Imprecise provisions of the Law encourage corruption

Imprecise formulations and the possibility of broad interpretation of the provisions of the Law on Public Procurement restrict the possibility of appeal and proving abuses, it was concluded at the yesterday’s panel discussion „How to fight against corruption in public procurement?“, held in Municipality of Bar.

As one of the provisions of the Law on Public Procurement which is subject to wide interpretation and manipulation, the panelists recognized the article (85) which refers to the „abnormally low price“. Namely, if the price of the most advantageous tender is at least 30% lower than the average offered price of all substantially responsive tenders, the contracting authority, according to this article, is obligated to request an explanation from the bidder. It stipulates, further, a framework for writing an explanation, but, in practice, those often unrealistic explanations are leaving the space for corruption. Also, the bidders’ opinion is that the abnormally low price is defined by the Law in a way that allows precise mathematical calculations, enabling incorrect, „setup“ tenders to remain within legal framework.

The participants of the pannel disussion have recognised the problem of an inprecise definitions of the terms in the Law, and cited as an example the term of „equivalence”, which, according to the Law, implies that the product or service has the same or better technical characteristics listed in the specification of the object of procurement. The bidders think that this term, as many others in the Law, could be a subject to wide interpretation and that it creates a problem in the procurement process, regardless of the likely improvement of definitions made with the recent amendments to the Law.

When it comes to the use of direct agreement, the contracting authorities have expressed the dilemma with respect of which year the allowed percentage should be calculated. The findings of the Institute alternative (IA) also show that there is a different practice of the contracting authorities when calculating the percentage of the use of direct agreement. Specifically, by examining the individual annual reports on public procurement of the contracting authorities for 2014, we noticed that, in most cases, they have counted the percentage of use of direct agreement in respect of completed annual budget for public procurement during that year. However, in several cases the contracting authorities have counted this percentage in respect of the completed budget for public procurement for 2013, which partly corresponds to the provisions of the Law, but sometimes even in respect to the planned budget for public procurement for 2014. Different interpretations of this provision are also problematic regarding the aspect of keeping record on the contracting authorities which have violated the percentage of use of direct agreement on an annual basis, so it should be more precisely defined by the Law.

Aside from the fact that there is no misdemeanor or criminal accountability for violating the legal provisions, , the latest amendments to the Law on Public Procurement enable corruption which remain in the legal framework, was concluded at the panel.

Panel discussion “How to fight against corruption in public procurement?” was organised within the project Civil Society and Citizens against Corruption in Public procurement, which is implemented by the Institute alternative with the support of the Embassy of the Kingdom of Netherlands. The project activities are aimed at strengthening cooperation between state and non-state actors in recognising irregularities in public procurement procedures and formulation of recommendations for improvement.

International conference on public policy in Milan

Representatives of TEN Network, which is composed of Institute Alternative (IA), European Policy Centre (CEP) and European Policy Institute (EPI) have presented the joint paper on successful comparative practices in the linkage of the performance audit and evaluation of public policy at the International conference on public policy in Milan (ICPP 2015). The moderator of the panel was professor Marleen Brans from the Catholic University in Leuven. The presentation of the results is the part of the project “Performance Audit and Policy Evaluation: On the same or parallel tracks?“, supported by the Swiss Agency for Development and Cooperation (SDC) within the the Regional Research Promotion Programme (RRPP) in Western Balkans.

The paper includes the overview of the situation in the areas of performance audit and evaluation of public policy in Montenegro, Serbia and Macedonia, as well as the overview of the experiences in three European Union countries (Great Britain, The Netherlands and Estonia) in linking these two processes.

International conference on public policy was held at the Catholic University Sacro Cuore from July 1st-4th and it was attended by numerous academics, researchers and decision makers from all around the world. The representatives of TEN network were Jovana Marović (IA), Simonida Kačarska (EPI) and Miloš Đinđić (CEP).

