THE BACKGROUND TO THE COMPLAINT

1. The present complaint relates to the ninth European Development Fund (EDF)[1], which followed the Partnership agreement signed in Cotonou on 23 June 2000 between the African, Caribbean and Pacific States (ACP States) and the European Community ('the Cotonou Agreement'[2]).

2. On 12 May 2005, the European Commission and the Republic of Chad signed a financing convention for a total amount of EUR 50 million. The money would be financed by the ninth EDF and pay for, among other things, the project "Accès à l'eau potable et appui à la politique sectorielle" ('the Project'), which aimed to fight poverty in Chad by improving access to drinking water. It comprised four main fields of action: (a) improving knowledge of water resources; (b) reinforcing and organising the watering holes developed in the framework of previous EDFs; (c) creating and consolidating new watering holes in priority areas; and (d) reinforcing national actions and institutional support.

3. In 2006, the Commission launched an international call for tender for the provision of technical assistance to the Chadian authorities relating to the fields of action under points (b) and (c).

4. A consortium represented by a French technical assistance firm ('the complainant'), and composed of two other firms, was awarded the tender.

5. On 25 April 2006, a service contract was signed between the Consortium and the Government of the Republic of Chad. The latter was represented by: (a) the Contracting Authority (the Ministry of Economy, Planning and Cooperation[3]); (b) the Ministry of Fisheries ('the Supervisor'); (c) the National Authorising Officers[4] (the Secretary-General and Deputy Secretary-General of the Ministry of Economy, Planning and Cooperation); and (d) the Unit ACTION-EDF; a support and technical advice unit.

6. The final amount of the contract was EUR 8 771 036. The Consortium received a pre-payment amounting to EUR 1 238 002. According to the contract, the services were to be carried out by the Consortium within 56 months, starting on 29 May 2006. However, the Project did not start on the above date.

7. In September 2006, the Commission Delegation ('the Delegation') informed the Ministry of Fisheries of its concerns regarding delays in some of the Consortium's activities and its inadequate performance in others[5]. The Ministry of Fisheries, therefore, informed the Consortium that, in the absence of remedies to the issues at hand, it would have to take appropriate measures, as provided for in the contract.

8. In October 2006, the Chadian authorities organised a series of meetings with the Consortium. As a result of the meetings, the Consortium agreed to replace two of its experts, but did not submit essential documents necessary to start the Project.

9. In December 2006 and January 2007, the Ministry of Fisheries and the Delegation organised several on-the-spot inspections in Chad. The inspection report of 13 December 2006, drafted by the Commission, mentioned that the Consortium needed substantially to improve its management of the "drinking water conveyance".

10. In a letter, sent in January 2007 to the Ministry of Economy, Planning and Cooperation and in copy to the Consortium, the Delegation again expressed its concerns regarding the Consortium's management of the Project. It also underlined the latter's lack of appropriate methodology and the urgency of the situation[6].

11. On 12 February 2007, the Ministry of Economy, Planning and Cooperation sent a formal notice to the Consortium asking it to remedy the situation as soon as possible. Otherwise, the contract would be terminated within a two-week period because of the Consortium's improper management of the project and its failure to make optimal use of the resources available.

12. However, following another series of meetings, on 5 March 2007, the Consortium and the Ministry of Economy, Planning and Cooperation signed a Memorandum of Understanding, which provided that the contract would not be terminated, if the Consortium fulfilled, in a way assessed as satisfactory by the Ministry of Economy, Planning and Cooperation, the objectives it had undertaken to achieve.

13. In the meantime, between 24 February and 10 March 2007, the Commission carried out its annual monitoring of the Project and concluded that the Consortium's management was poor.

14. An amendment was made to the contract in April 2007, modifying its initial value from EUR 8 771 036 to EUR 8 633 160. The amendment also foresaw the recruitment by the Consortium of two new experts (a socioeconomist and a geophysician).

15. The Consortium subsequently presented a number of experts' applications to the Ministry of Fisheries. However, it did not accept all of them because it wanted the Consortium to hire a specific geophysician expert. In reply, the Consortium informed the Ministry that this expert was not available.

16. On 23 July 2007, the Secretary-General of the Ministry of Finance and Information Technology of the Republic of Chad informed the Consortium that he had decided to terminate the contract. This was due to the Consortium's failure to comply with the provisions of the Memorandum of Understanding, dated 5 March 2007, and his latest instructions.

17. By letter of the same day, sent in copy to the Delegation, the Consortium replied that, from 29 May 2006 to July 2007, it had provided services under the contract amounting to EUR 1 461 792.

