Report on the audit of the operational efficiency of the management of the European Central Bank for the 2005 financial year together with the replies of the European Central Bank
Date: 2007-11-08
Institutions: European Court of Auditors
Subjects: European Central Bank, audit, financial year, invitation to tender, public contract, real property, report

21.12.2007

EN

Official Journal of the European Union

C 313/1

IV

(Notices)

NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES

COURT OF AUDITORS

Report on the audit of the operational efficiency of the management of the European Central Bank
for the 2005 financial year together with the replies of the European Central Bank

(2007/C 313/01)

Picture of the ECB’s future headquarters

(© www.LAUBlab.com)

C 313/2

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Official Journal of the European Union

21.12.2007

INTRODUCTION

1.
The Court’s audit of the operational efficiency of the Euro-
pean Central Bank (ECB) is based on Article 27.2 of the Protocol
on the Statute of the European System of Central Banks (ESCB)
and of the ECB (1). The audit subject selected for the 2005 finan-
cial year audit was the management of the New ECB Premises
(NEP) project. The Court also did a follow-up audit of the effi-
ciency of human resources policy at the ECB.

THE NEW ECB PREMISES

2.
The ECB will build its new premises in Frankfurt on the
site of the ‘Grossmarkthalle’ (former wholesale market). The new
ECB premises of about 186 000 square metres will combine the
historical buildings with an office tower around 185 metres high.
The current budget amounts to around 850 million euro, includ-
ing around 500 million euro for building costs (2).

3.
The Court’s audit objective was to assess the operational
efficiency of the management of the NEP project and its compli-
ance with the applicable rules. The Court assessed whether the
ECB had:

— established an efficient planning and organisational structure,

— set up an appropriate risk management, monitoring, control
and reporting framework, taking into account the complex-
ity of the NEP project,

In 2001, project completion was initially planned for the
6.
third quarter of 2008. Since then completion has been postponed
to the end of 2011 (3). This is mainly due to the introduction of
two phases not originally foreseen: a Revision Phase and an Opti-
misation Phase. The Revision Phase lasted 10 months followed by
an Optimisation Phase of 13 months in which 30 % cost reduc-
tion was achieved. However, the delay in the project completion
leads to additional renting cost.

Risk management, monitoring, control and reporting

The ECB has developed and implemented an appropriate

7.
and coherent monitoring, control and reporting strategy.

Regarding risk management, while a risk management
8.
framework has been established, some weaknesses have been
noted in the risk register. By August 2006, the Court had reviewed
the register on risks that was established for the NEP project,
detailing for each item a description, potential impact, action,
owner and status. The ECB had ranked more than 100 potential
risks in the risk register with levels from 1 (low impact and low
probability) to 25 (high impact and high probability).

9.
This register did not always provide a clear view of the
most risky items, the likelihood of their occurrence and the time-
frame: the risks were not always formulated in a coherent way
and were sometimes mixed up with sub-risks (4). Furthermore,
the various reputation risks were dispersed across the risk regis-
ter, sometimes with a relatively low ranking (5), and on a number
of occasions only a sub-risk was listed in the register or the main
risk was omitted.

— applied adequate procedures for procurements within the
NEP project in compliance with the general applicable rules.

Procurement

4.
The audit reviewed the period from September 2001 to
August 2006 but excluded the competition for the selection of
the building design and the technical aspects of the specifications
established by the ECB. The audit also took into consideration
subsequent developments of the NEP project.

Planning and organisational structure

5.
The established organisational structure for the NEP
project allowed the ECB to meet its current needs. This structure
was established before the final decision to build,
including
detailed building specifications, was taken in December 2005.

(1) Article 27.2 stipulates: ‘The provisions of Article 248 of the Treaty
shall only apply to an examination of the operational efficiency of the
management of the ECB’. The institutional provisions relating to the
European Central Bank are included in Article 110 of the EC Treaty.

(2) Based on 2005 prices.

10.
The general ECB procurement rules and procedures
applied for the procurement activities associated with the NEP
project were adequate. However, these rules did not provide for a
formal appeal procedure and did not define the criteria for exclud-
ing abnormally low offers. Although the ECB strives to meet the
requirements of the EU Directive (6), the thresholds were not sys-
tematically updated according to the requirements of
the
Directive.

(3) The timetable reflecting the development of the project is presented in

the Annex.

(4) For example, the risk ranked as number 4 ‘A one big bang move in
December 2011 is not possible due to core business’ is less critical and
constitutes a sub-risk of the risk ranked as number 13 ‘The move to
the new building is delayed (for whatever reason) — existing rental
contracts must be extended — time/cost prolongation’.

(5) For

instance,

the risk of

‘Illegal employment by contractors/

subcontractors’ which was ranked as number 43.

(6) The European Public Procurement Directive (European Parliament and
Council Directive 2004/18/EC on the coordination of procedures for
the award of public works contracts, public supply contracts and pub-
lic services contracts which should have been implemented by
31 January 2006 at the latest) is not directly applicable as Directives
are addressed to the Member States.

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Official Journal of the European Union

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In general, NEP procurements did comply with ECB rules
11.
and procedures, but the scoring was sometimes unclear and was
based on sub-criteria that were not explicitly foreseen as evalua-
tion criteria. Furthermore, while most exemptions are duly autho-
rised and substantiated, there were cases where the justification
for the exemption was questionable or not formally documented.

was set up for the NEP project, some weaknesses concerning the
risk register were found. The main project weaknesses were noted
in the execution of NEP procurements since in some cases the
ECB’s procurement rules and procedures were not fully respected.

