Historical event in Lithuania – the Supreme Court imposed a record fine of EUR 125 thousand to Lithuanian Road Administration for artificially limiting the competition in public tender. It’s the biggest fine ever appointed to any institution in Lithuania for violations of public procurement procedures. Market participants expect that this case will bring more transparency and competition into the Lithuania’s road sector
The Supreme Court of Lithuania set aside the decisions of the Vilnius Regional Court and the Lithuanian Court of Appeal, upholding the complaint submitted by the road and bridge construction companies, Latvijas Tilti and Kauno Keliai. The Court confirmed that the terms of reference in the procurement of the construction works of two viaducts on the Vilnius-Kaunas road, amounting to EUR 12.5 million, artificially limited competition, and the signed contract is unlawful. The Court ruling is final and unappealable.
As the construction works have already started and the agreement will not be terminated, the Court imposed a fine amounting to EUR 125,257 on the Lithuanian Road Administration that had conducted the tender for failure to ensure the competitive equality of suppliers. It is the biggest fine ever imposed by a court for public procurement violations. The Administration will have to pay this fine to the state.
The Supreme Court determined that the Road Administration had included excessive and disproportionate requirements in the terms of reference of the announced tender, which were not necessary to perform the works. As the Court stated, such excessive qualification requirements artificially limited the opportunities for companies to participate in the tender and was unlawful.
“We are happy with the Court’s judgment, which has restored justice. We trust that this case will have a positive effect on Lithuania’s road sector and will contribute to improvement of the public procurement system. It is a small step forward towards the aim of ensuring transparency and fair competition in all road and bridge public tenders”, said Genadijus Kamkalovas, the Chairman of the Board of Latvijas Tilti.
“When public procurements are held guaranteeing actual competition and all willing companies are allowed to participate, only then we can be certain that the price for purchasable works will be the most cost-effective. It would allow the saving of tens or even hundreds of millions for the taxpayers. The state would be able to use these saved funds for other important purposes like fixing bumpy roads or building kindergartens”, said Ramūnas Šilinis, Kauno Keliai Managing Director.
Latvijas Tilti and Kauno Keliai, after the publication of the terms of reference, applied to the Lithuanian Road Administration, which had organised the public procurement, regarding the competition-restricting terms of reference and after it refused to amend the terms of reference, they applied to court. Both the Vilnius Regional Court and the Lithuanian Court of Appeal dismissed the companies’ actions until, finally, the Supreme Court of Lithuania acknowledged the violation.
The Lithuanian Road Administration announced the tender “Installation of Traffic Safety and Environmental Measures in TEN-T Roads in 2014-2020. Stage I. Contract No 3.” in November 2014, and the proposals could be submitted by January 2015. The contract was awarded on the basis of cost effectiveness to UAB Fegda – the sole participant of the tender that could meet the qualification requirements. The company proposed to carry out the works for EUR 12.5 million, planning to complete them by November 2016.
by Rita Saunorytė Norutienė
About Latvijas Tilti
Latvijas Tilti, JSC, is a Lithuanian based subsidiary of one of the largest Latvian construction enterprises that is specialising in construction and reconstruction of bridges, overpasses and tunnels, as well as in reconstruction and construction of sea berths and coastal fortifications. Latvijas Tilti is listed on the Baltic states' Nasdaq OMX stock exchange. Latvijas Tilti, JSC, is part of a LNK Industries, construction and production group, and part of LNK Group holding company.
About Kauno Keliai
UAB Kauno Keliai is road building and repairing company, providing its services all around Lithuania. The company is operating since 1940. Kauno Keliai is certified to work at local and state roads, railroads, airports, bridges, overpasses and tunnels, to construct sports engineering buildings, dumps, to lay engineering grids, as well as work at the cultural heritage objects.