The case concerned the organisation of a tender procedure by the ECB for the provision of travel services to ECB staff and the handling of their travel expenses. A German travel service provider complained to the Ombudsman that the ECB had infringed the principle of equal treatment and non-discrimination by not dividing the procurement into two separate lots and by including a number of requirements that favoured the ECB's existing service provider.

The Ombudsman inquired into the issue and found that by bundling two travel service lots, without carefully assessing the merits of such bundling, the ECB committed maladministration. As the ECB had in the meantime awarded the contract, this maladministration could not be remedied. The Ombudsman closed her inquiry with a finding of maladministration against the ECB and a recommendation that it should take steps to ensure such maladministration does not recur in the future.

The background to the complaint

1. The complaint concerns how the European Central Bank (ECB) organised a public tender for the provision of travel services and the handling of travel expenses for its staff. The tender was launched in February 2015.[2] The complainant is a German travel service provider[3] which said that it wished to participate in the ECB's public procurement procedure for travel services for ECB staff and for the handling of travel expenses for ECB staff. The complainant complained to the ECB that the requirements laid down in the Contract Notice, and in the Invitation to Tender, were illegal. When the ECB rejected the complaint, the complainant turned to the Ombudsman in April 2015. The complainant in fact did not submit an offer under the procurement procedure.

The inquiry

2. The Ombudsman opened an inquiry into the complaint and identified the following allegation and claims:

Allegation

Certain tender requirements of the ECB's Tender Procedure for the provision of travel services and the handling of travel expenses are unjustified and violate the principles of non-discrimination and equal treatment of tenderers, also giving the impression that the ECB is privileging its incumbent travel service provider.

Claims

(a) The ECB should divide the tender procedure into two lots, one for the provision of travel services and one for the handling of travel expenses.

(b) The contract should start at the earliest two months after the notification of the tender award decision, in order to give the winning tenderer a reasonable period of time to take over the existing online travel booking system and server.

(c) The option of providing an airport office should be removed as a (sub-) criterion for the award of the contract.

3. The Ombudsman asked the ECB also to say how many eligible tenders were submitted and whether the contract was awarded to the travel services provider previously contracted by the ECB.

4. On 14 July 2015, the Ombudsman received the ECB’s response to the complaint. The complainant did not comment on the ECB's response . In May 2016, the Ombudsman made further inquiries, to which the ECB replied in June 2016.

Allegation that certain tender requirements are in violation of the principles of non-discrimination and equal treatment

Arguments presented to the Ombudsman

5. The complainant put forward three main arguments in support of its allegation.  First, the ECB did not divide the contract into two separate lots, one for the provision of travel services and one for the handling of travel expenses. The handling of travel expenses - which is not a core business of many providers of travel services - requires the use of temporary labour and thus requires tenderers to have a permit to supply temporary labour within the meaning of the German law. This resulted in discrimination between tenderers and unjustifiably restricted competition. Second, one of the specifications required tenderers to take over the existing online travel booking system (called "Cytric") within a period of four weeks, which would be impossible for any service provider other than the incumbent, giving the latter an unjustified advantage. Third, the fact that tenderers providing an airport office at Frankfurt/Main would be given an advantage unduly restricts competition.

6. In its response , the ECB said that the tender specifications had been drafted after consultation with an external consultant specialising in travel management and travel administration, who also provided assistance during the evaluation of the tender procedure.

7. As regards its decision not to divide the tender into lots the ECB stated that, while its procurement rules[4] do not require it to divide tenders into lots, it nonetheless adheres to the principles of transparency and publicity, equal access and equal treatment, as well as non-discrimination and fair competition. At the same time, the ECB is committed to the principle of cost-efficiency, seeking the best value for money for the procurement of goods, services and works. Therefore it also strives to define its tender specifications in a manner which best guarantees efficient and effective contract execution and, on this basis, takes decisions on whether to split certain procurements into specific lots.

8. The procurement in question was conducted as an open tender procedure for both the provision of travel services and the handling of travel expenses. The requested travel services included offline and online bookings for air, rail,  car rental, buses and hotels, based on a transaction fee model and using a specific  online  booking engine (that is, Cytric) which  constitutes  an  industry standard. In addition, the procurement encompassed an 'implant solution' at the ECB premises for the handling of travel expenses. On the basis of these principles and considerations, the ECB considered that the tasks to be performed by the 'implant solution' were closely linked to the tasks to be performed by the travel service provider and that separating these tasks into separate lots would therefore have led to a disproportionate disadvantage for the ECB.

