Банкеръ Weekly

Briefs

BRUSSELS TACKLES PUBLIC PROCUREMENT

Obviously, Brussels does not put much trust in the Bulgarian officials through whose hands the billions of subsidies from the European Union (EU) structural funds will go. The new confirmation was the draft bill on amendments to the Public Procurement Act, prepared under the guidance of the European Commission (EC), although the law itself was passed passed just a year ago.
After numerous notes in that sphere, included in the monitoring report of the EC, the Government quickly worked out a special strategy for reducing the misuse of state's funds and ensuring a greater transparency of the tender procedures. The most essential change to the law is that the assignment of contracts on the part of the State will be reported in future not only to the Public Procurement Agency, but directly to the EC as well. If the draft bill is passed, by March 1 of each year the state institutions shall have to
inform Brussels in advance
about the bigger contracts they intend to close in the year to come. Such are all contracts for deliveries and services that are worth more than EUR750,000, and all contracts for construction activities worth EUR6,242,000. In addition to the plans, announced in advance, the EU commissioners also insist on receiving notifications about each invited public procurement tender worth EUR162,000-plus. And the Public Procurement Agency should notify the EC about any activity, assigned without a tender, on the basis of an international contract with a third party (i.e. outside the community).
Moreover, the resumes of the tender announcements, containing the more important requirements to the candidates, should be translated in future in all the languages of the EU member countries. The costs for these translations will be entirely at the expense of the EC.
Another new moment is the introduction of the so-called
procedure of competitive dialogue
that will supplement the currently effective three procedures (open, limited, and direct negotiations). The new method admits any interested person or company to file an application for participation in a tender of competition, and the assigner to hold negotiations with some of the candidates after a preliminary selection. The competitive dialogue will be resorted to only when the holding of an open or limited procedure is connected with a factual or legal complexity, or if it is difficult for the assigner to set the technical parameters of the order. A single criterion for assessing the offers then will be their economic advantage. For the purpose the assigners will be obliged to include clear qualitative criteria still in the announcements. The minimum and maximum number of candidates, to be admitted to the dialogue, should be specified in the very beginning as well.
A curious moment as well is the proposal for
the introduction of a framework agreement
It will be closed between the assigners and the contractors as a kind of a preliminary agreement, but the parameters in it cannot be changed afterwards. Such agreements will be possible for all procedures under the Public Procurement Act, except when the negotiation is direct and without an announcement.
With the proposed amendments the governors will try to close somewhat the wide open loopholes regarding the changes in terms and the investigation of the candidates' clean financial past. They stipulate that the assigners will be allowed to eliminate some of the applicants in case of suspicions that they have used state assistance. And winners in the competitions will be demanded to present documents, certifying all the circumstances they have announced in advance. The draft also revokes the provisions that the bidders in tenders may litigate the decisions of the assigners only in front of the Arbitration Court, established with the Public Procurement Agency. According to lawyers, the currently effective text contradicts both the Constitution and the Civil Procedure Code.
Of course, it is difficult to foresee if the good intentions in the draft bill will scatter the present thick fog blanketing the public procurement. As we know, the problem in Bulgaria is usually not with the written regulations, but in their observation.
Moreover, a number of jurists believe that although drafted according to European model, the bill leaves
loopholes for corruption practices
The possibility for closing deals without a tender or competition stays, for instance, under the pretext that the contract is connected with the use of classified information and concerns the national security. Assigning these special orders is regulated by a separate ordinance of the Council of Ministers, but can hardly be described as an efficient one. There are simply no clear criteria regarding when a deal refers to the national security and when - not. Thus, in order to avoid control and assign the order to their people, the state institution should simply make it secret. That is why, in the beginning of October the Supreme Cassation Prosecutor's Office moved to the parliamentary Antimafia commission its own draft for amendments to the Public Procurement Act. It stipulates that contracts for all public procurement, to be paid by the budget, should be closed after holding a tender or a competition. However, it is questionable if the majority in the National Assembly will find sufficient political will to approve such an amendment.
A certain surprise in the Economy Ministry's drafts is caused by maintaining the procedure for direct negotiation, which is outrightly restricting free competition and creates preconditions for non-regulated payments. According to the Coalition 2002's analysis of the deals closed within the last four years, the ministries largely prefer direct negotiations to open tenders. In 2004, for instance, direct negotiation procedures tripled vs 2003, although they should be used as an exception. There is nothing strange in that growth of course. Especially, considering the fact that 40% of the local companies confess they have had to pay under the counter in order to be assigned a public procurement.

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