THE TENDER PROCESS
The tender for developing Friedrichstadtpassage was a particular one. First of all it was not a tender for a defined building, but a tender to define one, which at the same time contributed to the development of the entire quarter of the city. More than that: tenders were to combine both architectural and financial proposals. State money would not be given to the projects. The whole site was divided in three lots (205, 206, 207), in order to preserve the traditional (i.e. 19th century) dimensions of the sites and the shape and running of the streets of this part of the city, which the earlier Centrum Warenhausgesellschaft project had not done. All applicants had to make three proposals one for each of the three lots, although it was decided from the very beginning, that each lot should be given to a different investor to avoid the "need" for buildings covering two sites (and the street between them) or for bridges bet-ween the single buildings. This procedure obviously favoured strongly financially powerful and professionally experienced real estate com-panies.
An exception of the requirement to present proposals for all three lots was made for only one competitor - Galeries Lafayette - due to their earlier involvement with the Centrum Warenhausgesellschaft. They could argue that they were in some way, if not former co-owners, partners of the former owner of the site which now forms lot 207, and that the disappearance of their partner could not lead to a disappearance of their business rights and interests. If this argument could have withstood a legal challenge or not is moot; fact is, that the Senat of Berlin was very interested in having a shopping area designed by a well-known and high quality international group, like Galeries Lafayette, on such a prestige site. So to them the exclusive right to tender only for one lot was given.
The tender for the three lots took place in two stages. Initially more than 100 investors had stated their interest. 22 of them were invited to make propo-sals for the pre-tender stage, twelve of them foreign. In this first phase of the tender, applicants had to lay down the general aspects of their plans such as the overall dimensions of the building and its proposed users (Interview 15/12/94).
An urban development scheme did not exist for the eastern part of Berlin, and the process of developing one with all its administrative and parliamentary stages would have taken years. So due to the political and economic inter-est of the Senat of Berlin to present to its citizens and to the entire world an immediate start of reconstruction of the city, a very sparse building regulation was put in force. To participants in the tender process of Friedrichstadtpassage it was only prescribed, that their buildings must obey the alignment of the site to keep the shape of the streets and must not be above the traditional (i.e. 19th century) height of buildings in that area of Berlin of 22 metres ("Berliner Traufhöhe" cf Hans Stimmann, Berliner Abkommen Bauwelt 1991 heft 39 pp 2092-3).
The Senat of Berlin for its part guaranteed to investors, that on these sites there were no rights of restitution of former land owners (i.e. owners before the expropriations after 1933 and 1949). This assurance was the consequence of a special condition of German unification. In the process of unification, the government first of the (western) Federal Republic, then of Germany, both formed by a conservative-liberal coalition, had intended not only to register, that the GDR has disappeared, but to declare as many as possible of the measures taken by the GDR as a state as not happened, in particular the ex-propriation of land owners. Only expropriations made between 1945 and 1949 under Russian administration, and not under the Nazi or GDR governments, were excluded and remained in force. The principle of "Restitution before Compensation" was made. It determined, that former owners under all circumstances got back their property, regardless what had been done to it in between and by whom. It was clear, that possible investors would be massively deterred if they could not be completely sure to whom the land they intended to buy really belonged.
For the three lots of Friedrichstadtpassage, five applicants came into the se-cond tender stage. In this stage full architectural designs were required. Three applicants were the winners, all three entirely or mainly foreign investors: Tishman Speyer won lot 205 with a German architect, Prof. O.M. Ungers; the Fundus-Gruppe won lot 206 with the Americans Pei Cobb Freed and Partners as architects; and Galeries Lafeyette, who presented an architectural design by Jean Nouvel - won lot 207 (Interview 15/12/94). We took this last as our case to study.
