TI: City contracts are opaque, clientelism prevails

    PRAGUE/BRNO - Large Czech and Moravian cities award construction contracts in a significantly opaque manner. There are also connections between construction companies and certain politicians and officials. These conclusions were reached by the organization Transparency International (TI), which has dealt with the awarding of larger construction contracts. According to TI, it is necessary to make the awarding of contracts more transparent, improve control, and change the public procurement law.
    The survey concerned Prague, Brno, Ostrava, Olomouc, Zlín, Pilsen, Hradec Králové, and Liberec. According to David Ondráčka from TI, it cannot be said that the situation is better in some places and worse in others. A similar system works in all cities, according to him.
    "The result is that at the municipal level, strong clientelism operates when awarding construction contracts," Ondráčka said today to reporters. He pointed out that a limited number of companies, roughly one or two, obtain most of the contracts in each city. For example, in Prague, it is Skanska and Metrostav, in Ostrava Tchas, and in Liberec Syner. According to Ondráčka, there is a lack of competition in construction at this level, and cities pay more for work than necessary.
    Transparency International found no direct evidence of corruption in the awarding of construction contracts. They claim that was not the aim. "However, it can be said that it is almost impossible that some corrupt practices are not occurring," Ondráčka noted.
    The organization also criticizes that the prices of many contracts increase during their execution due to the awarding of additional work. It often happens that the final price is higher than the bid offered by the most expensive company in the competition. Additionally, construction companies behave like traders of contracts; when they obtain them, they hire other firms, TI claims.
    According to TI, the awarding of contracts must become transparent; currently, the decisions of selection committees and city councils are not public. The public procurement law should limit the possibility of additional work. Adriana Krnáčová from TI further believes that the Supreme Audit Office should have the authority to verify the management of municipalities.
    The Office for the Protection of Competition (ÚOHS) deals with erroneous tenders from municipalities. However, they only impose fines when no other remedies are possible. Last year, officials initiated 92 administrative proceedings from 244 submissions, with total fines amounting to 1.46 million CZK. A year earlier, there were a hundred more proceedings and fines nearly twice as high.
    For example, a fine of 150,000 crowns was imposed on the Brno-Žabovřesky district for errors in seven contracts for repairs and regenerations of apartment buildings. However, the municipality disagrees with the fine and is reluctant to pay it. "We have filed a lawsuit with the regional court, which will decide," said the lawyer of the office, Jitka Jirmanová, to ČTK today.
    The municipality of Prague 1 has also incurred a fine of 30,000 crowns after a review of a total of 21 public contracts. The Třeboň municipality received a fine of 30,000 crowns for evaluating bids on the construction modifications of the J. K. Tyl Theatre differently than originally published.
    Representatives of TI were surprised that they had difficulties obtaining information about contracts from the authorities. They were allegedly warned that it would be a long job and would cost hundreds of thousands of crowns. However, the municipalities ultimately relented and did not charge any fees.
    According to TI, the issue is also that large contracts are awarded by companies owned by cities, such as transport companies. Data cannot be obtained from them at all, as they cite trade secrets, the organization's representatives added.