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OuRt OF

CCOuntS

Summaries

Part I

Observations

Public Finances

Public Policies

Public Management

ummaries are intended to facilitate the understanding

and use of the report produced by the Court of

Accounts.

Solely the original report is legally binding on the Court of

Accounts.

The responses of the administrations and other bodies

concerned are included in the report.

Disclaimer:

Annual Public Report

2013

Introduction

The 2013 annual public report

produced by the Court of Accounts

comprises three parts, only the first two of which have corresponding

summaries :

Part I

which comprises two volumes (I-1 and I-2), outlines the obser-

vations and recommendations drawn from a selection of audits, surveys

and evaluations carried out in 2012 by the Court, regional and territorial

courts of accounts, or the Court in conjunction with regional and territo-

rial courts of accounts;

Part II

focuses exclusively on the action taken by authorities, admi-

nistrations and other audited bodies following the observations and

recommendations made in previous years;

Part III

provides an overview of the activities of the Court and the

regional and territorial courts of accounts over the course of 2012.

The annual report produced by the Court

de Discipline Budgétaire et

Financière

(French ‘Budget and Finance Disciplinary Court’) is attached

as an appendix to these three parts of the report.

The present instalment comprises a series of summaries of the 27 texts

that make up Part I, ‘Observations’.

These 27 texts are divided into three parts:

first part: public finances (2)

. the overall situation of public finances at the end of January 2013

. financial situation and prospects of departments

second part: public policies (12)

. chapter I

: health and social cohesion (4)

. chapter II:

research and higher education (2)

. chapter III

: transport and land planning (4)

chapter IV

: two sectorial assistance plans (2)

third part: public management (13):

. chapter I

: State administrations (3);

. chapter II

: local authorities (4);

chapter III

: State operators (1);

chapter IV

: state-owned companies (4);

chapter V

: a para-governmental foundation (1).

Summaries

of the Annual Public Report by the Court of Accounts

I - Public Finances

The overall situation of public finances . . . . . . . . . . . . . . . . . . . . . . . .7

The financial situation and prospects of departments . . . . . . . . . . .10

II - Public Policy

The combat against Alzheimer’s disease: a public health policy

to be consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Hospital restructuring: three illustrations of difficulties

encountered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

The attending physician and the coordinated care pathway:

an unfulfilled reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

The “in activity” RSA : a seldom solicited benefit, limited

impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Inserm and the life sciences: new challenges in a

strategic sector

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Graduate business and management schools:

a development to be regulated

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

The Joint Transport union of the Toulouse Agglomeration:

a necessary adaptation of network growth . . . . . . . . . . . . . . . . . . . .28

The Artois-Gohelle (Pas de Calais) tramway: an inadequately

thought out project

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Participation of local authorities in financing of the

Ligne à Grande Vitesse Est (LGV Est): costly counterparts,

one station too many

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Fishing ports in Brittany: regional management to be

strengthened . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Summaries of Part I

Observations

Table of Contents

Summaries

of the Annual Public Report of the Court of Accounts

State support of tobacconists: unjustified aid . . . . . . . . . . . . . . . . .37

The 2009-2011 printed press assistance plan: a missed

opportunity for reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

III - Public Management

Maintenance purchases for the Ministry of Defense: high potential

for savings

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Visa issuance and residence permits: modernization to be

accelerated and simplification to continue . . . . . . . . . . . . . . . . . . .46

General administration of civil aviation: generous and

costly social action

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Electricity distribution concessions:

organization to be simplified, investments to be financed . . . . . . .51

Wastewater treatment for the Corbeil-Essones and Évry region : for-

getting the general interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

Reestablishment of the maritime character of Mont-Saint-Michel:

a poorly managed project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

Property of local authorities: towards more dynamic

management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

The National Water and Aquatic Environment Agency:

poorly planned transformation, failing management

. . . . . . . . . . .62

Payments to EDF SA: rapid growth, accumulation of benefits, little

link with performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

SNCF communication expenses: expensive operations,

irregular markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

SONACOTRA at Adoma: drift corrected late . . . . . . . . . . . . . . . .71

Monnaie de Paris: change moving forward,

challenges to overcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Heritage Foundation: a unique model . . . . . . . . . . . . . . . . . . . . . . . .77

Summaries

of the Annual Public Report by the Court of Accounts

Table of Contents

the overall situation of public

finances

(at end of January 2013)

the situation in 2012

The public deficit, after reaching an

exceptionally high level in 2009 and

2010 (7.5% and 7.1% of GDP respecti-

vely) fell to 5.2% of GDP in 2011 and

the Government expect a further

decline in 2012 to 4.5% of GDP.

The Court’s report in July 2012 on

the situation and outlook for public

finances had pointed up the risk of

deviating from this goal, but remedial

measures were taken during the sum-

mer.

By including measures taken from

previous finance laws, the structural

effort to reduce the deficit in 2012 was

very significant (1.4 percentage points

of GDP). It was particularly based on

an increase in compulsory levies (1.1

percent of GDP), much less on control-

ling expenses (0.3 percent of GDP).

The

information

available

January 2013 does not lead to questio-

ning the deficit target of 4.5% of GDP

for 2012, but the risk of a higher deficit

is not negligible, especially since the

deterioration of conditions may have

led to a lower revenue growth than

expected. The public debt may have

exceeded 90% of GDP by the end of

December 2012.

Other European countries have

made similar efforts and the situation in

France in 2012 would remain lower than

that of the average for the European

Union or the Eurozone. Germany in

particular would have been close to

balancing its public accounts.

Outlook for 2013

The Government’s revenue projec-

tions for 2013 are probably too favoura-

ble, especially since they are based on a

fragile macroeconomic scenario and a

growth of compulsory levies which,

with an unchanged legislation, is too

high relative to economic activity. In

addition, the cost of community tax dis-

putes is still uncertain and the difficul-

ties in estimating numerous new tax

measures introduce a significant hazard.

The Government’s goal for 2013 is

stabilizing the State’s expenses, exclu-

ding interest and pensions (scope of the

standard value), relative to the Loi de

finances initiale (LFI -

Initial Budget

Act

) for 2012.

Compliance assumes that savings

will be generated to offset the new mea-

sures (

€

1 billion) and the growth trend

for expenses. Due to differing estimates

for this, for which measurement is partly

conventional, the savings required are

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

estimated

€

billion

the

Government and

€

7 billion by the

Court.

A significant proportion of

these savings will result from the

delayed effect of measures taken under

the previous legislature, including the

impact of workforce reductions inclu-

ded in the Initial Budget Act for 2012

on the 2013 payroll. The new measures

identified in the LFI for 2013 are quite

limited and compliance with the stan-

dard for expenses, if possible, will be

difficult.

Even if the Government’s objective

for 2013 is met, given that the supple-

mentary budget acts for 2012 reduced

credits by

€

1.2 billion compared to the

LFI 2012, the State’s expenses within

the scope of the standard value would

increase by

€

1.2 billion over in 2013

while they fell in 2012. Health insurance

and pension expenses would increase as

well, faster in 2013 than in 2012.

The total growth of primary public

expenses would nonetheless be almost

equal in 2012 and 2013, according to the

Government. This continued restraint

of expenses incurred in 2011 is the

result of assumptions made by the

Ministry of Finance in regards to the

changes of expenses least directly under

the State’s control (unemployment insu-

rance, local authorities, various central

administration bodies, etc.). Some of

these assumptions, including those rela-

ting to unemployment benefits, are fra-

gile.

Subject to these reservations, the

structural effort planned for 2013 is

significant, nearly 2 percent of GDP,

and the reduction of the structural defi-

cit, which is at the heart of the new

European treaty, will comply with the

commitments of France.

However, achieving the actual defi-

cit objective (3% of GDP) could be

compromised, both in France and other

European countries, if the economic

situation does not improve quickly

enough. This view, if confirmed, is

likely to call for a review at the

European level of the respective

weights given to the actual deficit crite-

ria, very hard to achieve in a deteriora-

ting situation, and to the structural defi-

cit and effort criteria, more easily

controllable by a government.

the need to control expenses

The absolute priority is now to

intensify the effort to control expenses

in all government bodies. Indeed, the

structural effort planned for 2013 is

unbalanced: it relies less than 25% on

controlling expenses and over 75% on

increases in compulsory levies. In addi-

tion, the expected savings are partly due

to low interest rates, which cannot be

regarded as durable, and the impact of

measures taken under the previous legis-

lature.

Summaries

of the Annual Public Report by the

Court of Accounts

the overall situation of public finances

(at end of January 2013)

A rebalancing is provided for in the

Budget Planning Act, beyond 2013, bet-

ween the efforts for revenues and

expenditures, mainly from financing of

the tax credit for competitiveness and

employment through additional savings.

The necessary measures for the

entire government, to move closer to

stabilisation in the level of expenditures

from 2014 as it is planned in the

Planning Act, must be taken quickly.

Modernisation of public action announ-

ced by the Government must explicitly

aim for both restraining expenses and

improving the quality of public services.

Summaries

of the Annual Public Report by the Court of Accounts

the overall situation of public finances

(at end of January 2013)

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

the financial situation and

prospects of departments

Over the last decade, the financial

organization of departments has been

profoundly changed. In parallel, the

adjustment of revenues to the growth

trend of expenses has become more dif-

ficult.

the growing weight of social

and personnel expenses

Since the 2000s, the departments

have

provided

payment

the

RMI/RSA, the personal autonomy allo-

wance (APA) and the disability compen-

sation benefit (PCH). The share of

these social expenses in department

budgets rose significantly between 2003

and 2011. Intervention expenses,

consisting mainly of social benefits,

thus rose from 58.7% to 65% of opera-

ting expenses.

Over the same period, the payroll

increased 115%. This growth is largely

explained by the transfer of State staff

(about 80,000 jobs), in connection with

the decentralisation of powers following

the Decentralisation Act II (2004).

These transfers do not alone explain the

increase in staff. Excluding the effect of

decentralisation, workforces increased

by 12% in the period.

A change in revenue structure

The structure of department reve-

nues has changed significantly. Transfers

of powers to the departments have

essentially been financed through indi-

rect tax transfers. Local tax reform has

reversed the relationship between direct

and indirect taxation in their resources

and reduced the ability of departments

to adjust tax rates.

A more difficult to achieve

balance between revenue and

expenses

In light of jurisprudence of the

Constitutional Council, compensation

for transfers and the extension of

powers, which is assessed at the time

when the transfer or extension takes

place, was not done in contravention of

the provisions of Article 72.2 of the

Constitution. However, financially a lag

occurs between the revenues allocated

and the increasing costs borne by the

departments, especially for the APA,

RMI/RSA and PCH. For these three

benefits, the gap between the cost borne

and the funding received from the State

rose to

€

5 billion in 2011.

The pinch effect noted in 2009 due

to the growth in expenses and the fall in

transfer

duties

real

property

Summaries

of the Annual Public Report by the Court of Accounts

(DMTO) has highlighted the fragility of

departments’ financial balance equili-

brium. In 2011, the departments were

able to rebuild room to manoeuvre, lar-

gely due to high DMTO levels. They

nonetheless severely limited their invest-

ments and borrowings.

However, this improvement is cycli-

cal while the growth in social expenses

continues in a less favourable economic

and social context. Departments’ social

expenses have risen sharply in recent

years. They increased by an annual ave-

rage of 7.1% over the 2005/2011

period.

taking the variety of

situations into account

Although the infrastructure situa-

tion of departments has deteriorated,

the response cannot be comprehensive

and uniform. Transfer of a new

resource benefits a community in finan-

cial difficulty the same as one in relative

ease. Similarly, any undifferentiated

increase in the rates of existing

resources only amplifies existing inequa-

lities.

In addition, wide disparities exist

between communities. If we compare

departments that combine both higher

social expenses and lower transfer

duties, it is possible to identify 11 com-

munities that have a potentially fragile

budget structure. Of these, five are also

marked by a high debt ratio.

Avoiding inappropriate solu-

tions

The use of an emergency fund does

not constitute a sustainable solution to

eliminate imbalances of structural ori-

gin. A strictly cyclical intervention

should be targeted in its purpose and

follow precise and objective criteria.

Transfer of the RMI/RSA, APA

and PCH to the departments made

sense given their other powers. Transfer

to another public administration hardly

seems feasible. It also would not resolve

the question of balance between

resources allocated and expenses.

In the current context of public

finance crisis, any reallocation of

resources to the departments would lead

de facto

to an effect of removing

resources available for the other public

administrations. Under these conditions,

transfer by the State of new tax

resources to the local authorities would

not be preferable.

Generating financial and fiscal

leeway

Leeway could be generated through

management efforts. Strengthening of

department responsibility in manage-

ment of various solidarity mechanisms

which have been entrusted to them

could promote seeking of management

savings. Independently of these efforts,

incentives at refocusing investments on

department priorities could be adopted.

Financial situation and prospects

of departments

For better control of expenses:

–

consider strengthening responsi-

bilities of departments in managing

various mechanisms of social inter-

vention;

–

avoid co-financing of regional

department investments and introduce

a subsidy ceiling for investment pro-

jects undertaken by other communi-

ties ;

–

limit the ability of departments

to intervene in addition to the State in

financing of public investments;

For security and better allocation

of resources:

–

establish a more ambitious equa-

lisation by volume (DMTO and

CVAE) and with criteria that should be

redefined (including by taking the

weight

social

expenses

into

account) with the goal of gradually

reducing gaps by 30% compared to the

current situation ;

–

for the DMTO, establish a

perennial mechanism for “smoothing”

fluctuations, whose criteria could be

modelled on the “set aside” mecha-

nism decided in 2012. A smoothing on

the last five years should avoid econo-

mic uncertainties;

–

consider reallocation of taxation,

neutral for the State, between the

departments and communal block, in

order to give the departments greater

leeway; to this end, reallocate a portion

of the tax on developed land to the

departments and a portion of DMTO

to the communal block, thus allowing

in particular increasing the flexible

share of department taxation and sta-

bilising a greater portion of their

resources.

Recommendations

A greater ability to adjust revenues

to expenses could be given to depart-

ments by transferring a share of taxes

on developed land in return for a share

of DMTO. This rearrangement should

be complemented by the strengthening

of equalisation and establishment of a

perennial “smoothing” mechanism over

five years of DMTO proceeds.

