CONSTRUCTION AND MAINTENANCE OF ROAD INFRASTRUCTURE IN THE CITY OF PANČEVO (2019/2020)

The open public procurement procedure announced by the contracting authority (city of Pancevo) for the selection of a private partner and the award of public-private partnership contract for financing, construction and maintenance of local road infrastructure, is another in a series of examples of restricting competition and discrimination of bidders, contrary to the Law on public procurement.

Namely, interpreting the additional condition in terms of business capacity in a way that obviously favored a certain bidder, the contracting authority rejected the bid of the only remaining bidder, which was as much as 3 million euros more favorable than the bid of the selected bidder, causing huge damage to public funds of the Republic of Serbia.

The contracting authority first accepted interested party’s suggestion to reduce the required business capacity to a minimum of 1 contract, the subject of which is similar to the subject of this public procurement, in the total value of at least 2,500,000.00 euros without VAT, and then published this change in the consolidated text of the tender documentation.

The contracting authority interpreted the stated condition so that the bidder should have concluded a minimum of 1 public-private partnership contract which includes construction, reconstruction and long-term maintenance of road infrastructure and that this contract should be worth at least 2,500,000.00 euros without VAT.

Therefore, the contracting authority interpreted the request that the subject of the reference contract be similar to the subject of this public procurement so that the reference contract should be a public-private partnership contract, and that the subject of the reference contract should refer both to construction and reconstruction and long-term maintenance of road infrastructure. Also, the request that the bidder concluded at least 1 contract in the total value of at least 2,500,000.00 euros, the contracting authority interpreted in a way that the bidder should have concluded 1 contract of that value, and not more contracts whose total value amounts to the stated value.

It should be noted that the contracting authority in its answer to the interested party’s question did state that a “subject similar to the subject of this public procurement” refers to the construction, reconstruction and long-term maintenance of local road infrastructure, but also that this statement referred to an additional condition of business capacity formulated in the original tender documentation (before changes), and that the stated specification of this additional condition was not published in the amended and consolidated text of the tender documentation.

It is also important to point out that this particular case does not necessarily have to be related to a previous public-private partnership, because it is related to a set of works that might have been the subject of some previous public procurement. Therefore, there was no reason for the contracting authority to insist on previous references from a public-private partnership project, especially bearing in mind the fact that, as we will see later, only one public-private partnership contract of identical content was concluded in Serbia before initiating this procedure.

Nevertheless, the procuring entity interpreted the additional condition in question as already stated, rejecting the bid of the bidder who had more than enough references for all three types of works that were requested (for construction and reconstruction of road infrastructure one contract of 14,848. 139.08 euros and 6 more contracts for the maintenance of road infrastructure whose total value is 18,503,043.45 euros). Also, in terms of the price element which is valued at 80 weights (total fixed fee for ensuring the availability of infrastructure for a 10 years period), the offer of the rejected bidder was almost 3 million euros more favorable than the bid of the selected bidder (17,612,402 euros compared to 20,600,814 euros). The same opinion was shared by the Republic Commission for the Protection of Rights in public procurement procedures, which rejected the request for protection of the rights of this bidder.

However, even if we accept the contracting authority’s interpretation and arguments regarding this additional condition (and we cannot), the fact remains that in the last five years preceding this tender (which was the time period required by the tender documentation) there was only one contract on public-private partnership concluded in Serbia in the amount of at least 2,500,000.00 euros without VAT, for the construction, reconstruction and long-term maintenance of road infrastructure. That contract was concluded by the selected bidder in the procedure in question – a group of bidders consisting of A.D. “Sremput” Ruma and “Baumiester” d.o.o. Beograd. Therefore, the conclusion inevitably imposes itself: in this particular case we have witnessed obvious discrimination against bidders and violation of the principle of competition.

If we add the fact that besides these two public-private partnership agreements the same group of bidders concluded the third public-private partnership agreement at the beginning of 2020, with the same subject, and that these are the only three public-private partnership agreements of this content that have ever been concluded in Serbia, then that only confirms our position.

Therefore, in the specific case, the selected bidder was favored by the way in which the contracting authority interpreted the disputed condition, whereby the contracting authority did not want to explicitly and clearly state that condition in the tender documentation as it interpreted it, because by doing so favoring the selected bidder and restricting competition would become completely obvious. In this way, besides the provision of Article 10 of the Law on public procurement which obliges it to enable greater competition and prohibits discrimination of bidders, the procuring entity violated the provision of Article 61, paragraph 1 of the same law, which obliges it to prepare tender documentation in a way that enables bidders to prepare acceptable offer. This resulted with the selection of a less favorable bid, which caused damage to public funds, and with the rejection of a better bid submitted by the bidder (private partner) who – according to the contracts submitted with the bid – had all the references that in this case could have easily been accepted as appropriate.