Made in accordance with Article 3(6) of the Statute of the European Ombudsman[1]

The background to the complaint

1. This complaint concerns a tender procedure. The contracting authority is the European Commission, Directorate-General for Taxation and Customs Union (DG TAXUD). The contract is for hardware and building infrastructure, as well as IT management and related services to support the tax and customs policies in the EU. The value of the contract is EUR 130 000 000 (+/- 20%), and its duration is a total of five years. The complainant is a consortium that submitted a bid for the contract in question.

2. On 1 October 2011, the Commission published the contract notice for the tender procedure. By 10 February 2012, the closing date for the submission of tenders, the Commission had replied to 218 clarification questions submitted to it and posted the answers on DG TAXUD's website.

3. From 14 March to 21 May 2012, the Evaluation Committee met to discuss and to decide on the selection and exclusion criteria as well as the award criteria, to carry out the financial evaluation, and to close the procedure.

4. On 5 July 2012, the Commission informed the complainant that its bid was unsuccessful and enclosed extracts of the evaluation report concerning it.

5. On 24 July 2012, the complainant requested additional information regarding the reasons for the rejection of its offer, the characteristics and relative advantages of the winning tender, and the name of the successful tenderer.

6. In addition, the complainant drew the Commission's attention to two issues concerning (a) a conflict of interest, and (b) the price evaluation.

7. As regards (a), the complainant stated that it was aware that one of the tenderers was in charge of several contracts at DG TAXUD. If, under a different contract, that company were to test the deliverables under the present tender procedure, it would have a conflict of interest. The complainant asked the Commission to specify the detailed measures that had been put in place in order to guarantee that there would be no risk of a conflict of interest in the event that the tenderer in question were to win the present tender.

8. As regards (b), the complainant argued that one of the potential reasons for the winning tenderer offering a low price could be off-shoring to low-cost service providers. Given that this was forbidden, the complainant asked the Commission to confirm that the necessary processes were in place to prevent off-shoring in the solution proposed by the winning tenderer.

9. In its reply of 31 July 2012, the Commission enclosed extracts of the evaluation report of the winning tender containing information about the name, the characteristics and the relative advantages of the winning tenderer.

10. Concerning the two aforesaid issues raised by the complainant, the Commission argued that (a) the measures described in the winning tender guaranteed that the winning tenderer would not be in a conflict of interest situation in delivering the services covered by the present tender procedure in parallel to its other contracts with DG TAXUD.

11. Furthermore, the Commission stated that (b) the winning tenderer and its subcontractors fully respected the requirements as specified in the Tendering Specifications and that the services covered by the contract would be implemented within the territory of the EU Member States.

12. On 3 September 2012, the complainant wrote to the Commission and stated that it was surprised to read that the Disaster Recovery Site ('DRS') proposed by the winning tenderer was not a Tier-4 solution[2]. The complainant argued that this was a mandatory requirement of the tender, which was confirmed in the Commission's replies to questions by tenderers. Specifically, the complainant pointed out that Section 9.2.21 of Annex II.A.2 of the Tender Specifications provides: "A disaster recovery site (Tier4 level) should be provided at least 100 km away from Luxembourg (Kirchberg) to ensure a total availability in case of disaster to complement the Main and Backup data centre". Moreover, in its replies to questions by tenderers, the Commission explained that "the disaster recovery site must be Tier level 4"[3].

13. On this basis, the complainant argued that, although the Tier-4 requirement was extremely important for the Commission, the evaluation report for the winning tenderer stated that the proposed disaster recovery site "is only Tier-3 compliant whereas Tier-4 was requested in the technical annex". Accordingly, the complainant stated that it did not understand why the failure to respect this important specification had no significant impact on the evaluation and expressed doubts about the equal treatment in the evaluation of the offers made. Moreover, the complainant wondered whether the proposed Tier-3 (instead of Tier-4) solution could be considered as a variant, even though it is clear that variants were not allowed under the tender specifications.

14. In its reply of 11 September 2012, the Commission confirmed that the tendering specifications and the answers to the questions provide for a Tier-4 compliant DRS. Although the winning tenderer proposed in its bid to implement a Tier-3 DRS, "this element cannot itself automatically involve the exclusion of its bid as it does not constitute either an exclusion criterion or a selection criterion". The Commission explained that the Evaluation Committee took this element into account, gave a negative evaluation and, thus, awarded the winning tenderer fewer points. It also noted that the Evaluation Committee concluded that this element did not result in a lack of conformity with the tendering specifications and stated that "the advantages however outweigh the weak points". Finally, the Commission pointed out that the financial elements linked to the equipment for the DRS had no impact on the best-value-for-money result.

