(Made in accordance with Article 3 (6) of the Statute of the European Ombudsman(1))

THE COMPLAINT

The complainant, a small German company, took part in lot H (Galileo Market Observatory – GMO) of the Galilei project as a sub-contractor of ESYS, the principal contractor. The project co-ordinator was a company called GAIN S.A.

According to the complainant, the work that it had to carry out was completed at the end of March 2003. The final presentation of the whole project took place on 10 July 2003.

The complainant submitted three cost statements ("CS") to ESYS (CS no. 1 - advance payment - on 14 December 2001, CS no. 1 - remainder - on 3 March 2002, CS no. 2 on 1 October 2002 and CS no. 3 on 1 April 2003) which were then forwarded (via GAIN) to the European Commission’s Directorate-General Energy and Transport (DG TREN). Payments for these cost statements (from DG TREN via GAIN and ESYS) reached the complainant between around 5 ½ and 10 ½ months after their submission to ESYS (for CS no. 1 - advance payment - on 7 June 2002, for CS no. 1 - remainder - on 25 October 2002, for CS no. 2 on 13 June 2003 and for CS no. 3 on 26 January 2004). According to the complainant, these delays were mostly due to the Commission, not to the intermediaries ESYS and GAIN.

In two letters or e-mails dated 23 April 2003 and 8 October 2003, the complainant asked the Commission to speed up procedures. In its reply of 8 May 2003 to the first letter, the Commission referred to the "complexity" of the project. According to the complainant, the second letter was not answered at all. The complainant pointed out that as a small company, it was seriously affected by these delays.

As regards the last cost statement, the complainant alleged that an amount of EUR 12 948,06 was still outstanding. According to the complainant, the Commission retained 15 % of all amounts due under the contract for the whole consortium pending its final assessment of the project. The complainant considered that the Commission was no longer entitled to retain the relevant amount, since the Commission had already accepted the relevant cost statements.

The complainant alleged that there had been considerable delays in payment which had caused it severe financial problems.

It made the following claims:

(1) The Commission should release the 15 % of the contract sum retained by it and transfer the amount of EUR 12 948,06 to the project co-ordinator or to ESYS;

(2) The Commission should pay to the complainant interest on account of late payment for delays exceeding the period of 60 days foreseen in the contract.

THE INQUIRY

The Commission's opinion

In its opinion submitted in June 2004, the Commission made the following comments:

The complainant was a sub-contractor of ESYS. There was no contractual relation between the complainant and the Commission in the framework of the relevant project.

Article 3 of the Galilei grant contract between the Commission and 12 contractors (including ESYS) provided that the total amount of the advance payment and of the periodic payments should not exceed 85 % of the maximum contribution. This guarantee retention of 15 % was applied until all project deliverables (technical reports and cost statements) had been submitted to and approved by the Commission. This meant that once the Commission had paid 85 % of the total contribution foreseen in the course of the project, it could not release any other payments until all the final reports were submitted and approved. The final cost statement for the Galilei project had been submitted on 9 February 2004 and was presently being assessed.

According to Article 3 (1) (c) and Article 4 (3) of Annex II of the Galilei grant contract, the Commission had 60 days to approve reports and 60 days to release the related payments after their approval. The 60 days' approval period could be suspended if the reports were incomplete or required further clarifications.

Payments were made to the co-ordinator who then had to transfer them to the other contractors (normally within 30 days) who in turn transferred the amounts to their sub-contractors.

According to the sub-contract between ESYS and the complainant, ESYS had 90 days to transfer the amounts to the complainant.

Consequently, a period of 240 days between submission of a cost statement and payment to a sub-contractor was to be considered as contractually normal.

The sub-contract between ESYS and the complainant did not provide for the payment of interest in the case of late payment. This contract also specified that the total periodic payments should not exceed 85 % of the total amount of the sub-contract in order to allow 15 % guarantee retention. This retention was to be paid upon the lifting of any potential reserve by the Commission and ESYS within 30 days of the corresponding payment from the Commission to ESYS. These conditions had been accepted by the complainant.

The Commission concluded from the above that it was not obliged to make any payments to the complainant or to pay interest on late payments.

The Commission submitted excerpts from the two contracts mentioned above. The excerpts from the sub-contract between ESYS and the complainant are marked "Standard Subcontract for GALILEI".

Further inquiries

After careful consideration of the Commission's opinion, it appeared that further inquiries were necessary.

Request for further information

The Ombudsman therefore asked the Commission (1) to specify in detail how it had handled the final cost statement that had been submitted to it on 9 February 2004, (2) to explain when it had received the cost statements to which the complainant had referred, when it had approved them and when it had released the relevant payments to the co-ordinator and (3) to explain whether it considered that no interest was due even where the Commission failed to pay the co-ordinator within a reasonable period of time or within the periods set out in the Galilei grant contract.

The Commission's reply

In its reply dated 30 July 2004, the Commission stated that as regards the final cost statement that it had received on 10 February 2004, it had informed the co-ordinator on 6 April 2004 that further information was needed in order to complete the assessment. Additional information had been provided on 19 May 2004. According to the Commission, however, it had still not received all the information it had requested. The Commission stressed that the final cost statement did not include any costs relating to the complainant.

Cost statements had been submitted by the co-ordinator (GAIN) and processed as follows:

Cost statement

Receipt of CS

Baseline date (= date from which the Commission has 60 days to make payments)

CS approved

Date on which Commission's account was debited