1

Private Sector Development Programme

Competitive Enterprises, Clusters and Business Support Organisations

EuropeAid/156332/DH/ACT/CY

Questions and Answers during the tendering period

This document provides answers and clarifications to questions received at the Info Sessions and Trainings and those received in the functional mailbox SRSS-

CYPRUS-SETTLEMENT-SUPPORT-SME@EC.EUROPA.EU up to 8 May 2018, as per point 2.2.8 of the Guidelines for grant applicants. Questions between 8 May 2018

and 18 May 2018 will be answered in a separate document by 28 May 2018.

The deadline for submission of Concept Note is 8 June 2018 at 12h00 Brussels time (13h00 Cyprus time).

Please note that we cannot provide advice to individual applicants, nor can we assess the individual eligibility of an applicant or application

outside of the framework of the formal evaluation of the call for proposals.

Where the Guidelines are quoted, please note that accentuations are made for the purpose of this document.

Nr Question Answer

1. Who should define the percentage of the grant amount

requested?

The percentage of the requested grant amount should be determined by the applicants.

For the percentages under this CfP, please refer to the “Section 1.3 Financial Allocation

Provided by the Contracting Authority” in the Guidelines:

“Any grant requested under this Call for Proposals must fall between the following maximum percentages of total eligible costs of the action: - Minimum percentage: 50% of the total eligible costs of the action; - Maximum percentage: 85% of the total eligible costs of the action“

2. Could you please clarify how will the initial pre-financing

payment be requested? Is it possible to include expected

Human Resources cost in the 60%?

Yes it is possible to include Human Resources cost. The Standard Grant Contract provided

in the application package (Annex G) for your information;

Article 7.2.3 states that:

“The payment request shall be drafted using the model in Annex V and shall be accompanied by the following documents:

2

For the initial pre-financing payment: a) a report on procurement activities conforming to the model in Annex X; b) signed contract(s) for supplies/services/employment for at least 60% the total eligible costs referred to in Article 3.1 of the Special Conditions; c) evidence of full access to (i.e. completion of) the facilities situated in (……), Cyprus where the equipment funded under the Action will be installed. For further pre-financing payments: a) a narrative and financial report in line with Article 2; b) a forecast budget for the following reporting period in case of request of further pre-financing. For the balance: a) a narrative and financial report in line with Article 2.”

3. Would the private sector be eligible to apply for “Finance to

third parties”? SMEs submitting a concept note for this CfP may include Financial support to third parties as an activity, if it will help achieving the objectives of the action. For further information

on Financial support to third parties please see Section 2.1.4 of the Guidelines.

4. What is the maximum amount of the EU grant that could be

requested within this CfP?

As stated in the Guidelines of this CfP:

“Size of grants; Minimum amount of EUR 100,000; maximum amount: EUR 250,000”

5. Is there any minimum number of years that the legal person

should have been established as a main applicant? Are the

new companies/start-ups eligible to apply under this CfP?

Under the guidelines there is no eligibility rule determining the number of years that a

legal person has been active. Applicants which are eligible according to the Call for

Proposals may submit their applications.

For the eligibility rules for the applicants under this Call for Proposals, please refer to the

Guidelines Section 2.1.1 Eligibility of applicants (i.e. lead applicant and co-applicant(s)):

"a) Lead applicant (1) In order to be eligible for a grant, the lead applicant must:

3

• be a legal person, and • fall under the EU “Small and Medium Enterprise” definition: consist of fewer than 250 employees and have EITHER an annual turnover not exceeding EUR 50 million, OR an annual balance sheet total not exceeding EUR 43 million. Applicants should provide a bona fide declaration concerning the number of employees and financial data; or • Be a non-governmental organisation, association, foundation, chamber, union, non-profit or for profit cooperative. However, non-profit organizations and non-profit cooperatives must demonstrate that their operations are strictly non-profit making. They must provide, together with their application, the company statutes in which provisions must feature prohibiting distribution of the profit to the shareholders. As an alternative the organisation should demonstrate, through an audit report covering the last three years that profit has never been distributed to the shareholders. In addition, the Board of Directors should declare that profit will not be distributed to shareholders in the future, and • be established in the northern part of Cyprus, and • be directly responsible for the preparation and management of the action with their partners, not acting as an intermediary," In addition to the listed categories, and in order to avoid conflict of interests and double funding, the following may not participate to the call: "• applicants whose legal representative, including company directors or any persons with power of representation, decision-making or control in relation to the applicant, is working in the public administration; • farm-holdings." Please note that, Financial and Management capacity of all applicants will be assessed at

the Full Application Stage.

