State-owned property administrator RKAS too expensive for ministry ({{commentsTotal}})

The Ministry of Education and Research's 11 Tõnismäe St. building in Tallinn.
The Ministry of Education and Research's 11 Tõnismäe St. building in Tallinn. Source: (Postimees/Scanpix)

The Ministry of Education and Research has terminated its contract with state-owned real estate administration company Riigi Kinnisvara (RKAS) for its 11 Tõnismägi St. property in Tallinn. The tasks so far covered in the agreement could be carried out by the ministry's employees, and a few thousand euros a month saved.

According to business paper Ärileht, the move of the ministry is likely to become a precedent. The gain in cost-efficiency that RKAS' establishment in 2001 was expected to bring never materialized (ERR News reported), and the Ministry of Education and Research is the first state authority to terminate an administration agreement with RKAS for cost reasons.

Indrek Riisaar, responsible for the administration of state assets at the ministry, said that the contract with RKAS didn't reduce the workload of ministry employees. The only change had been that instead of talking to a contractor to carry out work around the building, ministry employees spent just as much time talking to an RKAS administrator, while RKAS in turn hired subcontractors to do the work.

He also added that in many cases the ministry's employees ended up talking to the contractors on top of dealing with RKAS, suggesting that their workload actually increased while RKAS acted as a middleman not actually needed in reality.

"In the case of the 11 Tõnismägi St. property, our employees can manage the building's administration as well as technical maintenance at a lower cost," Riisaar explained, adding that the ministry will save a few thousand euros a month this way.

Any repair work needed could now also be planned and commissioned by the ministry, which also saved money, he added.

Other buildings of the ministry, for example schools, were better off with administrative tasks carried out by RKAS, Riisaar said, as the company had managed to improve service quality in many areas. The ministry's approach to administration, now choosing the best solution for an individual property, goes against a government goal as set out in the early 2000s, namely that to improve efficiency and cut costs administrative tasks should be taken care of by RKAS by 2020.

As the National Audit Office pointed out earlier this year, this plan has failed. In many cases, transferring property to RKAS and buy services from the state company has actually turned out a lot more expensive than individual state authorities running things.

RKAS press spokeswoman Mariliis Sepper commented that RKAS couldn't say whether or not other authorities had taken similar steps to save money. Asked about the case involving the Ministry of Education and Research, Sepper said that RKAS didn't comment on its relationship with individual clients.

Editor: Dario Cavegn



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