The background to the complaint

1. The present complaint was submitted by a company active in the area of Information Technology (IT) and communications (hereafter 'the complainant') and concerns the execution of a service contract.

2. On 21 September 2007, the complainant signed a multiple framework contract for services[1] (hereafter 'contract X') with the Publications Office of the European Union (hereafter the 'PO'). The contract concerned services related to several IT applications, one of which relates to the present complaint (hereafter 'the Application').

3. On 7 September 2007, two weeks before the signature of contract X, the PO placed an order with the previous contractor that was at that time still in charge of the Application. The order was for the services related to the technical migration of the Application to a new technology.

4. Between September 2007 and July 2008, the complainant contacted the PO on numerous occasions to contest the latter's decision to assign the above migration to the previous contractor. It argued that the performance of this task should have been assigned to it, in accordance with the terms and technical specifications of contract X. According to the complainant, the initial information provided by the PO was that the previous contractor was expected to complete its work by the end of 2007 and that the Application would, therefore, be handed over to it by January 2008. The complainant repeatedly asked for technical materials related to the Application, in order to prepare itself for taking over the work and complained about the delay in the hand-over of the Application.

5. On 29 April 2008, the PO provided explanations concerning the Application. It stated that the order form issued under the previous contract (contract Z) covered a minor development, which had already been foreseen for a long time, but which, regrettably, had not been signed earlier. It also noted that the task to be performed by the previous contractor was in fact a prerequisite for the implementation of contract X. It further stated that framework contracts carry no obligation on the institution as such. It added that the framework contract signed with the complainant was already being used for other services falling within its subject-matter.

6. After it made another attempt to organise the hand-over process, the complainant turned to the Ombudsman, on 9 October 2008.

The subject matter of the inquiry

7. The present inquiry covers the following allegation and claim:

The complainant alleged that the PO violated Article 7 (absence of abuse of power) and Article 10 (legitimate expectations, consistency and advice) of the European Code of Good Administrative Behaviour (ECGAB).

It argued in this context that: (1) the PO failed properly to inform it as to when the Application would be handed over and failed to launch the take-over process within a reasonable period of time; (2) considering the timing and the content of the work to be performed, the PO's decision to assign to the previous contractor the specific work related to the Application was wrong.

The complainant claimed that the work related to the Application should be transferred to it.

8. It should be noted that the complainant also claimed that it should be compensated for the financial losses it suffered in this context. However, considering that the complainant had not yet made appropriate prior administrative approaches to the PO regarding this claim, the Ombudsman took the view that, in accordance with Article 2(4) of his Statute, it was inadmissible.

9. In the course of the Ombudsman's inquiry, the complainant further alleged that the PO implemented all its framework contracts in a very arbitrary manner, privileging certain contractors against others. In support of this allegation, the complainant provided information related to a number of different contracts. The Ombudsman notes that the information provided by the complainant in this respect concerns contracts different from the ones at issue in the present case. The information provided is limited and not sufficient to enable the Ombudsman to take a position concerning the further allegation advanced by the complainant. If the complainant wishes the Ombudsman to consider this issue further, it remains free to submit a new complaint to the Ombudsman, providing all the relevant background information, as well as copies of all its related correspondence with the PO concerning this matter.

The inquiry

10. By letter of 31 October 2008, the Ombudsman launched his inquiry and asked the PO to submit an opinion. On 30 January 2009, the PO sent its opinion, which was forwarded to the complainant. On 7 April 2009, the complainant provided observations. On 1 March 2010, the Ombudsman requested the PO to reply to a number of further questions related to the subject-matter of the present complaint[2]. The PO sent its reply on 27 April 2010, which was forwarded to the complainant for observations. The complainant sent its observations on 29 June 2010. On 18 and 28 January 2011, the Ombudsman's representatives carried out an inspection of the PO's file. A copy of the report on the inspection was forwarded to the complainant for observations. The complainant sent its observations on 30 March 2011.

