THE BACKGROUND TO THE COMPLAINT

1. On 28 March 2007, Hydroplan Ingenieurs GmbH ('the contractor') and the European Commission entered into contract EUROPEAID 2007/133373 entitled "Identification and preparation of priority actions to be financed under the second tranche of the Water Facility". Under the contract, the contractor undertook to carry out two separate projects. The subject matter of the present complaint concerns the second project only[1].

2. According to the Terms of Reference for the project, the contractor was required to deliver services in two phases. The entire project was to be finalised within a period of seven months, that is, by 8 October 2007 at the latest.

3. During the first phase (the "identification phase"), initial field missions would take place in the regions concerned. After each mission, a field mission report would be drafted. At the end of the fieldwork, the contractor had to present a "Draft Report I" to the Commission. After the approval of Draft Report I, the second phase (the "formulation phase") would start. The formulation phase would lead to the submission of a second draft report, Draft Report II. Subsequently, the contractor had to submit a Draft Final Report. The Commission could submit observations within a maximum of four weeks after receiving the Draft Final Report.

4. The complainant is a consultant who worked for the contractor as a team leader. Following a first field mission in April 2007, the complainant submitted a field mission report. During a subsequent meeting between the Commission and the contractor, the field mission report was found to be incomplete. Following the Commission's request, the complainant presented a new draft one week later. The Commission considered that the new draft did not conform to the contractual requirements.

5. Following a second field mission, the complainant submitted Draft Report I to the Commission. The Commission rejected Draft Report I and provided comments (the comments referred to the absence of a formal validation of the findings, the lack of a clear link with the project's priorities and the absence of coherent information).

6. On the 19 July 2007, the contractor requested a modification of the budget in order to allow a further expert to participate in the last part of the project. In the document seeking to justify this extra expenditure, the contractor stated that: "Anticipating that a decision is being reached regarding the identified projects, the formulation mission (Phase II) would be fielded as from 23 July 2007."

7. By letter dated 23 July 2007, the Commission issued an administrative order allowing the team of consultants to carry out the formulation mission. In the letter, it added that this mission should also allow the consultants to complete and finalise the Draft Report I[2].

8. After the formulation mission had taken place, the complainant submitted Draft Report II. Following a meeting between the complainant and the Commission, the Commission expressed concerns regarding the content, coherence and readability of Draft Report II.

9. By e-mail of 12 November 2007, the contractor submitted a Draft Final Report.

10. By letter of 14 March 2008, the Commission informed the contractor that it considered the contract terminated "even for the services not rendered". With the same letter, it proposed an amicable settlement. Regarding the assignment in question[3], the Commission rejected the total value of the assignment on the grounds that it was unable to accept the Final Report because of its late submission (the contractor submitted the Draft Final Report on 12 November 2007, even though it had to be finished, at the latest, by 8 October 2007) and its poor quality. In particular, the Commission pointed out that, as it had already underlined to the contractor, it was crucial that the time limit be respected so that the proposed actions could be financed from the Water Facility Funds before the budgetary cut-off date of 31 December 2007. After this date, all non-committed funds would be lost. Nevertheless, the Commission agreed to consider the costs relating to the field trips (that is, travel costs, daily allowances and working days during the missions).

11. On the basis of this proposal, the Commission received from the contractor a final invoice dated 15 August 2008. The final payment was made on 24 October 2008.

12. On 11 December 2008, the complainant submitted the present complaint. According to the complainant, the contractor only paid him for part of the work he carried out on the project.

THE SUBJECT MATTER OF THE INQUIRY

13. In his complaint, the complainant essentially made the following allegation and claims:

Allegation:

1. The Commission contributed to the situation in which he did not receive payment for work he carried out on the project.

Claims:

1. The Commission should pay the sum of EUR 6 000 to cover the fees originally foreseen to him; and
2. The Commission should present a formal apology to him.

THE INQUIRY

14. On 25 February 2009, the Ombudsman invited the Commission to comment on the complainant's allegation and claims. On 29 May 2009, the Commission submitted its opinion, which was forwarded to the complainant for observations. The complainant submitted his observations on 6 September 2009.

THE OMBUDSMAN'S ANALYSIS AND CONCLUSIONS

A. Alleged mismanagement that resulted in the complainant's financial loss and the related claims.

Arguments presented to the Ombudsman

15. The complainant focused on the fact that the project was carried out in two phases and that, according to the Terms of Reference, Phase II could only start after the "approval" of Phase I[4]. However, he argued that the Commission agreed that he could work on Phase II of the project, even though it had not endorsed the earlier Phase I. In the complainant's view, the Commission's agreement for him to proceed to Phase II implied that it had accepted Phase I.

16. In addition, the complainant argued that he received wrong instructions from the Commission.

17. The complainant also argued that the Commission’s negative comments on his report were delayed. In his view, the Commission's mismanagement caused him financial loss.

18. In its opinion to the Ombudsman, the Commission stated that the contract was terminated because of the poor quality of the study and the fact that it was submitted late. It pointed out that the contracting authority is not obliged to pay for the time taken by a contractor to produce reports which are not in conformity with the Terms of Reference and which, therefore, cannot be approved. In the present case, none of the reports were approved by the Commission, because they were not in conformity with the Terms of Reference. Furthermore, the time limit for the submission of the final report (October 2007) was not respected. As a result, the mission failed to complete its main objective, which was to present a programme to the partners and to sign an agreement before 31 December 2007.

