Dumping prices in public auctions becoming common practice

The leaders of the Romanian Association of Construction Entrepreneurs (ARACO) will continue to notify the entrepreneurs of the National Authority for Regulating and Overseeing Public Procurement (ANRMAP) whenever public auctions get knocked down at dumping prices or with deadlines and guarantees that can"t be met. Adrian Florescu, First Vice-President and General Director of ARACO, said: "ANRMAP promised us their full cooperation in revising the law of public procurement in order to avoid the increasingly numerous problems arising from the selection of the winning tenders. We have exposed some of these cases, and we have recently presented specific cases of auctions that went to companies who submitted tenders amounting to less than half the estimated price of the works, provided good execution guarantees of 50-100 years or impossibly short deadlines. We hope that ANRMAP will keep its promise and watch carefully the few auctions being held in this period".

The number of disputed auctions has increased lately. Mr. Florescu said that the number of irregularities seems greater now because of the low number of calls for tenders for new investments than in the previous years. What"s more, competition between bidders has increased. Whereas last year, many auctions would only be attended by just one bidder or would be held repeatedly due to lack of bids, especially for rural infrastructure projects, some of these projects now see as many as ten bidders.

According to the general director of ARACO, harsh competition and the lack of orders have caused the number of dumping-price tenders to increase. Many constructors are so desperate that they make absurd tenders just to make sure they win the auctions. If they do win however, their bids would not even be enough for them to buy the needed construction materials.

Adrian said: "The beneficiaries are taking great chances in accepting these tenders, and constructors are desperate, and there is a high risk of low-quality execution or projects that would be quickly put on hold, which we really can"t afford in these times of crisis. We hope the authorities will take into account the amendments we have already submitted to ANRMAP and the concerned ministries, in order to improve the procurement legislation".

ARACO offered to provide consulting services for public institutions that have funds available for making new investments and don"t know how to prioritize their works. The months of March and April have lead to the resumption of works that were launched in the previous years, that are executed by small and medium sized companies, for the most part.

However, the managers of ARACO say that the good statistics of the first months of the year, do not yet reflect the deadlock in the construction sector.