More than UAH 39 mln of Possible Overpayment for House Insulation in Dnipro

On April 1–8, the Department of Housing of the Dnipro City Council concluded 13 agreements with Starbudkontrakt LLC on major repairs of residential buildings. The total amount of contracts reaches UAH 425.45 million.  

In all procurement transactions, Starbudkontrakt was the only participant. The company offered a price between 0.1% and 20% lower than the expected value. 

The requirements in the tender documentation in all procurement transactions are similar. Those include potentially discriminatory ones. For example, the procuring entity established a requirement for participants to provide a similar contract for the major or current repair of the roof and/or facade of a residential building, concluded in Prozorro during 2023-2024, as part of the tender bid. In this way, the procuring entity can narrow competition and create obstacles for unwelcomed participants.

By December 20, 2024, the contractor must repair and insulate the roofs as well as the facades at 13 addresses.  

 11 houses on this list are being thermomodernized with funding from the European Bank for Reconstruction and Development.  

 All contracts have a dynamic price. That is, they provide for a potential cost adjustment from the very beginning. It can move both upwards and downwards. Although the latter is extremely rare during construction.

 In the resources sheet, one of the most expensive and largest positions is indicated without detailed characteristics, which makes it difficult to compare the price with the market price. Thus, basalt insulation was considered at UAH 7,583 per cubic meter (all prices are indicated including VAT). The DOZORRO project sent a request to the procuring entity in particular to clarify the technical characteristics of this material: density 135 kg/m3, thickness 150 mm. For comparison, Izovat insulation with the same characteristics is sold for UAH 4,530 per cubic meter, Technofas—for UAH 4,387.8 per cubic meter. In terms of this item alone, the overpayment might amount to UAH 26.59 million.

 A significant part of the funds falls on Ceresit CT 174 plaster for 212 UAH/kg. The official website of Ceresit sells it for 114.36 UAH/kg, Epicenter sells it for the same price. Overpayment in terms of this item might amount to more than UAH 9 million.

 In terms of these six items, which are the main pricing elements of the estimate, the overpayment might reach UAH 39.4 million. 

In April, the auditors got interested in six procurement transactions for the insulation of Dnipro buildings and began monitoring. According to the results, no violations were found in four procurement transactions, and two more were in the process of monitoring.

In addition to clarifying the characteristics of the materials, the DOZORRO project also shared its calculations regarding the possible overpayment in the request. The Department of Housing of the Dnipro City Council replied that it had processed the information and even asked the contractor to clarify the current average market prices for construction materials, in which DOZORRO suspects overpricing. 

The contractor informed us that, as of April 17, the average market price for plaster was 114,36 UAH/kg, for basalt insulation—UAH 4,509.12.

The procuring entity also informed us that, considering the above, after the works are performed and certificates are signed, the cost of contracts will be reduced through the conclusion of additional agreements.

“We will monitor the implementation of the contract to make sure that the prices are really adjusted. However, this promise does not remove the issue of a potentially inflated expected value. After all, the contractor offered such prices having such an opportunity. The expected value is formed based on estimates of project documentation. So, the problem is how these documents are comprised and what price for building materials is provided for in them,” explains Yaroslav Pylypenko, DOZORRO project monitoring specialist, TI Ukraine.

Starbudkontrakt LLC was founded in 2016 in Bila Tserkva (then the company was called Style Profi). The founders of the company were Serhii Shkrebei and Tetiana Tkachenko. Less than three months later, Serhii Sovka became the sole owner of the company, renaming it Starbudkontrakt LLC. Currently, Serhii Sovka is accused of misappropriation of property by abuse of office.

Since March 2023, the owner of the company has been Viktoria Donets, who re-registered the company in Dnipro.

Since 2016, the company has received contracts for more than UAH 807 million. The largest procuring entity of the LLC was the Department of Regional Development of the Kyiv Regional State Administration: 33 contracts for more than UAH 182 million.

This publication was prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.