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European Commission

Directorate-General for International Partnerships

INTPA Companion to financial and contractual procedures

applicable to external actions financed from the general budget of the EU and from the 11th EDF

20. The implementation of service contracts – A users’ guide

[The content of this chapter is under the responsibility of Unit INTPA.R.4. The latest update was made in June 2022.]

20.1. Introduction#Service contracts

The user guide is designed exclusively to support staff of the European Commission when implementing procurement contracts in the context of external actions. It is neither an official interpretation of the contract documents nor does it create any rights or obligations. It is tailor made for Commission staff and requires knowledge of and experience in internal procedures. It is neither intended nor able to provide guidance to contractors or the general public.

The general conditions govern the implementation of service contracts. The standard tender documents and contracts contain several references and options for modifying and supplementing the general conditions through the special conditions. The special conditions may thus include the necessary additions to the general conditions. Through these additions and modifications, the special conditions should take into account the specific subject matter of the contract as well as the specific circumstances of the project to which the contract relates. This guide does not deal with each and every article of the general conditions for service contracts but only with those articles that are considered essential or so complex as to require further explanation. Other provisions of the general conditions speak for themselves.

20.2. Article 3 – Assignment

Contractors sometimes need to assign rights under the contract for the benefit of their creditors or insurers: for instance, when the contractor insures herself/himself for possible losses, the insurance contract will often require the contractor to transfer to the insurer his right to obtain relief against the person liable, so that the insurer can in his turn recover the damages from that liable person.

Likewise, when granting credit, the contractor’s bank can demand from the contractor that the payments that the contractor receives under the contract are directly paid to the bank. Such assignments for the benefit of the contractor’s creditors or insurers do, of course, not imply that these bank or insurance companies will take over the further implementation of the contract.

Consequently, Article 3(2) of the general conditions stipulates that for the situations under points (a) and (b) of that article, the prior written consent of the contracting authority is not required. Still, even for those cases, the contractor will have the responsibility to notify the contracting authority of the assignment, as covered in Articles 33(1) and 33(2) of the general conditions.

In all the other cases a prior authorisation of the contracting authority is required. In these situations the contractor’s rights and obligations under the contract can be transferred to a third party, the assignee, who then in his turn becomes the new contractor for the contract or a part of it. An assignment could, for instance, become necessary following an internal organisational change in the group of which the contractor forms part (e.g. acquisition, merge, etc.) when such change entails a modification in the juridical status of the contractor.

The assignment through which the assignee takes over the further implementation of the contract requires the prior written consent of the contracting authority formalised through an addendum to the contract. As the initial contractor, the assignor, obtained the contract through a public procurement procedure, the contracting authority, when giving its consent, has to assure that the assignment is not a way to circumvent the award procedure and does not call into question the basis on which the award decision was made. For this reason, the assignee must, for instance, also satisfy the eligibility and exclusion criteria applicable for the award of the contract. In addition, and depending on the scope of the assignment, the contracting authority might need to check if the assignee fulfils the relevant selection criteria.

For the same reason, the assignment must not alter the fee-based prices and contract conditions of the initial contract. As a result, the addendum formalising the transfer of the contract will often be limited to a mere modification of the contractor’s identity and bank account details.

Although the addendum is to be signed by the contracting authority, the assignor, and the assignee, often the assignor and assignee will lay down the arrangements between them in a separate deed to which the contracting authority is not and should not be a party.

Before giving its prior written consent to the proposed assignment, where necessary, the contracting authority should receive the pre-financing guarantee from the assignee. As the assignee takes over all contractual obligations without limitation, the assignee will bear full liability for any contractual breach, regardless whether the cause took place before or after the assignment. Article 3(3) of the general conditions states that assignment does not relieve the contractor of its obligations for the part of the contract already performed or the part not assigned.

By virtue of Article 3(4) of the general conditions, the assignment of a contract by the contractor without authorisation by the contracting authority, is a valid cause for the sanctions for breach of contract (Article 34 of the general conditions) and for termination of the contract (Article 36(2)(d) of the general conditions).

20.3. Article 4 – Subcontracting

The subcontracting of certain specialised parts of the services may be necessary in the implementation of a contract. Although the contracting authority may wish to have the contract carried out by the service provider that has been selected, it is recognized that other persons or firms may be able to carry out particular services more efficiently than the contractor.

 Although implementation of certain services may be subcontracted, the contractor remains fully responsible for the execution of the contract in accordance with the terms of the contract (Article 4(4)). Subcontracting is different from assignment in that, in the latter, rights and responsibilities vis-à-vis the contracting authority are transferred to another party, the assignee.

A tenderer may in his tender have stated the services that it proposes to subcontract and the name of the proposed sub- contractors. If it has already been foreseen in the technical offer, the award decision means approval of the proposed subcontractors by the contracting authority and no further authorisation is necessary, unless the subcontracted services or subcontractors change in the course of the implementation of the contract. Also in cases, where experts are not directly contracted or employed by the contractor but through a third party, the latter is a subcontractor.

In other cases, the services to be subcontracted and the names of the subcontractors must be notified to the contracting authority. The contracting authority then notifies the contractor of its decision authorising or refusing to authorise the proposed subcontract within 30 days. Where the contracting authority refuses authorisation, the reason for the refusal should be stated (Article 4(2)). If the contracting authority fails to provide notification of his decision within the 30 days, the proposed sub-contractors are deemed approved. The use of subcontracting without prior authorisation of the contracting authority is valid cause for the sanctions for breach of contract (Article 34 general conditions) and for termination of the contract (Article 36(2)(d) of the general conditions).

Before authorising a subcontract, the contracting authority should examine the contractor’s evidence that the subcontractor it proposes satisfies the same eligibility criteria as those applicable for the award of the contract, does not fall under the exclusion criteria described in the tender dossier and is not subject to EU restrictive measures (Article 4(6)).

For European Development Fund (EDF) financed contracts, where subcontracting is envisaged, preference must be given by the contractor to subcontractors of African, Caribbean and Pacific (ACP) States capable of implementing the tasks required on the same terms (Article 26(1)(d) of Annex IV of the Cotonou Agreement [1]). This requirement is contained in Article 4(9) of the special conditions.