Summaries

of the Annual Public Report by the

Court of Accounts

Financial situation and prospects

of departments

Court of Accounts

the fight against Alzheimer’s

disease:

a public health policy to be

consolidated

INSERM

estimates

that

860,000 people are currently afflicted

with Alzheimer’s disease or a related

disease. This condition, which develops

over several years and for which there is

no cure, affects 13% of men and 20.5%

of women beyond 75 years of age. It is

a major public health issue which has

been the subject of three successive

plans prepared and implemented bet-

ween 2001 and 2012. the Court has exa-

mined contributions in terms of medi-

cal management of this pathology.

Continuity in the implemented

policy and increasingly streng-

thened direction

Since 2001, the first Alzheimer’s

plan defined the main objectives of this

fight against the disease which then was

taken up and deepened in a consistent

manner in the subsequent plans. The

second plan (2004-2007) especially

enabled 100% support by health insu-

rance. The third (2008-2012 plan) has

focused in particular on research and on

organisation of the continuity of medi-

cal care through innovative mechanisms

intended to strengthen involvement of

municipal doctors and strengthen the

possibilities of specialised care facilities.

The first two plans were very poorly

structured in terms of management and

tracking. However, for the third, the

direct management mission placed

directly under the President of the

Republic allows all players to be mobili-

sed and avoided any disintegration of

the plan’s implementation.

A hard to measure financial

effort

This is especially true for the first

two plans, for lack of budget estimates

and accurate assessment. The projected

budget for the third plan (

€

1.6 billion

over five years including

€

226 million

for the health component), presented as

financed by medical deductions then

created, proved to be approximate and a

close monitoring of expenses actually

disbursed was not possible.

The esti-

mate made shows however an underper-

formance of the forecast financial enve-

lope, with the rate of overall achieve-

ment only being 31.54% by the end of

2011. This result is explained by the

slow deployment of new mechanisms,

delays in their design and underestima-

ted implementation: in September 2012

the various measures of the plan were

on average implemented at 83% of the

final objective.

Summaries

of the Annual Public Report by the Court of Accounts

Summaries

of the Annual Public Report by the Court of Accounts

Gradual organisation of a care

pathway that is still unfinished

A diagnosis offer that is now acces-

sible throughout the territory. It is based

on 469 local memory consultations arti-

culated with 28 memory resource and

research centres, with practices that are

very heterogeneous, however. A natio-

nal Alzheimer’s Bank was created in

2009 to enable epidemiological monito-

ring of the disease, but all the memory

consultations do not supply it.

Home medical monitoring is still in

the process of being organized. Specific

consultations by the GP for the patient

and the caregiver, experiments with new

methods of remunerations of health

professionals and creation of Alzheimer

specialist staff grouping several health

professions have however begun to

reposition the treating physician to the

centre of patient care for the disease.

However, only 273 Alzheimer places out

of 500 planned were operational by

June 2012.

Deployment of dedicated hospitals

created by the third plan has had delays:

only 55 reinforced accommodation

units (out of 109 planned) and 77 cog-

nitive-behavioural units (out of 120

planned) were actually opened by

December 2012.

An essential assessment of drug

management and the research

strategy

Initiatives have been undertaken to

best monitor the undesirable effects of

drugs used by Alzheimer’s patients and

to reduce the inappropriate use of neu-

roleptics. However, the downward reas-

sessment by the High Health Authority

in October 2011 of the medical service

rendered by four drugs used calls for a

quick performance of a strict medico-

economic assessment of the contribu-

tion of these products in terms of their

costs

for

the

community

(about

€

380 million in 2012).

The third plan has driven a real

dynamic for research by devoting

€

192 million and by creating a specialist

operator: the Alzheimer’s Scientific

Cooperation Foundation. The results,

especially in terms of developing new

tools for diagnosis as well as preventive

and curative treatments should be care-

fully assessed according to a calendar to

be determined.

the fight against Alzheimer’s disease

–

proceed with methodical assess-

ment of new mechanisms for care

before planning their renewal and sus-

tainability;

–

make a rigorous medico-econo-

mic assessment of drugs used for trea-

ting Alzheimer’s disease;

–

strictly enforce for all memory

consultations the obligation to docu-

ment the national Alzheimer’s Bank;

–

if a new Alzheimer’s plan is laun-

ched, organise accurate financial moni-

toring using a methodology that is

common to all the various administra-

tions concerned.

Recommendations

Summaries

of the Annual Public Report by the Court of Accounts

the fight against Alzheimer’s disease

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

Hospital restructuring:

three illustrations of

difficulties encountered

The reconstruction of the hospital

landscape undertaken over fifteen years

remains unfinished today and only

imperfectly meets the needs of the

population, as already noted by the

Court in its annual report on application

of the laws for financing social security

for 2008.

the Court and Regional Chambers

of Accounts examined, in 2012, three

examples

restructuring:

the

Perpignan hospitals in the Eastern

Pyrenees (1,151 beds), the Nord-Deux-

Sèvres in Deux-Sèvres (316 beds) and

the Albertville-Moutiers in Savoie

(544 beds).

Long project lead times

In spite of uneven financial chal-

lenges, the three projects have each had

a lot of trouble to get underway: it took

between ten and twenty years to make

the necessary decisions.

In Perpignan, reconstruction of the

old hospital, the decision of which was

made in 1993, was completed in 2012,

but with completion of only two sec-

tions out of the originally planned four.

The Nord-Deux-Sevres hospital has

not yet seen concrete completion, des-

pite three successive projects.

In the Tarentaise Valley, after the

difficult agreement on merging only two

entities (Albertville and Moutiers) out of

the originally planned three (with

Bourg-Saint-Maurice), and after five

successive projects, the new health care

facility is still not built.

Ambiguous roles of administra-

tive supervision

At Perpignan, several projects for

reconstruction of the old hospital were

successively rejected by the regional

hospital board then by the regional

health board without a global reflection

being carried out on the new hospital’s

activity.

The Nord-Deux-Sèvres hospital,

resulting from the merger of three hos-

pitals, experienced a deteriorating situa-

tion, especially due to the lack of admi-

nistrative supervision on the selection of

the type of organisation to be establi-

shed and the level of financing to plan

for.

In Tarentaise, the Ministry of

Health and the regional health board has

long insisted on the urgency of a mer-

ger, but the various players, institution,

medical community, elected representa-

tives and ministry, have not succeeded in

agreeing on an efficient and economical

grouping.

Summaries

of the Annual Public Report by the Court of Accounts

Hospital restructuring

Financially damaging delays

Successive projects for reconstruc-

tion of the Perpignan hospital have

incurred, since 1993, numerous useless

expenses and the financial scope of the

project has increase by 63% in constant

Euros, with the consequence of mort-

gaging the hospital’s financial situation

for a long time.

Similarly, for the Nord-Deux-Sèvres

hospital, the sustainability of the new

project, valued at

€

106 million, remains

uncertain.

The

financing

plan

for

the

Albertville-Moutiers hospital (CHAM)

also seems to be unrealistic in terms of

its activity and ability to ensure the

balance of the resulting operations.

A still inadequate health care

offer

At Perpignan, the new hospital was

built on its former site, which does not

allow for an extension. The architectural

choice is unsatisfactory and completion

of two additional sections planned

seems very hypothetical.

For the two other projects studied,

but not yet finally decided or financed,

these only very imperfectly meet the

needs of the population.

Consequently, the Court believes

that there is still time to reconsider them

and credibly define future activity of the

institutions within the framework of a

consistent and global approach to provi-

ding local health care.

The Court persists in its 2008

recommendations

revive

and

streamline the restructuring plans. It

insists on the need for State services to

define national hospital restructuring

goals, strengthen the means for action

by regional health boards to support

their decisions, in an increasingly diffi-

cult context of fighting social deficits.

Regarding projects that do not cur-

rently appear satisfactory from the

point of view of the medical organisa-

tion in the territory concerned, the

Court and the regional court of

accounts make the following recom-

mendations:

–

redefine projects by integrating

them in a rigorous and consistent

approach taking into account the ove-

rall local supply and demand for care;

–

ensure that hospital restructuring

projects actually achieve all the opera-

ting savings for which they offer the

opportunity.

Recommendations

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

the attending physician

and coordinated care:

an unachieved reform

Since the law of August 13, 2004,

regarding

health

insurance,

every

socially insured person over 16 years old

is encouraged to designate an attending

physician. the Court sought to assess the

actual contribution of this innovation,

presented as a major structural reform

of health organisation.

An ambitious mechanism, redu-

ced to a complex rate pathway

for insured persons

The 2004 reform systematized the

practice of family physician by provi-

ding that any patient declares a doctor

of their choice, called attending physi-

cians, and then aside from exceptions

(psychiatrists, gynaecologists, ophthal-

mologists), only consults other doctors,

called corresponding physicians, upon

referral by the attending physician. To

preserve patient freedom of choice, des-

ignation of an attending physician, who

could be a general practitioner or a spe-

cialist, is not compulsory. If the insured

person abstains or directly consults ano-

ther practitioner without referral from

their attending physician and thereby

does not respect the coordinated care

pathway, they are penalised by a signifi-

cant increase in the share not covered by

health insurance (70% instead of 30%),

without the possibility of supplemen-

tary insurance covering the increase.

In this way, and despite various

administrative obstacles, the proportion

of insured persons who declared an

attending physician (95% being a GP),

already at 80% in May 2006, reached

90% by December 2011, the date on

which medical consultations conducted

under the care pathway represented

91% of the total (other than emergen-

cies and other excluded actions).

The reform thus instituted a France-

style

gatekeeper

loosely based on the

British scheme where going through a

general practitioner is compulsory.

Unlike the British system where eve-

ryone is required to register with a gene-

ral practitioner, who is paid on the basis

of the number of his patients, who

treats freely and directs patients if

necessary to a specialist or a hospital,

the French system preserves the funda-

mentals of liberal medicine such as free

choice of doctor by the patient and fee-

for-service.

Establishment of the attending phy-

sician primarily means for the insured

person a rate pathway that is considera-

bly complex, with its main objective

limiting the costs of health insurance

reimbursements.

Indeed,

concerns

about this and of liberal physicians

unions, to which operational implemen-

Summaries

of the Annual Public Report by the Court of Accounts

the attending physician and

the coordinated care pathway

tation of the mechanism has been dele-

gated, have largely taken over from the

medical content.

A determining factor for diversi-

fication of

physicians remuneration

In a context marked by the persis-

tence of high deficits and a desire for

financial recovery, health insurance was

based on establishment of the attending

physician to favour targeted increases,

according to the different methods bet-

ween general practitioners and specia-

lists. The financial effort (

€

600 million

per year) has been paradoxically more

favourable to the specialists than gene-

ralists, who are supposed to be the keys-

tone of the mechanism.

As a consequence of the legal rela-

tionship established between the atten-

ding physician and the insured person,

by a reciprocal and formal designation,

any general physician now sees himself

attached to a clearly defined population

of patients. Health insurance thus has

found the necessary tool for establish-

ment of progressive positive incentives

to control medical health expenses, by

complementing fee-for-service, which

remains primary, with a modulated per-

formance remuneration based on rea-

ching quantified objectives and plans

intended to respond to certain particular

missions.

In regard of these proven additional

costs, the savings expected from optimi-

sation of health care has never given rise

to assessment.

Reform still unattained

Eight years after creating the atten-

ding physician, the aging population,

development of chronic pathologies

and changes in the medical demography

makes the need to generalise the “medi-

cal

pathway”

even

acute.

Experiments

aimed

supporting

patients being linked and coordinated

between the various players of the care

system have certainly increased but in

the greatest disorder and doing little to

call on the attending physician.

The lack of formal relations bet-

ween attending and corresponding phy-

sicians, coupled with delays in personal

health record, has contributed to remo-

ving any medical content from the coor-

dinated care pathway idea, each player

tending to want coordination to be exer-

cised from their own sphere of respon-

sibility. The result is a landscape blurred

at the expense of efficient patient sup-

port.

–

clearly reaffirm the attending

physician as the care coordinator for

his patients in relation to all other

health system players;

–

promptly make available to him

the needed tools for his mission and

relationship with other care system

stakeholders, including:

- secure messaging;

- a personal health record for each

patient, fully including their operatio-

nal concerns and incorporating the

annual summary component provided

for

the

Convention

July 26, 2011;

–

putting in place a mechanism for

rigorous assessment of additional

compensation to be provided to physi-

cians and make any new changes

relying on documented evidence of

efficiency gains for the care system

and savings for health insurance;

–

facilitate the administrative-tariff

pathway for the insured person, inclu-

ding:

- by removing the obligation to

again declare the attending physician if

changing regime;

- by studying removal of “authori-

sed overruns” billable by a specialist at

conventional fees (sector 1) to a

patient outside the coordinated care

pathway;

- by ensuring that any patient can

be offered a coordinated care pathway

with binding tariffs.

Recommendations

Summaries

of the Annual Public Report by the

Court of Accounts

the attending physician and

the coordinated care pathway

Court of Accounts

the “in activity” RSA:

a little sought benefit,

limited impact

The “in activity” RSA is an integral

part of a unique benefit, broader in

scope, the Revenu de solidarite active

(RSA -

earned income supplement

)

whose main feature is to both ensure a

guaranteed minimum income to unem-

ployed persons and to provide an

income supplement to those who work.

The “in activity” component of the

RSA is an ambitious and innovative pro-

jects: to make, regardless of the dura-

tion of work, employment always more

rewarding than inactivity and thereby to

contribute to combating employment

poverty.

Implemented despite the economic

crisis upsetting the labour market, this

benefit is struggling to meet the objec-

tives set for it by law.

two thirds of eligible house-

holds have not applied for the

“in activity” RSA.

Non-use of the “in activity” RSA,

considered too complex and stigmati-

sing by the public likely to benefit, is two

times higher than for other social bene-

fits: although the eligible populations

was estimated at about 1.7 million hou-

seholds, the number of beneficiaries has

been stagnant for two years at about

500,000.

This situation is the source of over-

funding of the measure and the use for

other purposes of extrabudgetary funds

allocated to the Fonds national des soli-

darités active (FNSA -

National earned

income funds

the “in activity” RSA suffers

from several major structural

defects

The “in activity” RSA pursues seve-

ral objectives that are hardly compatible

with each other, resulting in an unsatis-

factory

compromise

between

employment incentive measure, which

should be more individual, and a highly

family oriented measure aiming to sup-

plement household earnings.

The uniformity of treatment reser-

ved for different populations with

regard to their level of integration in

employment is a significant factor for

non-use of the benefit.

Finally, the methods for calculating

the benefit limit is impact on the reve-

nue of poor workers:

- the scale and method of calcula-

tion do not always allow recipient hou-

seholds to get out of poverty;

- the rules for taking family allo-

wances into account for calculation of

the allowance leads to excluding couples

with several children, for which the

Summaries

of the Annual Public Report by the Court of Accounts

employment premium (PPE) is more

attractive and easier to collect.

the lack of coordination with

other aid undermines its

effectiveness.

