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Decision of the European Ombudsman closing his inquiry into complaint 2597/2007/RT against the European Commission
Case 2597/2007/RT - Opened on Wednesday | 14 November 2007 - Decision on Tuesday | 09 December 2008
The complainant is a French IT company which merged with another French enterprise and replaced the latter in a consortium which was carrying out work under a project supported by the Commission. The complainant was not paid for the work it carried out under the project. It therefore contacted the Commission by e-mail to ask why. The Commission did not reply to that e-mail. As a result, the complainant turned to the Ombudsman.
In the course of the Ombudsman's inquiry, the Commission explained that some members of the consortium delayed submitting documents which were necessary for the signature of an amendment to the contract. This amendment, which provided for the complainant to replace the French company it had merged with, would constitute a legal basis for the Commission to make the payment due.
Despite the fact that the said documents had been missing since March 2006 and continued to be missing at the time it decided to sign the amendment, the Commission only signed the amendment in question in January 2008, and paid the complainant a few months later. It did so after the Ombudsman had opened the present inquiry.
The Ombudsman agreed with the Commission that it needed a legal basis in order to make the payment to the complainant. However, he underlined that, if the Commission was able to sign the amendment in January 2008, it could also have done so before that date; the fact that the documents were missing had proven to be irrelevant. In this respect, he found that nothing had prevented the Commission from taking proactive steps and contacting the members of the consortium itself in respect of the missing documents. Instead, the Commission relied on the co-ordinator of the consortium to do so.
However, given that, in the course of the Ombudsman's inquiry, the Commission signed the amendment and made the relevant payment, no further inquires were justified as regards this aspect of the case.
The Ombudsman found, however, that the Commission should have sent a direct reply to the complainant's concerns contained in its e-mail, instead of relying on the co-ordinator to inform the complainant. The Ombudsman made a critical remark in this respect.
THE BACKGROUND TO THE COMPLAINT
1. The complainant is a French IT company. In May 2003, it merged under French law with another company, Atlantel Multimedia ('the French enterprise'). As a result, the French enterprise ceased to exist.
2. According to the merger agreement, the complainant took over the French enterprise's tasks under the Mobile Adaptive Procedure (MAP) project, which was supported by the European Commission's Directorate-General for Information Society and Media ('the Project').
3. The Project was carried out on the basis of a contract signed by the Commission and a number of local public entities and private enterprises, including the French enterprise ('the Contractors'), all of which belonged to a consortium. The Contractors were led by one of the members of the consortium, an Italian enterprise ('the Coordinator').
4. According to Article 3 of the contract, entitled 'Estimated costs and maximum financial contribution of the Community', the Project would be partially financed by the Community. The Commission, acting on behalf of the Community, would make the initial advance payment, the periodic payments and the final balance payment. All the above payments by the Commission would be made to the Coordinator, which would distribute the payments among the Contractors in accordance with a table containing the indicative breakdown of the estimated eligible costs.
5. The Commission made the initial advance payment and the first payment for the tasks carried out by the Contractors between 1 March 2002 and 28 February 2003.
6. On 16 November 2004, the Coordinator asked the Commission for the second payment for the tasks carried out by the Consortium between 1 March 2003 and 31 May 2004. Subsequently, it informed the Commission of the complainant's merger. As a result, the Commission stated that an amendment to the contract should be signed in this respect.
7. On 8 September 2005, the Commission made the second payment of EUR 231 368, 26 to the Coordinator. However, it asked the Coordinator to distribute this sum to the Contractors, with the exception of the complainant and another contractor, which were not mentioned in the original contract.
8. On 7 March 2007, the complainant contacted the Commission as regards the payment due to it for its participation in the Project. On 11 April 2007, the Commission met the Coordinator regarding this matter.
9. On 15 October 2007, the complainant submitted its present complaint to the Ombudsman.
10. On 9 January 2008, that is, after the complaint was submitted to the Ombudsman, the Commission signed the amendment.
11. On 14 July 2008, the Commission made the balance payment for the project to the Coordinator. The complainant received part of it.
THE SUBJECT MATTER OF THE INQUIRY
12. In his original complaint to the Ombudsman, the complainant submitted the following allegations and claim:
- the Commission did not pay it the eligible costs to which it was entitled;
- the Commission failed to explain its delay in the above payment and to answer to its e-mail dated 7 March 2007; and
- the Commission should pay it the eligible costs.
13. In its further e-mail to the Ombudsman of 16 June 2008, the complainant referred to the above claim. It pointed out that it had carried out tasks under the Project in 2003 and 2004, and had incurred expenses over the following four years, without being repaid by the Commission. This had been prejudicial for its business. It also felt that it should be entitled to "possible late payment interest" from the Commission. The Ombudsman considered that this statement could be added as a new element to the complainant's original claim. On the basis of the evidence collected within the inquiry, which is known to both the Commission and the complainant, the Ombudsman felt that he could take a position on this new element without having to contact the Commission for separate comments.
