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Integrity Pacts – Civil Control Mechanism for Safeguarding EU Funds: Transparency International – Bulgaria Activity Report

26.07.2017

Reporting Period: January – June 2017

 

Introduction

 

During the first half of 2017, Transparency International – Bulgaria (TI-BG) continued its work on the ‘Integrity Pacts – Civil Control Mechanisms for Safeguarding EU Funds’ project in its capacity as an independent civil monitor on the award procedure for the design and construction work on the Zheleznitsa twin-tube tunnel, part of Lot 3.1 of the Struma motorway.

 

The construction of the Struma motorway sections, comprised within Lot 3 and co-funded under the Operational Programme ‘Transport and Transport Infrastructure’ 2014-2020, has been consistently referred to as one of the key priorities of all cabinets since the launch of project preparation under the current programming period. Despite the many fine declarations of intent, as of June 2017, progress is discernible only in the construction of the stretch between the towns of Kresna and Sandanski (Lot 3.3). The construction of the motorway roadbed of the section from the city of Blagoevgrad to the village of Krupnik (Lot 3.1) is expected to commence in August this year. As to the most challenging stretch of the motorway – the Kresna Gorge (Lot 3.2) – an Environmental Assessment Report (EAR) is still to be drawn up. The EAR will be a determinative factor in selecting the route through the Kresna Pass.

 

During the period under consideration, the political situation in thе country underwent tempestuous developments, which impacted also our organization’s activities relating to the implementation of the civil control initiative, including the resignation of the government in late 2016, the term of office of the caretaker government, which started in late January, the elections to the National Assembly held in March, and the investiture of the Borisov 3 cabinet in early May 2017. With a view to securing support for the project at the highest political level, the TI-BG team held meetings with the Ministers of Regional Development and Public Works both in the caretaker government and in the new regular elected government in their capacity as the principal of the Contracting Authority, the Road Infrastructure Agency.

 

The Road Infrastructure Agency (RIA) was designated to take over the completion of the tender procedures pertaining to the Struma motorway from the now closed National Company Strategic Infrastructure Projects (NCSIP), which was dissolved in 2016. The RIA itself has not been spared by a number of problems and public scandals, resulting in a few changes to the composition of the Agency’s Management Board. The volatility of the situation at the senior management level has undoubtedly affected the performance of the lower administrative levels, which, consequently, has had an impact on the procedure under consideration, thus resulting in extending the time limit for tender evaluation and contractor selection, selection of a new external expert to work with the evaluation committee, and the unsatisfactory level of information provision to the independent monitor.

 

The public procurement procedure that is subject to our civil monitoring, i.e., the tender procedure to select a contractor for the twin-tube tunnel at the village of Zheleznitsa, which was launched as early as in late 2015, was terminated in early April 2017. As of 30 June 2017, the new procedure was at the preparation stage.

 

Monitoring Team

 

During the first half of 2017, Transparency International – Bulgaria conducted an open procedure to select external experts to become members of the monitoring team. The specificity of the procedure being monitored – design and construction of a complex tunnel structure, highlighted the need for expertise in the field of road/tunnel design and construction, and in geoengineering. As a general rule, when monitoring public procurement procedures, TI-BG attracts also legal experts with experience in the area of public procurement who are tasked with assessing and analysing the lawfulness of the public tender being monitored. In result of the selection, the monitoring team was further strengthened by the addition of two legal experts and two technical experts – a road and highway civil engineer and an engineering geologist.

 

Monitoring the Public Procurement Procedure for the Design and Construction of the Zheleznitsa Tunnel

 

The activities of the independent civil monitor relating to the actual monitoring of the procedure during the first half of 2017 were driven by the developments in the course of the tendering procedure, which could be broken down into the following stages:

  • Examination, evaluation, and ranking of the tenders submitted in response to the invitation to tender and selection of a contractor. This stage started with the opening of the tenders in August 2016.
  • Termination of the tendering procedure by Decision No. 27 of 11 April 2017.
  • Preparation of a new tendering procedure.

In the framework of monitoring the public procurement procedure, TI-BG communicated intensively with the Contracting Authority. Several written requests were made asking for information and documents relating to the evaluation committee’s composition and work. A series of meetings on this issue were also held with the RIA management. As can be seen from the meeting minutes published on the buyer profile, the evaluation committee examined only the contents of Envelope 1 – documents establishing the tenderers’ eligibility.

