Dear Mr J.,

On 17 May 2002, you made a complaint to the European Ombudsman concerning two projects (SUNH and SHINE) funded under the Thermie programme.

On 13 June 2002, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 26 September 2002. I forwarded it to you with an invitation to make observations, which you sent on 29 November 2002. On 13 December 2002, you forwarded an additional letter which had been addressed to the Commission by one of your partners.

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

THE COMPLAINT

The complainant is the co-ordinator for a group of European companies which, as a consortium GEIE GEST, applied for Community funds under the Thermie programme. The Commission, through Directorate General Energy and Transport, decided to fund two demonstration projects, respectively SUNH - "Solar Urban New Housing" (9 partners) and SHINE - "Solar Housing through Innovation for Natural Environment" (6 partners), GEST being the main contractor and co-ordinator. Officially the projects started in January 1996.

According to the contracts, the final report was to be submitted by the end of November 2001. In a letter of 6 June 2001, following alleged oral agreements with Commission technical officers monitoring the projects, GEST asked for an extension of the deadline to 30 October 2002. No reply to this letter was ever received. Furthermore, GEST had also foreseen the extension of the deadline in two intermediary reports. According to art. 10.3 of the General Conditions governing the contract, intermediary reports are deemed to be approved if there are no observations by the Commission. The complainant therefore considered that the extension of deadline had been approved.

On 17 April 2002, the Commission sent a letter to all the members of the consortium, with exception, according to the complainant, of the co-ordinator. The Commission asked them to submit the final report before the end of May 2002. This deadline being regarded as too short for many of them, the complainant appealed to the Commission on several occasions to postpone it. Given the Commission's refusal to reconsider the matter, to talk to the complainant or to participate in a meeting of the consortium, the complainant lodged a complaint with the European Ombudsman and made the following allegations :

1. The Commission failed to reply to the complainant's letter of 6 June 2001 asking for an extension of deadline for the submission of the final report.

2. The Commission failed to take into consideration the extension of deadline as included in two intermediary reports. According to art. 10.3 of the General Conditions governing the contracts, these reports had been tacitly approved by the Commission.

The complainant claims the prolongation of the contracts and the deadlines as asked for in his letter of 6 June 2001 and allegedly agreed with Commission technical officers previously in charge of the projects.

THE INQUIRY

The European Commission's opinion

The opinion of the European Commission on the complaint was in summary the following:

History of the projects

Both contracts for the projects SUNH and SHINE were signed on 31 December 1997. The works were to take place between 1 September 1996 and 31 December 2000. On 30 December 1998, two endorsements were added to the contract. They foresaw an extension of the duration of the projects. The SHINE project was to end on 31 August 2001 and the SUNH project on 30 September 2001.

Object of the dispute

On 6 June 2001, the complainant sent a letter asking to postpone the deadline to 30 October 2002. Given that the Commission did not answer to this letter, the complainant claims that the requested extension of deadline was granted.

Until 26 April 2002, the Commission indeed never answered the letter of 6 June 2001. On 26 April 2002, it sent a formal notice asking the complainant to submit the final documents for the projects. The Commission apologises for the delay in replying to the complainant but considers that the contracts and the circumstances of the file do not allow to respond positively to the complainant's claim.

The request for prolongation

1. According to the contracts, a prolongation requires a written agreement of the contracting parties. The Commission's silence can therefore not be considered as a tacit approval. Furthermore, before accepting a contractual change, the Commission has to check that the request submitted by the co-ordinator was submitted upon agreement of the other contractors for the project. The Commission cannot deduce this from the application's wording. For the SHINE contract, as shown in an Email of 15 April 2002 addressed by one of the contractors to the Commission, at least one contractor was opposed to it.

2. The complainant also declares that the request for prolongation was clearly set out in the intermediary reports 8 and 9. Factually only reports 8 and 9 for the SHINE project mention the request for prolongation and refer to it as "modification to the initial project" or as "target for the six months to come". The SUNH reports remain silent on this issue. The fact that the Commission did not raise any objection cannot be understood as a change in the contract which requires the co-ordinator's application on behalf of all the contractors and a written approval of the change by all the parties to the contract, including the Commission.

3. The complainant also declares that he has received the agreement in principle from the technical officers of DG TREN. Neither the documents in the file, nor the technical officers' testimonies sustains this assertion. In any case, no oral agreement could validly commit the Commission as regards a change in the contract.

4. On 9 April 2002, the new technical officer orally informed the complainant that a formal notice requesting to submit the final reports within a month would be sent to all contractors shortly, thereby rejecting the request for prolongation. Formal notices for both contracts were sent respectively on 17 April 2002 (SUNH) and 26 April 2002 (SHINE). Since the complainant had declared not to have received the formal notice of 17 April 2002, a copy of it was sent to him on 6 May 2002.

