The background to the complaint

1. The present case concerns the way in which the Delegation of the EU to Montenegro (the 'Delegation') handled tender procedure EuropeAid/129435/C/SUP/ME concerning "Support to the Digitalisation of the Montenegrin Public Broadcasting". The complainant is a company that participated unsuccessfully in the tender procedure.

2. On 14 September 2010, the Delegation published a procurement notice for an international open tender and invited interested potential suppliers to submit their offers for equipment for the Digitalisation of the Broadcasting system of Montenegro[1].

3. The deadline for the submission of tenders was 15 November 2010. The Delegation received a total of 13 offers. Both the complainant and company E submitted a tender.

4. By letter dated 13 December 2010, the Delegation informed the complainant that its tender was not successful for the following reasons: (i) the complainant did not meet one of the selection criteria, (ii) it did not provide certain documents requested under the technical specifications and by the Contracting Authority, and (iii) its offer did not comply with the technical specifications because the equipment offered was not upgradable to the required technological standard. Furthermore, the Delegation informed the complainant that the tender procedure was cancelled because none of the tenderers were fully compliant with the tender requirements.

5. In a separate document sent on the same day, entitled "Cancellation of a supply tender procedure", the Delegation declared that the tender procedure was cancelled and confirmed that none of the offers received were fully technically compliant. The document stated that if a new tender procedure were to be launched for the project in question, a new procurement notice would be published.

6. On 18 April 2011, the complainant wrote a letter to the Delegation, in which it referred to the cancelled tender procedure EuropeAid/129435/C/SUP/ME and to the information received from the Delegation. It asked for official information about what stage the tender procedure had reached. The complainant also pointed out that it had been informed by unofficial sources that the contract had been awarded to company E.

7. On 20 April 2011, the Delegation replied that the tender procedure, in which the complainant had participated, had been cancelled and that none of the tenderers was nominated for the award of the contract. It stated that hat information had been sent to all the tenderers and had been published on the EuropeAid website. The Delegation declined to comment on the complainant's statement concerning the information it had received from unofficial sources, but advised it that such information was incorrect. It added that the cancellation of a tender procedure marked its 'irreversible finalisation'. Moreover, it quoted from Article 2.4.13 of the Practical Guide, which stated that "the Contracting Authority may, before the contract is signed, abandon the procurement and cancel the procurement procedure without the candidates or tenderers being entitled to claim any compensation."

8. On 17 June 2011, the complainant, represented by a lawyer, lodged the present complaint with the European Ombudsman. It enclosed with its complaint a letter from the Delegation dated 27 May 2011, entitled "Commencement Order" and concerning tender EuropeAid/129435/C/SUP/ME. The letter was addressed to company E and read: "in accordance with the Article 18 of the Special Conditions of the Contract I am pleased to inform you that the date for commencement of the activities to be performed under the above contract is 30 May 2011. The period of execution of the contract will be 270 days from this date."

The subject matter of the inquiry

9. The Ombudsman opened an inquiry into the following allegations and claim:

Allegations:

1) The Delegation acted in a biased manner, unfairly, and contrary to public procurement rules by directly awarding the contract to one of the original tenderers even though the relevant tender had been cancelled and no new procurement notice had been published.

2) The Delegation failed to publish a new procurement notice for the project covered by tender EuropeAid/129435/C/SUP/ME even though it had given assurances to the complainant to do so in case a new tender procedure were to be launched.

Claim:

The Delegation should (i) annul its decision to award the contract to company E, (ii) annul the contracts it had concluded with company E, (iii) publish a new tender and thus allow all interested tenderers to bid for the contract in a transparent manner and on equal terms.

The inquiry

10. By letter dated 21 July 2011, the Ombudsman requested the Commission to submit an opinion on the allegations and claim made by the complainant in relation to the tender procedure.

11. On 1 December 2011, the Commission submitted its opinion, which was forwarded to the complainant's lawyer for observations on 13 December 2011, with an invitation to provide observations. The Ombudsman pointed out that if he did not receive any observations from the complainant, he could base his decision on the information and documents provided by the complainant and the Commission until that point in time. The complainant did not submit any observations.

