Selection Criteria for European Agricultural Fund for Rural Development (EAFRD), Study notes of Financial Management

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FAQs

Selection criteria

• Version: 28 July 2016 -

Contents

• 1. Background and Overview
• 2. FAQs
  • 2.1. FAQs by topic
    • 2.1.1 General aspects
    • 2.1.2 Eligibility and selection criteria
    • 2.1.3 Scoring systems/Selection process
    • 2.1.4 Minimum threshold.........................................................................................................
    • 2.1.5 Tie-break........................................................................................................................
    • 2.1.6 Block procedure.............................................................................................................
    • 2.1.7 First-come-first-served principle
    • 2.1.8 Sole beneficiaries and selection of non-productive investment projects
    • 2.1.9 Guidelines
    • 2.1.10 Controls
    • 2.1.11 Monitoring Committee (MC)
  • 2.2. Measure-specific questions
    • 2.2.1 Measure 4......................................................................................................................
    • 2.2.2 Measure 6......................................................................................................................
    • 2.2.3 Measure 7......................................................................................................................
    • 2.2.4 Measure 10....................................................................................................................
    • 2.2.5 Measure 13....................................................................................................................
    • 2.2.6 Measure 19/ LEADER/ CLLD
• 3. Further information

1. Background and Overview The Directorate-General for Agriculture and Rural Development (DG AGRI) and the European Network for Rural Development Contact Point (ENRD CP) responded to the demand for greater clarity on the setting up and application of selection criteria in the implementation of the European Agricultural Fund for Rural Development (EAFRD). They jointly held a workshop in Brussels entitled 'Selection criteria: towards a more performant RD policy' on 15 March 2016. More than 80 representatives of national and regional Managing Authorities (MAs) and Paying Agencies (PAs) as well as DG AGRI desk officers took part in the workshop. Selection criteria should ensure more effective and efficient EAFRD spending. At the same time, defining selection criteria that are targeted, transparent, easy to administer and understandable for beneficiaries, in accordance with Art. 49 of the EAFRD Regulation^1 , appears to present a challenge. This was also highlighted at the workshop, which has been documented in a brief report. Several issues raised by workshop participants will be included by DG AGRI in an updated version of Guidelines on Eligibility Conditions and Selection Criteria for the Programming Period 2014 – 2020. Furthermore, the comprehensive set of FAQs presented in this document brings together the questions raised at the workshop. They supplement the guidelines and are to be seen as a living document to which further FAQs might be added if necessary. The FAQs will also be available online. (^1) Regulation (EU) No 1305/2013.

2. FAQs This section of FAQs addresses questions raised concerning the definition and application of selection criteria. The first part deals with general questions organised by topic, and the second part includes measure-specific questions.

2.1. FAQs by topic

2.1.1 General aspects

1. Why are selection criteria to be applied? Selection criteria are to be used in order to ensure better value for money in the projects supported by the EAFRD. The legal base to apply selection criteria is Art. 49 of the EAFRD Regulation. Article 49 of Reg. EU 1305/2013 - Selection of operations

1. Without prejudice to point (d) of Article 34(3) of Regulation (EU) No 1303/2013, the Managing Authority of the rural development programme shall define selection criteria for operations following consultation with the Monitoring Committee. Selection criteria shall aim to ensure equal treatment of applicants, better use of financial resources and targeting of measures in accordance with the Union priorities for rural development. In defining and applying selection criteria the principle of proportionality shall be taken into account in relation to the size of the operation.
2. The Member State authority responsible for the selection of operations shall ensure that operations, with the exception of operations under Articles 28 to 31, 33 to 34 and 36 to 39, are selected in accordance with the selection criteria referred to in paragraph 1 and according to a transparent and well documented procedure.
3. Where appropriate, the beneficiaries may be selected on the basis of calls for proposals, applying economic and environmental efficiency criteria.

2.1.2 Eligibility and selection criteria

2. Why is it necessary to have eligibility criteria? Eligibility criteria are the requirements which have to be fulfilled in order to be eligible (not excluded) for support under the EAFRD. It is a yes/no condition: either the condition is fulfilled and the application is eligible for support or it is not.

