Public procurement

2005

Serbia, and in particular Montenegro, should pursue their efforts to create transparent and open public procurement procedures ensuring fair and non discriminatory conditions of competition for EU suppliers.[1]

As regards public procurement, there are still inter-republican obstacles due to existence of domestic preferential schemes.[2]

As regards legislative framework, a Law on Public Procurement is also in the process of being amended.  [3]

2006

Allegations of corruption and fraud in the awarding of public contracts need to be seriously addressed by the Government.[4]

Substantial work will be required to upgrade the administrative capacity and the systems for monitoring and controlling procurement activities (including financial management and the independent control and audit functions outside the procurement system itself).[5]

Overall, preparations for alignment with the acquis in this area are underway. A substantial strengthening of the legal and institutional capacity of Montenegro in this area will be crucial for strengthening the rule of law and the prevention of corruption. [6]

The authorities of the Republic of Montenegro mentioned the Law on Public Procurement and the Law on Financing of Political Parties (adopted in 2001 and 2004 respectively) as major undertakings in the country’s efforts to combat corruption in the most vulnerable areas. In particular, the Law on Public Procurement establishes the general principle that tendering procedures must be open for competition.[7]

It was also clear that legislation had not always been prepared thoroughly enough and often required amending. As an example, the Law on Public Procurement was mentioned to the GET. This situation is conducive to corruption and contributes to creating an important level of uncertainty as it calls for frequent changes to and amendments of existing legislation.[8]

However, during the on-site visit the GET was told that there were significant lacunae in the Law and that it was very difficult to apply. [9]

Although the Law provides for specific committees (Commission for opening bids, Commission for examination, evaluation and comparison of bids and Award Commission) to reduce opportunities for corrupt activities during the procedure, the GET is of the opinion that the Law suffers from a significant lack of clarity. At the time of the on-site visit, the GET was told that a new legislative framework was being prepared to bring procurement procedures of Montenegro into line with European Union standards.

The GET recommends that the Law on Public Procurement be revised with a view to clarifying its provisions and ensuring a more transparent procedure.[10]

2007

At the present stage, the PPL[11] fails to comply with the acquis in several areas and the agreed institutional framework has not yet been completely established. One crucial step remaining is separation of the administrative tasks of the public procurement agency (PPA) on the one side and review of complaints by the public procurement commission (PPC) on the other, subsequently eliminating any risk of conflict of interests.[12]

2005

Serbia, and in particular Montenegro, should pursue their efforts to create transparent and open public procurement procedures ensuring fair and non discriminatory conditions of competition for EU suppliers.[13]

In the field of public procurement, there have been no legislative or administrative developments in Serbia. [14]

2006

No particular development can be reported in the field of public procurement. The legislation on public procurement is to a large extent based on the Community acquis. However, the implementation of a consistent, non-discriminatory and effective public procurement system was halted pending the adoption of a new Public Procurement Law. Further efforts are needed in strengthening the implementation capacity of the Public Procurement Office and the Public Procurement Commission, by increasing their independence vis-à-vis the Government and ensuring transparency in decision-making. [15]

The Serbian authorities reported that “a still relatively high level of corruption in public procurement justifies restrictive regulation, the need for its strict implementation and for developing an efficient monitoring and control mechanism of public procurement processes”.[16]

Moreover, significant lacunas in the implementation of the Public Procurement Law were brought to the attention of the GET.[17]

Therefore, the GET recommends that the implementation of the Public Procurement Law be enhanced, notably by providing training to civil servants involved in the procurement process.[18]

2007

A more systemic approach to fighting corruption, including proper financial control, transparent public procurement procedures and parliamentary oversight is needed.[19]

Little progress has been made in the area of public procurement. The public procurement Law has not been amended and no progress has been made in addressing the gaps in the legal framework, including the definition of contracting entities.[20]

Weaknesses in the internal audit system of the public administration, corruption and the absence of a fully functioning supreme audit institution represent further risks to the implementation of an effective, consistent and nondiscriminatory public procurement system in Serbia, to a degree, the institutional stalemate has been counterbalanced by the professionalism of those working in public procurement institutions.[21]

