CONSORTIUM AGREEMENT

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CONSORTIUM AGREEMENT
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Finding Partner

• CORDIS partner search
• NCPs
• Database of projects carried out by NCPs (eg.
  SMEs Go Lifesciences,
• Ideal IST, SMEs for Food, Rural ETINET)
• Recommendation from other partners
• Industry associations
• Networking events
• Specialized journals
• KEEP IN MIND
• The most popular method for finding partners is
  to attend workshops and
• conferences, probably because these methods allow
  for face to face contact

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What to look for in a partner

• Shared vision
• Technical, scientific expertise
• Added value, complementarity
• Reliability
• Capacity and adequate resources
• Adequate financial resources
• Capacity for long term growth and sustainability

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Consortium Development

• Allow more time to the establishment of the
  consortium if the working relationships are
  limited
• Do not be content with the people you already
  know expand
• your familiarity and try to look beyond
• Make special allowance for differences in culture
• Get to know which partner is in for what
• E.g. An exercise in a meeting each partner
  writes what he thinks the
• motivation of the other partners are. This
  exercise has proved to be
• very successful.

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Consortium Agreement (CA)

• FP projects need far more extensive and diverse
  partnership.
• It is a requirement for almost all kinds of
  project types.
• Even if it is not mandatory, it is wise to have
  one for other types as well.
• Internal organization and management, grant
  distribution, role of partners and performance,
  IPR issues, disputes are regulated by CA.

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Content of CA

• Preamble
• Subject
• Technical Provisions
• Commercial Provisions
• Organisational Provisions
• Financial Provisions
• Legal Provisions

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1. Preamble

• Title of project
• Acronym of project
• Specific RTD program
• Reasons why the parties are applying a specific
  legal framework
• Language(s) used in drafting CA
• (and language version considered to be valid in
  the event of multiple translations)
• P.S. Definitions of terms used in the agreement
  should be the same as the
• ones contained in the EC Contract (commercial,
  technical, financial, legal)

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2. Subject

• Technical background
• Desired technical results
• Work to be accomplished
• Duration of the agreement
• Beginning and end of any provisions which extend
  beyond the end of the agreement
• Must be described very precisely as it influences
  many clauses in the Contract
• (including the majority of the technical
  descriptions in appendices limits the
• volume of this section)

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3. Technical Provisions

• contribution of each party
• - a definition of the tasks that each party
  intends to carry out
• - relationships between the tasks of different
  participants and any inter-dependence
• resources
• - human resources
• - equipment and facilities
• - background knowledge (know-how)
• Production schedule
• - include contingency plans for delays or missed
  deadlines

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• Effort-to-be-spent
• - specify that the commitment of the
  participants applies to the availability of
  human, material and intellectual resources
• Flexible modification procedures
• - provide a very flexible procedure for making
  changes
• These means should be as detailed as possible,
  like number of persons, nature
• of the equipment used, qualifications, type of
  information disclosed, plans,
• manuals, calculations, prototypes, delivery
  dates, place at which it is made
• available, language.

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4. Commercial Provisions

• Confidentiality
• Ownership of results
• Legal protection of results (patent rights)
• Commercial exploitation of results
• Obligation to use
• Dissemination of knowledge
• Publication
• Background patents, know-how and information

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5. Organisational Provisions

• The agreement should clearly define
• the steering committees exact delegated
  responsibilities
• its organisational conditions (composition, etc.)
• its operating conditions (meetings, decisions,
  chairmanship, etc.)
• the scope of its power
• P.S. Other committees can be created as
  necessary. Therefore, provision
• should be made for the creation of ad hoc
  committees as and when necessary.

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6. Financial Provisions

• Plan
• - detailed estimate of the total cost
• - financial contribution of each party and EC
  contribution to some
• - outside financial assistance (from
  authorities, banks, venture capital, etc.)
• - expenses and financing plan
• - annual budget

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• Mutual Payments
• Several parties may incur common expenses
  (personnel, equipment, etc.) and its reporting to
  the Commission for Community contribution should
  be provided.
• - reimbursable advance of a participant and
  method of reimbursement
• - joint account and conditions of paying in
  funds
• - terms of payment
• - currency
• - impact of exchange rates and bank transfer
  costs
• - payment of taxes
• - interest, if any
• - identification of management activity costs
  beyond that provided by
• EC Contract

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7. Legal Provisions

• Legal status
• Legal forms of an agreement/contract/establishmen
  t of an association, a joint venture, an Economic
  Interest Group, etc.
• Terms Issues
• date of entry, expiry date, termination/renewal/e
  xtension/cancellation, withdrawal of a
  participant, admission of new partners,
  conditions for modification, revision of
  technical and financial provisions.

