Background to the complaint

1. The EU-China Energy Cooperation Platform (ECECP) is a project that aims to enhance cooperation between the EU and China in the energy sector. The project is led by the European Commission, and more specifically by the EU Delegation to China. The Commission organised a call for tenders[1] in order to select a contractor (the contractor) to carry out the above project. Eight candidates were shortlisted, including the complainant. A consortium of five entities (the consortium) submitted the winning bid.

2. On 19 July 2018, the Commission informed the complainant that its tender had been ranked as second best. It also provided the average scores of its tender as well as those of the winning tender.

3. The complainant appealed the outcome of the call for tenders. It claimed that the procedure was flawed with regard to the principles of fair competition and transparency.

4. The Commission replied that the evaluation of tenders followed the relevant rules and procedures, and fully respected the principles of transparency, equal treatment and fair competition.

5. Not satisfied with the reply it received, the complainant turned to the Ombudsman on 11 October 2018 arguing that the EU Delegation to China should not have considered the consortium’s tender.

The inquiry

6. The Ombudsman opened an inquiry into the alleged irregularities in the call for tenders, and in particular into the alleged conflict of interest situation of the consortium.

7. In the course of the inquiry, the Ombudsman’s inquiry team had a meeting with Commission representatives to clarify certain factual issues and procedural matters relating to the call and to inspect the Commission’s file on the case. An inspection report was drafted, which was then forwarded to the complainant for comments.

Arguments presented to the Ombudsman

8. According to the complainant, two of the entities participating in the consortium are at the same time direct beneficiaries of the ECECP. Thus, the complainant argues, the award of the tender to the consortium was in violation of the General Conditions for service contracts for external actions financed by the European Union or by the European Development Fund, in particular Articles 8 Code of Conduct and Article 9 Conflict of Interest.

9. Moreover, as organisations and institutions included in the consortium implementing the contract would be excluded from the stakeholders benefitting from the project during its implementation[2], crucial players in the energy sector in China would have to be excluded, jeopardising the project as such.

10. The Commission states that the objective of the action is to promote and enhance cooperation between the EU and China in the energy sector. The inclusion of consortia of Chinese public, private or semi-private entities does not compromise such a scheme. Neither does it affect the independence and impartiality of the consortium. The Commission argues that the clarifications it issued in the course of the procedure were clear and unambiguous on that matter.[3]

11. The Commission also says that it directly manages the project and is ultimately responsible for the project. It alone drafted the ‘Terms of Reference’[4] of the call without any involvement by the Chinese authorities or the consortium. The latter did not have any access to privileged information.

The Ombudsman's assessment

12. The Ombudsman takes note of the character of the ECECP as ‘partnership instrument’[5] project constituting a platform of cooperation between the EU and China in the energy sector with the aim of engaging as many entities of that sector in China as possible. Any alleged conflict of interest should be examined with that in mind.

13. The complainant did not submit any evidence to support his claim that the procedure followed was flawed or lacked transparency. Nor has the Ombudsman identified any elements to that effect.

14. The information gathered in the course of the inquiry shows that the clarifications published on Commission's Directorate-General for International Cooperation and Development (DG DEVCO) website on 17 October 2017 and those sent to shortlisted candidates on 13 March 2018 responded to (potential) tenderers’ questions and addressed the issue of conflict of interest. The Commission’s clarifications of October 2017, in particular, aimed, at least partly, to respond to a question the complainant posed concerning the issue of conflict of interest.

15. At the time, as the complainant was finalising its consortium, it asked the Commission whether two Chinese entities identified in the Terms of Reference as potential stakeholders would be eligible to partake (in a consortium) in the tendering process. Following that question, the Commission clarified to potential tenderers that “the inclusion of an entity in the list of stakeholders in the action fiche does not represent a ground for exclusion from participation to this tender procedure” [6]. The Commission also explained clearly which situations the term ‘conflict of interests’ referred to.

16. The Ombudsman notes, thus, that the Commission at an early stage in the tendering process explicitly informed interested parties that such entities could apply. That clarification also shows that the Commission had considered the possibility of a conflict of interest arising from the participation of such entities in the procedure.

17. In the course of the inquiry, the Commission’s representatives pointed out that conflicts of interest could arise in the implementation phase of the project. For that reason, monitoring is important. The Terms of Reference of the project provide for review and approval of the annual work plan (ex ante control), review and approval of interim/final reports (ex post control) as well as day-to-day monitoring of the contractor. The Commission considers that those levels of verification should address conflict of interest concerns.

18. The Ombudsman finds the Commission’s explanations reasonable and closes the case with a finding of no maladministration.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

There was no maladministration by the European Commission.

The complainant and the Commission will be informed of this decision.

 

Emily O'Reilly
European Ombudsman

 

Strasbourg, 12/07/2019

 

 

[1] The relevant documents for the call for tenders are available here: https://webgate.ec.europa.eu/europeaid/online-services/index.cfm?ADSSChck=1539704441192&do=publi.detPUB&searchtype=AS&zgeo=35405&debpub=&orderby=ctr&orderbyad=Desc&nbPubliList=15&page=1&aoref=139014

[2] Clarification to questions to Tender dossier - Service contract for “EU-China Energy Cooperation Platform (ECECP, P.R. China” the Commission (DG DEVCO) sent to shortlisted candidates on 13 March 2018.

[3] Ibid. “[...] should any possible target groups and stakeholders be members of the consortium to whom the contract is awarded, these entities would no longer be considered as stakeholders during the implementation phase [...]”.

[4] The Terms of Reference include information on the project such as the parties, the objectives, the scope of the work, the requirements and the evaluation of results.

[5] Regulation (EU) No 234/2014 of the European Parliament and of the Council of 11 March 2014 establishing a Partnership Instrument for cooperation with third countries [https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2014:077:0077:0084:EN:PDF]; see in particular Recitals 6, 19 and 21 and Article 2.2. More information on the Partnership Instrument is available here: https://ec.europa.eu/fpi/what-we-do/partnership-instrument-advancing-eus-core-interests_en

[6] Clarification to questions to Contract Notice on EU-China Energy Cooperation platform (ECEPR), Publication reference: EuropeAid/139014/DH/SER/CN.