In an audit of the fulfilment of public construction contracts, the National Audit Office said that the fulfilment of public contracts in construction requires greater attention, and it is important in the supervision of public procurements to emphasise whether the best possible outcome was achieved for public funds.
On the basis of ten buildings completed between 2015 and 2018, the National Audit Office examined the state of play regarding the fulfilment of public construction contracts in Estonia. According to the audit, current supervision practices, according to which the focus lies primarily on the formal judicial aspects of the conduct of a tender may not necessarily substantively support the achievement of the primary objective of the law, spokespeople for the National Audit Office said.
Records regarding the ten chosen buildings indicate that, on average, it was possible to begin using the building eight months later than set forth in the initial procurement contract concluded regarding said construction, while the total cost of the building increased by 20% on average.
Nonetheless, all audited parties were satisfied with the completed building, and the National Audit Office did not find any expert opinions suggesting that a completed building was of poor quality or dangerous.
The National Audit Office identified significant problems in the behaviour of contracting authorities and participants in the tenders alike. The analysis revealed that construction takes longer and grows more expensive primarily when the contracting authority begins procuring works on the basis of a deficient construction project or when it is revealed in the course of construction works that the builder is unable to fulfil the contract in the required manner.
Many of the problems encountered in the course of the fulfilment of a procurement contract were rooted in the works being procured on the basis of a project which cannot be executed in reality, or the wishes of the contracting authority changed and the builder had to redesign things or come up with additional designs. It was also observed that such a course of action was often the result not of a lack of knowledge or skills, but rather from time-related and financial pressures, as it is hoped that time and money can be saved by designing and building at the same time.
In a considerable portion of the procurements examined, the best offer was made by builders who, despite an additional assurance to the effect that they are able to build according to the agreed terms, had not set these terms as their goal and had knowingly made an underbid. Such tenderers sought to substitute solutions set forth in the tender with cheaper ones in the course of the fulfilment of the contract in order to achieve a reduction in costs.
Improve documentation, says audit office
The National Audit Office found that contracting authorities must help see to it that the violations of ill-willing parties be documented and other contracting authorities informed of them. Based on its audit, the National Audit Office also made several recommendations to contracting authorities regarding ensuring that discussions regarding the potential substitutions of materials and solutions are held before the procurement is concluded already, not afterward. In addition, it was also recommended that contracting authorities improve documentation of construction works as well as set forth in their internal guidelines who is responsible for what fields in the fulfilment of a procurement contract.
The Ministry of Finance was also advised to pay more attention to an analysis of the systemic problems revealed in the fulfilment of public contracts in order to clarify whether identified mistakes arise only as a result of either the ignorance or ill-will of a contracting authority or are partially caused by legislation not being implementable.
Editor: Aili Vahtla