Dear Mr X,

On 20 January 2001, you made a complaint to the European Ombudsman on behalf of Stiftelsen Akademisk Utveckling Lund (hereafter "SAUL") concerning the actions of the European Commission DG MARKT in the handling of contract No PRS/2000/B5-3001/A/03.

You made further submissions to the Ombudsman on 19 and 28 February 2001. Furthermore, during the inquiry you sent the Ombudsman copies of your on-going correspondence with the Commission.

On 13 March 2001, I forwarded the complaint to the President of the Commission. The Commission sent its opinion on 13 June 2001 and I forwarded it to SAUL with an invitation to make observations, which it sent on 31 August 2001. On 28 September 2001, I forwarded SAUL's observations to the Commission for a complementary opinion. On 8 November 2001, the Commission sent its complementary opinion and I forwarded it to SAUL with an invitation to make further observations, which it sent on 28 January 2002.

I am writing now to let you know the results of the inquiries that have been made.

THE COMPLAINT

According to the complainant, the facts are in summary as follows.

In Autumn 1999, Stiftelsen Akademisk Utveckling Lund (hereafter "SAUL" or "the complainant") made an offer to the European Commission in a call for tenders concerning the Signpost Service. The contract was awarded to SAUL on the basis of its bid and contract No PRS/2000/B5-3001/A/03 was signed on 14 February 2000.

The complainant had only three weeks to prepare itself to begin the running of the Signpost service as from 10 March 2000. It contacted the new provider of the Europe Direct Call Centre Global One/Tech Team (hereafter "Global One"), in order to establish co-operation. However, Global One was not aware of any obligation to co-operate with the Signpost Service. It became clear to the complainant that there was no prior agreement between DG MARKT and DG EAC concerning co-operation between the Signpost Service and Global One and no provision in the contract of Global One obliging them to co-operate with the Signpost Service. This led to extra costs for the Signpost Service.

After the initial difficulties were overcome, the Commission discovered that the call for tenders published in the Official Journal contained a mistake in the description of enquiries connected to the Internal Market and so-called "second level enquiries", which were not mentioned in the call for tenders or the contract itself. To remedy this, the Commission introduced in December 2000 Guidelines to assist SAUL with the identification of eligible "second level enquiries" arriving to the Signpost Service and the treatment of enquiries other than eligible "second level enquiries". In these Guidelines, the Commission proposed that SAUL should answer all incoming enquiries, but only be paid for the ones that are eligible and which according to the Commission amounted to about 50% of enquiries received. According to the complainant, this caused delays in getting the database functioning properly and the Commission used these delays as a pretext not to pay the complainant's invoices.

Furthermore, according to the complainant, it was informed at a meeting in Brussels on 20 and 21 December 2000, that the Commission would renew the contract. The complainant therefore renewed its contracts with its experts, rented new premises and made agreements for leasing of computer equipment and database services. On 16 February 2001, the complainant received a letter announcing that the Commission did not intend to renew the contract.

In the complaint to the Ombudsman, the complainant alleges that the Commission failed:

1) to ensure that there was an obligation for the Global One contractor of the Europe Direct Call centre to co-operate with the Signpost Service;

2) to provide adequate information in the call for tenders;

3) to renew the contract as agreed;

4) to pay invoices according to the contract.

The complainant claims that the Commission should immediately pay all invoices according to the contract and compensate for the delay in payment.

Furthermore, the complainant claims that the Commission should renew the contract, or compensate the complainant for the financial loss caused by the failure to renew.

THE INQUIRY

The Commission's opinion

The Commission’s opinion included, in summary, the following points:

Allegation 1)

The Europe Direct service comprises two levels. The first is the Call Centre, which dealt with the questions of a general nature. The second comprises the Signpost service (SAUL) and DG PRESS. The contract with Global One for management of the Europe Direct Call Centre did not oblige the Commission to ensure direct dialogue between two Commission contractors (Global One and SAUL) which would be contrary to good contract management. The contract with Global One included the obligation to set up interfaces with the Commission and the specialised external service (Signpost Service). Processing data and their transfer to the second level was by means of a database in which all the questions and answers were recorded.