During the Secretariat mission in Serbia, the Government Secretariat for Legislation proposed that the new draft law on public procurement be modified so as to incorporate the currently independent Public Procurement Office into the Ministry of Finance. This change would be much to the detriment of transparency in public procurement.[22] 

2008

In this connection, GRECO encourages the authorities to proceed promptly with the adoption of the envisaged amendments geared towards increasing the independence, transparency and effectiveness of the procurement process.[23]

2005

Laws on public procurement and new legislation on the Indirect Taxation System have been adopted, but implementation is still at an early phase and the impact of this legislation in reducing corruption remains to be seen. [24]

In March 2004, the Commission concluded that in the area of European standards, “For example, Republika Srpska’s refusal to support EU-compatible public procurement legislation is worrying; it may indicate a lack of commitment to reform.” [25]

Progress has been made by Bosnia and Herzegovina in this field. However, proper implementation of public procurement legislation and procedures remains a challenge.[26]

The new legislation is based on the relevant public procurement acquis. However, compliance with some key requirements has been deliberately delayed, in particular those related to non-discriminatory treatment, publication of procurement notices and the regime applicable to the utilities sector. The most serious divergence from EU standards is the existence of domestic preferences. [27]

Bosnia and Herzegovina should now ensure the full implementation of this legal framework, paying particular attention to the establishment of the bodies provided for in the public procurement law and to the overall strengthening of administrative capacities. It should also continue to approximate to the acquis and to prepare an action plan for the removal of provisions which may discriminate against EU firms participating in Bosnia and Herzegovina’s public procurement operations. [28]

Public procurement legislation should be properly implemented.[29]

GRECO recommended to develop further rules and regulations to govern public procurement at the State and Entity level.[30]

The authorities of Bosnia and Herzegovina reported that the Law on public procurement of Bosnia and Herzegovina (Official Gazette, issue 49/04) was adopted in November 2004. [31]

This Law is meant to clarify certain lacuna and inconsistencies regarding the application of the Law, procedures for awarding contracts, common provisions concerning bidding documents, transparency and public scrutiny, competitions for proposals and project documentation, complaints and review process. The implementation of the Law is ongoing. A number of by-laws have been adopted, regulating the issues of procurement and tendering. [32]

2006

The Procurement Review Body, which rules on complaints and reports to Parliament, was established after a long delay and has experienced some problems.[33]

2007

As regards enforcement of the public procurement legislation, there is a strong need to improve the capacity of contracting entities to manage procurement procedures efficiently and to strengthen administrative capacity at all levels of procurement. [34]

2005

There are frequent reports about irregularities in public tendering procedures.

The recent revision of the public procurement law is a step forward. The law reflects EU standards in terms of defining a clear division between the executive and regulatory functions. It has yet to be passed by the Assembly. It is expected that the implementation of the new law in coordination with the external audit activities of the Auditor General Office will contribute to the improvement of the situation and better use of public funds.[35]

The Public Procurement Law promulgated in 2004 by UNMIK Regulation 2004/3 encountered serious difficulties in its application.

The law established public procurement processes and three central bodies to manage them: the public procurement agency, the public procurement regulatory commission and the public procurement rules committee. While the agency is the centralised procurement agent for procurement over a certain threshold, the commission exercises a controlling function. However, instead of simplifying public procurement processes and making them more transparent, the procurement law proved too complicated to apply properly in the Kosovo context and led to delays and higher costs to the Kosovo Consolidated Budget. The public procurement regulatory commission is currently facing a conflict of interest between its regulatory and judicial review functions.

Secondary legislation was not implemented, which further complicated proper procurement, and decentralised procurement bodies (ministries, municipalities) did not receive sufficient support for the application of the law.

