Last week, we presented a draft Procurement Methodology, on the basis of which all tender documentation for Ukravtodor should be prepared
Typical tender documentation is designed to prevent risks in working with contractors and to thwart “tender trolls” who deliberately block the implementation of government procurements that are important for the industry.
What is the problem?
Having headed Ukravtodor at the end of November last year, its head Oleksandr Kubrakov received the key task of updating 4,000 km of roads of state importance. For this, UAH 85 billion of funding is required and for all participants in the process to work 100% — business, structural divisions, and other state institutions.
Disruption of the construction season due to the work of so-called “tender trolls” was identified as one of the real threats.
At the same time, it was obvious that procurement is a classic breeding ground for corruption. Ukravtodor was looking for a tool that would streamline the development of tender documentation by road services in the regions, help minimize corruption risks, and protect Ukravtodor from losing time and money due to unscrupulous contractors.Standard tender documentation became such a tool, and standard contracts will be implemented following it.
What is a typical tender document?
Typical tender documentation is based on a unified approach to working with contractors. For businesses, it is a guarantee of transparent conditions for participation in the tender, open competition and additional protection against tender trolls, and for Ukravtodor, it is an opportunity to better control the quality of repair work and the reliability of contracting organizations. After all, public procurement is basically a competition on price, and this gives rise to manipulations with quality. In order to cut off at the start those who are ready to give a price below the cost price for the sake of an advance payment, and are definitely not ready to bear responsibility for the quality of the work performed, it is necessary to select contractors who already have sufficient qualifications.
The methodology is a guideline, with the help of which potential contractors are evaluated within the framework of the tender. It is clear that not everyone will fit the specified parameters, and criticism from them is quite logical. If a company was pouring asphalt in a cottage town last summer, it has practically no chance of passing the qualification requirements of Ukravtodor to perform work on highways of international importance. But experience can be gained by participating in tenders for local roads, working in a subcontract or alliance with other, more experienced companies.
Contracting companies clearly understand what is expected of them.
How it works in the world
The system of Italy, and the European Union as a whole, is about ranking and encouraging companies to develop. Small businesses are not allowed to work on large infrastructure projects, but they are given the conditions so that over time these companies can grow and scale. In this way, there is no discrimination against small businesses (although they are not allowed, in fact, to work on large construction projects). We are partially implementing this model in Ukraine.
This is clearly seen in the example of the Czech Republic, where contractors are ranked according to the class of roads. Special attention is paid to compliance with the warranty period by contractors. The presence of high-quality roads with a long service life in these countries speaks for itself.
In preparing the Methodology, we were primarily guided by examples from the EU and the USA, and the other day I had a conversation with a veteran of the road industry, and according to him, even in the Soviet Union there was a ranking of companies that performed road work at the local, republican, or all-Union level, because this is, first of all, a question of responsibility.
What is already there?
The era of “wild capitalism” has come to an end, the market needs to operate according to the principles of a free economy and have clear boundaries and rules that are understandable to all players.
What we are already seeing is that the number of appeals and demands/complaints has already changed for the better, compared to last year.
But even more important than quantitative indicators are qualitative ones.
Because the main task of Ukravtodor is to renew roads. This requires funding, real business capacity, and quality control. The introduction of strict qualification requirements in the road industry can be compared to a surgeon’s diploma and real experience. No one will trust themselves to an inexperienced doctor, so we cannot trust the roads to companies that do not have sufficient qualifications in the construction of roads of national importance.
What’s next?
Ukravtodor has developed a Methodology on the specifics of procurement of construction works (new construction, major repairs and reconstruction) and services for current repairs and operational maintenance of public roads, the draft document can be found here.
After the presentation of the draft document, a formal process of public discussion begins on the basis of the working group of the Ministry of Economic Development. The draft takes into account the new version of the Law on Public Procurement, which will enter into force on April 19.
Oleksandr Kubrakov, Head of Ukravtodor
