The background to the complaint

1. The present case concerns the decision of the Publications Office of the European Union (the 'Publications Office') to award a contract by way of a negotiated procedure rather than by issuing a call for tenders.

2. The complainant is a company that operates in the field of information technology and communications. In 2007, it was the successful tenderer in a call for tenders launched by the Publications Office for the development and maintenance of the EU Bookshop internet portal and other information systems (the 'Maintenance Contract').

3. During the term of the Maintenance Contract, the Publications Office decided to replace the initial EU Bookshop website, since, in its view, it lacked functionality and caused numerous difficulties. In order to do so, the Publications Office identified via market research, and ultimately bought, software that it considered better suited to meet its specific needs (the 'Software'). In March 2009, the Publications Office launched a negotiated procedure concerning the provision of services related to the implementation, adaptation and customization of the Software (the 'Implementation Contract'). Negotiations were carried out with, and the contract was awarded to, the originator and licensor of the Software. The contract award notice was published in the Official Journal of the European Union on 11 April 2009.

4. In August and September 2009, the complainant, who had by then found out about the conclusion of the Implementation Contract, contacted the Publications Office to request information. It protested against the decision to purchase new software which it considered to be inconsistent with the previous choices to invest large amounts of money in the maintenance and development of the pre-existing system. The complainant also considered that having recourse to a negotiated procedure was not in conformity with Directive 2004/18/EC[1] and the Financial Regulation[2].

5. On 8 October 2009, the Publications Office replied to the complainant and rejected all its arguments.

6. On 25 August 2010, the complainant turned to the European Ombudsman.

The subject matter of the inquiry

7. The Ombudsman opened an inquiry into the following allegation.

Allegation

The decision of the Publications Office to award the contract covered by Contract Award Notice 2009/S 71-102354 by way of a negotiated procedure without a call for tender constitutes a breach of Article 31(1)(b) of Directive 2004/18/EC and the Financial Regulation.

The inquiry

8. On 29 September 2010, the Ombudsman requested the Publications Office to submit an opinion on the complainant's allegation by 31 December 2010. The opinion of the Publications Office was forwarded to the complainant with an invitation to submit observations, which the complainant sent on 13 May 2011.

The Ombudsman's analysis and conclusions

Preliminary remarks

9. The Ombudsman deems it appropriate to point out that, when providing background information on the case, the complainant made reference to certain irregularities that it considered to have taken place in connection with the purchase of the Software. However, the instance of maladministration which the complainant identified as having (allegedly) been committed by the Publications Office was its unlawful recourse to the negotiated procedure in order to award the Implementation Contract.

10. As a consequence, the Ombudsman understood the complaint, and therefore the present inquiry, as being limited to the issue of whether the decision to award the Implementation Contract by way of a negotiated procedure, and not following the publication of a call for tenders, constitutes a breach of the applicable provisions of EU law. The Ombudsman notes that the Publications Office's opinion was also focused on this specific issue only.

11. The Ombudsman notes, however, that, in its observations on the opinion, the complainant declared that the instance of maladministration committed by the Publications Office was more serious than originally understood and further elaborated on the Publications Office's decision to purchase the Software. In particular, the complainant asserted that that decision was unjustified and contradictory and breached the applicable rules on public procurement.

12. The Ombudsman notes, however, that even in the complainant's observations, the remarks concerning the decision to purchase the Software were included in a section entitled "background information". He therefore did not consider that, by making the said remarks, the complainant intended to submit a new complaint or to extend the scope of the present one. Consequently, the present decision will not deal with that additional issue. However, the complainant is of course free to consider submitting a separate complaint on the matter.

A. Allegation that the decision to award the contract by way of a negotiated procedure was unlawful

Arguments presented to the Ombudsman

13. In its complaint to the Ombudsman, the complainant alleged that the Publications Office cannot bypass the Financial Regulation and EU public procurement legislation by claiming that it can purchase all that it needs by conducting market research. According to the complainant, the conditions required by point (b) of subparagraph (1) of the first paragraph of Article 31 of Directive 2004/18/EC in order to be able to have recourse to a negotiated procedure were not met in the case at hand. In particular, the complainant pointed out that the said provision should be used exceptionally, since it restricts competition among economic operators.

14. More specifically, there were no technical reasons which could justify recourse to the said provision in the present case, since the relevant market includes a number of alternative products and suppliers. The complainant concluded that the Publications Office's behaviour resulted in a breach of Article 4 of the European Code of Good Administrative Behaviour.

15. In its opinion, the Publications Office pointed out that the Implementation Contract only concerned the provision of services relating to the implementation, adaptation and customization of the Software and not also its selection and purchase, which occurred earlier in time under a different contract concluded with a different contractor.

16. The Publications Office also stated that its decision to have recourse to the negotiated procedure was fully in line with Article 91 of the Financial Regulation and, in particular, with Article 126(1)(b) of the Rules Implementing the Financial Regulation[3] ('the Implementing Rules'), which mirrors point (b) of subparagraph (1) of the first paragraph of Article 31 of Directive 2004/18/EC in the area of public procurement by the European institutions. In particular, the Publications Office identified several major technical issues ensuing from the need to integrate the Software into its exceptionally complex informatics environment within the set time limit. Due to the specific technical constraints, the Publications Office considered that the level of complexity of the required services largely exceeded the level of complexity of standard services and required very specific complementary developments and corrections to the Software.

