The background to the complaint

1. The complainant is a Romanian non-governmental organisation. On 15 December 2004, acting on behalf of a consortium, it signed a grant agreement with the European Commission (the 'Contract'), concerning the implementation of a project (the 'Project'). The complainant was the Project's coordinator.

2. On 1 January 2006, the Education, Audiovisual and Culture Executive Agency (EACEA) took over the grant agreement with the complainant. The complainant was informed accordingly.

3. The grant agreement stipulated that the complainant had to provide the EACEA with a final report on the implementation of the Project by 15 April 2007. The complainant submitted the final report after that deadline had expired, that is to say on 4 December 2008. The EACEA did not accept the final report and decided to launch a recovery order for pre-payments it had already made.

4. The complainant was dissatisfied with the EACEA's decision to reject its final report and turned to the Ombudsman for the first time. The Ombudsman opened an inquiry (reference 670/2009/(BU)RT) and asked the EACEA to carry out an evaluation of the complainant's final report. In response to the Ombudsman's invitation to demonstrate a higher degree of flexibility towards the complainant, the EACEA exceptionally carried out an evaluation of the complainant's belated report. The Ombudsman thus decided to close his inquiry into complaint 670/2009/(BU)RT[1].

5. On 26 January 2010, following its evaluation of the complainant's final report, which was not approved, the EACEA sent a recovery order to the complainant. It requested reimbursement of the staff costs incurred for the Project.

6. On 22 March 2010, the complainant submitted an appeal to the EACEA concerning its decision to recover the aforementioned staff costs.

7. On 9 June 2010, the EACEA rejected the complainant's appeal.

8. On 13 September 2010, the complainant turned to the Ombudsman with the present complaint.

The subject matter of the inquiry

9. In its complaint to the Ombudsman, the complainant submitted the following allegation and claim.

Allegation

The EACEA acted unfairly by asking the complainant to reimburse all the staff costs for the Project.

Claim

The EACEA should suspend the recovery order and organise an audit of the Project.

The inquiry

10. On 26 October 2010, the Ombudsman opened an inquiry. In his opening letter, in accordance with Article 3(2) of the Statute of the European Ombudsman[2] and Article 5.2 of the European Ombudsman's Implementing Provisions[3], he asked the EACEA to provide copies of all documents relating to the assessment of the complainant's final report for the Project. He outlined that, in accordance with Article 13.3 of the Implementing Provisions of the European Ombudsman, any confidential documents would not be made available to the complainant.

11. On 3 November 2010 and 4 January 2011, the complainant forwarded additional information and documents to the Ombudsman's services. This consisted of its exchanges of correspondence with the EACEA (the EACEA's letter dated 29 October and the complainant's letter dated 22 December 2010).

12. On 26 January 2011, the EACEA sent its opinion, which was drafted in English. The EACEA also enclosed a list of documents which the Ombudsman requested, as well as copies of these documents except those considered to be confidential. It invited the Ombudsman to inspect the confidential documents at its premises. The Ombudsman did not consider it necessary to inspect the documents in question.

13. On 17 February 2011, the EACEA provided a translation of its opinion into Romanian, which the Ombudsman forwarded to the complainant with an invitation to make observations. The complainant sent its observations on 25 March 2011.

The Ombudsman's analysis and conclusions

A. Alleged unfair request for the reimbursement of all the staff costs for the Project

Arguments presented to the Ombudsman

14. In support of its allegation, the complainant submitted that (a) the Project activities were fully carried out; (b) the EACEA approved the progress reports for the Project and consequently paid the two instalments to the complainant for its work on the Project; (c) all the costs were declared on the basis of supporting financial documents, in accordance with the provisions of the Administrative and Financial Handbook for Applicants.

15. In its opinion, the EACEA first pointed out that its decision to terminate the grant agreement was legally justified and complied with the provisions of the grant agreement[4]. Moreover, it had in fact granted the complainant an extra 14 months to produce the final report for the Project. In this respect, the EACEA explained that the final report was due on 15 April 2007. However, it sent the formal written notice of the termination of the grant agreement on 16 June 2008. The complainant did not submit an appeal against this decision, nor did it send additional documentation. The complainant did not react to the debit note until one and a half months after the EACEA had sent it.

