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20.12.2013 | KPMG Law Insights

Scientific Advisory Board of the BMWi: Report on the Evaluation of Economic Policy Support Measures

Dear Readers,

Just in time for Christmas or the turn of the year, the EU Commission has issued its new de minimis regulation. However, not to everyone’s delight: those of you who had an increase in the aid ceiling for de minimis aid on your wish list are now likely to be disappointed. Some things are changing, but the unpopular ceiling remains.

There are also exciting reports from the area of subsidies and public procurement law as well as from the ECJ. The latter has put the national courts in their place and made it unequivocally clear that, despite an investigation still underway in the same matter before the EU Commission, they must take all necessary measures to draw the consequences from any breach of the obligation to suspend implementation of this measure.

We wish you a Merry Christmas and a Happy New Year 2014!

Sincerely yours

Public Sector Team of KPMG Rechtsanwaltsgesellschaft mbH

Mathias Oberndörfer Dr. Anke Empting

Lawyer Attorney

In September 2013, the Scientific Advisory Board of the German Federal Ministry of Economics and Technology (BMWi) published an expert report on the “Evaluation of Economic Policy Support Measures as an Element of Evidence-Based Economic Policy”. In expert circles, this is a source of discussion.

The Scientific Advisory Council is an independent body, currently consisting of 41 experts, which advises the Federal Ministry of Economics and Technology on specialist economic policy issues and regularly issues recommendations for action.

The Scientific Advisory Board calls for all economic policy support measures above a certain size to be subjected to a scientifically based evaluation as standard, these are as follows:

  • To enable an objective and appropriate evaluation, before a funding measure is introduced, it should be specified not only what its objectives are, but also what target variables are to be used to measure its effectiveness.
  • A data infrastructure in the form of a research data center for evaluation data should be established to provide evaluating institutions and the scientific community at large with access to evaluation-related microdata.
  • An organizational unit responsible for initiating, managing and supervising evaluations should be created within the BMWI to ensure the scientific quality and professional independence of the studies. A competitive tendering process for the evaluation studies must always be guaranteed.
  • In order to create transparency about the procedure and results of the evaluations, the evaluation studies should be published without publication proviso no later than six months after completion.

The requirements and recommendations of the Scientific Advisory Board are not binding for the BMWi. It is therefore impossible to predict whether and in what form these will actually be implemented.

However, immediately after publication of the report, the BMWi indicated that it shared the views and demands of the Scientific Advisory Board. In particular, greater attention must be paid in the future to ensuring that the use of public funds in economic policy is designed in a more goal-oriented manner with the help of evaluations and that decisions on economic policy support are made primarily on the basis of empirical-analytical valid findings. Thus, the effective and economic use of public funds in economic policy is always required in accordance with the provisions of the Federal Budget Code. Accordingly, the BMWi already regularly evaluates all of its funding programs.

Comments on the report in scientific practice are also aimed in the same direction. In view of the approximately 21 billion euros in annual public subsidies, there is a particular call for greater pressure for a consistent impact analysis of the subsidies granted. So far, this impact analysis has regularly been limited to a qualitative assessment of the processes and to a subjective evaluation by the recipients alone. Up to now, there has been no reliable causality test, i.e. no proof provided by means of objective analytical methods.

In its decision of October 22, 2013, the Administrative Court of Düsseldorf clarified that it must be evident from the required documentation of selection decisions for job appointments whether the employer has recognized and exercised its leeway for evaluation.

In an internal departmental job advertisement, the post of “Special assignment for an officer of the B service in the Fire and Civil Defense Department” was advertised, for which a total of three officers applied. After the selection process, one of the applicants, who was also the applicant, filed an action for interim relief against the intended appointment to the post. He requested that the filling of the position with the selected applicant be prohibited until a new decision had been made on the applicant’s application in compliance with the legal opinion of the court.

The Administrative Court ruled that the selection for the promotion post was unlawful because the employer had violated its obligation to set out in writing the essential considerations on which its selection decision was based. Moreover, it could not be ruled out that a different selection decision would have been made if the discretionary powers of assessment had been properly exercised.

Thus, the documentation of the selection result alone was legally insufficient. This is because only a written record of the essential selection considerations ensures that the performance principle is observed. Furthermore, the unsuccessful applicant would have the chance to decide whether to seek judicial protection and the court would also have the opportunity to review the challenged decision.

In addition, the court ruled that a selection decision based solely on the overall grades of official evaluations does not constitute an error-free exercise of the discretionary powers of evaluation if the comparison of the overall grades shows that several applicants are to be classified as “essentially equally suitable”. In such cases, the employer is obliged to examine whether it wishes to base the selection decision on another previously announced requirement.

The decisive factor is that the employer recognizes this scope for assessment, exercises it and documents it appropriately.

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Contact

Mathias Oberndörfer

Geschäftsführer
Mitglied des Vorstands Service Tax - KPMG AG Wirt­schafts­prüfungs­gesell­schaft

Theodor-Heuss-Straße 5
70174 Stuttgart

tel: +49 711 781923410
moberndoerfer@kpmg-law.com

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