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OIB_AAR 2007 - Signed

VIEWS: 13 PAGES: 48

									          EUROPEAN COMMISSION
          OFFICE INFRASTRUCTURE AND LOGISTICS – BRUSSELS


          Director of the Office



                                             Brussels,
                                             OIB.01/BG/bg




                                       ANNUAL ACTIVITY REPORT 2007




OIB_AAR 2007.doc                      31/03/2008            Page n° 1 sur 48
                                        OIB ANNUAL ACTIVITY REPORT 2007



1.   PART 1. POLICY RESULTS ..................................................................................... 4
     1.1. Level of policy area........................................................................................... 4
     1.2. ABB.1 - Buildings and related activities........................................................... 4
     1.3. ABB.2 - Equipment & Services activities......................................................... 8
     1.4. ABB.3 – Administrative Support .................................................................... 12
     1.5. General satisfaction with the services of OIB................................................. 17
2.   PART 2. MANAGEMENT AND INTERNAL CONTROL SYSTEMS ................. 18
     2.1. Inherent nature and characteristics of the DGs risk and control environment 18
             2.1.1.      Offices characteristics and Governance structure ............................. 18
             2.1.2.      OIB's staff structure........................................................................... 19
             2.1.3.      OIB Budget........................................................................................ 20
             2.1.4.      OIB's management mode................................................................... 20
             2.1.5.      OIB's organisational, administrative and accountability structure.... 20
             2.1.6.      OIB's cross delegations ..................................................................... 21
             2.1.7.      Service level Agreements.................................................................. 23
             2.1.8.      Working arrangements ...................................................................... 23
             2.1.9.      OIB's inherent risks and follow-up.................................................... 23
     2.2. Management and control systems ................................................................... 24
             2.2.1.      Internal Control Template for Direct Centralised Management – Non-
                         Building Procurement........................................................................ 24
             2.2.2.      Internal Control Template for Direct Centralised Management –
                         Procurement on buildings.................................................................. 30
     2.3. Follow up of previous year's reservations and audit follow-up ...................... 34
             2.3.1.      Follow up of previous year's reservation(s): state of play of the action
                         plan implementation .......................................................................... 34
             2.3.2.      ECA recommendations on the functioning of the system and their
                         follow-up ........................................................................................... 35
             2.3.3.      Follow-up of other identified system weaknesses............................. 35
             2.3.4.      Responding to the ECA's annual report/assessing the residual error:38
     2.4. Key indicators supporting assurance............................................................... 38
             2.4.1.      Ex post controls ................................................................................. 38
             2.4.2.      Authorising Officer by Sub-Delegation reports ................................ 38

           OIB_AAR 2007.doc                                    31/03/2008                                            Page n° 2 sur 48
             2.4.3.       Audit recommendations implementation .......................................... 39
             2.4.4.       GAMA opinion.................................................................................. 40
             2.4.5.       IAC opinion....................................................................................... 41
             2.4.6.       Internal Control Standards Compliance ............................................ 41
             2.4.7.       Variation in iCAT efficiency 2007 vs. 2006 per COSO module / ICS42
             2.4.8.       Variation in iCAT on over dependency 2007 vs. 2006..................... 43
             2.4.9.       iCAT on financial organization......................................................... 43
     2.5. Conclusion on the effectiveness of the internal control system ...................... 44
3.   PART 3. RESERVATIONS AND THEIR IMPACT ON THE DECLARATION .. 45
     3.1. Materiality criteria used .................................................................................. 45
             3.1.1.       Qualitative criteria for defining significant weaknesses ................... 45
             3.1.2.       Quantitative criteria for defining reservations .................................. 47
     3.2. Reservations .................................................................................................... 47
     3.3. Overall conclusion on the combined impact of the reservations on the declaration
          as a whole ........................................................................................................ 47
4.   PART 4. DECLARATION OF ASSURANCE......................................................... 48




           OIB_AAR 2007.doc                                     31/03/2008                                            Page n° 3 sur 48
                                             OIB ANNUAL ACTIVITY REPORT 2007




1.       PART 1. POLICY RESULTS

         1.1.    Level of policy area

                 As horizontal and support Office, whose mission is to support the Commission’s
                 activities, OIB activities do not impact directly on EU society.

                 The objectives or "raison d'être" of each of OIB’s three ABB activities described below
                 are the following:

                              a. to meet the building needs of the Commission and related Services and staff
                                  in an efficient, effective and timely manner, in line with the highest
                                  environmental standards

                              b. to ensure client-oriented logistical services and social infrastructures
                                  corresponding to staff needs and meeting the highest environmental
                                  standards

                              c. to manage activities in a service and results oriented way in a transparent,
                                  ethical and accountable manner

         1.2. ABB.1 - Buildings and related activities

                 General objective of this ABB: to meet the building needs of the Commission and
                 related Services and staff in an efficient, effective and timely manner, in line with the
                 highest environmental standards. Four specific objectives were identified accordingly.

                 Four units were totally or partially involved: ex-OIB.1, ex-OIB.2, ex-OIB.7 (without
                 Historical Archives) & ex-OIB.8.

                                          ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.1: Implement the long term buildings policy and the procedures for selecting new buildings and/ or sites
and Manage the Commission's buildings and infrastructures efficiently and effectively while improving space planning in line with
the MAPF objectives.

                  Result Indicators                               Situation at end 2007                             2007 Target

Average office space used per person (m2)                                 36,00                                        37,70
Average size of office building (m2)                                      15.324                                       15.785
Archive space per person (m2)                                              2,16                                         2,52
Average cost of office space per person (€)                               9.8731                                       9.035



1
    Extra amount of 25.104.284 euros received which was used to pay in advance for fitting out works. If this extra amount was not included, the
       indicator would be €8.759.



                OIB_AAR 2007.doc                                    31/03/2008                                           Page n° 4 sur 48
                                             ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.1: Implement the long term buildings policy and the procedures for selecting new buildings and/ or sites
and Manage the Commission's buildings and infrastructures efficiently and effectively while improving space planning in line with
the MAPF objectives.

Average offices m2 "hors sol"                                                 812.176                                   838.188
Average non-office m2 "hors sol"                                              61.589                                    61.589
Average number of Commission buildings (non-                                     10                                       11
offices)                                                                       (10.6)
Average number of Commission buildings                                           53                                        53
(offices)
Number of persons housed in the offices                                       23.136                                     22.257
Number of removals                                                            10.6452                                     8.000
Average annual cost for technical maintenance                                 23,18 €                                    22,50 €
per m² office space
% of credit notes-penalties on maintenance /                                   1,17 %                                   < 0,50 %
Total amount of contracts managed
Number of technical interventions                                              55.887                                    50.000
Average annual basic cost of moving office per                                  192 €                                     211 €
person (€)
m² of buildings projects followed (completed by                     3 projects = 32.378 m²                              30.000 m²
developers)                                                              L-56: 9.243 m²
                                                                        LX40: 9.135 m²
                                                                       COVE: 14.000 m²
m² of buildings projects followed with                                      1.362 m²                                    2.500 m²
Commisssion as developer / owner                               Delay in "showers", due to the late
                                                              signature of the framework contract
Number of computer rooms in office buildings                                    53                                         56
Main policy outputs (delivered in 2007)
Achieved:
    •    Managed the "parc immobilier" and acquired new m² needed and conducted regular space-use 'audits' (for controlling DGs'
         needs) – Recurrent action
    •    Managed building works, technical maintenance, télégestion, removals and the internal reorganisation of offices and
         provided assistance and technical advice to DGs' staff – Recurrent action
    •    Participated in the preparation of the new buildings' policy Communication (published on 5th September 2007)3.
    •    Contributed to the definition of the new buildings' acquisition new procedure.
    •    Finalised the "Étude du Patrimoine" in a view to developing of a long term solution for the EC's real estate needs.
    •    Performed development and refurbishment works: CCAB, EAS' offices and new rooms (DM24/+0), VM-2's Foyer, DG
         EAC (MADOU), HTWG atelier.
    •    Moved (after necessary works) services into new buildings / facilities already contracted or in the process of being
         contracted: L-56, LX40 and COVE.
    •    Carried out works (refreshing painting, renewing floor coverings in the buildings): BU-25, L130, CCAB, C107, B100, B29
         (start-up).
    •    Upgraded data networks by re-cabling: BU-9, C107 and VM2.
    •    Evacuated the following buildings: IMCO, J-37, N105, BU24, MO51, MARKELBACH
    •    Increased nursery capacity: a new one opened, in early September 2007, in the Rue de Genève.
    •    Continued the consolidation of IT infrastructure consolidation. Moved DIGIT's equipment to Datacentre (HOST) after
         IMCO evacuation.
    •    Participated in all the Task-force EU-Belgium and the European Quarter Foundation's meetings (around 9 meetings
         occurred for the latter).

Ongoing:
    •    Finalise a "Code de Mesurage". To consolidate and harmonise the different internal and external services' methods of
         calculating surfaces (including exchange of information with other institutions).
    •    Set up an appropriate risk management system for all building procurement projects adapted to different project types /



2
    One part of removals is linked to the implementation of the MAPF, the other is linked to the restructuring of DGs
3
    COM(2007)501



                OIB_AAR 2007.doc                                        31/03/2008                                         Page n° 5 sur 48
                                      ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.1: Implement the long term buildings policy and the procedures for selecting new buildings and/ or sites
and Manage the Commission's buildings and infrastructures efficiently and effectively while improving space planning in line with
the MAPF objectives.

          complexity levels and implementation related action plan (1st semester 2008)
     •    Finalise, and integrate into a project of DAV2's assessment of needs in order to propose a new programme to owner.
     •    Finalise the light refurbishment in the buildings MO59, BU29, CSM1
     •    Managed Cornet-Leman building project
     •    Start-up Wagons-Lits nursery project: the renovation works are being re-assessed and along with the purchase of the site
          and proceed with the works through a call for a tender is now being sought.
     •    Finalise the upgrading of data networks in 2 buildings: MO34 and SCAN

Carried over:
    •    Coordinate with OIL the framework of the 'Life Cycle Cost' project.
    •    Prepare the new procedure for a logistic building and use the clause regarding neighbouring buildings.
    •    Launch call for proposals for a New Conference Centre (L130 block alternative analysed, but decision depends on the new
         urban planning prescriptions expected in 2011) and for the extension of the central archives storage (KORT) (possible
         revision of the capacity needs).
    •    Renovate the CIE complex: develop necessary studies to launch the project.
    •    Upgrade of data networks in GUIM



                                      ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.2: Enhance OIB'S service-oriented culture and client satisfaction by offering good quality office space,
in respect of the Health and Safety Rules applicable to the Commission sites of Brussels.

               Result Indicators                             Situation at end 2007                          2007 Target

Average annual cleaning cost per m² (including                     14,76 €                                     15.70 €
waste disposal)                                                  (Estimation)
% of credit notes-penalties on maintenance /                        1.17%                                     < 0,50 %
Total amount of contracts managed

Main policy outputs (delivered in 2007)
Achieved:
   •    Managed the contracts for cleaning, waste disposal, treatment and the provision of sanitary supplies (toilet paper and hand
        towels/wipes), pest control – Recurrent action
   •    Managed the disposal of non-classified sensitive documents and papers – Recurrent action

Ongoing:
   •    Introduce a new quality control approach in the new service contracts (e.g. cleaning contracts) and put in place control
        quality structures for existing contracts (e.g. maintenance)
   •    Install new shower blocks
Carried over:
    •    Prepare the 2nd part of the 'Housing Conditions Manual', after the launch of the Inter Service Consultation (1st part of the
         Manual) – ongoing very important 2002 IAS recommendation on building infrastructure - and assemble a supplement to
         "Housing Conditions Manual" in relation to the "good state of buildings".
    •    Install new catering infrastructure in CSM1 (unsuccessful call for tenders in 2007).




            OIB_AAR 2007.doc                                  31/03/2008                                         Page n° 6 sur 48
                                             ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.3: Co-operate with other Institutions and Services on the basis of clearly defined arrangements &
Service Level Agreements (SLAs) and improve exchange of best practices and Market knowledge.

                  Result Indicators                                   Situation at end 2007                                 2007 Target

m2 occupied by agencies in CE portfolio and                                   15.927                                           9.551
managed by OIB                                                                                                 Note: After drafting the 2007 target,
                                                                                                                new requests for office space were
                                                                                                                        filled by agencies.
m2 occupied by agencies in dedicated                                48.197                                                      N/A
buildings
Frequency of meetings of established                                   3                                        N/A
cooperation groups (e.g. ILISWG)
Main policy outputs (delivered in 2007)
Achieved:
     •    Provided advice and assistance to agencies through SLAs – Recurrent action
     •    Ensured the secretariat of the ILISWG (3 meetings occurred in 2007) – Recurrent action.
     •    Provided technical assistance to DG RTD on its launch of calls for proposals for the European Research Council (ERC).
     •    Signed a number of SLAs, namely: EAC executive agency (supplementary office space), ERC and RTD Commission
          Agency (signature for Covent Garden building is ongoing), CoR/EESC (VM-2 building), EACEA (temporary housing in
          the BU29 building).
     •    Provided, on request, technical consultancy and legal advice to other EU-agencies for their own property projects (CFCA,
          DG EMPL's agency, RTD agencies).

Ongoing:
    •    Proceed internally in the definition of the "Life Cycle Cost" methodology in order to exchange views with other
         Institutions.

Carried over:
    •    Sign an SLA with EACEA for a new building.
    •    Prepare an SLA for the future TEN Executive Agency and one for EACI
    •    Carry out an inter-institutional comparative study of the market concerning the technical maintenance costs of buildings.



                                             ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.4: Meet the highest environmental standards in all its activities, through the implementation of the
Environmental Management Auditing System (EMAS).

                    Result Indicators                                 Situation at end 2007                                2007 Target

Number of EMAS certified buildings                                              74                                               13
Cost/ m² energy (electricity, gas, fuel)                                     15,54 €                                         16, 47 €
% of reduction in energy, electricity and gas for                     Electricity: - 5,74 %                                  - 3,00 %
buildings (proposed by EMAS)                                              Gas: - 4, 53%
                                                                2007 figures based on the period
                                                              starting from January until October
                                                                              2007.
% of water consumption reduction / year n-1 (in                            - 13, 09 %                                        -3,00 %
the 7 pilot buildings)                                       2007 figures extrapolaed for 9 months
                                                                 Decrease is mainly due to more


4
    7 buildings if BU-5 and BU-9 are considered as one building, 8 buildings if they are counted separately. The certification of 6 additional buildings
        was delayed due to a number of corrective actions that had to be taken in 2007.



                OIB_AAR 2007.doc                                        31/03/2008                                              Page n° 7 sur 48
                                       ABB.1 - BUILDINGS AND RELATED ACTIVITIES


SPECIFIC OBJECTIVE 1.4: Meet the highest environmental standards in all its activities, through the implementation of the
Environmental Management Auditing System (EMAS).