The structure is still inadequate with

certain social benefits (including hou-

sing benefits) and with the social aid

mechanisms set up by local authorities,

which can lead to significantly reducing

gains from returning to work.

In addition, the maintaining of a

measure of incentive allowing the com-

bination during the first three months

earnings revenue with the “base” RSA,

resulting in a reduction in revenue for

the beneficiary upon payment of the “in

activity” RSA.

Finally, coexistence with other

incentive measures and specifically with

the employment premium (PPE) whose

automatic receipt is much easier, works

against the “in activity” RSA.

With these faults, it seems that an

upturn of the labour market and better

information to the eligible public would

not be sufficient to significantly improve

the benefits performance if was not

accompanied by a system of work

incentives and organization around the

“in activity” RSA and the PPE.

the “in activity” RSA

Summaries

of the Annual Public Report by the

Court of Accounts

–

immediately undertake a study

on the structure between the “in acti-

vity” RSA and the PPE, with the

objective of organizing the comple-

mentarity between a social benefit (the

RSA) encouraging inactive persons to

take up or retake an activity and tax

measure (the PPE) benefiting low

income workers with modest revenues

to encourage them to continue

employment;

–

eliminate the period of full

accumulation between the “base” RSA

and activity revenues;

–

make sure to avoid threshold

effects and situations of revenue loss

during the recovery of activity by

structuring more social benefits and

incentive mechanisms and by conti-

nuing the reform of related rights;

–

replace the social and professio-

nal support at the centre of the

mechanism and for this undertake a

reform of aide personnalisée de retour

à l’emploi (APRE -

personalized

return to work assistance

) on the basis

of the evaluation that must be under-

taken from 2013;

–

complete the study required by

the Law of December 1, 2008, on the

possible replacement of the allocation

de solidarité spécifique (ASS -

specific

solidarity allowance

) by the RSA ;

–

return to a more rigorous mana-

gement of the Fonds national des soli-

darités active (FNSA -

National earned

income funds

Recommendations

the “in activity” RSA

Summaries

of the Annual Public Report by the

Court of Accounts

Inserm and the life sciences:

new challenges in a strategic

sector

Research in the life sciences, the pri-

mary research sector in France, is the

first priority under the stratégie natio-

nale de recherche et d’innovation (SNRI

National Research and Innovation

Strategy

) for the 2009-2012 period.

As a result of the Planning Act of

April 18, 2006, for research, the histori-

cal role of players has evolved and new

organizations dedicated to strategy,

planning, financing and assessment have

been created.

Declaration of Inserm’s place

Thanks to its staff’s success, Inserm

has benefited from the growth in finan-

cing of research by calls for projects: its

revenues have increased by 35% since

2006 and the share of external resources

represents close to 32% in 2011, compa-

red to 22% in 2006.

In parallel, the number of Inserm

publications and their share in French

publications has increased. The function

of valuation, entrusted to the Transfert

subsidiary of Inserm, has had encoura-

ging results.

Faced with the complexity of the

life sciences research organization (crea-

tion of new instruments for scientific

cooperation and autonomous funding

agencies), a role of steering and coordi-

nation was entrusted to Inserm in 2007.

The institute has played a major role in

creation of the Alliance pour les

Sciences de la vie et la Santé (AVIESAN

Alliance for Life Sciences and Health

)

in 2009. This constitutes a framework

for coordination of the main public

players.

Difficulties related to recent

reforms

Inserm’s dynamism in obtaining cre-

dits on projects has resulted in a signifi-

cant increase in staff recruited under

research contracts. These fixed term

contracts (CDD) create a social, legal

and financial risk, since 515 of these

contractors would be eligible for tenure.

The valuation borne by Inserm

Transfert risks being affected by the

establishment of companies for accele-

ration of technology transfer (SATT),

financed by the future investments pro-

gram.

The division of roles between

AVIESAN and the other players (State,

research operators, National Research

Agency (ANR)) is not sufficiently clear

concerning the definition of strategic

priorities, the consistency of financing

granted with these priorities, the plan-

ning of calls for projects or the opera-

tional coordination of different players.

Summaries

of the Annual Public Report by the

Court of Accounts

Structural problems persist des-

pite reforms

Steering joint research units, associa-

ting several institutions, has not signifi-

cantly progressed.

The diversity of public funding

sources and the absence of a consolida-

ted vision of credits always weigh down

the sectors abilities for strategic and

budget direction.

Finally, the increase in the budget

for the life sciences remains relative

compared to the United States, the

United Kingdom and Germany.

Inserm and the life sciences:

Summaries

of the Annual Public Report by the

Court of Accounts

–

clarify the procedures involving

the different players for life science

and

health

research

(ministries,

alliance, national research agency,

research operators) to ensure:

- definition of strategic research

priorities;

- planning calls for projects and the

consistency of financing granted with

the strategic priorities;

- operational coordination of dif-

ferent players in research;

–

maintaining the positive dyna-

mics of valuation of biomedical

research

supported

Inserm

Transfert;

–

providing the State with a global

vision of public resources dedicated to

research in the life sciences;

–

defining and implementing the

common administrative management

processes and tools for joint units and

creating the indicators that permit

monitoring of human and financial

resources of units;

–

re-examining the rules attached

to recruitment and management of

staff financed by research contracts.

Recommendations

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

Graduate business and

management schools:

a development to be regulated

Graduate business and management

schools (ESCG -

écoles supérieures de

commerce et de gestion

), examined by

the Court and the regional court of

accounts,

are

training

institutions

dependent on a chamber of commerce

and industry, recognized by the State

and authorized to issue a master’s

degree under the Ministry of Higher

Education and Research.

These schools play an important

role

alongside

universities

the

Francophone landscape of higher

management education: numbering 29,

in 2011 they trained over 135,000 stu-

dents and represented one third of stu-

dent bodies in management at bachelors

levels +4 and +5.

A change made necessary by

globalization

To confront international competi-

tion, recruitment of high-level profes-

sors in these schools and building

foreign networks became necessary.

However, this policy increases the bur-

den on schools at a time when public

financial resources are becoming scarce.

The resulting pinch effect led the

ESCGs to increase their student enrol-

ments and tuition fees while reducing

the cost of their investments.

An enviable international posi-

tion

In a market for management trai-

ning dominated by Anglo-Saxon institu-

tions, French schools have been able to

occupy an enviable international posi-

tion that has emerged over the last

20 years. The international performance

of the French model of leading busi-

ness schools is confirmed by the 2012

Financial Times

ranking of the best

Masters in Management

worldwide : out

of the first one hundred training institu-

tions, nineteen ESCG schools ranked in

these including three among the first

five.

Some schools at the crossroads

The critical size of schools and

adaptation

their

organizations

remains a serious challenge for the

future of each school and in addition

for French consular higher education,

since they determine access to the mar-

ket for international education. The

ESCGs must make strategic choices for

closer ties with other schools if they

wish to compete in the elite or refocus

on their regional and national markets.

Summaries

of the Annual Public Report by the

Court of Accounts

necessary regulation

Unlike the universities placed under

the sole authority of the Ministry of

Higher

Education

and

Research

(MESR), the ESCGs are under the dual

supervision of the Ministry of Industry,

for financial aspects through the

Chambers of Commerce and Industry

and through the MESR for awarding of

degrees.

The

Court

regrets

that

the

Chambers of Commerce and Industry

have not sought to analyse and have

more control over the relevance of the

fit between their schools, apparently lea-

ving it to the market to arbitrate in the

absence of regulatory mechanisms.

In 2012, to improve and consolidate

the role of ESCGs in higher manage-

ment education, some choices that are

the State’s responsibility must be made.

Graduate business and management schools:

–

undertake a reflection on the sta-

tus of ESCGs and the place of the

Chambers of Commerce and Industry

and the State in the mechanism, to

have the financial means to carry out

suitable strategies, while giving more

autonomy to the schools in their

governance;

–

ensure that the large increase in

tuition fees is offset by systems of

scholarships, loans or apprenticeship,

allowing each student to follow these

training programs based on their indi-

vidual merits, regardless of their

income or those of their family;

–

have better control of costs and

consistency of choices made regarding

making studies more academic and the

internationalization of curricula with

the size and positioning of schools in

the supply of management training ;

–

strengthen the audit activities of

the commission d’évaluation des for-

mations et diplômes de gestion

[National

Commission

for

the

Evaluation

Training

and

Qualifications in Management]

on the

quality of ESCG degrees, whether

issued in France or abroad, and on

schools’ obligations on informing stu-

dents on the name of diplomas.

Recommendations

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

the joint transport syndicate

of Greater toulouse:

a necessary adaptation to

network growth

Greater Toulouse has seen popula-

tion growth of over 20,000 inhabitants

per year on average and has over

1.2 million inhabitants. Saturation of the

road network and the constant increase

in public transport ridership makes the

issue of urban transport a major chal-

lenge.

The central player in urban trans-

port policy is the Greater Toulouse

Syndicat Mixte des Transports en

Commun

(SMTC

Joint

public

Transport Commission

), controlled by

the Midi-Pyrénées regional court of

accounts.

An inadequate

institutional organization

Institutional rules, including that of

unanimity, which govern the Joint

Commission

sometimes

cause

blockages in the decision-making pro-

cess. Adopting an urban mobility plan

has required nearly ten years of negotia-

tions. Finally, some structural projects

are delayed and coordination of urban

planning and transport policies remains

very imperfect.

An operation more financed by

taxpayers than users

The method of financing transport

operation is now showing its limits.

Although until now transport fares

ensured a steady growth in revenues,

this source of financing has tended to

stabilize since 2009. However, financing

of the Toulouse network is marked by

pricing that leaves ample room for free

travel since more than one third of tra-

vellers do not pay for their ticket. In

2010, free travel and the new “youth”

fare have therefore resulted in a cost of

close to

€

22 million per year for the

operator.

Financing of operations therefore

rests mainly on taxpayers, through pay-

ment for transport and participation of

communities in the Joint Commission,

including the Urban Community of

Greater Toulouse.

Yet despite the increase in the

contribution by Greater Toulouse,

which doubled its participation to

€

million,

financial

equilibrium

remains

precarious.

The

Joint

Commission even had to use an accoun-

Summaries

of the Annual Public Report by the Court of Accounts

ting device, by neutralizing its deprecia-

tion, to balance its operating section.

This budgetary practice constitutes

a solution that is both precarious and

unorthodox. It reveals the lack of ove-

rall financial strategy of the Joint

Commission and member communities.

the issue of financing invest-

ment

Already heavily indebted by its pre-

vious

investments,

the

Joint

Commission today has limited financing

capacity. However, to meet growing

demand, it has set investment objectives

that are very ambitious but which, in

view of its financial constraints, seem

oversized, amounting to

€

30 million per

year.

It is therefore imperative for the

Joint Commission to redefine its finan-

cial pact and also to review the rule of

unanimity, to envisage an urban trans-

port policy which can be built over the

long term.

For the Joint Commission and all

local authorities concerned:

–

formalize the partnerships bet-

ween local urban planning partici-

pants, taking into account the develop-

ment of potential demand for trans-

port, including during the launch of

the urban expansion project;

–

re-examine the conditions for

free access to the service which cur-

rently greatly hinders the growth of

commercial revenues and does not

generate sufficient self-financing;

–

finance the investments, by pre-

ferring unhindered self-financing, par-

ticipation by member communities

and third party subsidies, taking into

account the current level of debt,

which has reached a critical threshold;

–

reconsider the rule of unanimity

improve

efficiency

the

Commission’s

internal

decision-

making process ;

–

define a new financial pact bet-

ween all the municipalities concerned

and

applicable

with

the

Departement de la Haute-Garonne, in

view of providing the Commission

with sustainable financial perspectives.

Recommendations

the Greater toulouse Joint urban

transport Commission

Court of Accounts

the Artois Gohelle (Pas-de-Calais)

tramway project: an insufficiently

thought out project

The Artois Gohelle Transport Joint

Commission decided in 2008 to create

public transport on dedicated corridor,

at a cost estimated in 2009 at

€

657 mil-

lion, excluding taxes. This project

involves the simultaneous construction

of two lines with no connection bet-

ween them over 37 kilometres, along

two axes: Liévin - Lens- Hénin-

Beaumont for one, and Beuvry -

Béthune- Bruay-la-Buissière - Houdain

for the other.

An ambiguous project

The public transport project also

includes a renovation and urban renewal

component.

This dual ambition feeds ambiguity

resulting from a lack of prior thought

and the absence of consensus on the

project’s

consistency.

The

Urban

Mobility Plan adopted in 2006 only

covers the territory of the founding

communities, those of Lens-Liévin and

Hénin-Carvin. It does not incorporate

the Greater Artois community and the

municipal communities of Noeux and

Environs, which became members of

the Joint Commission in 2006.

As for the urban development

dimension, it is completely outside the

jurisdiction of the Commission, which

is limited to transport.

Definition of the project is difficult.

The need to choose a technical option,

single track or double track, appeared

late. The route Line Nº 1 was only fro-

zen in April 2011; but at the same time

it was challenged by the possibility that

the project would be abandoned due to

lack of consensus.

uncertain funding

Based on initial summary studies,

the assessment of expenses appeared to

be underestimated.

The accumulation of delays com-

promised the State subsidy of

€

57.6 mil-

lion obtained under the “Grenelle

Environment Forum”. Financing of the

project is also based on an increase in

the transport contribution, which was

increased in July 2010 to 1.80% .

If the

work does not begin before July 1, 2013,

this rate will be reduced to 1.05% .

This

business tax is strictly reserved for

urban passenger transport. It cannot

finance, even partially, urban develop-

ment. However, the project’s financing

plan does not distinguish between finan-

cing of these developments and does

not provide for any participation of the

communities concerned in this regard.

Summaries

of the Annual Public Report by the

Court of Accounts

the Artois Gohelle tramway Project

(Pas-de-Calais)

Incompetent project

management

Insufficiently staffed with personnel

skilled

urban

transport,

the

Commission delegated project manage-

ment by entrusting project performance

to an agent, under the conditions provi-

ded in the Law of July 12, 1985, relating

to public project management.

At the end of a selection process,

the methods of which appear to be

questionable with regards to the princi-

ples of transparency and equality that

govern public procurement, the choice

was made for a regional Société d’Éco-

nomie Mixte (SEM -

Semi-Public

Company

), a specialist in development

and construction operations but incom-

petent in public transport.

