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What has the new Public Procurement Law brought us?

The new Law on Public Procurement has brought obligations and more work to contracting authorities, has made procedures easier for the bidders and improved transparency and competitiveness of public procurement procedures.

This is stated by contracting authorities that participated in the meeting organised by Institute Alternative on the occasion of presenting the preliminary findings on the monitoring of the implementation of the new concepts from the Law on Public Procurement (PPL). Implementation of the new PP Law started on July 7, 2020.

They estimate that the new PPL has improved the system and brought the Montenegrin legislation in the field of public procurement closer to the legislation of the European Union.

The new PPL brought a number of novelties, and the implementation of new mechanisms and concepts of the Law in the second half of 2020 were the subject of monitoring by the Institute Alternative on a sample of all ministries and municipalities.

The initial six months of 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 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.

The aim of the meeting was to present to the contracting authorities included in the research preliminary findings on the monitoring of the implementation of the new mechanisms and concepts under the PPL – market analysis, most economically advantageous tender as the sole evaluation criterion, report on contract performance, simply procurement, as well as planning and execution of the budget for public procurement.

The meeting was also attended by representative of the Directorate for Public Procurement Policy of the Ministry of Finance and Social Welfare, as an institution that performs institutional monitoring of the public procurement system in Montenegro.

The meeting brought together almost 50 participants via the Zoom platform and live, in compliance with measures to combat the Corona virus.

Watch the experiences of the contracting authorities and the main conclusions from the meeting in a short video (in Montenegrin):

The meeting with contracting authorities was organised within the project “For the Better Use of Public Money!”, implemented by the Institute Alternative with the financial support of the Embassy of the Kingdom of the Netherlands. The opinions and views expressed in this video do not necessarily reflect those of the Embassy.

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Intensify and Improve the Work of Parliamentary Committees

Only two of the 14 parliamentary committees adopted work plans for this year during first quarter, while two committees have not held a single session since their constitution in mid-December last year.

According to the information available on the website of the Parliament, only the Committee on International Relations and Emigrants has adopted work plan for 2021, with the Security and Defense Committee, which according to a special law, adopts a plan of parliamentary oversight in the security and defense sector. Two committees, for European integration and anticorruption, have not held a single session since their constitution in mid-December last year. We express the expectation that the drafting of the Government’s Work Programme for 2021 will intensify the work and enable the planning of parliamentary oversight by all committees.

The new parliamentary convocation made a step forward by enabling video streaming of sessions (live streaming), a chronology of debates in plenary sessions, and the launch of a parliamentary TV channel.  We expect that the announced publication of the chronology of debates and transcripts from committee sessions will further improve the publicity of the Parliament’s work, considering that the minutes from the committee sessions are still not published and compiled in a timely manner. Minutes are currently not available for more than half (29) of the total committee session (51).

We also believe that parliamentary oversight should be accompanied by additional performance indicators, which were missing in the recently adopted Action Plan for strengthening the legislative and control role of the Parliament of Montenegro in 2021. We note that MPs have repeatedly publicly indicated the frequency of non-delivery of requested information by the executive, despite their clearly prescribed right to access all official materials, documents and data prepared or collected in committees or the Parliamentary  Service, Government, ministries and others state administration bodies, which refer to issues of importance for the exercise of the parliamentary function.

As “accountability“ but also the delivery of requested information by the executive is essential for the effectiveness of parliamentary oversight, we believe that the Parliament should pay special attention to the delivery of information requested by MPs. Failure to provide this information should also be accompanied by sanctions, which should be the subject of the announced Law on Parliament.

Milena Muk
Public Policy Researcher at Institute Alternative

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Defence and security procurement’s ID

It is difficult to improve the practice in the Montenegrin public procurement system when the “rules of the game” keep changing. The penultimate day of 2019 brought the new Public Procurement Law (PPL), which introduced a number of new rules, along with a timeline of only six months for the players to master those. The new rules impacted also the security sector.

