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Direct and without control – Simple procurement up to 5000 EUR

The research for the year 2022 has revealed irregularities in the use of the direct contract procurement. Our findings showed that individual procurement exceed the amount of 5,000 euros excluding VAT; contracting authorities do not take into account the annual estimation of public procurement subject, and for certain subject that amount reaches over 40,000 euros. Additionally, the research identified the dividing of public procurement subject to avoid a more transparent process through the Montenegrin Electronic Public Procurement System (CEJN), which is contrary to the Law on Public Procurement.

The Institute Alternative (IA), within a sample of ministries and municipalities analysed spending for the year 2022 using the direct agreement, ie. Simple procurement worth up to 5,000 euros. Direct agreement, or direct contract procurement that can be concluded up to 5,000 euros is a simple procurement of good, services and works by direct selection of a specific bidder with the acceptance of preliminary invoice /pro-invoice, fiscal invoice or contract depending on the type of procurement subject. These procurements are not carried out through the Montenegrin electronic public procurement system (CEJN). The analysis relied on data from CEJN, that is, the individual report of the contracting authorities delivered by Ministry of Finance. Those reports have certain shortcomings, since entering data on these procurement into CEJ is a possibility, but not an obligation of the contracting authorities. Additionally, IA also requested copies of invoices and contracts up to 5,000 euros from ministries and municipalities with the highest expenditure share through the direct contract procurement.

Ministries with the highest percentage of direct expenditure include the Ministry of Science and Technological Development (100%*, Ministry of Foreign Affairs (88,50%), Ministry of Capital Investments (64,03%), Ministry of Health (60,53%), Ministry of Human and Minority Rights (58,68%), Ministry of Ecology, Spatial Planning and Urbanism (48,75%), Ministry of Public Administration (44,96%), Ministry of Culture and Media (41,71%), Ministry of Economic Development (31,35%), Ministry of Education (26,98%), Ministry of Labor and Social Welfare (26,98%), and Ministry of Sports and Youth (26,98%).

In this way, these ministries during 2022 directly contracted purchases in the amount of 26,000 euros, which was spent by the Ministry of Sports and Youth, and up to 230,000 euros, spent by the Ministry of Ecology, Spatial Planning and Urbanism.

Although according to the Report on simple procurement up to 5,000 euros the Ministry of Public Administration (MPA) spent almost 2,7 million euros, the MPA clarified that the amount of 2,460,654.41 euros refers to a direct negotiation procedure without prior publication. This procedure was carried out in accordance with Article 33 of the Law on Public Procurement for urgent remediation of the cyber-attacks. MPA additionally clarified that the amount was presented in the report in agreement with the Ministry of Finance, because the CEJN portal was not in operation and another reporting option was not possible.

Municipalities that directly contracted procurement above 25% include Berane (59,16%), Kolašin (53,31%), Mojkovac (40%), Andrijevica (31,54%), Danilovgrad (28,83%), Tivat (28,68%), Kotor (28,48%), and Gusinje (26,83%). Municipalities directly contracted procurement ranging from 26,830 euros, spent by Gusinje Municipality, to over 500,000 euros, spent by Kolašin Municipality.

A total of 20 requests for free access to information were sent, and responses were received from 16 of them. All eight selected municipalities have sent invoices. Of the 12 ministries, eigh of them submitted documentation, that is seven, since the Ministry of Human and Minority Rights submitted only two contracts. Ministries of Capital Investments, Ecology, Spatial Planning and Urbanism, Public Administration, and Education did not respond to the request for free access to information.

When it comes to the accuracy and comprehensiveness of the data given in the reports of contracting authorities, significant discrepancies in the number of invoices/contracts, duplicate invoices, poorly copied contracts, making it impossible to see the company name, price, or type of service, can be observed in the documentation delivered from certain contracting authorities. Additionally, IA received a large number of invoices and contracts for procurement not reported in the authority’s reports, while on the other side some ministries and municipalities did not provide invoices for procurements reported to the Ministry of Finance.

The research for the year 2022 has revealed irregularities in the use of the direct contract procurement. Our findings showed that individual procurement exceed the amount of 5,000 euros excluding VAT; contracting authorities do not take into account the annual estimation of public procurement subject, and for certain subject that amount reaches over 40,000 euros. Additionally, the research identified the dividing of public procurement subject to avoid a more transparent process through the Montenegrin Electronic Public Procurement System (CEJN), which is contrary to the Law on Public Procurement.

