The Turkish association of companies that offered to build the Rail Baltica route at a cheaper price than its competitors in a tender has been excluded from the procurement on the recommendation of the State Security Service (VDD), Latvian television’s De Facto programme reported on 17 September.

The tender for the construction of Rail Baltica’s main track was completed last week. The contract was awarded to the French, Polish and Italian joint venture E.R.B. Rail Baltica JV. The contract price offered by the consortium is €3.7 billion (€3,698,833,520). A second bidder from Turkey, which offered around half a billion euros (€3,162,418,257) less, was rejected.

The tenders of two Turkish companies, IC İÇTAŞ İNŞAAT SANAYİ VE TİCARETŞ, and DOĞUŞ İNŞAAT VE TİCARET A. Ş, were not evaluated by the bidding committees following the advice of the State Security Service (VDD).

“I will not be able to comment further on the content of the recommendation, but it has been received as negative for the particular bidder,” said Einars Jaunzems, Director of the Department for the Implementation of the “European Railway Lines” (EDZL) Project and Chairman of the Procurement Commission.

“The recommendation is simply a name for this administrative act, but the nature of the document is that we simply could not conclude a contract with this bidder. […] We have to consider this recommendation as a ban on further possible cooperation,” Jaunzems explained.

The specific reasons for the exclusion of the Turkish companies are not known. According to de facto information, one of the companies in the Turkish association works closely with contractors from Russia. Turkish Holdings IC has built several bridges in St Petersburg, a terminal at Pulkovo International Airport and a toll motorway between Moscow and St Petersburg.

Currently, IC Holdings is building Turkey’s first nuclear power plant together with the Russian construction company Titan-2 on behalf of Rosatom. The first batch of nuclear fuel was delivered to the plant in May. Vladimir Putin took part in the symbolic event from afar and gave the go-ahead to hand over the certificate to Turkey.

Turkey is a member of NATO and has diplomatic and business relations with Russia at the presidential level.

“Many expected relations between Turkey and the West – and especially between Turkey and NATO – to improve after the Turkish presidential elections. We don’t see very fundamental improvements, but we don’t see a complete shift to the other side either. So the game continues, it’s called balancing, balancing between Russia and NATO,” says Veiko Spolītis, a foreign policy expert and former politician.

“Overall, Russia’s share of Turkish exports is less than 4%, so draw your own conclusions. Turkey’s main source of trade is the European Union. The concern of the Turkish population at the moment is inflation, which is around 110%. If Russia helps Erdogan solve these problems, the Turks will be at peace,” Spolītis noted.

It is unclear whether Turkish companies have been excluded from the Rail Baltica project precisely because they have Russian partners in other projects. VDD declined to comment on the case.

EDZL said that there was already a precedent in the Rail Batica project where a participant was excluded because of the objections of VDD. De facto is aware that a Chinese company was excluded from the procurement at an earlier stage.

The Turkish association of companies has challenged the exclusion from the tender at the Procurement Monitoring Bureau. Therefore, the builder of the route may still change.

“IC İÇTAŞ and DOĞUŞ told LTV they were surprised to be excluded from the tender as they had submitted by far the best financial offer.

Regarding your question about the recommendation of the State Security Service, we would like to clarify that we have not received a copy of it or any relevant information. Therefore, we do not know the specific reasons. […] We do not believe that this is related to the nuclear power plant project to be built in Turkey, as the companies involved in the project are not subject to any sanctions. Our company has successfully implemented many large-scale projects, especially in Asia, Europe and the USA,” the company’s response said.

It should be pointed out that the price offered by the Turkish companies, although the lowest, could have changed if the contracting authority had assessed whether the calculations were justified. However, it is clear that the association was excluded before a detailed examination of the financial offer.