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Conflict of Interest in Public Procurement

The Montenegrin public tends to perceive the public procurement system as unlawful, unfair, prone to abuse and non-transparent. Citizens identify both various forms of abuse and connections between political and economic players.

According to the official institutional data, there is no conflict of interest in public procurement in Montenegro. Up to two reports of potential conflict of interest get recorded per year; those are forwarded to the Administration for Inspection Affairs – Public Procurement Inspectorate for further action. The Public Procurement Law requires the contracting authorities to sign conflict of interest declarations ahead of a public procurement procedure, or during a procedure, should conflict of interest occur.

It is up to the contracting authority to verify the declarations and act accordingly, although it has no (automated) access to the registries and databases that would be of assistance.

Montenegro, thus, does not have an umbrella institution responsible for identification of conflict of interest in public procurement, running a registry and recording conflict of interest and actions taken in follow-up to reports. The Agency for the Prevention of Corruption, which holds the registries of public officials and their asset records (including any interest they may hold in companies) and is connected with other databases relevant for identification of conflict of interest in public procurement, has no role whatsoever in public procurement control. The mandatory submission of asset declarations, which are then not used for the purpose of substantive review, serves as a shield and a justification that everything is in line with the law.

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Western Balkan PAR Monitor 2019/2020

The PAR Monitor 2019/2020 is the result of monitoring work performed in 2020 by the members of the Think for Europe Network, and it represents a compilation report of key findings from across the Western Balkans in the six areas of PAR defined by the Principles of Public Administration (SIGMA principles). As the second systematic PAR monitoring done in the region by civil society, this report offers not only comparisons between Western Balkan (WB) administrations, but also comparison with the baseline PAR Monitor findings of the 2017/2018 monitoring cycle.

PAR Monitor reports are based on a comprehensive methodological framework designed by the WeBER research team that combines quantitative and qualitative sources of evidence. With the SIGMA principles as the building blocks of monitoring work, PAR Monitor reports are complementary to similar work by SIGMA/OECD and the European Commission, differing in that they offer citizen and civil society perspectives on these principles. Together with this comparative regional report, the PAR Monitor package consists of six national reports, each including findings on a total of 23 compound indicators to monitor a selection of SIGMA Principles.

In line with the mission of the WeBER initiative, these monitoring exercises are driven by the necessity to strengthen domestic, bottom-up pressure for PAR from civil society in the region, especially from the view of keeping demand for this reform ongoing in the event of the loosening of the EU’s conditionality which may come with membership in the Union. All findings from this report and from the baseline PAR Monitor 2017/2018 can be accessed and compared on the Regional PAR Scoreboard.

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The Ministry of Interior spent milions of euros over the plan

Institute Alternative’s analysis on implementation of the new Public Procurement Law

The Royal Capital of Cetinje amended its 2020 Public Procurement Plan as many as 18 times and the Municipality of Ulcinj executed only 7% of its public procurement budget in 2019.

Those are just some of the examples of poor planning that Institute Alternative pointed out in it’s analysis.

Besides serving as an illustration of poor procurement planning, this case (Cetinje) illustrates the poorly regulated procurement planning procedures: the Law allows for the Plans to be amended as many times as desired and without any rationale. Although the most drastic example, Cetinje was not an exception, states in the findings.

On average, the 24 municipalities covered by this report amended their Public

Procurement Plans on 6.4 occasions during a single year. The ones that resorted to this most frequently, besides Cetinje, were Zabljak (11), Berane, Pljevlja and Petnjica (10), while the ones that amended their Plans the least were Budva, Andrijevica, Mojkovac and Herceg Novi (twice).

Analysis „Implementation of the New Public Procurement Law: A Chance to Leave the Vicious Circle“, focused on the work of municipalities and ministries, was prepared by Ana Đurnić and Dragana Jaćimović.

The 17 ministries changed their Public Procurement Plans less frequently than the municipalities, on average on 2.8 occasions in 2020. The Ministry of Justice amended its Plan most frequently (eight times). The Ministry of Interior had six rounds of amendments; the Ministry of Sustainable Development and Tourism and the Ministry of Public Administration carried out amendments on average almost once in two months, or five times during the year.

The Ministry of Labour and Social Welfare, Ministry of Human and Minority Rights, Ministry of Science and Ministry of Health amended their respective Plans only once during 2020.

The new Public Procurement Law (PPL) was adopted on 17 December 2019 and its implementation began on 7 July 2020. It was adopted with the aim of further harmonisation with the EU Directives within the accession negotiation process between Montenegro and the EU.  Harmonisation of the national framework with the EU acquis communautaire is one of the three closing benchmarks for Chapter 5 – Public Procurement.

