In 2019, the research institutes audited by NIK earned from about PLN 8 million to more than PLN 91 million. Only a small part of that revenue – only 11.5% - was made up by the results of scientific research and development works, that is effects of their core activity. Only one of the audited institutes made proceeds from the sale of patents, protection rights and licences to use inventions and utility models. Those proceeds represented only 0.12% of its revenue, though. It is no wonder that in the European Innovation Scoreboard in 2019, Poland took the 24th position out of 27 countries.
NIK auditors verified how two ministries supervised research institutes. According to NIK, the Minister of State Assets did not discharge his task properly. He did not define any supervision goals or objectives to be met by the institutes. As a consequence, the operation of entities reporting to the Ministry of State Assets, was not linked to the government strategies or innovation programmes (as opposed to entities reporting to the Minister of Climate). However, full verification of supervisory actions taken by the Minister of State Assets and their real effects was not possible due to significant gaps in the documentation.
Following the audit, NIK filed a report with the Prosecutor’s Office of possible criminal activity in the Institute of Power Engineering. In 2018, nearly PLN 1.5 million of work incentive was paid to employees of the Measuring Apparatus Laboratory (being part of the Institute). Though, in line with the Institute’s internal regulations, such incentives may be paid only when the Laboratory reported profits in the given year. In this case a loss of over PLN 263 thousand was posted. At the same time, the Laboratory manager was paid an incentive of over PLN 506 thousand.
Moderate innovators
Polish research institutes have a considerable scientific potential that should be used to raise innovativeness and competitiveness of our economy. Their functioning model adopted in 2010 did not prove very efficient in that regard. The institutes defined challenges for themselves, specified problems to be solved as well as development guidelines to follow. As a consequence, they focused on maximising their own revenue, instead of contributing to the economy development. Over 30% of the institutes made profits on property rent, not on research and development activity. That is one of the reasons why the research network Łukasiewicz was founded in 2018., in which 38 of over 100 research institutes were incorporated.
NIK took eight institutes from outside that network under the microscope – their financial management and achieved results, also in terms of using their work results to raise innovativeness of the Polish economy. In that regard Poland is still at the far end in the EU ranking. In 2019, our country occupied the 4th position from the end, finding itself in the group of “moderate innovators”. The ranking authors pointed to Poland’s poor results, e.g. in terms of companies’ innovative activity, small number of applications in the European Patent Office, or low proceeds from the sale of patents and licences abroad.
A diagnosis being part of the government’s Strategy for Responsible Development to 2020 (with a perspective to 2030 ) indicated that research institutes insufficiently pursue their mission to shorten distance between science and business. At the same time, the fact that companies are not very willing to cooperate with business and the world of science, has a huge impact on their innovativeness. Studies show that search for a project partner is often perceived by entrepreneurs rather as a formal requirement, needed to receive financial support, less as a source of economic benefits.
It is also not without significance that spending on research and development activity against GDP in Poland is still relatively low. In 2018, it was 1.21% of GDP and it was assumed that it would reach 1.7% in 2020. At the same time, the European Union planned an average increase to 3%.
Good financial standing of institutes
In the audited period, five in eight institutes audited by NIK conducted full research activity. The Oil and Gas Institute and the Institute of Power Engineering were in the best financial condition. Their annual revenue in 2018-2019 ranged from over PLN 65.5 million to about PLN 91 million. Moreover, a big part of their revenue (in case of the latter it was almost 80% in 2018) was their own revenue. It came mainly from the sale of devices and apparatus as well as results of scientific research and development works.
The Oil and Gas Institute was the only one to generate revenue on the sale of patents, protection rights and licences to use inventions and utility models. Nevertheless, in 2018 . it made up only 0.14% of the Institute’s total revenue, a one year later it was even less – 0.12%.
In terms of the revenue level, the Information Processing Centre took the 3rd place. In 2018, it earned a bit more than PLN 61 million and in 2019 nearly PLN 62 million. But the Centre’s own revenue made up only about 1.6-1.7% in that period and its main source was property rent. NIK found that from January 2018 to April 2020, the Centre did not sell any results of scientific research or development works, patents or protection rights.