18. By letter of 8 August 2007 to the Consortium, the Head of the Delegation took note of the decision of the Secretary-General of the Ministry of Finance and Information Technology to terminate the contract with the Consortium.

19. On 15 August 2007, a meeting between the Consortium and the services of the Directorate-General 'Europe Aid' was organised in the Commission's premises. The aim of the meeting was to discuss the termination of the contract and the relevant payments. Two further meetings followed: the first, on 29 August 2007 in Brussels, and the second, with the Delegation, on 10 October 2007. The complainant, whose representative was present at the meeting, was not satisfied with their outcome.

20. The complainant turned to the national courts in Chad concerning the country's national authorities. It sought to have the decision to terminate the contract annulled and to receive damages for the harm suffered. In addition, it turned to arbiters, with a view to finding a friendly settlement to the dispute.

21. The Ministry of Finance and Information Technology decided to launch a restricted international call for tender to complete the services foreseen in the contract.

22. On 25 February 2008, the complainant turned to the European Ombudsman.

THE SUBJECT MATTER OF THE INQUIRY

23. In its complaint, the complainant made the following allegations:

1. By approving the decision of the Secretary-General of the Ministry of Finance and Information Technology of the Republic of Chad to terminate the service contract, without providing any legal basis, the Delegation infringed the legal provisions applicable to contracts financed by the EDF, Article 3 of the Commission's Code of Good Administrative Behaviour[7], as well as the rules for terminating contracts resulting from tender procedures.
2. By failing to ensure that payments were made in time and that interest for late payment were paid to the Consortium, the Commission infringed the applicable legal framework as regards payment.
3. The Commission failed to ensure that the issue was settled in a friendly way, in accordance with its own Code of Good Administrative Behaviour, and to reply to the Consortium's requests made in this regard.

24. The complainant also submitted the following claims:

1. The Commission should revoke its decision approving the termination of the contract or should ensure that the Contracting Authority pay damages to the Consortium.
2. The Commission should ensure that the Consortium is paid for the services already carried out.
3. The Commission should annul the tender procedure (the restricted international call for tender), launched for the purpose of having the remaining services carried out.
4. The Commission should ensure that the Consortium is paid interest for late payment.
5. The Commission should propose a calendar for the organisation of a friendly settlement of the issue.

THE INQUIRY

25. On 3 April 2008, the Ombudsman opened an inquiry regarding the complainant's allegations and claims, and asked the Commission to send its opinion by 31 July 2008.

26. On 22 September 2008, the Commission sent its opinion[8]. The Ombudsman forwarded it to the complainant with an invitation to make observations, which it sent on 28 October 2008.

THE OMBUDSMAN'S ANALYSIS AND CONCLUSIONS

A. The Commission's alleged infringement of the legal provisions applicable to contracts financed by the EDF, Article 3 of its Code of Good Administrative Behaviour, as well as the rules for terminating contracts resulting from tender procedures.

Arguments presented to the Ombudsman

27. The complainant alleged that, by approving the decision of the Secretary-General of the Ministry of Finance and Information Technology to terminate the service contract, without providing any legal basis, the Delegation infringed a number of legal provisions.

28. In the complainant's view, the Commission infringed the legal provisions applicable to contracts financed by the EDF, namely, Articles 41.1[9] and 41.2[10] of the General Conditions for service contracts financed by the EDF, contained in Annex IV to Decision No 3/90 of the ACP-EEC Council of Ministers of 29 March 1990[11] ('the General Conditions of Decision No 3/90').

29. Second, it infringed Article 3 of its Code of Good Administrative Behaviour, which provides that the Commission should provide a legal basis for its decisions.

30. Third, it infringed the rules for terminating contracts resulting from tender procedures, namely, Article 41.3[12] of the General Conditions of Decision No 3/90.

31. In support of its allegation, the complainant submitted the following arguments.

1. The Commission knew that the works carried out by the Consortium complied with the objectives set out in the contract. It was also informed by the Consortium that the Chadian authorities had implemented the contract with bad faith and that the delays were linked to these authorities' actions. As a result, their decision to terminate the contract was unfair and unfounded. However, the Commission failed to take an action to remedy the situation.
2. The Commission also knew that the decision to terminate the contract was taken by a non-competent body. In the complainant's view, only the Minister of Finance and Information Technology was competent to decide on the termination of the contract, and not the Secretary-General of that Ministry.
3. The Commission did not properly cooperate with the Chadian authorities, contrary to Article 36 (k) of Annex IV to the Cotonou Agreement[13]. In the complainant's view, the Commission intervened in the dispute with the national authorities on only four occasions, despite the "tense atmosphere" created by the Chadian Ministry of Finance and Information Technology.
4. The Commission requested that the national authorities sign a new contract, not with the complainant, but with the two other firms of the Consortium, According to Article 41.3 of the General Conditions of Decision No 3/90, only the Contracting Authority may decide to conclude any new contract with a third party.

