Overpriced and dubious tenders: investigation of procurement for the reconstruction of the South

In 2024, more than UAH 775 million was allocated to restore the infrastructure destroyed by the Russians in Odesa and Mykolaiv regions. Some buildings cost tens of millions to rebuild. And where there are multimillion-dollar tenders, there is likely to be overpricing. Intent has investigated the cost estimates for the restoration of residential high-rise buildings in Odesa and Mykolaiv regions, which cost the most.

Give your tithe

On December 20, 2024, the Department of Municipal Economy of the Odesa City Council signed an agreement with Stroy-Invest-Group-7 LLC for the restoration of an apartment building at 8-B Shevchenko Avenue. The value of the agreement amounted to UAH 45.8 million. UAH 20.6 million was the cost of materials. It is the cost of materials that is sometimes overpriced.

For example, according to the estimate, the company will use Izovat LS 100 basalt insulation to insulate the house. They plan to buy 7.9 thousand square meters of it for UAH 295 (excluding VAT) per meter. On the market, the same insulation is offered for 105 hryvnias per square meter. And this is already including 20% tax.

Screenshot from the video: Odesa City Council

The company also plans to purchase 8.7 thousand kilograms of retardant fireproofing material for 150 hryvnias. In online stores, this material costs 80 hryvnias per kilogram.

In addition, Stroy-Invest-Group-7 LLC will purchase 4.8 thousand square meters of metal tiles worth 2 million hryvnias at 429 hryvnias each. While on the market, its price ranges from UAH 370 to UAH 190 per square meter.

Therefore, the possible amount of overpayment on this 45 million renovation will be UAH 4 million.

Stroy-Invest-Group-7 LLC is registered in Odesa. It has been on the market for over six years. The company is owned by Oleksandr Zinchenko and Dmytro Romanyuk from Odesa. During this time, the company has concluded 56 transactions for UAH 55.9 million.

We would like to add that the first open bidding with special features took place in September. The tender was submitted by one bidder, Pylon West LLC.

According to the YouControl service, Pilon West LLC was registered in Odesa in 2008. The owners are residents of Odesa - Vyacheslav Petkov and Vyacheslav Vasiliev. The latter, according to media reports, is a former tax officer who was previously convicted of bribery. In general, Pilon West has a mixed reputation: the company has been repeatedly involved in criminal cases, in particular due to an increase in the actual cost of contracts. During its operation, the company concluded 349 contracts totaling UAH 142.6 million.

Held on, held on, and failed

A new contract for the long-suffering nine-story building in Serhiivka was awarded to DISK-Pivden, a private company that had been involved in the restoration of the building before. This time, the contract is worth 45.9 million hryvnias. The company budgeted 18.8 million hryvnias for material resources, which account for less than 50% of the contract value.

Most of the items in DISK-Pivden's cost estimate coincide with the market average. It is even lower. For example, the cost of rebar. On the market, a ton of hot-rolled reinforcing steel A 240 with a diameter of 10 mm costs 34.5 thousand hryvnias. In the estimate, the contractor prices it at UAH 27.1 thousand. If you take into account 20% tax, it will be 32.5 thousand hryvnias. Or Ceresit R766 primer. The calculation indicates a price of 342 hryvnias per liter, while on the market the price ranges from 394 to 460 hryvnias.

Photo: Infrastructure Restoration and Development Service in Odesa Oblast

However, they also have a strange item - Izovat 150 insulation in thicknesses of 50 millimeters, 100 millimeters, and 150 millimeters. It was not easy to find this product on the market in free access. So Intent called one of the stores. The consultant Natalia explained that this is not a standard type and is made only to order.

"There is Izovat facade, or Izovat 135 - this one is already in stock. And 150 is not produced, because, firstly, it is more expensive, and secondly, it is superfluous. Therefore, Izovat 100, 115, 135 will be enough," Natalia said.

She also added that only 10 tons can be ordered, and delivery to Odesa region will be either from Zhytomyr or Kharkiv.

A square meter of insulation costs 192 UAH, 385 UAH and 577 UAH respectively. The contractor quoted the price of Izovat 150 (excluding tax) at UAH 324, UAH 496, and UAH 547. The overpayment for the procurement of 45 million hryvnias is actually small - 629.4 thousand hryvnias - but unexplained.

