Bombardier and GP Group Win Public Railway Procurement for 200 Million through Fraud

by Екип на Биволъ

A consortium between the subsidiaries of Bombardier, the Canadian technology and engineering giant and the associated with the boss of Lukoil Bulgaria, Valentin Zlatev, company GP Group, has won the public procurement contract of the National Railway Infrastructure Company (NRIC) for the rehabilitation of the Plovdiv-Burgas railroad for BGN 195,424 175 without VAT. In the documentation, however, the consortium has listed false information – non-existent references/recommendations, which should disqualify it. The NRIC knew about this but closed its eyes instead of performing a simple check.

Out of public procurement, but some other time

In October 2018, GP Group announced a “voluntary withdrawal” from the “Zheleznitsa” tunnel contracts (worth BGN 185 million, excluding VAT), the “Struma” highway and the tramway line of tram 5 in Sofia. This happened after Prime Minister Boyko Borisov‘s statement that the company should be taken out of all projects with European and State funding.

Although violating the legal norms, Borisov’s decision was grounded in the ongoing investigations against the construction company, following Bivol‘s publications about large-scale corruption in the absorption of hundreds of millions of euros from public procurement funded by the European Union (EU). The scandal shed light on bribery practices and manipulation of public procurement through consulting companies linked to GP Group (here and here). Several days before Borisov’s order, Prosecutor General Sotir Tsatsarov announced that the Prosecutor’s Office had frozen accounts for about EUR 14 million of persons related to GP Group. Later, charges were filed against a shareholder in GP Group, Georgi Vassilev, brother-in-law of alleged drug trafficker and underground boss Hristoforos “Taki” Amanatidis.

A check by Capital daily in October last year, found that GP Group was a bidder in a number of key public procurement orders, worth together over BGN 1.15 billion. These include the modernization of the Elin Pelin – Kostenets railway line, the interconnection gas connection Bulgaria – Greece, the completion of the southern loop of the Sofia beltway and others. Even then, the publication noted that GP Group is participating through the Plobur Consortium in one of the major NRIC tenders – for the design and construction of signaling and telecommunication systems on the Plovdiv – Burgas railway line (Phase 2).

By Decision 3 from January 28, 2019, the NRIC declares the Plobur Consortium winner in the tender in question – with a total score of 100 points and a proposed price of BGN 184,999,094.47, excluding VAT. Naturally, the price is without the unforeseen costs (see here, in Bulgarian).

With the signing of the Plobur Consortium decision, NRIC Director General Krassimir Papukchiyski has practically cancelled Prime Minister Borisov’s orders

With the signing of the Plobur Consortium decision, NRIC Director General Krassimir Papukchiyski has practically cancelled Prime Minister Borisov’s orders.

Therefore, at the moment, with the NRIC’s ranking, Borisov’s statements that GP Group must be removed from “all projects with European and State funding” proved untrue. After the information about the winning companies emerged, Bivol approached the Prime Minister with a request for comment via the government press office.

To our question:

“Dear Mr. Prime Minister,

GP Group, which you ordered to be removed from public procurement, continues to win public tenders for hundreds of millions. What is your explanation of this phenomenon? “

The following official answer was received:

“Prime Minister Boyko Borisov believes that the State institutions must subordinate all their actions to the laws of the country. This was the point of his statement in October last year, when he assigned to the Chairman of the Road Infrastructure Agency to find legal ways for GP Group to be removed from the projects with European and State funding.

The Prime Minister has repeatedly expressed his position that in case of doubts about irregularities, there must be a probe and in the presence of fault, those who have committed it be held responsible. We remind you that a probe was requested into all persons mentioned in the Bivol article from September 2018, who had been in active relationship with an administration or a body of the executive power at the time of publication of the article in the media.

The information that the Prosecutor’s Office and the National Security Agency (DANS) had been carrying out an investigation into the activities of GP Group since the end of 2018 is also public.

Respectfully,

Government Press Office”

The NRIC’s reasoning is that the participant meets the requirements for personal status and selection criteria set by the contracting authority. Its offer complies with the requirements of the technical specification, the company says.

But is this true? Not according to Bivol’s check. It revealed that the references included by Bombardier Poland (consortium member) in the tender’s documentation for the “construction and putting into operation a GSM-R system” for the needs of the Polish railways are not true.