14. In September 2008, the complainant informed the Ombudsman that the Coordinator had paid it an amount of money which was considered to be the final payment from the Commission. However, the complainant was not satisfied with the Coordinator's calculation.
The Ombudsman understands that the complainant's above concerns are directed against the Coordinator. In this regard, he would like to point out that he can only investigate complaints concerning maladministration by Community institutions and bodies. The Coordinator is an Italian enterprise and, therefore, the Ombudsman has no power to deal with issues concerning the complainant's relationship with the Coordinator.
15. In light of the above, the subject matter of the present inquiry is limited to the original allegations and claim, including the new aspect described in paragraph 13 above.
16. On 26 March 2008, the Commission sent its opinion, which was drafted in English. On 9 April 2008, the Commission provided a translation of its opinion into French, which was forwarded to the complainant with an invitation to make observations. The complainant presented its observations on 3 June 2008.
17. On 16 June 2008, the complainant sent additional information.
18. On 15 July 2008, the Commission informed the Ombudsman's services that the final payment for the project had been made.
19. On 23 September 2008, during a telephone conversation with the Ombudsman's services, and on 30 September 2008 by e-mail, the complainant sent further additional information.
THE OMBUDSMAN'S ANALYSIS AND CONCLUSIONS
A. Allegation of failure to pay the complainant's eligible costs and related claim
Arguments presented to the Ombudsman
20. In the original complaint, the complainant alleged that the Commission had not paid it the eligible costs and claimed that it should do so. In its subsequent e-mail of 16 June 2008, the complainant pointed out that it had carried out tasks under the project in 2003 and 2004, and had incurred expenses over the following four years, without being repaid by the Commission. This had been prejudicial for its business.
21. The complainant originally argued that it had submitted the relevant cost statement for the tasks executed by it under the contract between 12 May 2003 and 31 May 2004. However, the Commission had failed to make the relevant balance payment before it complained to the Ombudsman. The complainant pointed out that it had carried out work under the Project, replacing the French enterprise with which it had merged while the contract was already in force. According to the merger agreement, the complainant was entitled to receive all the payments due under the contract.
22. In its opinion, the Commission explained that it had made the relevant payments to the Coordinator, who had the task of distributing them to the Contractors. The Commission made the initial advance payment and then the first payment for the tasks carried out under the Project before the complainant's merger. The Commission pointed out in this respect that, contrary to its obligations under the contract, the Coordinator had taken too long to inform the Commission about the merger between the complainant and the French enterprise. It added that the claim for costs submitted by the French enterprise was already being processed at the time when the Commission was informed about the merger.
23. On 8 September 2005, the Commission received the Coordinator's claim for the second payment, covering the tasks carried out by the Consortium between 1 March 2003 and 31 May 2004, that is, after the complainant's merger. Subsequently, the Commission informed the Coordinator that its second payment could not be distributed to the complainant and another contractor, which were not mentioned in the original contract. The relevant amendment concerning the replacement of the French enterprise by the complainant needed first to be signed by all Contractors and the Commission before the second payment could be made. The Commission further explained that it could not sign the amendment because some Contractors had not submitted all of the relevant documentation (three documents had been missing since March 2006). One of the Contractors had even opposed the said amendment.
24. Nevertheless, the Commission decided to demonstrate "a certain degree of flexibility". Despite the fact that the documents, which were missing in March 2006, were still missing on 9 January 2008, it signed the amendment. On 14 July 2008 the Commission made the balance payment to the Coordinator.
The Ombudsman's assessment
25. The Ombudsman agrees with the Commission that the costs relating to the execution of the contract may only be paid (and thus be eligible), if there is a contractual basis for such a payment.
26. The amendment to the contract was signed in January 2008. In accordance with the amendment, the French Enterprise withdrew from the contract on 12 May 2003. On the same date, the complainant was added to the contract as the Principal Contractor. As a result, all rights and obligations of the French enterprise resulting from the contract were transferred to the complainant on that date. The table containing the indicative breakdown of estimated eligible costs was modified accordingly.
27. This amendment gave the Commission the legal grounds to make the relevant payment to the complainant. It follows that the Commission's decision not to pay the complainant before the amendment entered into force appears to have been based on relevant legal grounds. In light of the above, the complainant's claim for interest for late payment cannot succeed.
28. The Ombudsman notes, however, that the Commission was able to be "flexible" in January 2008, and sign the amendment despite the fact that three documents had not been submitted. In this regard, he does not see why the Commission could not have done so in March 2006, when the situation was the same. Consequently, he fails to understand why the Commission waited passively for the documents for nearly two years, and then decided to make the payment to the complainant, regardless of the fact that it had not received the said documents.
29. The Ombudsman considers that the special role of the Coordinator, as representative of the Contractors, did not preclude the Commission from proactively entering into direct contact with those Contractors who had not submitted documents, in order to pressure them into doing so. Moreover, there was nothing to prevent the Commission, once it received the complainant's e-mail of 7 March 2007, from responding in a proactive way, as it did in the course of the Ombudsman's inquiry.
30. The Ombudsman notes, however, that, following the opening of hid inquiry into the present complaint, the Commission signed the amendment and made the balance payment on 14 July 2008.
