HET Public Procurement: The Republic Hydrometeorological Institute as a Cover for a Profitable Private Company

Photo: Glas Srpske

The private company “Gradnja” Ltd. from Gacko, whose primary registered activity is the construction of residential and non-residential buildings, will receive over 200,000 KM this year from the Hydroelectric Power Plants on the Trebišnjica (HET) for monitoring hydrological data on the Trebišnjica river basin.

Written by: Miljan Kovač

“Gradnja” is the leader of a two-member group of bidders (consortium), whose second member is the Republic Hydrometeorological Institute of Republika Srpska (RHMZ). The institute gets only crumbs from this arrangement, and its real role is to serve as a cover for transferring money to the private company.

The conditions outlined in the tender documentation make it clear that the mere participation of RHMZ in the consortium eliminates all competition in advance. Essentially, RHMZ is there to meet the requirements specified in the tender documentation for the “group of bidders”, while “Gradnja” carries out and charges for the profitable job, as confirmed by documents in our possession.

This story has been repeating for years. Since 2017, this group of bidders, without competition in HET tenders, has been regularly awarded the job of monitoring hydrological data. This is an activity that, if the Law on Meteorological and Hydrological Activities were followed, could only be performed by RHMZ.

Darko Borojević, director of RHMZ/Photo: RTRS

A Cover for Private Interest

After conducting the public procurement process, HET signed a contract on February 22nd of this year with the mentioned group of bidders for the service “Monitoring Hydrological Data on the Trebišnjica River Basin”, valued at 209,748 KM excluding VAT. The choice wasn't difficult since there were no other offers besides the one submitted by “Gradnja” and RHMZ.

There couldn't be any competition given the tender conditions. The bidders were required to provide a Contract of Business-Technical Cooperation with the Republic Hydrometeorological Institute of RS. Additionally, bidders had to submit a list of contracts executed in the past three years, including at least one contract with a minimum value of 180,000 KM excluding VAT. It's impossible for any potential bidder to meet both conditions, at least not in the domestic market, except for the group of bidders that ultimately submitted the only offer.

The condition related to the value of previously executed contracts was fulfilled by this evidently favored bidder because HET awarded the same job to them year after year, with the contract value never dropping below 180,000 KM. The Republic Hydrometeorological Institute was responsible for meeting the other requirements.

Formally, the procurement procedure doesn't violate the Public Procurement Law, according to experts we consulted. The law allows a “group of bidders to rely on the capacities of one of its members”. Here, one member relies on the capacities of the Hydrometeorological Institute to formally meet the tender requirements.

The question remains, why and on what basis did the Hydrometeorological Institute take on the role of a cover for the private partner, and whether another law has been breached? “Why does ‘Gradnja’ perform most of the tasks, especially those for which the other consortium member is qualified, and whether the contracting authority controls and supervises the quality of the performed services? This seems to be a case of covering, where the capacities of one member are formally used to win the job, while the other does all the work, even though they often don't meet the technical and professional requirements for the job”, says Damjan Ožegović from Transparency International BiH.

In response to these questions, the director of RHMZ, Darko Borojević, explains why the Institute cannot independently apply for the tender, which wasn't actually asked. He also mentions that RHMZ signed business-technical cooperation agreements with all potential participants in the mentioned procurements, not just with “Gradnja”.

However, documents on the selection of the most favourable bidder show that RHMZ only submitted joint offers with “Gradnja”. This is not a matter of business-technical cooperation, but a consortium agreement, which RHMZ previously signed exclusively with “Gradnja” from Gacko.

However, the Law on Meteorological and Hydrological Activities of RS is more than clear. According to the law, which has been in force since 2000, only RHMZ is authorized to perform the job that has been handled by a private company for years.

“Meteorological and hydrological tasks from Article 2 of this law are performed by the Republic Hydrometeorological Institute. The headquarters of the Republic Hydrometeorological Institute is in Banja Luka”, states Article 6 of this law. (Article 2 includes tasks such as “systematic hydrological observations and measurements of surface and groundwater”.)

And who cares about the law

However, neither in 2015 nor in the following years did anyone at HET care much about the law. They awarded the job, which by law can only be performed by RHMZ, to the construction company “Gradnja” from Gacko, which applied for tenders on its own for two years. The Republic Hydrometeorological Institute is not a company but a governmental body under the Ministry of Agriculture, Forestry, and Water Management of RS. Therefore, all payments for the services of this institute are paid directly into the RS budget. Instead of using RHMZ's services and leaving the money in the RS budget, HET decided to bypass the law and funnel the money into private pockets.

In 2017, according to our source from HET, someone realized that this blatant illegality could become a problem, as RHMZ itself began questioning why they were not performing this job, and why it was being done by a private company with no relevant references. At that time, HET's executive director and RS Assembly deputy Ilija Tamindžija personally intervened and “explained” that “Gradnja” should not be excluded. A “compromise” solution was found, which is evident from the documents in Impuls’ possession.

An agreement was reached to form a consortium between RHMZ and “Gradnja”, which in 2017 was the only bidder for HET's tender for hydrological data monitoring services. The consortium consisting of “Gradnja” and RHMZ signed its first contract for hydrological data monitoring with HET on October 11, 2017. The value of that contract, excluding VAT, was 189,394.70 convertible KM. The contract value was the same in the following year, 2018, while the value of the contracts grew in subsequent years.

Crumbs for the Institute, Profit for the Private Partner

The earnings of RHMZ and the private partner from this arrangement are evident from the contract annexes. In 2018, an annexe was signed between the consortium members to the public procurement contract awarded by HET at the end of 2017.

“For the execution of RHMZ's obligations under the contract, an amount of 15,000 KM excluding VAT (RHMZ is not a VAT payer) was agreed”, states Article 2 of the mentioned annexe.

This amount was to be paid in two equal instalments. According to the contract, RHMZ was responsible for controlling the conditions under which the measurement stations operated, checking the qualifications of workers, distributing and delivering work instructions at the stations, and other similar tasks. The actual monitoring of hydrological conditions was carried out by “Gradnja”.

As evident from the documentation, the hydrological monitoring service on the Trebišnjica river basin involves 62 observers who read water levels at existing gauges, as well as at several rain gauges and climatological stations (where temperature, humidity, and other climatological parameters are read). The service period is 12 months, and HET issues a new tender for the same public procurement item every year. The same bidder always wins the job under the same conditions.

The owner of “Gradnja” Gacko, which officially employs an average of 12 workers, is Miljan Doderović from Gacko. Although not publicly or politically prominent, he is known for his company regularly winning public procurement contracts in the RS energy sector and in municipalities governed by SNSD Milorad Dodik and coalition partners.

Impuls