16. As regards the complainant's argument under (a), the EACEA emphasised that the final report was ultimately evaluated by two independent experts. Given that the evaluation made by the first expert was rather negative, the EACEA requested a further assessment by a second independent expert. Both experts found weaknesses in the Project's implementation and underlined that the Project failed to achieve its main objectives. On the basis of these two assessments, the EACEA decided to recover part of the amount already paid for the Project. In this respect, on 26 January 2010, it sent a recovery order to the complainant. The EACEA enclosed with its recovery order the Final Report Assessment concerning the implementation of the Project. The Final Report Assessment was based on the evaluations made by the two independent experts.

17. According to the Final Report Assessment, the following seven criteria were used to assess the Final Report for the Project: 1) Objectives, results and products; 2) Coherence between work plan and activities carried out during the life of the project; 3) Partnership; 4) Project management; 5) Financial management: 6) Evaluation and 7) Dissemination. Each criterion, was awarded a score of between 0 (no evidence) and 5 (very good).

18. As regards the first criterion, the experts awarded a score of 1 (very weak) out of 5. In sum, they noted that the Project was not able to implement and fully achieve the set targets. In this respect, they stated that (i) there was no evidence that any of the training courses had been implemented; (ii) the content of the training modules for the five modules available on the project website was only available in English and was not of a convincing quality; and (iii) the innovative teaching character mentioned in the application was not visible in the final output. Apart from that, the whole documentation for all activities in the field of monitoring and quality assurance was missing. The whole report about the implemented research and analysis phase was also not presented. The experts concluded that "generally the Project did not, apart from presenting a five module training course content, fully achieve the proposed tasks and objectives."

19. As regards the second criterion, the experts again awarded a score of 1 out of 5. This was because the link between the activities and the work programme was unconvincing and there was little evidence that the activities under the different phases of the Project had been implemented. In addition, the Project suffered significant delays which were not sufficiently justified. The report also noted that the obligatory training courses did not take place, which had a very negative impact on this criterion because this was one of the Project's main aims.

20. As regards the third criterion, the score awarded was 2 (weak) out of 5. One partner from the coordinator country withdrew and had to be replaced. According to the report assessment, the impact of the partnership change was significant. The research phase could not be implemented in the Netherlands and the influence of the new partner drove the whole project and training content in the direction of accessibility and integration of disabled learners, which had no real relation to the main project topic proposed.

21. As regards the fourth criterion, the experts also awarded a score of 2 out of 5. Although the final report stated that the Project achieved all aims and objectives, "there [were] significant weaknesses on process and product level which have a clear relation to lacking project management activities and competences". In addition, there was no evidence of (i) project management and monitoring activities and (ii) transnational meetings (in the Project application, these were described as a core output).

22. As regards the fifth criterion, the financial management of the Project "was doubtful, in general the claimed costs lack[ed] coherence with the implemented activities". Thus, a score of 2 out of 5 was awarded.

23. As regards the sixth criterion, the experts noted that the final report, as well as its supporting documents, did not provide any information about the evaluation of activities performed during the Project. They awarded a score of 0 out of 5.

24. In relation to the seventh criterion, the report assessment pointed out that, although the Project mentioned dissemination activities that were performed mainly in the context of project presentations in workshops, meetings and conferences, the information provided only consisted of presentations used in different events and did not provide any clear information and documentation on the actual events (type, size, audience etc). This raised doubts about their dimension and quality. The final Project meeting and conference also lacked detail. The experts awarded a score of 1 out of 5.

25. Finally, as regards the overall evaluation, the independent experts concluded that the Project only partially achieved its aims and objectives. Thus, the overall score awarded for the implementation of the project was 1 out of 5.

26. In relation to the complainant's argument under (b), namely, that the progress reports for the Project were approved by the EACEA, which then paid two instalments to the complainant for its work on the Project, the EACEA noted that the condition to receive the second pre-financing payment was to have spent at least 70% of the first pre-financing payment. The approval of the Progress Report relating to the first pre-financing and the payment of the second pre-financing cannot be considered as an acceptance of the costs and of the future project output. The EACEA pointed out that the acceptance of the costs is based upon a final cost statement which is submitted with the final report. According to Article II.17.1 of the grant agreement, the amount of the grant may not be considered as final until the documents supporting the request for payment of the balance, namely, the final report and the financial statement have been approved[5]. Moreover, the final amount of the grant does not only depend on the level of costs actually incurred by the beneficiary, but also on the proper implementation of the action, which should be assessed after its completion.

