In an apparent conflict of interest, managers of construction companies, such as Bemax, Štrabag, Tehnoput Mne, which previously received millions in capital project contracts from the state, participated in the development of guidelines for calculating price differences due to rising inflation, which resulted in additional millions in payments from the state treasury, the non-governmental organization (NGO) Action for Social Justice (ASP) announced today.
"Previously, company managers literally 'taught' state authorities in numerous letters how to legally circumvent the Public Procurement Law, while certain construction companies threatened to terminate contracts and at the same time were interested in what model of increasing the prices of works would be established, and there are also examples of different companies sending letters with identical content," the ASP statement, signed by Ines Mrdović, states.
ASP data shows that certain contracts related to the construction of roads were annexed in millions of euros based on price differences due to inflation, but also that the implementation of some contracts at the time of market price changes was seriously delayed or had not even begun, which the companies claimed was not their fault.
"ASP is in possession of annexes to individual contracts, which approve price differences, so increases of over 2,2 million were approved for regular maintenance of regional and main roads (contractor Crnagoraput), around four million for the Rožaje Špiljani section (contractor Štrabag), more than 1,8 million for the Podgorica Danilovgrad section (contractor Bemax), around 95 thousand euros for the road near the Komanski Most (contractor Tehnoput Mne)...", the statement reads.
ASP said that since mid-March 2022, the Traffic Administration and the Public Works Administration have been receiving letters from construction companies requesting changes to contracted prices.
"So Bemax from Podgorica wrote that, although fixed/unchangeable contract prices were agreed, there was a 'dramatic increase in the prices of materials and services', but also cited the reasons for the war in Ukraine and the corona epidemic, which was at its peak two years earlier. Both Bemax and Crnagoraput, but also from other companies, 'drew' the Law on Obligations in their letters as a possible legal basis for increasing prices, with precise listing and interpretation of individual articles of that Law. In a number of letters to the Traffic Administration, Tehnoput Mne wrote that he was faced with the functioning of the company, that they were unofficially informed that procedures for amending the contract were being prepared, then he wrote that they were in possession of a draft methodology for determining the difference in price, which envisages the development of guidelines, and that from the contractor's perspective it is particularly important to specify from which period contracts will be able to be corrected and which method will be used, and asked for an answer as to whether the Law on Obligations or another regulation will be applied," it is written in ASP press release.
The NGO states that "some companies have concluded contracts from previous years... the implementation of which did not begin through no fault of the contractor... the contracts were concluded under the previous Public Procurement Law, which did not recognize changes to contracts of up to 20 percent... there are warnings that these bidders would be placed in an unequal position," the Chamber of Commerce wrote to the Public Works Administration in March 2022.
"In the coming month, namely April 2022, the Transport Administration will write to the Ministry of Finance with information that companies have approached them with a request to find a solution to 'amortize' the sudden increase in prices on the market, and that if a way is not found to help them, they will terminate the contracts," ASP said.
ASP stated that the then (and current) Director of the Traffic Administration, Radomir Vuksanović, wrote, "Termination would be a more expensive solution for us as investors, and the survival of the contractor would be directly threatened," adding that he did not offer any further explanations in the letter, but that he appreciated that "a legal framework must be urgently found on the basis of which the contractors could be accommodated."
"In July 2022, the government adopted conclusions accepting the application of the Law on Obligations and tasked the then - the Ministry of Capital Investments (MKI) and the Ministry of Ecology, Spatial Planning and Urbanism - to define a model for determining the difference in the price of works, after which a working team was appointed, which developed a methodology with four models. However, the methodology only states what each model of determining the price difference entails and the method of calculating them, with the application of appropriate formulas, but without recommending which model to use," the statement reads.
ASP said that a few months later, in mid-September 2022, MKI, on the recommendation of the working team, sent a letter to the Chamber of Commerce asking it to define the guidelines for the application of the price difference, explaining that the guidelines still relate to "practical issues related to the specific application by the contractors, with whom you communicate directly."
"The Chamber of Commerce then formed a working group with 18 members, of which it appointed two of its own members and nine more managers from construction companies: Željka Vukadinović from Crnagoraput, Vesko Kovačević from Bemax, Nevenka Jeličić from Štrabag, Nada Damjanović from Mehanizacija i programat, Damjan Bakić from Novi Volvox, Nikola Racković from Čelebić, Živko Šipčić from Tehnoput Mne, Aleksandar Čvorović from Indel Inženjering and Savo Lukić from Unipred. The Faculty of Civil Engineering had two representatives, the Chamber of Engineering one, as did the Ministry of Finance (Jelena Jovetić), the Transport Administration (Dušan Kokić) and the Public Works Administration - Capital Projects (Bojana Mitrić). The Electric Power Company of Montenegro also had one representative," ASP said.
The NGO said that the previous methods enabled the application of the Law on Obligations and circumvented the binding Law on Public Procurement, that is, the model was applied through the adoption of appropriate government conclusions, which are by-laws with lower legal force than the law.
"ASP data shows that some contracts were also concluded through the Fidic procedure, through which sliding scales are initially agreed, but they were subsequently applied here. The Government of Montenegro never publicly announced during 2022, or even later, that the guidelines for calculating the difference in the price of works for projects from the capital budget, due to the jump in inflation, were developed predominantly by representatives of directly interested construction companies," the ASP statement reads.
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