# CE2004084EN.01095601.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/956 |
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(2004/C 84 E/1055)

WRITTEN QUESTION P-1203/04

by Gianfranco Dell'Alba (NI) to the Commission

(14 April 2004)

Subject:   Suspected irregularities in the management of European Development Fund (EDF) resources for Project 8.ACP.PNG.003

| 1. | With regard to the contract award procedure used to select the undertaking to replace the original consultant (Studio Bichara Srl (‘SB’)) in the services contract in question, can the Commission indicate why:
(a)
no international restricted invitation to tender was launched, despite the contract being of a value in excess of EUR 200 000, and a local invitation to tender was opted for instead (see the Common Service for External Relations manual of procedures — paragraph 10 and Annex — applicable at the time of the events in question); (b)
no suspicion was aroused by the fact that the participants in the tender procedure (which differed enormously in terms of size and financial capacity) submitted tenders in excess of the maximum available budget when some of them had also participated in the original 1999 procedure and submitted tenders below the level of available resources; (c)
the contract was subsequently awarded (by direct agreement) to the companies PAC and ETS, contrary to Article 12(2) of the General Conditions for services contracts financed by the EDF, when PAC/ETS had, moreover, been declared ineligible in respect of another EU project in the Republic of Vanuatu? | (a) | no international restricted invitation to tender was launched, despite the contract being of a value in excess of EUR 200 000, and a local invitation to tender was opted for instead (see the Common Service for External Relations manual of procedures — paragraph 10 and Annex — applicable at the time of the events in question); | (b) | no suspicion was aroused by the fact that the participants in the tender procedure (which differed enormously in terms of size and financial capacity) submitted tenders in excess of the maximum available budget when some of them had also participated in the original 1999 procedure and submitted tenders below the level of available resources; | (c) | the contract was subsequently awarded (by direct agreement) to the companies PAC and ETS, contrary to Article 12(2) of the General Conditions for services contracts financed by the EDF, when PAC/ETS had, moreover, been declared ineligible in respect of another EU project in the Republic of Vanuatu? |
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| (a) | no international restricted invitation to tender was launched, despite the contract being of a value in excess of EUR 200 000, and a local invitation to tender was opted for instead (see the Common Service for External Relations manual of procedures — paragraph 10 and Annex — applicable at the time of the events in question); | | | | | | |
| (b) | no suspicion was aroused by the fact that the participants in the tender procedure (which differed enormously in terms of size and financial capacity) submitted tenders in excess of the maximum available budget when some of them had also participated in the original 1999 procedure and submitted tenders below the level of available resources; | | | | | | |
| (c) | the contract was subsequently awarded (by direct agreement) to the companies PAC and ETS, contrary to Article 12(2) of the General Conditions for services contracts financed by the EDF, when PAC/ETS had, moreover, been declared ineligible in respect of another EU project in the Republic of Vanuatu? | | | | | | |

| 2. | Concerning the contracts awarded after the cancellation of the contract with SB why, following the criticisms levelled by PAC/ETS itself at the Unitech plans drawn up by SB, was management of the works originally envisaged by SB awarded to PAC/ETS for an amount of around EUR 772 000, as opposed to the EUR 660 000 originally agreed with SB for the same services, on top of around EUR 100 000 for supplementary services and a rider amounting to around EUR 420 000 relating solely to the new plans for the Unitech institute (as opposed to the EUR 600 000 agreed with SB for the plans for all 9 of the institutes covered by the project)? |
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Answer given by Mr Nielson on behalf of the Commission

