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.
