Background to the complaint

1. The complainant, a Belgian-based non-profit organisation, took part in an EU-funded project, SENIOR, which aimed to address the issues faced by older people in using ICT solutions[1]. The complainant provided expert reports on ethical issues relating to the project. However, not all of the complainant’s actions in the project required a ‘deliverable’ report.  

2. A subsequent financial audit found that the time recording system used by the complainant was “entirely unreliable”. On the basis of this, the European Commission rejected all of the complainant’s personnel costs related to ten[2] ‘deliverables’ under the project, and sought to recover the related funds. Dissatisfied with the Commission’s stance, the complainant turned to the Ombudsman.

3. The Ombudsman decided to split the issues raised into two separate cases: this case, which deals with eight of the deliverables, and a separate case concerning the remaining two deliverables under the contract (complaint 1688/2015/JP)[3].

4. This case deals with the personnel costs related to eight deliverables which the auditors considered had been overstated because the complainant’s time-recording system was flawed and the timesheets unreliable. The Commission asked the complainant for alternative evidence to prove that the declared working hours had actually been spent on the project. Having examined the evidence, the auditors concluded that the personnel costs were overstated and thus ineligible for funding.

5. The Commission acknowledged the high standard of the complainant’s work, as it considered the project to be ”good to excellent”[4] in the technical review report. Moreover, it accepted all of the reports and ‘deliverables’ prepared by the complainant for the project.

6. The complainant noted that it was not possible to quantify the research and intellectual work for some of the activities, which included reviewing the scientific literature and audio-visual material, developing hypotheses, carrying out discussions and “finding paradigms”. The complainant explained that “the volume of hours of academic work simply cannot be translated into documents”.

The Ombudsman's recommendation

7. The Ombudsman found it unacceptable that the Commission would refuse to provide any remuneration for personnel costs related to work carried out by the complainant, which the Commission had previously praised.

8. Since the complainant provided insufficient evidence to justify all the working time for which it was claiming remuneration under the project, the Ombudsman accepted that the Commission could not reimburse all of the personnel costs. The Ombudsman recognised that it is the duty of the Commission to safeguard the financial interests of the EU. However, she considered that it is disproportionate to take this duty to the extreme of refusing any payment when the work had been carried out and acknowledged.

9. The Ombudsman found it contrary to the principles of fairness and proportionality, set out in the applicable rules[5], that the Commission would not recognise the time spent on the project to the extent that this can be reconciled with the evidence submitted by the complainant. She found that the Commission’s conduct constituted maladministration and recommended[6] that the Commission should (i) reassess the alternative evidence submitted by the complainant with a view to finding a basis on which to determine the hours worked on the eight ‘deliverables’ in question; and (ii) following this reassessment, accept the corresponding personnel costs related to the hours worked, and adjust the amount of funds it is seeking to recover accordingly.

10. In its reply to the Ombudsman’s recommendations, the Commission stated that it had, on previous occasions, thoroughly assessed the alternative evidence. This led it to reduce the amount it was seeking to recover by nearly EUR 37 000. It also noted that, in cases where those carrying out an EU-funded project have a system for recording working time that is manifestly unreliable, it is their responsibility to prove the amount of time spent on the project by providing suitable alternative evidence[7]. The Commission had engaged with the complainant to this end but could not accept any further reduction to the recovery order, as it considered the outstanding costs claimed to be overstated.

11. The Commission further noted that in projects funded under the Seventh Framework Programme for Research and Technological Development, beneficiaries are reimbursed for “a percentage of eligible costs”, upon providing proof of the costs incurred. In essence, it is not a ‘results-based’ but a ‘costs-based’ system. The Commission explained that grants are not payment for services but an EU contribution towards the financing of a research project. It added that, according to EU case-law, it is not sufficient for a project to be carried out with good results for the costs declared to be accepted. All the eligibility criteria stipulated in the applicable ‘grant agreement’ must be met[8].

12. Since it had already reduced the amount it was seeking to recover, it could not reconsider its position concerning the remaining costs.

The Ombudsman's assessment after the recommendations

13. The Ombudsman is disappointed with the Commission’s stance in this case.

14. She made two recommendations. The first that the Commission reassess the alternative evidence submitted by the complainant. In its reply, the Commission limits itself to stating that it had, on previous occasions, thoroughly assessed the alternative evidence and had already engaged with the complainant. The Commission therefore has not taken any action to address the first recommendation.

15. It is not surprising, therefore, that the Commission does not reply satisfactorily to the second recommendation which starts, “following this reassessment”. As the Commission did not carry out a reassessment, it could not have put itself in a position where it could “accept the corresponding personnel costs related to the hours worked” and “adjust the amount of funds it is seeking to recover accordingly”.

16. The Ombudsman has already explained in detail in her recommendation[9] why reassessing the alternative evidence and accepting those personnel costs that were substantiated by the alternative evidence would be a fair approach to take. With regard to the case-law cited by the Commission, the Ombudsman did not ask the Commission to accept costs that did not meet the eligibility criteria but to try harder to ensure a fair outcome for the complainant.

17. As further engagement with the Commission is unlikely to result in a more satisfactory outcome for the complainant, the Ombudsman confirms the finding of maladministration, and closes the case.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

The finding of maladministration identified by the Ombudsman in her recommendations has not been responded to satisfactorily.

The complainant and the European Commission will be informed of this decision.

 

Emily O'Reilly

European Ombudsman

Strasbourg, 26/11/2018

 

[1] The complainant took part in the project between 1 January 2008 and 31 December 2009.

[2] Ten ‘deliverables’ were identified by the auditors on the basis of the complainant’s alternative evidence submitted in the course of the audit procedure.

[3] Decision of the European Ombudsman in case 1688/2015/JAP on the European Commission’s decision to recover funds from a participant in an EU project on older people and ICT (SENIOR) is available at: https://www.ombudsman.europa.eu/cases/decision.faces/en/84419/html.bookmark.

The case dealt with two ‘deliverables’ submitted by the complainant under the SENIOR project. The Commission rejected the costs related to those ‘deliverables’ even though the auditors found them justified. The Ombudsman found maladministration in this regard and made a recommendation to the Commission to reduce the recovery. Since the Commission accepted her recommendation, the Ombudsman closed the case on 6 October 2017.

[4] This means that the project fully achieved its objectives and technical goals for the period, and even exceeded expectations.

[5] These principles are embodied in Article 80 of the EU Financial Regulation as well as Article 91 of the Rules of Application of the Financial Regulation.

[6] Recommendations of the European Ombudsman in case 646/2017/JAP concerning the European Commission’s decision to reject personnel costs of a participant in an EU project on older people and ICT (SENIOR project), available at: https://www.ombudsman.europa.eu/en/recommendation/en/89256

[7] The Commission referred to the judgment of the General Court in case T-500/04 Commission v IIC, ECLI:EU:T:2007:146, para. 94.

[8] Judgment of the General Court in Case T-644/14 ADR Center SpA v Commission, ECLI:EU:T:2017:533, para. 108.

[9] Recommendations of the European Ombudsman in case 646/2017/JAP, see above footnote no 6, paras. 36 to 37.