Strasbourg, 31 December 2004

Dear Mr K.,

On 16 December 2003, you made a complaint to the European Ombudsman on behalf of Vitro-Westland BV concerning your participation in tender ref. EuropeAid/11557/D/S/SR. On 30 December 2003, you sent a fax with additional information.

On 8 January 2004, I forwarded the complaint to the President of the Commission. On 21 January 2004 you sent a follow-up e-mail. The Commission sent its opinion on 20 April 2004. I forwarded it to you with an invitation to make observations, which you sent on 12 June 2004.

On 7 October 2004 you sent an e-mail inquiring about your case. My office replied to you by e-mail on 8 October 2004.

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

To avoid misunderstanding, it is important to recall that the EC Treaty empowers the European Ombudsman to inquire into possible instances of maladministration only in the activities of Community institutions and bodies. The Statute of the European Ombudsman specifically provides that no action by any other authority or person, like the Suriname authorities in the present case, may be the subject of a complaint to the Ombudsman.

The Ombudsman's inquiries into your complaint have therefore been directed towards examining whether there has been maladministration in the activities of the European Commission.

THE COMPLAINT

According to the complainant, the relevant facts are as follows:

The complainant, a Dutch company, made a bid further to the tender ref. EuropeAid/11557/D/S/SR in the framework of the European Commission project nb B7-8710 2000 01 ("Restructuring of the banana sector in Suriname"). Although the complainant's bid fulfilled all the tender conditions and its price was one of the lowest, it was rejected by the Suriname Ministry of Planning and Development Co-operation, without detailed reasoning. The tender procedure was closed on 25 April 2003. In a letter of 20 June 2003, the Ministry informed the complainant that the Evaluation Committee, in the presence of a Commission representative, had concluded that the complainant's offer was not the most economically advantageous. The letter also referred to paragraph 4.3.9.7 of the "Practical Guide to EC external aid contract procedures" stating that the evaluation report is not accessible to the tenderers or third parties and that the Contracting Authority is not obliged to communicate the reasons for its choice. This information was in contradiction with information obtained from the EU Delegation in Paramaribo, according to which the complainant's tender had not been successful in the technical evaluation.

On 7 November 2003(1), the complainant wrote to the Commission observing that there was lack of transparency in the evaluation procedure for the tender. The complainant received no reply or acknowledgement of receipt from the Commission.

On 16 December 2003, the complainant lodged the present complaint with the Ombudsman. The complainant alleged that there was lack of transparency in tender procedure EuropeAid/11557/D/S/SR, in that the complainant did not receive a detailed explanation of the reasons for the rejection of its bid. According to the complainant, this lack of transparency is due to the confidentiality of the tender procedure as set out in paragraph 4.3.9.7 of the "Practical Guide to EC external aid contract procedures". The complainant claims that the Commission should indemnify it for the damage suffered.

THE INQUIRY

The Commission's opinion

The Commission recalled that the tender EuropeAid 11557/D/S/SR "Supply of hardened and non-hardened banana tissue culture plants" in Suriname was divided into two lots. Three tenderers, one of which was the complainant, submitted an offer for lot 2, "in vitro (non-hardened) banana tissue culture plants".

On 30 January 2003, the Commission signed a Financing Agreement B7-8710/856/28 with the Suriname Government(2) concerning the support to the restructuring of the banana sector. The project was to be executed and financed out of EC budget resources. For tendering, the procedures as provided for by the Practical Guide to EC external aid contract procedures were thus applicable, namely Article 5 of the Financing Agreement and Article 3.2 of the Annex "Technical and Administrative provisions for implementation".

The Minister of Planning and Development Co-operation in Suriname was the National Authorising Officer (NAO) and had responsibility for the preparation of the tender dossiers, the specifications and the award of the contract (Article 3.2 of the Annex).