The law was revised in the course of 2005 by the Ministry of Finance and Economy in cooperation with the public procurement regulatory commission and other stakeholders. The new draft law appears to be compatible with the EU acquis and reflects the EU standards in terms of setting up an independent review body. It has yet to be passed by the Assembly and be promulgated.[36]

The procurement law was revised but it has not been approved yet by the assembly while the public procurement agency is not yet functioning.[37]

2006

The auditor general has published 17 external audit reports, noting widespread noncompliance with procurement laws and regulations.[38]

The Public Procurement Law was promulgated by the SRSG in 2004 but encountered serious difficulties in its application. The Law has therefore been subject to a lengthy revision process. A new draft law was presented to the Assembly in May 2006 and is intended to be in line with EU standards and requirements. The revised draft provides for a separation between regulatory and judicial functions: the former should be under the responsibility of the public procurement regulatory commission, while the latter should be exercised by a judicial review body. In June 2006, the Assembly sent the draft law back to the Government on procedural grounds, requesting that the new law should be presented in the form of amendments to the old law.

In order to facilitate the procurement process, a set of secondary legislation has been adopted such as rules, directives, documents and application forms which contracting authorities, procurement officers and other authorities have to implement during the exercise of procurement activities.

However, it is unclear when the new Public Procurement Law will be adopted. Between November 2005 and April 2006, the Office of the Auditor General issued 17 external audit reports regarding procurement procedures in municipalities and some ministries. The auditors noted widespread non-compliance with laws and regulations regarding procurement.

Overall, this remains a problematic area. While steps have been taken that may help to overcome certain difficulties in the future, no progress can be reported at this stage. Preparations for alignment with the acquis in this field are lagging behind.[39]

2007

In June 2007, a law amending the 2004 public procurement law (PPL) was promulgated. The amended PPL aims to improve compliance of procurement activities with EU requirements and with internationally recognised best standards and practices, by introducing inter alia a number of new definitions. It also changes the institutional structures for public procurement requirements, amending rules for appointing procurement officers (including their training), and ramework agreements, as well as providing for new rules on the Public Procurement Regulatory Commission (PPRC), the Public Procurement Review Board (PPRB), and the Public Procurement Agency (PPA). The amended PPL removes the requirement of prior approval for the restricted procedure, which will be much easier to use in practice as a result.[40]

The PPRC is an agency responsible for the overall development, monitoring and review of the system.[41]

However, the passage of the law amending the PPL through the Kosovo Assembly has suffered significant delays, and the final version is not in line with European standards. The PRB[42] (responsible for managing complaints) is a department under the PPRC and is therefore not an independent body. Moreover, there are concerns about the method of appointing the members of the boards of all these administrations which leads to their politicisation. These bodies are understaffed and are therefore unable to deal with complaints in a timely manner. The public procurement institutional framework needs to ensure the necessary administrative capacity and independence. This is all the more necessary given that the public procurement system was a contributory factor in the significant under-spending in terms of capital investment in 2006.[43]

2005

The current legislation is based on definitions, basic principles, procedures, thresholds, evaluation and award criteria, publication requirements and review procedures which are fundamentally different from those of EU legislation. Moreover, there are significant gaps in areas such as regarding concessions and contracting entities operating in the field of utilities. The framework set up by the primary legislation (the Public Procurement Law) and the implementing regulations (decisions and instructions) is overly complex and, moreover, inconsistent. It is therefore difficult for procuring entities and other stakeholders to interpret, and the lack of clarity leaves procuring entities too much room for discretion. These difficulties, coupled with a general lack of awareness of the legislation on the part of small local entities and the private sector, result in poor implementation and legal uncertainty in procurement practises. Albania’s Public Procurement Agency (PPA) is very weak, with insufficient funding and staff, leading to frequent irregularities. The dividing line between its various sections (especially the Procurement and Law section, and the Control section) is not sufficiently clear and there is a lack of appropriate consultation mechanism. In addition, very little use is made of IT within Albania’s public procurement system in general.[44]

In awarding public contracts, procuring entities award tenders solely on the basis of lowest price, rather than using the criterion of economically most advantageous tender. In addition, there are no efficient and independent review procedures especially since there is neither an independent body for complaints, nor a provision enabling an appeal to a court after the exhaustion of the administrative procedure. There is insufficient investigation and criminal prosecution of procurement-related offences, and political influence and corruption remain significant factors. The abovementioned issues, together with weak implementation of basic principles such as transparency, equal treatment, free competition and non-discrimination result in a procurement system that strongly discriminates against foreign bidders in favour of local ones, does not achieve the best value for money and efficiency in the procurement process and leaves room for corruption and collusion.[45]

