1.1 The legal status of OTKA: Act No. CXXXVI of 1997 on the Hungarian Scientific Research Fund Programmes (hereinafter the “Act?) was adopted by Parliament on 9 December 1997 in order to provide independent and extensive support to scientific research and to the research infrastructure, to provide assistance for young researchers and to promote the achievement of scientific achievements of international standards. The Hungarian Scientific Research Fund Programs is legal successor of Hungarian Scientific Research Fund, which was created by Act No. XXII of 1993 (Section 8 (2) of the Act).

1.2 The implementation of the duties of OTKA shall be funded from an appropriation in separated chapter management within the central budget. (Section 1(1) of the Act)

1.3 The objective of OTKA: The budget appropriated for OTKA shall be used for the provision of financial support, through a competitive bidding scheme, to scientific research projects and the requirements of the performance of such research and the publication of the achievements thereof, as are expected to lead to the recognition of new scientific laws, to the generation of new scientific knowledge, the elaboration of new methods and techniques. The OTKA appropriation may be used for the improvement of infrastructure facilities required for the achievement of scientific results. (Section 1 (2) of the Act)

1.4 The rights of the organisation supervising the chapter with respect to the appropriation of OTKA shall be exercised by the President of the Hungarian Academy of Sciences (hereinafter: the “Academy?), with the exception of the rights reserved by the Parliament or the Government. (Section 1 (3) of the Act)

1.5 OTKA's revenue sources:

a) the appropriation for financial support specifically established for this purpose each year in the annual budget of the Republic of Hungary;

b) payments and contributions from domestic and foreign legal entities and natural persons as well as the re-payments effected by domestic recipients. (Section 1(4) of the Act)

1.6 The availability of the central budgetary support - in compliance with the regulations pertaining to the source - shall be specified in the funding schedule. (Section 1(5) of the Act)

1.7 Voluntary financial contributions to OTKA qualify as commitments undertaken in the public interest in conformity with Sections 593-596 of the Civil Code. (Section 1 (6) of the Act)

2.1 The OTKA Committee

2.1.1 The Hungarian Scientific Research Fund Programmes Committee (Országos Tudományos Alapprogramok Bizottsága, hereinafter: “OTKA Committee?) shall be the executive body of OTKA - it shall be comprised of a President, two Vice-Presidents and fifteen members. One Vice-President shall be proposed by the Hungarian Rectors? Conference, the Conveyance of College Directors General and the Rectorial Congress of Universities of Art together, the other Vice-President shall be proposed by the Board of Academic Research Places. (Section 2. (1) of the Act)

2.1.2 The President and the Vice-Presidents shall be appointed by the Prime Minister - on the joint proposal of the President of the Hungarian Academy of Sciences and the Minister of Education and Culture - for a period of three years. The appointment may be extended once, for another three year period. (Section 2(2) of the Act)

2.1.3 The membership of the OTKA Committee (Section: 2 (3) of the Act):

a) five experts proposed by the Minister of Education and Culture - in agreement with the Minister of Agriculture, Minister of Industry, Trade and Tourism, the Minister of Environment Protection and Regional Planning, the Minister of Transport, Communication and Water Management and the Minister of Welfare;

b) two experts proposed by the President of the Hungarian Academy of Sciences;

c) one expert proposed by the directors of Public Collections;

d) three experts proposed by higher education conferences;

e) one expert proposed by the Acting President of the National Technical Development Board (Országos Műszaki Fejlesztési Bizottság);

f) the Presidents of the three Scientific Colleges.

2.1.4 With the exception of the Presidents of the Scientific Colleges the members of the OTKA Committee shall be appointed by the Prime Minister for a three year period. The appointment may be extended once, for another three years. The members of the OTKA Committee who are not civil servants shall not be members at the same time of the executive body of any other scientific support programme operating with central governmental funding. The position of the civil servants invited to the OTKA Committee as per Section 2 (3) a) shall be terminated upon the termination of their employment as civil servants. (Section 2 (4) of the Act). This shall be communicated to the President of the OTKA Committee by the organisation exercising such rights of employment.

2.1.5 The individuals who submit proposals as per sub-section 2.1.3 shall be entitled to designate deputies to stand in for the members of the OTKA Committee in case they are prevented from proceeding in their capacities as such.