Press Release: Assessments of the success for Chapter 23 are arbitrary

Semi-annual report on realization of the Action plan for the Chapter 23 abounds with imprecise information, while the assessment of the fulfillment of the measures itself is problematic and leaves a lot of space for arbitrary reporting and the manipulation with the achieved results.

The high degree of implementation of the measures, 77% in the Action Plan for Chapter 23 in 2015 is the result of inadequate reporting forms and descriptive assessment of the measures. Namely, in the report on the implementation of this plan, which was adopted yesterday by the Government, most of the measures are identified as “partially realized”, or it is refer to them as if they are being realized continuously. In total, 68 of the 99 outstanding measures and sub-measures for the implementation of the part in the report related to the fight against corruption are defined in this manner. We believe that this way of reporting reinforces the impression that implementation of activities has been carried out, which is not correct for a certain number of these measures.

In that manner, state authorities have assessed the measures of providing space and technical conditions for the work of the Special Prosecutor’s Office as partially realized, although it is said that the provision of these conditions is currently being realized, without any explanation at which stage the activities are taking place. Also, for a number of measures it is constantly repeated that are being realized continuously, although there were not any trainings conducted or round tables organized in the reporting period.

We can legitimately ask the question whether the measures are being implemented if we are not able to get an insight into the prepared material, as it is the case with the by-laws for the implementation of the Law on Prevention of Corruption. Additionally, in some cases it is emphasized that the implementers do not have the data defined as the success indicators for certain measures. For example, Department of Internal Control of the Police does not own the information about the number of indictments in relation to the number of criminal charges, which is controversial because of the manner of definition of impact indicators.

The example of imprecise and inaccurate reporting is also the measure related to the establishment of transparent procedures on public procurement. Since the indicator for this measure is the number of established services for public procurement in local governments, it is incorrect that they have been established in all local governments as it was pointed out in the report, because one Public procurement officer is not a substitute for the whole service, which is presented as equal in the report.

We believe that it is necessary to eliminate controversial qualifications of the degree up to which the measure has been implemented. Also, calculations on the percentage of the success of implementation of measures are unnecessary because they were based on superficial evaluation. For the measures reported that are being realizing continuously, it is necessary to establish precise quotas for the realization on the semi-annual level. Even with all these proposals, the public should be informed proactively and more frequently about the effects of the fulfillment of the measures.

Jovana MAROVIĆ
Research Coordinator

Parliament to request the Report on Budget Execution

We appeal to the Ministry of Finance to prepare the report on what was happening with the state budget in the first six months of 2015 and to submit it to the Parliament. It is necessary that the MPs have the data how was the state budget spent based on organisational and functional classification in relation to the plan, before they start amending it.

For the last year, the Parliament has adopted the conclusion by which it has obliged the Government to prepare the report, which was (with the delay of almost a month) prepared and submitted to the MPs. That was the first time that the MPs had this kind of information during the fiscal year. However, MPs didn’t adopt that conclusion for this year. Since the Law does not prescribe this obligation, if the MPs don’t request the report, it will not be submitted.

Since the moment the budget is adopted, Parliament and the Budget committee don’t have any information on its execution during the fiscal year, until the discussion on the final budget account, which is delivered in the September the following year.

The reports prepared and published by the Ministry of Finance throughout the year are not being submitted to the Parliament; neither they contain the data on expenditures by organisational or functional classification, but only aggregated data by economic classification. That means that we do not have accurate information on the budget execution at the level of consumer units or state functions.

International standard in terms of budget transparency is that the Ministry of Finance, apart from the final budget account, prepares and submits various reports on monthly and semi-annual level during the budget execution.

Despite our efforts during the drafting the Law on Budget and Fiscal Responsibility, this competence was not included for the Ministry of Finance. In this respect, Montenegro is an exception in the region because all the neighboring states have regulated mechanisms of submitting semi-annual reports on budget execution to the Parliament.

The need for improving the quality and timeliness of budget reports during the year was noted by the World Bank in its report “Public expenditure and financial accountability“ from 2013, in which this aspect of budget transparency is criticized and evaluated with the worst mark (D).