6. Can we procure equipment under this CfP? Yes. Types of activity as mentioned in Section 2.1.4 of the Guidelines of this Call for

Proposals “Purchase of services and /or modern machinery and equipment, production lines, tools and measurement instruments for sophistication of business systems, processes, products and services; purchase of services (including certification and accreditation); testing, etc.”

7. Would it be possible to apply for a grant for the procurement

of an equipment while the procurement of services related to

“… costs declared by the Beneficiary(ies) and financed by another action or work programme receiving a Union (including through EDF) grant;” are not eligible according to

4

the same activity/project is financed by EBRD? the Guidelines.

8. Would it be possible for an experienced company (15 years)

to submit an application in this CfP for a project in a new

sector/area?

Yes. As stated in Section 2.1.4 of the Guidelines “Types of action - Actions leading to the sophistication and innovation of SMEs' and cluster of SMEs' processes, systems and products are eligible. Please note that the objectives of your action must directly relate to

at least one of specific objectives of this CfP.

9. Would it be possible to undertake works or buy the building

as part of the same project if the company itself finances the

operation?

All costs included in the budget must be eligible, regardless of its source of finance.

Purchases of land and costs of works are ineligible as stated under the “2.1.4 Eligible

actions: actions for which an application may be made” section of the Guidelines;

”… The following types of action are ineligible:

• actions concerned only or mainly with individual sponsorships for participation in

workshops, seminars, conferences and congresses;

• one-off events such as conferences, round tables, seminars and similar events. Such

events may be financed if they are part of a wider action;

• actions concerned only or mainly with individual scholarships for studies or training courses; • actions already totally or partially financed by another donor; • infrastructure projects and works, unless if linked to the installation of movable

equipment purchased under the call.”

Please also note that in case infrastructure projects or works are linked to the installation

of moveable equipment purchased under the call, property rights of natural and legal

persons, including the right to possession and property must be respected as indicated in

Article 7 of the Council Regulation (EC) No 389/20068.

5

10. Is it possible to have a co-applicant from the northern part of

Cyprus or from Turkey

Please refer to the Section 2.1.1 of the Guidelines:

“Co-applicants must satisfy all of the eligibility criteria as applicable to the lead applicant except for the following criteria: 2. "be directly responsible for the preparation and management of the action with the co-applicant(s) and affiliated entity(ies), not acting as an intermediary" 3. "be established in the northern part of Cyprus". In addition to the categories referred to in section 2.1.1, the following are also eligible: • be legally established in a Member State of the European Union or on the territory of a Member State of the European Economic Area or on the territory of Candidate Countries for Accession to the European Union.” Turkey is a Candidate Country for Accession to the European Union and having a co-applicant from Turkey is accordingly possible.

Participation as co-applicant is also open to eligible co-applicants which are established in

a Member State of the European Union or in a country or territory of the regions

authorized by Council Regulation (EC) No 389/2006 of 27.2.2006. Please note that:

• This includes those residing or established in the northern part of Cyprus; and

• This does not imply recognition of any public authority in the areas other than the

Government of the Republic of Cyprus.