15. In its letter to the Commission of 21 September 2012, the complainant contended that the winning bid was not in conformity with the tendering specifications. Specifically, in its replies to questions by tenderers, which according to the Guidebook are "an integral part of the tendering specifications"[4], the Commission clarified that the DRS "must be Tier level 4". The complainant also invoked Section 5.5.3.3 of the manual on public procurement in the Commission, according to which tenders will be rejected if they propose a solution different from the one that is requested. On this basis, the complainant argued that the Commission had failed to treat all bidders equally and that this distorted competition.

16. On 26 September 2012, the Commission confirmed its previous replies and stated that the tender submitted by the winning tenderer met the requirements as set out in the tendering specifications and the replies to clarification questions. The Commission confirmed that the contract was awarded to it.

17. On 4 December 2012, the complainant lodged this complaint with the European Ombudsman.

The inquiry

18. The Ombudsman opened an inquiry into the complaint and identified the following allegation and claim:

1) In carrying out the evaluation of the offers submitted in response to the invitation to tender concerned, the Commission infringed the relevant applicable rules and principles.

2) The Commission should compensate the complainant for all the damages sustained including, but not limited to, the tender participation expenses (EUR 1 500 000) and loss of profit.

19. In the course of the inquiry, the Ombudsman received the opinion of the Commission on the complaint and, subsequently, the comments of the complainant in response to the Commission's opinion. In conducting the inquiry, the Ombudsman has taken into account the arguments and opinions put forward by the parties.

Allegation that the Commission infringed the relevant applicable rules and principles

Arguments presented to the Ombudsman

20. In support of its allegation, the complainant argued that the Commission: (i) wrongly considered that the winning tender was in conformity with the tendering specifications; (ii) failed to take measures to ensure that the winning tenderer does not have a conflict of interest; and (iii) failed to establish the necessary procedures so as to ensure that the services provided under the contract will be implemented within the territory of the EU.

21. In its opinion, the Commission provided a detailed account of the background to the complaint and of the steps leading to the selection of the winning tenderer. Specifically, the Commission informed the Ombudsman that the Evaluation Committee proceeded to both a technical evaluation and a financial evaluation. The Commission explained that the offer with the highest technical score received a Normalised Quality Indicator (NQI) of 100 points and the remaining offers received a lower NQI in proportion to their technical scores. Technically, the complainant's was the best offer, the winning tenderer having scored second best. Similarly, for the financial evaluation criterion, the cheapest offer received a Normalised Price Indicator (NPI) of 100 points and the remaining offers received a lower NPI in proportion to their prices. The winning tenderer's offer was considered the cheapest; indeed, it was cheaper than the complainant's by about EUR 30 000 000. To identify the best value for money offer, a formula according to which the NQI counted for 70% and the NPI for 30% was applied. Based on this formula, the winning tenderer obtained 98.59% and the complainant 94.06%. In light of this, the winning tenderer offered the best value for money and was awarded the contract.

22. Against this background, regarding the complainant's argument (i), the Commission acknowledged that the Tendering Specifications, as well as the answers to the tenderers' questions, indicated that a Tier-4 level DRS was needed. In this context, the Commission argued that this requirement was evaluated as one among the 33 elements under the award criterion "Fitness of the proposed organisation, methods, processes and services to sustain operational excellence" in the technical evaluation.

23. According to the Commission, the Evaluation Committee took note of the fact that the winning tenderer's proposal did not formally warrant a Tier-4 classification. However, the Commission argued that although the proposed DRS was set up within a Tier-3 building, the computer room provided for in the offer would fully correspond to Tier-4 requirements. The Commission therefore stated that "although, formally, the Disaster Recovery Site proposed by the winning tenderer was not a Tier-4 level, however, it reached the standards of a Tier-4 level and was thus in conformity with the technical needs of the Commission".

24. However, the Commission observed that the Evaluation Committee "took this formal aspect into consideration by giving the winning tenderer a negative evaluation for this element and, thus, fewer points". Specifically, the evaluation report states: "The proposed disaster recovery site is only Tier-3 compliant whereas Tier-4 was requested in the Technical Annex". However, that report concludes: "The tenderer's vision regarding this criterion is truly innovating and brings interesting solutions while ensuring operational excellence. The advantages however outweigh the weak points".