The Ombudsman's analysis and conclusions

A. As regards the complainant's allegation

Arguments presented to the Ombudsman

11. In support of its allegation, the complainant argued that the PO kept on assuring it that the Application would be handed over to it shortly. The PO had thus given rise to expectations on the part of the complainant that the work would start immediately. The complainant argued that it was, consequently, obliged to maintain a team of experts and the entire infrastructure in a stand-by or semi stand-by mode, which in turn resulted in serious financial losses for it. The complainant considered that, even if one were to assume that the PO could exercise a right to refuse to assign the contested work to it, this right should not be abused. It argued in this context that it would have made much more sense if it had been allowed to take care of the new version of the Application from the beginning.

12. In its opinion, the PO explained that the contract it had signed with the complainant was a framework contract and as such imposed no obligation whatsoever on the institution to buy services covered by it. Only the implementation of the said contract through orders or specific contracts was binding on the PO. The PO considered, therefore, that the complainant had no reason to expect that the PO would hand over the Application on any particular date. Furthermore, the PO clarified that, in accordance with the contract's tender specifications, it was entitled to add new applications to the scope of the contract or to withdraw some of them or even to migrate them to another environment.

13. In the PO's view, the successful completion of the migration in question constituted an essential condition for the transfer of the Application to the complainant for the purposes of the implementation of contract X. In this respect, it explained that its original intention was that the migration be completed long before the expiration of the previous contract. It provided evidence that on 4 May 2007, it had requested the previous contractor to make an offer for the work related to the migration of the Application. However, due to some delays in the execution of the contract, the PO was unable to pursue its initial plan and had to order the migration later than foreseen. Consequently, the implementation of the part of the new contract concerning the Application needed to be postponed as long as the said migration had not been completed. The PO also noted that it kept the complainant informed of the status of the migration and that, once the Application was ready to be transferred, on 6 December 2008, it informed the complainant shortly after, on 10 December, with a view to proceed to the take-over of the Application. The PO shared the complainant's frustration that the migration took much longer than initially foreseen, but, in its view, this fact did not create any space for legal expectations or rights.

14. In its observations, the complainant remarked that, in addition to telephone calls and meetings which it had with the PO's officials in charge, it had also submitted copies of letters and e-mails which clearly indicated that the PO had originally promised the transfer for December 2007 and then postponed it to February 2009.

15. As regards the contractual framework, the complainant submitted that the migration in question was foreseen in the tender specifications of its contract with the PO, which offered the latter the right to request the migration of the operational systems to another environment. Moreover, it argued that the migration of the Application was not part of contract Z. It listed the specific services covered by contract Z and took the view that the relevant specifications did not contain any provision regarding the migration. To demonstrate that the PO's actions were not consistent, the complainant also referred to another maintenance contract, in which the PO assigned the migration to the complainant, being the maintenance contractor, and not to the previous contractor which had developed the application. It further argued that, even if the migration could have been assigned to the previous contractor, this task should have been completed by December 2007. The PO should not have tolerated the significant delay that occurred and should have put an end to contract Z.

16. In its reply to the Ombudsman's further inquiries, the PO maintained that it was not possible to assign the migration to the complainant under contract X. It explained that the maintenance services provided by that contract required a different technology from the one used initially to create the Application. If the PO had decided to assign to the complainant the take-over of the application running on the previous technology, its migration and maintenance, it would have done so without previously assessing the complainant's skills in this field. That would have meant undermining the legitimacy of the results of the evaluation process. Furthermore, the PO argued that, even if it had been possible to assign the migration to the complainant, it would have been within the limits of its discretionary power to decide whether to continue the assignment with the previous contractor, during the time of the validity of the contract or to assign the task to a new contractor.

