12. 03. 2018.24. 04. 2018.

Procurement for Security and Defense to be Regulated by the Law on Public Procurement

The Law on Public Procurement should better regulate the procurement system in the area of security and defense. The National Security Agency (NSA) and the Ministry of Interior Affairs (MIA) spent about eight million euros for confidential procurement since 2013 until last year.

This was assessed at the panel discussion “Confidential Procurement – Out of Sight, Out of Mind”, which is part of the same project, implemented by the Institute Alternative in cooperation with the Center for Investigative Journalism, with the support of the European Union within the project “Accountability, Technology and Institutional Openness Network in the South East Europe region – ACTION SEE”.

Project Coordinator and Public Policy Researchers at the Institute Alternative, Ana Đurnić, explained that the research the IA conducted focused on the NSA, MIA and the Ministry of Defense, and covered the period from 2013 to 2017.

“Key research findings show that public money spending on confidential procurement in Montenegro is done far from the eyes of the public, and that even basic data on these procurements, such as acts which are used as basis for their implementation, are often not available to the public,” said Đurnić.

She said that in the Montenegrin legal framework, which regulates the procurement system in the field of security and defense, there is a “terminological mess” that negatively affects regulation of this area.

“Montenegrin legislation distinguishes between procurement in the area of security and defense and confidential procurement. Accordingly, procurement in the field of security and defense is subject to the Law on Public Procurement and internal acts of the contracting authorities, while the latter is treated as an exception to the application of the law, without specifying what constitutes confidential procurement and which act regulates it. This creates confusion in practice, as the contracting authorities claim to implement one, but not the other, even though they refer to the same procurement, “Đurnić explains.

Therefore, as she explained, the contracting authorities claim that since May 2015 they have not conducted confidential procurement at all, since the Decree on External Trade of Special Purpose Means ceased to be valid at the time.

“Despite this, expenditure for confidential procurement still exists because, as they say, they are paying off obligations stemming from contracts concluded before May 2015, when these procurements were regulated by the Decree on External Trade of Special Purpose Means” , Đurnić said.

She further notes that when it comes to internal acts of contracting authorities, the Ministry of Defense said that this act is in drafting process, although, as she explained, the deadline for its adoption was four months after June 2017, when amendments to the Law on Public Procurement entered into force.

“We also asked the MIA for this internal act and they sent us an instruction from 2014, which means that the new act in accordance with the new legal solutions has not been adopted,” Đurnić said.

She said that the NSA is the only institution that does not deny that it conducts confidential procurement and that has properly delivered data on confidential procurement expenditure, until 2016.

“Contrary to EU regulations, the NSA is exempted from the implementation of the Public Procurement Law when it comes to procurement in the area of security and defense. Instead these are prescribed by their Law on the NSA, and regulated by the act of the Agency Director, which is also classified as confidential and cannot be accessed, “Đurnić explained.

She notes that the NSA spent between 300 and 400 thousand euros on confidential procurement in 2015 and all of the previous years, while in 2016, this expenditure increased to almost two million euros.

“For 2017, we were not provided data under the pretext that this would require compiling of completely new information. We cannot say whether there is a growth trend when it comes to the NSA expenditure or this was only a temporary increase in expenditure, characteristic for 2016, “Đurnić said.

She said that no legal solution, apart from the Decree on External Trade of Special Purpose Means, regulated planning and reporting on procurement in the area of security and defense.

Đurnić pointed out that the international expert organization SIGMA in its last year’s report stated that legal solutions currently in force for the procurement system in the field of security and defense are not good.

“Because of this, this year the level of compliance of our regulations with the legislation of the European Union was assessed with a a score of three by SIGMA,” Đurnić said.

She notes that the only evidence of abuse in the area of defense and security when it comes to procurement are the reports of the State Audit Institution (SAI).

“During this reporting period, the SAI audited all three consumer units we dealt with and found the same irregularity with all three of them, namely procurements that should be public are conducted by confidential procedures,” explained Đurnić.

She stated that the NSA in 2015 spent 50.000 euros confidentiality on the procurement of official vehicles, and the SAI, based on tender specifications, subsequently found that this procurement should had been public because the vehicles were not procured with special operational-technical means, so in that sense they do not represent special equipment.