Therefore, it has contracted a sub-

contractor specializing in this field,

under irregular conditions under the law

respecting public contracting. The

imprecise definition of the subcontrac-

ted services had the effect of establish

dual control of the operation, causing

confusion.

To date, this operation seems to be

at an impasse and could be totally or

partially called into question.

Summaries

of the Annual Public Report by the Court of Accounts

the Artois Gohelle tramway Project

(Pas-de-Calais)

Summaries

of the Annual Public Report by the Court of Accounts

–

adapt the technical, administra-

tive and financial powers of the

Commission to the design and monito-

ring of a resulting project;

–

prepare, as soon as possible, an

urban transport plan covering the

entire scope of urban transport rela-

ting to the Commission.

–

insert the public transport pro-

ject definition on dedicated corridor,

including the route of tramway lines, in

a common reflection that includes the

various surrounding transport authori-

ties including the region and depart-

ment, so as to ensure consistency and

complementarity of urban and interur-

ban transport modes;

–

ensure use of the transport pay-

ment product in accordance with its

legal purpose which induces particu-

larly the mobilization of community or

intercommunity finances for the work

in excess of the strict domain of urban

transport.

–

In addition, it would be desirable

to set out the conditions for implemen-

ting the increase in the transport tax

rate authorized by the provisions of

Article L. 2333-67 of the CGCT, when

the population of the municipality or

public cooperation institution is grea-

ter than 100 000 inhabitants and the

urban transport authority has decided

to build a public transport infrastruc-

ture with a road or tracked mode.

Indeed, the insufficient maturity of

the project could lead to premature or

useless mobilization of this supple-

mentary tax resource.

Recommendations

Summaries

of the Annual Public Report by the Court of Accounts

Court of Accounts

Participation of local authorities

in financing of the Ligne à Grande

Vitesse Est (LGV Est): costly coun-

terparts, one station too many

The high speed line East (LGV Est),

inaugurated in June 2007, will link Paris

to Strasbourg over 406 km upon com-

pletion in March 2016, and will continue

to Germany. Trains from the German

company Deutsche Bahn are running

already, as are those of the SNCF.

Although passenger traffic is higher

than expected - 13 million in 2011 - the

economic impact for local authorities

has yet to be measured.

A complex

financing

Financing

the

LGV

Est

construction work, divided into two

phases so as to avoid delaying opening

of the line, presents a novel character:

the State, as the primary financier, is

associated with the local authorities, the

second source of funding, and with the

Réseau Ferré de France (RFF -

French

Rail Network

), as well as the European

Union and the Grand Duchy of

Luxembourg.

The financing plan has been slow to

develop because of the significant num-

ber of communities concerned, sixteen

in the Champagne-Ardenne, Lorraine

and Alsace, plus the Île-de-France

region.

The search for co-financing and

competition between the communities

for access to the TGV has weakened the

project’s direction.

Questionable choices of invest-

ment

The choice of location of the

Lorraine TGV station has been the sub-

ject of difficult negotiations. Originally,

it was planned to be located between

Nancy and Metz. The Cheminot-

Louvigny

site

has

been

selected.

However the station located there has

not interconnection with the Nancy-

Metz TER line. Despite this choice, the

project to locate another station at

Vandières, better served, has not been

abandoned; financing is however not yet

defined. If the full project is completed,

it would lead to construction of two

TGV stations, located at least 20 km

apart, for a total cost of

€

156 million.

Operating deficits at the com-

munities’ expense

The demand for regular direct ser-

vice by the TGV, from stations not loca-

ted on the high speed line has also led

the communities involved to finance the

Participation of local authorities in financing the

High Speed East line (LGV Est)

Summaries

of the Annual Public Report by the Court of Accounts

For the State and RFF:

–

ensure, by seeking co-financing

from the local authorities for major

transport infrastructures, to preserve

the project’s course, optimizing the

high speed line’s route and the equili-

brium of its future operation;

–

suspend performance of work

on the Vandières station up to the time

when traffic evolution ensures the

project’s socio-economic profitability;

For the local authorities:

–

limit, in case of co-financing, the

number of participating communities;

promote and assign the role of leader

to the region;

–

inform the financial participa-

tion of communities by prior assess-

ments of the choices of the lines

routes and service lines, complemen-

ting the overall assessments done by

RFF;

For the State, RFF, and local

authorities:

–

exclude the location of TGV

stations in open country without inter-

connection to the regional transport

network;

For the SNCF and RFF:

–

provide better information to

the local authorities on the results of

traffic, possibly with a confidentiality

clause.

Recommendations

corresponding operating deficits, while

the sustainability of some of them is

still not assured.

uncertainty about

economic benefits

The economic benefits for the local

authorities concerned still seem to be

uncertain. Some communities have

nonetheless proceeded, at stations ser-

ved by the TGV, with major urban deve-

lopments, particularly by building office

buildings or shops. Projects which they

have co-financed, whether the high

speed line or service lines, have not been

the subject of a priori evaluations or

retrospective assessments. These assess-

ments are also hampered by the reti-

cence of the SNCF to supply precise

data on traffic, for reasons of commer-

cial confidentiality.

Summaries

of the Annual Public Report by the Court of Accounts

Court of Accounts

Management of Brittany

fishing ports:

regional steering to be

strengthened

Although it represents 46% of the

value of seafood products marketed in

the seafood markets in France in 2011,

Breton fishing declined significantly

including the disappearance of half the

ships and fishermen in the last 20 years.

Operation of fishing ports adap-

ted to a context of crisis

Faced with an acute crisis, the opera-

tors have developed new services such

as online sales which expands the

demand or transportation assistance to

supply certain seafood markets with fish

unloaded at other ports. Human and

technical resources have sometimes

been pooled. However, the port supply

now seems excessive in some coastal

areas.

The fishing port facilities fee

(REPP -

redevance d’équipement des

ports de pêche

) is the main operating

revenue

for

concession

holders.

Regulation governing it is subject to

interpretation, generating tensions bet-

ween the ports. Thus, the REPP prima-

rily benefits unloading ports and not

those with seafood markets where the

large part of services borne by opera-

tors are concentrated.

Investments financed largely by

public aid

Some ports, particularly on the

north coast of Brittany, have conducted

extension work to improve the condi-

tions for management of vessels and

allow additional boats to be received.

Other ports have conducted major

health and environmental standardiza-

tion work to sustain activity, especially in

South Brittany.

Financing these investments is only

provided through major subsidies,

which can represent up to 80% of the

cost of equipment.

Inadequate concession holder

contracts

Concession holder contracts, often

old, are neither suitable nor fully respec-

ted. Concession holders are responsible

for the choice and project management

of investments while they only partially

finance them. When renewing existing

contracts, the concession holders could

retain responsibility for project manage-

ment of infrastructure investments.

Management of Brittany fishing ports:

Summaries

of the Annual Public Report by the

Court of Accounts

Relationships between local

authorities to be reviewed

The powers of different levels of

local authorities should be clarified.

Three of the Breton fishing ports

having a seafood market belong to the

region (Saint-Malo, Lorient and Brest),

the others are the property of depart-

ments. This sharing of powers between

these two levels of authorities does not

always favour consistency and relevancy

of regional port investments.

For

management

Brittany

fishing ports:

–

pursue the efforts to streamline

the supply of ports, particularly in

Cornouaille;

–

sharing good practices for all

ports;

–

applying a uniform policy of

royalties;

–

better defining accounting proce-

dures for closing concessions to secure

current concession holder manage-

ment;

–

define the respective roles of

delegators and delegatees better, for

carrying out investments, by favouring

on tenancy for the next public service

delegations;

–

strengthening the role of the

Brittany region in the choice of port

infrastructure by providing for esta-

blishment of a regional fishing port

equipment plan contracted between

the departments and the region, which

would set the list and location of

investments to be made;

For the State and the national

fishing port management policy:

–

review the regulations on the

fishing port equipment fee to take into

account new practices of ship-owners;

–

harmonize taxation applicable to

fishing ports;

–

examine the possibility of modi-

fying the division of powers relating to

fishing port management between

local authorities, by strengthening the

steering role of the region;

Recommendations

Summaries

of the Annual Public Report by the Court of Accounts

Court of Accounts

the State’s support of

tobacconists:

unjustified aid

The State’s financial support of

tobacconists is old. Establishment of

future contracts beginning in 2004 signi-

ficantly strengthened it. These grants,

designed to support a profession which

it was felt was weakened by the rise in

tobacco prices, proved unjustified and

costly. Under the guise of breaking, the

current future contract (2012-2016) per-

petuates this situation. A rapid and com-

plete reconsideration of this mechanism

is therefore imperative.

Assistance to the profession:

“

future contracts” were added

to traditional assistance

The State’s financial support of

tobacconists is old. It funds up to two

thirds of their supplementary pension

scheme established in 1963, and has par-

ticularly subsidised securing their pre-

mises since 1995.

Future contracts signed between the

State and tobacconists were added to

these traditional assistances beginning in

2004. The first contract (2004-2007) was

primarily intended to compensate for

the losses in revenue that were presu-

med to have resulted from lower pur-

chases on the regulated market, as a

result of price increases decided by the

government for public health purposes.

The total amount of support for the

profession amounts to

€

2.6 billion bet-

ween January 1, 2004, and the end of

2011 (

€

1.4 billion for the period corres-

ponding to the first contract and

€

1.2 billion for the second), in average a

little more than

€

300 million per year.

unjustified aid, causing massive

windfall effects

Contrary to the initially pessimistic

expectations, the rise in tobacco prices

between 2002 and 2003 contributed to

increasing, for tobacconists, the average

sales turnover related to tobacco.

Indeed, although the volume of sales

dropped 30%, from 90,000 tons per

year at the beginning of the 2000s to

65,000 tons per year from 2004, sales,

including taxes, grew by more than 20%

between 2002 and 2011, from

€

14.7 bil-

lion to

€

17.8 billion.

The average earnings of tobacco-

nists rose sharply, amplified by the

decline, formerly, of the number of

tobacconists. Excluding direct State aid,

earnings grew by 53.9% between 2002

and 2011, rising from

€

29,070 to

€

44,725. With this assistance, growth

was 67.1% (

€

29,070 to

€

48,564).

Summaries

of the Annual Public Report by the

Court of Accounts

Except for certain tobacconists

located in certain border areas who are

confronted with tough competition due

to tobacco prices in France, generally

higher than foreign prices, most tobac-

conists

have

received

assistance

although their sales turnover related to

tobacco had not fallen.

This situation is explained by the

lack of targeting mechanism established

by the administration which has favou-

red universal assistance, that is, benefi-

ting all tobacconists regardless of chan-

ging circumstances rather than assis-

tance granted temporarily only to tobac-

conists with a sharp fall in their activity

following the increase in tobacco prices.

the current contract: a

more apparent than real failure

The current contract (2012-2016)

provides for a better targeting of sup-

port and a considerable decrease in bud-

getary assistance, including the phasing

out

the

additional

discount.

However, alongside these measures, the

increase in the rate of net remittance,

which grew from 6.5% to 6.9% and will

generate a cumulative gain for tobacco-

nists of about

€

260 million, is expected

to fully offset the decline in budget sub-

sidies.

The failure seen is therefore more

apparent than real. Indeed, if the effort

made by the community in favour of

tobacconists spends less in the future in

payment of budgetary assistance, it will

remain overall in the same range as in

the previous contracts. It will actually

affect public finances since agreeing on

an increase in net remittance, supported

by the manufacturers, with a margin

unchanged by them the State has depri-

ved itself of the possibility to collect

additional tax revenues. In addition, the

mechanism is still less targeted than

before: given the proportional character

of the net remittance compared to the

sales turnover, this measure will increa-

singly benefit wealthy tobacconists.

the State’s financial support of tobacconists

Summaries

of the Annual Public Report by the

Court of Accounts

Recommendations

–

undertake a rapid and complete

reconsideration of the measures cho-

sen in early 2012 as “2012-2016 future

contract”;

–

leave only the structural sup-

ports (end of activity allowance, secu-

rity subsidy, public service premium)

intended to modernize the network

and strengthen tobacconists’ safety;

–

maintain, for the next four years,

the net remittance rate at the level rea-

ched on January 1st, 2012;

–

establish, after consultation with

the profession, a declining balance

mechanism for the net remittance,

based on the sales turnover level.

Summaries

of the Annual Public Report by the

Court of Accounts

the aid plan for the printed

press 2009-2011: a missed

opportunity for reform

Following the Estates-General on

the Printed Press in 2008, the President

of the Republic announced a very signi-

ficant assistance plan for the 2009-2011

period:

€

450 million in supplementary

budgetary expenses over three years,

€

5 billion taking into account the cumu-

lative cost of direct budgetary assistance

and fiscal measures over the same

period.

The government has however laun-

ched this plan without a prior diagnosis

which would have identified the most

effective support.

the predominance of emer-

gency measures to the detri-

ment of structural measures

Adoption of a moratorium on pos-

tal rates, for which the budgetary cost is

estimated at

€

32 million for 2013, has

contributed to delaying the develop-

ment of delivery of the daily press, sup-

ported by the State in respect of struc-

tural measures.

Furthermore, the high increase in

assistance for distribution of the natio-

nal daily press for political and general

information (

€

74 million in assistance

from 2009 to 2011) and the exceptional

measures in favour of press distributors

(

€

62.6 million over the same period) has

not improved the economic situation of

the two main players in press distribu-

tion: the Presstalis press courier and the

points of sale.

Modernization assistance has been

provided to printers while development

of the Internet should have been a pre-

ferred strategic component. Assistance

with social modernization of the press

has proved particularly costly, with an

average cost of over

€

150,000 per bene-

ficiary of the “Print” plan.

Ministerial direction strengthe-

ned too late

The procedures and structures that

the

Ministry

Culture

and

Communication has provided for more

effectively leading its press assistance

policy was only implemented after com-

pletion of the assistance plan. The mea-

sures provided by the decree of

April 13, 2012, are going in the right

direction but their methods of imple-

mentation are not yet set.

The

approach

multi-year

contracting undertaken with the media

companies will depend on setting pre-

cise objectives for financial support

Summaries

of the Annual Public Report by the Court of Accounts

from the State as well as effective moni-

toring of agreements.

Regarding, budgetary information,

progress has been made. But transpa-

rency now provides more complete

information on the amount of assis-

tance granted to publishers and press

owners.

It has become urgent to finalize the

methodological and operational frame-

work of control and assessment mecha-

nisms.

too timid reduction in the cost

of assistance

Credits open in 2012 in respect of

press assistance have diminished by

10% compared to 2011, but inflexibility

is delaying the return to the level of

public expenditure found before the

implementation of the 2009-2011 trien-

nial plan.