There was a purely technical problem in the transfer of telephone call data between Global One and SAUL. In order to solve this, there were countless meetings and e-mail exchanges during the first few months of the contract with SAUL. Furthermore, the transfer of telephone data was a source of other problems linked with the performance of the contract, such as: late sending of the monthly reports; late sending of the analytical reports and the delay in setting up the database required under the contract, which was the only means for the Commission to check that it was being implemented properly. SAUL had the basic obligation under the contract award criteria to operate the service according to the procedures it had itself proposed in its bid to the Commission as it was one of the contract award criteria. The Commission found itself having to take action to remedy the contractor's problems with implementing its own methodology, thereby actually going beyond its obligations. According to the Commission, SAUL failed to provide it with a database.

Allegation 2)

The call for tenders was clear on the functions of the Signpost Service but deliberately left the choice of means of implementation to the potential service providers and to the Commission's assessment of the ability of the methods proposed to provide a quality service, as contract award criteria.

On 31 August 2000, the Commission informed SAUL that due to the delayed reports it would apply the penalties provided for in the contract. The Commission underlined that it was essential for it to have access to the system developed or receive a complete table or file of the registered data since 9 March 2000. At the end of September 2000, having still not received a complete database from SAUL, DG MARKT decided it could not make additional payments until general checks had been carried out at the contractor's premises. On 18 and 19 October 2000, an audit took place in Lund. This audit confirmed that certain of the questions dealt with by SAUL were outside the scope of the contract. It also became evident that SAUL was not operating any system to filter the enquiries by content, contrary to what it had stated in its bid. On 6 November 2000, DG MARKT informed SAUL about the results of the audit.

On 20 November 2000, a working meeting was organised between SAUL and DG MARKT. On 28 November 2000, DG MARKT sent guidelines about filtering the questions which according to the Commission simply repeated the methods already envisaged by SAUL in its bid(1). At a working meeting on 20 December 2000, DG MARKT informed SAUL of the results of a survey carried out by DG MARKT on a sample of 1 500 questions chosen at random from the database. Over 50% of the questions were outside the scope of the contract. The Commission also informed SAUL that it was uncertain as to whether the contract could be renewed.

The call for tenders clearly stated that the enquiries to be dealt with by Signpost Service did not in any way include abstract or speculative questions or pure requests for information. Signpost Service was to reply to enquiries concerning the Single Market and the exercise of citizens' rights. According to the Commission, this was also clearly stated in the bid submitted by SAUL.

Allegation 3)

On 4 March 2001, SAUL sent a letter to Commissioner Bolkenstein concerning the non-renewal of the contract. On 22 March 2001, the Commission services replied on behalf of the Commissioner explaining that the contract was signed for one year from 9 March 2000 and gave the Commission the option of renewal for up to a maximum of five years. Furthermore, it explained that the renewal option had to be taken at least one month prior to the expiry of the contract by means of a supplementary agreement signed by the parties. Finally, there was no legal obligation to inform the contractor of the intention not to renew the contract. The letter of 24 January 2001 was sent as a matter of courtesy, and demonstrated good administrative practice.

With regard to the substance, non-renewal of the contract was the only possible option in view of the fact that the contract did not meet the requirements of a new listening and feedback initiative in the terms of the Reform White Paper and on the basis of the experience so far of the contract management. The Commission also gave specific reasons for not renewing the contract, such as information received on the veracity of the data, results which undermine confidence in relations with the contractor and DG MARKT and referral of the file to the European Anti-Fraud Office (OLAF), which opened an inquiry on 20 February 2001.

Irrespective of the results of the OLAF enquiry, the Commission considered that renewal of the contract would, in these circumstances, be contrary to the basic principles of prudence and caution in sound administrative management and of the need for mutual confidence between the parties to the contract to ensure that it is performed satisfactorily.

Allegation 4)

The contract for the Signpost Service was for a period of 12 months from 10 March 2000, and for a maximum of 10 000 enquiries. Under Article 4 of the contract, the Commission undertook to pay SAUL a maximum of € 442 537 for services rendered under the contract, based on the maximum of 10 000 enquiries per year.

According to Article 4 (3) of the contract, payments shall be made after the receipt and approval by the Commission of the relevant reports, including the analytical reports, and upon presentation of the corresponding invoices.

According to the Commission, it was clear from the contract that all payments were dependent on satisfactory performance of the work by the contractor, acceptance of the reports relating to the period concerned and, in the case of payments calculated on the basis of unit price, presentation of an invoice. Furthermore, according to Annex III of the contract, the main aim of the weekly and monthly reports was to "ensure that the Signpost Service worked efficiently".

