(Podgorica, 21 August 2012) – The reconstruction of the Podgorica city library is a textbook example of violations of the Law on Public Procurement. It also demonstrates the degree to which the Public Procurement Directorate actively participates in undermining the law.
Work on the City Library began in 2006, while to this day the Agency for the Building and Development of Podgorica concluded four agreements with Podgorica-based Cijevna Komerc.
Since the first agreement signed for the refurbishment of the library, worth about €550,000, in the meantime three additional agreements were signed for work on the library. The total value of construction on the library was increased to €1.9-million. Given that three of the four agreements were signed and the annexes that approved the additional jobs, calculations show that the city library in Podgorica has to date cost close to €3-million.
MANS’ research demonstrates how deadlines for the completion of contractual obligations were also violated and also demonstrates suspicion concerning the abuse of power by officials in the Agency for the Construction and Development of Podgorica during the tender. Evidence indicates that Cijevna Komerc was favored as a bidder at the expense of the public interest. Our research indicates that the monitoring function of the Directorate for Public Procurement was inadequately taken up, nor did it act to prevent the Agency from violating existing laws and regulations.
The First Agreement for the Renovation and Expansion of the City Library
The first contract for the renovation and expansion of the City Library was concluded on 29 September 2006, between the Agency for the Construction and Development of Podgorica (ACDP) and Podgorica-based ‘Cijevna Komerc’ (the winner of the tender). The value of the contract was cited at €557,389 with a deadline for completion within 90-days. 30% of the negotiated value of the contract was handed over to the construction firm as an advance.
The renovations weren’t completed within the time-frame of the agreement, in fact the deadline was seriously broken. It was only a year later – instead of the initial 90-days foreseen – that an annex to the agreement as signed in October 2007 that extended the deadline for completing the library to April 2010. In spite of the fact that Cijevna Komerc was seriously violating the agreed upon deadlines, the ACDP continued to conclude new contracts with this firm.
The renovation and expansion of the City Library should have been finished by the newly agreed upon date, but instead two new annexes were signed in April 2010. In early 2010, the ACDP had asked the Directorate for Public Procurement to approve an additional €139,3000 in costs for the library project. This is the maximum amount that can be transferred for additional work and handed to the contracting party without a new tender. Cijevna Komerc received this amount for additional work on the library and also got an extension for completing the agreed upon job by 30 June 2010.
New Call and Two New Agreements for Cijevna Komerc
While the contract for the expansion and renovation of the library was still in force, the ACDP decided to issue a new call for work on the library. The new calls, divided in two, deal first with the reconstruction of the library and the building of an underground passage (worth €670,000) while the second part involved the building of an annex to the library (worth €500,000).
As a criteria for the choice of the best tender offer, the most economically favorable price was chosen. The price of the offers was gauged on a scale of (60) points, the quality of the work (30) and the completion of works on time (5) and the guaranteed period (5). The call did not include a deadline for completion of works.
The ACDP violated the rules of the tender procedure, since it only gave three days between initiating the process and the issuing of the call. Article 28 of the Law on Public Procurement clearly stipulates that the “issuer of the call, prior to beginning the public procurement process, must adopt a decision regarding the implementation of the call.”
When the process opened it was clear that only Cijevna Komerc had submitted offers for the reconstruction of the library and the building of an annex (two full offers for the two separate jobs). The Commission for the Opening of Offers, presided over by Sanja Cukic, Dusanka Cupic and Vojka Adzic established that Cijevna Komerc submitted bids worth €818,093 – €938,886 and €462,489 – €457,553 respectively. The Commission appears to have chosen the more expensive variants (in spite of the requirement to negotiate the lowest price according to the established points system). This indicates that the members of the commission may have abused their positions for the benefit of Cijevna Komerc.
These contracts new contracts were concluded in July 2007. The deadline for carrying out the works foreseen in the contracts was set for 12 months. Both agreements also allowed for additional jobs to be implemented up to 25% of the value of the contract. A year later, these additional jobs were contracted, even though the initial tasks were still not complete. In July 2008, new annexes to the contracts were added that extended the deadlines for completing the projects to April 2010. The justification for the extension of the deadlines was the appearance of “unforeseen and additional jobs.”
Since not even these deadlines were met, the ACDP resorted to the same scenario as in the contract for the extension of the library. In January 2010, the Agency again requested from the Directorate approval of additional work on the library without issuing a public call. The value of the additional jobs for the renovation of the library and the building of an underground passage was valued at €234,700, while additional work on the building of a library annex was placed at €115,600. Both of the value represent exactly 25% of the value of the initial contract.
After the Directorate approved additional work, 25 March 2010, annexes were signed that extended work to 30 June 2010. Immediately after this, Cijevna Komerc concluded agreements for additional work as outlined above.
A Fourth Contract for Cijevna Komerc
Eventually, the ACDP announced in late 2009 yet another tender for the library. This time the call included skilled trade work on the library and its annex, as well as the ordering and installation of machine equipment and fireproof doors. The order was valued at €520,065. Cijevna Komerc was again the only bidder and it won the tender in February 2010 with a 5 month deadline to complete the stipulations of the contract.
From all of the above there is sufficient evidence to suspect that senior officials running the ACDP at the time, as well as members of the Commission charged with weighing tender offers, abused their position to secure an advantage for Cijevna Komerc. As a result in July 2012, MANS submitted criminal charges against the former directors of the Agency and members of the Commission. Separate charges were also filed against the director of the Public Procurement Directorate, Mersad Mujovic, on suspicion that he abused his position and failed to properly carry out his duty in monitoring the deals.
