QUESTION
1. in which cases is a financial guarantee requested?
2. who shall provide for it? The project coordinator for the whole amount of the project, or each participant for its share of contribution?
3. is it possible, instead of providing for a guarantee, to nominate a "Guarantor", undertaking to provide the participant with the financial resources needed to finance its share of costs?
4. in that case, which should be the rights and obligations of the Guarantor? In particular, how should it demonstrate to the EC to have the financial resources to pay in case of the participant's non-fulfilment of its contractual obligations? |
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ANSWER
A financial guarantee may be requested from a contractor in an indirect action of the 5th Framework Programme when the control of its financial viability by the relevant services of the Commission leads to the conclusion that there is a financial risk.
In that case, a bank guarantee may be requested from this participant or a reduction of the advance payment may be proposed. The bank guarantee is to cover the part of the advance payment made to that contractor.
A financial guarantee is not provided by the coordinator of an indirect action, but by the contractor to whom it is requested.
If the contractor is not able to obtain a financial guarantee, it is possible that one of the other contractors could provide this guarantee. The Guarantor's financial security provided for the participant must meet the same requirements as that provided by a bank or insurance company. That is, if the security is called from the guarantor must have the capacity and means to honour it. An alternative will be to reduce or eliminate the advance payment. IN the latter case the payment of the EC contribution will be made on the basis of work carried out during the project as justified by technical reports and cost statements.
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