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Insufficiently transparent procedure, lack of elaboration of amendments and useful recommendations

On the occasion of the Law on Amendments and Supplements to the Law on Public Procurements

Transparency Serbia (official chapter of Transparency International) emphasizes that Draft Law on Amendments and Supplements to the Public Procurement Law was submitted by the Government to the National Assembly without prior public debate, although organization of the debate was obligatory in compliance with both the Law on State Administration and the Rules of Procedure of the Government. Our organization emphasizes, that such proceedings (this Draft Law isn’t an isolated case), is in contradiction with political program of the current Government from April 2014 and adopted strategic acts Absence of public debate represents one step backwards, even for the National Assembly. Namely, the Draft of current Public Procurement Law in 2012 was subjected to public debate by the deputy group of SNS, as a proposer, (although it was not obligated to do so), and couple of months before Parliamentary Committee for Finances established working group to discuss the changes of this Act. Now, instead of formulating amendments on the basis of recommendations of other institutions and interested parties, Parliament debates this Draft, submitted by the Government, in emergency procedure.

Our organization estimates that there are many useful suggestions including those that we advocated for in previous period, but there are also those that we think represent one step backwards. Many problems still remain unresolved.

First of all, positive changes are envisaged through publishing of more documentation on Public Procurement Portal – e. g. internal acts of the purchasing entities on public procurements. Also, some positive changes are in the area of organizing competitive dialogues, in introducing the obligation of dividing centralized procurements into lots whenever it is possible.

Second, what could represent useful change is regulated by the article 77, 78 and 79 that reduce administering (scope of documents that bidders have to deliver). Also, purchasing entities are being limited in their requests regarding financial capacity of the bidders, but this regulations is unfortunately relativized.

Thirdly, we think that it is good that original Public Procurement Law will finally regulate procurements that occur as a result of natural disasters, technological accidents and traffic accidents, instead of regulating them with ad hoc regulations, like the Law on Elimination of the Consequences of the Floods in the Republic of Serbia.

Fourthly, useful provision among regulating exceptions, deals with implementing procurements from credits, it prescribes that implementation of the Law on Public Procurements can be ignored only if the procurement is majorly financed by foreign investor.

And lastly, in regards to protection of rights, useful innovations are noticeable in regards to composition of the Commission (more members).

However, limitation of submitting requests for protection of rights, through limiting of term of „interested party“ and increasing of taxes is not a good solution. In a situation when most of the violations of the Public Procurement Law do not get reported at all, every limiting of mechanisms of protection, provides a new chances for them to remain hidden.

Also, poor solutions in proposed amendments are:

  1. Changed definition of the key term in this Law - „purchasing entity“ - and not even a word of explanation on possible effects of these changes. Namely, reasonable doubt is that some of the enterprises in state ownership will in the future be excluded from the public procurement system.
  2. Erasing of the definition of the term homogeneity (of goods, services and works) that are being procured. Although critiques of current solution may be reasonable, far greater danger for legal safety lies in missing of these definitions, because obligations of purchasing entities are related to similar procurements in one budget year.
  3. Provisions on „mixed procurements“, although potentially useful, are neither clearly defined nor elaborated.
  4. Number of situations that do not fall under the Public Procurement Law will be increased, which is being explained with „harmonizing with Directive“. We remind that rules from EU Directives represent minimum standard – members of EU are not allowed to introduce exceptions that were not mentioned in the Directive, but are certainly not obligated to introduce all potential exceptions from the Directive.
  5. Termination of provision according to which public procurement procedure could be implemented with the approval of the Ministry of Finances instead of complying to PPL – which can now represent any rule of international organization or financial institution.
  6. Also, procurements of value between 400 and 500 thousand RSD are exempted from the Law.
  7. Effects of implementation of interesting but insufficiently elaborated exception no. 17 can still not be perceived. This exception should regulate situations when budget, will be spent through subventions, support to projects of public interest and similar, instead through public procurements, but according to our organization it hasn’t been regulated clearly enough. One of the problems in budget system recently effective mechanism of previous control hasn’t existed, therefore it has happened that something that should have been object of the procurement was actually financed through a donation or subvention.
  8. There are norms among prepositions that do not use insufficiently precise terms and language constructions that are not in line with key norms of the legal system, example could be found in article 7а that regulates procurements of related legal entities. Peculiarity is that explanation of this new rule is as much as 12 times shorter than the norm itself! Similar case is in article 64, where, by our opinion ”specifying” of what purchasing entity cannot do when estimating value of procurement, is unclear.
  9. In the „anti-corruption area“ amendments quit the concept that, contrary to provisions of the Law from 2012, were not being implemented. In other words, it is obvious that the Law is being adjusted to practice, instead of enabling its implementation with effective supervision. That way Governmental omission to adopt anti-corruption plan in public procurements, to proposition of the Public Procurement Office and the Anticorruption Agency, is being canceled by erasing this provision. What is being canceled as well, is the obligation for the larger purchasing entities to establish Service for Control of Public Procurements.
  10. Recent absolute prohibitions from the article 23 and 30 (cooperation of persons that prepared procurement with bidders, prohibition of signing contract if there is conflict of interest), are now being relativized. That by our opinion opens broad space for different interpretations, due to which it can happen that norms remain completely without effect.
  11. Negative references, that were not implemented so far, in this preposition of the Government of Serbia, completely lose their sense by introducing discretion right for the purchasing entity to refuse the offer, instead of previous rule that prescribes it as obligatory in certain cases.
  12. Changes of provisions that refer to public procurement planning, with reference to necessity of greater flexibility, that undoubtedly existed, leave situation susceptible to interpretation. That way it will be possible to implement procurement that wasn’t in the plan „when procurement isn’t possible to plan in advance or for emergency reasons“, whereas mechanism of previous control of existence of these conditions is not envisaged, which is by our opinion very risky.
  13. Similarly, possibility to avid publishing of data in public procurement plan for the reason of “business secret” can be damaging, whereas term of secrecy in that sense is not related to rules from the Public Procurement Law (public sector), but to the rules that apply to all business subjects.

Having in mind all these loopholes we think that adoption of current draft is not a good option. Amendments of PPL should be subjected to public debate and afterwards submitted to National Assembly for adoption of comprehensive changes of the PPL.

Transparency – Serbia

Belgrade, 30 July 2015