Tallinn to annul central hospital architecture contract

The City of Tallinn is to terminate a design contract for a proposed central hospital, on the grounds that the Italian-based design agency has not kept up with the agreed pace of work.
One Estonian firm involved in the tender process has said that for the sum of money the Italians proposed, keeping up with deadlines would not have been realistic in any case.
Since coalition negotiations for the next city government in the capital are ongoing, the issue will be on the table here also.
The opening chapter regarding the planned Tallinn hospital has still not begun despite lengthy discussions on the matter.
At present, Tallinn is served by several hospitals, mainly the East Tallinn Central Hospital (ITKH) and the West Tallinn Central Hospital (LTKH).
Opinions on how to proceed with the planned new hospital have diverged widely.
However, some politicians have said that putting a stop to the project, since design work is already underway, could have resulted in wasted funds.
Talks have also included potential penalties for breach of contract and lost time.
The hospital's design process began in the fall of 2021 when the city signed a contract with Italian firms ATI Project SRT and 3TI Progetti.
For a price-tag of €17.8 million, the city expected these companies to deliver the hospital's main project by December 2023.
The city only received a preliminary design, a small portion of the commissioned work, in January of this year, however.
Jevgeni Ossinovski, leader of the Social Democrats (SDE) in Tallinn and a member of the hospital foundation's (Tallinna Haigla Arenduse sihtasutus) supervisory board said the organization: "Is not satisfied with the work that the designer has carried out."
"The foundation did not have confidence that this designer was capable of providing us with a quality main project, and the supervisory board agrees with their arguments. Currently, work is underway to terminate the contract, on an extraordinary basis," Ossinovski added.
The design firms exhibited problems with both adhering to deadlines and with the quality of workmanship, he said.
"Our project team's assessment is that the work is poor," Ossinovski said. "The supervisory board has been informed of various examples where the work has not met the requirements or the client's wishes."
Doubts started to emerge last autumn
Culpability cannot entirely be placed on the Italian design firms, however.
In particular, once the war in Ukraine had started, the city government decided that the hospital required an additional underground floor. The contract was, however, amended to accommodate this, and the designer was given extra time to incorporate this change.
According to the revised agreement, the main project was supposed to be completed in the fourth quarter of this year.
The preliminary design had to be completed by fall 2023 at the latest.
Around the same time, in October last year, it became clear that this work was subject to delays, however.
Sven Kruup, the head of the hospital development foundation, said that the designers had been approached, to sound them out about potential solutions. The city did not however receive a substantive response, he said.
"This was the next surprise for us, and led us to analyze the status of the designer's work to date, in depth, which led to the assessment that it did not comply with the project's schedule," Kruup said.
Kruup added that they could now however consider the preliminary design received in January to be satisfactory.
Kruup would not comment on the interim quality of the design work so far, however, noting that the contract is to be terminated by mutual agreement.
He simply stated that the process has not been an easy one, for anyone.
Italians asked for significantly less money than others
The companies have not explained to the city what exactly went wrong or what was mishandled. "The most likely scenario is that being the lowest bidder, this put the designers under pressure they couldn't handle," Kruup suggested.
The design tender organized in 2021 awarded points for experience, price, and architectural solution.
Local companies EstKONSULT and Arhitekt11 were adjudged to have offered the best architectural concept, earning 43 points in this mini-competitive process, versus the Italians' 31 points.
However, the Italian companies, who asked for the lowest sums, won out when it came to the final assessment.
They wanted €17.8 million (exclusive of VAT) for their contract, compared with second-placers EstKONSULT and Arhitekt11, who asked for about €30 million, and Sirkel & Mall, another Estonian firm, which came in in third place and set a price tag of €22.7 million.
Kruup recalled: "At that time, the designer had been beating the drum, saying that it was business as usual."
"There was no reason at that time to suspect an international design company with 300 on payroll of providing false information," he went on.
Sirkel & Mall, however – the company that was third on the list of bidders – appealed to the public procurement appeals committee on the grounds that it would be "impossible" to carry out a job of that scale for the sum of money the Italians had asked for.
The committee, however, upheld the tender result.
Sven Kruup said that there had been lengthy correspondence going on at the time, while the City of Tallinn asked, and asked again, the Italian firms, on whether they could indeed manage the workload.
However, Kruup went on: "Our Public Procurement Act is perhaps too rigid in places," since "there is no legal basis for disqualifying a participant from a tender simply due to doubts."
Around a fifth of commissioned work has been completed
Inclusive of VAT, €6.6 million has been transferred to the company. The final sum might increase slightly from this. By comparison, with the addition of the subterranean floor, the contract's final price was supposed to be €26 million, again including VAT.
Put simply, four-fifths of the work remains to be done as of the termination of the contract.
Sven Kruup said that the hospital's foundation is now preparing a new public tender process to find another company that can take over from the Italians. The tender documentation should be ready by the summer, he said.
Unlike in 2021, the project's timeline is not now under the pressure of the hope of receiving EU funds.
This means a new successful bidder will be given more time for the design. "We can obtain a better project and, considering the current situation in the design market, more likely a more favorable price," Kruup stated.
More uncertainty over the continuation of the design process for the proposed Tallinn hospital relates to the coalition negotiations, which follow a motion of no confidence in Mihhail Kõlvart as Tallinn mayor and which passed by a narrow margin a week ago.
Once installed the new government will decide whether to announce a new tender.
Isamaa's leader in Tallinn, former minister Riina Solman, said the hospital could be located somewhere other than its currently planned site, in Lasnamäe.
Solman said: "Isamaa has never envisioned that this large hospital complex would be located in Lasnamäe, close to the Song Festival Grounds," and on the limestone ridge that runs to the east of central Tallinn.
"There are many issues which need resolving," she went on, including the location matter in that summation.
Reform's Tallinn leader, Pärtel-Peeter Pere, also pointed out that the chosen location for the hospital can be seen as controversial.
He said he is also concerned that no separate architectural tender process was held for the hospital.
Pere said: "Any architectural competitive process always means us asking what the best possible solutions can be."
"Right now, we don't know what that optimal solution is, but the city of Tallinn ordered the cheapest possible project. We cannot build any public building this way, especially not a hospital building," he added.
According to Pere, medical professionals should also be consulted on how to proceed with the hospital's design.
SDE wants to continue with hospital design
Jevgeni Ossinovski, the leader of the Social Democratic Party (SDE) faction in Tallinn, said he believes that despite obstacles, the hospital's design process must go on.
In the current coalition talks – SDE was also in coalition with the Center Party, from late 2021 to last week – the party wants to discuss sources of funding needed for the hospital's construction. "There are various ideas in relation to this," Ossinovski said.
While consensus is still being sought on the future of the planned hospital building, the four parties engaged in coalition talks are quite unanimous on the organizational solution.
ITKH and LTKH will likely be merged into one foundation in the near future, according to plans.
Minister of Health Riina Sikkut, Ossinovski's party-mate, said her ministry supports the move too, and has not given up on the dream of obtaining a new hospital building for Tallinn. "Tallinn Hospital would be a facility established and managed in cooperation between the city and the state," Sikkut said.
This would mean that the required funding should also be jointly found by the state and the city of Tallinn.
"The state and the city have the capacity to borrow," Sikkut said. "There is no available money in our budget for this at present, and this will not change in the future," Sikkut went on, referring to the Ministry of Social Affairs' budget.
"Likely, a financing scheme based largely on loans would have to be agreed upon," she added.
Sikkut said it is also worth considering the EU's next budgetary support measures as a potential source, though acknowledged that EU funding for new building constructions has fallen over time.
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Editor: Andrew Whyte, Merili Nael