RIA restricts prospective suppliers with too many requirements; most tenders related to reconstructions of railways only have three or four candidates
PRESS RELEASE on Audit No. 14/21 – April 20, 2015
The Supreme Audit Office (SAO) scrutinized the utilization of funds earmarked for reconstructions and the maintenance of national and regional railways within the period from 2010 to 2014. At the Railway Infrastructure Administration (RIA) or its regional directorates, no fundamental errors were found. However, auditors concluded that the RIA could utilise the funds even more effectively.
Auditors criticized the RIA for bad price estimates of maintenance works and selection of contractors. Because of the errors, contracts were not awarded to the best suppliers. Errors were found in the planning of railway reconstructions. Reconstructions got delayed, sometimes by years. As a result, the essential repairs got even more expensive.
The worst situation was found with bridges, passages, and tunnels. In 2013, there were 33 % of bridges, 36 % of passages, and 38 % of tunnels without serious defects, and could have been repaired through common maintenance works. In the period 2010–2013, the Railway Infrastructure Administration spent on average CZK 8,900 million each year for repairs. In 2014, the costs of urgent reparation works would be CZK 12,000 million. Every year, the average repair costs per one kilometre of railways made CZK 1 million.
Auditors revealed that the Railway Infrastructure Administration used a catalogue with subjective information about estimated prices of maintenance works. The suppliers’ offers contained unit prices, which differed a lot from the catalogue – sometimes even by 100 %.
When selecting suppliers, the Railway Infrastructure Administration restricted prospective applicants with too many requirements: For public contracts with estimated prices ranging between CZK 2 million and CZK 5 million, the RIA required applicants to have had experience with works worth CZK 50 million during the preceding three years. As a result, only three or four candidates applied for the tenders. For example, a tender for reconstructions of railway’s upper and lower sides, only 3 % of suppliers were awarded 56 % of all contracts.
As a sector contracting authority, the RIA does not have to comply with the Public Contract Act with below-the-threshold contracts. The SAO concluded that such an exception is unreasonable. With individual award procedures, errors were found including the following: unequal treatment to candidates, non-standard courses of proceedings, and unjustified exclusion of candidates. Errors were mostly found with below-the-threshold contracts.
The Ministry of Transport explains the act on the State Fund of Transport Infrastructure in a way, which makes it impossible for the Railway Infrastructure Administration to reimburse purchases of movable assets. As a consequence, the RIA leased 40 special vehicles for railways’ maintenance and repairs, which increased their final costs by CZK 87 million.
Communication Department
Supreme Audit Office