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A view of the ALT issue
from the contracting industry (EU aspects)
RA Ulrich Paetzold
Director General
F I E C European Construction Industry Federation
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CYPRUS
NETHERLANDS
IRELAND
PORTUGAL
NORWAY
TURKEY
DENMARK
HUNGARY
FINLAND SWEDEN
SPAIN
LUXEMBOURG
BELGIUM
ITALY
GREECE
BULGARIA
SWITZERLAND
CZECH REPUBLIC
SLOVAKIA
Full member
Observer member
ESTONIA
ROMANIA
AUSTRIA
SLOVENIA
CROATIA
FRANCE
LITHUANIA
GERMANY
www.fiec.eu
MALTA
1905 1st meeting 29 countries 33 federations Enterprises - of all sizes - active in all fields of building and civil engineering
POLAND
Co-operation Agreement
UNITED KINGDOM
www.fiec.eu
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1971/305, art. 29 (5) 1989/440, art. 29 (5) 1993/57, art. 30 (4) 2004/18, art. 55 2013/xxx, art. 69
Basis: reduce protectionism/ barriers
ALT in EU procurement directives
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Not covered: bad faith authority key priority: “value for money”
(at all cost!) disregard clear indications check, if any, only formal aspects accept any explanation
ALT in EU procurement directives
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Example: motorway A2, Poland
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Stryków (Łódz) - Konotopa (Warschau) 91 km total length, 5 sections A: 29 km, B: 17 km, C: 20 km, D: 18 km, E: 7 km
client: GDDKiA (Dir Gen of motorways) 1st tender as PPP, 2nd traditional award criterion: lowest tender FIDIC Yellow Book (“Brown Book” ),
i.e. contractor’s design
Example: motorway A2, Poland
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14/8/2009 tenders opened 17/8/2009 ALT-requests to COVEC 19/8/2009 COVEC-explanations 7/9/2009 "protest" of 2nd to GDDKiA 17/9/2009 appeal to nat. proc. office 28/9/2009 award to COVEC 9/6/2011 termination by GDDKiA 28/7 + 1/8/2011 new awards
time line of award procedure
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A2: client’s estimation ./. award price
0
20
40
60
80
100
section ACOVEC
section B section CCOVEC
section D section E
100 100 100 100 100
26,7
50,9
28,9
40,6 39,134,7
40,6estimatedawardednew awardnew est.
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A2: award price ./. 2nd ./. 3rd
90
110
130
150
section ACOVEC
section B section CCOVEC
section D section E
100 100 100 100 100
131,3
103,0
132,8
103,1
121,9
145,1
111,9
137,0
110,2
132,5134,7140,6
award2nd3rdnew aw.
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1. 100 million USD cash for tender phase,
plus further payments after award 2. no need for expensive European credits 3. efficient organisation of work 4. no need for risk margins 5. use of own construction machines
A2: explanations given for low price
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6. cheaper costs of Chinese staff 7. unique organisation methods 8. low benefit margin 9. price calculated on assumption of
winning 2 lots, so advantage of scale
Conclusion: all is fine!
A2: explanations given for low price
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State aid/ SOE Use of EU funds no rule for fair contract conditions
(contrary to art. 3.24 EBRD rules) External trade/ market access symmetric market access, worldwide
Professional project preparation and project management
A2: other aspects (not covered here)
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identify ALTs definition indications
check explanations genuinely, not just formally !
exclude unless ALT proven to be “LT”
Ideas what to do? “ice”
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