32. In its opinion, the Commission explained that, pursuant to Article 35 of Annex IV of the Cotonou Agreement[14] in decentralised procedures such as the present one, the beneficiary State appoints one of its authorities to act as the Contracting Authority responsible for the financial implementation of the Project.

33. Article 41 of the General Conditions of Decision No 3/90[15] states that the Contracting Authority is entitled to terminate the contract, at any time, under certain conditions provided for in Article 41.2 of the same Conditions. Article 35 of Annex IV to the Cotonou Agreement does not foresee that such a decision has to be authorised by the Head of the Delegation. On the contrary, in the decentralised procedure, the contracts, which are within the competence of the national authorities, shall be terminated by the latter.

34. The contractual provisions regarding the termination of the contract were respected by the Chadian authorities for the following reasons:

1. The Consortium did not provide adequate services. First, it failed properly to train the Chadian administration in a field which was supposed to be within its competencies and expertise. Second, it did not adequately carry out the technical follow-up of the works relating to the "drinking water conveyance". Third, it failed properly to carry out the technical studies concerning these works.
2. In its letter addressed to the Consortium and dated 23 July 2007, the Secretary-General of the Ministry of Finance and Information Technology clearly informed the Consortium of the above reasons for the termination of the contract.
3. The Ministry of Economy, Planning and Cooperation informed the Consortium of the reasons for the possible termination of the contract in its letters dated 8 February and 12 February 2007. On 27 April 2007, the newly created Ministry of Finance and Information Technology also informed the Consortium of these reasons. In addition, in his letter of 5 July 2007, the Secretary-General of the Ministry of Finance and Information Technology referred to points (a) and (c) of Article 41.2 of the General Conditions of Decision No 3/90 as the legal basis for the actual termination of the contract.

35. In view of the reorganisation of the Chadian Government, the Chadian Prime Minister, by letter of 16 April 2007, appointed the Ministry of Finance and Information Technology as National Authorising Officer (NAO). By letter of 5 June 2007, the NAO appointed two delegate NAOs, including the Secretary-General of the Ministry of Finance and Information Technology, who signed the decision terminating the contract. Therefore, the authority who decided to terminate the contract was competent to do so.

36. Furthermore, the Delegation actively supported the NAOs by participating in all monthly meetings organised by the Chadian authorities on the follow-up to the implementation of the project. On the occasion of all these meetings, the Delegation submitted its observations and gave advice.

37. The Commission intervened before the Chadian authorities in order to reach a common position regarding the termination of the contract. However, a final decision could only be taken by the Contracting Authority. As stated in Article 41.3 of the General Conditions of Decision No 3/90, if a contract is terminated before the Project has been completed by the contractor, the Contracting Authority alone can complete the Project, or conclude a new contract with a new contractor "for the account of the original contractor." If the Contracting Authority decides to conclude a new contract, it may do so in two ways: (a) according to Article 23.2.c of Annex IV of the Cotonou Agreement, for contracts of a value higher than EUR 200 000, it should launch a restricted international tender after publishing a procurement notice[16]; or (b) according to Article 10.1.2[17] (Negotiated procedure) of the General Regulations of Decision 2/2002[18], in case of emergency, it may, in agreement with the Head of the Delegation, conclude a new contract by direct agreement without calling a tender. Pursuant to Article 54 of Section 4[19] of the Financial Regulation of 27 March 2003 applicable to the ninth EDF[20], the Contracting Authority may do so within three years of the adoption of the relevant global financing commitment.

38. Given that this global financing commitment was signed on 26 April 2005, if the national authority had chosen the above option (b), the relevant contract would have to have been signed by the end of April 2008. The Commission, therefore, reminded the Ministry of Finance and Information Technology to ask for a special derogation from the implementation of the procedure so as to conclude contracts by direct agreement. However, the above Ministry decided to choose option (a) rather than option (b).

The Ombudsman's assessment

39. According to the established case-law of the Community courts[21], to which the Commission also referred in its opinion, contracts financed by the EDF remain 'national' contracts. Their termination remains at the entire discretion of the ACP States. The activity of the ACP States cannot, therefore, be the subject of an inquiry by the European Ombudsman, since he can only deal with cases of maladministration by Community institutions and bodies[22].