2.2 Scientific colleges

2.2.1 There are three Scientific Colleges (hereinafter: űColleges?) operating within the OTKA Committee: College of Social Sciences, College of Physical Sciences and College of Life Sciences. (Section: 2 (5) of the Act).

2.2.2 The Presidents of the Scientific Colleges shall be appointed by the President of the Committee on the basis of the proposal of the OTKA Committee formulated trough secret ballot, for a period of three years. The appointment of the Presidents of the Colleges may be extended once, for another three year period. (Section 2(5) of the Act)

2.2.3 The members of the Scientific Colleges shall be appointed by the President of the Committee on the basis of the proposal of the OTKA Committee formulated trough secret ballot, for a period of three years. (Section 2(5) of the Act). Further to as provided for in sub-section 3.1.2 g) researchers supported by OTKA over the preceding three year period shall submit proposals, in accordance with their special fields as per their respective juries, concerning the members of the Scientific Colleges - through secret ballot - to the OTKA Committee. The list of the members of the Colleges shall be published in OTKA?s Newsletter.

2.2.4 The administrative duties of the Colleges shall be performed by the College Secretaries appointed by the President of the OTKA Committee on the basis of the Presidents of the respective Colleges.

2.3 Disciplinal Juries

2.3.1 The juries representing the various branches of sciences or groups of disciplines (hereinafter: “Juries?) shall be operating under the direction of the Colleges.

2.3.2 The Presidents and the members of the Juries shall be appointed by the Presidents of the Colleges, on the basis of the proposals put forth by the members of the Colleges. The appointment of the presidents of the Juries shall not be extended, the appointment of a member of a Jury may be extended by one year. About one third of the membership of the Juries shall be replaced each year in a rotation scheme. The lists of the members of the Juries shall b disclosed in OTKA?s newsletter.

2.3.3 The administrative of work of the Juries shall be carried out by secretaries appointed by the Presidents of the Juries - on the basis of contractual assignments.

2.4 The OTKA Office

2.4.1 The technical, financial, organisational and administrative tasks associated with the operation of OTKA shall be performed by the OTKA Office (hereinafter: “Office?). (Section 3 (1) of the Act)

2.4.2 The Office shall be operating as a central budgetary organ with autonomous financial management, supervised by the Secretary General of the Academy. (Section 3(2) of the Act)

2.4.3 The operating expenses of the Office - including the honoraria paid to the experts involved in the evaluation of the bids - shall be covered from OTKA?s budgetary appropriation. (Section 3 (3) of the Act)

3.1 The Responsibilities of the OTKA Committee

3.1.1 The responsibilities of the President of the OTKA Committee shall be comprised of the following (Section 2 (6) of the Act):

a) submission of proposal to the OTKA Committee for the allocation of the funds in accordance with the key legal titles;

b) annual reporting on the operations of OTKA to the Government;

c) representation of OTKA this power may be delegated to the Vice Presidents or to members of the Committee - for single cases or for defined groups of issues;

d) procures the preparation of the Organisational and Operational Rules of OTKA which he/she forwards to the Government for agreement;

e) appointment of the Presidents and members of the Scientific Colleges on the basis of the proposals put forth by the OTKA Committee;

f) management of the OTKA Office, exercising of the employer?s rights with respect to the head (Director) and the employees of the Office,

g) approval of the annual financing schedule of research projects in accordance with the funding schedule of budgetary financial assistance,

h) controlling of the expenditure of the OTKA funds,

i) puts out invitations for tenders on the basis of the proposal put forth by the OTKA Committee,

j) approves the Organisational and Operational Rules of the Office,

k) approves the annual budget of the Office and the annual report on the implementation thereof.

