Bolkestein inspects lucrative transport contract in Rome

By Peter Chapman

Date: 06/05/04

FRITS Bolkestein, the commissioner for the internal market, is examining claims that the Roman authorities breached EU public procurement rules when they awarded a massive contract to install a state-of-the-art ticketing system in the Eternal City's transport network.

In 1999, the Roman transport authority, ATAC, signed a deal with a joint venture between Australian company ERG, based in Perth, and US electronics giant Motorola.

The contract was to design, supply and operate an "integrated smart card" collection system for the bus, rail and tram networks in Rome and the neighbouring region of Lazio, and the companies agreed to install around €43 million of equipment and software.

Under the nine-year contract, the two companies would service the system and, in return, pick up just under 8% of the total fare collection revenue - expected to reach around €211 million .

ERG acquired the ticket-technology arm of Motorola in 2000 and is now the sole beneficiary of the Rome cash flow.

However, Bolkestein has stepped-in following complaints by Italian MEP Roberta Angelilli, who insists the contract awards ran roughshod over the EU's 1993 public procurement rule book.

These rules are designed to ensure that all qualified companies have a fair chance to supply goods and services - and that EU taxpayers get value for money.

Bolkestein wrote to the Italians last December, outlining his concerns. But his aides told European Voice that the Italian authorities have failed to give sufficient reassurances in their March reply to the Commission. They said his department now plans to raise the issue in a face-to-face discussion with Italian authorities next month, covering a spate of other so-called infringement cases.

Angelilli says the contract award, advertised in the European Community's Official Journal, was so specifically written that effectively only one company could have possibly supplied the products - despite a competing bid from a Rome-based firm, TSF.

"The requirements turned out to be particularly difficult to meet, as regards both the technical specifications, which were way above normal market standards, and the extremely short deadlines for competition, impossible for any of the candidates to meet using current technologies," she says.

Worse, the MEP claims, once the contract was signed, the specifications were "radically altered" by ATAC to ERG's advantage

"as regards technical characteristics and completion dates, as well as the amount of the penalty [for delayed completion]".

Furthermore, she says ERG was awarded the contract for maintaining the machinery without a public tender procedure at all.

The Commission takes a dim view of public tenders that deliberately favour a specific supplier over qualified companies.

Bolkestein recently warned public authorities to stop stipulating that personal computer supplies should contain Intel microprocessors - a practice that infuriated its largest rival AMD. However, ERG's Rome-based lawyers insisted the tender was fair and above board, and rejected any claims of favouritism.

"Was there favouritism? Absolutely not," said an attorney at international firm Allen & Overy, who refused to be named.

"Why might they want to favour an Australian company over an Italian company TSF?

"There was a very detailed tender specification and they responded to that. I should also say that ERG is a specialist in ticketing systems and has done them in Hong Kong, Singapore, San Francisco, Stockholm, Manchester - and Rome, of course."

Frits Bolkestein, European Commissioner for the Internal market, is investigating a contract signed in 1999 between ATAC, Rome's transport authority, Australian company ERG and US company Motorola. Italian MEP Roberta Angelilli claims the contract contravened the European Union's 1993 public procurement rule book.