Late response by Commission to bid for Galileo contract criticised by Ombudsman, who pointed out that small business cannot take part in EU programmes if payment is long delayed (link)

October 12, 2005

Strasbourg, 11 October 2005

Decision of the European Ombudsman on complaint 530/2004/GG against the European Commission. Strasbourg, 3 October 2005
Full text

Complaint against the European Commission concerning lot H (Galileo Market Observatory - GMO) of the Galilei project.

THE OMBUDSMAN'S DRAFT RECOMMENDATION

The draft recommendation

On 11 March 2005, the Ombudsman addressed the following draft recommendation to the Commission:

The Commission should compensate the complainant for the negative effects of its delay in handling cost statements nos 2 and 3.

[?]

Conclusion

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

According to the conditions applicable the Galilei grant contract, the Commission should have made payments regarding cost statements submitted to it within a period of 60 days after a certain date. As regards two cost statements concerning the complainant, payment was only made 1.5 months and 4 days respectively after the expiry of the 60-days period. This constitutes maladministration.

4.2 The Ombudsman takes note of the fact that the Commission has felt unable to accept the proposal for a friendly solution and the draft recommendation that he had submitted to it with a view to remedying the above-mentioned instance of maladministration.

4.3 Article 3 (7) of the Statute of the European Ombudsman provides that after having made a draft recommendation and after having received the detailed opinion of the institution or body concerned, the Ombudsman shall send a report to the European Parliament and to the institution or body concerned.

4.4 In his Annual Report for 1998, the Ombudsman pointed out that the possibility for him to present a special report to the European Parliament was of inestimable value for his work. He added that special reports should therefore not be presented too frequently, but only in relation to important matters where the Parliament was able to take action in order to assist the Ombudsman(3). The Annual Report for 1998 was submitted to and approved by the European Parliament.

4.5 The Ombudsman notes that the present case concerns the duties of the European Commission in relation to a specific contract. He further notes that it is not apparent which action the European Parliament could take in order to assist the Ombudsman and the complainant in the present case. Given these circumstances, the Ombudsman concludes that it is not appropriate to submit a special report to the European Parliament.

4.6 The Ombudsman will therefore send a copy of this decision to the Commission and include a short summary in the annual report for 2005 that will be submitted to the European Parliament. The Ombudsman thus closes the case.

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

FURTHER REMARKS

It emerges from the present inquiry that the complainant, a small or medium-sized company that had carried out work as a sub-contractor on a project run by the Commission, had to wait for more than 1 ½ years before being paid a comparatively substantial amount of money (EUR 12 948.06). The Ombudsman considers that small and medium-sized companies will hardly have a realistic possibility of taking part in such projects in circumstances like these. In the Ombudsman's view, it would be useful if the Commission could take the above remarks into account when preparing future contracts, especially those involving small or medium-sized companies, in order to prevent similar problems from arising. In particular, the Commission could consider whether it would not be appropriate to alter its standard contractual practice so that payment of interest to contractors in respect of amounts due to sub-contractors that have properly fulfilled their obligations would become automatic. In the Ombudsman's view, such a change would constitute a useful confirmation of the Commission's commitment to the interests of small and medium-sized companies. It would also appear to be in conformity with the Commission's proclamations to the effect that delays in payment by its own services should not result in disadvantages for third parties.

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