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Highway tender stalls

TENDERS have not had an easy ride in Slovakia lately: the twice-stalled attempt to find an operator for the country’s proposed new electronic highway toll system; problems surrounding the tender for the euro campaign launch; the Defence Ministry’s ill-fated cleaning contract, to name but a few. Now, the tender for the first tranche of public private partnership (PPP) projects to build and operate parts of the D1 highway, worth several billion crowns, has joined the list of troubled tenders.

TENDERS have not had an easy ride in Slovakia lately: the twice-stalled attempt to find an operator for the country’s proposed new electronic highway toll system; problems surrounding the tender for the euro campaign launch; the Defence Ministry’s ill-fated cleaning contract, to name but a few. Now, the tender for the first tranche of public private partnership (PPP) projects to build and operate parts of the D1 highway, worth several billion crowns, has joined the list of troubled tenders.

The Transport Ministry has put the tender on hold until the Bratislava Regional Court rules whether the country’s procurement authority was right to require the ministry to allow one of the bidders, whom it had excluded on January 29, to re-enter the tender. Four firms were eliminated due to shortcomings in the way their bids were submitted.

The contract at stake is to project-manage, build, fund, operate and maintain five sections of the D1 highway totalling nearly 75 kilometres: Dubná Skala-Turany, Turany-Hubová, Hubová-Ivachnová, Jánovce-Jablonov and Fričovce-Svinia. The contract could last up to 30 years.

Observers said the suspended tender might endanger the government’s ambitious plan to complete the highway, linking western and eastern Slovakia, by 2010. However, the Transport Ministry says it is confident the plans are not in peril.

Originally, six candidates were enrolled in the tender, valued at Sk49.1 billion without VAT, announced last November. The ministry had shortlisted two: a Swedish-French consortium comprising Vinci Concessions and Skanska Infrastructure Development; and a six-member consortium including French firms Bouyges Travaux Publics and Colas, the Hungarian company Intertoll-Europe, the Portuguese firm Mota Engil, and the Slovak companies Doprastav and Váhostav-SK.

However, on March 14, the Public Procurement Office (ÚVO) cancelled the ministry’s decision to exclude one of the original six bidders, the Austrian-German consortium combining Alpine Bau, Hochtief PPP Solutions and Western Carpathians Motorway Investor, and ruled that it should be allowed to continue running for the contract.

Helena Fialová, spokeswoman for the ÚVO, said that the Transport Ministry had failed both to sufficiently justify its exclusion of the consortium and to examine adequately the arguments of the bidder regarding its inability to submit the required documentation, according to the SITA newswire.

The ministry has filed a complaint against the decision and said that statements by the procurement authority have harmed the credibility of the tender. According to the ministry, the decision of the procurement office was politically motivated.

“The office said that we applied non-transparent steps, which is a blemish on the tender that we simply cannot ignore,” Transport Minister Ľubomír Vážny told SITA.

The ministry is planning on a delay of about two months but state officials say that they intend to stick to the ambitious plan of completing the highway linking Bratislava and Košice by 2010.

The Transport Ministry had planned to sign a contract with the winner in autumn 2008.

This is the first PPP project the country has embarked on; two other highway construction packages are in the pipeline. The second tender should cover a 47-kilometre stretch of the R1 dual carriageway between Nitra and Tekovské Nemce, at an estimated value of Sk16 billion excluding VAT. The third package includes 29 kilometres of the most technically-demanding sections of the D1 highway between Žilina and Martin, and could be worth Sk39.8 billion, SITA wrote.

For the first tender package, each bidder had to demonstrate that it had experience of PPP road infrastructure projects between 1999 and 2007. Each project must have had at least one construction, operation and maintenance component, and total costs of at least €100 million. Applicants also had to prove that they can secure project revenues of €1.2 billion for each of the next three years, and have a share capital of about €800 million, according to the procurement notice in the EU Official Journal.

References will make up 70 percent of the total evaluation of the bidders, said the procurer. Experience will account for 10 percent; revenues from current operations and shareholders’ equity will account for seven percent each; and cash flow makes up six percent of the points the bidders can collect.

“Such mega-projects are very complicated matters from a legal and economic point of view and it is extremely difficult to avoid eventual trials,” the director of the Transportation Research Institute, Ľubomír Palčák, told The Slovak Spectator.

Every revision complicates the process of such projects and of course embeds the threat of missing the deadlines set, Palčák said. He does not expect that halting this tender will have an impact on the upcoming ones, or on Slovakia’s international credibility.

“Even the most developed countries struggle with similar problems,” Palčák said. “Maybe Slovakia is unique only on the point that the country has perhaps chosen far too large a package.”

However Palčák did criticise the level of politics involved in the whole process, which does not really help address the problems.

“What Slovakia needs the most is a highway and not political quarrels,” he told The Slovak Spectator.

Former transport minister Pavol Prokopovič has been critical of the complications surrounding the tender.

“It is, after all, proof that the projects have not been sufficiently prepared and there are immense risks,” Prokopovič told the financial daily Hospodárske Noviny. “The current government has had a megalomaniac approach without the necessary experience.”

Prokopovič, a deputy for the Slovak Democratic and Christian Union (SDKÚ), also told SITA that the 2010 highway deadline is completely unrealistic.

While the ministry remains optimistic about the time the court might take to rule on the procurement decisions, lawyers have been warning that the process might take several years.

With files from Dominika Uhríková

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