17. The PO regretted that it took the previous contractor 15 months longer than originally expected to complete the migration. It explained that the previous contractor was invited to make an offer for the migration work on 4 May 2007. The PO then issued the order on 7 September 2007. At the kick-off meeting that took place on 11 September 2007, it was agreed that the delivery of the main site would take place on 5 December 2007 and the rest of the work packages would be delivered on 15 January 2008. However, the delivery was completed only in early December 2008.

18. The PO noted that it had reacted to this delay by sending letters to the previous contractor, urging it to improve its performance under the contract. In addition, the PO applied a financial penalty by deducting EUR 20 000 from the last payment it made to the previous contractor. The PO also submitted that before 10 December 2008 it had not given the complainant any precise date for the transfer of the Application. In all exchanges between the PO and the complainant before that date, the PO always kept the latter informed about the state of the migration and of the fact that the migration, which was a pre-requisite for taking the Application over, was not yet completed.

19. In its observations, the complainant submitted that the PO did not refer explicitly to any provision of contract X which would have prevented the complainant from carrying out the migration of the Application. In the complainant's view, the PO also failed to explain on which legal basis it based its decision to assign the migration to the previous contractor. The complainant also expressed doubts as to whether the PO had decided to undertake the migration before launching the call for tenders for contract X. As regards the financial penalty imposed on the previous contractor, the complainant considered that the entire amount paid to the previous contractor was irregular, since the deliverables were not compliant with the contractual specifications. In the complainant's view, no payment should have been made at all.

The Ombudsman's assessment

20. The main issue in the present case is the way the PO handled the transfer of the Application to the complainant under contract X. In particular, the complainant's grievances concern three aspects: (i) the PO's decision to order the migration of the Application to a new technology from the previous contractor before transferring the Application to the complainant; (ii) delays in launching the take-over process, and (iii) lack of information regarding the take-over process. These are examined below.

(i) The PO's decision regarding the migration

21. The complainant argues that the PO's decision to assign the migration to the previous contractor was wrong. At the outset, the Ombudsman notes that the parties do not agree as to whether the scope of the relevant contracts covered the migration in question. In particular, the complainant considers that contract Z could not serve as a valid basis for ordering the migration, while the PO argues that the migration was not possible under contract X. What the Ombudsman should seek to verify is (i) whether the PO was entitled to order the migration under contract Z and (ii) whether the PO was not bound, under the terms of contract X, to assign the migration to the complainant.

22. In relation to contract Z, the Ombudsman notes that Chapter 2.2 of the technical specifications of the contract provides the list of different types of services covered by it. These services do not specifically include the migration of the Application to open source software. However, Point 20 (Maintenance) of the same contract states that, if requested to do so, "the Contractor shall undertake to provide corrective and evolutionary maintenance of the software supplied, if appropriate including technical migration, for a period of four years" (emphasis added). In view of the above provision, the Ombudsman cannot therefore agree with the complainant that the PO could not have ordered the migration on the basis of contract Z. Despite the fact that the technical migration of the Application was not specifically envisaged under the contract's technical specifications, it was, therefore, possible to order it on the basis of Point 20 of the said contract.

23. Furthermore, the Ombudsman cannot share the PO's view that it could not order the migration under contract X. In fact, Points 4.1 and 4.2 of the technical specifications in contract X read as follows:

"Software development - Extensions, technical and functional enhancements of operational information systems, technical migrations, development of complementary modules and new information systems within the specified functional domain. Interfaces are included". (emphasis added)

"The list of operational systems per lot is indicative. It gives a global estimation of the scope of the lots at the beginning of the tendering procedure. During the course of the contract, the Publications Office could at any moment adding new projects/applications, or phasing them out or migrating them to another environment, etc. The contractor will be keep informed of any changes". (emphasis added)

It results, therefore, that the scope of contract X covered the migration in question. That being said, the Ombudsman also notes that, according to the contract, the PO had the possibility ('could') to order a migration, but it was in no way bound to do so. In any event, as the PO rightly pointed out, contract X was a framework contract Xnd it was entirely in the PO's discretion if and when to order the specific services on its basis.