Point 18(8) of Annex I to the Financial Regulation (FR) [2] foresees the possibility for the contracting authority to require ‘critical tasks’ to be performed by the tenderer itself and not subcontractors, in the case of some contracts (works contracts, service contracts and siting and installation operations in the context of a supply contract). This provision should be used with extreme caution since it could be a restriction on the freedom of enterprise and there is yet no court case on its interpretation. The contracting authority may announce in the tender specifications that it may require that certain critical tasks be performed directly by the contractor itself, be it a sole entity, or by a participant in the group, in case of consortium. This assumes that all tasks are very well defined and that one or two of them are identified as critical for the contracting authority. In this case, there must be a direct contractual link between the contracting authority and the entity performing these tasks, i.e. they cannot be performed by a subcontractor. This provision is not to be understood as the possibility to cap subcontracting.

For more details on subcontracting, please refer to point 18 of Annex I to the FR.

20.4. Article 7 - General Obligations

Save where the European Commission requests or agrees otherwise, the contractor shall take all relevant measures to ensure the highest visibility to the financial contribution of the European Union. Additional communication activities required by the European Commission are described in the special conditions. All visibility and, if applicable, communication activities must comply with the latest Communication and Visibility Requirements for EU-funded external action, laid down and published by the European Commission at the following address: Communication and Visibility Requirements for EU External Actions | International Partnerships (

The Parties will consult immediately and endeavour to remedy any detected shortcomings in implementing the visibility and, if applicable, communication requirements set out in this Article and in the special conditions. Failure to perform the visibility and communication requirements can constitute a breach of contract and can lead – inter alia – to suspension of payment and/or reduction of the final payment in proportion to the seriousness of the breach.

20.5. Article 8 – Code of conduct

The contractor must act at all times with impartiality and as a faithful advisor to the contracting authority in accordance with the code of conduct of its profession (Article 8(1)). It must abstain from partaking in any activity or receiving any benefit that are in conflict with its obligations towards the contracting authority (Article 8(5)).

The requirement that the contractor be independent is further developed in Article 8(4), which also concerns its sub-contractors, agents, and personnel. The European Commission applies a zero tolerance policy regarding all forms of misconduct including sexual exploitation, abuse and harassment by its staff and those of partner organisations receiving EU funds.

In this respect, Article 8(2) covers any form of physical, sexual and psychological conduct as well as any form of verbal and non-verbal abuse and intimidation, including harassment and sexual harassment.

Contractors must immediately report to the contracting authority any allegation of misconduct involving sexual exploitation, abuse and harassment. If the contracting authority is an EU delegation, it must also inform the relevant ‘Finance and Contracts’ unit as well as the central contact point in Headquarters (DG INTPA Director R. Security Coordinator).

As a minimum this notification should include the following information about the report/allegation e.g. misconduct category, type and short description. It is for the contracting authority to assess the gravity of the misconduct, taking into account possible remedial measures taken.

These remedial measures may include for instance:

  • the active collaboration with the investigating authorities;

  • the implementation of safeguarding procedures to prevent, respond and manage the harassment / sexual harassment and sexual exploitation and abuse situations, such as: creating internal procedures to address the risk of sexual exploitation and abuse in the contractor personnel programme, developing a code of conduct with standards that include the sexual exploitation and abuse principles, developing complaints procedures for the staff and other personnel to report incidents, developing internal investigation procedures, ensuring disciplinary actions and sanctions, establishing and implementing a victim assistance mechanism;

  • the evidence of appropriate staff reorganisation measures following the misconduct, such as the dismissal of the employee responsible of the infringement.

Investigations should be completed within an acceptable time frame and the contracting authority should update DG INTPA Directorate R and the appropriate geographical directorate on outcomes and actions taken.

If the contracting authority considers the remedial measures to be not sufficient, it must inform the contractor.

These procedures should take into consideration all relevant data protection and confidentiality related requirements. The contracting authorities must treat the related information as ‘special categories of personal data’ and in doing so ensure appropriate confidential storage and handling. To this end, the contracting authorities must have in place appropriate safeguards for the rights of the data subjects concerned, in particular adequate technical and organisational measures to ensure the security and confidentiality of such categories of data, to prevent accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to personal data transmitted stored or otherwise processed. Where the contracting authority is a EU delegation the measures may, among other, take the form of secure transmission of data via Secure Electronic Mail (SECEM), definition of access rights strictly on a need to know basis, secure storage of paper files in locked cupboards, restricted access to relevant Ares files, secured electronic documents stored in common drives.

The respect of the code of conduct set out in Article 8 constitutes a contractual obligation. Failure to comply with the code of conduct is always deemed to be a breach of the contract under Article 34 of the general conditions. In addition, failure to comply with the provision set out in Article 8 can be qualified as grave professional misconduct that may lead either to suspension or termination of the contract, without prejudice to the application of administrative sanctions, including exclusion from participation in future contract award procedures.

The grave professional misconduct covers not only the misconduct related to offensive behaviours as defined in the ‘zero tolerance’ clause (Article 8(2)), but also any wrongful conduct that has an impact on the professional credibility of the contractor and denoting a wrongful intent or gross negligence. In practical terms, the contracting authority may invoke the grave professional misconduct for all wrongful conduct that implies a breach of the obligations stated in the code of conduct/ethical obligations by contractors that the contracting authority can demonstrate with any means. In this respect, the grave professional misconduct may lead to suspension or termination of the contract, without prejudice to the application of administrative sanctions, including exclusion from participation in future contract award procedures.

 Article 136(1)(c) FR provides a no-exhaustive list of cases, such as:

  • fraudulently or negligently misrepresenting information required for the verification of absence of grounds for exclusion or the fulfilment of eligibility or selection criteria or in the implementation of the legal commitment;

  • entering into agreement with other persons or entities with the aim of distorting competition;

  • violating intellectual property rights;

  • attempting to influence the decision-making of the authorising officer responsible during the award procedure.

20.6. Article 9 – Conflicts of interest

The contractor must take all necessary measures to prevent or put an end to any situation of conflict of interest that may arise, for example financial interests, national or political affiliations, or familial or emotional links. This article does not only cover the contractor, but also its subcontractors, agents, and personnel.

Where a conflict of interest arises during the implementation of the contract, the contractor must inform the contracting authority and take all necessary measures to put an end to the conflict.

Article 36(2)(n) permits the contracting authority to terminate the contract if the provisions concerning conflicts of interest have not been respected.

20.7. Article 13 – Medical, insurance and security arrangements

The contractor maintains full responsibility for the health and security conditions of all persons working for him/her. Article 13 of the general conditions stipulates therefore that the contractor takes all necessary medical and professional insurances, as well as insurance covering its liabilities as laid down in Article 12 of the general conditions. The insurance content is specified in Article 13(3) of the general conditions.