The 2013-2015 triennial program

provides for a reduction of about 13%

of budgetary credits allocated to the

printed press, without relying on a

reform of mechanisms, the only way to

generate real leeway.

A strategy for State intervention

to be rebuilt

A more selective approach and a

stronger concentration of resources on

the key objectives of the assistance

policy to the press are now imperative.

Development of distribution must

lead to consistency among the many

existing mechanisms and prepare tools

for overall steering by 2015, the date

when the agreements on postal assis-

tance expire.

Preservation of pluralism involves a

reflection on the scope of application of

preferential postal rates and the VAT

rate “super reduced” to 2.1%, in order

to better take into account the specific

situation of each press family in relation

to this objective.

Finally, for modernization of the

printed press sector, the intervention of

the strategic funds created in 2012 must

be oriented to innovative projects and

the political and general information

press.

the aid plan for the printed press 2009-2011

Recommendations

Concerning governance and mana-

gement of assistance:

–

effectively implement contrac-

ting with companies receiving subsi-

dies;

–

publish the annual amount of

assistance granted to each press title;

–

systematize the procedures for

assessment and control and improve

consistency of the mechanism;

Concerning the State’s intervention

strategy:

–

accompany the scheduled reduc-

tion of public assistance with an overall

reflection aimed at:

- ensure consistency between the

different assistances to be distributed

by 2015;

- accentuate their targeting in

favour of press families presenting

challenges in terms of pluralism;

- refocus assistance with moderni-

zation on innovative projects.

Summaries

of the Annual Public Report by the

Court of Accounts

Summaries

of the Annual Public Report by the Court of Accounts

Maintenance purchases by

the Ministry of Defence:

a high potential for savings

The Ministry of Defence is the pri-

mary buyer of the State. Every year it

brings about

€

13 billion to merchant

businesses to purchase everyday goods

and services and especially military

equipment and maintenance services for

its military equipment.

Purchases relating to equipment

maintenance,

constantly

increasing,

represent about

€

3 billion in payment

credits each year. Performance of ser-

vices responsible for these purchases is

therefore essential so that the armies

have a good level of maintenance of

their equipment at the best possible

cost.

A buyer under constraints

Three joint army services purchase,

on behalf of the armies, equipment

maintenance services; the Aircraft

Maintenance Services (SIMMAD), Fleet

support service (SSF) and the ground

equipment

maintenance

service

(SIMMT). In 2011, they consumed

€

1.95

billion,

€

630

million

and

€

460 million credits respectively.

In these services, the contracts with

the greatest financial and technical

stakes are granted to a limited number

of companies without competitive bid-

ding, these being exclusive suppliers or

monopolies. In addition, the State’s

position is sometimes ambiguous -

often present in the capital of these

companies as a minority or majority sha-

reholder, it cannot ignore the impact in

terms of industries or jobs of its pur-

chasing decisions.

Insufficient professional buyers

Although the Ministry of Defence

declares its willingness to obtain signifi-

cant savings in this domain where costs

vary while budgetary constraint is

increasing, it does not draw on the

consequences in terms of organization

and procedures which would allow it to

improve its performance.

The number and qualification of

professional buyers are insufficient, in

particular for aircraft maintenance ser-

vice, the SIMMAD, where the very low

number of professional buyers is inap-

propriate for the financial and operatio-

nal procurement issues. The Ministry

of Defence does not devote more

buyers for these crucial purchases in

terms of consumption of budgetary

resources (over

€

2 billion per year) and

of operational consequences, than for

everyday purchases (security, mainte-

nance, fluids) of a defence base, which

only represents a few million Euros.

Court of Accounts

Limited implementation of

investigative powers

The State makes insufficient use of

the

provisions

the

Public

Procurement Code which allows it,

when there is little or no competition, to

investigate the costs and margins of its

suppliers.

This power is entrusted to a cost

investigation division placed under the

central purchasing authority of the

Ministry of Defence general armament

directorate. The role that it should play

to improve negotiation conditions bet-

ween the Ministry of Defence and its

monopoly suppliers is altered by the fact

that it does not decide its investigation

program and that the maintenance ser-

vices, which depend on the general staff,

cannot use them directly.

In comparison to the United

Kingdom and Germany, this investiga-

tion service has little staff. Its powers of

investigation are limited to the phases of

completed tenders and it is not always

able to meet their obligations of trans-

parency to supplier companies. Finally,

the results of investigations are used at

the discretion of purchasing services.

Therefore, negotiations are not underta-

ken in good conditions.

Delayed negotiation for mainte-

nance of new programs

When the Ministry of Defence

acquires new military equipment it esti-

mates the cost of ownership over its

entire life, including maintenance. Since

2010 this estimation has been automatic,

which is a significant improvement over

past practices. However, maintenance

contracts remain shared between those

under the initial commissioning phase

negotiated by the DGA and the mainte-

nance contracts negotiated by the main-

tenance services. This second negotia-

tion comes when all components of the

equipment contract have been already

defined, frequently without competitive

bidding. The supplier companies provi-

ding maintenance are then in a position

of strength to obtain the highest prices

possible.

The Ministry of Defence should

involve the maintenance services well

upstream with specifying equipment

and with negotiations with the compa-

nies and seek to obtain commitments

from the industry on the future cost of

maintenance while providing some

flexibility to take into account changes

in these costs and effective use of

equipment.

Maintenance purchases

by the Ministry of Defence:

Summaries

of the Annual Public Report by the

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

Recommendations

–

strengthen and professionalize

buyer workforces for armed services

responsible for priority service within

aviation

equipment

maintenance

(SIMMAD);

–

strengthen the powers of inves-

tigators of the cost investigation divi-

sion of the DGA, by modifying the

regulatory provisions that limit their

powers of investigation a priori, so the

State buyers can appreciate the reaso-

nable

character

margins

contracts concluded with monopoly

suppliers;

–

reattach the cost investigation

division directly to the armament

Delegate General;

–

increase, within the Ministry, the

control or second opinion mecha-

nisms on buyer service practices to

avoid an excessive concentration of

functions;

–

give scope to the maintenance

services in the definition of estimated

costs of ownership to all stages of

development of an armament pro-

gram;

–

anticipate, from the acquisition

of military equipment, a part of the

negotiation on future estimated main-

tenance costs, with the industrial sup-

pliers.

On the basis of examination of a

sample of cost investigations, the

Court estimates that savings in the

order of 10% of the total of annual

maintenance service purchases, or

€

300 million, should be able to be

achieved for future maintenance

contracts of the Ministry of Defence

if these measures are implemented.

Maintenance purchases

by the Ministry of Defence:

Visa issuance and residence

permits modernization to

be accelerated and

simplifications to pursue

A complex legal framework

Since 1945, the laws relating to entry

and stay of foreigners have been amen-

ded thirty six times. Community law has

evolved, and the majority of short term

visas are now “Schengen” type. There is

a variety of permits: one year stay cards,

ten year resident cards, «skills and

talents” cards, etc. In 2009, a major sim-

plification was introduced with the crea-

tion of the long stay visa.

Increased resources for overall

stable activity

The issuance of these permits

makes use of resources of the Ministry

of the Interior, Foreign Affairs and the

French Office for Immigration and

Integration (OFII).

For 60% of visas granted, consu-

lates call upon external service provi-

ders, totalling some 700 persons, for ser-

vices paid for by the applicants. Despite

this outsourcing, consulate human

resources have held practically steady.

Those of prefectures have increased,

while the volumes processed have not

changed much: visa applications rose

from 2,411,000 in 2005 to 2,431,000 in

2011

(+1%),

visas

issued

from

2,053,000 to 2,153,000 (+5%); perma-

nent residence permits issued by the

prefectures remained nearly constant:

from 846,000 in 2006 to 849,000 in

2010, with a temporary jump in 2011

(935,000).

The total cost of visa issuance was

about

€

54.3 million in 2011 (including

€

42 million for staffing), or

€

22 per visa

issued. Revenues collected by the State

amounted to

€

116 million, or

€

54 per

visa issued.

The total cost of permanent and

temporary residence permit issuance

was about

€

121.5 million in 2011 (inclu-

ding

€

82 million for staffing), or

€

120

per permit issued. It was covered by the

fees paid by applicants.

unification of management still

yields few results

The

General

Secretariat

Immigration and Integration (SGII),

created in 2007 and today placed under

the authority of the Ministry of the

Interior, is both a source of orders, a

facilitator and a coordinator of prefec-

tures and consulates in order in particu-

lar to increase exchanges of experience.

Summaries

of the Annual Public Report by the

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

Visa issuance and residence permits

But all the expected beneficial effects

have not yet been obtained from this

reorganization.

Thus, the former computerized

applications from Ministries of the

Interior and Foreign Affairs do not

always allow for sharing of data.

Existing appointment services are not

effective. Collection of statistical data is

unreliable. The Ministry of the Interior’s

project is delayed by over two years and

that of the Ministry of Foreign Affairs

is not included in the 2013-2015 trien-

nial budget.

The combat against documentary

fraud is still inadequately coordinated

and the services are unevenly active.

Clarification of powers completed in

2012 at the central administration remai-

ned partial.

Two fraud prevention mechanisms -

the «return control” in the country of

origin and the requirement imposed on

employers to check the validity of cer-

tain work permits - should especially be

assessed.

Hard road for the residence per-

mit applicant

In the most sought for prefectures,

long queues lead to tensions, sometimes

to parallel systems for changing places

for consideration. The prefectures issue

on average 1.4 million temporary docu-

ments per year. This large number helps

to clog the wickets and testifies to orga-

nizational defects that raise questions

about the equality of treatment for dif-

ferent users.

The statement and issuance are, in

some cases, scattered, especially bet-

ween prefecture and sub-prefectures.

Several town halls and police stations

still gather applications or issue permits.

To reduce the risks of unequal treat-

ment, in 2011 the central administration

issued a receptionist’s guide which

brought together the previously scatte-

red texts and encouraged modernization

and simplification of services and

reception of the public.

“Best practices” are not automati-

cally disseminated. Some websites are

incomplete; several prefectures do not

sell the necessary tax stamps, without

notice to applicants.

Simplifications must be continued.

For example, family reunification appli-

cations are to be sent to the single OFII

but the excessive number of instruction

players, which lengthens delays, have not

been reduces.

In conclusion, in the 2006-2011

period, the resources have generally

increased while the number of applica-

tions have changed little. New avenues

for simplification of procedures must

be explored.

The coordination and exchange of

information between the prefectures,

consular posts, the OFII and the police

and gendarmerie have progressed but

the SGII does not fully perform its role

of direction, in particular for moderni-

zation of information systems and the

combat against documentary fraud.

Summaries

of the Annual Public Report by the

Court of Accounts

Visa issuance and residence permits

–

ensure compliance with the law:

- correct certain differences in

interpretation of tax law;

- remind prefectures to comply

with the requirement of physical

appearance when prescribed by the

Code of Entry and Residence of

Aliens and the right to Asylum;

- eliminate certificates of deposit

not provided for by this code;

–

facilitate the administration’s

work and the user’s pathway:

- limit the number of instructor

services for a single application;

- develop paperless operation,

remote procedures and electronic

updating of permits;

- assess the effectiveness of the

«return control» and the requirement

for employers to check the situation of

foreign employees;

–

coordinate the networks better;

- modernize computer systems by

facilitating data exchange and statistics

collection;

- designate a single interdepart-

mental correspondent responsible for

combating documentary fraud;

- develop best practices exchange

within and between networks.

Recommendations

Summaries

of the Annual Public Report by the Court of Accounts

Court of Accounts

the General Directorate of

Civil Aviation: generous and

costly social action

Social action in the public service,

enshrined in the Law of July 13, 1983,

on the rights and obligations of civil

servants, consists of all specific services

which the State grants to its active and

retired employees in the fields of food,

housing,

childcare

and

leisure.

Within the Ministry of Ecology,

Sustainable Development and Energy, it

applies in a specific manner to staff of

the General Directorate of Civil

Aviation (DGAC) and for historical rea-

sons to those of Meteo-France.

The mechanism gradually lost sight

of its mission of solidarity and now

only seeks to provide services to the lar-

gest possible number of agents.

Abundant structures for

redundant actions

Social

action

implemented

through a tangle of over 120 national,

regional and local associations. The

pooling policy performed is not up to

the challenge. In general, the administra-

tion does not perform the duties of

management and direction that fall to it.

Management of this costly mecha-

nism (

€

1,300 per agent per year) lacks

clear vision. Its effectiveness and the

rigor of its management have been

seriously affected by the dilution of

skills between its different bodies (admi-

nistration, social action committee).

A generous mechanism

The cost of a very generous policy

(more than

€

15 million annually) proves

to be higher than the appropriations

voted and allocated by Parliament

(

€

9.2 million in 2010).

In terms of investment, the “re-use”

technique, without a regulatory basis,

leads the return to social action of the

proceeds of real estate transfers which

should be dedicated to debt repayment

of the air operations Control and

Operations budget.

In addition, a “rule” without any

other legal basis than the protocol

(2007-2009) negotiated with the social

partners provides that in any construc-

tion at least 2% of the amount of the

investment must be devoted to socio-

cultural equipment.

Weak management by the

administration

The control that the administration

must exercise over the associations that

it subsidizes is, in practice, very inade-

quate. It would be even facilitated by

collecting and exploiting the informa-

tion available and improving its control

and evaluation tools. Truly objective

contracts should be entered into with

the associations concerned.

Two examples illustrate the Court’s

findings: the “Bataillet” family vacation

home (Hautes-Pyrénées), where work

was done under questionable conditions

is well maintained despite having now

lost its attractiveness, and the Maison

des

associations

Raizet

(Guadeloupe), completed in 2010, was

still not in use at the end of 2012.

Finally, the staff made available to

associations was not always under

conditions consistent with the regula-

tions. Leaves of absence granted are not

systematically recorded in the accounts.

Recommendations

–

refocus social action on solida-

rity, by supporting the administration’s

modernization;

–

significantly reduce the number

of associations supported, by favou-

ring attachment to a local social action

committee according to a principle of

service;

–

ensure that the administration

exercises its role of defining and

implementing social action;

–

finance social action by appro-

priations registered for this purpose in

the related budget;

–

develop scoreboards for effec-

tive management of social action;

–

enter into objective contracts

with associations receiving subsidies

of over

€

23,000 and periodically eva-

luate their activities;

–

define and plan all measures

relating to the closing of the Bataillet

vacation center.

