The municipal administration in Silistra has signed a contract for the construction of a riverside ramp as part of a project funded by the European Union. The order, which includes ‘shoreline reinforcement, a ramp, and a service building,’ is valued at 1.2 million leva, intended to be secured through the ‘Interreg V-A’ Romania – Bulgaria 2014-2020 program. However, it turns out that the contractor selected based on concerning criteria is the company that proposed the highest possible price.
The full title of the project is ‘Improving the Safety of Shipping on the Danube in the Cross-Border Region of Călărași – Silistra.’ The lead partner in the project is the County Council in the Romanian city of Călărași. To secure the funding, Silistra recently received approval from the Municipal Council to take on a loan through the FLAG Fund.”
This means that the municipality, and thus its citizens, will have to repay the loan, including interest, that will finance the construction of the facility. On top of that, the company chosen as the contractor for the public procurement for the construction of the dock proposed the highest price.
Here’s how it happened:
The municipality announced a tender for the award of a public procurement, to which two participants applied, according to a review of the documentation. One participant is the well-known Varna company “Solei 06” Ltd., which has worked on the renovation of the “Manezh” hall, the renovation of “Albena” square near the bus station, and other projects. It is noticeable that this company is a favored and frequently selected contractor by the mayor for key projects in Silistra.
The other participant is the Dobrich-based company “Dive Engineering,” which is working on this project with a subcontractor – the local “Stroi Proekt” Ltd.
Both companies submitted bids for the announced procurement with attached quantitative and financial accounts.
However, from the submitted bids, which are published in the municipality’s profile in the register of the Agency for Public Procurement (APP), it is striking that the offer from “Solei 06” shows a
dramatic increase in execution price
compared to the offer from “Dive Engineering.” The difference amounts to a total value exceeding 200,000 leva.
The expected value of the public procurement announced by the municipality is 1,493,916.54 leva excluding VAT.
The criterion for selecting the contractor is the economically most advantageous offer. This is determined based on the “optimal quality/price ratio,” according to Article 70, paragraph 2, item 3 of the Public Procurement Act (ZOP). The maximum possible points are 100, with 50% allocated for the proposed execution time and 50% for the proposed price.
Under these conditions, the first participant, “Dive Engineering,” proposed an execution price of 1,255,555.55 leva excluding VAT, while the second participant, “Solei,” proposed a price of 1,491,933.48 leva excluding VAT. This means that “Solei 06” offered a price that is 236,000 leva higher.
However during a meeting of the evaluation committee appointed by the mayor of the municipality, the participant “Dive Engineering” was disqualified on the grounds that the offer was unsuitable, citing various reasons.
The reasons for disqualification also mentioned that there were mistakes in the given quantitative and financial accounts, which, as indicated in the protocol, were insignificant but were sufficient grounds to conclude that the offer was unclear. On this basis, the committee proposed to disqualify the participant (based on Article 107, item 2, letter “a” of the Public Procurement Act) for presenting an
offer that does not meet the previously announced conditions
of the procurement.
Thus, only the offer from “Solei 06” was admitted for evaluation. Accordingly, the committee rated the proposal with the maximum possible overall score: 50 points out of 50 for the proposed price and 50 points out of 50 for the execution timeline.
The practice of project implementation in Silistra shows that
timelines are a very relative concept
– it is not uncommon to state one timeframe when applying, only to fail to adhere to it and extend it as necessary. This happened during the implementation of projects for constructing bike paths, renovating the Art Gallery, and others. Therefore, it is not an issue to receive the highest score based on this criterion.
But beyond that, there are other interesting aspects in the offer from “Solei 06.”
For, according to the attached quantitative and financial accounts, the company proposed a price of 572.08 leva per cubic meter for the delivery and pouring of monolithic concrete. For the 96.08 cubic meters that need to be poured along the Danube, this amounts to 54,962.59 leva. In contrast, “Dive Engineering” offered 368.70 leva per cubic meter in its bid, which totals 35,423.02 leva for 96.08 cubic meters for the same activity.
For placement of reinforcing steel in the concrete surface, “Solei 06” proposed a price of 6.96 leva per kilogram. For 7,031.70 kg, this totals 50,819.83 leva for the reinforcement. In comparison, “Dive Engineering” offered a price of 4.13 leva per kilogram for the placement of the reinforcement, amounting to a total price of 30,132.92 leva.