9. If the ECB were to have two service providers, there would be a risk of miscommunication between the service providers due to different operating methods. This could also lead to situations where wrong information would be provided to ECB travellers. Moreover, the ECB would have to deal with cases of 'shifting responsibilities' between providers when, for example, it comes to incorrect bookings, thus incurring additional costs. Finally, the ECB asserted that the handling of travel expenses is a core business for many travel service providers.

10. As regards the requirement for tenderers to have a permit to supply temporary labour, the ECB explained that this is not a discretionary choice made by the ECB, but an obligation under German law. However, even against this background, the ECB took a balanced approach, enabling tenderers who do not hold a permit for the supply of temporary labour at the time when the contract notice was published to apply for such a permit with the competent German authorities and to provide proof of such a permit at the time of the award decision, at the latest.

11. Concerning the requirement to take over the online booking tool Cytric within four weeks, the ECB argued that since it uses a standard interface to connect to Cytric, and as Cytric is a widely used travel management software, and given that Cytric works on a plug-in plug-out basis, the period of four weeks should suffice for an external supplier to adapt its own application to Cytric.

12. On the matter of of providing an airport office, the ECB argued that in the case of unforeseen situations, such as strikes and flight cancellations, an airport office provides an advantage by ensuring efficient support directly through a contact person on site. Additionally, the ECB said that this criterion is optional and has a limited weight (that is, 5 points out of a total of 650).

13. As a side remark, the ECB added that a nearly identical tender procedure (with specifications that were substantially the same as in the current tender procedure) was carried out in 2011, resulting in applications from eleven commercial operators, among them the complainant. In the 2011 tender procedure, the complainant  did  not  raise any comments  or  objections  and submitted  its  bids  and  all  relevant supporting  documentation.

14. Finally, in relation to the complainant's inferred criticism that the tender was to be awarded to the incumbent travel service provider and the Ombudsman’s request for clarifications in this respect, the ECB stated that the tender procedure was still ongoing at the time of its response and that an award notice would be published in the Official Journal of the EU in due course.

The Ombudsman’s further inquiries

15. In light of the fact that it appeared that the ECB had in the meantime taken a decision on the award of the contract[5], the Ombudsman, on 24 May 2016, again asked the ECB to reply to the question of how many eligible tenders were submitted in the context of the 2015 procurement procedure. This was a question first posed by the Ombudsman in notifying this inquiry and which the ECB had neglected to answer.  The Ombudsman asked the ECB also to clarify whether, in advance of the tender procedure, it had carried out an assessment of the impact that the joining of the provision of travel services and the handling of travel expenses in one single lot could have on the number of bids it might receive (in comparison to the previous procedure, where, according to the ECB, eleven commercial operators submitted bids).

The ECB’s reply to the Ombudsman’s further inquiries

16. On 28 June 2016, the ECB replied that it had finalised the tender procedure and signed  a contract with the (then) incumbent travel service provider on 29 July 2015. Out of the nine offers received, only one was admissible. The ECB said it had not found it necessary, in advance of launching the tender procedure, to assess the possible impact on the number of bids which might be received of joining the provision of travel services and the handling of travel expenses in one single lot.

The Ombudsman's assessment leading to a recommendation

The ECB's decision not to split the tender procedure into lots

17. The ECB acknowledges that, as an EU institution organising a tender procedure, it must abide by the principles of transparency and publicity, equal access and equal treatment, as well as the principles of non-discrimination and fair competition, as laid down in its procurement rules[6] and in accordance with settled case-law.[7]

18. The principles of equal treatment and non-discrimination between tenderers aim at promoting the development of healthy and effective competition between undertakings taking part in a public procurement procedure.[8] The Ombudsman considers that dividing a contract into lots normally increases competition and makes it easier for companies to participate in the tender procedure. Indeed, in certain cases, competition can be achieved only by splitting the contract, since only a small number of operators, perhaps even just one, would otherwise be able to offer all the products or services requested, thus placing the contracting authority in a weak economic position.

19. The Ombudsman notes that neither the Financial Regulation^[9], nor the Procurement Directive^[10] apply directly to the ECB. The Financial Regulation applies only to EU institutions and bodies financed by the general budget of the European Union[11]. The Procurement Directive is addressed exclusively to Member States. However, the Ombudsman finds it useful to be guided by the Commission's manual on public procurement[12] as well as by the new Procurement Directive[13], which recommend the practice of contracting in lots as a means of fostering competition, unless the proper execution of the contract would be undermined by using lots.[14]

20. The ECB justified its decision by arguing that splitting the tender into lots would have resulted in a “disproportionate disadvantage” to it because of the possibility of miscommunication between ECB staff, the travel provider and the “implant” staff handling the travel expenses, as well as of problems caused by 'shifting of responsibilities'. The ECB also argued that splitting the tender into lots would conflict with the principle of cost-efficiency to which the ECB has committed.