The reasons for refusing a prolongation

Setting aside the fact that the Commission considers that the request for prolongation was not made in the name of all contractors, the Commission also considers a fourteen-month prolongation as inappropriate and disproportionate for the following reasons :

SUNH contract

The reasons for requesting the prolongation are either very general in nature or contradicted by the intermediary reports. The efforts of the contractors to finalise the projects within the deadline are obvious. On 15 October 2001, 7 out of 10 projects foreseen by the contract appear to have been finalised and the final report was about to be prepared. In view of the situation at that time, the prolongation might have allowed to finalise two more projects, the last project being at a too early stage. The Commission services therefore consider that, from the technical point of view, the finalisation of the remaining projects would only have a minor impact on the added value of the whole project. The Commission therefore cannot accept a prolongation of the SUNH contract.

SHINE contract

As well as in the SUNH contract, the reasons for requesting the prolongation are either very general in nature or contradicted by the intermediary reports. On 15 October 2001, 8 out of 10 projects were finalised or at an advanced stage to be conclusively taken into consideration in the contract's global project. Only one project directly depends on the acceptance of the prolongation. However even the prolongation is insufficient to allow the finalisation of the project. The Commission therefore cannot accept a prolongation of the SHINE contract.

The complainant's observations

The European Ombudsman forwarded the Commission's opinion to the complainant with an invitation to make observations. In his reply the complainant in summary stated the following.

Object of the dispute

Prior to the formal request of 6 June 2001, the Commission had already been informed in December 2000, in writing and by phone, that a prolongation was necessary.

The request for prolongation

1. The Commission alleges that its silence can not be considered as a tacit approval. However under the contract the complainant had the obligation to inform the Commission of possible delays in the execution of the project. He did so in due time. The Commission only reacted 16 months later and almost one year after the termination of the contract. The Commission must also take into consideration that the prolongation request had been planned with the responsible technical officer who considered it to be justified. In view of this and having received no contradictory letter, the contractors continued to invest to achieve the projects in the shortest possible and realistic time span.

The complainant insists that all the partners were aware of the need to ask for the prolongation. Although absent in the meeting in which it was decided, the German partner knew about it and was represented in a previous meeting in which it was discussed. The request for prolongation was made on 6 June 2001 in the name of all the partners. In any case, the German partner could not have hindered a decision taken by 6 out of 7 partners (SHINE group) and confirmed during the General Assembly.

2. The prolongation was taken into consideration for the timetable or clearly mentioned in the reports starting with the 7th SHINE report and in the 8th SUNH report. The contract does not mention that the reports should only contain information regarding the progress in the project. The contract however states that, without remarks, a report is deemed to be approved one month after the reception (Art. 10.3 of the general conditions governing the contract). The prolongation requests included in reports 7, 8 and 9 have therefore been tacitly approved.

3. The prolongation request was preceded by a preliminary consultation of the technical officer in charge at that time. When the first prolongation was requested, the latter had even suggested that it would be more "diplomatic" to divide the request in two periods of time and to submit a second prolongation request at a later stage. The letter sent to the Commission by GEST on 22 December 2000 shows that the prolongation was discussed well before the actual request dated 6 June 2001.

4. The new technical officer informed the complainant that the orders came directly from the director general. She never mentioned that the formal notices would be sent to all contractors. The formal notice was sent against the contractual provisions which foresee that the all correspondence should go through the co-ordinator.

The reasons for refusing a prolongation

All the partners (6 out of 7 for SHINE and 8 out of 10 for SUNH) present at the meeting at which it was decided to ask for the prolongation considered the prolongation to be necessary and counted on it.

The Commission's interpretation of the state of achievement of the various projects is erroneous and originates in a different interpretation of the monitoring phase which is essential in these kinds of demonstration projects. In May 2001 an expert considered that half of the SUNH projects would not be finalised before the Summer of 2002. For the SHINE contract, the expert also reached less optimistic conclusions than the Commission does in its opinion.

The practical results show that 14 months after the end of the contract, i.e. on the date asked for in the prolongation request, 31 October 2002, all projects were finalised.

All intermediary technical reports have been sent to the Commission as well as the final technical report which was sent on 15 July 2002. The financial report was sent on 31 October 2002.

In view of the above, the GEIE GEST considers that all expenditures incurred by the partners should be taken into consideration and the projects brought to an end without further formalities.

ADDITIONAL INFORMATION

On 13 December 2002, the complainant provided the European Ombudsman with a letter sent on 11 December 2002 to the Commission by the partner which according to the Commission had refused the prolongation of the SHINE contract. In this letter, the partner apologises for the misunderstandings resulting from his action and declares that he supports the prolongation request for the group.

