Market to be self-regulated via the decrease of submitted discounts in public project tenders

The discounts in the tenders of the public works of the country in 2020 marked a slight de-escalation. According to data available by SATE, the average discount (referring to the bidders) in all projects with a budget of 1 million euros and above, ranged at 51.18%. This percentage is slightly improved by 1.5 points compared to the 2019 percentage which was 52.74%.

More encouraging, however, are the figures in the category of auctioned projects with a budget of over 2 million euros. Here, after several years, the average discount “fell” below the 50% barrier and more specifically reached 49.56%. This percentage is significantly improved by 2.4 points compared to the percentage of 2019 which was 51.94%.

De-escalation in the offered discounts

This decline was a continuation of the de-escalation of excessive discounts in recent years. In the category of tenders with a budget of over 2 million euros, in 2017 the corresponding average had climbed to 58.35% with discounts that had reached even 80%.

In both 2018 and 2019, started a correction of the average. In 2018, the average discount of the bidders fell to 56.19% and in 2019, as we said above, we had a drastic reduction in the percentages that reached 51.94%.

These encouraging findings come in parallel with the waiting for the submission of the reform of law 4412/2016 on public procurement. This element can be perceived as a mini “self-regulation” of the market that now seems more cautious in submitting excessive bids.

It has been pointed out many times that very high discounts often lead to a dead-end for both the project and the contractor. This often has further consequences if the project is co-financed. It is not a few times that we have seen contracts dissolve or to become “cancerous”, failing to absorb European funds and this money in turn does not lead to the real economy.

Lots of projects, half of them on a small budget

In a more general context in 2020, a total of 756 budget projects over 1 million euros were auctioned. This statistic is quite encouraging since in an extremely difficult year with several months of lockdown we saw an increase both compared to 2019, where 617 projects were auctioned, and in 2018 when 724 projects were auctioned.

Of the 756 projects in 2020, 395 were for small budget projects (from 1 to 2 million euros) and 361 were for projects with a budget of over 2 million euros.

In the number of auctions in 2020 with the temporary contractor discount available, there was a braking due to the pandemic. According to the data of SATE, this index moved downwards in relation to 2019 and 2018 since many auctions were either not held or were postponed.

More specifically, in 2020 the number of tenders available with the temporary contractor discount was 311 projects. In 2019 the corresponding number was 335 projects while in 2018 we had reached very high levels, with 561 projects.