3.1.2 (7) The responsibilities OTKA Committee shall be comprised of the following: (Section: 2 (7)):

a) decision on the allocation by key legal titles of the funds on the basis of the proposal put forth by the President,

b) identification of the priority research areas and goals of expenditure,

c) putting forth proposal to the Government concerning the amount of the budgetary funding of OTKA,

d) decision on the provision of support to bids submitted for financial assistance and the breakdown of the appropriation for such bids on the basis of the proposal formulated by the Scientific Colleges in co-ordination - under a separate set of internal rules - with the expenditure of appropriations managed by chapters for associated purposes and that of the budget appropriations of the extra-budgetary funds of the state,

e) appraisal of bids submitted by members of the Scientific Colleges - on the basis of the proposals put forth by the Presidents of the Colleges (Section 4 (6) of the Act),

f) approval of the annual budgetary report,

g) submission of proposal to the President concerning the members of the Scientific Colleges, on the basis of the recommendations submitted by scientific organisations and communities and individual holders of scientific degrees,

h) approval of the Organisational and Operational Rules of OTKA,

i) preparation of a summary for the report of the President of the Academy to be made to Parliament on the outstanding scientific results and developments of the scientific infrastructure achieved with the financial assistance provide by OTKA,

j) decision on the amounts that may be allocated to the Scientific Colleges,

k) establishment of the internal operating regime of the OTKA Committee,

l) expression of opinion on the tendering forms and the mechanisms of appraisal developed by the Colleges,

m) putting forth proposals for tender invitations,

n) approval of draft contracts to be concluded with bidders,

o) decision making on the mechanism of appraisal of the interim and closing reports of research projects,

p) provision for the publication of decisions on bids and of the achieved research results,

r) making decision on issues submitted by the colleges.

3.1.3 The operation of the OTKA Committee:

a) the OTKA Committee shall hold its meetings as necessary, at least three times a year,

b) the members of the Committee shall be entitled to vote,

c) individuals substituting members of the Committee shall be entitled to vote only with written prior authorisation for doing so,

d) the Committee shall have a quorum if at least ten members - including substitutes - are present at the meeting,

e) the Committee shall make its decisions by simple majority of votes - in the case of a tie vote the vote cast by the President shall be decisive,

f) the Committee may invite specific experts for special technical/professional tasks and/or specific appraisals,

g) the Committee may involve special ad hoc committees for the appraisal of the bids in special justified cases - on the basis of the proposals by the Colleges,

h) the head of the Secretariat of the Science Policy College and the Director of the OTKA Office shall have a permanent invitation to the meetings of the Committee. the President of the OTKA Committee shall invite the representative of the Ministry of Finance from time to time.

i) a memorandum shall be drawn up of each meeting of the Committee which shall be distributed to the holders of permanent invitations - besides the members of the committee,

j) the documents to be discussed by the meetings of the Committee shall be delivered to the members at least ten days prior to the meeting, along with the invitation.

3.2 The responsibilities of the Colleges

3.2.1 The responsibilities of the Presidents of a College shall include:

a) representation of the professional/technical interests of the college at the meetings of the OTKA Committee,

b) appointment of the presidents and members of the Juries on the basis of the proposal put forth by the College,

c) decision on issues, disputes submitted by bidders (budget expenditure reallocation, deadline modification, change of participants, replacement/substitution of theme leader, change of research place, procurement of special equipment) in view of experts? opinion or of the opinion expressed by the Jury,

d) decision on the approval of the proposals put forward by the Travelling and Publication Committee set up by the College, concerning the bids received to be supported from the separate limit of the college for participation in and organisation of conferences and for publications,

e) summoning of the meetings of the College,

f) co-ordination of the operation of the Juries, supervision of their appraisal activities,

g) summarising of proposals submitted by the Juries, for the meeting of the College,

h) forwarding to the OTKA Committee of the consolidated proposal of the College concerning the financial assistance to be provided to bidders,

i) provision for the implementation of the decisions made in the meetings of the College.

3.2.2 The responsibilities of a College:

a) deciding on the allocation of the available limit to the various Juries,

b) putting forward of proposals to the OTKA Committee concerning the scientific areas to be prioritised in terms of assistance,

c) putting forth proposals to the OTKA Committee concerning the provision of financial support to the various bids in a breakdown of the budgetary appropriation by the key items of the expenditure plan, on the basis of the ranking of the bids established by the Juries, the available limit and the research directions specified by the OTKA Committee,

d) appraisal of the bids submitted by the Presidents of the Juries, in co-operation with experts,

e) preparation of a proposal for the regime of appraisal of inter-disciplinary bids,

f) formulating and updating, on an ongoing basis, of the bidding forms used by the College, the criteria of appraisal and the aspects of evaluation for the Juries,

g) monitoring of the mechanism of controlling and appraisal of the interim and closing reports on the performance of research,

h) establishing of the internal operating regime of the College,

i), putting forth of proposal to the President of the College concerning the set-up of the Juries, their respective Presidents and members;

j) establishment of the duties and operating regimes of the Juries,

k) putting forward of proposal(s) concerning the Organisational and Operational Rules of OTKA,

l) setting up of separate special committee for appraising bids, if necessary,

m) meeting at least three times a year.

