Very tender procedures

Tenders were created to make the procedure of selecting the best bids as unambiguous and uncontroversial as possible. Because of the frequent tensions between investors and participants however, tenders particularly public ones, don't enjoy the greatest of reputations in Poland. What could be the solution?

Przedsiębiorstwo Państwowe (PPL) Porty Lotnicze's selection of the main contractor for the development of Okęcie airport and ING Real Estate's decision as to who would build their retail complex, Złote Tarasy, are two recent examples of major tenders for construction work. The tenders followed quite different procedures, which is perhaps why, whereas the former tender commission's choice was disputed by the unsuccessful bidders, the latter did not experience any such problems.

Problems with documentation
"What is quite astonishing is the fact that major, respectable construction companies in Poland do a sloppy job preparing their tender documents. It is not unusual for bank guarantees to be incorrectly drawn up or that the submitted documents are badly initialled," says Bogdan Chudziak, Director for the development of the Okęcie airport extension.
Bogdan Klukowski of Warbud, on the other hand, claims that a lot of reliable companies end up losing tenders because of very minor and futile flaws in their offer portfolios, and  supports the idea of bidders  having the right to clarification, of the areas questioned by the tender commissions. This way there would be less reason to suspect any biased and selective treatment of the competing companies. "It's too often the case that firms aren't able to look at all the tender documentation and if you consider that bidders are expected to offer, among other things, fair and credible prices, they should really be given unrestricted access, says Klukowski."

Grey areas
One of the problems indicated by bidders is that the criteria applied when offers are evaluated are far too vague and indeed, arithmetically overwhelming, which makes them vulnerable to various interpretations and their appraisal questionable. So, are they worth simplifying?
Zbigniew Obłoza, responsible for the organization of tenders within the framework of the Phare Cross Border Co-operation Programme, believes that they are. "The Phare procedures are clearer than those run in accordance with official regulations, which contain such obscure notions as trustworthiness or experience. We, on the other hand, are solely concerned with the price, and the simplicity of our regulations allows us to retain our common sense during tenders."

International procedures
Jerzy Hanczewski of ING RE, maintains that one of the reasons the Złote Tarasy tender escaped controversy was the application of FIDIC (the International Federation of Engineering Consultants), procedures. He goes on to say that since the analysis and appraisal procedures are very clear, they give tender organizers a fuller view of bidders' financial standing and allow a more thorough study of the offers made. "Thankfully, these regulations have been adopted by the main Polish construction companies and it would be pointless applying even the best procedures if nobody on the market was aware of them," says Hanczewski, who adds however, that the company might have managed to avoid appeals from unsuccessful bidders, for reasons other than the accessibility of the regulations.

Private and public tenders - different worlds
Bogdan Klukowski maintains that, given their different nature and legal principles, public and private tenders should be considered separately. "Owing to the commonly-applied consultation, pre-selection and negotiation procedures, sometimes at a number of stages, a private investor has an undeniable advantage over a public one. The private tender process enables the contractor to present the company via examples of both former and current undertakings, as well as the formal documentation. The procedure allows contractors to present their bid and proposals for improving the investment properly, and therefore make the best use of time and the price," says Bogdan Klukowski, adding that public procedures don't provide such possibilities. The act on public orders states that investors must maintain an equal distance from each of the bidders and visits to construction sites, for example, would reduce that distance to a perilous extent.

Possible solutions
How could the procedures and organisation of tenders be changed to make them less cumbersome and truly serve the purpose of selecting the best bid? Jerzy Hanczewski claims that one of the strong points of private tenders is good communication between the parties. "As a result, the offer made by the potential contractor fully reflects the investor's needs. Sometimes I get the impression that with public tenders, the organisers themselves aren't always clear about what they expect from the competing firms."
Bogdan Klukowski goes on to say that for a start, the legislation concerned with so called 'additional' works, which helps a lot of firms win tenders with suspiciously low prices, should be repealed because the same bidders later seek to increase their contracts by the statutory 20%, on the grounds of having come up against unexpected circumstances. "Changing the legislation would force the organizer to take full responsibility for the assessment of the tender documentation as well as the tender procedure itself. Bidders on the other hand, would have to predict and carefully consider all the circumstances surrounding the tender and the conditions related to construction work, knowing that increasing costs would be practically impossible. The possible consequences of underestimating the value of the contract would undermine weak and inexperienced firms, to the advantage of reliable, technically viable and experienced companies."