The Ombudsman's analysis and conclusions

A. Allegation that the Delegation acted in a biased manner, unfairly, and contrary to public procurement rules by directly awarding the contract to one of the original tenderers, without proceeding to a new tender procedure

Arguments presented to the Ombudsman

12. In its complaint, the complainant argued that the Delegation acted in a biased manner, unfairly, and contrary to public procurement rules by directly awarding the contract to company E, one of the original tenderers, even though the relevant tender had been cancelled and no new procurement notice had been published. In the complainant's view, it was clear from the cancellation notice that company E's offer was also inadequate.

13. In its opinion, the Commission explained that, during the evaluation of all 13 of the offers received, the evaluation committee established that none of the offers were fully compliant with all eligibility, administrative and technical requirements as specified in the procurement notice and in the tender dossier.

14. Following the recommendation of the evaluation committee, on 14 December 2010, the Delegation decided to cancel the tender procedure on the basis of point 2.4.13 of the Practical Guide to Contract Procedures for EU external actions ("PRAG"), which states that "[c]ancellation may occur where the tender procedure has been unsuccessful, i.e. no qualitatively or financially worthwhile tender has been received or there is no valid response at all". The Commission informed the unsuccessful tenderers, that is, all tenderers, of the outcome of the tender procedure on 16 December 2010.

15. The Commission emphasised that, in case of cancellation of an open tender procedure, the Contracting Authority could opt to use a negotiated procedure if all the relevant conditions were fulfilled. In the procedure at hand, compliance with the selection criteria set out in the procurement notice constituted the sole criterion for selecting the tenderers to be invited to participate in the negotiated procedure.

16. On 18 January 2011, the request for prior approval to launch a negotiated procedure for this project was approved by the Authorising Officer by Sub-Delegation, based on a proposal from the Head of Delegation. The proposal explained, besides the legal background, the urgent need to initiate a negotiated procedure - rather than relaunching the tender procedure - because it was the only procedure allowing for the implementation of the project within the deadline for the digital switchover, as adopted by the national authorities of Montenegro.

17. Out of the 13 offers, only 4 were compliant with the selection criteria set out in the procurement notice. Thus, the respective four tenderers were invited to participate in the negotiated procedure on 26 January 2011. This procedure was based on point 2.4.13 of the PRAG, which provided that "[a]fter cancelling a tender procedure, the Contracting Authority may decide to open negotiations with one or more tenderers who participated in the tender procedure and comply with the selection criteria, provided that the original terms of the contract have not been substantially altered" and point 4.2.4.1(d) of the PRAG[2]. The Commission added that the complainant was not invited to participate in the negotiated procedure, since it had failed to satisfy all the selection criteria from the procurement notice for economic and financial, and professional and technical capacities.

18. The Commission went on to state that, once a tender procedure is cancelled and the unsuccessful tenderers are informed of the outcome and the specific reasons for their not having been successful, the applicable rules do not impose any obligation on the Contracting Authority to inform them of the subsequent negotiated procedure in case they do not fulfil the conditions to be invited to participate in it. With respect to those unsuccessful tenderers, the tender cancellation marks the end of the tender procedure and, as stated in point 2.4.13 of the PRAG, the unsuccessful tenderers are not entitled to claim any compensation. In other words, to the extent that the Contracting Authority chose to pursue a negotiated procedure instead of relaunching the international open tender procedure, only those tenderers who met the conditions defined in points 2.4.13 and 4.2.4.1(d) of the PRAG were to be informed of the negotiated procedure.

19. The Commission stressed that the publication of procurement notices is not applicable to negotiated procedures.

The Ombudsman's assessment

20. The complainant alleged that the Delegation acted in a biased manner, unfairly, and contrary to public procurement rules by directly awarding the contract to company E, even though the tender had been cancelled and no new procurement notice had been published.

21. On the basis of the opinion and explanations provided by the Commission, it emerges, first, that the award of the contract in tender procedure EuropeAid/129435/C/SUP/ME to company E was not the result of a direct award but of a selection process based on a negotiated procedure in which only four tenderers, who met the selection criteria of the procurement notice, were invited to participate. Second, point 2.4.13 of the PRAG expressly foresees the possibility for the Contracting Authority, in this case represented by the Delegation, to cancel a tender procedure and to continue it in the form of a negotiated procedure. Therefore, the Delegation's decision to continue the tender procedure by launching a negotiated procedure did have an appropriate legal basis, even though the Delegation had informed the complainant by letter dated 13 December 2010 of the cancellation of the tender procedure. It may be useful to add that the complainant did not put forward any arguments in its complaint or when invited to submit observations on the Commission's opinion to suggest that it met the selection criteria and thus should also have been invited to participate in the negotiated procedure. Third, it follows from the decision of the Delegation to proceed to a negotiated procedure with the four tenderers that met the selection criteria that no new procurement notice had to be published.

