# CE2004088EN.01048801.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/488 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/488

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(2004/C 88 E/0501)

WRITTEN QUESTION E-0202/04

by Michl Ebner (PPE-DE) to the Commission

(29 January 2004)

Subject:   Lack of clarity in the rules excluding firms from applying for projects funded by the EU

Subject:

The ‘Practical Guide to contract procedures financed from the general budget of the European Communities in the context of external actions’ sets out the rules on application and selection procedures for projects funded by the EU.

Despite being revised in 2003, this guide is, in part, too stringent, and yet it leaves too much room for interpretation with regard to applications by companies and experts. On conflicts of interest for example, Section 2.3.6 is so strict that it excludes firms that had participated in the preparation of a project from participating in tenders based on this preparatory work. This criterion applies to all firms within the same legal group, including international firms, regardless of the share one may have in the other, even when this is as low as 1 %. It is entirely possible that precisely these applicants would achieve the best results.

Furthermore, a number of rules are ambiguously worded, and different delegations therefore intrepret them in different ways, leading to misunderstandings in the selection procedure, which means that the best possible results are not necessarily achieved.

Has the Commission studied all the legal ramifications and the correct interpretation of the ‘Practical Guide’ in all language versions? If not, what does the Commission intend to do to clarify these grey areas?

Answer given by Mr Patten on behalf of the Commission

(15 March 2004)

(15 March 2004)

The principles on which the ‘Practical Guide’ is based are defined in Article 89 § 1 of the Financial Regulation of 25 June 2002 applicable to the general budget of the European Communities (1). All public contracts financed in whole or in part by the budget, must comply with the principles of transparency, proportionality, equal treatment and non-discrimination. According to article 94 a) of the Financial Regulation, contracts may not be awarded to candidates or tenderers who, during the procurement procedure, are subject to a ‘conflict of interest’.

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For external actions, these principles have been implemented as follows:

| — | according to Articles 237 and 238 of the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 (2), laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, the implementation of procurement procedures for external actions is decided by the Commission. The Commission Decision, ‘Rules and procedures for service, supply and works contracts financed from the general budget’, was adopted on 25 March 2003 (3). This Decision replaces the Manual of Instructions adopted in 1999 by the Commission (4), with the unanimous agreement of Member States; |
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according to Articles 237 and 238 of the Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 (2), laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, the implementation of procurement procedures for external actions is decided by the Commission. The Commission Decision, ‘Rules and procedures for service, supply and works contracts financed from the general budget’, was adopted on 25 March 2003 (3). This Decision replaces the Manual of Instructions adopted in 1999 by the Commission (4), with the unanimous agreement of Member States;

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| — | in the new Commission Decision, the ‘conflict of interest’ is defined as ‘Any event influencing the capacity of a candidate, tenderer or contractor to given an objective and impartial professional opinion, or preventing it, at any moment, from giving priority to the interests of the contracting authority. Any consideration relating to possible contracts in the future or conflict with other commitments, past or present, of a candidate, tenderer or contractor. These restrictions also apply to subcontractor and employees of the candidate, tenderer or contractor’. It must be underlined that the same definition applied already in the Manual of Instructions; |
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in the new Commission Decision, the ‘conflict of interest’ is defined as ‘Any event influencing the capacity of a candidate, tenderer or contractor to given an objective and impartial professional opinion, or preventing it, at any moment, from giving priority to the interests of the contracting authority. Any consideration relating to possible contracts in the future or conflict with other commitments, past or present, of a candidate, tenderer or contractor. These restrictions also apply to subcontractor and employees of the candidate, tenderer or contractor’. It must be underlined that the same definition applied already in the Manual of Instructions;

| — | on the basis of this new Commission Decision, the ‘Practical Guide to contract procedures financed from the General Budget of the European Communities in the context of external actions’ has been adopted by EuropeAid. The translation in Spanish, Portuguese and English of this Practical Guide has been done by the relevant services of the Commission; |
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on the basis of this new Commission Decision, the ‘Practical Guide to contract procedures financed from the General Budget of the European Communities in the context of external actions’ has been adopted by EuropeAid. The translation in Spanish, Portuguese and English of this Practical Guide has been done by the relevant services of the Commission;

| — | the provision on conflict of interests of section 2.3.6 of this Practical Guide reads as follows: ‘Fair competition: To avoid any conflict of interest, any firm (including firms within the same legal group, other members of the same consortium, and subcontractors) or expert participating in the preparation of a project must be excluded from participating in tenders based on this preparatory work’. Consequently, the provision of ‘conflict of interest’ the Honourable Member refers to is legally binding on the basis of the Commission Decision; |
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the provision on conflict of interests of section 2.3.6 of this Practical Guide reads as follows: ‘Fair competition: To avoid any conflict of interest, any firm (including firms within the same legal group, other members of the same consortium, and subcontractors) or expert participating in the preparation of a project must be excluded from participating in tenders based on this preparatory work’. Consequently, the provision of ‘conflict of interest’ the Honourable Member refers to is legally binding on the basis of the Commission Decision;

| — | the prohibition of a firm or expert participating in the preparation of a project is derived inter alia from the criticisms made by the Court of Auditors in its special report 16/2000 on tendering for service contracts under the Phare and Tacis programmes. This provision is desirable from a competition point of view to avoid irregularities that occurred in the past. Moreover it is proportional and necessary to its main objective, which is to avoid fraud and unfair tendering. The Commission's intention is to avoid collusion between bidders. Considering the very complex nature of multinational groups, the prohibition has to be very broad in order to be effective and not to be bypassed through the use of affiliate companies; |
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the prohibition of a firm or expert participating in the preparation of a project is derived inter alia from the criticisms made by the Court of Auditors in its special report 16/2000 on tendering for service contracts under the Phare and Tacis programmes. This provision is desirable from a competition point of view to avoid irregularities that occurred in the past. Moreover it is proportional and necessary to its main objective, which is to avoid fraud and unfair tendering. The Commission's intention is to avoid collusion between bidders. Considering the very complex nature of multinational groups, the prohibition has to be very broad in order to be effective and not to be bypassed through the use of affiliate companies;

| — | this provision has now been implemented for more than three years in external aid projects. It was drafted to take into account the interests of the various actors as well as the legal context. The Commission's major concern has been to harmonise all its award procedures to make the rules more transparent and to rationalise management. On the basis of acquired experience, the specific issue of conflict of interest will be examined during the next revision of the rules. The Commission will, of course, continue to insist on the principles of fair and equal participation in tenders and contracts and of transparency, which underlie the contract award procedures in the field of Community external aid. |
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this provision has now been implemented for more than three years in external aid projects. It was drafted to take into account the interests of the various actors as well as the legal context. The Commission's major concern has been to harmonise all its award procedures to make the rules more transparent and to rationalise management. On the basis of acquired experience, the specific issue of conflict of interest will be examined during the next revision of the rules. The Commission will, of course, continue to insist on the principles of fair and equal participation in tenders and contracts and of transparency, which underlie the contract award procedures in the field of Community external aid.

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(1)  OJ L 248, 16.9.2002.

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(2)  OJ L 357, 31.12.2002.

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(3)  SEC(2003) 387/2.

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(4)  Decision SEC(1999) 1801/2.

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