                                                       reliable equipment and better
                                                          corrective maintenance
% of selected waste vs. sum of waste                              56,90 %                                   58,50 %
Main policy outputs (delivered in 2007)
Achieved:
   •    Implemented the "Energy performance" (consumption and emissions) action plan – Recurrent action
   •    Ensured the follow up of the "conditions d'exploitation" and monitored the expiry/renewal of the buildings' environmental
        permits – Recurrent action
   •    Maintained EMAS certified buildings and prepared the certifications of new buildings (L-86, Clovis/Wilson, J-54, DAV1,
        and B-28).
   •    Included environmental criteria in new contracts (e.g.: cleaning contract).
   •    Continued, via campaigns in all buildings, to promote EMAS actions (e.g.: waste sorting and recycling in buildings).
   •    Signed and extended several administrative arrangements in order to monitor and verify the conformity with the
        specifications (laid down in the cleaning contract) of all chemical products used.

Carried over:
   •    Improve and create more Green Areas (L130 and Breydel - 2 buildings/ year).



      1.3.    ABB.2 - Equipment & Services activities

              General objective of this ABB: to ensure client-oriented logistical services and social
              infrastructures corresponding to staff needs and meeting the highest environmental
              standards. Four specific objectives were identified accordingly.

              Five units were totally or partially involved: ex-OIB.3, ex-OIB.4, ex-OIB.-6, ex-OIB.7
              (Historical Archives) & ex-OIB.9.

                                        ABB.2 - EQUIPMENT & SERVICES ACTIVITIES

SPECIFIC OBJECTIVE 2.1: Continue to develop and ensure high level quality services in order to create the best possible working
conditions and ensure a sound financial management of the inventory (including the correct and secure delivery of mail, the optimal use
of the Commission's printing capacity and the correct delivery of office supplies and furniture).

                Result Indicators                            Situation at end 2007                          2007 Target

Number of calls & complaints regarding office                         115                                        90
supplies
% of tracked items vs. total number of                             36,50 %                                    38,00 %
inventoried items
% of pre-equipped offices vs. removals                                18%                                       40%
                                                    (1 out of 3 buildings was pre-equipped
                                                    with new furniture, 2 buildings out of 3
                                                           equipped with old stocks)
Annual cost per person for office supply                              213 €                                   255,5€
Tons of internal mail handled per year                                1805                               1870 – 1 % = 1851
Tons of incoming mail for diplomatic pouch per                         341                                405 + 4% = 421
year
Tons of outgoing mail for diplomatic pouch per                        427                                 459 + 4% = 477
year
Tons of incoming external mail handled per year                       792                                 731 – 3% = 709
Tons of outgoing external mail handled per year                       110                                 109 – 3 % = 106
Annual cost of Digital reproduction per 1.000                       11,90 €                                   14,50 €
pages (including paper)



             OIB_AAR 2007.doc                                31/03/2008                                       Page n° 8 sur 48
                                         ABB.2 - EQUIPMENT & SERVICES ACTIVITIES

SPECIFIC OBJECTIVE 2.1: Continue to develop and ensure high level quality services in order to create the best possible working
conditions and ensure a sound financial management of the inventory (including the correct and secure delivery of mail, the optimal use
of the Commission's printing capacity and the correct delivery of office supplies and furniture).

Annual cost of External Offset reproduction per                       9,26 €                                      6,70 €
1.000 pages (including paper)
% of time of actual operation of offset machines                       78 %                                        80 %
(in %)
% of "jobs" delivered within deadlines (printing                       84 %                                        95%
activity)
Number of documents printed                                          37.200                                       16.800
                                                         More activity with less copy per
                                                                   document
Number of pages printed/ produced                                 195.000.000                                    161.500.000
Loss of registered mail vs. total of registered mail                   0%                                          0,002 %
Number of files more than 30 years old analysed                       3.390                                         3.500
(during period) in order to open to the public
Annual average cost per km for rented vehicles                           0,60 €                                     0,75 €
Annual average cost per km for cars owned by                             0,26 €                                     0,23 €
the Commission (excluding depreciation)
Number of bicycle uses per bike per year                                  127                                          80
Number of service bicycle loans                                          23.050                                     18.000
Number of One Way Tickets issued                                        37.647                                      27.000
Number of parking spaces available for bikes                             2.470                                       2.200
Number of parking spaces available for                                    420                                         380
motorbikes
Main policy outputs (delivered in 2007)
Achieved:
    •    Managed the ongoing service contracts – Recurrent action
    •    Performed inventories of one third of furniture per year – Recurrent action.
    •    Provided support to DG BUDG on the SAM (Supply & Assets Management) project and implemented some modifications
         concerning the ABAC Assets tool in order to integrate functionalities from SICMOB into ABAC Assets.
    •    Improved the delivery time and frequencies of mail transport (e.g. automatic redistribution within 2 hours of internal mail
         collection).
    •    Managed the mail – Recurrent action
    •    Managed the printing activity – Recurrent action
    •    Provided transport services for all staff concerned via a straightforward online order service (using the Commission' car fleet)
         and purchases of One Way Tickets & Airport Line Tickets ; managed parking spaces for bicycles & motorbikes and managed
         the contract and monitoring of quality of Eurobus lines – Recurrent action
    •    Increased the number of service bicycles available (based on usage and absorption capacity criteria) -130 new bicycles were
         ordered in 2007 and shall be delivered in 2008.
    •    Analysed alternative actions, concerning the Commission Communication on "Transport mobility" of March 2006 - several
         actions have been achieved or are ongoing: to launch a call for tender for new bicycles, to replace bicycles' security locks, to
         prepare a call for tender for a bicycle management system, to introduce a new training course on "safe bicycle in the city" and
         increase the OWT distribution.
    •    Installed the two new Commission's cabinets.
    •    Managed the Historical Archives with a view to reducing the existing backlog of archives to be opened to the public –
         Recurrent action

Ongoing:
   •   Develop services according to new technological opportunities (implement the "Impressive" informatics tool - May 2008) and
       client needs (customer feed–back for concept and 'print jobs').
   •   Implement the agreement on a new methodology for simplification and streamlining of archival description, content
       management, appraisal/ selection and declassification reached with the SG.




            OIB_AAR 2007.doc                                   31/03/2008                                        Page n° 9 sur 48
                                              ABB.2 - EQUIPMENT & SERVICES ACTIVITIES


SPECIFIC OBJECTIVE 2.2: Promote good social infrastructures, to increase both nursery and after school childminding capacity
and to optimise the use and quality of welfare services.

                    Result Indicators                                 Situation at end 2007                              2007 Target

"29" & VM – Number of clients                                                 5.286                                           6.515
"29" & VM – Meals per day5                                                    22,00                                           27,50
"29" & VM – Sold Items                                                       29.196                                          35.769
Selfs - Number of clients                                                  1.600.383                                       1.538.833
Selfs - Meals per day                                                         6.613                                           6.359
Selfs - Sold Items                                                         4.131.988                                       4.071.319
Cafeterias - Number of clients                                             3.386.290                                       3.245.147
Cafeterias - Meals per day                                                   13.993                                          13.410
Cafeterias - Sold Items                                                    7.177.631                                       6.781.487
Satisfaction rating for Selfs                                               58,00 %                                         58,50 %
Satisfaction rating for Cafeterias                                          77,00 %                                         69,50 %
Satisfaction rating for Restaurants                                         64,00 %                                         79,00 %
Satisfaction rating for Vending Machines                                    75,00 %                                         65,00 %
Number of complaints - Restaurants, Cafeterias,                                438                                             511
Drink for meetings                                            Note : This represents a decrease of          This objective represented a decrase of
                                                                16% versus AAR 2006 figures                     2% versus actual figures as of
                                                                                                                          31/12/2006.
Number of audits on the execution of catering                                  1.398                                          1.287
framework contracts (COMCAL audits)
% of non conformities                                                        5,96 %                                         3,70 %
                                                               Note : increase due to a change in
                                                                          criteria used
% of critical values                                                         0,11 %                                         0,10 %
Number of children on waiting lists for                                         0                                              0
'Garderies Post-Scolaires'
Number of children on waiting lists for                                           0                                           0
'Garderies Aérées'
Number of children on waiting lists for nursery                               472                                            335
Number of existing places in GPS                                              793                                            702
Number of existing places in GA                                               550                                            470
Number of existing places in nursery                                          883                                            921
                                                             Local nurseries: 81 (vs. target of 103)
                                                             Council nursery : 34 (vs. target of 50)
Cost of nursery per child per year                                        19.049,00 €                                    22.398,00 €
                                                              Note: Estimative - 2007 average cost
                                                                 indexed to the 2006 real cost.
Cost of GPS per child per year                                             5.184,00 €                                     6.082,00 €
                                                              Note: Estimative - 2007 average cost
                                                                 indexed to the 2006 real cost.
Cost of GA per child per day                                                37,31 €                                        35,00 €
                                                              Note: Estimative - 2007 average cost
                                                                 indexed to the 2006 real cost.
Number of complaints – crèches, GPS, GA, CIE                                   38                                              61
                                                              Note : This represents a decrease of           This objective represented a decrease
                                                                 39% versus AAR 2006 figures                   of 2% versus actual figures as of
                                                                                                                          31/12/2006.
Number of members for the winter tennis                                          73                                            79



5
    Indicator calculated based on the number of receipts paid yet one receipt usually bears more than one meal.




               OIB_AAR 2007.doc                                         31/03/2008                                           Page n° 10 sur 48
                                      ABB.2 - EQUIPMENT & SERVICES ACTIVITIES


SPECIFIC OBJECTIVE 2.2: Promote good social infrastructures, to increase both nursery and after school childminding capacity
and to optimise the use and quality of welfare services.

season (CIE)
Number of members for the summer tennis                              212                                       159
season (CIE)
Number of training participants (CIE)                               3.903                                     4.704
Main policy outputs (delivered in 2007)
Achieved:
   •    Monitored catering contracts and « restauration protocolaire » – Recurrent action
   •    Managed the existing childminding facilities and nursery capacities – Recurrent action
   •    Managed the CIE and contributed to the renovation project, and managed agreements with sport clubs – Recurrent action
   •    Implemented the action plans resulting from surveys on catering services (e.g.: widen choice of sandwiches fillings in the
        cafeterias).
   •    Implemented the action plans resulting from the surveys on nurseries, and childminding facilities
   •    Improved the aesthetics of the self-service areas and cafeterias in the buildings G-12, B-28, SPA2, F-101, VM-2



                                      ABB.2 - EQUIPMENT & SERVICES ACTIVITIES


SPECIFIC OBJECTIVE 2.3: Co-operate with the other Institutions and services on the basis of clearly defined arrangements &
Service Level Agreements (SLAs) and improve exchange of best practices and market knowledge.

               Result Indicators                            Situation at end 2007                          2007 Target

Number of interinstitutional actions (printing                             6                                    Not Applicable
projects)                                                (ongoing actions as of 15/12/2007)                     (new indicator)
Main policy outputs (delivered in 2007)
Achieved:
    •     Provided procurement of furniture and office supplies for other Institutions and Agencies on the basis of SLAs.
    •     Provided support to other institutions in their printing projects (technical & logistical operations) – Recurrent action
    •     Managed the Council's nursery on the basis of a SLA – Recurrent action
    •     Contributed to the project to develop a fitness centre on The European Parliament's premises
    •     Collaborated with Historical Archives of the European Union in Florence (AHUE) – Recurrent action
    •     Collaborated with the European Parliament in the STIB contract to use two Eurobus lines (21 and 22), and shared the costs
          in proportion to each institution's population.
    •     Opening of Genève nursery (September 2007)

Carried over:
   •    Conclude an agreement to print "in house" products for OPOCE (following closure of the latter's internal printshop) and
        thus use the spare printing capacity



                                      ABB.2 - EQUIPMENT & SERVICES ACTIVITIES


SPECIFIC OBJECTIVE 2.4: Promote environmental awareness and the integration of environmental considerations in activities
through the implementation of the Environmental Management Auditing System (EMAS).

               Result Indicators                            Situation at end 2007                          2007 Target

% of reduction of paper and consumable budget/                       -7%                                      -2%
DG
Cumulated replacement of equipment                       100 % (16/ 16 equipments)                  75 % (12/ 16 equipments)
containing hard CFCs within EMAS certified
buildings - Gas R12 (% of replacement)



           OIB_AAR 2007.doc                                  31/03/2008                                        Page n° 11 sur 48
                                               ABB.2 - EQUIPMENT & SERVICES ACTIVITIES


SPECIFIC OBJECTIVE 2.4: Promote environmental awareness and the integration of environmental considerations in activities
through the implementation of the Environmental Management Auditing System (EMAS).

Cumulated replacement of equipment                                   72 % (36/ 50 equipments)                        66 % (33/ 50 equipments)
containing hard CFCs within EMAS certified
buildings - Gas R22 (number of equipments)
Emissions of CO2 by car/ km                                                   241 g/ km                                       240 g/ km
Main policy outputs (delivered in 2007)
Achieved:
   •    Monitored/reduced the consumption of paper – Recurrent action
   •    Provided, since June 2007, new contracts for print shops & paying particular attention to the ecological aspects of the
        equipment and services. First evaluation of this implementation will be done during 1st quarter of 2008.
   •    Monitored chilling and freezing equipment used in the kitchens – Recurrent action
   •    Ensured the conformity with chemical products used for cleaning – Recurrent action
   •    Gradually renewed the car fleet, with emphasis on environmental characteristics of the new vehicles – Recurrent action
   •    Reduced petrol consumption and gas (CO2 and NOx) emissions of the fleet vehicles – Recurrent action
   •    Provided general training drivers to adopt an "environmentally-friendly driving" attitude: 75 drivers out of 79 received the
        training.
   •    Increased the number of more environmentally friendly vehicles in the Commission's car fleet (hybrids, bio ethanol, blue
        motion, bluetec…). Leased vehicles are automatically replaced by more environmental-friendly. In 2007, 23 vehicles were
        replaced (in 2008, 25 vehicles will be replaced; in 2009, around 10 vehicles will be replaced).



          1.4.     ABB.3 – Administrative Support

                   General objective of this ABB: to manage activities in a service and results oriented
                   way in a transparent, ethical and accountable manner. Four specific objectives were
                   identified accordingly.

                   OIB.Staff and two units were involved: ex-OIB.5 & ex-OIB.10.

                                                     ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.1: Continue to evolve towards a more pro-active management of human resources.


                    Result Indicators                                  Situation at end 2007                                 2007 Target

% of the TEC annual objective                                            52,63 % (= 20 / 38)                                  38 (value)

                                                                             20 (value)
Cumulated % of the TEC annual objectives                               91,04 % (= 183 / 201)                       201 (2006 objective postpone)
                                                                         183 (2007 value)
Cumulated theoretical annual economies in staff                           12.531.532,78 €                                  12.655.110,00 €
costs in € since the creation of the Office
Theoretical annual economies in staff costs in €,                          4.331.431,74 €                                   4.555.008,00 €
on the basis of transformation of posts into
credits (TEC)
Ratio of number of non officials on total staff                                 58 %                                             58 %
Number of training days per person and per year                                 8,176                                            10,00
                                                                        (4.474 training days)
Number of local training sessions organized by                                    89                                               70



6
    If the staff employed under private law contracts were included in the calculation, the indicator would account for 8,14.(5.064 training days)




                 OIB_AAR 2007.doc                                        31/03/2008                                               Page n° 12 sur 48
                                             ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.1: Continue to evolve towards a more pro-active management of human resources.


