Government to scrap eco-tender as finance minister refuses to back lowest bid

Czech Prime Minister Petr Nečas has announced his government will not name a winner in a multi-billion public tender to clean up the country’s old environmental pollution leftover from the communist days. The Prime Minister made the announcement on Wednesday after Finance Minister Miroslav Kalousek refused to back the lowest bid in the tender saying the price was less than convincing.

Miroslav Kalousek

56.8 billion crowns – that is how much the Czech branch of the Danish company Marius Pedersen Engineering asked to be paid for cleaning up over 500 sites around the country polluted before 1992. Even though price was the single decisive factor in the tender, Finance Minister Miroslav Kalousek refused to recommend that the lowest bidder be awarded the government contract.

“The overall price consists of three parts. First there are costs charged by the subcontractors of the bidder. Then there is the cost of money. The bidder would first finance the operation itself and the government would pay it back with interest. In my opinion both those prices were reasonable. Nevertheless the level of the risk surcharge took me by surprise. It would practically cancel out the advantage of the contractor taking all the risk upon himself.”

While the decision was welcomed by the Civic Democrats and their coalition partner Public Affairs, Marius Pedersen Engineering has expressed disappointment. Sales Director Pavel Borůvka:

“Of course, we are very sorry because the effort and money we invested in the process was quite significant. It is a pity that rather than objective criteria political decisions were taken into consideration.” Prime Minister Petr Nečas who says he has always had doubts about the eco-tender has suggested a possible future direction.

“One way would be to set a fixed price, parcel up the deal into individual clean-up projects according to regions, type of environmental damage and urgency or even a combination of all three factors. But this will need to be discussed by the government. Let’s not jump to conclusions now.”

Critics, including the anti-corruption watchdog Transparency International repeatedly slammed the deal for lack of transparency and a great corruption risk. Czech environmental organizations are also suggesting the tender should be broken down into smaller parts in order to allow more competition. Before a final decision is made, Finance Minister Miroslav Kalousek says partial clean-up operations will continue nevertheless.

Photo: Barbora Kmentová

“We will carry on the way we have so far. Old environmental damage has been gradually removed for 17 years now. It has cost a lot of money and it is going to cost a lot more. This has been an honest attempt to find a way to do it quicker, cheaper and more efficiently. The bidders had an opportunity to submit an offer that would convince us, but unfortunately that did not happen, so we have no other option but to carry on the way we did before.”

The other two finalists in the bid were Geosan Group which offered 57.8 billion crowns and Environmental Services, part of the Slovak financial group J&T, which offered 65.5 billion. The firms will have 15 days to raise objections against the government’s decision.