This analysis confirmed the findings for the year 2021, when Institute Alternative for the first time through analysis of “Direct procurement under scrutiny” indicated the possibility of this mechanism. The aforementioned irregularities were also noted by the Public Procurement Inspection.

Table 1: Data on the differences between the reports of the contracting authorities and the data submitted to the IA through the SPI on simple procurements up to 5,000 euros in 2022/Ministry

Just above the “threshold”

When it comes to using the direct agreement mechanism for procurement, the rules are clear – a simple procurement with an estimated annual value up to 5,000 euros is conducted through direct selection. This means that the total value for the same procurement subject must not exceed 5,000 euros, excluding VAT. In December 2022, Amendments to the Law on Public Procurement were adopted, increasing the threshold for this type of simple procurement from 5,000 to 8,000 euros.

As in previous years, the majority of ministries, 8 out of 12 analysed, chose to procure airline tickets using this method instead of conducting that service through a simple procurement or a framework agreement. For this purpose, eight ministries spent over 90,000 euros through direct contracting in 2022. The Ministry of Economic Development and Tourism spent over 43,000 euros on airline ticket procurement with eight different agencies, representing more than half of the total amount (85,147.45 euros) spent on simple procurements below 5,000 euros. Following is the Ministry of Ecology, Spatial Planning and Urbanism, which spent over 15,000 euros, the Ministry of Science and Technological Development spent nearly 11,000 euros with three agencies, the Ministry of Labor and Social Welfare spent around 10,000 euros, Ministry of Human and Minority Rights spent over 7,000 euros, and the Ministry of Foreign Affairsspent 5,000 euros.

The Ministry of Labor and Social Welfare allocated over 5,000 euros annually for hotel accommodation services, while the Ministry of Ecology, Spatial Planning and Urbanism directly contracted over 13,000 euros for the same service. This ministry exceeded the estimated amount for various analyses, consultations, and the procurement of protective equipment, as it spent sums from five thousand euros onwards.

The Ministry of Economic Development and Tourism spent over 20,000 euros on translation services last year and over 7,000 euros on office supplies. Additionally, this ministry signed 50 invoices with one company during 2022, with a total value exceeding 7,500 euros, all related to the procurement of some type of automotive material.

Controversial procurement in the Ministry of Capital Investments, which collectively amount to over 5,000 euros annually, mostly relate to consulting services, i.e., fees paid to individuals ranging from five to six thousand euros for one job.

A similar situation exists with municipalities, which also directly contracted procurement exceeding the allowed limits. For example, the Municipality of Andrijevica purchased 72 sets of textbooks for the Gymnasium exceeding 6,000 euros. The Municipality of Gusinje paid over 5,000 euros twice for geodetic services and over 8,000 euros for the services of operating a excavator on local roads. The Municipality of Mojkovac exceeded the amount when purchasing pellets, totaling almost 6,000 euros.

Procurement through multiple invoices, without competitiveness

The norm that the total value for the same procurement subject must not exceed 5,000 euros in most municipalities and ministries is interpreted in a way that one invoice cannot exceed 5,000 euros, thus not taking into account the annual estimation of funds for the same procurement subject, deviating from the stated rule.

For instance, the Municipality of Mojkovac executed the procurement of office adaptation with one construction company through three invoices. Although it concerns a hallway and two offices located in the same “Bojna njiva” building, based on three invoices, the municipality executed the adaptation and directly selected the contractor, instead of issuing a public call for the adaptation of premises through a regular procedure for simple procurement. One invoice is for the adaptation of office number 1 in the amount of 3,280 euros (offer from 25.08.2022), the second for the adaptation of office number 2 in the amount of 2,900 euros (offer from 05.09.2022), and the third for the adaptation of the hallway in the amount of 2,800 euros (offer from 19.09.2022). The total value of these works without VAT is 8,980 euros, paid through three invoices on the same day, December 28, 2022.