In Annex II of the tender dossier, the technical information to be provided regarding the supplier was formulated as follows:

"The suppliers must show their capacity to produce, and market healthy in vitro banana plants. With this intention the tenderer must provide following verifiable information:

- localisation of the mother-plants parcels and description of the type: country, area, type (monoclonal or polyclonal);

- statistics of two last years production by varieties of clones, stages or marketed seedlings (in vitro, hardened, but ready to seedling) and the countries of destination of these exports; (…)".

According to article 16.1 of the Supply Procurement Notice (selection criteria) "All the information required in this chapter of the technical specifications must be provided. If one of required information is omitted the tenderer is simply eliminated like credible candidate of the supply tender" [sic].

The complainant’s offer did not indicate whether the mother plants were monoclonal or polyclonal. Furthermore, the statistics for the last two years of production included in the offer only provided the information that the complainant exported hardened and non-hardened tissue culture plants. This was considered insufficient to show their capacity to produce and market healthy in vitro banana plants. For those reasons, the offer of the complainant was rejected.

In reply to the complainant's allegation of lack of transparency, the Commission pointed out that paragraph 4.3.9.7 of the Practical Guide to EC external aid contract procedures provides that "the evaluation report, in particular, is for official use only and may be divulged neither to tenderers, nor to any party outside the authorised services of the Contracting Authority, the European Commission and the supervisory authorities". The confidentiality of the evaluation report does not constitute a lack of transparency. Nor can this provision be interpreted as a prohibition against providing the rejected tenderers with the reasons for the rejection. Moreover, in paragraph 4.3.11.3 of the Practical Guide, it is said that the Contracting Authority must write to the unsuccessful tenderers informing them that their tenders have been unsuccessful and explaining why they have not been awarded the contract, stating whether their tenders were technically compliant and indicating any technical shortcomings. It was the responsibility of the NAO/Contracting Authority to inform the complainant of the reasons for the rejection according to the provisions of the Practical Guide. They initially failed to do so, but after a follow-up of the matter by the EC Office in Suriname, the NAO rectified this and wrote on 18 December 2003 to the complainant with an explanation as to why the offer had been rejected.

The Commission is thus of the opinion that the evaluation of the tenders was carried out in accordance with the rules of the Practical Guide. The offer of the complainant was rejected by the Evaluation Committee because it was not compliant with the technical specifications of the tender dossier. The NAO followed the recommendation from the Evaluation Committee to award the contract to Vitropic and the contract was endorsed by the Commission.

As it cannot be held responsible for the acts of a foreign Authority, the Commission feels there is no case of maladministration on its part. It cannot, therefore, be held liable to the complainant for the damage it allegedly suffered.

The Commission apologised, however, for the fact that it omitted to answer the complainant directly itself in reaction to its letter of 7 November 2003.

The complainant's observations

The complainant observed that, in a first letter of 20 June 2003, the NAO gave as the reason for the rejection of its tender that it was economically not the most advantageous. After having complained to the Ombudsman, the complainant received the second letter, dated 18 December 2003, which contained a reason which was diametrically opposed to the first reason given, namely that its technical offer was not considered to satisfy the criteria of the technical specifications.

If after 6 months, the NAO gave a different reason for the rejection, then this means that the ground for the rejection was not contained in the initial evaluation report. The second answer of the NAO is thus unacceptable.

The complainant maintained therefore its complaint and requested that the evaluation reports should be accessible after an independent expert declares that the documents have not been modified. The EU tender conditions should be changed so that in the future tenderers can have access to the evaluation reports so that any appearance of partiality in the evaluation of tenders is excluded. The complainant maintains its demand for compensation.

The Commission has approved the decisions of a foreign authority and has not acted responsibly with regard to the distribution of the funds which it provided.

THE DECISION

1 The alleged lack of transparency in the tender procedure

1.1 The complainant alleges that there was a lack of transparency in tender procedure EuropeAid/11557/D/S/SR, in that the complainant did not receive a detailed explanation of the reasons for the rejection of its bid. According to the complainant, this lack of transparency is due to the confidentiality of the tender procedure as set out in paragraph 4.3.9.7 of the "Practical Guide to EC external aid contract procedures".

