ECONOMY

Tendering reform presented

Environment and Public Works Minister Giorgos Souflias yesterday presented a draft bill on awarding public project contracts and project implementation. This major piece of legislation, which the present government had promised it would present shortly after taking over in March, replaces the present system of awarding public projects through a complex mathematical formula. «This is an effort to redress the weaknesses of the present system,» Souflias said. He added that the draft law, which he called «a comprehensive piece of legislation» would be forwarded to the Technical Chamber of Greece and to construction firms for their remarks. «If their remarks back up the law’s goal of promoting transparency, they will be taken into consideration. Otherwise, we will go ahead anyway because it is we, the government, who have the responsibility,» Souflias said. Limits on subcontracting Among the law’s provisions is one limiting subcontractors to executing 30 percent of a public project. This is designed to combat a phenomenon which rose as a result of the mathematical formula method, namely the alliance of many firms to carve up a project and the existence of fictitious subcontractors. Construction firms had discovered, almost as soon as the mathematical formula method was adopted that it could easily be manipulated through cartel formation. Supposed competitors often submitted similar bids in order to ensure the winner of the result and then would join in a consortium. In certain instances, it was found that «rival» bids contained identical language. The draft also allows the ministry to intervene to unblock projects delayed due to legal challenges. At present, public projects worth 1.5 billion euros fall under this category. The law would allow the ministry to annul the tender and call for a new one if, 12 months after the terms of the tender were published, no contract has been signed. Counter-incentives Souflias emphasized that, although the system of awarding projects to the lowest bidder is reintroduced, a number of counter-incentives and punitive measures would prevent «adventurers» from submitting bids with unrealistic discounts. The most important counter-incentive would be to increase the amount required in the letter of guarantee to 35 percent of a project’s budget from the current 5 percent. Also, fines for failure to deliver on time will be doubled and the process of taking away the project from rogue contractors will be simplified. Asked why he was presenting the legislation without also taking into account the fact that many preliminary studies were faulty or incomplete, Souflias said that «studies were not the greatest problem» and that, in any case, the law provides for a three-member panel to scrutinize preliminary studies. He added that several projects, including a billion euro project concerning the Egnatia Highway will be tendered later this year under the new system.