3.3 The responsibilities of the Juries

3.3.1 The responsibilities of the President of a Jury:

a) summoning the meetings of the Jury,

b) appointment of opponent for the appraisal of the bids on the basis of the proposal put forward by the Jury; forwarding of the list of the opponents to the Office,

c) preparation of the ranking of the Jury for supporting bids and executes the Jury forms on the basis of the decisions made by the Jury,

d) approval of the working plans of the research contracts,

e) checking the technical performance of the interim reports with the involvement of experts and putting forth proposals concerning the continuation of financial support,

f) appointment of opponents for the appraisal of the closing reports on the basis of the proposal of the Jury,

g) provision for the protection of the anonymity of the opponents involved in the tender,

h) putting forth proposal to the President of the College on issues and disputes submitted by bidders (budget expenditure reallocation, deadline modification, change of participants, replacement/substitution of theme leader, change of research place, procurement of special equipment).

3.3.2 The responsibilities of a Jury:

a) proposal of Hungarian and/or foreign experts for the appraisal of bids and provision for the confidential treatment of the names of the opponents,

b) ranking of the bids on the basis of ht scores assigned and the opinions expressed by the opponents as well as on the basis of the appraisal by the Jury, and preparation of proposal concerning their financial support, to the College,

c) putting in proposal concerning the opponents of the appraisal of interim and closing reports,

d) evaluation of the research results on the basis of the opinions expressed by opponents,

e) monitoring the various research activities,

f) the position formulated by the Juries shall be represented at the meetings of the College by a member of each Jury.

3.4 The scope of responsibilities of the Office

3.4.1 The responsibilities of the Office:

a) announcement of tender invitations, receipt, format check and registration of bids,

b) administrative tasks associated with the appraisal of bids, forwarding of bids to Juries and opponents, preparation of lists, preparation of decisions to be made,

c) notification of bidders, administration of the conclusion of contracts, performance of administrative duties,

d) transferring aid amounts to research places,

e) financial audit of annual and closing reports, forwarding of such to Juries and opponents for technical/professional control,

f) posting of assignment contracts, payment of fees to opponents, experts and professionals,

g) correspondence with theme leaders of bids, advisory activities,

h) subject to the decision of the OTKA Committee implementation of asset and software procurements with the involvement of external organisations within the framework of instrument and library related bids,

i) provision of services (rooms for committee meetings, printing capacity, mail service),

j) forwarding of tendering forms, interim and closing report forms, OTKA Newsletters and other publications, to bidders, institution managers and committee members.

3.4.2 The responsibilities of the Director:

a) organisation of meetings of the OTKA Committee, preparation of memoranda,

b) implementation of the decisions made by the OTKA Committee,

c) preparation of the draft annual budget of OTKA on the basis of the proposal elaborated by the OTKA Committee,

d) preparation of OTKA?s annual financing plan,

e) semi-annual and annual report on the expenditure of the funds of OTKA,

f) preparation of reports and statements for the OTKA Committee and superior organisations,

g) provision of information to the various bodies of OTKA,

h) liaising with domestic and foreign funds and organisations that provide support to scientific research,

i) provision of information to executives of ministries and institutions,

j) conclusion of contracts with bidders on behalf of the President of the OTKA Committee,

k) conclusion of contracts of assignment with opponents and experts on the basis of the authorisation granted by the President of the OTKA Committee,

l) preparation of the Organisational and Operational Rules of the Office and submission thereof to the President of the OTKA Committee for approval,

m) procurement of approval by the President of the OTKA Committee and the Secretary General of the Academy, of the annual budget plan of the Office,

n) preparation of report on the semi-annual and annual expenditure of the funds of the Office,

o) appointment, in a delegated power, of the employees of the office - as approved by the President of the OTKA Committee - and exercising the rights of the employer with respect to such employees,

p) management of the activities of the employees of the Office to perform the duties of the Office,

r) conclusion of contracts associated with the performance of the duties of the Office, with external organisation,

s) preparation of publication on the decisions made by the OTKA Committee on the supporting of bids,

t) organisation of the publication of the OTKA Newsletter, the annual reports on the operation of OTKA and of the summaries of research results, procurement of the creation and maintenance of the OTKA home page on the internet.