27. As regards the complainant's argument under (c), the EACEA noted that, even if the complainant declared the costs using supporting documents, and did so in accordance with the provisions of the Administrative and Financial Handbook, it did not do so within the deadline foreseen in the grant agreement. In any event, the reasons for reducing the grant initially provided relate to the complainant's weak implementation of the project. The EACEA further explained that it carried out an operational and financial analysis of the project. Subsequently, in accordance with the provisions of Article II.17.5[6] of the grant agreement, and following the procedure applied in similar cases, it declared all the staff costs for the project ineligible because they were not justified and did not comply with the requirements of sound financial management. This led to a final grant of EUR 43 893 and a negative balance of EUR 146 133.

28. The EACEA clarified that the final amount of the grant after deduction of ineligible staff costs must be in line with the actual implementation of the Project. In this respect, if the complainant had properly implemented the Project (that is to say, 100%), it would have been entitled to receive the amount of EUR 161 221. However, its implementation of the Project received a score of 1 out of 5, which represents 20% of the actual implementation of the Project. The EACEA noted that the final amount paid to the complainant (EUR 43 893) corresponds to 27% of the requested amount. This is more than the amount obtained by applying the final score awarded for the Project by the two external experts. Thus, the EACEA considered that its decision to reduce the grant to EUR 43 893 complied with the principle of proportionality.

29. In its observations, the complainant contested the EACEA's statement concerning the weak implementation of the Project. It took the view that the assessments made by the two experts relied on incomplete information.

30. The complainant agreed with the EACEA's argument that the approval of the progress reports was not relevant to the approval of the final Project costs. However, it reiterated that it had ensured the sound financial management of the Project.

31. In the complainant's view, the late submission of the final report which delayed the Commission's assessment should not have had a negative impact on the results of this assessment. Furthermore, it was unfair to penalise the experts working for the project by rejecting all the staff costs "because of the late submission of the final report."

32. The complainant also stated that it did not receive a copy of the Final Report Assessment until the course of the Ombudsman's inquiry. This document should have however been annexed to the EACEA's letter to the complainant dated 26 January 2010. After the Ombudsman opened the inquiry, the complainant submitted to EACEA detailed comments on the Final Report Assessment by letter dated 22 December 2010. These comments read as follows.

33. In relation to the first criterion of evaluation, it first pointed out that the evaluation of this criterion was not objective. The proposed results were achieved in line with the conditions and the dates provided by the Project. In this respect, it argued that the implementation of two training sessions in each partner country was not an activity to be completed during the Project, but would be carried out after the Project had finished. The complainant then referred to the fact that the content of the five training modules was only available in English on the Project's website and was not of a fully convincing quality. In this regard, it stated that the partners agreed to the modules only being available in English. The complainant contested the alleged lack of documentation for all the activities in monitoring and quality assurance. It stated that these documents exist. However, it did not consider it necessary to enclose them with the Final Report. They were enclosed with its letter dated 22 December 2010. As regards the missing report concerning the implemented research and analysis phase of the Project, the complainant explained that this document was available on the Project's website.

34. In relation to the second criterion, the complainant considered that all the Project activities were carried out in accordance with the approved activity plan. The complainant admitted that the Project faced a few difficulties and delays, but it took the view that the "management team acted constructively and found solutions to the problems that came up, to the benefit of the Project". It is true that training sessions were not organised, but this was not one of the Project's objectives.

35. As regards the third criterion, the complainant noted that the report assessment provided a subjective opinion because the Project management succeeded in limiting the adverse impact resulting from one partner's withdrawal. The new partner selected to take over the tasks of the Dutch partner was suitable both from the point of view of its qualifications and also from its work experience in European and national projects.

36. Concerning the fourth criterion, the complainant maintained that it fulfilled the aims and objectives of the Project. It reiterated that all the documents relating to the Project management and monitoring activities were available, and parts of them were posted on the Project's website.

37. Regarding the fifth criterion, the complainant took the view that all the reported expenses were documented according to the "Administrative and Financial Handbook for Applicants - Selection 2004".

38. With respect to the sixth criterion, the complainant reiterated that the evaluation documents and reports were not included as annexes to the final report, nor were they asked for afterwards. However, it provided them in its letter dated 22 December 2010.