“Additional problem is that they obtained special approval from the Government to do this,” explained Đurnić.

The NSA and the MIA expenditure for confidential procurement in the five-year period, as she said, amounted to about EUR 8 million.

“We still do not know how much the Ministry of Defence spent since they refuse to provide us data on their spending for confidential procurement for three months already,” said Đurnić.

The Security and Defense area, as she said, is not sufficiently regulated and needs to consider well the Law on Public Procurement which is currently in public discussion.

“Special attention should be paid to regulating this area, otherwise, next year we will again get a warning from SIGMA and the European Commission with regard to the irregularity of this particular area,” says Đurnić.

President of the Center for Investigative Journalism, Milka Tadić Mijović, assessed that procurements are designated confidential even when they are not.

“It is absurd, but as the European integration process which should strengthen the rule of law and structural reforms in our country develops, media freedoms and access to information of public interest are declining,” said Tadić Mijović.

According to all relevant international organizations, as she said, Montenegro is lower on the scale of media freedom today than it was before the opening of negotiations.

“Political circles holding monopoly, who have captured our country, do everything to make media reporting impossible when it comes to issues related to corruption, violation of rights and procedures, especially in the area of procurement where there is vast space for abuse of public interest,” assessed Tadić Mijović.

She assessed that grand corruption hides exactly in the institutions from which we seek information that sometimes refers to transactions worth tens of millions of euros, which, she adds, are often conducted without following prescribed procedures at the expense of the public interest.

“This concealing of data should not discourage us. Media together with NGOs should do their best to illuminate processes and state affairs, even suspicious ones. Hidden data can often be found between the lines even in official documents. We should not stop, we should just seek the truth and do everything to make it public, “said Tadić Mijović.

Belgrade Center for Security Policy Researcher from Serbia, Vladimir Erceg, assessed that when it comes to procurement in the field of security and defense in Serbia there are two key messages.

“One is that the legal framework for public procurement and the framework regulating procurement in the field of defense and security is harmonized as much as possible with the EU acquis. The second message is that, despite the strengthening of the legal framework, procurement practices in the security sector institutions are not progressing, instead there are quite worrying trends, “Erceg said.

He said that the Law on Public Procurement in Serbia was adopted in 2013, adding that competitiveness in Serbia in the field of public procurement is decreasing.

“We can be particularly concerned about the area of defense and security. At the EU level, the average number of bids per tender is 5.4, and in Serbia the average is 2.9, while in the MIA in 2016, this average fell to 1.9. There is also an increase in the number of open procedures in which only one bidder participates.”

Representative of the Center for Democratic Transition, Milena Gvozdenović, said that openness is one of the key conditions for democracy because, as she said, it enables citizens to get information and knowledge they need in order to effectively control the government.

“Unfortunately, this topic is little discussed in our region, and concrete steps are taken even less often,” Gvozdenović said.

Below you can find video recordings from the event:

https://youtu.be/PHSGMACPoCs

Panel discussion is a part of the project “Confidential Procurement – Out of Sight, Out of Mind”, implemented by the Institute Alternative in cooperation with the Center for Investigative Journalism, with the support of the European Union within the project “Accountability, Technology and Institutional Openness Network in the South East Europe region – ACTION SEE”.

08. 03. 2018.22. 04. 2018.

Municipalities Wait for the Effects of the New LAP and the Reduction of the Number of Employees

Majority of Montenegrin municipalities expressed readiness to reduce the number of positions – for example, in Bijelo Polje, the current number of surplus employees is hundred. Municipalities are working on creating prerequisites for the implementation of the new Law on Administrative Procedure, which should improve delivery of services to citizens.

This was highlighted at the conference “Public Administration Reform: For Quality Services at the Local Level” held in Ulcinj.

Public Policy Researcher at the Institute Alternative, Milena Milošević, pointed out that the new Law on Local Self-Government still fails to recognize the specificities of local needs in the area of civil service.

She further noted that Institute Alternative agrees with the representatives of municipalities that it is too early to speak about the effects of the implementation of the Law on Administrative Procedure.