22. In view of the foregoing, the Ombudsman considers that the Commission's position that the tender procedure was neither biased nor unfair, but in line with the applicable public procurement rules, appears reasonable.

B. Alleged failure to publish a new procurement notice, contrary to the assurances given

Arguments presented to the Ombudsman

23. According to the complainant, the Delegation failed to publish a new procurement notice for the project covered by tender procedure EuropeAid/129435/C/SUP/ME, even though it had assured the complainant it would do so in case a new tender procedure were to be launched.

24. The Commission pointed out that the obligation to publish a tender notice did not apply to a negotiated procedure such as the one initiated in the case at hand.

The Ombudsman's assessment

25. The complainant referred to the document entitled "Cancellation of a supply tender procedure", in which the Delegation declared that the tender procedure was cancelled and that if a new tender procedure were to be launched for the project in question, a new procurement notice would be published. However, as the Ombudsman has already stated, since the Delegation chose to continue tender procedure EuropeAid/129435/C/SUP/ME by means of a negotiated procedure, there was no legal basis for publishing a new procurement notice.

26. Consequently, no maladministration can be established with regard to the second allegation.

C. The complainant's claim

The Ombudsman's assessment

27. The complainant's claim is closely linked to the two allegations examined above. Given the Ombudsman's findings on the complainant's allegations, its claim cannot succeed either.

D. Other issues

28. Despite his finding of no maladministration, the Ombudsman nevertheless considers that the Delegation could have handled the correspondence with the complainant in a more transparent and forthcoming manner. In fact, when the complainant wrote to inquire about the status of the tender procedure, the Delegation did not expressly address the issue raised by the complainant, namely, that it had learnt from unofficial sources that the contract had been awarded to company E. Even on the assumption that at the date of the Delegation's reply to the above letter, that is, 20 April 2011, no final decision about the award of the contract to company E had yet been taken, it is not clear why the Delegation felt unable to inform the complainant that it intended to award the contract by means of a negotiated procedure. It is even more difficult to understand why the Delegation instead informed the complainant that the cancellation of the tender procedure marked its "irreversible finalisation", which was evidently not the case.

29. At the same time, the Ombudsman notes that the complainant did not submit any specific allegations or claims concerning the way in which the Delegation handled its correspondence. Nor did the complainant submit any observations on the Commission's opinion, even though it was invited to do so.

30. This notwithstanding, the Ombudsman notes that he may address further remarks to EU institutions, bodies, offices and agencies, when he considers that doing so could contribute to an overall improvement in their administration for the future. In the Ombudsman's view, it is appropriate to do so in the present case.

E. Conclusions

On the basis of his inquiry into this complaint, the Ombudsman closes the case with the following conclusion and further remark:

No maladministration has been found in the present case.

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

Further remark

In cases, such as the present one, where, after having cancelled a tender procedure, an EU Delegation chooses to proceed to a negotiated procedure with some of the initial tenderers, the Delegation would be well advised to consider informing the unsuccessful tenderers openly and proactively about that development. Doing so would further strengthen the perception of legality and transparency of tender procedures implemented by EU Delegations.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 17 May 2013

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[1] The tender documentation is available at: http://www.delmne.ec.europa.eu/code/navigate.php?Id=411

[2] "Supply contracts may be awarded by negotiated procedure on the basis of one or several tenders in the following cases:

[...]

d) where the tender procedure has been unsuccessful, that is where no qualitatively and/or financially worthwhile tender has been received. In such cases, after cancelling the tender procedure, the Contracting Authority may negotiate with one or more tenderers of its choice, from among those that took part in the tender procedure, and which comply with the selection criteria, provided that the initial conditions of the tender procedure are not substantially altered and the principle of equal treatment is observed [...]".