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Decision of the European Ombudsman closing her own-initiative inquiry OI/2/2013/EIS concerning the European Commission

The background to the complaint

1. Article 228 of the Treaty on the Functioning of the European Union empowers the European Ombudsman to conduct inquiries on her own initiative in relation to possible instances of maladministration in the activities of the Union institutions, bodies, offices or agencies.

2. In own-initiative inquiry OI/5/99/(IJH)GG, the Ombudsman investigated the subject of late payment by the European Commission. This inquiry was closed on 16 February 2001.

3. On 14 December 2007, the Ombudsman opened a further own-initiative inquiry concerning the issue of timeliness of payments by the Commission (OI/5/2007/GG). This inquiry was closed on 20 June 2008.

4. In its opinion in that case, the Commission inter alia pointed out that Article 106 of Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities[1] ("Regulation 2342/2002") had been modified.

5. Article 106 of Regulation 2342/2002[2] is worded as follows:

"Payment time limits and default interest

1. Sums due shall be paid within no more than forty-five calendar days from the date on which an admissible payment request is registered by the authorised department of the authorising officer responsible [...].

2. The payment period referred to in paragraph 1 shall be thirty calendar days for payments relating to service or supply contracts, save where the contract provides otherwise.

3. For contracts, grant agreements and decisions under which payment depends on the approval of a report or a certificate, the time-limit for the purposes of the payment periods referred to in paragraphs 1 and 2 shall not begin to run until the report or certificate in question has been approved.[...]

The time allowed for approval may not exceed:

(a) 20 calendar days for straightforward contracts relating to the supply of goods and services;

(b) 45 calendar days for other contracts and grant agreements and decisions;

(c) 60 calendar days for contracts and grant agreements and decisions involving technical services or actions which are particularly complex to evaluate.

[...]

5. On expiry of the time limits laid down in paragraphs 1, 2 and 3, the creditor shall be entitled to interest in accordance with the following provisions:

(a) the interest rates shall be those referred to in the first subparagraph of Article 86(2);

(b) the interest shall be payable for the period elapsing from the calendar day following expiry of the time limit for payment up to the day of payment.

By way of exception, when the interest calculated in accordance with the provisions of the first subparagraph is lower than or equal to EUR 200, it shall be paid to the creditor only upon a demand submitted within two months of receiving late payment. [...]".

6. In his decision of 20 June 2008 closing own-initiative inquiry OI/5/2007/GG, the Ombudsman noted that many of the measures adopted by the Commission in this context, and in particular those that resulted in changes of Regulation 2342/2002, appeared to be comparatively recent and that it was therefore too early to assess the impact that they might have on the situation. In the Ombudsman's view, the best way to proceed was thus to close inquiry OI/5/2007/GG and to open a new own-initiative inquiry in early 2009, when figures for the Commission's performance in 2008 would be available.

7. In view of the above, on 17 February 2009 the Ombudsman decided to open a new own-initiative inquiry into the subject of timeliness of payment by the Commission (OI/1/2009/GG). In particular, the Ombudsman asked the Commission to provide information on its performance in 2008. After having received the Commission's opinion, the Ombudsman launched a public consultation. A total of nine contributions were received from interested members of the public. The Ombudsman subsequently asked the Commission to address the arguments that had been raised in these contributions. In addition to that, the Ombudsman requested it to provide information concerning its performance in 2009. Having examined the information supplied by the Commission, the Ombudsman concluded that the Commission's responses to the issues and arguments raised during the public consultation were largely convincing. As regards the Commission's performance in 2009, the Ombudsman noted that the measures undertaken by the Commission had borne fruit and that an important step had been made in order to get to grips with the problem of delayed payments. The number of late payments decreased considerably from 2008, when it amounted to 22.67 % of all payments, to 2009, when this percentage went down to 14.42%. The overall sums of money affected by delays, in percentage terms, more than halved between 2008 (13.95%) and 2009 (6.63%). In addition to that, the average delay also decreased considerably from 47.45 to 40.43 days. In view of the above, and in particular in light of the clear improvements achieved by the Commission in 2009, the Ombudsman considered that there were no grounds for further inquiries into the issue of the timeliness of payments by the Commission. This inquiry was thus closed on 8 February 2011.

8. In spite of the foregoing, the Ombudsman noted that problems still persisted and considered it necessary to keep the issue under consideration. When closing inquiry OI/1/2009/GG, the Ombudsman invited the Commission to provide figures for its performance in 2010, which the Commission duly supplied.

9. On 29 September 2011, the Ombudsman informed the Commission that a new own-initiative inquiry was envisaged for 2013 in order to verify progress in relation to the timeliness of payments by the Commission.

10. In view of the above, on 23 April 2013 the Ombudsman decided to open the present own-initiative inquiry into the subject of timeliness of payment by the Commission.

The subject matter of the inquiry

11. In his letter opening the present inquiry, the Ombudsman asked the Commission to provide information on the results of the steps it had taken to identify and deal with the causes of delays it experienced in making payments to contractors and to beneficiaries of grants and subsidies. The Ombudsman added that information on any further steps the Commission might have taken in this field would also be welcome.

12. The Ombudsman pointed out that, in this context, it would be most useful if the Commission could also present statistical data that might illustrate the problem or the remedial action taken by the Commission. More particularly, the Ombudsman stated that information (i) on the number and percentage of cases where delays in payment occurred; (ii) on the extent of the delays that occurred; (iii) on the sums involved; and (iv) on the cases where interest was paid on account of late payment would be appreciated.

The inquiry

13. On 23 April 2013, the Ombudsman opened the present own-initiative inquiry and requested an opinion from the Commission.

