ECONOMY

Egnatia works bidders offer large discounts

The first bids for major public projects, following a change in the methodology of awarding tenders unveiled yesterday, were a disappointment to the government, as bidders defied its warnings and offered large discounts, though not so large as in the past. The «lowest bidder» method for awarding public projects had been abolished by the previous, Socialist government because its obligatory nature had resulted in bidders offering incredible discounts compared to the originally estimated budget – often as much as, or more than, 90 percent. As the project progressed, the contractors revised their budgets upward to reflect a more realistic price. The previous government had devised the method using a mathematical formula. Soon, however, bidders learned to manipulate the formula, with several allies submitting remarkably similar bids. The new government brought back the lowest-bidder method, in a modified form. Despite warnings to contractors, higher guarantees and penalties imposed and the law specifically referring to a «reasonable discount level» of 12 percent, bids for sections of the Egnatia Highway, running across northern Greece, averaged discounts about 25 percent and ranged between 18.11 and 31.75 percent. Environment and Public Works Minister Giorgos Souflias professed himself satisfied with the result. «It was the first big test for the new law and the system worked. The doomsayers who predicted discounts of 50 to 60 percent should reconsider,» he said. Asked if the discounts offered would guarantee the work will proceed smoothly and not be delayed by objections and court fights, Souflias replied, «The new law provides for the swift replacement of the winning bidder by the next lowest bidder (in cases of successful appeals against the tendering), so it will not be the project that suffers but the contractor who has offered an excessively high discount.» Many of the losing bidders will base their appeals on the fact that several winners should not have been allowed to take part in the bids due to their shaky financial situation. Souflias avoided answering a question on the winning bidders’ finances. «I won’t go into that; the law has many safety valves,» he said.