Dear Mr F.,

On 19 September 2001 you made a complaint to the European Ombudsman against the European Commission concerning the Tender EuropeAid/112404/C/SV (lot 1) Monitoring the implementation of projects (Tacis and Balkans). Your complaint is made on behalf of a Consortium.

On 12 October 2001, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 8 February 2002. I forwarded it to you with an invitation to make observations, which you sent on 21 March 2002. On 30 May 2002, you sent further observations to the European Ombudsman.

In a letter sent on 15 July 2002, I sent a proposal for a friendly solution to the Commission. On the same date, I sent a copy of the proposal to you. On 20 July 2002, you acknowledged receipt of my proposal. On 18 November 2002, I received the Commission's opinion regarding this proposal. On 20 November 2002, you made a further submission. I forwarded the Commission's opinion to you on 10 December 2002 with an invitation to make observations, if you so wished. On 27 January 2003, you sent me your observations on the Commission's opinion.

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

THE COMPLAINT

The complainant is the Project Director of Integration GmbH Consortium. In September 2001, he made a complaint to the European Ombudsman against the European Commission on behalf of the Consortium.

According to the complainant, the relevant points are as follows:

On 5 June 2001, the tender Monitoring the implementation of projects (Tacis and Balkans) for a service contract was launched by the European Commission, together with four other lots. On 9 July 2001, "Integration GmbH" Consortium submitted a bid under call for tenders No. Europeaid.112404/C/SV (lot 1) to the Commission, EuropeAid Co-operation Office.

On 18 June 2001, before submitting the bid, the complainant together with other tenderers requested clarification from the Commission of some points in the terms of reference. One of the questions put by the complainant to the Commission concerned the financial evaluation. The complainant asked whether it was based on unit prices or global price. On 20 June 2001, the Commission replied to the complainant that "The assessment of the financial offer is made on the basis of the unit prices/fixed costs, and fees" (point B in the clarification letter entitled "Cost Breakdown and Financial Offer"). The complainant consequently based his proposal on the assumption that the financial evaluation would be based on unit prices. The complainant's proposal contained a high number of " working days by expert" as he was aware that a higher number of working days by expert is not automatically to a tenderer's detriment when the tender is based on unit prices.

On 7 September 2001, the complainant heard rumours that he may have lost the tender on the basis of global price and that another tenderer was awarded the contract because his proposal contained a substantially lower input of "working days by expert". The complainant then wrote to the Commission on 11 September 2001, to ask for clarification of the method of price evaluation. Upon calling the Commission, the complainant was told that this second letter would not be replied to. The contract was awarded to another tenderer for a period of six months.

The complainant then decided to turn to the Ombudsman on 19 September 2001. In his complaint, he alleged possible irregularities in the handling of the tender.

The claims of the complainant can be summarised in the following main points:

(i) The complainant wants to be informed whether the evaluation was really based on unit prices.

(ii) If the financial evaluation was made on the basis of the global price, the Commission should suspend the procedure and review whether the use of this wrongful evaluation method resulted in an incorrect ranking of tenders. If this were the case, the proposals should be re-calculated on the basis of unit prices.

THE INQUIRY

The Commission's opinion

In its opinion, the European Commission made, in summary, the following points:

The complainant contacted the Commission's departments several times during the tender procedure. The Commission considered that the complainant's behaviour could be regarded as an attempt to gain access to confidential information on the tender procedure. Moreover, the Commission expressed "its strong disapproval of the manner in which the complainant used the arbitration procedure (...) the complainant seems to have only lodged a complaint with the European Ombudsman in order to influence the Commission's departments during the tender procedure."

The contract was awarded in accordance with the procedural rules in force, in particular with Section 4 of the Manual of Procedures(1). The complainant's tender was rejected because it was less cost-effective.

Concerning the criteria for awarding the contract, the invitation to tender stipulates that "The financial offer must show the following; the full budget for the services described in the terms of reference for one, the first, year. This budget will be the basis of the assessment of the offer." Section 11.10.02 of the Manual of Procedures defines the rules for the financial assessment of tenders(2).

Point B of the letter of clarification sent to the complainant on 20 June 2001(3) should not be used outside its context and outside the provisions of the invitation to tender and the tender dossier. Although the clarification letter was sent to all tenderers, the complainant was the only one to use this point to challenge the tendering procedure, which demonstrates the lack of logic in his interpretation of it.

For monitoring contracts, the financial evaluation is always made on the basis of global pricing. This issue has never been raised in previous invitations to tender. Given that the complainant was the successful tenderer for the previous monitoring system, he should have been well acquainted with the tendering rules.