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• Penalties for non-compliance
• - payment of fixed indemnities (delay in
  providing info)
• - financial compensation to offset any damage
• - payment of interest (delay in payments),
• - cancellation of agreement (failure to provide
  info, failure to pay, disclosure of any
  confidential material, etc.)
• Law to be applied in the settlement of disputes
• The national law of one of the parties or the
  law offering the highest degree of technological
  protection or the rules of international trade
• Secondment of personnel
• Participants may second personnel to other
  organisations.
• e.g. Travel expenses, medical care, social
  security items, applicable law

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Consortium Management

• Decision-making
• Representation and voting
• Performance monitoring
• Dispute resolution

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1. Decision Making Structures

• Management Structures should provide for the
  control of the
• project ensuring that the project deliverables
  are produced on
• time and in accordance with the Contract.
• Projects steering committee
• Work management group
• Project management team

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Project Steering Committee

• consists of all the partners in the project
• makes the key decisions, normally meets 2 or 3
  times a year
• (revision of the Contract, addition or
  termination of partners, modification of the work
  program, approving budgets,appointing
• or forming task forces or groups)
• This structure may have different names (like
  steering committee, liaison committee, management
  committee) and it can be broken down into
  sub-groups (such as financial, technical, etc.)
• The work of this committee is frequently
  translated into daily management and
  representation duties by a coordinator (or
  manager) selected from among the parties
• A strict and effective inspection and supervision
  system

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Work Management Group

• deals with issues like preparing reports and
  budgets for the PSC
• coordinates and monitors the work of the
  specialist scientific committees and task forces
• aids and supports the project manager in his
  contacts with the Commission
• proposes termination of contracts with defaulting
  partners
• meets once a month

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Project Management Team

• comprises the deputy project manager and key
  managers from the internal team
• basically scientific manager 5/6 people
• having 2 reviewers from outside (consultants) can
  be helpful

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2. Representation Voting Rights

• Management structures should be democratic as
  everyone has the right to be heard
• However, representation or voting rights in the
  various committees could vary, according to the
  percentage share of the budget
• Type of voting rights (quorum, majority etc.)
  need to be carefully specified
• E.g. To terminate a partner is a key issue.
• Therefore, you need a unanimity vote.

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3. Performance Monitoring

• The Commission can terminate the Contract for
  non-performance of the project or of any of the
  partner(s)
• Termination of a partner may have financial
  consequences for the partnership if he/she does
  not repay the EU, as the Commission may turn to
  the remaining partners to pay the share
• Stages
• Application of the project
• Prior to or at the start of the project
• During the project

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Application of the Project

• The performance of the partners must be properly
  checked and
• monitored
• Obtain adequate information, especially
  financial, on the partners
• Take up references when working with a partner
  that is unknown
• Avoid last minute additions of partners
• Assess any risk of non-performance
• Consider the issue of requesting financial
  guarantees

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Prior to or at the start of the Project

• Many projects fail because of a lack of
  understanding of what is
• required of them.
• Carry out a training needs analysis and identify
  any partners with special needs
• Give a thorough training to all partners
  concerning their basic roles in the project
• (what is expected of them, what are the
  accounting procedures and their obligations under
  the Contract and the CA)

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During the project

• Institute regular reporting, both financial and
  technical-quarterly
• Follow-up reports properly
• Ensure that action taken by the appropriate team
• Watch out for warning signs
• (constant changing of persons attending the
  project meetings, problems meeting deadlines,
  constant mistakes in reporting, absence from key
  meetings, etc.)

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4. Dispute Resolution

• Dispute within the partnership can damage the
  project in the eyes of the Commission thus
• avoid dispute within the partnership for the long
  term viability of the project
• foster good communications, trust and
  understanding among the partnership to avoid some
  disputes
• allocate rules, responsibilities and budgets in a
  transparent and clear manner

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Dispute Resolution (cont.)

• If some dispute can not be avoided, then
• resolve it as quickly as possible
• try all the non-judiciary ways first
• (like use of a third party, a consultant, a
  friendly settlement)
• ensure that the CA requires the partner in
  dispute to submit the dispute to not directly the
  Commission but the relevant bodies (e.g. the PSC)
  
• avoid arbitration (e.g. European Council of
  Commerce), as this can prove to be very costly
• ensure that the CA allows you to terminate the
  participation of troublesome partners

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Revision of CA

• Simple and clear procedures for the revision of
  the CA should be provided for
• - modification of technical and financial
  provisions
• - withdrawal of partners and acceptance of new
  partners
• - termination of the agreement after full
  completion of program
• - termination prior to full completion or upon
  early termination of the EC contract
• A decision-making method should be adopted for
• - routine steering committee meetings
• - calling of exceptional meetings
• - powers of each party
• - decision-making method (unanimously, majority
  agreement, etc.)

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• Keep in mind!
• A project is a collection of individuals
• These individuals are from different countries,
  business cultures and organizational structures
• Allow time for trust to develop
• A PROJECT CAN ONLY BE AS GOOD AS ITS WEAKEST
  PARTNER!!!

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• THANK YOU!
• www.euoffice.metu.edu.tr