TALLINN, 29 May 2019 – Auditor General Janar Holm finds on the basis of the overview report prepared by the National Audit Office that it would be reasonable to open the solution for the temporary control line between the Republic of Estonia and the Russian Federation, i.e. the eastern border, which was approved by the Government without alternatives, to discussion and to analyse whether optimal performance could also be achieved at lower costs. The process of streamlining the border does not have to be stopped in order to do this, but this analysis can be carried out within the scope of the planned schedule.

“The procurement for building the first stage of the border project – a section of 23.5 kilometres – has been announced and tenders will be submitted in June,” said Auditor General Janar Holm. “But the border solution approved by the Government should be broken down to pieces again and assessed. We may find out that building the border without compromising on performance doesn’t have to cost so much or that the approved solution really is the best option – either way, we’ll win. At least we’ll have the reassurance that this is the price we’ll have to pay for a functioning border.”

The National Audit Office believes that building the eastern border is important, as the state must be able to control its territory. However, building the eastern border of Estonia is a massive project – construction and future maintenance of the border will require a lot of money. When the Government made its decision in February 2015, it proceeded from the knowledge that building the border infrastructure will cost ca 71.3 million euros and the amount required for operating expenses from 2016-2019 will be 8.2 million euros. The projected total cost of the project has increased four times by now and the Government of the Republic received information about the specified cost of the project in February 2018 instead of the promised autumn 2015. According to the estimate prepared in the second half of 2018, construction of the border will cost ca 250 million euros and maintenance of the infrastructure will take ca 70 million euros until 2026, which will be on top of the present cost of guarding the border.

The Auditor General has described the background of his considerations in detail in the preface to the overview about the construction of the eastern border published today. Last summer, the Auditor General already said that in his opinion, it had actually been impossible for the Government to make a well-considered and informed decision about the border. The overview of the National Audit Office confirms this conclusion once again and highlights many more risks to which attention should be given in the further development of the project.

The analogue of the National Audit Office in the United Kingdom has outlined, on the basis of its extensive experience that spans decades, the general warning signs that should be noticed during the management of major projects and which should give the decision-makers a reason to be concerned and request additional information.

For example, warning signs are if:

• a minister or leader of the project wants a ground-breaking project;
• the project team names a specific amount (not an estimated range) regarding the cost of the project in the initiation stage of the project;
• the costs are intentionally or optimistically reduced in order to guarantee approval of the project;
• alternatives are discarded too early, ruling out the possibility to choose;
• extension of the deadline is offered as a solution to the increased cost.

According to Auditor General Janar Holm, the eastern border project is a textbook example of a situation where all of the aforementioned warning signs and fully or partly present. “The incident that occurred with a state official on the border in 2014 became the catalyst of the streamlining of the temporary control line between the Republic of Estonia and the Russian Federation (hereinafter the eastern border), as it resulted in the publication of photos of the eastern border, which showed that its condition is very poor and it basically looks like a thicket,” admitted the Auditor General. “The impending parliamentary elections added fuel to the fire. The reaction was amplified further by the realisation of the people responsible for border control that a window of opportunity had opened, and their understandable desire to take advantage of the situation in order to solve an old problem – to build the best border that could become the standard for the external border of the European Union.”

As building border is a big investment, which has a significant impact on the state budget of Estonia in the next years, the Auditor General decided it would be reasonable to give the parliament and the new Government that prepares the state budget strategy for several years an overview by the supreme audit institution of what has been done about the eastern border so far. In summer 2018 the Minister of the Interior at the time also requested that the National Audit Office prepare an overview of the plans and preparations of the construction of the eastern border. The National Audit Office started preparing the overview last August.

The National Audit Office made the following observations when preparing the overview:

• No alternative solutions were developed for the construction of the eastern border, which is why it’s impossible to assess whether the present solution for the establishment of the eastern border is optimal. In the letter sent to the Auditor General in July 2018, the Minister of the Interior named four development directions as the variants that were initially considered. One of them was finally offered to the Government of the Republic, the second was to leave everything as it is and the remaining two were half-finished, non-contemporary solutions that lacked detailed descriptions, financial calculations or estimates in documented format. The alternative border solutions were not discussed in working groups or presented to the Government of the Republic. The Auditor General has said that it has actually been impossible for the Government to make a well-considered and informed decision about the border.

