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Initiative for a joint hearing on public procurement in healthcare system

Institute Alternative (IA) sent the Initiative for a joint hearing on the topic of public procurement in healthcare to the Committee for Economy, Finance and Budget, and the Committee for Health, Labour and Social Welfare of the Parliament of Montenegro.

At today’s session of the Committee for Economy, Finance, and Budget, the President of the Committee, Mirsad Nurković, introduced the members of the Committee to this initiative. Member of this Committee and President of the Committee for Health, Labor and Social Welfare Dražen Petrić pointed out that in communication with Nurković, they will agree on the details of the organisation of this hearing.

The goal of the hearing is to obtain more information from all relevant actors, especially in light of allegations about the senselessness of the procedure for public procurement of medicines due to the limited number of bidders in Montenegro.

The immediate reason for this hearing is, among other things, that according to media reports, there are 906 branded medicines on the basic, supplemental, and special regime list of medicines, which are paid for by the Health Insurance Fund, and it is alleged that even 92 percent of the mentioned medicines representative or authorised distributor “Glosarij”, with subsidiary companies “Glosarij CD” and “Medica”.

In its latest report for Montenegro, the International Monetary Fund (IMF) pointed out some of the problems in this area, namely that it is necessary to improve the efficiency of spending in the health sector, and that it is important to limit pharmaceutical expenditures, which reached 2.5% of GDP in 2022.

We remind the public that more than a decade ago, a joint consultative hearing of these committees was held, but unfortunately, there was no conclusion, that is, a joint report with recommendations for solving the problem.

We urge that this hearing be organised with quality preparation that will allow clear recommendations to be articulated for changing policies, regulations, and practices in this area. Institute Alternative is at the disposal of MPs and the services of the Parliament in terms of data on budget spending and concluded procurement contracts.

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A Regional Overview: Criminal Liability for Corruption in Public Procurement

Public procurement refers to the procedure in which public sector entities - contracting authorities - procure goods, works and services. This procedure is also one of the most susceptible to corruption, and uneconomic methods of public spending in the countries of the Western Balkans.

An increase in the share of public procurement in the national GDP was recorded in all countries of the Western Balkans. On average, it ranged from 9% to 11%, with yearly fluctuations only in the cases of Kosovo and North Macedonia. Given the above, as well as the fact that the value of public procurement is constantly increasing, we can conclude that this area merits active control mechanisms, thereby reducing the manoeuvring space for anyone inclined to commit abuse.

In December 2023, Montenegro introduced a special criminal offence of abuse concerning public procurement into the criminal legislation. Details on how this area is regulated in Montenegro and results in the area of fight against corruption in public procurement will be presented in a separate analysis.

The aim of this paper is to provide brief insight into how countries in the Western Balkans (Serbia, Bosnia and Herzegovina, North Macedonia, Albania and Kosovo) have legally regulated the issue of criminal liability for corruption in public procurement. This paper also presents a four-year overview of results in the area of fight against corruption for countries that have made data publicly available.

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Half of the Parliamentary committees have still not adopted annual work plan

Institute Alternative has been monitoring the work of the Parliament of Montenegro and its committees for years and, at the beginning of this year, we sent proposals for improving the work, where we insisted on active monitoring of the implementation of reports’ conclusions, of the public administration reform, budget, application of secret surveillance measures, and public enterprises reform.

However, in the middle of the spring session, with a third of the year behind us, half of the parliamentary committees still have not adopted the annual work plan for the current year. To be precise, seven committees have not adopted a work plan for 2024.

The work plan was not adopted by: the Legislative Committee, Committee for Political System, Judiciary and Administration, Committee for Economy, Finance and Budget, Committee for Gender Equality, Committee for Education, Science, Culture and Sports, Committee for Tourism, Agriculture, Ecology and Spatial Planning and Committee for Health, Work and Social welfare.

The committees that have adopted the work plan for 2024 are: Administrative Committee, Constitutional Committee, Committee for Security and Defense, Committee for International Relations and Emigrants, Committee for European Integration, Committee for Human Rights and Freedoms, and Committee for Anti-Corruption.

As before, we emphasise the importance of parliamentary committees in planning their work, in relation to the legal obligations and supervision they exercise over other institutions. Therefore, we appeal to the committees to adopt work plans in a timely manner.