“We focused on the appointment of officials authorized to conduct administrative procedures and to make decisions, and on data exchange which should lead to the situation where citizens do not have to collect the documents necessary for service delivery on their own,” Milošević said.

She emphasized that they wanted to verify whether civil servants in charge of conducting administrative procedures are appointed, so accordingly they sent an electronic survey to 101 local secretariat.

“We got 38 percent of responses, which tells us it is not a representative finding, but qualitatively it is indicative. From each municipality we got an answer from at least one secretariat, except from Gusinje and Herceg Novi. In most of the secretariats, 20 of them, there are still no official persons appointed for conducting administrative procedures, while they are appointed in 19, “she said.

Milošević added that the level of decision-making will not be lowered in a way that it is brought closer to the citizens, if decisions are still to be signed by heads of authorities, i.e. the secretaries.

She said that exchange of data ex officio is another novelty of the Law on Administrative Procedure and that it is important to distinguish it from the traditional way, in paper form, which is currently the only possible one since single information system is still not in place.

Milošević considers it problematic that there are no bylaws defining the period during which authorities must exchange data with a view to making decision.

Milošević recalled that Institute Alternative, besides conducting public opinion polls on perception of public administration, also devised an innovative research that consisted of trained polltakers visiting local self-governments.

“Interestingly, out of 8 municipalities, Ulcinj got the best rating. The polltakers estimated that compliance with service standards was about 80 percent, although this percentage referred mostly to accessibility, employee kindness, and quality of responses to visitors’ questions. We will repeat the survey this month, but the selected institutions will probably be different as well as the questionnaire and criteria. “

The Head of the Directorate for Monitoring Regulations and Normative Affairs in the Ministry of Public Administration, Senad Crnovršanin, said that the local self-government system had not provided quality services and better status to citizens at one point, and that this was the reason for the adoption of the new Law on Local Self-Government. He said that when drafting the law, they kept the system’s sustainability in mind, adding that tax collection and huge tax debt were among the biggest problems.

Crnovršanin noted that earlier there were legal solutions which in practice led to inadequate solutions, such as, for example, municipalities having several vice presidents. The new Law on Local Self-Government, he said, limited the number of vice-presidents, as well as the number of assistant secretaries.

“The law provides clear solutions and is better than the previous one. Previously there were ranks that did not exist in regulations… In the forthcoming period bylaws will be adopted. The Ministry of Public Administration is undertaking concrete activities on implementation of the Plan for optimizing the number of employees at the local level,” Crnovršanin said.

He concluded that a large number of municipalities have a problem with the surplus of employees. Also, he added that providing severance funds presents a problem and that Municipality of Bijelo Polje, for example, plans to let go 100 employees.

Vice-President of the Bar Municipality, Sanela Ličina, pointed out that they have understood the importance of public administration reform, which is the basis for continuation of EU membership negotiations, adding that the overall objective of reform activities is citizen oriented public administration.

Ličina noted that Bar Municipality has created preconditions for implementation of the LAP and that at least a year needs to pass after the start of its implementation to see first effects.

“Since the beginning of LAP implementation, civil servants in charge of administrative procedure have been designated and fulfilling their function,” Ličina said. She added that 20 verdicts were delivered by the Administrative Court on the basis of appeals against the Municipality decisions during 2017, out of which only three were adopted.

Further, Ličina said that the Municipality publishes on its webpage Statute, Rulebook of the Local Assembly, budget, reports, decisions and contracts.

Ličina concluded that citizens do not use mechanisms for participation in decision-making:

“Public discussions are conducted in accordance with regulations and reports are published, but the presence of citizens is negligible and not at a satisfactory level.”

Nazif Velić, from NGO New Horizon, stated that very good cooperation has been established between the non-governmental sector and the Local Assembly of Ulcinj.

“Local non-governmental organizations often use the “free chair” institute with the aim of presenting citizens’ attitudes and influencing the quality of local parliament’s decisions … In all three local councils, representatives of NGOs are represented,” he said.

Velić pointed out that the New Horizon, based on its monitoring, came to the conclusion that the Ulcinj Municipality only partially publishes information of public importance.