According to the data from the Report, the Municipality of Gusinje had two material procurement, executed on the same day but separated as their total amount exceeds the limit of 5,000 euros. This municipality also exceeded the annual estimated value for the procurement of electrical materials, which it procured through four procurements from the same company (6,300 euros excluding VAT).

The Municipality of Danilovgrad had five invoices with the same procurement item, i.e., the description of the job “Expert construction supervision” for which more than 9,000 euros were paid. Simultaneously, it signed two contracts for pothole repair with one construction company, paying more than 7,000 euros.

Table 2: Data on the differences between the reports of the contracting authorities and the data submitted to the IA through the SPI on simple procurements up to €5,000 in 2022/Municipalities

Contracting authority Ministry of Finance Report Data from invoices
Number of invoices Value Number of invoices Value
Andrijevica 359 € 89.985.30 240 € 46.790.518
Berane 100 € 197.293.59 110 € 223.284.657
Danilovgrad 560 € 330.646.66 609 € 350.734.36
Gusinje 96 € 84.375.22 105 € 65.180.967
Kolašin 586 € 516.475.65 518 € 392.784.66
Kotor 165 € 88.661.20 160 € 79.737.27
Mojkovac 395 € 200.564.45 420 € 251.030.118
Tivat 298 € 461.808.92 241 € 443.817.244

What is procured through direct contract?

Both ministries and municipalities have been purchasing “luxurious trinkets” through direct procurement. Ministries have been buying expensive phones priced over 1,000 euros, armchairs, fountain pens, clothing, and paying for boat rides. The list of public procurement below 5,000 euros also includes charms, light bulbs, gusle (traditional musical instrument), and the Gorski Vijenac.

The Municipality of Andrijevica procured brandy (quince and plum) on three occasions. In these procurements, they did not provide invoices, but these details can be found in the report of the Ministry of Finance. Concerning municipalities, an interesting detail is related to the Municipality of Andrijevica, which, in 2022, made multiple procurement at the “Karamela” market, the total value of which exceeds 5,000 euros. In this case, there is a potential conflict of interest as the municipality chose to directly procure specific goods from a market owned by the mayor of Andrijevica, Željko Ćulafić, which can be verified by checking the Montenegro Business Register.

It is also noteworthy that the Municipality of Berane used the services of the “Karamela” market, which organised catering for the Agricultural Fair, including the purchase of 122 kg of roast meat.

Simple procurement that are not simple

In the report on simple procurement related to the Ministry of Foreign Affairs, there are some items that significantly exceed the amount that should be the subject of this type of procurement. Specifically, these are special procurement for diplomatic-consular representations, regulated by a separate regulation. This regulation stipulates that diplomatic-consular representations can contract the procurement of goods and services up to 40,000 euros by collecting three offers and selecting the most favorable one. However, the Ministry of Foreign Affairs exceeded this amount in the procurement of an official vehicle for the needs of the Embassy of Montenegro in Washington, amounting to around 60,000 euros. The table (report) indicates that there were five offers. However, this procurement is not listed in the overall list of public procurement contracts for 2022, nor in the Montenegro Electronic Public Procurement System (CEJN). The ministry did not provide invoices for these procurements.

You can watch the TV Vijesti feature on this topic in the following link:

This investigative article was produced within the Project “Procurement under spotlight – Making Watchdogs Work!”, with the support of the Embassy of the Kingdom of the Netherlands in Serbia and Montenegro within the MATRA Rule of Law program. Project aims to empower and motivate watchdogs to combat corruption and undue influence in public procurement.

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There is no sufficient progress in gender-responsive budgeting

The recommendations for improving gender-responsive budgeting include, among other things, supporting spending units for better formulation of gender-responsive and transformative goals and indicators, as well as better control of reports on budget execution, with a focus on the results achieved.

This was highlighted during the panel discussion ‘Program Budgeting through Gender Lens: What Have We Learned?’ organised by IA, with the support of the Ministry of Human and Minority Rights.

Among other recommendations for improving gender budgeting, presented by representatives of institutions, civil society organisations, and international organisations, the emphasis was on increasing the gender-sensitiveness of managers and coordinators for program budgeting through additional training. The Ministry of Finance was called upon to increase the control over the quality of budget execution reports concerning gender perspective. Additionally, there is a perceived necessity to amend the Budget and Fiscal Responsibility Law with provisions on gender-responsive budgeting.