Two proposals for amending the national budget are currently in the parliamentary procedure. (2) Prior to any amendments of the annual budget, it is necessary that the MPs have an overview of how the budget was spent in the last six months.

Marko Sošić

Public Policy Researcher

(1) OECD Best Practices for Budget Transparency

(2) Proposal of SNP – Socialistic People’s Party (Aleksandar Damjanović), proposal of SDP – Social Democratic Party (Banović, Bralić, Vuksanović, Šabović)

Our administration or the non-merit based rule?

Naša uprava ili vladavina (ne)zaslužnih?In late April, the Institute Alternative (IA) has launched a new internet website. Symbolically, we have named it “My Administration”, to remind people that the government and state authorities are here because of us, and not because of them, i.e. administration itself, which often, encapsulated into the bureaucratic practices, transforms itself into a self-contained apparatus for harvesting the fruits of power.

We have recently witnessed a warning of the Prime Minister that those irresponsible in the state administration will be punished. The latter, however, with the exception of magic submissions of “resignations at personal request”, has practically never happened. What is more troubling, however, is that we are just silent witnesses of the events around us and within our administration, to which we pay taxes and fees for public services, disproportionate to their actual quality… While laud advocates of superficial development directions of our country are gathering at congresses, which are marked by deficit of women and established vision.

And by lack of choice.

The defining feature of non-democratic systems around the world is precisely an illusion of choice and its very simple mathematics, comprised, for example, in the election of 153 national representatives out of 153 candidates. This is how our ruling party has elected their leader, the only one who dared to run for president.

In most cases, unfortunately, this is how our state employees are being appointed too.

The IA’s findings have shown that very little has been done to establish a merit based system in our state administration, precisely because the main problem of our society – a lack of competition – reflects on this sector too.

This systemic ailment has deflated the Law on Civil Servants and State Employees, which was expected to sow the seeds of depoliticisation and professionalisation, two multifaceted concepts which compress everything that Montenegrin administration should strive for.

The Law promised a reduced discretion in recruitment of state administration staff, by confining a ranking list from which the head of authority can appoint a civil servant to a total of five candidates.Yet, we now know is that the ranking list only occasionally consists of five candidates, or four, or three. More often, it has only one candidate. Just as in the case of election of the president of our ruling party or, once upon a time, in the case of election of the delegates into the bodies of self-governing organizations and the assemblies of socio-political organizations in former Yugoslavia.

Even when our administration is injected competitiveness, the top – ranked candidates are those who suffer. The IA’s findings point to the dissatisfaction of the candidates who, although given the best score during the testing procedures, are not being appointed because of subjective reasons, which are difficult to verify since they often refer to the level of motivation or communication skills. Sometimes, the prevailing reasons for choosing another candidate directly contradict with principles of meritocracy, or, literally, of “the rule based on merit”.

As such, meritocracy is maybe utopia, which, if maintained in its fullness, as one British sociologist suggested, could have a negative, frustrating effect on those less capable or less smart in a society. However, that still does not mean that a system based on merit should not be a principle to be pursued.

It is encouraging, though, that, from time to time, a handful of courageous contacts us. They do it either directly through our new website or by using less modern messengers: telephone, electronic mail, or sometimes, over the first morning coffee, they tell us about the injustice they suffered while trying to achieve one of their basic human rights – the right to work. The fact that they have chosen the state administration does not make them lonely in a country where a majority of citizens, according to a survey, would rather have “a government job” for a salary of 450 euro than a private sector job for a salary of 750 euro. On the other hand, the fact that employment in state authorities is very often “a contest without contestants”, despite the attractiveness of the government job, should be “a wake-up call” for policy makers and representatives of the international community, and society itself, which often, due to the prevailing apathy, “reconciles with destiny”.

Milena Milošević
Public Policy Researcher

Text originally published in the section ,,Forum” of Daily Vijesti