21. The Ombudsman notes that, contrary to the impression which the ECB may have attempted to convey (see Para. 13 above), the previous tender procedure in 2010-2011[15], for the same services, was split into two separate lots. Consequently, in 2010-2011, the ECB does not appear to have had any concerns about there being a disproportionate disadvantage in potentially having two service providers. Furthermore, its concerns in this regard cannot be based on practical experience, given that both lots in the 2010-2011 procedure were won by the same service provider.

22. The Ombudsman understands however that a contracting authority may wish to adopt, for the sake of administrative convenience, and in the interests of reducing internal administrative costs, a one-stop-shop approach, by having only one company provide a number of services. Hence, it is possible for the ECB to justify this approach, in principle.  Indeed, the risk of miscommunication between service providers providing travel services and travel expense handling services is real, and joining the provision of these two services could arguably improve the efficiency and quality of the services sought by the ECB.[16]

23. However, while in principle it is possible that the bundling of lots into a single tender makes economic sense, the ECB’s reference to cost-efficiency deserves close scrutiny. The contract award notice[17] states that the total final value of the contract in 2015 was 1,200,000 Euro.  The contract award notice for the 2011 tender procedure[18] sets the final total value of the contract for the same set of services (and over the same time period) at 278,290,34 Euro. This suggests that the final total value, for the provision of what appear to be identical services, increased by approximately 1,000,000 Euro in four years.

24. It is true that the nature of the travel services provided has evolved; the number of travellers, the number of transactions and the amount of money to be spent on travel seem to have almost doubled. For the handling of travel expenses, the evaluation grid in the 2015 tender awards full marks if the tenderer can provide the ECB with five employees, an increase of two staff members compared to the 2011 requirement. Nevertheless, it is difficult to understand how a doubling of the volume of services required could explain a fourfold increase in the price for the services. The most obvious explanation for this increase was that there was a severe lack of competition for the tender (there was only one eligible bidder, which happened to be the incumbent service provider) and that the only eligible bidder had a reasonable certainty when it submitted its bid that it would have little or no competition. If the incumbent had feared that other bidders might enter that market, it is unlikely that it would have submitted such an expensive bid.

25. If it can be assumed, on the basis of the facts, that the incumbent was reasonably certain that it would be the only eligible bidder, the ECB should have had at least some awareness that, by bundling the lots, the incumbent would be the only eligible bidder.

26.  In these circumstances, the Ombudsman considers that the ECB should have carefully assessed the economic consequences of bundling the bids. It should have assessed to what extent bundling would have a negative impact on competition, and measured this against any possible internal efficiency gains, in order to arrive at a conclusion as to whether the bundling was detrimental to the financial interests of the Union (and, by extension, of EU citizens).

27. The ECB has said it did not consider it necessary, in advance of the tender procedure, to assess the impact that joining the provision of travel services and the handling of travel expenses in one single lot could have on the number of bids received. It is difficult to understand how the ECB could have taken the view that it was not necessary, in order to protect the financial interests of the EU, to assess in advance all of the factors which could have a bearing on its achieving the best value for money.  In the absence of a convincing explanation, the Ombudsman concludes that the manner in which the tender was organised constituted maladministration. Considering that the ECB has in the meantime awarded the contract, this maladministration cannot now be remedied. The specific requirements the tenderers had to fulfil

28. The Ombudsman notes that the contracting authority clearly has a margin of discretion in defining the criteria reflecting its service needs. The Ombudsman would find maladministration in this context only where a contracting authority acts manifestly outside this margin of discretion.

The issue of providing an airport office

29. The Ombudsman notes the ECB's argument that such a service would ensure efficient support directly on site in the event of flight cancellations or strikes. The Ombudsman acknowledges that tenderers not having an airport office were indeed, to a certain degree, disadvantaged. However, the Ombudsman considers the reasons given by the ECB to justify 5 extra points, out of a possible 650, to be given to tenderers with an airport office to fall within the ECB's margin of discretion.

The requirement for tenderers to have a permit to supply temporary labour

30. The Ombudsman considers the ECB's explanations provided in the context of the present inquiry to be reasonable and to fall entirely within its margin of discretion.

The requirement to take over the online booking tool within four-weeks

31. The Ombudsman notes that Cytric is a standard travel management tool., Following the expiry of its then existing contract, the ECB would need to be able to ensure that the new service provider could effectively replace the previous one and guarantee proper servicing within a relatively short time-span. Against this background, and given that Cytric works on a plug-in/plug-out basis, the Ombudsman considers that the deadline of four weeks was reasonable and entirely within the ECB's margin of discretion.