                Result Indicators                           Situation at end 2007                        2007 Target

OIB
Average vacancy rate of available posts                           3,88 %                                    2,20 %
Rate of absenteeism                                    Data not available due to TIM                          5%
                                                                 migration.
                                                    Should be made available by DIGIT in
                                                                March 2008
% of permanent staff leaving within first 2 years                 0,24 %                                    1,50 %
% of non permanent staff leaving within first 2                   1,94 %                                    3,00 %
years
% of women on total OIB staff                                      46 %                                      45 %
Main policy outputs (delivered in 2007)
Achieved:
    •    Managed the OIB's Human Resources (careers, recruitments, training, leave and absences, …) Recurrent action
    •    Carried out the 1st evaluation exercise and the reclassification of contracts agents 3a) for around 250 staff members
    •    Organized 38 contractual agents selection panels (+/- 300 interviews in 2007) Recurrent action
    •    Adopted the OIB's staff mobility plan.
    •    Adopted an action plan to reduce absenteeism
    •    Adopted the 'Charte de l'Encadrement de l'OIB (sur l'Egalité des Chances entre Hommes et Femmes) on 22/01/2007;
         organized meetings of the "Egalité des chances" networks (e.g.: follow-up of women recruitment objectives, improvement
         of information available on intranet, …)
    •    Established and implemented OIB's Strategic Training Framework (STF)provided personalised training for specific
         populations and ensured effective follow-up of the compulsory training (e.g. 'Chefs d'Immeubles'). Recurrent action
    •    Organised thematic workshops on current events related to Human Resources matters (e.g. attestation and certification
         procedures, staff mobility, flexitime arrangements, contractual agents …).
    •    Implemented and adopted the flexitime rules: specific OIB guidelines were developed
    •    Implemented measures for managing sensitive posts (identification, flagging in Sysper2, individual notification, turnover
         or other mitigating measures) and follow-up to ensure the correct segregation of duties. Recurrent action
    •    Finalised a screening exercise on sensitive functions
    •    Finalised the screening exercise of the staff involved in procurement

Ongoing:
    •    Manage external recruitment and ensure of EUR12 targets (33 interviews in 2007).
    •    Implement OIB's staff mobility plan
    •    Implement OIB's action plan to reduce absenteeism

Carried over:
    •    Implement actions from the future Communication on the functioning of the Offices (the Communication was not adopted
         in 2007).



                                             ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.2: Strengthen internal control systems, reporting and supervision, consolidate budgetary planning and
execution and reinforce the management and timely conclusion of procurements, on the basis of sound financial principles, legality
and regularity.

                Result Indicators                           Situation at end 2007                        2007 Target

% Commitments / Budget (C1)                                       94 %                                      100 %
% Payments / Commitments (C1)                                     86 %                                      90 %
% of recovery orders issued / amounts                            15,42 %                                   90,00 %
receivable (FOR)                                    For which RO were not issued in 2007


            OIB_AAR 2007.doc                                31/03/2008                                       Page n° 13 sur 48
                                            ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.2: Strengthen internal control systems, reporting and supervision, consolidate budgetary planning and
execution and reinforce the management and timely conclusion of procurements, on the basis of sound financial principles, legality
and regularity.

                                                    (i) contribution of other Institution to
                                                       the CPE (crèche & garderie); (ii)
                                                     federal and regional contribution for
                                                                   electricity
% of overdue payments                                               38,98 %                                  22,63 %
% of overdue recovery orders                                         4,75 %                                   0,50 %
                                                       ROs to be issued concern mainly:
                                                       other contributions to nurseries /
                                                      childminding facilities; federal and
                                                    regional contribution for energycosts.
% de crédits C8 perdus / total crédits C8                            7,70 %                                 < 10,00 %

% de crédits C8 perdus / total crédits engagés                       0,94 %                                       N/A
% of completion of the SLA on infrastructure &                       62 %7                                       82 %
informatics with the DG DIGIT
% of completion of the "schema directeur" (all                        80 %                                       87 %
applications)
% of accepted audit recommendations                                  84,4%                         Improvement compared to previous
implemented / total accepted audit                           42 new accepted audit                          period (84, 3%)
recommendations to be implemented                    recommendations were noted in 2007
Main policy outputs (delivered in 2007)
Achieved:
     •    Monitored budgetary execution (commitments/payments/recovery orders), ensured the proper execution of the carry
          forward operations and closely monitored “payments and recovery orders delays” – Recurrent action
     •    Coordinated the Preliminary Draft Budget procedure and OIB's budget planning – Recurrent action
     •    Implemented DG BUDG's methodology on the new Commission accounting rules. Recurrent action
     •    Implemented and executed controls on the correctness of accountability: the action plan was established during May and
          June 2007. The action plan and the control programmes were sent to the Commission's Accountant. Recurrent action
     •    Contributed to the audits organized in 2007, and implement all the accepted recommendations from previous and ongoing
          audits in an efficient and active manner. Recurrent action
     •    Finalised the non-budgetary accounting operations and closed the associated relevant accounts: July 2007 (except
          economist - carry-over).
     •    Issued the update of 'The Manuel des Procedures Financières' (MPF) for budgetary matters
     •    Developed, maintained and enhanced OIB's information systems according to the Schema Directeur (e.g. in 2007 :
          'MARCO': plan and follow-up module for procurement procedures ; 'KiddyWeb' : to facilitate the enrolment of children in
          the nurseries and other childminding facilities – Recurrent action
     •    Achieved the business Processs modelling of the IT application related to facilities management (Data Corporate Model)
          according to Schema Directeur for the Real Estate domain (with alignment of data from PaceGIS, TechBat & PIMM).
     •    Organized IT supervision through vision documents for all new IT application: performed to all new projects – Recurrent
          action
     •    Updated the BCP action plan.
     •    Developed all SPP cycle documents : APS, AMP & AAR as well as "Rapport Intermédiaire de Gestion de l'Office" and
          mid-term review (addressed to the Commissioner) – Recurrent action
     •    Managed the standard iCAT questionnaire and the questionnaires concerning the dependency of contracting parties and
          financial organisation.
     •    Analysed the mid term values of indicators and refined some of them to better measure each Units' objectives
     •    Cooperated with audit teams during their audit mission in order to ensure a good quality of audit reports and implemented
          existing audit recommendations – Recurrent action
     •    Assisted ECA with the DAS process – Recurrent action
     •    Follow-up various action plans (e.g. : 2005 OIB reservation, critical and significant risks, iCAT, corrective measurements
          within exceptions (Standard nº18), 2005 and 2006 'Décharge' – Recurrent action
     •    Organized the Internal Control coordinators' network meetings to present the revised Internal Control Standards and a


7
    Indicator to be reformulated in 2008




               OIB_AAR 2007.doc                              31/03/2008                                        Page n° 14 sur 48
                                             ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.2: Strengthen internal control systems, reporting and supervision, consolidate budgetary planning and
execution and reinforce the management and timely conclusion of procurements, on the basis of sound financial principles, legality
and regularity.

          workshop to present these revised standards to the management and team leaders.
     •    Executed the annual programme of ex-post controls – Recurrent action.
     •    Managed horizontal activities (e.g.: security access requests, Inter-Service consultations, …) – Recurrent action

Ongoing:
    •    Finalise the 'KiddyWeb': deployment of Garderies Aérées and Garderies Post-Scolaires. (1st Semester of 2008)
    •    Carry on the drafting of missing operational procedures (all units concerned)

Carried over:
    •    Develop guidelines for an analytical accounting system to improve the management of the SLAs signed with executive
         agencies (waiting for conclusions from DG ADMIN)
    •    Invoice the services provided to other Institutions – as it is done for the other Agencies and Offices on the basis of SLAs -
         taking into account the need to pursue a balanced approach.



                                             ABB.3 - ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.2: Strengthen internal control systems, reporting and supervision, consolidate budgetary planning and
execution and reinforce the management and timely conclusion of procurements, on the basis of sound financial principles, legality
and regularity.

                Result Indicators                            Situation at end 2007                        Target (mid-term)

Number of procedures > € 60.000 handled                  54 (corresponding to 89 lots)                            70
(inter-institutional procedures included)
Number of procedures > € 60.000 handled of               12 (corresponding to 27 lots)                           N/A
which inter-institutional
% of valid candidatures / total received                             74,6%                                      90 %
candidatures (> € 60.000)
% of positive opinions from GAMA                                     86 %                                       93 %
% of procedures launched for which the delay                         55.6%                                      80 %
was respected / total procedures forecasted
Number of (> € 60.000) contracts signed (inter-                        30                                         50
institutional contracts included)                     (36 contracts signed resulting from
                                                           procedures > € 60.000)
Number of inter-institutional contracts signed                         10                                        N/A
(among the above mentioned figure)
Main policy outputs (delivered in 2007)
Achieved:
    •    Managed procurement procedures – Recurrent action
    •    Update of the 4-year tender planning with the new IT tool "MARCO" (for procedures above € 60.000), and its follow-up
         (e.g.: quarterly "early warning report" to units)
    •    Signed 30 contracts above € 60.000 (e.g. : cleaning (windows and offices); cabling works; diplomatic pouches; Covent
         Garden maintenance services, print shops and print software system ; Paint, carpeting and brickwork,; receptionists; food
         platform, Eurobus, signposting, refurbishment of CCAB, shower changing rooms, white goods, vehicle insurance, BXL/ST
         shuttle …)
    •    Finalised the 'orientation document' on procurement, which englobes inter alia cost-benefit-analyses, the duration of
         contracts, the reasons of duration if more than 4 years contract, the volume of market in question (in quantity and/or euro)
         (done: February 2008)


Ongoing:
    •    Purchase of playground equipment, disposable nappies, document shredder, insurance for natural disasters,
         accommodation for children in the 'Garderies Aérées' in Overijse



            OIB_AAR 2007.doc                                  31/03/2008                                         Page n° 15 sur 48
                                             ABB.3 - ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.2: Strengthen internal control systems, reporting and supervision, consolidate budgetary planning and
execution and reinforce the management and timely conclusion of procurements, on the basis of sound financial principles, legality
and regularity.

                Result Indicators                            Situation at end 2007                        Target (mid-term)

     •    Launch calls for proposal (e.g. additional space in the 'European Quarter'; logistical building for the European Research
          Council (ERC))
     •    Launch call for tenders (e.g. windows for G-12 building (offers expected in May 2008), waste treatment (offers expected
          in April), furniture (technical specification on translation)

Carried Over:
    •    Finalise or launch tender procedures (gas delivery) - once the energy price volatility and market rules are regulated (close
         collaboration with DG TREN) ; work uniforms; necessary fitting out works and provision of specific equipment for
         disabled; refurbishment of conference rooms in L130 and BREY; mail, sun blinds, legal assistance, fire detection, white
         goods, transport related to publications, pre-printing equipment, musical entertainment for nurseries, crockery, containers
         for the historical archives, asbestos removal for Cornet-Leman.
    •    Collaborate on inter-institutional tenders: energy delivery by the European Parliament and gas delivery by the Commission
         and a joint initiative with regard to buildings insurance.



                                             ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.3: Promote environmental awareness and the integration of environmental considerations in activities
through the implementation of the Environmental Management Auditing System (EMAS).

                Result Indicators                            Situation at end 2007                        Target (mid-term)

% of finalised EMAS actions vs. EMAS action                       76% (35/46)                                     75 %
Plan
% of reduction in the number of individual b/w            - 35 % - 110 (22/11/2007)                              - 30%
and colour printers (proposed by EMAS)
Main policy outputs (delivered in 2007)
Achieved:
     •    Continued the action of reducing the number of personal printers, Took care of power consumption in acquisition of new
          equipment : De-commission black and white printer and colour personal printers – Recurrent action
     •    Verified / ensured the inclusion – where appropriate - of environmental criteria and specifications in calls for tender and
          contracts – Recurrent action




                                             ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.4: Improve the communication policy focusing on the promotion of OIB's identity and visibility and on
clear and timely information.

                Result Indicators                            Situation at end 2007                        Target (mid-term)

Number of articles "la Une" on IntraComm                              23                                         28
Number of articles "à la Une" on OIB-Net                              227                                        150
Number of issues of newsletter "Concrete"                              8                                         10
Number of articles in "Commission en Direct"                           24                                         15
Number of visits of OIB sites on Europa                             310.097                                    250.000
(including Historical Archive's site)
Main policy outputs (delivered in 2007)



            OIB_AAR 2007.doc                                  31/03/2008                                         Page n° 16 sur 48
                                            ABB.3 – ADMINISTRATIVE SUPPORT


SPECIFIC OBJECTIVE 3.4: Improve the communication policy focusing on the promotion of OIB's identity and visibility and on
clear and timely information.

                  Result Indicators                         Situation at end 2007                      Target (mid-term)

Achieved:
    •    Continued regular e-publication of the "e-Concrete" newsletter, and frequent new publications on different topics through
         various channels.
    •    Implemented all recommendations resulting from the survey launched in 2006 on "OIB-Net customer satisfaction".
    •    Published all new procedures, guidelines, instructions (as soon as signed) in the "A la Une" on OIB's Intranet – Recurrent
         action
    •    Organized exhibitions and events and provided assistance to services with their organisation.

Ongoing:
    •    Continue to monitor websites (OIB-Net, PersAdmin and OIB on Europa and Historical Archives). Recurrent action

Not Achieved:
    •     Carry out a new survey to measure satisfaction among OIB users (2008). (to be done after the opening to other services)



        1.5.     General satisfaction with the services of OIB

                 For the 4th year, a staff opinion survey was carried out among Commission staff related
                 to the services of Administrative Offices (OIB, OIL, and PMO).

                 The general satisfaction with OIB services significantly improved compared with 2004
                 & 2005 results. Today near to half of the staff in Brussels who answered to the survey
                 (5.233 persons for Brussels) states to be satisfied or very satisfied with the services
                 provided by OIB (49%).

                 The most positive changes compared to 2005 were in the mail (delivery speed and
                 handling of special mail) and in cleaning. Examples of very positive feedback to open
                 questions were in electronic newsletter, childcare, movings, technical helpdesk (55555)
                 and general service quality of OIB.

                 Some aspects still still special attention: the provision of cafeterias and restaurants
                 (notwithstanding efforts already made such as the provision of a larger choice of
                 sandwiches, the greater availability of vegetarian and low-calorie dishes, Foyer evening
                 opening trial period starting 1 April 2008, …), and the general quality of office cleaning.




               OIB_AAR 2007.doc                              31/03/2008                                       Page n° 17 sur 48
2.   PART 2. MANAGEMENT AND INTERNAL CONTROL SYSTEMS

     2.1.     Inherent nature and characteristics of the DGs risk and control environment

              2.1.1.    Offices characteristics and Governance structure

              In line with the Commission Decision of 6th November 2002 (C(2002)4368),
              establishing the Office for Infrastructure and Logistics in Brussels, OIB is responsible
              for all activities associated with the housing of staff, the management of social welfare
              infrastructures and the logistics of the Commission in Brussels.

              OIB is also responsible for the execution of the Health and Safety Rules in the
              Commission buildings (the division of responsibilities between OIB and DG ADMIN is
              ongoing).

              The objectives established in the Commission Decision for the Offices are mainly to
              make a more efficient and economic use of resources while improving the visibility of
              the services provided, refocusing effective operational responsibilities and keeping pace
              with the needs and demands of users.