40. Nevertheless, even if the management of Community development funds is decentralised, the Commission should supervise the national authorities and monitor whether Community funds are spent by the beneficiary country in accordance with the applicable rules and European standards. Article 36 of Annex IV to the Cotonou Agreement[23] provides that the Commission should ensure that the projects and programmes financed from the resources of the EDF are properly executed. In particular, the Commission's delegations should carry out regular checks to ensure that operations are carried out in accordance with the schedule laid down in the advance timetable contained in the Financial Regulation of 27 March 2003 applicable to the ninth EDF.

41. In light of the above, the Ombudsman will limit his inquiry into the present allegation to an assessment of whether the Commission applied a sufficient degree of care and diligence when monitoring the appropriateness of the decision taken by the national Chadian authorities to terminate the contract with the Consortium.

42. First, on the basis of the evidence available, it appears that the Commission was correct to consider that the decision to terminate the contract with the Consortium was taken by a competent body. In its opinion, the Commission recalled Article 35 of Annex IV to the Cotonou Agreement ("The Government of each ACP States shall appoint a National Authorising Officer to represent it in all operations financed from the resources of the Fund managed by the Commission and the Bank. The National Authorising Officer may delegate some of these functions and shall inform the Chief Authorising Officer of any such delegation...") and explained that the Minister of Finance and Information Technology delegated his functions to the Ministry's Secretary-General. The Secretary-General was, therefore, competent to take the decision to terminate the contract.

43. Second, according to the Commission, the Chadian authorities could terminate the contract for only a limited number of reasons specified in Article 41.2 of the General Conditions of Decision No 3/90. These include situations when: (a): the consultant fails to carry out the services substantially in accordance with the contract; or (b) the consultant fails to comply within a reasonable time with the notice given by the supervisor requiring him to make good the neglect or failure to perform his obligations under the contract, which seriously affect the proper and timely performance of the services.

44. The Ombudsman notes in this respect that, on the basis of Article 1 of the contract, the Consortium had to provide the following services: a technical follow-up of the works relating to "drinking water conveyance" in the framework of the ninth EDF; technical studies concerning the improvement of works (to be submitted by 29 March 2007 at the latest); a technical and financial follow-up of contracts for "drinking water conveyance"; and the continuous management of the "drinking water conveyance" through the development of methodology tools. In its opinion, the Commission explained that the Ministry of Fisheries found serious weaknesses in the Consortium's implementation of the Project, namely: (a) delays; (b) the designation of experts who ultimately were not available; and (c) a failure to organise a proper training for the Chadian authorities.

45. The Ombudsman notes in this respect that the Commission checked the appropriateness of the above Ministry's view by taking part in on-the-spot inspections in Chad in December 2006 and January 2007 and by carrying out the annual monitoring of the Project between 24 February and 10 March 2007. On these occasions and as stated in the Commission's Mission Report of 13 December 2006, the Commission concluded that the Project was not being managed in an appropriate way.

46. Moreover, on the basis of the evidence available, it appears that, when it became aware of (a) the Consortium's failure to comply with the above obligations and (b) the national authorities' intention to terminate the contract, the Commission took a number of actions. It organised meetings in order to discuss the termination of the contract. An initial meeting was organised on 20 July 2007, and a second meeting was organised on 15 August 2007 in the Commission's premises, with the participation of the Consortium and the services of the Directorate-General 'Europe Aid'. By convening the parties to the contract, the Commission intended to clarify the issue.

47. It appears, therefore, that the Commission fulfilled its obligations, set out in Article 36 of the Cotonou Agreement[24] and Decision No 3/90 to collaborate with the ACP State, to ensure a fair implementation of the project financed by the EDF.

48. As regards the reasons for the decision to terminate the contract, the Ombudsman notes the terms of the letter dated 23 July 2007, which the Ministry of Fisheries addressed to the Consortium. The letter stated the following:

"The signature of the Memorandum of Understanding[25] foresaw the recruitment of several experts in order to fully cope with your responsibilities as regards the management. It also stated that an improvement in the management of the contract was necessary in order to achieve the expected results.

The following points have to be highlighted:

- The unavailability of the expert responsible for the management of the drinking water conveyances

- The unavailability of the expert geophysician

- The unavailability of the socio-economist

- The failure to achieve several objectives set out in the Memorandum of Understanding."