3.4.3 The operating regime of the Office

The operation of the Office is governed by the Organisational and Operational Rules prepared specifically for the Office and approved by the President of the OTKA Committee.

4.1 Financial aid shall be granted by OTKA through open competitive bidding. (Section 4 (1) of the Act). The types of tenders: thematic project tenders, tenders for young researchers, fellowship, procurement of appliances, library development, tenders for research in international co-operation, participation in conferences, organisation of conferences in Hungary, supporting of publications.

4.2 Invitation of bids shall be put out by the President of the Committee - on the basis of the proposal by the OTKA Committee. (Section 4 (2) of the Act). The Office shall provide for the publication of the tender invitation in a daily paper of nation-wide circulation and in the OTKA Newsletter as well as on the Internet - tender invitations shall be forwarded to the major research places.

4.3 Invitations of thematic bids shall be put out by the OTKA Committee once a year - bids shall be submitted before a deadline set in the spring of each year, appraisal shall be completed by the end of the year and funding shall be launched from the next year.

4.4 The bidding forms shall be elaborated by the Colleges and shall be submitted to the OTKA Committee for approval. Bidding form shall be available - free of charge - at the OTKA Office and at the research places, or may be downloaded from the Internet.

4.5 Bidders shall submit the required number of copies of the precisely executed bidding forms along with the necessary attachments, to the OTKA office, before the expiry of the defined deadline. Bids may be submitted on an ongoing basis, but the OTKA Committee shall set the deadline before which bids are to be received in order to be appraised in the given tendering period.

4.6 Individuals, research teams and institutions may enter their bids. Theme leaders shall be Hungarian citizens. The OTKA Committee shall submit a proposal to the President concerning the group of bidders to be targeted by the given tender invitation and the type of the tender.

4.7. Holding of a scientific degree shall be a pre-requisite for the submission of thematic bids - this requirement may be relinquished only in the case of outstanding scientific achievements. Young researchers (individually or in groups of individuals each below the age of 35 in the year of the submission of their bid) with promising research concepts may submit youth bids. University students may only be participating researchers of a thematic bid.

4.8 A bidder may submit more than bids but one individual bidder may participate in a maximum of three projects supported by OTKA and may be the theme leader of no more than two of such three projects.

4.9 Members of the OTKA Committee shall not participate in projects contained in bids for OTKA support submitted during the term of their appointment. (Section 4 (6) of the Act)

4.10 OTKA may provide financial support for a thematic bid for three years in general - or under special circumstances - for a maximum of five years. (Section 4 (7) of the Act)

4.11 From the OTKA budgetary appropriation (Section 4 (4) of the Act):

Personal expenditures and associated taxes/contributions and material as well as investment type expenditures may be covered, in the form of

a) current expenditures associated with scientific research,

b) participation in international scientific research,

c) scholarship grants (with special regard to the necessity of promoting scientific activities of young researchers),

d) financial support to publication activities, and

e) costs associated with the procurement of instruments, equipment and other necessary means of scientific research (in the framework of bids for specific themes, infrastructure development).

4.12 OTKA appropriation may not be expended on construction, renovation or real estate procurement. Financial assistance granted to bids shall not provide coverage for profit. (Section 4 (4)-(5) of the Act)

4.13 The OTKA Committee may undertake commitments - including the commitments undertaken in prior years - for the next two years up to 85% of the current year?s budgetary appropriation. (Section 4 (8) of the Act)

5.1 Proposals concerning the procedure of the appraisal of the bids shall be put forward by the Colleges and they shall be approved by the President of the OTKA Committee. The opponents? and the Juries? appraisal sheets shall be elaborated by the Colleges. The key criteria of the appraisal of the bids: the basic research nature of the theme of the research, its scientific significance, the expected results, the personal conditions of the research, the expected efficiency of the bidders, the feasibility of the research, the financial rationale of the requested aid, scientific results to date (publications, references), scientific results achieved on the basis of earlier closed projects with OTKA aid and their utilisation. The opponents shall elaborate the justification of their decision in the narrative justification of the scores assigned in the appraisal.