17. The Publications Office considered further that providers of standard services who were mere implementers of the Software did not provide the necessary guarantee that they possessed the technical expertise required to face the exceptional level of complexity of the services concerned. It therefore came to the conclusion that the only company capable of dealing with all the relevant technical issues, including the required developments and corrections to the Software, was its developer.

18. In its observations, the complainant pointed out that the tasks and technical issues identified by the Publications Office could not be qualified as complex, but rather as ordinary and basic. It underlined that the Software was one of the simplest IT applications used by the Publications Office and the services requested were not at all extraordinary. The Publications Office did not explain which "complementary developments" and "corrections" to the Software were necessary.

19. In any event, even supposing that "complementary developments" and "corrections" to the Software were necessary and that the required tasks were of a complex nature, the Publications Office failed to justify why these activities could only be performed effectively by the developer of the Software. The complainant pointed out that the tailoring and development of a given application is often offered by companies which are not the original developer but which make use of the same technology. In the present case, the complainant underlined that the developer's website itself identified a number of "implementation partners" which offer services such as those required by the Publications Office and which could have participated in a call for tenders, if such a call had been published.

The Ombudsman's assessment

20. The Ombudsman deems it useful to recall that the conclusion by EU institutions of contracts for the supply of assets, the execution of works or the provision of services is regulated by Financial Regulation and its Implementing Rules.

21. The Financial Regulation and its Implementing Rules apply to the EU institutions the same regime on public procurement applicable under Directive 2004/18/ to the award of public contracts in the Member States and which in turn recast the provisions of three pre-existing Directives[4]. In particular, Article 126(1)(b) of the Implementing Rules reproduces almost word for word point (b) of subparagraph (1) of the first paragraph of Article 31 of Directive 2004/18/EC[5] and reads as follows:

"Contracting authorities may use the negotiated procedure without prior publication of a contract notice, whatever the estimated value of the contract, in the following cases:

[...]

(b) where, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the contract can be awarded only to a particular economic operator".

22. The Ombudsman considers, therefore, that the complainant's allegation should be understood as making reference to Article 126(1)(b) of the Implementing Rules rather than letter (b) of subparagraph (1) of the first paragraph of Article 31 of Directive 2004/18/EC.

23. The Ombudsman also recalls that the Court of Justice has clarified in its case-law the scope of the similarly worded provisions contained in the Directives referred to above. In particular, the Court has noted that, since the provision in question authorises derogations from the rules intended to ensure the effectiveness of the rights conferred by the Treaties in relation to public procurement contracts, it must be interpreted strictly and that the burden of proof regarding the exceptional circumstances justifying a derogation lies with the person seeking to rely on those circumstances[6].

24. The Court has clarified further that the application of the provision is subject to two cumulative conditions, namely, that there are technical reasons connected to the works which are the subject matter of the contract and, second, that those technical reasons make it absolutely necessary to award the contract to a particular contractor[7].

25. The Ombudsman also recalls that, within the legal framework provided by the Financial Regulation and its Implementing Rules as interpreted by the Court, the institutions enjoy a wide margin of discretion when performing the technical assessments required in order to define the nature of the tasks which are the subject matter of the contract and to compare the offers received[8].

26. When reviewing such technical decisions, the Ombudsman cannot replace the institution's technical assessment with his own. Rather, he must check that the exercise of an institution's technical discretion does not result in an arbitrary decision, and therefore that it fully complies with the relevant applicable norms and is justified on the basis of objective criteria[9].

27. It is therefore against this background that the Ombudsman will assess the complainant's allegation that the Publications Office's decision to award the Implementation Contract by way of a negotiated procedure was unlawful.

28. In the present case, the complainant alleges that none of the two conditions laid down in Article 126(1)(b) of the Implementing Rules is met.

29. As regards the existence of technical reasons, the complainant considers that the technical issues identified by the Publications Office correspond to ordinary and basic tasks and that the Publications Office failed to explain which "complementary developments" and "corrections" to the Software were necessary.

30. The Ombudsman notes that, in its opinion, the Publications Office made reference to four major technical issues which all related to the need to integrate the Software into its exceptionally complex informatics environment within a given time limit. In particular, the Publications Office referred to the need to integrate into the Software a number of features, including three data management systems in use by the Publications Office, an electronic library, the electronic identification system for EU officials and an existing credit card payment service. The Publications Office also referred to the need to take into account the specific requirements of a body which operates in a multinational public sector environment, including multilingual electronic services. According to the Publications Office, the level of complexity of the required services largely exceeded the level of complexity of standard services and required very specific complementary developments and corrections to the Software.