14. The Commission submitted its opinion on 23 July 2013.

The Ombudsman's analysis and conclusions

A. Information submitted by the Commission to the Ombudsman

15. In its opinion, the Commission stated that it continues to take the question of late payments seriously. It added that its performance has been monitored regularly by its Accounting Officer, and pointed out that follow-up action had been undertaken where problems were identified in relation to specific Directorate-Generals (DGs).

16. As regards the steps taken to identify and deal with problems, the Commission explained that the following measures were taken: (i) the setting up of action plans; (ii) the analysis of flows and procedures; (iii) the development of tailored reporting; (iv) training to promote best practices by the staff concerned; (v) hiring of additional staff during peak periods. It also added that an ex-post analysis was performed in order to identify the reasons for delays and possible solutions. The Commission explained that the action plans set out the rules and deadlines for registration and payment. It underlined that ensuring respect for these rules and deadlines remains a priority and that it had launched a number of actions to improve its performance in this area.

17. Moreover, the Commission submitted that in 2012 further action was taken to review workflows, checklists and related document management flows. In addition to this, guidance and recommendations on specific issues provided by the Commission's DG Budget allowed DGs to improve their monitoring with the aim of producing better performance.

18. The Commission pointed out that the measures it had taken had led to further improvements. It provided information on its performance in 2011 and 2012, as requested by the Ombudsman. This information is set out in the following tables:

Table 1: Contracts, grants and subsidies: average number of days to make a payment.

 

2011

2012

Net payment time

26 days

25 days

Table 2: Contracts, grants and subsidies: Payments outside the Financial Regulation deadlines.

 

2011

2012

Number of late payments

50 481

46 815

Value of late payments in €

1 515 824 414

1 377 081 000

Percentage of late payments in number

12.26%

11.80%

Percentage of late payments in value

6.89%

6.02%

Average delays for payments outside the Financial Regulation time limit

43.05 days

41.74 days

Table 3: Contracts, grants and subsidies: total interest paid on late payments in € and number of request.

 

2011

2012

Number of requests for interest submitted by creditors on account of late payment

   

65

67

Total amount of interest paid on account of late payment

   

679 726.98*

738 959.75

Of which amount paid upon request

157 552.70

208 931.21

* An additional amount of EUR 1 054 503 has been paid concerning fees linked to a legal case

19. With reference to the above tables, the Commission submitted the following:

- more priority is given to the timely treatment of payments;

- steps adopted in the last five years have helped reduce considerably the percentage of late payments in number and in value;

- DG Budget continues the monitoring of results;

- follow-up actions are taken where problems are identified with particular DGs or specific events.

20. In conclusion, the Commission stressed that it is to be expected that initiatives already taken and the ones proposed will continue to influence positively the payment performance.

B. The Ombudsman's assessment

21. The Ombudsman considers that her examination should specifically take account of the Commission's performance as regards the timeliness of payments carried out in 2011 and 2012, while putting the figures submitted by the Commission into the broader context of the Commission's performance in previous years. As in own-initiative inquiry OI/1/2009/GG, the focus of the present inquiry is on payments to contractors and beneficiaries of grants and subsidies, but does not include, for instance, delays in making payments to EU staff.

22. At the outset, the Ombudsman notes with satisfaction that the Commission, in its opinion, detailed a number of measures it has taken over the last five years to address problems of delayed payments.

23. There is no need for the Ombudsman to review the contents of these measures in detail. It is enough to establish whether the figures obtained in the course of her inquiry suggest that these measures have been successful in addressing the issue of late payments.

24. The tables reproduced in point 18 above show that there have been some improvements in the Commission's performance between 2011 and 2012. In 2012, the average number of days to make a payment decreased to 25 days (as compared to 26 days in 2011), which is a small but encouraging improvement. All the parameters set out in table 2 above have improved in 2012, as compared to 2011, some quite significantly.

25. Comparing the figures for 2012 with those for 2008, obtained in the framework of the Ombudsman's own-initiative inquiry OI/1/2009/GG, it emerges that the percentage of the number of delayed payments has more than halved between 2008 (22.67%) and 2012 (11.80%). The same is true as regards the percentage of late payments in value which, in 2008, amounted to 13.95%, has decreased to 6.02% in 2012. Moreover, the average delays decreased from 47.45 days in 2008 to 46.05 days in 2011 and 41.74 days in 2012.

26. The Ombudsman notes that the above findings clearly show that the measures undertaken by the Commission are working and that a further important step has been made in dealing with the problem of delayed payments.

27. In view of the above, the Ombudsman considers that there are no grounds for further inquiries at present.

28. The picture however is not entirely positive. In particular, the Ombudsman notes with concern that the total amount of interest paid on account of delays in payment has increased, from EUR 679 726.98 in 2011 to EUR 738 959.75 in 2012. In 2008, the relevant amount was EUR 631 909.62. It also emerged that the total amount of interest paid upon request has also significantly increased from EUR 157 552.70 in 2011 to EUR 208 931.21 in 2012. It is therefore clear that further improvements are needed.

29. In view of the above, the Ombudsman considers that it is necessary to keep this issue of late payments under consideration. She therefore invites the Commission to provide her with figures on late payments for 2013, as soon as these are available. This information should be submitted in the same form as it was provided with regard to previous years.

C. Conclusion

On the basis of her inquiry into this matter, the Ombudsman closes it with the following conclusion:

There are no grounds for further inquiries at present.

The Commission will be informed of this decision.

 

Emily O'Reilly

Done in Strasbourg on 17 December 2013


[1] OJ 2002 L 357, p.1.

[2] In its version resulting from Commission Regulation (EC, Euratom) No 478/2007 of 23 April 2007 (OJ 2007 L 111, p. 13).