If not submitted before by the contractor, proof of the insurance coverage can be requested within the letter accompanying the transmission of the contract signed by the contracting authority (Annex A9 to the PRAG) using the field <Add any special instructions as appropriate>. According to Article 13(2) of the general conditions, proof of the insurance coverage (cover notes and/or certificates of insurance) must be provided at the latest with the return of the contract signed by the contractor.

Notwithstanding the primary responsibility of the contractor, in the absence of adequate insurance the contracting authority may bear the health-related expenses mentioned in Article 13(3)(b) of the general conditions. If this is the case, the bearing of costs is subsidiary and the contracting authority can then claim the reimbursement of the costs incurred, as well as compensation for possibly resulting damage, from the person who failed to take the insurance.

The contractor has to ensure adequate security arrangements corresponding to the level of risk of the country were the contract has to be performed. The cost of these measures is generally part of the incidental expenditures under a fee-based contract and is described in Section 6(5) of the terms of reference for fee-based contracts.

20.8. Article 14 – Intellectual and industrial property rights

The rights and obligations of the contractor and the contracting authority as regards intellectual and industrial property rights are often a source of misunderstandings and disputes.

The minimum level of protection guaranteed to the contracting authority is set out in Article 14, which provides that copyright and other intellectual and industrial property rights, and all technological solutions and information therein, which are obtained in implementation of the contract, must be irrevocably and fully vested to the contracting authority from the moment these results or rights are delivered to it and accepted by it, unless the parties agree otherwise.

The terms of reference indicate that no equipment can be purchased under a service contract, therefore the ownership of equipment cannot also be granted to the contracting authority. So, for example, if the terms of reference indicate that a car and/or certain hardware should be provided to an expert, these items will not be considered to be the property of the contracting authority at the end of the contract because their cost has already been taken into account for the calculation of the fees. Similarly, no procurement procedure is imposed on the contractor for the purchase of such equipment.

20.9. Article 15 – The scope of the services

Global price contract concerns in particular studies that touch on the identification and definition of projects, pre-feasibility studies, economic and market studies, technical projects, and the preparation of tender documents, evaluation and audits. These contracts must never have the implementation of incidental expenditure as their principal goal.

Fee-based service contracts are used in the case where the contractor is responsible for fulfilling an advisory role for all the technical aspects of projects, as well as where the contractor is required to assume the management and/or the supervision of the implementation of a project (Article 15(3)).

20.10. Article 16 – Personnel

When the contract concerns the provision of technical assistance personnel, the contractor is under an obligation to provide the personnel specified in the contract. This specification may take different forms.

Firstly, the contract identifies and designates the key experts that the contractor must provide under the contract. These are the experts that the contractor proposed in his tender, in the offer it made before the conclusion of the contract. The offer of the contractor must contain the detailed curriculum vitae of these experts. Secondly, Article 16(1) states that the contractor must also specify the categories of personnel other than the key experts that he/she intends to use to implement the tasks. The terms of reference also set out the level of training, qualification, experience, and specialisation necessary for the non-key experts.

All of these factors must be taken into account in a situation where the contractor must replace personnel after signing the contract or during its implementation.

The contracting authority may object to the contractor’s selection of any categories of personnel proposed to work under the contract.

However, for the appointment of non-key experts the contractor needs to submit to the project manager a request for approval in advance (Article 16(4)). No minimum number of CVs is required: the contractor may propose the non-key experts of its choice, provided he/she respects the provisions included in Section 6.1.2 of the terms of reference. The nationality rule does not apply to experts.

Experts are considered as being the personnel of the contractor regardless of whether they are self-employed or employed by a third party, if the following cumulative conditions are fulfilled in accordance with the terms of reference of the service contract:

  1. a contractor has a contract to engage the expert to work for it;

  2. the expert must work under the direct instructions/supervision of the contractor;

  3. the expert must work in the premises defined in the terms of reference (if applicable);

  4. the output of the work belongs to the contractor;

  5. travel and subsistence costs related to such expert's participation in activities defined in the contract or to travel relating to the implementation of the contract is directly invoiced by the contractor to the contracting authority;

  6. the expert uses the contractor's infrastructure and administrative support (i.e. user of the ‘overheads’).

All personnel working on the project must reside close to the normal place of work, unless there are exceptions specified in the contract, which is the case for example with contracts that are implemented in different locations. The terms of reference may provide for missions that require personnel to relocate outside of the normal place of work. These missions, provided that they are accepted by the contracting authority, are the only situation where a per diem reimbursement may be permitted. A mission lasting more than 28 days is considered a long term mission. For such missions, the contracting authority may reduce daily allowances up to 75%. For ongoing contracts, this option can be activated when setting the per diem rate at the beginning of each mission. For contracts still to be awarded, it is advisable to announce this possibility in the tender dossier. In order to facilitate the proper implementation of the project by the contractor ‘s personnel, certain types of equipment may be requested (such as computers, vehicles, etc.). However such equipment should not be confused with incidental expenditure. It should be kept in mind that no piece of equipment may be purchased under a service contract. This means that all the costs of equipment that is necessary for the contractor’s personnel should be covered by the fees. At the end of the contract, this equipment remains the property of the contractor. Indeed nothing in the general conditions provides that equipment that is purchased under a service contract should be transferred to the contracting authority/partner country. It should be noted that there is no obligation on the contractor to respect PRAG procurement procedures for the purchase of such equipment.

The provision for incidental expenditure covers the ancillary and exceptional expenses that are authorised and incurred under a service contract. The allowed expenses are specified in each contract. The most recurrent expenses concern travel related to experts’ missions; other examples relate to the organisation of seminars and security measures in hostile places, where those are not treated as a lump-sum component of the contract. By no means can incidentals be used for the costs that should be covered by the contractor under its fees. The prior authorisation for the use of incidental expenditures must remain exceptional.

Be aware that neither the contracting authority nor the European Commission have contractual relations with any of the personnel employed by the contractor under the contract. This means that if one of the personnel appeal to the contracting authority or the European Commission to resolve disputes with the contractor, the contracting authority or the Commission are not able to respond favourably to such a request, if this is not related to the application of the general conditions.

20.11. Article 17 – Replacement of personnel

The contractor must, on its own initiative or at the request of the contracting authority, propose the replacement of agreed personnel in case of death, injury or illness of any personnel, or when it is necessary to replace a person for any other reason beyond the control of the contractor, for example in case of resignation or when the contracting authority considers that a member of personnel is incompetent or not suitable for the performance of the relevant tasks under the contract.