11. Are legal persons eligible to submit application under this CfP? Yes, if the other eligibility criteria are also met. Please refer to the Section 2.1.1 of the

Guidelines: “… a) Lead applicant (1) In order to be eligible for a grant, the lead applicant must: • be a legal person, and • fall under the EU “Small and Medium Enterprise” definition: consist of fewer than 250 employees and have EITHER an annual turnover not exceeding EUR 50 million, OR an annual balance sheet total not exceeding EUR 43 million. Applicants should provide a bona

6

fide declaration concerning the number of employees and financial data;; or • Be a non-governmental organisation, association, foundation, chamber, union, non-profit or for profit cooperative. However, non-profit organizations and non-profit cooperatives must demonstrate that their operations are strictly non-profit making. They must provide, together with their application, the company statutes in which provisions must feature prohibiting distribution of the profit to the shareholders. As an alternative the organisation should demonstrate, through an audit report covering the last three years that profit has never been distributed to the shareholders. In addition, the Board of Directors should declare that profit will not be distributed to shareholders in the future, and • be established in the northern part of Cyprus, and • be directly responsible for the preparation and management of the action with their partners, not acting as an intermediary.”

12. Are cooperatives and associations eligible under this CfP? Yes. Please see section 2.1.1. of the Guidelines;

“… Be a non-governmental organisation, association, foundation, chamber, union, non-profit or for profit cooperative. However, non-profit organizations and non-profit cooperatives must demonstrate that their operations are strictly non-profit making. They must provide, together with their application, the company statutes in which provisions must feature prohibiting distribution of the profit to the shareholders. As an alternative the organisation should demonstrate, through an audit report covering the last three years that profit has never been distributed to the shareholders. In addition, the Board of Directors should declare that profit will not be distributed to shareholders in the future, and … “

13. Does the maximum amount of the grant (€250,000) include

the Contingency reserve (up to 5%) and Eligible indirect costs

(up to 7%)

Yes, the total amount of the EU grant should be max €250,000 all eligible costs included.

14. Does the “rule of origin” apply for each procurement item? All supplies and materials purchased by the Beneficiary(ies) under the contract must

originate from:

• a Member State of the European Union: Austria, Belgium, Bulgaria, Croatia, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,

7

Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal,

Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom, or

• a non-EU Member State of the European Economic Area: Liechtenstein, Norway,

or Iceland

• a Candidate Country for Accession to the European Union: Albania, Serbia, Former

Yugoslav Republic of Macedonia, Montenegro, Turkey.

However, Article 4.2. of the Special Conditions of the draft Contract included in the application package for your information states that “Equipment with a unit price lower or equal to EUR 2,500 are exempted from compliance to the rule of origin.”

15. Is it possible to change the grant amount/percentage or the

duration after CN stage, in Full Application Form stage?

Yes. Section 2.2.5 of the Guidelines states that:

“…The elements outlined in the concept note may not be modified in the full application form. The EU contribution may not vary from the initial estimate by more than 20 %. Lead applicants are free to adapt the requested EU contribution as a percentage of the total eligible costs within the minimum and maximum amounts and percentages of co-financing… The lead applicant may adjust the duration of the action if unforeseen circumstances outside the scope of the applicants have taken place following the submission of the concept note and require such adaptation (risk of action not being carried out). An explanation/justification of the relevant replacement/adjustment shall be included in section 2.1.1 of the grant application form.”

16. Will we have VAT and custom tax exemption in case we are

awarded the grant project? Will the VAT exemption be for all

of the budget items?

The EU grant contracts will be exempted from VAT in the Turkish Cypriot community. VAT

paid to other tax authorities are eligible provided the beneficiary(ies) (or, where applicable,

its affiliated entity(ies)) can show they cannot reclaim them.

Please also note that Annex J- INFORMATION ON THE TAX REGIME APPLICABLE TO

GRANT CONTRACTS provided in the application package for information purposes states

that “The Contracting Authority has agreed to waive the proof obligation in the following

cases:

1) Low value taxes: no proof needs to be provided for taxes for expenses where

8

the amount of taxes per invoice is less than EUR 200, within a maximum of EUR 2 500 per grant contract, representing not more than 5 % of the contracting authority’s contribution.

17. How should we upload multiple documents in one section on

PADOR & PROSPECT?

At the Concept Note stage filled in Annex A1-Concept Note (max. 5 pages) and Annex A3-

Declaration concerning financial data and number of employees will be submitted. Please

sign where it is indicated on these documents and scan the signed pages. Please then

“zip” these documents together to upload on the PADOR & PROSPECT as the system

allows uploading only one document. You can download the Zip programme at

https://winzip.tr.softonic.com/

18. Could we receive price offers from Turkish companies? See the answer to question 14 above.

19. Should we include the sources of finance other than EU funds

for the project proposal submission?