24. In light of the above, it is clear that the PO could have validly used either contract to order the migration. It was therefore within its margin of discretion to choose whether it would assign the migration to the complainant or to the previous contractor. The Ombudsman has, however, consistently stated that a discretionary power is not the same as an arbitrary power. An administration which has a margin of discretion must always have good reasons for choosing one course of action rather than another and should be in a position to justify, on the basis of objective criteria, its choices[3]. Thus, what needs to be examined further is whether the PO's decision in question was not abusive and was instead based on objective criteria.

25. As the PO explained to the Ombudsman and as it is corroborated by the inspection of the relevant files, it was the PO's intention to complete the migration of the Application before it was transferred to the successful tenderer of contract X. In fact, the PO's intention to launch the migration procedure dates back to November 2006, when the tender procedure leading to the conclusion of contract X was still ongoing and long before the contract was awarded to the complainant. It transpires from a number of documents that the Ombudsman inspected that the PO wished to finalise the migration within a short period of time in order to be able to hand over the Application to the successful tenderer of contract X. It is also clear from these documents that the PO gave emphasis to the fact that the migrated application should have been ready by the time contract X was signed. Considering that the decision to migrate the Application was taken before the contract with the complainant was signed, it was not surprising that the migration was envisaged to take place under contract Z and not under contract X. At that point of time that seemed to be the only available option.

26. The Ombudsman notes, nevertheless, that it eventually took the PO longer to issue the relevant order than it was originally foreseen. In fact, although the PO asked the previous contractor to submit an offer on 4 May 2007, it only signed the relevant order form on 7 September 2007, only a few days before it signed contract X. One could argue that, given the delay in issuing the order and in view of the imminent entry into force of contract X, it might have been better if the PO had asked the complainant to carry out the migration instead. However, it was clearly within the PO's margin of discretion to decide to assign this task to the previous contractor instead. In light of all the above, the Ombudsman considers that the complainant has not established that the PO's decision to order the migration from the previous contractor was abusive and/or not based on objective criteria.

27. That being said, the Ombudsman cannot overlook the fact that, as a result of the delay in ordering the migration, the complainant became suspicious as to the timing of the PO's decision to assign the task to the previous contractor and convinced that the PO acted in bad faith, privileged the previous contractor and tried to bypass its obligations under contract X.

28. As the Ombudsman has already stated, it is important not only that there is good administration but also that, in the eyes of the citizens, good administration is seen to be done[4]. Principles of good administration require that situations should be avoided where the impression is given that an authority called upon to decide on a matter might be perceived as acting in an abusive, unfair or partial manner. In the present case, it has been established that the PO's decision to order the migration from the previous contractor was not vitiated by an error. Nevertheless, because of the delay in issuing the relevant order, the PO's approach led the complainant to believe that it had acted in an unfair and abusive manner, in particular as a result of the lack of comprehensive and adequate explanations from the part of the PO in response to the complainant's grievances. In the Ombudsman's view, such appearance could have been avoided if the PO had better explained why the migration had been assigned to the previous contractor. The Ombudsman considers that this constituted an instance of maladministration. He will make a corresponding critical remark.

(ii) Delays in launching the handover process

29. The complainant further argued that the PO failed to launch the take-over process within a reasonable period of time. The Ombudsman first notes that contract X did not impose a specific time-frame for launching the take-over process. In other words, the PO was not obliged by the terms of the contract to transfer the Application to the complainant immediately after they had signed the said contract. That being said, it is also true that the PO's original intention was to hand over the Application to the complainant in early 2008. This was not, however, feasible due to delays related to the migration. These delays concerned (a) the issuing of the order and (b) the completion of the migration process. The Ombudsman will thus examine whether the PO could be held responsible for these delays.