Summaries

of the Annual Public Report by the Court of Accounts

the General Directorate of Civil Aviation:

Electricity distribution

concessions: organization to

be simplified, investments

to be financed

Electricity distribution includes rou-

ting it from the high voltage network’s

output to user’s meters.

An atypical and potentially

conflicting organization

Electricity distribution is managed

in the form of very specific public ser-

vice concessions on nearly the entire

national territory. Municipalities and

their groups are required to entrust elec-

tricity distribution to ERDF, a 100%

subsidiary of the EDF group, under the

law.

This organization compared to

other public service concessions is aty-

pical and potentially conflicting.

The atypical character is reflected

first of all by a distribution rate set

nationally through a cross-subsidization

that allows all consumers to pay the

same amount for electricity, unlike water

for example.

It is also reflected in the lack of

choice by granting authorities to des-

ignate their distributor, ERDF having a

legal monopoly on virtually the entire

territory.

Conversely, the granting authorities

have a power that they do not have for

the other public service concessions:

that of providing contract oversight for

certain projects in rural areas and the-

reby benefiting from financing paid by

the distributor.

The uncertainty over long term

maintenance of the ERDF monopoly

complicates relationships between the

distributor and some of the granting

authorities and could jeopardize this

balance from the post-war period.

Rising investment needs

However, in this already tense

context, the need for investments on the

distribution network is increasing:

ERDF currently invests

€

3 billion per

year on the network but this amount

could reach

€

5 billion by 2020. For their

part, the granting authorities invest

about

€

1 billion per year on the net-

work.

The current increase in investments

(from

€

1.5 billion at the beginning of

the 2000s to about

€

3 billion in 2011 for

ERDF) is explained primarily by the

need for renovation of the network

which is aging and more sensitive to cli-

matic uncertainties. The average electri-

city outage time has tended to increase

in France since the beginning of the

2000s, even though this deterioration

Court of Accounts

Summaries

of the Annual Public Report by the Court of Accounts

remains limited (50 minutes of outage

in 2000, 85 minutes in 2010, a level less

than many comparable European coun-

tries; however, Germany has a lower

average outage time).

In addition, the rise of new decen-

tralized and intermittent energy sources,

such as wind power or photovoltaics

involves building intelligent networks,

for which a primary element will be the

future Linky communicating meter. The

cost for deployment of this meter alone

is estimated at

€

4 billion.

A need to streamline expenses

Electricity distribution in France

could evolve towards two different

models: optimisation of expenses by

national management of investments,

becoming all the more necessary with

more interconnected and interdepen-

dent electrical networks, or otherwise

increasing the autonomy of local autho-

rities, in a context of less centralized

electricity production and limits to

monopolies.

In the absence of choice between

these two opposing models, the Court

recommends better regulation of invest-

ments under the current electricity dis-

tribution system and a streamlining of

expenses before increasing rates, which

assumes that:

- the ERDF distributor controls its

expenses such as staffing costs or pur-

chases;

- the ERDF shareholder, EDF and

indirectly the State, limits raising divi-

dends with the need for investments on

the network;

- the granting authorities, of which

there are still too many (736) accelerate

consolidation. In addition, funding allo-

cated to them should be simplified and

reoriented towards work that improves

the quality of the electricity;

- finally, to deal with these needs for

investment, the current electricity distri-

bution organization should be impro-

ved: coordination between ERDF

investments and granting authorities in

the form of local planning which could

be eventually consolidated nationally, to

direct efforts towards priority challenges

such as the medium voltage network

which currently is the source of most

outages.

Only after these improvements can

a rate increase be potentially considered

if there remain investments to be cove-

red.

Summaries

of the Annual Public Report by the

Court of Accounts

Electricity distribution concessions

–

accelerate consolidation of gran-

ting authorities to complete depart-

mentalization;

–

conclude

public

services

contract between the State and ERDF;

–

establish a local program of

investments between ERDF and gran-

ting authorities, aimed at directed

them to priority issues in terms of

electricity

quality,

especially

the

medium voltage network. These local

programs should eventually be conso-

lidated nationally;

–

simplify the system for finan-

cing of granting authorities’ invest-

ments by refocusing on priority invest-

ments for electricity quality;

–

review the position of EDF and

the State with respect of rises in

ERDF dividends, in the light of future

investments to be agreed for the net-

work;

–

increase ERDF’s productivity

efforts to develop its capacity for self-

financing of investments in the next

tariff framework;

–

review longer term develop-

ments on the electricity distribution

model.

Recommendations

Summaries

of the Annual Public Report by the Court of Accounts

Electricity distribution concessions

Court of Accounts

Summaries

of the Annual Public Report by the Court of Accounts

Wastewater treatment in

the Corbeil-Essonnes-Évry

region: overlooking the

general interest

Wastewater

treatment

the

Corbeil-Essonnes-Évry region, in the

eastern central section of the Essonne

department, has the distinction of being

provided by two adjacent stations, loca-

ted on the banks of the Seine River, on

the territory of the Évry municipality.

This situation originates from the rivalry

between the towns of Corbeil-Essonnes

and Évry, since creation of the new city

of Évry, since the end of the 1960s to

today.

Failure of cooperative

renovation of the stations

Renovation of the stations was

necessary both to increase treatment

capacity and to comply with emission

standards required by the European

Directive of May 21, 1991, on wastewa-

ter.

A comprehensive and consistent

wastewater treatment policy was first

sought. A joint commission for water

treatment (SYMETRIE), including both

inter-municipal contracting authorities,

was created and in 2004 proposed seve-

ral scenarios.

In the scenario based on the coope-

ration of contracting authorities and

seeking optimal use of both sets of

equipment, the overall estimated cost of

work and operation were clearly less

than those of the scenario opting for

renovation of both plants indepen-

dently of each other.

Yet the latter, overall less effective

and more expensive, was the one that

prevailed.

Cost overruns resulting from the

disagreement

The cost of renovation work of the

SIARCE station, the intercommunity

commission of whose main municipa-

lity is Corbeil-Essonnes, increased by

54%

four

years,

rising

from

€

20.08 million in August 2006 to

€

30.89 million in April 2010, after six

changes. The change relating to the

creation of a sludge composting unit,

which lead to an increase in the amount

of the initial contract of about 40%,

was a reflection of the failure of the

solution of joint treatment of sludge by

a single station.

Meanwhile, the Greater Évry com-

munity undertook the renovation of its

plant, whose work is not yet completed

and for which the cost amount to about

€

43.5 million.

The work of extending and bringing

the two plants into compliance with

standards can thus be estimated overall,

at the end of 2012, to be about

€

80 mil-

lion. The updated cost at the same date,

of coordinated renovation, would

amount to about

€

70 million.

The cost overrun due to the lack of

cooperation can therefore be assessed at

about ten million Euros without consi-

dering the overall operational expenses

assessed at

€

1.11 million per year.

Overlooking the general interest

None of the many stakeholders

have been able to uphold the general

interest.

The contracting authorities have

been unable to overcome their old

oppositions and act in a concerted man-

ner.

The public funders, the Seine-

Normandy Water Board and the

Department of Essonne in particular

certainly preferred joint action to

modernize equipment but they were not

able to oppose the choice of contracting

authorities.

It was the responsibility of the

State’s representative to uphold the

general interest. However, the State’s

services were primarily aimed at com-

pleting as quickly as possible the work

for bringing wastewater treatment plants

up to standards following the condem-

nation of France in 2004 for failure to

comply with the obligations prescribed

by the European Directive of 1991.

Urgency therefore prevailed to the detri-

ment of the most economical solution

for public funds.

Summaries

of the Annual Public Report by the

Court of Accounts

Wastewater treatment for the

Corbeil-Essonnes-Évry region

Recommendations

For the two communities concer-

ned:

–

act from now on in a joint man-

ner, preferring the most sensible

approach for management of their

equipment, in terms of investment

and operating costs.

For State services:

–

ensure that the general interest is

upheld in the exercise of their respon-

sibilities.

Restoration of the

maritime character of

Mont-Saint-Michel:

a poorly managed project

Restoration of the maritime charac-

ter of Mont-Saint-Michel is a vast pro-

ject

whose

current

management

methods have not promoted a compre-

hensive consideration of all aspects of

the project.

A project whose effectiveness

can only be measured in the

long term

The current project, initiated in

1969 and assessed in March 2011 at

€

185

million,

consists

mainly

construction of a new dam whose

object is to restore to the Couesnon the

needed hydraulic power. Combined with

the force of the sea and new facilities

giving way to the free flow of water

around the Mont, it is expected to drive

sediments away.

The actual effectiveness of these

methods may however be unable to be

confirmed for many years (by 2025) and

will permit restoring the insular charac-

ter of the Mont for several hours per

year during outstanding tidal conditions.

Ambiguous dual management

which did not facilitate

overall consideration of this

project

Initiated by the State in 1990, the

current project is managed by the local

authorities through a joint commission.

However, being aware of the diffi-

culty of disengaging from such a project

which evidently goes well beyond a sim-

ple regional context, if only due to regis-

tration by UNESCO of the site as a

World Heritage, the State established,

along with the joint commission, a

management commission, which consti-

tutes the primary joint decision-making

body.

The result is an ambiguous dual

management, this committee legally not

having the real decision-making or ope-

rational role, penalizing joint reflection

on the future of this remarkable site.

In addition, the current arrange-

ments for funding this commission

involve some common members but

not all, and an associated community

which cannot legally take part in the

decisions, representing so many poten-

Summaries

of the Annual Public Report by the

Court of Accounts

Summaries

of the Annual Public Report by the

Court of Accounts

tial sources of conflicts in the event of

discrepancies.

Faulty operational execution

The conduct, management and ope-

rational execution of this project by the

Baie

Mont-Saint-Michel

Joint

Commission reveals deficiencies, espe-

cially in overall management and direc-

tion of this project.

Thus, construction and operation of

facilities and public reception services,

entrusted by the joint commission to the

Veolia Transport company by a public

service delegation contract agreed for a

13 year duration, reflects a lack of

control and vigilance.

The Commission noted that this

delegate would not be able to provide

rolling stock on the planned date of

start-up (April 2012). In addition, ini-

tially designed transport equipment will

need to be broadly reviewed. This situa-

tion could lead to questioning the terms

of the delegation.

Future operating conditions on

hold

According to the project’s schedule,

all planned improvements and construc-

tion to restore the maritime character of

Mont-Saint-Michel will be completed by

the end of 2015.

However, the financial contributions

of commission members were defined

in 2006, largely to finance the invest-

ments needed for the project’s operatio-

nal achievement. Nothing to date has

been planned for future contributions

for operation, once the work is comple-

ted.

Similarly, the protocol signed with

the State only determined contributions

to the cost of the work in the broad

sense, without addressing the conditions

for financing operating expenses in a

sustainable perspective which integrates

the cultural, touristic and environmental

dimensions of this world renowned site

which is visited by many foreign visitors.

Restoration of the maritime character

of Mont-Saint-Michel

Summaries

of the Annual Public Report by the

Court of Accounts

Recommendations

For the State:

–

initiate a new reflection on

governance and operational manage-

ment of the projects, by integrating

the cultural, touristic and environmen-

tal dimensions of the site, particularly

in such a way as to include the com-

mission of the municipalities that are

financing the project;

–

effectively

exercise

financial

control of the joint commission, since

it is the maritime public agent of the

State;

–

encourage the local authorities

concerned to precisely specify the dis-

tribution of funding for the site’s ope-

ration, from 2015, the year when work

is planned to be completed;

For the Baie du Mont-Saint-

Michel Joint Commission:

–

prepare a real depreciation sche-

dule from a regularly updated asset

inventory and accurately assess future

operational changes;

–

implement control of the dele-

gate, including management of recep-

tion structures;

–

make financial monitoring of

the project reliable.

Restoration of the maritime character

of Mont-Saint-Michel

Summaries

of the Annual Public Report by the

Court of Accounts

Property of local

authorities: towards more

dynamic management

The real estate assets of local autho-

rities and their groups are increasing and

diversifying with the extension of their

areas of operation and new needs of

inhabitants. It represents a very impor-

tant asset which also generates costs for

its operation.

Today, while local public authorities

are called upon to contribute to the

effort to restore public finances and,

with respect to pressure on local bud-

gets, exercising more effective property

management is required.

Preparing a policy of assess-

ment of public property of local

authorities

The current real estate situation

often results in a succession of ad hoc

decisions based on needs, opportunities

and constraints over real estate transac-

tions. However, defining a real estate

strategy can provide a clear overview in

the medium and long term, making the

connection between the various policies

that affect real estate assets.

However, real estate transactions

that translate this overall vision rarely

result in decisions made after review by

assemblies deliberating on various

potential scenarios and the steps taken

so that they can make a real choice are

not accomplished.

Knowing the property

A physical inventory, allowing a

complete census of properties and their

monitoring, are sometimes non-exis-

tent. It is often partial, succinct, presen-

ted in the form of a simple list, with

insufficient information.

Management of real assets also

involves accurately identifying the legal

systems that affect occupancy condi-

tions and the obligations related to the

property owned and/or occupied. In

this area there are gaps, especially during

transfers related to decentralization or

intercommunity development, and also

with respect to private real assets.

Finally, real asset accounting mana-

gement allows for traceability of trans-

actions and verification of their subs-

tantiation. Improvement of the quality

of information produced is therefore

important for managers. In most cases,

the statements and writings related to

real estate transactions only imperfectly

meet the rules for accounting quality.

Property of local authorities

Summaries

of the Annual Public Report by the

Court of Accounts

Optimizing the costs

for investment and operation

For office real estate only, there

appears to be inadequacies, correction

of which would bring significant impro-

vements.

Real estate management operations

mobilize legal, technical, accounting and

budgetary powers of various depart-

ments but are not integrated into a dedi-

cated unit. This segmentation is not

conducive to mobilization of skills and

control of costs and risks. To meet their

needs, communities can choose their

asset management tools but the possibi-

lities available are not always used, or

even poorly or underused, and the

information produced is incomplete or

poorly shared, which is detrimental to

more overall management of the pro-

perty.

In conclusion, the observations

made by the regional chambers indicate

that management of real estate assets is

not yet a major concern for most local

authorities. The practices of local

authorities who have implemented more

dynamic management show, however,

that although the costs of activities

undertaken remain modest the benefits

in terms of economy, efficiency and

effectiveness are significant.