1.2 The Commission argues that the confidentiality of the evaluation report does not constitute a lack of transparency. Paragraph 4.3.11.3 of the Practical Guide provides that the Contracting Authority must write to the unsuccessful tenderers informing them that their tenders have been unsuccessful and explaining why they have not been awarded the contract, stating whether their tenders were technically compliant and indicating any technical shortcomings. It was the responsibility of the NAO/Contracting Authority to inform the complainant of the reasons for the rejection according to the provisions of the Practical Guide. They initially failed to do so, but after a follow-up of the matter by the EC Office in Suriname, the NAO rectified this and wrote on 18 December 2003 to the complainant with an explanation as to why the offer had been rejected. The evaluation of the tenders was thus carried out in accordance with the rules of the Practical Guide. The offer of the complainant was rejected by the Evaluation Committee because it was not compliant with the technical specifications of the tender dossier. The NAO followed the recommendation from the Evaluation Committee to award the contract to Vitropic and the contract was endorsed by the Commission.

1.3 The Ombudsman notes that the provisions applicable to the tender under consideration are the following: 1) the Practical Guide to EC external aid contract procedures (January 2001)(3), 2) the Financing Agreement B7-8710/856/28 between the European Community(4) and the Government of Suriname concerning Support to the restructuring of the banana sector (Budget Line B7-8710 Assistance to Traditional ACP Suppliers of Bananas), signed on 19 February 2003, 3) the Annex "Technical and Administrative Provisions for Implementation" to the above Financing Agreement, and 4) the Invitation to tender ref. EuropeAid/11557/D/S/SR ("Supply to hardened and non-hardened banana tissue culture plants").

1.4 Article 1 of the Special Conditions of the Financing Agreement provides that the project "support to the restructuring of the banana sector" shall be executed and financed out of the budget resources of the Community, by way of a grant. Article 5.1 of the General Conditions of the Agreement provides that "the award of works supply and service contracts shall be in conformity with the Financial Regulation applicable to the General Budget of the European Community". Article 11.1 of the General Conditions of the agreement provides that "the Commission shall monitor the execution of the project and may request any explanation". Point 3.2 of the Annex "Technical and Administrative Provisions for Implementation" provides that the implementation procedures for the award of contracts for services, supplies and works will be in accordance with the EuropeAid "Practical Guide to EC external aid contract procedures" (hereafter "the Practical Guide") of January 2001.

1.5 The tender invitation EuropeAid/11557/D/S/SR, which was for a supply contract via an open procedure, provided that the Contracting Authority - and National Authorising Officer - was the Ministry of Planning and Development Co-operation in Suriname. Point 20 ("Evaluation of tenders") of the instruction to tenderers provided, successively, for 1) an examination of the administrative conformity of tenders, 2) a technical evaluation, 3) a financial evaluation of any arithmetic errors and 4) the final award. Point 20.6 provided that the sole award criterion shall be the price and that the contract shall be awarded to the lowest compliant tender.

1.6 Point 4.3.9.7 of the Practical Guide (in the section of "supply contracts") provides that the Contracting Authority must submit the Evaluation Report together with its recommendation to the European Commission for approval. It further provides that the entire tender procedure is confidential from the end of the tender opening session to the signature of the contract by both parties and that the Evaluation Committee's decisions must remain secret. It also states that the Evaluation Report is for official use only and may be divulged neither to tenderers nor to any party outside the authorised departments of the Contracting Authority, the European Commission and the supervisory authorities (eg the European Court of Auditors).

1.7 Point 4.3.11.3 of the Practical Guide ("Publicising the award of the contract") provides that "once the contract has been signed, the Contracting Authority must prepare a supply contract award notice and send it to the Commission, which publishes the results of the tender procedure in the Official Journal, on the Internet and in any other appropriate media. In addition, the Contracting Authority must write to the unsuccessful tenderers informing them that their tenders have been unsuccessful and explaining why they have not been awarded the contract, stating whether their tenders were technically compliant and indicating any technical shortcomings.