In light of the failure to respect Article 41 and 41. 2 of the General Conditions of Decision No 3/90, I hereby give you seven days notice for the termination of the contract."[26]

49. The letter thus specified the reasons for the decision of the Ministry of Finance and Information Technology to terminate the contract with the Consortium. As regards the complainant's reference to Article 3 of the Commission's Code of Good Administrative Behaviour, relating to the Commission's supervision over the national authorities and whether the latter gave proper reasons for their decision, the Ombudsman does not find any infringement of this Article. Prior to its letters of 8 February and 12 February 2007, the Ministry of Economy, Planning and Cooperation had already warned the Consortium, on several occasions, of its serious dissatisfaction and concerns regarding the latter's specific activities.

50. Finally, the Ombudsman notes the complainant's argument that the Commission did not have the authority to "decide on the launching of a new call for tender", since, as foreseen in Article 41.3 of the General Conditions of Decision No 3/90, such a decision pertained exclusively to the national authorities. The Ombudsman understands that the complainant referred to the negotiated procedure. He, therefore, takes note of the explanation provided by the Commission, as described in paragraphs 37 and 38 above, and finds it reasonable. He also notes that this explanation was not challenged in the complainant's observations.

51. In light of the above, it is reasonable to consider that the Commission acted with due diligence when monitoring the termination of the Contract between the Consortium and the Chadian authorities.

52. Taking into account that this was a case of decentralised management, the Ombudsman does not find any maladministration concerning the complainant's allegation.

B. Alleged infringement of the applicable legal framework as regards payment

Arguments presented to the Ombudsman

53. The complainant alleged that, by failing to ensure that payments were made in time and that interest for delayed payment was paid to the Consortium, the Commission infringed the applicable legal framework as regards payment.

54. In support of its allegation, the complainant submitted the following arguments:

1. Pursuant to Article 38 of the General Conditions of Decision No 3/90[27], the Consortium was entitled to be paid interest. According to this provision, payment to the "consultant" of the amounts due under each of the interim payment certificates, and the certificate for the final balance issued by the "supervisor", shall be made by the Contracting Authority within 90 days of such certificate being delivered to the latter.
2. According to Article 37 of Annex IV to the Cotonou Agreement[28], interest following late payment was to be paid by the Commission using budgetary lines foreseen in Article 6(2) of the Financial Regulation.

55. In its opinion, the Commission recalled that the Consortium was awarded a pre-payment amounting to EUR 1 238 000. The Consortium submitted two invoices concerning its eligible costs to the Chadian authorities, which forwarded them to the Delegation. The first invoice, for a total amount of EUR 317 747, was submitted by the Consortium to the Chadian authorities on 17 April 2007 and referred to services provided in the period from May to June 2006 and July to September 2006. The Delegation received the file relating to this invoice on 14 August 2007. The second invoice[29] was submitted by the Consortium on 24 September 2007, after the termination of the contract, and referred to services provided in the period from October 2006 to July 2007.

56. The Commission then referred to Article 41 of the General Conditions of Decision No 3/90[30], according to which, after the termination of the contract, the Ministry of Finance and Information Technology was not obliged to make any further payments to the Consortium until the services were completed by the Chadian authorities or by a new contractor. The contract was terminated on 23 July 2007. Following the termination of the contract, the rule stating that payment to the Consortium of the amounts due shall be made by the Ministry of Finance and Information Technology within 90 days, was no longer relevant.

The Ombudsman's assessment

57. Article 35 of the General Conditions of Decision No 3/90 provides that "[t]he consultant shall be entitled to interim payments or to the payment of the final balance in accordance with the procedures, schedules and time limits stipulated in the contract as and when the services are provided and accepted." (emphasis added)

58. The Ombudsman understands that the services provided by the Consortium, to which both requests referred, were not accepted by the Chadian authorities. As a result, on 23 July 2007, the contract was terminated by letter of the Secretary-General of the Ministry of Finance and Information Technology. Since the services were not accepted by the Chadian authorities, it appears that the payment could not have been made and that, therefore, no delay could apply. The Ombudsman points out, however, that the competent Chadian court, to which the complainant turned concerning the Chadian authorities, will decide on this issue.

60. Moreover, the Ombudsman notes that the second request for payment was submitted after the termination of the contract. If, as suggested by the Commission, Article 41 of the General Conditions of Decision No 3/90 should be interpreted as referring to the payments requested after the termination of the contract, and not to the payments for the services performed after the termination of the contract, the Ministry of Finance and Information Technology could only have cleared the accounts with the Consortium after the services covered by the contract had been completed by a new contractor. The Ministry of Finance and Information Technology would then have to have paid the balance to the Consortium after calculating the costs incurred by the new contractor in completing these services. Consequently, the Commission's explanation that the 90-day deadline for payment did not apply to the Consortium's request for payment of the statements, submitted after the termination of the contract and before the completion of the services by a new contractor, appears reasonable. In these circumstances, it appears that the Consortium was not entitled to any interest for late payment. The Ombudsman notes again, however, that the Chadian court, to which the complainant turned for redress, will also decide on this issue.