The European Commission's Advisory Committee on Procurement and Contracts (hereafter ACPC) delivered a favourable opinion on the Commission's choice on 19 September 2001. This opinion certifies that the technical and financial evaluation of tenders complied with the information contained in the Manual of Procedures, the tender provisions and the clarification letter to the tenderers.

The complainant's observations

In his observations, the complainant made, in summary, the following points:

By lodging a complaint with the Ombudsman, the complainant believed that he had chosen the right procedure.

The complainant contacted the Commission's departments several times during the tender procedure. It aimed to alert the Commission to possible maladministration based on unclear terms of reference, a misleading letter of clarification and violation of the prevailing Tacis monitoring methods. The complainant did not take the initiative to contact the Commission in order to gain access to confidential information. On the contrary, information on the Commission's recommendation to the ACPC was given to the consortium from various other sources.

It was precisely the experience of the five companies of the consortium which submitted the bid that led them to request a letter of clarification. Their knowledge of the fundamental differences between Tacis Monitoring and Global Monitoring caused them to alert the Commission. The complainant knew that for Global Monitoring (lots 2-5), the annual monitoring visits were precisely defined and that the financial evaluation would be based on global prices. On the contrary, for Tacis Monitoring (lot 1), the required monitoring input was defined only vaguely in the terms of reference ("the frequency of monitoring visits per year will be established…after the individual requirements of Projects managers are known…"). Knowing that, in such cases, the financial evaluation would be based on unit prices, in accordance with the Court of Auditors Special Report n° 16/2000(4), the complainant asked the Commission for clarification.

In addition, the complainant stated that the sentence "The assessment of the financial offer is made on the basis of the unit prices/fixed costs" in the clarification letter sent by the Commission could not be found in any of the documentation available to him. In compliance with the Court of Auditor's interpretation of the method to be used in such unclear cases, the complainant constructed its proposal accordingly.

The complainant fully agreed with the Commission that this sentence in the clarification letter should be seen in the context of the full text including the invitation to tender and the tender dossier. However, the scope of the complaint was not limited to the letter of clarification but referred also to various paragraphs in the terms of reference.

In its opinion on the complaint, that the Commission quoted a different definition of rules for the financial assessment procedures from that set out in the letter of clarification. The documentation accessible to companies bidding for tenders, as posted on the Commission's Europeaid web site, does not include such a Manual of Procedure. The complainant based his proposal on the "Practical Guide to EC external aid contract procedures" dated January 2001, in which a section 11.10.02 does not exist. In the complainant's view, this guide is based on a document adopted on 10.11.1999 by the Common Service for External Relations called "Manual of Instructions". The complainant assumed that the Commission is either quoting an internal document or an earlier version of this Manual of Instructions.

In its closing remarks, the complainant concluded that he wished an "amicable in-house solution" to be found in this case.

The complainant's further observations

On 30 May 2002, the complainant sent further observations to the European Ombudsman. He pointed out the urgency of his complaint since the Commission awarded the disputed contract for six months expiring on 15 June 2002. He also emphasises that he wishes to have the dispute settled peacefully.

THE OMBUDSMAN'S EFFORTS TO ACHIEVE A FRIENDLY SOLUTION

The possibility of a friendly solution

After careful consideration of the Commission's opinion and the complainant's observations, the Ombudsman’s provisional conclusion was that there could be an instance of maladministration by the Commission. The reasons for this conclusion were, in summary, as follows:

The European Ombudsman noted that in its clarification letter, which was sent to all tenderers, the Commission stated that the financial evaluation would be made on the basis of unit prices. According to the rules of the tender procedure, a clarification letter, which is sent to all tenderers, is binding on the Commission. However, afterwards in its opinion the Commission stated that for monitoring contracts, which is the kind of contract in this case, assessment is always carried out on the basis of global pricing. The Ombudsman considered that, by stating that it would apply unit prices and by applying afterwards the overall pricing method, the Commission failed to comply with the rules governing the tender procedure.

On 15 July 2002, the Ombudsman therefore made a proposal for a friendly solution to the Commission in accordance with Article 3 (5) of the Statue of the Ombudsman. In his letter, the Ombudsman invited the Commission to consider to take steps to satisfy the complainant and thereby achieve a friendly solution that would eliminate the possible instance of maladministration.

The Commission's reply

In its reply of 18 November 2002, the Commission informed the Ombudsman that it is not in a position to accept the solution proposed by the European Ombudsman. The Commission formally disagreed with the complainant's conclusions and rejected that its services are held responsible for his misinterpretation. The Commission considered that its services complied with the rules and principles governing the tender procedure.

