92000E4105

WRITTEN QUESTION P-4105/00

by Frédérique Ries (ELDR) to the Commission

(20 December 2000)

Subject: The Commission's assumption of the cost of renovating the Berlaymont Building

The newspaper La Libre Belgique of 6 December reports the findings of a study carried out by the consultants Ernst & Young on Berlaymont, according to which the Commission would not be able to return to its offices in the Berlaymont in 2002 as initially scheduled, and the cost could significantly exceed the initial estimate. According to the press report, Commissioner Kinnock had passed the Berlaymont papers to OLAF, which had begun an inquiry. SA Berlaymont 2000's 1999 report, page 19, gives an estimated figure of BEF 15,5 billion ( 387,5 million) for the work involved in the renovation. This figure includes price reviews and extra work requested by the Commission to the amount of BEF 120 million ( 3 million). A Memorandum of Understanding was entered into in July 1997 by Belgium and the Commission, Article 4(2) of which stated that the cost of the renovation would be finally determined on handover and vouched for by all relevant documents; SA Berlaymont agreed to work on an open books basis and to allow the Community to inspect all accounting and technical data which were a factor in the cost of the work; the cost of studies and contract management, miscellaneous costs and interim financial charges during construction. According to my information, Annex I of the protocol mentioned a sum of 13 million, stating that the sum was a provisional estimate of the cost, the final cost of renovation to be established in the light of actual expenditure.

Can the Commission answer the following questions:

1. When will the results of the OLAF inquiry be available?

2. The Memorandum was to be followed shortly by an agreement and a notarial act. When are they to be concluded?

3. Does the Memorandum constitute a firm and final commitment by the Commission to bear the cost of renovation?

4. What arrangements has the Commission made to monitor the work and the related costs?

5. Can you explain the 2,5 billion BEF difference between the 1997 estimate and the current estimate?

6. According to the Memorandum, the Commission's sole interlocutor is the Belgian Government; what is the nature of the relationship between the Commission and the Régie des Bâtiments and SA Berlaymont 2000?

Answer given by Mr Kinnock on behalf of the Commission

(20 February 2001)

The Commission would like to stipulate that:

1. Following the referring of relevant documents to the European Anti-Fraud Office (OLAF), the Office opened an investigation on 5 December 2000. The Office is independent and, whilst the Commission is confident of the thoroughness of the work of the Office, the Commission is not in a position to forecast when the results of OLAF inquiries will be made known.

2. On the initiative of the Commission, negotiations are being held on a follow-up to the terms of the Memorandum of Understanding with the Belgian government and Berlaymont 2000. Agreement at the earliest possible time is desirable but clearly all parties would have to be satisfied with the conclusions and it is therefore not possible to specify a date for that at this juncture.

3. The Memorandum of Understanding constitutes an agreement between parties. The failure to fulfil the agreement by one of the parties can, under certain conditions, be invoked by the other contracting party as justification for the suspension or abrogation of its own obligations. The Memorandum does not oblige the Commission to take over the Berlaymont at any cost. It confirms the Commission's intention to reoccupy the building if the works are brought to a satisfactory conclusion.

4. According to the Memorandum, SA Berlaymont 2000 is the sole body responsible for bringing the project to a proper completion. The Commission has, in addition to charging its internal administrative structures with the technical follow-up of the works and the related costs, concluded external quantity surveying and technical assistance contracts with two firms, Ernst & Young/MDA and with Coalpa.

5. The Commission is currently examining all elements relating to the cost of the renovation including an external audit of all contracts signed. Consequently the Commission cannot yet make a final comprehensive assessment of the cost estimate made by SA Berlaymont. However, it is already clear that a major reason for delays and subsequent additional costs is the contractual problem SA Berlaymont 2000 has with the 4D consortium which was to have provided the installation of heating, ventilation and air conditioning.

6. The relations which the Commission maintains with the Régie des bâtiments and especially with SA Berlaymont 2000 are limited to the technical and financial monitoring of the renovation. All matters of political relevance are currently being discussed with Mr Rik DAEMS, the Belgian Minister for Telecommunications, Public Works and Public Participations.