Nikoleta Pavićević from IA presented the findings of the analysis ‘Program Budgeting in Montenegro: Contribution to Gender Equality or Just a Tick in a Box?’

“When delving deeper into the analysis of budget requests and budget execution reports, it is evident that program budgeting is not sufficiently developed, especially in the area of gender-responsive budgeting”, she stated.

This is reflected in the data demonstrating that for over 70% of the program budget goals, there is no data on how they contribute to reducing gender disparities. The insufficient gender sensitivity of the budget is also evident from the fact that, out of 87 indicators in the analyzed budget requests, only 2 are gender-responsive.

Luka Đuričković, the Head of the Directorate for Budget Policy, Program Budget, and Procedures at the Ministry of Finance, emphasized that, even though there is still a lot of room for improvement in the implementation of gender-responsive budgeting, he is satisfied with the progress made after three years of its implementation, especially because these are only the first steps. He highlighted that the 2024 budget proposal will be significantly more advanced in terms of gender-responsive budgeting, explaining:

“We have had intensive communication with spending units in this regard, and the current draft budget recognizes numerous activities that are gender-responsive, corrected, and improved.”

As a challenge, the Ministry of Finance recognizes the insufficient number of budget analysts who could monitor the quality of requests and reports from spending units, and currently, there are only 15 of them.

Marija Dragojević from the Secretariat of the Council for Competitiveness said that the topic of gender-responsive budgeting requires a horizontal approach involving all interested parties, as well as the recognition of the concepts of gender-responsive budgeting and gender-responsive statements in the law.

“The Secretariat has trained over 150 employees from spending units, including 15 trainers for gender-responsive budgeting who will work on enhancing capacities in this field,” said Dragojević.

Blažo Savković, a state auditor at the State Audit Institution, emphasized that the findings of their report on the audit of the effectiveness of implementing gender equality policies show that a certain number of spending units, which marked a portion of their budget as gender-sensitive, did not conduct appropriate analysis and assessment of its impact on gender equality.

“In practice, without gender analysis, it is not possible to define appropriate gender-sensitive goals or indicators to measure progress in achieving these goals,” concluded Savković.

“For the quality of the program budget, it is necessary to define the structure and establish responsibilities for budget development in spending units, especially when collecting and processing data needed for gender analysis,” he added.

Angelina Šaranović, the Secretary of the Committee for Gender Equality in the Parliament of Montenegro, shared that the budget for the year 2023 recorded an increase of 1.40% compared to the previous budget when it comes to allocations for reducing gender disparities. However, many programs are still labeled as gender-neutral in the submitted reports, which is not a good indicator. She also mentioned that it would be good to introduce a label indicating whether a program is gender-transformative. She concludes that the government should provide clear guidelines for gender mainstreaming in the capital budget, which is currently completely left out of the gender mainstreaming efforts.

Anita Stjepčević from the Center for Women’s Rights reminded us that the specific needs of those targeted by policies (women, girls, men, boys, and all other gender identities) are often insufficiently or not taken into account at all.

“Gender analysis and the measures developed based on them are a condition for good public policies,” she stated.

Anita also pointed out the need to enhance the gender literacy of the personnel working on program budgeting.

IA Team

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NGOs submitted proposals and priorities for public administration reform

A meeting of the National Working Group for Public Administration Reform was held in Podgorica, attended by representatives of the civil society and the Ministry of Public Administration.

At the meeting, discussions revolved around the 2024 priorities of the Ministry of Public Administration and proposals from representatives of non-governmental organisations for improving public administration reform. Additionally, a Draft of guidelines for the implementation of a design thinking approach regarding governance issues at the local level was presented. Proposals on how to enhance the Draft were also discussed. 

The meeting was attended by ten representatives from eight non-governmental organisations, as well as four representatives from the Government of Montenegro and the Ministry of Public Administration. Marija Hajduković, the General Director for Strategic Planning in Public Administration, International Cooperation, and IPA Funds at the Ministry of Public Administration, spoke on behalf of the government.