DG MARKT suspended the invoices for October 2000 to January 2001 in accordance with Article 10 (5) of the general terms and conditions because the required documents, notably the database, had not been supplied and the Commission saw the need for further checks.

On 6 April 2000, despite the difficulties with the implementation of the Signpost Service, the Commission granted SAUL an advance of 30 % of the value of the contract with a bank guarantee, although it was under no obligation to do so.

On 14 March 2001, at a meeting between SAUL and DG MARKT, the representative of SAUL was prepared to look into other ways of providing the missing information, such as direct access to SAUL's computer system. However, SAUL confirmed in a letter of 23 March 2001 that this option was rejected.

The contractor failed to meet its basic obligation to provide for and encode in a database all the minimum data specified in the contract which was needed to monitor the satisfactory performance of the contract and for quantitative and qualitative analysis of the enquiries addressed by citizens to the Signpost Service. By failing to supply the data in question, the contractor made it impossible for the Commission to check fully that the contract was being properly implemented. It also prevented the Commission from carrying out the substantive analysis of citizens' experience of the functioning of the Single Market.

In these circumstances, the Commission was prevented by principles of sound administrative and financial management from making the payments due upon satisfactory performance of the contract.

The complainant's observations

The complainant maintained its complaint. According to the contract, the task of SAUL was to "advise the public of their rights and opportunities in the European Union and its Single Market, and point them to official or non-governmental organisations able to help any difficulties they may encounter, including means of redress as appropriate". Because SAUL had already been active within the Signpost Service, answering mainly Swedish enquiries during 1997-1999, it was familiar with the type of enquiries that the Signpost Service received. SAUL had only been paid the guaranteed monthly payments for the months March - September 2000. The last payment was received in November 2000 and after that SAUL had received no payment at all.

According to SAUL, there were various problems relating to the available character sets for texts and changes in the format. These problems were not caused by the complainant, but resulted from the lack of co-ordination between DG EAC and DG MARKT concerning the operation of the Europe Direct Service. SAUL was of the view that the Commission never took action to remedy its own managerial problems. It did not go beyond its obligations at any moment. According to SAUL, the technical problems and changes in format required by the Commission resulted in its having to hire in-house lawyers, resulting in additional costs.

SAUL's efforts were never diverted from the contract’s main objective of providing a high quality service to the citizens of Europe. It rejected the allegation that over 50% of the questions fell outside the scope of the contract. SAUL also contested the view that it made no distinction between the enquiries received.

According to the complainant, an oral message was given on 21 December 2000 that the contract was to be renewed. This misled it into taking on new obligations towards experts and other contractors. Furthermore, the OLAF investigation has not given any proof of wrong doing on the complainant's part.

SAUL was paid a total of € 170 646 which was not even 60% of the guaranteed monthly payments. It considered that the postponement of payments for further checks for a period exceeding 12 months resulted in an abuse of power. SAUL claimed that it had provided a copy of the entire database more than once.

Further inquiries

After careful consideration of the Commission's opinion and the complainant's observations, it appeared that further inquiries were necessary to clarify the issues in dispute between the complainant and the Commission. Therefore, the Ombudsman wrote again to the Commission requesting a complementary opinion on the complainant's observations.

The Commission's complementary opinion

According to the Commission, it handled the call for tenders and preparation of the contract efficiently. SAUL inserted all enquiries received into their database and invoiced them. This demonstrated that SAUL did not filter out ineligible questions, while their bid stated clearly that they understood the requirement.

The allegations about poor contract management by the Commission were unfounded. The reference to different standards related to the way in which dates are encoded, which could hardly be considered an insuperable technical obstacle. As regards the alleged additional costs related to the hiring of in-house lawyers, the Commission provided a list of the dates by which experts started to reply to enquiries. It revealed that most of SAUL's in-house experts started working from the beginning of the contract year, before the problems which SAUL alleged made their hiring necessary could have become apparent.

According to the Commission, SAUL was not obliged by the contract to exceed the 10 000 enquiries. As a result of SAUL's failure to correctly filter questions, the level of 10 000 eligible enquiries was never reached. Following the meeting in December 2000, the Commission's intention was to renew the contract. However, this position changed radically in January when allegations came to the knowledge of DG MARKT concerning manipulation of the SAUL database from the beginning of the contract aimed at increasing the invoiceable amounts.