Recommendations

For the State:

–

clearly distinguish in the inven-

tories of local authorities between the

properties relating to their public and

private domains and mention the main

legal information principles related to

the source and characteristics of their

property;

–

generalize in the large local

authorities establishment of a master

plan for land and property assets,

coordinated with their multi-year

investment plan;

–

strengthen the obligation of

information to deliberative assemblies

on the one hand, on decision-making

criteria relating to real estate transac-

tions, and on the other hand, on their

closing balance sheets;

–

for major real estate transactions

require production for deliberative

assemblies of overall investment and

Summaries

of the Annual Public Report by the

Court of Accounts

operating costs with an assessment of

potential alternative solutions.

For the State and local authorities:

–

finish as soon as possible, along

with streamlining of the map of inter-

community cooperation public institu-

tions, steps for unbundling of pro-

perty, both for property transferred by

the State under decentralization laws

and for those allocated to the joint

municipalities or returned to munici-

palities;

–

ensure, through strengthened

collaboration of authorising officers

and accountants, compliance of the

local authorities’ balance sheets with

the reality of their real estate assets.

For the local authorities:

–

establish, when needed, the sin-

gle and complete physical inventory

provided by regulation and ensure

when a property is recorded that it

receives only a single inventory num-

ber, common to all departments of the

authority and communicated without

delay to the public accountant;

–

strengthen sharing of commu-

nity services in the joint municipality

framework and coordination of their

respective real estate policies;

–

identify a “real estate” function

in the communities’ organizations and

implement management tools using

the real estate data available in the

information systems;

–

list real estate made available to

third parties and consolidate all agree-

ments and information relating to each

property concerned in a single file;

–

define a policy for coverage of

risks related to a property and regularly

audit insurance contracts to always

have coverage at the best cost of insu-

red properties.

the real property of local authorities

Court of Accounts

Summaries

of the Annual Public Report by the Court of Accounts

the national Office for

Water and Aquatic

Environments (OnEMA):

poorly prepared transfor-

mation, poor management

The National Office for Water and

Aquatic Environments (ONEMA) is a

public administrative institution created

in 2007. Under the supervision of the

Ministry

the

Environment,

employs some 900 people and has an

annual budget of around

€

110 million,

mainly financed by a levy on water fee

paid by users and collected by the water

boards.

The scope and growth of tasks

entrusted to the ONEMA, in an envi-

ronment that is changing, complex and

subject to the pressure of Community

deadlines, has not been supported by

provision of resources that meet the

challenges. The result is numerous defi-

ciencies and irregularities in administra-

tive and financial management which

have harmed the effectiveness of activi-

ties by the new public institution.

An accumulation of poorly insu-

red duties

ONEMA has not emphasized, in

the early years of its existence, the qua-

lity of management essential to econo-

mically and effectively conduct the

duties of the institution which commits

France in terms of water policy.

Recommendations had yet made by the

Court on this subject from the point of

view of creating the institutions from

the Higher Fishing Council.

Projects relating to the water infor-

mation system (SIE), needed to achieve

the priority objective of water know-

ledge and to report to the European

Commission on the results obtain on

water quality, were delayed.

The police task was improved after

the recommendations previously made

by the Court. Tools and guidelines have

been deployed. However, coordination

of the States’ relevant departments

remains mainly incomplete for lack of a

shared tool for monitoring of police

actions. The effectiveness of these acti-

vities is still difficult to assess in the

absence of appropriate indicators. The

pressure of controls requested to com-

bat water pollution by nitrates is too

weak in view of the challenges.

ONEMA provides financial support

to water sanitation policies, including

wastewater for France to comply with

its Community obligations. For Corsica,

the financial mechanism itself is ques-

tionable. For the DOM-TOMs, financial

monitoring is unsatisfactory.

Summaries

of the Annual Public Report by the Court of Accounts

national Water and Aquatic Environment

Agency (OnEMA)

Deficiencies in organization and

management

The resources have not been suita-

ble for the objectives and therefore

duties have been performed imperfectly.

The public institution has been slow to

take corrective measures. In this respect,

confusion of the roles of the chairman

of the board of directors and supervi-

sion has not allowed the process to be

expedited.

Accounting and financial manage-

ment have presented serious shortco-

mings. The accounts have proved to be

unreliable and the procedure for addres-

sing spending deficient up to 2010.

ONEMA’s contractual practices have

not allowed financial control to be fully

exercised. Management control remains

inadequate due to lack of scoreboards.

Until 2011, multiple and costly

management errors were committed,

ONEMA often exempting themselves

from the rules of the public procure-

ment code. They are the source of

delays in project performance, essential

for the exercise of duties of the public

institutions and compliance with the

commitments of France.

The weakness of personnel mana-

gement organizations, the inadequacy of

statutes and the legal inefficiencies

noted have confronted ONEMA with

recruitment problems which even today

expose it to the risk of a loss of skills.

Financially,

although

strengthening

management

largely

explains

the

increase in payroll (+27% in 4 years),

several measures related to compensa-

tion or vacations, disputable or even

irregular, have accentuated growth of

expenses. Finally, the organization of

local services and the pace of work by

some agents (4 days per week) are not in

line with the institution’s duties. While

the 2015 deadline is approaching for the

2000 water framework directive, to

achieve “good condition” of waters

and, at a time when the 2012 Finances

Law has increased the annual ceiling on

the water charges paid to ONEMA

from

€

108 million to

€

150 million from

2013, it is imperative to provide rigo-

rous management to the institutions by

continuing activities recently underta-

ken.

Summaries

of the Annual Public Report by the

Court of Accounts

national Water and Aquatic Environment

Agency (OnEMA)

Recommendations

–

separate the functions of super-

vision and presidency of the board of

directors;

–

make accounts reliable and as

soon as possible put in place formal

internal audit procedures;

–

establish rigorous direction and

monitoring of computer projects,

including those related to the water

information system;

–

reorganize the territorial mecha-

nism;

–

review the conditions for human

resources management including the

conditions for allocation of the mobi-

lity allowance, monitoring work time

and the adequacy of the four day work

week with the duties of the ONEMA;

–

continue activities undertaken

for water police by redefining the

monitoring indicators and significantly

increasing the pressure for control on

themes or areas at issue.

Summaries

of the Annual Public Report by the

Court of Accounts

Remuneration to EDF SA:

rapid growth, accumulation

of benefits, little connec-

tion with performance

The audit period coincided with

major changes in the enterprise: listing

on the stock market for a portion of

capital, spin-off of network and distri-

bution networks, end of the monopoly,

globalization of activities. In parallel,

the 65,931 employees of EDF SA at the

end of 2011 remained for 94% gover-

ned by the statute of electrical and gas

industries, whose foundations were laid

by the law of April 8, 1946. Exempted

from the common labour law, this sta-

tute sets the rules for pay and refers to

sectorial agreements, then to company

agreements for the application and

improvement

conditions

for

employees.

A generous pay policy

Unlike employees of the private sec-

tor, within the EDF Group, the deve-

lopment of the average net salary per

head has represented more than 3% per

year. In addition, salaries at EDF are

higher at hiring (16% more than the sta-

tutory minimum wage for a young per-

son with no degree, 26% for a holder of

a technical school certificate), and have

an automatic growth guarantee. At the

end of their career, the seniority remu-

neration can constitute as much as 22%

of the set remuneration. Additional

remunerations can represent over 50%

of the total remuneration for some

employees, five years after hiring.

Decided at the company level, and

in addition to the above increases, indi-

vidual measures are also more favoura-

ble than in the private sector and more

widespread: 67% of agents received

them in 2010.

The EDF group initiated in 2008-

2009 a merit pay system with variable

mechanisms for remuneration, as do

many public and private enterprises. Its

uniqueness is however to allocate to a

greater

proportion

employees

amounts that are still low (less than 4%

of primary remuneration).

Summaries

of the Annual Public Report by the

Court of Accounts

EDF SA remuneration

Remuneration of executives

increasing strongly until

recently

From 2005 to 2010, the overall remu-

neration of the CEO of EDF SA mul-

tiplied, in constant Euros, by 2.35,

under the effect of two cumulative

movements: regular and significant

increases of the fixed annual portion

(

€

1 million in 2010) and fixing of a

variable portion whose criteria were

reached in the period at the upper part

of the range (between 75 and 100%).

This remuneration, expressly approved

by the Minister of the Economy, rea-

ched about

€

1.5 million in 2011. Since

the Decree of July 26, 2012, it was cap-

ped at

€

450,000. The remuneration of

other corporate officers followed a

similar trend, and their bonus rates

achieved high amounts, above 75%.

The State shareholder is only aware

of the policy for remuneration of EDF

SA executives through items infre-

quently communicated to the remunera-

tion committee, issued by the board of

directors of which it is a part. It is

unfortunate that from 2004 it ceased to

perform the annual survey on remune-

ration.

During the period audited the num-

ber of executives increased by 32.5%

and their fixed salary at close to 4% per

year, as for all employees. Added to this,

however, is a higher variable share (with

a maximum of 26 to 37% of the fixed

salary). No executive achieved less than

90% of the objectives set in 2010. The

bonus therefore appears more like an

additional remuneration than a variable

incentive.

Many employment benefits

Supply of electricity at a preferen-

tial rate

Like all electricity and gas industry

employees, those of EDF SA benefit

from an “agent’s fee”, which represents

a cost to the company estimated at

€

222 million in 2010.

This benefit is exorbitant for several

reasons: subscription is free and the

supply of energy at the preferential rate

is open without consumption limits,

regardless of household composition,

to employed and retired agents, for the

primary and secondary residence, and

even for occasional vacation homes.

It is also taxed under conditions and

on a favourable scale, and in addition

undervalued for social contributions.

A wide range of additional benefits

Employees of EDF SA may benefit,

under certain conditions, from staff

housing, or a monthly allowance inten-

ded to share housing costs (cost to EDF

SA in 2011:

€

263.7 million). They col-

lect or have collected profit shares, free

Summaries

of the Annual Public Report by the Court of Accounts

EDF SA remuneration

shares, and benefit from collective

savings schemes matched by the com-

pany under favourable conditions, com-

pared to the private sector. EDF SA can

also provide them with loans for

consumption.

In May 2011, the Court issued com-

ments on the organization of the health

insurance scheme for electricity and gas

companies which guarantees higher ser-

vices that the common law, further

enhanced by additional and supplemen-

tary coverage.

The level of family and retirement

benefits

and

guarantees

EDF

employees is also considerably higher

than in the average branches of the eco-

nomy: many family advantages in the

form of paid holidays and specific allo-

wances, even combining these two

benefits for a single reason, such as mar-

riage for example; retirement calculated

on the bases of the last six months,

combined with supporting arrange-

ments.

Recommendations

For the company and government:

–

continue

differentiation

remuneration by remunerating perfor-

mance rather than statutory position;

–

set objectives for the variable

part sufficiently ambitious to justify

the concept itself of the variable part;

–

restore the annual survey of exe-

cutive remuneration of public compa-

nies, including the EDF group in it;

–

study the impact on the hierar-

chy of the provision for capping of

executive

remuneration

that

was

recently introduced;

–

end provisions for exemptions

from common tax and social law that

are currently related to the agent tariff;

set a consumption ceiling for the

energy subject to this tariff and index

it to the real price of electricity;

–

redefine the housing policy so

that the housing benefit and/or hou-

sing allowance are granted to agents

who need it due to the constraints of

their duties;

–

review the family policy in rela-

tion to its cost and changes in the

family structure.

Summaries

of the Annual Public Report by the

Court of Accounts

Communications expenses

of SnCF: expensive transac-

tions, irregular contracts

The Court has audited the regularity,

efficiency and effectiveness of external

and internal communications expenses

of the public institution between 2000

and 2011.

the slow formulation of the

“SnCF” single brand strategy

Over the last decade, the SNCF

undertook an active policy of “group”

communication which covers the scope

of the industrial and commercial public

institutions (EPIC SNCF) and its subsi-

diaries. At the end of a slow develop-

ment, the SNCF opted in July 2010 for

the “SNCF” single brand strategy, appli-

cable to the entire group.

Difficult assessment of the cost

of communication

The SNCF has not done analytical

monitoring

its

communication

expenses (commercial, institutional or

internal communication) and the overall

cost of the activity is difficult to quan-

tify. For EPIC alone, it is estimated at

€

153 million of average annual expenses

between 2007 and 2011, to which

should be added on average

€

55 million

payroll per year, for a total of close to

€

210 million per year. This amount

equals about 13% of EPIC investments

which amounted to

€

1.6 billion in 2010.

Insufficient control

and monitoring of expenses

Controlling

and

monitoring

expenses suffer from weak budgetary

planning, budget gaps in the audit trail,

inadequate anticipation of operations

and the non-existence of annual balance

sheets. Consequently, there are many

significant budget overruns. Committed

in 2009 to a policy of reducing its struc-

tural costs from 2% to 4% per year, the

SNCF planned, on the basis of an exter-

nal audit, a reduction of communication

expenses of

€

1.5 million from 2010,

€

6.5 million in 2011 and

€

8.3 million in

2012; it did not happen.

Summaries

of the Annual Public Report by the Court of Accounts

the SnCF’s communication expenses

Purchasing practices

non-compliant with the rules in

force

The excessive recourse to negotiated

contracts, without competitive bidding,

is the greatest concern. These practices

relate to 71% of the 41 largest contracts

concluded since 2007 and audited by the

Court. They show non-compliance with

the broad principles of public procure-

ment

defined

the

Order

June 6, 2005, and its implementing

Decree, to which is subjected the SNCF

communication expenses and shows

that the institution is also non-com-

pliant with its internal procedures in this

field.

The invocation of extreme urgency

or technical specificity, to escape the

requirement for competitive bidding,

was not the subject of justification in

accordance with the regulations in force

or SNCF internal rules. The reference to

a “request by the president” shown in

strengthening justification of these

exceptional procurement procedures

cannot justify their use and does not

figure among the cases provided by the

regulation in force.

A periodic overall survey shows that

the SNCF suffers from a poor image

with the public, however the effective-

ness of the SNCF communication acti-

vities remains poorly evaluated. Tests

were carried out occasionally to measure

the effectiveness of advertising cam-

paigns and other marketing activities.

However, the achievement of these

objectives of the SNCF in terms of

communications was not evaluated for

any

the

operations

studied.

Significant sums were thus spent in the

absence of any evaluation or feedback.