Investigation on the case “For the Truth” showed that for current offers published online revealed that for the placement of this type of concrete – C35/37, for which “Solei 06” is proposing 572.08 leva per cubic meter,
the prices vary but do not exceed 300 leva.
The concrete itself costs no more than 200 leva. The same applies to reinforcing steel – it does not cost more than 2 leva, and when combined with the installation, it does not exceed 4 leva per kilogram, unlike the price of 6.96 leva proposed by “Solei 06.”
The total cost of the construction and installation works for the ramp, calculated according to the quantity and financial accounts from “Solei 06,” amounts to 871,000 leva including VAT.
However the project also requires the construction of a single-story service building without a basement. Its total value, calculated based on the prices provided in the winning company’s offer, amounts to 353,951 leva. This translates to 7,711.35 leva per square meter. Importantly, this “golden” price does not include activities related to the installation of electrical systems, design, and supervision.
Here is
another striking difference in the offers
from the two companies, evident from the quantitative and financial accounts. For position 1 – delivery of ceramic bricks for a 55 square meter wall with a thickness of 25 cm, “Dive Engineering” proposed a unit price of 77 leva, totaling 3,925 leva. In contrast, “Solei 06” offers a unit price of 612.50 leva for the same wall, amounting to a total price of 30,931.25 leva. This raises the philosophical question of how much a 55 square meter wall with a thickness of 25 cm costs:
Three thousand or thirty thousand?
In May 2022, the municipality of Silistra conducted a procedure for market consultations under Article 44, paragraph 1 of the Public Procurement Act to determine an estimated price for the upcoming procurement before announcing it.
According to the provisions of the law, the contracting authority may conduct market consultations when preparing to award a public procurement, seeking advice from independent experts or entities, or from market participants. The consultation was conducted by the company “Vodstroy Bulgaria” Ltd., managed by Hristo Nyagalov. However, Hristo Nyagalov had common companies with the manager of “Solei 06,” Stefan Pavlov, as shown in the commercial register. One such company is “Sitidens” Ltd., which was also based in Silistra.
This raises the question of whether the conditions of the procurement were pre-prepared for the winning bidder “Solei 06.” In this case, however, the municipal mayor terminated the market consultation because only one offer was submitted, making it impossible to compare it in a competitive environment. Consequently, it is also impossible to determine the accurate estimated price of the public procurement.
However, the competitive environment between the two participants, after the estimated price was set, evidently produces
dramatic differences in the proposed prices.
And the municipality chooses the much more expensive offer.
These discrepancies, as well as the elimination of one of the two participants in the tender, prompted the manager of “Stroi Proekt” Ltd., Ivelin Lozev, to send a letter to the mayor of Silistra Municipality on March 13 (i.e., just a few days after the decision to select the contractor), urging him to terminate the procurement and reannounce it. In the letter, which “For the Truth” possesses, he claims there is
an unacceptable and unjustified increase in the offer
of the candidate chosen as the winner. The letter was sent not only to the mayor but also to the direct managers of the project from the municipal side, to the regional governor Nikolay Nedelchev, to the chairwoman of the municipal council Maria Dimitrova, and through the regional coordinator of GERB, Todor Todorov, to the party chairman Boyko Borisov.
Lozev commented to “For the Truth” that he wrote the letter hoping for the goodwill and ethics of the mayor to terminate the procurement, as such prices do not exist either in Bulgaria or in the European Union. In his letter, he compared these prices to the current construction costs in Hong Kong and Dubai.
“In case, we are talking about a project funded by European money, for which a loan has been taken from the Municipality of Silistra with the approval of the municipal council. This loan will be repaid by the citizens of Silistra to pay a possibly excessively high and unjustified price. Even if the procurement allows it, it is not ethical to abuse this,” Lozev further commented.
Despite letter, to which there has been no response so far, the procurement has not been terminated. On the contrary, in recent days, the Municipality of Silistra published a notice about a contract signed between the mayor and the manager of “Solei 06” Ltd. This means that the procurement has not been challenged in accordance with the Public Procurement Act by the interested parties.
Thus, for now, the higher “Dubai” price for the construction of the new Danube quay in the city remains.