 

The Contracting Authority’s decision to terminate the tendering procedure sparked widespread media reaction mostly because of the serious risk of losing the agreed-upon European funding for the Struma motorway. The said decision stated five whys and wherefores pointing to violations detected, which, according to the Contracting Authority, could not be rectified. In our opinion, the decision was inadequately justified and reasoned (see the Legal Analysis of points 1, 2, 4, and 5 of the Statement of Reasons to the Decision to Terminate the Tendering Procedure). Furthermore, no information was provided on the circumstances surrounding the main reason for terminating the tendering procedure, as stated by the Road Infrastructure Agency and the Ministry of Regional Development and Public Works, i.e., the disappearance of a portion of the tender documentation submitted by one of the tenderers.

 

Despite the declarations of willingness to cooperate made by officials at the senior management level, the operational level fulfillment of the Contracting Authority’s commitments taken under the Integrity Pact could be rated as unsatisfactory. During the period under consideration, the independent civil monitor did not receive any response to written requests for information and documents relating to the tendering procedure.

 

The full monitoring report on the second stage of the terminated tendering procedure will be drawn up on the basis of analysis of publicly accessible documents, media publications, and information provided by the Contracting Authority during the meetings held to discuss the issue.

 

As early as before the expiry of the time-limit for appealing against the decision to terminate the public procurement tender, media reports appeared that intensified preparations were underway for a new call for tender. The tender documents for the new procedure should be fully compliant with the new Public Procurement Act (which entered into force on 15 April 2016). TI-BG, in turn, started preparations to monitor this stage of the procedure by requesting the Contracting Authority to provide draft documents vis-à-vis the new procedure. As at the end of the reporting period covered by this Activity Report, no such documents had been provided to TI-BG.

 

Signature of a new Integrity Pact to the Public Procurement Procedure for the Zheleznitsa Tunnel

 

In the framework of monitoring the new public procurement procedure for the Zheleznitsa tunnel, the team of Transparency International – Bulgaria held a number of meetings and discussions with the Contracting Authority for the purpose of signing a new Integrity Pact. The purpose of this document is to reflect correctly the provisions of the new Public Procurement Act, referred to in the Integrity Pact.

 

Transparency of the Procedure

 

As noted above, during the first half of this year, the independent civil monitor maintained practically one-way communication with the Contracting Authority vis-à-vis the course of the public procurement procedure. Viewed objectively, the selective provision of the necessary information, combined with considerable time delays, has not been conducive to the transparency of the procedure.

 

According to observations made by the TI-BG’s expert team, the information relating to the public tender publicly available on the sites of the RIA and the MRDPW is piecemeal and poorly structured. This affects negatively the quality of media reports on the topic. In order to address this shortcoming, TI-BG developed a new section of the project’s subsite titled Monitoring. The purpose of the new section is to offer to the public at large a systematic arrangement of the facts and circumstances surrounding the terminated tendering procedure. The independent civil monitor will continue to keep this ‘timeline’ of all events and actions associated with the new procedure.

 

In response to the unexpected termination of the public tender, TI-BG expressed its concern about the substantial delay in the implementation of the Zheleznitsa tunnel project in an opinion published by two analytical national media. (See the story “Who Will Pay for the Struma Motorway?” published in Club Z and in Mediapool.) TI-BG’s efforts aimed at enhancing transparency and shedding light on the hidden processes within the RIA, were supported also by the Bulgarian National Radio (see the interview with Mr Kalin SlavovThe RIA’s Decision to Halt the Construction of the Zheleznitsa Tunnel Will Be the Object of Particular Attention”) and by the Trud Daily (see the editorial “A Farce Worth over a Billion Levs” and the interview “How the Integrity Pacts Could Help”).

 

Meetings with the Stakeholders

 

In the framework of the campaign to attract the widest possible support for the application of the Integrity Pact (IP) tool in the area of public procurement, Transparency International – Bulgaria held a number of meetings in the first half of 2017 with representatives of the state institutions and with business representatives. The independent civil monitor discussed the positive traits of independent monitoring and the opportunities for cooperation between civil society and business with the leadership of the Bulgarian Construction Chamber as well as with representatives of a company that participated in the public tendering procedure as a tenderer. In addition to the aforementioned meetings in April 2017 with senior officials at the MRDPW and the RIA, the TI-BG team held also a meeting with the Managing Authority of the Operational Programme ‘Transport and Transport Infrastructure2014-2020.

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