5.2 Bids submitted by members of the Scientific Colleges shall be appraised by the OTKA Committee on the basis of the proposals put forth by the Presidents of the Colleges, those submitted by the Presidents of Juries shall be appraised by the competent Scientific College. No individual with an interest in a given bid, nor one biased in any other way shall participate in the evaluation process of such bid or vote on its financial support. (Section 4 (6) of the Act)

5.3 Bids received by the OTKA office shall be recorded, checked for format, entered in the computer registry and allocated to the competent Jury as specified in the bids. A series of the bids shall be forwarded by the OTKA Office to the competent Jury. Bids not assigned to Juries or re-directed between the various Juries shall be assigned to a Jury with a competency of appraisal - in agreement with the Presidents of the Juries concerned.

5.4 Juries shall designate three opponents plus one reserve opponent - if possible - for each bid. The Office shall forward the bids for appraisal on the basis of the lists of opponents put together by the Presidents of the Juries, along with a letter of invitation, appraisal form and the contract of assignment. In the case of a bid that is to be forwarded to a foreign opponent, the bidder shall be requested to submit an English version of the bid. Provision for the preparation of the invitation language in the given foreign language shall be made by the President of the given Jury. The Office shall forward the opponents? opinions to the President of the Jury concerned, as received, on an ongoing basis. Should an invited opponent decline to undertake the appraisal of a bid the Office shall forward the bid to the spare opponent, or where no such individual exists, the President of the Jury shall be asked to designate another opponent. Both the Juries and the Office shall provide for the confidential treatment of the names of the opponents. (Section 5 (1) of the Act).

5.5 The Juries shall appraise and rank bids on the basis of the experts? opinions and scores and they shall submit proposals concerning the granting of financial support, on the basis of the limits specified by the Colleges. (Section 5 (1) of the Act). The ranks defined by the Juries shall be public. The Juries shall receive from the Office the executed jury sheets for the various bids and shall enter the narrative justification supporting their decision. The Presidents of the Juries shall prepare narrative reports to the Colleges on the findings of the appraisals.

5.6 On the basis of the comments of the technical juries, in view of the priority scientific research directions established by the OTKA Committee the Scientific Colleges shall submit proposals to the OTKA Committee on the supporting of bids, with the appropriation allocated in a breakdown by the key items of the expenditure plan. (Section 5 (1) of the Act) The final decision shall be made by the OTKA Committee.

5.7 The Juries involved in inter-disciplinary bids shall each designate their appraisal. Proposals concerning bids involving several Juries within a College shall be put forward by the given College, in the case of bids involving several Colleges the given Colleges shall put forth joint proposals concerning the support to the bid, specifying the funding source.

5.8 Bidders shall be informed of the decision made by the OTKA Committee within 30 days of decision making: in the case of thematic bids the opponents? opinions shall be delivered without identifying the opponents and accompanied by the opinion of the Jury in support of the decision made by the Jury. The OTKA Committee shall disclose its decisions in a separate edition of the OTKA Newsletter. (Section 5 (3) of the Act)

6.1 On behalf of the President of the OTKA Committee the OTKA Committee executes contracts with bidders granted OTKA?s financial support (hereinafter: űtheme leader?) and the research places providing the requirements of the research, using the contract form approved by the OTKA Committee (Section 6 (1) of the Act)

6.2 The amount of the financial aid provided by OTKA shall be managed, in the case of a research place belonging to the sphere of Treasury financing, among the appropriations of the research place, in the case of other research places on their respective bank accounts. Payment and performance obligations may be undertaken to the debit of the aid amount only by the theme leader and costs may be accounted only in accordance with the theme leader?s written instruction, with the exception of the coverage for overhead costs and the administration costs. (Section 6 (2) of the Act).