When asked by the CPR why they chose this particular insulation, DISK-Pivden explained that the choice of materials for the overhaul, including the insulation, was made in accordance with the project documentation, which "was developed by competent designers and approved by the customer." At the same time, the owner of the company, Liudmyla Kiosia, agreed that it did cost more: "We understand that Izovat 150 has a higher cost compared to other insulation options. However, this decision was made solely with a view to long-term efficiency and reducing future maintenance costs," the contractor said.

It is worth noting that the contract price in the calculations is indicated as "fixed". This means that the contractor cannot change it.

Last year, DISK-Pivden also won a contract for the reconstruction of this building. The deal amounted to UAH 73.5 million. It was the second attempt. Before that, the Service for Infrastructure Restoration and Development in Odesa Oblast rejected the company's proposal because they did not have all the documents. The second time, the company provided all the documents.

According to the YouControl service, DISK-Pivden was registered in 2009. Its owner is Lyudmyla Kiosia from Odesa. The main activity is the construction of residential and non-residential buildings. In total, the company has participated in public procurement 17 times. It concluded 11 agreements for UAH 109.9 million.

The company started receiving million-dollar contracts in 2023. The first contract for UAH 9.6 million was signed with the Department of Capital Construction and Roads of the Odesa Regional State Administration for the overhaul of an outpatient clinic in Kurisove village and the second for the reconstruction of a 9-storey building in Serhiivka. All other agreements were for less than a million hryvnias.

It should be added that this year, law enforcement officers put the head of the Serhiivka community , Anatoliy Cherednychenko, on the wanted list, accusing him of conspiring with some officials and entrepreneurs to misappropriate budget funds allocated for the repair of this nine-story building by overstating the amount of work actually performed, its cost and the cost of construction materials used.

The chicken pecks at the grain

The Department of Housing and Communal Services of the Mykolaiv City Council, which signed a 15 million hryvnia agreement with City-Stars LLC for the restoration of the building at 8A Samoilovycha Street, is likely to overpay.

According to the estimate, UAH 9.3 million was allocated for materials. Thus, the cost of a square meter of mineral wool is UAH 455. Its average cost on the market is UAH 296. The company planned to spend UAH 1.3 million on it. So the overpayment could amount to more than UAH 600 thousand.

Photo: MikVisti

In addition, the price is overstated for rebar. According to the company's calculations, the cost of a ton of A III rebar of 12 mm, 10 mm, and 8 mm is 42.5 thousand hryvnias, 42 thousand hryvnias, and 41.5 thousand hryvnias, respectively. On the market, the cost of this rebar is UAH 33,500, UAH 33,900, and UAH 34,100, respectively. The possible overpayment for these items may exceed UAH 23.2 thousand.

It should be noted that the cost of materials in the calculations may vary, as the estimate states that the type of contract price is dynamic.

City-Stars has been on the market for a little over three years. The company is owned by Dmytro Kurbatov and Mykhailo Zhendubaev from Mykolaiv. The latter also owns Mykolaivmiskbud, which, according to media reports, is related to Olga Vidina, the former head of the municipal property department of the Mykolaiv Regional State Administration.

Since its inception, City-Stars has received four contracts worth UAH 59.3 million.

They took care of inclusion, but there are nuances

Volodymyr Kondratiuk 's estimate of UAH 15.6 million for the reconstruction of a building at 67 Yantarna Street in Mykolaiv raised questions.

The intent drew attention to a lift for people with disabilities. According to Kondratyuk's calculations, one such mechanism costs UAH 108.3 thousand (excluding 20% tax). He planned to install four lifts. Since the entrepreneur did not specify the model and manufacturer, we looked at the average cost on the market, which is 70 thousand hryvnias. Therefore, the possible overpayment for the lifts alone is almost 240 thousand hryvnias.

Photo: MikVisti

Volodymyr Kondratiuk started his business in 2012. His main activity is "machining of metal products". However, other types of work include construction. Since then, the entrepreneur has participated in public procurement 11 times. At the same time, he received six contracts for UAH 22 million 903 thousand.

It is worth noting that despite the fact that public procurement is designed to avoid artificially increasing the cost of work, almost every estimate contains overpricing. We have contacted the above-mentioned contractors, but have not yet received a response. In today's reality, every thousand, not to mention millions, is an extra drone, an EW vehicle, a vehicle for the frontline. It means either a step towards victory or someone's bank account.

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