SNCF is committed to implement,

according to a precise timetable and in

the short term, the necessary measures

to stop such practices. It presented its

board

directors

December 20, 2012, with the main lines

of its communication strategy and the

measures decided as a result of the

Court’s audit.

the SnCF’s communication expenses

Summaries

of the Annual Public Report by the

Court of Accounts

Recommendations

–

formalize the multi-year com-

munication strategy, detail it in action

plans with the objective of managing

costs and presenting it to the board of

directors;

–

anticipate and evaluate annual

needs in order to improve the quality

of forecasts;

–

formalize a project management

approach for each operation including

budgetary aspects;

–

make a financial assessment of

each major projects and establish a

performance review of the annual

budget;

–

provide annual information on

expenses by major strategic lines by

presenting reliable financial informa-

tion, consolidated for EPIC and the

group;

–

ensure strict application of pro-

cedures required by Order 2005-649

of June 6, 2005, and strengthen the

internal control mechanisms to ensure

legal security of exceptional proce-

dures.

Summaries

of the Annual Public Report by the

Court of Accounts

From Sonacotra to Adoma:

drift corrected late

The Adoma semi-public limited

company, formerly SONACOTRA,

manages over 500 hostels for migrant

workers or social residences, housing

70,000 people and representing 60% of

hostels for migrant workers and social

residences.

In its special public report on “wel-

coming and integration of immigrant

populations”, the Court had referred in

positive terms to activities by SONA-

COTRA while underlining the com-

pany’s difficulties, urged to move from

the status of “immigrant landlord” to

“landlord of the poorest”.

A fluctuating strategy at the

expense of the renovation of

homes

The State holds 57% of Adoma.

From the end of the 1990s, its priority

was to renovate the hostels of migrant

workers. Adoma did its part in the

effort. However, in 2012, half of the

rooms offered by the company to its

customers continued to have an area of

9 square meters or less, and only one in

five has self-contained comfort ele-

ments, integrating individual sanitary

and kitchen corners.

These mixed results are largely

explained by the instability and the dis-

persal of objectives set for the company.

Thus the 2005-2010 objectives contract

invited Adoma to diversify its activity to

social housing for families in difficulty

as well as to housing for young people,

especially students.

The company is also involved in

reception of asylum seekers and provi-

ding emergency shelter, for which its

own funds, provided by the State, have

been used to finance construction on

lands granted at-will, sometimes for

only 5 years. Early redemption of such

transactions contributed to much of the

accounting loss of

€

26 million recorded

in 2010.

Serious management

failures

For housing young people and fami-

lies, rather than accelerating the trans-

formation of hostels into social resi-

dences, it was decided to create additio-

nal capacity. Operations conducted in

the emergency led, especially in the

south-east of France, to acquisitions at

higher prices than the field estimates or

without prior technical study, which led

to cost overruns for work and difficul-

ties in using certain buildings.

To carry out this investment policy,

Adoma is indebted within the limits

provided in the objectives contract. It

Summaries

of the Annual Public Report by the

Court of Accounts

From Sonacotra to Adoma

has however agreed, in a risky fashion,

to speculative contracts with the banks,

which have already led to a certain loss

€

7 million and created a latent unrea-

lized loss estimated at

€

57 million in

outstanding debt.

In day to day management, the com-

pany’s procurement policy as experien-

ced drifts, curbed only since 2011. A

certain laxity has long tainted human

resources management, local manage-

ment being too dispersed and the bene-

fits provided in terms of housing not

always justified by service constraints.

Finally, a profit-sharing agreement was

established so while the regulations did

not permit it; denounced late, this agree-

ment continues to pose a legal and

financial risk.

A late recovery

New governance was established in

2010, operational control of the com-

pany being entrusted to a minority sha-

reholder, the SNI, subsidiary of the

Caisse des dépôts et consignations. This

has highlighted the strategic refocusing

that began in 2009 and established gui-

delines that go in the direction of reco-

very.

Adoma thus disengaged itself from

non-priority sectors. It implemented a

savings plan and workforce reduction

that allowed it to make a profit in 2011.

The State must now set clear ultimate

objectives to provide this operator with

a stable shareholder structure, sufficient

capital and transparent governance.

Summaries

of the Annual Public Report by the Court of Accounts

From Sonacotra to Adoma

Recommendations

The Court recommends that the

State shareholder:

–

specifies public service duties

that it assigns to the Adoma company;

–

encourages the necessary syner-

gies with the national property com-

pany, to provide Adoma with a stable

shareholding structure, sufficient capi-

tal and transparent governance;

–

strengthen inter-departmental

coordination and ensure that specific

duties entrusted to Adoma benefit

from balanced funding and allow for

sustainable achievements;

–

determine strategic priorities

over a sufficiently long period to

obtain robust results, and make up for

delays in rehabilitation of hostels,

especially in the elimination of small

rooms and completing the transfor-

mation of homes into social resi-

dences.

The

Court

recommends

the

Adoma company to:

–

continue streamlining its mana-

gement and securing its loans.

Court of Accounts

the Monnaie de Paris:

a fully committed change,

challenges to overcome

Management of coins and medals

was transformed into a public industrial

and commercial institution called “La

Monnaie de Paris” by the 2007 Finance

Act.

With 500 agents today, the Monnaie

de Paris must carry out several duties

provided by law, some as a monopoly

(minting common and collector legal

coinage, punches) and other competitive

items (decorations, medals, common

foreign coinage).

The company faces two main chal-

lenges: to provide its economic balance

by sufficiently developing its commer-

cial activities to compensate for an

unprofitable sovereign activity, and suc-

ceed in the new duty entrusted to it of

increasing its Paris real estate assets.

A change of status source of a

positive dynamic

Before the change of status, the

company’s economic situation was

greatly deteriorated. Structural handi-

caps, in particular related to the large

payroll, were aggravated by the difficul-

ties to be related to the transition to

Euro (very large orders followed by a

sharp drop in activity).

The social climate was very tense

within the company, in a context of

uncertainty on the sustainability of acti-

vities. In 2006, despite a significant

decline in workforce that began in 2002,

the financial situation of coinage and

medallion management remained criti-

cal.

In 2007, new governance was

rapidly established and a strategic plan

was defined and validated by the board

of directors in less than one year.

A system of voluntary departures

helped accelerate the workforce reduc-

tion, while simultaneously engaging in a

renewal of personnel on targeted func-

tions.

Five years after the change of status,

the results are encouraging. The staff

are now better suited to the company’s

transformation, and the social climate is

better.

Turnover has increased by over 50%

in five years. The payroll has stabilised

and now represents 20% of turnover.

These results allowed for the first

time in 2009 payment of a dividend of

€

8.3 million to the State. The dynamic

was confirmed in 2010, with a payment

€

12.2 million and

€

9 million in 2011.

Summaries

of the Annual Public Report by the Court of Accounts

the economic model of the

Monnaie de Paris remains

fragile.

The company’s fixed costs are still

too high. The effects of reducing the

workforce have in reality been compen-

sated by certain hirings focused on high

levels of responsibility, and therefore

pay. The level of salaries and the average

age of staff consequently remain high

(

€

3,600 monthly gross on average, and

49.6 years of age).

Similarly, efforts at reorganization

have not been sufficiently extensive.

Support functions are still very high

compared to operational functions.

Finally, the company remains struc-

turally with overcapacity in the produc-

tion of coinage. At the time of changing

over to the Euro, the need for 1 Euro

and 50 cent coins were greatly overesti-

mated, which led Treasury management

to destroy 310 million coins, For the

State, the overall cost of overproduction

of Euro coins may be valued at

€

41.5 million, or a net cost of

€

20.5 mil-

lion if the sale of the metal is taken into

account, which should bring in close to

€

21 million.

Orders from the State (about

850 million coins) are now permanently

lower

than

production

capacities

(1.5 billion coins).

To increase profitability of produc-

tion tools, the activity of minting

foreign common coinage must be deve-

loped. This market is however very

competitive and this activity remains for

the moment at a deficit for the com-

pany.

Ultimately, the current improvement

in the economic situation of the

Monnaie de Paris is mainly related to the

success of face value collector coins

(“gold or silver Euros”). However, it is

based on a “novelty effect” and a “wind-

fall effect” which may disappear.

Other commercial activities of the

institution are being rethought and the

Monnaie de Paris should consider stop-

ping some.

A new mission of enhancing

assets with uncertain impact

Since it was created, the public insti-

tution has been entrusted by the law

with a mission of enhancing the Hôtel

de la Monnaie, from which the

Metalmorphosis project arose.

All the Paris property was however

deprived of the Year IV Plot, two years

after the change in status, while it was

useful for operating the company, being

occupied by workshops that were diffi-

cult to move. Its transfer to the Institut

de France to build an auditorium was

decided by the State without studying

the impact and without taking into

account the consequences for the

Monnaie de Paris.

The loss for the institution is

€

3.6 million on the accounting level, but

it has also suffered major indirect costs

Summaries

of the Annual Public Report by the

Court of Accounts

La Monnaie de Paris

related to the work resulting from

moving the machinery.

In addition, transferring the plot

forced the institution to modify the

Metalmorphosis project, although the

prime contract work had already been

completed.

The institution’s management drawn

on the fact that the decision to transfer

from the Year IV Plot was imposed for

broad leeway in project implementation.

Estimates of economic benefits are

very optimistic; the project must there-

fore have constant attention from the

sponsor (State holdings agency) and the

board of directors.

Finally, with regard of the duty of

presenting its historical collections, the

Monnaie de Paris must strive, with the

support of its leadership, to build part-

nerships to develop its assets better.

With regards to the production

activity:

–

provide an alternative scenario

intended to deal with the possibility of

a slowdown of the “face value collec-

tion coinage” activity;

–

undertake, in connection with

the sponsor, an accurate and complete

study to evaluate the relevance of each

commercial activity and consider the

economic and organizational conse-

quences of their potential shutdown.

With regards to the company’s

expenses:

–

better manage changes in pay;

–

continue the effort to streamline

support functions;

–

limit the use of external service

providers by reclaiming strategic

management.

With regards to the task of enhan-

cing asset value:

–

review

and

update

the

Metalmorphosis project business plan;

–

develop partnerships, especially

with the Cité de l’économie et de la

monnaie, to better present historical

collections.

Recommendations

Summaries

of the Annual Public Report by the

Court of Accounts

La Monnaie de Paris

Court of Accounts

the Heritage Foundation:

a unique model

Instituted

the

Law

July 2, 1996, and recognized as of public

utility by the Decree of April 18, 1997,

the Heritage Foundation received the

public service mission to contribute to

the conservation and enhancement of

unprotected national heritage. This heri-

tage, whose elements do not benefit

from a system of classification or regis-

tration

historical

monuments,

consists of several hundred thousand

movable and immovable assets that pre-

sent an architectural, memorial or land-

scape interest (traditional housing, wash

houses,

halls,

bread

ovens,

rural

churches, etc.).

A beneficiary foundation of

major public

supports

Fifteen large companies participated

initially in constituting the capital of the

Heritage Foundation. They are still all

represented on its board of directors

where they hold a majority of votes.

The Foundation today has about

€

32 million of annual resources, inclu-

ding public financial supports which

represent, depending on the years, bet-

ween 35 and 50% of its budget. For the

2000-2011

period,

the

Heritage

Foundation assisted over 18,000 pro-

jects of varying sizes (14,000 among

them under private heritage and close to

4,000 of public heritage).

After a slow and difficult start, the

Foundation has experienced growth

from the year 2000 when it was authori-

zed by the tax authorities to grant the

“Heritage Foundation” label. The year

2004 marked a new step thanks to the

decision to allocate it a share of the

State’s property revenues from eschea-

ted estates. During the 2006-2010

period which brought the Court’s audit,

the Foundation was rapidly expanding.

In just four years, its revenues increased

by 80%.

The Heritage Foundation is a

unique organization, irreducible to any

known legal category: a private organi-

zation directly allocating tax rulings, a

foundation benefiting from the State’s

property revenues, a foundation whose

mission and operation was not establi-

shed by its founders but by law, a foun-

dation with a status exempted from the

foundation law.

For the legislator, the Foundation’s

original objective was to boost private

initiatives and funding in favour of non-

protected heritage so they would com-

plement the rather feeble public action

and credits in this area. For this purpose,

Summaries

of the Annual Public Report by the Court of Accounts

the Foundation has been granted some

unusual rights for a private institution of

this type, such as the ability to trigger, by

award of the “Heritage Foundation”

label, tax reductions or even by way of

waiver from the status of recognized

public utility foundations, the possibility

offered to individuals or legal entities of

direct membership.

Despite such a unique and privile-

ged situation, it is clear that the Heritage

Foundation has not been able to raise

significant funding from companies.

Yet, to accomplish its mission in favour

of non-protected heritage, it has taken

advantage of many powers and skilfully

combines public funding, tax incentives

and initiatives by individuals.

However it is a result of the legal

system in which the Foundation ope-

rates that the public expenditure asso-

ciated with its various actions remains

poorly understood in its amount and

difficult to read in its signs. What is even

more questionable, considering that this

budgetary and fiscal effort is much more

significant than originally envisaged by

the legislator at the beginning: property

revenues allocated, annual subsidies

from local authorities, tax expenditures

related to the “Heritage Foundation”

label and gifts.

Broad support for

volunteering

The Foundation’s activity is now

based on significant support of public

grants, not originally planned. In addi-

tion, the Heritage Foundation’s develop-

ment has been at the expense of a reo-

rientation of its activities compared to

the perspectives outlined by the legisla-

tor. It does not rely on a vast network of

individual members or on major natio-

nal partnerships, it draws little on corpo-

rate sponsorship, it does not manage

any renovation projects as contracting

authority.

The Foundation managed however

to find other avenues for developing its

actions, in particular through a commu-

nity of very active volunteers and laun-

ching of local public subscriptions to

finance its largest projects.

The Heritage Foundation has there-

fore met the objectives of its mission,

within the extent of its resources, accor-

ding to its original conditions for action

and within satisfactory management

conditions.

Summaries

of the Annual Public Report by the

Court of Accounts

the Heritage Foundation

For the Ministry of Culture and

the Ministry of the Budget:

–

annually inform Parliament of

the amount of revenues allocated to

the Foundation and its use;

–

institute a mechanism capping

this revenue;

–

begin a dialog with the Heritage

Foundation on its objectives and

actions to integrate with the national

heritage policy;

–

strengthen the consistency bet-

ween the general heritage protection

policy and the tool that the represents

the label.

For the Heritage Foundation:

–

strengthen headquarters’ control

on regional delegations in financial

matters;

–

develop further private resources

that are less used to date: corporate

sponsorship, relaunch of the member-

ship arrangement;

–

apply all obligations relating to

appealing on public generosity, in the

framework of “popular patronage”

subscriptions.

Recommendations

Summaries

of the Annual Public Report by the Court of Accounts

the Heritage Foundation