1.8 On the basis of the documents in the file, it appears that, on 20 June 2003, the Ministry of Planning and Development Co-operation in Suriname replied to a letter of the complainant's lawyer. The reply stated that, after evaluation by the Evaluation Committee and in the presence of a Commission representative, it appeared that the complainant was not the most economically advantageous tenderer. The letter referred also to point 4.3.9.7 of the Practical Guide according to which the evaluation report could not be divulged.

1.9 On 18 December 2003, the Ministry sent a letter with a different content to the complainant. This time the letter stated that the complainant's tender was not successful because the technical offer was not considered to satisfy the following criteria of the technical specifications (annex II of the tender dossier): localisation of the mother plants for the type (monoclonal or polyclonal): statistics of the last two years of production by variety or clones, stages of marketed seedlings and the country of destination of these exports for in-vitro banana plants (Cavendish). The letter also informed the complainant that the contract had been awarded to Vitropic SA for an amount of EUR 767 668.50.

1.10 In its opinion on the complaint, the Commission confirmed that that the complainant's tender was rejected by the Evaluation Committee because it was not compliant with the technical specifications.

1.11 It appears from the above that the Ministry has communicated to the complainant two different reasons why its tender was rejected, namely a first reason which concerned the final award evaluation and thus presupposed that the complainant's tender had been considered technically compliant, and a second reason which concerned the technical evaluation of the tender. The latter reason corresponds to the information given by the Commission concerning the decision of the Evaluation Committee.

1.12 Given that that Evaluation Report was confidential and not divulged to the complainant in accordance with point 4.3.9.7 of the Practical Guide, the Ombudsman understands that the complainant, having received contradictory reasons for the rejection of its bid, could reasonably have entertained doubts concerning the tender procedure.

1.13 However, according to the Practical Guide, it was the responsibility of the Contracting Authority - namely the Ministry in question - and not of the Commission, to write to the complainant informing it why its tender was unsuccessful and why it was not awarded the contract. On the basis of the available information, the Ombudsman considers that there is no evidence of maladministration by the Commission with regard to the transparency of the procedure.

1.14 The Ombudsman suggests, however, that in order to enhance the trust of tenderers in future procedures the Commission could consider revising the Practical Guide to EC external aid contract procedures with a view to allowing tenderers, upon request, to have access to the part of the evaluation report concerning their own tender. The Ombudsman therefore, makes a further remark to this effect below.

2 The claim for damages

2.1 The complainant claims that the Commission should indemnify it for the damage suffered.

2.2 The Commission observed that, as it cannot be held responsible for the acts of a foreign Authority, there was no case of maladministration on its part. It can thus not be held responsible for indemnifying the complainant for the damage allegedly suffered.

2.3 The Ombudsman notes that no maladministration by the Commission was found in point 1.13 above. The Ombudsman further notes that he has no competence to deal with allegations against institutions and bodies, such as, for instance, the Ministry in question, which are not Community institutions and/or bodies. The complainant has however the possibility to submit a claim for damages in accordance with point 2.4.12 "Appeals" of the Practical Guide which provides that "tenderers believing that they have been harmed by an error or irregularity during the award process may petition the Contracting Authority directly. The Contracting Authority must reply within 90 days of receipt of the complaint (…)".

3 Conclusion

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

FURTHER REMARK

The Ombudsman suggests that in order to enhance the trust of tenderers in future procedures, the Commission could consider revising the Practical Guide to EC external aid contract procedures with a view to allowing tenderers, upon request, to have access to the part of the evaluation report concerning their own tender.

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

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

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(1) The Ombudsman points out that the copy of the letter supplied to the Ombudsman by the complainant is in fact dated "17 December 2003".

(2) The Suriname government countersigned on 19 February 2003.

(3) This document can be found under the EuropAid website at: http://ec.europa.eu/europeaid/tender/gestion2001/index_en.htm

(4) The preamble of the agreement mentions that the Commission acts for and on behalf of the European Community.