Railway: A contract factory even after the crime in Tempi

The “contract factory that never stops” on the Greek railways, with contracts that only serve
construction companies’ interests, has failed for 20 years to improve passenger safety and
service. The same system that, since the 2000s, has managed to extend dozens of contracts,
paying “extra costs” through extensions and add-ons, with the approval of the Court of
Auditors, but failing to prevent tragedies like that of Tempi, is now preparing to award new
projects to “fix” the loopholes of the previous ones, without anyone being held accountable
for past mistakes.

Today, Data Journalists focus on contracts related to the safe management of rail traffic.
One of them is the infamous contract 717/2014 for the remote control and signaling system,
which came to light after the death of 57 people on February 28, 2023, and was considered
“completed” in November of that year, although many of its systems were destroyed by the
storm Daniel in September.

In addition, there is another contract for the GSM-R radio communication system that
could have prevented the Tempi tragedy by ensuring immediate communication between
the train drivers involved in the head-on collision. A new tender is now being launched,
which, if it is ever completed, will result in a project costing twice as much as the one that
began in 2006.

Two other contracts concern the ETCS system, which forces trains to brake automatically,
even against the driver’s will, if they exceed the speed limit or enter a section of track where
another train is running. It is worth noting that both ERGOSE and the Railway Regulatory
Authority (RAS) accepted and authorized the operation of the system in 2022, while the project contractor (TERNA) declared at the end of the same year that 30% of the equipment
was not operational.

These four contracts, if finalized, would allow Greece to claim that it is “getting closer to
Europe” by implementing the European Rail Traffic Management System (ERTMS), which
ensures common standards in railway signal management and interoperability. In practice,
none of the above systems are currently operational, as either the contracts were
completed with loopholes or new contracts are being initiated for “restructuring,” as
happened in 2014 with Contract 717. And all the loopholes that remain open will be closed
with the mammoth 463-million-euro contract to repair the damage caused by Daniel.
Maybe there will be some left for the company that will play the role of “management
consultant” in the “new” unified OSE.

Automatic braking, “automatic” delivery

One of the most glaring cases of a hastily concluded contract is contract 10005, which was
awarded by ERGOSE in the distant year of 2007 with a budget of 17.2 million euros and a
duration of 2.5 years, until March 2010.

Fifteen years later, the project contractor, TERNA-GTS Austria, addressed a letter to
ERGOSE stating that 30% of the equipment was damaged and requesting additional costs. (PDF) 

The letter is dated December 30, 2022, two months before the Tempi incident, and states,
among other things:

• That, according to the contract, “the study, procurement of all necessary materials and
  equipment, installation, testing, provisional acceptance, and certification” should have
  been completed by December 26, 2022.
• That the initial contract duration of 54 months (including 2 years of maintenance) has
  been “excessively extended by 153 months” due to ERGOSE’s responsibility. It should be
  noted that for ETCS to be operational, the signaling-telecontrol system must first be
  operational, i.e. contract 717 must have been concluded.
• That it has been supplying the necessary equipment for 14 years, since 2008, resulting in
  a “gradual physical deterioration”, in particular “of the radio beacons that have been
  installed for more than 12 years without functioning”.
• That the failure rate of the radio beacons already installed to date exceeds 30%  and
  that the immediate procurement of 300 radio beacons will be necessary, representing
  an additional cost of 840,000 euros.

Despite this clear admission by the ETCS contractor, ERGOSE has accepted various parts of
the project throughout 2021, while the Railway Regulatory Authority (RAS) has authorized
the operation of the system with its decision of November 7, 2022.

( PDF)

According to decision 88 of the plenary session, RAS has taken into account the relevant
requests of OSE since April 2022, as well as the reports of the assessors (entities certifying
the operation) and approves the “Operation of the stable installation control – operation
and signaling of the project “Procurement of the ETCS Level 1 line system with related
services” for the sections Oinoi – Chalkida, TX1 – Promachonas and Platia – TX1 – TX5″.
Furthermore, without any trace in Diavgeia of a decision regarding the payment of the
840,000 euros requested by TERNA for the defective radio beacons, the management of
ERGOSE notes the “successful completion of system tests and demonstration of good
operation” on the sections Acharnes-Oinoi (June 2023), Larissa-Platy (August 2023) and
Oinoi-Therapia (October 2023). All the above details are taken from the documents
submitted to Parliament by the Minister of Infrastructure and Transport, Christos
Staikouras, on April 24, 2024, informing the Committee on Production and Trade.

Was the gap covered by a “donation” from TERNA after the Tempi tragedy? However, for the ETCS to
work, the ETCS contract and the 717 contract, for which ERGOSE issued a certificate of
completion in November 2023, should have been concluded, as Mr. Staikouras assured at
the same meeting.

Another prerequisite for the functioning of this system is that it is installed not only on the
track (which was covered by contract 10005) but also on board the trains. For this part of
the project, another contract, 10004, was also signed in 2007, with Ansaldo Segnalamento
Ferroviario as the contractor, with a budget of 25 million euros. The progress of this
contract is described in a ministerial decision entitled “Approval of the annual management
program of the rolling stock fleet under the jurisdiction of the company GAIAOSE SA for the
year 2023”, signed by Christos Staikouras on 18/9/2023. (εδώ PDF)

There it is mentioned that the contract started at 25 million euros, but was reduced twice,
not because the contractor decided to offer an additional discount, but because the
installation was initially planned for 122 trains, “as not all vehicles were in working order”, 8
trains were initially removed, and in 2016 another 26 trains. The cost was reduced to 21.7
million euros and the procurement was finally delivered in July 2018, “with the observation
that the system was not fully functional in some vehicles due to wear and tear caused by
external factors”.