25. Based on the Financial Regulation and the Implementing Rules applicable at the time, the Commission stated that it could not reject the winning tender since it complied with the tendering specifications. The Commission elaborated on this issue and pointed out that, on a technical level, the solution proposed by the winning tenderer was well above the targets of system-availability outlined in Annex II 'Technical Specifications' of the tendering specifications and was hence perfectly in line with the requirements.

26. On a financial level, the price element associated with the DRS did not influence the financial evaluation because the cost of the DRS accounted for only EUR 350 000 of the difference in price between the complainant's and the winning tenderer's offer. Given that the complainant's offer amounted to EUR 30 000 000 more than the winning tender, the Commission argued that eliminating the winning tenderer's offer solely on the basis of the DRS element, a non-essential requirement, would have plainly constituted a decision contrary to the principle of proportionality and, thus, contrary to good administration.

27. In light of the above, the Commission argued that its evaluation, ranking and final selection complied with the relevant applicable rules, with the principles of proportionality, equal treatment and transparency, and with the principles of good administration.

28. As regards the complainant's argument (ii), the Commission argued that the winning tenderer described measures to mitigate any possible conflict of interest (separate teams; separate tools and infrastructure; separate management and reporting structures) that guaranteed that it would not be in a conflict of interest situation in delivering the services under the contract at issue in parallel with its other contracts with DG TAXUD. The Commission clarified that the winning tenderer had no control or supervision responsibilities under its contracts with DG TAXUD, other than verifying that the software was in line with the established service-level agreements. Furthermore, it stressed that both the Commission itself and a quality control contractor carried out the supervision of those agreements.

29. As regards the complainant's argument (iii), according to the Commission, the Evaluation Committee's examination showed that the winning tenderer, including its subcontractors, respected the requirements specified in the Tendering Specifications, in that the services under the contract would be implemented within the territory of the EU Member States. The Commission pointed out that the winning tenderer is based in Brussels and has subcontracted to companies based in the Netherlands, Poland and Romania. All services within the scope of the contract will therefore be delivered from within the EU.

30. The Commission insisted that the evaluation procedure had been carried out in conformity with the relevant applicable rules and therefore considered that the complainant's claim for compensation of the expenses incurred in preparing its tender and of the loss of profit was not justified.

31. In its observations, the complainant argued that the Commission admitted that a Tier-4 DRS was required and that the winning tenderer's offer did not meet that requirement. The complainant added that the winning tenderer's failure to respect this requirement should have had an important impact on the technical evaluation as well as on the financial evaluation. The complainant disagreed with the Commission that this was not an essential requirement due to the fact that it did not influence the financial evaluation. In addition, both the tendering specifications and the answers to questions specified that a Tier-4 DRS was needed. In the complainant's view, because of this requirement, several companies did not participate in the tender procedure, given that a Tier-4 DRS was not available in Belgium. Consequently, the complainant argued that the Commission failed to ensure equal treatment for potential tenderers and thus created a distortion of competition.

The Ombudsman's assessment leading to draft recommendations

32. The Ombudsman considers it appropriate to start her analysis by examining arguments (ii) and (iii) put forward by the complainant in support of its allegation.

33. As regards argument (ii), the Ombudsman notes that the Commission put forward specific arguments to support the view that there is no conflict between, on the one hand, the winning bidder's interests under the present contract and, on the other, any other contracts it has entered into with DG TAXUD. As regards (iii), the Commission explained that, taking into account the location of the winning bidder and its subcontractors, no services would be off-shored. Regarding both these arguments, the Commission made a case which at first sight appears convincing. What is more, the complainant submitted no argument in its observations to rebut the Commission's position. In light of this, the Ombudsman finds no maladministration by the Commission in this regard.

34. As regards the complainant's argument (i), the Ombudsman notes at the outset that, according to settled case-law, the Commission enjoys a broad margin of assessment with regard to the factors to be taken into account for the purpose of deciding to award a contract following an invitation to tender, and that review by the Court is limited to checking compliance with the procedural rules and the duty to give reasons, the correctness of the facts found and that there is no manifest error of assessment or misuse of powers[5]. The Ombudsman applies the same standard when dealing with complaints relating to tenders which have been submitted to her[6]. Specifically, the Ombudsman has continuously taken the view that it is for the administration organising a call for tenders to assess whether the applicants fulfil the conditions laid down in the call. The Ombudsman must not substitute her own assessment for that of the institution but should check whether the relevant procedures have been respected and whether the assessment made is vitiated by a manifest error[7].