              The Office is attached to the Directorate General for Personnel and Administration and
              its tasks are carried out under the supervision of a Management Board which is
              responsible to lay down policy guidelines, adopt the Director’s Work Programme and
              approve the estimates of the Office's revenue and expenditure and make any adjustments
              necessary to the establishment plan. Also, the Management Board is consulted on the
              Multi-Annual Framework Programme (MAPF). In 2007, the Management Board met on
              four occasions.

              The Office has a proper establishment plan and ensures all programming, planning and
              reporting activities (complete ABM/SPP cycle). OIB is also fully responsible for the
              management of its own procurement and financial/budget activities.

              The Director is an Authorising Officer directly appointed by the Commission.

              On 22nd November 2006, the Commission appointed a new Director ad interim for the
              Office, who subsequently became acting Director after 12 months, and was appointed as
              Director on 13th February 2008.

              As required by the 2002 Commission Decision establishing the Offices, the functioning
              of the Offices was analysed and some adjustments are foreseen. An Inter-Service
              Consultation (ISC) on this matter was launched by DG ADMIN on 20th December 2007
              and is still ongoing.




            OIB_AAR 2007.doc                     31/03/2008                           Page n° 18 sur 48
  2.1.2.    OIB's staff structure

            The structure of OIB staff is the following:

                               OIB's Staff Typology in % (all ABB)
                                        As of 31/12/2007


                                                     Interim: 7
                                                                     AD: 45
                                      END: 1            1%
                                                                      4%           AST: 373
                                       0%                                            37%
               Private law
                  110
                  11%




              Contractual
             Agents: 465
                47%




                                   OIB's Staff per ABB
                                     As             of
                                     31/12/2007



           ABB.3

                                                                              AD
                                                                              AS
      ABB ABB.2                                                               T
                                                                              CA
                                                                              Private law
                                                                              END
           ABB.1                                                              Interim


                   0         200         400         600             800

                                   Number of Staff

              Detailed figures on Human resources are provided in Annex Nr 3.



           OIB had 1001 staff members as of 31/12/2007 (ABB1: 182, ABB2: 736, ABB3:
           83).




OIB_AAR 2007.doc                           31/03/2008                                         Page n° 19 sur 48
  2.1.3.    OIB Budget

            The structure of OIB's budget is the following:

                                           OIB's 2007 Commitments (C1, C4 &C5)


                                                                                    Subdelegated
                                                                                       credits
                   Operationel Budget                                                10.711.691
                      62.426.962                                                         3%
                          16%

                                                                                      Administrative
                                                                                        Budget
                                                                                      314.657.347
                                                                                          81%



                           Detailed figures are provided in Annex Nr 3.

            Note :Administrative budget ('budget opérationnel') covers more or less all
            ABB.1 & ABB.2 activities (buildings and maintenance costs, social
            infrastructures, …) and operational budget ('budget de fonctionnement') is used
            for the functioning of the Office (staff, …).

            Total commitments (for C1, C4 & C5) reached in 2007: € 387.796.000

            OIB carried out payments to the value of € 342.398.723 of C1, C4 & C5
            credits in 2007.

  2.1.4.    OIB's management mode

            OIB's management mode is the direct centralised management. The working
            environment is characterised by the importance of procurement management
            (services/works/supplies procurement and buildings specific procurement), the
            volume and complexity of the budgetary and financial management generated
            by the variety and nature of its tasks and responsibilities.

  2.1.5.    OIB's organisational, administrative and accountability structure

            Two distinct units manage the main procurement procedures, one is responsible
            for building procurement management (acquisition, or renting) and the other is
            responsible for all non-building procurement matters (works, services and
            supplies) above € 60.000. Non building procurement below this threshold is
            managed by operational units. These two main processes are detailed by the
            Internal Control Template, under 2.2.

            OIB's financial circuits are partially decentralised for commitments and
            centralised for payments. These were assessed as justified by IAC in 2005. No
            change has intervened since this date even if thresholds were adapted.




OIB_AAR 2007.doc                            31/03/2008                           Page n° 20 sur 48
             Human resources, budget, informatics, internal communication, as well the
             whole ABM/SPP cycle (APS/PDB, AMP & AAR) and the coordination of
             internal control are managed in the horizontal 'resources unit'. The ex-post
             control team is directly attached to the Director.

            As of 1st January 2008, the management of financial transactions was
            transferred to the horizontal unit in charge of non building procurement above €
            60.000. This also indirectly resolved a potential conflict of interest between
            finances and coordination of internal control which had both previously been in
            the same Unit.

            The Office has neither an Internal Audit Capability nor an evaluation unit; these
            functions are covered by DG ADMIN.


  2.1.6.    OIB's cross delegations

            Some credits were sub delegated on a permanent basis according to Internal
            Rules since the creation of the Office (annex I of Internal Rules) to OIB by:
           PMO                   Mainly building, logistics and        Amount: € 3.4 01.232
                                 supplies expenditures as calculated   on B2007- 26.012100.010300-C1-
                                 in 2003 and indexed each year for     PMO/OIB budget line
                                 the Office                            Execution :
                                                                       Commitment: € 3.401.232
                                                                       payment : € 3.157.993
           EPSO                  idem                                  Amount: € 2.529.381
                                                                       on B2007- 26.012000.010300-C1-
                                                                       EPSO/OIB budget line
                                                                       Execution:
                                                                       Commitment: € 2.529.381
                                                                       payment : € 2.254.550
           OLAF                  idem                                  Amount: € 1.009.061
                                                                       on B2007- 24.010600.010300-C1-
                                                                       OLAF/OIB budget line
                                                                       Execution :
                                                                       Commitment: € 1.009.061
                                                                       payment: € 900.517
           OIL                   Insurance OIL expenditure             Amount: € 5.000
                                                                       on B2007- 26.012301.010300-C1-
                                                                       OIL/OIB budget line
                                                                       Execution :
                                                                       Commitment: € 5.000
                                                                       payment: € 5.000



            Other credits were sub delegated temporarily to OIB by:
           RTD                   Renting a building (Covent Garden)    Amount: € 3.646.202
                                 up to 2013 - Detailed conditions      on B2007-08.010503.05-C1-
                                 were governed through a Service       RTD/OIB budget line
                                 Level Agreement (SLA).                Exécution :
                                                                       Commitment: € 3.646.202
                                                                       payment: € 3.437.494
           Secretariat General   Development of IT application for     Amount: € 100.000
                                 Historical Archives ('Archis')        on B2007-25.010211.00.05-C1-
                                                                       SG/OIB budget line.
                                                                       Exécution :
                                                                       Commitment: € 99.815,30



OIB_AAR 2007.doc                              31/03/2008                                   Page n° 21 sur 48
                                                                            Payment: nihil
                     PMO              20.000 € majoré des intérêts          € 21.000
                                      moratoires suite à l'arrêt T-271/04   on B2007-26.015007-C1-PMO/OIB
                                      du 8 mai 2007.                        budget line
                                                                            Exécution :
                                                                            Commitment: € 21.000
                                                                            Payment C1: € 20.673



                       Some credits were sub delegated by OIB to:
                     ADMIN            Guarding and Health & Safety          Amount: € 988. 120,75
                                                                            on B2007-26.012201.010300-C1-
                                                                            OIB/ADMIN budget line
                                                                            Exécution :
                                                                            Commitment: € 988.000
                                                                             Payment: € 974.730

                     ADMIN            External Personnel                    Amount: € 4 54 .000
                                                                            on B2007-26.012201.010201-C1-
                                                                            OIB/ADMIN budget line
                                                                            Exécution :
                                                                            Commitment: € 400.000
                                                                            Payment C1: € 256.876

                     ADMIN            Social Welfare Infrastructure         Amount: € 40.000
                                                                            on B2007-26.015004-C%-
                                                                            OIB/ADMIN
                                                                            Exécution :
                                                                            Commitment: € 40.000
                                                                            Payment: € 40.000
                     DIGIT            IT support, software and              Amount: € 2.701.145
                                      telecommunications                    on B2007-26.012201.010300-C1-
                                                                            OIB/DIGIT budget line
                                                                            Exécution :
                                                                            Commitment: € 2.701.145
                                                                            Payment: € 2.128.954
                     PMO              Salaries                              Amount: € 41.763.115
                                                                            on B2007-26.012201.%-C%-
                                                                            OIB/PMO budget line
                                                                            Exécution :
                                                                            Commitment: € 41.763.115
                                                                            Payment: € 41.660.537
                     OPOCE            nihil                                 nihil
                                                                            Wrong budget line in internal rules
                      BUDG            Frais générées par l'acceptation la   nihil
                                      succession Fisher -                   on B2007- 26.012203.00-C1-
                                                                            OIB/BUDG budget line
                                                                            Reporté vers B2008 car la vente de
                                                                            l'immeuble n'a pas eu lieu en 2007




                     According to article 6, § 2 of Internal Rules, OIB justified the use of these
                     amounts as requested by RTD and SG and asked the same for the credits sub
                     delegated by itself8.




8
    DG ADMIN,PMO & DIGIT answered.



           OIB_AAR 2007.doc                        31/03/2008                                      Page n° 22 sur 48
  2.1.7.    Service level Agreements

            OIB signed various Service Level Agreements (SLAs) with Agencies and other
            institutions to provide accommodation, logistical services and technical/legal
            assistance.

            An analysis of these SLAs has been conducted in 2007 and DG ADMIN will
            establish guidelines on the matter in 2008.

  2.1.8.    Working arrangements

            In addition to regular meetings with the Commissioner’s Cabinet on various
            topics and to the participation of OIB in DG ADMIN's management meetings,
            OIB's Director informs formally twice a year, as required by the internal control
            standard n° 21, the Commissioner on the state of play of internal control
            environment.

  2.1.9.    OIB's inherent risks and follow-up

            Some inherent risk in the human resources domains materialized in 2007:

            ► Non achievement of the objective of transforming posts into credits for
            contractual agents (TEC): the objectives set for the 2003-2009 period is 297
            TEC; taking into account the great difficulties that Offices have to achieve this
            objective, the ongoing ISC on the functioning of the Offices mentioned above
            foresees to revise this target reducing it by 25% the for same period (224 TEC).
            ►having not enough choice of candidates in the short list of Contractual
            Agents for certain specific profiles (e.g.: nursery, building, …) ► Increase of
            vacant posts and consequent damages for the continuity of service, due to the
            difficulties to recruit EUR12 and respect OIB targets. Main difficulties may
            occur in procurement and financial recruitment as well as in specific profiles
            (e.g. buildings). Of 73 people contacted in 2007, 40 declined the proposal of an
            interview. Out of 33 interviewees, 14 refused OIB's job offer(s) (because of
            competition among DGs' for certain profiles) and 9 were not selected. (OIB
            plans to launch in 2008 a more specific recruitment plan including AT2b
            recruitments). ► strike risk in Clovis nursery caused by disagreements of staff
            related to the transfer from 'private law' individual contracts to Contractual
            Agents status (negotiations with unions are ongoing under the coordination of
            DG ADMIN)

            Considering the very specific operational nature of its activities, OIB has to
            accept the following risks – notwithstanding the mitigating measures in place
            which are regularly updated ► Health, Safety & Security of Staff and children
            in Commission social infrastructures: this generic risk covers operational risks
            such as: food poisoning, intrinsic hygiene conditions of buildings, outbreak of
            fire, lack of vigilance related to child minding, for which continuous preventive
            actions and specific controls are regularly carried out.

            Two other specific risks are also monitored: ► Historical Archives: the backlog
            in the opening of HA to the public, which should improve since the recruitment
            of staff in 2007 and a new approach (pre-screening of documents to be analysed


OIB_AAR 2007.doc                       31/03/2008                           Page n° 23 sur 48
                        on request. ► Shortage of capacity in nurseries: the shortage of capacity in the
                        Commission's nurseries (472 children are on the nursery waiting list as of 31st
                        December 2007) due essentially to the length of procedures related to financing
                        and renovations was partially mitigated in 2007 by increasing the number of
                        nurseries places on the local market (81 places), continuing the use of Council
                        capacity (34 places for inter-institutional needs), the opening of the new Genève
                        nursery in September 2007 (54 places) Nevertheless, the waiting list for inter-
                        institutional needs increased as the capacities offered by the local market and
                        the Council nursery places were lower than foreseen. In this respect, a new call
                        for tenders to find (approxm 400) places on the local market is ongoing in
                        parallel to the Cornet-Leman project (for an additional 216 nursery places).

                        Risks related to procurement (Services/Supplies/Works and Buildings) and
                        financial management are detailed below in Part 2.

     2.2.     Management and control systems

              OIB's main general objectives are to ►to meet the building needs of the Commission
              and related Services and staff in an efficient, effective and timely manner, in line with
              the highest environmental standards and ► to ensure client-oriented logistical services
              and social infrastructures corresponding to staff needs and meeting the highest
              environmental standards ►to manage activities in a service and results oriented way in a
              transparent, ethical and accountable manner. OIB's main operational activities are
              acquisition & management of premises and a wide range of services and logistical
              activities.

              OIB has two main areas of budgetary expenditures ► expenditures on works services &
              supplies contracts and ► expenditures on building. Both are presented hereafter in the
              Internal Control Templates (2.2.1 & 2.2.2).



              2.2.1.    Internal Control Template for Direct Centralised Management – Non-Building
                        Procurement

1. Inherent nature and characteristics of the DG's policy environment and stakeholders

     OIB awarded around 142 Mio euros in 2007 versus 137 Mio euros the previous year (for markets above €
     60.000: 30 contracts versus 34 in 2006).

     47% of those are related to service contracts (14 contracts, versus 23 contracts in 2006) which represent almost
     96 Mio euros (68% of the 2007 value) (for 2006 they represent about 54, 5 Mio euros which is 40% of the 2006
     value)

     20% of those are works contracts (6 contracts, versus 4 contracts for 2006) which represent about 23 Mio euros
     (16% of the 2007 value) (for 2006 they represent about 24,5 Mio euros which is 18% of the 2006 value)

     33% of those are supply contracts (10 contracts, versus 7 contracts for 2006) which represent about 23 Mio euros
     (16% of the 2007 value) (for 2006 they represent about 58 Mio euros which is 42% of the 2006 value)




            OIB_AAR 2007.doc                         31/03/2008                                  Page n° 24 sur 48
                                                        O IB's Proce dures
                                    (e xcluding Building Contracts and Contracts < 60.000 €)
                 100%
                                              Works;                                Works;
                     90%                  24.564.200,00                         22.824.000,00
                     80%

                     70%
                                             Service;
                     60%                  54.090.000,00
        Percentage




                                                                                   Service;
                     50%
                                                                                95.941.904,81
                     40%

                     30%
                                              Supply;
                     20%                  58.096.771,12
                     10%                                                            Supply;
                                                                                23.131.068,00
                       0%
                                                2006                                   2007
                                                                  Ye ar


     2006 supply figures were impacted by the signature of contracts for office furniture and cleaning services.

OIB's management mode is the direct centralised management.

Procedures above € 60.000 handled: OIB has planned to manage 70 procedures in 2007, but succeeded by handling 54
(versus        57/70       in      2006).       Those        54        procedures      represent      89      lots.
They are mainly restricted procedures, negotiated procedures representing 12% in estimated value and 18% in number
of all 2007 procurement procedures.


