November 16, 2023 16:29
The Secret of Success of the Main Contractor of the Kyiv Oblast
The Regional Development Department of Kyiv Regional Military Administration (KRMA) became the core procuring entity for Kyiv Oblast restoration. Since the first restoration contract in September 2022, KRMA has signed more than 800 contracts worth 6.9 billion in a year.
The department mostly operates funds received from the Fund for the Elimination of the Consequences of Armed Aggression and the regional budget. It was usually used to transfer funding from the state budget for restoration needs, and not to communities with destroyed or damaged facilities. This can be explained by the fact that most of them had no experience in implementing large construction projects. While the KRMA could ensure more professional approaches and transparent procurement procedures. However, everything turned out somewhat differently in practice.
Nidkom LLC has become the main contractor for KRMA’s f Regional Development Department in 2022-2023. The total price of contracts concluded on Prozorro is to UAH 755 million, i.e. 11% of total amount.
Two firm’s largest contracts are fresh restoration projects funded by the Fund for the Elimination of the Consequences of Armed Aggression:
- Construction of a new school with a pre-school unit at 37 Kurortna Street in Vorzel, Bucha District worth UAH 428 million. There must be built an educational institution for 360 school students and 85 places in a kindergarten unit.
- Major repair of a residential building at 101 Vokzalna Street in Bucha, worth UAH 91 million.
We decided to analyze these two major projects.
How the tenders were held
In Vorzel school tender, the procuring entity set only 5 working days deadline for submitting proposals by participants.
The tender was announced on Friday evening, August 11, 06:26 PM. Participants had to analyze 127 pages of the terms of reference, and prepare all necessary documents and estimates before the following Friday (August 18).
To make that even harder, the procuring entity put forward a requirement for mandatory inspection of a facility to be agreed upon by the procuring entity itself. To do that, participants had to send a letter to a procuring entity and agree on the day and time of inspection. The AMCU Board recognized that kind of requirement as discriminatory in other tenders since it contradicts the open access principle.
It is clear that there were not many people who managed to get acquainted with the project and prepare several dozen certificates and estimates. Nidkom LLC and Rikdom LLC competed for the contract.
The participants submitted their proposals with a one-hour difference and did not make a single step to reduce the auction price.
Nidkom was awarded the contract with 0.9% difference from the expected value.
In the procurement for the restoration of an apartment building in Bucha, the procuring entity established similar requirements and a 5 working day deadline for submitting proposals. However, two other participants appeared for that tender. They reduced prices at the auction and eventually offered to perform a contract for UAH 8.5 million cheaper than Nidcom LLC which did not tried to make any discount.
However, the procuring entity disqualified both competitors of Nidkom LLC.
Atlant Construction and Investment Group LLC was disqualified for non-compliance of certain items in the estimate part of the proposal. This could probably have been affected by the very short time required to prepare procurement proposals.
The reason for disqualification of Time Engineering was discrepancies in established salaries in different files of the proposal: an estimate, certificate, and average salary calculation.
“The participant’s tender proposal (contract price) has salary calculations and an average monthly salary certificate per full-time employee to be maintained at the facility. The above calculations mention average salary to be UAH 12,595.43. And the imd document calculations in AVK-5 software and the PDF explanatory note to the contract price set the average monthly salary of UAH 12558.80.“
The procuring entity believes that if the estimate (explanatory note to the contract price) had the correct average salary, the participant’s proposal would be UAH 43 thousand more expensive. At the same time, the difference between this and the closest proposal is more than UAH 8.5 million.
On the one hand we could agree with the procuring entity because the calculation mistake does exist. But the thing is, the winning Nidkom LLC has similar discrepancy in calculations.
Nidkom LLC set UAH 12710.69 as average monthly salary for workers. The average salary in the estimate part and the average salary certificate is UAH 12558.80.
The was a similar discrepancy in the calculations in other previous tenders participated by Nidkom LLC and held by KRMA’s Regional Development Department. However, the procuring entity did not see any violations there.
Nor the procuring entity saw any other discrepancies in Nidkom’s proposal. For example, the entity required to submit the list of owned or rented equipment to be used at the facility. Nidkom did not actually confirm that requirement since instead of the list of its own or rented equipment, the company submitted the transport services agreement with Sparta Trade House LLC (transportation and special equipment services agreement).
We contacted the procuring entities to ask about the winner but they believe they did everything correctly and in compliance with the law.
Cost of works
If we carefully examine Nidkom’s estimates in Bucha residential building restoration tender, we will see why its competitors proposals were UAH 9 million cheaper.
