,784 €1,135,219 €1,129,681 €1,124,171 €788,647 €456,370 Sub-total costs relating to FST €1,301,200 €1,014,306 €1,009,358 €1,004,435 €999,535 €994,659 €989,807 €695,051 €403,148 Grand total option 4.3.2 €6,004,094 €5,508,087 €5,211,895 €5,186,754 €5,161,736 €5,136,839 €5,112,064 €3,732,656 €2,423,973 €38,934,279 Notes: The extension of PHEA’s mandate for public health policy is assumed. Figures shown are inflated and discounted at 2.0% and 2.5% respectively, staff requirements are in Full Time Equivalents. Sub-total costs for CP and FST include PHEA staff costs associated with these policy areas, mission costs, SANCO costs and Commission overhead.


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A1B.3. Scenario analysis

A1B.3.1. PHEA closure or extension

Table B-7 shows the impact of adjusting the assumptions as discussed in section A1B.1 as applicable to these scenarios. The baseline scenario is as presented in the main report. The inclusion of the Service Level Agreements (SLAs) increases the cost of both options, but more so in the case of extension as would be expected. Using differentiated staff costs (instead of the Commission average staff cost) reduces the cost of the closure option, but increases the cost of the extension option. However, it is emphasised that the differentiated staff costs used here are an assumption and this conclusion should therefore be used with caution. Finally, introducing the new PHP from 2009 rather than 2008 would significantly reduce the cost under the closure scenario as DG SANCO staff would not be involved in 2008. The advantage would be even larger if a new staff mix was used in DG SANCO. However, starting the programme in 2009 does not alter the cost of extending the mandate in time as the current PHP would merely continue in 2008.

Table B-7: Cost of closure/extension of the Agency under different assumptions

Closure of PHEA Extension of PHEA in time

Baseline €42,432,489 €23,351,012

SLAs included €43,009,149 €25,063,978

Differentiated staff costs €40,538,956 €24,004,825

New DG SANCO staff mix (a) €35,088,628 €23,351,012

New PHP from 2009 €37,593,918 €23,351,012 New DG SANCO staff mix (a), and new PHP from 2009 €30,250,058 €23,351,012

(a) Assumes staff mix in DG SANCO Directorates B and E is different than current practice, as follows: COM grade AD (30%), AST (30%) and C.A. (40%). For PHEA, the staff mix considered is based on the EA Guidelines of May 2006, the CEOS and DG ADMIN consultations.

A1B.3.2. Outsourcing of consumer policy and food safety training

Table B-8 shows the impact of adjusting the assumptions as discussed in section A1B.1 as applicable to these scenarios. The baseline scenario is as presented in the main report. The inclusion of the Service Level Agreements in the analysis increases the cost of all options, but less so in the case of no outsourcing and more so in the case of outsourcing, as would be expected.


86

Using differentiated staff costs reduces the cost of the no outsourcing option, but increases the cost of the outsourcing options, thus reducing the cost advantage of the latter. Again, we draw attention to the need for caution in the interpretation of this result. If a different staff mix than current practice in DG SANCO is introduced in the calculations, the cost of all options is reduced. As would be expected, the main cost difference compared to the assumption of continuing with the current staff mix is felt at the no outsourcing option. Nonetheless, even with this more advantageous staff mix in DG SANCO, there is a significant cost advantage in outsourcing programme implementation to the Agency. Consideration of transition issues is included in the calculations according to the assumptions outlined in section A1B.1. Although the cost advantage of the outsourcing options is eroded, particularly if the existing staff mix is used in DG SANCO, these options remain advantageous over the no outsourcing option. Finally, results are presented in aggregate for the two programmes together, as well as separately for each programme. It is noted that the aggregate calculations incorporate the costs of PHEA’s extension in time, while the calculations for each programme refer specifically to this programme.


87

Table B-8: Cost of outsourcing consumer policy and/or food safety training under different assumptions

No outsourcing Outsourcing

Baseline (both programmes) (a) €44,327,052 €38,934,279

SLAs included €46,040,019 €39,578,026

Differentiated staff costs €43,610,873 €37,633,455

New DG SANCO/PHEA staff mix (b) €41,295,374 €36,125,555

Transition period €44,327,052 €37,474,004 New DG SANCO/PHEA staff mix (b), and transition period €41,295,374 €38,609,908

Baseline: consumer policy only €12,053,977 €8,073,244



Baseline: food safety training only €8,922,064 €7,110,299



(a) All results assume extension of PHEA in time (therefore these costs are incorporated).

(b) Assumes staff mix in DG SANCO Directorates B and E is different than current practice, as follows: COM grade AD (30%), AST (30%) and C.A. (40%). For PHEA, the staff mix considered is based on the EA Guidelines of May 2006, the CEOS and DG ADMIN consultations.