19. The Commission did not agree with the complainant's argument that it implicitly endorsed Phase I. It stated that it repeatedly rejected all of his submissions. It approved a third mission in order to give the complainant a final chance to revise his report. For the above reasons, the Commission considers that it applied correctly the rules governing the management of the contract and that it has no obligation to pay financial compensation or to apologise to him.

The Ombudsman's assessment

20. The Ombudsman understands the undisputed facts as follows. The letter dated 14 March 2008 clearly shows that the Commission terminated the contract because the work submitted to it was not in conformity with the Terms of Reference. In particular, it is not disputed that the Final Report was submitted late. Furthermore, the complainant has not put forward any arguments to show that the substantive assessment by the Commission in relation to the work carried out was manifestly incorrect. In an amicable settlement with the contractor, the Commission agreed to pay the 'costs' relating to field trips (that is, travel costs, daily allowances and working days during the missions).

21. Given that the services required of the contractor were not provided in full, as provided for in the contract, the Ombudsman agrees that the Commission was entitled, and indeed obliged, in accordance with principles of sound financial management, not to pay the contractor in full.

22. The Ombudsman considers the Commission cannot be reproached for anything in relation to the above actions.

23. The main argument put forward by the complainant is that the Commission "implicitly" approved the identification phase of the project, or at least gave the impression that it approved it, since it allowed the contractor to proceed to the formulation phase. The complainant relied on the Methodology section of the Terms of Reference to support his argument. The Methodology section of the Terms of Reference, in a description of how the project should proceed, states that the second phase will commence after the approval of the first phase report.

24. The Ombudsman does not agree with this assessment.

25. The Ombudsman notes that the applicable contractual rules (Framework Contract Beneficiaries) expressly allowed for modifications of the Terms of Reference during the term of the contract (see Section 5.4 "Modification du Contrat Specifique"), provided the contractor and the Commission both agree to the modification. As such, the contractor and the Commission were not prevented from modifying the Terms of Reference regarding methodology during the term of the contract.

26. In relation to the above, the Ombudsman notes that the contractor requested permission to start the formulation phase even though Draft Report I had not been accepted. By an administrative order of 23 July 2007, the Commission agreed to the request to start the formulation phase even though Draft Report I had not been accepted. It expressly noted that the identification report had not been accepted. Indeed, the Commission clearly stated that the purpose of the next mission would, among other things, be to provide the consultants with the opportunity to complete and finalise the Draft Report I.

27. As such, the Commission's agreement to move to Phase II cannot, in any way, be viewed as proof that it "implicitly" approved Phase I of the project. Any argument that Commission implicitly endorsed the documents submitted to it would run counter to its express statements. Indeed, the Commission repeatedly expressed its dissatisfaction about the quality of the complainant's work and frequently asked him to amend his reports. The complainant was aware of the Commission's dissatisfaction.

28. The complainant also argued that, from the Commission's behaviour, he had a legitimate expectation to assume that the entire project would be approved. The Ombudsman notes, in this respect, that the overall project could only have been approved if it had been presented on time and produced to the requisite standard. The Commission's repeated concerns as regards the quality of the reports submitted to it indicate that there were no grounds for the complainant to have any legitimate expectations that the Commission would approve the entire project.

29. As regards the complainant's argument that he received wrong instructions from the Commission while preparing the reports, the Ombudsman notes that the complainant failed to produce any evidence in support of this argument.

30. Finally, the complainant argued that the Commission’s negative comments on the Final Report were delayed. The Ombudsman notes that the reason the Commission had rapidly to submit comments to the contractor concerning the Final Report was to allow a programme to be presented to the Commission's partners and an agreement to be signed before 31 December 2007. The contractor submitted a Draft Final Report on 12 November 2007, more than one month after the 8 October 2007 deadline. By letter of 14 March 2008, the Commission informed the contractor that it considered the contract terminated. In its letter, it explained why it had terminated the contract and emphasised the significance of the late submission of the Final Report. The Ombudsman is of the view that, on its own, the late submission of the Final Report rendered void any Commission obligation to make comments within a short period of time.

31. In any event, there is no causal link between the fact that the Commission did not comment on the Final Report until March 2008 and the complainant's alleged losses, given that his alleged losses result directly and only from the fact that the work he produced was inadequate.

32. In view of the above, the Ombudsman finds that the complainant's allegation and claims cannot be sustained.

B. Conclusions

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

No maladministration has been found in the present case.

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

 

P. Nikiforos DIAMANDOUROS

Done in Strasbourg on 26 July 2010

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[1] The first assignment was successfully completed and the contractor received full compensation for all the services performed.

[2] According to the original letter:

"Suite à votre proposition du 19/07/07 (...), j'autorise (...) à débuter la mission de formulation le 263/07/07 (...).

Cette mission devra également permettre aux consultants d'intégrer les commentaires réalisés, de compléter et de finaliser le rapport d'identification de propositions de projets pour financement sur la zone SADC.

Cet ordre administratif autorise également la modification du budget tel qu'indiqué dans votre communication, modification dont l'objectif est la réalisation de ladite mission."

[3] Regarding the first assignment, the Commission asked the contractor to include in the final invoice all the services performed for its completion.

[4] 2.4. Methodology

"…The second phase, after approval of the first phase report, would be focused towards the preparation of agreed projects under the SADC region. Eventual missions in this phase will have to be agreed upon the Contracting Authority (administrative order will be delivered)…"