WRITTEN QUESTION P-2438/97 by Luciano Pettinari (GUE/NGL) to the Commission (8 July 1997)

Subject: Higher Health Institute

The Italian Higher Health Institute (Istituto Superiore di Sanità - ISS) was awarded the contract, publicized in the Official Journal of the European Communities of 6 July 1996, for a 'scientific and technical analysis of resources in matters relating to monitoring and controlling transmissible diseases', the contract number being SOC/96 202361. The ISS was asked to obtain a bank guarantee for an amount equal to 30% of the total cost of the contract. However, the ISS is a public body and, as such, is prohibited under Italian law from carrying out such banking transactions. Article 10(2) of Annex 1 to the 'General terms and conditions applicable to service contracts awarded by the EC Commission' stipulates that 'the payment of the advance MAY BE made conditional upon the furnishing by the Contractor of proof that he has lodged a deposit equal to the amount of the advance'. In other words, the Commission itself considers this to be optional, not compulsory. Does the Commission therefore not intend to drop its requirement that the ISS provide a guarantee - given that the ISS is expessly forbidden by law to do so - and to allow the project signed with the ISS to go ahead? What are the Commission's reasons for insisting that the ISS obtain such a guarantee and, thereby, risking the cancellation of such an important project, which is a sign of the competitiveness of Italian public health bodies?

Answer given by Mr Flynn on behalf of the Commission (12 September 1997)

The 'Istituto superiore di Sanita' was awarded the contract following a public invitation to tender. The specifications relating to this invitation to tender explicitly mentioned the fact that the contractor would have to provide a bank guarantee as security against the initial payment. Dispensing with this requirement would have falsified the rules of competition, giving rise to the possibility of legal proceedings being taken against the Commission by the other applicants.

The purpose of the guarantee, as explained in Article 64a of the Commission's Financial Regulation, is to protect the Commission in the event of the contractor failing to perform a contract or against a delay in its performance, by providing for the reimbursement of all damages, interest and equivalent costs. In other words, it is not merely a question of guaranteeing the financial soundness of the contractor, and the fact that the contractor selected is a public body is therefore not a decisive factor.

The same objective may be achieved by other means, such as a direct payment to the Commission, appropriate insurance arrangements or the provision of a guarantee by another body. The 'Istituto superiore di Sanita' informed the Commission that it did not have any possibility of providing an acceptable substitute guarantee.

A solution has finally been found between the contractor and the Commission, involving changes to the schedule of payments by the Commission.

For information, it should also be noted that when the Commission's Joint Research Centre is awarded a public contract in Italy, the Commission is obliged to provide a guarantee in accordance with the Italian public contracts code.