                                                       2007 OIB's Procedure Typology
                                        Negotiated
                                        Procedures

                                    13.781.194,81
                                        10%




                                                                                              Restricted
                                                                                              Procedures

                                                                                         128.115.778,00
                                                                                              90%




Contracts signed: Among those 54 procedures above € 60.000 handled during the year, 36 contracts [30 above €
60.000] were signed before 31/12/2007 (versus 37 in 2006 of which 34 above € 60.000) and 8 at the beginning of 2008,
5 procedures were also unfruitful and 7 procedures been planned to be launched at the end of 2007.

Contracts duration: Contracts are mainly signed for a period of 4 years; some exceptions however exist, such as
catering concession, lifts, or technical maintenance for which the contractual period is of 10 years.

Contractors (Nbr / Volume): 680 different contractors were subject to a financial transaction in 2007 (payments) – vs.
771 in 2006




                     OIB_AAR 2007.doc                            31/03/2008                                Page n° 25 sur 48
Financial transactions in 2007:
     • 429 Commitments/ Decommitments signed by OIB's AOD & AOSD (vs. 449 in 2006)
     • 8.181 payment orders initiated by OIB Staff (vs. 7.706 in 2006)
     • 1.792 recovery orders (vs. 998 in 2006)

Key inherent risks insofar they impact on reasonable assurance (including limit and extent of its responsibilities
and those of other stakeholders):

Procurement is a key activity for OIB. Taking into account the operational "business" of OIB (24/24 7/7) any delay in
the procurement might have impact on the continuity of operations of the Commission. In that context, some inherent
risks exist in the following areas:

      •   Respect of the planning of procedures to be launched during the year (only 56 % of procedures respected
          initial planning – versus 52% in 2006 and 47% in 2004)
      •   Reliable assessment of needs and market value to be set (lack of prospective vision, multi-users of
          framework contracts (others institutions, agencies, several DGs', …) which may impact the choice of
          procedure to be followed, …
      •   Possible insufficient awareness of ethics
      •   Possible lack of respect of confidentiality along the tendering process (e.g.: low value procedures).
      •   Potential dependency on contractors in some specific domains due to nature of market (e.g.: partition walls,
          lifts)
      •   Weakness in the financial management of contracts (overstepping of the GAMA threshold, a posteriori, …)
      •   Weaknesses in the documentation of 'Certified correct' procedures in some specific domains and in the
          management and follow-up of contract implementation followed (quality control, segregation of duties,
          sensitiveness, …)
      •   Delays in tracking fixed assets (partially delayed to be sure that the new equipment would be compatible
          with the new SAM program) and possible weaknesses in posting in real time all stocktaking variations and/or
          write-off
      •   Difficulties in issuing all recovery orders on time (e.g. those resulting from the various SLA's and institution
          contributions to nurseries and childcare facilities); 39% of payments were not made within the prescribed
          deadline which could have jeopardized the continuity of operations and possibly could generate
          supplementary expenditure in 2008; they could also potentially impact the Commission’s reputation if not
          dealt with.
2. Management and control systems – the basis of the declaration of assurance

Planning        and    Planning :
selection process
of      contractors,         •   Markets: A 4-year rolling planning for procurement procedures exists The yearly
including                        planning is submitted to the approval of the Director (for the period 2008-2011,
preventive                       approved on March 13th, 2008), taking into account the contractual priorities and the
controls                         balance with the human resources available. In 2007, it was optimized through the
                                 implementation of an IT tool ('MarCo') for managing all procurement steps for
                                 procedures above € 60.000. An additional module will be completed in 2008 for low
                                 value market procedures.
                             •   Budget: Budget programming is allocated to units in parallel (for 2008, done in the
                                 management meeting 3rd March, 2008). Regular updates/revisions are carried out
                                 throughout the year to optimise spending.

                       Preparation of a procurement procedure :

                             •   Before launching a tender and choosing the type of procedure to be used, units are
                                 invited to inform the unit in charge of procurement (≥ € 60.000) to ensure the
                                 consistency with planning.
                             •   If the market concerned is complex or is a new one for OIB, a specialised external
                                 consultant may be required – in respect of prevention of conflicts of interest (e.g.:
                                 cleaning contracts in 2007).


          OIB_AAR 2007.doc                              31/03/2008                                    Page n° 26 sur 48
                                •   OIB manages mainly recurrent contracts, an orientation document, which englobes
                                    inter alia cost-benefit-analyses, the duration of contracts, the reasons of duration if
                                    more than 4 years contract, the volume of market in question (in quantity and/or Euro)
                                    has been established (February 2008).
                                •   The unit in charge of procurement (≥ € 60.000) is responsible to check and supervise
                                    the quality of 'cahier des charges' and consistency with 'avis de marchés'.


                       Selection/Evaluation:

                                •   Evaluation and selection committees are set up in procurement procedures.
                                •   Members of evaluation committees are asked to sign a document reminding them of
                                    their obligation to declare any potential conflict of interest.
                                •   All non building procedures above € 137.000 (2007 threshold) are sent for opinion by
                                    OIB to the Groupe d’Analyse des Marches pour la DG ADMIN (GAMA). In 2007, out
                                    of 22 files submitted to GAMA in 2007, 19 received a favourable opinion.
                                •   Before a contract is signed, contractors must show that they are not in one of the
                                    situations of exclusion specified in the Financial Regulation (e.g. bankruptcy, failure to
                                    pay tax or social security contributions …), and Early Warning System is also
                                    consulted.

                       All along the process:

                                •Staff involved in procurement management (tender specification drafting, or contracts
                                 management through 'conforme aux faits' (CAF)) – as well as people having a
                                 financial responsibility are defined as occupying 'sensitive post'.
Communication          Externally:
and information             • Above the legal publications, in order to ensure the widest advertising possible OIB
                                 also published calls for expressions of interest (AMI), pre-information notices on
                                 Europa for contracts above € 60.000. Furthermore OIBsends notices to Euro Info
                                 Centre (EIC). Additional information is provided to sectoral Chambers of Commerce,
                                 and in general, if possible, to sectoral bodies.
                            • For all tendering procedures above € 60.000 (and for some low value procedures),
                                 selected candidates who did not apply (no offer received, or in case of 'procédure
                                 infructueuse') are contacted in order to identify the causes of their 'non-submission'.
                            • Complaints are recorded in a register which is keeping update and the mandatory
                                 standstill period is observed.

                       Internally:
                             • A 'manuel des procédures financières et de passation de marchés applicables à l'OIB'
                                   exists since 2005. The last update was published on the OIB's intranet beginning 2008
                             • Specific training is considered as compulsory in the 'Cadre Stratégique de Formation
                                   OIB' for all staff involved in tendering, such as, 'Expenditure Life Cycle',
                                   'Procurement & Contrat Management', 'Assessing financial viability of potential
                                   contractors and beneficiaries', various ABAC training sessions, Article 22 of the
                                   Status and 'Ethics & Integrity' - Follow-up is ensured - as for all compulsory trainings
                                   - on a permanent basis.
                             • On spot training is ensured for new comers (procurement/ finance, …)
                             • A draft of a charter/code of conduct specific on ethics in public procurement in OIB
                                   was also issued (internal consultation is on going). It will then be distributed to all in
                                   2008 through Welcome-pack, specific training sessions, …
Detective        and         • Every financial transaction respects the "four eyes" principle: a single person cannot
corrective                         initiate a transaction and verify it.
controls:                    • Each person involved in the apposing of the ‘certified correct’ and Authorising Officer
                                   by Sub-Delegations are nominated by the appropriate Authorising Officer to carry out
Performance                        the task and their names are published on OIB's intranet
monitoring,      and         • In order to respect the procurement, the total consumption of a framework contract
verification      of               versus the total amount foreseen in the award decision is followed and should be


             OIB_AAR 2007.doc                              31/03/2008                                    Page n° 27 sur 48
payments and key                 included in the transaction files.
milestones                   •   Depending on the nature of outputs provided, different control systems are in place to
                                 monitoring contractors' performance …, (e.g.: cleaning, maintenance, catering …).
                                 Guidelines are being finalised for operational units to improve the drafting of
                                 specification related to quality control of output / deliverable domain.
                             •   Derogations / exceptions cases (e.g.: legal and/or budgetary a posteriori; overstepping
                                 the award amount of a contract …) are recorded in a register and flagged in the
                                 accounting systems (ABAC). A cross analysis of this data is carried out accordingly.
                             •   An inventory of accountancy risks was issued and subsequent regular quality controls
                                 were established in 2007 and submitted to the Commission's Accountant. Controls
                                 related to the record of new assets in the general ledger (e.g.: controls on amounts, and
                                 on exhaustivity …guarantee reliable entries are carried out in ABAC Assets.
                             •   Relative high rate of depreciations for assets mitigate significantly the potential risk of
                                 non posting on real time all stocktaking variations and/or write-off in books. Some
                                 efforts in the number of trackings carried out and improvement in the workflow of
                                 information between operational units and accounting cell are still needed.
Preventive     and           •   In order to ensure that the Authorising Officer by Delegation has a global view on this
corrective                       procurement process, and to optimise planning and control, procedures above € 60.000
controls       and               are coordinated by a single unit.
audit:                       •   Internal financial circuits are partially decentralised for commitments and centralised
Desk reviews, on-                for payments. The audit carried out by the IAC in 2005 confirmed that the decision on
the-spot      audits             the existing model was justified.
carried out either           •   In order to limit potential “saucissonage” and also negotiated procedures, a ‘fiche
ex ante or ex post.              d’information préalable’ was developed for all markets; several elements are analysed
                                 such as the total amount for 4 years, the existence of ‘similar’ market in the past, the
                                 type of the expected procedure, ... are analysed at an early stage.
                             •   A central register was developed in which all non building procedures – from all units
                                 - above € 3.500 - € 5.000 since 13th June 2007 – should be recorded; since the
                                 beginning of 2007, a cross check is made on a quarterly basis between this
                                 procurement procedure central register and procedures recorded in ABAC contracts
                                 aiming at reinforcing the quality of the monitoring of procurement procedures and the
                                 exhaustivity of ABAC records. After one year of experience, it appears that this
                                 control is still necessary and should be reinforced, as well as an additional cross check
                                 with procedures included in the formally approved planning.
                             •   When there is recourse to the negotiated procedure – e.g.: where contracts relate to
                                 technical captivity of a given market –- an exception has to be documented and
                                 formally approved by the Authorising Officer by Delegation. In the orientation
                                 document it is also foreseen that the causes of a negotiated procedure are documented,
                                 hence technical captivity will be justified.
                             •   Awareness of units has to be increased concerning the handling process of low value
                                 procurement (awarding decisions, confidentiality, …)
                             •   Ex-post controls are now being undertaken on the whole range of financial
                                 transactions with a "from cradle to grave" approach. A new ex-post control
                                 methodology is under preparation so as further to improve this approach, to increase
                                 the effectiveness of the controls being carried out with a view to providing assurance,
                                 and minimise any undesired potential overlaps with other internal control activities
                                 and with audits.
                                 Some findings lead to the implementation of corrective measures aimed at reducing the
                                 risk of a posteriori and the chronological follow-up of all steps of the expenditure
                                 cycle (budgetary and legal commitments and payments). OIB is in that respect actively
                                 involved in the DG BUDG 'Supply & Assets Management' project (SAM) (delivery
                                 foreseen before end of 2008). At the same time, OIB has to consider establishing
                                 contingency/alternative solutions via a standard format tables/models to follow more
                                 chronologically the commitments, payments and GAMA thresholds.




          OIB_AAR 2007.doc                              31/03/2008                                     Page n° 28 sur 48
3. Feedback which enables control activities to be optimised

Verification    that         •   Global risk assessment is updated twice a year, ensuring that mitigating measures are
processes        are             taken and appropriate.
working           as         •   Three standard iCAT questionnaires were sent to all OIB's senior & middle
designed                         management in order to asses the effective implementation of Internal Control
                                 Standard, the possible over-dependency on contractors and the effectiveness and
                                 efficiency of OIB's financial organisation to ensure it complies with the Financial
                                 Regulation and that the procedures in place mitigate the risks at a reasonable cost
                                 taking into account the availability of qualified personnel and the number and type of
                                 transactions. Action plans were issued accordingly for 2008.
                             •   OIB carried out two screenings in 2007:
                                      − a screening on sensitive post with the aim of reviewing 'sensitive criteria' if
                                          needed (the decision is on going),
                                      − a screening of the staff involved in procurement matters aiming at analysing
                                          the existing procurement structure, resources, competencies, …
Monitoring        of
performance       of
independent            No independent bodies, 3rd party auditors, externally contracted auditors assessed OIB's non-
bodies, 3rd party                                  building procurement management
auditors, externally
contracted auditors

IAC, IAS, ECA                •   The European Court of Auditors' examination of a sample of negotiated procurement
recommendations                  procedures at OIB in the context of DAS 2006 showed that in a number of cases poor
on the functioning               procurement planning and insufficient analysis of market conditions had resulted in
of the system and                negotiating with only one supplier, instead of launching calls for tenders.
their follow up                  Although, some negotiated procedures are justified by the captivity in certain domains,
                                 all the action implemented and yet to be implemented in this procurement domain are
                                 detailed in this template (mainly in the planning module above).
                             •   IAS achieved in the same time follow-up audit on transaction test (on procurement)
                                 (2004 audit) and issued afterwards some additional recommendations related to the
                                 procurement contracts, mainly on mobility and sensitive posts, follow-up of contracts
                                 implementation, determination of needs, ethic and integrity, ex-post control coverage
                                 and supervision. In addition, IAS/IAC carried out audits – before 2007 - on the
                                 negotiated procedures and financial circuits and issued some recommendations, mainly
                                 in the CAF and financial procedures (need of documentation) and on the control of
                                 low value procedures and sensitive posts. IAC and IAS carried out audits on the
                                 implementation of internal control standards in OIB and issued recommendations
                                 mainly concerning the documentation of the work supporting the internal control
                                 assessment and the supervisory and ex-post controls. In that respect, accepted
                                 recommendations are either implemented or under implementation.
High           level         •   Three times a year (every 4 months) all Authorising Officers by Sub-delegation
management                       reported their activities to the Director/Director, following a standard format and in
reporting and its                line with the charter of AOS. The detailed action plan is regularly monitored.
role in identifying          •   A Financial Corporate Reporting (budget allocation, execution, by units, budgetary
problem issues                   posts, ..) exists in OIB, and is available in the intranet to all OIB's staff. Figures from
                                 the reporting are used by AOS in their above mentioned reports.
                             •   An IT application (MarCo) enables the follow-up of procurement procedures planned,
                             •   Additional reporting exists at the management level in order to allow efficient
                                 supervision:
                                       − Quarterly reporting on existing and/or potential delays in the respect of
                                            procurement process, kind of early warning system has been developed and is
                                            regularly submitted to the Head of Units concerned and in management
                                            meetings. As reporting on procurement is concerned, new functionalities of
                                            reporting of the IT MarCo application are under development.


