KOSOVO: UNMIK/PISG SELECT KOSMOCELL CONSORTIUM FOR

C O N F I D E N T I A L PRISTINA 000114

SIPDIS

SIPDIS

DEPT FOR EUR/SCE, EEB/IFD/OIA, EEB/CBA AND EEB/CIP-AGIBBS
USAID FOR EE/ECA, EE/DGSR
USDOC FOR 4232/ITA/MAC/EUR/OEERIS/CEED/SSAVICH

E.O. 12958: DECL: 02/08/2017
TAGS: ECPS ECON PREL YI
SUBJECT: KOSOVO: UNMIK/PISG SELECT KOSMOCELL CONSORTIUM FOR
SECOND MOBILE TENDER

REF: (A) 06 PRISTINA 219 (B) 06 PRISTINA 752 (C) 06

PRISTINA 966 (D) 05 PRISTINA 1159

Classified By: Chief of Mission Tina Kaidanow for reasons
1.4 (B) and (D).


1. (C) SUMMARY: The Kosovo Telecommunications Regulatory
Authority announced local consortium Kosmocell, which
included American companies Computer Science Corporation and
the Omni Group, as the winner of the second mobile telephone
tender. UNMIK officials said the selection of Kosmocell was
conducted in a fair and transparent process, but there have
been NGO allegations reported in the press of irregular
administrative and procedural decisions. It is possible some
of the competitors will file protests against the decision
arising from claims that the evaluation process was unfair,
especially definition of certain criteria and late publishing
of the score sheet. END SUMMARY.

KOSMOCELL SELECTED


2. (SBU) On February 6 the Kosovo Telecommunications
Regulatory Authority (TRA) formally announced that the local
consortium Kosmocell won the second mobile telephone
operating license. The Kosmocell consortium is composed of
local companies the Dukagjini Group, owned by Kosovo
businessman Ekrem Lluka and the IT company Kujtesa; the
Italian mobile operator, Eutelia; and American companies, the
Computer Science Corporation and the Omni Group. According
to TRA officials, Kosmocell won because the points it
received for the technical specifications of the tender were
the same or better in comparison to its competitors, and the
consortia offered 81 million euros for the license, which was
the highest offer made for the financial qualifications,
which required a minimum bid of 20 million euros.


3. (SBU) Kosmocell beat out three other consortia that
competed for the second mobile operating license: Slovenia
Telecom/Ipko/Albright Group (Slovenia/Kosovo/USA) bid 71
million euros; Mobilkom Austria/Columbia Ventures Corporation
(Austria/USA),65 million euros; and Team Kosova
(USA/Greece),27.7 million euros. It is noteworthy that
Slovenia Telecom has majority shares both in Ipko (70
percent) and Lluka's Kosmocell (51 percent),a position which
UNMIK's Office of Legal Affairs (OLA) said did not violate
the rules of the tender. Slovenia Telecom and Lluka
(Mobitel/Mobikos consortium) won the original second mobile
tender in 2004 before the process was annulled by the SRSG in
2005 due to irregularities.

UNMIK CLAIMS FAIR PROCESS...


4. (SBU) UNMIK officials believe that the selection of
Kosmocell was fair and reputable due to steps it took to
ensure integrity and transparency in the process in
comparison to the original second mobile tender. Ernst
Tschoepke, Senior Legal Officer for UNMIK's Office of Legal

SIPDIS
Affairs (OLA),said UNMIK agreed to have an international
consultant develop the tender package and assist the
evaluation committee prepare the score sheet (ref B). He
noted that UNMIK pushed the PISG to set up a special
supervisory committee to oversee the entire process and a
separate evaluation committee to score bids to determine a
winner. Tschoepke also noted that the SRSG selected two
internationals outside of Kosovo to sit on the evaluation
committee. He added that UNMIK Pillar IV, responsible for

Kosovo's economic policy, invited diplomatic liaison offices
to observe some of the meetings of the evaluation committee
as additional step to ensure the process would be reputable
in the eyes of the international community.

...BUT SOME COMPANIES PLAN TO FORMALLY PROTEST OUTCOME


4. (C) That said, Team Kosova and possibly Austrian Mobilkom
plan to formally protest the outcome of the evaluation due to
what they say are questionable decisions and procedures in
the tendering process. (Note: Nearly all of the companies
competing for the second mobile tender complained about the
mixed evaluation criteria, and most complained that the score
sheet for the evaluation process was published after the
expression of interest. End Note.) They argue that a mixed
process is not clear or transparent, and complicates the
evaluation committee's job of selecting a winner (ref C).
They also assert that bidders were required to submit their
offers before the score sheet was released, which they argue

is not a normal practice for mobile tenders. The companies
complain that they did not have a chance to raise questions
about certain criteria on the score sheet such as local
content requirements and network roll-out strategy, which
would have helped them to prepare better packages. Both
Mobilkom Austria and Team Kosova said that international
standard practice of publishing the score sheet is that it
should be distributed at the same time the tender package is
disseminated. UNMIK's Tschoepke said the reason the score
sheet went out last was to ensure a fair process and avoid
bid-rigging. According to Tschoepke, all bidders were
somewhat disadvantaged, but noted that UNMIK officials were
concerned that the score sheet might leak and believed that
releasing it at a later moment would ensure a fairer process.


5. (U) One local anti-corruption NGO was also reported as
having criticized the tender process. According to press
reports, the group "COHU" said the results of the tender
reflected political influence.


6. (SBU) USOP does not/not clear this cable for release to
UN Special Envoy Ahtisaari.
KAIDANOW