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Pronksi and Jõe street procurement: other bidders do not have to simply accept the situation

Pronksi and Jõe street procurement: other bidders do not have to simply accept the situation

The situation that has come to light with the construction procurement of Pronksi and Jõe streets in Tallinn is against the law, and it is mistakenly believed that in such a situation other bidders cannot protect their interests, write lawyers Maria Veermäe and Ringo Heidmets of the Glimstedt Estonia law firm.

In the case of the procurement of Pronksi-Jõe Street, which received attention in the press in the last few days, the contracting authority, before the deadline for submission of tenders, ordered the procurement condition to be interpreted in such a way that the full-scale closure of the street is prohibited according to the documents. The contractor’s interpretation is mandatory for all bidders and something that bidders must take into account when preparing their bid (including pricing), before submitting the bid.

According to experts in the field of construction, the difference in the cost of the renovation of Pronksi-Jõe Street, in the case of full street closure vs. partial closure, can reach several million euros.

Considering the expected cost of the public procurement, this is undoubtedly a significant difference. This is made even more remarkable by the fact that companies operating in the field compete with each other when participating in public procurements, often with a price difference of only a few percent. The risk analyzes carried out by the companies in order to accept the decision to prepare and submit bids were undoubtedly influenced by the explanations given by the procurer.

To give different interpretations to the procurement documents or to change the contract today, compared to the explanations given by the procurer at that time, is contrary to the general principles of public procurement, such as equal treatment of companies and transparency. From there, the obligation to use financial resources sparingly can also be jeopardized in a situation where one particular company is privileged as a result of probably illegal (whether conscious or not) proceedings. In this case, the winner of the tender can carry out the works under the conditions he likes, in which the economic risks are unusually mitigated.

We live in a rule of law, and local governments and state institutions must be guided by the use of state money
of laws.

What has been published in the press in recent days also gives the impression that we have to accept the situation. Based on the current practice, bidders (who participated but did not win or those who refused to participate) still have the opportunity to protect their rights in this situation by applying for the nullity of the concluded contract.

The entrepreneur can rely on the statement that if he, as a person interested in the procurement, had known that the procurement contract would be signed under such conditions as it is executed today, he would have made an offer or made an offer at a completely different price. It is in the interest of entrepreneurs to be able to participate in tenders on equal terms, i.e. to have fair competition, among other things, so that the entrepreneur can rely on the conditions established by the contracting authority and the explanations given by the contracting authority and be sure of their survival.

Understandably, a void contract would lead to burdensome consequences for the procurer. However, there is a solution for the moment contrary to the principle of public procurement, and the entrepreneurs in the field also bear their responsibility not to accept the situation.

 

Article “Juristid Pronksi ja Jõe tänava hankest: teised pakkujad ei pea olukorraga lihtsalt leppima” was originally published in business paper Äripäev: https://www.aripaev.ee/arvamused/2022/10/28/juristid-pronksi-ja-joe-tanava-hankest-teised-pakkujad-ei-pea-olukorraga-lihtsalt-leppima

Authors: Ringo Heidmets, Maria Veermäe