Regulation (EC) No 1906/2006 of the European Parliament and of the Council of December 18, 2006 lays down the rules for the participation of undertakings, research centres and universities in actions under the Seventh Framework Programme and for the dissemination of research results (2007-2013), and article 30 of this regulation stipulates that: Participants from international cooperation partner countries may opt for the Community financial contribution in the form of lump-sum financing. The Commission shall establish applicable lump sums in accordance with the Financial Regulation.

Since the publication of this regulation in the Official Journal of the European
Union in December 2006, no further practical information has been provided by the EC, in particular on how FP7 project proposal partners (applicants) should deal with this question when submitting a proposal and filling in the project’s budget in the A3.1. proposal submission form (EPPS).
In this A3.1 proposal submission form for any FP7 type of activity (RTD, Demonstration, Training, Coordination, Support, Management), each partner of the project consortium is required to answer yes or no to the question:
My legal entity is established in an ICPC and I shall use the lump sum funding method?
If yes, please fill below the lump sum costs (flat-rate or scale of unit costs) row only for the specific type of activity
If no, please do not use the lump sum row

For this purpose each project partner has to know

• whether it is really located in an International Cooperation Partner Country (ICPC) or not (which is and has been difficult to decide in the phase of the first open FP7 calls for proposals for applicants/partners in countries like Croatia, FYR of Macedonia and Serbia) and
• what amount of lump-sum contribution for participants from ICPC the European Commission has foreseen.

The first question has already been extensively discussed in this journal. Basically, a list of the international cooperation partner countries is published on the CORDIS Website “Participate in FP7 - Eligible countries” (http://see-science.eu/goto/1793.html). Additional information on the definition of associated countries, ICPC etc was provided in the last issue of the journal (page 4 or see http://see-science.eu/news/1035.html), and further information on the association procedures is given on page 2 of this journal.

In the official documents we learn that “The Memoranda of Understanding (MoU) associating respectively Croatia, FYR of Macedonia, Serbia and Turkey to the Seventh EC Framework Programme are expected to be applied retro-actively as of 1 January 2007. Proposers are hereby informed that subject to the satisfactory conclusion of the respective internal procedures and the entry into force of the relevant MoUs, legal entities established in respectively Croatia, FYR of Macedonia, Serbia and Turkey, will be able to receive Community contributions for contracts signed after 1 January 2007.” Many researchers have been confused as to whether they are located in an ICPC or in a country already associated to FP7 as a result of this information.

With regard to the second question, ‘Article II.18 of ECGA – Community financial contribution’ of the ‘DRAFT Guide to Financial Issues relating to FP7 Indirect Actions’ (http://see-science.eu/goto/1791.html) published on April 24, 2007, in chapter 2 ‘EC contribution in the form of lump sums’ states that:
2.1 Lump sums for ICP countries (DISCLAIMER: The decision on lump sums has not been yet adopted by the Commission. The text may have to be adapted according to the decision of the Commission) The EC lump sum contribution for participants from ICPC takes into account the economy of the respective country and is structured in three categories:

Albania, Bosnia-Herzegovina, FYR of Macedonia, Serbia and Montenegro belong to the group of countries with lower middle income. For the calculation of the maximum EC contribution, the project partner organisation from an ICPC has to take into account the upper funding limit for the specific type of activity.

Conclusion

a) A clear answer to the above question on the legal status of specific countries (in particular Croatia, FYR of Macedonia, Serbia and Montenegro) will be available as soon as the Memoranda of Understanding are signed.

b) Since the decision on lump sums has not been yet adopted by the Commission and the guide to financial issues relating to FP7 indirect actions is not available in its final version, it is the project proposers/partners decision (respectively responsibility) to take into account the information in the draft guideline regarding lump sum funding and to decide which method of calculating the direct and indirect cost the organisation shall use.

Article published in see-science.eu eJournal spring 07.
Note: The decision on lump sums has now been adopted by the EC, for further information see the related article.