31. In light of the above, the Ombudsman considers that no further inquiries are justified as regards this aspect of the case.
B. Allegation of failure to reply and to explain the late payment
Arguments presented to the Ombudsman
32. The complainant alleged that that the Commission failed to explain its delay in making the final payment. It also alleged that the Commission failed to answer its e-mail dated 7 March 2007, in which it requested, inter alia, the above explanation.
33. The Commission explained that its reasons for not paying the claimed costs "were regularly explained to the Coordinator by phone, e-mails and orally during the meetings". According to the contract, the Coordinator should have transmitted these explanations to all Contractors, including the complainant. Following the complainant's e-mail of 7 March 2007, the Commission's services had a meeting with the Coordinator on 11 April 2007 and provided him with answers to all the questions raised by the complainant in its e-mail.
The Ombudsman's assessment
34. The Commission's Code of Good Administrative Behaviour requires that its staff (i) give reasons for decisions which negatively affect citizens and (ii) reply to correspondence from citizens within a reasonable time.
35. In the present case, the Commission acknowledged that it had failed to reply directly to the complainant's e-mail of 7 March 2007. The Commission explained that it assumed that the Coordinator would inform the complainant of its answer to the complainant's e-mail in question and, in general, of the reasons accounting for the delay in paying the complainant. In this respect, the Commission stated that it had regularly discussed the Project-related problems with the Coordinator.
36. In its e-mail of 7 March 2007, the complainant stated however that, "three years after the end of the project and more than one year after the Commission's final request for documents, it did not receive any information concerning the final payment". If the Commission had regularly informed the Coordinator about the reasons for not paying the complainant, following its receipt of the complainant's aforementioned e-mail, the Commission should have been reasonably aware that this information had not reached the complainant.
37. Therefore, upon receipt of the above e-mail, the Commission was aware that it could not rely solely on the Coordinator to transmit the relevant information and that it would be useful to contact the complainant directly. The Commission, however, failed to do so and again relied on the Coordinator, in order to inform the complainant.
38. The Commission's failure to reply to the complainant's e-mail directly and to provide it with the required information, including the reasons for its delay in paying the complainant, was an instance of maladministration.
39. The fact remains, however, that however belatedly, the Commission explained its reason to the complainant in its opinion on the complaint. Therefore the Ombudsman does not make a proposal for a friendly solution or a draft recommendation. Instead, he makes a critical remark below.
On the basis of his inquiries into this complaint, the Ombudsman makes the following critical remark:
The Commission's failure to reply to the complainant's e-mail directly and to provide it with the required information, including the reasons for its delay in paying the complainant, was an instance of maladministration.
The complainant and the Commission will be informed of this decision.
P. Nikiforos DIAMANDOUROS
Done in Strasbourg on 9 December 2008
 In the original French: "Nous nous interrogeons également sur les indemnités de retard que la Commission envisage d'ajouter aux sommes dues."
 In the original French: "(...) les prestations effectuées pour le projet MAP datent de l'année 2003, et les dépenses ont donc du être supportées par notre société pendant plus de 5 ans. Bien entendu ce délai de paiement est préjudiciable pour une entreprise de la taille de la notre."
 The merger agreement reads as follows in French: "En conséquence de ladite cession, la société Alienor Net est substituée purement et simplement a la société Atlantel Multimedia pour l'exécution des contrats en cours au jour de la cession et notamment dans l'exécution du projet européen MAP."
 Article 3 of the second amendment reads as follows: "Principal contractor "Atlantel Multimedia" has withdrawn effective from 12 May 2003. The Preamble of the contract, Article 6 of the contract and Annex I have been modified accordingly."
Article 4 of the second amendment reads as follows: "Principal contractor Alienor Net has been added as of 12 May 2003. The preamble of the contract, the table of indicative breakdown of estimated eligible costs and Annex I have been modified accordingly."
Article 5 of the second amendment reads as follows: "All rights and obligations of the principal contractor "Atlantel Multimedia" are transferred to the principal contractor "Alienor Net" from 12 May 2003. The preamble and Article 6 have been modified accordingly."
Article 6 of the second amendment reads as follows: "The table of indicative breakdown of estimated eligible costs, which follows the signatures contract, has been modified (...)"
 The Commission referred to the Article 2 of Annex II to the grant contract, which reads as follows: "The project coordinator shall be the intermediary between the contractors and the Commission. In particular, he shall be responsible for transmitting to the Commission all documents and correspondence relating to the project."
 Code of Good Administrative Behaviour for Staff of the European Commission in their Relations with the Public, OJ L 267, p. 64.
 In accordance with the Commission's Code: "A Commission decision should state the reasons on which it is based and should be communicated to the persons and parties concerned (...)"
 In accordance with the Commission's Code "a reply to a letter addressed to the Commission a reply to a letter addressed to the Commission shall be sent within 15 working days from the date of receipt of the letter from the responsible Commission department. If a reply in substance cannot be sent within the deadline mentioned above (...) a holding reply should be sent."
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