Defence and Security Procurement: New “Rules of the Game”, Old Issues

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; however, the Government Decree on the list of military equipment and products, procedure and method of conducting public procurement in the fields of defence and security limited the arbitrary actions of contracting authorities only to a certain extent. The system of planning and reporting on these procurements was not significantly improved. Planning was not tied to the strategic objectives in the security and defence sector, while security procurements were envisaged to be reported only to the Ministry of Finance. Other oversight instances, such as the National Security Council, and in particular the Parliamentary Security and Defence Committee, were not integrated in the oversight system.

According to the publicly available annual reports on public procurement, four institutions, namely the Ministry of Interior (MoI), Police Administration (PA), Ministry of Defence (MoD) and National Security Agency (NSA), spent in aggregate close to €30 million on public procurement in 2018, while the MoI alone spent as much in 2019. The four institutions’ total spending on public procurement in 2019 amounted to close to €42.5 million. It usually remains unknown, however, what share of that amount referred to security procurement, or if any additional amounts were spent. No specific reports are prepared on this segment of spending.

During the three-year legal vacuum brought about by the 2017 amendments to the PPL, due to the incomplete and ambiguous regulatory framework, the contracting authorities conducted procurement in a hybrid fashion: they applied the open procedure, while classifying some data, such as technical specifications, contracts and such. The contracting authorities continued to conduct public procurement in such a manner even after the adoption of the new Law and Decree, which had a negative impact on the remedies system.

The NSA remains the most secretive institution in the security and defence system – not only was their spending on security procurement a secret, but so was also the relevant regulation. That leaves the State Audit Institution (SAI) as the only witness of any irregularities concerning the spending on security procurement. SAI’s audits in the security sector are not frequent enough.

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