61. In light of the pending proceedings before the Chadian Courts concerning the complainant's request for redress, the Ombudsman concludes that there are no grounds for further inquiries into this allegation.

C. Alleged failure by the Commission to ensure that the issue was settled in a friendly way and its alleged failure to reply to the firm's requests made in this regard

Arguments presented to the Ombudsman

62. The complainant alleged that the Commission failed to ensure that the issue was settled in a friendly way, in accordance with its own Code of Good Administrative Behaviour, and to reply to the Consortium's requests, made in this regard, on 18 September 2007 and 9 November 2007.

63. In its opinion, the Commission first referred to the procedure for a friendly settlement of the issue, as set out in Article 45.2 of the General Conditions of Decision No 3/90[31].

64. On 26 July 2007, the Consortium sent a request for an amicable settlement of the issue to the Ministry of Finance and Information Technology, and stated that it would ask for the Commission's intervention. The Consortium sent a reminder to the Ministry on 1 August 2008, that is to say, before the expiration of the eight-day time-limit referred to in Article 45.2 (c) of the contract. On 2 October 2007, the Ministry of Finance and Information Technology confirmed that the termination was definitive. No further requests for intervention by the Commission were made.

65. There is no obligation for the Contracting Authority to accept a request for an amicable settlement of the issue. According to Article 45.2 (c) of the contract[32], if a party fails to reply within an eight-day deadline, this is deemed to be a negative reply. As a result, the other party can seek conciliation and/or arbitration. In the present case, the Commission drew the Ministry of Finance and Information Technology's attention to the consequences of the termination of the contract. However, the Ministry decided that the Consortium's failure to respect its contractual obligations justified the termination and that there was no possibility for an amicable settlement of the issue.

The Ombudsman's assessment

66. The Ombudsman notes that Article 45 of the General Conditions of Decision No 3/90 foresees that the Contracting Authority, that is to say, the Ministry of Finance and Information Technology in the present case, and the consultant, that is, the Consortium, shall make every effort to amicably settle any dispute relating to the contract which may arise between them.

67. It would appear, therefore, that the above mentioned provision did not apply to the Commission.

68. Nevertheless, the Ombudsman notes that, in its admittedly delayed reply of 5 December 2007 to the Consortium's letters of 18 September and 9 November 2007, in which the Consortium asked the Commission to intervene, the latter stated that "[w]e intervened in order for a common position to be adopted and a final decision to be taken by the Contracting Authority." There are no reasons for the Ombudsman to consider that the Commission did not do so.

69. In light of the above, the Ombudsman does not find any maladministration concerning the complainant's allegation.

D. The complainant's claims

Arguments presented to the Ombudsman

70. The complainant put forward the following claims:

1. The Commission should revoke its decision approving the termination of the contract or should ensure that the Contracting Authority should pay damages to the Consortium.
2. The Commission should ensure that the Consortium is paid for the services already carried out.
3. The Commission should annul the tender procedure, that is, the restricted international call for tender, launched for the purposes of having the remaining services carried out.
4. The Commission should ensure that the Consortium is paid interest for late payment.
5. The Commission should propose a calendar for the organisation of a friendly settlement of the issue.

71. The Commission argued that the claims were unfounded. It followed its obligations in the framework of a decentralised procedure. The points of facts and interpretation of the contractual provisions have already been dealt with in the arbitration procedure. The Commission was not party to this procedure.

The Ombudsman's assessment

72. Given that the issue regarding the payment of damages is pending before the court and/or arbiters, there are no grounds for inquiries into claims 2 and 4.

73. Furthermore, in light of his above conclusions that there has been no maladministration in the complainant's relevant allegations, the Ombudsman considers that the complainant's claims 1, 3, and 5 cannot be sustained.

Conclusions

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

There has been no maladministration by the Commission.

The complainant's claims cannot, therefore, be sustained.

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

 

P. Nikiforos DIAMANDOUROS

Done in Strasbourg on 30 September 2009

---

[1] The European Development Funds (EDFs) were set up initially by means of an annex to the EEC Treaty and subsequently through successive agreements between Member States meeting in the Council of the European Union. The EDFs aim is to finance the European Union's cooperation with the ACP States. To date, there have been ten EDFs. The agreement concerning the tenth EDF is currently in force.