35. The Ombudsman's review in the present case is thus limited to analysing whether, by considering that the winning tender was in conformity with the tendering specifications although it proposed a Tier-3 DRS solution when a Tier-4 was required[8], the Commission committed a manifest error of assessment.

36. In a nutshell, the complainant argued that the winning tenderer offered a solution that was prohibited under the tender specifications. The Commission argued that the requirement for a Tier-4 DRS was one of several non-essential requirements and that the solution offered by the winning tenderer, in fact, exceeded the system-availability requirements (and, therefore, met the Commission's needs) and only marginally affected the evaluation of the tenders under the financial evaluation criterion.

37. The Ombudsman considers that it is clear from the tender file that the Commission asked for a specific solution and confirmed, in reply to several questions, that the alternative it finally accepted was not acceptable. It is thus clear that the Commission accepted an offer that did not correspond to what it had asked for. It is also clear that the Tier-4 DRS requirement, as the complainant argued, could have had the effect of dissuading potential bidders from taking part in the tender procedure concerned.

38. The Commission's submissions suggest that it considers the winning bidder's solution to be as good as, or even better than, the solution it required. The Ombudsman does not have to assess whether there may be advantages that could be derived from the solution proposed by the winning tenderer in comparison with the requirements expressly provided for in the tender documents[9]. What is decisive is that, as the Commission acknowledges, a Tier-4 DRS was required by the tender. The Ombudsman therefore reaches the conclusion that, in disregarding the Tier-4 DRS requirement when evaluating bids, the Commission committed a mistake.

39. Although the Commission did not expressly address the complainant's argument that the solution proposed by the winning tenderer was a variant, the Ombudsman considers it useful to add that, in the bpost judgment[10], the General Court, referring also to earlier case-law[11], clarified the difference between the concept of a 'departure' from the technical award criteria and that of a 'variant'[12].

40. Mindful of the above distinction, the Ombudsman considers that an alternative solution, such as the one proposed by the winning tenderer, which consisted in offering a Tier-3 level DSR when a Tier-4 level DSR was requested, can hardly be considered a simple 'departure' in relation to the requirements appearing in the tender specifications but should rather be interpreted as a 'variant'[13]. Given that, in accordance with Section 4.1.3 of the Guidebook, variants are not permitted[14], it would thus have been logical for the Evaluation Committee to disregard the offer submitted by the ultimately successful tenderer without further evaluation.

41. Finally, the Ombudsman is not convinced that arguments relating to costs put forward by the Commission are relevant in relation to the DRS requirement. In fact, as the Commission explained, the DRS requirement was considered within the technical evaluation of tenders, which is separate from their financial evaluation.

42. In light of the above considerations, the Ombudsman finds that, in considering that the winning tender was in conformity with the tendering specifications, the Commission made a manifest error of assessment under the relevant applicable rules. This constitutes an instance of maladministration.

43. Having found that the Commission committed an instance of maladministration, the Ombudsman underlines that it would be good administrative practice for the Commission to take the necessary measures to remedy this error. In these circumstances, the Ombudsman considers that, as a first step, the Commission should acknowledge the maladministration that has occurred. In this connection, the Ombudsman will make a draft recommendation.

44. As regards the complainant's claim for compensation (i) for tender participation expenses (EUR 1 500 000), and (ii) for loss of profit, the Ombudsman notes that, according to the case-law of  the Court of Justice, certain conditions have to be fulfilled for such a claim to succeed[15].

45. The Ombudsman notes, however, that the Commission, which took the view that no mistake had occurred, has so far not addressed the substance of the complainant's claim. It is therefore appropriate to make a second draft recommendation requesting the Commission to address the complainant's claim in light of the relevant case-law.

46. In light of the above, the Ombudsman finds that, by considering that the winning tender was in conformity with the tendering specifications, the Commission made a manifest error of assessment, which constituted an instance of maladministration. She therefore makes the following draft recommendations, in accordance with Article 3(6) of the Statute of the European Ombudsman.

The draft recommendations

On the basis of the inquiry into this complaint, the Ombudsman makes the following draft recommendations to the Commission:

The Commission should acknowledge that, by considering that the winning tender was in conformity with the tendering specifications, it committed maladministration.

The Commission should address the complainant's claim for compensation.

The Commission and the complainant will be informed of these draft recommendations.  In accordance with Article 3(6) of the Statute of the European Ombudsman, the Commission shall send a detailed opinion by 30 September 2014. The detailed opinion could consist of the acceptance of the draft recommendations and a description of how they have been implemented.

 

Emily O'Reilly

European Ombudsman