Belated correction

In an attempt to emphasize that the government does not sustain untoward relations with the big construction groups, Prime Minister Costas Simitis told Parliament last week that he was open to proposals for improving the controversial formula for awarding big public projects. The European Union criticized the formula on the grounds that it adulterates free competition in public projects and asked the authorities to give more leeway to contractors wishing to offer greater discounts. Furthermore, the recent announcement that the government asked to keep the current formula to the end of June raised suspicions that it intended to auction the final stretches of Egnatia Highway (worth about 900 million euros) under the current method. Public Works Minister Vasso Papandreou’s remarks yesterday indicate that this danger has been avoided. She has already signed a resolution which abolishes the «excessive discounts» description, giving more room to make lower bids. The new measures convey some optimism that the competition for the final segments of the Egnatia Highway will allow contractors intending to challenge the usual bidders to justify their discounts. However, avoiding further damage to free market competition does not do away with previous wrongdoings. It is common knowledge that the mathematical formula introduced to fight excessive discounting – and hence the distortion of free competition – in fact led to a costly constructor oligopoly that ultimately harmed the public interest. In short, the system brought the opposite result. Criticism of the government from independent constructors (and Kathimerini) prompted ironic or angry comments from ruling officials. Today, under the burden of EU recommendations, both the prime minister and the public order minister (who is not really to blame for the ills of the system) are essentially admitting that the formula that was supposed to boost competition only nourished an oligopoly of big construction firms. In other words, they admit that billions of drachmas may have been lost as the competitions were tailored to suit the profile of specific construction groups. It is unclear whether corruption or obtuseness is to blame. And it’s hard to say which of the two is actually worse. But the government should stop congratulating itself for correcting something that had long been pointed out.

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