Public Discussion Rendered Meaningless: 80% of Comments on the Draft Law on Public Procurement Rejected

During recently organised public discussion on the Draft Law on Public Procurement, almost 450 comments were received from over 20 different entities – bidders, contractors, civil sector, associations and business associations, almost 80% of which have been rejected by the Public Procurement Administration and the Ministry of Finance. Our key objection was also rejected, by which we asked for deletion of misdemeanour sanctions for authorities, so that citizens would not pay for mistakes of contracting authorities, and instead suggested that responsibility for violations of the Law is determined at individual level of responsible persons within institutions.

The recently held public discussion on the Draft Law on Public Procurement did not have much effect, since the Ministry of Finance and the Public Procurement Administration rejected most of the comments, with very vague and problematic explanations.

According to the Report on the public debate, these institutions received close to 450 comments, of which almost 80% have been rejected. Only 4.5% of the comments were entirely accepted, almost 13% was partially accepted, while 67 comments, or about 15%, “will be further considered”.

Out of 13 comments submitted in writing by the Institute Alternative, nine were not accepted at all, while four will be “further considered”, which does not mean that they will ultimately be accepted.

In the comments, we criticised very high misdemeanour penalties for violations of the Law on Public Procurement for authorities, and low ones for responsible persons within the authorities. Namely, prescribed penalties for determined misdemeanour liability of contracting authorities as legal entities amount to 5.000 to 20.000 euros, which will be paid by citizens – taxpayers. On the other hand, a penalty of 200 to 2.000 euros is envisaged for a responsible person within an authority. We believe that penalties prescribed in this way will not lead to real determination of responsibility, because contractors’ penalties will be paid by the citizens, while institutions will not suffer any damage or liability. Liability for mistakes and violations of the Law on Public Procurement should be established at individual level, and penalties should be retained and increased for the responsible persons within contracting authorities, and deleted for the authorities, in order to avoid the situation in which citizens would pay for mistakes of contracting authorities. However, our proposal was rejected, with the explanation that solutions from the Draft Law “point to increased responsibility of a natural person in a legal entity in the performance of public procurement activities”.

We also thought that the Law on Public Procurement should prescribe that the data from the Electronic Public Procurement Gazette (EPPG) will be publicly available, and that interested public will be able to search and collect data contained in this record, without monetary compensation. Electronic Gazette will replace Public Procurement Portal, and its establishment aims to improve the transparency of public procurement, which will only matter if citizens and interested public are able to use this database for free. However, this objection was also rejected, with explanation that “only the first publication on the EPPG will be free, while every subsequent publication is included in the price list for the publication of acts.”

In the comments, we also criticised the fact that the Law does not prescribe an obligation to publish reports on realisation of concluded contract. Bearing in mind that the area of control over execution of public procurement contracts is the least regulated and the least transparent one, we deemed that these reports should be made publicly available by prescribing an obligation to publish them in the Electronic Gazette. We consider that the Law should also prescribe penalties for contracting authorities if they do not respect this obligation. However, in the Report on the conducted public discussion, it was stated that “monitoring of contract execution is under the supervision of the public procurement inspector”, so the objection was not accepted.

The draft Law also prescribes that only procurement items whose estimated value is equal to or greater than 3.000 euros are entered in the Annual Procurement Plan. We pointed out that this provision is contrary to the Article 84, paragraph 1 of the Draft Law on Public Procurement, which stipulates conditions for initiating a public procurement procedure: “A contracting authority may initiate the public procurement procedure if funds for that particular procurement contract have been allocated by the budget or in some other manner in accordance with the law and if such procurement is envisaged by the annual procurement plan of the contracting authority.”

The proposed solution in practice means that, given that it is not in the annual procurement plan, it will not be possible to implement any procurement worth less than 3.000 euros without violating the Law. However, in the Public Procurement Administration and the Ministry of Finance, they do not see any reasons for deleting this provision and state in the Public Discussion Report that “proposed deletion of restrictions is unnecessary”.

Only our comments relating to the part of the Law regulating procurement in the field of security and defence will be “further considered”, as stated in the Report. However, our key suggestion to regulate these procurements in detail by the Law, and not by a by-law, was not accepted. The Ministry of Finance and the Public Procurement Administration maintain that these procurements will be “regulated in detail by the Decree on Defence and Security”, although we have repeatedly pointed out that this is contrary to the European Union Directive regulating procurement in the area of security and defence.

During the public discussion, we proposed that the Law should regulate in detail and prescribe procedures that can be applied to procurement in the field of security and defence, manner of collecting and evaluating bids, and criteria for evaluating bids. We also considered that a system of planning and reporting on these procurements should be regulated in detail, with a prescribed minimum of information that a plan and a report should contain. Bearing in mind secrecy that characterises these procurements, and the low level of control over them, we also proposed that the Law stipulates an obligation to submit security and defence reports and procurement plans to the Committee on Security and Defence to be advised of and give its opinion, and to the Government for adoption.

Ana Đurnić
Public Policy Researcher

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