6.3 The conditions of the expenditure of financial aids won through bids submitted for infrastructure development shall be contained in the contract concluded between the OTKA Committee on behalf of the President of the OTKA Committee and the successful bidder. (Section 6 (3) of the Act)

6.4 The OTKA Committee imposes the following rules to be followed in the case of thematic research contracts:

a) The research place - or the organisation managing the fund - may be a domestic institution specified in the bid, the work, place of the theme leader or that of any other researcher participating in the project.

b) The overheads (expenses) that may be charged by the research place may amount to a maximum of 15% of the direct expenditures (personal remuneration, trips abroad, participation in conferences, purchase of inventories, other expenditures), unless otherwise provided by law.

c) The management cost that may be charged by the institution may amount to 2% of the direct costs.

d) Where only fund management is proven to be performed by the institution, only the costs of such fund management may be charged.

e) The theme leader may be paid up to 20% of his/her basic salary in the form of an assignment fee - as specified in the research contract.

f) The various Colleges have established additional rules on personal payments from which they grant exemption only in especially justified cases:

- In the case of bids in the areas of life sciences and physical sciences the personal payments shall not exceed 305 of the aid amount (annually).

- The fee payable for the theme leader in the case of bids in the areas of social sciences shall not exceed 20% of the aid amount.

g) The total aggregate amount that may be drawn by any one researcher - as theme leader or participating researcher - under all of the OTKA themes concerned shall be established each year by the OTKA Committee.

h) In the case of the employment of a participating organisation the same rules shall apply to the participant?s cost schedule.

6.5 A research contract shall provide only the amount falling on the first year of the research off the aid amount. The disbursement of the aid over the subsequent years is subject to the performance of the researcher in the prior year and the annual central budgetary subsidy of OTKA.

6.6 Within the term of the contact the residual amounts of the originally granted aid may be carried over to the next year. (Section 6. (5) of the Act)

6.7 The attachments to a research contract include the lit of the participants of the implementation of the research contract, the work plan of the research in an annual breakdown, the cost schedule: in an annual breakdown and in an breakdown by legal title, the planned list of the assets to be procured as investments in the course of the research as well as the attachments required for the provision of information to the Treasury.

6.8 The contracts shall be signed by the theme leader, the chief executive of the research place or a person designated by him/her and the Director of the OTKA Office on behalf of the President of the OTKA Committee. The cost schedule shall be co-signed by the head of the financial department of the OTKA Office and the economic official of the fund managing organisation.

6.9 The tangible assets and inventories purchased by the successful bidder with the OTKA aid money during the course of the research shall be recorded in the asset registry of the research place providing the requirements of the research activity, for the period of the validity of the contract (Section 6 (4) of the Act) and these shall be stated in its annual balance sheet. Such assets shall not be discarded or alienated during the term of the contract.

6.10 In the case of a change of the research place with the permit of the College the theme leader shall be entitled to transfer the OTKA research and the assets procured to the debit of the research funding - within the term of the contract - to the new research place.

6.11 Upon any change of the terms and conditions specified in the contract or upon the expiry of the contract or in the case of failure of the supported research activities decisions on the unused appropriations and, on the right of disposal of the purchased tangible assets and/or inventories shall be made by the President of the OTKA Committee, in connection with the appraisal of the results of the research. Where a support agreement is violated the President of the OTKA Committee decides - on the basis of the proposals put forth by the Presidents of the Colleges - whether or not the aid amount has to be repaid. (Section 6 (6) of the Act)

6.12 The term of a research project may be extended once and for up to a year, or may be suspended once for up to one year, but the whole term of a research project shall not be longer than five years.

6.13 The technical/professional revision of the working plans of the contracts shall be carried out by the Juries, on the basis of the authorisations granted by the Colleges. they check the tasks undertaken by the theme leader in comparison with the research theme specified in the bid, in terms of the aid amount, in an annual breakdown, in line with the costs specified in the cost schedule of the contract. The work plan of the research contract, its cost schedule or the list of participating researchers may deviate from the specifications of the contract only under circumstances justifying such deviation and only in accordance with the purpose of the aid granted to the given bidder.

6.14 The format of the contracts and their financial aspects shall be checked by the OTKA Office.

6.15 The Office may endorse only professionally/technically approved and financially and formally flawless contracts.

6.16 For infrastructure bids the OTKA Committee shall formulate a separate contract arrangement specifying the rights and obligations of the contracting parties - the OTKA Office and the beneficiary institution.