6 ) Is it possible to use national legislation as a reference point for choosing selection criteria? Selection criteria should be in line with the overall strategy of the RDP and reflect the objectives of the measures concerned, but they might also be related to national legislation. 7 ) Is it possible to apply different scoring schemes between groups of beneficiaries within the same call? It is possible to have different scoring and ranking schemes within a call, provided that they are defined in advance, e.g. for different groups of beneficiaries. But in such a case it is also to be made explicit in the call how the budget is distributed. 8 ) Why is it necessary to use selection criteria if there is not a sufficient number of applications? Selection criteria and the minimum threshold should be used regardless of the number of applications and the budget available. The application of selection criteria is not only necessary for establishing ranking in the case that the budget is limited and only the best projects to be funded have to be selected; it is also for determining whether an application complies with the minimum threshold set in order ensure the better use of financial resources. Thus, even if the budget is sufficient, not all projects will be funded if some score below the minimum threshold. 9 ) For some areas, such as employment creation and improving environmental conditions, the application of related selection criteria appears to be a challenge prior to the realisation of the projects to be supported, but those fields are not to be ignored as the consideration of rural development priorities appears to be important. What can be done with those selection criteria which are not verifiable at the point an application is made for support? Selection criteria which appear to be not verifiable at the application stage should be subject to a plausibility check. The plausibility check should assess the expected benefits in light of the nature, type, scope and extent of the project; it might be performed by external experts. This assessment should be justified and documented in order to be checked by auditors if necessary. A system for a kind of plausibility check for projects submitted for support has been established in Denmark (for further information, see here). MAs are encouraged not to base the selection system exclusively on this type of criteria, and rely more on section criteria which are verifiable at the moment of application. In the case that selection criteria are not fulfilled when the project has been finalised, no penalty should be imposed on the beneficiary but it would be considered a deficiency/failure in a key control/ audit which could eventually lead to a financial correction to the Member State.

10 ) Considering that applicants are selected based on a kind of 'ex-ante assessment', the question arises how to avoid 'hurting beneficiaries' in the case framing conditions are changing, leading to the fact that originally stated objectives of a project cannot be achieved? It has to be differed between two cases: In the case that selection criteria are not fulfilled when the project has been finalised, no penalty should be imposed on the beneficiary as long as they do not constitute at the same time commitments or other obligations but it would be considered a deficiency/failure in a key control/audit which could eventually lead to a financial correction to the Member State (see also Question 9). In the case of non-compliance with eligible criteria at any stage of project implementation, a reduction or withdrawal of support might have to be enforced. Yet, a list of force majeure and exceptional circumstances that Member States may recognise is established in Art. 2(2) of Reg. (EU) 1306/2013. (See Guidance Document on Control and Penalty rules in Rural Development). In practice, cases of non-compliance with eligible criteria -- with which the beneficiary complied when it was selected -- due to changing framing conditions, should be rare. An example might be that for being eligible for an investment measure a farmer had to have a minimum of 10 hectares of arable land, and for some reason five hectares were destroyed (e.g. due to flooding events), so that they have less than 10 hectares before the completion of the project. Here it has to be seen whether the cause of the destruction of the land falls under the scope of Art. 2(2) of Reg. (EU) 1306/2013 or not. 11 ) Is it necessary/recommendable to set a maximum threshold for avoiding the case that too good projects are supported? In principle, a selection system consisting of eligible and selection criteria should allow for the selection of projects/applications targeted by the measure within a certain RDP without the need of additional exclusion of applicants by setting a maximum threshold. For instance, if the measure targets mid-performant holdings, the selection system should be defined accordingly: fewer points for low and high performant holdings and more points for mid-performant holdings. 12 ) How can the effect of 'targeting' be achieved with a set of selection criteria? MAs have to decide on the objectives pursued with one measure and have to define selection criteria taking into account that selection criteria should reflect the objectives of the measure and should ensure equal treatment of applicants. Thus, by means of selection criteria, the effect of targeting can be achieved at measure level. Increasing the number of selection criteria might lead to better targeting but at the same time also to increased administrative burdens. The effect of targeting is/can also be induced by the application of the eligibility criteria.