The predominance of foreign investors was not unforeseen. It may be argued, that the real estate business is more developed in countries like Great Britain, France or the USA than in Germany. Investors from these countries are more used to developments of greater financial dimensions, their power in a completely open and risky competition like it was the case here could be ex-pected to be greater than those of most of their German competitors. But there were also explicit efforts by the Senat of Berlin to encourage foreign investors to take part in the reconstruction of the city. The aim may have been to present Berlin as an open, international city. About other reasons only as-sumptions can be made. The City of Berlin has always strived to be on the world's top level. One probably can safely presume that in this period only the most powerful investors, the most effective con-tractors, and the best architects of the world in the eyes of the Senat and the people of Berlin were adequate to take part in the reconstruction of their city. And surely it was also in the interest of the Senat to avoid giving projects worth billions of DM to the well-known network formed by the Berlin construction industry which extended to contractors, engineers, property developers, architects, and government officials, which had been protected from external competition because of more than 40 years of isolation.
In order to pursue these policies, the Senat from May 1990 on started to employ a special person to look after investors and this person, particularly for the most attractive sites in the most high profile locations in the city, looked for investors from abroad. He did not make a secret of his opinion that German, and in particular Berlin, investors generally were not able to meet the needs of the reconstruction of Berlin. This person was murdered in June 1991 when amongst the mail he opened one evening in his apartment was a letter-bomb (Warum starb Hanno Klein? Die Tageszeitung 19/9/91 and 9/10/91). Although many of the members of the Berlin network may have benefited from his death, the latest evidence points towards ex-members of the Staatssicherdienst (STASI), the former GDR secret police (Warum starb Hanno Klein? Der Tagesspiegel 16/4/96)
A loser in the tender process for Friedrichstadtpassagen had been a French-German joint venture named EP Europrojektentwicklungs GmbH, a joint venture by the Ger-man real estate company of Roland Ernst, Dresdner Bank, and two French construction Société Générale des Entreprises (SGE) and Compagnie Générale de Bâtiment et de Construction (CBC), who for this purpose had formed CBC Immobilière as a real estate company. Roland Ernst, one of the most experienced and farsighted German real estate owners, knew better German reality than his foreign competitors and Berlin history than the Senat. Already before the tenders had been opened, he had found a former Berlin family now living in the USA, who were owners of a piece of land now forming a part of the site of lot 207. That gave him the possibility to buy 25 per cent of this lot and, after the tender was made, present himself to Galeries Lafayette as an owner, who could not be ignored in case of the execution of a construction project on land which was partly his property. To avoid a possible lawsuit lasting years, Galeries Lafayette agreed to withdraw from ownership of the land and retired to the role of final user of the building which was to be constructed. In return, Roland Ernst agreed to execute the architectural design of Jean Nouvel, originally made for Galeries Lafayette. So EP Europrojektentwicklungs GmbH (Europrojekt) became the developer of lot 207 (Die Tageszeitung 30/7/91; Südeutschezeitung 24/10/91).
In a turnkey contract, the contractor is responsible for the whole project, including the design. Among the criteria, a contractor has to fulfill, therefore priority is given to the capacity and the reliability to perform a large and complex project. The assurance of this capability is given by references, espe-cially performance on international projects, financial data on the company, and the impression, that the company's representatives made when they present their proposal. Of course, the price offered plays an important role too, including guarantees offered by banks, assuring the liquidity of the turnkey contractor, who has to finance the while the project is under way. So it is quite clear, that only big companies with a great amount of ap-propriate experience had a chance to win this contract.
The winner in the end was the French contractor CBC. That meant, even if CBC Immobilière as part of the client is not identical with the construction company CBC, that part of the client and the turnkey contractor were in the end part of the same company. So the question may be raised whether the tender process was competitive, or whether the order was simply handed out by the client to the contractor on a friendship basis. It was reported to us that there was a competitive tender and that CBC won it, because their offer was the best in terms of cost-benefit and reliability (Interview 18/5/95). But in this game the whole question of the nature of the tender process is misleading.
In the case of a private construction project, where client and contractor be-long to the same enterprise, the question whether the tender process is more or less competitive, is of minor importance compared to the fact, that the result of the process brings a noticeable advantage for the whole company. If the project is low risk, then internalising the project can lead to greater profits. If the project is a risky one, then internalising the risks can lead to better management of the conflicts that may arise. In this case it is even better to rely on a well-known partner, who shares the same values and interests. Moreover, for CBC the project at Friedrichstadtpassage was more than a simple con-struction project. It was planned as a first step to enter the German con-struction market.