88

Appendix 2: DG SANCO organigramme


89


90

Appendix 3: PHEA organigramme


91

Source: PHEA, June 2007

PHEA ORGANISATION CHART

DIRECTOR Accountant

Internal Audit Capability

Internal Controller

Ex-Post Controller SECRETARY

Head of Administration section Head of Scientific Unit

Human Resources

IT Cell Financial Cell Co-ordination/Program Manager

Project Officer Health Information

Project Officers Health threats

Project Officers Health determinants

Project Assistants


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Appendix 4: List of persons consulted

This list comprises mainly those persons with whom formal interviews were carried out. The consultants also had informal contacts with many of these (and other members of their teams) in order to follow up specific issues and to receive additional input. DG SANCO Robert Shotton: Director A (General Affairs) Agne Pantelouri: Director B (Consumer Affairs) Daniel Janssens: Head of Unit A.3 (Financial resources and controls) Carina Törnblom: Head of Unit A.5 (Human Resources) Tomas Molnar: Head of Unit B.5 (Enforcement and Consumer Redress) Antoni Montserrat: Acting Head of Unit C.2 (Health Information) John Ryan: Head of Unit C.3 (Health Threats) Michael Huebel: Head of Unit C.4 (Health Determinants) Eric Poudelet: Head of Unit E.2 (Hygiene and control measures) Ludwig Vandenberghe: Deputy Head of Financial Cell Veterinary Control Programme (DDG.4) Johan Vernelen: Deputy Head of Unit A.5 (Human Resources) David Mair: Deputy Head of Unit B.1 (Policy analysis and development; relations

with consumer organisations and international relations) Willem Daelman: Deputy Head of Unit E.2 Bart Van Uythem: Head of Sector Budget and Financial Management, Unit A.3 Jean-Luc Sion: Head of Finance and Contracts Section, Unit C.1 Salvatore Magazzù: Head of Sector Food Safety Training, Unit E.2 Ernest Franken: Internal Control Officer, Unit A.3 Michal Zyrnicki: Member of Central Financial Cell, Unit A.3 Ginette Nabavi: Principal Administrator Responsible for Education and Training, Unit

B.1 Antonia Fokkema: Desk officer consumer policy, Unit B.1 Vicky Pelleni: Desk officer consumer policy, Unit B.1 Robert Nuij: Policy Officer, Product and service safety, Unit B.3 Antonella Correra: Policy Officer, Product and service safety, Unit B.3 Isabelle Rouveure: Policy Officer, Unit B.3 Jesus Orus Baguena Policy Officer, Unit B.5 Lauro Panella: Economic Analyst, Unit E.2 Marc Vallons: Financial Cell Veterinary Control Programme (DDG.4) Daniella Heyninck: Administrative Assistant, Unit E.2


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PHEA Luc Briol: Director Dr Michel Pletschette: Head of Scientific Unit Silvia Bento: Accountant Robert Geeraerts: Acting Head of Administrative Sector Dominique Claeys: Coordination / Programme Manager Christian Pyckavet: Human Resources Cell Other Jean-Luc Feugier: HRM Officer, Responsable de l'équipe "Agences de régulation &

exécutives", DG ADMIN, Unit A.1 (General policy, agencies and co-ordination)

Francesco Bonanomi: Budget Officer, DG BUDGET, Unit A.3 (Internal policies) Stephan Webers: Budget Officer, DG BUDGET, Unit A.6 (Allocation of human

resources) Martin Schauer: Legal Officer, DG BUDGET, Unit D.1 (Financial regulations) Jutta Haug MEP EP Committee on Budgets


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Appendix 5: List of background documents

Commission of the European Communities (2004) Decision of 15 December 2004 setting up an executive agency, the “Executive Agency for the Public Health Programme”, for the management of Community action in the field of public health – pursuant to Council Regulation (EC) No 58/2003. Commission Decision 2004/858/EC. Commission of the European Communities (2004) Draft Commission Decision of 15 December 2004 delegating powers to the agency for the Public Health Programme (‘Delegation Act’). Not published in the Official Journal. Commission of the European Communities (2004) Legislative financial statement for the setting up or extension of the lifetime of an Executive Agency: Executive Agency for the Public Health Programme (‘Financial Fiche’). Version of 9/9/04 (original in French). Commission of the European Communities (2005) Commission Staff Working Paper. Appendix to the Health and consumer protection strategy and programme. Extended Impact Assessment. SEC(2005) 425. Brussels, 6.4.2005. Commission of the European Communities (2005) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Healthier, safer, more confident citizens: a Health and Consumer protection Strategy. Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a Programme of Community action in the field of Health and Consumer protection 2007-2013. COM(2005) 115 final. Brussels, 6/4/2005. Commission of the European Communities (2005) Commission Regulation (EC) No 1821/2005 of 8 November 2005 amending Regulation (EC) No 1653/2004 as regards the posts of accounting officers of executive agencies Commission of the European Communities (2006) Decision No 1926/2006/EC of the European Parliament and of the Council of 18 December 2006 establishing a programme of Community action in the field of consumer policy (2007-2013). Commission of the European Communities (2006) Amended proposal for a Decision of the European Parliament and of the Council establishing a second Programme of Community action in the field of Health and consumer protection (2007-2013) - Adaptation following the agreement of 17 May 2006 on the Financial Framework 2007-2013. COM(2006) 234 final.