(30 April 2004)

| 1. | (a)
Project 8.ACP.PNG.003 was financed under the 8th European Development Fund (EDF). The main legal base is Decision No 3/90 of the ACP-EEC Council of Ministers of 29 March 1990 adopting the general regulations, general conditions and procedural rules on conciliation and arbitration for works, supply and service contracts financed by the EDF and concerning their application( 1 ).
The EUR 200 000 limit is based on Decision No 2/2002 of 7 October 2002, which covers the implementation of Annex IV of the Cotonou Agreement. It applies to service contracts under the 9th EDF and not contracts under the 8th EDF.
In accordance with Article 7.5 of Annex I to Decision No 3/1990 adopting the General Regulations for Service, Supply and Works, a shortlist of companies was established in order to carry out a restricted tender procedure. (b)
It was decided, in order to maximise the competition, not to communicate the maximum budget available. This explains why the bids submitted were above the maximum limit and why this did not raise any suspicion. Since the offers made by companies are based on market prices, it is clear that prices increased between 1999, year of the initial procedure and 2002, year of the procedure in question. This could explain why companies that had already participated in the 1999 tendering procedure submitted higher financial offers in 2002. (c)
The procedure followed is compatible with the Decision No 3/1990 governing the 8th EDF, Article 35. Article 12(2) refers to the Decision No 2/2002 governing the implementation of Annex IV of the Cotonou Agreement. It applies to the 9th EDF and not the 8th EDF. | (a) | Project 8.ACP.PNG.003 was financed under the 8th European Development Fund (EDF). The main legal base is Decision No 3/90 of the ACP-EEC Council of Ministers of 29 March 1990 adopting the general regulations, general conditions and procedural rules on conciliation and arbitration for works, supply and service contracts financed by the EDF and concerning their application( 1 ).
The EUR 200 000 limit is based on Decision No 2/2002 of 7 October 2002, which covers the implementation of Annex IV of the Cotonou Agreement. It applies to service contracts under the 9th EDF and not contracts under the 8th EDF.
In accordance with Article 7.5 of Annex I to Decision No 3/1990 adopting the General Regulations for Service, Supply and Works, a shortlist of companies was established in order to carry out a restricted tender procedure. | (b) | It was decided, in order to maximise the competition, not to communicate the maximum budget available. This explains why the bids submitted were above the maximum limit and why this did not raise any suspicion. Since the offers made by companies are based on market prices, it is clear that prices increased between 1999, year of the initial procedure and 2002, year of the procedure in question. This could explain why companies that had already participated in the 1999 tendering procedure submitted higher financial offers in 2002. | (c) | The procedure followed is compatible with the Decision No 3/1990 governing the 8th EDF, Article 35. Article 12(2) refers to the Decision No 2/2002 governing the implementation of Annex IV of the Cotonou Agreement. It applies to the 9th EDF and not the 8th EDF. |
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| (a) | Project 8.ACP.PNG.003 was financed under the 8th European Development Fund (EDF). The main legal base is Decision No 3/90 of the ACP-EEC Council of Ministers of 29 March 1990 adopting the general regulations, general conditions and procedural rules on conciliation and arbitration for works, supply and service contracts financed by the EDF and concerning their application( 1 ).
The EUR 200 000 limit is based on Decision No 2/2002 of 7 October 2002, which covers the implementation of Annex IV of the Cotonou Agreement. It applies to service contracts under the 9th EDF and not contracts under the 8th EDF.
In accordance with Article 7.5 of Annex I to Decision No 3/1990 adopting the General Regulations for Service, Supply and Works, a shortlist of companies was established in order to carry out a restricted tender procedure. | | | | | | |
| (b) | It was decided, in order to maximise the competition, not to communicate the maximum budget available. This explains why the bids submitted were above the maximum limit and why this did not raise any suspicion. Since the offers made by companies are based on market prices, it is clear that prices increased between 1999, year of the initial procedure and 2002, year of the procedure in question. This could explain why companies that had already participated in the 1999 tendering procedure submitted higher financial offers in 2002. | | | | | | |
| (c) | The procedure followed is compatible with the Decision No 3/1990 governing the 8th EDF, Article 35. Article 12(2) refers to the Decision No 2/2002 governing the implementation of Annex IV of the Cotonou Agreement. It applies to the 9th EDF and not the 8th EDF. | | | | | | |

| 2. | The Commission has requested the corresponding documentation from the Delegation in Papua New Guinea in order to be able to formulate a reply on this point which will be communicated as soon as possible. |
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( 1 )  OJ L 382, 31.12.1990.

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