Bidding process derailed

  • 2011-05-11
  • From wire reports

RIGA - Swiss rail passenger car manufacturer Stadler Bussnang AG (Stadler), one of the bidders for the supply of new trains for the Latvian railway company Pasazieru vilciens (Passenger Train, PV), has turned to the European Commission asking that an infringement procedure be started against Latvia, said a report on LNT television’s morning show ‘900 sekundes,’ reports Stadler believes that the competing bid from Rigas Vagonbuves Rupnica (RVR) does not comply with the requirements of the tender and should be rejected. If the principles of fair competition are not observed, the state of Latvia may lose 140 million euros in funding available from the Cohesion Fund for the procurement of new trains.

Stadler believes that Transport Minister Uldis Augulis (Union of Greens and Farmers) and his predecessor, Kaspars Gerhards (For Fatherland And Freedom/LNNK), exerted political pressure on the Procurement Monitoring Bureau and PV in publicly expressing support for RVR.
The Swiss company says in its letter to the Commission that RVR had violated several principles of fair competition, directly and indirectly, by launching a major campaign in the Latvian media and presenting information in a biased and non-objective way so as to win the public’s support.

Stadler is especially critical of RVR’s appeal to the public to support local bidders, which goes against the principle of non-discrimination and European ideals of fair and free trade.
There have been several similar cases in the European Union in the past. For instance, EU co-funding for Poland’s Silesia was slashed 21 percent in 2010 after the Commission established competition infringements on the part of Polish authorities.
The Procurement Monitoring Bureau on May 9 ordered PV to halt the procurement of new trains and prohibited the company from signing any contracts on the supply of new trains until the procurement regulations are altered.

The Bureau made the decision following a protest submitted by RVR on Feb. 11, and supplemented on March 9.
The contested provision deals with the requirements on the identical parts of electric and diesel trains as well as on contractual penalties for the supplier of new trains, which are not explained well enough in the procurement regulations.
However, Stadler notes in its petition that the PV procurement regulations’ provision, which says that RVR partner Bombardier Transport France will have to assume RVR’s obligations if RVR is unable to honor its obligations itself, is also against EU directives, as it means that if RVR’s bid is selected by PV, all the work may eventually be done by Bombardier.
PV plans to buy 34 new electric trains and seven diesel trains in total by 2015, with the total cost of the project estimated at 144 million lats (205.7 million euros).