39. As regards the seventh criterion, the complainant noted that all the necessary dissemination materials relating the Project were produced and distributed. In relation to the quantity and quality of the dissemination materials, it stated that they were assessed with the partner organisations and by the external evaluator (the latter's report was annexed to the complainant's letter dated 22 December 2010). In relation to the final Project meeting and conference, the complainant stated that the final report described this meeting in detail, and all the materials regarding the organisation and progress of the meeting were posted on the website.

40. The complainant also emphasised that the experts evaluating its Final Report for the Project did not ask it for additional information and documents. Thus, their assessment was not objective. It also explained that some documents could not be physically attached to the final report because of their huge volume. The complainant sent them in electronic format with its letter dated 22 December 2010.

41. In conclusion, the complainant considered that the overall evaluation of the Project as "very weak" (score 1 out 5) was not justified. In its appeal of March 2010 and letter dated 22 December 2010, it requested that EACEA review the assessment of the Final Report. However, the EACEA failed to do so. According to the complainant, the EACEA should have reassessed the implementation of the Project in light of all the additional information provided in its letter of 22 December 2010.

The Ombudsman's assessment

Preliminary remark

42. In its observations, the complainant submitted what appears to be a new claim for its Final Report to be reassessed. This new claim is however strongly linked with its original claim that the EACEA should suspend the recovery order and organise an audit of the Project. This is because, reasonably, in order to be able to justify a decision to suspend and/or waive a recovery, it is first necessary to reassess the very result of the project, namely, its Final Report. The Ombudsman's conclusions on the original claim below thus constitute a response to the complainant's new claim.

Original allegation and claim

43. The Ombudsman understands that the reason for issuing the recovery order was not the belated submission of the Report but the weak implementation of the Project. Indeed, according to the grant agreement, if the project is not implemented or is implemented poorly, partially or late, the EACEA may reduce the grant initially provided for the actual implementation of the project. In this respect, Article II.17.5 of the grant agreement reads as follows: "Without prejudice to the right to terminate the agreement under Article II.11, and without prejudice to the right of the Commission to apply the penalties referred to in Article II.12, if the project is not implemented or is implemented poorly, partially or late, the Commission may reduce the grant initially provided for in line with the actual implementation of the project on the terms laid down in this agreement." The EACEA's view is thus reasonable and the complainant's arguments under (b) that the EACEA approved the progress reports for the Project and paid two instalments and (c) that all the costs were declared on the basis of supporting financial documents, cannot be sustained. As rightly explained by the EACEA, the non-contested facts under (b) and (c) have no relevance for the recovery order.

44. The complainant also argued (under (a)) that the EACEA's assessment of the implementation of the Project was not substantiated. The Ombudsman cannot agree with the complainant.

45. The Ombudsman first notes, in this respect, that the EACEA requested two independent experts to assess the complainant's Final Report for the Project, both of whom agreed that the Project's implementation was weak. Acting separately, they both came to the same conclusion that the overall score for the complainant's implementation of the Project should be very low: 1 out 5. There are no convincing reasons to ask for a third assessment.

46. The Ombudsman has analysed the experts' comments put in the Final Report Assessment. As noted in paragraphs 17-25 above, they were indeed very specific and detailed.

47. The experts' comments appear reasonable and detailed. It is true that, in its letter dated 22 December 2010, the complainant submitted counter arguments to contest the experts' specific views (paragraphs 33-40 above). However, these arguments are not sufficient to prove that the two independent experts committed a manifest error of assessment when carrying out the evaluation of the grant agreement's implementation.

48. First, the complainant argued that the supporting documents at its disposal could prove that the experts' assessment was not grounded and that the EACEA could have asked for the submission of these documents. The Ombudsman does not agree. It was ultimately the complainant's duty to provide these documents along with the Final Report for the Project. In this respect, the Ombudsman notes that, according to point II.15.2 of the grant agreement, the beneficiary must submit the request for payment of the balance together with the following documents: (i) a final report on the implementation of the project; (ii) a final financial statement of the eligible costs actually incurred and (iii) a full summary statement of the receipts and expenditures during the project. The complainant submitted only some of the above documents and did not inform the EACEA in the Final Report that some documents could be found on its website.

49. In its observations, the complainant took the view that, if any documents were missing, the EACEA should have contacted it and asked for clarifications. However, the Contract does not provide for such an obligation. It does, however, contain an obligation for the complainant to submit the documents. Moreover, on the basis of the evidence available, the Ombudsman takes the view that the complainant did not establish that principles of good administration would have required the EACEA to ask it for additional information or documents. Finally, it is worth noting that the complainant had enough time to submit all the relevant documents along with its Final Report.