16 ) Is there a certain minimum threshold to be applied, e.g. 50%? What should be the minimum threshold? There is no minimum threshold which can be applied to all measures or all RDPs. A minimum threshold should be set on a case-by-case basis considering the scoring system in place. The minimum threshold shouldn't be easily met by all eligible applicants/projects and should ensure a minimum quality of the projects supported. It could be recommended that at least 30% be required, but it very much depends on the scoring system (e.g. difficulty to fulfil the criterion and number of points attributed). 17 ) Is there any rule on how to define a minimum threshold correctly? Is there a certain procedure to define a minimum threshold? The MA should decide on the procedure to define selection criteria, including the threshold, in accordance with the principles included in the RDP. Selection criteria, including the threshold and the reasoning behind it, should be discussed at regional national level in the Monitoring Committees. A minimum threshold has to be designed on a case-by-case basis under the consideration of the objectives pursued and the scoring system in place; there is no one correct solution. Yet, a minimum threshold should not be too low while ensuring a certain quality of projects are supported (see Question 15). The development of a selection/scoring system is subject of Question 4; an example can be found here. 18 ) If there is a sufficient budget for one measure, it is tempting to set the minimum threshold quite low. How would auditors assess and make judgements under such an approach? The establishment of selection criteria, including the threshold, does not depend on the budget availability. Even where there is sufficient budget to support all the applicants/project, selection criteria should ensure that only those leading to a better use of financial resources are supported. The auditor might look at the reasons for setting the threshold to ensure the quality of projects selected. 19 ) Does the Monitoring Committee need to be involved in defining a threshold? The Monitoring Committee has to be consulted on the selection criteria, including the threshold.

20 ) Programme agencies might have to deal with many applications, from which only a small proportion are selected due to the threshold. Is there a possibility of preventing programme agencies from a substantial workload, which finally has little effect as only a low number of beneficiaries are selected? The workload, which the programme agencies, i.e. all agencies involved in the implementation of the RDP including MA and PA, are confronted with in the selection procedure, strongly depends on the choice of eligibility and selection criteria. Indeed, the definition of the threshold determines the relationship between overall administrative costs and the number of supported applicants, and setting the threshold properly is challenging. There might be a trade-off between ensuring quality of projects and the number of beneficiaries. A clear communication to potential beneficiaries of the eligibility and selection criteria, including the threshold for selection in advance, might prevent the submission of applications that have little chance of been selected. Thus, the number of applications to be checked decreases. A simple, easy-to-apply selection criteria that avoids complexities might also contribute to reducing the burden associated with the selection process. Moreover, similarly the application of eligibility criteria can already have a 'filtering effect' and might lead to a lower number of applications being submitted. 21 ) Is it possible to change the threshold within a call? No, in order to ensure equal treatment of applicants a threshold should not be changed within the period that a call is open. 22 ) Can the threshold be changed if the budget available decreases faster than expected/ if it appears that the budget is not sufficient for having call over the whole funding period? The threshold should be fixed in order to ensure the quality of the applications selected for support is not directly linked to budget availability. If a threshold turns out not to be suitable, it might be changed, but the conditions of a call should not be changed within a call. The experience gained, however, could be used to define the conditions for setting the threshold for the next call. 23 ) If a MA implements a new measure, with which it has not gained experience in the former funding period/ in the past, what can be done should it turn out that the minimum threshold set is not suitable? Selection criteria (including the minimum threshold) should not be modified after a call has been launched. In order to ensure equal treatment of applicants, a threshold should not be