The “Annex B – Budget” with the Section/Tab on “3. Expected sources of funding &

summary of estimated costs” is requested only at the Full Application Form stage.

20. Can “co-applicant” be from the same group of companies as

the main applicant?

Please refer to Section 2.1.2 of the Guidelines for the status of co-applicants. It is not

forbidden from organisations of the same group as the main applicant to act as co-

applicant(s).

21. Is it possible to submit a proposal as a continuation of a

previous grant project?

Yes. In this case, this should be clearly stated at the Concept Note Stage under Description of Action.

22. Would it be a disadvantage if the shareholders leave the

partnership?

A solid justification should be provided in case of any structural change.

23. When would the results of Concept Note assessment be

announced?

Please refer the “2.5.2 Indicative timetable” section of the guidelines noting that this

timetable is indicative and may change depending on the number of applications received

by the Concept Note submission deadline.

9

24. Is it possible to submit more than one application if the

company/applicant is active in different sectors? Or is it

possible to be awarded for more than one grant project?

Please see Section 2.1.4 “Number of applications and grants per applicants / affiliated

entities” of the Guidelines:

“The lead applicant may submit more than 1 application under this call for proposals. The lead applicant may not be awarded more than 1 grant under this call for proposals. The lead applicant may be a co-applicant or an affiliated entity in another application at the same time. A co-applicant/affiliated entity may submit more than 1 application under this call for proposals. A co-applicant/affiliated entity may be awarded more than 1 grant under this call for

proposals.”

25. Are “farmers” eligible under this CfPs? No. Please see Section 2.1.1 of the Guidelines:

“…In addition to the listed categories, and in order to avoid conflict of interests and double funding, the following may not participate to the call: • applicants whose legal representative, including company directors or any persons with power of representation, decision-making or control in relation to the applicant, is working in the public administration; • farm-holdings.”

Please note that as stated in Section 1.2 of the Guidelines “Food and drink industry

including agro-processing) is a priority sector.

26. Is it possible to sign contracts with the service providers or

suppliers before the signature of the EU funded grant

contract?

No, any cost incurred or any funds committed before the signature of the grant contract

will be ineligible. Please refer to Article 14 of the General Conditions to the standard grant

contract.

27. Is it possible to invest in activities outside EU countries? As stated in Section 2.1.4 of the Guidelines, “Actions must take place in Cyprus.”

10

28. There were different Lots under the previous CfPs. Is it only 1

Lot in this CfP?

Yes. There is only one Lot for the Private Sector Development Programme Competitive

Enterprises, Clusters and Business Support Organisations -EuropeAid/156332/DH/ACT/CY.

29. Is it possible to change the address after the signature of a

grant contract?

Any changes to the contract after it is signed must be requested in writing and are subject

to the acceptance of the Contracting Authority.

30. Could you please clarify the difference between recruitment

under Human Resources Budget Line and procurement of a

service for a specific service?

Human Resources Budget line includes the salaries of personnel to be employed by the

Beneficiary to work under this project and must be provided in Gross amount including the

tax, social security and providence funds to be paid to relevant local bodies.

Procurement of a service will be carried out through preparing a Terms of Reference for

the required service and signing a contract with a company providing the best value for

money.

31. Would it be possible to issue an invoice from our company for

an installation of the equipment procured under the grant

project?

No, contributions in kind are not eligible as stated in section 2.1.5 of the Guidelines:

“The following costs are not eligible: a) debts and debt service charges (interest); b) provisions for losses or potential future liabilities; c) costs declared by the Beneficiary(ies) and financed by another action or work programme receiving a Union (including through EDF) grant; d) purchases of land or buildings; e) cost of rent of land, buildings and offices where property rights of natural and legal persons have not been respected (in conformity with Article 7 of the Council Regulation (EC) No 389/2006 of 27 February establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community); f) costs of works, infrastructure and renovation/refurbishment of buildings where property rights of natural and legal persons have not been respected (in conformity with Article 7 of the Council Regulation (EC) No 389/2006 of 27 February 2006 establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community and amending Council Regulation (EC) No 2667/2000 on the European Agency for Reconstruction (OJ L 65, p. 5);

11

g) currency exchange losses; h) credits to third parties, unless otherwise specified in the Special Conditions; i) contributions in kind; j) salary costs of the personnel of the local administration.”