15.

The Court recommends that the ECB should:

12.
For a number of tenders, there is no evidence available
that best value for money was always achieved. In some of these
tenders, the exact scope of services tendered was not sufficiently
clear, the offers showed high deviations and the tenderers selected
for negotiations were later allowed to significantly change their
offers.

— continue to improve its risk management within the NEP

project,

— enhance its own controls within the procurement process
and ensure that the procurement rules and procedures are
fully respected.

The Court found weaknesses in the ECB’s controls of
13.
procurements related to the work of external consultants. In one
case, the controls performed by the ECB on the scoring of the
offers were not traceable. In another case, the procurement pro-
cess was mainly conducted by the external project manager
whereas the ECB’s participation was not clearly evidenced.

Conclusions and recommendations

14.
While the initial timing for project completion was too
optimistic, overall, the ECB has established an adequate organisa-
tional structure to meet its current needs and managed to signifi-
cantly reduce the overall cost estimate. The ECB has set up an
appropriate monitoring, control and reporting framework for the
NEP project. Although a specific risk management framework

FOLLOW-UP ON HUMAN RESOURCES (HR) AUDIT

The Court carried out a follow-up audit to its 2004 audit

16.
of the efficiency of human resources policy at the ECB.

17.
Significant progress has been made regarding the global
HR framework, notably with the definition of an HR communi-
cation strategy. Other issues were still in the process of imple-
mentation, such as the definition of Key Performance Indicators
(KPIs) for all business areas. Furthermore, the new release of the
IT system to enhance the reliability and completeness of the data
on staff leave and absences has been delayed to 2008. Some spe-
cific guidelines and procedures were not yet established, such as
the guidelines for part-time work and the rules on disciplinary
procedures.

This report was adopted by the Court of Auditors in Luxembourg at
8 November 2007.

its meeting of

For the Court of Auditors
Hubert WEBER
President

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Official Journal of the European Union

21.12.2007

ANNEX

DEVELOPMENT OF THE NEP PROJECT

Competition phase

Nov 2002 — Dec 2004

Optimisation
phase

Jan 2005 —
Feb 2006

Planning phase

Construction phase

Occupation
of the premises

Mar 2006 — Nov 2008

Jan 2008 — Dec 2011

End 2011

Competition phase
(1st part)

Competition
phase
(2nd part)

Revision phase
(3rd part)

Optimisation
phase

International
competition
with
12 participants

Award 1. Prize

High rise
150 m

International
competition with
80 participants

High rise 150 m

(Source: ECB)

with
3 participants

Optimising the
project by
significantly
reducing costs

High rise
elevated
to 180 m

High rise
180 m

Preliminary planning
Detailed planning
Planning for building
permit
Planning for tender

Design planning with
different level of details,
preparing and applying
for the building permit,
preparing the tenders
for construction

High rise 185 m

Preliminary
construction
works

Main
construction
works

Preparatory
construction
works

Construction
of new
buildings

Relocation

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Official Journal of the European Union

C 313/5

THE REPLIES OF THE EUROPEAN CENTRAL BANK

The European Central Bank (ECB) welcomes the report of the
European Court of Auditors (ECA) for the financial year 2005 and
expresses its appreciation of the Court’s acknowledgment that the
ECB has established an adequate organisational structure for the
New ECB Premises (NEP) project in order to meet its current needs
and has set up an appropriate and coherent monitoring, control
and reporting framework. The ECB is also pleased to note that the
Court of Auditors considers the general ECB procurement rules
and procedures applied to the procurement activities associated
with the NEP project to have been adequate.

The ECB takes note of the Court’s observations and recommen-
dations for improvement. Below are the ECB’s comments with
regard to specific paragraphs.

Paragraphs 7 to 9: the NEP risk register is an evolving product
and reviewed on a regular basis. The ECB has taken note of the
ECA’s observations and has addressed them in the meantime.

Paragraph 10: the ECB has published updated procurement rules
in a formal ECB decision (ECB Decision of 3 July 2007 laying
down the rules on procurement). This decision introduced a for-
mal appeals procedure, defined ‘abnormally low offers’ and
updated the thresholds in accordance with the EU Directive on
which it is based. Regular monitoring will be carried out to ensure
that changes to the Directive are incorporated as and when
required.

Paragraph 11: the ECB is transparent in publishing the main
evaluation criteria in the procurement documents (‘Invitation to
Tender’ for public tenders, and ‘Request for Quote’ for three/five-
quote procedures). In one case the wording of the evaluation
report did not fully coincide with the published evaluation sub-
criteria. The scoring is based on the published criteria.

Paragraph 12: the standard documentation for the tender pro-
cess in general includes detailed evaluation reports, technical
assessments, price calculations, minutes of negotiation meetings
and documentation from Procurement Committee meetings.
Such documents evidence the process and the achievement of
best value for money for all tenders.

Paragraph 13: the procurement process was at all times con-
ducted under the full control of ECB staff. The role of the external
project manager was limited to support, organisation and docu-
mentation of the evaluation process. All procurement decisions
were taken by the ECB. Revised documentation standards now
ensure that the ECB’s control over the tender process is clearly
documented.

Follow-up on Human Resources (HR) audit: the ECB remains
committed to the implementation of further key elements of its
global HR framework.