Dear Mr H.,

On 24 April 2001, you made a complaint to the European Ombudsman concerning the administration of a contract with the Commission.

On 8 May 2001, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 14 September 2001. I forwarded it to you with an invitation to make observations, which you sent on 19 October 2001.

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

THE COMPLAINT

The complainant, WSP Int. (WSPI), submitted allegations against the Commission in April 2001 in regard to the administration of a contract.

According to the complainant, the relevant facts were as follows.

The complainant had entered into the contract with the Commission in December 1998 for the "Supervision and Quality Control of the Reconstruction of the Samac Interstate Bridge" (Bosnia and Herzegovina). The contract period was for 19 months, covering site supervision of the Works Contract.

It was anticipated in the tender and the Contract that the Team Leader would be based at the site in Samac, ca. 200 Km. from Sarajevo, for 19 months with only occasional visits to Sarajevo. The Contract therefore provided for 19 months housing allowance at Samac rates, and 100 days daily allowances for Sarajevo. The Sarajevo daily allowance should cover a few days at the beginning and at the end of the projects, and a few days per month in Sarajevo for meetings with Commission staff and Bosnian Ministries.

WSPI started working 1 March 1999 in Sarajevo, expecting immediate signature of the Works Contract and, accordingly, imminent transfer to the site at Samac.

On 28 June and 20 September 1999, WSPI informed the Commission about the negative effects of the delay in signing the Works Contract. One of these effects was the exhaustion of the budget for daily allowances for its Team Leader, i.e. the allowances that WSPI would normally only have been entitled to for shorter stays in Sarajevo.

At a meeting on 28 October 1999, the Commission Delegation acknowledged the need to increase the budget to cover the unexpected delay that preceded the signing of the contract (hereinafter 'the pre-contract period'). The Commission Delegation re-affirmed its position on 30 June 1999.

The Works Contract was signed in March 2000. An Addendum No 1 was agreed in March to cover the pre-contract period (March 1999 - March 2000) and also to cover the maintenance period after completion of construction. The contract was furthermore extended to 47 months. Addendum No 1 was signed and issued by the Delegation in June 2000.

Following correspondence about the allowances for the pre-contract period, the Commission put forward a proposal for a new monthly housing allowance to cover WSPI Team Leader's stay in Sarajevo during this period. WSPI calculated and submitted a rate of € 3000 per month. The Commission agreed to pay €2250 per month. WSPI accepted the amount of €2250, and subsequently received payment.

WSPI maintained, however, that Addendum 1 entitled it to also receive daily allowances. WSPI therefore considered that it was entitled to the full daily allowance for the pre-contract period, less the housing allowance. The Commission denied this.

WSPI had furthermore contacted the Commission to obtain compensation for inflation during the extension of the contract. The Commission had informed WSPI that there was no basis for such a claim.

The complainant alleged, in summary, that

1) the subsistence allowances allowed for the WSPI's Team Leader for an unexpected stay in Sarajevo were unfair and not in accordance with the contract.

2) the Commission failed to ensure that the complainant receive compensation for inflation during the extended contract period.

THE INQUIRY

The Commission's opinion

The complaint was forwarded to the European Commission for comments.

In regard to the complainant's first allegation, the Commission referred to the Comment to the Breakdown of Prices, a document annexed to the contract. According to the Commission, this document provides that housing allowances could not be paid for the pre-contract period, and the complainant had been informed about this. The Commission also denied that Addendum 1 entitled the complainant to receive daily allowances for the pre-contract period.

In regard to the complainant's second allegation, the Commission stated that the contract did not foresee a price revision based on inflation.

The complainant's observations

In it observations, the complainant maintained its allegations.

THE DECISION

1 Allowances

1.1 The complainant alleged that the subsistence allowances allowed for its Team Leader for an unexpected stay in Sarajevo were unfair and not in accordance with the contract.

1.2 The Commission denied that the complainant is entitled to a bigger allowance than the allowance already paid by the Commission. The Commission referred to the Comment to the Breakdown of Prices, a document annexed to the contract.

1.3 When a complaint concerns an existing contractual relationship between the complainant and a Community institution, the contract is normally governed by the provisions of the relevant national law.

In many Member States, the Ombudsman does not deal with contractual disputes, either because of the general characteristics of such contracts under national law, or because the law establishing the Ombudsman's mandate expressly excludes contractual matters. As stated in the Annual Report for 1995, part of the mission of the European Ombudsman is to help relieve the burdens of litigation, by promoting friendly solutions and by making recommendations that avoid the need for proceedings in courts. The European Ombudsman, therefore, does deal with complaints of maladministration that arise from contractual relationships.

He does not, however, seek to determine whether there has been a breach of contract by either party. 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. However, as a matter of good administration, a public authority engaged in a contractual dispute with a private party should always be able to provide the Ombudsman with a coherent account of the legal basis for its actions and why it believes that its view of the contractual position is justified.

1.4 Having thoroughly examined the contract and the correspondence between the Commission and the complainant, the Ombudsman does not find reason to conclude that the Commission's view of the contractual position appears to be unjustified. There is therefore no maladministration in regard to this aspect of the case.

2 Compensation for inflation

2.1 The complainant alleged that the Commission failed to ensure that it receive compensation for inflation during the extended contract period.

2.2 The Commission stated that the contract does not provide for such compensation.

2.3 The Ombudsman examined the contract, which does not suggest that the Commission was under an obligation to compensate the complainant for inflation. The Ombudsman considers, therefore, that the Commission's view of the contractual position appears unjustified. There is therefore no maladministration in regard to this aspect of the case.

3 Conclusion

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

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

Yours sincerely,

 

Jacob SÖDERMAN