          OIB_AAR 2007.doc                              31/03/2008                                     Page n° 29 sur 48
                                        −    Reporting on updating of job description and training (compulsory) allows
                                             also ensuring that OIB's staff is aware of its responsibilities and received the
                                             appropriate training.
                                        − Reporting on ‘sensitive posts’ which is used as an anticipative tool for
                                             mobility and/or implementation of mitigating measures.
                                        − Regular reporting on payment delays is also carried out, highlighting where
                                             the bottlenecks are. A specific IT tool (Paraph OIB) supports this analysis.
                                        − Reporting on the progress made in the implementation of other action plans
                                             (audits, iCAT, mitigating measures for risks and/or exceptions) is also carried
                                             out.
                               •    Results and progress made throughout the year in procurement and financial
                                    management is reported at least twice a year in the Mid-term Review to OIB’s board
                                    and to the Commissioner and in the Annual Activity Report.


               2.2.2.     Internal Control Template for Direct Centralised Management – Procurement
                          on buildings

1. Inherent nature and characteristics of the DGs policy environment and stakeholders

    Existing building procurement procedures are governed by the Financial Regulation (Article 91 of the Financial
    Regulation and Articles 116(1) and 126 (1) point h of Modex). According to the Internal Audit Service, these
    procedures are designed in a way that ensures neither a sufficiently high degree of transparency nor all the
    necessary elements of full competition in order to ensure best value for money.

    For this reason, the Commission felt the need to increase both transparency and hence competition in the area of
    procedures for renting and buying buildings. In that respect, and also in order to better take into consideration the
    most notable changes which have taken place in the area of the average market price, the total surface occupied,
    the increased focus on the environment and the need to reduce the Commission's carbon footprint, on security and
    safety and in relations with the host country authorities, the Commission has adopted on September, 5th a new
    Communication on policy for the accommodation of the Commission services in Brussels and Luxembourg
    (COM(2007)501).
OIB's management mode is the                 In 2007 only one building contract was signed: a usufruct contract for the
direct centralised management                Lux-40 building for a total of € 27 million.
                                                                        Square meter Typology
Some key figures :                                                      (source MAPF - December 2007)


Average offices m2 'hors sol':                                             Location                       Propriété
                                                                          77.896 m²
812.176 m²                                                                    9%
                                                                                                         151.954 m²
                                                                                                            18%
                                                      Usufruit
Average non-office m2 'hors sol':                   189.198 m²
61.589 m²                                              23%


Average number of Commission
buildings (Offices / Non offices) :                    Emphytéose
53 / 10                                                  locative
                                                        29.345 m²                                       Emphytéose
                                                                                                         acquisitive
Average size of office buildings:                          4%
                                                                                                        386.193 m²
15.324 m²                                                                                                  46%

Number of persons housed in the
offices: 23.136
                                             In 2003, the Commission choose the approach of purchasing or renting,
Stakeholders: DG's / services,
                                             rather than having built to purpose9.


9
    COM(2003)755


            OIB_AAR 2007.doc                               31/03/2008                                    Page n° 30 sur 48
agencies, & real estate stakeholders
                                                In spite of constraints in the legal framework preventing borrowing, OIB
Budgetary commitments 2007:                     has also put in place a new way of funding acquisitions. Deferred payment
234,7 mios € (building rent,                    purchasing is both legally and financially simpler to implement than the
usufructs,… - including 24 mios €               previous leasehold contracts (emphytéose).
for an early reimbursement of some
buildings) versus 203 mios € for         Long-term contracts are signed if the purpose is to acquire the building
2006                                     under the deferred payments scheme. Shorter-term contracts of around 15
                                         years are signed to take buildings in usufruct; this formula is economically
                                         sound.
Key inherent risks insofar as they impact on reasonable assurance (including limit and extent of its
responsibilities and those of other stakeholders):

         •
        Inadequacy of the legal & budgetary framework: ►legal framework preventing borrowing, and ►yearly
        budget allocation (administrative credits) for developing and implementing a long-term strategic vision.
     • A governance model to be refined : clear division of responsibilities between Cabinet, DG ADMIN and the
        Director of OIB as Authorizing Officer by Delegation
     • Absence of a comprehensive strategic management and long term planning decision and pluri-annual
        programming (a written procurement building strategy, documentation and audit trail, ..): operational
        framework and clear negotiating mandate (choice of the procedure , setting the boundaries, completing the
        Charter given to the AOD and limits for the negotiating, (such as maximum cost, time, and quality deviations
        on initial or expected, …)
     • Risk that some components of the market change (market parties withdraw from the negotiation, prices
        increase …) due to the length and complexity of the decision making process (significant lead time between
        identification of needs and implementation of decisions)
     • Some weaknesses in the project definition from inception to completion – definition of the real estate needs
        in office space (real evolution of staff, reliability of data available, …), insufficient consideration of some
        risks inherent to building procurement, taking account of whole life cycle costing and long term
        sustainability issues, …)
     • The 'price' of transparency: The publication of needs may lead to higher prices, weaker negotiations
        Commission' positions, cooperation - or even collusion - of owners in European District.
     • Difficulties in optimizing the allocation of spaces to DGs' & Services due to the dispersion of buildings
        within European District.
     • Insufficient inter-institutional cooperation: absence of inter-institutional methodology on the needs
        assessment, common indicators, & costs definition, life-cycle cost methodology, 'implantation in European
        District'/poles …
2. Management and control systems – the basis of the declaration of assurance

Planning        and              •    Political guidelines for building policy are set up between Cabinet, DG ADMIN &
selection process                     OIB at an early stage
of      contractors,             •    A long-term strategy for satisfying Commission's building needs, including the
including                             reflection on alternatives sites or complementary solutions to the existing poles for the
preventive                            Commission in Brussels is regularly prepared and updated (Multi-Annual Policy
controls                              Framework (MAPF) for 2008-2018).
                                 •    An IT application called PACE/GIS is used for management of building space.
                                 •    A specific 'procedure immobilière' exists which complies fully with the requirements
                                      of the Financial Regulation (Article 91 and Articles 116(1) and 126 (1) point h of
                                      Modex). This means that before any commitment to a third party, the Legal Services
                                      and DG BUDG and DG ADMIN are consulted (for any contract above € 300 000,
                                      where additional budget (credit) is required) and the competent Member of the
                                      Commission is informed of any, where any dossier deemed important or sensitive. The
                                      Budgetary Authority, in line with Art. 179 of FR is also informed.
                                      Nevertheless, the Commission's new Communication on policy for the accommodation
                                      of the Commission services in Brussels and Luxembourg10– focussed –among other
                                      points - on a revision of the buildings procurement methodology in order to ensure


10
     COM(2007)501 - adopted on 5th September 2007



              OIB_AAR 2007.doc                               31/03/2008                                   Page n° 31 sur 48
                                both maximum value for money – notably by using its negotiating position to best
                                advantage – and transparency towards the market.
                            •   For some buildings projects with a purely technical purpose (central kitchens, archive
                                space, Data Centre, conference building, logistics building) an open consultation of the
                                market took place.
                            •   A "Manuel des normes applicables à l’immeuble type" (MIT) – covering inter alia
                                Health and Safety requirements and environmental criteria - is used as a benchmark for
                                the fitting-out works which are part of the negotiated procedure used to find a
                                building.
                            •   OIB resorts to comprehensive "due diligence" with an external law firm for the
                                buildings it negotiates. This due diligence covers all the legal aspects, contracts with
                                architects and insurance companies, official measures of the building, environmental
                                and town-planning permits, and tax matters. Regarding the valuation of buildings, OIB
                                has a contract with a specialist in this field, and for technical aspects with an
                                engineering company.
                            •   In order to increase inter-institutional operational cooperation which would allow the
                                sharing and better use of expertise as well as economies of scale in purchasing
                                services, when the Commission intends to launch a call for tenders related to building-
                                related services (e.g. insurance, maintenance, training courses in building techniques,
                                cleaning), it consults other institutions in order for them to have the possibility to join
                                forces.
                            •   In order to increase inter-institutional co-operation – even if each institution has its
                                own specific needs and priorities-, OIB is part (secretary) of a working group
                                (ILISWG — Inter-institutional Logistics and Internal Services Working Group),
                                whose mandate also covers the exchange of information on the evolution of the real
                                estate market and the needs of the institutions. In 2007 a further working group was
                                created under ILISWG to look into reconciling the different methods used by the
                                different Institutions when measuring/calculating surfaces; the purpose being to arrive
                                at improved comparability.
                            •   It should be underlined that the European Court of Auditor reiterated its
                                recommendation that differentiated appropriations — which would allow greater
                                flexibility — should be used for transactions relating to purchase or construction of
                                buildings.) – To be analysed in the context of 'budget review' (ongoing).
                            •   All the negotiations are carried out in OIB's premises and in presence of at least 2
                                members of staff
                            •   Sensitive criteria for people involved in building negotiation are under analysis
                                (ongoing)
Communication               •   Key steps in the buildings procurement process are explained in Inter-Service
and information                 Consultations launched for each project and the information notes to the budget
                                authority do provide a detailed description of the choices made and the alternatives
                                considered. However, OIB should continue its efforts by maintaining an appropriate
                                file of the key steps in the buildings procurement process.
                            •   In the context of the new Communication, a draft document on a new methodology -
                                with a view to perfecting the existing procedures envisaged by the legislator in order to
                                sign a building contract, on the one hand by adding the element of systematic market
                                prospection by means of publication of a buildings' prospecting notice, and on the
                                other hand by further structuring and clarifying the procedures within the Commission
                                – The new methodology is already in inter Services Consultation (launched by DG
                                ADMIN), and should be implemented in 2008.
                            •   The new procedure (urgency clause) will first be used in March 2008 for the rent of
                                part of the Orban 10 building. The first call for proposal will be published later in
                                2008.
                            •   Further improvement of transparency and to fully inform market operators of the
                                Commission's procedures, the Commission will publish in 2008 an Information Guide
                                on the procedures, explaining the new methodology and the conditions applicable for
                                leasing/purchasing buildings.
                            •   OIB is cooperating with the host country, to discuss the development of the European
                                Quarter and is participating in the meetings of the "Fonds Quartier européen". Since


         OIB_AAR 2007.doc                              31/03/2008                                     Page n° 32 sur 48
                                    2005 an interinstitutional ad hoc Task Force EU-Belgium meets every two months
                                    with representatives of the federal, regional and local level to deal with matters related
                                    to building policy. Meetings of the Inter-Institutional Working Group (ILISWG) have
                                    been aligned to prepare these meetings in particular with regard to questions related to
                                    PPI.
                                •   Specific actions in terms of training and ethics are common to all OIB. See details
                                    under Non-Building Procurement ICT (2.2.1)
Detective        and            •   Every financial transaction respects the "four eyes" principle: a single person cannot
corrective                          initiate the transaction and verify it.
controls:                       •   Apposition of ‘Certified correct’ on buildings is based on 'procès verbal de réception'
                                    and on the fact that the Commission is still occupying the building and each person
Performance                         involved in the apposing of the ‘certified correct’ is nominated by the appropriate
monitoring,  and                    Authorising Officer to carry out the task and his name is published on OIB's intranet.
verification  of                •   In order to assess the total cost incurred over the life of a building, including energy
payments and key                    and environmental aspects, OIB has started to develop a "Life Cycle Cost"
milestones                          methodology . Since 2006, the Commission asks the owner to provide a report on the
                                    building's energy performance.
                                •   The payments for rents are mainly done on quarterly basis or bi-annual basis; Before
                                    each payment, re-calculation – of rent and indexations - are double checked, and an
                                    analytical review of costs is carried out, in order to avoid possible double payment
                                    and to ensure the exhaustivity and reality of postings in the ledger.
                                •   Particular attention is also paid to the cut-off in buildings expenditures; those postings
                                    representing the main value of the 'cut-off bookkeeping entries'.
                                •   Other aspects of payments are detailed under Non-Building Procurement ICT (2.2.1.)
Preventive       and            •   Building procurement is handled by a single unit, and decision are taken by the
corrective                          Authorising Officer by Delegation based on favourable opinion provided by the
controls         and                above-mentioned relevant services (Legal Service, DG BUDG, …) in respect of the
audit:                              MAPF which is submitted for approval to the Management Committee (the final
                                    version is still under consideration).
Desk reviews, on-
the-spot      audits            •   Payments are centralised in another distinct unit. The audit carried out by the IAC in
carried out either                  2005 confirmed that the decision on the existing model (partially decentralised for
ex ante or ex post.                 commitments and centralised for payments) was justified.
                                •   Ex-post controls in 2007 covered only non building procurement process.
3. Feedback which enables control activities to be optimised

Verification     that           •   In addition to the global Risk assessment (see under Procurement ICT template), a
processes         are               specific building procurement risk assessment is ongoing with the assistance of an
working            as               external auditor. The assessment aims at clear identification of roles in the area of
designed                            building procurement, providing for risk identification, qualitative and quantitative
                                    assessment (cost, time, and performance), as well as an evaluation of the costs of
                                    reducing, transferring, or accepting the most important risks associated with project
                                    phases. A contingency plan will be then set up accordingly.
                                •   Assessment of the effectiveness of controls, and development of periodic reporting on
                                    the results of the overall risk management process are conducted on an annual basis
                                    (risk register);
                                •   Other aspects (screening, iCAT …) are detailed under Non-Building Procurement ICT
                                    (2.2.1.)
Monitoring        of            •   In order to assess how OIB is implementing EMAS, an updated environmental
performance       of                statement has been subject to verification by an external accredited body. On the basis
independent                         of interviews, review of documents, internal procedures of the European Commission,
bodies, 3rd party                   data and information gathered during the verification process, the auditor stated that
auditors, externally                the updated EMAS statement 2002-2006, including the environmental policy, annual
                                    plans and environmental reports, comply with the requirements of EC Regulation N°




             OIB_AAR 2007.doc                              31/03/2008                                     Page n° 33 sur 48
contracted auditors                      761/2001 of 19 March 2001 allowing voluntary participation by organizations in a
                                         Community Eco-Management and Audit Scheme (EMAS)11 .
                                     •   In addition, an internal audit by an external firm started in OIB in December 2007. The
                                         objective is to check both the environmental system implementation in the different
                                         units and the legal compliance of the buildings concerned (8 certified buildings and 5
                                         buildings that will be presented to be EMAS registered in 2008). The results and
                                         recommendations issued by the audit report will be followed in 2008.
                                     •   Progresses made in that domain are followed up and indicators are regularly produced
                                         and updated.
IAC, IAS, ECA                        •   The European Court of Auditors carried out a Special Report concerning the
recommendations                          ‘Institutions’ expenditure on buildings in collaboration with the Institutions concerned.
on the functioning                       The report assessed three issues: planning, financing and costs and interinstitutional
of the system and                        cooperation.
their follow up                          The adoption of the new Communication constitutes the main answer to the Court's
                                         observations (transparency, procedure, methodology …). Some other ongoing
                                         measures should also allow to implement the ECA observations in the medium term,
                                         such as :
                                              − finalization of life cycle cost - which should reinforce the long term
                                                   framework for the building policy,
                                              − the continued application of the policy of diversification of office space in
                                                   Brussels,
                                              − increased exchanges of best practices and initiatives (environment, …)
                                     •   IAS finalized also in 2007 the follow-up of the 2002 IAS audit on buildings
                                         infrastructure managed by the European Commission and issued a new audit report on
                                         building procurement.
                                         Efforts are being made to ensure an enhanced audit trail namely by finalizing and
                                         implementing the new methodology, by further developing and supporting by a
                                         comprehensive written procurement strategy, by documenting the building risk
                                         assessment, by coordinating with stakeholders an adequate reporting on key issues and
                                         milestones, and by working closely with DG ADMIN on governance issues.