Very considerable further efforts will be necessary if Albania is to ensure the correct implementation of procurement rules. Significant improvements are needed in the legislation to align it with the acquis and to provide full coherence. Radical measures to prevent irregularities and to prosecute fraud and corruption at all levels will need to be adopted and vigorously pursued.[46]

2006

It has proposed reforms to the tax administration, public procurement and business registration to reduce corruption and improve the environment for business.[47]

There has been limited progress in the field of public procurement. [48]

A new law which takes into consideration the principles and most of the procedures provided for by EU directives is pending in parliament. Some progress has been made as regards organisation of the Public Procurement Agency (PPA). Introductory public procurement training courses have been held for central institutions and city officials. A training unit has been created in order to liaise with public bodies involved in procurement activities throughout the country, including line ministries. The Agency has designed a new website to increase transparency.[49]

The current public procurement legislation neither provides a specific criterion to identify abnormally low offers nor allows use of the most economically advantageous offer criterion.

In the absence of an independent body for complaints, efficiency and independence of the review procedures cannot be guaranteed. Political influence and corruption remain due to insufficient investigation and criminal prosecution of procurement offences. Lack of transparency still constitutes an obstacle to the promotion of competition within the private sector, which leads to a few local economic operators holding a key advantage. The PPA remains weak and underfunded, with insufficient staff and little clarity in task attributions. Staff removed recently from the high and middle-management levels need to be replaced. No particular progress can be reported as regards procurement procedures. The use of direct tender procedure by procurement entities remains too frequent. The Council of Ministers has further increased the threshold value for tendering construction contracts, deepening the gap between EU and Albanian requirements. In awarding public contracts, procuring entities still award tenders solely on the basis of the lowest price. Albania is lagging behind in the field of public procurement.[50]

2007

Albania has made good progress in implementing the GRECO (Council of Europe Group of States against Corruption) 2002 recommendations. This has included, in particular, new public procurement legislation, measures to strengthen the independence and transparency of the Public Procurement Agency and the appointment of a public procurement ombudsman.[51]

The new public procurement law takes into account the principles of non-discrimination and equal treatment, transparency, value for money and legal protection of bidders’ interests. Direct tendering has been abolished and criteria to identify abnormally low bids have been introduced.[52]

However, further alignment is required in all areas of public procurement (public contracts, utilities, concessions). The PPA also remains responsible for decisions on complaints, therefore the impartiality of review procedures cannot be guaranteed. The administrative capacity of all those dealing with public procurement needs to be strengthened to ensure that Albania can properly implement the new public procurement legislation properly. Proper records are required in order to monitor enforcement of the new law. [53]

2005

While the Croatian public procurement system shares several key concepts with the acquis, their practical implementation tends to differ significantly from EU requirements, e.g. regarding the access of EU bidders to Croatian procurement procedures, the procurement activities of defence agencies. Moreover the Concessions Act is not in line with the acquis and fails to ensure respect of the general procurement principles.[54]

2006

However, weaknesses in co-ordination of policy making and implementation continue to undermine the coherence of the public procurement system.[55]

2007

Major gaps in the application of the basic principles and the overall legal framework on public procurement, particularly on concessions, remain.[56]

2005

Implementation of the public procurement rules will have to be enhanced to detect fraud and corruption better. [57]

The effectiveness of the system will have to be significantly enhanced in order to ensure fair competition and deter corruption and fraud.[58]

While the current situation provides a starting point to develop an effective public procurement system, the country will have to make considerable and sustained efforts to align its legislation with the acquis and to effectively implement and enforce it in the medium term. [59]

2006

The Public Procurement Bureau cooperates actively with the Commission for Protection of Competition, the State Commission for the Fight against Corruption, and the State Audit Office. However, effective remedies still have to be put in place.[60]

