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.
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).
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.
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 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.
“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.
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.