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Estonia toughens state procurement requirements

BC, Tallinn, 22.04.2014.Print version
The Estonian state will toughen the requirements of participating at state procurements, in order to keep tax evaders and fraudulent bidders away, hoping this way to gain around 8 mln euros for the state budget, LETA/Postimees writes.

Estonian Tax and Customs Board (TCB) estimates that currently, the state looses up to 17 mln euros a year at the construction market. State procurements form around a half of the total construction market. TCB deputy director general Egon Veermäe says that the state could regain nearly a half of that by toughening the rules.

 

Currently the main criterion in choosing the procurement winner is low price. TCB together with Estonian State Real Estate Company (SREC) and Union of Construction Companies has now prepared a set of additional requirements that aim to reduce the amount of excessively low bids submitted at the procurements and keep tax fraudsters away from the procurements.

 

In the future, the subcontractors have the obligation to submit a report showing the average wages of employees, average number of employees and tax law violations, in order to get the job; the TCB will issue the report. "The subcontractors who pay considerably lower than construction sphere average wages, who don’t have a sufficient number of employees to do the work or who have valid tax law violations, will not be included in the work," said SREC board member Elari Udam. Subcontractors who during the work commit tax law violations or don’t fulfill the conditions set by the client are fined or the contract with them can be severed.

 

"The bids should not become more expensive. I think that prices will become truer, not higher. Competition should become healthier, proper bids should emerge and the state should get a better result for its money," he said.

 

Udam estimated that many honest bidders currently don’t participate at state procurements at all since there are too many bidders who distort the market but that should change now.

 

The new requirement will first be implemented on three test projects, Kaagvere Reformatory School in Tartumaa, Häädemeeste rescue depot in Pärnumaa and National Archives construction objects.






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