Slovakia gets tender pains

TWO stalled take-offs, one winner, three unhappy bidders; followed by one appeal to the courts, several complaints filed with the procurement authority, and now the potential scrutiny of the European Commission: just a potted history of one of Slovakia’s most closely-watched multi-billion-crown tenders.

TWO stalled take-offs, one winner, three unhappy bidders; followed by one appeal to the courts, several complaints filed with the procurement authority, and now the potential scrutiny of the European Commission: just a potted history of one of Slovakia’s most closely-watched multi-billion-crown tenders.

Although the winner has already been chosen for the contract to build an electronic highway toll system for 2,435 kilometres of the road network and operate it for 13 years, the disqualified candidates have already appealed the result in court, with the procurement authority in Slovakia and also with the European Commission in Brussels.

The winner’s bid was the most expensive of the four offered. One opposition party is calling for the tender to be binned and a new one launched.

The state originally planned to have the toll collection system functioning from January 1, 2009, for vehicles weighing over 3.5 tonnes.

Neither observers nor the transport minister now regard this deadline as realistic.

However, Transport Minister Ľubomír Vážny said that the tender will simply roll on.

“The tender is all right,” Vážny told TV news channel TA3 on July 10.

The SanToll-Ibertax consortium, led by the French firm Sanef, won the tender with a Sk25.7 billion bid. Among its competitors, Slovakpass, led by the Italian company Autostrade, submitted the lowest bid, of Sk19 billion.

The bid from the Slovak-Swiss consortium ToSy was for Sk19.62 billion and Kapsch, headed by the Austrian firm Kapsch TrafficCom AG, Vienna, bid at Sk22.57 billion, according to the SITA newswire.

Both, Slovakpass and Kapsch had asked the Public Procurement Office (ÚVO) to reverse the selection made by the buyer, the National Highway Company (NDS), which last December said that the winning candidate would be the one with the most economically favourable offer and the most efficient toll collection system.

The NDS said it disqualified the losing bidders due to shortcomings in their bids

On July 2, the ÚVO upheld the NDS’s decision, meaning that SanToll-Ibertax remained the winner of the tender.

However, on July 14, Kapsch filed a complaint with the Bratislava regional court against the ÚVO’s ruling.

“The goal of the complaint is to have the decision of the Public Procurement Office, as with the previous decision of the procurer, checked by a court,” said Erwin Toplak, a member of the board of directors or Kapsch TrafficCom AG, in a memo sent to the media.

The memo continued: “We still think that the reasons for [our] expulsion from the public procurement process … are not in line with the law.”

Slovakpass went further than a regional court, and complained to the European Commission about its exclusion from the tender despite it having offering the lowest bid.

“We decided to go directly to Brussels, as we are concerned about whether the local environment assures transparency, non-discrimination and Europe-wide and internationally accepted legal standards,“ Peter Newole, a Slovakpass executive told the SITA newswire.

The European Commission now is calling on Slovak officials to provide some proof that the tender was handled in line with the rules.

"We will respond,“ Vážny said.

Getting late

However, voices of doubt regarding the early 2009 deadline are getting stronger.

“Today it is clear that the electronic toll system will not be installed by January 1, 2009,” Ľubomír Palčák, director of the Transport Research Institute told The Slovak

Spectator. “The general opinion is that the minimum time for building the system is eight months. About half-way through next year seems realistic to me.”

While avoiding comment on the NDS’s decision without having studied the complete documentation, Palčák said he is not surprised that the process is riddled with complications.

According to Palčák, the greatest problem of the type of large system that Slovakia wants to build is that the European Union itself has problems defining exact norms and standards, while such systems integrate different sub-systems which are difficult to compare.

“This makes it even more crucial that the tender conditions are clearly defined so that they make it possible for the procurer to clearly say whether the submitted bids will meet the tender conditions,” Palčák said.

As for revisions, Palčák said that in the case of such a large tender, with strong bidders, one has to expect some complications.

“The players are readying for additional competition: the UK, Poland and even Hungary are talking about tenders and none of them wants to get an image as having failed to submit a high-quality offer, so it is normal that they are using any available means of correction,” Palčák told The Slovak Spectator.

Opposition: Kill the tender

The Slovak Democratic and Christian Union (SDKÚ) have been calling on the transport minister and Prime Minister Robert Fico to cancel what they call the “non-transparent tender” and announce a new one.

The SDKÚ argues that the NDS is refusing to publish information about the owners of the companies in the winning consortium. In particular, they have pointed to the company Ibertax, according to the website.

The opposition has also called on state officials to publish the names of the people who sat on the selection committee, or acted as technical advisors.

“The whole preparation and the course of the tender show the signs of the winner being picked in advance, moreover for the highest offered price,” former transport minister Pavol Prokopovič told TA3.

His successor denies any failing on the part of the NDS or the state in general.

Cancellation of the tender and a subsequent new public competition would be likely to push the launch deadline back to 2010.

Palčák said that, in general, it would be bad for Slovakia to delay the tender, but “if someone erred, for example the announcer of the tender, then there is no other way to just announce a new one.”

Money and impacts

Toll collection projects have perhaps the fastest return on investment of all infrastructure projects, said Palčák. The state will basically start paying for the project only after the first vehicle uses the toll system and payments will in fact be covered from the toll income. He estimates that income from toll collection might reach about Sk120 billion over 13 years.

As for the impact of toll costs on business, a study by the Transport Research Institute suggests that transport companies will feel the greatest impact.

They already say that there is no room for them to bear increasing costs without increasing their prices, Palčák told The Slovak Spectator.

“The impact on the public should not be that great,” said Palčák.

However, what Palčák sees as a great asset of the toll system is that it will harmonise conditions between rail and road transport, since there is currently a much higher fee for using the rail infrastructure than for using the roads.

“Optimists say that the installation of the toll system might move at least 10 percent of the goods to railways,” Palčák concluded.

Marta Ďurianová contributed to this report.

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