Contractors get together to bid for public projects

Contractors are reshuffling their alliances as a result of the changes made to the law on bidding for state contracts and the government’s decision to make it incompatible for media owners to also be contractors bidding for public contracts. Yesteryear’s enemies seem to be settling into a sort of uneasy truce in order to further common interests, that is, to continue to bid on new contracts. When the present conservative government took office last March – and even before – it had pledged to abolish the «mathematical formula» method used to award public contracts. That method had proved to be vulnerable to manipulation by allied companies, which submitted similar bids and managed to divide the spoils among themselves. The «outsiders,» firms such as Thessaloniki-based Michaniki, that found themselves excluded from these alliances, resorted to the one weapon they had, recourse to the Council of State. Via this tactic, they often succeeded in delaying several projects related to the Olympics, until the previous Socialist government was forced to pass a law that allowed it to bypass such challenges. Its successor, which took office five months ahead of the Olympics, did not immediately make a move as it had a number of Olympic projects still to complete. According to sources, Environment and Public Works Minister Giorgos Souflias rebuffed Michaniki’s boss Prodromos Emfietzoglou in his bid to make the state reconsider projects from which his group had failed, unfairly according to him, to be considered. The current government’s solution – a return to the old «lowest bidder» formula – was widely decried as a return to an old state of affairs that existed until the late 1990s, in which companies took advantage of the provisions to offer huge discounts, get the projects and then revise their budgets upward as implementation unfolded. The government responded that safeguards built into the current law would prevent the discount levels seen earlier. The results of the awarding of the first major batch of post-Olympics projects showed the truth to lie somewhere in the middle. The discounts, ranging from 18 to 31 percent, were nowhere as low as the government had hoped and nowhere as high as its critics had warned. In fact, the recent bids revealed a willingness on the part of the big construction companies and the sub-contractors to move ahead and put an end to widespread fears of a post-Olympics slump in public projects that would be due either to a stalled bids process or the unavailability of government funds due to the worsening fiscal situation. The latter issue, of government (and EU) funding, has not been resolved yet but the government is finally poised to announce what its predecessor should have done but didn’t: the promotion of «co-financed» public projects – known abroad as public/private partnerships – where the private contractors put up most, or all, of the financing for a project in return for (at least) a share in operating it. Such projects already exist: the new Athens international airport, opened in 2001; the Attiki Odos highway skirting Athens’s western and northern suburbs and linking the city to the airport; the Rio-Antirio bridge and the Athens metro are all public/private partnerships. What is missing is a complete legal framework governing such partnerships and which the government will hopefully provide. Building infrastructure did not finish with the Olympics: there are still many important projects – such as the completion of the Egnatia Highway in northern Greece; the expansion and upgrade of the railway system; extensions of the Athens metro; the Thessaloniki metro and tramway and a major highway along western Greece, from the Peloponnese to Epirus – to be completed in the future. With Greece certain to secure a far lower share of EU aid under the coming Fourth Community Support Framework, private funds will become far more important. At least, construction firms are showing a willingness to cooperate with each other, however uneasily, rather than get at each other’s throats.

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