These considerations of course only cover the agreed experts, but not the personnel who must be provided as a result of the contract (note that these will not be individually identified in the contract). Indeed, for certain members of the personnel who are not the agreed experts, the special conditions do not indicate either the required qualifications or experience, but give a general description of the tasks to be fulfilled, such as the tasks relating to the support structure provided in the framework of the contract. When the contractor proposes to replace an agreed member of personnel, the replacement must possess a level of qualification and experience that is at least equivalent to that of the person to be replaced according to the terms of reference, and his/her remuneration may not go beyond that of the person to be replaced.

Where the contractor is not able to provide a replacement of equivalent qualifications and experience, the contracting authority may decide to terminate the contract, or to accept an alternative proposed replacement provided that they meet at least the minimum qualifications indicated in the Terms of Reference, and on condition that the fees are negotiated downwards.

When the replacement of an expert is necessary, the contractor must propose a replacement within 15 days, starting from the first day of absence of the person to be replaced. Otherwise, the contracting authority may impose liquidated damages of up to 10% of the fees due for the expert.

When the contractor requests the agreement of the contracting authority for the proposed personnel, the contracting authority may not unreasonably delay its agreement or objection. It has 30 days from the date on which the request was introduced to accept or reject the replacement.

If the contracting authority is the European Commission, the partner country must also give its agreement to the replacement of an expert. In this case, the partner country has 15 days to accept a replacement or to submit objections with justification.

The additional costs generated by the replacement of personnel are normally the responsibility of the contractor. The fact that the contracting authority has given its agreement for the replacement, or that it has ordered the replacement for reasons of incompetence or inadequacy, does not give the contracting authority responsibility for paying these costs (Article 17(4)). In certain cases, these costs may be covered by the insurance that the contractor must take out under the contract. This is the case for costs relating to arrangements that must be taken for deceased members of personnel (Article 13(3)(d)) or where personnel is involved in an industrial accident (Article 13(3)(a)).

 In order to formalize the replacement of an expert, a note to the file should be prepared confirming that the new expert meets at least the same criteria as the expert to be replaced, and that the fees remain unchanged. The CVs of the expert to be replaced and of the new expert should be annexed to the note. If the contracting authority is the European Commission, this note must also be accompanied by a confirmation that the representative of the partner country accepts the new expert.

20.12. Article 18 – Trainees

In order to ensure the long-term viability of projects, the training of nationals of the partner country is an important element in the provision of technical assistance and should be encouraged.

Article 18 sets out the terms under which the contractor must provide this training. The contracting authority must, in accordance with the training schedule, make trainees who possess the basic knowledge required for this training available to the contractor. The details of the training requirements should be clearly defined in the Terms of Reference, which should also include mechanisms to monitor the training (evaluation reports, activities that are entrusted systematically to trainees, etc.) in order to ensure that the objectives are attained and to avoid future trainees or organizations having unrealistic expectations.

The idea is that the trainees chosen by the contracting authority to collaborate with the contractor are integrated into the team of experts with clearly defined responsibilities. The contractor expects every member of his team to be productive. The level of training that the trainees are expected to acquire must be clearly defined. In this regard, it should be noted that the contractor must have the possibility to request the contracting authority to replace a trainee that is judged incompetent or ill-suited on the basis of an evaluation of the trainee’s work. The contracting authority must comply with such a request, unless it considers that the reasons given by the contractor are not valid.

Although the cost of the training is included in the contract amount, the remuneration of trainees, and their travel and accommodation expenses and other expenses incurred by them, are the responsibility of the contracting authority. The cost of the training should be included in the incidental expenditures.

20.13. Article 20 – Amendment to the contract

During its execution period, the parties might need to modify some elements of a contract. The procedure for amending a contract varies depending on the kind of modification. A number of modifications require going through a negotiated procedure, at the end of which a formal addendum is signed. For the exhaustive list of such situations, please refer to Section of the PRAG.

Other modifications can be done via an addendum or an administrative order without a negotiated procedure, while others only require a notification. For all modifications that do not require a negotiated procedure, and specifically for cases and conditions for amending a contract via an addendum, please refer to Section 2.11.2 of the PRAG.

It is not possible to modify the contract in order to reduce the ‘provision for expenditure verification’ or to reduce the provision for incidental expenditure in order to increase the fees.

For other modifications, it is necessary to distinguish three situations:

20.13.1. Changes that do not need a contractual modification

The changes of address, bank account or auditor by the contractor do not constitute a modification of the contract and do not therefore require an administrative order or an addendum (Article 20(6)). The contracting authority may also simply notify to the contractor changes regarding the contact persons, addresses and other contact details in writing by any means of communication that provide assurance it was delivered.

20.13.2. Administrative order

The project manager can, on his/her own initiative or at the request of the contractor, order any modification that he/she considers useful for the proper implementation of the contract, as long as it does not change its purpose or its scope. Article 20(2) of the general conditions outlines the modifications that he/she may make, and sets out the terms and criteria of their execution. These modifications can be implemented with an administrative order.

An administrative order to modify a contract is made in accordance with the following procedure:

  1. The project manager evaluates the nature and form of the modification.

  2. Although the project manager is not obliged to request authorisation from the contracting authority before inviting the contractor to submit proposals, he/she can consult the contracting authority in order to be sure that it does not disapprove. This precaution is particularly important where the modification results in budgetary adjustments that must be considered by the donor.

  3. The project manager notifies the contractor of his intention to request a modification and outlines its nature and its form. He/she also asks the contractor to submit all necessary proposals for changing the budget of the contract and the period of implementation for the tasks.

  4. After receiving the contractor’s proposal, the project manager can issue an administrative order to make the modification, which should indicate any additional information given by the contractor.

All administrative orders issued by the project manager must receive the agreement of the contractor.

All modifications are evaluated in accordance with the rules defined in Article 20(2). Whenever possible, appropriate rates and prices in the budget of the initial contract (such as fees when tasks are similar in nature and carried out by comparable experts) should be used, at least, as a basis for comparison. An amount considered as ‘reasonable’ should only be fixed when there are no appropriate applicable rates or prices. This amount should cover the estimated actual cost to the contractor, as well as overheads and profit.

Among the modifications that can be requested by the project manager are for example changes of non-key experts, budgetary reallocations between budget lines and within the heading “fees”, or from the heading ‘fees’ towards the heading ‘incidental expenditure’. Reallocations from the heading ‘incidental expenditure’ towards the heading ‘fees’ are not allowed, neither by means of an addendum nor by administrative order. Increases in the line ‘verification of expenditure’ are subject to the signature of an addendum, and cannot therefore be decided by the project manager. No amendment either by means of addendum or through administrative order shall lead to decreasing the amount within the contractual budget allocated to expenditure verification, or change the award conditions prevailing at the time the contract was awarded.