7.1 The OTKA Office files application through the supervisory organ for the aid amount appropriated by the Budget Act for the OTKA programmes to be disbursed from the central budget in accordance with the financing plan approved by the OTKA Committee.

7.2 On the basis of the financing plan approved by the OTKA Committee the Office arranges the transfer of the amounts to the research places.

7.3 The Director of the Office may effect payments to the debit of the OTKA Programmes? appropriation on the basis of the valid contracts concluded on the basis of the OTKA Committee, on the instructions issued by the President of the OTKA Committee and on the written instructions issued by the Presidents of the Colleges, to the debit of their own limits.

8.1 Successful bidders shall report on the expenditure of the aid amount won through the tendering process and on the progress of the research project [not including the aids won for infrastructure development] in accordance with the schedule prescribed in the contract or at least once every year, to the OTKA Committee which makes its decision on the acceptance of the such reports - on the basis of expert opinions - and on the continued provision of the financial assistance, or on the amendment or termination thereof, as appropriate. The appraisal begins with the evaluation of the achievements of the first full year of the research. (Section 7 (1) of the Act)

8.2 The annual audit of thematic projects shall take place following the year under review on the basis of the interim (financial and technical/professional) report submitted before the deadline set by the Office. The OTKA Office shall deliver pre-printed forms - as agreed with the Colleges and the OTKA Committee - to each theme leader for the purposes of the annual reports.

8.3 Where a theme leader fails to submit the mandatory annual report before the deadline expires, the continuation of the assistance shall be submitted. Until the performance of any unperformed settlement or reporting obligation of a theme leader with respect to any OTKA contract the OTKA Committee shall be entitled to withhold the aid moneys under other OTKA contracts of the same theme leader as well.

8.4 The Juries shall be in charge of verifying the contents of the technical/professional reports. One member of a Jury who is an expert of the given bid shall be asked to evaluate the bid - where there is no expert of the given field in the Jury, an external expert shall be invited. Juries may send separate committees to perform on-site inspections of research activities, they may ask the theme leader to submit supplementary information and where they see fit, they may submit a proposal to the College on the suspension of the continuation of the support.

8.5 Incoming interim reports shall be checked for format and financial compliance by the Office. Wrong settlements shall be returned to the theme leader for correction.

8.6 The Office shall accept interim and final reports only if the technical/professional is approved by the Jury and the financial accounts are in order.

8.7 The theme leaders of bids concerning appliances shall submit annual reports during the term of their contracts in accordance with the conditions thereof, on the measurements taken with such instruments and the publications that shall have appeared on them. The purpose of the requirement of such annual reports is to monitor the use in the public interest, the degree of utilisation of and the ongoing provision of measurements taken with the instruments purchased with OTKA moneys. (Section 7 (4) of the Act)

8.8 The OTKA Committee shall appraise the results of supported research projects that are suitable for utilisation as innovations in co-operation with the National Technical Development Board, as a priority perspective in the course of the regular appraisal of the reports on the supported projects. (Section 7 (3) of the Act)

9.1 Upon the (contractual) completion of the research the theme leaders shall prepare closing reports on the successfulness of the activities and the expenditure of the appropriations - on the basis of the criteria approved and within the deadline fixed by the OTKA Committee. (Section 7 (2) of the Act).

9.2 Should a theme leader fail to file the closing report it shall not be eligible for any further OTKA grant until the submission of such report.

9.3 The Juries shall appoint an opponent for the technical/professional appraisal of the closing reports. The Juries shall evaluate the research reports on the basis of the opinions filed by the opponents and shall submit a proposal to the Colleges for the qualification of the reports. (Section

7 (2) of the Act)

9.4 The financial accounts of the closing reports shall be audited by the OTKA Office.

9.5 The evaluations of the closing reports shall be taken into account by the appraising bodies in deciding on the granting of future aids.

9.6 The OTKA Committee bring out publications on the summaries - in Hungarian and English - of the closing reports.

9.7 The summary of the appraisal of the closing reports shall be disclosed in the OTKA Newsletter. (Section 7 (5) of the Act)