Comment on the Strategy for Development of Public Procurement System 2011 – 2015 and on the Action plan for implementation of the strategy

Strategy for Development of Public Procurement System 2011 – 2015 and Action plan for implementation of the Strategy were adopted at the session of Government of Montenegro, which was held on December 22, 2011. The Strategy’s draft was publicly debated, what cannot be said for the draft of the action plan, which wasn’t available at the website of the Public Procurement Directorate. Although representatives of the civil society, public sector and bidders participated in the public debate, the reports suggest that there was no motions or suggestions for the change of the draft to be considered.

Upon the completion of the central public debate, Institute Alternative sent its comments and suggestions about the Strategy’s draft to the Public Procurement Directorate. Those comments, however, were neither implemented nor reported.

Action plan for implementation of the Strategy was structured in a manner to present goal, measures, time frame, success indicators, source of funding and institutions in charge of implementation of certain measures. Measures were too broad, imprecise, and certain parts of the Strategy were unequally treated by the Action plan. It is thus not clear how the certain goals of the Strategy will be accomplished, especially when it comes to the fight against the corruption and irregularities in the public procurement system and the long term process of harmonization with European standards.

One of the Strategy’s goals was advance of normative framework, aimed at its complete alignment with European standards and full efficiency and competitiveness of public procurement procedures. One of the measures for the accomplishment of this goal was establishment of coordinating body for the implementation of the Strategy as well as the adoption of secondary legislation in the late 2011. Members appointed to the new coordinating body, which was subsequently established by a special decision, are representatives of the Ministry of Finance, Ministry of Justice, Ministry of Sustainable Development and Tourism, Ministry of Transport and Maritime Affairs, Ministry of Information Society and Telecommunications, Supreme State Prosecution, Public Procurement Directorate, Commission for Control of the Public Procurement Procedures, Parliament of Montenegro, the Chamber of Commerce.

Institute Alternative thinks that, apart from representatives of the afore mentioned state authorities, this body should include representatives of other economic entities (Montenegro Business Alliance, Union of Employers), trade unions, as well as representatives of relevant non-governmental organizations which deal with public procurement, all that with the aim of making the public procurement procedures more transparent over the next four years.

With regard to the current legal framework, we think that the problems in the implementation should be explicitly pointed out. Formulation of priorities and their rankings over the next four years should be based on a thorough analysis of the current implementation of the Law on Public Procurement. The implementation should be assessed precisely, by the usage of both experiences of direct participants and statements from the most recent European Commission’s progress report on Montenegro. The long term measures aimed at harmonization of normative framework with the European standards are not envisaged.

Out of 14 measures in the Action Plan, 11 of them is dedicated to the development of institutional framework and strengthening of administrative capacities, that is, to the further strengthening of the existing institutions in charge of development and control of the public procurement system, electronic public procurement, and training. Only two measures are aimed at prevention of the corruption in the public procurement system.

Competences of the authorities, in charge of the public procurement, need to be expanded. State prosecution, Directorate for Competition Protection, internal audits, commercial courts, should also be included in the list of institutions indirectly dealing with the public procurement. The same chapter cited the competencies of these institutions, which should be changed to include:

State Prosecutor is prosecuting the perpetrators of criminal and other offenses, including the public procurement, using all available means to protect constitutional and legal order, represents the state in property claims and perform other duties specified by the law.

Directorate For Competition Protection is independent body established by the amendments of the Law on competition protection. It monitors market competition, undertakes measures against the participants and associations in order to prevent, stop or eliminates harmful consequences of infringement of competition rules. Directorate can use its competences when the bidders and potential bidders agree in advance on terms of the offer in the public procurement procedure, breaching thus the laws on public procurement and on competition protection. After the Strategy is adopted, the working cooperation mechanisms between the institutions and individuals, which have knowledge or doubt that the competition rules were breached by the deal-making between the bidders and the Directorate for Competition Protection.