32. What is the flat rate for local transportation? €0.22/km needs to be provided as the flat rate for local transportation for this CfP.

33. Is it possible to introduce new activities in Full Application

Form stage?

Section 2.2.5 of the Guidelines indicates that:

“…The elements outlined in the concept note cannot be modified by the lead applicant in

the full application form…The lead applicant may adjust the duration of the action if

unforeseen circumstances outside the scope of the applicants have taken place following

the submission of the concept note and require such adaptation (risk of action not being

carried out). An explanation/justification of the relevant replacement/adjustment shall be

included in section 2.1.1 of the grant application form.”

34. Could we submit certificates, etc. as an annex to Concept

Note?

No. As stated in Section 2.2.1 of the Guidelines “…Only the Concept Note form will be

evaluated. It is, therefore, of utmost importance that this document (Annex A1) contains

all relevant information concerning the action. Please sign and scan 2. DECLARATION BY

THE LEAD APPLICANT page of the Concept Note as well as Annex A3. Declaration

concerning financial data and number of employees. No additional annexes should be

sent.”

35.

Which parts of the statutes should be translated and uploaded

on PADOR? Should it be translated by certified translators?

Applicants should upload their statutes both in Turkish (full statute) and in English (only

Activities (Faaliyetler) & Objectives (Amaçlar) sections). There is no need for certified

translations. Applicants not having statutes (sole proprietorships) may upload a legal

document stating that they do not have statutes.

12

36. Would it be possible to procure equipment which is produced

only in United Kingdom, in case United Kingdom withdraws

from the EU during the grant period?

Please be aware that after the UK's withdrawal from the EU, the rules of access to EU

procurement procedures of economic operators established in third countries will apply to

candidates or tenderers from the UK depending on the outcome of the negotiations. In

case such access is not provided by legal provisions in force, equipment produced in the

UK will become ineligible.

37. Is it possible to apply with a group of 5 or 6 companies

without being structured as “clusters”?

What will be the legal statutes of the “clusters”? How will

clusters register on PADOR?

Please refer to the Section 2.1.1 of the Guidelines. The lead applicant may act

individually or with co-applicant(s) and it is the responsibility of the applicants and

their affiliates to design a proposal and to apply or not in this call for proposal.

Clusters need to have a legal personality, such as a cooperative or a union. They may

register as a limited partnership if they have a structure other than cooperative.

38. If the project we are planning to apply for is not among the

priority sectors but is an innovative idea, can we still apply?

Yes. However, the objectives of your proposed action must be directly related to at least

one of the specific objectives of this CfP.

39. Could you please clarify the actors under this Call for

Proposal?

As mentioned under Section 2.1. Eligibility Criteria;

(1) the actors:

• The lead applicant, i.e. the entity submitting the concept note and the full application

form (2.1.1),

• if any, its co-applicant(s) (where it is not specified otherwise the lead applicant and its

co-applicant(s) are hereinafter jointly referred as the "applicants") (2.1.1),

• and, if any, affiliated entity(ies) to the lead applicant and/or to a co-applicant(s).

(2.1.2)”.

For the detailed eligibility rules of actors, please see 2.1.1. Eligibility of applicants (i.e. lead

applicant and co-applicant(s)) & 2.1.2 Affiliated entities sections in the Guidelines.

13

40. Is it possible to include trainings abroad for our employees

under this CfP?

Yes, it may be possible if the planned training is part of the action related to the objectives

and estimated results of the grant project.