50. Second, the complainant admitted itself that not all of the Project's objectives were achieved. This was the case, for instance, in relation to the organisation of two training sessions in each partner country. According to the complainant's Project application[7], this was one of the objectives.

51. On the other hand, it should be noted that, in its letter dated 26 January 2011, the EACEA provided the complainant with a copy of the detailed expert opinion, which, reasonably, should have been sufficient to enable the complainant to understand why the EACEA considered that the Project was weakly implemented and did not attain its objectives.

52. In light of the above, the Ombudsman does not see any reasons for a third assessment by auditors, as claimed by the complainant. Furthermore, the fact alone that the complainant does not endorse the assessment made by the two independent experts does not prove the existence of a manifest error in that assessment.

53. The complainant also appeared to argue that, in its letter dated 26 January 2011, the EACEA failed to provide it with the Final Report Assessment. According to the complainant, it only received a copy of the above document in the course of the Ombudsman's inquiry. Thus, it could not submit its observations or contest the EACEA's decision to recover part of the amount paid for the grant in due time.

54. In relation to the above argument, the Ombudsman notes that the complainant was aware of the existence of the Final Report Assessment. In this respect, the EACEA's recovery order of 26 January 2011 had two annexes: 1) the Explanatory Annex and 2) the Final Report Assessment. Moreover, the first annex[8] stated the following: "Your final report has been evaluated by the Executive Agency with the assistance of external experts and received a score 1 out of 5 which is equivalent to 20%. Their assessment is attached". (Ombudsman's emphasis)

55. Even though the EACEA appears not to have enclosed the second annex (namely, the Final Report Assessment) to its recovery order of 26 January 2011, the complainant did not approach the EACEA in relation to this omission before it submitted the present complaint to the Ombudsman. The Ombudsman thus takes the view that the complainant's argument cannot be sustained.

56. In light of the above, the Ombudsman does not find an instance of maladministration as regards the complainant's allegation. Thus, its claim must also fail.

B. Conclusions

On the basis of his inquiry into this complaint, the Ombudsman closes it with the following conclusion:

There has been no maladministration.

The complainant and the EACEA will be informed of this decision.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 20 September 2011

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[1] See decision on complaint 670/2009/(BU)RT, available on the Ombudsman's website: www.ombudsman.europa.eu

[2] Article 3(2) reads as follows: "The Community institutions and bodies shall be obliged to supply the Ombudsman with any information he has requested from them and give him access to the files concerned. Access to classified information or documents, in particular to sensitive documents within the meaning of Article 9 of Regulation (EC) No 1049/2001, shall be subject to compliance with the rules on security of the Community institution or body concerned."

[3] Article 5(2) reads as follows: "The Ombudsman may inspect the file of the institution concerned. The institution concerned shall clearly identify any documents in the file which it regards as confidential. The Ombudsman may take copies of the whole file or of specific documents contained in the file. The Ombudsman informs the complainant that an inspection has taken place."

[4] Article II.11.2b of the grant agreement reads as follows: "The Commission may decide to terminate the contract without any indemnity on its part, in the following circumstances: … b) if the beneficiary fails to fulfil a substantial obligation incumbent on it under the terms of the agreement, including its annexes".

Article II.11.4 of the grant agreement reads as follows: "In the event of termination of the agreement, payments by the Commission shall be limited to the eligible costs actually incurred by the project up to the date when termination takes effect, in accordance with Article II.17. …"

[5] Article II.17.1 reads as follows: "Without prejudice to information obtained subsequently pursuant to Article II.19 [Checks and audits], the Commission shall adopt the amount of the final payment to be granted to the beneficiary on the basis of the documents referred to in Article II.15.2 [Payment of the balance] which it has approved".

[6] Article II.17.5 reads as follows: "Without prejudice to the right to terminate the agreement under Article II.11, and without prejudice to the right of the Commission to apply the penalties referred to in Article II.12, if the project is not implemented or is implemented poorly, partially or late, the Commission may reduce the grant initially provided for in line with the actual implementation of the project on the terms laid down in this agreement".

[7] A copy of the complainant's project application was enclosed with EACEA's opinion.

[8] A copy of which was annexed to the present complaint.