Other issues

32. The Ombudsman notes that the complaint was made on the basis of a concern that the tender procedure was designed to favour the ECB's incumbent service provider. In its response to the Ombudsman, the ECB stated that the tender procedure was still ongoing. However, the Ombudsman notes that the ECB's response was sent to her on the day before the date of the decision awarding the contract to the incumbent service provider. Given that the Ombudsman had, from the outset, asked the ECB to say whether the contract had been awarded to the incumbent provider, it is disappointing that the ECB chose to avoid answering this question by sending its response on the day before the contract was awarded - to the incumbent provider.  Knowing that the award decision was about to be taken, the ECB could have opted to delay its response by one day in order to be in a position to answer that question. The ECB subsequently told the Ombudsman that the award decision was taken on 29 July 2015, and not on 15 July 2015. However, the ECB’s contract award notice published on its website leaves no doubt about the exact date of the award decision.[19]

Conclusion

It is clear that the underlying procurement procedure organised by the ECB was undermined by a shortcoming which constituted maladministration. Whenever the Ombudsman makes a finding of maladministration, she seeks, as far as possible, a solution with the institution or body concerned “to eliminate the instance of maladministration”.[20] However, in this case the ECB has in the meantime awarded the contract and the particular maladministration cannot be remedied at this stage. The Ombudsman is nevertheless concerned that this type of maladministration on the part of the ECB should not recur in the future and, with that in mind, makes the recommendation below to the ECB.

Recommendation[21]

In order to avoid similar instances of maladministration in future procurement procedures, the European Central Bank should revise its Decision laying down Rules on Procurement with a view to providing, in each procurement procedure, that a specific assessment is undertaken of the merits, or otherwise, of bundling different service requirements into separate lots or just one lot; this revision of its Decision should be completed within six months of the date of this Ombudsman recommendation. In accordance with Article 3(6) of the Statute of the European Ombudsman, the ECB shall send a detailed opinion, in response to this recommendation, by the end of December 2016.

Strasbourg, 06/10/2016,

Emily O'Reilly

European Ombudsman

 

[1] Decision of the European Parliament of 9 March 1994 on the regulations and general conditions governing the performance of the Ombudsman's duties (94/262/ECSC, EC, Euratom), OJ 1994 L 113, p. 15.

[2] For more information concerning the tender, visit http://ted.europa.eu/udl?uri=TED:NOTICE:65706-2015:TEXT:EN:HTML

[3] This company provides services to many EU institutions, including to the Office of the European Ombudsman.

[4] Decision of the ECB of 3 July 2007 laying down the Rules on Procurement, as amended (ECB/2007/5).

[5] For more information, see the ECB's relevant contract award notice on its website, available at https://www.ecb.europa.eu/ecb/jobsproc/proc/pdf/2015-ojs241-436432-en.pdf.

[6] Article 3 of the ECB procurement rules states the following: "Any procurement procedure shall be carried out in accordance with the general principles of transparency and publicity, equal access and equal treatment, as well as the principles of non-discrimination and fair competition."

[7] See, in this respect, Cases T-160/03 AFCon Management Consultants, para. 75, and T‑345/03 Evropaïki Dynamiki, para. 141.

[8] See Case T‑86/09 Evropaïki Dynamiki, para. 61.

[9] Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ 2002 L 248, p. 1

[10] Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC , OJ 2014 L 94, p. 65–242

[11] The ECB has its own budget, which is financed by the central banks of the euro area.

[12] Vade-Mecum on Public Procurement in the Commission, updated in November 2015, paragraph 2.2.2.

[13] Article 46(1) of Directive 2014/24.

[14]Recital 78 of Directive 2014/24.

[15] More information can be found here, https://www.ecb.europa.eu/ecb/jobsproc/proc/pdf/262727.pdf

[16] This nonetheless, it is worth mentioning that many EU institutions (such as the European Parliament, the European Commission, and even the European Ombudsman) do not face too great an administrative challenge by not combining the provision of these two services.

[17] https://www.ecb.europa.eu/ecb/jobsproc/proc/pdf/2015-ojs241-436432-en.pdf

[18] http://ted.europa.eu/udl?uri=TED:NOTICE:262727-2011:TEXT:EN:HTML

[19] The ECB's relevant contract award notice is available at https://www.ecb.europa.eu/ecb/jobsproc/proc/pdf/2015-ojs241-436432-en.pdf.

[20] Article 3(5) of the Ombudsman's Statute, available at:  http://www.ombudsman.europa.eu/en/resources/statute.faces

[21] In accordance with Article 3(6) of the Statute of the European Ombudsman