From our info sheet you can find out what are the defence and security procurement, which institutions of the security sector implement them, and which regulation impose the rules on these procurement. We mapped the key issues and proposed recommendation for improvements – you can find them bellow.

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Procurement planning did not unfold “according to the plan”

In practice, public procurement planning is meaningless, especially at the local level, by multiple and unexplained changes of public procurement plans, which results in spending slightly more than half of the planned expenditures for these purposes on an annual basis.

A large number of contracting authorities are waiting for the Budget Law so that they can plan procurement for the current year and fulfill their legal obligations in that regard. The Ministry of Finance and Social Welfare has suggested planning only those procurement necessary for the smooth functioning of these contracting authorities. However, procurement planning did not go smoothly in previous year, even when the adoption of the budget was not delayed.

That procurement are planned inadequately is also shown by the fact that at the end of the year, municipalities and ministries have millions of deviations in the planned and realised funds for public procurement. Municipalities have not spent approximately 40 percent of the planned amounts for public procurement in 2019 (about 48 million of the planned 81.7 million euros were spent).

The Municipality of Ulcinj especially stands out. This Municipality did not realise the budget for procurement in the amount of 93% (about 355 thousand euros of the planned 5.5 million euros were spent). It is followed by the Royal Capital Cetinje with only 29% of realised procurement budget (out of the planned almost 8 million, only 2.2 million euros were spent). The Municipality of Budva has not spent more than half of the planned funds, ie almost 54% (out of the planned 12.2 million euros, Budva spent about 5.6 million euros on procurement).

In 2019, the ministries in the total amount did not realise 7.2% of the planned funds for public procurement (out of the planned over 60 million, more than 55.5 million euros were spent). However, looking individually at the ministries, this difference is more pronounced. For example, we have the Ministry of Interior (Mol), which “broke“ the planned budget for procurement by about 36% (22 million was planned, and more than 30 million euros were spent). On the other hand, the Ministry of Labor and Social Welfare has spent a little over 40% of the planned budget (about 3 million euros were spent and it was planned almost 7.4 million). The Ministry of Defense did not implement about 30% of the planned procurement budget (planned amount was 13.5 million and slightly less than 9.5 million euros were spent).

Data on the total difference at the level of all contracting authorities are not publicly available, so it is impossible to gain insight into the scope of the problem of poor public procurement planning in Montenegro. Public procurement reports provide a comparative overview of planned and realised funds for only some categories of contracting authorities (ministries, municipalities, and in the last report administrations), and in a number of reports there was no data, so it is impossible to follow the trend by year.

We remind that for implementation of public procurement procedure, it is necessary to be included in the Public Procurement Plan, which must be prepared by each contracting authority, and that financial resources has to be secured for it.

The Royal Capital Cetinje amended its Public Procurement Plan 18 times for the last year. Beside serving as indicator of poor public procurement planning, this case illustrates the poorly regulated public procurement planning procedures: the Law allows for plans to be amended as many times as desired and without rationale. Although the most drastic example, Cetinje was not an exception, as almost all institutions and municipalities amended their public procurement plans several times during the year.

On average, 24 analysed municipalities amended their public procurement plans 6.4 times per year. Along with Cetinje, it was most often done by the municipalities of Žabljak (11 times), Berane, Pljevlja and Petnjica (10 times), and the least frequently municipalities were Budva, Andrijevica, Mojkovac and Herceg Novi (twice).

Ministries, 17 of them, amended their plans less frequently than municipalities, on average 2.8 times during 2020.  The plan was most frequently amended by the Ministry of Justice (eight times).

Apart from the frequency, an indicator of poor planning is the period where amendments of plans were adopted. Almost a third of municipalities has amended their “plans“ at the end of 2020, while only the Ministry of Finance and the Ministry of Justice had amendments in November.

One of the total number of amendments in each municipality and ministry referred to the mandatory harmonisation of public procurement plans with the new Law on Public Procurement and the procedures it requires.

Dragana Jaćimović
Project Associate