[2] The Cotonou Agreement is available at:

http://ec.europa.eu/development/geographical/cotonou/cotonoudoc_en.cfm.

[3] Following the reorganisation of the Chadian Government on 16 April 2007, the Ministry of Economy, Planning and Cooperation was replaced by the Ministry of Finance and Information Technology.

[4] According to Article 35 of Annex IV to the Cotonou Agreement: "The Government of each ACP States shall appoint a National Authorising Officer to represent it in all operations financed from the resources of the Fund managed by the Commission."

[5] See the letter (French original version): "Le Bureau d'Etudes, responsable, en qualité de Maitre d'Œuvre délégué, des activités du programme ne donne pas des résultats permettant de justifier le démarrage de la phase I et de la mobilisation de la tranche conditionnelle. La qualité des informations disponibles sur les régions du Batha, Guéra et Mandoul est insuffisante, les méthodologies opérationnelles au niveau socio-économique et au niveau technique sont à approfondir."

[6] See the conclusion of the letter (French original version): "Ceci constitue une véritable inquiétude car un des objectifs principaux du Projet (la pérennisation des ouvrages) est incertain. Dans l'intérêt de tous les partenaires, nous souhaitons qu'une solution soit trouvée au plus vite."

[7] Article 3 of the Commission's Code of Good Administrative Behaviour - Relations with the public (http://ec.europa.eu/civil_society/code/rights_en.htm) states the following:

"A Commission decision should clearly state the reasons on which it is based and should be communicated to the persons and parties concerned..."

[8] The Commission requested an extension to the deadline for submitting its opinion, explaining that, due to the political situation in Chad, it had encountered difficulties collecting the necessary information from its Delegation there.

[9] Article 41.1 of the General Conditions of Decision No 3/90 provides the following: "[T]he Contracting Authority may, at any time and with immediate effect, terminate the contract, except as provided for in Article 41.2."

[10] Article 41.2 of the General Conditions of Decision No 3/90 provides the following: [E]xcept as otherwise provided in these general conditions, the Contracting Authority may, after giving seven days notice to the consultant, terminate the contract in any of the following cases where: (a) the consultant fails to carry out the services substantially in accordance with the contract; (b) the consultant continues to default for a period of 14 days after the Contracting Authority has given notice to him of suspension of payments under Article 35.11; (c) the consultant fails to comply within a reasonable time with the notice given by the supervisor requiring him to make good the neglect or failure to perform his obligations under the contract which seriously affects the proper and timely performance of the service ... (emphasis added)

[11] See OJ 1990 L 382, p. 1.

[12] Article 41.3 of the General Conditions of Decision No 3/90 provides that:

"[T]ermination shall be without prejudice to any other rights or powers under the contract of the Contracting Authority and the consultant. The Contracting Authority may, thereafter, complete the services itself, or conclude any other contract with a third party, for the account of the consultant. The consultant's liability for delay in completion shall immediately cease when the Contracting Authority terminates the contract without prejudice to any liability thereunder that may have already been incurred."

[13] Article 36 (k) of Annex IV to the Cotonou Agreement states that:

"... in close cooperation with the National Authorising Officer, the Head of Delegation shall:

(k) cooperate with the national authorities of the ACP State where he represents the Commission in evaluating operations regularly;"

[14] Article 35 of Annex IV to the Cotonou Agreement: "The Government of each ACP States shall appoint a National Authorising Officer to represent it in all operations financed from the resources of the Fund managed by the Commission and the Bank. The National Authorising Officer may delegate some of these functions and shall inform the Chief Authorising Officer of any such delegation."

[15] Decision No 3/90 of the ACP-EEC Council of Ministers of 29 March 1990 adopting the general regulations, general conditions and procedural rules on conciliation and arbitration for works, supply and service contracts financed by the European Development Fund (EDF) and concerning their application OJ 1990 L 382, p. 1.

[16] Article 23.2.c of Annex IV of the Cotonou Agreement states that "Contracts of a value higher than EUR 200 000 shall be awarded through a restricted international tender after publication of a procurement notice ..."