Sometimes a modification is made necessary by a failure of the contractor or by a deficiency in implementation that is imputable to it. In this case, all the additional costs created by this modification shall be borne by the contractor (Article 20(5)).

Exceptionally, if provided for in the terms of reference, an administrative order can, in certain cases, also be issued for the mobilisation of incidental expenditure (seminars, workshops etc.).

The project manager cannot issue an administrative order resulting in an increase or reduction in the initial amount of the contract, the replacement of a key expert, or a change in the implementation period of the contract. It should be noted that all modifications that result in an increase or reduction in the total value of the contract, the replacement of a key expert, or a change in the implementation period of the contract, require an addendum (see below), except in the case of the application of a price revision clause.

An administrative order must be validated within the execution period of the contract, provided any modification is requested during the implementation period. It must be noted that the execution period of the contract may continue up to 18 months after the end of the period of implementation.

20.13.3. Addendum

In addition to the above changes, it may of course happen that the contracting parties mutually agree on a more substantial modification of the contract. In this case, such a modification must be formalised by way of an addendum (Article 20(1)).

In this regard, it is important to keep in mind that:

  • it is necessary to proceed with an addendum when the proposed change results in an increase or decrease in the contract value as regards the initial contract price, or increases in the line ‘provision for expenditure verification’;

  • an addendum is necessary in case of a replacement of a key expert or a change in the implementation period of the contract. When the removal of a key expert is requested by the contracting authority the contractor and the key expert must be asked to provide their observations on such request;

  • an addendum may also be necessary in case of substantial changes that affect the object or scope of the contract, resulting from budgetary reallocations between headings, even if these changes have no financial impact on the total contract value.

If the request for an addendum is made by the contractor, the contracting authority must respond to it within 30 days.

An addendum must be validated within the execution period of the contract. It must be noted that the execution period of the contract may continue up to 18 months after the end of the period of implementation.

20.14. Article 26 – Interim and final reports

The contractor must report on the state of progress of the contract implementation. These reports are essential for the approval by the contracting authority of the services provided by the contractor, and they are a necessary condition for payment.

The subject and frequency of these reports must be specified in the terms of reference. The project manager notifies to the contractor on the format of such reports. Contractors are encouraged to submit invoices, reports and other documents (if any) related to a payment request in electronic version, if this is allowed by the national law of the contracting authority (under indirect management).

For fee-based contracts with a duration of more than 12 months, interim reports must be provided every 6 months. Every report must have a narrative section and a financial section. The financial section must contain detailed information on the time that experts have spent on the contract, on incidental expenditure, and on the provision for expenditure verification.

For global price contract with duration of more than 24 months for which interim payments are foreseen annually, interim reports must also accompany the request for payment. These reports must indicate that specific objectives have been attained, and they must be approved by the contracting authority before the payment is made. Where global price contracts provide for interim payments, it is essential to define in the Terms of Reference the objectives that must be achieved, and the implementation period for each of these objectives. The budget should also be divided so that contractors estimate amounts related to each objective and confirm an implementation period for each one.

In accordance with Article 7(5) of the general conditions, the contractor must also make special reports if an unforeseen event, or an action, or an omission in the Terms of Reference, put the implementation of the contract directly or indirectly in peril, partially or totally. A report covering such a situation must include a description of the problem, an indication of the date on which the problem arose, and the actions taken by the contractor to fulfil its obligations under the contract. If circumstances such as these arise, the contractor should give priority to the resolution of the problem rather than to the allocation of liability.

When the contract is performed in phases, the contractor must give a report at the end of each phase (Article 26(5) and 27(4)).

Whatever the nature of the service contract, the final report must be communicated to the contracting authority by the latest 60 days after the completion of the provision of the services.

20.15. Article 27 – Approval of reports and documents

If the contracting authority does not approve the report, it must either indicate the changes that are deemed necessary, or reject the report with a justification for the rejection. If further changes are requested, the time period for the implementation of these changes should be specified. As the approval of reports must be given within the payment deadline, in case of rejection of a report the contracting authority may halt the countdown towards the payment deadline. See Article 29(2) of the general conditions.

Although the contractor is formally responsible to the contracting authority, in the case of a contract signed in indirect management with partner countries with ex ante control by the Commission, the Commission must be able to verify that the implementation of the projects is progressing as foreseen. This is the reason for which the contractor may be required, by virtue of Article 29(5) of the special conditions, to send to the Commission a copy of the invoices accompanied by the reports that it submits to the contracting authority. Contractors are encouraged to submit invoices, reports and other supporting documents (if any) related to a payment request in electronic version, if this is allowed by the national law of the contracting authority (under indirect management). For the same reason, the contractor may wish to inform the European Commission of difficulties that arise, if it considers that this may help to avoid complications or delays.

Also, where services contracts are signed in direct management, in accordance with standard practice, the partner country should be involved in the discussion and in the approval of reports. This must be specified in the terms of reference.

20.16. Article 29 – Payments and interests on late payment

The contractor has the right to payments at different stages of the implementation of the contract: pre-financing, interim payments, and final payment. These payments are made in the currency of the contract (Article 29(5)).

Pre-financing may be conditioned on the delivery of a financial guarantee by the contractor to the contracting authority.

Pre-financing should enable the contractor to deal with expenses resulting from the commencement of the implementation of the contract. However, the contractor cannot condition the beginning of the implementation of the project on the provision of pre-financing.

The pre-financing payments are made in the form of a lump sum, and their total amount may not exceed 20% of the contract price for fee-based service contracts, and 40% of the amount of the contract for global price contracts. The contract amount is understood to include all budget lines, thus including the reimbursable expenses that correspond to incidental expenses and to expenses that are linked to the expenditure verification in the case of fee-based contracts.

Pre-financing payments must be requested by the contractor and are therefore not paid automatically. The contractor may also decide the amount that it wishes to receive, within the limits specified above. It sometimes happens that contractors decide to reduce the amount of pre-financing to which they are entitled in order to avoid having to provide a financial guarantee, which is acceptable. In this case no addendum is required.

The pre-financing payments are cleared when 80% of the value of the contract has been paid. However, if the pre-financing is covered by a guarantee that stops being valid without the contractor renewing it, the contracting authority can deduct the amount of the advance payment from subsequent interim payments, or terminate the contract (Article 30(3)).