30. As previously stated, there was an initial delay in launching the migration process of the Application, which amounted to approximately four months. In the Ombudsman's view, the said delay was not such as to cause, on its own, any significant problems for the transfer of the Application to the complainant and for the implementation of contract X. The Ombudsman further notes that, in its letter to the complainant of 29 April 2008, the PO expressed regrets that it had not signed the order form in question earlier.

31. As regards the further delay of approximately ten months (from the end of January 2008 until early December 2008), the Ombudsman understands that this was due to the inability of the previous contractor to deliver on time. The Ombudsman is not empowered to review any allegations against private companies and consequently any grievances regarding the work of the previous contractor fall outside his remit. The Ombudsman can only look into the question whether the PO failed to take all the measures that it was supposed to take in order to prevent this further delay from occurring.

32. In this respect, the Ombudsman notes that from the PO's submissions and the inspected documents it results that the previous contractor had agreed to deliver the main part of the work on 5 December 2007, and the rest of the work packages on 15 January 2008. Even in the communications between the PO and the contractor preceding the issuing of the order, the PO had put emphasis on the need to have the migration completed before the entry into force of contract X, and at the latest by the end of 2007. It also results from the inspection of the file that the PO was in constant communication with the contractor and insisted on the timely delivery of the work. Furthermore, in response to its contractor's delays and failures, the PO imposed a financial penalty on it. Finally, the Ombudsman also notes that, once the migration had been completed, the PO took the necessary steps in order to proceed, in due time, to the handover of the Application to the complainant and thus to avoid any further unnecessary delays. In light of the above, the Ombudsman considers that the PO took all the necessary measures in order to ensure a timely delivery of the Application and cannot be held responsible for its previous contractor's failure to deliver its work on time.

33. The complainant also argued that the PO should have imposed stricter penalties on the previous contractor or terminated the contract with it. The Ombudsman notes that, in accordance with contract Z, it appears that the PO could indeed have imposed stricter penalties and even terminated the contract with the previous contractor. However, such a course of action fell clearly within the PO's discretion, since Article 21 of contract Z did not impose on PO an obligation to do so, but only bestowed upon the latter the "right to apply penalties". Thus, the fact that the PO decided to impose a penalty of EUR 20 000 clearly falls within the latter's discretion. Moreover, it is doubtful whether imposing more severe financial penalties or terminating the contract with the previous contractor would have led to a better and faster delivery of outputs.

34. The complainant finally argued that the delay in taking over the Application caused it financial losses, since its resources were kept on hold for many months. As noted above, a framework contract does not impose on the contracting authority any obligation to purchase. Any such legal obligation arises only when specific order forms are issued. In addition, as noted above, the complainant's contract with the PO was a "cascade framework contract"[5]. According to that contract, if the complainant could not take upon itself a particular assignment due, for example, to the lack of available resources, the PO was entitled to request the second, or eventually the third, company in the cascade to submit an offer. Therefore, in light of the type of contract the complainant had signed and the implications resulting therefrom, the fact that the complainant decided to maintain available the human resources necessary for taking on the Application before being invited to sign a specific order for services related to the Application was a risk that the complainant chose to assume. Thus, in the Ombudsman's view, the PO cannot be held responsible for the complainant's decision to allocate and maintain resources for a work assignment that had not yet been given, nor for the alleged financial losses resulting from such a decision.

35. In view of the above the Ombudsman considers that there was no maladministration concerning this aspect of the case.

(iii) Lack of information regarding the handover

36. The complainant alleged that the PO failed properly to inform it as to when the Application would be handed over. In support of its view, the complainant submitted several e-mails in which it had in essence conveyed to the PO its readiness to take over the Application. The complainant argued that the PO had given it concrete assurances that the process would commence in January 2008, but then kept on postponing it for several months.

37. The Ombudsman notes that the communication between the parties concerning the hand-over of the Application took place both orally and in writing. Given that there is no evidence as regards the oral exchanges between the parties, the Ombudsman will focus on the written evidence that was presented to him in the course of the present inquiry.