“There was an invalid list of local councilors on the official webpage, guide for free access to information was not updated, and rules of procedure were not published. Even after submitting a request, the Municipality of Ulcinj did not adopt Decision on citizens’ participation in the conduct of public affairs “.

Secretary of the Secretariat for Administration and Societal Affairs in Ulcinj Municipality, Mirjeta Gjoni, said that the quality of the administration work is questionable.

She concluded that participation of citizens in decision-making is negligible, although they publish all information on the webpage. She posed a question of causes of such a small interest and degree to which it can be attributed to the administration.

During the discussion it was pointed out that citizens were not informed about public discussion on the budget of the Ulcinj Municipality.

Finally, good practice in collecting real estate taxes in the Bar Municipality was noted. Also, the necessity of keeping municipal property registers and linking local self-governments to the Tax Administration were pointed out, so that municipalities would have insight into funds at their disposal from the central level.

The Conference in Ulcinj was held in the framework of the project “Civil Society for Good Governance – To Act and Account!”, funded by the European Union in the framework of the EU assistance programme aimed at supporting the development of local civil society organizations and the Balkan Trust for Democracy, the project of the German Marshall Fund (GMF). The project is implemented by Institute Alternative, Bonum, Natura, New Horizon and Centre for Investigative Journalism.

Ana Komatina
Centre for Investigative Journalism

06. 03. 2018.22. 04. 2018.

Confidential Procurements far From Public’s Control (2): Army Keeps Everything Secret

It seems absurd, but when the Ministry of Defence purchases helicopters for 30 million euros – the public gets at least some basic information about it, while it is much harder to gain an insight into purchase of gym equipment, forklift or air tickets. Common to all these transactions is that procurement regulations and procedures are kept even further from the public. Or there is none.

Due to insufficient harmonization of legislation with the European one, and partly due to poorly regulated procurement in the field of security and defence, Montenegro was assessed with a three in the 2017 report of the international expert organization SIGMA on respecting European principles of public administration.

Even after three months, the Ministry of Defence (MoD) has not provided Institute Alternative data on confidential procurement expenditures in the last five years (2013-2017).

Confidential procurement refers to the procurement of goods, services and works, such as weapons, ammunition and other special equipment used for the protection and security of the state and citizens.

The Ministry of Defence informed the Centre for Investigative Journalism of Montenegro (CIJ-MNE) that they have not conducted confidential procurements since May 2015, when the Decree on External Trade of Special Purpose Means which prescribed and regulated the area ceased to be valid. In the same response, however, they say that they are conducting procurement in the area of security and defence that are prescribed as exemption by the Law on Public Procurement, and that these are protected in accordance with the Law on Data Confidentiality.

“Specifically, the exemptions from its application are prescribed by the aforementioned amendments to the Law, Article 116b (Procurement in the field of defence and security), on the basis of which the Ministry of Defence implements procedures exempted from the application of the Law on Public Procurement,” reads the MoD reply to CIJ MNE.

However, the article referred by the MoD, which provides for exceptions to the application of the Law on Public Procurement, obligation of the contracting authority, in this case of the Ministry, to regulate these procedures by an internal act is also stipulated. Still, the Ministry of Defence has not done so. This was confirmed in the MoD response to the IA request for free access to information.

We received a similar response to the question on whether a credit purchase agreement for three multipurpose helicopters worth 30 million euros, signed by the Defence Minister Predrag Bošković and the Canadian Business Corporation in January, falls under the scope of confidential procurement. With the same exception logic, they replied that the purchase was carried out pursuant to Article 116b, p.1, p.8 of the Law on Public Procurement – which stipulates that procurements by the Montenegrin state bodies with state bodies of the EU Member States or third countries for the purchase of military or security sensitive equipment, shall be conducted on the basis of the exemption from the application of this Law.

“The article referred to by the Ministry of Defence stipulates exemptions from the application of the Law on Public Procurement and a clear obligation of the contracting authority to adopt a special internal act that will prescribe procedures for this type of procurement. We requested this act from the Ministry of Defence and they responded that they do not have it, so neither this nor any similar procurement could have been conducted as they claim. If it was conducted in this way, then it is contrary to the law,” says Ana Đurnić, a Public Policy Researcher at the Institute Alternative.