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Budget Inspections – Montenegro and experiences from the region

Transparent and appropriate public finance management is a key factor for economic and sustainable development of societies. Budget Inspections play a significant role in ensuring the integrity and efficiency of this process. This research paper analyses the role of the Budget Inspection in Montenegro, comparing it to models from the region.

The research objective is to understand how Montenegro takes on challenges related to public finance management and what it can learn from practices of other countries in the region. Through analysis of these experiences, the research paper aims to provide relevant recommendations for improving the work of the Budget Inspection in Montenegro, and to contribute to a wider understanding of the role of these institutions in promoting transparent and responsible management of public funds. The analysis of the work of Budget Inspections contains detailed scrutiny of different aspects of the context in which they operate, including the legal framework and evidence from practice.

Countries covered by this analysis include Serbia, Bosnia and Herzegovina, Croatia, North Macedonia and Slovenia. Analysis of the legal framework and experience of Budget Inspections in the region revealed that Montenegro’s performance in this area is subpar. Some countries in the region committed far more resources to the development of Budget Inspections. These circumstances require thorough analysis and careful consideration in order to identify key challenges and adopt best practices from the region.Learning from experiences of neighbouring countries and applying best practices can be a step toward achieving greater efficiency and transparency in budget management, thereby contributing to improved development of society and the economy.

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Fleet Expansion: Million-Euro Acquisitions Planned

Although there is still no unified record of vehicles owned by the state, according to available data, the state’s fleet has exceeded 4.600 vehicles.

In 2013, the Government of Montenegro, led by then-Prime Minister Milo Đukanović, announced plans to reduce the state’s vehicle fleet to 2,159 vehicles (from 3,718 registered at the time). However, 11 years later, Montenegro remains far from that goal. The state currently owns at least 4,658 vehicles, which is 2,499 more than the target set a decade ago.

The number of registered vehicles with the Ministry of the Interior (MUP) currently represents the most reliable data on the size of the state-owned vehicle fleet. There are also discrepancies between the number of entities that, according to the State Property Administration possess vehicles (126) and the number of institutions that have registered vehicles they use (460), indicating that the record-keeping of state property is still not functioning adequately.

4,658 Vehicles Registered as State-Owned

According to data from the Ministry of the Interior (MUP) from February 2024, there are 4,658 vehicles registered as state-owned in Montenegro, which is 377 more than in 2022, and 85 more than in 2020.

The data provided by the Ministry shows that 460 institutions use these 4,658 vehicles. The Ministry of the Interior itself has the most vehicles—550. Following are Post Office of Montenegro with 345, the Police Directorate with 181, the Capital City with 169, and the National Security Agency (ANB) with 119. Several other institutions also have dozens of registered vehicles, including the Administration for Inspection Affairs (90), the Revenue and Customs Administration (77), Monteput (State Transport Company) (72), the Emergency Medical Service (54), the Cadastre and State Property Administration (44), the Forest Administration and Radio-Television Montenegro (each with 43), the Administration for the Execution of Criminal Sanctions (42), Roads (40), Airports (39), and the Food, Veterinary, and Phytosanitary Affairs Administration (38).

The 10 state institutions with the largest vehicle fleets:

Name Number of vehicles
Ministry of the Interior 550
Post Office of Montenegro 345
Police Directorate 181
Capital of Montenegro 169
Agency for National Security 119
Administration for Inspection Affairs 90
Revenue and Customs Administration 77
D.o.o. Čistoća 74
Ministry of Agriculture, Forestry, and Water Management 74
Monte put d.o.o. 72

You can find the complete record of registered official vehicles from the MUP here.

According to these records, the Ministry of Agriculture and Ministry of Rural Development have the most vehicles among ministries after the Ministry of the Interior, with a total of 74 vehicles. The Ministry of Defense possesses 68 vehicles, the Ministry of Spatial Planning and State Property has 21, and the Ministry of Capital Investments owns 19 vehicles.

Among local governments, after the Capital, the municipalities with the largest vehicle fleets are Tivat with 43 vehicles, followed by Bar with 32, Herceg Novi and Kotor with 31 each. The Parliament of Montenegro has significantly fewer vehicles (33) than the Municipal Assembly of Budva, which has a fleet of 61 vehicles. The Municipal Assembly of Pljevlja also has a larger fleet than the state parliament, with 38 vehicles. Additionally, several local companies in various Montenegrin municipalities possess dozens of vehicles.