38. After having carefully analysed both the documents submitted by the parties and the documents consulted during the inspection, the Ombudsman does not consider that the information provided by the PO to the complainant was misleading or inaccurate. In the Ombudsman's view, it does not transpire from any of the documents examined that the PO had established a specific date for the handover or that it had made any concrete promises in this respect. Even if one were to assume that in its oral exchanges with the complainant the PO had led it to believe that the hand-over process would take place sooner, it appears that the PO's intention was simply to inform the complainant, in good faith, about the current state of affairs. Given, however, that the PO kept the complainant informed about the status of the migration of the Application, the Ombudsman cannot find any maladministration as regards this aspect of the case.

B. As regards the complainant's claim

Arguments presented to the Ombudsman

39. The complainant claimed that the work related to the Application should be handed over to it.

The Ombudsman's assessment

40. The hand-over of the Application was completed in early 2009. The Ombudsman thus considers that further inquiries into the complainant's claim are no longer justified.

C. Conclusion

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

Principles of good administration require that situations should be avoided where the impression is given that an authority called upon to decide on a matter might be perceived as acting in an abusive, unfair or partial manner. In the present case, the PO's approach led the complainant to believe that it had acted in an unfair and abusive manner, in particular as a result of the lack of comprehensive and adequate explanations from the part of the PO in response to the complainant's grievances. This was an instance of maladministration.

There was no maladministration concerning the other aspects of the case.

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

 

P. Nikiforos Diamandouros

Done in Strasbourg on 7 June 2013

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[1] This contract was a 'cascade multiple framework service contract', which was concluded between the PO and three companies and which entitled the PO to call on these companies to perform certain services for the maintenance of several IT applications, including the Application. If the PO needed to order services under this contract, it was supposed to contact the first contractor on its list. If this contractor was unavailable, it was to contact the second and (if this contractor was also unavailable) the third contractor. The complainant was the first on the list of the three contractors.

[2] The Ombudsman requested the PO to reply to the following questions:

1. In its opinion, the Publications Office argued that the migration of the Application was a prerequisite for entrusting the complainant with this application under the contract the latter had entered into with the Office. In its observations, the complainant disagreed with this view, referring to the technical specifications of the contracts concerned. Could the Office please specify the provisions in the contracts/technical specifications on which it based itself, provide copies of the relevant provisions and also address the complainant's further arguments in this regard?

2. In its opinion, the Publications Office noted that it shared the complainant's frustration that the migration of the Application took much longer than originally foreseen. Could the Office please inform the Ombudsman what period had initially been foreseen for the implementation of the said assignment, why it took so long to complete this task and whether it was considered to ask the complainant to carry out the relevant task when it became clear that the previous contractor was unable to perform it within a reasonable period of time?

3. The e-mail sent to the Publications Office by the complainant on 30 January 2008 suggests that the latter was assured or led to believe by the Publications Office that the hand-over of the Application would take place in early 2008. Could the Publications Office please comment on this matter, in light of the statements to that effect made by the complainant in its correspondence with the Office?

[3] Decision of the European Ombudsman closing his inquiry into complaint 1874/2008/BB against the European Centre for the Development of Vocational Training, paragraph 43 and decision of the European Ombudsman closing his inquiry into complaint 3307/2006/(PB)JMA against the European Commission. The decisions are available at: http://www.ombudsman.europa.eu/cases/decision.faces/en/4514/html.bookmark

http://www.ombudsman.europa.eu/cases/decision.faces/en/4653/html.bookmark

[4] Decision of the European Ombudsman concerning complaint 642/2008/(TS)(ELB)MMN against the European Commission, paragraph 82. The decision is available at:

http://www.ombudsman.europa.eu/en/cases/decision.faces/en/11903/html.bookmark

[5] See footnote 1.