The Commission pointed out that in his observations to the European Ombudsman, the complainant stated that it based its proposal on the "Practical Guide to EC external aid contract procedures". However, contrary to what the complainant implies, the Practical Guide foresees that the Commission concludes only two types of services contract using two different financial evaluations(5).

The first one is called the global price contract, for which the Financial offer consisting of a single sheet of paper must state the tenderer's global price for providing the services according to its Technical offer.

For the second one, the fee-based contract, the comparison is made on the basis of the total amount derived from the multiplication of the fee rate by the corresponding number of working days. The Financial offer must include the Budget breakdown and Cashflow forecast. The fee rates to be paid for the experts provided by the Consultant to carry out the services, together with the Provision for incidental expenditure, are set out in the Budget breakdown.

Despite having based his proposal on the Practical Guide, the complainant expected the services to use a third method that compared the average unit price which is not foreseen in the Practical Guide. The Commission underlined that the Court of Auditors report n° 16/2000 which the complainant mentioned to justify his interpretation, specifies that the average unit price method of evaluation has been abandoned.

According to the Commission, in the context of methods foreseen in the Practical Guide, and considering that the contract was not a lump sum contract, the clarification given by the services emphasised that between the two financial evaluation methods, the evaluation would be based on the method comparing the unit prices/fixed costs and fees and would not be done using the global price method. Therefore, the Commission considered that the clarification to the tenderers was done regarding the method foreseen and that the financial evaluation complied with the rules governing the tender procedure.

The Commission underlined that the complainant was the only one of a total of 26 tenderers who received the same clarification that misinterpreted the clarification. According to the Commission, the clarification given by the services on the awarding procedure was applicable to all the lots, and the complainant had presented an offer for four other lots without contesting the financial evaluation.

The complainant's observations on the Commission's reply

In his observations on this opinion, the complainant made, in summary, the following points:

The arguments of the Commission demonstrated the state of confusion regarding the evaluation method. The Commission referred in its reply to documents which were not provided in the tender documents. If the Commission intended to follow the fee-based contract, it did not in this case comply with its own repeatedly quoted rules.

The clarification letter is binding on the Commission according to the rules of the tender procedure. However, the 'clarification' given by the Commission was misleading and not based on the Commission's instructions. The complainant contested the argument that the unit-priced method has been abandoned.

According to the complainant, the Commission attempted to discredit the complainant and harm its credibility and integrity by mentioning that the consortium was the only one out of 26 tenders to complain. On the contrary, only two proposals for lot 1 were evaluated. It is obvious that the winning consortium would have no reason to complain.

The Commission's inaction has led to the following direct and indirect damage:

(a) Financial loss

- Loss of a Service contract for 3 years;

- Compensation and 'bridging honoraria' paid to key staff to keep them on board in case the conflict could be settled quickly;

- Loss of nine highly qualified key monitoring staff to the successful consortium;

- Cost for legal advice and substantial time for replying to the Commission's statements.

(b) Non financial damage

Damage to the complainant's reputation and integrity through the Commission's almost personal allegations.

The complainant concluded his observations by urging a quick friendly solution to avoid a long legal dispute.

THE DECISION

1 The Commission’s criticism of the complainant for having recourse to the Ombudsman

1.1 In its opinion on the complaint, the Commission expressed "its strong disapproval of the manner in which the complainant used the arbitration procedure. The complaint seems to have been lodged solely in order to influence the Commission's departments during the tender procedure." The European Ombudsman understands this criticism to refer to the fact that the complainant complained to the European Ombudsman before the conclusion of the tender procedure.

The Ombudsman considers it necessary to make the following comments on this aspect of the Commission's opinion.

1.2 The right to complain to the European Ombudsman is guaranteed by the EC Treaty and by the Charter of Fundamental Rights of the European Union. The Ombudsman does not consider it appropriate for the institution complained against to speculate on the reasons why a citizen chooses to exercise his or her fundamental right to make a complaint.

1.3 The Ombudsman points out that an inquiry by the Ombudsman does not have a suspensive effect on administrative procedures, nor can the Ombudsman set aside a decision to award a contract. Complaint to the Ombudsman is not therefore a procedure of the kind foreseen by the Court of Justice in the Alcatel case(6), through which the bidder in a tender procedure may seek review of the contracting authority's decision prior to the conclusion of the contract. However, a tenderer who wishes to use a non-judicial remedy has the possibility to complain to the Ombudsman concerning maladministration in a tender award procedure.