Please take note of Section 2.1.4 of the Guidelines (Eligible Actions: actions for which an

application may be made), noting the following types of action are ineligible:

“…• actions concerned only or mainly with individual sponsorships for participation in

workshops, seminars, conferences and congresses;

• one-off events such as conferences, round tables, seminars and similar events. Such

events maybe financed if they are part of a wider action;

• actions concerned only or mainly with individual scholarships for studies or training

courses;"

41. Does the “healthcare and business services” include the

hospitality sector?

As stated in section 2.1 of the Guideline;

"Note that Quarries, Real Estate and Gambling sectors are excluded from this Call."

Please also note that we cannot provide advice to individual applicants, nor can we assess

the individual eligibility of an applicant or application outside of the framework of the

formal evaluation of the call for proposals.

42. Is it possible to procure vehicles as part of our grant project

within this grant scheme?

Yes, if procuring a vehicle is directly related to the project objectives, a vehicle can be

procured.

43. Is it possible to submit a proposal for a project which includes

works for insulation?

As stated in section 2.1.4 of the Guidelines;

”… The following types of action are ineligible:

• actions concerned only or mainly with individual sponsorships for participation in

workshops, seminars, conferences and congresses;

14

• one-off events such as conferences, round tables, seminars and similar events. Such

events may be financed if they are part of a wider action;

• actions concerned only or mainly with individual scholarships for studies or training courses; • actions already totally or partially financed by another donor; • infrastructure projects and works, unless if linked to the installation of movable

equipment purchased under the call.” Please also note that in such a case property rights

of natural and legal persons, including the right to possession and property must be

respected as indicated in Article 7 of the Council Regulation (EC) No 389/20068.

44. Is it possible to be the project coordinator as the company

director?

Yes, if the director is justified to be the only person capable of managing the project, s/he may be the project coordinator.

45. Under “1.2. Objectives of the Programme and Priority Issues”,

one of the specific objectives listed is: “to innovate

manufacturing processes and technologies and to support

innovative business models/ideas”. Is the second part of the

sentence (support innovative business models/ideas) again for

the manufacturing sector, or can an SME in the retail sector

apply for implementation of an innovative business model

/ideas?

Yes, an SME in the retail sector may apply for implementation of an innovative business

model /ideas. However, the objectives of your proposed action must be directly related to

at least one of the specific objectives of this CfP.

46. A construction company wants to buy new equipment to

produce aluminium doors and windows in their production

unit. Is that company (construction company) eligible to apply

this programme?

Please note that we cannot provide advice to individual applicants, nor can we assess the

individual eligibility of an applicant or application outside of the framework of the formal

evaluation of the call for proposals. For the eligibility criteria applicants should take note of

Section 1.2 (Objectives of the Programme and Priority Issues) and Section 2.1 (Eligibility

15

Criteria) of the Guidelines.

47. I am planning to open Chinese restaurant (takeaway) in June

2018 and I have already purchased all required equipment

and supplies. Can I apply to purchase motorbike and to hire

personnel for takeaway service?

Please note that we cannot provide advice to individual applicants, nor can we assess the

individual eligibility of an applicant or application outside of the framework of the formal

evaluation of the call for proposals. For the eligibility criteria applicants should take note of

Section 1.2 (Objectives of the Programme and Priority Issues) and Section 2.1 (Eligibility

Criteria) of the Guidelines.

48. I was wondering if the applicant (beneficiary) of a grant could

also work in the implementation of the project under Human

Resources ( i.e as Project Coordinator of Project Assistant ).

Yes, provided that the beneficiary can fully justify that s/he is the only person capable for

implementing the project. Please also see the answer to question 48 above.

49. A frozen food importing company wants to buy and set up

new and bigger cold storage room to their establishment to

have better storage conditions. They don't produce or

distribute any local products. Is that company (importing

company) eligible to apply this programme?

Please note that we cannot provide advice to individual applicants, nor can we assess the

individual eligibility of an applicant or application outside of the framework of the formal

evaluation of the call for proposals. For the eligibility criteria applicants should take note of

Section 1.2 (Objectives of the Programme and Priority Issues) and Section 2.1 (Eligibility

Criteria) of the Guidelines.

50. Is it possible to procure second-hand equipment? Yes, procuring second-hand equipment is possible provided that the EC Procurement rules

are followed.