High           level             •  Regular meetings are organized between the Director of the Office and the Cabinet
management                       •  A long-term framework for building policy, the Multi-Annual Policy Framework
reporting and its                   (MAPF), which is a rolling plan with a 5-10 years perspective, is discussed yearly at the
role in identifying                 OIB Management Board's meetings.
problem issues                   • In the real estate domain, OIB management has at its disposal a set of reporting
                                    documents, such as a weekly report on allocated capacity, a bimonthly report on the
                                    Commission's population and a quarterly report on moves.
                                  • Other reporting exists and is common to all OIB. See detailed under Non-Building
                                     Procurement ICT (2.2.1)



         2.3.     Follow up of previous year's reservations and audit follow-up

                  2.3.1.       Follow up of previous year's reservation(s): state of play of the action plan
                               implementation

                               In 2006 the reservation related to contracts and procurement management in the
                               2005 Director's declaration was removed.

                               In addition to measures taken in 2006, further measures were taken/are
                               ongoing: ► the finalization of the screening exercise - per unit - of the staff
                               involved in procurement matters, aimed at identifying the quantitative and/or

11
     OJ L 114/1 of 24.4.2001



                OIB_AAR 2007.doc                                31/03/2008                                   Page n° 34 sur 48
            the qualitative gaps (internal discussions on the results are ongoing), ► the
            reinforcement of human resources and their qualifications, ► the improvement
            of the planning process supported by an adequate IT tool (MarCo); further
            modules of MarCo relating to procurement procedures below € 60.000 and
            reporting are foreseen in 2008 and ► the finalization of an update of the
            'Manuel des procédures de passation de marché d'application à l'OIB'
            (published in February 2008).

            Implementation in 2008 of IAS recommendations on the procurement/financial
            management audit (e.g. : mobility/sensitive posts, 'orientation document'/cost
            benefit analysis, follow-up of contracts ('quality control), 'Ethics & Integrity
            charter/code of conduct', … - see details under 2.2.1) should also have a
            positive impact on the different procurement processes.

  2.3.2.    ECA recommendations on the functioning of the system and their follow-up

            In the European Court of Auditors' (ECA) 2006 Annual Report, the Court
            highlighted its examination of a sample of negotiated procurement procedures
            at OIB showed that poor procurement planning and insufficient analysis of
            market conditions had resulted in negotiating with only one supplier, instead of
            launching calls for tenders. Actions taken/ongoing are detailed in the Internal
            Control Template on non-building procurement under 2.2.1 and above (2.3.1).

            In addition the ECA carried out a Special Report concerning the ‘Institutions’
            expenditure on buildings’which assessed three issues: planning, financing and
            costs and interinstitutional cooperation.

            Actions taken or ongoing are mainly in coordination with DG ADMIN ► the
            implementation of the new building policy Communication and associated new
            methodology, ► the development of 'life cycle costs' methodology, ► the
            exploration of alternative and complementary sites in Brussels, and ► the
            pursuit of commitment in inter-institutional co-operation (environmental and
            energy issues, planning, methodology for the estimation of needs, best
            practices, …) should meet the ECA recommendations. (See details in the
            Internal Control Template on building procurement under 2.2.2.).

  2.3.3.    Follow-up of other identified system weaknesses

            In 2007, IAS conducted three audits (one on procurement, another on building
            procurement, and a third new one on Internal Control Standards). IAC finalized
            two other audits (one in Internal Control Standard and a second one on
            nurseries & after school childminding facilities management). A third IAC audit
            is under finalization. Three main topics were concerned by new audits in 2007:

            (a)    Procurement: IAS - Buildings procurement audit (follow-up of the 2002
                   audit of buidings infrastructure) and IAS audit on procurement, (follow-
                   up of the 2004 IAS audit on transaction testing).




OIB_AAR 2007.doc                      31/03/2008                           Page n° 35 sur 48
                                          • Related to buildings procurement

                                            It has to be highlighted that a critical recommendation was issued
                                            related to implementation of the negotiated procedure - audit trail
                                            in building procurement management. It has been considered that
                                            the recommendation suggested measures going beyond the
                                            compliance requirements with the Financial Regulation aiming at
                                            demonstrating a transparent implementation of the negotiated
                                            procedure by improving publicity, competition and transparency.
                                            On that basis, OIB committed to pursue the direction
                                            recommended by the IAS, namely by the implementation of the
                                            new methodology (ongoing) in the context of the new
                                            Communication on policy for the accommodation of the
                                            Commission services in Brussels and Luxembourg12.

                                            Among the very important recommendations that will be
                                            continued/achieved in 2008 ► clarification of the governance
                                            model (future Communication on Offices for which DG ADMIN is
                                            leader) and supervision (MAPF, reporting, …); ► a new
                                            methodology on buildings procurement ► appropriate risk
                                            assessment on buildings procurement and ► the definition of a life
                                            cycle cost methodology.

                                          • Related to non buildings procurement

                                            Among very important recommendations are already
                                            implemented: ► an orientation document model for a better
                                            determination of the needs; ► guidelines for the integration of
                                            minimum requirements in quality control/deliverables in the
                                            drafting of technical specifications of the most important/complex
                                            contracts;

                                            Will be continued/achieved in 2008 ► redefinition of mobility
                                            rules for sensitive functions (following a screening of sensitive
                                            posts carried out in 2007) ► a customized code of conduct on
                                            Ethics & Integrity and efforts in training in that domain.Details are
                                            given on both Internal Control Templates on non-buildings
                                            procurement (2.2.1) and on buildings procurement (2.2.2) and
                                            above under 2.3.1.

                            (b)       Internal control standards with an 'IAS audit on Evaluation on targeted
                                      Internal Control Standards' and an 'IAC Application d'une sélection de
                                      Standards de Contrôle Interne'.

                                      No critical recommendation was issued in these audits.




12
     COM(2007)501 of 5th September 2007



              OIB_AAR 2007.doc                           31/03/2008                             Page n° 36 sur 48
                   Are already implemented in that domain : improvements in the annual
                   review of internal control (ICS 24) by ►organising – in the context of
                   2007 AAR - bilateral meetings with Director, Heads of Units, Internal
                   Control Coordinator & Ex-Posts control teams and IAC, focusing on
                   some specific areas based on documentation provided in advance ►
                   improving documentation of internal control review on the context of
                   2007 AAR preparation.

                   Will be continued in 2008 ► documentation of some procedures (e.g.:
                   'Certified correct', …) and an integrated framework of internal
                   control/ex-post controls, ► review and enhancement of the ex-post
                   control methodology and ► better consistency between Internal Control
                   Standard compliance & effectiveness.

            (c)    IAC audit on 'Nurseries & After School childminding facilities
                   management '

                   No critical recommendation was issued in this audit.

                   Will be continued in 2008 ► implementation of a better follow-up of the
                   absences of nursery staff, and ► setting-up of financial indicators and
                   ratios and appropriate documentation in order to increase the monitoring
                   of budgetary costs in nurseries and childminding facilities, and better
                   assistance to management in the decision making process.

            (d)    A third IAC audit related to a check of the tendering procedure
                   involving a group of companies is ongoing - main concerns being
                   covered by issues already mentioned above, namely segregation of
                   duties.

            The Secretariat General's IAC also carried out a follow-up audit of the 2005
            Historical Archives, and concluded that no more recommendations are yet
            assigned to OIB (implemented, obsolete or transferred).

            One very important recommendation is still in progress from the IAS Audit of
            buildings infrastructure managed by the European Commission of 2002. It
            concerns the adoption of the Housing Conditions Manual, for which the first
            part which defines the rules and guidelines applicable to the overall allocation
            of space to Directorates General and Services is dependent on a future Inter
            Service Consultation (ISC) to be launched during the 1st Semester 2008. The
            second part of the Manual will address issues relating to space allocation to
            individual staff members will take place after launching this 1st part of the
            Manual.

            From the former audits or assessments, the following are also now closed:
            Former ‘Contrôle Financier’ – « Crèches » section of DG IX/C-6 , through ►
            the conclusion of contracts following the tendering procedures for food, and
            IAC/BDO – ‘Politique de couverture d’Assurance’, for which ► a procedure on
            insurance was finalized.




OIB_AAR 2007.doc                      31/03/2008                           Page n° 37 sur 48
                   Actions implemented or ongoing related to recommendations from both IAC –
                   Negotiated Procedures and IAC Inventory are covered by the both Internal
                   Control Templates (2.2).

         2.3.4.    Responding to the ECA's annual report/assessing the residual error:

                   Not Applicable for OIB (which did not receive a "red light")

2.4.     Key indicators supporting assurance

         2.4.1.    Ex post controls

                   The volume, quality and coverage of ex-post controls have increased in 2007
                   though the volume of formal reports that issued by the end of the year
                   decreased.

                   The number of individual verifications (excluding procurement) increased by
                   over 50% in 2007 (156) compared to those carried out in 2006 (90).

                   They can be broken down as follows:
                   Type of transactions    Number of          Value of             Coverage
                                          Transactions      Transactions             (%)
                                                             (in Mio €)

                                                                             21% of the total number
                   Budgetary                  90                21,5                (90/429)
                   Commitments
                                                                             5,5 % of the total value
                                                                           (21,5 MEuro/387,8 M Euro)

                   Legal Commitments          46                6,2


                   Payments                   20                0,4        0,25 % of the total number
                                                                                   (20/8181)
                                                                             0,13 % of the total value
                                                                           (0,4 MEURO/342.4 M Euro)

                   Recovery Orders             0                 0                     0




                   In addition to this specific areas of activity were covered in a more global and
                   detailed approach and verifications in the area of procurement covered 7
                   procurement procedures in 2007 (of which one high value procedure) versus 9
                   in the previous year.).

                   The results of these controls, some of which still remain to be formally reported
                   on, have already enable some generic corrective measures to be taken to remedy
                   a number of identified weaknesses. (See template on procurement 2.2.1).

         2.4.2.    Authorising Officer by Sub-Delegation reports

                    Number of AOSD reports                      113



       OIB_AAR 2007.doc                            31/03/2008                           Page n° 38 sur 48
                               AOSD reports highlighted a number of constraints under which OIB is working
                               and worthy of mention, namely:

                               • That OIB frequently has to have recourse to specialised legal advice and as it
                                 itself does not possess all of the necessary in house expertise has to call on
                                 the Commission's Legal Service and on outside law firms.

                               • The difficulties encountered in the prioritisation and pursuit of tasks
                                 especially in areas where OIB is dependent not only on other departments
                                 but also on outside bodies (e.g. project management area).

                               • Additional points mentioned in those AOSD reports are covered in other
                                 parts of this report (e.g.: payment delays, ABAC Assets …).

                   2.4.3.      Audit recommendations implementation

                               In spite of an increase of 16 % of .recommendations to implement (42 new OIB
                               accepted recommendations in 2007), 84,4% of accepted recommendations
                               managed by OIB were closed at the end of 2007 (versus 84, 3 % at the
                               beginning of the year)

                                                  Carried out by
             Topic of the audit
                                                        …              Closed       In Progress       Transferred   Rejected     TOTAL
                                                      in …

Audit of Evaluation of targeted Internal
                                                     IAS 2007                  0                 3              0           0            3
Control Standards in OIB

Audit sur l'"Application d'une sélection
                                                     IAC 2007                  3                11              0           1           15
de Standards de Contrôle Interne"

Nurseries & Post School childminding
                                                       IAC
facilities management (by the                                                  0                 3              0           0            3
                                                       2007
Commission)

Management of procurement contracts in
                                                     IAS 2007                  6                 6              1           1           14
OIB

Management of the building procurement                 IAS
                                                                               1                 7              3           0           11
contracts by OIB                                       2007

                                                       IAC
Negotiated procedures13                                                       10                 7              1           3           21
                                                       2006

                                                       IAC
Financial Circuits                                                            29                 2              0           7           38
                                                       2005

                                                     SG's IAC
Historical Archives                                                            6                 0             15          10           31
                                                      2005

                                                       IAS
Transaction tests on markets procedures                                       68                 0              0           4           72
                                                    2004/2005




 13
      On 21 recommendations- 7 recommendations left open representing 3 major actions to be implemented.



                OIB_AAR 2007.doc                                     31/03/2008                                     Page n° 39 sur 48
                                                  Carried out by
             Topic of the audit
                                                        …               Closed      In Progress        Transferred        Rejected       TOTAL
                                                      in …

Inventory Management of fixed assets by                IAC
                                                                              32                 2                  0               8            42
the OIB                                                2004

Audit on the Insurance cover policy of              BDO (IAC
                                                                              23                 1                  0               7            31
the Commission                                        2003)

Report on the Building Infrastructures                 IAS
                                                                              71                 5                  0               0            76
Management14                                           2001

                                                     Financial
« Crèches » section of DG IX/C-6                      control                  9                 0                  1               0            10
                                                       1999

TOTAL as of 31st December 2007                                               258                47                 21             41           367



                   2.4.4.      GAMA opinion

                               As mentioned under 2.2.1, all non building procedures above € 137.000 (2007
                               threshold) are sent for opinion by OIB to the Groupe d’Analyse des Marches
                               pour la DG ADMIN (GAMA). Out of 22 files submitted to GAMA in 2007,
                               three received a negative/non favourable opinion.

                               86% of procedures sent to GAMA received a positive opinion (this represents
                               52% of the value of procedures sent to GAMA).

                               The value of the single 'cleaning' contract which received a non favourable
                               opinion from GAMA represents 42 % of procedures sent to GAMA.

                               The negative/non favourable opinions received were the following:

                               The 1st case - related to 'travaux de peinture, de pose de revêtements de sols et
                                      de maçonnerie' (€ 4.904.000 for 2 years) - received a negative opinion
                                      as the contract proposed was to have been signed before the previous
                                      contract ran out. In order not to expose the Commission to a reputational
                                      risk, OIB – following internal consultation of the appropriate Services –
                                      suspended the original contract, thus following the decision that was
                                      taken to end all business with the contractor that was the subject of an
                                      OLAF case. A 'vice de forme' (20 days instead of 21 concerning the time
                                      limit to submit offers) was advanced as a further argument in this matter
                                      although this, on its own, was not sufficient to prevent the signature of
                                      the contract in 2007 (which was awarded to a different company than
                                      the former contractor). With regard to GAMA's criticism that not all
                                      bidders may have received full information on the start date of works
                                      during a preliminary visit which all did not attend, the reason the
                                      company in question did not submit a bid was due to a heavy workload
                                      and had nothing to do with the time limit.


 14
      Due to some recommendations which may have several actions, and therefore several implantation dates, the number was considered last year as
        83; it became 76 in 2007.



               OIB_AAR 2007.doc                                      31/03/2008                                           Page n° 40 sur 48
            The 2nd negative opinion concerned receptionists (€ 2.752.264 for 4 years) on
                  which GAMA felt that there was not sufficient clarity between the
                  selection and evaluation criteria. OIB considered that there was no
                  misunderstanding, as first of all a decision was taken on whether or not
                  offers were conform and only subsequently offers were evaluated.