Significant progress can be reported in alignment with the acquis in the area of public procurement and in strengthening implementation capacity. The basis for developing an effective public procurement system has been established. However, effective remedies still have to be put in place. Considerable efforts are still needed to effectively implement and enforce the legislation.[61]

2007

In performing its role in detecting corrupt activities, the Public Procurement Bureau (PPB), regularly submits reports to the state anti-corruption commission and the state audit office.[62]

Alignment of legislation with the acquis is moving forward.[63]

2004

The new law on public procurement enters into force in October 2004 and introduces a new institutional set up and principles compliant with the acquis. The health care sector has been exempted from this law.[64]

The Law on Public Procurement adopted in 2003 to implement EU acquis should make procedures more transparent and provides for the creation of a Public Procurement Agency which is responsible for the register of public procurements.[65]

In the field of public procurement, the adoption of a new Law on public procurement in March 2004 and its entry into force in October 2004 represent an important step towards alignment. The new law defines the different types of procurement contracts and relevant exemptions, the contracting procedures to be followed and the contracting authorities.[66]

In the field of public procurement, an important step was taken with the entry into force of the new law and the establishment of the Public Procurement Agency under the Ministry of Economy.[67]

On public procurement, further efforts would be needed to adopt all the relevant acquis.[68]

In the field of public procurement, Bulgaria’s efforts need to focus on completing the legislative alignment and on developing the administrative capacity of the newly established authority. [69]

Alignment of the legislation on public procurement needs to be completed. [70]

2005

There have been several exemptions already from the new law on public procurement which entered into force in October 2004. Claims of non-transparent procedures for procurement and the granting of concessions are continuing.[71]

Related legislative efforts need to be continued and the implementation of the new legal framework will have to demonstrate Bulgaria’s genuine commitment to competitive and transparent public procurement procedures. Special efforts are needed to strengthen administrative capacities and to ensure an effective implementation of the procurement rules. Since its establishment, the Public Procurement Agency has continuously developed and improved its administrative capacity, but further efforts are required, notably as regards a clear separation of advisory and review functions and the improvement of staff professional skills.[72]

2006

Bulgaria is now generally meeting the commitments and requirements arising from the accession negotiations in the non-harmonised and public procurement areas, as a result of significant progress.[73]

Preparations in the field of public procurement need to be completed as regards implementing rules.[74]

Efforts are also needed to ensure full operation at all levels of an ex-ante control system with regard to public procurement.[75]

2004

To ensure financing and quality for money, there is a need to carefully consider the priorities in the field of motorway construction and to respect open and transparent procurement procedures, which are instrumental for cost-efficient public investment.[76]

Significant ad hoc derogations from Romania’s public procurement legislation and the award of large contracts without open tenders have, however, raised serious concerns about the Government’s commitment to open and transparent procurement rules. Romania should discontinue such practices and align those parts of the public/private partnership legislation falling within the scope of the public procurement acquis.[77]

However, important derogations from Romanian public procurement legislation have raised serious concerns and questions as to Romania’s commitment to implement the acquis in this field.[78]

As a matter of priority, particular attention should be given to the correct enforcement of public procurement rules and to the elimination of inconsistencies with the acquis, especially in relation to Romania’s public/private partnership legislation. [79]

However, transposition of the public procurement legislation must be completed. In addition, practices which put Romania’s commitment to open and transparent procurement procedures into question should be discontinued.[80]

However, about the Government’s commitment to open and transparent procurement rules of the public procurement legislation must be completed. In addition, practices which put Romania’s commitment to open and transparent procurement procedures into question should be discontinued.[81]

2005

Implementation of public procurement legislation remains an area of serious concern. Romania has to demonstrate continued commitment to fully respecting and enforcing competitive and transparent public procurement procedures.[82]

Public procurement continues to be an area of serious concern. While legislative alignment needs to be completed, substantial shortcomings remain in the implementation and enforcement of legislation.[83]

The correct implementation of public procurement legislation should be ensured.[84]

2006

The qualitative improvement of DNA’s investigations has continued as is demonstrated by the reopening of cases which had been closed under the previous management team and by the launch of new investigations into long-standing public procurement scandals.[85]