Thus, as in the case of contract 717, on June 9, 2022, GAIAOSE, which manages the rolling
stock, “announced a competitive process for the restoration of the operational status of the
ETCS on-board system in 120 vehicles, which was declared unsuccessful”. A new tender
followed in November 2022, in which the only timely offer, from Hitachi, “was submitted
with reservations and therefore rejected as unacceptable, with the Board of Directors of
GAIAOSE declaring the tender unsuccessful.

After the Tempi incident, and amid announcements made by the Minister in charge at the time, Mr. G. Gerapetritis, GAIAOSE received approval to proceed again with a direct contract with Hitachi, with an estimated
cost of 6.8 million euros. Despite the accelerated procedures, the contract with Hitachi was
signed a year later, on March 14, 2024, as Mr. Staikouras informed the Parliament last April.

Radio coverage left exposed

After the sinful contract 717, the GSM-R system for the radio coverage of the Greek railways
is following in the same footsteps, with modern equipment that should have been delivered
16 years ago, but is now tied to a new contract, since the previous one became entangled in
the financial irregularities of Siemens.

Siemens took over the installation of the necessary systems to free the railways from the limitations of FM radio in 2006 through contract 10012, with a budget of 57.2 million euros and completion by September 2008.
Siemens received extensions for 2009 and 2010 while an international scandal erupted over
bribes paid to officials to secure contracts in various countries. The matter was investigated
by the Greek Parliament, and in August 2012, an out-of-court settlement was signed
between Greece and Siemens, waiving the company’s claims against ERGOSE. It was claimed
that this settlement reduced the price to 31.8 million euros, but the extensions continued.
Testing was supposed to begin in 2016, but according to OSE, the delivery of the system was
staggered from June 2018 to February 2021. Gaps in the system were soon discovered,
prompting the then Minister of Infrastructure and Transport, K. Karamanlis, to admit in
November 2022 that he had approved credits of 8.7 million euros for “the renovation of
equipment and software upgrades serving the system, as well as the provision of
operational management, maintenance with fault clearance and damage restoration
services for all installed internal and external railway line equipment of the GSM-R radio
coverage system.” The tender was declared invalid after Tempi, and in December 2023 a
new – almost tripled – loan of 22.7 million euros was approved by Christos Staikouras.

However, as of January 2024, OSE remains without a Board of Directors, which is expected
to reconvene in May after the appointment of a new one, with lawyer and Honorary
President of the Hellenic-American Chamber of Commerce, Giannis Grammatidis, as its
President. A few days ago, the new tender was announced with a deadline of July 5 and a
budget of 28,123,200 euros including VAT. If we add to this the 6 million euros that Mr.
Staikouras announced last year and the 6 million euros that OSE will allocate for trackside
equipment, the 2006 contract will again be paid for.

Contract 717

However, it seems that the record for handling, extensions, and cost escalation will be
broken by the contracts for the Tele management Signaling System, since this system not
only did not start with the sinful contract 717 of 41 million, which rose to 60 million, but it
may end with the 463 million contracts to repair the damage caused by Daniel. Contract
717, awarded in 2014 to TOMI, a member of the then powerful Bobolas group, also came to
upgrade and supplement the systems that should have been installed with previous
contracts.

Contract 717 underwent multiple extensions, faced punitive decisions from the Competition
Commission due to contractor collusion, led to a fiscal adjustment of 2.4 million by the Fiscal
Audit Committee, required a Supplementary Agreement signed with a three-year delay in
2021, and has recently been scrutinized by the Parliamentary Commission of
Inquiry—deemed by some as a farce. At the heart of the debate was whether the state
exhibited favoritism towards the contractors, particularly since the investigation was
launched by the European Public Prosecutor’s Office.

The controversies surrounding Contract 717, coupled with alleged cover-up procedures, formed the core of criticisms voiced by the relatives of the victims of the Tempi tragedy.

Essentially, had these extensions not occurred and the train control and signaling systems
been operational, train traffic would not have relied on the coordination of an untrained
stationmaster, potentially averting the Tempi tragedy. Equally notable is the government’s
assertion that the contract was completed last autumn, despite ERGOSE issuing a Work
Completion Certificate while a significant portion of the project was destroyed by storm
Daniel. Consequently, reconstruction will be financed through new funds, part of the 463
million allocated by the government. Critics argue that ERGOSE executives, currently under
prosecution by the European Public Prosecutor’s Office, could have sought damages
coverage from the project’s compulsory insurance rather than issuing a Work Completion
Certificate.

Following the Tempi incident, a heated debate ensued over whether the Mitsotakis government or
the previous SYRIZA government bore greater responsibility for the delays in Contract 717. Initially,
K. Karamanlis contended that Contract 717 was inherited with only an 18% completion rate.
However, by March 2018, ERGOSE reported it had achieved 67% completion, a pivotal detail that
influenced the Court of Auditors’ approval of the Supplementary Agreement for Contract 717.
Ironically, today it is the Mitsotakis government that celebrates. They successfully argued before the
Court of Auditors to overturn the 2.4 million euro fiscal adjustment imposed in 2019, which
precipitated the Supplementary Agreement. They interpret this as validation of the contract’s proper
execution and as undermining the European Public Prosecutor’s Office’s prosecution.
One might have expected that the Tempi tragedy, which has deeply affected Greece, would have
prompted reflection within the public procurement system and the government, leading to an
acknowledgment of responsibility rather than serving particular interests. However, the blame game
that has been going on since February 28, 2023, and the apparent effort to place the blame solely on
the station master and the deceased train drivers, reveals a harsh reality.