ASFINAG and ÖBB: shortcomings as regards corruption prevention and contract awards
The Austrian Court of Audit (ACA) analysed the data on contract awards at the ASFINAG Bau Management GmbH and the ÖBB-Infrastruktur Aktiengesellschaft in the period from January 2016 to May 2019. The total value of such contracts amounted to EUR 5.305 billion. Of the 22 awards assessed, the Federal Procurement Act (Bundesvergabegesetz) was violated in 13 cases. Potential for improvement was also identified as regards the prevention of corruption. Furthermore, in order to counteract possible unfair business practices by contractors, such as price agreements and territorial divisions, contracting authorities should put a special focus on the examination of bids.
The audit was carried out based on a request by the then Federal Minister for Transport, Innovation and Technology, Andreas Reichhardt.
Shortcomings as regards the determination of contract value and the choice of tender procedure
From January 2016 through to May 2019, the ASFINAG Bau Management GmbH awarded contracts totalling EUR 2,609 billion. At the ÖBB-Infrastruktur AG, the contracts amounted to EUR 2.696 billion. The ACA’s auditors took a close look at 22 award cases with a total contract volume of EUR 281.27 million. In doing so, they detected 13 violations of the Federal Procurement Act – primarily as regards the determination of contract value and the choice of tender procedure.
Furthermore, the auditors unveiled other deficiencies, the majority of which result from non-compliance with internal regulations. The ACA recommends to the ASFINAG Bau Management GmbH and the ÖBB-Infrastruktur AG to intensify their efforts to comply with internal regulations. In this way, a higher degree of transparency and traceability can be ensured for contract awards.
In both groups, the process for the award of construction contracts was comprehensively regulated in writing. Both used electronic tender platforms, which the ACA considers positive in terms of transparency and traceability. However, seven per cent of the construction contract volume was either not or only partially processed via the tender platforms by the ASFINAG Bau Management GmbH. At the ÖBB-Infrastruktur AG, this figure was as high as 23 per cent. Shortcomings were also identified as regards the data entered into the platforms on the tender procedures.
Deterioration of the competitive situation of public contractors
While the turnover generated in the construction sector increased, the willingness of companies to participate in public tender procedures decreased. Among other things, this resulted in higher construction prices. In the period from 2011 to 2019, the average number of bids submitted per procurement procedure with prior publication dropped. From the perspective of the contracting authorities, this had a negative impact on the competitive situation.
As regards both the ASFINAG Bau Management GmbH and the ÖBB-Infrastruktur AG, the ten largest companies and groups of companies held 79 per cent and 59 per cent of the construction contracts, respectively, measured by contract value.
Counteracting unfair business practices
Financial disadvantages can also ensue for the federal government, the president, the municipalities and municipal associations as well as for public companies as a result of price agreements. Since private contractors do not fall within its audit remit, the ACA was unable to assess the extent to which the procurement procedures of public builder-owners were influenced by possible price agreements between the contractors.
Nevertheless, the ACA strongly affirms the necessity to counter unfair business practices with a bundle of measures to be adopted by the contracting authorities. Particular emphasis should be placed on the examination of bids in order to be able to assess the plausibility of price calculations and to identify conspicuous features that could point to price agreements.
In October 2021, the Cartel Court imposed a fine of EUR 45.37 million on an Austrian construction group. According to the Federal Competition Authority’s communication of September 2021, another Austrian construction group made an acknowledgement to pay a fine of EUR 62.35 million for collusion in the construction industry.
The ACA recommends to the ASFINAG Bau Management GmbH and the ÖBB-Infrastruktur AG to assert claims for damages against the companies concerned, taking into account procedural risks.
Improving the prevention of corruption
When it comes to the awarding of contracts for construction services, the ASFINAG Bau Management GmbH and the ÖBB-Infrastruktur AG must ensure that the statutory and internal company regulations on contract awards, but also on corruption prevention, are complied with. To a large extent, ASFINAG and the ASFINAG Bau Management GmbH as well as the ÖBB-Holding AG and the ÖBB-Infrastruktur AG have the essential components of a compliance management system in place. Nevertheless, there was room for improvement: ASFINAG, for example, did not have a code of conduct. Furthermore, the company lacked any provisions explicitly stipulating that staff members need to take note of compliance regulations.
The ACA recommends to the ÖBB-Holding AG to set up an electronic whistle-blower system that also allows for the receipt of anonymous notifications. At the time of the audit, external as well as internal persons could only report information on compliance violations anonymously if they themselves had an anonymized e-mail account. This could make it more difficult to pass on indications. Furthermore, in line with international standards, the compliance management system would have to be audited regularly both externally and also internally by the corporate audit department.
The ACA’s auditors acknowledge the fact that both groups implemented, already during the audit, recommendations issued by the ACA with regard to compliance and contract awards.
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Report: Contract Awards at the ASFINAG Bau Management GmbH and the ÖBB-Infrastruktur Aktiengesellschaft (in German)
The ACA audited the awarding of construction contracts and compliance at the Austrian road operator ASFINAG and its subsidiary ASFINAG Bau Management GmbH. The audit was carried out pursuant to Article 126b para. 4 last sentence of the Federal Constitutional Law based on a request by the then Federal Minister for Transport, Innovation and Technology, Andreas Reichhardt. The ACA also extended the audit to the Österreichische Bundesbahnen-Holding Aktiengesellschaft and its subsidiaries, the ÖBB-Business Competence Center GmbH and the ÖBB-Infrastruktur Aktiengesellschaft.