How Italtrend won its contracts

By David Cronin

Date: 27/11/03

JUST two of 75 contracts won by Italtrend from the European Commission were awarded following a fully open tendering procedure.

The Italian public procurement company, which is based in Commission President Romano Prodi's home region of Reggio Emilia, has secured the contracts over an 11-year period. They range from work on nuclear safety in the former Soviet Union to developing political institutions in the West Bank and Gaza.

The total value of its work with the Commission since 1999, the year Prodi became president, is around €15 million.

European Voice has obtained a breakdown of the different procedures used in awarding the contracts to Italtrend since 1992.

These show that in only two cases was a call for proposals issued. In ten cases a "restricted procedure" was followed. Such a procedure requires that only firms invited by the Commission may submit a tender.

In a further 14 cases, a "direct agreement" was signed between the company and the Commission.

And in 40 cases, Italtrend won "framework contracts" - these allowed it to compete with a restricted number of other firms in a series of tendering procedures.

Another eight contracts were granted after what the Commission calls an "informal consultation" and one was granted by a "negotiated procedure".

In recent years, most of the EU contracts secured by Italtrend have been with the EuropeAid Cooperation Office, formed in 2001 to coordinate the Commission's foreign aid activities.

Giorgio Bonacci, the Italian director-general at EuropeAid, said that the rules followed by his office allow it to award contracts by restricted procedures under certain circumstances.

He has stressed that EuropeAid has "been under no influence" from Romano Prodi or any other commissioner to conclude deals with Italtrend. Prodi has also insisted that no favouritism has been shown to the firm, which employs his niece.

But UK Conservative MEP Chris Heaton-Harris this week called on the Commission to fully explain why so few contracts were won through an open competition.

"Out of decency and transparency, the Commission should explain how these contracts were awarded," he said.

EuropeAid has become embroiled in the ongoing scandal concerning the Eurostat data agency over the past two months.

A report by the Commission's Internal Audit Service (IAS) highlighted alleged favouritism by the institution, stating there has been "a very significant concentration of tenders in a limited number of contractors".

The IAS said contracts worth €35 million were awarded to statistics collator CESD by EuropeAid without any call for tenders being issued.

External Relations Commissioner Chris Patten, EuropeAid's chairman, is due to appear before the Parliament's budget control committee on Monday (1 December) to take questions about CESD contracts.