The allocation of financing and the tendering process for a DBOM type contract concerning automated fare collection in the public transport system of the Hungarian capital has been successfully completed. CHSH Dezső & Partners advised BKK Centre for Budapest Transport in each step of this high-profile transaction.
The finance team of the firm, led by Dr Edina Nagy (partner), advised BKK throughout the structuring, negotiation and preparation of the Loan Agreement, which was concluded in September 2013 with the European Bank for Reconstruction and Development (EBRD) in the amount of EUR 54.5 million. As part of the loan structure, the Municipality of Budapest provided HUF 5.3 billion to BKK according to a Development Agreement concluded in April 2013.
The tendering process of the project proceeded in accordance with EBRD’s Procurement Policies and Rules. Dr Orsolya Hajós (Partner) and Dr Eszter Á. Kontor (Of Counsel), the firm’s procurements specialists, actively supported BKK at each stage of the procurement process. Six out of the eight internationally renowned companies met the criteria of the prequalification closed in December 2013. Prequalified tenderers submitted their technical bids containing key technical and business requirements. During contract negotiations conducted on the basis of technical tenders, Projects&Finance specialist Dr Andras Kauten (Senior Lawyer) greatly contributed to the successful completion of the procedure.
Four prequalified tenderers submitted valid, final commercial bids. The contract award was made to Scheidt&Bachmann, a German company, ahead of LG CNS from South Korea, Cubic from the United Kingdom and a joint venture of Thales and Xerox from France, which also submitted strong, competitive tenders. Scheidt&Bachmann quoted a price of EUR 91 million for the system design, implementation and projected five-year operation.
In addition to the importance of this transaction on the Hungarian market in terms of contract value and the significance of this contract for the transport and fare collection industry, the transaction also provided a unique opportunity to the firm to demonstrate its solid capabilities in procurement procedures that are international in every respect.