The Commission argued that the delay in payment was not an abuse of power by the Commission but was due to the failure of the contractor to provide the necessary means to carry out necessary checks. Principles of good financial management guided the Commission not to release further payment without clear evidence of the services rendered.

The complainant's complementary observations

The complainant maintained its complaint. The complainant considered that it had honoured its bid and provided for a database of high quality. The complainant was of the view that the Commission failed to make clear in the call for tenders its expectations and that it aimed at changing the practice used during 1997-1999 by the Signpost Service.

THE DECISION

1 Scope of the inquiry of the European Ombudsman

1.1 The complaint concerns obligations arising under a contract concluded between the Commission and the complainant.

1.2 According to Article 195 of the EC Treaty, the European Ombudsman is empowered to receive complaints "concerning instances of maladministration in the activities of the Community institutions or bodies". The Ombudsman considers that maladministration occurs when a public body fails to act in accordance with a rule or principle binding upon it(2). Maladministration may thus also be found when the fulfilment of obligations arising from contracts concluded by the institutions or bodies of the Communities is concerned.

1.3 However, the Ombudsman considers that the scope of the review that he can carry out in such cases is necessarily limited. In particular, the Ombudsman is of the view that he should not seek to determine whether there has been a breach of contract by either party, if the matter is in dispute. This question could be dealt with effectively only by a court of competent jurisdiction, which would have the possibility to hear the arguments of the parties concerning the relevant national law and to evaluate conflicting evidence on any disputed issues of fact.

1.4 The Ombudsman therefore takes the view that in cases concerning contractual disputes it is justified to limit his inquiry to examining whether the Community institution or body has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. If that is the case, the Ombudsman will conclude that his inquiry has not revealed an instance of maladministration. This conclusion will not affect the right of the parties to have their contractual dispute examined and authoritatively settled by a court of competent jurisdiction.

2 Alleged failure to ensure that there was an obligation for the contractor of the Europe Direct Call centre to co-operate with the Signpost Service

2.1 The complainant alleges that the Commission failed to ensure that there was an obligation for the contractor of the Europe Direct Call centre to co-operate with the Signpost Service.

2.2 According to the Commission, the contract with Global One for management of the Europe Direct Call Centre did not oblige the Commission to ensure direct dialogue between two Commission contractors, which would be contrary to good contract management. The complainant had the basic obligation to operate the service according to the procedures it had itself proposed in its bid to the Commission. The technical and organisational merits of the methodology for implementing the service were, in fact, one of the contract award criteria.

2.3 The Ombudsman observes that the contract between the complainant and the Commission and its annexes do not mention any obligation of the Commission to ensure co-operation between the contractor of the Europe Direct Call centre and the Signpost Service. The Ombudsman therefore finds no maladministration in relation to this aspect of the complaint.

3 Alleged lack of information in the call for tender

3.1 The complainant alleges that the Commission failed to provide adequate information in the call for tenders. According to the complainant, the description of enquiries connected to Single Market and so-called "second level enquiries" were not mentioned in the call for tenders or the contract itself, but only provided in the Guidelines to assist SAUL with the identification of eligible "second level enquiries" arriving to the Signpost Service and the treatment of enquiries other than eligible "second level enquiries" delivered by the Commission on 28 November 2000.

3.2 The Commission argued that the call for tenders was clear on the functions of the Signpost Service, but deliberately left the choice of means of implementation to the potential service providers and to the Commission's assessment of the ability of the methods proposed to provide a quality service, as contract award criteria. The Guidelines were delivered in order to help the contractor in filtering the questions which, according to the Commission, simply repeated the methods already envisaged by the complainant in its bid.

3.3 The Ombudsman observes that the complainant’s bid stated that its first function would be to filter incoming questions to ensure that they fall within the scope of the Signpost Service and re-route questions which are considered to fall outside its scope. Furthermore, it is clear from the contract between the Commission and the complainant that the enquiries had to deal with the exercise of citizens' rights in the EU and the Single Market.

3.4 The Ombudsman therefore considers that, in the present case, the Commission has put forward a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. The Ombudsman therefore finds no maladministration in relation to this aspect of the complaint.

