Procurement office loses one power

POLITICAL ethics watchdogs have been calling for changes to the country’s public procurement legislation to ensure more transparency and accountability. In one of its last-minute moves before the parliamentary elections in June, the ruling coalition did modify this legislation. But the watchdogs say it was not the kind of move they had in mind.

POLITICAL ethics watchdogs have been calling for changes to the country’s public procurement legislation to ensure more transparency and accountability. In one of its last-minute moves before the parliamentary elections in June, the ruling coalition did modify this legislation. But the watchdogs say it was not the kind of move they had in mind.

As of April 1, Slovakia’s public procurement authority no longer has the authority to challenge a government initiated contract in court. The Public Procurement Office (ÚVO) had been able to challenge a contract it thought was questionable by filing a legal action within one year after the contract document was signed. The procurement authority said that it had rarely used this option over the past decade.

The Transport Ministry, the author of the amendment stripping ÚVO of its right to take legal action, said that it was an unnecessary power for ÚVO to intervene into what the ministry called private legal relations. Under the amendment, only participants in a tender will now have the right to take legal action in court but they can do so only after submitting a €100,000 fee. The party initiating such legal action will get that fee returned only if they are successful in their claim.

“It was an unnecessary administrative burden for ÚVO,” Transport Minister Ľubomír Vážny told public-service broadcaster Slovak Radio on April 14, adding that any affected party, for example an unsuccessful bidder in a tender, still has the option to file legal objections.

The ministry argued that protection of the public interest is sufficiently secured by the tender bidders who are interested in the outcome of a public procurement.

Political ethics watchdogs, however, say even parties which might appear to be competitors may become united by common interests not necessarily beneficial to the public interest.

“In cases where the procurer and supplier in a tender create a textbook example of a corrupt couple, in which neither side is interested in cancelling a contract which is disadvantageous for citizens, an impartial entity which has an interest in cancelling such a contract has now disappeared,” said Peter Kunder of the Fair-Play Alliance, a political ethics watchdog. “In other words, the number of cases in which citizens will be able to look on only helplessly at how the state is buying at overpriced rates might grow.”

Regarding ÚVO statements that the authority has used this option only a few times over the past decade, Kunder told The Slovak Spectator that the authority’s failure to use this right was clearly a mistake which has cost the taxpayers dearly.

“To use this right and claim the cancellation of a tender through the courts would have been the proper action for example in the bulletin-board tender, where the audits found several different violations of the public procurement law and uneconomical spending of public funds while fulfilling the contracts,” Kunder said. “I consider it bizarre to use the fact that the office did not take legal action when it should have to be a reasonable argument to prove that having this legal authority was superfluous for the office.”

The so-called bulletin-board tender was for a public contract worth €119 million that was published only on a bulletin board in a restricted part of the Construction Ministry not normally accessible to the general public. The tender contract was then awarded to the sole bidder, a consortium that included two companies, Zamedia and Avocat, believed to be close to Slovak National Party (SNS) leader Ján Slota. The contract was subsequently cancelled after pressure from the European Commission, since EU funds were being spent. The ministry did not seek repayment of more than €11 million that had been paid out prior to the contract’s cancellation.

Minister Vážny also suggested that by amending the legislation the ruling coalition wanted to remove any possible obstacles to the funding of public-private partnership (PPP) projects. He said that banking consortia which are expected to lend money for highway construction were uncomfortable with ÚVO having this particular authority.

“Bank consortia which had analysed our legal system in-depth, suggested that they would give the funds which they had taken in their obligation to pour money into PPP projects, but would do so only when this possibility of the office [ÚVO] to challenge the contracts disappears,” Vážny told Slovak Radio.

An opposition party sees the forthcoming parliamentary elections as behind the government’s decision to trim the powers of ÚVO. Daniel Lipšic, the deputy chairman of the Christian Democratic Movement (KDH), told the Sme daily that the current government wants to conclude all the highway deals before the election, especially since the PPP projects involve huge amounts of money.

Prime Minister Fico has made the PPP projects part of his pre-election rhetoric by suggesting that if the centre-right opposition parties win the election they would halt the PPP projects and endanger highway construction in Slovakia (see story on pg 1).

Kunder said that the public procurement process has other flaws in Slovakia, noting that the law sometimes makes it possible for a government ministry to refuse to publish the results of its procurement, he said.

“The sole condition for not publishing information about the conclusion of a contract is that the procurer does not wish to do so,” Kunder told The Slovak Spectator. “The other absurdity is that the Public Procurement Office accepts huge amounts of information and announcements in electronic form which it does not publish. It is hard to understand why.”

According to Kunder, technically, the publishing of these data would be easily manageable and there would be almost no financial implications.

“If there was an interest in transparency on the part of politicians, parliament could have passed such a mini-amendment any time over the past four years,” Kunder said. “It did not happen.”

Kunder stated that the law on public procurement requires several other significant changes. Foreign investors in Slovakia, for example, have been calling for a completely open, online procurement system which in their opinion would significantly increase both transparency and efficiency.


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