Auditor general slams government approach to border construction ({{commentsTotal}})

Auditor General Janar Holm.
Auditor General Janar Holm. Source: ERR

In a report published on Wednesday, Auditor General Janar Holm suggests that the current plans for the improvement of the infrastructure along the Estonian-Russian border should be "broken down" and reassessed. The project was never started on grounds of necessity, and developed too quickly without taking into account all the possible options, Holm said.

The planned works along Estonia's eastern border exploded into a small scandal in early 2018, when it became clear that instead of the initially budgeted €79 million, the project would cost in excess of €197 million. At the same time, there would be a delay of at least four years, moving the completion date from 2022 to 2026 while breaking up the project into a greater number of stages.

Renewed estimates, taking into account the rise in construction prices and the extended construction period, have predicted a further increase by about €62 million. Adding the cost of the necessary surveillance equipment as well as additional money to be allocated for maintenance, the total cost is estimated to be some €320 million.

Harking back to comments made in summer last year, the auditor general once more points out in his report that the government never really considered any alternative scenarios, and that the government never had the necessary overview to make an informed decision about the project.

In addition to these difficulties, Holm also demonstrates that there have been questionable aspects to the project from the start. Quoting the National Audit Office's British counterpart, the auditor general lists several warning signs, all of which are applicable to the current situation in Estonia:

  • Political demand for a ground-breaking project
  • Initial announcement of a fixed cost, rather than a tentative and flexible estimate
  • Project costs are intentionally or optimistically reduced to guarantee approval
  • Alternatives are excluded early on, thus ruling out the option to choose from several scenarios
  • To handle exploding costs, the completion date is postponed

 

Political demand: Project initiated after Russia kidnapped Eston Kohver

The political aspect of the project can be seen in the aftermath of the abduction of Internal Security Service (ISS) official, Eston Kohver, by Russian security authorities. Images that were circulated in the media following the incident showed a wild border without any notable reinforcements, "Not much more than undergrowth," as Holm puts it.

With a general election coming up in 2015, the situation back then acted as a catalyst for quick political action, with the government of then-Prime Minister Taavi Rõivas (Reform) mounting efforts to exploit the situation.

"The reaction was amplified further by the realization of the people responsible for border control that a window of opportunity had opened," Holm says. Adding to this, the "understandable" desire to take advantage of the situation, solve an old problem and at the same time build a border that would become the new standard for the EU's external border was too good to pass up, the auditor general suggests.

Before September 2014, construction along the Estonian-Russian border had not been a priority, and funding for it wasn't allocated—there was no rush, as the Russian side continued to drag out the ratification of the border treaty. The kidnapping of ISS officer, Eston Kohver, on Sep. 5, 2014 changed things: on the 26th of the same month, the government initiated a border construction and reinforcement schedule with all urgency, producing the current project, which it would approve a year later.

According to the auditor general, the fact that the project was fast-tracked made it objectively impossible for both the Ministry of the Interior and the PPA to thoroughly look into the kind of border they would actually need to build, and look at cost in detail as well. The did jump the bandwagon, though, and did so with a vengeance—neither of the two ever requested more time, or suggested that more time was needed to do a more thorough job.

In the heat of the moment, with the coming election in mind, and with the Eston Kohver case moving the public, the ministers in the government were not encouraged to question the approach as it was presented to them. This repeated in February last year, when instead of questioning the chosen course, the completion deadline was extended, and money allocated from government reserves.

Lack of alternatives: Politicians left without options to choose from

Holm adds that no alternative solutions were developed for the construction of the eastern border. This is why today it is near impossible to tell whether or not the present solution is the best option available.

In a letter to the auditor general of July last year, Minister of the Interior Andrus Anvelt (SDE) named four scenarios that were initially considered, one of which was eventually submitted to the government.

The second scenario was to leave everything as it is, and the remaining two were only half-finished solutions that neither offered detailed descriptions nor financial calculations or estimates. None of these alternatives was discussed in working groups or presented to the government, hence making it impossible for the latter to come to an informed decision.

Police and Border Guard's risk assessment limited, too optimistic

According to the National Audit Office, while they did take into account all the potential risks and pitfalls facing them, the Police and Border Guard Board (PPA) didn't include any risks outside their immediate purview when calculating the project cost.

But plenty of risks as well as opportunities to reduce them remain outside the jurisdiction of the PPA. For example, the state's real estate management company, Riigi Kinnisvara AS (RKAS), highlighted in an assessment published in May last year that the projected cost of construction of the eastern border may be significantly increased by other major construction projects in Estonia, including Rail Baltica as well as road construction.

The auditor general's report also stresses that the PPA still don't have any idea how much exactly the maintenance of the border will cost once the new infrastructure is completed. The information they have provided remains contradictory.

Estimated maintenance costs (inclunding labor costs) of the eastern border until 2026 amount to €70 million, adding to the present cost of guarding it. And while the PPA are saying that an accurate estimate how much staff will be required and how much the maintenance of the new infrastructure will cost is impossible at this point, this is precisely the sort of input needed to calculate the cost of the project on the whole, Holm stresses.

Ministry and PPA specifications mainly concerned with minor issues

The Ministry of the Interior as well as the PPA have justified the chosen option with threats related to illegal migration and smuggling. These, according to the auditor general, are infrequent in the areas concerned, and have no significant impact according to virtually all of the relevant authorities, including the ministry and the PPA.

Other factors that call for construction of border infrastructure to the currently planned extent include guarding Estonian airspace, reduce the costs associated with being part of the EU's external border (e.g. where processing incidents is concerned), dealing with the border line across transboundary bodies of water, such as the lakes along the Estonian-Russian border, sort out land ownership of plots touching on the border, complement needed legislation, securing the border with a view to maintaining the security of NATO units in Estonia, and so on.

Yet none of the above have been assessed as costs should anything related with them actually become an issue. In other words, the government was handed a cost estimate that dealt with nothing more than the absolute basics immediately within the jurisdiction and competency of the PPA.

Costs had nowhere to go but up, too many factors excluded from initial estimate

The cost estimate presented to the government by the Ministry of the Interior and the PPA was too optimistic, and the plan eventually approved in no way included an assessment of all the potential costs that would become an issue later, Holm explains.

Although there was mention of a more specific cost estimate to follow after final designs to be completed by late 2015, the presentation made to the government did not emphasize in any way that this would be so—instead, it used amounts with an accuracy down to the last euro.

Which meant that when the government at the time decided to approve the border construction project, it was under the impression that the costs would amount to some €71.3 million, with another €8.2 million required for maintenance and operations between 2016 and 2019.

By now, estimates are at least four times that, and the government was made aware of the actual cost of the project in February 2018 instead of fall 2015.

Auditor general believes reassessment should be carried out right away

Auditor General Janar Holm points out that a reassessment of the current approach is possible and could be done while works along the border continue. A first round of procurement tenders for a 23.5-kilometre stretch have been announced, and bids are expected to come in already next month.

"But the border solution approved by the government should be broken down again and assessed. We may find that building the border without compromising on performance doesn't have to cost so much, or that the approved solution really is the best option. Either way we win. At least we'll have the reassurance that this is the price we'll have to pay for a functioning border," Holm says.

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Editor: Dario Cavegn



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