THE DECISION

1 Failure to reply to the request for an extension of deadline

1.1 According to the complainant, the Commission failed to reply to the complainant's letter of 6 June 2001 asking for an extension of deadline for the submission of the final report.

1.2 The Commission argued that, until 26 April 2002, it indeed never answered the letter of 6 June 2001. On 26 April 2002 it sent a formal notice asking the complainant to submit the final documents for the projects. The Commission apologises for the delay in replying to the complainant.

1.3 The Ombudsman notes that the Commission sent two formal notices to the complainant on 17 and 26 April 2002, respectively for the SUNH and the SHINE contracts. These letters required the contractors to provide the final technical and financial reports within a month and inform the contractors of possible consequences if they fail to do so. No explicit mention is made of the complainant's request for a prolongation of the contract sent on 6 June 2001. The formal notices can only be considered as an implicit rejection of the complainant's request for prolongation.

1.4 Principles of good administrative behaviour require the Commission's services to reply to letters and to ensure that a decision is taken within a reasonable time. In the present case, the Commission failed to reply to the request for prolongation of two contracts before the contractual expiration date. An implicit rejection was sent more than ten months after the request and respectively more than six and seven months after the expiration of the contracts. This is an instance of maladministration. A critical remark will be made in this context.

2 Tacit approval of the extension of deadline contained in the reports

2.1 According to the complainant, the Commission failed to take into consideration the extension of deadline as included in two intermediary reports. He alleges that according to art. 10.3 of the General Conditions governing the contracts, these reports had been tacitly approved by the Commission.

2.2 The Commission argued that the fact that it did not raise any objection cannot be understood as a change in the contract which requires a written approval of the change by all the parties to the contract, including the Commission. A hypothetical oral agreement by the technical officers in charge does not commit the Commission either. Finally an extension of deadline would not have been granted in view of the advanced stage of most of the projects.

2.3 According to Article 195 of the EC Treaty, the European Ombudsman is empowered to receive complaints "concerning instances of maladministration in the activities of the Community institutions or bodies". The Ombudsman considers that maladministration occurs when a public body fails to act in accordance with a rule or principle binding upon it. Maladministration may thus also be found when the fulfilment of obligations arising from contracts concluded by the institutions or bodies of the Communities is concerned.

2.4 However, the Ombudsman considers that the scope of the review that he can carry out in such cases is necessarily limited. In particular, the Ombudsman is of the view that he should not seek to determine whether there has been a breach of contract by either party, if the matter is in dispute. This question could be dealt with effectively only by a court of competent jurisdiction, which would have the possibility to hear the arguments of the parties concerning the relevant national law and to evaluate conflicting evidence on any disputed issues of fact.

2.5 The Ombudsman therefore takes the view that in cases concerning contractual disputes it is justified to limit his inquiry to examining whether the Community institution or body has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. If that is the case, the Ombudsman will conclude that his inquiry has not revealed an instance of maladministration. This conclusion will not affect the right of the parties to have their contractual dispute examined and authoritatively settled by a court of competent jurisdiction.

2.6 The Ombudsman has examined the contracts forwarded to him by the complainant. The Commission's position according to which changes in the contract and in the present case a prolongation of the contract, should be made through a written amendment signed by all parties appears to be reasonable. The first prolongation of both contracts has followed this procedure (Addendum n° 2 to contract n°BU 1054/96 and Addendum n° 2 to contract n°BU 1051/96).

2.7 Thus, the Ombudsman considers that the Commission has provided a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. The present inquiry has therefore not revealed an instance of maladministration on the part of the European Commission with regard to this aspect of the complaint.

3 Claim for prolongation of the contracts

3.1 The complainant claims the prolongation of the contracts and the deadlines as asked for in his letter of 6 June 2001 and agreed with Commission technical officers previously in charge of the projects.

3.2 In light of the Ombudsman's findings in 2.6 and 2.7 above, there is no need to pursue his inquiry into this aspect of the complaint.

4 Conclusion

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

Principles of good administrative behaviour require the Commission's services to reply to letters and to ensure that a decision is taken within a reasonable time. In the present case, the Commission failed to reply to the request for prolongation of two contracts before the contractual expiration date. An implicit rejection was sent more than ten months after the request and respectively more than six and seven months after the expiration of the contracts. This is an instance of maladministration.

Given that this aspect of the case concerns procedures relating to specific events in the past, it is not appropriate to pursue a friendly settlement of the matter. The Ombudsman therefore closes the case.

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

Yours sincerely,

 

Jacob SÖDERMAN