1 NATIONAL AUDIT – FIDIC CONTRACTS BASIS OF FAIR CONTRACT

2 NATIONAL AUDIT – FIDIC BASIS OF CONTRACT 1.THE FIDIC CONTRACT FORM IS USED ON NEARLY ALL EU FUNDED INVESTMENTS. 2.THE FIDIC CONTRACT TERMS HAVE BEEN USED FOR GENERATIONS IN MULTIPLE LANGUAGES AND LEGAL CODES 3.FIDIC IS ABSOLUTELY COMMITTED TO HONESTY AND FAIR CONTRACT, AND THUS LOWEST PRICE. THESE ARE WHY THE WORLD BANK INSIST ON COMPLETE FIDIC TERMS. 4.IT HAS BEEN USED IN MULTPLE ECONOMIC CYCLES AND CONTAINS PROVISIONS FOR ALMOST EVERY EVENTUALITY 5.IT IS INEVITABLE THAT ANY INTRODUCTION OF UNFAIR OR ONE SIDED TERMS WILL INCREASE PRICES NOT ONLY TO EU BUT ALSO THE NATIONAL TAX PAYERS

3 NATIONAL AUDIT – FIDIC CONTRACTS 1THE FEDERATION WAS FOUNDED ABOUT 100 YEARS AGO, AND MEMBERS ARE THE NATIONAL ENGINEERING ASSOCIATIONS 2THERE ARE NO REPRESENTATIVES IN ANY COUNTRY EXCEPT AT HQ IN GENEVA. NO LOCAL ASSOCIATION REPRESENTS FIDIC 3THE TERMS OF CONTRACT HAVE BEEN UPDATED ON FEW OCCASIONS, THE LAST BEING THE CHIEF DRAFTER WAS AN EMPLOYEE OF MY COMPANY, AND I MADE MY LARGE MEETING ROOMS AVAILABLE FOR THEIR GROUP MEETINGS.

4 NATIONAL AUDIT – FIDIC CONTRACTS 1.THE REVIEW PANELS REPRESENT THE BEST OF THE BEST FROM AROUND THE WORLD, AND INCLUDED ENGINEERS, LAWYERS, BANKS, FUNDING AGENCIES, CONTRACTOR FEDERATIONS, AND GOVERNMENT AGENCIES. 2.IT IS BREATHTAKING THAT THESE CONDITIONS SHOULD BE SUBJECT TO SUBSTANTIAL CHANGES ALTERING THE ENTIRE PRINCIPLE OF FAIR CONTRACT. 3.THE DRAFTING IS PRECISE AND CLEAR, AVOIDING EXPLANATION AND REPETITION.

5 NATIONAL AUDIT - FIDIC 1.THROUGHOUT MY WORK IN LITHUANIA I HAVE SEEN A LARGE NUMBER OF CHANGES TO THE PRINCIPLES OF FAIR AND BALANCED CONTRACT, LEAVING OPENINGS FOR UNFAIR CONTRACT ADMINISTRATION. THE TEXT CONTAINS, AT EVERY POINT, EXCEPTIONALY POOR DRAFTING WITH MULTIPLE FAULTS, SOME QUITE SERIOUS. 2.THE TEXTS GIVEN TO ME TO REVIEW VARY WIDELY BETWEEN DIFFERENT GOVERNMENT AGENCIES

6 NATIONAL AUDIT - FIDIC 1. AS PART OF PREPARATIONS FOR AN IMPORTANT ASSIGNMENT, I COMPARED THE TERMS USED BY TID (LG AND KLAIPEDA), APVA, AND IGNALINA. 2.FOR VOLUME 1, THE INVITATION TO TENDER, AND IN FIDIC TERMS, THE INSTRUCTIONS TO TENDER, ARE WHOLLY DIFFERENT IN CONCEPT, THOUGH IT WAS POSSIBLE WITH SOME EFFORT TO BRING THESE TEXTS INTO LINE. 3.THE TENDER, ITS APPENDIX AND THE CONTRACT CONDITIONS, REVEAL ABOUT 100 DIFFERENCES.

7 NATIONAL AUDIT – FIDIC CONTRACTS 1.ABOUT HALF ARE EITHER REPETITIONS, OR INSERTIONS OF SOME PARTS OF VARIOUS LAWS, OR EXPLANATIONS OF CLAUSES WHICH ARE ALREADY CLEAR. 2.THERE ARE MANY CHANGES TO THE PRINCIPLES OF FAIR CONTRACT, ERRORS, OMISSIONS, AND SIMPLE BAD DRAFTING. 3.THE RESULTING TEXT IS ONE-SIDED AND WILL RESULT IH HIGHER PRICES FAR BEYOND ANY SIMPLE MISTAKES MADE IN THE ENGINEERING OR FINANCIAL CONTROLS OR AUDITS.

8 NATIONAL AUDIT - FIDIC 1.ONE CONSEQUENCE IS ALSO THAT SERIOUS INWARD INVESTMENT OF EU INFRASTRUCTURE COMPANIES WILL BE DIMINISHED EVEN MORE THAN NOW. 2. ALL THE LAWS OF LITHUANIA APPLY. THE TWO MOST APPLICABLE ARE THE PROCUREMENT LAW AND THE CONSTRUCTION LAW. 3. THE LATTER CONTAINS DEFINITIONS QUITE DIFFERENT TO THE FIDIC DEFINITIONS, BUT IS QUITE EASY TO HARMONISE THESE.

9 NATIONAL AUDIT - FIDIC 1.THE ISSUES RAISED ABOVE ARE A VERY SHORT INTRODUCTION TO THE SUBJECT. 2.A FULL TRAINING COURSE IS USUALLY 2 DAYS FULL TIME. THERE ARE MORE PLANNED AND AGREED FOR THE COMING MONTHS. 3.UNFORTUNATELY SENIOR PEOPLE OFTEN FAIL TO ATTEND AND THE MIDDLE AND JUNIOR STAFF HAVE LITTLE AUTHORITY TO MAKE MUCH DIFFERENCE TO THE MAIN POINTS RAISED.

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