Representatives of the civil sector have agreed that it would be beneficial to restart public discussions on the work program of the government and ministries for the upcoming year 2024. The issue of regulating recruitment in public enterprises and institutions, as well as the necessity of introducing special organisational units for monitoring and evaluating public policies, was also highlighted as an important item for further consideration. The adoption of amendments to the Law on Free Access to Information, the Law on Salaries of Public Sector Employees, and the Law on Non-Governmental Organisations were also prioritised.

Representatives of non-governmental organisations also pointed out the lack of effective oversight of the implementation of standards for electronic accessibility of websites and highlighted that the internet presentations of municipalities are not harmonised. Therefore, non-governmental organisations have called on the Ministry of Public Administration to follow good examples of some of the Western Balkan administrations and to offer the draft of the next report on the implementation of the Public Administration Reform Strategy for comments to interested citizens, citizens’ groups, and non-governmental organisations.

To involve the non-governmental sector and citizens in the public administration reform process, a draft of guidelines for addressing local-level public administration issues, with a focus on the needs of citizens (applying the design thinking approach), was presented to the representatives of NGOs at the meeting. This was part of the call for project proposals within the framework of the WeBER 3.0 project program. Those interested in submitting proposals were invited to identify a specific problem related to local governance or public administration reform and approach its resolution through seven key steps while adhering to the principles of sustainable development.

Western Balkan Enablers for Reforming Public Administrations – WeBER 3.0 is a project with the main goal of further empowering civil society organisations to contribute to a more transparent, open, and accountable administration that is citizen-focused. The aim is to achieve an administration that is more in line with EU standards in the Western Balkans region. The project is funded by the European Union, represented by the European Commission, and co-financed by the Austrian Development Agency and the Ministry of Public Administration of Montenegro.

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European Commission Report’s findings for 2023 as expected

Dragana Jaćimović, public policy researcher at the Institute Alternative, participated in an online discussion organised by the European Policy Centre (CEP) on the topic of the European Union (EU) enlargement package for 2023 and the very functioning of democratic institutions in the countries of the Western Balkans.

The participants also discussed the recently published reports of the European Commission, as well as recommendations for the further path of the countries of the Western Balkans towards institutional reform and fulfilling the conditions for further integration into the EU.

“The findings of the latest report of the European Commission were expected, where similar criticisms as in previous years were repeated. There were no backslidings, nor the break through when it comes to the assessment of progress during the last year”, concluded Jaćimović.

Answering the question about Montenegro’s readiness to become the 28th member of the EU by 2028, Jaćimović said that it remains to be seen how the new 44th Government will work towards achieving this priority, which is listed as one of the main goals in the future work. She pointed out that membership in the EU had been, at least declaratively, a priority of the previous governments, but that not enough concrete actions and results were achieved.

“Stagnation of the process is reflected in a fact that interim benchmarks for Chapters 23 and 24 have not been met even after 10 years since they were formulated. This affects the overall progress in negotiation process, since other chapters cannot be provisionally closed before meeting interim benchmarks in the rule of law”, Jaćimović stated, and added that the latest European Commission report gives clear indications of what needs to be done in the following period, and what is expected from the new Government is to form a stable and functional negotiation structure as soon as possible.

“Reaching an agreement on key positions in the judiciary is the main precondition for reforms in the judiciary. This depends solely on the political will of the parties, which is a first step for meeting interim benchmarks in the rule of law”.

She also pointed to the new recommendation of the European Commission related to the elimination of the risk of infiltration of organised crime and corruption in the judiciary, which is especially important when taking into account the numerous cases initiated by the Special State Prosecutor’s Office and in which the enormous infiltration of organised crime in state structures.

The discussion was opened by the ambassador of Italy in Serbia, Luka Gori, and Director-General for EU Neighbourhood Policy & Enlargement Negotiations (NEAR) at the European Commission Gert Jan Koopman.

In addition to Jaćimović, comments and findings were also presented by panelists from the Western Balkan countries: Strahinja Subotić (CEP), Simonida Kacarska (European Policy Institute – Skopje), Arbëresha Loxha Stublla (Group for Legal and Political Studies – Prishtina), Haris Ćutahija (Foreign Policy Initiative – Sarajevo), Daniel Prroni (Institute for Democracy and Mediation – Tirana).

You can watch the discussion at the following link.

