Mirage of the National Stadium: Taxpayers will pay to stop the project

Earlier this year, the Vilnius City Municipality planned to sign a concession agreement with Axis Industries, which, after winning the tender, had to fix the end of the drama of the national stadium construction. However, in mid-March, Public Procurement ordered the suspension of 156 million. the reason for seeking to determine whether the increase in the value of the concession contract in question, which took place during the negotiations, is justified and lawful.

The Vilnius City Municipality appealed to the court against the VPT’s decision, which suspended the progress of the project, and won in the court of first instance: it was established that the VPT had illegally suspended the signing of the contract. For its part, the VPN is considering an appeal against the ruling, which would continue to freeze the project indefinitely.

Brakes and delays increase the price

Povilas Poderskis, the Director of the Vilnius City Municipality Administration, states that if the VPN court appeals the decision, the investors determined to build the national stadium will not withdraw, but obviously it will give the impression that the processes are carried out out without much sense.

“In this case, the VPN does not fulfill the function of making the projects come true, but it assumes the role of punishing and discouraging. As long as this regulatory environment exists, it is obvious that investors will be discouraged from investing and participating in public sector projects, which reduces competition and has negative aspects ”, the interviewee is convinced.

According to him, the partners who have won the concession tender so far tend to take risks, because they have already seen everything, but in the future such stories may cause difficulties in finding new partners: “that part of the political risk and, for the regulatory environment of the public sector, the risk of investors is considered excessive and does not participate in bids, or the participants take high risks, which also costs taxpayers more ”.

The representative of the Municipality of Vilnius assured that the decisions to suspend the signing of contracts or public procurement tenders not only take time away from specialists from public institutions that implement projects and tenders, but also have obvious negative benefits for taxpayers .

“Risk is the amount of money that is valued. This means that future projects will also be evaluated with higher risk, which will generally increase project prices, since the amounts include all the risks of the sector, which also arise from past experiences ”, continued P. Poderskis.

When asked what awaits the national stadium if the VPN still appeals against the court’s decision and the judicial process is prolonged, the interlocutor said that he would have to wait again: “Maybe we can plan for about two months, but if the VPN he complains, and investors pump their money into the economy. “

As the interlocutor recalled, if it were not for the VPN’s decision to suspend the process of signing the concession contract, the works would have already begun on the site of the national stadium.

“If the VPT does not appeal the court’s decision, it is likely that we can sign this agreement at the end of this year. This would shed some light on the mood of the quarantine. And if not, it will be more complicated,” added the interlocutor. .

See the basis for the appeal decision

At the time, Jovita Petkuvienė, deputy director of the VPN, acting director, said that a judicial decision unfavorable for the service was received on Monday night and that there were grounds to appeal what she saw.

“We have examined and yet we see the grounds for a possible appeal. We are inclined to appeal the decision and start thinking about the composition of the appeal,” he said.

However, on Wednesday, the Vilnius City Council asked the VPT for a proposal for the signing of the Peace Treaty, according to which it is proposed to abolish the VPT’s obligation to reimburse the costs of litigation incurred by the municipality (about 6.5 thousand euros ). However, according to J. Petkuvienė, so far the service is more inclined to follow the path of appealing against a court decision.

“Based on what is stated in the sentence, we see that some of the arguments that we present before the court have not been evaluated. We have our own arguments that would allow us to make an appeal, ”he said.

J. Petkuvienė assured that if it had been possible for the Municipality of Vilnius City to modify certain parts of the concession contract, in that case, VPT would have instructed the Municipality to do so.

“In our opinion, the concession itself in this case is distorted according to the conditions that were tried to put together, so we don’t see the possibilities of how to fix them. We discussed it with the municipality in the spring, ”said the VPN representative.

When asked why the VPN would not be satisfied with the Peace Treaty, J. Petkuvienė replied that the Service continues to adhere to the position that its conclusion was not wrong.

“We always prioritize the opportunity to save a bid or purchase if there is an opportunity to make amends. But if there is no possibility, it is natural that our decision leads to the termination of the process, “he added.

He believes that the project should be stopped only by the court.

Ramūnas Petravičius, a partner at the Ellex Valiunas law firm, realized that the national stadium competition had been held for many years, but VPT intervened at the end of the process, on the finish line.

And it was said that it is not a concession, but a public procurement, so all the procedures are supposedly illegal. Interestingly, the entire marathon had already been run in court and the courts had not seen any shortcomings in the procedure in response to complaints from other bidders. In my personal opinion, a project like this should be stopped only by a court and not by the VPT, although it has that right ”, shared the interlocutor.

R. Petravičius emphasized that stories like those of the national stadium have a negative impact on potential investors.

“It just came to our attention then. In any tender in which the company participates, a considerable amount of money is already invested and spent only for the preparation of proposals, presentation, search for partners and obtaining financing. After every scandal of this type, it is more difficult to attract investors because the project is committed, “he said.

The partner of the law firm also pointed out that the interpretation of public procurement relationships between institutions is the responsibility of taxpayers.

“The legal costs are only a small part of the real damage. If the VPN courts lose and the courts award the costs, all citizens will, of course, pay them. Has any official been asked for such a refund at any time? ”He asked rhetorically.

R. Petravičius saw that the problem in Lithuania is not with the Public Procurement Law, which has been drawn up in accordance with EU directives, but with its implementation and the lack of responsibility of the institutions and officials: “It can abuse any system for any purpose, including any contracting authority and court having all the tools to prevent such abuse. The legal processes of public procurement are going very fast, but in this case it was not the court that delayed it, but rather the request of the VPT, ”the interlocutor spoke about the fate of the national stadium project.

Money is wasted preparing the public procurement itself

Egidijus Skrodenis, former head of the Lithuanian Highway Administration and now a partner at Civitta, assessed the current public procurement system in Lithuania and the resulting delays, saying that the situation is not very bad, but that there are opportunities to change it so that the processes lengthy or suspension of hiring procedures do not cost taxpayers. more and more money.

“It just came to our attention then. For some, the system works, for others it is bad. In any case, it seems to me that a great deal of money is being wasted on public procurement alone. From experience I can say that there were about 400 purchases. per year in the Directorate, with recurring companies involved, but the same procedures had to be done each time. It was necessary to verify, provide information that had already been provided. This deprives the specialists of time, which also depends on costs, “he commented .

Speaking of the institutions that control public procurement, E. Skrodenis would also see more benefits if, in case of disputes or disagreements, mediation was followed rather than court.

“Legal procedures are time consuming and it is really easier to come to an agreement. I really don’t think the contracting authorities are trying to maliciously make purchases, maybe sometimes, for example, the contracting authority just has more information than the authorities of control, so there should be consultation rather than creating an additional judicial mechanism and wasting money. After all, it doesn’t matter who wins and who gets the good – taxpayers will pay, “he continued.

Therefore, in the opinion of the interlocutor, there would be less confrontation between the contracting authorities and the contracting control authorities on the issue of public procurement and more dialogue.

When asked whether stories about stagnant and stagnant public sector projects discourage investors from taking on such projects, E. Skrodenis, who currently works with the company, said that it does not deter companies, but forces them to rethink their participation in tenders.

“You get used to working in the circumstances in which you find yourself. The state is the largest customer in many areas, so companies will continue to provide services. But sometimes you hear from the company that if everything happens as it is now, it’s just that they just won’t waste time or money, “he added.