26 ) In the case of a tie-break and a MA has already applied several criteria for identifying which applicants on the tie-break will be supported, but could not come up with a final decision, is it possible to apply the first-come-first-served principle? The first-come-first-served principle should be the last resort in a tie-break to select the beneficiaries. 27 ) In the case of a tie-break, is it possible to increase the budget for a call retrospectively? Even if it is legally possible to increase the budget allocated to a call for proposals, as a matter of good practice it should be avoided because increasing the budget per call would be done at the expense of new calls. Ideally, in order to be fully transparent towards potential beneficiaries, MAs should communicate the number of calls planned for the programming period and the budget allocated for each of them in advance. 28 ) Is it possible to have different tie-break rules for each Focus Area/each measure? Yes, it is possible to have different tie-break rules per Focus Area or per measure. The rules should be in line with the objectives of the measure(s) concerned. 29 ) What to do in the case of many applications falling on a tie-break if the available budget is rather small? MAs should define tie-break rules in advance. The applications which have not been selected might be kept on a waiting list (see Question 33) to be considered in the next call provided that the selection criteria applied in the next call are the same. Increasing the budget devoted to the call because many applications are lying on the tie-break is not to be regarded as good practice (see Question 27). 30 ) How is it possible to get assurance that the criteria defined for a threshold and the process to be followed in the case of a tie-break will not be questioned in future? Rules related to the selection process might be questioned because they have not been developed in a proper way, they are not applied correctly or first experiences gained with the rules have revealed that they are not suitable.

In order to ensure that the rules are developed in a proper way and applied correctly, programme agencies should do this in accordance with the regulation, following the guidance provided by the Commission and then taking into account the recommendation of the ECA^3. Appropriate records justifying the decisions taken in the selection process should be kept. The rules related to the selection process should be discussed with the Monitoring Committee in order to increase understanding and acceptance. If it turns out that rules set appear not to work properly or that they are not suitable, their modification is to be worked out with the Monitoring Committee and must be performed with its consultation.

2.1.6 Block procedure

31 ) The principle of first-come-first-served was excluded in the last programming period. Is it possible to have an alternative procedure, which foresees a set of semi-open/semi-closed calls – i.e. a call for a measure would be open for quite a long time, say one to one-and-a-half years? Such a kind of permanent open call for proposals, which is open for a comparatively long period, would be acceptable provided that a block procedure is applied. 32 ) Applying the block procedure, calls might last quite long, and thus it might appear to be advantageous to adapt the originally set threshold. Is it possible to change the threshold within one call in such a case? Within a permanent open call, a threshold could be adapted but only after one block has been closed, in order to ensure the equal treatment of applicants within a block. Adequate communication of changes to potential beneficiaries should be provided. (^3) In several of its reports the ECA made recommendations related to the usage of selection criteria in the field of EU rural development policies, for instance, in the Special Report No 6/2013 on diversification measures, Special Report No 5/2010 on the implementation of the LEADER approach, and in the Special Report No 1/ on support to the food-processing industry.

2.1.7 First-come-first-served principle

36 ) Considering that for Measure 13 no selection criteria are to be applied, the question arises, as to whether it is possible to apply the first-come-first-served-principle in cases where only a small budget is available? In case of Measure 13, selection criteria cannot be applied. If there is not enough budget, then there should be a partial compensation. The first-come-first-served principle should generally be avoided (see also answer to Question 31).

2.1.8 Sole beneficiaries and selection of non-productive investment

projects

37 ) How to translate the recommendation of the guidance on eligibility and selection criteria that selection criteria have also to be applied to measures that are exclusively implemented through one public entity into practice, e.g. in the context of the management of Natura 2000 sites, Measures 7. and 7.6? Even in cases where there is only one potential beneficiary, selection criteria should be applied. These could be 'pre-defined selection criteria' in the sense that those criteria are closely related to the eligibility conditions. The application is scored according to the system of selection criteria foreseen and checked for compliance with the minimum threshold. The selection of non-productive investment projects can be based on predefined criteria, such as geographical location (risk zones, Natura 2000, other geographical delimitation), regional or local site conditions, actual land use, etc. (referred to as 'Light selection criteria'). In the context of non-productive investments, it can be accepted that no other selection criteria are added. Similarly, it can also be accepted that no threshold is defined in relation to those light selection criteria (e.g. in the case of restoration measures, logically the whole damaged area should be selected).