• The construction of the eastern border is exposed to several risks, which may increase the duration and cost of construction. The Police and Border Guard Board has tried to identify the risks related to the construction of the eastern border and come up with measures for reducing the risks the management of which depends directly on them. At the same time, many risks and options for reducing them remain outside the jurisdiction of the Police and Border Guard Board. For example, Riigi Kinnisvara Aktsiaselts highlighted in its “Assessment of the Volume and Cost of the Project for Construction of the Border Infrastructure of the Eastern Border” of 6 May 2018 that the projected cost of construction of the eastern border may be significantly increased by other major construction works in Estonia (e.g. Rail Baltic. roads).

• It’s still not clear to the Police and Border Guard Board how much guarding the eastern border will cost after the construction of the border infrastructure. The information presented about this has been contradictory. The estimated maintenance costs (incl. labour costs) of the eastern border until 2026 total 70 million euros, which will be on top of the present cost of guarding the eastern border. In the opinion of the Police and Border Guard Board, preparing an accurate assessment of how much staff will be required and how much the maintenance of the infrastructure will cost is impossible right now. However, this is a very important input for the calculation of the cost of guarding the eastern border.

• The Ministry of the Interior and the Police and Border Guard Board have predominantly justified the specific solution to the construction of the eastern border with threats related to illegal migration and smuggling, which according their own risk assessments as well as those of the other relevant authorities, however, are not frequent in the area between the border crossing points and have no significant impact. In the opinion of the Ministry of the Interior and the Police and Border Guard Board, the eastern border must also be built in order to support guarding the air border; to reduce the costs associated with the obligations of a European Union Member State (e.g. when border cases are processed); to streamline environmental sites (transboundary water bodies); to solve the issues related to the ownership of land next to the border; to create the missing legal regulation and update the existing one; to guarantee the security of the NATO units staying in Estonia; etc. However, the scale of the problems has not been assessed in the case of these needs and there has been no analysis of how much the selected eastern border solution supports these activities.

• The Government approved the eastern border solution in 2015 on the basis of the initial cost estimate of the Police and Border Guard Board. During the fourth-month preparations of the eastern border project, the Ministry of the Interior and the Police and Border Guard Board prepared an estimate of the cost of the project, which turned out to be too optimistic and did not consider the fact that giving reassurance about the scale of the cost was impossible due to inadequate preparations. Although the materials on the approval of the eastern border solution of the Government of 26 February 2015 state that cost will be specified after the design is finalised in autumn 2015, this was not separately emphasised in the presentation made to the members of the Government and amounts of tens of millions of euros were given to the accuracy of the last euro. When the Government made its decision, it proceeded from the knowledge that building the border infrastructure will cost ca 71.3 million euros and the amount required for operating expenses from 2016-2019 will be 8.2 million euros. The projected total cost of the project has increased four times by now and the Government of the Republic received information about the specified cost of the project in February 2018 instead of the promised autumn 2015.

• The construction of the eastern border was not a priority for the Government of the Republic or the Ministry of the Interior before September 2014. From 2010-2013, the development plans of the area of government of the Ministry of the Interior and the annual action plans of the Police and Border Guard Board included activities arising from the State Borders Act (e.g. marking the border and maintenance of the border strip). However, no money was found for these activities or for the functions set forth by law. The reason given for this was that the construction of the eastern border was not a priority for the Government of the Republic or the Ministry of the Interior, because the Republic of Estonia and the Russian Federation had not signed a border agreement. The incident that occurred on the border on 5 September 2014 brought the focus of the Government of the Republic and the Ministry of the Interior on the construction of the eastern border. On 26 September 2014 the Government of the Republic urgently initiated the activities for the maintenance, marking and construction of the eastern border (money was allocated for this as well). The Government approved the project on 26 February 2015.

  As the activities were fast-tracked, it was objectively impossible for the Ministry of the Interior or the Police and Border Guard Board to thoroughly consider what kind of border infrastructure Estonia needs on the eastern border or to analyse alternatives and their cost. At the same time, there is no information that the Police and Border Guard Board have communicated to the Ministry of the Interior and the Ministry of the Interior in its turn to the Government of the Republic that the need considerably more time to ensure that the border solution(s) to be submitted were better thought through and prices as realistically as possible.

  The strong political support of the Government of the Republic to the construction of the eastern border did not encourage the members of Government to question the optimality of the border solution submitted by the Ministry of the Interior and the Police and Border Guard Board.

  Even in 2018, when it became evident that building the eastern border would cost considerably more than initially thought, the Government did not question whether the only solution to the construction of the eastern border was optimal after all.

Toomas Mattson
Communication Manager, National Audit Office
+372 640 0777
+372 513 4900
[email protected]
[email protected]
http://www.riigikontroll.ee/

• Posted: 5/29/2019 12:00 AM
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