WATER DISINFECTANTS PUBLIC UTILITY COMPANY “UZICE WATER SUPPLY” (2017)
As in the case of public procurement of water disinfectant intended for the public utility company “Belgrade Waterworks and Sewerage”, in this procurement procedure the contracting authority limited competition among bidders and favored a specific bidder and product in the way it determined the subject of public procurement and technical specification of the required good. Therefore it is obvious that such behavior of the contracting authority is not an isolated case, because in addition to these two cases, numerous public utility companies in Serbia tried (some successfully) to procure chlorine dioxide from a specific manufacturer, without adequate explanation of their objective needs. Among other things, this case was chosen because in previous years city of Uzice has experienced some serious problems in the water supply, since the drinking water was bacteriologically defective.
The subject of the disputed lot 4, chlorine dioxide, is a water disinfectant which is also foreseen by the Ordinance on disinfection and inspection of drinking water. The sanitizer is obtained by mixing powdered or liquid components, and can also be obtained as a finished product. In all three cases, the functionality of the product consisting of powder components (mixed by the purchaser), of the product consisting of liquid components (mixed by the purchaser) and of the finished product (used as such) is completely the same: only the procedure differs, that is, the technology of obtaining chlorine dioxide.
Therefore, when the contracting authority procures chlorine dioxide, they can buy it as a two-component liquid solution, as a two-component powder mixture or as a finished product, with precisely determined quantities of active substance. It is the only way of competitive, functional and non-discriminatory procurement of this good which in no way violates the right of the contracting authority to procure the good with the function it should achieve. The amount of components that are to be mixed to obtain chlorine dioxide is completely irrelevant in terms of its functionality.
In this procurement procedure, the contracting authority determined a two-component powder mix as the subject of the lot 4. The purchaser even stated the name of the product of a certain manufacturer – Twinoxid, with the addition of the words “or its equivalent”. Also, in the tender documentation the quantities and quality of the required powder components were precisely determined.
An interested party submitted a request for additional clarification of the tender documentation, pointing out to the contracting authority the fact that they favored a specific bidder in the way the procurement was prepared. At the same time, the applicant pointed out that the only parameter that should have been important to the purchaser is the amount of active substance obtained by mixing powdered or liquid components, i.e. the amount of active substance in the finished product. The interested party suggested that in addition to the two-component powder preparation, the subject of lot no. 4 should also include liquid components, and that the contracting authority should only define the required amount of chlorine dioxide as the active substance, instead of stating the quantities of components to be offered.
Responding to this request, the contracting authority rejected the applicant’s suggestions, arguing that the Project for Reconstruction and Upgrading of the Drinking Water Production Plant in Užice, prepared by the Institute for Water Management “Jaroslav Černi” (hereinafter: the Project), envisaged the use of powder components for automatic production and dosage of chlorine dioxide. It is interesting that the contracting authority in their response mentioned for the first time this Project on which they based the subject of this public procurement, as well as that this Project was not made available to potential bidders at any time during the whole procedure.
After that, the interested party submitted a request for protection of rights, but the contracting authority nevertheless, in accordance with the Law on Public Procurement, decided to continue with their activities and to award the contract. The contracting authority argued that delaying further procedural activities would cause great difficulties in work and business, which are disproportionate to the value of public procurement, because the regular supply of citizens with healthy drinking water would be jeopardized.
In the public procurement procedure in question, only two bids were submitted, and both bidders offered the Twinoxid solution, which was exactly what the interested party indicated in their requests for additional clarification of the tender documentation and the request for protection of rights.
After the contract was concluded with the more favorable bidder, the Republic Commission granted the request for protection of rights and annulled the subject procedure in its entirety.
In its decision, the Republic Commission stated that the contracting authority did not dispute the applicant’s allegations that the requirement that the components from which chlorine dioxide was obtained must be powdered restricted competition in favor of one bidder offering such mixtures, nor did it dispute the applicant’s claim that liquid and powder components give the same result, i.e. chlorine dioxide. The Republic Commission also stated that the arguments of the contracting authority only show that the reconstruction of the drinking water treatment plant in Uzice is underway, financed by the Government of the Republic of Serbia and the city of Uzice, and that the project defines equipment used for dosing chlorine dioxide powder components. By the way, the contracting authority did not submit the disputed Project to the Republic Commission either.
In this regard, the Republic Commission pointed out that when prescribing technical requirements, the contracting authority must not neglect their legal obligation to ensure as much competition as possible in each public procurement procedure, especially in a situation where there are different forms of the same product on the market, like in the case of chlorine dioxide.
Based on all the above, it is more than obvious that the contracting authority wanted to get a specific product. It remained unclear how and why the purchaser was convinced that no other product would suit them, i.e. the same product obtained by different technology. The contracting authority never published the project, and this project was the only explanation they offered.
The absurdity of this case lies in the fact that the contracting authority conducted an open public procurement procedure, which is characterized by the fact that all interested parties can submit a bid and which, therefore, implies the widest possible competition. For all the reasons we stated, it is quite clear that such competition in this procedure was not even close to being provided, but on the contrary – was completely limited.