1.4 In this context, the Ombudsman considers it useful to mention that the present case formed part of the background to the Ombudsman’s own-initiative inquiry (OI/2/2002/IJH) into the remedies available to bidders in tender procedures organised by the Commission. The own-initiative inquiry, which is still on-going, does not deal with the substance of the present case.

2 The allegation of irregularities in the tender procedure

2.1 The complainant alleged possible irregularities in the handling of the tender procedure. The complainant wants to be informed whether the evaluation was really based on unit prices.

2.2 The Commission argued that the contract was awarded in accordance with the procedural rules in force and that the Advisory Committee on Procurement and Contracts had delivered a favourable opinion.

2.3 As regards the basis of evaluation, the Commission’s opinion states that, for monitoring contracts, assessment is always carried out on the basis of global pricing. The Ombudsman therefore considers that the complainant's claim to be informed has been met.

2.4 The Ombudsman notes that in its response to the Ombudsman’s proposal for a friendly solution, the Commission acknowledges that its reply to the complainant’s request for clarification of the tender stated that the global price method would not be used. Since the Commission’s opinion states that the global pricing method is always used for monitoring contracts, the Commission appears to have provided incorrect information in reply to the complainant’s request for clarification of the tender and, thereby, failed to comply with the rules governing the tender procedure. This constitutes an instance of maladministration and the Ombudsman makes a critical remark below.

3 The complainant's claims

3.1 The complainant’s original claim was that, if the financial evaluation was made on the basis of the global price, the Commission should suspend the procedure and review whether the use of this wrongful evaluation method resulted in an incorrect ranking of tenders. If this is the case, the proposals should be re-calculated on the basis of unit prices.

In his observations on the Commission's reply to the Ombudsman’s proposal for a friendly solution the complainant submits a new claim for damages.

3.2 As regards the complainant’s original claim, the Ombudsman recalls that, as mentioned in point 1.3 above, complaint to the Ombudsman does not have a suspensive effect on administrative procedures, nor can the Ombudsman set aside a decision to award a contract. Furthermore, the Ombudsman observes that the tender procedure in question led to the award of a contract, which expired on 15 June 2002. Therefore, the Ombudsman concludes that it is no longer possible to comply with the complainant's claims to suspend and review the evaluation.

3.3 As regards the complainant’s new claim for damages, the Ombudsman notes that the complainant urges a quick friendly solution to the case. The Ombudsman considers, however, that it is not possible for him to achieve a friendly solution in this case, because the Commission has already rejected the Ombudsman’s proposal for a friendly solution. The Ombudsman therefore considers that it is appropriate to close the case with a critical remark concerning the instance of maladministration identified in paragraph 2.5 above and for the complainant to address his new claim for damages directly to the Commission. The Ombudsman notes that the complainant is aware of the possibility to bring legal proceedings to enforce his claim.

4 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, it is necessary to make the following critical remark:

The Ombudsman notes that in its response to the Ombudsman’s proposal for a friendly solution, the Commission acknowledges that its reply to the complainant’s request for clarification of the tender stated that the global price method would not be used. Since the Commission’s opinion states that the global pricing method is always used for monitoring contracts, the Commission appears to have provided incorrect information in reply to the complainant’s request for clarification of the tender and, thereby, failed to comply with the rules governing the tender procedure. This constitutes an instance of maladministration.

For the reasons set out in point 3.3 of the decision the Ombudsman considers that it is not possible for him to achieve a friendly solution in this case. Given that the critical remark concerns procedures relating to specific events in the past, it is not appropriate to pursue this matter further. The Ombudsman therefore closes the case.

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

Yours sincerely,

 

Jacob SÖDERMAN

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(1) "When contracts are awarded (…), the following operations are always performed: (b) Comparison of tenders on the basis of the award criteria stipulated in the procurement notice or tender dossier, using price and other pre-established criteria enabling the most economically advantageous tender to be identified."

(2) "Comparison of the bids takes account of all contract expenses (fees, direct or lump-sum costs, etc.) with the exception of expenses repayable on presentation of proof of payment."

(3) "The assessment of the financial offer is made on the basis of the unit prices/ fixed costs, and fees."

(4) Special report No 16/2000 on tendering procedures for services contracts under the Phare and Tacis programmes together with the Commission's replies-OJ C350, 6/12/2000 p. 1- 28.

(5) Annex 1: Standard tender dossier, instructions to tenderers and article 1 of the General conditions for service contracts financed by the EC both in Annex B8 of the Practical Guide.

(6) Case C-81/98, Alcatel Austria AG v Bundesministerium für Wissenschaft und Verkehr, 1999 ECR I-7671; paragraph 43.