The New Year’s preparatory work has already begun. Yerevan Municipality has concluded a 22 million AMD Contract with “Dzevavorum” (Decoration) CJSC for the procurement of services on installation and decoration of Christmas trees in the capital. The procurement was carried out by the open procedure, the tender was announced and only this company had applied for participation.
The Municipality has also provided the same amount of money for the installation of Christmas trees during the last four years (2013, 2014, 2015, and 2016). And in the past four years only “Decoration” CJSC has applied for participation in the tender, and just this company has been serving for many years. We learn about this from the reply of Yerevan Municipality to the inquiry of Iravaban.net website, as well as from the procurement procedures published by the Yerevan City Hall on gnumner.am website.
Companies participating in the public procurement contest have repeatedly talked about the issue, saying that that procurement tender announcements require the conditions of such professional experience, which limit the competition.
In February of this year, an open procedure tender for the purchase YK-BOTZB-17/114 was announced. Its section for the “professional experience” evaluation indicates:
“The bidder submits a statement that it has had at least one similar contract which has been properly executed during the year and the preceding three years. The previously concluded contract (or contracts) are assessed (or evaluated) as similar, if the volume (or cumulative volume) of the services provided within their scope or (its) amounts is not less than fifty per cent of the bid price offered by the Participant within the scope of the Purchase Procedure, and of which the volume of services rendered under at least one contract is not less than twenty per cent of the bid price offered by the Participant within the scope of the Purchase Procedure. The provision of services for organization of cultural events is considered similar.”
Arsen Hambardzumyan, President of the Association of Procurement Professionals of Armenia in the interview with Iravaban.net noted that in this case there is no violation of any legislative norms, “The section containing the professional experience requirements mentioned above is legitimate and was provided by Government Decision 168-N. The same definition is provided by the current 526 decision as well. Another question is whether such a regulation contradicts the purpose and objectives of the Law on Procurement.”
He is the co-author of the research the “State Procurement System Monitoring Results for 2016-2017,” which made a reference to this issue, “Under the conditions of a limited market in Armenia, in many cases it is not possible to have similar previously concluded contracts, which are considered to be professional experience, including the condition of not less than 20% of the bid price presented by a participant of a contract. A potential participant meeting this criterion may be a provider of the relevant contract who had satisfy state needs previously under a contract. As a result of such approach, the Armenian market has been monopolized over time and the competition has almost disappeared.”
That is, in case of these requirements, the same companies become practically the only suppliers, because they have the previous experience of rendering services to the state, as well a other experience that meet the requirements of the state. Whereas the new businessmen simply have no opportunity to take part in the competition. As a result, the state suffers from losing the possibility of getting more affordable offers.
By the way, Karen Tamrazyan, Deputy Minister of Finance, in response to this issue said that a draft government decree “About approval of the selective order of assessment of qualification requirements to the characteristics of the purchasing materials and the participants, approved by the customer order” is currently submitted for public discussion to exclude concerns about professional experience requirements.
After approval by the Government of this draft, the Ministry of Finance will be able to examine in selective order the qualification requirements for sampling customers and the qualification requirements for the participants. Its purpose is to ensure competition and exclude discrimination
Vague, general definitions, between the procurement announcements and contracts
Arsen Hambardzumyan refers to other noteworthy circumstances of the case, in particular, that the service is regarded as a “providing cultural event”. “In my opinion, the installation of the Christmas tree should have been considered as the assembly of temporary structures. In addition, the Christmas tree will be impossible to install without special construction equipment (crane).”
Thus, 13.45 million drams (about $ 28,000) from the 22 million drams stipulated by the contract were allocated for the placement and decoration of the main Christmas tree on the Republic Square. In response to Iravaban.net‘s inquiry, Vilen Arevshatyan, head of the financial department of the Yerevan City Hall, mentioned that the Christmas tree design includes the installation of Christmas tree trim, pedestal construction, assembly of Christmas tree branches on the carcass, installation of lighting fixtures, mounting of lighting fixtures, toys and tops, dismantling of Christmas trees, transportation and other necessary work.
In other words, construction and installation work has been done.
On the other hand, in 2014 – 2017 “Decoration” Company conducted the following work for the installation of Christmas trees in Yerevan for the amount of AMD 22 million of the Contract:
- Installation of metal frame in Republic Square.
- Cutting the branches of the fir trees in the provinces, loading on trucks, transportation to Yerevan.
- Sorting and transporting toys, lights, and branches to Republic Square,
- Construction of the main Christmas tree pedestal, assembly of Christmas tree branches on the carcass, installation of lighting fixtures, mounting of lighting fixtures, toys and top.
- Providing for duty on holidays, dismantling, transportation to the warehouse
The contracts also state that 6,000 fir tree branches should be cut in the provinces.
The specified technical specification is also included in the procurement announcements. Arsen Hambardzumyan notes that the technical specification contains uncertainties regarding the materials accessories and metal constructions used during the installation. Should they be provide by the customer or the supplier at his expense? And finally, who will provide permission to go to the provinces and cut seedlings in the fir tree?
“In other words, the title of the competition did not say anything to organizations engaged in construction and assembly works, the number of which is much larger than the number of organizations involved in organizing cultural events. The latter could hardly be tempted by this competition, given the fact that the branches of the trees were cut and the remaining uncertain issues. As a result, the only participant of the competition was “Decoration” CJSC,” Arsen Hambardzumyan says.
By the way, the head of the financial department of the Municipality staff replied that no lights and branches were purchased in 2014, 2015 and 2016 for the decoration of the main Christmas tree, and the Christmas tree decorations were purchased with installation and design services. As for the branches, it turns out that Hrazdan forestry has been providing pine branches free of charge for each year as a result of sanitary branch cutting. That is to say, “Decoration” Company did not implement the contractual branch cuts.
Information about the beneficiary owners of “Decoration” company is not disclosed.
The estimated cost of the YK-BOTZB-17/114 tender was 22,000,000 AMD, “Decoration” Company offered to realize the contract for 21 990 000 AMD. In other words, only 10 thousand drams cheaper price was offered.
Sargis Mesropyan, the director of the Company, is presented in the document submitted to the Ministry of Finance, as the beneficiary owner of the “Decoration” Company.
The same data is indicated in the State Register of Legal Entities as well. And there is no information about who owns the company’s shares.
On the other hand, the main photo of backdrop of this company’s Facebook page is the coat of arms of the Yerevan Municipality, and the records of the official Facebook page of the Yerevan Municipality are disseminated mainly through this page.
Astghik Karapetyan