The interim payments are paid at regular intervals, in accordance with the nature and duration of the contract. In the case of fee-based contracts, the interim payments are paid after every 6 months of execution. In the case of global price contracts with a duration of less than two years, or if the contract is not divided between different outputs that the contracting authority can approve independently, no interim payment is provided for. In the case of global price contracts with a duration of at least two years and if the budget is divided between different outputs that the contracting authority can approve independently, it is possible to provide that interim payments be made at the end of each year of implementation, provided that the objectives clearly stated in the terms of reference have been attained.

In the case fee-based service contracts, the interim payments can cover four types of costs:

  • The fees of key and non-key experts, on the basis of the timesheets that must be approved by the project manager, or the contracting authority or any person authorised by him/her. A minimum of 7 hours worked are deemed equivalent to a working day. Days of travel for experts for tasks that are exclusively for the contract and that are necessary (in general these will be missions provided for in the terms of reference) may be included in the number of days entered on the presence sheet. It is not the same for days of travel that are undertaken by experts for their mobilisation, demobilisation, or leave periods, whether these experts are key or non-key experts (see also Article 24(2)).

  • Lump sum costs: these are determined by the contractor in the submission of the tender. They correspond to the objectives detailed in the terms of reference. If the objectives are attained, the lump sum costs must be paid in full.

  • Incidental expenditure: a certain amount of funds is made available to the contractor by the contracting authority for carrying out a number of tasks that are defined in the terms of reference. The incidental expenditure covers the transports costs and per diems of the experts who are required to go on missions for the purposes of the contract. These incidental expenses are reimbursable on the basis of the presentation of supporting documents that evidence actual costs incurred by the contractor. However, per diems are a subsistence allowance and have to be regarded as fixed amounts. Consequently, the contractor does not need to provide list of actual costs related to the per diems, but still needs to be able to prove that the mission took place by providing evidence (such as flight tickets and/or hotel invoices) and that the experts were provided with the agreed per diem.. It should be recalled that service contracts should never have the implementation of incidental expenditure as their principal goal, so the amount of incidental expenditure must stay at a reasonable proportion of the overall contract value.

  • Costs for verification of expenditure: every request for payment presented by the contractor must be accompanied by an expenditure verification report carried out by an external auditor. The invoice for the work of this auditor must be reimbursed based on actual costs. See articles 28 and 29(2).

The total pre-financing and interim payments may not go above 90% of the value of the contract – the minimum final payment must correspond to 10%. The final payment is made after approval by the contracting authority of the final report. In accordance with the general conditions, the payment periods include the approval of reports, subject to what is specified in the special conditions.

The payments deadline for pre-financing is 30 days for contracts funded by the EU general budget, 60 days for the 11th EDF and 90 days for the 10th EDF (Article 29(1) of the special conditions derogating from the same article of the general conditions).

The payment deadlines for interim payments are 60 days in accordance with the general conditions. This payment deadline applies to the contracts in direct management. Article 29(1) provides a derogation for the contracts in indirect management with partner countries and for the contracts under the EDF. In this case, the payment deadline is 90 days. Indeed, for the budget, the contracts in indirect management are considered as ‘complex’ contracts, in the sense of the Financial Regulation, and for the EDF, the Financial Regulation sets a payment deadline of 90 days, regardless of what the mode of management may be.

Accordingly, in the special conditions, the applicable option has to be selected:

Contract in indirect management under the general budget of the European Union only: by derogation, the payments to the contractor of the amounts due under interim and final payments must be made within 90 days after receipt by the contracting authority of an invoice and of the reports, subject to approval of those reports in accordance with Article 27 of the general conditions;

Contract under 10th EDF only: by derogation, the pre-financing payment must be made within 90 days from the date on which an admissible invoice is registered by the contracting authority. The interim and final payments to the contractor of the amounts due must be made within 90 days following approval of the reports in accordance with Article 27 of the general conditions, after receipt by the contracting authority of an admissible invoice;

Contract in indirect management under 11th EDF only where the Commission executes payments: by derogation, the pre-financing payment must be made within 60 days from the date on which an admissible invoice is registered by the contracting authority. The interim and final payments to the contractor of the amounts due must be made within 90 days from the date on which an admissible invoice is registered by the contracting authority.

The payment deadlines for the final payments are 90 days in all cases.

If the payment deadlines are not respected, the contractor has the right to late-payment interest. Article 29(3) of the general conditions states that the contractor receives them automatically, except if the amount of the interest is less than EUR 200, in which case the contractor has to make a demand within the two months following the late payment. As a result of a derogation from this article that is made in the special conditions, in indirect management the payment of interests is never automatic and the contractor must make a demand in all cases, while still respecting the two month deadline following the late payment.

Be aware that in accordance with Article 37(1)(a) of the general conditions, if payments are due for more than 120 days after the deadline, the contractor is permitted, after having given 14 days’ notice to the contracting authority, to terminate the contract.

20.17. Article 30 – Financial guarantee

Before any pre-financing payment above EUR 300 000 a financial guarantee must be requested to cover the amount of the pre-financing, for an amount equal to the pre-financing, and denominated in the currency of payment. Subject to a risk analysis to be made by the contracting authority, a pre-financing guarantee may also be required below the amount of EUR 300 000 of pre-financing, (i) for contractors that have been listed in the Early Detection and Exclusion System at any moment during the last 3 years, and (ii) for contractors having relied on the capacity of another entity not part of the contract in order to meet the selection criteria.

The results of the overall risk analysis may be found in an annex to the INTPA Companion (Annex I5). For instructions on financial guarantees please refer to Section 9.1. of the INTPA Companion.

For service contracts of less than EUR 60 000, it is not possible to demand a guarantee to cover the pre-financing.

For fee-based contracts, the guarantee must be returned to the contractor when 80% of the value of the contract has been paid. For global price contracts, the guarantee should be retained by the contracting authority until payment of the final amount.

20.18. Article 34 – Breach of contract

A breach of contract is committed where one of the parties to the contract fails to discharge any of its obligations under the contract. Some breaches are of only minor importance, whereas others, such as the non-implementation of the contract by the contractor or the failure by the contracting authority to pay amounts due to the contractor, are major breaches and have serious consequences. Only serious breaches entitle one of the parties to terminate the contract, and these are enumerated in Article 36 (breaches by the contractor) and Article 37 (breaches by the contracting authority). For other breaches the injured party may claim damages, suspend payments, or suspend the implementation of the contract.

The injured party is then entitled to recover damages from the other party either by negotiation and agreement or, if necessary, by a court action.

The damages to which an injured party is entitled may be either general damages or liquidated damages, both of which are defined in the Glossary of Terms, Annex a1a to the PRAG.