A crucial part of the audited institutes’ revenue were subsidies and grants provided primarily by the Minister of Science and Higher Education, the National Science Centre and the National Centre for Research and Development. Funds for specific projects were also granted by the European Commission.
Only in case of two institutes: the Institute of Power Engineering and the Oil and Gas Institute, subsidies and grants represented less than 30% of revenue, whereas in the Institute of Plasma Physics and Laser Microfusion they made up about 90% (in 2019). NIK established, though, that the results of development works conducted there are to be delivered in the perspective of a few tens of years. Therefore, NIK stands in a position that this Institute should become part of the Polish Academy of Sciences (the Institute director has already pursued that direction).
Primary spending – employees’ salaries
Employees’ salaries absorbed most money from the audited institutes’ budgets. Their percentage ranged from 39% in the Institute of Nuclear Chemistry and Technology to 71% in KOMAG Institute of Mining Technology.
Average monthly gross salaries as of the end of 1st quarter 2020 totalled from over PLN 5 thousand in the Institute for Ecology of Industrial Areas to nearly PLN 10 thousand in the Information Processing Centre. In case of the latter, the level of salaries was affected by a nearly by 50% headcount increase in 2018-2019. As a result the cost of salaries under employment agreements went up by nearly 24%.
The NIK audit revealed that in the Institute of Power Engineering, salaries in individual groups of employees varied significantly. Also, the level of work incentive for the head of one unit was shockingly high. Average salaries of assistant professors in 2020 in the whole Institute ranged from over PLN 5.5 thousand to nearly PLN 18 thousand. As to engineers, it was from PLN 3 thousand to over PLN 14.5 thousand.
The biggest differences, especially among administrative and economic workers as well as engineers, occurred in the Measuring Apparatus Laboratory. They were often twice as low or twice as high as the average salary in the given profession. NIK also found significant differences in work incentive levels – their total amount paid to engineers from 1 January 2018 to 30 June 2020 was 34 times lower than the incentive paid to the Laboratory manager.
In case of six work incentive requests, the Supreme Audit Office filed a report with the Prosecutor’s Office of possible criminal activity.
Ineffective supervision of the Ministry of State Assets (MSA)
In the period audited by NIK, the Ministry of State Assets and the Ministry of Climate replaced the Ministry of Energy and the Ministry of Environment. Those changes had impact on the split of duties related to the supervision of research institutes.
On 15 November 2019, the Ministry of State Assets took over supervision of all 9 research institutes, which until then were supervised by the Ministry of Energy. From 21 March 2010, MSA has exercised supervision over 5 institutes and the Ministry of Climate over 7. The supervision comprised the institutes’ financial management, including their revenue and spending, but also their core activity: conducting research- as well as research and development projects, publishing results of scientific research, organising conferences on science and technology, taking actions aimed at using research results in practice – such as inventions and utility models, obtaining patents and protection rights.
The Minister of Climate properly discharged his obligations related to supervision, for instance by commissioning tasks to the institutes in terms of current government strategies on environmental protection. At the same time, NIK identified irregularities in case of the Minister of State Assets. His supervision over the institutes’ core activity was only on paper. Until May 2020, the Minister did not take any actions related to scientific research or development works conducted by the institutes; he did not allocate any tasks to the institutes, either.
Full verification of supervisory actions taken by the Minister of State Assets and their real effects was not possible due to significant gaps in the documentation. In the opinion of NIK, following liquidation of the Ministry of Energy, the Minister of State Assets did not ensure proper acquisition of files concerning supervision of research institutes.
MSA lacked required knowledge and complete supervisory documentation for 2018, and in case of the Oil and Gas Institute also for 2019. In the latter case, due to improperly conducted reorganisation, the Institute’s documentation was taken over by the Ministry of Climate, although it should be provided to the Ministry of State Assets. As a consequence, the lack of access to those files limited the MSA’s ability to exercise supervision over the Institute. Finally, as a follow-up of the NIK audit and efforts of the Minister of State Assets, the documentation on the Oil and Gas Institute returned to that Ministry.
According to NIK, the above shows that a consistent database should be developed and files – to be generated in the process of the institutes’ supervision – should be standardised. That is why, NIK addressed the above recommendation to the Ministry of State Assets.
