22.

In relation to the 5 procurement procedures, F4E would like to provide the following comments: Amount allocated to the different contracts: The Court notes that at the time of launching the procurement procedures (2013 and 2014) F4E had not allocated a value from the 6,6 billion euro to the different contracts. As reported previously by F4E, the 6,6 billion euro capped budget was established on the assumptions of the Toschi report which were done at WBS levels 3 (System) and 4 (PA) and not at level 6 (Contracts). This was because, at that time, the level of detail on how the total scope would have been split among different contracts was not homogeneous across the different systems. Hence, the necessity of monitoring the evolution of the scope and its related cost at levels 3 and 4 which allowed a direct comparison with the Toschi baseline and so against the 6,6 billion euro. Deviation of the awarded value over the cost baseline: The case reported by the ECA corresponds to a procurement procedure in the area of buildings, where the low level of definition of the design (at functional specification level) and the continuously changing requirements posed by IO, also due to the new requests from the French Safety Authority, caused an escalation of the costs in this area going beyond the initial assigned share of the budget. To address the cost risks and minimise the cost impact resulting mainly from constant changes in the scope of the project deliverables which F4E has suffered in some areas under its responsibility, in particular for the buildings, a detailed analysis of the causes and the lessons learned was presented to F4E’s Governing Board in December 2014. It has been shown that delays in the delivery of input data and continuous change requests by IO and the increase of Safety requirements after Fukushima accident slows down the progress of work by F4E and leads to countless deviations with huge cost impact. Even if mitigation actions have been put in place by F4E to contain the costs, in many cases the implementation of changes imposed to the project, with their associated costs, has been unavoidable. Deficiencies in the assessment of the financial offers: F4E considers that there were no deficiencies in the assessment of the financial offers. It has to be kept in mind that at the time of those procurement procedures the tracking and control of the evolution of the scope and its related cost was done at levels 3 and 4. It should also be emphasised that, whenever F4E has awarded a major contract, on top of the mandatory recommendation by the Executive Committee, specific meetings have always been carried out with the Authorising Officer in order to provide a complete picture, prior to the contract award, on both costing and risk aspects. When these procurement procedures were launched, the Project Team Manager had already estimated the possible cost of the procurement (i.e. through own assessment, expert’s input or industrial estimate) and made sure that the original scope was covered and at a cost which would allow to keep the overall cost at WBS level 4 within the allocated ceiling. The now executed work, at central level, to define an EAC at WBS level 6 provides an improved approach for controlling and containing further the costs. In the case of the contract containing options amounting to 32 million euro and additional costs, it has to be noted that such options are intended to cover potential risks for the whole procurement arrangement (TF Coils). The financial impact of risks was managed at the level of Procurement Arrangement (so at WBS level 4). Indeed in this specific system a total saving was achieved by F4E: the total financial value of the 3 contracts placed for manufacture the TF coils is actually ~50 million euro below the financial value allocated to the TF coils level 4 (corresponding to the 6,6 billion euro capped budget. This amount is well above the 32 million euro associated to the options of this contract, and it is therefore more than adequate to cover risks not only to this contract but also the other 2 contracts. It is also important to note that, thanks to the risk mitigation strategy adopted by F4E for these 3 contracts, these risks have presently a low probability (presently below 5 %). Delays in procurement procedures: F4E considers that these delays do not constitute a weakness in the procurement procedures as in fact they respond to the exceptional environment in which F4E operates (lack of competition and contractual complexities) and to the needs to seek cost savings by ensuring that the specifications are mature enough before launching the procurement procedures. Unforeseen activity: F4E had to introduce in the 2014 Work Programme a material procurement activity, which indeed was not originally foreseen in the baseline for the JT60SA Broader Approach project. This was launched following experts opinion, in order to overcome an unforeseen technical difficulty. The activity, and the potential risks and reputational damage associated with avoiding it, was discussed at the December 2013 Governing Board who agreed to proceed with this material procurement as a matter of urgency. This additional activity was anyhow carried out within the contingency allocated to this specific project and that notwithstanding the urgency, F4E managed to maintain reasonable competition and to obtain an economical price. Assessment of technical award criteria: The technical specifications were prepared on the basis of the outcome of the expert review and the requirements contained in the specs were fully defining the material requirements. The explicit acceptance of all the requirements by each of the two bidders (in the form of a duly filled ‘Compliance Matrix’) together with the description of the proposed manufacturing process and the risk assessment attached to the offers, were giving full assurance of the technical quality of the bids. On this ground the evaluation committee unanimously agreed that the assignment of the maximum technical ranking to both the offers was justified. Use of pre-information notice: F4E considers that this did not constitute a weakness in the procurement procedure as mitigating actions were taken in order to increase competition. Indeed, in the 3 procedures identified by the ECA there was no publication of the pre-information notice, as this was not foreseen by internal procedures at the time (this changed in the meanwhile in order to address risks highlighted by other audits and now the use of pre-information notices is mandatory for procurements above 10 million euro). F4E considers to have mitigated the risk of poor competition by carrying out targeted actions (info days, events such as business forum, market surveys, use of ILO network, etc.). Such dissemination strategy is deemed to be more effective than the simple publication of a pre-information notice through the OJEU, as it is more directly addressing the concerned economic operators.