However, this does not fully represent the number of vehicles used by state and local authorities and institutions, nor the costs associated with their use. This is because the data does not include vehicles that state institutions lease, with an obligation to return them after the contract period ends, as was done in the past by the Administration for Inspection Affairs and the Police Directorate. Although these vehicles incur costs for the state budget (multi-year leases, fuel costs, etc.) and are part of the state institutions’ fleet, they are registered by the leasing companies and therefore do not appear in the count of vehicles registered to state authorities, as confirmed by the Administration for Inspection Affairs and the Ministry of the Interior. In February, the Directorate for Inspection Affairs was using 40 leased vehicles, while the Police Directorate was using 130, all registered under the leasing companies (Auto Čačak and Erste Bank Leasing).

State’s Vehicle Fleet Worth at Least 20 Million Euros

The value of the vehicles, as reported by the 126 direct and indirect budgetary institutions that provided data, is €19,854,655.29, according to the State Property Administration. However, given that many direct and indirect budgetary users have not submitted data on their movable assets to the Directorate, and some have provided incomplete data, it is evident that this estimate is not final and is significantly higher.

This is also indicated by the number of entities that own official vehicles according to the records of state-owned registered vehicles, which is much higher than the number of entities that have submitted data about their vehicle fleet to the Directorate for State Property. Vehicles registered at the Ministry of the Interior’s branches are used by 460 institutions.

The value of the vehicle fleet has increased by €13,303,313.24 compared to 2020. The vehicles owned by the state, for which the then Directorate for Property had accounting values three years ago, were worth €6,551,342.05 at that time. The Directorate for State Property also noted that the average age of the vehicles for which data was provided is 15 years.

When asked about the number of vehicles for which they have records, the Directorate previously stated that a vehicle registry is being compiled and that the public will be informed in due time, with the data being publicly accessible on the Directorate’s website for the first time.

Despite the oversized state-owned vehicle fleet, budget users have requested the purchase of over 500 new official vehicles during the budget planning for 2024.

Uncertainty Over Fleet Optimisation

Before the end of its mandate, the government led by Dritan Abazović adopted information on establishing an interdepartmental working group aimed at optimising the management of the vehicle fleet. The document noted that there is no unified policy for the procurement and use of official vehicles, unclear prioritisation for this type of procurement, and significant and inefficient allocation of budget funds for these purposes. This highlights the need to optimise, improve, and make the management of the existing state-owned vehicles more efficient, leading to the proposal to establish a working group.

In the conclusions adopted at the Government session, the Ministry of Finance was tasked with forming this body and including representatives from the Ministry of the Interior, the General Secretariat of the Government, the Administration for Cadastre and State Property, and other relevant institutions. The Ministry of Finance was also instructed to inform the Government about the activities of this interdepartmental group.

It is unclear whether the new government, led by Milojko Spajić, supports this initiative and whether the interdepartmental team for fleet optimisation has been established since the change in executive power. Questions on this matter were sent to the General Secretariat of the Government on February 14, who forwarded them to the Ministry of Spatial Planning, Urbanism, and State Administration. However, no response has been received.

Million-Euro Vehicle Purchases Planned for This Year

Several state institutions and bodies plan to expand their vehicle fleets this year, which, according to their public procurement plans, will cost taxpayers at least €4 million. In early February, the Parliament initiated procedures for purchasing five new passenger vehicles, with a total value of €103,305. New vehicle purchases are also planned by the Agency for the Prevention of Corruption (ASK), Monteput, Regional Water Supply, the Central Bank of Montenegro (CBCG), and various municipalities.

In December 2023, the Government adopted an initiative from the Eco-Fund to introduce electric and hybrid vehicles for the public sector, offering subsidies of €7,500 for electric vehicles and €4,000 for hybrid vehicles. In the conclusions adopted at that session, all ministries and administrative bodies were instructed, and local self-government units were recommended, to prioritise electric and hybrid vehicles in their public procurement processes for new vehicles starting January 1, 2024.

Overview of Vehicle Public Procurement in the Last Three Years

Between 2021 and 2023, state bodies spent at least €5 million on vehicle procurement. This is shown by data from the Montenegrin Electronic Public Procurement Portal (CEJN) that we analysed, which exclusively covers vehicle procurement for state bodies and does not include the purchase of specialised and commercial vehicles, vehicles used by city services, or medical transport vehicles. During this period, as in previous years, vehicle procurement continued through financial leasing with the obligation to return the vehicles after the agreed period.

The tables below provide examples of some official vehicle procurements during 2021, 2022, and 2023.