The European Commission 2020 Montenegro Report noted limited progress in this area, with the adoption of the new PPL and the Law on Public-Private Partnerships.

It further stated the need for consistent implementation of these laws, along with the adoption of relevant secondary legislation, it is stated in the analysis.  Institute Alternative reminded on the European Commission’s assessment from 2015, which noted good progress on the back of the PPL amendments from late 2014; the subsequent implementation, however, failed, and the 2016 Report noted limited progress. The 2018 Report noted a backslide.

Inadequate procurement planning is illustrated also by the large differences between the planned and executed procurement budgets of contracting authorities. However, the data for the individual categories of contracting authorities, such as ministries and municipalities, are available and suggest that the problem of inadequate planning is particularly present among municipalities.

During 2019, the municipalities spent only some 60% of the budget planned for public procurement: €48,114,198.99 out of the planned amount of €81,703,241. The Municipality of Ulcinj executed only 7% of its public procurement budget in 2019,16 followed by the Royal Capital of Cetinje at just 29%,17 and the Municipality of Budva at close to one half of

the planned budget, almost 54%, stated Đurnić and Jaćimović.  Dana for 2020 are not yet available and the issue of poor planning at the level of all contracting authorities is impossible to measure.  Neither the Ministry of Finance nor its predecessor the Public Procurement Administration publishes the total difference between the planned and spent procurement budget as the aggregate amount for all of the contracting authorities, just for some of them such as ministries and municipalities.

According to the data collected by Institute Alternative, in 2019, Municipality Ulcinj spent spent a bit more than  350.000,00EUR, against the originally planned amount of  5,5 milions EUR. Overall, the ministries executed 93% of the funds planned for public procurement in 2019.19 Individual ministries were flagged up as examples of poor planning: one-half and one-third of the respective planned budgets remained unspent in the cases of the Ministry of Labour and Social Welfare20 and Ministry of Defence, while the Ministry of Interior spent €8 million more (€30,230,903.72) than originally planned (€22, 211,729.21), it is stated in the IA’s analysis.

Institute Alternative recommends that more stringent obligations should be defined on the part of contracting authorities concerning the development of Public Procurement Plans. According to them, such Plans should include the contracting authority’s needs assessment for the previous three years, explanatory notes in case the envisaged needs differ radically from the past ones, and specific explanatory notes on any new procurement. Amendments to the Public Procurement Plan should include mandatory explanations.

Croats constantly conduct market analysis

The PPL introduced market research in the course of developing a Public Procurement Plan or when launching a public procurement procedure. It is prescribed as a possibility, not an obligation, and only provided that it does not jeopardise the principle of market competition, prohibition of discrimination and transparency.

In practice, there are no indications or evidence that the contracting authorities from the category of ministries and municipalities implemented such analyses. No findings of a market analysis were included in Public Procurement Plans, Tender Documentation, procurement notices or reports on implemented procedures i.e. Decisions on the selection of the best tender, they stated.

The IA points to the example of neighbouring Croatia, an EU member state, market analyses are implemented as a rule prior to launching a public procurement to prepare the procurement and inform economic operators about the contracting authorities plans and requirements and are mandatory also prior to launching an open or restricted procedure for the purchase of works or procedures of large value purchases of goods or services.  the contracting authority is required to prepare and publish a report on endorsed and rejected comments and suggestions.

Author: Miloš Rudović, Vijesti

Text is originally published in the Daily Newspaper Vijesti, and also on the portal Vijesti.

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Initiative: Increase Transparency of the Government’s work

It will soon be a month since we wrote to the Government and called for greater transparency in the work through three concrete steps regarding the availability of information on the work and decision-making of the Government and its working bodies. We have not yet received the answer or noticed a change in practice.

It is necessary for citizens to be informed about the Government’s work and to have access to key documents on the Government’s agenda, regardless of the format of the session, while increasing transparency by publishing basic information on the work of Government’s commissions.

We proposed to the Government to adopt new practices and change those with which it started its mandate, in order to truly work in the spirit of the promise of publicity of the work from the Expose. In order to increase citizens’ trust in their work and provide comprehensive information on the decisions it makes, the Government need to take three steps:

  1. Publishing of the complete agenda of the Government’s sessions

In cases when materials marked with  certain degree of secrecy is discussed at the Government’s sessions, except that material is not published, the public can not even know that it was on the agenda of the session because the name of the material is excluded from the agenda. As the legal provisions defining data confidentiality are broad, in the mandate of the previous government this possibility was used for the various cases: for from contracts and decisions to redirecting money between budget units and using the budgetary reserve.