            The 3rd case (non favourable opinion) is related to cleaning services (€
                  60.130.000 for 4 years) for which GAMA did not agree with the
                  methodology used by the evaluation committee, which they felt was too
                  restrictive. OIB is of the opinion that all offers were evaluated strictly in
                  line with the quality and results oriented approach which had been
                  announced in the call for tenders. GAMA also considered that there
                  should have been more clarity with regard to the process of 'procédure
                  par lots'. As the principle of equality was respected and there was thus
                  no discrimation made related to the financial evaluation – based on the
                  lot approach – OIB's Authoring Officer by Delegation awarded this
                  contract.

  2.4.5.    IAC opinion

            The IAC is of the opinion that the internal control system in place provides
            reasonable assurance regarding the achievement of the business objectives set
            up for the activities audited.

            Except for the issues raised as critical by IAS reports (audit trail in building
            procurement: See 2.3.3), IAC considers that there is no other information that
            should lead to a reservation OIB's AAR.

            IAC underlined a critical observation from an audit which is under finalization
            related to the classification of sensitive posts and segregation of duties to the
            'agents de proximités' (staff in charge of the control of technical maintenance
            contracts). The decision on the classification of the sensitive posts is pending
            (based on the screening on that topic finalized in 2007)



  2.4.6.    Internal Control Standards Compliance

            In order to assess compliance with the baseline requirements of the internal
            control standards, OIB based its assessment on the one hand on its knowledge
            of its control environment and actions taken during the year in that respect, and
            on the other hand on audits from both IAS and IAC during the year.

            OIB continues to persevere to be in alignment with the requirements of the
            Internal Control Standards and in that respect an action plan has been
            updated/set up in the context of the preparation of the Annual management Plan
            2008 for areas where the need for a particular effort has been identified:
            ►Documentation of procedures, namely in some operational processes and
            CAF, ►Sensitive functions, where sensitive criteria have to be established
            based on a screening of sensitive posts - which was carried out in 2007 ►Ethics
            & Integrity, where efforts on dissemination took place already through


OIB_AAR 2007.doc                       31/03/2008                             Page n° 41 sur 48
            compulsory training but for which a Code of Conduct on Ethics and Integrity
            namely for procurement and contracts management will be established in
            2008.► Supervision, where ex-post controls should be reinforced and an
            internal working group coordinated by Internal control and ex-post control
            teams should still be set up during 2008 to work on establishing better tracking
            of the main supervisory controls. ►Mail registration and filling system, where
            mail registration in Adonis - namely for e-mails – should still increase and a
            better monitoring of the filing system in Nomcom is expected following the
            reorganisation of OIB at the beginning of 2008.

            Indicators at the end of the year, highlighted also that efforts should be pursued
            in ► Training (8,19 days of training days per person for a target of 10). In the
            2008 OIB's Training Strategic Framework (adopted in March 2008) 24 new
            actions/training sessions/actions are proposed in all domains (buildings,
            services, management …).


  2.4.7.    Variation in iCAT efficiency 2007 vs. 2006 per COSO module / ICS

      Number of control objectives to improve (> 50
         %) / Total control objectives per COSO       2005     2006      2007
                         Module
     Control Environment                              2/10     2/10      5/10
     Performance & Risk Management                     0/4      0/4       0/4
     Information & Communication                       0/6      1/6       1/6
     Control Activities                                3/8     3/10      3/10
     Audit & Evaluation                                0/5      0/5       0/5
     TOTAL                                            5/33     6/35      9/35


            The general iCAT questionnaire on internal control standards was administrated
            to 56 people; around 61% answered.

            The 2007 iCAT assessment confirms the following areas (see AMP 2008) as
            requiring improvement of the effectiveness of internal control systems: ►
            documentation of procedures ► registration, filing, & archiving and ►
            sensitive functions.

            Individual perception of ►staff mobility and on ► career development and
            ►Difficulties in recruitment was in line with a general concern among
            Commission staff in this field, and with OIB's risk analysis.

            ► Roles and responsibilities and ► continuity of operations were also pointed
            out as areas where improvements are needed as well as ►project management
            (even if only around 50% of people who answered the questionnaire took a
            position on this matter).

            For all the above, the existing action plan has to be closely monitored and
            additional actions will be established in 2008.




OIB_AAR 2007.doc                        31/03/2008                           Page n° 42 sur 48
            Two control objectives for which improvements were considered desirable in
            2006 have reached a satisfactory level in 2007 ► Fixed assets management and
            ► Business continuity.

  2.4.8.    Variation in iCAT on over dependency 2007 vs. 2006

            For the second year, the potential over-dependency on contractors was also
            assessed through a specific iCAT questionnaire. Even if the turnout remains
            quite weak (50% versus 46%) due to the larger scope (questionnaire was sent to
            56 officials versus 37 officials in 2006), the number of answers increased to
            65% (27 versus 17). Among the answers collected 11, 5 % were of the opinion
            that OIB is exposed to a high potential over-dependency on contractors. This
            perception is mainly supported (high risk for 26 %) by the fact that 'simple'
            dependency could turns into 'over' dependency (versus 11% in 2006). The
            existence of (quasi) monopolistic situations or closed markets, which do not
            provide real alternative competitor, is considered as a high or medium risk for
            81 %. For 75 % (medium or high risk), the awareness of staff with regard to
            dependencies and risks has to be reinforced.

  2.4.9.    iCAT on financial organization

            The iCAT questionnaire on financial organization was administrated to 56
            people; 46 % answered.

            For the first time, OIB assessed the efficiency of its financial organization
            through a specific DG BUDG iCAT questionnaire, the purpose of which was to
            assess compliance with the Financial Regulation and if the procedures in place
            mitigate the risks at a reasonable cost taking into account the availability of
            qualified personnel and the number and type of transactions.

            According to the ICAT questionnaire's responses, there are four domains with
            significant high and medium risk; three included in the "People and
            Organisation" Internal Control Standards and one in the "Communication and
            Information" field.

            As for the "People and Organisation" area, the domain that stand out are the
            "Obsolete or insufficient description of tasks of financial operators", and the
            "Financial operations are not efficiently organised (delegation is not
            proportional to risk)", both accounting for 72% (High and Medium risk
            perception) of the perceived risk and the "Unforeseen absences of financial
            operators create gaps and/or delays in control system" totalling up 64% of the
            risk (High and Medium risk perception).

            Concerning the "Communication and Information" area, the risk that is
            important to mention is the "Unreliable, untimely, non-relevant management
            information", which presents almost 92% of the risk (High and Medium risk
            perception).




OIB_AAR 2007.doc                      31/03/2008                          Page n° 43 sur 48
2.5.     Conclusion on the effectiveness of the internal control system

         OIB operates in a relatively risky environment in terms of building and procurement
         management.

         2007 was again a challenging year for OIB in relation to the management of the Office
         and internal control structure and organization.

         OIB based its appreciation of effectiveness of internal control systems through different
         elements mentioned above : a quite large number of audits (5 new in 2007, of which 4 in
         procurement/ finance and internal control standards) issued covering our core business
         processes, risk analysis carried out, ex-post controls and AOS reports and legality and
         regularity indicators and reporting in general presented to the Authorising Officer as
         well as the efficiency and effectiveness of internal control standards assessed through
         iCAT questionnaires.

         It should also be noted that OIB is working in a centralised and direct mode of
         management which has lower intrinsic risk than others. Moreover, OIB manages
         administrative expenditures for which the European Court of Auditors –has given since
         several years a positive assurance.

         It can be concluded that internal control systems have been strengthened, and that
         controls and measures in place enable to limit the risk exposure in some fields

         Nevertheless, internal control could be further enhanced, namely in the management of
         the sensitive posts (including segregation of duties), in documentation of procedures
         (e.g.: CAF …), in documents management, in supervision (e.g. ex-post controls and
         audit trail in general).

         As far as procurement is concerned, following the implementation of the action plan
         foreseen in the OIB's AAR 2005 reservation, internal control systems were reinforced
         bringing to light continuing risk in this area for which mitigating measures have been
         identified and are ongoing (see point 2.2.1). Special attention will continue to be given
         to this area in 2008.




       OIB_AAR 2007.doc                     31/03/2008                           Page n° 44 sur 48
3.   PART 3. RESERVATIONS AND THEIR IMPACT ON THE DECLARATION

              The materiality criteria used are based on those recommended in the Commission's
              Communication COM(2003)28 of 21 January 2003.

     3.1.     Materiality criteria used

              3.1.1.    Qualitative criteria for defining significant weaknesses

                               A significant weakness in one of the control systems

                                     Procurement weaknesses and associated corrective measures have
                                     been also identified in the procurement template (under 2.2.1),
                                     namely in the planning (assessment of the needs on a 4 year basis,
                                     respect of the date limits foreseen, overstepping of GAMA
                                     thresholds…).

                                     OIB suffers from the absence of an integrated information system in
                                     the Commission which would enable it to track the whole financial
                                     process from budgetary commitment, to legal commitment, to
                                     payment, which sometimes leads to a posteriori situations with
                                     consequences for the respect of payment delays. OIB is actively
                                     collaborating with DG BUGD on the SAM project. Alternative
                                     solutions (e.g.: common standard OIB tables to monitor budgetary
                                     consumptions & legal commitments) are ongoing and are being
                                     reinforced.

                                     Procedures (mainly operational) and/or control methodologies (CAF
                                     procedures missing, ex-posts methodology...) are also being reviewed
                                     in order to improve documentation, and thus reinforce the quality of
                                     internal control systems. In order to facilitate the respect of rules
                                     relating to financial management and the roles of the various actors in
                                     financial circuits, an update of the Manual of Financial Procedures
                                     has been a step to clarifying any latent ambiguities in this area.

                               Situations where the DG knows that it does not have sufficient evidence
                               from internal control systems or audit coverage (for example, ex-post
                               control work) to be confident of providing the necessary assurances.

                                     ► Ex-post controls carried out and finalized on 2007 transactions are
                                     not yet sufficient in terms of coverage (see legality & regularity
                                     indicators – under 2.4). However, the results of the controls carried
                                     out have contributed to highlight a number of weaknesses already
                                     identified which are being addressed either through generic measures
                                     or by specific actions. (see part 2).

                               Situations where a major issue has been outlined by the European Court of
                               Auditors or the Internal Audit service.




            OIB_AAR 2007.doc                         31/03/2008                            Page n° 45 sur 48
                         ► The observation of the European Court of Auditors in the DAS
                         2006 cannot be considered as major; hence a positive DAS was given
                         to administrative expenditures. In addition, mitigating measures are
                         already in place or on going. (See in template under 2.2.1 and under
                         2.3.2).

                         ► Observations of the Court in its Special Report concerning the
                         ‘Institutions’ expenditure on buildings’ are also already partially
                         mitigating. (See under 2.2.2 and 2.3.2).

                         ► A critical recommendation was issued in the IAS audit report on
                         the management of the buildings procurement contracts related to the
                         regulatory framework, implementation of the negotiated procedure
                         and audit trail.

                         Considering – as mentioned under 2.3.3 – on the one hand, that
                         negotiated procedures are explicitly allowed by the public
                         procurement Directive and taking into account, on the other hand, the
                         existing ongoing action plan, namely the adoption and
                         implementation of a new methodology aimed at improving publicity,
                         competition and transparency in buildings acquisition, OIB considers
                         this recommendation as not having any impact on assurance.

                   Situations where the DG has evidence, possibly through its own control
                   work or through audits, that significant risks remain unmitigated.

                         ► Internal analysis on potential risk of non respect of procurement
                         planning highlighted that OIB has no contractual basis namely for
                         furniture supplies since end 2007. In that respect a call for tender is
                         ongoing with the aim to sign a new contract in October/November
                         2008.

                   A significant reputational risk.

                         ► Two areas were identified as having a potential impact on the
                         Commission's reputation: the persistence - if any – of the actual
                         payment delays (39 %). (See under 2.2.1), and potential deficiency in
                         ethics & integrity awareness, namely in procurement.

                         Three ongoing OLAF cases cannot be ignored and could have a
                         potential impact on the Commission's reputation, should
                         investigations become conclusive.

                         An action plan for those areas has been developed (under 2.2) which
                         leads OIB that there was no unmitigated reputational risk in 2007.

                         These areas will be closely followed in 2008.




OIB_AAR 2007.doc                          31/03/2008                           Page n° 46 sur 48
         3.1.2.    Quantitative criteria for defining reservations

                   OIB continued to keep up to date system of tracking exceptions / derogations
                   and potential weaknesses of internal control systems in order to assess the
                   materiality quantitative criteria in a comparable way to former years:

                   ► 'a posteriori'

                   The weight of total 'a posteriori' versus total budgetary execution reached 0,45
                   % of all ABB budgetary execution of C1, C4 & C5 credits (versus around €
                   3.000.000 in 2006 which represented 0, 97 %)

                   A total of approximately € 1.500.000 of a posteriori commitments – budgetary
                   and / or legal - were approved by the Authorising Officer, mainly linked to the
                   management of energy (which is difficult to forecast), additional works, and
                   recourse to interim in nurseries and/or childminding facilities, for which direct
                   use of framework contracts were used (without first issuing the related order
                   forms).

                   ► Weaknesses on procurement management

                          (a)     A total of around € 4.300.000 exceptions/derogations approved
                                  related to 2007 procurement management: overstepping of
                                  GAMA threshold on the cleaning contract. This was due to
                                  property in Brussels which was greater than the amount of what
                                  was foreseen in 2002 when the original estimations were made (a
                                  number of substitution buildings were abandoned later than
                                  expected, 'Agencies' where established, etc…).

                          (b)     An overstepping of the GAMA threshold identified in 2006 of
                                  framework contracts for data network cabling and works in
                                  specialised rooms concerned around € 1.200.000 expenditures in
                                  2007

                          (c)     The need to equip new catering services led OIB to overstep this
                                  GAMA threshold by around € 700.000.

                   The sum of those approved exceptions (€ 6.600.000) represented 1, 91 % of all
                   ABB budgetary execution of C1, C4 & C5 credits in 2007.



3.2.     Reservations

         None



3.3.     Overall conclusion on the combined impact of the reservations on the declaration
         as a whole

         None

       OIB_AAR 2007.doc                      31/03/2008                            Page n° 47 sur 48
4.      PART 4. DECLARATION OF ASSURANCE

        I, the undersigned,

        Head of Service of OIB

        In my capacity as authorising officer by delegation

        Declare that the information contained in this report gives a true and fair view15.

        State that I have reasonable assurance that the resources assigned to the activities described in
        this report have been used for their intended purpose and in accordance with the principles of
        sound financial management, and that the control procedures put in place give the necessary
        guarantees concerning the legality and regularity of the underlying transactions.

        This reasonable assurance is based on my own judgement and on the information at my
        disposal, such as the results of the self-assessment, ex post controls, the work of the internal
        audit capability, the observations of the Internal Audit Service and the lessons learnt from the
        reports of the Court of Auditors for years prior to the year of this declaration.

        Confirm that I am not aware of anything not reported here which could harm the interests of
        the institution.



                                                                                             Brussels, March 31st, 2008




                                                                                                                 [Signed]
                                                                                                              Gábor Zupko




15
     True and fair in this context means a reliable, complete and correct view on the state of affairs in the service.


             OIB_AAR 2007.doc                               31/03/2008                                     Page n° 48 sur 48

								
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