Liquidated damages are damages that have been agreed beforehand by the parties, and recorded in the contract, as being a genuine estimate of the loss suffered by the injured party for a particular breach of contract.

General damages are not agreed beforehand. An injured party seeking to recover general damages must prove the loss it has suffered, whether it attempts to do so by direct agreement with the party in breach or by means of arbitration or litigation.

Any amount of damages, whether liquidated or general, to which the contracting authority is entitled, can be deducted from any sums that it is due to pay to the contractor, or alternatively from an appropriate guarantee, the pre-financing guarantee.

Additional information can be found in Chapter 12 of the INTPA Companion ‘Roadmap for contractual sanctions’.

20.19. Article 36 – Termination by the contracting authority

The general conditions enumerate several grounds that entitle the contracting authority to terminate the contract, and also stipulate its rights upon termination.

The period of 7 days notice mentioned in Article 36(2) is not aimed at giving the contractor a final chance to remedy his failures, but instead to give him/her a chance to make the necessary preparations to achieve his tasks.

Termination is a serious step and should only be taken after exhaustive consultations between the contracting authority and the project manager. Before resorting to termination, the issue of warnings to the contractor or instructions to remedy should be considered. The grounds for termination mentioned in Article 36(2) all relate to defaults or lack of ability on the side of the contractor and speak for themselves. Some of those cases are also applicable to members of the administrative, management or supervisory body of the contractor and/or to persons having powers of representation, decision or control with regard to the contractor, to persons jointly and severally liable with the contractor for the performance of the contract, or to subcontractors. Nevertheless, attention should be drawn to the fact that the contracting authority may terminate the contract for reason of any organisational modification in the legal personality, nature, or control of the contractor, for which it did not obtain the prior consent of the contracting authority through an addendum to the contract (Article 36(2)(f)).

Of course, any modification that is acceptable to the contracting authority should be formally agreed. This is most likely to occur in the case of a change to the legal relationship between the parties within a consortium or a joint venture. However, there may be changes that affect the rights of the contracting authority in a way that it cannot accept. In that case it has the possibility to terminate the contract.

The contracting authority may also, at any time and with immediate effect, terminate the contract for other reasons than those provided in Article 36(2), whether they are provided elsewhere in the general conditions or not.

Where termination by the contracting authority is not due to a fault of the contractor, force majeure, or other circumstances beyond the control of the contracting authority, the contractor is entitled to claim an indemnity for loss suffered, in addition to sums owed to him/her for services already rendered. Such а loss includes that of profit on the remaining part of the services to be implemented. Termination of the contract does not result in a cessation of all rights and obligations and activities as between the parties. Indeed, in such a case, the project manager has to draw up a detailed report of the services that have been rendered by the contractor.

The net amount due to the contractor can be ascertained and paid only when all services have been rendered and the full value of contracts with third parties and other costs have been deducted from amounts due to the contractor (Article 36(6)).

20.20. Article 37 – Termination by the contractor

Unlike the contracting authority, the contractor can terminate the contract only on a few specific grounds listed in Article 37: the contracting authority has not paid him/her sums due for more than 120 days after the expiration of the contract payment deadline, consistently fails to meet its obligations under the contract, or has suspended the contract for more than 90 days for reasons that are not specified in the contract and that are not due to any failure by the contractor. The termination takes effect automatically 14 days after the contractor has given notice of termination to the contracting authority. In the notice, the contractor should specify the grounds for the termination.

The contractor is entitled to be paid by the contracting authority for any loss or damage it has suffered, which can add to the recovery of overpayments, corresponding to the difference between what was paid and the total amount of the contract. This entitlement is limited to the contract price (Article 37(3)).

20.21. Article 38 – Force majeure

There is no default or breach of contract if implementation is prevented by force majeure (Article 38(1)). Because of the seriousness of the consequences that arise, it is important that any notification of force majeure should be carefully examined to ensure that the event in question is genuinely outside the control of the parties. For example, strikes and lockouts may be caused by some action of the contractor, and would then not be considered as resulting from force majeure. Provisions of force majeure should, therefore, not be used as an escape from contractual obligations or to improperly terminate the contract. Any dispute between the parties arising from the application of this article should be resolved under the procedures for settlement of disputes.

If a situation of force majeure occurs, it is likely that at least one of the parties suffers some loss. The general principle here is that ‘the loss falls where it falls’.

Another case of force majeure general conditions concerns the suspension of cooperation with the partner country. This new case allows for the protection of the interests of the contractor who can terminate the contract in this way without putting itself in default towards a decentralised contracting authority with whom cooperation has been suspended.

As a result of Article 38(3), the contracting authority does not have the right to demand the payment of liquidated damages or to terminate the contract for the contractor’s failure of implementation, to the extent that this failure is due to force majeure. Similarly, the contractor is not entitled to interest on delayed payments or to other remedies arising from the contracting authority’s failure to fulfil its contractual obligations, or to terminate the contract for failure of implementation, where these failures are due to force majeure. The procedure to be followed in the event of force majeure is set out in Article 38(4). It is initiated by either party giving prompt notice of the event in question. The contractor is then required to make proposals on how to continue with the implementation of the contract. The contractor is entitled to any extra costs incurred as a result of the project manager’s directions (Article 38(5)).

Both parties should monitor the evolution of the circumstances of force majeure especially when those are long-lasting. If the situation of force majeure continues for a period of 180 days, each party is encouraged to make recourse to the 30-day notice for termination provided for in Article 38(6) of the general conditions, in order to release all parties from their respective contractual obligations.

20.22. Article 40 – Settlement of disputes

Although a party can decide to initiate the dispute settlement procedures of Article 40 of the general conditions at a moment when the contract is still being implemented, these procedures may also begin once the contract has been completed, or after the termination of the contract by one of the parties. It should be noted that if there is a dispute that concerns an on-going contract, this does not relieve the contractor of its responsibility to continue complying with its contractual obligations with due diligence.