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Political parties hold the key to unfreezing the road to the EU

In the annual report, the European Commission noted a lower average assessment of progress, recognised that only one recommendation was fully fulfilled within the fundamentals cluster, while the average assessment of readiness remained the same.

The absence of effective political dialogue and constructive approach by political parties was particularly highlighted in this year’s report, with the conclusion of a lack of direction on EU accession issues.

As part of the fundamental chapters, in the area of “functioning of the judiciary”, the assessment of the lack of progress was repeated as in 2021, making it the worst rated aspect in this year’s report. This is largely due to the fact that the work of Constitutional Court was blocked in the period from mid-September 2022 to the end of February 2023, which is covered by the report.

In terms of progress, chapters 5 (public procurement), 12 (food safety, veterinary and phytosanitary control) and 30 (external relations) were rated lower this year: “some level of progress” compared to “good progress” in 2022. On the other hand, chapters 7 and 14, on intellectual property law and on transport policy, were rated somewhat better: “good progress” compared to “limited progress” in the last year’s report. Thus, the average rate of readiness is 3.12, compared to 3.15 in 2022.

Average rate of readiness by year

In terms of readiness, neither backsliding nor progress was noted, so the average rate remained the same (3.12). To remind, since 2015, the European Commission has been applying two levels of assessment – “readiness” and “progress”. The first level refers to the assessment of the overall state of play in the areas covered by individual chapters, while the second level focuses on the time-bound assessment of the progress made during twelve months.

The absent progress in EU integration is mirrored in the reiteration of old recommendations, but also in a more direct formulation of recommendations, especially in those areas where more decisive steps have been missing for a long time, such as media legislation. Within the cluster of fundamental chapters, only one of last year’s recommendations, which refers to the establishment of a strategic framework for public administration reform, through the adoption of the Public Finance Management Reform Program, was fully fulfilled. Therefore, in the chapters which condition the overall progress in the negotiations, only one minor improvement was observed, although it still does not guarantee the delivery of tangible results.

We especially highlight as an important recommendation, which requires the preparation of a road map for the reform of state – owned enterprises, the improvement of management and supervision of their work, and the development of objective criteria for the selection of their management bodies. New and equally important is the recommendation that refers to the need to address the risk of corruption and infiltration of organized crime into the institutions of justice and law enforcement agencies, through preventive measures and a more decisive judicial response to detected cases.

Similar to previous years, frequent reorganizations and high turnover in the public administration were criticized, and the lack of improvement of the Law on Civil Servants and State Employees was particularly emphasized. The European Commission particularly emphasized that, instead of working to improve eligibility criteria for recruitment in public administration, which were downgraded in early 2021 through the changes to the Law on Civil Servants and State Employees, the parliamentary majority proposed changes to the Law on Local Self-Government, which would also degrade these criteria at the local level. We, at the Institute Alternative, have previously warned about these attempts. The European Commission underlines that changes to the Law on Access to Information are still pending, although “the process of preparation and consultation has been going on for years.”

As expected, and similar to earlier evaluations from the non-paper on chapters 23 and 24, the European Commission recognized the alacrity in initiating cases of high corruption and organized crime under the new Chief Special Prosecutor. However, the contrast in the number of initiated cases compared to the almost non-existent balance of final judgments was also pointed out.

See how the European Commission evaluated the progress in certain chapters this and in previous years:

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Discussing the repression of corruption in public procurement with the Police

Police efforts in cases concerning corruption in public procurement were discussed at the meeting – the first one in a series of meetings on the performance of repressive institutions in the fight against corruption in public procurement.

On November 6, Institute Alternative (IA) organised a meeting attended by representatives of the Ministry of Internal Affairs and the Police Administration. 

During the closed meeting, we discussed the so far results of the Police Administration, current capacities for conducting investigations, and cooperation with the prosecution and other state bodies. Moreover, the focus of the conversation was on the obstacles to conducting effective investigations in this area and recommendations for improvement in the area.

As a result of the meeting, IA will prepare an overview of the Police’s results in the fight against corruption in public procurement.

The meeting was organised within the project „Procurement under the spotlight – making watchdogs work!“, funded with the support of the Embassy of the Kingdom of Netherlands in Serbia and Montenegro, within the MATRA programme. The project aims to empower and motivate watchdogs to combat corruption and undue influence in public procurement.