31. The Ombudsman cannot exclude that the factors taken into consideration by the Publications Office could be recognised as constituting technical reasons within the meaning of Article 126(1)(b) of the Implementing Rules. However, on the basis of the information received from the Publications Office, and, in particular, in the absence of a more detailed account of the "complementary developments" and "corrections" that were necessary to integrate the Software into its complex informatics environment, the Ombudsman considers it difficult to come to a definitive conclusion on this point.

32. As regards the second condition, namely, that the technical reasons identified by the Publications Office made it absolutely necessary to award the contract to a particular contractor, the complainant pointed out that the tailoring of a given application can effectively be provided by companies which are not the original developer but which make use of the same technology. It pointed out that the developer of the Software itself has identified a number of "implementation partners" that offer services such as those required by the Publications Office.

33. In its opinion, the Publications Office explained that, given the exceptional technical complexity of its informatics environment and the given time limit, providers of standard services, including official 'implementation partners' did not have the necessary technical expertise effectively to perform the required tasks. The Publications Office therefore came to the conclusion that the only company capable of dealing with all the relevant technical issues, including the required developments and corrections to the Software, was its developer.

34. The Ombudsman acknowledges that it is reasonable to maintain, as the Publications Office does, that the developer of a particular software is normally best placed to offer services in relation to the development, implementation and correction of that software.

35. However, the Ombudsman also recalls that the test required by Article 126 of the Implementing Rules to justify recourse to a negotiated procedure is one of absolute necessity, and not of mere reasonableness, and that the burden of proof lies with the institution which invokes the provision.

36. In that regard, the Ombudsman notes that simply stating that the implementation partners of the developer did not possess the required technical expertise, without providing any evidence in support of the statement (for instance, an assessment of the services and conditions offered by the relevant providers), is not sufficient to establish that it was absolutely necessary to entrust the services concerned to the developer of the Software.

37. In light of the above, the Ombudsman considers that the Publications Office failed to meet the standard of reasoning required in order to justify the need to award the Implementation Contract by means of a negotiated procedure, and in so doing breached Article 126(1)(b) of the Implementing Rules as interpreted by the Court. This constitutes an instance of maladministration.

38. When the Ombudsman finds an instance of maladministration, he makes, where appropriate, a friendly solution proposal or a draft recommendation to the institution concerned. In the present case, however, it should be noted that the Implementation Contract has already been executed in full. The Ombudsman further notes that the only claim that the complainant put forward was, in accordance with Article 2(4) of the European Ombudsman's Statute, declared inadmissible at an early stage of the proceedings due to a lack of prior administrative approaches. In these circumstances, the Ombudsman takes the view that it would not serve any useful purpose to make a friendly solution proposal or a draft recommendation as regards the issue here concerned. Accordingly, he will make a critical remark below.

B. Conclusions

On the basis of his inquiry into this complaint, the Ombudsman closes it with the following critical remark:

Article 126(1)(b) of the Rules Implementing the Financial Regulation lays down that institutions may have recourse to a negotiated procedure in order to award a contract only if they are able to establish that, for technical or artistic reasons or for reasons connected with the protection of exclusive rights, it is absolutely necessary to award a contract to a particular contractor. In the present case, the Publications Office failed to provide sufficient evidence to show that it was absolutely necessary to entrust the service contract to the software developer to which it awarded the contract. This constitutes an instance of maladministration.

The complainant and the Publications Office will be informed of this decision.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 26 June 2013

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[1] Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, OJ 2004 L 134, p. 114.

[2] Council Regulation (EC/Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ 2002 L 248, p.1, as subsequently amended and corrected. This regulation has since been replaced by Parliament and Council Regulation (EU/Euratom) No 966/2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002, OJ 2012 L298, p.1. However, given that the former version of the Financial Regulation is applicable to the present case, all refrences in this decision are to Regulation 1605/2001.

[3] Commission Regulation (EC/Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC/Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities , OJ 2002 L 357, p.1, as subsequently amended and corrected.

[4] Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts, OJ 1992 L 209, p. 1; Council Directive 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts, OJ 1993 L 199, p.1, and Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts, OJ 1993 L199, p.54.

[5] The following provisions are worded in a similar manner: Article 11(3)(b) of Directive 92/50/EEC, Article 6(3)(c) of Directive 93/36/EEC and Article 7(3)(b) of Directive 93/37/EEC.

[6] Case C-385/02 Commission v Italy [2004] ECR 8121, paragraph 19; Case C-394/02 Commission v Hellenic Republic [2005] ECR 4713, paragraph 33 and the case-law cited therein.

[7] Case C-385/02 Commission v Italy, cited in footnote 7 above, paragraph 20; Case C-394/02 Commission v Hellenic Republic, cited in footnote 7 above, paragraph 34 and the case-law cited therein.

[8] On the same lines, see the Decision of the European Ombudsman closing his inquiry into complaint 3345/2008/TS against the European Commission, paragraph 22, available at: http://www.ombudsman.europa.eu/en/cases/home.faces

[9] See the Decision of the European Ombudsman closing his inquiry into complaint 1874/2008/BB against the European Centre for the Development of Vocational Training, paragraph 43, available at: http://www.ombudsman.europa.eu/en/cases/home.faces