Ministry wraps up supervision of €150 million field hospital RKIK procurement

The Ministry of Finance has decided to wind up a supervision procedure put in place due to concerns over the procurement of mobile field hospitals.
The €150-million procurement was overseen by the Center for Defense Investment (RKIK) and the mobile field hospital component was part of a larger process.
Two private sector firms, MDSC Systems OÜ and AS Maru Metall, had complained that the process violated public procurement law and was skewed in favor of a third company, Semetron.
Now, the finance ministry has ended its supervision of the RKIK on this matter.
However, while shortcomings in the procurement process have been identified, the finance ministry found that annulling that procurement process would be a disproportionate step.
The Ministry of Finance noted that the complainant did not file an appeal within the set time, despite being aware of the requirements and conditions set out in the procurement documents, and so justifying the termination of the supervision procedure.
The ministry said: "On the allegations that specific requirements resulted in the preference for a particular company, the documents submitted to the Ministry of Finance indicate that more than one company offers products which meet the requirements, and so conditions cannot be considered overly restrictive of competition or indicative of arbitrary behavior by the contracting authority."
More serious, however, was the ministry's concern that the RKIK had altered the fundamental conditions underlying the procurement.
While explaining procurement conditions is permissible, materially changing, expanding, narrowing, or supplementing them is not.
The finance ministry said: "Changing the fundamental conditions of a procurement via clarifications contradicts the general principles of equal treatment and transparency."
"However, considering that the impact of these clarifications was to expand the circle of potential applicants, plus there is no evidence of unequal treatment, annulling the procurement would be a disproportionate step," the ministry concluded.
The plaintiff was also dissatisfied with a lack of a requirement for any official price list or pricing policy, arguing that discovering the cost of a service only after the contract was awarded undermines principles transparency, equal treatment, and effective competition.
The Ministry of Finance acknowledged that the pricing mechanism found in the contract raises questions about cost transparency, but found too that annulling the procurement for this reason would also be disproportionate, while the cost of the particular service is small within the context of the entire procurement.
"The facts and explanations from the contracting authority indicate that the cost of the mentioned service is marginal, within the total procurement cost," the finance ministry went on.
As a result of all this the ministry chose to terminate the supervision procedure initiated to verify the legality of the RKIK's mobile field hospitals procurement.
However, the Ministry of Finance acknowledged that some qualification criteria could have potentially restrictive effects on competition, but since these were not contested with the Public Procurement Review Committee (Riigihangete vaidlustuskomisjon), again, issuing an order to annul the procurement would not be justified, for reasons of legal certainty and peace, the ministry found.
The complaint had also criticized the RKIK for not responding to questions within a stipulated timeframe.
The RKIK said that the questions were thorough and required more time to answer, a fact which they communicated each time, eventually going on to provide comprehensive responses.
The Ministry of Finance found that this in any case had minimal impact on the preparation of the bid.
In its explanation to the Ministry of Finance, the RKIK stated that all companies meeting the procurement conditions were capable of producing a field hospital.
They argued that if the technical conditions were skewed towards one company or another, the other bidders would not have been able to submit compliant bids, yet they did manage to do so.
The RKIK also noted that all conditions had been common knowledge since their publication electronically, while no one had contested these conditions at the time.
In July last year, the RKIK initiated a state procurement process for mobile field hospitals, receiving applications from five bidders, including a joint bid from MDSC Systems and Maru Metall, as well as from Semetron AS.
In April of this year, MDSC Systems OÜ and AS Maru Metall claimed the procurement process was heavily flawed and biased, and that the only way to ensure the contract was not awarded in violation of procurement rules was to cancel the procurement in its entirety.
The two firms' lawyers pointed out that a requirement in the reference contract stipulated that the bidder must have produced or sold mobile dressing stations or field hospitals to any NATO member country within in the past five years.
According to the complainants, this restriction unfairly limited the reference to contracts with public authorities, which, they said, represented a violation of the law on public procurement. This legislation expressly bars excluding the taking into account experience gained from the private sector, during procurement processes.
The applicants questioned whether the procurement conditions were in fact designed to suit only one company in Estonia, ie. Semetron.
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