Due to the increase in prices, UPB and Pillar Contractor have abandoned the Tobacco Factory project

VAS “Valsts nekustamie ipäsumi” (VNĪ) announces a new procurement for the construction works of the 1st stage of Tabakas fabrika quarter, because the two existing applicants – AS “UPB” and SIA “Pillar Contractor” have successively refused to implement the plan due to the unexpected rapid rise in the prices of building materials, essential energy resources due to rising costs and inflation.

In the procurement announced this year for the development of the first stage of the Tobacco Factory, a record number of offers was received in June – 17 offers from builders. AS “UPB” was recognized as the winner of the procurement with a contract price of 3,536,369 euros excluding VAT at the beginning of September, but on September 20, the construction contractor, after re-evaluating his estimate, refused the right to enter into a contract for the implementation of the plan. SIA “Pillar Contractor” was determined as the next applicant to whom the right to conclude the contract was awarded as a result of the procurement, which submitted an offer for 3,658,582 euros without VAT. However, on October 14, this applicant also refused to sign the contract, citing the rapid increase in the cost of building materials and energy resources, which was impossible to predict in advance, as well as inflation, which directly affects the further increase in the cost of building materials. In compliance with the regulatory acts regulating public procurement, which stipulates that in cases where two applicants who have been granted the right to enter into a contract for the implementation of the plan have refused to do so, the procurement commission shall make a decision to terminate the procurement procedure without selecting any offer and to announce a re-procurement. In the new procurement, the deadline for construction works is 18 calendar months from the date of conclusion of the procurement contract. “The experienced price increase and changes of building materials are happening rapidly, the issue of indexation of the price increase of materials in contracts, as well as the issue of availability of qualified labor, is becoming relevant at the industry level. We follow the situation in the construction industry and are ready for the updated development of procurement requirements in projects where it must be done objectively due to public procurement regulations. At the moment, there are no indications that it would be necessary to make drastic changes in the procurement process of construction works – the execution of state construction orders and the progress of projects are generally going well, “said Renārs Griškevičs, chairman of the board of VNĪ.

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