Material cost analysis:
| Item | Unit | Winner’s estimate price, UAH | Market prices analysis, UAH | Average market price, UAH | % deviation to market prices | ||
| 80 mm concrete paving stones | m2 | 648.00 | 408.00 | 415.00 | 600.00 | 504.00 | +29% |
| 1500×700 mm steel bath tube with a siphon | pcs. | 19071.00 | 4956.00 | 7389.00 | 4219.00 | 5804.00 | +229% |
| Aerated concrete blocks D600 | m3 | 4608.00 | 3150.00 | 3100.00 | 3050.00 | 3100.00 | +49% |
| A500C hot-rolled reinforcing bars, diameter 12 mm | t | 43200.00 | 32790.00 | 28638.00 | 34500.00 | 31569.00 | +37% |
| Ceresit CT15 adhesive primer paint | L | 280.80 | 186.80 | 233.50 | 182.20 | 207.85 | +35% |
| I-Beam N 24 | t | 66000.00 | 43445.00 | 50610.00 | 48000.00 | 47027.50 | +40% |
| Dowels for thermal insulation, l=180 mm, pcs. | 12.60 | 3.30 | 2.79 | 5.7 | 4.25 | +196% | |
| Extruded polystyrene foam | m3 | 4710.00 | 3733.33 | 4089.60 | 5872.72 | 4803.02 | -0.2% |
| 3×1.5 mm2 LSOH PVC fire resistant cable-1.0 | 1000 linear meters | 45540.00 | 34200.00 | 23420.00 | 40520.00 | 31970.00 | +42% |
| UUKKI FRIGGE 50/PUMA metal profile | m2 | 684.00 | 606.25 | 613.21 | 693.00 | 649.63 | +5.3% |
| Professional multipurpose foam | L | 415.20 | 316.60 | 392.80 | 262.66 | 327.73 | +27% |
| 135 kg/m3 mineral wool slabs, 150 mm thickness | m2 | 1080.00 | 598.03 | 598.95 | 817.00 | 707.50 | +53% |
| 135 kg/m3 mineral wool slabs, 50 mm thickness | m2 | 360.00 | 247.50 | 199.34 | 233.90 | 223.42 | +61% |
| Non-additive multipurpose Portland cement, 400 brand | t | 5100.00 | 5000.00 | 4350.00 | 4960.00 | 4675.00 | +9% |
| Steel radiator, type 22, 1100x500h | pcs. | 7800.00 | 3799.00 | 2610.00 | 3367.00 | 3204.50 | +143% |
| Glass grid CT-325 | m2 | 56.64 | 49.09 | 41.19 | 43.39 | 45.14 | +26% |
| Dry adhesive glue and reinforcement mix | kg | 21.00 | 9.84 | 13.70 | 9.32 | 11.51 | +83% |
| Profile pipe | t | 69840.00 | 40325.00 | 38000.00 | 44600.00 | 41300.00 | +69% |
Even aerated concrete blocks are 50% more expensive in Nidkom’s estimate than market retail prices. Even so, construction materials for large construction facilities are usually purchased in bulk. That is, the price should have been much lower than in the next-door hardware store.
In the end, those inflated prices for materials determined the total contract price. However, there is a possibility that those prices will be reduced when the certificates of work performed are finalized.
Nidkom has already been accused of inflating prices. According to the materials of criminal proceedings, the National Police of Kyiv Oblast investigates fraud and embezzlement of funds during the implementation of restoration projects in 2022.
According to investigators, Nidkom LLC provided false information about the service price and scope in their work acceptance certificates, and the officials of Bucha City Council and the KRMA’s Regional Development Department knew about that.
We also contacted the State Audit Service with the information about the discovered procurement violations, to have them checked by auditors.
How is work going
On October 20, we visited Bucha to see personally how Nidkom is rebuilding apartments in Vokzalna Street. And we found a lot of issues there.
For example, some windows did not fit apertures. The gap between the frame and the wall was covered with additional beams and blown out with mounting foam. We also saw the signs of violated standards for fixing window blocks, and some double-glazed windows might have insufficient thermal resistance.
The shelled holes in the house walls were not bricked up, they were just covered with insulation materials. The apartments are not repaired inside, and the contractor does not comment that matter at all.
Work is clearly behind schedule, and there are not enough workers at the facility.
For more details of the inspection results, see facility monitoring report.
What we know about Nidkom LLC
Given the contract prices and the speed of preparation of tender documents, it may seem that Nidcom has a large staff and its own construction equipment. However, this is not quite the case.
Nidcom LLC is registered in Boryspil, 1/6 Botanicha Street. That is a small one-story building with 172 companies registered in it, according to YouControl. Therefore, it will be difficult to find a company there.
The company did not mention any owned equipment in their material and equipment confirmation document. All equipment is used under transportation service contracts.
And finally, Nidkom LLC listed 13 workers in their personnel availability certificate. Moreover, the same 13 workers are listed both for 101 Vokzalna restoration tender in Bucha, and Vorzel school restoration tender.
If we take the complexity of only those two contracts, those workers would need 20 years to complete the construction provided that working hours standards are met. Of course, after the contract is awarded, the company may hire staff but we will not see that in the tender documents.
As we mentioned before, the company managed to appear in criminal cases about scandalous procurements for Kyiv Oblast restoration in 2022. Nidkom is also mentioned in Bihus.info’s investigation about last year’s restoration projects. For example, the journalists talked about the company’s connection with the circle of Oleksii Kuleba, former head of Kyiv RMA and deputy head of the Presidential Office, and its former deputy in KRMA Dmytro Nazarenko.
Unfortunately, the procurements by KRMA’s Regional Development Department with the participation of Nidkom cannot be called the best in 2023. The contract prices grew though. From UAH 3-5 million in 2022 to tens and hundreds of millions now.
The text was prepared within the USAID / UKaid project “Transparency and Accountability in Public Administration and Services / TAPAS.”
Source: glavcom.ua
