In the re-announced price survey of SJSC “State Real Estate“ (SRE), out of six bidders SIA “Citrus Solutions” has repeatedly submitted the most publicly advantageous offer, with the tender repeatedly including the shortest project implementation period and lowest costs, which is especially important for national security. The submitted offer - 53.57 million euros (including VAT) - is higher than the offer submitted by SIA “Citrus Solutions” at the end of February (38.09 million euros). The new project implementation deadline for the construction of the fence in three sections is the end of 2022, in the next three sections - the end of January 2023 and in the final three sections - the end of February 2023. Evaluating two possible scenarios - a price survey with and without indexation options - the scenario without price indexation has been recognized as the most economically advantageous, informs Renārs Griškevičs, Chairman of the Board of SRE.
Six construction companies participated in the new, closed price survey announced on 8 March 2022 for the construction of infrastructure of nine high readiness sections of the border between the Republic of Latvia and the Republic of Belarus, who had also submitted their offers in the first price survey. Construction companies submitted offers with and without indexation options. The offers submitted by the other bidders had generally longer project implementation periods and higher tender amounts.
SRE has decided not to apply price indexation and to conclude an agreement with SIA “Citrus Solutions” by the end of March for the offered fixed agreement price of 53.57 million euros. As can be concluded from the information published on the website of the Central Statistical Bureau, the costs of construction products have increased by ~ 18% during 2021, and the share of construction products in the performance of the agreement is significant. When concluding an agreement with a fixed and higher initial price, the costs offered are binding on the contractor throughout the performance of the agreement. The agreement fulfilment period is relatively short - the construction company has the opportunity to immediately purchase the necessary resources in a situation where the prices of raw materials, especially energy, gas and metal, are rising, thus significantly reducing the risk of non-performance of the agreement and uncontrolled increase of costs to the state.
"By submitting both offers - with and without indexation - the construction companies have assessed and included the risks corresponding to the currently changing situation and confirmed their willingness and possibilities to implement the project. SRE did not choose the indexation option in the project because the project implementation period is short. Such an approach ensures the predictability of the amount of the state budget required for the implementation of the project and facilitates the timely purchase of the amount of materials, protecting both the state contracting authority SRE and the construction company from unforeseen price increases. It is important to understand that in the current circumstances there is no ideal option and each solution includes different risks and shortcomings for some or all involved parties, the current decision ensures optimal risk sharing between the state and the construction company in a difficult situation,” R. Griškevičs points out.
The offered project implementation deadline by SIA “Citrus Solutions” for the construction of the fence in three sections is the end of 2022, in the next three sections - the end of January 2023 and in the final three sections - the end of February 2023. The construction of the rest of the infrastructure in seven sections will be completed by March 2023, and in the sections where the tunnel is to be built and the operation is restricted by the Natura 2000 site bordering NP “Silene”, the infrastructure construction term is June and July 2023. The extended deadlines are linked to a one-month delay in concluding the agreement and the risk of delays in the delivery of the building materials included by the constructor - all players in the construction industry are still adapting to the new reality.
The Eastern border project is an inter-institutional co-operation project. In accordance with the Law on the Construction of the External Land Border Infrastructure adopted by the Saeima on 12 November 2021, the SRE manages, implements and supervises all works necessary for the construction of the border infrastructure, implements the procurements necessary for construction, and concludes procurement contracts. The implementation of the project is supervised by the Monitoring Committee for the Construction of External Border Infrastructure, which consists of representatives from the Ministry of Defence, Ministry of Foreign Affairs, Ministry of Economics, Ministry of Transport, Ministry of Agriculture, Ministry of Environmental Protection and Regional Development, State Border Guard, National Collateral Agency, SJSC “Latvian State Radio and Television Centre”, SJSC “State Real Estate”, JSC “Latvian State Forests”, Latvian Geospatial Information Agency and the National Armed Forces. The project envisages the construction of 173 kilometres of the state border strip, including 134 kilometres of permanent fencing.
Maintenance of objects important for the security of Latvia and the European Union and the development of borders is one of the directions of SRE activity. In total, 18.5 million euros is currently being invested in the modernisation of the Latvia-Russia and Latvia-Belarus borders taking place under the management of SRE. As a result of these projects, by the end of 2023, comfortable and modern working conditions will be available to the staff of border control points, and the infrastructure necessary for border control and customs control will be improved, making border crossing more efficient and faster.