Turkish builders see Rail Baltica bid excluded over security concerns: LTV's De Facto

The Turkish association of companies which offered to build the Rail Baltica track route for a cheaper price than its competitors in a tender, has been excluded from the procurement on the recommendation of the State Security Service (VDD), Latvian Television's De Facto broadcast of September 17 reported.

Last week, procurement for the construction of the main track of Rail Baltica closed. The contract was given to the French, Polish, and Italian joint venture E.R.B. Rail Baltica JV. The contract price they offer is EUR 3.7 billion (EUR 3,698,833,520). A second bidder from Turkey, which bid around half a billion euros less (3,162,418,257) to do the work, was rejected.

The tenders of two Turkish companies, IC İÇTAŞ İNŞAAT SANAYİ VE TİCARETŞ, and DOĞUŞ İNŞAAT VE TİCARET A. Ş, were not evaluated by the bidding committees following the advice of the State Security Service (VDD).

“I will not be able to comment further on the content of the recommendation, but it has been received as negative for the particular bidder,” said Einars Jaunzems, director of the Department for implementation of the “European Railways lines” (EDZL) project and chairman of the procurement commission.

All members of the commission have had the opportunity to acquaint themselves with a document from the security authority, and the final decision was unanimous.

'“The recommendation is quite simply a name for this administrative act, but the nature of its document is that we simply could not enter into a contract with this bidder. […] We need to take this recommendation into account as a ban on continued possible cooperation,” Jaunzems explained.

The specific reasons for the exclusion of the Turkish companies are unknown. According to De Facto's information, one of the Turkish association's companies has close cooperation with commissioning agents from Russia. Turkish Holdings IC has built several bridges in St. Petersburg, a Pulkovo International Airport terminal, and a toll high-speed highway between Moscow and St. Petersburg.

Currently, IC Holdings is building the first Turkish nuclear power plant, along with Russian construction firm Titan-2, on orders from Rosatom. In May, the first batch of nuclear fuel to the power plant was delivered. Vladimir Putin attended the symbolic event remotely and granted permission to hand over the certificate to Turkey.

Turkey, on the one hand, is a Member of NATO and, on the other hand, maintains diplomatic and business relations with Russia at presidential level.

“Many expected relations between Turkey and the West – and especially between Turkey and NATO – to improve after Turkey's presidential election. We don't see very cardinal improvements, but we also don't see a complete move to the other side. So the game continues, it's called balancing, balancing between Russia and NATO,“ said Veiko Spolītis, a foreign policy expert and former politician.

“Overall, Russia's share of Turkish exports is below 4%, so draw your own conclusions. The main source of trade for Turkey is the European Union. The concern of the Turkish population is currently inflation, which is around 110%. If Russia helps Erdogan solve these problems, then the Turks are at peace,” Spolītis noted.

Whether the Turkish companies were excluded from the Rail Baltica project precisely because of Russian partners in other projects, is uncertain. VDD refrained from commenting on the case.

EDZL said there was already a precedent in the Rail Batica project that a participant was excluded due to the VDD's objections. It is known to De Facto that at an earlier stage of the procurement, a Chinese company was excluded from the procurement.

The Turkish association of companies has challenged the exclusion from the tender at the Procurement Monitoring Bureau. Therefore, the builder of the route may still change.

“IC İÇTAŞ” and “DOĞUŞ” told LTV they were surprised by the exclusion from procurement because they had submitted by far the best financial offer.

'In relation to your question on the recommendation of the State Security Service, we would like to clarify that we have not received a copy of it or any information relevant to it. Therefore, we do not know the specific justifications. […] We do not believe that this is related to the nuclear power plant project to be built in Turkey, as the entities involved in the project are not subject to any sanctions. Our company has successfully implemented many large-scale projects, especially in Asia, Europe, and the US,” the company's response reads.

It should be pointed out that the price offered by the Turkish companies, although the lowest, could also have changed if the contracting authority had assessed whether the calculations were justified. However, it is clear that the association was excluded before a detailed examination of the financial offer.

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