Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Firms Rush for Army Rehousing Contracts

The Russian military will award eight contracts worth hundreds of millions of dollars over the next three months in the final stage of the $5. 3-billion German-funded project to rehouse Russian troops withdrawing from eastern Germany.


Colonel Vladimir Oksyuk, deputy head of the Russian Defense Ministry's special unit for administering the project, said that the pace of the project had increased due to last year's decision to bring forward the deadline for the withdrawal of all troops from Germany by six months to Aug. 31, 1994.


Russian and foreign firms have been rushing to land the contracts arising from the project, which involves the construction of a total of 40 mini-towns and 40, 000 apartments. The projects are now 25 percent complete with a total of $2. 5 billion already spent.


Last week the Korean-firm You One Construction and Engineering won the job of general contractor for the 32nd of the mini-towns. The firm will build 546 apartments near the town of Kostroma at a cost of $48 million.


Oksyuk said that despite the urgency, the ministry had used a system of competitive international tenders to


drive prices down. He said the tenders had been so competitive that the ministry had already saved about $470 million, which it would use to build an extra 3, 000 apartments.


Oksyuk said the main problem with the rush was that it allowed local governments to "blackmail" the army. Because they controlled the land earmarked for the mini-towns, they were demanding additional construction for local needs.


A total of 16 companies, including German, Turkish, Finnish and one Russian firm, have already been named as general contractors. The Turkish company ENKA has been the most successful, receiving four general contracts worth $485 million.


Even though only one Russian firm had won a tender, Oksyuk said that Russian subcontractors and material suppliers have gotten about 50 percent of the money spent so far.


Germany first agreed in October 1990 to pay for $4. 9 billion of housing to compensate the former Soviet Union for the costs of withdrawing its troops from bases in eastern Germany.


But the project was set back a year by the breakup of the former Soviet Union, which forced planners to relocate 13 towns which were to be built in Ukraine.