2.1.9 Guidelines

38 ) When can the guidelines on eligibility and selection criteria^4 be considered as final (currently it is still called a draft) so that programme authorities can rely on them? The guidance document is a 'living document' which is likely to be further developed and updated according to the experiences gained in the course of the funding period. But the document can be regarded as stable, in so far as programme authorities can take it as a basis for their decisions, as the document has been discussed by the RDC.

2.1.10 Controls

39 ) How to deal with parameters which can hardly be assessed at the stage of submitting the application, such as contribution to energy efficiency or employment creation? See answer to Question 9. 40 ) Have sanctions for non-compliance to be applied if certain objectives stated in an application could not be achieved by the project promoters within the project? Are selection criteria counted as a 'commitment of a beneficiary' within controls? In the case that selection criteria are not fulfilled when the project has been finalised, no penalty should be imposed on the beneficiary, but it would be considered a deficiency/failure in a key control that could eventually lead to a financial correction to the Member State. Project agencies are advised to perform a plausibility check at application stage for assessing the expected benefits in light of the nature, type, scope and extent of the project (see Question 10). (^4) Draft Guidelines on Eligibility Conditions and Selection Criteria for the Programming Period 2014 – 2020.

2.2. Measure-specific questions

2 .2.1 Measure 4

2.2.1.1 Sub-measure 4.

43 ) How far can one specific set of criteria be used for selecting different kinds of operations under Sub-measure 4.1? One set of selection criteria can be used for selecting different operations under one sub- measure as long as the application of the set of selection criteria is reasonable for each kind of operation and in line with the objective pursued (the expected targeting).

2.2.1.2 Sub-measure 4.

44 ) Is there an example for an approach to treat smaller and larger enterprises differently as applicants for Sub-measure 4.2 for achieving specific objectives without adding too much administrative burden for the programme agencies? Provided that the scoring systems applied in one call are defined in advance, it is possible to have different scoring and ranking schemes at the same time, e.g. for different groups of beneficiaries. But in such a case it must be made explicit how the budget of the call is distributed.

2.2.1.3 Sub-measure 4.

45 ) How to proceed in a case where there is only one applicant under Sub-measure 4.3? In cases where there is only one applicant, the application is scored according to the system of the foreseen selection criteria. The application must also to be checked for compliance with the minimum threshold and must be above the threshold.

2.2.1.4 Sub-measure 4.

46 ) How to deal with the problem of a very limited number of potential applicants due to narrow eligibility criteria under Sub-measure 4.4. (i.e. the Sub-measure design is already quite targeted) and the application of selection criteria would further narrow the pool of potential applicants? The selection of non-productive investment projects can be based on predefined criteria, such as geographical location (risk zones, Natura 2000, other geographical delimitation), In these cases it can be accepted that no other selection criteria are added. Similarly, it can also be accepted that no threshold is defined in relation to those light selection criteria (e.g. in the case of restoration measures, logically the whole damaged area should be selected).

2.2.2 Measure 6

47 ) Considering that the preparation of an application might be costly (e.g. when applying for support for young farmers) setting the minimum threshold quite high might lead to a low number of applicants, but setting the threshold quite low could result in projects of low quality. Is there any advice how to overcome this problem? It is up to the MA to determine how high a threshold for a certain measure is set, as long as a minimum quality of the projects supported is assured. (See also Section 2.1.4).

2.2.3 Measure 7

48 ) If Measure 7-type projects are implemented through LEADER, to what extent must the selection criteria stipulated in the RDP for Measure 7 to be applied? For all operations implemented through LEADER, the Local Action Group (LAG) defines the selection criteria and carries out the selection process according to the objectives and targets of the local development strategy, the local development plan and targets. The Monitoring Committee doesn't have to be consulted on selection criteria for operations funded under LEADER local development strategies and plans.