TERNA’s miraculous deal in the ashes of Evros

• The “Christmas miracle”: Although the judges of the Court of Auditors initially considered the procedure illegal, the objections were quickly overcome.
• They invited five companies, two submitted bids, one was disqualified. Only TERNA’s subsidiary Iliochora S.A. remained.
• How they secured the contract with a mere 2.7% discount – which was deemed “reasonable, sufficient and acceptable”.
• For the sake of speed, the project was divided into four parts. In the end, they were all awarded to the same company.

By Aris Chatzigeorgiou

First, they let a forest fire rage for a full 17 days, breaking the all-time European record for area burned – 93,500 hectares (935,000 stremmas). Then they announced that funds from the Recovery and Resilience Facility were available and that €50 million worth of urgent flood protection work needed to be done – without a public tender. They invited five companies, two submitted bids, and one was disqualified. Who was left? TERNA’s subsidiary, Iliochora S.A., with a 2.7% discount – a discount that was actually considered “reasonable, sufficient and acceptable,” so no improved offer was requested. Up to this point, it was business as usual for a centralized state… But the small “miracle” occurred in the way the objections raised by the judges of the Court of Audit – at two different levels – were finally circumvented.

The story Data Journalists uncovered today takes us to the remote region of Evros, where in the summer of 2023, vast swaths of forest were allowed to burn for 17 days. The destruction was massive – and ripe to be turned into a business opportunity. Through TAIPED (the Hellenic Republic’s Asset Development Fund), known for its “philanthropic” deeds, the government began the process of awarding the flood protection works and was ready to hand them over to TERNA’s subsidiary before the summer. However, the 5th Chamber of the Court of Accounts declared the procedure illegal. The government and the company appealed, and the appeal was heard by the 7th Chamber. On November 12, 2024, the section issued its decision, confirming the lack of legality. And that’s where the “Christmas Miracle” takes place.

Βόμβα στο «ακαταδίωκτο» του ΤΑΙΠΕΔ

Before the end of 2024, the case reached a higher level – the Lesser Plenum – which found everything legal. And right after the holidays, on January 16, 2025, the four contracts were signed. It is clear that the higher the level of consideration, the more the attitude of the judges changed… After all, from 2019 to 2023, the president of the Court of Auditors was Ioannis Sarmas – who was also elected caretaker prime minister between the first (May) and second (June) rounds of the 2023 national elections.

Data Journalists have previously reported on the activities and actions of TAIPED as an unchecked authority to award public projects. On February 2, 2024 – just as the €50 million contract with TERNA was “maturing” – they reported on a “bombshell under TAIPED’s immunity” as the company won a court case after TAIPED refused to provide information about a specific tender. We reminded readers how the Mitsotakis government had strengthened TAIPED’s “secrecy privileges” to allow for more “advantageous” (advantageous for whom?) direct awards, and entrusted it with all contracts for projects covering the 3 million stremmas of forest that will burn between 2021 and 2023 – the so-called Antinero programs. These programs were the rebranded version of the National Reforestation Plan that we previously reported on in 2023.

Afforestation program faces funding cut of €644.3 million

But let us return to Evros through the exact wording found in the decision 1379/2024 of the 7th Section of the Court of Auditors

 

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But first, let us point out the following:

• On April 26, 2024, the €50 million tender was published for the project entitled: “Flood Protection Works for the Management of Mountainous Catchment Areas after the Forest Fire of 2023 in the Areas under the Jurisdiction of the Forestry Departments of Alexandroupoli and Soufli and the Forestry Directorate of Evros”.
• For the sake of speed, the project was divided into four parts. In the end, however, all were awarded to the same company – and all with the same “reasonable” discount of 2.7%.
• The decision we are publishing relates to one of the four parts. Similar decisions were issued for the other three.
• Similarly, four overruling decisions were published by the Lesser Plenary in record time.
• The RFP emphasized the “need for immediate protection of the burned area from further degradation and mitigation of flooding from the upcoming fall and winter rains.
• It was also noted that “the project includes only the absolutely necessary works resulting from the forest fire that occurred in the area on 19-08-2023”. This reference was of great importance, as it was the main reason why the Court of Auditors initially declared the direct award illegal.

The rejection decision begins with the background at the executive level:

1. The project was included in the Antinero II program in January 2024 by decision of the Government Committee for Strategic Contracts, which in turn is included in the Development Program of Contracts of Strategic Importance since February 2023. The overall project is implemented within the framework of the National Recovery and Resilience Plan “Greece 2.0”, with funding from the European Union – Next Generation, through the Recovery and Resilience Facility.
2. “For section 1, which is the subject of the contract under review (and indeed for all sections), only two candidates submitted bids: the intervening contractor and “…”, whose bid (the second lowest, with a 1% discount) was rejected…”. The result of the procedure was ratified by the decision of the TAIPED Board of Directors dated …/13.6.2024.
3. According to this TAIPED decision, the Negotiating Committee considered that the discount offered (2.7%) was “reasonable, sufficient and capable of ensuring the proper execution of the project”. It also stated that, given the need to conclude the contract quickly, “it is not appropriate to ask for an improved offer”. For these reasons, no further negotiation process was undertaken.
4. The Chamber had already ruled that the award was not lawful because “all the conditions required by Article 32(2)(c) of Law 4412/2016 to justify recourse to this exceptional public procurement procedure were not met.” The negotiated procedure without prior publication can only be used for public works contracts under certain conditions.
5. The procedure “in which the contracting authority does not have to advertise widely its intention to award a public contract by means of a notice but may, at its discretion, negotiate with one or more economic operators of its choice constitutes a derogation from the principle of competitive tendering”.
6. In order to justify such a procedure, five conditions must be met simultaneously: a) the existence of an urgent need incompatible with the time-limits laid down by the normal procedures; b) the occurrence of an unforeseeable event; c) a causal link between the unforeseeable event and the urgent need; d) the circumstances invoked by the contracting authority must in no case be the result of its own acts or omissions; and e) the award of the contract must be strictly limited to what is strictly necessary to meet the needs caused by the unforeseeable event.
7. The fifth condition is further elaborated: it is emphasized that direct grants cannot be used to cover regular or recurring needs, but only for truly urgent and exceptional needs.
8. A brief history of the forest disaster follows: “On August 19, 2023, a forest fire broke out in the area of Melia, near Alexandroupoli, which quickly grew and merged with another fire that broke out on August 21, 2023, in the Dadia-Lefkimi-Soufli National Park (area of Gkimprena). These fires were brought under partial control on September 4, 2023 – that is, about 17 days later – and burned more than 93,500 hectares (935,000 stremmas)”.
9. In its initial decision to reject the contract, the Chamber stated that “although the repair of the damage caused by the devastating forest fires of 2023 in the region of Evros constitutes a need arising from unforeseeable events for the contracting authority, the extensive intervention – with an implementation horizon of nineteen months – in the affected area exceeds what is strictly necessary to meet the alleged urgent need”. This is also clear from the contract itself, which provides for a study to identify the areas in urgent need of rehabilitation. At the same time, there is no differentiation between the truly urgent actions and those that could be carried out through a standard tendering process; instead, the contract “primarily aims at the holistic restoration of the consequences of the deforestation of the burned forest areas”. Meanwhile, anti-erosion works have already been awarded to cover immediate needs, with a high budget of 8 million euros.
10. “Finally, the Chamber notes that as a result of the use of the negotiated procedure for the award of the contract, only two of the five economic operators invited participated and, following the exclusion of one of them, the entire contract was awarded to the sole remaining candidate, with a discount rate of 2.70%, which is low considering the size and budget of the project. Moreover, as the pre-contractual complaint shows, other construction companies were also interested in participating”.
11. Before reaching its own decision, the Board sets out the arguments raised in the appeals by the Ministry of Environment, the Hellenic Republic Asset Development Fund (HRADF/TAIPED) and the contractor, a subsidiary of TERNA. They argue that this was the largest wildfire in Greece’s recorded history and that there was “an urgent and compelling need for the immediate study and implementation of appropriate flood control works in the mountainous catchment areas of the burned area, and the awarding of the relevant contracts without the slightest delay, in order to avert the immediate and active risk of devastating floods in the downstream areas of the burned area”. They go on to claim that “this system was chosen for obvious reasons of speed, specifically to avoid two separate contracting processes – one for the studies and another for the execution of the works – and so that the contractor responsible for the preparation of the relevant final study could carry out the works more quickly and effectively”. They also claim that “the risk of flooding cannot be mitigated by other milder or more ‘temporary’ flood protection measures” and that “TAIPED, which by law had a wide discretion as to the number of candidates it could invite in the procedure under review, invited five economic operators in order to ensure as much competition as possible. The final number of participants and the discount rate obtained were beyond its control and did not constitute a defect in the procedure”.
12. In its decision, the Chamber essentially agreed with the Preliminary Panel, stating that the circumvention of the competitive bidding process was illegal because “the conditions required by Article 32, paragraph 2(c) of Law 4412/2016 – namely, the absolutely necessary measure and the element of urgency – are not met.” What the Court of Auditors is saying is that you can’t invoke reasons of urgency to carry out works that address long-term or permanent needs. The decision states: “What is being carried out in the region of Evros is not a targeted intervention limited to what is absolutely necessary to meet an extremely urgent, immediate and present need in a situation of force majeure, but rather a particularly extensive intervention which is part of a broader and long-term plan of the contracting authority for the construction – after the forest fire of 2023 – of flood protection projects intended to protect the area permanently and systematically against future extreme weather events.”
13. This is reflected in the scope of the overall project, which includes the construction of a particularly large number of 440 dams in all the basins. In addition, works will be carried out to create auxiliary access roads. The technical complexity of the project, which requires the preparation of new studies, as well as the high budget allocated to the entire project, is also clear. “The fact that the audited project is part of a long-term plan is also reflected in the fact that, in order to carry out a hydrological analysis of the burned area by watershed in the above-mentioned study, factors such as the 100-year return period before the fire, current conditions and conditions expected in 2050 were taken into account. This long-term nature is also reflected in the timeframe of the audited project, which is set at 19 months.
14. All the above points show that this is a long-term project and that it is not intended to meet urgent needs as defined by the law, since it is not suitable for achieving the objective declared by the contracting authority – the immediate completion of the works and “the immediate protection of the burned area from further degradation and the alleviation of flooding phenomena caused by the forthcoming autumn and winter rains”. In other words, they are rushing through urgent procedures, but by the time the project is completed, two more fall and winter seasons will have passed.