In the rationale of the decision by which the Ministry rejected the IA request it is stated that “in the procedure conducted pursuant to the request, it was established that this authority is not in factual possession of the requested information”, and that requested act is in the drafting procedure.

In its replies to the Institute Alternative, the Ministry of Defence claims that they did not conduct confidential procurement procedures in 2017 either. However, the MoD informed CIJ /MNE that during the past year they spent 893.972 euros for the purpose of confidential procurement. They explain that this is expenditure for confidential procurement that the Ministry had initiated before May 2015.

The only records on confidential procurement conducted by the Ministry of Defence can be found in the reports of the State Audit Institution (SAI).

In the audit of the MoD financial report for 2007, it is stated that 39 out of 42 planned confidential procurement procedures were implemented that year. “The total value of implemented contracts for confidential procurement in 2007 amounted to 4.799.681 euros,” as stated in the report.

47.82 percent of this money was used for procurement of military equipment (2.295.329 euros), while 52.18 percent (2.504.352 euros) was used for other services – procurement of gym, forklifts, air transport services, consulting services, works on equipping the multimedia room of the Ministry of Defence…

It is obvious that airplanes, gym and forklifts cannot be classified as military equipment, so the SAI concluded in its report that it is necessary to clearly distinguish what can be classified as confidential procurement, and that these items should have been acquired in the procurement procedure pursuant to the provisions of the Law on Public Procurement.

The SAI notes the same problems in its 2013 report. The purchase of air tickets is repeated, and the abuse model is also applied to road traffic. Based on confidential procurement procedures from 2012 with two companies from Podgorica and Igalo, the Ministry concluded a contract lasting until mid-2014, on providing transportation services to the members of the Armed Forces of Montenegro covering local and inter-city transport.

In 2013, the Ministry of Defence planned confidential procurement in the amount of 4.617.630 euros and realized only the amount of 1.773.747 euros. They explained that the contracts were concluded that year, but the implementation of a number of contracts was postponed for the following one.

“All documents on confidential procurement procedures in the MoD are classified as secret”, states the SAI report.

In the last SAI report on the MoD, published mid-last year, it is stated that the Ministry carried out four procurement procedures in 2016, two of which referred to security-sensitive equipment. The auditor points out that he could not verify the procedure:

“The state auditor could not determine whether and in what manner are procurements to which the Law on Public Procurement (confidential procurement) does not apply planned and how is the procedure and the reporting on the procurement conducted, as there are no acts regulating this” – as stated in the report.

Montenegro’s membership in NATO, as well as amendments to the Law on Public Procurement from June last year, which regulate security and defence procurement in two articles, have still not contributed to improvements in this area.

As previously published by CIJ MNE, the other two institutions which also conduct confidential procurement procedures in the mentioned period – the Ministry of Internal Affairs (MIA), and the National Security Agency (NSA) spent for this purpose close to 5 and over three million euros respectively.

We received similar answers from the MIA to those from the Ministry of Defence, claiming that this Ministry does not conduct confidential procurement as of May 2015.

However, in the period from 2013 to 2017, as CIJ-MNE published earlier, nearly five million euros were spent on confidential procurement. Thereby, highest value of confidential procurement in the MIA was recorded last year – 2.528.761 euros.

The Ministry of the Internal Affairs has not provided CIJ MNE with the clarification on what acts were used as basis for conducting confidential procurement process in the past two and a half years.

At the last week’s meeting of representatives of the Institute alternatives in the MIA, it was repeated that no confidential procurement has been conducted since May 2015. However, the MIA claims that expenditure for confidential procurement continues to exist, as the funds are being paid on the basis of previously assumed contractual obligations.

The difference between the amount stated in the MIA response to the FAI request and the SAI report referring to the expenditure for confidential procurement in 2014 (according to the SAI report, the amount is EUR 1.596.985,46, while in the FAI response, four times lower expenditure is presented for that year), the MIA justifies by distinguishing expenditure from the value of contracted procurement. In particular, in 2014, the MIA conducted procedures and contracted procurement in the value stated in the SAI report, but it was not all paid immediately. A part of that expenditure was transferred to the following years, and the actual expenditure (payment) amounted to that stated in the responses to FAI request.