Strategy and Action Plan envisage capacity building of Public Procurement Directorate and professional services of the Commission for Public Procurement Control. The Strategy states that three new servants were employed in the Public Procurement Directorate in the last quarter of the 2011, while in 2012 one more servant is expected to be employed. This represents the huge difference in comparison to the Strategy’s draft which envisaged employment of eleven new servants during 2012. Action plan does not deal with the employment of new servants in the Comission for Public Procurement Control, although the Strategy’s draft envisages additional employment in the Commission.

Some deficiencies of the Action plan are an outcome of the Strategy’s deficiencies. In 2012, centralization of the public procurement, meaning the establishment of central bodies for public procurement, is planned. The Strategy does not provide directions in which way the centralization will be conducted, what are the centralization’s goals, what are the phases of its implementation, or which bodies will conduct it.

The document does not devote enough attention to fighting the corruption and irregularities in the public procurement system. It does not discuss the concrete results of the fight against the corruption in the past. When discussing the fight against the corruption in the field, the Strategy stated that the open phone line was opened for people to report corruption, get information or legal advice from the authorized person. The number of people who reported corruption, however, remains unknown.

The document further mentions that the cooperation and information sharing has been agreed between the Public Procurement Directorate, on the one hand, and Commission for Prevention of the Conflict of Interests and Directorate for Anti-Corruption Initiative, failing, however, to list concrete results of this co-operation and information sharing. We think that these results needed to be listed.

There are only two measures, envisage for the fight against the corruption in the public procurement:

Signing of the cooperation agreement between the Public Procurement Directorate and the so-called anti-corruption institutions (Directorate for Anti-corruption Initiative, Commission for Prevention of Conflicts of Interests, SAI, etc).

Public awareness raising campaigns with regard to the public procurement. We think that these measures are not sufficient for the successful anti-corruption policies in the upcoming period, especially bearing in mind that the two existing measures are not provided with the adequate follow up.

The Strategy does not cite the ways to measure effects of public awareness raising campaigns, in terms of effectiveness, efficiency and transparency of this type of public expenditure over the next four years. Also, there is a need for a more detailed list of current results of the Public Procurement Directorate’s efforts to raise the people’s awareness about the importance of corruption prevention in the public procurement. We think that the existing measures are not sufficient for the achievement of one of the Strategy’s main goals, and that is corruption prevention. We therefore think that these measures need to be more concrete, and defined in line with the corruption risks in the various phases of the public procurement procedures. As a part of the education and awareness raising about the mechanisms of corruption, we think that the organization of special workshops for the representatives of non-governmental organizations and media should be envisaged.

The further steps in enhancing cooperation with NGO sector need to be listed, including the information-sharing and joint projects.

With the aim of making the whole process more transparent, the public should get an access into the recommendations of internal audits. The recommendations should also be published at the websites of the contracting authorities. The obligation of the internal audits to report to the State Audit Institution when the latter’s recommendations are not fully implemented needs to be established. Mechanisms for the safe exchange of information about the issues of internal audits between the internal audits and employees of contracting authorities need to be put in place.

The Strategy should highlight the importance of the State Audit Institution’s capacities for the public procurement control. The long term goal should be auditing of as many public procurement procedures as possible, especially in the phase of public procurement planning.

A more efficient control of the enforcement of Commission’s decisions is one of the significant measures aimed at advancing the work of the State Commission. This part, among other things, envisages the warning notice to the contracting authorities about their duties to abide the Commission’s decisions. If they do not comply after the warning, Commission will inform the Government or the competent local authority about the case and suggest launching of a procedure to determine responsibility. In our opinion, granting the State Commission for the Public Procurement Control authority to directly sanction contracting authorities which failed to comply its decisions after the misdemeanor procedure was launched is one of the possibilities for enhancing the control of the contract enforcement.

Milica Popovic
Public Policy Researcher