4 Non-renewal of the contract

4.1 The complainant alleges that the Commission failed to renew the contract as agreed. According to the complainant, it was informed at a meeting in Brussels on 20 and 21 December 2000 that the contract was to be renewed and it therefore renewed its contracts with its experts, rented new premises and made agreements for leasing of computer equipment and database services. On 16 February 2001, the complainant received a letter announcing that the Commission did not intend to renew the contract.

4.2 According to the Commission, the contract was signed for one year with the option of renewal up to a maximum of five years. The renewal option had to be exercised at least one month prior to the expiry of the contract by means of a supplementary agreement signed by the parties. However, there was no legal obligation to inform the contractor of the intention not to renew the contract. The letter of 24 January 2001 was sent as a matter of courtesy.

4.3 The Commission also states that, following the meeting in December 2000, its intention was to renew the contract. However, this position changed radically in January when allegations concerning manipulation of the complainant's database from the beginning of the contract aimed at increasing the invoiceable amounts came to the knowledge of DG MARKT. The Commission considered that renewal of the contract would, in these circumstances, be contrary to the basic principles of prudence and caution in sound administrative management and of the need for mutual confidence between the parties to the contract to ensure that it is performed satisfactorily. The complainant observed that an OLAF investigation has not given any proof of wrong doing on its part.

4.4 The Ombudsman notes that the Commission accepts that it originally intended to renew the contract. However, the complainant has not established that the staff of the Commission gave any specific promise of renewal. Moreover, the reasons given by the Commission for changing its intentions do not seem unreasonable. On the basis of the available evidence, the Ombudsman finds no maladministration in relation to this aspect of the complaint.

5 Non-payment of part of the invoices

5.1 The complainant alleges that the Commission failed to pay invoices according to the contract.

5.2 According to the Commission, it was clear from the contract that all payments were dependent on satisfactory performance of the work by the contractor, acceptance of the reports relating to the period concerned and, in the case of payments calculated on the basis of unit price, presentation of an invoice. Furthermore, according to Annex III of the contract, the main aim of the weekly and monthly reports was to ensure that the Signpost Service worked efficiently. DG MARKT suspended the invoices for October 2000 to January 2001 in accordance with Article 10 (5) of the general terms and conditions because the required documents, notably the database, had not been supplied and the Commission saw the need for further checks.

5.3 Furthermore, the Commission argues that the contractor failed to meet its basic obligation to provide for and encode in a database all the minimum data specified in the contract which was needed to monitor the satisfactory performance of the contract and for quantitative and qualitative analysis of the enquiries addressed by citizens to the Signpost Service. By failing to supply the data in question, the contractor made it impossible for the Commission to check fully that the contract was being implemented properly. It also prevented the Commission from carrying out the substantial analysis of citizens' experience of the functioning of the Single Market. In these circumstances, the Commission was prevented by principles of sound administrative and financial management from making the payments due upon satisfactory performance of the contract.

5.4 The Ombudsman considers that the Commission has put forward a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. The Ombudsman therefore finds no maladministration in relation to this aspect of the complaint.

6 The complainant’s claims

6.1 The complainant claims that the Commission should immediately pay all invoices according to the contract and compensate for the delay in payment. Furthermore, the complainant claims that the Commission should renew the contract, or compensate the complainant for the financial loss caused by the failure to renew.

6.2 In view of the findings of no maladministration in sections 2 - 5 of this decision above, the Ombudsman does not consider it necessary to inquire further into the complainant's claims.

7 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, there appears to have been no maladministration by the Commission. The Ombudsman therefore closes the case.

The President of the Commission will also be informed of this decision.

Yours sincerely,

 

Jacob SÖDERMAN

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(1) According to SAUL's bid for the citizens' Signpost Service of 15 October 1999, p. 10: "The first function of the new Signpost Service is to filter the incoming questions to ensure that they fall within the scope of the contract with the European Commission. This function itself requires both onsite language and legal skills, something that has been a considerable problem in the earlier operation of the service. Our management team thus has been selected, structured and trained to incorporate these basic requirements. Those questions deemed to fall outside the scope of the Signpost Service, such as those asking for general information, are then re-routed to the appropriate information service of the European Commission."

(2) See Annual Report of the European Ombudsman 1997, page 22 and following.