According to the IA’s research, based on the minutes from the Government’s sessions obtained through FOI, in the mandate of the previous Government, out of the total number of the items on agenda, more than 10% were completely hidden form the public (12.3%).

Understanding the need of the Government to decide or discuss classified materials in exceptional cases, it is unacceptable for the public not to be informed that they were on agenda at all, the classification number of the act and exact level of secrecy that could serve to gain access to them after the expiration of the secrecy period.

  1. Publishing materials decided without holding a session

The Government began its mandate with the bad practice of not publishing the materials discussed without holding a session. In less than five months of the new Government’s work, the Government considered and adopted decisions 32 times without holding a session. That is more often than regular weekly sessions (of which there were 21 in the same period).

In this way, the Government discussed and decided on 62 items on the agenda, not including numerous personnel issues, without these materials being published on the Government’s portal. These are draft laws, decisions, information, conclusions, but also personnel decisions, which in some cases are only mentioned in government’s announcements, so that no details are given about which positions and persons were discussed or decided.

Deciding on certain issues without holding a session in urgent and particularly justified cases is provided by the Decree on the Government. This Decree also prescribes that the work of the Government is public. Publishing acts of the Government is particularly important for those types of material for which there is no obligation to publish in the Official Gazette. It is not for the Government to publish a statement in which it will briefly explain what was discussed. Citizens have the right to access complete documents and adopted conclusions. It is especially problematic that in this aspect the new Government has taken a step backwards compared to the previous one, which published materials from such sessions.

  1. Publishing data on the work of Government’s working bodies

It is necessary for the citizens to have basic information on the work of Government’s commissions, permanent and temporary working bodies. The four permanent Government’s working bodies (Commission for Political System, Internal and Foreign Policy; Commission for Economic Policy and Financial System; Commission for Personnel and Administrative Affairs; Commission for Allocation of Funds from Budgetary Reserve) have numerous and significant competencies, from their role in recruitment procedures and appointments to the discretionary allocation of funds to individuals  and legal entities.

Currently, there is no practice of publishing information on the sessions or on the overall activities of the four permanent or temporary working bodies of the Government.  In the previous period, even the most basic information about the work of some of them was declared secret by the General-Secretariat of the Government.

Transparency in practice, not only in the Expose

Having in mind all the listed issues, and after a whole decade of validity, it is necessary to  amend the Decision on Publishing Materials from the Session of the Government of Montenegro from 2011, and improve the openness of the Government in three important aspects:

    1. Publishing the complete agendas, which will also include the items marked with the degree of secrecy, the classification number of the act as well as the degree of secrecy declared, so that the public knows in which period the expiration date expires (two year for the degree “internally”, five years for degree “confidential” or some other)
    2. Integral publishing of all materials and decisions considered and adopted by Government without holding a session, in the same way as when the session is held.
    3. Publishing of basic information on the work of the Government’s working bodies (commissions).

In this way, the previous bad practices will be corrected and the level of openness of the work of the Government and its working bodies will be raised.

Marko Sošić
Institute Alternative

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Implementation of the New Public Procurement Law: A Chance to Leave the Vicious Circle

Although the new PPL is largely harmonised with the EU Directives – just as the previous Law, which was implemented as of May 2015, was harmonised with the Directives applicable at that time – its implementation is threatening to become a stumbling block. The initial six months of its implementation showed a lack of consistent implementation of some of the provisions from the Law and the secondary legislation, and the potential for the new concepts, such as market analysis, to bring more damage than benefits to the public procurement system.

Inadequate planning and failure to deliver on the plans remain the key weaknesses in the management of this segment of public spending. For the most part, the Rulebook on the method of conducting simple procurement resolved the issues attached to low-value procurement. Still, in practice, these procurement and must be kept under the constant scrutiny of the Public Procurement Inspectorate, in order to ensure consistent application of the rules. Furthermore, it is very important to prevent abuse of simple procurement and to use them for the purpose of simplified procedures, faster procurement and lower procurement costs. Unfortunately, control of contract performance failed to deliver on the announcements made by the Ministry of Finance, since contract performance reports contained very few or no new data when compared with the contents of the contract. Inadequate monitoring of contract performance, both internal and external, is another chronic shortcoming of the public procurement system.

Provided no reoccurrence of the situation from 2017 – of a course of action contrary to harmonisation with the EU regulations – the current provisions may serve as a good basis for further strengthening and upgrades of the public procurement system.