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Commission of the European Communities (2006) Commission Staff Working Document: Guidelines for the establishment and operation of executive agencies financed by the general budget of the European Communities. SEC(2006) 663 final. Commission of the European Communities (2006) Commission Staff Working Document accompanying the Communication from the Commission to the Council and the European Parliament Better training for safer food – Executive Summary of the impact assessment. SEC(2006) 1164. Commission of the European Communities (2006) Commission staff working document - Document accompanying the Communication from the Commission to the Council and the European Parliament - Better training for safer food - Impact assessment. SEC(2006) 1163. Commission of the European Communities (2006) Communication from the Commission to the Council and the European Parliament Better training for safer food. COM(2006) 519 final. Commission of the European Communities (2007) Better Training for Safer Food – Annual Report 2006. Prepared for: DG Health and Consumer Protection, Luxembourg. ISBN: 978-92-79-04990-3. Commission of the European Communities (2007) Commission Staff Working Document. Accompanying document to the Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee. EU Consumer Policy Strategy 2007-2013. Review of Consumer Policy Strategy 2002-2006. SEC(2007) 321. Brussels, 13.3.2007. Commission of the European Communities (2007) Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee. EU Consumer Policy Strategy 2007-2013. Empowering consumers, enhancing their welfare, effectively protecting them. COM(2007) 99 final. Brussels, 13.3.2007. Consumer Policy Evaluation Consortium (2006) Ex-post evaluation of the impact of the Consumer Policy Strategy 2002-2006 on national consumer policies. Final Report. 22 December, 2006. The Council of the European Union (2002) Council Regulation (EC) No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes. Cowi (2004) Cost-benefit assessment of the externalisation of the management of Community financial support to the TEN-T networks. Final report for the Commission of the European Communities. June, 2004.


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DG SANCO internal document (2006) Conclusions of the meeting of 16.11.2006 on transfer of actions in the area of the consumer policy to the PHEA. Meeting held between Dir. A (R. Shotton, D. Janssens, M. Zyrnicki), Dir. B (A. Pantelouri) of DG SANCO and the PHEA (L. Briol). Brussels 28.11.2006. DG SANCO internal document (2006) Meeting of 04.10.2006 on transfer of training activities (“better training for safer food”) to the Public Health Executive Agency. Meeting held between Dir. A (R. Shotton, D. Janssens, M. Zyrnicki) and Dir. E (W. Daelman, S. Magazzu) of DG SANCO. Brussels 05.10.2006. European Commission (no date) Guide to cost-benefit analysis of investment projects. Prepared for: Evaluation Unit DG Regional Policy, European Commission. European Commission Public Health Executive Agency (no date) Community action in the field of public health (2003-2008). Call for proposals 2006. Evaluation summary. The European Parliament and the Council of the European Union (2002) Decision No 1786/2002/EC of the European Parliament and of the Council of 23 September 2002 adopting a programme of Community action in the field of public health (2003-2008). As amended by Decision No 786/2004/EC. The European Parliament and the Council of the European Union (2004) Decision No 786/2004/EC of the European Parliament and of the Council of 21 April 2004 amending Decision No 1786/2002/EC with a view to adapting the reference amounts to take account of the enlargement of the European Union. The European Parliament and the Council of the European Union (2006) Decision No 1926/2006/EC of the European Parliament and of the Council of 18 December 2006 establishing a programme of Community action in the field of consumer policy (2007-2013). European Policy Evaluation Consortium (2005) Cost-benefit analysis for FP7 research agencies. Draft final report for the Commission of the European Communities. 13 September, 2005. Eureval-C3E (2002) Externalisation arrangements for the Public Health Action Programme: a cost-effectiveness assessment. Final report for the Commission of the European Communities. 25 july, 2002. Eureval-C3E (2002) Externalisation arrangements for “Intelligent Energy for Europe” programme: a cost-effectiveness assessment. Final report for the Commission of the European Communities. 10 December, 2002. PHEA (2007) Annual Activity Report 2006, 27 March 2007, Luxembourg PHEA bi-monthly reports


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Tavistock Institute (2003) The Evaluation of Socio-Economic Development. The Guide. December 2003. Technopolis (2004) Cost-benefit study for the creation of an executive agency in the field of education and culture. Final report for the Commission of the European Communities. February, 2004. Technopolis (2006) Cost-benefit analysis concerning the extension of the Education, Audiovisual and Culture Executive Agency for the years 2009-2015. Final report for the Commission of the European Communities. November, 2006.

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