Tender Nuances at Boryspil

Tender Nuances at Boryspil

In recent days, the state enterprise “International Airport Boryspil” has given two reasons to dive into deep pedantry. One — for a billion hryvnias, the other — for a quarter of a million euros.

A billion for Altis

In a contest with an expected value of 1,06 billion UAH for the reconstruction of the apron at Terminal D, Altis and Altkom faced off against three other companies. Boryspil managed, for various reasons, to reject not only Fortis Ukraine and the visiting Belarusians OAO “Construction and Installation Trust No. 8”, but also the very experienced tender player Onur.

The list of objections is truly impressive — from the inability to open documents uploaded to Prozorro by Fortis, to the failure to provide information about the existence of an anti-corruption program from the seasoned tender heavyweight Onur. The Belarusians also had several gaps. For example, in one place in the tender documentation they stated they had 13 cement trucks, but in the turnover-balance statement the Boryspil tender committee found confirmation of only 11 (similarly “significant” discrepancies appeared for bulldozers and tractors).

The rebuttal from the rejected bidders was almost in “ultrasound” for ordinary mortals. For specialists, however, the decision turned out to be on the verge of scandal.

So this is about Fortis’s complaint against the admitted pair Altis and Altkom. They have completely different founders. Nevertheless, they practically didn’t compete in the auction, with scant effort lowering the price by a paltry 1,5%. And they also had the same error in their bank guarantees. According to the complainant, after several auction postponements their guarantees already had invalid expiration dates.

Here is the auction date. And the bank guarantee must be valid for at least 90 days from the auction date — exactly as long as the participant’s tender offer is valid. After the auction, the procuring entity continues to review proposals and determine the winner, but those decisions can be appealed, which again delays the procedure. And the bank guarantee is only valuable if it is valid up to the moment of contract signing, to incentivize the winner not to refuse to sign and not to demand inserting contractual whims that were not in the draft.

Each appeal forces the Prozorro system to automatically shift the auction date. So the total validity period of the bank guarantee must take this possibility into account.

And here is how the Antimonopoly Committee of Ukraine (AMCU) used to act in such cases. For example, a tender by the Road Service in the Volyn region worth a quarter of a billion. There the complainant noted that due to all the delays the winner’s guarantee already exceeded the validity period of the tender offer. During the complaint review, the AMCU looked into Prozorro and saw that, at that moment, the proposal opening date had been set as day D. That date plus the formal validity period of the tender offer already exceeded the validity of the bank guarantee by a month. And AMCU has no other way to determine the proposal opening date except to look in Prozorro and see what date the auction shows there.

So. In the review of the complaint regarding Boryspil, AMCU first followed its established practice and looked in Prozorro. There, at the time of the complaint review, the proposal opening date was indicated as 2 January. Add 90 days of tender offer validity and we get 1 April, which is only one day, but still longer than the validity period of the bank guarantees of Altis and Altkom.

Suddenly! The procuring entity stated at the hearing that AMCU was looking at it the wrong way and said that one should orient to a different date. Namely, the date that the Prozorro system designated as the proposal opening date at the moment participants submitted their proposals — that is, before any appeal. And so it claimed that Prozorro showed 29 December as that date. Plus 90 days gives 28 March, which, voila!, fits within the guarantee validity up to 31 March.

By this logic, one only needs to wait for a precedent in which a couple of participants stage a parade of complaints, delaying the contract signing by 90 days; then a properly positioned winner’s guarantee would truly expire and the procuring entity would have no chance to complete the procurement. Those actors would also produce some certificate showing that Prozorro once showed the auction date as a long-ago day. In principle, this is an ideal trolling scheme. And it’s set in motion by AMCU, which abandons its practice of monitoring the process and switches to trusting the word of one party.

After AMCU’s decision, Boryspil decided to conclude the contract with Altis (in addition to another recent Altis contract for the reconstruction of Zaporizhia Airport for 529,85 million UAH). Recall: Altis belongs to Oleksandr Hlymbovsky. He is the father-in-law of the head of the State Fiscal Service, Roman Nasirov, who is favored by the Kononenko-Granovskyi group. Altkom, which, to put it mildly, did not strongly resist its competitors’ victory, belongs to Donetsk businessman Oleksandr Tislenko, who previously received multi-billion contracts under the patronage of Borys Kolesnikov.

Arempa’s introscopes

In a smaller duel for X-ray television introscopes (those that scan suitcases online for weapons), the Swiss company Entreprises Medicales Gray S.A. from Mykola Kuzma’s group was thrown out of the tender with an expected value of 273 thousand euros. There was fierce competition among seven firms and Entreprises made the cheapest offer, cutting the price by almost half — to 158 thousand euros. However, after the auction Boryspil was not satisfied with the certificates from the Swiss company drawn from Swiss registers regarding compliance with Ukrainian qualification criteria.

For example, the procuring entity was displeased with the Swiss analogue of the Ukrainian police clearance certificate that a company’s tender representative had not been prosecuted for corruption. Namely, an extract from the Federal Office of Justice of Switzerland showing that Entreprises Medicales Gray administrator Gerald Larpin does not appear in the criminal register. The complaint was the absence of a date on the document showing it was issued 30 days before the auction.

The procuring entity also reported that it tried to verify the certificate on its own but could not, and therefore rejected the firm.

The firm appealed its rejection to AMCU, explaining that the check should have been done on the site casier-judiciare.admin.ch indicated in the provided certificate, not on e-service.admin.ch, which the procuring entity tried to use. And the search should have been done not by the scan of the paper certificate uploaded to Prozorro, but by the original electronic extract from the Swiss justice authorities.

The point is that the Swiss criminal register for individuals differs greatly from the Ukrainian counterpart. There, an electronic document that contains a digital signature (in .pdf format) with an electronic cryptographic seal is considered the electronic form. This qualified digital signature is attached to the electronic extract using a certified signature card that is issued only to the Swiss head of criminal records. In other words, you can’t upload that electronic original into Ukrainian Prozorro because it would not meet Ukrainian requirements. And the fact that the paper copy from the Swiss register looks exactly like that — without a date — how is the firm at fault for having obtained it?

In the end, AMCU, in full strictness of the law, decided that Entreprises Medicales Gray was indeed at fault.

And here’s a sarcastic remark: “Perhaps they should have added an appropriate date themselves,” — not so absurd upon further analysis.

The next cheapest competitor Arempa International Ltd FZC, preferred by Boryspil, is also not Ukrainian. This firm from the United Arab Emirates is registered in the Sharjah Airport International Free Zone.

It submitted a certificate from the Dubai government stating that the firm representative Hasmik Danielyan Babazyan from Armenia “fully complies with the code of proper conduct.” Arempa explained submitting this particular document by saying that in the UAE this is how issues with corruption offenses are determined — not by certificates of no criminal record, but by statements of compliance with the “code of proper conduct.”

At the same time, they did not submit the original certificate, but only a company-stamped copy with a Russian translation and dates.

Clearly, few people at AMCU or Boryspil would understand the Arabic document. Likewise for a bankruptcy certificate, which the UAE government also does not provide, but which does provide a “Certificate of Good Standing” stating that the firm of Hasmik Danielyan, Vahe Papazyan and Nataliya Lebedeva “conducts activities in accordance with the rules and provisions of Emir Decree No. 2 of 1995 year.” This certificate was also not uploaded to Prozorro but was provided as a Russian translation bearing the company’s stamp. And that is sufficient to pass the strict control of Boryspil and AMCU.

Blog by: Yurii Nikolov