The record two and a half million which the MIA spent last year, under the confidential procurement item, are obligations under the contract for confidential procurement that were inherited from the Ministry of Information Society and Telecommunications, which ceased to exist pursuant to the reorganization of the state administration of December 2016, as the MIA representatives informed the Institute Alternative.

It is difficult to believe that the MIA and the MoD pay only others’ instalments stemming from contracts that were concluded before May 2015 and that during the past two and a half years they have not conducted procurement of goods, services and works, such as weapons, ammunition and other special equipment.

“Confidential procurements are conducted outside or at least on the margins of a poor legal framework,” says Đurnić. She highlights non-transparency that follows this type of procurement: “Almost all data, acts, reports and plans relating to confidential procurement are inaccessible to the public. We have a completely closed system in which every kind of control over this part of public spending is almost impossible. ”

And in such a system, the possibility of establishing responsibility for possible abuses is even more difficult.

Special Treatment of NSA

The National Security Agency is the only institution that does not deny that it conducts confidential procurement procedures. According to the information it provided, in the period from 2013 to 2016, the NSA spent more than two and a half million euros for this purpose.

The IA request for free access to information by which it asked for the information on the total amount the NSA spent on confidential procurement in 2017 was rejected. The rationale was that the NSA does not possess this information, and that the answer would require new information to be compiled.

Institute Alternative says that this decision is problematic as the financial year is over, so the NSA should already know the amount it spent on this last year, as well as on other items. “Hence, the refusal to provide access to this information under the pretext of having to compile new information suggests that this is an attempt to conceal something. It will be particularly interesting to see expenditure for 2017, because on the basis of the data provided so far, we know it has jumped from almost 400.000 in 2015 to almost two million in 2016”, says Đurnić.

Requests for access to information on confidential procurement plans and reports on conducted confidential procurements have also been rejected. The reason – they are classified as confidential.

The Institute Alternative insisted on gaining access to the Rulebook on the implementation of confidential procurement. The duration of classification “internal” under the Law on data confidentiality is two years meaning that it has expired at the beginning of December 2017 for the Rulebook. The NSA responded that confidentiality of Rulebook was extended in the middle of the past years.

Confidential procurement for the NSA is exempt from the Law on Public Procurement and it is prescribed by the Law on National Security Agency and regulated by the internal act of the Director of the NSA. The Institute Alternative emphasizes that such a solution has no foundation in the European regulations nor in the practices of the EU countries. According to the IA, procurement in the area of security and defence should be equally regulated for all contractors who implement them, without any exception, and they underline that it is not clear why the Agency has a special treatment in Montenegro.

It Was Better Prior to the Latest Amendments

In 2017 SIGMA (the EU and OECD initiative providing expert services in the administration reform of the countries that are in the accession process) Report on European public administration principles, Montenegro was assessed with a score of three for harmonizing its legislation with the European regulation, partly due to poorly regulated procurement in the area of security and defence.

The report also states, among other things, that legislative solutions from 2015 improved the level of compliance with European legislation, particularly in the area of security and defence. However, with the latest amendments to the Law on Public Procurement from June 2017, the level of compliance with EU directives and the Treaty on the Functioning of the European Union has been reduced.

“In particular, defence procurement is no longer regulated by the PPL; instead, the PPL requires the Government to adopt special procedures for defence-related procurement before the end of 2017. Defence-related contracts below EUR 20 000 for goods and services and EUR 40 000 for works are completely exempted from the PPL, without any obligation so far to follow the basic principles set out in the Treaty on the Functioning of the EU,” states the SIGMA report.

“Thus, we have a legal vacuum for nearly three years now, and this does not seem to represent a problem for anyone in our administration. In light of the latest SIGMA assessments on insufficient compliance of our legislation with European in this area, in the process of preparing and adopting new law on public procurement, decision-makers have to pay particular attention to regulating this area,” concluded Đurnić.