20.22.1. Amicable settlement

When a dispute relating to the contract arises, the parties are required to make every effort to settle this dispute amicably. To this end, as an obligatory first step, Article 40(2) of the general conditions requires one of the parties to notify the other party in writing of the dispute, stating its position and requesting an amicable settlement (see template T1 and – as a follow-up – template T2). A prior information letter issued in the view of a recovery order can also take the place of a formal request for amicable settlement, if so indicated in the letter itself. The other party is to respond to that request within 30 days with its position on the dispute. The general principle is that disputes are discussed by the parties and, whenever possible, resolved in an amicable way. The way of pursuing an amicable settlement may vary according to the internal administrative procedures of the contracting authority concerned, but it is usually of an informal nature. Nevertheless in order to ensure a certain efficiency and transparency, Article 40(2) of the general conditions sets clear time limits to the attempt for amicable settlement. These time limits guarantee that a party cannot indefinitely prolong the amicable settlement negotiations in an attempt to gain time and without any genuine intention to come to a settlement. As such, the maximum time period for reaching an amicable settlement is fixed at 120 days, unless both parties agree otherwise. The amicable settlement procedure can be considered to have failed earlier if the other party did not agree to the request for an amicable settlement or if it did not respond to that request within 30 days.

Unlike the attempt to reach an amicable settlement that is mandatorily foreseen in Article 40(2), Article 40(3) provides for the possible recourse to conciliation by a third person, and sets maximum time periods for reaching a settlement. See also 20.21.3. below.

20.22.2. Litigation

If the attempt to resolve the dispute through amicable settlement fails and, if so requested, the conciliation procedure fails, each party can, by way of last resort, submit its claims to a court or initiate arbitration proceedings, as stipulated in the special conditions of the contract.

  • Unlike with an amicable settlement, a court or arbitral tribunal may take a decision on the submitted claims even if the other party does not cooperate during the legal proceedings - for instance if one party does not attend proceedings, the court or tribunal may still make a decision. Unlike a proposal made during a conciliation procedure, the final decision taken by a court or arbitration tribunal will be binding. Whether a court or an arbitral tribunal will be competent and, if so, which court or arbitral tribunal, will be laid down in the special conditions of the contract. As a general rule, whenever the Commission is the contracting authority, the courts in Brussels are designated as being exclusively competent for the litigation. In the case of indirectly managed EDF-financed contracts, the special conditions will distinguish between disputes arising in a national contract and disputes arising in a transnational contract. Disputes arising from a national contract, i.e. a contract concluded with a national of the State of the contracting authority, are under Article 30.a of Annex IV of the Cotonou Agreement, to be settled in accordance with the national legislation of the ACP State concerned.

  • Disputes arising from a transnational contract, i.e. a contract concluded with a contractor who is not a national of the State of the contracting authority, are, unless the parties agree otherwise, to be settled by arbitration in accordance with the Procedural Rules adopted by the decision of the ACP-EC Council of Ministers (the EDF Procedural Rules) [3].

In an EDF indirect transnational contract, parties further have the option to agree not to submit the dispute to arbitration, but instead to follow either the national legislation of the ACP State concerned or its established international practices. Such agreement can be reached at the start of the contract before any dispute has arisen, or later on. In any event, the agreement to deviate from recourse to arbitration in a transnational contract must be recorded in writing and signed by both parties.

If an internal administrative appeal procedure exists within the ACP State, the arbitration must be preceded by that procedure. The contractor will only be in a position to initiate arbitration if internal administrative appeal procedures fail or are deemed to have failed (that is if there are no such procedures in the ACP State in question) as indicated in Article 4 of the EDF Procedural Rules.

Arbitration is a kind of private dispute resolution procedure in which the parties contractually agree to submit their dispute to an arbitral tribunal and accept the decision of this tribunal to be binding. If the parties agree, the arbitral tribunal can consist of one single arbitrator. If not, each party selects, on its own, one arbitrator, who then jointly nominate a third arbitrator who will act as chairperson of the tribunal. The arbitration procedure is an adversarial procedure, with written statements exchanged between the parties and concluded with oral proceedings. No appeal is open against the final decision taken by the arbitral tribunal. It should be noted that arbitration procedures are not public, and are subject to payment – the cost must be borne by the party requesting the arbitration. For more information on arbitration in EDF contracts, please see the rules of procedure for conciliation and arbitration of contracts financed by the EDF (Annex A12 to the PRAG):


Once the dispute has arisen, the parties may agree to have recourse to conciliation by a third party.

The main difference between conciliation and arbitration is that, unlike arbitration, the proposal made by a conciliator is not binding for the parties. They remain free to accept or reject any settlement-proposal made by the conciliator. Unlike the attempt for amicable settlement, the conciliation is not an obligatory step.

Often, conciliation is initiated when one of the parties has already submitted the dispute to a court or arbitral tribunal. Indeed, as a protective measure, a party may, for instance, already have lodged a request for arbitration to avoid such possibility to become time-barred. In that respect, one should bear in mind that Article 18 of the EDF Procedural Rules for conciliation and arbitration stipulates that the notice initiating arbitration must be time-barred unless it is given not later than 90 days after the receipt of the decision closing the internal administrative proceedings taken in the ACP State. The conciliator will, as a general rule, request the parties to suspend arbitration proceedings pending conciliation.

Like under the amicable settlement procedure, conciliation starts with a party requesting the other party in writing to agree on an attempt to settle their dispute through conciliation by a third person. The other party must respond to this request within 30 days. The same safeguards as for the amicable settlement procedure govern the conciliation procedure: unless the parties agree otherwise, the maximum time period for reaching a settlement through conciliation is 120 days.

Should conciliation fail, the parties may refer their dispute to, or continue their dispute before, a court or arbitral tribunal, as specified in the special conditions. If so, nothing that has transpired in connection with the proceedings before the conciliator must in any way affect the legal rights of any of the parties at the arbitration.

In a contract to which the Commission is not a party, the Commission can act as a conciliator, and if so, this will take the form of a good offices procedure. Such a good offices procedure can be conducted by the delegation or by Headquarters, depending on the availability of resources and competences. In any event, it is crucial that both parties have confidence in the impartiality and capacity of the conciliator and fully accept his mission.

For more information on the good offices procedure, please consult the document to be previously signed by the parties, which describes its steps and principles. [4]

20.23. List of annexes


The implementation of service contracts – A users’ guide


Letter to request amicable settlement – template LS

Letter_to request amicable settlement - template LS.docx


Letter to convene amicable settlement meeting – template LS

Letter_to convene amicable settlement meeting - template LS.docx

[1] Partnership Agreement between the Members of the African, Caribbean and Pacific Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 (OJ 2000 L 317, 15.12.2000, p. 3).

[2] Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p.1).

[3] Decision No 3/90 of the ACP-EEC Council of Ministers of 29 March 1990 adopting the general regulations, general conditions and procedural rules on conciliation and arbitration for works, supply and service contracts financed by the European Development Fund (EDF) and concerning their application (OJ L 382, 31.12.1990, p. 1).

[4] To be obtained from INTPA LEGAL HELPDESK