[17] According to Article 10.1.2. (Negotiated procedure) of the General Regulations of Decision 2/2002:

"With the prior agreement of the Commission, service contracts may be awarded in the following situations using a negotiated procedure (a) where unforeseeable events oblige the Contracting Authority to act with an urgency incompatible with the periods laid down for the restricted or simplified procedures described in points 11 and 12.2. The circumstances invoked to justify extreme urgency must in no way be attributable to the Contracting Authority. In this context, the latter shall enter freely into such discussions as it may consider appropriate with the prospective tenderers whom it has short-listed in agreement with the Head of Delegation and award the contract to the tenderer whom it has selected;"

[18] General Regulations on supply, service and work contracts financed by the European Development Fund (EDF), annexed to Decision No 2/2002 of the ACP-EC Council of Ministers of 7 October 2002- OJ 2002 L 320, p. 1.

[19] Article 54 of Section 4 (Commitment of expenditure under decentralised management) of the Financial Regulation of 27 March 2003 applicable to the Ninth European Development Fund states that:

"4. In accordance with the principle of sound financial management referred to in Article 4 and acting within its powers, the Commission shall endeavour to see that:

(a) the individual legal commitments implementing the financing agreements referred to in paragraph 2 are concluded no later than three years from the date of the corresponding financial commitment by the Commission."

[20] See OJ 2003 L 83, p. 1 (Regulation amended by: Council Regulation (EC) No 309/2007 of 19 March 2007.

[21] Case T-175/94 International Procurement Services SA v Commission of the European Communities [1996] ECR II-729.

[22] Article 195(1) of the EC Treaty provides the following: "The European Parliament shall appoint an Ombudsman empowered to receive complaints from any citizen of the Union or any natural or legal person residing or having its registered office in a Member State concerning instances of maladministration in the activities of the Community institutions or bodies, with the exception of the Court of Justice and the Court of First Instance acting in their judicial role"

[23] See footnote 14 above.

[24] Article 36 of Annex IV to the Cotonou Agreement provides that: "[T]he Commission shall be represented in each ACP State by a delegation under the authority of a Head of Delegation, with the approval of the ACP State or States concerned. The Head of Delegation shall represent the Commission in all spheres of its competence and in all its activities. To this end, and in close cooperation with the National Authorising Officer ("NAO"), the Head of Delegation shall, inter alia, participate and give assistance in the preparation of projects and programmes and in negotiating technical assistance contracts;"

[25] The Ombudsman recalls that the Consortium and the Ministry of Economy, Planning and Cooperation signed a Memorandum of Understanding on 5 March 2007.

[26] Translation from the French original version.

[27] Article 38 of the General Conditions of Decision No 3/90 provides the following:

"Payment to the consultant of the amounts due under each of the interim payment certificates, and the certificate for the final balance issued by the supervisor shall be made by the Contracting Authority within 90 days of such certificate being delivered to the Contracting Authority. If the period laid down for payment has been exceeded, the consultant shall qualify for interest calculated pro rata on the basis of the number of days delay at the rate specified in the special conditions, subject to a maximum period also specified therein. The consultant shall be entitled to such payment without formal notice and without prejudice to any other right or remedy under the contract. In the case of the final statement of account, the interest for the delayed payment shall be calculated on a daily basis at the rate specified in the special conditions."

[28] Article 37 of Annex IV of the Cotonou Agreement: "Claims for delayed payments shall be borne by the ACP State or States concerned, and by the Commission from its own resources, for that part of the delay for which each party is responsible in accordance with the above procedures."

[29] The Ombudsman notes that the amount is not specified in the complaint.

[30] Article 41 of the General Conditions of Decision 3/90: "After the termination of the contract, the consultant has to take immediate steps to bring the services to a close in a prompt and orderly manner and to reduce expenditure to a minimum. The Contracting Authority is not obliged to make any further payments to the consultant until the services are completed, whereupon the Contracting Authority is entitled to recover from the consultant the extra costs, if any, of completing the services, or pay any balance due to the consultant."

[31] Article 45.2 of the General Conditions of Decision No 3/90 provides the following: "[T]he special conditions shall prescribe (a) the procedure for the amicable settlement of disputes; (b) the time limits within which the amicable settlement procedure may be invoked after the time that the dispute is notified to the other party and the maximum time limit within which such settlement may be reached, provided that the time limit prescribed for reaching such settlement does not exceed 120 days from the commencement of the adopted procedure; (c) the time limits for responding in writing to a request for amicable settlement or to other requests permitted during the course of that procedure and the consequence of failure to comply with those time limits."

[32] Article 45.2 (c) of the Contract provides the following: "The time limits set out in Article 45.2.c of the General Conditions, for responding in writing to a request for amicable settlement are eight days as from the receipt of the request. In case of non-respect of this time-limit, a reminder is sent by the requesting party. In case of non-reply within an eight-day deadline, the procedure for amicable settlement of the issue is deemed to have failed."