NOVI PAZAR BYPASS (2021)
This case study looks into the public procurement procedure for the construction of a 2.3 km Novi Pazar bypass, from Varevo to Paralovo. The contracting authority, JP Putevi Srbije [Roads of Serbia], estimated the contract to be worth RSD 166.7 million before VAT. The procedure was conducted after the previous one, with the same subject matter of the contract, conducted five months earlier, was suspended due to lack of interest from potential tenderers.
The only company that replied to the invitation to submit a tender was Novi Pazar put d.o.o., with a quote that was over RSD 46 million higher than the estimated value (RSD 212.8 million before VAT). However, since the new law on public procurement allows a contracting authority to award the contract to a tenderer whose price is higher than the estimated contract value, and the tender was acceptable, Novi Pazar put d.o.o. was awarded the contract. The rationale of the decision stated that the tender was acceptable despite the price being higher than the estimated value because, after checking the bill of quantities, the commission concluded that it was, in fact, within the market value.
Although choosing a tender above the estimated value did comply with the law in this particular case, the question is whether the contract value was estimated in accordance with the public procurement law and if the prices offered were really within the valid market values, as was reasoned in the rationale, or whether the contracting authority accepted the tender with a significantly higher price tag than the estimated value because there was no competition?
Last year, Novi Pazar put d.o.o. participated in rather dubious public procurement procedures conducted by another contracting authority, the City of Novi Pazar. On one occasion, this company was awarded a contract in a negotiated procedure (after the open procedure was suspended) after it had reduced the price quoted in the open procedure (which was above the estimated value) by the princely sum of 12 dinars. Despite the tenderer’s “generous” concession, according to the decision to amend the contract, the project ultimately cost the contracting authority over 750 thousand dinars more than the original quote. In another open procedure where it was the only tenderer, the same company was awarded a contract for an offer that was a “whopping” 4.52 dinars under the estimated value.
Incidentally, in January 2020, Inkop d.o.o. Ćuprija became the sole owner of Novi Pazar put d.o.o. Inkop d.o.o. is owned by two brothers, Zvonko and Žarko Veselinović, and Milan Radojčić, who is the Vice President of Serb List in Kosovo, a political party close to the government. 23 2. Restricted Competition All three men have been implicated in several scandals and taken to court for various reasons.
Also interesting is the deadline that the contracting authority stipulated for the completion of works, especially considering that the contractor was to perform the works during the winter months. As the decision on contract award was made in late October and the deadline for the completion of works stipulated in tender documents was 120 days, the contractor would have to clean and prepare the terrain, pave the road, lay concrete on the supporting walls and install signalization and other equipment between December and March, when the weather often obstructs (and even prevents) the works. Quite a feat, especially considering that the construction of this bypass has been on and off for the past 15 years and that delaying the procedure or extending the deadline for a few months would not have made much difference.
This case study does not contain any conclusions. In our opinion, simply stating the facts should be enough for you to draw your own conclusions as to whether public procurement procedures in Serbia make sense. Because, even when they are conducted in compliance with the law, they seem to be just a formality: the contract is awarded to the only tenderer that submitted a tender, often at a price significantly higher than the market price. The answer may be “Yes”, “No”, or “Maybe”. Or the standard one “So what?”. It is for you to say.