Project as recommendation without reference

In the specific tender of the NRIC for the design and construction of signaling and telecommunication systems on the Plovdiv-Burgas railway line, construction activities are not the main part of the work. They are rather auxiliary. The main activities are the implementation of signaling systems, telecommunication systems and a GSM-R system. The NRIC does not accept as reference works on metropolitan and city tramway transport, where GP Group has some experience, albeit unfortunate.

The NRIC emphasizes that the railway section Plovdiv – Stara Zagora – Burgas is a key part of the railway network of the Republic of Bulgaria with a length of 293 km. The results to be achieved by the winning bidder include the construction of modern signaling systems at stations and between the stations in this railway section. The stations are actually 19 in number. Their modernization involves the introduction of route-computer centralization, new external signaling equipment and cables, as well as dispatching centralization and ETCS. According to the assignment, the contractor has to build advanced telecommunication systems at stations and between the stations, based on fiber-optic cables including transmission networks, station and dispatching devices, telephone exchanges and what we are interested in this case – a GSM-R network.

The terms of the competition state that each participant must have experience in construction activities with an objective and volume identical or similar to the objective and volume of the contract. This must have happened in the last five years before the date of submission of the offer.

The requirement for applicants to have had built a GSM-R system fulfilling the requirements of the Technical Specifications for Interoperability (TSI), including a system of base stations on a railway section with a minimum linear length of 60 km had become a turning point.

Perhaps the high-tech details in such procurement, tend to encourage domestic construction companies to cooperate with high-tech global giants. In recent years, several global names, such as the Austrian PORR and the Greek TERNA worked some in Bulgaria, completed some renovations and withdrew from the local market.

According to the requirements of the contracting authority, a project should be mentioned in the documentation to serve as а recommendation. As such, of Plobur consortium lists “Modernization of the E30 railway line, Stage II. Pilot deployment of ERTMS in Poland in the section Legnica – Węgliniec – Bielawa Dolna”.

The above project was completed in December 2015 and chronologically complies with the criteria set by NRIC.

However, the actual GSM-R system for the E30 line was built in the framework of another project implemented by the Austrian Kapsch. This is a fact that can be confirmed on the company’s page.

Bivol sent a written request to the Head of the Polish-Rail GSM-R Network Management Unit Gzegorz Wątkowski. He replied that BOMBARDIER TRANSPORTATION (ZWUS) POLSKA SP. Z.O.O, part of Plobur, had not participated in a tender for a GSM-R network implementation in the Legnica – Węgliniec – Bielawa Dolna section.

Bombardier (ZWUS) and NRICs did not respond to our questions by the time of publication of this article.

It turns out that GP Group and its consortium partners have been ranked first without being able to prove they have experience in building and commissioning GSM-R systems.

The NRIC with eyes wide shut

According to sources, who wished to remain anonymous, the NRIC has received a signal that the participant Plobur has indicated incorrect information in its reference project – Modernization of the E30 railway line, Stage II. Pilot deployment of ERTMS in Poland in the section Legnica – Węgliniec – Bielawa Dolna.

However, the NRIC did not find it unnecessary to use its powers under the Public Procurement Act, according to which when the aim of a public contract is complex or of a special purpose, the contracting authority may check the technical capabilities of the bidder and, if necessary, their equipment.

Furthermore, GP Group is not the only one having a dubious reputation in the Plobur consortium. Not so long ago, Bombardier was involved in a corruption scandal in Sweden. One of its employees, a Russian citizen, was arrested on suspicion of having participated in a corruption deal – giving a bribe in connection with the modernization of a railway line in Azerbaijan.

The Swedish court later acquitted Evgeni Pavlov, the Russian, of the charge of corruption on grounds of lack of evidence.

The second ranked company is also close to #WHO

The NRIC has ranked in the second place in the tender procedure another consortium close to the current most powerful people in Bulgaria – “AAA Sdruzhenie”. The NRICs has rated its offer with 96.88 points.

Global giant Alstom and AT Engineering 2000 are partners in this consortium. AT Engineering 2000’s owner, Iliyan Terziev, is the Chairman of the Bulgarian Construction Chamber. A publication by the site Mediapool describes him as a person close to controversial lawmaker and media magnate Delyan Peevski.

The third participant in the competition, the TKP Plovdiv-Burgas consortium has been disqualified due to inconsistencies of its offer with the technical specification of the assignment.

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