2021. Number of vehicles Type of Vehicles (new/used/electric) Leasing Purchase Value (euro)
State Property Administration (for the needs of Police Directorate)

130

 Used Kupovina na lizing, s obavezom povraćaja vozila nakon 12 mjeseci

714.745
State Property Administration (for the needs of the Ministry of Ecology, Spatial Planning, and Urbanism)

8

 New /

129.400
RTCG (Radio and Television of Montenegro)

4

 2 new electric, 2 used /

84.408
Secretariat of the Judicial Council (for court needs)

2

 New /

55.902
Agency for Electronic Communications

1

 New /

29.724
Institute for Standardisation

1

 New /

16.488

Data from the Montenegrin Public Procurement Portal (CEJN) on vehicle purchases in 2021.

2022. Number of Vehicles Type of Vehicle (new/used/electric) Leasing purchase Value (euro)
Ministry of Defence

3

 New /

73.507
Parliament of Montenegro

2

 New /

53.180
RTCG

5

 3 electric, 1 new, 1 used /

132.721
Post Office of Montenegro

3

 New /

112.402
Monteput

1

 New /

41.950
Broadcasting Centre

1

 New /

20.489

Data from the Montenegrin Public Procurement Portal (CEJN) on vehicle purchases in 2022.

2023 Number of vehicles Type of Vehicle (new/used/electric) Leasing Purchase Value (euro)
State Property Administration (for the needs of Customs Administration)

6

 New /

146.057
State Property Administration (for the needs of the Ministry of the Interior)

33

 Used 12-month leasing

218.983
State Property Administration (for the needs of the Ministry of Public Administration)

2

 Used /

31.999
State Property Administration (for the needs of Administration for Inspection Affairs)

40

 Used 2-month leasing

29.800
Rectorate

1

 New /

36.880
Ministry of the Interior

97

 Used Leasing with return obligation

633.890
Parliament of Montenegro

10

 New /

263.411
RTCG

8

 5 electric, 3 new /

319.984
Agency for National Security

2

 New /

69.099
Monteput

1

 New /

49.400
Compensation Fund

1

 New /

26.446

Data from the Montenegrin Public Procurement Portal (CEJN) on vehicle purchases in 2023.

Recommendations Regarding Official Vehicles Regularly Featured in State Audit Institution Reports

The findings of the State Audit Institution (SAI) have repeatedly shown that the records of state property are neither adequate nor complete. It has been established on several occasions that the State Property Administration itself does not consistently apply the regulations governing this area.

Between 2020 and 2023, the State Audit Institution issued multiple recommendations to state bodies regarding the use of official vehicles in a manner regulated by the Decree on the Conditions and Manner of Using Vehicles Owned by Montenegro. In the SAI’s Recommendations Register, by using filters with keywords such as “official,” “vehicle,” “car,” and “Decree on the Conditions and Manner of Using Vehicles Owned by Montenegro,” dozens of recommendations can be found for audits conducted in 2020, 2021, and 2022.

Although the Decree clearly defines who is entitled to the use of official vehicles, institution heads often grant themselves or their closest associates the right to 24-hour use of official vehicles through internal regulations. However, the findings of the State Audit Institution (SAI) indicate that the internal regulations of state bodies governing the use of official vehicles are frequently not aligned with the decree and related regulations.

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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On the work of inspections and coordination mechanisms of inspections in the region: Conclusions and recommendations from the IA meeting

The work overview of seven inspections in Montenegro and the mechanisms of coordination of inspections in Croatia and Serbia were the topics of the second meeting on the work of inspection bodies. Below are the conclusions and recommendations from the second meeting organised by IA between inspections and other organisations and institutions relevant to the fight against corruption.

The aim of the meeting was to deepen the discussion on the current state, future direction of regulating inspection oversight, and adapting the legal framework to a more effective role of inspections in the fight against corruption.

The conclusions and recommendations suggest the need for detailed analyses of the work of inspections before reforms are implemented. The reform should be based on clearly identified needs and good practices from the region, taking into account the recommendations of international organizations.

The meeting is part of our efforts to strengthen the anti-corruption role of inspections, within the project  Inspect to Protect: Turning Inspectorates Into Anti-Corruption Allies supported by the Embassy of the United States in Montenegro, the State Department’s Bureau for International Narcotics and Law Enforcement Affairs (INL). The content of the onclusions and recommendations is the sole responsibility of Institut alternativa and does not necessarily reflect the views of the United States Government.